Justia Insurance Law Opinion Summaries

The dispute centers on insurance policies purchased by several Louisiana public entities, including the Town of Vinton, from a group of foreign and American insurers. The policies included an arbitration clause and a contract endorsement stating that each policy is a “separate contract” between the insured and each insurer. After alleged breaches, the insured entities sued all participating insurers in Louisiana state court. Subsequently, the insureds dismissed the foreign insurers with prejudice, leaving only American insurers as defendants.Following the dismissal of the foreign insurers, the remaining American insurers removed the cases to the United States District Court for the Western District of Louisiana. They sought to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. The district court denied these motions, holding that the contract endorsement created separate agreements between each insurer and the insured, and, since the foreign insurers were no longer parties, no agreement involved a non-American party. The court also rejected the American insurers’ equitable estoppel argument, finding it precluded by Louisiana law, which expressly bars arbitration clauses in insurance contracts covering property in the state.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s decision. The Fifth Circuit held that the Convention does not apply because no foreign party remains in any agreement to arbitrate. The court further concluded that Louisiana law prohibits enforcement of arbitration clauses in these insurance contracts and that equitable estoppel cannot override this prohibition. Lastly, the court determined that the delegation clause in the arbitration agreement could not be enforced because Louisiana law prevents the valid formation of an arbitration agreement in this context. View "Town of Vinton v. Indian Harbor" 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

A teacher employed by the Los Angeles Unified School District purchased a variable annuity with an optional Guaranteed Minimum Income Benefit (GMIB) rider from an insurance company in 2010. The GMIB rider, which provided a guaranteed minimum level of payments, was subject to an annual fee that was disclosed both to the purchaser and on a state-maintained website as required by the California Education Code at the time of purchase. In 2018, the insurer ceased offering the GMIB rider to new customers, but permitted existing holders, including the plaintiff, to maintain the rider and continue paying the associated fee. After January 2019, the fee for the GMIB rider was no longer listed on the state-administered website, although the underlying annuity product remained available to new purchasers.The plaintiff filed a lawsuit in the Superior Court of Los Angeles County, alleging that the insurer’s collection of the GMIB rider fee after it was no longer disclosed on the state website constituted an unlawful business practice under California’s Unfair Competition Law (UCL). The plaintiff did not claim to have relied on the website or to have been misled about the fee, but asserted that the insurer was statutorily barred from collecting undisclosed fees. The trial court sustained the insurer’s demurrer, finding that the plaintiff failed to allege reliance necessary for standing under the UCL, and dismissed the action with prejudice when the plaintiff declined to amend the complaint.The California Court of Appeal, Second Appellate District, Division One, affirmed the dismissal, albeit on different grounds. The court held that the Education Code does not require continued disclosure of fees for optional product features, such as the GMIB rider, after those features are no longer offered to prospective purchasers. As a result, the insurer was not prohibited from collecting the fee from existing holders, and the plaintiff’s UCL claim failed as a matter of law. The court awarded the insurer its costs on appeal. View "Jacobson v. Metropolitan Life Insurance Co." on Justia Law

The case concerns an insurance dispute in which the plaintiff’s father purchased liability insurance for three vehicles from Progressive Direct Insurance Company, but rejected uninsured/underinsured motorist (UM/UIM) coverage by signing a rejection form. After the plaintiff was seriously injured in a car accident where damages exceeded the other driver’s coverage limits, he filed a claim for UIM coverage with Progressive, which was denied due to the prior rejection of coverage. The plaintiff then sued Progressive, arguing that the insurer’s offer of UM/UIM coverage was invalid because it was made on a per-policy, rather than a per-vehicle, basis.At the trial level, the District Court granted summary judgment in favor of Progressive, dismissing the plaintiff’s claims with prejudice. The New Mexico Court of Appeals affirmed the dismissal, relying on its earlier ruling in Lueras v. GEICO General Insurance Co., which found that New Mexico law did not require UM/UIM coverage to be offered on a per-vehicle basis. The Court of Appeals concluded that Progressive’s per-policy offer complied with existing law, and thus the plaintiff’s rejection of coverage was valid.The Supreme Court of the State of New Mexico reviewed the case on certiorari and held that New Mexico’s UM/UIM statute requires insurers to offer UM/UIM coverage on a per-vehicle basis and disclose premiums for each vehicle accordingly. The Court found that per-policy, all-or-nothing offers frustrate the legislative purpose of encouraging consumers to purchase UM/UIM insurance and limit consumer choice. The Court ruled that the plaintiff’s rejection of coverage was invalid because it was not knowingly and intelligently made under the required per-vehicle offer structure. The Supreme Court reversed the lower courts’ decisions and remanded for further proceedings, applying its holding with selective prospectivity. View "Kileen v. Didio" on Justia Law

In this case, Roland Pour Sr. purchased and insured a home in Minnesota, where his children Kmontee and Roland Jr. lived. Pour Sr. moved to Georgia in 2019, updating all personal records to reflect his new residence but did not sell the Minnesota home or notify the insurer of his change in residence. He maintained some belongings in the Minnesota home and visited occasionally, while his children continued to live there and paid for utilities. In September 2021, a fire damaged the home and personal property. Pour Sr., living in Georgia at the time, filed a claim under the homeowners insurance policy for damages to the house, his own property stored there, and his children’s property and living expenses.The United States District Court for the District of Minnesota reviewed cross motions for summary judgment. Applying Minnesota law, the court granted summary judgment to Liberty Mutual, holding that the policy did not cover the home or attached structures because Pour Sr. did not “reside” at the house at the time of the fire. The court also held that Kmontee and Roland’s property was not covered because, although they lived in the home, they were not “residents of Pour Sr.’s household” as defined by the policy and Minnesota law. Pour Sr.’s claim for his own property was settled and not at issue.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s ruling de novo. The appellate court affirmed the district court’s judgment, holding that, under the unambiguous terms of the policy and Minnesota law, Pour Sr. did not reside at the Minnesota home during the relevant period, and his children were not insureds under the policy because they did not reside in his household. The court found no conflict with Minnesota’s Standard Fire Insurance Policy and rejected arguments regarding ambiguity or illusory coverage. View "Pour v. Liberty Mutual Pers. Ins. Co." on Justia Law

The case concerns an automobile accident in Prince George’s County, Maryland, involving George Bowens and a driver named Lisa Daniels, who was at fault. Bowens sustained injuries and held a $50,000 underinsured motorist (UIM) policy with State Farm. Daniels’ insurance had a $30,000 liability limit, which was offered to Bowens as a settlement for his injuries. Following established statutory procedures, Bowens notified State Farm of this offer, State Farm consented and waived subrogation rights, and Bowens accepted the $30,000. Bowens then sought to recover the remaining $20,000 available under his UIM policy from State Farm, which denied the claim.Bowens filed a breach of contract action in the District Court for Prince George’s County, seeking $20,000. State Farm moved to dismiss, arguing that the District Court lacked subject matter jurisdiction because Bowens would have to prove total damages of $50,000—exceeding the court’s $30,000 jurisdictional cap. The District Court agreed and dismissed the case. Bowens appealed to the Circuit Court for Prince George’s County, which affirmed the dismissal, reasoning that the District Court would need to find damages over $30,000 and thus could not grant relief.The Supreme Court of Maryland reviewed the case and held that the District Court’s jurisdiction is determined by the amount the plaintiff seeks from the defendant in the pending action, not by the total underlying damages or prior settlements received from the tortfeasor’s insurer. Since Bowens’ claim against State Farm was for $20,000, the District Court had jurisdiction. The Supreme Court of Maryland reversed the judgment of the circuit court and ordered the case remanded to the District Court for further proceedings. View "Bowens v. State Farm Mut. Auto. Ins." on Justia Law

After a car accident in Prince George’s County, Maryland, George Bowens, who was injured by the clear negligence of another driver, sought to recover compensation for his injuries. The at-fault driver had $30,000 in liability insurance, which was offered to Bowens in settlement. Bowens, however, had a $50,000 underinsured motorist (UIM) policy with his own insurer, State Farm. After accepting the $30,000 from the at-fault driver’s insurer (with State Farm’s consent and waiver of subrogation rights), Bowens sought the remaining $20,000 from State Farm under his UIM policy, claiming breach of contract when State Farm denied the claim.Bowens filed his action in the District Court of Maryland, which has jurisdiction over contract claims not exceeding $30,000. State Farm moved to dismiss, arguing that to recover the $20,000, Bowens would have to prove total damages of $50,000—an amount above the District Court’s jurisdictional cap. The District Court granted the motion to dismiss for lack of subject matter jurisdiction, and the Circuit Court for Prince George’s County affirmed, reasoning that the court would need to find Bowens’ damages exceeded $30,000, thus exceeding the District Court's authority.The Supreme Court of Maryland reviewed the case and reversed the lower courts. It held that, for purposes of determining the District Court’s jurisdiction under § 4-401(1) of the Courts and Judicial Proceedings Article, the relevant amount is the “debt or damages claimed” in the pleadings—that is, the net recovery sought from the defendant in the action—not the plaintiff’s total damages. Because Bowens sought only $20,000 from State Farm, the District Court had jurisdiction to hear the case. The Supreme Court of Maryland remanded the case for further proceedings consistent with this opinion. View "Bowens v. State Farm Mutual Automobile Insurance Co." on Justia Law

The case involves a Florida-based title insurer that suffered significant financial setbacks, prompting a series of business restructurings and asset transfers. In 2009, the company entered a joint venture with another title insurance group, forming a new entity to handle certain business functions. Over subsequent years, the original company retained substantial assets and continued operations, but further financial decline led to a 2015 agreement in which it transferred assets and liabilities to its business partner, in exchange for the assumption of its policy liabilities. The Florida insurance regulator scrutinized and ultimately approved the transaction after requiring additional commitments from the acquiring party.The United States Bankruptcy Court for the Middle District of Florida later oversaw the company’s Chapter 11 proceedings. The appointed Creditor Trustee brought an adversary proceeding against the acquiring parties and related entities, alleging that the asset transfer constituted a fraudulent transfer under federal bankruptcy law and Florida statutes, and sought to impose successor liability and alter ego claims. The bankruptcy court held a bench trial, excluding portions of the Trustee’s expert valuation as unreliable, and found that the company had received reasonably equivalent value in the transaction. The court also rejected the successor liability and alter ego theories, finding insufficient evidence of continuity of ownership, improper purpose, or harm to creditors.The United States District Court for the Middle District of Florida affirmed the bankruptcy court’s rulings. On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the record and affirmed the district court’s order. The Eleventh Circuit held that the bankruptcy court did not err in excluding the Trustee’s expert, that the asset transfer was for reasonably equivalent value and not fraudulent, and that the successor liability and alter ego claims failed for lack of evidence and legal sufficiency. View "Stermer v. Old Republic National Title Insurance Company" 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

Cheriese Johnson began experiencing a range of symptoms, including coughing and pain in her hands and feet, prior to her employment in July 2016 with The William Carter Company. She purchased a long-term disability insurance policy from Reliance Standard that became effective in October 2016. During the three months before her coverage began, Johnson sought medical care for various symptoms and received several diagnoses, but not scleroderma. In early 2017, after her policy was active, she was diagnosed with scleroderma—a rare autoimmune disease—following a lung biopsy. Johnson then filed a claim for long-term disability benefits, which Reliance Standard denied, arguing her disability was caused by a preexisting condition for which she had received treatment during the policy’s lookback period.After her claim was denied and her appeal was unsuccessful, Johnson sued Reliance Standard in the United States District Court for the Northern District of Georgia under the Employee Retirement Income Security Act (ERISA). She moved for judgment on the administrative record, while Reliance Standard sought summary judgment. The district court granted summary judgment to Reliance Standard, finding its decision to deny benefits was correct under the terms of the policy.On appeal, the United States Court of Appeals for the Eleventh Circuit reversed the district court’s judgment. Applying ERISA’s interpretive framework and reviewing the plan administrator’s decision de novo, the Eleventh Circuit held that Reliance Standard’s interpretation of the policy was both incorrect and unreasonable. The court concluded that Johnson had not received medical treatment “for” scleroderma during the lookback period because neither she nor her doctors suspected or intended to treat that specific condition at that time. The court found that Reliance Standard’s interpretation was arbitrary and capricious, and remanded for further proceedings consistent with its opinion. View "Johnson v. Reliance Standard Life Insurance Company" on Justia Law