The Colorado Supreme Court declined on Monday to expand its narrow prohibition on insurance companies accessing policyholders’ medical information, clarifying that a dispute over an insurer’s bad-faith decision to deny benefits is the only situation where a company is limited to the information it knew at the time of the decision.

In 2018, the Supreme Court addressed a scenario in which a policyholder sued her insurance company and the insurer sought to dispute the cause of her injuries by obtaining a medical examination. In that case, Schultz v. GEICO Casualty Company, the Supreme Court decided that the reasonableness of an insurance company’s decision to deny coverage “must be evaluated based on the information that was before the insurer at the time it made its coverage decision.”

Eight years later, plaintiff Samantha Pinto of Colorado Springs asked the Supreme Court to similarly rule that her insurance company, United Services Automobile Association, was not entitled to obtain her medical records and evaluate her through its medical expert after it decided not to pay benefits for a car accident. Otherwise, USAA would be allowed to “create new medical evidence” to support its decision that it did not have at the time, her lawyers argued.

But the Supreme Court determined its Schultz decision did not apply to Pinto. In Schultz, the question was whether the insurance company acted in bad faith in its decision-making, wrote Justice Susan Blanco in the June 8 opinion. Pinto, on the other hand, was seeking benefits allegedly owed under her policy.

“Schultz does not extend to breach of contract claims because, unlike bad faith claims, the reasonableness of the insurer’s conduct is not a consideration. Instead, the only consideration is whether the insured can establish an entitlement to the benefits under the policy,” Blanco wrote.

Pinto sued USAA after she was injured in a 2020 rear-end accident. The insurer for the at-fault driver paid her $500,000, but Pinto’s estimated losses from her inability to work totaled nearly $1.4 million. Consequently, she sought the maximum of $300,000 under her USAA policy.

In September 2023, the USAA claims department offered her “$0.00 to settle” the claim. Pinto’s lawsuit sought the benefits under her policy and also brought a bad-faith-related claim.

Pinto challenged USAA’s requests for her medical records related to other accidents that happened in 1999 and 2022. Pinto also disputed that she should sit for a neuropsychological exam with USAA’s medical expert.

Her attorney, Timothy G. Buxton, argued USAA was trying to “create new medical evidence that was not before the adjuster at the time the adjuster made her decision and USAA denied the claim,” in violation of Supreme Court precedent.

District Court Judge Eric Bentley noted that Pinto had a bad-faith claim, to which Schultz would apply. But there was also a breach-of-contract claim.

“You’re saying that the damages exceeded the amount paid out on the underlying policy, and so USAA owes your client,” he said. “So, your arguments all may be relevant to the claim number 2 for bad faith, but I am looking at … all claims.”

Bentley ordered Pinto to provide medical records, including documentation from her other accidents, and to sit for a psychological evaluation. Although Bentley referenced a recent Supreme Court decision that shot down a different judge’s order requiring a personal injury plaintiff to be examined by that same doctor, he did not explain why he was ruling differently.

Pinto immediately turned to the Supreme Court.

“It is well settled law in Colorado that a denial of underinsured motorist benefits … is evaluated based on the evidence and information available to the insurer at the time it made its coverage decision, not on evidence developed later during litigation or trial,” her lawyers wrote. “Defendant is doing what this Court has already said it is not allowed to do: attempting to create new evidence to justify its position.”

The Colorado Defense Lawyers Association wrote in support of USAA, arguing the question of whether an insurer acted reasonably in its decision-making was separate from whether benefits were actually owed.

“‘Freezing the frame’ of a breach of contract claim to include only pre-suit (evidence) would encourage insureds to file suit to prevent unfavorable evidence from being discovered by their insurers,” the group wrote. “An insured’s medical records are not ‘newly created evidence’ under Schultz, but rather evidence that should have been shared with an insurer during the claim investigation.”

As for whether Pinto should sit for a psychological evaluation with the defense’s expert, USAA argued that Pinto was asserting a link between the 2020 car accident and her cognitive condition.

“The purpose of the (exam) is to evaluate Pinto’s claimed cognitive impairment, to ascertain its extent and relationship to the December 2022 accident, to rule out other possible causes, and to determine the relationship, if any, between her pre-existing cognitive impairment and the impairment claimed from the subsequent accident,” wrote USAA’s attorneys.

The Supreme Court agreed with the company.

“Pinto placed her mental health at issue when she asserted that her cognitive impairments should be covered,” wrote Blanco. “As a result, USAA reasonably inquired whether causes other than the motor vehicle accident contributed to her alleged cognitive deficits.”

Further, the limitation on medical evidence for to bad-faith claims does not apply elsewhere.

“Accordingly, Schultz does not extend to breach of contract claims that do not involve a reasonableness inquiry,” added Blanco.

The case is Pinto v. United Services Automobile Association.