Conflicting Medical Opinions Are Not “Material” Without Evidence of Unreasonable Claims-Handling Under Colorado Bad-Faith Standards

Introduction

In Rajabi v. Sedgwick Claims Management Services, Inc. (10th Cir. Jan. 14, 2026) (nonprecedential “Order and Judgment”), plaintiff Cyrus Rajabi, a volunteer firefighter injured during training, sued two third-party workers’ compensation claims administrators— Sedgwick Claims Management Services, Inc. and Tristar Group—for breach of the duty of good faith and fair dealing under Colorado law. He alleged they delayed, denied, or failed to authorize medical treatment for Complex Regional Pain Syndrome and related care.

The core issues on appeal were (1) whether summary judgment was proper given the evidentiary record on Colorado bad-faith standards, and (2) whether the district court abused its discretion by refusing a stay and additional discovery time in light of Rajabi’s health and litigation posture.

Summary of the Opinion

The Tenth Circuit affirmed summary judgment for the claims administrators. The court held that the administrators met their initial Rule 56 burden by pointing to Rajabi’s lack of admissible evidence on essential elements of Colorado bad faith—particularly objective unreasonableness measured against industry standards. It further held Rajabi failed to raise a genuine issue of material fact: evidence that treating physicians disagreed with consulting physicians about necessity/causation did not, by itself, create a triable issue on claims-handling reasonableness.

The court also rejected Rajabi’s procedural arguments, concluding the district court did not abuse its discretion in denying a stay or more discovery time where Rajabi failed to pursue discovery, failed to properly seek relief, and did not invoke Federal Rule of Civil Procedure 56(d).

Analysis

Precedents Cited

1) Colorado bad-faith elements and the centrality of industry standards

  • Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333 (Colo. 2004) (en banc), and Sandoval v. Unum Life Ins. Co. of Am., 952 F.3d 1233 (10th Cir. 2020): cited for the baseline proposition that Colorado law imposes a duty of good faith toward insureds and recognizes a claim for breach.
  • Peden v. State Farm Mutual Auto. Ins. Co., 841 F.3d 887 (10th Cir. 2016), and Goodson v. Am. Standard Ins. Co. of Wis., 89 P.3d 409 (Colo. 2004) (en banc): provided the controlling two-part test— (1) the insurer acted unreasonably under the circumstances and (2) knowingly or recklessly disregarded the validity of the claim. Goodson also supplied the opinion’s key evidentiary theme: objective reasonableness is measured by industry standards, “often” requiring expert help.
  • Zolman v. Pinnacol Assur., 261 P.3d 490 (Colo. App. 2011): reinforced that bad faith requires denial or delay “without a reasonable basis.” The panel used this to frame why mere disagreement over medical treatment does not automatically imply bad faith.
  • Sanderson v. Am. Fam. Mut. Ins. Co., 251 P.3d 1213 (Colo. App. 2010): discussed the “fairly debatable” concept as a factor bearing on reasonableness, but not outcome-determinative. Notably, the panel emphasized the district court did not rely on “fair debatability” to decide the case.
  • Fear v. GEICO Casualty Co., 560 P.3d 974 (Colo. 2024): cited to identify one category of potentially unreasonable conduct—failure to pay undisputed benefits— and to highlight that Rajabi offered no evidence of such failures.
  • Sandoval v. Unum Life Ins. Co. of Am., 952 F.3d 1233 (10th Cir. 2020): used specifically for the proposition that an insurer’s disagreement with a claimant’s physician does not itself show an unreasonable investigation.

2) Summary judgment mechanics and “materiality”

  • Celotex Corp. v. Catrett, 477 U.S. 317 (1986), together with Savant Homes, Inc. v. Collins, 809 F.3d 1133 (10th Cir. 2016), Walkingstick Dixon v. Oklahoma ex. rel. Reg'l Univ. Sys. of Okla. Bd. of Regents, 125 F.4th 1321 (10th Cir. 2025), and Cillo v. City of Greenwood Vill., 739 F.3d 451 (10th Cir. 2013): grounded the burden-shifting framework—movants may point to an absence of evidence; then the nonmovant must produce specific facts for trial.
  • Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), and Alcala v. Ortega, 128 F.4th 1298 (10th Cir. 2025): supplied the definition of “material” fact—one that could affect the outcome under the governing law. The panel applied this directly to hold that conflicts between treating and consulting physicians were not “material” to Colorado bad faith absent evidence of unreasonable claims-handling measured by industry standards.

3) Expert testimony boundaries (industry standards vs. legal conclusions)

  • Pioneer Ctrs. Holding Co. Emp. Stock Ownership Plan & Tr. v. Alerus Fin., N.A., 858 F.3d 1324 (10th Cir. 2017), and Christiansen v. City of Tulsa, 332 F.3d 1270 (10th Cir. 2003): used to police the line that experts may not opine on legal standards or ultimate legal conclusions. The panel accepted that some portions of the defense expert’s report might stray into legal territory but held the district court properly disregarded any impermissible parts rather than excluding the report wholesale at summary judgment.
  • Tesone v. Empire Mktg. Strategies, 942 F.3d 979 (10th Cir. 2019): cited on issue preservation—although Rajabi did not properly raise one admissibility point below, the district court “passed upon” it, allowing appellate review.

4) Discovery/stay discretion and Rule 56(d)

  • Price ex rel. Price v. W. Res., Inc., 232 F.3d. 779 (10th Cir. 2000), Ben Ezra, Weinstein, & Co., Inc. v. Am. Online Inc., 206 F.3d 980 (10th Cir. 2000), and Bolden v. City of Topeka, 441 F.3d 1129 (10th Cir. 2006): provided the abuse-of-discretion standard for denial of stays and discovery extensions.
  • Int'l Bhd. of Boilermakers v. Baca, 122 F.4th 1224 (10th Cir. 2024), quoting Rocky Mountain Prestress, LLC v. Liberty Mut. Fire Ins. Co., 960 F.3d 1255 (10th Cir. 2020): supported the conclusion that where a party fails to invoke Rule 56(d), the district court may decide summary judgment on the record presented.

Legal Reasoning

  1. The administrators satisfied their initial Rule 56 burden by identifying an evidentiary gap. Relying on Celotex and its Tenth Circuit applications (including Walkingstick Dixon), the panel agreed the defendants could meet their initial burden by pointing to Rajabi’s lack of evidence on essential elements—here, proof of objectively unreasonable claims handling and knowing/reckless disregard.
  2. Colorado bad faith turns on claims-handling reasonableness under industry standards—not whether treatment was actually needed. The opinion’s key move was to define the “material” question under Anderson/Alcala: whether the claims administrators acted unreasonably under industry standards (per Goodson, Peden, Zolman). A record showing only that treating doctors and consulting doctors disagreed did not answer that question.
  3. Expert evidence mattered, but only within proper bounds. The administrators supported summary judgment with an industry-standards expert report. Rajabi countered with a physician’s report addressing causation/medical necessity of surgery, but not claims-handling standards. The panel accepted the district court’s approach to expert admissibility: impermissible legal conclusions in an expert report can be disregarded, without requiring wholesale exclusion, consistent with Pioneer Ctrs. Holding Co. Emp. Stock Ownership Plan & Tr. v. Alerus Fin., N.A. and Christiansen v. City of Tulsa.
  4. Procedural diligence and Rule 56(d) were decisive on the stay/discovery issue. The panel emphasized that Rajabi did not pursue discovery, did not properly seek a stay when given opportunities, and did not submit a Rule 56(d) affidavit/declaration specifying why facts essential to oppose summary judgment could not yet be presented. Under Int'l Bhd. of Boilermakers v. Baca and Rocky Mountain Prestress, LLC v. Liberty Mut. Fire Ins. Co., this undercut any claim that summary judgment was premature.

Impact

  • Reinforces a recurring Colorado bad-faith litigation principle: a plaintiff must connect claim denials/delays to unreasonable claims-handling conduct, typically via evidence of industry standards (often expert testimony), not merely to a substantive dispute over medical necessity/causation.
  • Clarifies “materiality” in this context: even robust proof that treatment was appropriate may be immaterial unless paired with proof that the administrator’s investigation, evaluation, communication, or payment practices departed from industry standards.
  • Signals procedural consequences: failure to conduct discovery, respond to discovery (including Rule 36 requests), or invoke Rule 56(d) can leave a plaintiff unable to create triable issues, and appellate courts will generally not rescue that record through after-the-fact discovery complaints.
  • Limits of precedential force: because the disposition is “not binding precedent” under Tenth Circuit rules, its influence is chiefly persuasive—yet it is likely to be cited for its tight linkage between “material facts” and “industry standards” in Colorado bad-faith cases.

Complex Concepts Simplified

  • Bad faith (Colorado): not simply a wrong coverage decision; it is an unreasonable decision or delay plus a knowing/reckless disregard of the claim’s validity.
  • Industry standards: objective benchmarks for how insurers/claims administrators are expected to investigate, communicate, evaluate, and pay claims; Colorado law often expects expert testimony to explain these standards.
  • “Fairly debatable”: if reasonable people could disagree about coverage facts/law, that tends to show the insurer acted reasonably—but it does not automatically win the case.
  • Summary judgment “material fact”: a factual dispute matters only if it could change the outcome under the governing legal test. Here, a dispute over medical necessity did not matter unless it demonstrated unreasonable claims handling under industry standards.
  • Rule 56(d): the tool a nonmovant uses to say, “I cannot yet oppose summary judgment because I need specific discovery.” Without a proper Rule 56(d) showing, courts may decide the motion on the existing record.
  • Experts and legal conclusions: experts may explain practices/standards and apply specialized knowledge, but they generally may not tell the court/jury what the law is or declare that a party “violated the law.” Courts can ignore impermissible portions rather than exclude everything.

Conclusion

Rajabi underscores that Colorado insurance bad-faith claims live or die on evidence of unreasonable claims handling measured against industry standards. Conflicting medical opinions—even if extensive—do not necessarily create a “material” dispute unless they are tied to proof that the administrator’s investigative and decision-making process fell below objective standards and was undertaken with knowing/reckless disregard. The decision also highlights that litigants who need discovery to oppose summary judgment must timely and properly invoke Rule 56(d); absent that, appellate courts will typically affirm decisions made on the record the parties chose (or failed) to build.