Justia Insurance Law Opinion Summaries

The company and its affiliates filed for Chapter 11 bankruptcy and sought to resolve asbestos-related liability through the creation of a personal-injury trust under 11 U.S.C. 524(g). As part of its reorganization plan, it sought to transfer rights under insurance liability policies to the trust. The Insurers had provided liability policies to the debtors prior to bankruptcy and objected that the transfer violated the policies' anti-assignment provisions. The bankruptcy and district courts held that 11 U.S.C. 1123(a)(5)(B) preempts those provisions. The Third Circuit affirmed. Section 524 trusts are the only national statutory scheme available to resolve asbestos litigation through a quasi-administrative process. The plain language of 11 U.S.C. 1123(a) evinces clear intent for a preemptive scope that includes transfer of property to a 524 trust; that preemption reaches private contracts enforced by state common law.

The attorney represented more than 400 plaintiffs in a class action related to the diet drug Fen-Phen. Lawyers’ fees were to be limited to 30 percent of the clients' gross recovery. The case settled for almost $200 million. Plaintiffs together received $74 million, 37 percent of the settlement; $20 million was used to establish Kentucky Fund for Healthy Living. The attorney served on the Fund’s board, for which he received $5,350 monthly. The attorney knew that the Kentucky Bar Association was investigating fee division in the case and possible unauthorized practice of law by his paralegal. The attorney subsequently applied to renew his malpractice insurance and answered "no" to questions about possible pending claims and investigations. The policy excluded coverage for dishonest acts and omissions. Members of the class subsequently filed malpractice claims and were awarded $42 million. The insurer sought a declaration that it was entitled to rescind the policy. The district court granted the insurer summary judgment and awarded $233,674.49 for its outlay on defense costs. Class members intervened to protect their ability to recover. The Sixth Circuit affirmed. Disbarment constituted a sufficient "regulatory ruling" under the dishonesty exclusion clause and there were material misrepresentations on the application.

Plaintiff, a class representative, appealed the district court's dismissal of her complaint for failure to state a claim and its order denying her motion for reconsideration. Plaintiff argued that examinations under oath (EUOs) were impermissible conditions precedent to personal injury protection (PIP) coverage under Florida law and the Florida No-Fault automobile insurance statute based on the Florida Supreme Court's decision in Custer Med. Ctr. v. United Auto. Ins. Co. As a result of varying interpretations of Custer in the lower Florida state courts, the court concluded that Florida law was unclear in the context of statutorily mandated insurance and the Florida No-Fault Statute and certified this question to the Florida Supreme Court.

Main & Associates, Inc., d/b/a Southern Springs Healthcare Facility, filed an action in the Bullock Circuit Court, on behalf of itself and a putative class of Alabama nursing homes, against Blue Cross and Blue Shield of Alabama (BCBS), asserting claims of breach of contract, intentional interference with business relations, negligence and/or wantonness, and unjust enrichment and seeking injunctive relief. BCBS removed the case to the the federal court, arguing among other things, that Southern Springs' claims arose under the Medicare Act and that the Medicare Act, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the MMA) completely preempted Southern Springs' state-law claims. Southern Springs moved the federal court to remand the case to the circuit court, arguing that the federal court did not have jurisdiction over its claims. The federal court granted the motion and remanded the case to the Bullock Circuit Court. After remand, BCBS moved the circuit court for a judgment on the pleadings, arguing that Southern Springs had not exhausted its administrative remedies and that the circuit court did not have subject-matter jurisdiction over the case. The circuit court denied BCBS's motion, and BCBS petitioned the Supreme Court for a writ of mandamus to direct the circuit court to dismiss Southern Springs' claims. Upon review, the Court concluded that Southern Springs' claims were inextricably intertwined with claims for coverage and benefits under the Medicare Act and that they were subject to the Act's mandatory administrative procedures and limited judicial review. Southern Springs did not exhaust its administrative remedies, and the circuit court did not have jurisdiction over its claims. Therefore, the Court granted BCBS's petition and issue a writ of mandamus directing the circuit court to dismiss the claims against BCBS.

Plaintiff filed a class-action lawsuit against the insurance company, claiming breach of contract because the company began interpreting the "actual charges" provision of his cancer-insurance policy to mean the charges that the medical provider accepts as full payment from the primary insurer and the insured. Plaintiff claims that the policy entitles him to be paid the higher "list prices" that appear on his hospital bills before the primary insurer negotiates a lower rate. The company made payments to the insured, not directly to hospitals. The district court certified the class and issued a preliminary injunction, requiring the company to pay plaintiff according to his interpretation. Meanwhile, an Arkansas state court certified a nearly identical class, and the Arkansas Supreme Court affirmed a settlement in that action. The Sixth Circuit vacated class certification, based on the intervening Arkansas case. The court dismissed appeal of the injunction for lack of jurisdiction because was not a decision on the merits.

Insureds, Minnesota residents, filed class action complaints against their automobile insurers alleging violations of a Minnesota statute, Minn. Stat. 65B.285, requiring insurers to provide a discount for cars which have antitheft devices and breach of contract claims based on the failure to apply the statutory discount. The court affirmed the district court's dismissal of the insureds' amended complaints, rejecting their attempts here, particularly in the absence of any indication that Minnesota's administrative remedies were inadequate, to circumvent Minnesota's administrative remedies in order to create a private right of action.

Plaintiffs-Appellants Randolph Farber, Scott Becker, and Critter Clinic (Farber) alleged that the Manager of the Defendant-Respondent State Insurance Fund (SIF or "the Fund") failed to comply with I.C. 72-915, which provides the means by which the SIF Manager may distribute a dividend to policyholders. The district court determined that the gravamen of Farber's claim implicated the statute and held that the three-year statute of limitation provided by I.C. 5-218(1) barred all claims that accrued prior to July 21, 2003. Farber timely appealed. Upon review, the Supreme Court held that the five-year statute of limitation in I.C. 5-216 applied to Farber's claim. Therefore, the Court reversed the trial court's decision and remanded the case for further proceedings.

In November 1998, Respondent David Moeller’s 1996 Honda Civic CRX was damaged in a collision. Respondent had an insurance policy through Farmers Insurance Company of Washington (Farmers). Farmers chose to repair Respondent's damaged car, and he authorized the repairs. In May 1999, Respondent brought suit on behalf of himself and other similarly situated Farmers policy holders in Washington State asserting a breach of contract claim on the grounds that Farmers failed to restore his vehicle to its "preloss condition through payment of the difference in the value between the vehicle's pre-loss value and its value after it was damaged, properly repaired and returned." The issue on appeal before the Supreme Court was whether the contract between Farmers and Respondent provided for the diminished value of the post-accident, repaired car. Upon review, the Court affirmed the appellate court which held that the policy language at issue here allowed for recovery for the diminution in value.

Blue Cross and Blue Shield of Montana (BCBS) and New West Health Services (collectively TPAs) administered a self-funded employee healthcare benefit plan for the State's employees. Jeannette Diaz and Leah Hoffmann-Bernhardt (Plaintiffs), who were both injured in accidents, filed suit against the state, BCBS, and New West for allegedly violating their made-whole rights by failing to conduct a made-whole analysis before exercising subrogation rights. Plaintiffs moved for class certification seeking to include in the lawsuit individuals who had their benefits reduced under the State plan, as well as individuals who had their benefits reduced under policies independently issued and administered by the TPAs. The district court denied class certification and determined that Montana's made-whole laws did not apply to TPAs. The Supreme Court (1) affirmed the district court's finding that BCBS and New West, in their capacities as TPAs in the present case, were not subject to the made-whole laws under either the subrogation statutes or under a third-party beneficiary theory; and (2) reversed the district court denial of class certification, as Diaz and Hoffmann-Bernhardt demonstrated that the requirements of Mont. R. Civ. P. 23 were met.

Appellant Brenda Jones was involved in an automobile accident with another driver that caused damage to her vehicle. Appellant's insurance policy with Nationwide Property and Casualty Company (Nationwide) included collision coverage for the vehicle involved, subject to a $500 deductible. The policy also provided Nationwide with the right of subrogation. Nationwide paid Appellant for all damage to the vehicle, reduced by the $500 deductible. Nationwide then filed a subrogation claim against the other driver and recovered under the other driver's liability coverage. The recovery, while in excess of Appellant's deductible, was only ninety percent of the amount Nationwide paid Appellant under the collision coverage policy. Nationwide paid Jones a pro rata share of the subrogation award by reimbursing her for ninety percent of her deductible, which amounted to $450. Appellant filed a class action against Nationwide claiming that Nationwide's uniform practice of pro rating reimbursements of deductibles violated the "made whole" doctrine. All claims were based upon Appellant's conclusion that Nationwide should have reimbursed her for her entire $500 deductible, despite the provision in the policy granting Nationwide subrogation rights. Appellant also sought injunctive relief to stop Nationwide's practice of pro rata deductible reimbursement. The Supreme Court concluded that the "made whole" doctrine did not apply to the collision coverage at issue in this case, the Court affirmed the dismissal of Appellant's class action.