An insurer that offered its entire policy limit cannot be pinned with bad faith, a federal appeals court ruled - even against a $60 million judgment.
On July 21, 2026, the US Court of Appeals for the Tenth Circuit affirmed summary judgment for Prime Insurance Company, closing a years-long dispute over a fatal surgery claim.
It started with a liposuction procedure. The patient went into arrest during surgery and died that day. Her father negotiated with the surgery center's insurer, then sued the center, CLJ Healthcare, LLC.
The coverage was slim. Prime's policy capped payment at $50,000 for each occurrence, and defense costs ate into that cap as the case ran. Prime offered the full limit. The father turned it down.
Then the stakes jumped. The father learned CLJ also held a $2 million policy with Owners Insurance Company. He demanded the $2 million from Owners, with a contingency that Prime tender $100,000. Owners denied coverage.
The next move changed everything. CLJ assigned the father its right to sue Prime for bad faith and agreed not to defend a malpractice case. The father then sued CLJ and obtained an uncontested $60 million judgment.
With that assignment in hand, the father and CLJ sued Prime. They said the insurer should have explained the policy, offered the limit sooner, and told CLJ it could chip in its own money.
The court said no to all three. Under Utah law, it predicted the state's top court would not require an insurer to explain clear policy terms unless there was an ambiguity or fraud - and Prime had explained the coverage anyway, in a memo and a binder. Prime told CLJ it could use the money as it "see[s] fit in the defense or settlement of this claim" and should "consult with counsel regarding these issues."
There was no duty to tell CLJ it could add its own funds, and no sign Prime imposed impossible conditions. The father's offer, the court noted, targeted a different insurer for $2 million - not Prime for $100,000.
The message for claims teams is plain. Prime offered its limit and papered its explanations. That record, plus the lack of any real offer it could have accepted, sank the bad-faith claim - even with a $60 million number in the background.
