Justia Insurance Law Opinion Summaries

In March 2020, the Governor of Ohio declared a state of emergency in connection with the COVID-19 pandemic. A few days later, the Director of the Ohio Department of Health ordered restaurants across the state to close their doors to in-person diners, forcing Santosuossos restaurant in Medina to halt ordinary operations. Although the closure order permitted restaurants to offer takeout services, in-person dining generates the substantial majority of Santosuossos’s revenue.” The restaurant sustained significant losses and laid-off employees. The restaurant filed a claim with Acuity, seeking recovery under its commercial property insurance policy. After Acuity denied coverage, the owner filed suit.The Sixth Circuit affirmed the dismissal of the suit. The policy covers business interruption “caused by direct physical loss of or damage to property.” The cause of the suspension of operations—the prohibition on in-person dining—did not arise from a physical loss of property or physical damage to it. The court also noted policy exclusions for “loss or damage caused directly or indirectly by . . . [a]ny virus . . . capable of inducing physical distress, illness or disease” and for “loss or damage caused directly or indirectly by [ordinance or law] . . . [r]egulating the construction, use or repair of any property.” View "Santo's Italian Cafe LLC v. Acuity Insurance Co." on Justia Law

In the underlying action, the insureds were sued by victims of a fire that occurred at the insureds' property. The insurer, Aspen, and managing underwriter, D&H, defended the action, which ultimately settled without any out-of-pocket payment from the insureds. The insureds then filed this action against Aspen and D&H, seeking a declaration that a conflict of interest existed in the underlying case between them and Aspen and D&H, so they were entitled to so-called "Cumis" counsel under Civil Code section 2860. The trial court sustained a demurrer without leave to amend and entered judgment for Aspen and D&H.The Court of Appeal concluded that the demurrer was the incorrect procedural vehicle to resolve the insureds' declaratory judgment claim against Aspen and D&H. However, the insureds' family suffered no prejudice because the second amended complaint (SAC) did not allege a conflict of interest entitling them to independent counsel pursuant to section 2860 as a matter of law. Accordingly, the court modified the judgment to declare the rights adverse to the insureds and affirmed the trial court's judgment. View "Nede Management, Inc. v. Aspen American Insurance Co." on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment in favor of GEICO and its rejection of claimant's attempt to obtain a $14,900,000 bad faith judgment from the insurer. The court concluded that, under the totality of the circumstances, no reasonable jury could conclude that GEICO acted in bad faith before, during, or after sending the proposed release to claimant. The court noted that it was not allowing GEICO to escape liability merely because claimant and his attorney's actions could have contributed to the failure to settle. Rather, the court discussed claimant and his attorney's actions because they show how, in the totality of these circumstances, GEICO did fulfill its good faith duty to the driver and his mother. The court explained that they show how the failure to settle the lawsuit against the insureds did not result from bad faith of the insurer. View "Pelaez v. Government Employees Insurance Co." on Justia Law

Consolidated cases presented a certified question from the United States District Court for the District of Oregon. The Oregon Supreme Court was asked to determine whether Oregon law precluded an insurer from limiting its liability for uninsured/underinsured motorist (UM/UIM) benefits on the basis that another policy also covered the insured’s losses. Each plaintiff suffered injuries caused by an uninsured or underinsured motorist, and each plaintiff incurred resulting damages that qualify as covered losses under multiple motor vehicle insurance policies issued by defendant State Farm Mutual Automobile Insurance Company (State Farm). Each plaintiff alleged a loss that exceeded the declared liability limits of any single applicable policy and sought to recover the excess under additional applicable policies, up to the combined total of the limits of liability. In each case, however, State Farm refused to cover the excess loss, citing a term in the policies that allowed State Farm to limit its liability to the amount that it agreed to pay under the single policy with the highest applicable limit of liability. The Oregon Supreme Court concluded that that term made State Farm’s uninsured motorist coverage less favorable to its insureds than the model coverage that the legislature has required and, thus, was unenforceable. View "Batten v. State Farm Mutual Automobile Ins. Co." on Justia Law

The Supreme Court held that Neb. Rev. Stat. 44-3,128.01, which grants an insurer the right of subrogation, does not preempt a common-law rule, known as the common fund doctrine, allowing an attorney to collect a pro rata share of his or her fees from an insurer.A law firm sued an insurer in county county, alleging that its work in obtaining a recovery on behalf of the law firm's client, including the insurer's subrogation interest in the claim, created a common fund, that the insurer benefited from the law firm's work, and that a fair attorney fee under Nebraska common law was one-third of the amount recovered per the law firm's agreement with its client. The county court sustained the law firm's motion, and the district court and court of appeals affirmed. The Supreme Court affirmed, holding that the court of appeals did not err in failing to determine that the common fund doctrine was preempted by section 44-3-128. View "Hauptman, O'Brien, Wolf & Lathrop, P.C. v. Auto-Owners Insurance Co." on Justia Law

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

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

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 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

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