Justia Insurance Law Opinion Summaries

Judon was injured while riding in a commercial passenger vehicle that was insured by Travelers. Judon sought first-party medical benefits of $7,636.40. Travelers paid $5,000, up to the policy’s first-party medical benefits limit. Judon filed a class-action complaint in state court, alleging that Pennsylvania law required that the policy offer up to $25,000 in first-party medical benefits. Judon alleged that “there are hundreds of members of the class” who were wrongfully denied payment of first-party benefits. Travelers removed to federal court, under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), 1453, arguing that the parties were minimally diverse; the proposed class consisted of at least 100 putative members; and the amount in controversy exceeded $5,000,000. The district court remanded, finding that CAFA’s numerosity and amount-in- controversy requirements were disputed and placing the burden of proof on Travelers to establish jurisdiction. The Third Circuit affirmed in part and vacated in part. Judon’s complaint unambiguously pleaded that the numerosity requirement was satisfied, so the court should have placed the burden of proof on Judon to show, to a legal certainty, that the numerosity requirement was not satisfied. The court correctly applied the preponderance of the evidence standard to the amount-in-controversy requirement. View "Judon v. Travelers Prop. Cas. Co. of Am." on Justia Law

Hoey, who owns a farmers’ market that offers hay rides, pony rides, and pumpkin picking, hired Armbruster to run the hay wagon for eight weekends. Armbruster is now a paraplegic because an accident with the wagon crushed her spine. She sued for negligence in Michigan state court. Armbruster and Hoey also sought a declaratory judgment, again in state court, that Armbruster was covered by Hoey’s General Commercial Liability insurance policy. The insurer, Western, sought a federal declaratory judgment that Armbruster was not covered by the insurance policy. The cases were consolidated in federal court. Counsel, provided by Western to Hoey, filed a workers’ compensation claim on the theory that Armbruster was an “employee” eligible for workers’ compensation. The state tort claim has been stayed until the workers’ compensation claim is resolved. The district court accepted jurisdiction and construed the policy to exclude Armbruster’s injury from coverage. The Sixth Circuit affirmed, agreeing that it would be helpful for the parties to know whether Western was liable for Hoey’s legal fees, that Western was not playing procedural games, and that the federal forum could resolve the action without interfering in Armbruster’s tort suit or taking on difficult questions of state law. View "W. World Ins. Co. v. Armbruster" on Justia Law

“In Texas, the general rule…is that an injured party cannot sue the tortfeasor’s insurer directly until the tortfeasor’s liability has been finally determined by agreement or judgment.” Plaintiff sued San Diego Tortilla (SDT) for personal injuries after he lost his hand operating a tortilla machine. Plaintiff then added a declaratory judgment claim against SDT’s liability insurer, Essex Insurance Company, seeking a declaration that Essex must indemnify SDT for its liability to Plaintiff. Essex filed motions to dismiss Plaintiff’s claims, arguing that the “no direct action” rule barred Plaintiff from suing Essex until SDT’s liability to Plaintiff was determined. The trial court denied the motions, and the court of appeals denied Essex’s petition for writ of mandamus. The Supreme Court conditionally granted mandamus and directed the trial court to grant Essex’s motions to dismiss, holding that no exception to the “no direct action” rule applied in this case. View "In re Essex Ins. Co." on Justia Law

In a consolidated appeal, Aviva Life & Annuity challenged identical orders of the U.S. District Court for the Western District of Oklahoma sitting in its capacity as a bankruptcy appellate court. The district court entered the orders in two directly related cases brought by Aviva in the nature of interpleader pursuant to the Federal Interpleader Act, and Federal Rule of Civil Procedure 22. Aviva argued the court erred by limiting the scope of the interpleader relief granted. This case stemmed from the Chapter 11 bankruptcy proceedings of the Millennium Multiple Employer Welfare Benefit Plan. Prior to seeking the protection of the bankruptcy court, the Millennium Plan was an employee welfare benefit plan providing medical, disability, long term care, severance, and death benefits. Participants made contributions to the Millennium Plan, which then purchased life insurance policies (Policies) on the lives of the participants from Aviva and other insurance companies. Finding no reversible error in the district court's decision, the Tenth Circuit Court of Appeals affirmed. View "Aviva Life & Annuity v. Millennium Multiple Employer" on Justia Law

Mary Erving filed suit against National Lloyds Insurance Company, alleging that National Lloyds had underpaid her insurance claims. During discovery, Erving requested production of all claims from the previous six years involving three individual adjusters along with claim files from the past year for properties involving two adjusting firms that handled her claims. National Lloyds objected to the requests as overbroad and unduly burdensome, after which Erving moved to compel production. The trial court ordered production of the majority of the files. National Lloyds unsuccessfully filed a petition for writ of mandamus with the court of appeals and, thereafter, sought mandamus relief in the Supreme Court. The Court conditionally granted mandamus relief and directed the trial court to vacate its discovery order, holding that because the information Erving sought was not reasonably calculated to lead to the discovery of admissible evidence, the trial court’s order compelling discovery of such information was overbroad. View "In re Nat’l Lloyds Ins. Co." on Justia Law

Lodholtz, injured in 2011 while working at a Pulliam plant in Indiana, filed suit against Pulliam in state court. Pulliam asked Granite State, its insurer, to defend and indemnify. Granite State declined, believing that Pulliam was not liable because Lodholtz could claim workers’ compensation. Lodholtz argued that he was employed by another firm although he was injured on Pulliam’s premises and obtained default judgment for $4 million. Pulliam assigned him its rights against Granite State, which had unsuccessfully moved to intervene in Lodholtz’s suit, then sought a federal declaratory judgment that it had no duty to indemnify. Meanwhile, the Indiana court of appeals affirmed, reasoning that Granite State had sought leave to intervene under a reservation of rights. Indiana courts forbid the insurer to control the defense of the insured without acknowledging coverage. The Indiana Supreme Court declined review. The federal district court subsequently ruled that because Lodholtz’s employer had “leased” Lodholtz to Pulliam, he had been Pulliam’s employee, and that the Indiana judgment should be “disregarded.” The Seventh Circuit granted a petition under 28 U.S.C. 1292(b) and dismissed Granite State’s suit. The U.S. Supreme Court is the only federal court with appellate authority over state courts, but would have had no authority in this case because it involved no issue of federal law.View "Lodholtz v. Granite State Ins. Co." on Justia Law

In 1987, two men were wrongfully convicted of arson and the brutal murders of two residents of Paris, Illinois and were sentenced to death. After years of pursuing post-conviction remedies, they were released in 2004 and 2008. They filed 42 U.S.C. 1983 and malicious prosecution claims against the city, police officers, and prosecutors. Defendants sought defense and indemnification from their insurers, which sought a declaratory judgment to clarify the duty to defend. In 2010, the district court granted two insurers summary judgment, but denied a motion by an excess insurer, which had issued policies that were in effect from 1985 to 1996--encompassing the wrongful investigations and prosecutions but not the exonerations. The district court held that malicious prosecution claims “occur” for insurance purposes when prosecution is instituted. The Seventh Circuit subsequently held that, under Illinois law, a claim for malicious prosecution “occurs” for insurance purposes on the date that the underlying conviction either is invalidated or terminated. In 2012, 33 months after the judgment, Defendants sought reconsideration. The district court denied the motion. The Seventh Circuit affirmed. Defendants were too late to use Rule 59(e), and “Rule 60(b) cannot be used to reopen the judgment in a civil case just because later authority shows that the judgment may have been incorrect.” View "Selective Ins. Co. v. City of Paris" on Justia Law

Acumen, the underwriter, filed suit against General Security, the reinsurer, for breach of a reinsurance underwriting agreement. The district court granted partial summary judgment for General Security, certified the judgment under Rule 54(b), and closed the case. The court dismissed Acumen's appeal, holding that the district court's entry of the Rule 54(b) order and judgment was erroneous because the district court did not address separate claims for relief. In the absence of a final judgment on a claim or an otherwise reviewable order, the court lacked jurisdiction over the appeal.View "Acumen Re Mgmt. Corp. v. General Security Nat. Ins. Co." on Justia Law

The Patient Protection and Affordable Care Act requires almost everyone to have health insurance and is enforced by a tax that most businesses must pay if they fail to provide insurance as a benefit, or that anyone not covered by an employer’s plan must pay in lieu of purchasing insurance, 26 U.S.C.4980H, 5000A. The Internal Revenue Service has stated that it will collect the tax in 2014 from uninsured persons, but not from certain businesses. Plaintiffs, a physician and an association of physicians, claimed violation of the separation of powers and the Tenth Amendment. Because they did not complain about their own taxes, the district court dismissed for lack of standing. The Seventh Circuit affirmed. Rejecting an argument that the challenged policies change demand for plaintiffs’ services, the court noted that plaintiffs “appear to believe” that insurance is free to workers--that wages do not adjust to reflect pensions, insurance, and other benefits. By the same logic, they could litigate any tax policy. In a market economy everything is connected to everything else through the price system. To allow a long, intermediated chain of effects to establish standing is to abolish the standing requirement. The Constitution’s structural features are not open to litigation by persons who do not suffer particularized injuries. Plaintiffs, who do not accept insured patients, want to reduce, not increase the number of persons who carry health insurance. Someone else would be more appropriate to argue that the IRS has not done what it should to accomplish the statute’s goal of universal coverage.View "Ass'n of Am. Physicians & Surgeons, Inc. v. Koskinen" on Justia Law

Illinois insurance regulators permitted WellPoint to acquire RightCHOICE health insurance. WellPoint caused RightCHOICE Insurance to withdraw from the Illinois market. WellPoint offered the policyholders costlier UniCare policies as substitutes. Those who chose not to pay the higher premiums had to shop for policies from different insurers, which generally declined to cover pre-existing conditions. Former RightCHOICE policyholders filed a purported class action. The district court declined to certify a class and entered judgment against plaintiffs on the merits. No one appealed. Absent certification as a class action, the judgment bound only the named plaintiffs. Their law firm found other former policyholders and sued in state court. Defendants removed the suit under 28 U.S.C. 1453 (Class Action Fairness Act); the proposed class had at least 100 members, the amount in controversy exceeded $5 million, and at least one class member had citizenship different from at least one defendant. Plaintiffs sought remand under section 1332(d)(4), which says that the court shall “decline to exercise” jurisdiction if at least two-thirds of the class’s members are citizens of the state in which the suit began and at least one defendant from which “significant relief” is sought is a citizen of the same state. The district court declined remand, declined to certify a class, and again rejected the case on the merits. The Seventh Circuit affirmed, stating that “Counsel should thank their lucky stars that the district court did not sanction them under 28 U.S.C. 1927 for filing a second suit rather than pursuing the first through appeal."View "Phillips v. Wellpoint Inc." on Justia Law