State Farm Mutual Automobile Insurance Co. v. Peiffer

Donna Peiffer (plaintiff) filed suit against State Farm Mutual Automobile Insurance Company (State Farm) (defendant) alleging breach of her insurance contract and for the tort of bad faith breach of an insurance contract after the insurance company refused to pay her personal injury protection (PIP) benefits under her policy in accordance with the Colorado Auto Accident Reparations Act, more commonly referred to as the No-Fault Act (the Act). Peiffer was injured in a car accident when her vehicle was struck by another automobile. Under the terms of her policy, State Farm was responsible for payment of up to $50,000 for Peiffer’s medical and rehabilitation treatments that were reasonable, necessary, and causally related to the accident. After the accident, Peiffer’s medical treatment providers deemed all of her treatment as being necessary. Nevertheless, State Farm instructed Peiffer to submit to three independent medical examinations (IMEs), each of whom indicated that Peiffer no longer required medical treatment or that continued treatment was no longer causally related to the accident. Based upon the findings of all the IMEs, State Farm refused to pay for further treatment other than pool therapy. At trial, State Farm called Peiffer as a hostile witness. During her testimony, Peiffer acknowledged that she failed to inform the examining physician that she had received substantial chiropractic treatments prior to the accident. Over State Farm’s objection, the trial court give the jury a “thin skull” instruction which prohibited the jury from reducing and award because of any frailty or condition Peiffer may have had that would have made her more susceptible to injury or impairment. The jury held for Peiffer and awarded her over $10,000 for the breach of contract claim and $10,000 on the bad faith breach of contract tort claim. State Farm appealed. The court of appeals affirmed the judgment of the trial court. The Colorado Supreme Court granted certiorari to review.