Justia Insurance Law Opinion Summaries

Articles Posted in Business Law
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MSPA Claims 1 LLC—the assignee of a now-defunct Medicare Advantage Organization—sued Tower Hill Prime Insurance Company to recover a reimbursable payment. The district court granted Tower Hill’s motion for summary judgment because it determined that MSPA Claims 1’s suit was untimely.The Eleventh Circuit affirmed. The court explained that because it is at least “plausible” that the term “accrues” in Section 1658(a) incorporates an occurrence rule—in fact, and setting presumptions aside, the court wrote that it thinks that’s the best interpretation—that is how the court interprets it. Therefore, MSPA Claims 1’s cause of action accrued in 2012 when MSPA Claims 1’s assignor, Florida Healthcare, paid D.L.’s medical bills and became entitled to reimbursement through the Medicare Secondary Payer Act. Because that was more than four years before MSPA Claims 1 filed suit in 2018, its suit is not timely under 28 U.S.C. Section 1658(a). View "MSPA Claims 1, LLC. v. Tower Hill Prime Insurance Co." on Justia Law

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The issue this appeal presented for the New Jersey Supreme Court’s review centered on an exclusionary clause in a commercial general liability insurance policy issued by Admiral Insurance Company (Admiral) to Richfield Window Coverings, LLC (Richfield). Richfield sold window coverage products, including blinds, to national retailers like Home Depot and provided retailers with machines to cut the blinds to meet the specifications of the retailers’ customers. Colleen Lorito, an employee of a Home Depot located in Nassau County, was injured while operating the blind cutting machine. She and her husband filed a civil action against Richfield, asserting claims for product liability, breach of warranty, and loss of spousal services. Admiral denied any obligation to defend or indemnify, asserting the claims were not covered under the policy based on the Designated New York Counties Exclusion of the insurance policy. Richfield filed a declaratory judgment action seeking to compel Admiral to defend it in the Lorito case and, if necessary, indemnify it against any monetary damages awarded to the plaintiffs. The Law Division granted summary judgment in favor of Admiral. The Appellate Division reversed, finding that “Richfield’s limited activities and operations have no causal relationship to the causes of action or allegations.” The Supreme Court found that the policy’s broad and unambiguous language made clear that a causal relationship was not required in order for the exclusionary clause to apply; rather, any claim “in any way connected with” the insured’s operations or activities in a county identified in the exclusionary clause was not covered under the policy. Richfield’s operations in an excluded county were alleged to be connected with the injuries for which recovery was sought, so the exclusion applied. Admiral had no duty to defend a claim that it is not contractually obligated to indemnify. View "Norman International, Inc. v. Admiral Insurance Company " on Justia Law

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The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Sullivan Management, LLC operated restaurants in South Carolina and filed suit to recover for business interruption losses during COVID-19 under a commercial property insurance policy issued by Fireman's Fund and Allianz Global Risks US Insurance Company (Fireman's). Specifically, the questions was whether the presence of COVID-19 in or near Sullivan's properties, and/or related governmental orders, which allegedly hinder or destroy the fitness, habitability or functionality of property, constituted "direct physical loss or damage" or did "direct physical loss or damage" require some permanent dispossession of the property or physical alteration to the property. The Supreme Court held that the presence of COVID-19 and the corresponding government orders prohibiting indoor dining did not fall within the policy’s trigger language of “direct physical loss or damage.” View "Sullivan Mgmt v. Fireman's Fund" on Justia Law

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AFM ran 52 mattress stores in Indiana and Illinois. Motorists insured AFM with a policy covering loss of Business Income, Extra Expense, and loss due to actions of a Civil Authority. An exclusion applicable to all coverage stated: We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease. During the COVID-19 pandemic, the governors of Illinois and Indiana ordered the closure of businesses. AFM was forced to cease business activities at all of its stores. AFM submitted a claim for coverage. Motorists denied it.AFM sought a declaratory judgment in Illinois state court. The judge dismissed the case with prejudice, based on the Virus Exclusion, rejecting a claim of “regulatory estoppel.” AFM claimed that Motorists misrepresented the Virus Exclusion to the Illinois Department of Insurance so that the regulators would approve it. The Seventh Circuit affirmed. Illinois does not recognize regulatory estoppel. The Virus Exclusion unambiguously precludes “civil authority” coverage. View "AFM Mattress Company, LLC v. Motorists Commercial Mutual Insurance Co." on Justia Law

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Plaintiffs, a group of restaurants, filed claims through their respective insurance policies seeking coverage for losses and expenses related to the COVID-19 pandemic. Insurers denied Plaintiffs' claims and, upon Plaintiff's filing suit, the district court granted the insurance companies' motion for summary judgment.On appeal to the Eighth Circuit, the court held that under either Kansas or Missouri law, Plaintiffs' claims fail. Under both states' laws, there is a "physical loss or damage" which requires some form of "physical alteration" to the insured's property. Here, Plaintiffs did not prove that the presence of COVID-19 resulted in any physical alteration to their property. The court also rejected Plaintiffs' argument that their claims were covered under the "Limited Extension for Food-Borne Illness," finding that this claim also required a showing that there was a "direct physical loss of or damage to property," which Plaintiffs did not allege. View "Planet Sub Holdings, Inc. v. State Auto Property & Casualty" on Justia Law

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Dukes Clothing, LLC (“Dukes”) operated two clothing stores. As a result of the state orders and a customer’s exposure to COVID-19, Dukes was forced to close its doors. These closures resulted in lost business income for Dukes. Dukes’s insurer, The Cincinnati Insurance Company (“Cincinnati”), had issued an all-risk commercial insurance policy to Dukes. Dukes submitted a claim under its policy to recover its loss of business income due to its store closures caused by COVID-19. Cincinnati denied the claim on the basis that Dukes’s income loss was not caused by a direct physical loss or damage to the insured’s property.   The Eleventh Circuit affirmed the district court’s dismissal of Plaintiff’s claims holding that Plaintiff’s income loss was not caused by a direct physical loss or damage to the insured’s property. The court explained that when examining insurance policies, Alabama courts consider the language of the policy as a whole, not in isolation. There are no Alabama appellate court decisions interpreting the relevant terms here—physical loss or damage—or interpreting these types of all-risk policies in the COVID-19 context so the court looked to its’ decisions interpreting nearly identical terms under Florida and Georgia law. Ultimately, the court found that since COVID-19 does not cause a “tangible alteration of the property” such that the property could not be used in the future or needed repairs to be used, lost business income resulting from COVID-19 could not constitute a “physical loss of or damage to” the property necessary for insurance coverage. View "Dukes Clothing, LLC v. The Cincinnati Insurance Company" on Justia Law

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The Court of Appeals held that when an employer pays premiums to a mutual insurance company to obtain a policy for its employee and the insurance company demutualizes, the employee is entitled to the proceeds from demutualization.Medical Liability Mutual Insurance Company (MLMIC) issued professional liability insurance policies to eight medical professionals who were litigants in the cases before the Court of Appeals on appeal. The premiums for the policies were paid by the professionals' employers. After MLMIC demutualized and was acquired by National Indemnity Company, MLMIC sought to distribute $2.502 billion in cash consideration to eligible policyholders pursuant to its plan of conversion. At issue was the employers' claim of legal entitlement to receive the demutualization proceeds. The Supreme Court held that, absent contrary terms in the contract of employment, insurance policy, or separate agreement, the employee, who is the policyholder, is entitled to the proceeds. View "Columbia Memorial Hospital v. Hinds" on Justia Law

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In a consolidated appeal each of the insured businesses, SA Palm Beach, LLC, Emerald Coast Restaurants, Inc., Rococo Steak, LLC, and R.T.G. Furniture, Corporation, were denied after seeking coverage under an all-risk insurance policy that provides compensation for losses and expenses incurred in connection with “direct physical loss of or damage to” the covered property or “direct physical loss or damage to” the covered property. The Eleventh Circuit addressed the question of whether under Florida law, all-risk commercial insurance policies provide coverage for “direct physical loss of or damage to” property or “direct physical loss or damage to” property insure against losses and expenses incurred by businesses as a result of COVID-19. The court affirmed in part and vacated in part, the district court’s dismissal of the complaints. The court held that under Florida law there is no coverage because COVID-19 did not cause a tangible alteration of the insured property. The court reasoned that under Florida law, an insurance policy should be read “as a whole, endeavoring to give every provision its full meaning and operative effect.” Further, Florida Supreme Court has explained, that an “all-risk policy” does not extend coverage to “every conceivable loss.” Thus, the court found that it believes that the Florida Supreme Court would hold that, under the allegations in the complaints before the court, there is no coverage. The court vacated in part the dismissal of Emerald Coast’s complaint finding that the district court did not address the Plaintiff’s Spoilage provision claim. View "SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London, et al." on Justia Law

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In March 2020, to prevent the spread of Covid-19, Illinois Governor Pritzker ordered all persons living in the state to stay at home except to perform specified “essential activities” and ordered “non-essential” businesses to cease all but minimum basic operations. Childcare providers were permitted to continue operating only with an emergency license to care for the children of essential workers. Michigan’s Governor Whitmer issued a similar order. Both states lifted those restrictions by June 2020. West Bend denied claims by childcare centers under their all-risk commercial property insurance policies.The policies cover the actual loss of income and expense due to the suspension of an insured’s operations “caused by direct physical loss of or damage to property”. The loss or damage must be caused by “[d]irect physical loss.” Lost income and extra expenses are covered when a civil authority prohibits access to insured premises because of damage at nearby property. The policies cover income lost and expenses incurred when an insured’s operations are temporarily suspended by government order "due to an outbreak of a ‘communicable disease’ … at the insured premises.”The district court concluded that the Centers had not plausibly alleged that COVID-19 caused physical loss of or damage to their property—or to nearby property— or that government shutdown orders were due to an outbreak at their premises. The Seventh Circuit affirmed, noting that other circuits have reached the same conclusion. View "Paradigm Care & Enrichment Center, L.L.C. v. West Bend Mutual Insurance Co." on Justia Law

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Plaintiff, a Hollywood restaurant, maintained a business interruption insurance policy through Defendant.  In response to COVID-19, the Governor, Mayor of Los Angeles, and several public health agencies ordered Plaintiff to close its restaurant, resulting in the loss of all its business. Plaintiff filed a claim with Defendant insurance company, which was denied based on the grounds that the policy only covered “direct physical loss of or damage to” the property, and expressly excluded coverage for losses resulting from a government order and losses caused by or resulting from a virus. Plaintiff appealed after Defendant's demurrer was sustained without leave to amend.   The California Court of Appeal affirmed the dismissal and held that Plaintiffs cannot establish a breach of contract.  At issue is whether the clause’s requirement can be construed to cover the pandemic-related closure. The court held that under California law a business interruption policy that covers physical loss and damages does not provide coverage for losses incurred by reason of the COVID-19 pandemic. Moreover, the court explained that the fact that loss and damage requirements are sometimes found in exclusionary provisions does not change the plain meaning of the terms. The court noted that even if Plaintiff could bring itself within the coverage clause, the virus exclusion would bar coverage. View "Musso & Frank Grill v. Mitsui Sumitomo Ins. USA" on Justia Law