Failure to Immediately Offer Policy Limits not Bad Faith

Since the Insurer Offered the Available Policy Limits and Jenkins Failed to Identify Evidence of Bad Faith, the Insurer Is not Liable for an Excess Judgment.

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In Hal Jenkins; CLJ Healthcare, LLC v. Prime Insurance Company; Prime Holdings Insurance Services, Inc., d/b/a Claims Direct Access; David McBride; Evolution Insurance Brokers, LC, No. 25-4064, United States Court of Appeals, Tenth Circuit (July 21, 2026) April Jenkins died after liposuction surgery at CLJ Healthcare, LLC.

Her father, Hal Jenkins, pursued claims against CLJ and negotiated with CLJ’s insurer, Prime Insurance Company. Prime’s policy provided $50,000 in liability coverage per occurrence, reduced by defense costs. Prime later offered the remaining policy limits, but Jenkins rejected the offer.

CLJ subsequently assigned Jenkins its bad-faith claim against Prime and declined to defend the malpractice action, resulting in an uncontested $60 million judgment against CLJ.

LAW:

The Tenth Circuit applied Utah law, under which an insurer owes an implied duty of good faith and fair dealing to its insured, including a duty to investigate and evaluate settlement opportunities.

The court predicted that Utah would not ordinarily require an insurer to explain unambiguous policy terms absent ambiguity or fraud. Summary judgment is proper when no genuine dispute of material fact exists and the movant is entitled to judgment as a matter of law.

DISCUSSION:

The Tenth Circuit Court rejected each bad-faith theory. Prime had no duty to further explain the policy because CLJ could read the policy and Prime had already provided information showing the $50,000 limit and defense-cost erosion. Prime also did not act unreasonably by waiting for the medical examiner’s report before evaluating settlement, especially because Jenkins had not made a definite offer to settle for the $50,000 limit and later conceded he would not have accepted that amount.

The court further held that Prime had no duty to advise CLJ or the surgeon that they could contribute personal funds to settlement, and Prime’s request for a “full and final settlement” did not impose an improper condition because there was no evidence Jenkins would have accepted the policy limits even under different release language.

ANALYSIS:

Even assuming Prime’s pre-suit conduct could support tort liability under Utah law, Jenkins could not show that Prime’s actions caused the excess judgment because he never made a definite policy-limits demand and admitted he would not have accepted $50,000. The court also treated the policy as controlling because the limits and defense-cost erosion were unambiguous and already communicated, Prime’s alleged failure to further educate CLJ did not create bad faith. Overall, the opinion narrows bad-faith exposure where an insurer tenders available limits and the claimant cannot prove that different conduct would have produced a settlement.

The Tenth Circuit predicted that the Utah Supreme Court wouldn’t ordinarily require an insurer to explain the policy terms absent an ambiguity or evidence of fraud. And Mr. Jenkins also failed to identify any ambiguities in the policy language or suggest that Prime Insurance misrepresented the terms. So Prime Insurance didn’t need to explain the policy terms to CLJ.

CONCLUSION:

The Tenth Circuit affirmed summary judgment for Prime Insurance and Prime Holdings. Because Prime offered the available policy limits and Jenkins failed to identify evidence of bad faith, the insurer could not be held liable for the excess judgment.

In any event, Mr. Jenkins has not pointed to any evidence showing that he would have accepted Prime Insurance’s policy limit to settle with CLJ even if the tender had expressly excluded claims against the nurse. So Prime Insurance’s request for a “full and final settlement” does not support Mr. Jenkins’ claim of bad faith.

ZALMA OPINION

When a medical care provider carried a liability policy with limits of only $50,000 it is obligated to offer the limits if liability is clear. The insurer offered what was left of its limits that was not accepted nor did the plaintiff establish a willingness to accept what was left of the $50,000 policy limit. An insurer has no obligation to pay a settlement if it does not eliminate the insured’s exposure. No demand that was a full and final settlement for the limit could not be accepted and no bad faith existed.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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