Justia Insurance Law Opinion Summaries

The Plan is a nonprofit health care service plan subject to Health & Safety Code 1340, including the Parity Act, under which: “Every health care service plan contract . . . that provides hospital, medical, or surgical coverage shall provide coverage for the diagnosis and medically necessary treatment of severe mental illness of a person of any age, and of serious emotional disturbances of a child . . . under the same terms and conditions applied to other medical conditions.”Plaintiffs alleged that the Plan violates the Parity Act by “deterring members from obtaining one-on-one mental health therapy without making individualized determinations … encouraging ‘group’ therapy, without making individualized determinations" where similar practices are not followed in the treatment of physical health conditions. An Unruh Civil Rights Act claim alleged that the Plan intentionally discriminated against persons with mental disabilities or conditions. The court granted the Plan summary judgment.The court of appeal affirmed the rejection of one plaintiff’s individual claims; the Plan is not liable for the acts of its subsidiary by whom the plaintiff’s coverage was issued. The court otherwise reversed. On an Unfair Competition Law claim, the court failed to consider how the Plan’s conduct undermines its contractual promises of covered treatment in violation of the Parity Act. On the Unruh claim, triable issues of fact exist as to whether the plaintiffs were denied medically necessary treatment as a result of intentional discrimination. View "Futterman v. Kaiser Foundation Health Plan, Inc." on Justia Law

Plaintiffs sued Defendants GEICO Advantage Insurance Company and its related entities. Each Plaintiff possessed a vehicle that was subject to a private passenger auto insurance policy with a different Defendant (collectively, the “Policies”). Each Plaintiff’s vehicle was involved in an auto collision while insured under one of the Policies. Plaintiffs sought to represent a class of insureds claiming that GEICO failed to fully compensate them for the total loss of their vehicles under their respective insurance policies. The district court held that Plaintiffs had standing to sue on behalf of the proposed class and subsequently granted class certification. GEICO appealed both holdings.
The Fifth Circuit affirmed. The court wrote it is clear that each Plaintiff individually satisfies the less stringent class certification approach. Indeed, there is no dispute that each Plaintiff alleges that he or she has suffered some injury; the disagreement between the parties concerns how those injuries relate to those of the class. Further, the court wrote it disagreed with the contention that Plaintiffs have alleged three separate injuries. GEICO’s failure to remit any of the three Purchasing Fees amounts to the same harm—a breach of the Policies. The court also concluded that the strategic value of these claims’ waiver is considerably greater than their inherent worth. It was accordingly within the district court’s discretion to rule that Plaintiffs are adequate class representatives. Moreover, the court wrote that GEICO’s arguments against class certification for this claim largely track its arguments opposing certification of Plaintiffs’ other claims. The district court’s analysis meets the requisite rigor when read in the broader context of its decision. View "Angell v. GEICO Advantage Ins" on Justia Law

The Supreme Court affirmed the judgment of the district court granting summary judgment in favor of Plaintiffs' insurer and its agent in this negligence action brought by Plaintiffs seeking to recover damages after their home was destroyed in a fire, holding that the district court did not err.Insureds purchased a homeowners insurance policy from Insurer through a licensed insurance producer (Agent). Insureds later filed a complaint alleging that Agent negligently advised them on the estimated replacement value of their home and negligently misrepresented the adequacy of their policy limits in the event of a total loss. Insureds also alleged that Insurer was liable under a theory of respondent superior. The district court granted summary judgment for Insurer and Agent. The Supreme Court affirmed, holding that Insureds' claims failed as a matter of law and that the district court did not err in granting summary judgment. View "Callahan v. Brant" on Justia Law

The federal district court in Washington State certified a question of law to the Washington Supreme Court. Washington law required group life insurance policies to have an incontestability clause providing that “the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue.” The certified question in this case asked whether an insurer could invalidate a life insurance policy after this two-year period on grounds that the policies were void ab initio or never “in force.” New York Life Insurance (NY Life) issued two life insurance policies to Lorenzo Mitchell, naming his nephew, Simon Mitchell, as the sole beneficiary. Lorenzo died more than two years after the policies were issued, and Simon sought to collect on the policies. NY Life became aware that Lorenzo had Down syndrome and lived with significant intellectual disabilities. These facts raised questions about the circumstances under which the policies were issued. NY Life sued Simon in federal district court seeking declaratory relief that the policies were void ab initio under three possible theories: imposter fraud, incapacity, and lack of an insurable interest. The Washington Supreme Court concluded NY Life’s first and third claims were not barred by that provision. “In contrast, lack of capacity does not, on its own, render an insurance contract void; it renders it at most voidable. Because a voidable contract is not void ab initio, we hold the incontestability provision bars NY Life’s second claim.” View "New York Life Ins. Co. v. Mitchell" on Justia Law

In an interlocutory appeal, multiple hotel operators challenged a superior court’s orders in a suit against defendants, multiple insurance underwriters, all relating to the denial of coverage during the COVID-19 world health pandemic. Plaintiffs owned and operated twenty-three hotels: four in New Hampshire, eighteen in Massachusetts, and one in New Jersey. Plaintiffs purchased $600 million of insurance coverage from defendants for the policy period from November 1, 2019 to November 1, 2020. With the exception of certain addenda, the relevant language of the policies was identical, stating in part that it “insures against risks of direct physical loss of or damage to property described herein . . . except as hereinafter excluded.” For periods of time, pursuant to governors’ orders, hotels in each of the three states were permitted to provide lodging only to vulnerable populations and to essential workers. These essential workers included healthcare workers, the COVID-19 essential workforce, and other workers responding to the COVID-19 public health emergency. Beginning in June 2020, plaintiffs’ hotels were permitted to reopen with a number of restrictions on their business operations. Plaintiffs, through their insurance broker, provided notice to defendants they were submitting claims in connection with losses stemming from COVID-19. Plaintiffs sued when these claims denied, arguing that the potential presence of the virus triggered business loss provisions in their respective policies. To this, the New Hampshire Supreme Court disagreed, finding that “[w]hile the presence of the virus might affect how people interact with one another, and interact with the property, it does not render the property useless or uninhabitable, nor distinctly and demonstrably altered.” View "Schleicher & Stebbins Hotels, LLC, et al. v. Starr Surplus Lines Insurance Co., et al." on Justia Law

Allied World Specialty Insurance Company issued a WaterPlus Package Insurance Policy to the Windermere Oaks Water Supply Corporation. That policy includes coverage for Public Officials and Management Liability. But it also includes various exclusions from coverage. At issue in this appeal is the exclusion of contractual liability.   The Fifth Circuit affirmed the district court’s judgment granting summary judgment in favor of the insured. The court held that a claim for breach of fiduciary duty is not a claim for breach of contract and is, therefore, not subject to exclusion from coverage under a contractual liability exclusion. The court explained that under the Texas Prompt Payment of Claims Act, Tex. Ins. Code Section 542.060, an insurer’s breach of the duty to defend constitutes a per se violation View "Windermere Oaks v. Allied World" on Justia Law

In this insurance coverage action, Defendant Stillwater Insurance Company (Stillwater) contends that an animal liability exclusion in the insured’s homeowner’s insurance policy (the policy) precludes any duty to defend because the third parties sued the insured for injuries they and their dogs sustained when their dogs were bitten by two pit bulls on a public street. The insurer determined that the exclusion applied because the underlying complaint alleged that the pit bulls lived at the insured’s home and, therefore, it had no obligation to indemnify an excluded claim. The insured denied any ownership or control of the pit bulls, which were owned by her boyfriend, who did not live at her home. The insurer did not conduct any further investigation. Plaintiff argued that the trial court erred in granting summary judgment in favor of Stillwater on her claims based on Stillwater’s refusal to defend Plaintiff in the third-party lawsuit.   The Second Circuit reversed. The court concluded that the trial court erred in granting summary judgment to Stillwater because there is evidence that Stillwater breached its duty to defend. The court also reversed the trial court’s grant of summary judgment in favor of Stillwater on Plaintiff’s claim for breach of the duty of good faith and fair dealing. The court explained that even if the insured was correct and the pit bulls were not under her ownership, the third party still might have raised a claim potentially covered by the policy. An insurer can be excused from the duty to defend only if the third-party complaint can by no conceivable theory raise an issue within the policy’s coverage. View "Dua v. Stillwater Insurance Company" on Justia Law

The Supreme Court vacated the judgment of the superior court entered favor of Allstate Property and Casualty Insurance Company in this breach of contract action, holding that, under the circumstances, the court erred in granting Allstate's motion for summary judgment.Plaintiff made a claim for loss under its homeowners policy with Allstate after a water loss Plaintiff's property suffered. While Plaintiff sought to invoke a provision in the policy that either party could seek appraisal in the event of a dispute as to the amount of the loss Allstate refused to proceed to appraisal. Plaintiff filed suit for breach of contract in his first action. Allstate counterclaimed seeking a declaration that the parties were required to submit the matter to appraisal. The trial justice granted summary judgment for Allstate without prejudice. Thereafter, Plaintiff demanded that Allstate move forward with the appraisal process. Allstate refused, asserting that Plaintiff's demand was untimely under the policy. Plaintiff then commenced the instant action seeking relief in the form of a judgment ordering Allstate to designate an appraiser and to complete the appraisal process. Final judgment entered for Allstate. The Supreme Court vacated the judgment below, holding that Plaintiff's initial demand for appraisal was not time-barred, and therefore, the trial court erroneously granted summary judgment for Allstate. View "Romeo v. Allstate Property & Casualty Insurance Co." on Justia Law

Thirteen’s building suffered fire damages covered by Foremost’s policy. Thirteen retained Paramount as its public adjuster and general contractor for repairs. Paramount was “to be [Thirteen’s] agent and representative to assist in the preparation, presentation, negotiation, adjustment, and settlement” of the fire loss. Thirteen also “direct[ed] any insurance companies to include Paramount … on all payments on” the fire loss claim. Paramount negotiated the fire loss. Foremost delivered settlement checks to Paramount. The checks named Thirteen, its mortgagee, and Paramount as co-payees. Paramount endorsed the names of all co-payees, cashed the checks, and kept the proceeds. Paramount performed some repair work on the building before Thirteen sought a declaratory judgment that the insurer had breached its policy by not paying the claim.The Seventh Circuit affirmed summary judgment for Foremost. Paramount received and cashed the checks, discharging the insurer’s performance obligation under the policy. The court rejected Thirteen’s arguments that Foremost waived payment as an affirmative defense by failing to plead it in its answer; that, under controlling Illinois law, Foremost’s policy obligation was not discharged when it delivered the checks to Paramount, which cashed the checks; and that Foremost agreed to make claim payments to Thirteen in installments after Foremost had inspected repair work performed. View "Thirteen Investment Co., Inc. v. Foremost Insurance Co. Grand Rapids Michigan" on Justia Law

Starlight Cinemas, Inc., Akarakian Theaters, Inc. (collectively, Starlight) appealed from a judgment entered in favor of Defendant Massachusetts Bay Insurance Company (MBIC) after the trial court granted MBIC’s motion for judgment on the pleadings without leave to amend. Starlight, which owns and operates movie theaters in Southern California, sued MBIC for breach of an insurance contract and bad faith denial of coverage after MBIC denied Starlight’s claim for losses sustained when it was compelled by government orders to suspend operations during the COVID-19 pandemic. Starlight contends a policy term providing coverage for lost business income due to a suspension of operations “caused by direct physical loss of or damage to property” can be reasonably construed to include loss of use of its theaters without any physical alteration to the property.   The Second Appellate District affirmed. The court concluded Starlight has not alleged a covered loss because the policy language requires a physical alteration of the covered property, which was not alleged. The court explained that Starlight did not allege that the COVID-19 virus was present in its theaters or that there was any physical alteration of its property as a result of either the virus or the government orders. As discussed, most California appellate courts have held the allegation of temporary loss of use of property resulting from pandemic-related government closure orders—without any physical loss of the property—is not sufficient to support a claim against an insurer for business income coverage under a policy that requires the suspension be caused by “direct physical loss of or damage to” insured property. View "Starlight Cinemas, Inc. v. Massachusetts Bay Insurance Company" on Justia Law