Justia Insurance Law Opinion Summaries

The State of Arizona appealed the district court's order granting a preliminary injunction to prevent a state law from taking effect that would have terminated eligibility for healthcare benefits of state employees' same-sex partners. The district court found that plaintiffs demonstrated a likelihood of success on the merits because they showed that the law adversely affected a classification of employees on the basis of sexual orientation and did not further any of the state's claimed justifiable interests. The district court also found that plaintiffs had established a likelihood of irreparable harm in the event coverage for partners ceased. The court held that the district court's findings and conclusions were supported by the record and affirmed the judgment.

Plaintiffs, a class of economically vulnerable Arizonians who receive public health care benefits through the state's Medicaid agency, sued the U.S. Secretary of Health and Human Services (Secretary) and the Director of Arizona's medicaid agency (director)(collectively, defendants), alleging that the heightened mandatory co-payments violated Medicaid Act, 42 U.S.C. 1396a, cost sharing restrictions, that the waiver exceeded the Secretary's authority, and that the notices they received about the change in their health coverage was statutorily and constitutionally inadequate. The court affirmed the district court's conclusion that Medicaid cost sharing restrictions did not apply to plaintiffs and that Arizona's cost sharing did not violate the human participants statute. The court reversed the district court insofar as it determined that the Secretary's approval of Arizona's cost sharing satisfied the requirements of 42 U.S.C. 1315. The court remanded this claim with directions to vacate the Secretary's decision and remanded to the Secretary for further consideration. Finally, the court remanded plaintiffs' notice claims for further consideration in light of intervening events.

Las Vegas Metropolitan Police Department (LVMPD) was named as a defendant in an action alleging civil rights violations. LVMPD had an insurance policy with respondent Coregis Insurance to protect against liability for police officer actions when the damages exceeded a certain amount. Coregis denied LVMPD coverage for the civil rights claims because LVMPD did not notify Coregis of its potential liability until ten years after the incident that led to the lawsuit. After settling the action, LVMPD filed a declaratory-judgment action seeking a judicial determination that Coregis was required to defend and indemnify LVMPD for damages related to the civil rights claims. The district court entered summary judgment in favor of Coregis, concluding that LVMPD's notice was clearly late and that Coregis was prejudiced by the late notice. The Supreme Court reversed the summary judgment, holding (1) when an insurer denies coverage of a claim because the insured party failed to provide timely notice of the claim, the insurer must demonstrate that notice was late and that it was prejudiced by the late notice in order to assert a late-notice defense to coverage; and (2) there were genuine issues of material fact regarding the timeliness of LVMPD's notice. Remanded.

In consolidated appeals, defendants appealed the denial of their motions for judgment on the pleadings where plaintiffs brought a diversity suit to enforce California Civil Code 2527 and 2528, which required defendants to supply the results of bi-annual studies of California's pharmacies' retail drug pricing for private uninsured customers to their clients, who were third-party payors such as insurance companies and self-insured employer groups. At issue was whether the court was bound by the Erie doctrine to follow the state appellate court decisions striking down section 2527 and if not, whether section 2527 violated the First Amendment or the California Constitution's free speech provision. The court held that the Erie doctrine did not require it to follow the state appellate court decisions and that section 2527 did not unconstitutionally compel speech under either the United States or California Constitutions. Accordingly, the court affirmed the judgment.

Appellant, an African-American resident of Texas, sued appellees alleging that their credit-scoring systems employed several undisclosed factors which resulted in disparate impacts for minorities and violated the federal Fair Housing Act ("FHA"), 42 U.S.C. 3601, 3619. At issue, in a certified question, was whether Texas law permitted an insurance company to price insurance by using a credit-score factor that had a racially disparate impact that, were it not for the McCarran-Ferguson Act, 15 U.S.C. 1012(b), would violate the FHA, absent a legally sufficient nondiscriminatory reason, or would using such a credit-score factor violate Texas Insurance Code ("Code") sections 544.002(a), 559.051, 559.052, or some other provision of Texas law. The court answered the certified question by holding that Texas law did not prohibit an insurer from using race-neutral factors in credit-scoring to price insurance, even if doing so created a racially disparate impact.