Justia Insurance Law Opinion Summaries

A dentist applied for benefits under his individual disability insurance policy after suffering impairments to his hip and back. While his claim was under review, he received payments from his insurer for over a year. During that period, he earned income through part-time teaching and performing duties for two professional dental associations. After discovering this income, the insurer terminated his benefits, determining that his continued work qualified as a “gainful occupation” and thus he did not satisfy the policy’s requirement for “total disability.”The dentist subsequently filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, alleging breach of contract and seeking statutory penalties for bad faith under the Illinois Insurance Code. Both parties moved for summary judgment. The district court granted summary judgment in favor of the insurer, finding that the policy’s language was unambiguous and that the dentist was, as a matter of law, engaged in a gainful occupation based on the undisputed facts.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s ruling de novo. The appellate court held that the policy unambiguously required the claimant to show not only inability to perform his prior occupation but also that he was not engaged in any other gainful occupation. The court concluded that “gainful occupation” was not ambiguous and that the dentist’s nonclinical work, which generated substantial income, disqualified him from benefits. The court also rejected the contention that “gainful occupation” should be defined as earning at least 60% of pre-disability income, finding no support for that standard in the policy language. The Seventh Circuit affirmed the district court’s judgment for the insurer. View "Caraba v Paul Revere Life Insurance Co." on Justia Law

Transportation Consultants, Inc. owned property in Louisiana insured under a surplus lines commercial property policy issued by a group of domestic and foreign insurers. The policy contained an arbitration clause and a provision stating it should be construed as separate contracts between the insured and each underwriter. Following Hurricane Ida, a dispute arose regarding coverage, prompting Transportation Consultants to file suit against all insurers in Louisiana state court.The insurers removed the case to the United States District Court for the Eastern District of Louisiana, relying on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards to assert federal jurisdiction. The district court initially granted the insurers' motion to compel arbitration and stayed the litigation. After the Louisiana Supreme Court decided Police Jury of Calcasieu Parish v. Indian Harbor Insurance Co., the plaintiff moved for reconsideration. The district court then reversed its earlier decision as to the domestic insurers, finding that Louisiana law prohibits arbitration clauses in insurance contracts between Louisiana parties, and lifted the stay as to the domestic insurers. The order compelling arbitration and staying litigation against the foreign insurers remained.On appeal, the United States Court of Appeals for the Fifth Circuit held that, following its precedent in Town of Vinton v. Indian Harbor Insurance Co. and Crescent City Surgical Operating Co. v. Interstate Fire & Casualty Co., the arbitration clauses in contracts with the domestic insurers are unenforceable under Louisiana law and equitable estoppel cannot be used to compel arbitration. The court affirmed the district court’s denial of arbitration as to the domestic insurers but vacated the lifting of the stay. The case was remanded for the district court to reconsider, in light of updated precedent and additional briefing, whether litigation against the domestic insurers should be stayed pending completion of arbitration with the foreign insurers. View "Transportation Conslt v. Certain Undwr" on Justia Law

Sonia Breslow purchased a $250,000 watch from Jacob & Company, which was shipped from New York to the Iron Horse Golf Club in Montana. The Club repackaged the shipment and sent it via Federal Express (FedEx) “priority overnight” to a UPS store in Arizona. The shipping label did not declare a value for the package. Video evidence showed that after FedEx took possession, the yellow bag containing two boxes was no longer secured by a zip tie, and at the Scottsdale facility, an employee removed one box from the bag. Ultimately, FedEx delivered the bag to the UPS store, but the watch was missing. Sonia filed an insurance claim, and Pennsylvania Insurance paid the Breslows the purchase price, then sued FedEx as their subrogee.Pennsylvania Insurance initially brought claims for negligence, conversion, unjust enrichment, breach of contract, and civil theft in Nebraska state court. FedEx removed the case to the United States District Court for the District of Nebraska. The district court ruled that the Airline Deregulation Act preempted the claims for negligence, unjust enrichment, and civil theft, dismissed the conversion claim for lack of evidence, and found breach of contract but limited FedEx’s liability under the shipping contract to $100. The case proceeded to a bench trial, where the court found the breach and upheld the liability limit, entering judgment for Pennsylvania Insurance in the amount of $100.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court’s rulings. The court held that the Airline Deregulation Act preempts state-law claims relating to FedEx’s package handling and transportation services. It found no error in the district court’s dismissal of the conversion claim and upheld the liability limit of $100, concluding that the Club had adequate notice and opportunity to purchase greater coverage. The court also affirmed that Pennsylvania Insurance had standing as subrogee and that FedEx breached the contract. View "Pennsylvania Insurance Co. v. Federal Express Corp." on Justia Law

After an explosion and fire at an oil and gas well in North Dakota, XTO Energy, Inc., the well’s owner and operator, sought insurance coverage for compensation paid to injured workers. XTO had retained Missouri Basin as a contractor, and their agreement required Missouri Basin to maintain insurance supporting indemnity obligations. Missouri Basin obtained a second-layer umbrella policy from Commerce and Industry Insurance Company. This policy contained a pollution exclusion, which could be avoided if five specific conditions in a “time element exception” were met, including a requirement that any pollution incident be reported to Commerce within twenty-one days of being known to the insured. XTO failed to provide this notice within the required timeframe.Berkley National Insurance Company, another insurer, initially sought a declaration in the United States District Court for the District of North Dakota that it owed no indemnity obligation due to a pollution exclusion in its policy. XTO counterclaimed against Berkley and brought a third-party complaint against Commerce, seeking coverage. The district court granted summary judgment to XTO, finding that although XTO had not met the notice requirement, Commerce had waived this defense by not objecting promptly, and that Commerce failed to demonstrate prejudice from the late notice. The court ultimately ordered Commerce to pay damages to XTO.On appeal, the United States Court of Appeals for the Eighth Circuit found that the pollution exclusion in Commerce’s policy unambiguously barred coverage for XTO’s claim. The court held that XTO failed to satisfy the conditions of the time element exception, and Commerce did not waive its right to deny coverage by relying on the exclusion rather than on late notice. The court also held that North Dakota law did not require Commerce to show prejudice in these circumstances. Additionally, the court concluded that exceptions in Berkley’s policy were not incorporated into Commerce’s policy. The Eighth Circuit reversed the district court’s judgment and vacated the award. View "XTO Energy, Inc. v. Commerce and Industry Ins. Co." on Justia Law

The dispute concerns damage to a commercial property owned by a company and insured under an all-risk property insurance policy. The tenant, Star Fisheries, Inc., had leased part of the property for over thirty years, during which its operations—particularly the use of water and salt—caused structural deterioration to concrete stairs, walls, and flooring. After initial damage was discovered in 2010, an engineering report recommended several repairs, some of which were completed, while others were not. The tenant was made responsible for remediation costs. No insurance claim was filed at that time. In 2021 and 2022, similar damage was again discovered, confirmed as structural, and the owner filed a claim with the insurer.The insurer investigated and denied coverage, citing policy exclusions for inherent vice, faulty workmanship, settling, and wear-and-tear. The owner requested reconsideration, but coverage was denied again. The owner then sued in Maricopa County Superior Court; the insurer removed the case to the United States District Court for the District of Arizona. That court granted summary judgment in favor of the insurer, applying a test from Ingenco Holdings, LLC v. Ace American Insurance Co., which included whether the loss was reasonably foreseeable and almost certain to occur, concluding the loss was not fortuitous.On appeal, the United States Court of Appeals for the Ninth Circuit certified a question to the Supreme Court of the State of Arizona regarding the legal definition of a “fortuitous loss.” The Supreme Court of Arizona held that under Arizona law, a fortuitous loss is one that, so far as the parties to the contract are aware, is dependent on chance. A loss is non-fortuitous only if the insured knew, at the time coverage attached, that the loss-causing event had already occurred, was in progress, or was certain to occur because no material contingency remained. The court adopted a subjective standard focused on the insured’s knowledge at the time of contract formation. View "INDUSTRIAL PARK CENTER v GREAT NORTHERN INSURANCE" on Justia Law

Several patients suffered harm after undergoing surgeries performed by Abubakar Atiq Durrani, M.D., whose conduct involved unnecessary procedures and fraudulent misrepresentations about the need for surgery. Following Durrani’s indictment and flight from the United States, hundreds of injured patients pursued civil suits in Ohio state court, obtaining judgments against Durrani for negligence, fraud, and, in some cases, battery or lack of informed consent. After prevailing at trial but unable to collect damages directly from Durrani, the plaintiffs sought to enforce their judgments against his insurer, the Medical Protective Company (MedPro), under the terms of Durrani’s malpractice insurance policy.In the United States District Court for the Southern District of Ohio, the plaintiffs filed enforcement actions to compel MedPro to pay their verdicts and initiated a direct action against MedPro and its vice president, alleging bad faith and other torts related to MedPro’s handling of the litigation and denial of payment. The district court dismissed all claims, finding that the policy’s exclusion for damages “in consequence of” intentional torts (including fraud) barred coverage where the damages were inseparable from Durrani’s fraudulent acts, and that Ohio law permits only the insured—not third-party claimants—to assert bad faith claims against insurers.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s decisions. The court held that MedPro’s policy exclusion applies when the plaintiffs’ damages directly arise from and cannot be separated from Durrani’s fraud. Where jury verdicts did not allocate damages between negligence and fraud, or where all remaining damages were tied to fraudulent acts, the plaintiffs could not plausibly claim coverage. The court further held that, under Ohio law, third-party claimants may not bring bad faith claims against insurers, and the plaintiffs failed to state any viable independent tort claims. The district court’s dismissals were therefore affirmed in all respects. View "Adams v. Med. Protective Co." on Justia Law

A young child, Brianna, suffered injuries consistent with attempted vaginal penetration while attending Room to Grow Preschool in Murray, Kentucky, in 2000. Multiple individuals were suggested as possible perpetrators, including another child, the operator’s teenage son, and Brianna’s own father, but no one was convicted in relation to the injuries. Brianna, through her mother and later in her own right, sued the preschool operator, alleging that his negligence in running the facility, including hiring, training, and supervision, led to her injuries. The preschool’s insurer, Monroe Guaranty, intervened, seeking a declaration that its policy did not require it to defend or indemnify the preschool or its operator.In the Calloway Circuit Court, Monroe Guaranty was granted declaratory and summary judgment, with the court finding that the injury arose from a violation of law and thus was excluded under the policy’s terms. The Kentucky Court of Appeals affirmed, focusing on the injury as the triggering event and finding that it was intentional and within the insured’s control. The case was previously reviewed by the Supreme Court of Kentucky, which remanded for more thorough factual findings and coverage analysis. On remand, the trial court again granted judgment for Monroe Guaranty, and the Court of Appeals affirmed, concluding no coverage existed under either the general liability or professional liability provisions.The Supreme Court of Kentucky, on discretionary review, affirmed the Court of Appeals as to the commercial general liability policy, holding coverage was not triggered because the insureds had control over the relevant events. However, it reversed as to the professional liability endorsement, finding the lower courts failed to conduct a proper coverage analysis. The case was remanded to the Calloway Circuit Court for a complete factual and legal evaluation under the professional liability endorsement. View "ROBINSON V. MONROE GUARANTY INSURANCE COMPANY" on Justia Law

The dispute arose after an insured, Joseph Russell Falasco, filed a claim with his insurer, USAA Casualty Insurance Company, following a fire that destroyed his partially restored 1974 Porsche 911S. After the incident, USAA began an investigation, sent a reservation of rights letter, and ultimately relied on an appraisal by a third party, CCC Intelligent Solutions, to value the vehicle. USAA’s valuation was based on comparable vehicles that Falasco disputed as inappropriate, and the company initially withheld settlement pending the outcome of a special investigations unit review, which ultimately found no intentional wrongdoing. After further dispute over the valuation, USAA eventually paid Falasco based on a higher appraisal obtained during litigation.The United States District Court for the Eastern District of Arkansas granted partial summary judgment to USAA on Falasco’s claims of bad faith and unfair claims settlement practices, concluding that the undisputed facts showed USAA had reasonably attempted to discharge its contractual obligations in good faith. The breach of contract claim proceeded to a jury trial, where Falasco prevailed and was awarded damages for the value of the car.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the partial summary judgment de novo. The court held that under Arkansas law, bad faith requires affirmative misconduct by the insurer that is dishonest, malicious, or oppressive, and that mere negligence, mistakes, or honest errors in judgment do not meet this standard. The appellate court found no evidence that USAA’s conduct—including its valuation methods, investigation for potential fraud or arson, alleged misrepresentations, and attempts to obtain the vehicle’s title—rose to the level of bad faith. The court affirmed the district court’s grant of summary judgment in favor of USAA on the bad faith claim. View "Falasco v. USAA Casualty Insurance Company" on Justia Law

A couple alleged that their home in Union Springs suffered significant roof damage from a storm in January 2024. They had a homeowners’ insurance policy with an insurer and submitted a repair estimate of $9,112.02 to the company, which responded with a significantly lower settlement offer. The couple sued the insurer in the Bullock Circuit Court, claiming breach of contract and bad faith, and alleged a systematic practice by the insurer of underpaying roof claims. During discovery, the couple requested documents relating to the handling of roof claims. The insurer objected, citing concerns over the breadth of the requests and the confidential nature of certain documents.After both sides submitted competing motions for protective orders, the circuit court entered an order that allowed some confidential materials produced by the insurer to be used not only in the couple’s case but also in other cases handled by their counsel involving similar claims against the insurer. The order also permitted sharing information with governmental agencies under certain conditions. The insurer petitioned the Supreme Court of Alabama for a writ of mandamus, seeking to vacate the protective order and require a more restrictive, non-sharing version.The Supreme Court of Alabama held that there is no per se prohibition against sharing provisions in protective orders, provided there are adequate safeguards. The court concluded that the circuit court did not exceed its discretion in allowing sharing with government entities. However, it required the protective order to be modified to (1) specify the exact cases in which sharing is permitted, (2) require all recipients to agree in writing to be bound by the order and submit to the circuit court’s jurisdiction, and (3) clarify obligations for returning or destroying confidential materials at the conclusion of each case. The petition for mandamus was granted in part and denied in part, and the writ was issued accordingly. View "Ex parte State Farm Fire and Casualty Company" on Justia Law

A group of former shareholders of a reinsurance provider’s parent company acquired the provider’s rights to seek recourse against third parties for losses stemming from a failed reinsurance program. The losses occurred after the provider’s agent advised participation in a structurally unsound London Market program, resulting in significant financial harm. The shareholders, now plaintiffs, alleged that an insurance brokerage firm failed to properly notify the agent’s professional liability insurers of claims arising from these events, as required under agreements between the broker, the agent, and the insurers.After unsuccessful attempts to recover from the provider’s agent and its bankrupt parent company, the plaintiffs notified the agent’s insurers, who denied coverage due to untimely notice. The plaintiffs then filed suit against the brokerage firm in the Circuit Court of Cook County, Illinois, asserting claims for professional negligence and breach of contract. The suit was removed to the United States District Court for the Northern District of Illinois. The district court dismissed the negligence claim and granted summary judgment to the brokerage firm on the contract claim, finding the provider was not a third-party beneficiary to the relevant agreements and the broker owed no duty to the provider.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s judgment. The court held that the provider was not a third-party beneficiary of the agreements between the broker and the agent, as the contracts did not expressly manifest an intent to benefit the provider. The court also held that the broker owed no professional duty to the provider to notify the agent’s insurers of claims. Finally, it concluded that the claims were time-barred under Illinois law. View "Ferguson v Aon Risk Services Companies, Inc." on Justia Law