Justia Insurance Law Opinion Summaries

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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

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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

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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

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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

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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

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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

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A mortgage conveys an interest in real property as security. Lenders often require borrowers to maintain hazard insurance that protects the property. If the borrower fails to maintain adequate coverage, the lender may buy the insurance and force the borrower to cover the cost (force-placed coverage). States generally require insurers to file their rates with an administrative agency and may not charge rates other than the filed rates. The filed-rate is unassailable in judicial proceedings even if the insurance company defrauded an administrative agency to obtain approval of the rate. Borrowers alleged that their lender, Nationstar, colluded with an insurance company, Great American, and an insurance agent, Willis. Great American allegedly inflated the filed rate filed so it and Willis could return a portion of the profits to Nationstar to induce Nationstar’s continued business. The borrowers paid the filed rate but claimed that the practice violated their mortgages, New Jersey law concerning unjust enrichment, the implied covenant of good faith and fair dealing, and tortious interference with business relationships; the New Jersey Consumer Fraud Act; the Truth in Lending Act, 15 U.S.C. 1601–1665; and RICO, 18 U.S.C. 1961–1968. The Third Circuit affirmed the dismissal of the suit. Once an insurance rate is filed with the appropriate regulatory body, courts have no ability to effectively reduce it by awarding damages for alleged overcharges: the filed-rate doctrine prevents courts from deciding whether the rate is unreasonable or fraudulently inflated. View "Leo v. Nationstar Mortgage LLC of Delaware" on Justia Law

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The Supreme Court affirmed the determination of the trial court that the collapse provisions of Insured's homeowners insurance policy unambiguously foreclosed coverage under the circumstances of this case, holding that the trial court did not err. Insured brought this action against Insurer claiming that Insurer breached the homeowners insurance policy it issued by denying coverage for cracks in the basement walls of Insured's home under the collapse provisions of the policy. The trial court granted summary judgment for Insurer because the policy defined "collapse" as "an abrupt falling down or caving in" of the home and because Insured's remained standing and was in no imminent danger of falling down. On appeal, Insured argued that the definition of "collapse" in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), applied. The Supreme Court affirmed, holding that, even if this Court agreed that the definition of collapse contained in the policy was ambiguous and that, therefore, Beach's substantial impairment standard applied to Insured's claim, Insured's claim of coverage would fail even under that standard. View "Jemiola v. Hartford Casualty Insurance Co." on Justia Law

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The Supreme Court answered certified questions concerning the application of Connecticut insurance law in this action to recover damages for, among other things, breach of an insurance contract, concluding that the definition of "collapse" in Beach v. Middlesex Mutual Assurance co., 532 A.2d 1297 (Conn. 1987), applied in this case. In Beach, the Supreme Court held that the term "collapse," when not defined in a homeowners insurance policy, is "sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity" of the insureds' home. At issue before the Supreme Court was whether the Beach standard also required a showing that the building was in imminent danger of falling down or caving in. The Supreme Court concluded that it does, holding that the "substantial impairment of structural integrity" standard requires a showing that the building is in imminent danger of falling down or caving in, or in other words, in imminent danger of an actual collapse. View "Vera v. Liberty Mutual Fire Insurance Co." on Justia Law

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The Supreme Court reformulated a certified question concerning the application of Connecticut insurance law in this action to recover damages for, among other things, breach of an insurance contract, concluding that the definition of "collapse" in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), applied in this case. At issue before the Supreme Court was the definition of the term "collapse" in a homeowners insurance policy, when otherwise undefined, as set forth in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), as "any substantial impairment of the structural integrity" of the insureds' home. The United States District Court for the District of Connecticut certified questions to the Supreme Court regarding whether Beach's definition of collapse applied in this case. Insureds sued Insurer, claiming that their homeowners insurance policy covered the cracking and tumbling of their concrete basement walls. The Supreme Court held (1) the Beach standard applied to Insureds' policy; (2) the "substantial impairment of structural integrity" standard requires proof that the home is in imminent danger of falling down; and (3) the term "foundation" unambiguously encompasses the basement walls of Insureds' home. View "Karas v. Liberty Insurance Corp." on Justia Law