Justia Insurance Law Opinion Summaries

Braun sought coverage for numerous asbestos-related claims under various excess insurance policies. In phased proceedings lasting over 10 years, the trial court entered judgment in favor of the excess insurers based on Braun’s failure to establish that the primary and, in some cases, underlying layers of excess insurance had been exhausted. Braun challenged the interpretation of the policies as requiring exhaustion of all underlying layers of insurance (horizontal exhaustion) rather than exhaustion of only policies specified in each policy (vertical exhaustion). Braun also argued the court abused its discretion in refusing to consider additional evidence of exhaustion presented four years after the trial's evidentiary phase was completed. The California Supreme Court subsequently decided “Montrose,” addressing the sequence in which the insured could access its excess insurance policies for coverage of claims for continuous environmental damage caused in 1947-1982. Interpreting the language of those excess policies, the Montrose court held the insured “is entitled to access otherwise available coverage under any excess policy once it has exhausted directly underlying excess policies for the same policy period.” After considering Montrose, the court of appeal reversed. The trial court erred in interpreting the Braun policies to require horizontal exhaustion of all primary and underlying excess insurance coverage before accessing coverage under the excess policies at issue. The trial court abused its discretion in refusing to consider Braun’s new evidence of exhaustion. View "Santa Fe Braun, Inc. v. Insurance Co. of North America" on Justia Law

Under its replacement-cost homeowner insurance contracts, State Farm calculated its payment obligations by estimating the amount it would cost to repair or replace damaged property and subtracting depreciation and the deductible. During the class period, State Farm depreciated costs for both materials and labor. Policyholders filed a putative class action. The Sixth Circuit held that in an insurance contract that incorporates Kentucky’s “replacement cost minus depreciation” formula, the insurer cannot depreciate the costs of labor when determining payments. State Farm changed its practice and created a refund program for those who had received payments between the decision and the date State Farm stopped deducting labor depreciation. Most policyholders received refunds of less than $1,000. The court certified the class as: All persons and entities that received “actual cash value” payments ... from State Farm … for loss or damage to a dwelling or other structure in … Kentucky ... where the cost of labor was depreciated," excluding those that received payment in the full amount of insurance. The Sixth Circuit affirmed. The claims share a common legal question central to the validity of each claim: whether State Farm breached the standard form contracts by deducting labor depreciation. No individualized proof is necessary to resolve this question on a classwide basis. That common question predominates over individual questions, although damages will vary. The court did not abuse its discretion in finding class litigation to be the superior method of adjudication and class membership is ascertainable View "Hicks v. State Farm Fire & Casualty Co." on Justia Law

This matter arose from alleged violations of the Health Care Consumer Billing and Disclosure Protection Act (“Balance Billing Act” or “Act”). The Louisiana Supreme Court granted certiorari review to resolve the question of whether a patient’s claims against a contracted healthcare provider for an alleged violation of La. R.S. 22:1874(A)(1) were delictual in nature. The consolidated lawsuits in this matter were filed by Matthew DePhillips and Earnest Williams, individually and on behalf of putative classes, against Hospital District No. 1 of Tangipahoa Parish d/b/a North Oaks Medical Center/North Oaks Health System (“North Oaks”). In February, 2011, Williams was injured in a motor vehicle accident. He sought emergency medical treatment from North Oaks. At the time of the accident, Williams was insured under an insurance policy administered by Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana (“BCBS”). North Oaks is a contracted healthcare provider with BCBS pursuant to a certain Member Provider Agreement (the “MPA”) between North Oaks and BCBS. After Williams’ treatment, North Oaks filed a claim with BCBS, and BCBS paid a discounted rate on the claims as provided by the MPA. Thereafter, North Oaks sought to collect from Williams by filing a medical lien against his liability insurance claim for the full and undiscounted charges. Williams alleged that North Oaks filed this lien despite being a contracted healthcare provider with BCBS and despite its legal and contractual requirements to accept the insurance as payment in full. The trial court denied the exceptions of no right of action for breach of contract and prescription, but granted the North Oaks’ exception of no cause of action for claims arising before the effective date of the Balance Billing Act. The court of appeal granted writs in part, finding DePhillips did not have a right of action to assert a claim for breach of the MPA, as he was neither a party nor a third-party beneficiary to that agreement. The appellate court denied North Oaks’ writ application insofar as it related to the trial court’s denial of its exception of prescription. After review, the Supreme Court determined plaintiff's claims were delictual in nature, subject a one-year prescriptive period. View "DePhillips v. Hospital Service Dist. No. 1 of Tangipahoa Parish d/b/a North Oaks Medical Center et al." on Justia Law

Dunbar, a Service Disabled Veteran Owned Small Business (SDVOSB), was awarded an Army Corps of Engineers ditch and tributary project in Arkansas. Dunbar then hired a subcontractor, Harding Enterprises, to work on the project. After Harding Enterprises defaulted, Dunbar made a demand on the bond guaranteed by Hanover, which Hanover denied. Hanover then filed suit seeking a declaration that it had no obligations under the bond and seeking to have the bond rescinded based on illegality of the subcontract. The Eighth Circuit reversed the district court's grant of summary judgment in favor of Hanover, holding that the district court erroneously concluded that the subcontract was undisputedly in violation of 13 C.F.R. 125.6(b)(2) because the percentage that Dunbar spent on contract performance relative to the prime contract price could not be conclusively ascertained until conclusion of performance of the prime contract. The court also held that the potential that Hanover may have liability under the False Claims Act if it were to perform under the bond does not justify discharging Hanover from its obligations and rescinding the contract. View "Hanover Insurance Co. v. Dunbar Mechanical Contractors, LLC" on Justia Law

The Third Circuit Court of Appeals certified a question of law to the New Jersey Supreme Court. The matter before the federal court involved a dispute between a workers' compensation insurance carrier and its insured, a public employer. Both plaintiff, the City of Asbury Park (the City), and its insurance carrier, defendant Star Insurance Company (Star), sought reimbursement of monies paid toward an injured firefighter’s workers’ compensation claim from funds he recouped through settlement with a third-party tortfeasor. The funds available for reimbursement will not cover the full amount paid collectively by the City and Star. The question was whether, under the equitable “made-whole” or “make-whole” doctrine, the City had priority to recover what it paid before Star could recover any of its losses. The Supreme Court answered the certified question in the negative. Under equitable principles of New Jersey law, the made-whole doctrine did not apply to first-dollar risk, such as a self-insured retention or deductible, that is allocated to an insured under an insurance policy. View "City of Asbury Park v. Star Insurance Company" on Justia Law

The Patient Protection and Affordable Care Act of 2010 (ACA) requires covered employers to provide women with “preventive care and screenings” without cost-sharing requirements and relies on Preventive Care Guidelines “supported by the Health Resources and Services Administration” (HRSA) to define “preventive care and screenings,” 42 U.S.C. 300gg–13(a)(4). Those Guidelines mandate that health plans cover all FDA-approved contraceptive methods. When the Federal Departments incorporated the Guidelines, they gave HRSA the discretion to exempt religious employers from providing contraceptive coverage. Later, the Departments promulgated a rule accommodating qualifying religious organizations, allowing them to opt out of coverage by self-certifying that they met certain criteria to their health insurance issuer, which would then exclude contraceptive coverage from the employer’s plan and provide participants with separate payments for contraceptive services without any cost-sharing requirements. In its 2014 “Hobby Lobby” decision, the Supreme Court held that the contraceptive mandate substantially burdened the free exercise of closely-held corporations with sincerely held religious objections. In a later decision, the Court remanded challenges to the self-certification accommodation so that the parties could develop an approach that would accommodate employers’ concerns while providing women full and equal coverage. The Departments then promulgated interim final rules. One significantly expanded the church exemption to include an employer that objects, based on its sincerely held religious beliefs, to coverage or payments for contraceptive services. Another created an exemption for employers with sincerely held moral objections to providing contraceptive coverage. The Third Circuit affirmed a preliminary nationwide injunction against the implementation of the rules. The Supreme Court reversed. The Departments had the authority under the ACA to promulgate the exemptions. Section 300gg–13(a)(4) states that group health plans must provide preventive care and screenings “as provided for” in comprehensive guidelines, granting HRSA sweeping authority to define that preventive care and to create exemptions from its Guidelines. Concerns that the exemptions thwart Congress’ intent by making it significantly harder for women to obtain seamless access to contraception without cost-sharing cannot justify supplanting that plain meaning. “It is clear ... that the contraceptive mandate is capable of violating the Religious Freedom Restoration Act.” The rules promulgating the exemptions are free from procedural defects. View "Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania" on Justia Law

The Fifth Circuit affirmed the district court's grant of the insurer's motion to dismiss an action brought by the insureds, seeking coverage of a residence destroyed by fire. The court also affirmed the district court's grant of summary judgment for the insurer. The insureds had purchased the property with the intention of moving into it, but had not moved in before the fire burned down the house. The court held that Louisiana requires the insured to first prove coverage, after which the insurer can show that an exclusion applies. In this case, plaintiffs failed to show coverage where they repeatedly admitted that they never resided at the property; the insureds failed to satisfy the policy's residence requirement and the property was not a covered "residence premises;" and thus the vacancy exclusion did not apply under the circumstances. The court also held that the reside-at-inception policy is not absurd because insureds who had yet to move in purchased it. The court explained that purchasing the wrong insurance policy is not unheard of, and the law provides a remedy when the fault lies with the agent who procured it. View "GeoVera Specialty Insurance Co. v. Joachin" on Justia Law

Plaintiff Skanska USA Building Inc. served as the construction manager on a renovation project for Mid-Michigan Medical Center–Midland (the Medical Center); plaintiff subcontracted the heating and cooling portion of the project to defendant M.A.P. Mechanical Contractors, Inc. (MAP). MAP obtained a commercial general liability insurance policy (the CGL policy) from defendant Amerisure Insurance Company (Amerisure). Plaintiff and the Medical Center were additional named insureds on the CGL policy. In 2009, MAP installed a steam boiler and related piping for the Medical Center’s heating system. MAP’s installation included several expansion joints. Sometime between December 2011 and February 2012, plaintiff determined that MAP had installed some of the expansion joints backward. Significant damage to concrete, steel, and the heating system occurred as a result. The Medical Center sent a demand letter to plaintiff, asserting that it had to pay for all costs of repair and replacement. Plaintiff sent a demand letter to MAP, asserting that MAP was responsible for all costs of repair and replacement. Plaintiff repaired and replaced the damaged property, at a cost of $1.4 million. Plaintiff then submitted a claim to Amerisure, seeking coverage as an insured. Amerisure denied the claim. The issue this case presented for the Michigan Supreme Court's review centered on whether the unintentional faulty subcontractor work that damaged an insured’s work product constituted an “accident” under a commercial general liability insurance policy. Because the Court concluded the answer was yes, it reversed the Court of Appeals’ judgment to the contrary. View "Skanska USA Building, Inc. v. M.A.P. Mechanical Contractors, Inc." on Justia Law

Ben-E-Lect, a third-party insurance claim administrator, developed a medical expense reimbursement plan; employers could buy a group policy of medical insurance with a high deductible and self-fund to pay for the healthcare expenses employees incurred within the annual deductible or any copay requirement. The practice of employers’ using such plans in conjunction with a high-deductible health plan is called “wrapping.” Ben-E-Lect was the state’s largest third-party administrator for small group employers who wrapped their employee medical policies. Anthem provides fully insured health plans to the California small group employer market. Beginning in 2006, Anthem announced a series of policies that limited wrapping. In 2014, Anthem prohibited wrapping all Anthem plans. Employer groups who used Anthem plans certified they would not wrap Anthem policies, and agents certified they would not advise employers to enter into any employer-sponsored wrapping plan. Ben-E-Lect sued Anthem. The court of appeal affirmed that Anthem’s policy to prohibit wrapping its health insurance products violated the Cartwright Act (Bus. & Prof. Code, 16700); interfered with Ben-E-Lect’s prospective business relationships; and was an illegal, coercive, vertical group boycott under the antitrust rule of reason (Bus. & Prof. Code, 17200), because Anthem told its insurance agents that if they wrapped any Anthem policies they would be subject to termination loss of sales commissions. The court affirmed an award of $7.38 million and an injunction. The trial court considered sufficient evidence of market power and market injury. View "Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co." on Justia Law

The Ninth Circuit certified to the Nevada Supreme Court the following questions: Whether, under Nevada law, the burden of proving the applicability of an exception to an exclusion of coverage in an insurance policy falls on the insurer or the insured? Whichever party bears such a burden, may it rely on evidence extrinsic to the complaint to carry its burden, and if so, is it limited to extrinsic evidence available at the time the insured tendered the defense of the lawsuit to the insurer? View "Zurich American Insurance Co. v. Ironshore Specialty Insurance Co." on Justia Law