Justia Insurance Law Opinion Summaries

In 2016, Daniel Zeljkovich, driving a tractor trailer, collided with Donald Matthews, who was insured by Protective Insurance Company. Zeljkovich was insured by Spirit Commercial Auto Risk Retention Group. Matthews sued Zeljkovich for negligence in Virginia, and Spirit negotiated a $700,000 settlement. Before finalizing the settlement, Spirit became insolvent and was placed into receivership and liquidation. Matthews then sought uninsured/underinsured motorist (UM/UIM) benefits from Protective, which paid him $700,000 and claimed subrogation rights against Spirit’s estate.The Special Deputy Receiver categorized Protective’s claim under the residual priority category, NRS 696B.420(1)(g), due to insufficient funds. Protective objected, arguing its claim should fall under the higher-priority classification, NRS 696B.420(1)(b). The Eighth Judicial District Court in Clark County, Nevada, affirmed the Special Deputy Receiver’s decision, leading Protective to appeal.The Supreme Court of Nevada reviewed the case and held that NRS 696B.420(1)(b) excludes a private insurance company’s subrogation claim. The court reasoned that subrogation law, the statute’s text, and public policy all support this exclusion. The court emphasized that the statute prioritizes claims by policyholders and statutory insurance guaranty associations, not private insurers. The court also found that including private insurers’ subrogation claims would undermine the statute’s purpose of protecting vulnerable insurance consumers. Consequently, the court affirmed the district court’s decision, relegating Protective’s claim to the residual category, NRS 696B.420(1)(g). View "Protective Insurance Company v. State" on Justia Law

Julian Omidi and his business, Surgery Center Management, LLC (SCM), were involved in a fraudulent scheme called "Get Thin," which promised weight loss through Lap-Band surgery and other medical procedures. Omidi and SCM defrauded insurance companies by submitting false claims for reimbursement, including fabricated patient data and misrepresented physician involvement. The scheme recruited patients through a call center, pushing them towards expensive medical tests and procedures regardless of medical necessity.A grand jury indicted Omidi and SCM for mail fraud, wire fraud, money laundering, and related charges. After extensive pretrial litigation and a lengthy jury trial, both were convicted on all charges. The district court sentenced Omidi to 84 months in prison and fined SCM over $22 million. The government sought forfeiture of nearly $100 million, arguing that all proceeds from the Get Thin scheme were derived from fraud. The district court agreed, finding that even proceeds from legitimate procedures were indirectly the result of the fraudulent scheme.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court's forfeiture judgment, holding that under 18 U.S.C. § 981(a)(1)(C), all proceeds directly or indirectly derived from a health care fraud scheme must be forfeited. The court rejected the argument that only proceeds from fraudulent transactions should be forfeited, noting that the entire business was permeated with fraud. The court concluded that there is no "100% Fraud Rule" in forfeiture cases seeking proceeds of a fraud scheme, and all proceeds from the Get Thin scheme were subject to forfeiture. View "United States V. Surgery Center Management, LLC" on Justia Law

Liberty Mutual Insurance Company ("Liberty") and Atain Specialty Insurance Company ("Atain") were involved in a contract dispute. Liberty sued Atain for breach of contract after Atain refused to indemnify Liberty for a $1 million appeal bond related to a racial discrimination case against McClure Hotel. Atain argued that it was not obligated to indemnify Liberty based on equitable estoppel, claiming it relied on Liberty's misrepresentation that the bond was closed.The United States District Court for the Northern District of West Virginia granted summary judgment in favor of Liberty, rejecting Atain's equitable estoppel defense. The court found that Liberty had not misrepresented the status of the appeal bond to Atain.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit held that even if Liberty had made a misrepresentation, Atain could not demonstrate detrimental reliance because it had access to all necessary information to understand its obligations under the indemnity agreement. Atain, as a sophisticated party, should have known that the appeal bond remained in effect until the judgment in the underlying action was satisfied, regardless of the outcome of the separate coverage action. Therefore, Atain's equitable estoppel defense failed, and the grant of summary judgment to Liberty was affirmed. View "Liberty Mutual Insurance Co. v. Atain Specialty Insurance Co." on Justia Law

Bellin Memorial Hospital hired Kinsey & Kinsey, Inc. to upgrade its computer software. Kinsey failed to implement the agreed-upon software, leading Bellin to sue Kinsey in Wisconsin state court for breach of contract and other claims. Bellin also sued Kinsey’s president and a senior product consultant. Kinsey’s insurer, Philadelphia Indemnity Insurance Company, provided a defense under a professional liability insurance policy. During the trial, Bellin and Philadelphia Indemnity entered into a partial settlement, resolving some claims and specifying the conditions under which Bellin could collect damages from Kinsey. Bellin prevailed at trial and was awarded damages.The Wisconsin circuit court ruled that the limited liability provision in the Agreement did not apply due to Kinsey’s material breach. The court granted a directed verdict on the breach of contract claim against Kinsey, leaving the question of damages to the jury. The jury awarded Bellin $1.39 million, later reduced to $750,000 plus costs. The jury found Kinsey and its president not liable for intentional misrepresentation and misleading representation.Philadelphia Indemnity filed a declaratory judgment action in the United States District Court for the Northern District of Illinois, seeking a declaration that the state court’s judgment was covered by the insurance policy and that the $1 million settlement offset the $750,000 judgment. The district court ruled for Bellin, concluding that the state court judgment was not covered by the insurance policy.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s decision. The court held that the insurance policy covered only negligent acts, errors, or omissions, and the state court’s judgment was based on a breach of contract, not negligence. Therefore, the $1 million set-off provision did not apply, and Bellin could recover the full amount of the judgment. View "Philadelphia Indemnity Insurance Co. v Kinsey & Kinsey, Inc." on Justia Law

Home Depot, Inc. and Home Depot U.S.A., Inc. (collectively, "Home Depot") experienced a data breach where hackers accessed their computer system and stole payment card information from customers. Home Depot settled claims with financial institutions for approximately $170 million, which included costs for reissuing payment cards and losses from reduced card usage. Home Depot's cyber insurers covered up to $100 million, and Home Depot sought additional coverage from Steadfast Insurance Company and Great American Assurance Company under their commercial general liability policies. The insurers denied coverage, arguing that the policies did not cover electronic data losses.The United States District Court for the Southern District of Ohio granted summary judgment in favor of the insurers, finding that the policies did not cover the claims related to the data breach. Home Depot appealed the decision.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo and affirmed the district court's decision. The court held that the electronic data exclusion in the insurance policies unambiguously barred coverage for both the reissuance and reduced usage claims. The court found that the payment card data qualified as "electronic data" under the policies, and the damages arose from the loss of use of this electronic data. Additionally, the court determined that the insurers had no duty to defend Home Depot in the lawsuits filed by the financial institutions, as the claims were not covered by the policies. The court concluded that the plain language of the policies excluded coverage for the damages arising from the data breach. View "Home Depot, Inc. v. Steadfast Insurance Co." on Justia Law

Christopher Meek purchased a universal life insurance policy from Kansas City Life Insurance Company, which combined a standard life insurance policy with a savings account. Meek alleged that Kansas City Life improperly included profits and expenses in the cost of insurance, which was not mentioned in the policy, leading to a lower cash value in his account. Meek filed a federal lawsuit for breach of contract and conversion, and the district court certified a class of about 6,000 Kansans with Meek as the lead plaintiff.The United States District Court for the Western District of Missouri found that Meek's lawsuit was timely for payments going back five years under Kansas’s statute of limitations. The court granted partial summary judgment in favor of Meek on the breach-of-contract claim, interpreting the policy against Kansas City Life. The conversion claim was dismissed. A jury awarded over $5 million in damages, which was reduced to $908,075 due to the statute of limitations. Both parties appealed.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court’s class certification, finding that common questions of law and fact predominated. The court also upheld the application of Kansas law for both the conversion claim and the statute of limitations. The court agreed with the district court’s interpretation of the insurance policy, concluding that the cost of insurance should not include profits and expenses. The court found that the jury’s damages award was supported by reasonable evidence and did not warrant an increase.The Eighth Circuit affirmed the district court’s judgment, including the class certification, the application of Kansas law, the partial summary judgment in favor of Meek, and the damages award. View "Meek v. Kansas City Life Ins. Company" on Justia Law

Christopher Meek purchased a universal life insurance policy from Kansas City Life Insurance Company, which combined a standard life insurance policy with a savings account. Meek alleged that Kansas City Life improperly included profits and expenses in the cost of insurance, which was not mentioned in the policy, leading to a lower cash value in his account. Meek filed a federal lawsuit for breach of contract and conversion, and the district court certified a class of about 6,000 Kansans with Meek as the lead plaintiff.The United States District Court for the Western District of Missouri found that Meek's lawsuit was timely under Kansas’s five-year statute of limitations for breach-of-contract claims. The court granted partial summary judgment in favor of Meek on the breach-of-contract claim, concluding that the policy's cost-of-insurance provision was ambiguous and should be construed against Kansas City Life. The jury awarded over $5 million in damages, which was reduced to $908,075 under the statute of limitations. Both parties appealed the decision.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's judgment. The appellate court held that the cost-of-insurance provision in the policy did not include profits and expenses, as these were not listed factors. The court also upheld the class certification, finding that common questions of law and fact predominated over individual issues. Additionally, the court agreed with the district court's application of Kansas law for the conversion claim and the statute of limitations for the breach-of-contract claim. The court found that the jury's damages award was supported by sufficient evidence and did not warrant an increase. View "Meek v. Kansas City Life Ins. Company" on Justia Law

Therese Hood was involved in a three-car accident and subsequently filed multiple lawsuits. Hood's underinsured motorist (UIM) carrier, United Services Automobile Association (USAA), provided her with counsel in a lawsuit filed by the Kucks, who were also involved in the accident. Hood also sued Johnson, the driver who initially hit her, and USAA defended Johnson under Hood's UIM policy. During mediation, USAA offered $200,000, but Hood did not accept it, and the case went to trial, where Hood won. Hood then filed a third lawsuit against USAA, alleging bad faith, negligence, and other claims, arguing that USAA took disparate positions on her headlight use and did not offer its full settlement authority during mediation.The Circuit Court granted summary judgment for USAA on several claims and directed a verdict on others, leaving only the bad faith and negligence claims for the jury. The jury found in favor of USAA on the bad faith claim but in favor of Hood on the negligence claim, awarding her damages. The trial court granted USAA's motion for judgment notwithstanding the verdict (JNOV) on the negligence claim, stating that a first-party insured could only bring a bad faith claim, not a negligence claim. The Court of Appeals affirmed this decision, holding that a first-party insured has no separate cause of action in negligence under the duty of good faith and fair dealing.The South Carolina Supreme Court reviewed the case and affirmed the Court of Appeals' decision. The court held that South Carolina law does not recognize a separate negligence claim between an insured and insurer, only a bad faith claim. The court also found that USAA did not act in bad faith during mediation or by taking a position on Hood's headlight use in the UIM action. The court concluded that USAA's actions were within its rights and that Hood's claims were without merit. View "Hood v. USAA" on Justia Law

In January 2021, Bertrand Nedoss, an 87-year-old resident of an assisted-living facility in Morton Grove, Illinois, wandered out of the facility, developed hypothermia, and died of cardiac arrest. His estate filed a negligence and wrongful-death lawsuit against Welltower Tenant Group, the facility’s owner, and Frontier Management, its operator. Welltower and Frontier were insured under a "claims made" policy by Church Mutual Insurance Company, effective from July 1, 2020, to July 1, 2021. The estate filed the lawsuit in October 2021, after the policy expired. However, nine days after Bertrand’s death, an attorney for the Nedoss family sent a letter to the facility, claiming an attorney’s lien and demanding evidence preservation.The United States District Court for the Northern District of Illinois ruled that the attorney’s letter qualified as a "claim" under the policy, triggering Church Mutual’s duty to defend. The court entered partial summary judgment for Welltower and Frontier and stayed the rest of the federal case pending the outcome of the state lawsuit.The United States Court of Appeals for the Seventh Circuit reviewed the case. On the eve of oral argument, Welltower and Frontier settled with the estate, and the state-court case was dismissed. This development mooted the appeal. The stay order was the only possible basis for appellate jurisdiction, and the partial summary judgment was not a final order. The Seventh Circuit dismissed the appeal as moot, noting that the dismissal of the state-court case removed the justification for the stay and rendered any appellate ruling on the stay irrelevant. View "Church Mutual Insurance Company v. Frontier Management, LLC" on Justia Law

In April 2013, Michael Riste applied for a bail bond for his son, Michael Peterson, and signed an Indemnity Agreement and a Premium Agreement with Bad Boys Bail Bonds (Bail Agent). The agreements required Riste to pay a $10,000 premium in installments. Peterson signed identical documents after his release. The Bail Agent executed a $100,000 bail bond on behalf of The North River Insurance Company (Surety), ensuring Peterson's appearance at future court proceedings. Peterson failed to appear, leading to the forfeiture of the bail bond and a summary judgment against the Surety in October 2015.The Superior Court of Los Angeles County denied appellants' previous motions to set aside the summary judgment, vacate the forfeiture, and exonerate the bond. Two different panels of the Court of Appeal affirmed these denials. In October 2020, a class action cross-claim was filed against BBBB Bonding Corporation (doing business as the Bail Agent), arguing that their bail bond premium financing agreements were subject to Civil Code section 1799.91 and thus unenforceable. The trial court agreed, and the Court of Appeal upheld this finding, affirming a preliminary injunction against BBBB.In September 2022, appellants filed a third motion to set aside the summary judgment, citing the Caldwell decision. They argued that the premium was part of the consideration for the bail bond, making the bond void and the summary judgment invalid. The trial court denied the motion.The California Court of Appeal, Second Appellate District, Division Three, affirmed the trial court's order. The court held that the bail bond was not void because the consideration for the bail bond was Peterson's release from custody, not the premium financing agreement. Therefore, the trial court had jurisdiction, and the summary judgment was valid. View "P. v. North River Ins. Co." on Justia Law