Justia Insurance Law Opinion Summaries

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While driving a car insured by Arizona Automobile Insurance Company, Marlena Whicker rear-ended a taxi and injured its passenger, Georgiana Chavez. Chavez sued Whicker in Colorado state court and won a default judgment when neither Whicker nor Arizona entered a defense. Whicker, unable to satisfy the judgment from the lawsuit, assigned her rights against Arizona to Chavez, who then filed this diversity suit against Arizona in federal court for failure to defend Whicker in the underlying state court action. Her theory was that Arizona had a duty to defend Whicker under Colorado law because Arizona knew that she was a driver covered under its policy. The district court disagreed with Chavez and granted Arizona’s motion to dismiss. The Tenth Circuit determined that under Colorado law, Arizona was only required to defend Whicker if Chavez’s complaint plausibly alleged Whicker was insured under the Arizona policy. It therefore reached the same conclusion as the district court and, affirmed its dismissal of Chavez’s case. View "Chavez v. Arizona Automobile Ins. Co." on Justia Law

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GEICO Insurance Company appealed a trial court judgment entered in favor of plaintiffs Johnson Evans, Jimmy Smith, and Bernard Smith on plaintiffs' claims for damages resulting from an automobile accident caused by GEICO's insured, Bernard Grey. GEICO argued that the April 17, 2019, judgment entered against it was void because it did not receive notice of plaintiffs' claims against it or notice of the hearing on plaintiffs' claims. For their part, plaintiffs did not dispute that GEICO never received actual notice of any action pending against it in the present case. Instead, they argued GEICO had "constructive notice of potential litigation" because it had actual notice of Grey's accident involving plaintiffs -- which occurred in 2010 -- and that GEICO was aware that plaintiffs claimed to be injured by Grey's actions. The Alabama Supreme Court agreed with GEIDO that "constructive notice of potential litigation" clearly fell short of "even the most basic requirements of due process." Because it was undisputed GEICO never received notice of any claim pending against it, the April 17 judgment violated due process, and was therefore void. Because a void judgment would not support an appeal, the trial court was instructed to vacate its judgment, and GEICO's appeal was thus dismissed. View "GEICO Insurance Co. v. Evans" on Justia Law

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In 2010 San Diego Sherriff’s Deputy Collier died following an accident while on duty. Collier owned a house together with his fiance, Li, who was also designated as Collier’s beneficiary for his retirement benefits and as a dependent for purposes of workers’ compensation. The two were to have been married three months after the date of Collier’s death; Collier had repeatedly stated, including on a video, that he had made arrangements for Li to be taken care of in the event of his death. Stamp, Collier’s former girlfriend, was named as the beneficiary of his life insurance. Stamp and Li agreed to split the proceeds; Li received $560,920 and Stamp received $25,000. The Bureau of Justice Assistance denied Li’s claim for benefits under the Public Safety Officers’ Benefits Act, 34 U.S.C. 10281, because Li was not the designated beneficiary on Collier’s life insurance policy. The Federal Circuit affirmed. Rejecting Li’s argument that the Bureau should have considered the “totality of the circumstances,” the court stated that Li was not the designated life insurance beneficiary. California law requires strict compliance with the requirement of a policy to change the beneficiary; Collier’s policy required a written designation. There was no written designation and none of the exceptions apply. View "Li v. Department of Justice" on Justia Law

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The Supreme Court reversed the judgment of the court of appeals in this action determining whether an insurer who settles a personal injury claim with an accident victim has a duty to distribute a portion of the settlement proceeds to the victim's former lawyers pursuant to a charging lien, holding that an action based upon a charging lien is an in rem proceeding against a particular fund and that when a matter is resolved through a settlement, the fund comes into being at the time the settlement is paid and the release is received. A discharged law firm sought to enforce a charging lien against a tortfeasor's insurer for the law firm's representation of the victim injured by the tortfeasor. However, no lawsuit was filed on behalf of the victim against the tortfeasor, and the victim settled with the tortfeasor's insurer after he discharged the law firm. The Supreme Court held that, under the facts of this case, the discharged law firm could not enforce its charging lien against the tortfeasor's insurer, and therefore, the discharged law firm did not have a viable charging-lien claim against the tortfeasor's insurer. View "Kisling, Nestico & Redick, LLC v. Progressive Max Insurance Co." on Justia Law

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In this case involving the indictments of Dr. Frank Stirlacci and his office manager, Jessica Miller, for violations of the Controlled Substances Act and for submitting false health care claims to insurance providers, the Supreme Judicial Court affirmed in part and reversed in part the superior court's judgment dismissing several of the indictments, holding that there was sufficient evidence to indict Shirlacci on twenty-six counts of improper prescribing and to indict both defendants on twenty of the twenty-two counts of submitting false health care claims. The charges against Defendants included twenty-six counts each of improper prescribing, twenty counts each of uttering a false prescription, and twenty-two charges each of submitting a false health care claim. The trial judge dismissed the indictments for improper prescribing and uttering false prescriptions and dismissed six of the indictments against each defendant for submitting false health care claims. The Supreme Judicial Court reversed in part, holding (1) the evidence was sufficient to indict Stirlacci on all counts of improper prescribing, but Miller's status as a nonpractitioner precluded her indictment on improper prescribing; (2) there was insufficient evidence to indict either defendant for uttering false prescriptions; and (3) there was sufficient evidence to indict both defendants on twenty counts of submitting false health care claims. View "Commonwealth v. Stirlacci" on Justia Law

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Plaintiff-Appellant Luzetta Murphy-Sims appealed after a jury ruled in favor of Defendant-Appellee Owners Insurance Company (Owners) on her complaint against Owners' insured stemming from a car accident. The insured was at fault; Murphy-Sims maintained that she suffered extensive injuries, and consequently incurred significant medical costs, as a result of the accident. In February 2014, she sent Owners a letter demanding settlement claiming $41,000 in medical expenses. Owners timely replied with a request for more information. When Murphy-Sims failed to reply, Owners sent two additional follow-up requests. Finally, in June 2014, Murphy-Sims provided Owners with some of the requested information. It did not offer a settlement payment in response. In July 2014, Murphy-Sims sued the insured. The parties agreed roughly three weeks later to enter into a Nunn agreement, which bound the matter over to binding arbitration. The arbitrator awarded Murphy-Sims approximately $1.3 million and judgment was entered against the insured. Pursuant to the agreement, Murphy-Sims did not execute on the judgment. In March 2016, Murphy-Sims, standing in the insured's shoes as permitted under the Nunn agreement, filed the underlying lawsuit against Owners in state district court, claiming Owners breached its contract with Switzer and had done so in bad faith. Owners removed the suit to federal court and the case proceeded to trial. The jury ultimately found that Owners did not breach its contract with the insured, thereby declining to award $1.3 million in damages to Murphy-Sims. The jury did not reach the bad faith claim having been instructed that it need not be reached in the absence of a breach of contract. After review of Murphy-Sims arguments on appeal, the Tenth Circuit determined the district curt committed no reversible error, and affirmed its judgment. View "Murphy-Sims v. Owners Insurance Company" on Justia Law

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After an underground storage facility in a cave that formerly housed a limestone mine experienced a series of dome-outs, the primary insurer sought a declaratory judgment that the operator of the facility's claimed losses were not covered. Four excess insurers also sought declarations of no coverage; the operator of the facility, Interstate, counterclaimed against the insurer, alleging a vexatious refusal to pay claim under Missouri law; and the district court granted summary judgment for the insurers. The Eighth Circuit affirmed the district court's judgment, holding that the insurers were entitled to the declaratory judgment that no coverage existed under the respective policies. The court applied the meaning that would be attached by an ordinary person of average understanding, and held that the district court properly dismissed Interstate's claims because the rubble zone above the natural ceiling of Interstate's facility was not part of the "building." The court explained that, because the decay that caused the dome-outs in this case occurred within the rubble zone, it follows that the dome-outs were not caused by "building decay" within the meaning of the policy. View "Westchester Surplus Lines Insurance Co. v. Interstate Underground Warehouse & Storage, Inc." on Justia Law

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The Supreme Court answered in the negative a question certified to it by a federal district court regarding tension in case law between an insurer's duty to a third-party claimant and its duty to its insured. As a result of an accident caused by High County Paving, Inc., one person died and another was critically injured. United Fire & Casualty Co., High County's insurer, advance-paid the medical expenses of the injured parties prior to a final settlement. High County argued that any further payments to the injured parties without obtaining a release for High County would violate United Fire's duties to High Country, as general damages are not a type of damages that are required to be advance-paid to an injured third party. United Fire argued it was required to tender a payment of policy limits to the injured parties without a release for High Country because total damages exceeded policy limits. The Supreme Court held that an insurer does not breach its duty to its insured when it pays policy limits to an injured third party, without a release for its insured, after a motor vehicle accident when both liability for the accident is reasonably clear and it is reasonably clear that total damages caused by the insured exceed policy limits. View "High Country Paving v. United Fire & Casualty Co." on Justia Law

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Among its reforms, the Patient Protection and Affordable Care Act (“ACA”) required private health insurers to provide coverage for individuals regardless of their gender or health status, including preexisting conditions. Congress anticipated these reforms might hamper the ability of insurers to predict health care costs and to price health insurance premiums as more individuals sought health insurance. To spread the risk of enrolling people who might need more health care than others, Congress established a risk adjustment program for the individual and small group health insurance markets. Congress tasked the Department of Health and Human Services (“HHS”) with designing and implementing this risk adjustment program with the states. HHS developed a formula to calculate how much each insurer would be charged or paid in each state. The formula relied on the “statewide average premium” to calculate charges and payments. Plaintiff-Appellee New Mexico Health Connections (“NMHC”), an insurer that was required to pay charges under the program, sued the HHS Defendants-Appellants under the Administrative Procedure Act (“APA”), alleging that HHS’s use of the statewide average premium to calculate charges and payments in New Mexico from 2014 through 2018 was arbitrary and capricious. The district court granted summary judgment to NMHC, holding that HHS violated the APA by failing to explain why the agency chose to use the statewide average premium in its program. It remanded to the agency and vacated the 2014, 2015, 2016, 2017, and 2018 rules that implemented the program. After the district court denied HHS’s motion to alter or amend judgment under Federal Rule of Civil Procedure 59(e), HHS appealed. The Tenth Circuit Court of Appeals: (1) determined NMHC’s claims regarding the 2017 and 2018 rules were moot, so the matter was remanded to the district court to vacate its judgment on those claims and dismiss them as moot; (2) reversed the district court’s grant of summary judgment to NMHC as to the 2014, 2015, and 2016 rules because it determined HHS acted reasonably in explaining why it used the statewide average premium in the formula. Because the Court reversed the district court on its summary judgment ruling in favor of NMHC, it did not address the denial of HHS’s Rule 59(e) motion. View "New Mexico Health Connections v. HHS" on Justia Law

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In September 2014, a driver was rear-ended by an SUV driven by a Union Pacific employee. The motorist lost control of her car, spinning off the freeway and onto the dirt shoulder, where it struck a roadside light pole. The light pole, which was manufactured by Ameron Pole Products, was designed to “break away” on impact, causing the pole to pass over the impacting vehicle, thereby reducing the force of the collision and concomitant risk of injury. On this occasion, however, the light pole did not break away, but instead remained standing. The driver sustained multiple injuries, including skull fractures, injuries to her brain and face, a fracture of the right scapula, and bilateral chest trauma. The driver sued Union Pacific Railroad Comapny and Ameron. Union Pacific cross-complained against Ameron for equitable indemnity and apportionment. Ameron moved for summary judgment, arguing the driver would be unable to prove causation as a matter of law. Union Pacific opposed the motion, arguing Ameron failed to carry its initial burden or showing judgment as a matter of law. Alternatively, Union Pacific argued the evidence submitted raised triable issues of fact as to whether Ameron’s negligence was a substantial factor in causing the driver’s injuries. The trial court entered judgment in Ameron’s favor. The Court of Appeal reversed, concurring with Union Pacific’s alternate grounds. Summary judgment was reversed and the matter remanded for further proceedings. View "Union Pacific Railroad Co. v. Ameron Pole Products LLC" on Justia Law