Justia Insurance Law Opinion Summaries

Defendants Farmers Insurance Company of Oregon, Mid-Century Insurance Company and Truck Insurance Exchange (Farmers) petitioned the Supreme Court to reconsider an opinion that affirmed a trial court's judgment against it for approximately $8.9 million in compensatory and punitive damages. Farmers contended that the Court's resolution of certain state law issues violated its federal due process rights. Farmers was required by statute and contract to provide personal injury protection to its insureds by covering all reasonable and necessary medical expenses within a year of the insured's injury. Plaintiff Mark Strawn filed a class action suit against Farmers, alleging that Farmers' claims handling process breached its contractual obligations to its insureds. According to Farmers, the Court, in its prior decision, created an "irrebuttable presumption" that altered what was required under state law to prove a fraud claim in a class action in a way that violated due process. The Court held that "Farmers's argument misses the mark" by characterizing the Court's conclusion in its prior holding as "novel" by "assuming the answer to one of the legal questions that [the] Court had to resolve." The Court concluded that Farmers' premises on appeal were incorrect, and that "Farmers's legal arguments therefore fail."

Appellant Robert Petty is sole owner of Co-Appellant R.G. Petty Masonry. Appellants contracted with Respondent Blue Cross of Northeastern Pennsylvania (Blue Cross), a nonprofit hospital corporation that provides health insurance coverage for its employees. Appellants are covered under the group policy as subscribers. Appellants filed a four-count class action suit against Blue Cross, alleging that it violated the state Nonprofit Law by accumulating excessive profits and surplus well beyond the "incidental profit" permitted by statute. The second count alleged Blue Cross breached its contract with Appellants by violating the Nonprofit Law. The third count alleged Blue Cross owed appellants a fiduciary duty by virtue of their status as subscribers, and that duty was breached when it accrued the excess surplus. The fourth count requested an inspection of Blue Cross' business records. The trial court found Appellants lacked standing to challenge Blue Cross' alleged violations of the Nonprofit Law and dismissed the suit. The Commonwealth Court affirmed the trial court. Upon careful consideration of the briefs submitted by the parties in addition to the applicable legal authorities, the Supreme Court found that Appellants indeed lacked standing under the Nonprofit Law to challenge Blue Cross by their four-count complaint. Accordingly, the Court affirmed the lower courts' decisions and dismissed Appellants' case.

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.

Plaintiff purchased a credit disability insurance policy from defendant in connection with credit union financing of an automobile. Following an injury on the job, he received benefits in the form of credit union payments on the auto loan for about three years. The defendant then notified plaintiff that it would not continue to pay because he no longer met the definition of Total Disability under the policy. The district court certified a class action, found the definition of the term âTotal Disabilityâ ambiguous and construed it in favor the insured, entered an injunction that set up a claims review process for class members, then decertified the class. The Third Circuit affirmed with respect to the definition. The court vacated and remanded the rest of the judgment, holding that the court abused its discretion in issuing an injunction in which it retained jurisdiction over the class members' claims throughout the claims procedure process after the class was decertified.

Respondents, on behalf of beneficiaries of the CIGNA Corporation's ("CIGNA") Pension Plan, challenged the new plan's adoption, claiming that CIGNA's notice of the changes was improper, particularly because the new plan in certain respects provided them with less generous benefits. At issue was whether the district court applied the correct legal standard, namely, a "likely harm" standard, in determining that CIGNA's notice violations caused its employees sufficient injury to warrant legal relief. The Court held that although section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1022(a), 1024(b), 1054(h), did not give the district court authority to reform CIGNA's plan, relief was authorized by section 502(a)(3), which allowed a participant, beneficiary, or fiduciary "to obtain other appropriate relief" to redress violations of ERISA "or the [plan's] terms." The Court also held that, because section 502(a)(3) authorized "appropriate equitable relief" for violations of ERISA, the relevant standard of harm would depend on the equitable theory by which the district court provided relief. Therefore, the Court vacated and remanded for further proceedings.

The first plaintiffs alleged that Fidelity failed to provide a discount, required by its filed rates, when issuing title insurance to homeowners who had purchased a title insurance policy for the same property from any other insurer within the previous 10 years. The second plaintiff brought the same claims against First American. The district court denied their motion to certify a class. The Sixth Circuit affirmed. Although the claims involve small amounts, so that the plaintiffs are likely unable to recover except by class action, the plaintiffs did not establish that issues subject to generalized proof and applicable to the whole class predominate over issues subject to individualized proof. The need to establish entitlement to join the class and the need to prove individual damages are not fatal to class certification, but the Ohio insurance rate structure would necessitate individual inquiries on the issue of liability. The plaintiffs phrased their claims in a way that would require examination of individual policies and whether the company received the requisite documentation for the discount.

Appellants appealed an order revoking their pro hac vice admissions in connection with a putative class action suit where the suit alleged that appellants' clients breached supplemental cancer insurance policies that they had issued. At issue was whether the district court erred in revoking appellants' pro hac vice status where the revocation was based on motions appellants filed in response to plaintiffs' request for class certification, chiefly a motion to recuse the district judge based on his comments during an earlier hearing. The court vacated the revocation order and held that, even though the recusal motion had little merit, the district court erred in revoking appellants' pro hac vice admissions where it did not afford them even rudimentary process.

Defendants-Appellants Farmers Insurance Exchange (Farmers) and Mid-Century Insurance Company (Mid-Century) removed a putative class action suit from state court to federal district court. Upon motion of Plaintiff-Appellee Lawrence Countryman, the federal court remanded the case back to the state court based on a procedural defect in the Defendantsâ notice of removal. Specifically, Defendants were required to attach copies of all process, pleadings and orders for both Farmers and Mid-Century. The copies served to all parties in this case only contained those pertaining to Farmers, not Mid-Century. Defendants supplemented their joint notice or removal to include the missing Mid Century documents. Defendants challenged the lower courtâs remand of the case to state court. Upon review, the Tenth Circuit found that the Defendantsâ omission was an inadvertent, procedural defect that was timely cured, and caused no prejudice to Plaintiffs. The Court vacated the district courtâs decision, and remanded the case back to federal court.