Justia Insurance Law Opinion Summaries

GEICO Insurance Company appealed a trial court judgment entered in favor of plaintiffs Johnson Evans, Jimmy Smith, and Bernard Smith on plaintiffs' claims for damages resulting from an automobile accident caused by GEICO's insured, Bernard Grey. GEICO argued that the April 17, 2019, judgment entered against it was void because it did not receive notice of plaintiffs' claims against it or notice of the hearing on plaintiffs' claims. For their part, plaintiffs did not dispute that GEICO never received actual notice of any action pending against it in the present case. Instead, they argued GEICO had "constructive notice of potential litigation" because it had actual notice of Grey's accident involving plaintiffs -- which occurred in 2010 -- and that GEICO was aware that plaintiffs claimed to be injured by Grey's actions. The Alabama Supreme Court agreed with GEIDO that "constructive notice of potential litigation" clearly fell short of "even the most basic requirements of due process." Because it was undisputed GEICO never received notice of any claim pending against it, the April 17 judgment violated due process, and was therefore void. Because a void judgment would not support an appeal, the trial court was instructed to vacate its judgment, and GEICO's appeal was thus dismissed. View "GEICO Insurance Co. v. Evans" on Justia Law

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

Javonne Hunt appealed a district court order requiring him to pay $27,501.86 in restitution to Blue Cross Blue Shield (“BCBS”). In 2017, Hunt was playing basketball at the YMCA in Bismarck, North Dakota when he was involved in an altercation with an opposing player. Hunt intentionally struck the opposing player in the jaw causing a bone fracture. Hunt was charged and subsequently found guilty by a jury of aggravated assault. Following his conviction, Hunt agreed to pay as restitution the out-of-pocket medical expenses incurred by the injured individual in the amount of $3,233.07. BCBS provided evidence that it had paid an additional $27,501.86 for the medical treatment of the injured individual under the injured individual’s policy of insurance. The district court applied N.D.C.C. 12.1-32-08(1) in granting restitution to BCBS and ordered Hunt to pay a total of $30,734.93; $3,233.07 for the conceded out-of-pocket costs plus the $27,501.86 claimed by BCBS. Hunt argued BCBS is precluded from recovery of its expenditures in the criminal proceedings because the definition of “victim” under N.D. Const. art. I, section 25 was incompatible with a recovery by a corporation under the criminal restitution statute, N.D.C.C. 12.1-32-08(1). The North Dakota Supreme Court found no reversible error in the district court’s judgment and affirmed the order. View "North Dakota v. Hunt" on Justia Law

Dami Hospitality, LLC (“Dami”) was the owner-operator of a Denver motel that employed between four and ten people at any given time. As an employer of three or more persons, Dami was required by statute to maintain workers’ compensation insurance. Dami allowed its workers’ compensation coverage to lapse on in 2005. Upon receiving notification of the lapse from the Division of Workers’ Compensation (“DWC”), Dami conceded the violation and paid a corresponding settlement in June 2006. Dami again allowed its workers’ compensation coverage to lapse in 2006. From June 2007 to September 2010, Dami carried the proper insurance, but the company’s workers’ compensation coverage again lapsed on September 12, 2010 and went without insurance until July 9, 2014. On February 19, 2014, the DWC discovered that Dami had allowed its workers’ compensation insurance to lapse for these periods of time and issued a notice to Dami regarding this. Dami faxed a copy of workers' compensation insurance for the July 10, 2014 - July 10, 2015 period; Dami offered no such evidence for any other period, nor any explanation for the lapses. Fines accrued for noncompliance, totaling $841,200. The DWC ultimately issued an order upholding the fines. Dami appealed to the Industrial Claim Appeals Office (“ICAO”). The ICAO rejected all but Dami’s excessive fines argument. The ICAO remanded the matter to the DWC, directing it to review the constitutionality of the aggregated per diem fines assessed in accordance with the test established by the court of appeals in Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo. App. 2005). The ICAO would ultimately affirm the resulting fines, and Dami appealed to the Court of Appeals. The appellate court set aside the fines, assuming, without deciding, the Excessive Fines Clause could be applied to challenge regulatory fees imposed on a corporation. The Colorado Supreme Court concluded the proper test to assess the constitutionality of government fines under the Eighth Amendment required an assessment of whether the fine was grossly disproportional to the offense for which it was imposed. The Supreme Court thus reversed the court of appeals’ ruling and remanded to that court for return to the Division of Workers’ Compensation with instructions to, as appropriate and necessary, develop an evidentiary record sufficient to determine whether the $250–$500 fine that a business was required to pay for each day that it was out of compliance with Colorado’s workers’ compensation law is proportional to the harm or risk of harm caused by each day of noncompliance. View "Colo. Dept. of Labor & Emp. Div. of Workers' Comp. v. Dami Hosp." on Justia Law

After DNA evidence exonerated Phillip Bivens, Bobby Ray Dixon, and Larry Ruffin, who spent a collective 83 years in prison for the rape and murder of a woman in Forrest County, their estates filed a civil rights law suit against the County. At issue in this appeal was whether two of the County's law enforcement liability policies require the insurers to defend the civil rights suit.The Fifth Circuit affirmed the district court's holding that there is a duty to defend, because the policies are triggered when injuries occur during the policy period, even though the wrongful acts that caused the injuries occurred before the policy period. In this case, the provisions of the Travelers and Scottsdale policies cover bodily injuries occurring during the policy period, and the estates' complaint alleges those injuries during the relevant time periods. Therefore, both insurers have a duty to defend the County and its officers. View "Travelers Indemnity Co. v. Mitchell" on Justia Law

The Eleventh Circuit dismissed this insurance dispute case, holding that Gerber, as assignee of the insured, did not have standing to bring a declaratory judgment class action against GEICO. In this case, the action did not assert any claims for money damages and there was no substantial likelihood that the insured would suffer a future injury. Accordingly, the court reversed and remanded with instructions to dismiss the complaint for lack of standing. View "A&M Gerber Chiropractic LLC v. Geico General Insurance Co." on Justia Law

Defendant issued a life insurance policy to the Decedent. Plaintiff, Decedent’s former wife, is the primary beneficiary; the contingent beneficiaries are Decedent’s “surviving children equally.” Plaintiff and Decedent divorced. Their Dissolution Agreement required that Plaintiff pay the premium of the Defendant’s policy and required “Husband at his expense [to] maintain" insurance on his life with the parties’ children as irrevocable primary beneficiaries. The couple had minor children at the time of Decedent’s death. When Plaintiff requested payment, Defendant requested that Plaintiff obtain waivers from "other potential parties” and court-appointed guardians for the children or that Plaintiff waive her rights so that Defendant could disburse the proceeds to the minor children. The court dismissed Defendant’s subsequent interpleader complaint and ordered Defendant to disburse to Plaintiff. A jury found that Defendant breached its contract, resulting in actual damages of $350,000; Defendant’s refusal to pay was in bad faith, resulting in additional damages of $87,500; and Defendant’s refusal to pay was either intentional, reckless, malicious, or fraudulent. The jury awarded punitive damages of $3,000,000. A Tennessee statute capped punitive damages at two times the compensatory damages awarded or $500,000, whichever is greater. Plaintiff challenged the cap under the Tennessee Constitution. The Tennessee Supreme Court declined to provide an opinion on certified questions. The district court then rejected Plaintiff’s challenge, reducing Defendant’s punitive damages liability to $700,000. The Sixth Circuit vacated in part, finding that the statutory cap on punitive damages, T.C.A. 29-39-104, violates the individual right to a trial by jury. View "Lindenberg v. Jackson National Life Insurance Co." on Justia Law

The Supreme Court answered a certified question from the Unitde States District Court by holding that Ohio Rev. Code 4123.35(O) is not unconstitutional as applied to the tort claims of an enrolled subcontractor’s employee who is injured while working on a self-insured construction project and whose injury is compensable under Ohio’s workers’ compensation laws.Daniel Stolz was injured while working as a concrete finisher for Jostin Construction. Jostin was a subcontractor of Messer Construction Company, the general contractor for the project. Under section 4123.35(O), Messer provided workers’ compensation coverage on the project for employees of subcontractors like Jostin that chose to enroll in Messer’s self-insurance plan. Stolz eventually sued Messer and several subcontractors for negligence. Messer and three enrolled subcontractors argued that they were immune from liability under section 4123.35(O). The Supreme Court concluded that the statute provides immunity to both general contractors and enrolled subcontractors from tort claims brought by employees of other enrolled subcontractors. Stolz later amended his complaint to allege that section 4123.35(O) is unconstitutional. The enrolled subcontractors petitioned the district court to certify a question of state law to the Supreme Court. The Supreme Court answered that section 4123.35(O) does not violate the Ohio Constitution’s right-to-remedy, right-to-jury, or equal-protection provisions. View "Stolz v. J & B Steel Erectors, Inc." on Justia Law

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law