Jerry Kopel

KOPEL: EVER WONDER WHAT HAPPENED TO NO-FAULT INSURANCE?

In Colorado, tort law has quietly replaced 'No Fault' in vehicle injury cases

Colorado’s Department of Regulatory Agencies wants to see the hodgepodge of insurance statutes compiled into a coherent whole under the upcoming Sunset review.

“The current Sunset review schedule (is) both cumbersome and duplicative” confesses DORA in its recommendations. Under the spread out approach, tort law replaced “No Fault” payment in vehicle injuries.

The state Insurance Division was actually repealed in 2002, when the bill to continue regulation died after radical changes. To avoid the repeal, pushers of insurance regulation had to pass a continuation bill by June 30, 2003, while at the same time meet the Sunset requirements of “winding down” the Insurance Division’s existence.

Chief sponsor of the original No Fault law was the late Majority Leader Rep. Carl Gustafson, R-Denver. He failed to get it passed in 1971 and 1972. In 1973, he paid much closer attention to the wishes of the car insurance industry.

Back in 1973, the car insurance industry wanted to be the prime payer of health costs and leave the health insurance industry as the secondary payer, with a carrot to consumers by thereby forcing the health insurance industry to lower its rates. The reason? As prime health payer, they could profit from a type of insurance policy not then available for car insurers. They got their wish.

According to the Colorado Trial Lawyers Association, under insurance industry proposals made in 2002, “mandatory health insurance coverage would decline sharply from the $100,000 in coverage then available to seriously injured people, and costs would inevitably shift to health insurance, Medicare, Medicaid and indigent care resources. The Colorado Hospital Association estimated it to be a $170 million shift.

No Fault insurance provided prompt payment to injured victims, who didn’t have to resort to lawsuits. It covered reasonable and necessary medical expenses, wage losses, death benefits and rehabilitation expenses for the insured driver, passengers and pedestrians injured in a car accident. If medical expenses climbed above a certain statutory amount, the insured could sue the person responsible for non-economic losses such as pain and suffering.

In 1997, the Legislature passed House Bill 1209, sponsored by then-Rep. Norma Anderson, R-Lakewood, and then-Sen. Elsie Lacy, R-Aurora. The two legislators added a repeal date of 2001 for No Fault Insurance in a bill dealing mainly with a Motorist Insurance Identification Database (MIDB). This was the first time since No Fault was passed in 1973 that a repealer was added to the No Fault statute.

In its 2000 review of the No Fault law, DORA remarked, “However, it is not likely the General Assembly intended to repeal Colorado’s entire No Fault law based on the success of the MIDB, but without a public debate on No Fault. The repeal provision should be removed until the General Assembly determines after a full hearing that the law should be repealed.”

The Legislature moved the repealer date to July 1, 2002. When no discussion on No Fault took place, the Legislature moved the No Fault repealer date to July 1, 2003. But the Legislature did not pass House Bill 1136, which would have continued the Insurance Division. It was still on the calendar on the last day of the 2002 session in the House, whose members did not have time to study the major changes made in the Senate. The House chief sponsor, Rep. Laura Spradley, R-Beulah, did not try to accept the Senate amendments. So the bill died and moved the Insurance Division issue over to 2003 for “windup.”

In 2003, the Legislature passed Senate Bill 59 “concerning the re-creation of the division of insurance... reinstated the regulatory functions as they existed as of July 1, 2002, staggering the time frame under which the division of insurance undergoes Sunset review...”

Page 624 of Volume One of the 2003 session laws is the only place you can see at a glance how the Sunset breakup was supposed to work.

Part 4-701 to 726 of Title 10 entitled Motor Vehicle (“No Fault”) insurance was repealed separately as of July 1, 2003, under Senate Bill 90 adopted by the 2002 Legislature.

DORA’s recommendation for 2010: The current Sunset review schedule has proven to be both cumbersome and duplicative... the entire Division of Insurance should be included in one Sunset review... except for licensing of bail bonding agents... which licensing is contained in Title 12.

One legislator who, after 1997 appeared mostly in the background, knocked No Fault out of the picture with skill equal to a professional chess player. That was Rep. Anderson, who arranged for someone else to be prime sponsor in 2002 of SB 90.

Having an interest in an issue subject to legislation was quite normal. I always considered myself the legislator to contact when issues arose regarding DORA.

The question now is whether anyone can reinvent a No Fault law in 2010.

Jerry Kopel served 22 years in the Colorado House.