Lawsuit over devastating wildfire is an 'ancient' principle

DENVER - Three insurers who paid out $7.04 million in claims stemming from the worst wildfire in Colorado history now are going after a third party: the U.S. government.

It's a lawsuit based on a standard practice in the industry, experts said.

The insurers allege in a lawsuit filed Wednesday in U.S. District Court that the Forest Service was negligent in the 138,000-acre Hayman fire, partly because of how it supervised forestry worker Terry Lynn Barton. She started the blaze when she burned a letter in 2002, despite a fire ban she was supposed to be enforcing.

Carole Walker, head of the Rocky Mountain Insurance Information Association, said it is standard practice for insurers to seek recovery from a responsible party on behalf of policyholders. Insurers could not sue Barton, because she was a federal employee, so the companies sued the government under the federal Tort Claims Act.

The insurers suing are State Farm Fire & Casualty Co. Inc., Allstate Insurance Co. and three companies that are part of The Hartford Financial Services Group Inc.: Hartford Underwriters Insurance Co., Property and Casualty Insurance Co. of Hartford and Hartford Fire Insurance Co.

"This particular event was triggered by negligence by some third party. The insurer does have the right to subrogate against those parties," said Robert Hartwig, chief economist for the Insurance Information Institute. "It's an ancient insurance principle, well-established in the law. It just so happens the party is the federal government."

The government had not been served with the lawsuit as of Thursday afternoon. "Once the government has been served, the U.S. Attorney's Office will review the allegations and respond in due course," spokesman Jeff Dorschner said.

Forest Service spokesman Jim Maxwell has said the agency already pursued justice in its investigation of Barton.

Barton, 42, is serving a six-year prison sentence after pleading guilty to a federal charge. She is appealing a concurrent 12-year sentence that was handed down after she pleaded guilty to a state felony arson charge.

The Hayman fire destroyed 133 homes and forced more than 8,000 people to evacuate.

The lawsuit argued that the Forest Service breached its duty by failing to properly train Barton and allowing her to "act alone and unsupervised" by not having teams of two patrolling the area.

The lawsuit also alleged failure to keep radio dispatch lines available to report the fire and failure to adequately respond to the report.

The Hartford and Allstate paid about 160 claims totaling about $3.51 million while State Farm paid about 150 claims totaling $3.53 million relating to the fire, the lawsuit said.

It was unclear how successful the lawsuit would be.

"An employer is only liable if they had some reason to think there was going to be a problem with an employee's performance," said Denver attorney Scott Robinson, who is not involved in the lawsuits.

After a wildfire burned nearly 43,000 acres in 2000 near Los Alamos, N.M., Congress appropriated $455 million for claims by fire victims and their insurers. That fire started as a controlled burn set by the National Park Service.