Justia Insurance Law Opinion Summaries

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

After a motor vehicle accident in October 2020, Maryann Thomas sought uninsured/underinsured motorist coverage from Liberty Mutual Insurance Company. She filed a lawsuit in March 2021. Liberty’s legal representation changed several times, with attorney transitions and withdrawals occurring between law firms in 2021 and 2022. Thomas sent requests for admission to Liberty’s previous counsel in June 2022, but Liberty’s new attorneys were not notified nor served with these requests. Thomas’s counsel did not follow up or inform the new attorneys about the requests, and Liberty did not respond.Thomas later moved for summary judgment, arguing that Liberty’s failure to respond meant the requests were deemed admitted under Oklahoma law, establishing liability for coverage. Liberty’s new counsel asserted they had no knowledge of the requests until Thomas moved for summary judgment a year later, asked the court to allow withdrawal of the admissions, and opposed summary judgment. The District Court of Oklahoma County granted summary judgment to Thomas based on deemed admissions, finding liability, and denied Liberty’s motion for summary judgment. The district court certified its order for immediate appeal.The Supreme Court of the State of Oklahoma reviewed the certified interlocutory order. It held that the district court abused its discretion by refusing to allow Liberty to withdraw the admissions. The Supreme Court found that permitting withdrawal would serve the presentation of the merits and that Thomas was not prejudiced, especially given the early stage of litigation and notice of disputed coverage. The Court reversed the district court’s order granting summary judgment to Thomas and remanded with instructions to allow Liberty to withdraw the admissions. View "THOMAS & GOZA v. LIBERTY MUTUAL INSURANCE CO." on Justia Law

A television production company maintained insurance coverage for its shows, including one chronicling the struggles of obese individuals to lose weight. In 2011, the insurer added an exclusion to the general liability portion of the policy, barring coverage for “any/all reality shows.” The company did not object to this exclusion. Years later, several participants or their families sued the production company for injuries allegedly arising from the show’s filming. The insurer refused to defend or indemnify the company, citing the “reality show” exclusion.The insurer brought a declaratory judgment action in the United States District Court for the Southern District of Texas, seeking confirmation that it had no duty to defend or indemnify. The production company counterclaimed for breach of contract, fraudulent inducement, and violations of Texas consumer protection statutes. The district court granted summary judgment to the insurer, finding that the exclusion unambiguously barred coverage for bodily injuries arising from reality shows like the one at issue. At a subsequent bench trial, the district court rejected the company’s fraud and statutory claims, finding no misrepresentation by the insurer and concluding the company could not have justifiably relied on any representation given its knowledge of the exclusion and the show’s nature.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit held that the company forfeited its argument about the ambiguity of "reality show" by not raising it in the district court and, in fact, previously represented the show as a “reality show.” The appellate court also found no clear error in the district court’s factual findings rejecting the fraud and consumer protection claims, noting substantial evidence of the company’s understanding of the exclusion. The district court’s judgment was affirmed in full. View "Megalomedia v. Philadelphia Indemnity" on Justia Law

A seven-year-old child named J.T. died after being physically restrained by care workers at a behavioral care center in Kentucky. The restraint, described as a “kneeling cradle,” was performed by employees of the center’s management company, Seven Counties Services, Inc. Following J.T.’s death, his estate filed a wrongful death lawsuit against the care center, Seven Counties, and other parties. Seven Counties sought defense and indemnity from its insurers, Mental Health Risk Retention Group (MHRRG) and Scottsdale Insurance Company, under its insurance policies, but both insurers denied coverage, citing exclusions for “professional services.”After the underlying wrongful death suit was filed, Hanover Insurance Group, which insured Uspiritus (the center’s operator), agreed to defend Uspiritus but declined coverage for Seven Counties, arguing that Seven Counties was not named as an additional insured after a written agreement expired. MHRRG and Scottsdale continued to deny coverage for Seven Counties, asserting that the restraint was a professional service excluded from coverage. The insurers then filed a declaratory judgment action in the United States District Court for the Western District of Kentucky. The district court granted summary judgment for Seven Counties as to the duty to defend but granted summary judgment for the insurers as to the duty to indemnify, finding the restraint was a professional service and thus excluded from indemnification.On appeal, the United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo. The Sixth Circuit affirmed the district court’s ruling, holding that the act of restraining J.T. constituted a professional service under Kentucky law, given the specialized training, required judgment, and regulatory oversight involved. Thus, the professional services exclusion in the insurance policy applied, and the insurers had no duty to indemnify Seven Counties for liability arising from the underlying wrongful death action. View "Scottsdale Ins. Co. v. Seven Cntys. Servs., Inc." on Justia Law

Eric Stupak, a pass-holder at a Wisconsin resort, was injured after using the resort’s tube slides during the summer of 2022. The slides were closed at the time, but the resort had not posted the “Ride Closed” sign or removed the tubes; instead, the protective bumpers on the slides were deflated. After playing disc golf, Stupak and two friends asked the manager if they could use the slides. The manager responded ambiguously, saying, “I’m not going to say anything.” The group proceeded to use the slides, and Stupak fell off, sustaining serious injuries.The United States District Court for the Western District of Wisconsin reviewed Stupak’s suit against the resort and its insurer. The district judge determined, as a matter of law, that Stupak had been a trespasser on the slides, which meant the resort could only be liable if it engaged in “willful, wanton, or reckless conduct.” The judge found insufficient evidence of recklessness and granted summary judgment for the defendants, without addressing other issues raised in the parties’ motions.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s grant of summary judgment de novo, applying Wisconsin substantive law. The appellate court agreed that Stupak was a trespasser, as he lacked express or implied permission to use the closed slides. However, the Seventh Circuit found that a reasonable jury could determine the resort’s actions were reckless, given the ambiguous response by the manager and the unsafe condition of the slides. The court vacated the district court’s summary judgment and remanded the case for further proceedings, allowing the district court to address additional arguments regarding assumption of risk and proximate cause. View "Stupak v Mont du Lac Snowsports, LLC" on Justia Law

A jury found that the defendant was negligent and awarded the plaintiff over $18.5 million in damages, which, after adding costs and interest, resulted in a judgment of more than $20 million. To stay enforcement of this judgment pending appeal, the defendant was required to post a bond under California law. The defendant, despite having about $1.75 million in assets, asserted that he could not obtain a bond in the statutorily required amount, which was over $30 million, and requested the trial court to waive or reduce the bond to the limit of his insurance policy ($1.25 million).The Superior Court of Sacramento County considered the defendant’s financial declaration and a supplemental declaration detailing the costs and collateral requirements for various bond levels from a bond broker. After evaluating these submissions and hearing arguments, the trial court found the defendant qualified for relief under Code of Civil Procedure section 995.240 and ordered him to post a reduced bond of $1.25 million. The plaintiff then filed a petition for writ of mandate or prohibition, challenging the trial court’s interpretation of “indigent” within the statute and the sufficiency of the evidence supporting the bond reduction.The Court of Appeal of the State of California, Third Appellate District, reviewed the trial court’s decision for abuse of discretion. The appellate court held that “indigent” under section 995.240 is not limited to those in extreme poverty but includes any person unable to obtain sufficient sureties, considering access to the judicial process. The trial court retains discretion to weigh all relevant factors, including the nature of the obligation and the potential harm to the beneficiary. The appellate court also found no evidentiary error in the trial court’s consideration of the defendant’s declarations. Accordingly, the petition was denied, and the trial court’s order was affirmed. View "Guzman v. Super. Ct." on Justia Law