Justia Insurance Law Opinion Summaries

A veteran who suffered a traumatic brain injury from an improvised explosive device while deployed sought financial assistance under the Traumatic Servicemembers’ Group Life Insurance (TSGLI) program after experiencing a stroke within two years of the injury. The Army denied his claim, determining the stroke was a physical illness or disease, not a qualifying traumatic injury as defined by the relevant statute and regulations. The veteran then petitioned the Department of Veterans Affairs (VA) to amend its rules to include coverage for illnesses or diseases caused by explosive ordnance, arguing these conditions are analogous to those already covered under existing exceptions for injuries resulting from chemical, biological, or radiological weapons.The VA initially denied the rulemaking petition but agreed to further review as part of a program-wide assessment. After several years, extensive consultation with medical experts, and consideration of the petition and supporting materials, the VA issued a final denial. It concluded that expanding coverage to delayed illnesses or diseases linked to explosive ordnance would be inconsistent with TSGLI’s purpose, which focuses on immediate injuries, would deviate from the insurance model underlying the program, and could threaten its financial stability. The VA also found insufficient evidence of a direct causal relationship between explosive ordnance, traumatic brain injury, and downstream illnesses like stroke.The United States Court of Appeals for the Federal Circuit reviewed the VA’s denial under the highly deferential “arbitrary and capricious” standard of the Administrative Procedure Act. The court held that the VA provided a reasoned explanation addressing the petitioner’s arguments and the record, and did not act arbitrarily or capriciously. The petition for review was therefore denied. View "MCKINNEY v. SECRETARY OF VETERANS AFFAIRS " on Justia Law

A longtime deputy sheriff was convicted by a federal jury of mail and wire fraud after she submitted an insurance claim for items stolen during a burglary at her home, some of which she falsely claimed as her own but actually belonged to her employer, the sheriff’s office. She also used her employer’s fax machine and cover sheet in communicating with the insurance company and misrepresented her supervisor’s identity. The criminal conduct arose after a romantic relationship with a former inmate ended badly, leading to the burglary, but the fraud conviction was based on her false insurance claim, not on the relationship or the burglary itself.Following her conviction, the California Public Employees’ Retirement System (CalPERS) determined that her crimes constituted conduct “arising out of or in the performance of her official duties” under Government Code section 7522.72, part of the Public Employees Pension Reform Act, and partially forfeited her pension. The administrative law judge and the San Francisco Superior Court both upheld CalPERS’s decision, reasoning that her actions were sufficiently connected to her employment, particularly in her misuse of employer property and resources and in the context of her relationship with the former inmate.The Court of Appeal of the State of California, First Appellate District, Division One, reversed the trial court’s judgment. The appellate court held that the statute requires a specific causal nexus between the criminal conduct and the employee’s official duties, not merely any job-related connection. The court found that the deputy’s fraudulent insurance claim, although it referenced employer property and resources, did not arise out of or in the performance of her official duties as required by the statute. Accordingly, the pension forfeiture determination was set aside. View "Myres v. Bd. of Admin. for CalPERS" on Justia Law

A dispute arose between the California FAIR Plan Association (CFPA), a statutorily created insurer of last resort, and the state’s Insurance Commissioner. The Commissioner issued an order in 2021 directing CFPA to submit a plan to offer and sell a comprehensive “Homeowners’ Policy” that included, among other coverages, premises liability and incidental workers’ compensation. CFPA challenged this order, contending that the Basic Property Insurance Law only required it to provide first-party property insurance—coverage for direct loss to property—not liability coverage or similar third-party protections.The Superior Court of Los Angeles County denied CFPA’s petition for a writ of mandate. The court found ambiguity in the statutory definition of “basic property insurance,” specifically in the phrase allowing for “other insurance coverages as may be added.” Deeming the term ambiguous, the court deferred to the Department of Insurance’s interpretation that allowed the Commissioner to require CFPA to offer additional coverages, including liability insurance, so long as such coverages had a connection to the insured property. The court relied in part on the longstanding approval of liability coverage in certain businessowner policies since the early 1990s.The California Court of Appeal, Second Appellate District, Division Three, reviewed the lower court’s decision de novo. It concluded that, while the statutory language was ambiguous, extrinsic evidence such as legislative history and statutory context demonstrated that the Legislature intended for CFPA to be limited to providing first-party property insurance. The court found no sufficient basis to defer to the Department of Insurance’s later-adopted interpretation that expanded coverage to liability. The Court of Appeal reversed the judgment and directed the trial court to grant CFPA’s petition for writ of mandate, holding that the Commissioner lacked authority under the Basic Property Insurance Law to require CFPA to offer liability coverage. View "California FAIR Plan Assn. v. Lara" on Justia Law

Several insurance companies initiated a federal lawsuit against a licensed acupuncturist, three professional service corporations under his control, and two unlicensed individuals. The insurers sought a declaration that one of the corporations was not entitled to no-fault insurance reimbursement for services rendered, alleging the corporation engaged in a scheme to pay unlicensed individuals for patient referrals. The payments allegedly violated New York’s professional conduct rules but did not involve the transfer of control over the corporation to unlicensed persons.The United States District Court for the Eastern District of New York found that the acupuncturist and his corporations had engaged in an unlawful fee-splitting and kickback scheme, violating New York law. The court ruled that this professional misconduct rendered the corporation ineligible for no-fault reimbursement under the relevant Department of Financial Services (DFS) regulation and granted summary judgment for the insurers. On appeal, the United States Court of Appeals for the Second Circuit agreed that the referral fees were paid but found it unclear whether this type of professional misconduct made the provider ineligible for reimbursement under the regulation. It certified to the New York Court of Appeals the question of whether such misconduct, absent ceding control to unlicensed persons, permits denial of no-fault benefits.The New York Court of Appeals held that the DFS regulation does not authorize insurers to deny no-fault reimbursement based solely on a provider’s alleged professional misconduct, such as paying for patient referrals, unless that misconduct amounts to a failure to meet a foundational licensing requirement—specifically, surrendering control of the professional practice to unlicensed individuals. The court deferred to DFS’s longstanding interpretation that only licensing violations resulting in loss of eligibility to practice, as determined by regulators, justify denial of reimbursement. The court answered the certified question in the negative. View "Government Employees Ins. Co. v Mayzenberg" on Justia Law

Jessica De'Andrea, a patrol officer with the Montgomery Police Department, was involved in a motor vehicle collision while on duty. The driver of the other vehicle, Clint Walters, later sued De'Andrea individually for negligence, resulting in a $550,000 judgment against her after a jury trial. De'Andrea alleged that the City of Montgomery, which had procured liability insurance and acted as a self-insurer for its employees, failed to properly defend her, did not communicate settlement or appeal options, and refused to satisfy the judgment. She claimed these failures led to her bankruptcy and brought multiple claims against the City, including breach of contract, bad faith, fraudulent misrepresentation, and violations of the Alabama Legal Services Liability Act.The Montgomery Circuit Court denied the City's motions to dismiss, finding it was not apparent beyond doubt that De'Andrea could prove no set of circumstances entitling her to relief. The City then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking dismissal of all claims on the basis of statutory immunity and other defenses.The Supreme Court of Alabama reviewed only the City's immunity defense as to the fraudulent misrepresentation claim, because the City had not preserved immunity arguments for the other claims in the lower court. The Court held that municipal immunity under § 11-47-190, Ala. Code 1975, does not automatically bar all fraudulent misrepresentation claims, as such claims can be based on innocent or mistaken misrepresentations, not just intentional torts. The Court denied the City's petition for a writ of mandamus, allowing De'Andrea's claims to proceed. The City may raise its other defenses on appeal if necessary. View "De'Andrea v. City of Montgomery" on Justia Law

Victory Insurance Company, a Montana property and casualty insurer, issued workers’ compensation policies to several businesses in 2019. Later that year, Victory entered into an agreement with Clear Spring Property and Casualty Company to reinsure and then purchase Victory’s book of business, including the relevant policies. Victory notified its insureds by phone and sent a single email on December 31, 2019, stating that their policies would be “upgraded” to Clear Spring policies effective January 1, 2020. All policies were rewritten under Clear Spring as of that date.The Montana Commissioner of Securities & Insurance (CSI) initiated an enforcement action in December 2022, alleging that Victory had illegally cancelled its policies and could be fined up to $2.7 million. After discovery, both parties moved for summary judgment before a CSI Hearing Examiner. The Hearing Examiner found that Victory committed 165 violations of Montana’s insurance code and recommended summary judgment for the CSI. The CSI adopted this recommendation, imposing a $250,000 fine with $150,000 suspended, payable only if further violations occurred within a year. Victory sought judicial review in the First Judicial District Court, Lewis and Clark County, which affirmed the CSI’s decision.The Supreme Court of the State of Montana reviewed the case, applying the same standards as the district court. The Court held that the Hearing Examiner properly granted summary judgment because Victory’s actions constituted cancellations under the insurance code, regardless of whether they could also be considered assignments. The Court also held that Victory’s due process rights were not violated during the fine imposition process, that the statutory delegation of fine authority to the CSI was constitutional, and that Victory was not entitled to a jury trial because there were no material factual disputes. The Supreme Court affirmed the district court’s order. View "Victory Insurance v. State" on Justia Law

A hailstorm damaged the roof of Hector Campbell’s home, which was insured under a replacement cost insurance policy by Great Northwest Insurance Company. Campbell hired a contractor to replace the damaged shingles. The contractor discovered that the roof’s decking had gaps larger than permissible under the state code for shingle installation. Consequently, the contractor installed a new layer of sheathing before affixing the new shingles. Great Northwest denied coverage for the sheathing installation and the contractor’s overhead and profit costs, citing policy exclusions.The district court determined that Great Northwest’s denial of coverage for the sheathing violated Minnesota Statutes section 65A.10, subdivision 1, which mandates that replacement cost insurance cover the cost of replacing or repairing damaged property in compliance with the minimum code requirements. However, the court granted summary judgment to Great Northwest on the overhead and profit issue, concluding that Campbell’s policy clearly excluded coverage for those costs. Both parties appealed.The Minnesota Supreme Court reviewed the case. The court held that Minnesota Statutes section 65A.10, subdivision 1, requires Great Northwest to cover the cost of installing the new sheathing because it was necessary to replace the damaged shingles in accordance with the state building code. Therefore, the policy exclusion for sheathing was invalid under the statute. However, the court also held that Great Northwest could deny coverage for the contractor’s overhead and profit because Campbell failed to establish that these costs were part of the “cost of replacing, rebuilding, or repairing any loss or damaged property in accordance with the minimum code as required by state or local authorities.” The court affirmed the decision of the court of appeals on both issues. View "Great Northwest Insurance Company vs. Campbell" on Justia Law

In early 2019, G.K. and K.K. purchased a homeowners insurance policy from Travelers Home and Marine Insurance Company for their residence. The policy included an anti-assignment clause prohibiting assignment without the insurer's consent. In May 2020, after the policy expired, the Policyholders reported roof damage from a 2019 storm and hired Featherfall Restoration, LLC to repair it. Travelers denied the claim, citing wear and tear. The Policyholders then assigned their claim to Featherfall, which Travelers refused to recognize due to the anti-assignment clause.Featherfall filed a complaint with the Maryland Insurance Administration (MIA), asserting its right to act in place of the Policyholders. The MIA upheld Travelers' denial, stating the anti-assignment clause invalidated the assignment. Featherfall requested a hearing, arguing the clause should not apply to post-loss assignments. The MIA Commissioner granted summary decision in favor of Travelers, finding the assignment invalid and Featherfall not entitled to a hearing.Featherfall sought judicial review in the Circuit Court for Baltimore City, which affirmed the MIA's decision and denied declaratory relief. The Appellate Court of Maryland also affirmed, holding that anti-assignment clauses apply to post-loss assignments and that Featherfall lacked standing.The Supreme Court of Maryland reviewed the case and held that the anti-assignment clause did not prohibit the assignment of a post-loss claim. The court distinguished between the policy itself and a claim arising under it, noting that a claim is a chose in action and thus assignable. The court reversed the lower courts' decisions and remanded the case to the MIA for further proceedings consistent with this opinion. View "In re Petition of Featherfall Restoration" on Justia Law

Plaintiffs, limited liability companies, filed class action lawsuits in the United States District Court for the District of Maryland seeking relief under the Medicare Secondary Payer (MSP) provisions. These provisions make Medicare a secondary payer when a beneficiary has other insurance coverage. Plaintiffs obtained assignments from Medicare Advantage Organizations and other secondary payers to seek reimbursement from primary payers like the defendants, Government Employees Insurance Company and its affiliates (GEICO). Plaintiffs had no preexisting interest in the claims and were compensated on a contingency basis.The United States District Court for the District of Maryland denied GEICO's motion to dismiss the case, which argued that the assignments were void as against Maryland public policy based on the doctrines of maintenance, champerty, and barratry. The court found no clear statement of Maryland law on this issue and certified questions to the Supreme Court of Maryland.The Supreme Court of Maryland held that Plaintiffs did not violate Maryland’s barratry statute, which prohibits soliciting another person to sue for personal gain without an existing relationship or interest. Plaintiffs did not solicit secondary payers to file lawsuits but obtained the right to sue in their own names through assignments. The court also held that the common law doctrines of maintenance, champerty, and barratry, to the extent they still apply, do not invalidate Plaintiffs’ assignments. The court concluded that the assignments are not void as against public policy and did not address the enforceability of choice-of-law provisions in the agreements. View "GEICO v. MAO-MSO Recovery II" on Justia Law

The case involves the Massachusetts Insurers Insolvency Fund (MIIF) seeking cost-of-living adjustment (COLA) payment reimbursements from the Workers' Compensation Trust Fund (trust fund). MIIF, a nonprofit entity created by statute, administers and pays certain claims against insolvent insurers. Between 1989 and 2013, MIIF paid workers' compensation benefits, including COLA payments, on behalf of several insolvent insurers. MIIF filed claims with the trust fund for reimbursement of these payments, but the trust fund denied the claims, arguing that MIIF is not an "insurer" under the relevant statutes and does not participate in the trust fund.The Department of Industrial Accidents (DIA) administrative judge denied MIIF's claims, and the Industrial Accident Reviewing Board (board) affirmed the decision. The board relied on the Appeals Court's decision in Home Ins. Co. v. Workers' Compensation Trust Fund, concluding that MIIF, like the insolvent insurers, does not collect and transmit assessments to the trust fund and is therefore not entitled to reimbursement.The Supreme Judicial Court of Massachusetts reviewed the case and concluded that MIIF is eligible for COLA-payment reimbursements. The court determined that MIIF, when taking on an insolvent insurer's covered claims, is "deemed the insurer" and has "all rights, duties, and obligations" of the insolvent insurer under G. L. c. 175D, § 5 (1) (b). The court also found that the plain language of the relevant statutes does not exclude MIIF from reimbursement eligibility and that the trust fund's funding mechanism, which is paid for by employers, supports MIIF's entitlement to reimbursement.The Supreme Judicial Court reversed the board's decision and remanded the case for further proceedings consistent with its opinion. View "Massachusetts Insurers Insolvency Fund v. Workers' Compensation Trust Fund" on Justia Law