August 24, 2019

Colorado Court of Appeals: Insurance Company Owed Duty to Third-Party so Trial Court’s Grant of Motion to Dismiss in Error

The Colorado Court of Appeals issued its opinion in Medical Lien Management v. Allstate Insurance Company on Thursday, June 6, 2013.

Breach—Assignment—Personal Injury—Settlement—Notice.

In this breach of assignment action, plaintiff Medical Lien Management, Inc. (MLM) appealed the judgment dismissing its complaint against defendant Allstate Insurance Co. (Allstate). The judgment was reversed and the case was remanded.

In October 2005, Fred Martinez was injured in an automobile accident caused by a tortfeasor insured by Allstate. In March 2007, in consideration for payment by MLM of his medical bills, Martinez executed a written agreement granting MLM a lien on, and assigning his rights to, any and all proceeds derived from his personal injury claim in an amount equal to the fees and costs of the medical treatment paid by MLM. MLM eventually paid $9,938 for such treatment. In October 2008, Martinez settled his personal injury claim against the tortfeasor insured by Allstate. Allstate issued payment to Martinez without paying MLM.

MLM asserted that the court erred in granting Allstate’s CRCP 12(b)(5) dismissal motion for failure to state a claim. First, an individual can validly assign the sums to be recovered from his or her personal injury claim before settlement. Here, the language of the agreement was sufficient to withstand a pleadings challenge as to whether the parties intended to affect a present transfer of the proceeds of Martinez’s personal injury recovery. Additionally, the complaint adequately alleged a valid assignment to MLM of Martinez’s rights to proceeds resulting from his injury and notice of the assignment. Once a debtor receives notice of a valid assignment, it is required to pay the assignee. Allstate failed in this regard. Therefore, the trial court erred in granting Allstate’s motion to dismiss for failure to state a claim.

Summary and full case available here.

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