Justia Insurance Law Opinion Summaries

In 2013, a bus driven by Defendant Asia Partman struck Respondent Andrew Neumayer while he was a pedestrian in Cayce, South Carolina. EMS transported Neumayer to Lexington Medical Center where he was diagnosed with a ruptured spleen, broken left ribs, left humerus fracture, left pneumothorax, and a punctured lung. After eight days in the hospital and medical costs of approximately $122,000, Neumayer was released. Partman worked for Defendant Primary Colors Child Care Center, and in November of 2013, Neumayer filed a lawsuit against both defendants, alleging negligence against Partman and Primary Colors. The defendants did not answer or respond in any fashion, and after a default judgment was entered, the court held a damages hearing, where it awarded Neumayer $622,500. Over eighteen months after the entry of default, Philadelphia Indemnity Insurance Co. (Philadelphia), Primary Colors' insurance carrier, received notice that its insured was involved in a lawsuit that culminated in a default judgment. While the record was unclear as to why it took eighteen months to notify Philadelphia, it ultimately received notice when Neumayer's counsel faxed documents seeking to collect $622,500. Philadelphia declined to pay that amount, instead asserting its indemnification obligation was limited to $25,000 because South Carolina jurisprudence required an insurer to pay only the minimum limits when it was substantially prejudiced by its insured's failure to provide notice of a lawsuit. Further, Philadelphia contended the failure to receive notice of the underlying lawsuit prevented an opportunity to investigate and defend. Neumayer filed this declaratory judgment action asking the court to require Philadelphia to pay the judgment in full. At issue before the South Carolina Supreme Court was whether notice clauses in automobile insurance policies were rendered meaningless by Section 38-77-142(C) of the South Carolina Code (2015) . The trial court found the clause in this policy void and accordingly required the insurance company to pay the full default judgment entered against its insured. The insurer appealed. The Supreme Court determined the circuit court erred in ruling that section 38-77-142(C) invalidated the standard notice clause contained in this insurance policy. “An insurer may continue to invoke notice clauses to deny coverage above the statutory limits, providing the insurer can prove that it was substantially prejudiced by its insured's failure to comply with the provision.” View "Neumayer v. Philadelphia Indemnity" on Justia Law

The Eighth Circuit affirmed the district court's orders requiring it to deposit $21 million in disputed insurance proceeds to maintain its federal statutory interpleader claim and dismissing Ronald Gean and the Estate of Jean Carol Gean for lack of personal jurisdiction in its declaratory judgment claims. The Geans are citizens of Michigan and were injured in an automobile accident in Illinois by a truck operated by Rex, a Missouri company.The court agreed with the district court that subject matter jurisdiction was lacking because Acuity did not deposit the disputed amount into the court's registry. The court rejected Acuity's argument that the district court had personal jurisdiction over the Geans. Rather, the court held that the district court lacked personal jurisdiction over the Geans in the remaining declaratory judgment action. View "Acuity v. Rex, LLC" on Justia Law

Matthew Dye brought an action against Esurance Property and Casualty Insurance Company and GEICO Indemnity Company, seeking personal protection insurance (PIP) benefits under the no-fault act, MCL 500.3101 et seq., for injuries he sustained in a motor vehicle accident while driving a vehicle he had recently purchased. At plaintiff’s request, plaintiff’s father had registered the vehicle in plaintiff’s name and obtained a no-fault insurance policy from Esurance. The declarations page of the policy identified only plaintiff’s father as the named insured. At the time of the accident, plaintiff was living with his wife, who owned a vehicle that was insured by GEICO. After Esurance and GEICO refused to cover plaintiff’s claim, plaintiff filed a breach-of-contract claim against both insurers along with a declaratory action, alleging that either Esurance or GEICO was obligated to pay his no-fault PIP benefits and requesting that the trial court determine the parties’ respective rights and duties. The issue this case presented for the Michigan Supreme Court’s review centered on whether an owner or registrant of a motor vehicle involved in an accident was excluded from receiving statutory no-fault insurance benefits under the no-fault act when someone other than an owner or registrant purchased no-fault insurance for that vehicle. The Court of Appeals concluded that “[a]t least one owner or registrant must have the insurance required by MCL 500.3101(1), and ‘when none of the owners maintains the requisite coverage, no owner may recover [personal injury protection (PIP)] benefits.’ ” The Supreme Court concluded an owner or registrant of a motor vehicle was not required to personally purchase no-fault insurance for his or her vehicle in order to avoid the statutory bar to PIP benefits. Rather, MCL 500.3101(1) only requires that the owner or registrant “maintain” no-fault insurance. The Court reversed in part the judgment of the Court of Appeals and remanded this case to the circuit court for further proceedings. View "Dye v. Esurance Property & Casualty Ins. Co." on Justia Law

At issue in this case was whether a first-party insurer, after obtaining a partial recovery in a subrogation action, had to reimburse its fault-free insureds for the full amount of their deductibles before any portion of the subrogation proceeds could be allocated to the insurer. Lazuri Daniels brought claims, and sought class action status, in a lawsuit against State Farm Mutual Automobile Insurance Company arguing that by failing to fully reimburse its insureds for their deductibles, State Farm violated both Washington law and the terms of its own insurance policy. The trial court dismissed the claims, and the Court of Appeals affirmed. In addressing conflicts between subrogated insurers and injured insureds, Washington law generally establishes priority for the interests of the insured through the "made whole doctrine." "Out of the recovery from the third party the insured is to be reimbursed first, for the loss not covered by insurance ,and the insurer is entitled to any remaining balance, up to a sum sufficient to reimburse the insurer fully, the insured being entitled to anything beyond that." If the insured still has uncompensated injuries, both the insurer and insured will generally be looking to recover from the same third party, and that party's own insurance and assets are not always sufficient to cover both claims. In such circumstances, there is a high potential for conflict between insureds who wish to be compensated for the full extent of the damages they have suffered, and first-party insurers who expect to be reimbursed for amounts they have advanced to the insured. Daniels argued that insureds' right to be fully compensated for their losses, including full reimbursement for deductibles, takes priority over an insurer's interest in recouping its payments through a direct subrogation action. The Washington Supreme Court concluded Daniels' complaint asserted valid claims for relief under the common law, under Washington insurance regulations, and under State Farm's own policy language. As such, dismissal was improper. The matter was remanded to the trial court for further proceedings. View "Daniels v. State Farm Mut. Auto. Ins. Co." on Justia Law

The Court of Appeal reversed the trial court's denial of plaintiff's motion for costs of proof after State Farm denied eight of his requests for admissions. The court held that the trial court incorrectly placed on plaintiff the burden to prove that none of the exceptions to an award of costs as set out in Code of Civil Procedure section 2033.420, subdivision (b) applied. Rather, State Farm should have carried the burden of proof and failed to do so. Therefore, the court remanded to the trial court to determine the reasonable costs of proof. View "Samsky v. State Farm Mutual Automobile Insurance Co." on Justia Law

Fessenden’s employment was terminated after he began receiving short-term disability benefits. He then applied for long‐term disability benefits through his former employer’s benefits plan. The plan administrator, Reliance, denied the claim. Fessenden submitted a request for review with additional evidence supporting his diagnosis of Chronic Fatigue Syndrome. When Reliance failed to issue a decision within the timeline mandated by regulations governing the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132, he filed suit. Eight days later, Reliance finally issued a decision, again denying Fessenden’s claim. The district court granted Reliance summary judgment. The Seventh Circuit vacated. If the decision had been timely, the court would have applied an arbitrary and capricious standard because the plan gave Reliance the discretion to administer it. When a plan administrator commits a procedural violation, however, it loses the benefit of deference and a de novo standard applies. The court rejected Reliance’s argument that it “substantially complied” with the deadline because it was only a little bit late. The “substantial compliance” exception does not apply to blown deadlines. An administrator may be able to “substantially comply” with other procedural requirements, but a deadline is a bright line. View "Fessenden v. Reliance Standard Life Insurance Co." on Justia Law

John Buckley started working for Labor Ready, Inc., a temporary employment service, in 2009. He was injured on assignment for a shipping company. At the time of injury he was performing a task prohibited by the contract between the temporary employment service and the shipping company. The injury resulted in loss of the worker’s hand and part of his arm. After getting workers’ compensation benefits from the temporary employment service, the worker brought a negligence action against the shipping company and one shipping company employee. The superior court decided on cross-motions for summary judgment that the exclusive liability provision of the Alaska Workers’ Compensation Act (Act) barred the action. The Alaska Supreme Court reverse, finding material issues of fact precluded disposition by summary judgment. View "Buckley v. American Fast Freight, Inc." on Justia Law

Keith Steffes, Kelly Steffes and Tasha (Rohrbach) Steffes appealed a district court order granting Nodak Mutual Insurance Company’s motion for a new trial. The Steffeses argued the district court abused its discretion in vacating the judgment and granting Nodak’s motion for a new trial. The North Dakota Supreme Court dismissed the appeal because the order granting a new trial was not then reviewable. View "Nodak Mutual Insurance Company v. Steffes, et al." on Justia Law

The United States Court of Appeals for the Fourth Circuit certified a question of South Carolina law to the South Carolina Supreme Court. The underlying case was an insurance bad faith action against an insurance company for its failure to defend its insured in a construction defect action. The insured settled the construction defect action and brought a bad faith tort action. When the insurer asserted it acted in good faith in denying coverage, the insured sought to discover the reasons why the insurer denied coverage. According to the insurer, the discovery requests included communications protected by the attorney-client relationship. The federal district court reviewed the parties' respective positions, determined the insured had established a prima facie case of bad faith, and ordered the questioned documents to be submitted to the court for an in camera inspection. The insurer then sought a writ of mandamus from the Fourth Circuit to vacate the district court's order regarding the discovery dispute. In turn, the Fourth Circuit asked the South Carolina Supreme Court whether state law supported the application of the "at issue" exception to attorney-client privilege such that a party may waive the privilege by denying liability in its answer. The South Carolina Supreme Court found that the parties, especially the insured, contended the certified question did not accurately represent the correct posture of the case. In fact, the insured conceded the narrow question presented required an answer in the negative. The Supreme Court agreed, finding “little authority for the untenable proposition that the mere denial of liability in a pleading constitutes a waiver of the attorney-client privilege.” The Court elected to analyze the issue narrowly in the limited context of a bad faith action against an insurer, and felt constrained to answer the certified question as follows: "No, denying liability and/or asserting good faith in the answer does not, standing alone, place the privileged communications 'at issue' in the case." View "Mt. Hawley Insurance Company v. Contravest Construction" on Justia Law

Two cases consolidated for review by the Delaware Supreme Court involved automobile accidents. John Henry and Charles Fritz sustained injuries in accidents while operating employer-owned vehicles during the course of their employment. In both cases, the accidents were allegedly caused by a third-party tortfeasor. Both employees received workers’ compensation from their respective employers’ insurance carriers. In each case, the vehicle was covered by an automobile liability insurance policy issued to the employer by Cincinnati Insurance Company. The superior court issued an order in Henry’s case first, finding the exclusive-remedy provision in the Delaware Workers’ Compensation Act in effect at the time of his accident precluded Henry from receiving underinsured motorist benefits under the Cincinnati policy. Following that decision, the Fritz court granted Cincinnati’s motion for summary judgment on the same ground. Henry and Fritz argued on appeal to the Delaware Supreme Court that the superior court erred in finding the Act’s exclusivity provision precluded them from receiving underinsured motorist benefits through the automobile liability policies their respective employers purchased from Cincinnati. The Supreme Court agreed both trial courts erred in finding the Act’s exclusivity provision prevented underinsured motorist benefits. The Court reversed and remanded for further proceedings. View "Henry v. Cincinnati Insurance Co." on Justia Law