Amica Life Ins. Co. v. Wertz
| Decision Date | 27 April 2020 |
| Docket Number | Supreme Court Case No. 19SA143 |
| Citation | 462 P.3d 51 |
| Parties | AMICA LIFE INSURANCE COMPANY, Plaintiff Counter Defendant-Appellee, v. Michael P. WERTZ, Defendant Counterclaimant-Appellant. |
| Court | Colorado Supreme Court |
Attorneys for Plaintiff-Appellee: Cozen O’Connor, Christopher S. Clemenson, Denver, Colorado, Cozen O’Connor, Lisa D. Stern, West Conshohocken, Pennsylvania
Attorneys for Defendant-Appellant: The Law Office of Ruth Summers, LLC, Ruth Summers, Boulder, Colorado
Attorneys for Amicus Curiae Colorado Trial Lawyers Association: McDermott Law, LLC, Timothy M. Garvey, Denver, Colorado
Attorneys for Amici Curiae National Association of Insurance Commissioners and Interstate Insurance Product Regulation Commission: Holland & Hart LLP, Marcy G. Glenn, Melissa Y. Lou, Denver, Colorado
En Banc
¶1 This case requires us to answer the following certified question from the Tenth Circuit Court of Appeals:
May the Colorado General Assembly delegate power to an interstate administrative commission to approve insurance policies sold in Colorado under a standard that differs from Colorado statute?
¶2 The certified question arises from a dispute in which plaintiff Amica Life Insurance Company seeks a declaratory judgment that it is not required to pay defendant Michael P. Wertz benefits under a life insurance policy naming Wertz as the beneficiary. The policy, which was issued in compliance with a standard enacted by the Interstate Insurance Product Regulation Commission (the "Commission"), contained a two-year suicide exclusion, and the insured committed suicide more than one year but less than two years after Amica had issued the life insurance policy to him. Wertz contends, however, that the policy’s two-year suicide exclusion is unenforceable because it conflicts with a Colorado statute, section 10-7-109, C.R.S. (2019), which provides:
The suicide of a policyholder after the first policy year of any life insurance policy issued by any life insurance company doing business in this state shall not be a defense against the payment of a life insurance policy, whether said suicide was voluntary or involuntary, and whether said policyholder was sane or insane.
Wertz asserts that the Colorado General Assembly could not properly delegate to the Commission the authority to enact a standard that would effectively override this statute.
¶3 We agree with Wertz. Accordingly, answering the certified question narrowly, we conclude that the General Assembly did not have the authority to delegate to the Commission the power to issue a standard authorizing the sale of life insurance policies in Colorado containing a two-year suicide exclusion when a Colorado statute prohibits insurers doing business in Colorado from asserting suicide as a defense against payment on a life insurance policy after the first year of that policy.
¶4 In 2004, the Colorado General Assembly passed legislation to join with other states to establish the Interstate Insurance Product Regulation Compact, section 24-60-3001, C.R.S. (2019) (the "Compact"). The Compact’s purpose is, among other things, to create the Commission and to "develop uniform standards for insurance products covered under the Compact." Id . at art. I, §§ 2, 6.
¶5 As pertinent here, the Compact authorized the Commission to promulgate rules, to establish uniform standards governing the form of insurance policies covered under the Compact, and to review and approve such insurance policies. Id . at art. IV, §§ 1–3. Under the Compact, such rules, standards, and complying policies are given "the force and effect of law and shall be binding in the Compacting States." Id.
¶6 In accordance with the foregoing authority, the Commission established certain Individual Term Life Insurance Policy Standards, IIPRC-L-04-I (2016) ("Standards"). As pertinent here, one of these Standards provides, "The suicide exclusion period shall not exceed two years from the date of issue of the policy." Id . at § 3(Y)(3).
¶7 Pursuant to this Standard, the Commission authorized the sale of life insurance policies containing a two-year suicide exclusion in Compacting States like Colorado. Id . In Colorado, however, by statute, insurers doing business in this state may not assert suicide as a defense against payment of a life insurance policy after the first year of that policy. See § 10-7-109. Thus, this case presents a scenario in which the policy at issue complied with the Commission’s suicide-exclusion Standard but in which enforcement of that Standard amounts to the assertion of a defense that is precluded under Colorado statutory law.
¶8 Specifically, on January 28, 2014, Amica issued a ten-year convertible level term life insurance policy (with an annual renewable term provision) to Martin Fisher. The policy was in the face amount of $500,000 and named Wertz as the beneficiary. Pursuant to the Commission’s Standards, the policy included a suicide-exclusion section that provided, "Suicide of the Insured, while sane or insane, within two (2) years from the Date of Issue is not covered under this policy."
¶9 Thereafter, on March 12, 2015—that is, more than one year but less than two years after the policy was issued—Fisher committed suicide. Wertz then submitted a claim for the death benefit under the policy, but Amica denied that claim, relying on the policy’s two-year suicide exclusion. Amica Life Ins. Co. v. Wertz, 272 F. Supp. 3d 1239, 1244 (D. Colo. 2017).
¶10 Recognizing the imminent dispute between the parties, Amica filed suit in the United States District Court for the District of Colorado, seeking a declaratory judgment that it had properly denied Wertz’s claim. Id. Wertz responded that the two-year suicide exclusion in the policy violated Colorado state law and should be declared unenforceable. Id. In addition, he filed counterclaims for reformation of the policy, breach of contract, and common-law bad faith breach of insurance contract. Id . Amica then moved for summary judgment, asserting that, as a matter of law, the Standards control over section 10-7-109. Id. at 1245.
¶11 The district court determined that to decide the summary judgment motion before it, it could not avoid the question of the validity of the Compact under the Colorado Constitution. Id. at 1247. In particular, after observing that an administrative regulation that is inconsistent with or contrary to a statute is void, the court noted Amica’s argument that interstate compacts "operate in a different legal dimension, where things can happen that normally do not happen." Id. at 1247–48. Finding that the authorities on which Amica relied did not establish this principle, the court certified the following question to us:
Does the Colorado Constitution empower the Colorado Legislature to enter into the Interstate Insurance Product Regulation Compact, Colo. Rev. Stat. § 24-60-3001, considering that: (a) the Compact will not be approved by the United States Congress; (b) the Compact creates an administrative body with power to promulgate rules and regulations with the force of law in Colorado; and (c) such rules and regulations supersede any Colorado statute to the extent of a conflict between the rule or regulation and the Colorado statute?
¶12 We declined to accept this certified question, and the district court ultimately concluded, "to its surprise," that "the Colorado Legislature may validly delegate to an administrative agency the power to promulgate a regulation that modifies a statute." Amica Life Ins. Co. v. Wertz , 350 F. Supp. 3d 978, 982 (D. Colo. 2018). The court thus concluded that there was no barrier to the legislature’s delegation of authority to the Commission here and therefore the two-year suicide exclusion was valid and Amica had properly denied payment of the death benefit. Id.
¶13 Wertz then appealed to the Tenth Circuit. That court subsequently certified its own question to us, and, reframing that question, we agreed to decide whether the Colorado General Assembly may delegate power to an interstate administrative commission to approve insurance policies sold in Colorado under a standard that differs from Colorado statute.
¶14 We begin by discussing our jurisdiction under C.A.R. 21.1 and the applicable standard of review. Next, we set forth the pertinent principles underlying the non-delegation doctrine. Last, we apply those principles to the facts presented here and conclude that the General Assembly did not have the authority to delegate to the Commission the power to adopt the Standard at issue, which effectively overrides section 10-7-109 for Commission-approved policies sold in Colorado by insurers authorized to do business here.
¶15 Under C.A.R. 21.1, we may answer questions of law certified to us by a federal court if the proceeding before that court involves "questions of law of this state which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court that there is no controlling precedent in the decisions of the supreme court." We agreed to answer the certified question from the Tenth Circuit here because it involves a significant question of first impression as to the reach of the non-delegation doctrine in Colorado, and it appears that our answer to this question may be determinative of the underlying dispute.
¶16 The matter before us presents a question of law, and we review such questions de novo. See Hernandez v. Ray Domenico Farms, Inc. , 2018 CO 15, ¶ 5, 414 P.3d 700, 702.
¶17 Of our three branches of government, only the General Assembly has the power to make law. See Colo. Const. art. III (...
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