Chief Justice MULLARKEY delivered the Opinion of the Court.
We granted certiorari to consider whether the court of appeals erred in Martinez v. Lewis, 942 P.2d 1219 (Colo.App.1995), when it affirmed an order by the Denver District Court (trial court) granting summary judgment against the petitioner, Yolanda Martinez (Martinez), and in favor of Frederick Lewis, Jr., M.D. (Dr. Lewis).
Dr. Lewis conducted an independent medical evaluation (IME) of Martinez at the request of Martinez's insurer, State Farm Mutual Automobile Insurance Company (State Farm). The purpose of the IME was to evaluate the existence and extent of Martinez's claimed neurological injuries allegedly sustained when the car she was driving was rear-ended by an uninsured motorist. In a report to State Farm, Dr. Lewis concluded that Martinez was "malingering." State Farm subsequently denied Martinez coverage for future psychiatric or psychological care under her no-fault automobile insurance policy.
After State Farm denied coverage, Martinez brought suit against State Farm for violations of the Colorado Auto Accident Reparations Act, see §§ 10-4-701 to -725, 4A C.R.S. (1986 & 1992 Supp.), breach of contract, and breach of the duty of good faith and fair dealing. Approximately one year later, Martinez amended her complaint to include claims against Dr. Lewis for professional negligence, breach of fiduciary duty, and violation of section 6-1-105, 2 C.R.S. (1992 & 1994 Supp.), of the Colorado Consumer Protection Act (CCPA). Only the claims against Dr. Lewis are at issue here.
In affirming the trial court's summary judgment order, the court of appeals held that Dr. Lewis did not owe a duty of care to Martinez. See Martinez, 942 P.2d at 1221-24. Consequently, according to the court of appeals, Dr. Lewis was not liable to Martinez for his IME reports notwithstanding Martinez's assertions that the reports led to State Farm's erroneous denial of benefits. The court of appeals also held that Martinez was not entitled to relief under the CCPA. See id. at 1224-26.
We now affirm the judgment of the court of appeals. We hold that, under the facts of this case, Dr. Lewis did not owe a duty to Martinez. Additionally, we hold that Martinez could not seek damages under the CCPA for the alleged misrepresentations Dr. Lewis made to State Farm.
The material facts relevant to Dr. Lewis's summary judgment motion are not in dispute. On September 3, 1991, Martinez was in an automobile collision in Pueblo, Colorado. Following the accident, Martinez received medical care for cognitive deficits she claimed resulted from a closed-head injury she sustained in the accident. Martinez made a claim for benefits with State Farm for the therapy she received. State Farm subsequently requested that Dr. Lewis perform an IME for purposes of evaluating the existence and extent of Martinez's claimed neurological injuries.
After meeting with Martinez on March 3, 1992, Dr. Lewis submitted to State Farm a completed report summarizing his evaluation of her condition. In his report, Dr. Lewis
Martinez then sued State Farm on September 24, 1993. In her complaint, Martinez alleged that State Farm willfully and wantonly failed to pay policy benefits within the time limits provided in section 10-4-708, 4A C.R.S. (1986 & 1992 Supp.), of the Colorado Auto Accident Reparations Act. Martinez also made a breach of contract claim and a claim for a breach of the duty of good faith and fair dealing.
At State Farm's request, Dr. Lewis performed a reevaluation of Martinez on March 14, 1994. In his reevaluation report, Dr. Lewis summarized his review of Martinez's medical records, the traffic accident report, Martinez's patient history, and the results from another battery of psychometric tests. In the conclusion of the report, Dr. Lewis stated, "My impression remains that the patient is malingering."
On September 23, 1994, Dr. Lewis submitted a supplemental report to State Farm concerning his prior evaluations. In the supplemental report, Dr. Lewis summarized information he received from State Farm's attorney concerning a psychological report made by one of Martinez's expert witnesses, who was also the clinical psychologist treating Martinez. After reviewing the clinical psychologist's report, Dr. Lewis concluded that "my overall impression continues to be that the patient is Malingering [sic] in the sense that she is not telling the truth."
On October 17, 1994, Martinez filed an amended complaint in which she added Dr. Lewis as a defendant.
Dr. Lewis subsequently moved for summary judgment. In response to the negligence claim, Dr. Lewis argued that, as a physician conducting an IME for State Farm, he did not owe a duty to Martinez as a matter of law. Regarding the CCPA claim, Dr. Lewis argued that it was undisputed that he did not make any representations to Martinez regarding any of the services he performed for State Farm.
In an order dated June 2, 1995, the trial court granted Dr. Lewis's summary judgment motion. Applying this court's discussion in Greenberg v. Perkins, 845 P.2d 530, 536-38 (Colo.1993), of the multiple factors that a court should consider in determining whether a defendant owes a duty of care to a plaintiff, the trial court concluded that Dr. Lewis did not owe Martinez a duty. The trial court explained:
The trial court also ruled that Martinez failed to state a claim under the CCPA. As the trial court explained, Martinez stated in her deposition testimony that she did not recall Dr. Lewis making any representations
On appeal, the court of appeals affirmed the trial court's ruling. See Martinez, 942 P.2d at 1221-26. The court of appeals held that Dr. Lewis did not owe Martinez a legally cognizable duty. See id. at 1224. In so holding, the court of appeals stated:
Id. at 1223.
The court of appeals also held that Martinez was not within the class of persons whom the CCPA was intended to protect, and consequently, she did not have a viable claim against Dr. Lewis for violating the CCPA. See id. at 1226. As did the trial court, the court of appeals explained that Martinez had neither asserted that Dr. Lewis made misrepresentations to her, nor presented any evidence indicating that Dr. Lewis made any misrepresentations to the public. See id. Rather, the alleged misconduct occurred within the context of the contract between State Farm and Dr. Lewis. See id. Consequently, the CCPA was not applicable.
II. The Negligence Claim
In order to establish a prima facie case for negligence, a plaintiff must show a legal duty of care on the defendant's part, breach of that duty, injury to the plaintiff, and causation, i.e., that the defendant's breach caused the plaintiff's injury. See Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913, 929 (Colo.1997); Connes v. Molalla Transp. Sys., Inc., 831 P.2d 1316, 1320 (Colo. 1992). Because a negligence claim will fail if it is based on circumstances for which the law imposes no duty of care upon the defendant, see Connes, 831 P.2d at 1320, we must determine whether or not Dr. Lewis owed a duty of due care to Martinez.
According to Martinez, a physician conducting an IME for an insurance company owes an examinee a duty to use due care in formulating any opinions, diagnoses, and recommendations upon which the insurance company will rely in deciding whether to deny coverage for the examinee's treatment claims. In making this argument, Martinez relies heavily upon our decision in Greenberg, where we held that a physician conducting an IME owes the examinee "a duty to act with reasonable care so as not to cause her injury by referring her for testing of a type that foreseeably would result in injury based on information known to him." Greenberg, 845 P.2d at 538.
Our decision in Greenberg, however, does not necessarily lead to a conclusion here that Dr. Lewis owed a duty to Martinez. While we agreed with the plaintiff in Greenberg that, as a general matter, a physician owes an examinee a duty of care to conduct the examination
Id. at 538 n. 7.
In our view, the situation presented by this case differs significantly from the facts of Greenberg. In Greenberg, the IME physician referred the plaintiff for additional testing which allegedly aggravated the plaintiff's condition. See id. at 532-33. That is, in Greenberg, the tests which the physician ordered as part of his evaluation of the plaintiff caused harm to the plaintiff. Here, by contrast, Martinez alleges that Dr. Lewis's misdiagnoses and subsequent report led the insurance company to decide not to cover future treatment. That is, the harm alleged by Martinez resulted from the fact that her condition worsened during the period she did not receive treatment. That period of nontreatment stemmed from the insurance company's decision not to cover future benefits—a decision which allegedly was based on Dr. Lewis's negligently compiled report. Unlike the plaintiff in Greenberg, Martinez does not allege that Dr. Lewis harmed her during the course of his examination.
Whether a particular defendant owes a duty to a particular plaintiff is a question of law. See Connes, 831 P.2d at 1320. In circumstances where a physician examines a person at the request of a first-party insurance company, a court should take into account the nature of the services to be performed, the circumstances surrounding the request for service, and whether the physician obtains information during the performance of the services which would suggest to the physician a need to proceed with care in order to avoid injury to the examinee. See Greenberg, 845 P.2d at 534-35.
Ultimately, the determination of the existence of a duty is "essentially one of fairness under contemporary standards—that is, would reasonable persons recognize and agree that a duty of care exists." Id. at 536. Relevant to a court's consideration are the following factors: the risk involved, the foreseeability and likelihood of injury as weighed against the social utility of the defendant's conduct, the magnitude of the burden of guarding against the harm, and the consequences of placing the burden of a duty on the defendant. See id. We now turn to an examination of these factors in light of the facts of this case.
We first note the context in which Dr. Lewis's examinations of Martinez occurred. Following the automobile accident in which Martinez was involved, Martinez sought psychological and psychiatric treatment from her own health care providers. Martinez does not contend that she sought medical advice or treatment from Dr. Lewis, that he advised her in any way, that he failed to inform her about an unknown condition, or that he injured her during the course of the examination.
The agreement between State Farm and Dr. Lewis was solely for the insurance company's benefit. Under that agreement, Dr. Lewis's obligations were to report to State Farm his opinions regarding the diagnosis, prognosis, and other pertinent information
We consider next the risk involved to an examinee, such as Martinez, created by an unfavorable IME report upon which an insurance company will rely in denying coverage. As we explained, the risk here is not that the physician will injure the examinee during the course of the examination, as was the risk we considered in Greenberg. Rather, the risk here is that a misdiagnosis will lead the insurance company to deny coverage for benefits to which the examinee claims she is entitled. While significant concerns are raised by the scenario in which an insurance company wrongly denies coverage for treatment the company is contractually bound to provide, that type of risk is qualitatively different from the risk that a physician will actually harm the patient while examining the patient. In our view, a plaintiff's alternative avenues of relief against the insurance company—such as actions based on the breach of the duty of good faith and fair dealing, breach of contract, and violations of the Colorado Auto Reparations Act -provide strong incentives to an insurance company to hire and rely upon physicians who will perform their IMEs adequately and competently.
We also conclude that the foreseeability and likelihood of injury is outweighed by the social utility of physicians conducting IMEs without the fear of liability to the examinee based on allegations that the physician negligently submitted an examination report adverse to the examinee's treatment claims. In Travelers Ins. Co. v. Savio, 706 P.2d 1258, 1274 (Colo.1985), we recognized that a first-party insurance provider "must be accorded wide latitude in its ability to investigate claims and to resist false or unfounded efforts to obtain funds not available under the contract of insurance." Imposing liability on physicians in a case such as the one before us would undermine insurance providers' ability to rely on IMEs, either because physicians would be more likely to submit a report favorable to the examinee in order to avoid a subsequent law suit in which the examinee alleges the IME physician negligently made the report to the insurance company or because physicians would be less likely to perform IMEs altogether given the liability risks. See Hafner v. Beck, 185 Ariz. 389, 916 P.2d 1105, 1107 (Ariz.App.1995) ("If an IME practitioner's evaluations, opinions, and reports could lead not only to vehement disagreement with and vigorous cross-examination of the practitioner in the claims or litigation process, but also to his or her potential liability for negligence, the resulting chilling effect would be severe.").
The magnitude of the burden on IME physicians and the consequences of imposing a duty also militate against finding a duty here. As we explained, were we to burden IME physicians with liability to the examinee for their recommendations to the insurance company, we would undermine the ability of insurance providers to utilize IMEs to confirm or reject a claimant's need for medical treatment. This conclusion is consistent with the General Assembly's recent change to the Colorado Auto Accident Reparations Act and its decision to limit an IME practitioner's liability for his or her findings, opinions, and conclusions to instances in which the practitioner acted with malice or in bad faith. See supra note 3.
Accordingly, we hold that Dr. Lewis did not owe Martinez a duty of care. We note that this conclusion is in accord with virtually every other court to consider this issue. For example, in Felton v. Schaeffer, 229 Cal.App.3d 229, 279 Cal.Rptr. 713, 716-19 (Cal.App.1991), the court rejected the plaintiff's argument that the physician in that case breached a duty owed to the plaintiff when the physician allegedly misdiagnosed the plaintiff in a physical examination and consequently recommended that the plaintiff was not suitable for a particular job. The Felton court stated:
Felton, 279 Cal.Rptr. at 716;
In so holding, we emphasize that the absence of a physician-patient relationship under Greenberg is not dispositive as to the existence of a duty.
III. The CCPA Claim
The Colorado Consumer Protection Act prohibits numerous trade practices defined as deceptive. See §§ 6-1-105 to -105.5, 2 C.R.S. (1998). For example, the CCPA prohibits a person from knowingly making false representations as to the characteristics, uses, or benefits of services the person provides in the course of his or her business, vocation, or occupation. See § 6-1-105(e). Section 6-1-113(1), 2 C.R.S. (1998), the section of the CCPA at issue here, establishes private damages for violations of the Act.
§ 6-1-113(1), 2 C.R.S. (1998) (emphasis added).
The court of appeals held that Martinez could not assert an action under section 6-1-113(1). See Martinez, 942 P.2d at 1226. The court of appeals explained:
Id. Because Dr. Lewis allegedly misrepresented his qualifications to State Farm and not to Martinez or the public, the court of appeals concluded that Martinez was not within the class of persons the CCPA was intended to protect. See id. We likewise conclude that Martinez's claim did not fall within the purview of the CCPA.
The parties offer very different views of the proper interpretation of section 6-1-113(1). Martinez would have us construe the statute in an unqualified manner allowing anyone to sue under the CCPA even if, as here, the alleged misrepresentation was not public and was limited to two private parties, neither of whom is the plaintiff suing under the CCPA. By contrast, Dr. Lewis and several of the parties submitting amicus curiae briefs would have us limit the availability of the CCPA to consumers only. Thus, under Dr. Lewis's interpretation of the statute, a party making public misrepresentations could be sued under section 6-1-113(1) only by consumers of the defendant's goods or services. We disagree with both parties' interpretations.
In the companion case of Hall v. Walter, 969 P.2d 224 (Colo.1998), we considered this same issue regarding the meaning of the phrase "any person" for purposes of section 6-1-113. In that case, the respondents, the Walters, had suffered injury to their real property as a result of misrepresentations made by the petitioners, Hall and Hammond. Hall and Hammond were real estate brokers offering lots for sale on land adjacent to the Walters' property. Hall and Hammond widely advertised the lots and represented to actual and potential purchasers that a road on the Walters' property was a proper means of access to the lots. In fact, no easement or license existed for such use of the Walters' road. At trial, the Walters presented evidence of injury including the loss of opportunities to lease pastures through which the road ran. A jury determined that Hall and Hammond's misrepresentations and actions had caused the Walters' injury. The jury returned a verdict awarding the Walters $72,000 in actual damages. The trial court subsequently awarded treble damages pursuant to section 6-1-113. See Hall, 969 P.2d at 227-229. After the court of appeals affirmed the treble damages award, we affirmed the court of appeals' judgment. See id. at 238.
In Hall, we announced the standard for whether a private remedy is available under the CCPA. We held that a plaintiff must establish five distinct elements to sustain a private cause of action under section 6-1-113:
Hall, 969 P.2d at 235. We now apply the Hall analysis to the facts of the case before us.
In reviewing a motion for summary judgment, we resolve inferences regarding undisputed facts in a manner favorable to the nonmoving party. See Greenwood Trust Co. v. Conley, 938 P.2d 1141, 1149 (Colo.1997). In this case our analysis may consider all of the material facts before us because these facts are not in dispute. See id.
The first three elements of our analysis determine whether the defendant's actions fall under the purview of the CCPA. See Hall, 969 P.2d at 236. To survive Dr. Lewis's motion for summary judgment on the CCPA claim, Martinez must allege facts sufficient to support an inference that Dr. Lewis engaged in an unfair or deceptive trade practice. Martinez alleges that Dr. Lewis misrepresented his qualifications and services to
We find that Martinez, indeed, has alleged that Dr. Lewis "[k]nowingly ma[de] a false representation as to the characteristics, ... uses, [or] benefits" of his services. § 6-1-105(e). This conduct, if proven, constitutes a deceptive practice. Because it undisputedly occurred in the course of Dr. Lewis's business practice, Martinez's allegations satisfy the first two elements of the Hall analysis.
The third element of the analysis requires that the challenged conduct significantly impact the public as actual or potential consumers of the defendant's goods, services, or property. See Hall, 969 P.2d at 235. In Hall, we found that the defendants' actions met this part of the analysis because they occurred in the course of advertising real property to the public and implicated numerous actual and potential consumers. See id. at 235. The case now before us presents different circumstances because Dr. Lewis's alleged deceptive practices occurred only in the context of his private agreement to provide services for State Farm. State Farm was the sole consumer of Dr. Lewis's services. It used his services to assist its insurance coverage decisions. Thus, we consider whether misrepresentations involving a single consumer like State Farm significantly impact the public as consumers of Dr. Lewis's services.
Some of the considerations relevant to whether a challenged practice significantly impacts the public as consumers are the number of consumers directly affected by the challenged practice, the relative sophistication and bargaining power of the consumers affected by the challenged practice, and evidence that the challenged practice previously has impacted other consumers or has significant potential to do so in the future.
First, under the facts before us, State Farm is the only "person" implicated as a consumer of Dr. Lewis's services. Such circumstances suggest "a purely private wrong." See United States Welding, Inc. v. Burroughs Corp., 615 F.Supp. 554 (D.Colo. 1985). Second, State Farm is a large insurance provider that relies on the assistance of experts like Dr. Lewis in making a broad range of coverage decisions. State Farm is not the type of consumer that the CCPA generally contemplates requiring protection.
The CCPA provides consumers who are in a position of relative bargaining weakness with protection against a range of deceptive trade practices. A review of the prohibited practices, defined primarily in section 6-1-105, indicates that they serve essentially to prevent injury created by false or misleading information. See, e.g., § 6-1-105(a) to -105(g) (making false representations as to various qualities or characteristics of goods or services); § 6-1-105(i) to -105(k) (advertising in a way that creates false or misleading expectations with respect to the price or availability of goods or services). These provisions protect the public as consumers in situations where consumers do not have and cannot reasonably gain access to truthful information relevant to a contemplated transaction unless it comes from the person offering the good, service, or property.
Unlike the consumers contemplated by the CCPA, State Farm has ample access to information regarding appropriate qualifications and practices for experts offering to conduct medical evaluations, and it has extensive experience as a consumer of this type of service. As a large organization with substantial resources, it is in a position of relative bargaining strength when it solicits the services of experts to assist with insurance coverage decisions.
Finally, there is no allegation that consumers of Dr. Lewis's services were previously affected by his alleged misrepresentations or
Because Martinez's claim fails to establish the third element of our analysis, we do not reach the fourth and fifth elements. We reiterate, however, that if Dr. Lewis's alleged deceptive practice had significantly impacted the public as consumers of his services, Martinez would have been required to show that she suffered injury in fact to an interest legally protected under the CCPA and that Dr. Lewis's alleged violation caused the injury. See Hall, 969 P.2d at 235. In Hall we found that property, particularly business property, was a legally protected interest under the CCPA. See id. 236-237. Here, we need not reach the question of whether Martinez's interests, arising primarily from personal injury, are legally protected under the CCPA.
For the foregoing reasons, we affirm the judgment of the court of appeals. Dr. Lewis did not owe Martinez a duty of care and, consequently, Martinez could not proceed on her negligence claim against him. Because the alleged misrepresentations did not significantly impact the public as consumers of Dr. Lewis's services, Martinez was also precluded from pursuing a claim against him for violations of the CCPA. Accordingly, we affirm the court of appeals' judgment upholding the trial court's grant of summary judgment in favor of Dr. Lewis.
JUSTICE SCOTT concurs.
JUSTICE KOURLIS specially concurs.
JUSTICE SCOTT concurring:
I join in the judgment of the majority. Under these facts, Yolanda Martinez cannot bring a cause of action under the Colorado Consumer Protection Act (CCPA). Here, Frederick Lewis' misrepresentations as to his competence were conveyed to State Farm, and not to Martinez. Thus, his misrepresentations did not result in any harm caused by conduct prohibited by the CCPA, and, therefore, Martinez cannot establish a causal link between Lewis' misrepresentations and her injury, such that she would enjoy standing under the CCPA. In Hall v. Walter, 969 P.2d 224 (Colo.1998) (Scott, J., dissenting), the plaintiffs proved injury as a result of trespass, but the record did not reflect injury to their property as a consequence of any CCPA violation. Thus, in my view, in Hall, trespass damages were impermissibly trebled by the trial court. Here, similarly, Martinez did not claim injury caused by a deceptive trade practice, and therefore cannot recover under the CCPA.
Under my reading of our CCPA, where a plaintiff fails to prove a causal connection between a deceptive trade practice and actual damages, such damages cannot be trebled, nor any recovery effected. Accordingly, I concur with the judgment of the majority.
JUSTICE KOURLIS specially concurring:
I concur with the judgment of the Majority, but I write separately to clarify my understanding of the limits of a private right of action under the Colorado Consumer Protection Act ("CCPA" or "Act").
In the companion case to this action, Hall v. Walter, 969 P.2d 224, 235 (Colo.1998), this court held that a plaintiff must establish five things in order to have standing to bring a private claim under the CCPA: (1) that the defendant engaged in an unfair or deceptive trade practice, (2) that the challenged practice occurred in the course of defendant's business, vocation, or occupation; (3) that it significantly impacts the public as actual or potential consumers of the defendant's goods, services, or property; (4) that the plaintiff suffered injury in fact to a legally protected interest; and (5) that the challenged practice caused the plaintiff's injury. See id. I dissented from the court's decision in that case because the Majority's test extended standing to plaintiffs who were not consumers.
In this case, the court holds that Martinez cannot assert a private claim under the CCPA because she fails the third prong of the Majority's test in Hall; that is, she fails to establish that Dr. Lewis's alleged misrepresentations to State Farm significantly impacted the public as actual or potential consumers of the doctor's services. See maj. op. at 222.
I would reach that same result for the reason that I articulated in Hall: a plaintiff cannot recover under the CCPA unless she is an actual or potential consumer of the defendant's goods or services. Dr. Lewis was hired by State Farm to examine Martinez for purposes of evaluating her insurance claim. He was not Martinez's treating physician, nor, as the court concludes today, did he owe her a duty of care. Indeed, Martinez was never exposed to any of Dr. Lewis's alleged misrepresentations.
Thus, Martinez was not a consumer of Dr. Lewis's services, and she therefore did not have standing to bring a private action under the CCPA. Accordingly, I concur with the judgment of the Majority.
The first case, Armstrong v. Morgan, 545 S.W.2d 45 (Tex.Civ.App.1976), although concluding a duty existed to an examinee, grounded its holding on only two authorities—a quotation from Prosser and an A.L.R. annotation. However, the cited annotation (found at 10 A.L.R.3d 1071) contains many of the same cases we cite below as supportive of the opposite and majority view of no duty, and hence undercuts rather than supports Armstrong. Moreover, Armstrong is a Texas case, yet makes no effort to reconcile its result with the contrary conclusion reached by Lotspeich [v. Chance Vought Aircraft, 369 S.W.2d 705 (Tex.Civ.App.1963)]. In light of the weak authority for Armstrong's conclusion and the status of Texas law (both before and after Armstrong), Armstrong is of questionable strength. Id.
Greenberg, 845 P.2d at 537.
The trial court found that the plaintiffs suffered property damage as a result of the defendants' trespass. Because that trespass was a consequence of the defendants' public misrepresentation, this court affirmed the holding that plaintiffs were entitled to treble damages under section 6-1-113 of the CCPA despite the fact that the plaintiffs were not consumers nor even exposed to the defendant's deceptive trade practice. See Hall, 969 P.2d at 238.