Justia Insurance Law Opinion Summaries

A licensed psychologist faced disciplinary action after being convicted in 2018 of insurance fraud related to a workers’ compensation claim. The Board of Psychology issued an accusation in 2019 based on the conviction and also alleged dishonesty in her 2007 license application for failing to disclose a 1984 conviction. Following a two-day evidentiary hearing in 2020, the Board found cause to discipline her solely for the insurance fraud conviction, dismissed the charge related to the 1984 conviction, and placed her on probation for five years with various conditions, holding the probation in abeyance during periods when she was not practicing in California.After moving out of state and returning, the psychologist petitioned the Board in 2023 for early termination of her probation. The Board held an evidentiary hearing in 2024, found she failed to provide clear and convincing evidence of rehabilitation—citing her lack of insight and responsibility for the insurance fraud conviction—and denied the petition. The Board noted her probation had been tolled due to her absence and non-practice. She then sought judicial review of both the 2021 probation decision and the 2024 denial of early termination in the Superior Court of Sacramento County.The Superior Court denied her petition, finding the challenge to the 2021 decision untimely and concluding the 2024 denial was supported by substantial evidence. On appeal, the California Court of Appeal, Third Appellate District, affirmed the trial court’s judgment. The Court held that the trial court properly applied the substantial evidence test to review the Board’s denial of early termination, as this was analogous to review of an agency’s decision on reinstatement rather than discipline. The Court found the Board did not abuse its discretion and rejected arguments regarding procedural unfairness and relevance of the 1984 conviction. The judgment was affirmed. View "Bombardini v. Board of Psychology" on Justia Law

A couple began constructing a residential barndominium and lived in an RV on their property in Sandpoint, Idaho. After a heavy snowstorm caused the collapse of the partially constructed dwelling and damaged utility connections to their RV, they made claims under their State Farm homeowner’s insurance policy for structural losses, personal property damage, demolition and outbuilding losses, additional living expenses (ALE), and alleged unreasonable delays. State Farm paid over $120,000 but denied further claims, citing lack of required documentation and inventories.The couple filed suit in the District Court of the First Judicial District, Bonner County, alleging breach of contract, bad faith, and negligent adjustment. State Farm moved for partial summary judgment, arguing the plaintiffs failed to substantiate their losses and did not incur ALE as defined under the policy. The district court struck several exhibits as inadmissible hearsay, including a letter from a medical expert and a timeline of events, and granted summary judgment to State Farm. The court concluded that the plaintiffs had not complied with policy conditions, failed to substantiate their claimed losses, and that their claims were fairly debatable.On appeal, the Supreme Court of the State of Idaho reviewed evidentiary rulings for abuse of discretion and the grant of summary judgment de novo. The Court affirmed the district court’s exclusion of evidence as inadmissible hearsay and lack of personal knowledge. It held that the plaintiffs did not establish entitlement to ALE, failed to substantiate structural and personal property losses, and provided insufficient evidence of bad faith or negligent adjustment. The judgment of the district court was affirmed, with State Farm awarded costs on appeal. View "Espinosa v. State Farm" on Justia Law

The plaintiff, owner of a business, purchased a commercial automobile insurance policy for her company and paid an additional premium for an endorsement that extended underinsured motorist (UIM) coverage to herself and listed family members when occupying vehicles not owned by the company. She was injured in a car accident while driving her personally owned vehicle, recovered policy limits from her own insurer and the other driver’s insurer, but her damages were not fully covered. She then sought UIM benefits under her company’s policy, which were denied by the insurer because she was driving her own car.The Superior Court of the State of Delaware granted summary judgment in favor of the insurer. The court reasoned that the plaintiff was not entitled to UIM coverage under the endorsement because she was not driving a company-owned vehicle for business purposes. It further held that the Delaware Supreme Court’s ruling in Frank v. Horizon Assurance Co.—which invalidated certain vehicle-based UIM exclusions—did not apply since the named insured on the policy was the company, not the plaintiff. The plaintiff appealed the decision.The Supreme Court of the State of Delaware reviewed the Superior Court’s grant of summary judgment de novo. It found the endorsement unambiguously excluded UIM coverage when the individual named on the schedule occupied a vehicle owned by that individual or a family member. However, the court held that this vehicle-based exclusion was unenforceable under Delaware law, specifically under the precedent set by Frank v. Horizon Assurance Co., which established that UIM coverage is personal to the insured and not vehicle-specific. Consequently, the Supreme Court reversed the Superior Court’s judgment and remanded the case for further proceedings. View "Natalie Ayers v. Travelers Casualty Insurance Company" on Justia Law

Two individuals formed a limited liability company to purchase a jet, with one contributing funds that he had embezzled from a client. The company secured an aircraft insurance policy from an insurer, which later renewed the policy without investigating the source of funds used for the purchase. Eventually, the United States government seized the jet in connection with criminal charges against the member who committed the embezzlement. The other member had no knowledge of the crime.After the seizure, the company filed a claim with the insurer, seeking compensation under the policy for the loss. The insurer denied coverage and rescinded the policy, citing concealment of the material fact that embezzled funds were used to purchase the aircraft. The company sued for breach of contract and breach of the implied covenant of good faith and fair dealing. Following trial in the Superior Court of Santa Barbara County, the trial court denied the insurer’s motion for judgment based on concealment, and the jury found in favor of the company, awarding substantial damages, including punitive damages.The Court of Appeal of the State of California, Second Appellate District, Division Six, reviewed the case. Applying a de novo standard, the court held that an applicant for insurance has an affirmative duty to disclose material facts, even if the insurer does not specifically inquire about them. The court determined that the use of embezzled funds was a material fact, and the manager’s knowledge of the embezzlement was imputed to the company. Therefore, the insurer was entitled to rescind the policy. The judgment in favor of the company was reversed, and the company’s cross-appeal was dismissed. View "Passport 420, LLC v. Starr Indemnity & Liability Co." on Justia Law

Homeowners jointly owning a residence in Sherman Oaks purchased a comprehensive, all-risk homeowners insurance policy from an insurer. In 2019, construction on a neighboring upslope property paused before completion of a retaining wall. During a subsequent rainstorm, runoff was diverted by the incomplete wall, causing water, mud, and debris to damage the insured property, rendering it uninhabitable. The homeowners filed a claim with their insurer, which initially denied coverage based on an earth movement exclusion, then reopened the claim after the homeowners contested the denial. Although insurer representatives allegedly told the homeowners the loss was covered, the insurer ultimately denied the claim, citing multiple policy exclusions including inadequate construction, weather, and acts or decisions exclusions.The homeowners sued the insurer in the Superior Court of Los Angeles County for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress (IIED), and fraud based on the denial of their claim and representations made during the investigation. The insurer moved for summary judgment, arguing that policy exclusions precluded coverage as a matter of law and that the evidence did not support the fraud claim. The trial court concluded that the loss was subject to one or more policy exclusions, that estoppel could not create coverage where it did not exist, and that no triable issues remained as to the other causes of action. The court granted summary judgment in favor of the insurer.On appeal, the California Court of Appeal, Second Appellate District, Division One, affirmed the trial court’s judgment. The court held that all possible efficient proximate causes of the homeowners’ loss triggered exclusions in the policy, that estoppel could not create coverage, and that the evidence did not support the fraud or bad faith claims in the absence of coverage. View "Linsao v. First American Property & Casualty Ins. Co." on Justia Law

Mr. Linhart purchased a life insurance policy from New York Life Insurance and Annuity Corporation in 2007, naming his wife, Barbara Linhart, as the sole beneficiary. The policy required sufficient account value to cover monthly deduction charges, but did not require regular premium payments. In 2021, after a grace period due to insufficient funds, the policy lapsed and Mr. Linhart died four days later. When Mr. Linhart’s estate inquired about the payout, the Corporation declined, citing the lapsed policy.Barbara Linhart filed suit in the United States District Court for the Central District of California, alleging that the Corporation failed to comply with California Insurance Code section 10113.72(a) by not providing a designation form to policyholders whose policies were issued prior to the section’s effective date, January 1, 2013. The district court granted summary judgment in favor of the Corporation, relying on the language of section 10113.72(a) and the California Supreme Court’s interpretation in McHugh v. Protective Life Ins. Co., 12 Cal. 5th 213 (2021), which indicated section 10113.72(a) applied only to new policies issued after the statute’s effective date.The United States Court of Appeals for the Ninth Circuit reviewed the appeal. The court held that, under McHugh, section 10113.72(a) applies exclusively to policies issued on or after January 1, 2013, and does not require insurers to send designation forms to holders of pre-2013 policies. The court affirmed the district court’s summary judgment in favor of the Corporation, concluding that section 10113.72(a) did not apply to Mr. Linhart’s policy. View "LINHART V. NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION" on Justia Law

A pump manufacturer faced numerous lawsuits alleging bodily injury from asbestos exposure in its products. To address these liabilities, it maintained a layered insurance structure: primary coverage by several insurers, including Reliance Insurance Company, and umbrella/excess coverage by Federal Insurance Company. Over time, the limits of one primary insurer were exhausted, and Reliance became insolvent, making its coverage uncollectible. The manufacturer sought indemnity and defense from Federal for claims that otherwise would have been covered by Reliance.After Federal denied coverage, the manufacturer sued in the United States District Court for the District of Colorado, seeking declaratory relief and damages. Federal responded with a counterclaim and moved for judgment on the pleadings, arguing its policies only require it to defend or indemnify for occurrences not covered by scheduled underlying insurance, not for occurrences where the coverage is uncollectible due to insolvency. The district court agreed with Federal, holding that insolvency does not trigger the umbrella/excess policy and that Federal has no obligation to provide defense or indemnity until underlying limits are exhausted or paid by the insured. The court noted its ruling was consistent with most authorities but certified the question to the Supreme Court of Colorado, given a potentially conflicting state appellate decision.The Supreme Court of Colorado reviewed the certified question de novo. It held that, under the unambiguous language of the umbrella/excess policies, “not covered” refers to occurrences outside the scope of coverage, not to collectibility due to insolvency. The court concluded that the umbrella/excess insurer is not obligated to step into the shoes of an insolvent scheduled underlying carrier and provide first-dollar coverage. The certified question was answered in the negative, and the case was returned to the federal district court for further proceedings consistent with this opinion. View "A.R. Wilfley & Sons v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA" on Justia Law

A plaintiff was injured in a car accident when his vehicle was rear-ended by a driver operating her employer’s car. The plaintiff claimed damages exceeding the liability limits of the at-fault driver’s insurance policy. He sent a settlement demand to the at-fault driver’s liability insurer, seeking the policy limits, and subsequently made a separate demand to his own insurer for uninsured/underinsured motorist (UM) benefits. The UM insurer, which was the same company as the liability insurer, accepted the UM demand.After the plaintiff filed suit against the at-fault driver and her employers, he later settled his UM claim. The defendants then sought to enforce an alleged settlement of the liability claim, arguing that the plaintiff’s pursuit of a UM settlement required that the liability claim had already settled. The Superior Court denied the defendants’ motion to enforce the settlement. The Court of Appeals of Georgia reversed, holding that an enforceable settlement existed because the exhaustion of liability coverage was a prerequisite to recovery under the UM policy. The Court of Appeals relied on prior decisions that had articulated an exhaustion requirement.The Supreme Court of Georgia reviewed the case and held that the so-called exhaustion requirement does not apply to the settlement of UM claims before the exhaustion of liability coverage. The Court clarified that previous decisions addressing exhaustion applied only in the context of lawsuits seeking to recover UM benefits, not to pre-litigation settlement offers. The Court found no statutory or decisional law basis for extending the exhaustion requirement to settlement of UM claims under these circumstances. Accordingly, the Supreme Court of Georgia vacated the judgment of the Court of Appeals and remanded the case for further proceedings. View "CRAVENS v. SLAUGHTER" on Justia Law

A psychiatrist in Massachusetts operated his own private practice and, between 2015 and 2018, submitted fraudulent bills to a range of private and public health insurers, including Medicare and several major insurance companies. The fraudulent conduct included billing for over a thousand sessions at times when either he or the purported patient was out of the country. When insurers began to scrutinize his claims and requested additional billing records, he delayed responses and provided falsified records to support his claims. Eventually, at least one insurer halted payments pending his compliance, and another made payments contingent on preauthorization. Following federal investigation, the psychiatrist was indicted and, in October 2023, convicted by a jury on fourteen out of fifteen counts related to the fraud.In the United States District Court for the District of Massachusetts, the sentencing judge calculated his guidelines range based on a loss amount equating to the total billed—about $19 million—which resulted in a twenty-level sentencing enhancement. He was sentenced to ninety-nine months on the main counts, with additional concurrent sentences, and was ordered to pay approximately $6.5 million in restitution and a similar amount in criminal forfeiture. The defendant challenged both the intended loss calculation used for sentencing and the restitution amount.The United States Court of Appeals for the First Circuit reviewed the appeal. The court applied a burden-shifting framework, allowing the billed amount as prima facie evidence of intended loss, and found that the defendant did not provide sufficient evidence to show he intended to obtain less than he billed, even considering his status as an in-network provider. The appellate court also rejected his argument that restitution should be offset by claims for legitimate, unpaid services, holding that such offsets are not appropriate in the context of criminal restitution. The First Circuit affirmed the district court’s decisions in all respects. View "US v. Kinrys" on Justia Law

A plaintiff, seeking to secure retirement funds, sold an apartment complex in 2017 and was introduced to Ronald Hill, who represented himself as a financial advisor but was only licensed as an insurance producer. Hill persuaded the plaintiff to invest the sale proceeds in a product offered by Future Income Payments, LLC (FIP), and also to purchase an Indexed Universal Life (IUL) insurance policy, initially from Minnesota Life and later from Pacific Life. Hill proposed that the proceeds from the FIP investment would fund the premiums for the Pacific Life IUL policy. FIP was subsequently exposed as a Ponzi scheme, resulting in the plaintiff’s loss of the investment and inability to pay the insurance premiums.The plaintiff and other parties filed suit in the District Court of the Third Judicial District, Canyon County, Idaho, asserting claims including negligence against Hill and Pacific Life. By trial, only Hill and Pacific Life remained as defendants, with the plaintiff as the sole remaining claimant. The trial proceeded on a common law negligence claim. The jury found both Hill and Pacific Life negligent, determined Hill was acting as Pacific Life’s agent, and apportioned 60% of fault to Pacific Life and 40% to Hill. The district court entered judgments against Pacific Life, including joint and several liability with Hill for a portion of damages. Pacific Life appealed, challenging the district court’s denial of motions for directed verdict.The Supreme Court of the State of Idaho reviewed the appeal and held that, under Idaho law, Pacific Life owed no duty to protect the plaintiff from pure economic loss absent an applicable exception to the economic loss rule. The Court further found insufficient evidence to establish Hill acted as Pacific Life’s agent when marketing the FIP investment. The Court vacated the judgments against Pacific Life and remanded with instructions to enter judgment in favor of Pacific Life. View "Shelstad v. Pacific Life Insurance" on Justia Law