Justia Insurance Law Opinion Summaries

Plaintiff's lawsuit arose from defendant's refusal to pay some or all of plaintiff's claims for reimbursement for medical-device procurement and financing services provided in connection with over 2,000 patients insured under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., plans administered by defendant. Plaintiff subsequently appealed a summary judgment for defendant. At issue was whether plaintiff's state-law claims of promissory estoppel, quantum meruit, unjust enrichment, negligent misrepresentation, and violations of the Texas Insurance Code, 541.051(A) & (B) and 541.061(1) & (2), were preempted by ERISA. The court reversed with respect to plaintiff's promissory estoppel, negligent misrepresentation, and Texas Insurance Code claims because these claims were premised on allegations and evidence that plaintiff provided the services in reliance on defendant's representations that it would pay reasonable charges for plaintiff's services. The court affirmed with respect to plaintiff's quantum meruit and unjust enrichment claims because these claims depended on plaintiff's assertion that without its services the patients' ERISA plans would have obligated defendant to reimburse a different provider for the same services.

After a fire damaged a building the Hinebauchs purchased from the McRaes, the Hinebauchs filed a complaint against the McRaes, alleging breach of contract and unjust enrichment. The district court granted the McRaes' motion for summary judgment, determining (1) because no evidence was presented showing that the McRaes agreed to obtain insurance for the building naming the Hinebauchs as an insured party, there was a lack of mutual consent and the agreement was unenforceable; and (2) the Hinebauchs did not establish any requisite misconduct or fault on the part of the McRaes, and the Hinebauchs had unclean hands in seeking equitable relief on the claim for unjust enrichment. The Supreme Court affirmed, holding (1) the statute of frauds precluded the Hinebauchs from enforcing any promises ostensibly made to them by the McRaes; and (2) the Hinebauchs wholly failed to show any misconduct or fault on the part of the McRaes, and therefore, the Hinebauchs' claim for unjust enrichment was without merit.

After a fire damaged a building the Hinebauchs purchased from the McRaes, the Hinebauchs filed a complaint against the McRaes, alleging breach of contract and unjust enrichment. The district court granted the McRaes' motion for summary judgment, determining (1) because no evidence was presented showing that the McRaes agreed to obtain insurance for the building naming the Hinebauchs as an insured party, there was a lack of mutual consent and the agreement was unenforceable; and (2) the Hinebauchs did not establish any requisite misconduct or fault on the part of the McRaes, and the Hinebauchs had unclean hands in seeking equitable relief on the claim for unjust enrichment. The Supreme Court affirmed but on different grounds, holding (1) the statute of frauds precluded the Hinebauchs from enforcing any promises ostensibly made to them by the McRaes; and (2) the Hinebauchs wholly failed to show any misconduct or fault on the part of the McRaes, and therefore, the Hinebauchs' claim for unjust enrichment was without merit.

The issue before the Tenth Circuit in this case centered on whether property damage caused by a subcontractor's faulty workmanship is an "ocurrence" for purposes of a commercial general liability (CGL) insurance policy. The issue arose from the appeals of Plaintiffs-Appellants Greystone Construction, Inc., The Branan Company, and American Family Mutual Insurance Company (American) who all appealed the district court’s grant of summary judgment in favor of Defendant National Fire & Marine Insurance Company (National). Greystone was the general contractor that employed multiple subcontractors to build a house in Colorado. As is common along Colorado’s front range, the house was built on soils containing expansive clays. Over time, soil expansion caused the foundation to shift, resulting in extensive damage to the home’s living areas. The homeowners sued Greystone for damages, alleging defective construction by the subcontractors who installed the foundation. Greystone was insured under CGL policies provided by two insurers. American provided policies for 2001 to 2003, and National provided policies for 2003 to 2006. The American and National policy periods did not overlap. Greystone tendered a claim to American and then National. National denied it owed Greystone any defense. In district court, the builders and American sought to recover a portion of their defense costs from National. Upon review, the Tenth Circuit concluded that damage arising from a poor workmanship may fall under a CGL policy’s initial grant of coverage, even though recovery may still be precluded by a business-risk exclusion or another provision of the policy. The case was remanded to the district court for further proceedings.

The class certification issue presented in this case arose from a dispute concerning the payment of medical bills under the Colorado Automobile Accident Reparations Act (No-Fault Act). Plaintiffs Pauline Reyher and Dr. Wallace Brucker filed suit against State Farm Mutual Automobile Insurance Company (State Farm) alleging that it failed to pay full, reasonable amounts in medical expenses in violation of the No-Fault Act and its own contracts. Plaintiffs subsequently moved to certify two classes that included all insureds and providers, respectively, who submitted medical bills to State Farm and were reimbursed for less than the full amounts. The trial court denied the motion for certification on grounds that Plaintiffs failed (among other things) to establish the "predominance" requirement. The appellate court reversed and remanded the case to enter an order certifying the class. State Farm appealed, arguing that the appellate court's finding of "predominance" was made in error. Upon review, the Supreme Court affirmed the trial court's decision and reversed the appellate court.

The issue central to this case arose from Plaintiff Ginger Durio's claims for property damage to her home following Hurricane Rita and for damages and penalties against her homeowner's insurer. The Court granted review of Plaintiff's case primarily to review the correctness of the rulings of the lower courts that applied the penalty provision of La. R.S. 22:1220 (C) to contractual damages, and awarding attorney fees pursuant to the amended La. R.S. 22:658. In September 2005, Plaintiff owned a home in Lake Charles, which was covered by a policy issued by Defendant Horace Mann Insurance Company (Horace Mann). The home was damaged by the hurricane. The extent of damage to the rest of the structure and to the interior of the home was disputed. Plaintiff filed suit against the insurer alleging her home and everything in it were destroyed, but Horace Mann "consistently arbitrarily and capriciously refused to classify [the] home as a total loss." Following a bench trial, the court ruled in Plaintiff's favor. The court ordered payment of policy limits on Plaintiff's homeowner policies. Horace Mann filed a motion for new trial. At the hearing on the motion for new trial, the court found it erred in awarding penalties under both La. R.S. 22:658 and La. R.S. 22:1220, and vacated those awards. Otherwise, the court denied Horace Mann’s motion for new trial. On its own motion, the court also granted a new trial relative to the attorney fees issue. Noting that newly discovered damages could trigger the amended version of La. R.S. 22:658, the court found there were newly discovered damages as established by the proofs of claim submitted, and those newly discovered damages were subsequent to the amendment. After review, the Supreme Court held that the lower courts erred in calculating 22:1220 penalties based on contractual amounts due under the insurance contract: "[s]uch penalties are properly calculated by doubling the amount of damages sustained as a result of the insurer’s breach of its duties under the statute." Applying the proper statutory interpretation to the facts of this case, the Court amended the trial court’s judgment to reflect the correct award of penalties. Furthermore, the Court held the lower courts erred in applying the amended version of La. R.S. 22:658 allowing attorney fees to be awarded. Thus, the Court reversed the lower courts’ rulings on this issue, and vacated the award of attorney fees. In all other respects, the rulings of the lower courts were affirmed.

Defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, Defendant hired an independent contractor to make repairs. While performing the work, the independent contractor caused a fire, resulting in a large insurance claim by the homeowners. As subrogor to the homeowners' rights and claims arising out of the fire, Plaintiff insurance company sued Defendant in tort and contract. The trial court granted Defendant's motion for summary judgment on all claims, finding that because Defendant had subcontracted the work, he could not be liable. The court of appeals reversed. The Supreme Court affirmed, holding that Defendant had an implied non-delegable duty to install the roof in a careful, skillful, diligent, and workmanlike manner. Remanded.

Hospital records state that decedent died of a nonsurvivable head injury following an accidental fall at a casino. An insurer refused to pay, claiming that the fall was likely caused by a stroke, so that death was not "accidental" within the meaning of the policy. The company's expert testified accordingly. The district court entered judgment in favor of the company. The First Circuit affirmed. The district court did not err in admitting the expert's testimony; it fell within the scope of his previously disclosed report. The estate was not prejudiced by any difference between the report and testimony.

Plaintiff Government Employees Insurance Company (GEICO) sought a declaratory judgment against Defendants Jeffery and Tracie Quine and Amanda Watkins. GEICO filed suit following a demand from Defendants' attorney seeking partial advance payment of underinsured motorist benefits available through a policy it issued. GEICO requested the federal court determine whether the subject policy or Oklahoma law obligated the company to unconditionally tender a partial payment of underinsured benefits when (1) a dispute had arisen between the insurer and its insured over the amount of underinsured motorist proceeds due; and (2) the parties had not arrived at a complete settlement agreement. The district court certified the question to the Oklahoma Supreme Court. Upon review, the Supreme Court concluded that an insurer's refusal to unconditionally tender a partial payment of UIM benefits does not amount to a breach of the obligation to act in good faith and deal fairly under Oklahoma law when: (1) the insured's economic/special damages have been fully recovered through payment from the tortfeasor's liability insurance; (2) after receiving notice that the tortfeasor's liability coverage has been exhausted due to multiple claims, the UIM insurer promptly investigates and places a value on the claim; (3) there is a legitimate dispute regarding the amount of noneconomic/general damages suffered by the insured; and (4) the benefits due and payable have not been firmly established by either an agreement of the parties or entry of a judgment substantiating the insured's damages.

A employee made a series of attempts to obtain benefits under the company's long-term disability policy. A copy of the plan, which he obtained during internal appeals, contained no limitation on filing suit to challenge denials, but did reserve the right to make alterations to the plan. The plan was later amended to include a one-year limitation on bringing suit. Employee did not receive notice of the change. In 2005 the plan issued a final written rejection. In 2008 the employee filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1109 and 1132. The district court dismissed. The First Circuit reversed. While the plan did not engage in deceptive conduct that would implicate equitable estoppel, equitable tolling applies based on the failure to give notice of the change. The employee was reasonably diligent.