Justia Insurance Law Opinion Summaries

PCS Nitrogen sought insurance coverage for liability arising from contamination of a fertilizer manufacturing site in Charleston, South Carolina, claiming its right to coverage stemmed from an assignment of insurance benefits executed by Columbia Nitrogen Corporation in 1986. Respondents, the insurance carriers who issued the policies at issue, claimed they owed no coverage because Columbia Nitrogen Corporation executed the assignment without their consent. The circuit court granted summary judgment to Respondents, and the court of appeals affirmed. The South Carolina Supreme Court granted PCS's petition for a writ of certiorari, finding Columbia Nitrogen Corporation executed a valid post-loss assignment of insurance rights in 1986. "PCS cannot be denied coverage on the basis that Respondents did not consent to the assignment." The case was remanded to the trial court for further proceedings. View "PCS Nitrogen, Inc. v Continental Casualty Company, et al." on Justia Law

Relator Gilbert Ellinger brought a qui tam suit on behalf of the People of the State of California against Zurich American Insurance Company (Zurich), ESIS, Inc. (ESIS), and Stephanie Ann Magill, under Insurance Code section 1871.7, a provision of the Insurance Frauds Prevention Act (IFPA). In January 2016, Ellinger injured his back while working, and he immediately informed his supervisor. The following month, Ellinger reported to his employer’s human resources manager that he had sustained a work-related injury and had told his supervisor about it. The human resources manager created a “time line memorandum” summarizing the conversations she had with Ellinger about the injury. She placed the memorandum in Ellinger’s personnel file. Ellinger filed a workers’ compensation claim. Magill worked as a senior claims examiner for ESIS and was the adjuster assigned to investigate Ellinger’s claim. ESIS denied Ellinger’s claim on an unspecified date. Magill later testified that she denied the claim because of a written statement from Ellinger’s supervisor in which the supervisor claimed that Ellinger had not reported the injury to him. When the human resources manager was deposed in November 2016, she produced the time line memorandum, which Ellinger’s counsel in the workers’ compensation action did not know about until then. Nearly eight months after that disclosure, in July 2017, ESIS reversed its denial of the claim and stipulated that Ellinger was injured while working, as he had alleged. Contrary to Magill’s testimony, her email messages showed that the human resources manager had emailed Magill the time line memorandum in March and April 2016, and Magill thanked the manager for sending it. Ellinger alleged that Magill’s concealment of or failure to disclose the time line memorandum violated Penal Code section 550 (b)(1) to (3). On the basis of those alleged violations, Ellinger alleged that defendants were liable under section 1871.7. Against each defendant, Ellington sought a civil penalty and an assessment of no greater than three times the amount of his workers’ compensation claim. The trial court sustained defendants’ demurrers without leave to amend, concluding defendants could not be held liable under section 1871.7 for any failures of Magill in the claims handling or review process. Finding no reversible error in sustaining the demurrers, the Court of Appeal affirmed. View "California ex rel. Ellinger v. Magill" on Justia Law

This appeal involved a challenge to how Geico General Insurance Company (“GEICO”) processed insurance claims under 21 Del. C. 2118. Section 2118 provided that certain motor vehicle owners had to obtain personal injury protection (“PIP”) insurance. Plaintiffs, all of whose claims for medical expense reimbursement under a PIP policy were denied in whole or in part, were either GEICO PIP policyholders who were injured in automobile accidents or their treatment providers. Plaintiffs alleged GEICO used two automated processing rules that arbitrarily denied or reduced payments without consideration of the reasonableness or necessity of submitted claims and without any human involvement. Plaintiffs argued GEICO’s use of the automated rules to deny or reduce payments: (1) breached the applicable insurance contract; (2) amounted to bad faith breach of contract; and (3) violated Section 2118. Having reviewed the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court affirmed the Superior Court’s ruling that the judiciary had the authority to issue a declaratory judgment that GEICO’s use of the automated rules violated Section 2118. The Supreme Court also affirmed the Superior Court’s judgment as to the breach of contract and bad faith breach of contract claims. The Court concluded, however, that the issuance of the declaratory judgment was improper. View "GEICO General Insurance Company v. Green" on Justia Law

Cardinal, a distributor of wholesale pharmaceutical products, purchased commercial umbrella insurance policies from National Union. Various plaintiffs have filed more than 3,000 lawsuits against Cardinal and other manufacturers, distributors, and dispensers of prescription opioids. The majority of federal cases are consolidated in coordinated, multi-district proceedings in the Northern District of Ohio. Plaintiffs “assert a wide variety of federal and state causes of action, many seeking to recover for increased payments, services, treatment, and/or care allegedly necessitated by the opiate-related addictions, overdoses, and deaths of those they serve.”National Union has reserved its right to deny coverage for opioid litigation claims. Cardinal sought a declaratory judgment in the Franklin County, Ohio Court of Common Pleas. National Union removed the suit to the Southern District of Ohio. The district court granted Cardinal’s motion and remanded the case to state court. The Sixth Circuit affirmed. The district court found no evidence of procedural fencing and properly declined to weigh that factor in favor of federal jurisdiction. The court noted a preference to allow state courts to answer questions of insurance contract interpretation and the actively developing nature of insurance coverage claims related to opioid litigation in Ohio state courts. The district court adhered to the principles of federalism and comity and engaged in a reasoned analysis of each factor in declining jurisdiction. View "Cardinal Health, Inc. v. National Union Fire Insurance Co. of Pittsburgh" on Justia Law

The Louisiana Supreme Court granted certiorari in this case to decide whether the district court had jurisdiction over a claim for penalties against an insurer arising from its failure to provide a defense in workers’ compensation proceedings, and, if so, whether the insurer violated its duties of good faith and fair dealing, thereby making it liable for damages and penalties. After review of the trial court record, the Supreme Court concluded the district court had jurisdiction over the claim and correctly found that the insurer breached its duties to its insured. However, the Court found the district court’s damage award rose to the level of an abuse of discretion. The judgment of the court of appeal was amended to award damages in favor of Cox, Cox, Filo, Camel & Wilson, LLC and against Louisiana Workers’ Compensation Corporation in the total amount of $61,655.00, representing $20,550.00 in special damages and $41,100.00 in penalties. View "Cox, Cox, Filo, Camel & Wilson, LLC v. Louisiana Workers' Compensation Corporation" on Justia Law

North Dakota Insurance Reserve Fund (“NDIRF”) appealed a judgment and orders granting Lance Hagen’s amended petition for a writ of mandamus requiring NDIRF to disclose documents under the open records law. NDIRF argued: (1) the amended petition was untimely; (2) NDIRF was not a public entity subject to open records requests; and (3) the documents sought were protected from disclosure under North Dakota court rules. Hagen cross appealed, arguing the district court erred by not requiring NDIRF to disclose all of the documents he sought and by denying him costs and attorney’s fees. After review, the North Dakota Supreme Court affirmed in part, concluding the amended petition was timely, NDIRF was a public entity for purposes of the open records law, and the records sought were not exempt from disclosure. The Court reversed the part of the judgment and orders excluding records from disclosure, and remanded to the district court to review in camera those previously excluded records and those records identified in Appellant’s Brief to determine whether they were exempt from disclosure under the potential liability exception in N.D.C.C. 44-04-19.1(8). The Court affirmed the denial of costs and attorney’s fees. View "Hagen v. North Dakota Insurance Reserve Fund" on Justia Law

In March 2012, First Solar, Inc. stockholders filed a class action lawsuit against the company alleging that it violated federal securities laws by making false or misleading public disclosures ("Smilovits Action"). National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) provided insurance coverage for the Smilovits Action under a 2011–12 $10 million “claims made” directors and officers insurance policy. While the Smilovits Action was pending, First Solar stockholders who opted out of the Smilovits Action filed what has been referred to as the Maverick Action. The Maverick Action alleged violations of the same federal securities laws as the Smilovits Action, as well as violations of Arizona statutes and claims for fraud and negligent misrepresentation. In this appeal the issue presented for the Delaware Supreme Court's review was whether the Smilovits securities class action, and a later Maverick follow-on action were related actions, such that the follow-on action was excluded from insurance coverage under later-issued policies. The Superior Court found that the follow-on action was “fundamentally identical” to the first-filed action and therefore excluded from coverage under the later-issued policies. The Supreme Court found that even though the court applied an incorrect standard to assess the relatedness of the two actions, judgment was affirmed nonetheless because under either the erroneous “fundamentally identical” standard or the correct relatedness standard defined by the policies, the later-issued insurance policies did not cover the follow-on action. View "First Solar, Inc. v. National Union First Insurance Company of Pittsburgh, PA" on Justia Law

Robinson submitted an “uninsured driver” claim to State Farm for injuries sustained in an accident involving her car and an unidentified vehicle. Coverage was available only if the two cars came into contact. (Ins. Code 11580.2(b)(1).) In arbitration, State Farm propounded requests for admissions that there was either no contact between the two cars or that no damage resulted from any contact. Robinson failed to respond by the due date. After finding that Robinson had not “substantially complied” with Code of Civil Procedure sections 2033.220 or 2015.5, the court deemed the requests admitted and awarded sanctions. Robinson unsuccessfully moved to withdraw or amend the deemed admissions, citing inadvertence. The arbitrator entered an award in favor of State Farm, relying on the established admissions.The trial court confirmed the award. The court of appeal affirmed. In typical arbitration proceedings, discovery disputes are resolved by the arbitrator but in uninsured-motorist arbitration proceedings, discovery disputes are resolved by a trial court. Trial court discovery orders in these proceedings are not reviewable on appeal from a judgment confirming the arbitration award. A party’s recourse to challenge an allegedly improper discovery ruling in an uninsured-motorist arbitration proceeding is through a timely petition for a writ of mandamus. View "State Farm Mutual Automobile Insurance Co. v. Robinson" on Justia Law

The federal district court for the District of Colorado certified a question of law to the Colorado Supreme Court. In July 2020, Alexis Skillett was involved in a car accident. At the time of the accident, Allstate Fire and Casualty Insurance Company (“Allstate”) insured Skillett under a policy that included underinsured motorist coverage. Skillett settled with the at-fault driver and his insurer and also filed a claim with Allstate for underinsured motorist benefits. Allstate assigned one of its employees, Collin Draine, to handle Skillett’s claim. Draine concluded Skillett was not entitled to underinsured motorist benefits. Skillett filed suit in Denver District Court, naming both Allstate and Draine as defendants. Her claims against Allstate included breach of contract, statutory bad faith, and common law bad faith. As to Draine, she alleged that he had personally violated section 10-3-1116, which creates a cause of action for insureds whose insurance benefits have been unreasonably delayed or denied. The certified question asked the Supreme Court whether an employee of an insurance company who adjusts an insured’s claim in the course of employment could, for that reason, be liable personally for statutory bad faith under Colorado Revised Statutes Sections 10-3-1115 and -1116. Given the plain statutory language, the Supreme Court answered that question in the negative: "An action for unreasonably delayed or denied insurance benefits under Colorado law may be brought against an insurer, not against an individual adjuster acting solely as an employee of the insurer." View "Skillet v. Allstate" on Justia Law

In an interlocutory appeal, the issue this case presented for the Vermont Supreme Court's review was whether Vermont or Georgia law applied to a coverage dispute between claimant Bestwall LLC and insurer Ambassador Insurance Company. Bestwall contended that the trial court erred in concluding that Vermont law applied following the special master’s prediction that Georgia courts would adopt the same loss-allocation method as Vermont. But because Georgia law was unsettled on this issue, the Vermont Supreme Court concluded there was no conflict with Vermont law and accordingly, Vermont law applied. The Court therefore affirmed the trial court’s grant of partial summary judgment to Ambassador. View "In re Ambassador Insurance Company (Bestwall LLC, Appellant)" on Justia Law