Justia Insurance Law Opinion Summaries
In re: WR Grace & Co
Grace operated a Montana asbestos facility, 1963-1990. Facing thousands of asbestos-related suits, Grace filed for Chapter 11 bankruptcy. Its reorganization plan provided for a several-billion-dollar asbestos personal-injury trust to compensate existing and future claimants. All asbestos-related personal injury claims were to be channeled through the trust (“Grace Injunction,” 11 U.S.C. 524(g)(4)). CNA provided Grace's general liability, workers’ compensation, employers’ liability, and umbrella insurance policies, 1973-1996 and had the right to inspect the operation and to make loss-control recommendations. After 26 years of litigation regarding the scope of CNA’s coverage of Grace’s asbestos liabilities, a settlement agreement ensured that CNA would be protected by Grace’s channeling injunction. CNA agreed to contribute $84 million to the trust.The “Montana Plaintiffs,” who worked at the Libby mine and now suffer from asbestos disease, sued in state court, asserting negligence against CNA based on a duty to protect and warn the workers, arising from the provision of “industrial hygiene services,” and inspections. The Bankruptcy Court initially concluded that the claims were barred by the Grace Injunction but on remand granted the Montana Plaintiffs summary judgment.The Third Circuit vacated. Section 524(g) channeling injunction protections do not extend to all claims brought against third parties. To conform with the statute, these claims must be “directed against a third party who is identifiable from the terms of such injunction”; the third party must be “alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the debtor”; and “such alleged liability” must arise “by reason of” one of four statutory relationships, including the provision of insurance to the debtor. The Bankruptcy Court erred in anlyzing the “derivative liability” and “statutory relationship” requirements. While the claims meet the derivative liability requirement, it is unclear whether they meet the statutory relationship requirement. View "In re: WR Grace & Co" on Justia Law
Harvey v. Centura, No.
Peggy Harvey and Eileen Manzanares were injured in separate car accidents when their cars were struck by other drivers. Each was then taken to a Centura-affiliated hospital (along with Centura Health Corporation, “Centura”) for treatment. At the time they were treated by Centura, both women’s health insurance was solely through Medicare and Medicaid. And both women’s injuries resulted in hospital stays. In addition to Medicare and Medicaid, both women had automobile insurance whose policies included medical payment ("Med Pay") coverage for medical bills incurred as a result of a motor vehicle accident. In addition, the third-party tortfeasors who caused Harvey’s and Manzanares’s injuries also had automobile insurance. Both Harvey and Manzanares advised Centura of all of the available health and automobile insurance policies. Centura then assigned the women’s accounts to a collection agency, Avectus Healthcare Solutions, for processing; Avectus submitted Centura’s medical expenses to each of the automobile insurers involved, including the automobile insurers for Harvey, Manzanares, and the third-party tortfeasors. Within two weeks after submitting these charges to the various automobile insurers (and within two months of the women’s respective discharges from their hospital stays), Centura filed hospital liens against both of the women. Centura conceded it did not bill either Medicare or Medicaid before filing their respective liens. Both Harvey and Manzanares subsequently brought suit, alleging that Centura had violated the Lien Statute by not billing Medicare for the services provided to the women prior to filing the liens. The parties disputed whether when, as here, Medicare was a person’s principal source of health coverage, Medicare could be considered a “primary medical payer of benefits” under the Lien Statute (such that a hospital must bill Medicare before asserting a lien), or if such an interpretation was barred by the Medicare Secondary Payer statute, which designated Medicare as a “secondary payer.” The Colorado Supreme Court concluded that when Medicare was a patient’s primary health insurer, the Lien Statute required a hospital to bill Medicare for the medical services provided to the patient before asserting a lien against that patient. "Hospital liens are governed by state, not federal, law, and merely enforcing our Lien Statute does not make Medicare a primary payer of medical benefits in violation of the MSP Statute." View "Harvey v. Centura, No." on Justia Law
Moffitt v. State Farm Mutual Auto Insurance Co.
Plaintiffs, vehicle owners, filed suit alleging that State Farm violated Arkansas Insurance Rule 43, which governs loss settlements, and thus committed fraud in the inducement, breached their contracts, acted in bad faith, and engaged in an unconscionable, false, or deceptive act or practice in violation of the Arkansas Deceptive Trade Practices Act (ADTPA). Plaintiffs' claims stemmed from State Farm's use of a computer-generated vehicle valuation report to determine cash settlement amounts for the vehicle owners' automobiles' total losses. After removal to federal court, the district court dismissed the claims based on its finding that Rule 43 did not provide a private right of action.The Eighth Circuit affirmed on different grounds, concluding that State Farm's settlement practice complied with Section 10(a)(3) of Rule 43. Therefore, the vehicle owners have failed to state a claim. The court explained that Section 10(a)(3) does not require insurers to justify their deviation from the methods prescribed in Section 10(a)(2). Rather, the Rule requires only that insurers thoroughly document any value deductions when they deviate from Sections 10(a)(1) and (2). In this case, State Farm's valuation reports, which are attached to the vehicle owners' complaint, clearly set forth the itemized deductions and additions in compliance with Section 10(a)(3). Furthermore, the report fully explained the basis for the final settlement amounts. View "Moffitt v. State Farm Mutual Auto Insurance Co." on Justia Law
Viking Insurance Company of Wisconsin v. Mississippi Farm Bureau Casualty Insurance Company
Viking Insurance Company appealed a circuit court's grant of summary judgment. The circuit court adjudged that stacking uninsured-motorist coverages in a Viking policy should have been separated for purposes of the State Farm Mutual Auto Insurance Co. v. Kuehling, 475 So. 2d 1159 (Miss. 1985), offset. Viking covered the insured through a single policy covering both the vehicle involved in the accident, and an uninvolved vehicle while Mississippi Farm Bureau Casualty Insurance Company covered the insured through a single policy covering two uninvolved vehicles. The circuit court applied the offset first to Viking’s coverage of the involved vehicle, and then allocated the remainder between Viking’s and Farm Bureau’s coverages of uninvolved vehicles. As the parties agreed regarding the facts of this case, the only issue before the Mississippi Supreme Court was whether or not Farm Bureau was entitled to judgment as a matter of law. The Court found the circuit court erred: Viking was the primary insurer, so it was entitled to an offset against its entire stacking policy amount first. It was error to apply a pro rata offset in this case. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Viking Insurance Company of Wisconsin v. Mississippi Farm Bureau Casualty Insurance Company" on Justia Law
Wilkie v. Hartford
The Supreme Court reversed the order of the district court dismissing as moot Appellant's claim for declaratory judgment that The Hartford Underwriters Insurance Company had a duty as an insurer to provide its insured's policy to a third-party claimant when the insured's liability was reasonably clear, holding that the district court improperly dismissed The Hartford from the action.The district court dismissed the case as moot after the insureds provided the policy at issue to Appellant. On appeal, Appellant argued that the district court erred in dismissing the case because The Hartford failed to meet its burden of demonstrating the inapplicability of the voluntary cessation exception to mootness. The Supreme Court agreed, holding that the district court erred by failing to apply the voluntary cessation exception to the mootness doctrine and dismissing the claims against The Hartford. View "Wilkie v. Hartford" on Justia Law
National Trust Insurance Co. v. Southern Heating and Cooling Inc.
The Eleventh Circuit affirmed the district court's order dismissing National Trust's federal declaratory judgment action without prejudice. Plaintiff filed a wrongful death action against Southern Heating and others in Alabama state court after his parents died from carbon monoxide poisoning. National Trust, Southern Heating's insurer, filed suit in federal court seeking a declaration that it has no duty to defend or indemnify Southern Heating because there is no coverage under its policy. The district court found that the Alabama state court action was parallel to the federal declaratory judgment action and that the non-exhaustive guideposts set out in Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1331 (11th Cir. 2005), weighed in favor of not hearing National Trust's action.The court concluded that, when relevant, the degree of similarity between concurrent state and federal proceedings is a significant consideration in deciding whether to entertain an action under the Declaratory Judgment Act. In this case, the district court properly took into account that similarity in its consideration of the Ameritas guideposts. The court explained that the district court's perspective may not be the only way to view the two proceedings at issue, but it is a permissible way to look at them, and that is enough to constitute a reasonable exercise of discretion. View "National Trust Insurance Co. v. Southern Heating and Cooling Inc." on Justia Law
HM International, LLC v. Twin City Fire Insurance Co.
The Fifth Circuit reversed the district court's grant of summary judgment in favor of Twin City in an action brought by HMI, alleging that Twin City had breached its duty to indemnify. HMI provides various accounting and financial services for Greg and Kathy Geib. The district court interpreted the policy as not covering settlement payments made after limitations for the underlying negligent conduct had expired.The court concluded that the district court erred for two reasons: first, the district court did not account for the policy's definition of the term "claim," instead treating it as synonymous with "cause of action;" and second, the district court interpreted the phrase "legally liable to pay" to mean effectively that HMI actually lost or would have lost had the Geibs filed suit. With these two clarifications, the court concluded that HMI's settlement payment constitutes a loss because it is an amount that HMI is legally liable—through contract—to pay to the Geibs as a result of the demand letter. Furthermore, the fact that the Geibs never filed their threatened suit and that the limitations period had seemingly run does not change that. Finally, the court rejected Twin City's two alternative arguments. View "HM International, LLC v. Twin City Fire Insurance Co." on Justia Law
Drew v. Pacific Life Insurance Co.
The Supreme Court vacated the determination of the court of appeals that R. Scott National, Inc. (RSN) was an "agent" of Pacific Life Insurance Company (Pacific Life) based on Utah Code 31A-1-301(88)(b), and therefore granting partial summary judgment to Plaintiffs on their claim that Pacific Life should be held liable for RSN's alleged misdeeds, holding that remand was required.The district court granted summary judgment to Pacific Life, concluding that nothing RSN did was within the actual or apparent authority Pacific Life granted RSN. The court of appeals reversed and granted partial summary judgment for Plaintiffs, holding that RSN was Pacific Life's agent and that RSN's actions fell within the scope of authority Pacific Life had granted RSN. The Supreme Court vacated the judgment below, holding that the court of appeals (1) erred in ruling that section 31A-1-301(88)(b) made RSN an agent of Pacific Life and in injecting respondeat superior principles into Utah Code 31A-23a-405(2); and (2) Plaintiffs were entitled to the entry of partial summary judgment on the issue of RSN's apparent authority from Pacific Life. View "Drew v. Pacific Life Insurance Co." on Justia Law
Alpert v. Nationstar Mortg., LLC
The U.S. Appeals Court for the Ninth Circuit certified several questions of law to the Washington Supreme Court. When the homeowner failed to insure his property, the mortgage servicer purchased insurance to cover the property pursuant to the mortgage agreement - known as “force placed insurance” or “lender placed insurance.” The policy was underwritten by the insurers and passed through a broker to the mortgage servicer. The homeowner claimed that these parties participated in an unlawful kickback scheme that artificially inflated the premiums. In Washington, insurers must generally file their rates and receive approval from the Office of the Insurance Commissioner (OIC) before selling insurance. Once the rates are filed and approved by the governing agency, the rates were “per se reasonable” and claims that run squarely against these rates had to be dismissed (known as the "filed rate doctrine”). While the filed rate doctrine historically applied to shield entities that file rates, the Washington Court was asked whether the filed rate doctrine also applied to bar suit against intermediaries who did not file rates: the mortgage servicer (Nationstar Mortgage LLC) and broker (Harwood Service Company) who participated in the procurement of the policy from the insurers. If the filed rate doctrine applied to these intermediaries, the Supreme Court was then asked to determine whether damages would be barred under Washington's only case applying the doctrine, McCarthy Fin., Inc. v. Premera, 1347 P.3d 872 (2015). The Washington Supreme Court held that the filed rate doctrine had to also apply to bar suit against intermediaries where awarding damages or other relief would squarely attack the filed rate. In light of this holding, the Court returned the second question pertaining to damages to the Ninth Circuit to first revisit and apply McCarthy to the specific allegations of the appellant-homeonwer's outstanding claims. View "Alpert v. Nationstar Mortg., LLC" on Justia Law
Spire Missouri, Inc. v. USIC Locating Services, LLC
The Eighth Circuit affirmed the district court's grant of summary judgment in favor of a utility-locating service, USIC, in an action brought by Spire, a gas company, and its insurers, seeking full indemnification from USIC, as well as a declaratory judgment that USIC would be liable for all future settlements as well, without regard to fault. The court held that, under Missouri's anti-indemnification law, Mo. Rev. Stat. Sec. 433.100.1, Spire could not use the parties' contract to seek indemnification for its own negligence or wrongdoing. The court explained that, even if Spire is right that "construction work" does not ordinarily include marking and flagging the location of gas lines, it makes no difference here because Missouri has adopted a broader definition of "construction work." View "Spire Missouri, Inc. v. USIC Locating Services, LLC" on Justia Law