Justia Insurance Law Opinion Summaries

Eric Walters was a federal employee covered by a Standard Option health insurance plan (the Plan) administered by Blue Cross Blue Shield of Kansas City (Blue Cross). In November 2007 he went to Weight Loss Healthcare Centers of America, Inc. (Weight Loss) to inquire about surgical treatment for obesity. Because Weight Loss had no contractual arrangement with Blue Cross as either a preferred provider or a participating provider, Walters would expect to pay more than if he used a provider that had a contract. Nevertheless, Walters had outpatient laparoscopic surgery at Weight Loss to help him better control his weight. Although Walters obtained preauthorization from Blue Cross for the surgery, there was no indication in the record that he requested or received information about his out-of-pocket costs. Weight Loss billed Blue Cross for the procedure. The Blue Cross Plan paid $2,300 according to the Planâs benefit for out-of-network providers. Weight Loss appealed the payment to the federal Office of Personnel Management (OPM), which held that Blue Crossâs interpretation of Waltersâs Plan was correct and it had paid the proper amount. The district court affirmed OPMâs decision. Upon review, the Tenth Circuit determined that OPM reasonably interpreted the Plan language. However, the Court reversed the district courtâs decision because OPM neither (1) reviewed the evidence that would show whether Blue Cross had correctly calculated the Plan allowance, nor (2) explained why such review was unnecessary.

Plaintiffs filed suit in district court against the United States, alleging negligence in record-keeping and the administration of a certain life insurance policy. Plaintiffs subsequently appealed from the district court's order granting the United States' motion to dismiss for lack of subject matter jurisdiction. The court held that plaintiffs did exhaust its administrative remedies, but its claim arose out of a misrepresentation and was barred by the Federal Tort Claims Act (FTCA), 28 U.S.C. 2671.

Plaintiffs Aviva Life & Annuity Company and American Investors Life Insurance Company (collectively, "Aviva") contended the Federal Deposit Insurance Corporation (FDIC) acted in an arbitrary and capricious manner in rendering insurance determinations concerning certain of Plaintiffsâ bank deposit accounts. They appealed a district courtâs order upholding the FDICâs determinations. In 2008, the Kansas Bank Commissioner closed Columbian Bank & Trust Company and appointed the FDIC as receiver. At that time, Plaintiffs maintained twelve deposit accounts at Columbian. The bulk of those funds were held in two accounts (the âChallenged Accountsâ). The remaining accounts bore a variety of titles. Shortly after its appointment as receiver, the FDIC determined that each Plaintiffsâ respective accounts identified as âoperatingâ accounts, which included the Challenged Accounts, would be aggregated as corporate accounts. The FDIC further determined that the accounts designated as âbenefitsâ accounts would be separately insured as annuity contract accounts. Upon review of the FDIC's determination and the applicable legal authority, the Tenth Circuit found that the FDIC ultimately concluded the deposit account records clearly and unambiguously indicated the Challenged Accounts were owned in the manner of âcorporate accounts.â Plaintiffsâ extrinsic evidence was not, therefore, ârelevant dataâ for purposes of the FDICâs final insurance determination: "[t]he absence of any discussion pertaining to this evidence in the FDICâs final determination is therefore unsurprising, and in no way arbitrary or capricious." The Court affirmed the FDIC's determination.

Employee was injured while working in Minnesota for Wisconsin-based Employer. Employee applied for Wisconsin and Minnesota workers' compensation benefits. Employer's insurance company, Travelers Insurance, covered the Wisconsin benefits but denied the claim for Minnesota benefits based on an exclusion of Minnesota coverage in Employee's policy. Employee then filed a claim for Minnesota benefits with the Minnesota Department of Labor and Industry. After settling the claim, the Department pursued a petition for reimbursement it had filed against Employer. A compensation judge found that Employer was not insured for Minnesota workers' compensation liability and ordered Employer to reimburse the Department. The Workers' Compensation Court of Appeals (WCCA) reversed, concluding that Employer was entitled to coverage from Travelers under the reasonable expectations doctrine. On review, the Supreme Court reversed and remanded for reconsideration in light of a recent Court decision clarifying that the doctrine should not be used to provide coverage in contravention of unambiguous policy terms. On remand, the WCCA again reversed the compensation judge. On review, the Supreme Court reversed, holding that the WCCA had no authority to declare unambiguous language of an insurance contract to be invalid and unenforceable because the exclusion conflicted with Wisconsin statutory provisions and public policy.

Plaintiff, employed by a company contracted to do grounds maintenance, was injured while mowing grass at an Army base. A deteriorating steam pipe fell, striking him in the head. The district court granted summary judgment to the United States, reasoning that under the Kentucky Workers' Compensation Law, the United States was an up-the-ladder contractor, or statutory employer, so that plaintiff's only remedy was the workers' compensation benefits he received from his direct employer. The Sixth Circuit affirmed, holding that the U.S. government is a "person" entitled to the up-the-ladder defense and that the waiver of immunity under the Federal Torts Claims Act, 28 U.S.C. 1346, provides for claims in the same manner and to the same extent as a private individual. The government "secured the payment of compensation" by hiring a contractor and, therefore, cannot be treated as an employer that did not secure benefits. The work performed by plaintiff was a "regular and recurrent" part of work at the facility and the government was entitled to contractor immunity.

Plaintiff Melissa Qualls appealed a district Court's order that affirmed the Social Security Administration's decision to deny her application for disability insurance benefits. Plaintiff alleged she became disabled in 2004. Her "date last insured" was December 31, 2008, "thus she had the burden of proving that she was totally disabled on that date or before." Though Plaintiff suffered from multiple sclerosis, the Administrative Law Judge (ALJ) found that she was not disabled because "she could make a successful adjustment to other light and sedentary work that exists in significant numbers in the national economy." On appeal, Plaintiff argued that the ALJ failed to perform a proper credibility determination prior to rendering his judgment. Upon review of the Administration's record, the Tenth Circuit found that the Commissioner's decision was supported by substantial evidence, and the the law was properly applied. The Court affirmed the Commission's decision to deny Plaintiff further insurance benefits.

The Montana Department of Revenue (Department) issued final ad valorem assessments of Puget Sound Energy (Puget) for several tax years, after which Puget petitioned the State Tax Appeal Board (STAB) for review of the Department's assessments. STAB determined the Department inaccurately assessed Puget's value and assessed Puget's value in excess of the Department's original assessment. Puget petitioned the district court for review, and the court concluded that STAB could not adopt an assessment value exceeding the Department's original assessment. On appeal, the Supreme Court reversed, holding that the district court incorrectly concluded that STAB may not assess Puget's market value in an amount that exceeds the Department's original assessment. The Court held that STAB has the constitutional and statutory duty to hear Puget's appeal and make an independent determination of Puget's market value even if STAB's assessment exceeds the Department's original assessment. Remanded.

BancInsure, Inc. appealed a declaratory judgment in favor of Columbian Financial Corporation and a former director, Carl McCaffree (collectively the Insureds). The insurance policy at issue here was a "claims-made" policy covered any claim made to BancInsure against any Columbian officer or director for a "Wrongful Act" as defined by the policy. A disputed provision of the policy pertained to the scope of coverage if Columbian was placed in receivership or otherwise ceased to engage in active banking business. The parties interpreted the provision differently. The Insureds contended that if Columbian went into receivership, the policy covered all claims made through the end of the original policy period, although only for Wrongful Acts committed before the receivership. BancInsure contended that the policy covered only claims made before the receivership. The operation of the disputed provision became relevant in August 2008 when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Soon thereafter, Columbianâs management sent BancInsure a letter to notify it of potential claims by the FDIC and others. The parties disputed many of the claims against Columbian which led to Columbian filing suit to the district court to determine which claims were covered under the policy. The sole issue on appeal to the Tenth Circuit was whether the district court had jurisdiction. Though no party disputed jurisdiction, the Tenth Circuit found that there was no actual controversy between the parties when the district court below rendered its judgment. The court therefore lacked jurisdiction. The Tenth Circuit reversed the lower courtâs decision and remanded to case with instructions to the court to vacate its judgment.

To provide relief in the aftermath of Hurricanes Katrina and Rita, Congress appropriated funds to Louisiana which distributed some of those funds through the "Road Home" program. The State required more than 150,000 Road Home grant recipients to execute a "Limited Subrogation/Assignment Agreement." The Road Home program created "perverse incentives" for insurance companies and their insured homeowners: some insurers inadequately adjusted and paid grant-eligible claims, and some grant-eligible homeowners had little motivation for file insurance claims. As a result, Road Home applications skyrocketed and created a $1 billion shortfall in the program. The State filed suit against more than 200 insurance companies, seeking to recover the funds spent and yet to be spent on claims under the Road Home program. The Insurance Companies successfully removed the case to the federal district court. The Insurance Companies then sought to dismiss the State's case, arguing that as a matter of law, anti-assignment clauses in the homeowners' policies invalidated the subrogation/assignment to the State. The federal district court denied the Companies' motion to dismiss. The Companies appealed to the Fifth Circuit. Because interpretation of the policy provisions at issue was a matter of State law, the Court certified interpretation to the Louisiana Supreme Court. The Supreme Court found that there is no public policy in Louisiana that precludes anti-assignment claims from applying to post-loss assignments. The Court commented that the language of the anti-assignment clause must clearly and unambiguously express that it applies to post-loss assignments, and as such must be evaluated on a policy-by-policy basis.

Plaintiff sought disability insurance benefits under the Social Security Act, alleging that migraine headaches, affective mood disorder, and mayofascial back pain left her unable to work. At issue was whether the administrative law judge's ("ALJ") decision was supported by substantial evidence and whether the ALJ properly weighed physicians' opinions in determining plaintiff's residual functional capacity. The court concluded that substantial evidence supported the ALJ's decision to discredit plaintiff's subjective complaints where none of her doctors reported functional or work related limitations due to her headaches and where there was no basis for her creditability. The court also held that the ALJ properly weighed the physicians' opinions in determining plaintiff's residual functional capacity.