Colorado's Made-Whole Statute: When Your Insurer Can Be Repaid

By the FigureMyTax Editorial Team · How we calculate

Under Colorado's statute, a health insurer or other payer of benefits may be repaid from your recovery only if you have first been fully compensated for all your damages, and then only for what it actually paid, less its proportionate share of your attorney fees and expenses.

The rule

C.R.S. 10-1-135(3) says reimbursement or subrogation under an insurance policy, contract or benefit plan is permitted only if the injured party has first been fully compensated for all damages arising out of the claim, and that any provision allowing reimbursement when you have not been fully compensated is void as against public policy. The legislature declared that it wants each injured insured to recover full compensation, undiminished by a payer's repayment rights.

How much, if you are made whole

If you are fully compensated and reimbursement is authorized, the amount cannot exceed what the payer actually paid for benefits (or, for capitated services, 80 percent of the usual and customary charge). It is also reduced by the payer's proportionate share of your attorney fees and expenses, based on the ratio of fees and expenses to your recovery. On a $100,000 recovery with $36,333 in fees and expenses, a $9,000 claim is reduced by about 36.3%, to roughly $5,730.

Presumptions that help you

If your recovery is less than the total coverage available under any third-party liability policy or UM/UIM coverage, there is a rebuttable presumption that you have been fully compensated. If your recovery equals the total coverage available under all liability policies and UM/UIM coverages, there is a rebuttable presumption that you have not been fully compensated. A judgment is presumed to be the amount necessary to fully compensate you. Policy limits cases therefore often turn on proof of your full damages.

How a dispute is handled

If you recover less than all your damages and want the statute applied, you must notify the payer within sixty days of receiving each recovery, with the total amount and source of the recovery, the applicable coverage limits and your costs. If the payer disputes that your recovery is less than your damages, it may request arbitration within sixty days after the notice. If the arbitrator finds you are not fully compensated, the payer has no right to repayment, reimbursement or subrogation.

Other protections

A payer may not bring a direct action against the at-fault party or the UM insurer for reimbursement, except if you have not pursued a claim by sixty days before the limitation period ends, may not name itself a copayee on the settlement check, and may not delay or reduce your benefits because a third party may be liable. The statute does not modify hospital liens, Medicaid's lien or workers' compensation subrogation, and a self-funded federal plan may not be bound by it, so find out what kind of plan you have.

Test it

Model your insurer's claim in the Colorado medical lien calculator, and see how other claims work in the hospital and provider lien post and the Medicare and Medicaid post.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Colorado's rules apply to your specific case with a licensed Colorado attorney.