Justia Insurance Law Opinion Summaries

Plaintiff Geral Brown appealed a district court's order that granted summary judgment to Defendant Hartford Insurance Company (Hartford). Plaintiff sued Hartford under the Employee Retirement Income Security Act (ERISA) for the company's termination of his long-term disability benefits. Following his injury, Plaintiff filed for Social Security Disability benefits as required by his benefit plan, and the Social Security Administration awarded him benefits. The plan then offset the monthly benefit it paid to Plaintiff by the amount of the Social Security benefit. The Hartford denied Plaintiff's administrative appeal. After examining and weighing the evidence, the trial court granted summary judgment to the Hartford. The Tenth Circuit concluded that the plan administrator's decision was supported by substantial evidence. Accordingly, the Court affirmed the decision of the district court.

Plaintiff Scott Hackett aggravated a pre-existing low back injury while working as a long distance truck driver for Western Express. After Hackett was terminated for reasons unconnected to his injury, Hackett filed a petition for award to the Workers' Compensation Board and was awarded ongoing partial incapacity benefits for a gradual injury to his lower back. When calculating Hackett's weekly wage, the hearing officer (1) excluded the nine cents per mile Hackett received as per diem pay, concluding that it was paid to cover special expenses, and (2) concluded that the per diem payments were not a fringe benefit that could be included to a limited extent in average weekly wage. Hackett appealed. The Supreme Court affirmed the hearing officer's decision but remanded for a recalculation of Hackett's fringe benefits pursuant to Me. W.C.B. R. ch. 1, 5(1).

This case involved a coverage dispute between St. Paul Fire & Marine Insurance Company ("St. Paul") and its insured where the insured wrote a recommendation letter for a former employee who later injured a patient. St. Paul appealed the district court's judgment, in which the court concluded that the commercial general liability policy issued by St. Paul covered the insured's claim for the damages he was required to pay in a misrepresentation lawsuit. The court held that there was no coverage under the policy for the amounts at issue and therefore, reversed the district court's judgment and remanded for entry of judgment in favor of St. Paul.

In 2009, a car collided with a bus driven by Angela Austin, causing several passengers' deaths and serious injuries to others. Austin drove the bus as a transport vehicle for a nonprofit called Focus. Focus was insured by appellant Philadelphia Indemnity Insurance Company, who filed a complaint for interpleader indicating its willingness to pay insurance-policy proceeds in the total amount of $1 million as per its policy and requesting to be discharged from further liability. The circuit court entered an order interpleading appellant's funds. Appellees, the injured passengers and administrators of the deceased passengers' estates, filed counterclaims against appellant, alleging that Focus negligently failed to restrict Austin from using her cell phone while driving and arguing they were entitled to a judgment against appellant for a share of the interpleaded funds. Appellant filed a motion for declaratory judgment and a motion to dismiss, stating it had paid the full amount as stated in the insurance policy. The circuit court denied appellants' motions. The Supreme Court affirmed, holding that the circuit court correctly concluded that the language of the policy was ambiguous.

Petitioner Brady Farr appealed a circuit court judgment in favor of Respondents The Gulf Agency, Orange Beach Insurance Agency and Lexington Insurance Company. Mr. Farr finished renovating his house in 2003. In 2004, he decided to sell his property to a developer who wished to turn the property into condominiums. In anticipation of the sale, Mr. Farr obtained a $1 million loan, secured by a mortgage. As part of the loan process, the mortgage company ordered an appraisal of the property. The property was appraised at $1.3 million and the improvements were valued at $313,000. In 2004, Mr. Farr contacted Orange Beach to insure the property against "total loss." Lexington, acting as Orange Beach's agent, submitted an insurance application for policy limits based on the appraisal to The Gulf Agency, who ultimately served as underwriter for the policy. In the fall of 2004, Mr. Farr was concerned that the policy limits were not sufficient to adequately cover a total loss of the property. In September, Mr. Farr's concerns were realized when Hurricane Ivan destroyed the property. He filed a claim with Orange Beach. In November, Mr. Farr sold his property for $1.18 million. The sales agreement was amended to reflect the total loss he suffered as a result of the hurricane. Lexington's adjuster visited the property to determine the cause of Mr. Farr's loss. The adjuster found the hurricane was the "proximate cause". Lexington subsequently paid Mr. Farr $50,000 for the damage. Alleging that the policy did not provide adequate coverage and that Lexington failed to pay the proper benefits under the policy, Mr. Farr sued the insurance companies for breach of contract, fraud, misrepresentation, negligence, conspiracy, and bad-faith failure to pay an insurance claim. The trial court granted the companies' motion for summary judgment, finding that some of Mr. Farr's claims were barred by a two-year statute of limitations. Upon review of the trial court record, the Supreme Court affirmed the lower court's judgment pertaining to Mr. Farr's tort claims. The Court found that those claims were indeed barred by a statute of limitations. The Court however found that the breach of contract and bad faith claims should not have been dismissed through summary judgment. The Court affirmed part and reversed part of the lower court's order and remanded the case for further proceedings.

In June 2002, Codiejo Apodaca and her stepsister (the Insureds) were injured in an automobile accident. At the time of the accident, the Insureds were covered as resident relatives under an auto policy and a personal umbrella policy both issued by Respondent Allstate Insurance Company (Allstate). The policy included uninsured and underinsured motorist coverage in addition to bodily injury coverage. The umbrella policy provided excess liability for "occurrences" arising out of, among other things, "occupancy of a land vehicle by an insured for personal transportation." Allstate did not offer separate UM/UIM coverage in connection with the umbrella policy. The Insureds brought suit against Allstate for reformation of the umbrella policy to include UM/UIM coverage. In their view, Colorado law required Allstate to offer UM/UIM coverage in connection with the umbrella policy because the policy included automobile liability coverage. As such, the Insureds contended that UM/UIM coverage should have been incorporated into the umbrella policy as a matter of law. The trial court granted Allstate's motion to dismiss the suit, finding that only liability policies expressly linked to a specific, licensed Colorado vehicle were required to include mandatory UM/UIM insurance. The appellate court affirmed the trial court, and on appeal, the Insureds argued that both the trial and appellate courts misread both the policy and Colorado law. Upon review, the Supreme Court held that an umbrella policy is not an "automobile liability or motor vehicle liability policy" as specified by Colorado law. Therefore, the Court affirmed the appellate court's decision.

Respondent optometrist Steven Hobbs sublet space leased by Cole Vision Corporation (Cole Vision) from Sears Roebuck and Company (Sears) for his optometry practice. The sublease agreement between Hobbs and Cole Vision contained indemnity provisions whereby Hobbs agreed to defend Cole Vision and Sears against any and all liabilities arising from events occurring in Hobbs' business location or as a result of Hobbs' activities at the business. The agreement also purportedly required Cole Vision to retain copies of Hobbs' patient records. Pursuant to the agreement, Hobbs obtained professional liability insurance with NCMIC Insurance Company (NCMIC). Mary and John Lewis (the Lewises) sued Hobbs, Cole Vision, and Sears based on Hobbs' alleged malpractice in failing to properly diagnose and treat Mary Lewis. Cole Vision and Sears brought this action for declaratory relief after Hobbs and NCMIC refused to defend them in the malpractice suit. Although the Lewises' case was pending when Cole Vision brought this declaratory judgment action, it eventually settled. Cole Vision and Sears also sought judgment against Hobbs and NCMIC for defense costs and settlement amounts of the malpractice action brought by the Lewises. In response to the complaint, Hobbs filed a defense and counterclaim for negligent spoliation of evidence against Cole Vision and Sears stemming from the loss of Mary Lewis's patient profile sheet. Hobbs contended that Cole Vision lost the profile sheet, which was a key piece of evidence needed to defend the malpractice claim. According to Hobbs, he incurred costs and attorney fees as a result of his inability to adequately defend against the Lewises' claim for malpractice. Cole Vision filed a motion to dismiss on the ground that South Carolina does not recognize a cause of action for spoliation of evidence. The circuit court agreed and granted the motion to dismiss. Hobbs appealed the circuit court's order and the court of appeals reversed the circuit court, finding that Hobbs pled facts sufficient to constitute a general negligence cause of action. The court of appeals did not determine whether South Carolina recognizes a cause of action for negligent spoliation, instead reversing the circuit court based on its characterization of Hobbs' claim as a general negligence claim. Upon review of the record of the courts below, the Supreme Court found that Hobbs' claim that Cole Vision breached a contractual duty to maintain the document at issue remained a viable defense in his action for indemnification. The Court declined to recognize the tort of negligent spoliation of evidence and accordingly found that the circuit court properly dismissed it as a counterclaim. The Court reversed the appellate court's decision and remanded the case for further proceedings.

After appellant Stephanie Riley, who was insured by State Farm, was involved in a car accident, Riley settled with the tortfeasor's insurer, GEICO. Riley asserted that State Farm filed a lien on her settlement before it knew whether she would be made whole by the settlement. After taking her case to trial court, Riley appealed with a Ark. R. Civ. P. 54(b) certification the dismissal of count one of her amended petition for declaratory judgment and complaint, which sought a declaratory judgment that appellee State Farm had failed to establish a legal lien or right to subrogation under Arkansas law. The Supreme Court reversed and remanded, holding that the circuit court erred in interpreting Ark. Code Ann. 23-89-207 and the state's subrogation law. The subrogation lien cannot arise, or attach, until the insured has received the settlement proceeds or damage award and until there is a judicial determination that the insured has been made whole.

Megan Bradley, who was insured by State Farm, was injured in a motor-vehicle accident. State Farm paid $3844 in medical benefits to Bradley. State Farm then pursued a subrogation claim against the tortfeasor's insurer, Farmers Insurance. Bradley responded that the settlement with Farmers Insurance was not sufficient for her to be made whole. State Farm refused to release its subrogation claim. Bradley filed a petition for declaratory judgment and complaint for bad faith against State Farm and later filed an amended declaratory action to invalidate lien and complaint for injunctive relief, deceptive trade practices, bad faith and tortious interference with a contract. The circuit court dismissed count one of Bradley's amended pleading, finding (1) State Farm had a valid but unenforceable lien for sums paid to Bradley, (2) State Farm's right of subrogation arose at the time State Farm paid the medical benefits by operation of law, and (3) State Farm's right of subrogation is not enforceable until a subsequent judicial determination that Bradley was made whole by the settlement. The Supreme Court reversed and remanded for the reasons set forth on the same day in Riley v. State Farm Mutual Automobile Insurance Co.

Steve Baxter, who was insured by State Farm, was injured in a motor-vehicle accident. State Farm paid medical coverage in the amount of $5000 and informed the tortfeasor's insurer carrier, Farmers Insurance, of its notice of subrogation rights. Baxter informed State Farm that the amount of his settlement with Farmers was not sufficient for him to be made whole and filed a petition for declaratory judgment and complaint for bad faith against State Farm. Later Baxter filed an amended declaratory action to invalidate lien and complaint for injunctive relief, deceptive trade practices, bad faith, and tortious interference with a contract. The circuit court found that State Farm had a valid but unenforceable lien against any settlement paid to Baxter and dismissed count one of Baxter's complaint with prejudice. Baxter appealed, arguing the court erred in dismissing the first count of his complaint because, pursuant to the Supreme Court's case law, an insurer's right to subrogation only arises once the insured has been made whole. The Court reversed and remanded for the reasons set forth on the same day in Riley v. State Farm Mutual Automobile Insurance Co.