Justia Insurance Law Opinion Summaries

Krista Peoples and Joel Stedman filed Washington Consumer Protection Act ("CPA") suits against their insurance carriers for violating Washington claims-handling regulations and wrongfully denying them personal injury protection (PIP) benefits. The federal district court for the Western District of Washington certified a question of law relating to whether Peoples and Stedman alleged an injury to "business or property" to invoke their respective policies' PIP benefits. Peoples alleged her insurance carrier refused, without any individualized assessment, to pay medical provider bills whenever a computerized review process determined the bill exceeded a predetermined limit, and that the insurance company's failure to investigate or make individualized determinations violated WAC 284-30-330(4) and WAC 284-30-395(1). Due to this practice of algorithmic review, the insurance carrier failed to pay all reasonable medical expenses arising from a covered event, in violation or RCW 48.22.005(7). Stedman alleged his carrier terminate PIP benefits whenever an insured reached "Maximum Medical Improvement," which he alleged violated WAC 284-30-395(1). The Washington Supreme Court held an insurance carrier's wrongful withholding of PIP benefits injures the insured in their "business or property." An insured in these circumstances may recover actual damages, if proved, including out-of-pocket medical expenses that should have been covered, and could seek injunctive relief, such as compelling payment of the benefits to medical providers. Other business or property injuries, apart from wrongful denial of benefits, that are caused by an insurer's mishandling of PIP claims are also cognizable under the CPA. View "Peoples v. United Servs. Auto. Ass'n" on Justia Law

In its motion for summary judgment, Farmers Insurance Company of Idaho argued that Erica Klein was barred from pursuing a supplemental UIM claim because the five-year statute of limitations in Idaho Code section 5-216 had run. Farmers asserted the statute of limitations began to run on either the date of the accident or the date Klein settled with the third party tortfeasor, both of which occurred more than five years prior to Klein filing her complaint to compel arbitration of her UIM claim. The district court denied Farmers’s motion and subsequent motion for reconsideration, holding that the “breach of contract” rule was the proper method of calculating the accrual date for Klein’s cause of action. Farmers appealed the district court’s denial of both motions. The Idaho Supreme Court determined the issue raised by this case was one of first impression, inasmuch as it was asked to determine when the statute of limitations began to run on a cause of action for UIM benefits under an automobile insurance policy. After considering the different approaches taken by other states, the Court adopted the majority’s “breach of contract” rule and affirmed the district court’s decisions. View "Klein v. Farmers Insurance Co." on Justia Law

In 1994, based on doctored evidence from the City of Chicago Heights Police Department, Sanders was charged with murder, attempted murder, and armed robbery. Sanders was wrongfully convicted and imprisoned for approximately 20 years before being exonerated in 2014. From November 2011 to November 2014, Chicago Heights obtained primary liability insurance from Illinois Union and excess liability insurance from Starr. The primary insurance policy covered damages arising out of the “offense” of “malicious prosecution.” The Illinois Supreme Court held that, although the cause of action for malicious prosecution did not arise until the exoneration, the underlying event that triggered the obligation to provide coverage occurred in 1994, not during the policy period. The court noted that a typical occurrence-based policy, containing multiple references to coverage for occurrences or offenses happening during the term of the policy, reflects the intent to insure only for the insured’s acts or omissions that happen during a policy period. If exoneration were deemed to trigger for coverage of a malicious prosecution insurance claim, liability could be shifted to a policy period in which none of the acts or omissions giving rise to the claim occurred, which would violate the intent of the parties to an occurrence-based policy. View "Sanders v. Illinois Union Insurance Co." on Justia Law

The First Circuit affirmed the judgment of the district court granting summary judgment for Insurer and dismissing Insured's complaint alleging breach of contract and violations of Massachusetts General Laws chapters 93A and 176D, holding that Insured failed to produce evidence in support of its assertions.In the complaint, Insured claimed that Insurer breached the parties' contract and violated chapters 93A and 176D in the way that Insurer handled Insured's claim for residential property damage. The district court granted summary judgment in favor of Insurer. The First Circuit affirmed, holding (1) the district court did not err in concluding that no reasonable jury could find that Insurer had violated chapter 176D; and (2) there was no breach of the contract. View "River Farm Realty Trust v. Farm Family Casualty Insurance Co." on Justia Law

A storm caused minor hail damage at the Winding Ridge condominium complex located in Indiana, which was not discovered until almost a year later when a contractor inspected the property to estimate the cost of roof replacement. Winding Ridge submitted an insurance claim to State Farm. The parties inspected the property and exchanged estimates but could not reach an agreement. Winding Ridge demanded an appraisal under the insurance policy. State Farm complied. After exchanging competing appraisals, the umpire upon whom both sides agreed issued an award, which became binding. Winding Ridge filed suit alleging breach of contract, bad faith, and promissory estoppel. The Seventh Circuit held that the appraisal clause is unambiguous and enforceable; there is no evidence that State Farm breached the policy or acted in bad faith when resolving the claim. Winding Ridge’s own appraiser found no hail damage to the roofing shingles on 20 buildings. The fact that Winding Ridge independently replaced the shingles on all 33 buildings for $1.5 million while its claim was pending does not obligate State Farm under the policy or mean State Farm breached the policy. There is no evidence that State Farm delayed payment, deceived Winding Ridge, or exercised an unfair advantage to pressure Winding Ridge to settle. View "Villas at Winding Ridge v. State Farm Fire and Casualty Co." on Justia Law

The Supreme Court quashed this Court's preliminary writ of prohibition, holding that the issuance of the writ of prohibition sought by Key Insurance Company directing the circuit court to dismiss claims filed against it by Josiah Wright and Phillip Nash for lack of jurisdiction would be inappropriate.After arbitration, Wright filed a lawsuit against Key and Nash seeking to collect insurance proceed's from Nash's child's insurance policy. Nash filed a cross-claim against Key alleging that Key breached its contractual duty to defend him. Key filed a motion to dismiss the claims for lack of jurisdiction. The circuit court overruled the motion. Key then sought a writ of prohibition from the Supreme Court. The Court issued a preliminary writ of prohibition, which it then quashed, holding that where there had been no showing that the circuit court’s usurpation of jurisdiction was "clearly evident" and Nash adequately pleaded facts in his cross-claim that established personal jurisdiction, the issuance of a writ of prohibition would be inappropriate. View "State ex rel. Key Insurance Co. v. Honorable Marco A. Roldan" on Justia Law

This litigation arose from a suit filed by plaintiff Beverly Smith against Darlene Shelmire and her insurer, GoAuto Insurance Company (“GoAuto”), as a result of an automobile accident in 2010. In 2015, following a trial on the merits, the district court entered judgment in favor of plaintiff against Shelmire and GoAuto in an amount in excess of the insurance policy limits. GoAuto appealed that judgment, but Shelmire did not. The court of appeal ultimately affirmed the district court’s judgment in March 2016. Thereafter, Shelmire assigned her rights to pursue a bad faith action against GoAuto to Smith. Through that assignment of rights, Smith filed the underlying suit against GoAuto on March 10, 2017, and amended her petition on September 27, 2017, asserting a bad faith claim based on GoAuto’s violation of its duties under La. R.S. 22:1973(A) as well as the recognized duty of good faith pre-existing the statute. GoAuto answered the petitions, asserting the prescriptive period for a bad faith claim against an insurer was a delictual action, and subject to a one-year prescriptive period. Plaintiff opposed the exception arguing a bad faith claim against an insurer was a contractual action and subject to a ten-year prescriptive period. The Louisiana Supreme Court granted this writ application to determine whether a first-party bad faith claim against an insurer was indeed a delictual action subject to a one-year prescriptive period, or whether it was a contractual claim subject to a ten-year prescriptive period. Finding the bad faith claim arose as a result of the insured’s contractual relationship with the insurer, the Court held it was subject to a 10-year prescriptive period. View "Smith vs. Citadel Insurance Company" on Justia Law

After a customer purchased a pharmaceutical product from Target (the retailer) which was distributed by McKesson (the supplier), she experienced an adverse reaction to the product that resulted in serious bodily injury. The customer filed suit against Target, and McKesson and Golden State Insurance (the carrier) refused to defend it. Target then filed suit against McKesson and Golden State, seeking to compel them to defend it. The trial court granted McKesson and Golden State's motion for summary adjudication.The Court of Appeal affirmed, holding that the indemnification/defense clause in McKesson's contract with Target and the additional insured endorsement did not require McKesson and Golden State to defend Target against the customer's lawsuit. In this case, the customer's claim was based on Target's mislabeling of a product that was not defective. Therefore, Target's actions came within the exclusions of the additional insured endorsement for repackaging and labeling and relabeling. Furthermore, the additional insured endorsement did not impose on McKesson a duty to provide additional insured coverage that would protect Target from the customer's claim that it had mislabeled the medication and had failed to warn of possible adverse reactions and side effects. View "Target Corp. v. Golden State Insurance Co. Ltd." on Justia Law

The United States District Court for the Ninth Circuit certified a question of law to the Washington Supreme Court. Specifically, the federal appellate court asked whether an insurance company was bound by its agent’s written representation (made in a certificate of insurance) that a particular corporation was an additional insured under a given policy. This question arose in a case where: (1) the Ninth Circuit already ruled that the agent acted with apparent authority; but (2) the agent’s representation turned out to be inconsistent with the policy; and (3) the certificate included additional text broadly disclaiming the certificate’s ability to “amend, extend or alter the coverage afforded by” the policy. The Washington Supreme Court responded yes: an insurance company is bound by the representation of its agent in the circumstances presented by the federal court. “Otherwise, an insurance company’s representations would be meaningless and it could mislead without consequence.” View "T-Mobile USA, Inc. v. Selective Ins. Co. of Am." on Justia Law

In 2005, Protective Life Insurance Company (Protective Life) issued William McHugh a 60-year term life policy (the policy) that provided for a 31-day grace period before it could be terminated for failure to pay the premium. McHugh failed to pay the premium due on January 9, 2013, and his policy lapsed 31 days later. McHugh passed away in June 2013. This appeal raised one fundamental issue: whether Insurance Code sections 10113.71 and 10113.72 ("the statutes"), which came into effect on January 1, 2013, applied to term life insurance policies issued before the statutes' effective date. Mchugh's daughter, Blakely McHugh, the designated beneficiary under the policy, and Trysta Henselmeier (appellants) sued Protective Life for breach of contract and breach of the implied covenant of good faith and fair dealing, claiming Protective Life failed to comply with the statutes' requirement that it provide a 60-day grace period before it terminated the policy for nonpayment of premium. The parties filed various trial court motions, and Protective Life, relying largely on interpretations of the Department of Insurance (the Department) argued that the statutes did not apply retroactively to McHugh's policy and the claim. The court rejected Protective Life's arguments and ruled that the statutes applied to the claim. The matter proceeded to jury trial and Protective Life prevailed. Appellants appealed both a special verdict in favor of Protective Life and an order denying their motion for judgment notwithstanding the verdict (JNOV). Pursuant to Code of Civil Procedure section 906, Protective Life requested that the Court of Appeal affirm the verdict on the additional ground that the statutes did not apply to the policy and the trial court erred by ruling to the contrary when it denied Protective Life's motion for a directed verdict. The Court of Appeal concurred with Protective Life, finding the trial court should have granted the company’s motion for a directed verdict. View "McHugh v. Protective Life Insurance" on Justia Law