Justia Insurance Law Opinion Summaries

Protective Life Insurance Company ("Protective") appealed a circuit court judgment entered on a jury verdict against Protective and in favor of Apex Parks Group, LLC ("Apex"), in the amount of $11,495,890.41. Apex, a California-based corporation, owned and operated 16 moderately sized amusement parks, water parks, and family-entertainment centers nationwide. Apex's founder and chief executive officer was Alexander Weber, who had possessed 43 years' experience in the industry and who was critical to Apex's success. Because of Weber's importance, in early 2016 Apex sought a "key-man" insurance policy on Weber. Protective is a Birmingham-based insurance company owned by the Dai-ichi Corporation. At that time, Weber was 64 years old. Answers from Weber's interview with a paramedical examiner were incorporated into the Apex application for insurance. Weber underwent a series of medical examinations, all of which were reported and incorporated into the key-man policy. In November 2016, after the first premium payment was made and the policy went into effect, while on vacation with his wife, Weber died. Shortly after Weber's death, Apex submitted its claim under the policy for the $10-million benefit. Protective then began a contestable-claim investigation, contending Weber's complete medical history was not disclosed, thereby voiding the policy. Protective thereafter refunded the premium Apex paid. Apex sued Protective asserting claims of breach of contract and bad faith in failing to investigate all bases supporting coverage and in making false promises that the claim would be paid. After review, the Alabama Supreme Court determined Protective was entitled to judgment as a matter of law on Apex's claim of breach of contract, and the trial court erred by submitting this claim to the jury for consideration. Accordingly, that portion of the trial court judgment was reversed. "Because Protective demonstrated that Weber made a material misrepresentation and Apex failed to introduce substantial evidence to the contrary, Protective was entitled to rescind the policy, which was a complete defense to Apex's claims of breach of contract. Thus, the trial court erred in denying Protective's motions for a judgment as a matter of law." View "Protective Life Insurance Company v. Apex Parks Group, LLC" on Justia Law

Kathleen Hendrix ("Hendrix"), as administratrix of the estate of Kenneth Morris Hendrix, deceased, appeals a circuit court judgment dismissing Hendrix's medical-malpractice wrongful-death claim against United Healthcare Insurance Company of the River Valley ("United"). Kenneth, who was covered by a health-insurance policy issued by United, died after United refused to pay for a course of medical treatment recommended by Kenneth's treating physician. The trial court determined that Hendrix's claim was preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), because the claim "relate[s] to" the ERISA-governed employee-benefit plan pursuant to which United had issued Kenneth's health-insurance policy. In October 2015, Kenneth was injured in an automobile accident. His physician recommended Kenneth be admitted to an inpatient-rehabilitation facility. Hendrix claimed United "imposed itself as [Kenneth's] health care provider, took control of [Kenneth's] medical care, and made a medical treatment decision that [Kenneth] should not receive further treatment, rehabilitation, and care at an inpatient facility." Instead, Hendrix contended United made the decision Kenneth should have been discharged to his home to receive a lower quality of care than had been ordered by his physicians. Kenneth died on October 25, 2015, due to a pulmonary thromboembolism, which, the complaint asserts, would not have occurred had United approved inpatient rehabilitation. The Alabama Supreme Court concurred with the circuit court that Hendrix's claim related to an ERISA-governed benefit plan, and thus preempted by the ERISA statute. View "Hendrix v. United Healthcare Insurance Company of the River Valley" on Justia Law

Aaron Kyle Steward sued Nationwide Property and Casualty Insurance Company ("Nationwide"), seeking uninsured-motorist ("UM") benefits after he was injured in an accident at a publicly owned and operated all-terrain-vehicle ("ATV") park. The circuit court entered summary judgment in Steward's favor, ruling that the ATV that collided with the one on which he was riding was an "uninsured motor vehicle" for purposes of Steward's automobile-insurance policies with Nationwide, and Nationwide appealed. Because the Alabama Supreme Court concluded that the roads on which the accident occurred were "public roads" under the policies, judgment was affirmed. View "Nationwide Property and Casualty Insurance Company v. Steward" on Justia Law

The Alabama Supreme Court granted Mid-Century Insurance Company permission to appeal the denial of its motion for a partial summary judgment in an action seeking underinsured-motorist benefits filed by Rodney Watts, as the personal representative of the estate of his wife Leiah Watts, deceased, and others (collectively, "the Watts plaintiffs"). In 2016, Leiah Watts, Caiden Watts, Jackson Watts, Faye Howard, Mary Adair, Evelyn Watts, Tammy McBurnett, Renee Stone, and Victoria Stone were traveling in a 2014 Ford Expedition sport-utility vehicle when it was struck by a vehicle driven by Wiley "Pete" Whitworth. The collision killed Leiah Watts, Faye Howard, Mary Adair, and Evelyn Watts. Tammy McBurnett, Renee Stone, Caiden Watts, Jackson Watts, and Victoria Stone suffered serious injuries in the collision. The Watts vehicle was insured by a policy of insurance issued by Farmers Insurance Exchange to Rodney Watts, underwritten by Mid-Century. Mid-Century contended that, because the policy allowed for the stacking of up to three UIM coverages, the maximum amount of UIM benefits available under the policy for the accident in this case was $300,000, based on $100,000 per accident. The Watts plaintiffs contended that each of the nine occupants of the Watts vehicle involved in the accident (or his/her personal representative) was entitled to $150,000 in UIM benefits ($50,000 per person limit of the occupied vehicle plus the per person limit of $50,000 for two additional coverages under the stacking provision of the policy). Thus, the total sought by Rodney in UIM benefits was $1,350,000 (9 x $150,000). The case was removed to federal district court, and the federal court granted Mid-Century's motion to dismiss in part, granting the motion as to fraud claims as to Farmers Insurance Exchange and Mid-Century. The court dismissed without prejudice claims of breach of contract and bad faith on ripeness grounds. The Alabama Supreme Court determined the Watts plaintiffs were unable to stack more than three coverages under the uninsured-motorist statute and insurance policy, and the fact that they could not do so did not render the coverage under the policy illusory. The Court reversed the trial court's order denying Mid-Century's motion for a partial summary judgment as to the UIM claim and remanded the case for further proceedings. View "Mid-Century Insurance Company v. Watts" on Justia Law

Plaintiffs filed suit against State Farm after it denied their claim for windstorm damage to their home. The district court granted summary judgment for State Farm on various causes of action. Plaintiffs' breach of contract claim was presented to the jury where the jury presented a verdict in plaintiffs' favor. After the district court originally granted plaintiffs relief on their request for attorney's fees and statutory interest, it then ruled that the failure to specifically plead relief under Texas Insurance Code 542.060 (the Texas Prompt Payment of Claims Act or "TPPCA") barred the requested relief and entered judgment only in the amount of the breach of contract damages found by the jury, together with regular pre-judgment and post-judgment interest.The Fifth Circuit reversed and remanded, holding that the district court erred in holding that Chavez v. State Farm Lloyds, 746 F. App'x 337 (5th Cir. 2018), barred plaintiffs' claims for the 18 percent penalty and attorney's fees under Chapter 542. The court held that subsequent Texas Supreme Court cases make clear that Chavez is no longer good law. Rather, the Texas Supreme Court recently stated that nothing in the TPPCA would excuse an insurer from liability for TPPCA damages if it was liable under the terms of the policy but delayed payment beyond the applicable statutory deadline. View "Agredano v. State Farm Lloyds" on Justia Law

After Primerica filed an interpleader action under Federal Rule of Civil Procedure 22 in order to resolve competing claims to Garvin Reid's life insurance proceeds, the district court awarded summary judgment and the insurance proceeds to Ila Reid, Garvin's widow. However, the district court granted summary judgment in favor of Primerica on Ila's counterclaim against Primerica for breach of contract stemming from the disputed life insurance policy.The Eighth Circuit held that there is a legitimate dispute over the question of fault in creating the competing claims to Garvin's life insurance proceeds, and circuit precedent has not previously required a fault determination in the interpleader context. In this case, there is an active dispute on appeal regarding whether the competing claims to Garvin's insurance proceeds arose because of Primerica's failure to process the 2002 Multipurpose Change Form or because of Garvin's failure to respond when Primerica sought more information in 2002. Accordingly, the court remanded for a fault determination by the district court and further proceedings. View "Primerica Life Insurance Co. v. Reid" on Justia Law

The Ninth Circuit reversed the district court's grant of summary judgment to AXIS in an action seeking reimbursement of an insurance payment that it made, as a secondary excess insurer, to Northrop. AXIS argued that underlying insurers paid an uncovered claim arising from Northrop's settlement of alleged Employment Retirement Income Security Act (ERISA) violations, thereby "improperly eroding" their policies' liability limits and prematurely triggering AXIS's excess coverage.The panel held that, consistent with the limited caselaw and secondary sources that have addressed excess insurer claims of "improper erosion," "improper exhaustion," "wrongful exhaustion," and similar challenges to the payment decisions of underlying insurers, an excess insurer may not challenge those decisions in order to argue that the underlying liability limits were not (or should not have been) exhausted absent a showing of fraud or bad faith, or the specific reservation of such a right in its contract with the insured.In this case, the panel held that no reasonable insured in Northrop's position would understand that it might have to justify its underlying insurers' payment decisions as a prerequisite to obtaining excess coverage from AXIS. The district court misapplied the panel's unpublished decision in Shy v. Insurance Company of the State of Pennsylvania, 528 F. App'x 752 (9th Cir. 2013), ignored the weight of authority rejecting "improper erosion" as a valid basis for denying coverage, and misconstrued the "covered loss" provision in AXIS's excess policy as a reservation of the right to second-guess other insurers' payments. Accordingly, the panel remanded for further proceedings. View "AXIS Reinsurance Co. v. Northrop Grumman" on Justia Law

David Murray purchased used computer equipment worth nearly $40,000, which was damaged by the United Postal Service (UPS) while it was being transported from California to Texas. Murray believed he purchased appropriate insurance to cover this loss, but the insurance company denied his claim. Murray sued his insurance broker, UPS Capital Insurance Agency (UPS Capital), for breach of contract and negligence, claiming UPS Capital owed him a special duty to make the insurance policy language understandable to an ordinary person and to explain the scope of coverage. The court granted UPS Capital’s motion for summary judgment after concluding there was no heightened duty of care and dismissed Murray’s lawsuit. On appeal, Murray asked the Court of Appeal to create a new rule that brokers/agents, specializing in a specific field of insurance, hold themselves out as experts, and are subject to a heightened duty of care towards clients seeking that particular kind of insurance. While the Court declined the invitation to create a per se rule, it concluded Murray raised triable issues of fact as to whether UPS Capital undertook a special duty by holding itself out as having expertise in inland marine insurance, and Murray reasonably relied on its expertise. Therefore, the Court reversed the judgment of dismissal and remanded the matter for further proceedings. View "Murray v. UPS Capital Ins. Agency, Inc." on Justia Law

The House of Blues music studio in Memphis suffered a burglary and arson in 2015. Brown owned House of Blues through TME. He and two tenants, Falls and Mott, submitted insurance claims to Hanover for the loss. Brown submitted fraudulent documents in connection with this claim, resulting in an insurance-fraud lawsuit. Brown was found liable after admitting on the stand that he had forged documents submitted in his insurance claim. Falls prevailed before the jury, only to have the judge set aside the verdict and direct judgment for Hanover under Federal Rule of Civil Procedure 50(b). Rule 50(a) provides for a motion for judgment as a matter of law at trial; Rule 50(b) provides for “Renewing the [50(a)] Motion after Trial.” Hanover failed to make a Rule 50(a) motion at trial. The Sixth Circuit affirmed as to Mott, who failed to raise any issues on appeal, and as to Brown. The court rejected Brown’s arguments that the district court abused its discretion by refusing to allow him to introduce an exhibit that he tried to introduce several times; by intervening excessively to question witnesses; and by imposing a time limit on Brown and not on Hanover. The court reversed as to Falls. Hanover forfeited its ability to “renew” a motion for a directed verdict after trial under Rule 50(b). View "Hanover American Insurance Co. v. Tattooed Millionaire Entertainment, LLC" on Justia Law

A superior court determined State Farm Mutual Auto Insurance Company and State Farm Fire and Casualty Company’s (collectively, “State Farm”) payment practices with Spine Care Delaware, LLC (“SCD”) for medical fees incurred by its Personal Injury Protection (“PIP”) insureds in connection with covered multi-injection spine procedures contravened 21 Del. C. 2118(a)(2). When State Farm received SCD’s charges for a multi-injection procedure performed on one of its PIP insureds, it unilaterally applied a Multiple Payment Reduction (“MPR”) to the charges for injections after the first injection in a manner consistent with Medicare guidelines, paying SCD less than what it charged. SCD sought a declaration that State Farm's application of its MPRs was inconsistent with section 2118(a)(2)’s requirement of reasonable compensation for covered medical expenses, and sought a declaration that State Farm had to pay SCD any reasonable amount charged for PIP-related medical expenses, without applying MPRs. Both parties then moved for summary judgment. The superior court held that State Farm failed to show that the MPR reductions correlated to reasonable charges for the multiple-injection treatments, and thus contravened section 2118(a)(2). On appeal, State Farm contended the superior court incorrectly placed the burden of proof on State Farm to demonstrate that its application of MPRs was reasonable, and that SCD failed to meet its burden of demonstrating that State Farm’s application of MPRs was a failure to pay reasonable and necessary expenses under the statute. Alternatively, State Farm argued that even if it had the burden of proof, it satisfied that burden. The Delaware Supreme Court agreed with State Farm's first premise, that the superior court erred in assigning State Farm the burden of proof. Judgment was reversed and the matter remanded for further proceedings. View "State Farm v. Spine Care Delaware" on Justia Law