Justia Insurance Law Opinion Summaries

In this case, the respondent was injured in a 2017 automobile accident and pursued benefits under three insurance policies: the tortfeasor’s liability policy, his own underinsured motorist (UIM) policy with State Farm, and an excess UIM policy with USAA held by his brother. Both insurers requested that he provide medical releases to apportion damages between the 2017 accident and a prior accident in 2014. The respondent either did not provide the requested releases or submitted deficient ones. With his claims unresolved and the statute of limitations approaching, he sued USAA and State Farm for breach of contract and bad-faith delay or denial of benefits.The trial court, the El Paso County District Court, granted summary judgment to the insurers. It found that providing a comprehensive medical release was a condition precedent to coverage under both policies, and the respondent’s failure to do so warranted summary judgment. The court also determined that the claim against USAA was improper because the respondent had not exhausted his primary State Farm policy. The Colorado Court of Appeals reversed, holding that section 10-3-1118’s procedural requirements for insurer “failure-to-cooperate” defenses applied to all policyholder duties, and that USAA’s exhaustion clause was unenforceable because it conditioned payment on exhausting the primary insurer’s limits.The Supreme Court of Colorado reviewed the case and held that section 10-3-1118 applies only to defenses based on a policy’s general cooperation clause, not all contractual duties or conditions precedent. The court reversed the appellate court’s contrary interpretation. The court further clarified that exhaustion clauses in excess UIM policies are enforceable only if they are triggered by the policyholder’s undisputed damages exceeding the underlying policy limits, not merely by payment from the primary insurer. The Supreme Court affirmed that USAA’s duty to investigate is triggered only once such undisputed damages are established, and otherwise, summary judgment was proper for the insurers. The case was remanded for further proceedings consistent with these holdings. View "United Servs. Auto. Ass'n v. Wenzell" on Justia Law

Two individuals were injured while riding in a rental car after the driver, who had rented the vehicle from a car rental company, purchased a supplemental insurance policy that included uninsured/underinsured motorist coverage. The policy was issued by a third-party insurer, with the car rental company listed as the named insured and the driver and passengers as additional insureds. After the accident, the third-party insurer’s claims administrator processed the injury claims, but the payments made were less than the medical expenses incurred by the passengers, leading them to file suit against the car rental company for breach of contract, bad faith, and violation of insurance statutes.The District Court for Arapahoe County determined that the car rental company was neither a statutory insurer under Colorado’s insurance code nor a common-law de facto insurer, and dismissed the plaintiffs’ claims. The court reasoned that legislative amendments following the Colorado Supreme Court’s decision in Passamano v. Travelers Indemnity Co. had distinguished car rental companies from insurers. It further found that, under Cary v. United of Omaha Life Insurance Co., the car rental company’s limited involvement in claim processing did not rise to the level needed for de facto insurer status, as it lacked primary responsibility for claims handling.The Colorado Court of Appeals reversed, finding that the car rental company could qualify as a statutory insurer and that factual disputes remained as to whether it acted as a de facto insurer under Cary. On review, the Supreme Court of Colorado held that, in light of legislative amendments, car rental companies offering supplemental insurance are not statutory insurers under Colorado law. The court also clarified that only entities whose primary business is claims handling and who have significant financial risk in claim outcomes may qualify as de facto insurers under Cary, which did not apply to the car rental company here. The Supreme Court reversed the judgment of the Court of Appeals and ordered reinstatement of the district court’s dismissal. View "Hertz Corp. v. Babayev" on Justia Law

Matthew and Jamie Skipper obtained health insurance from CareFirst BlueChoice, Inc. through the Maryland Health Benefit Exchange. After experiencing infertility, they underwent in-vitro fertilization (IVF), which included freezing embryos. When they later sought coverage for the medically necessary procedure of embryo thawing as part of a subsequent IVF cycle, CareFirst denied coverage, citing a policy exclusion. The Skippers paid for the thawing themselves and later sought reimbursement. CareFirst denied their appeal as untimely. The Skippers filed a complaint with the Maryland Insurance Administration and, while that was pending, brought a putative class action in the United States District Court for the District of Maryland. Shortly after the federal suit was filed, CareFirst reversed its denial and paid the claim. The federal court then dismissed the Skippers’ complaint for lack of jurisdiction due to the amount-in-controversy requirement. The Skippers promptly refiled their class action in the Circuit Court for Prince George’s County.CareFirst moved to dismiss in the Circuit Court, arguing the case was moot because it had paid the Skippers’ claim and that the policy did not cover embryo thawing. The Circuit Court granted the motion based on mootness. The Appellate Court of Maryland reversed, holding that the payment did not moot the class claims and that the complaint adequately stated a claim.The Supreme Court of Maryland affirmed the Appellate Court’s judgment. The Court held that when a putative class action is first filed in another court and the defendant tenders individual relief to the named representative before dismissal for lack of jurisdiction, a substantially similar complaint promptly refiled in state court is not moot until the representative has a reasonable opportunity to seek class certification. Additionally, the Court held that the relevant policy exclusion does not authorize CareFirst to deny coverage for medically necessary expenses arising from IVF procedures, including embryo thawing, and that Maryland law requires such coverage. The case was remanded for further proceedings. View "Carefirst Bluechoice v. Skipper" on Justia Law

State Farm, an automobile insurer, uses a standard process in Tennessee to determine the “actual cash value” (ACV) of vehicles totaled in accidents. This process involves comparing the insured’s vehicle to similar used vehicles listed for sale and then applying a “typical negotiation” adjustment, which reduces the estimated value based on the assumption that advertised prices are generally higher than actual sales prices. After her own totaled minivan was valued using this process, Jessica Clippinger agreed to the payout but later challenged the fairness of the typical-negotiation adjustment, arguing that it systematically undervalued cars and breached the insurance contract. She brought a putative class action on behalf of similarly situated State Farm customers.The United States District Court for the Western District of Tennessee initially required Clippinger to use the policy’s appraisal process. After the appraisal resulted in a higher valuation and State Farm paid the difference, the district court found that Clippinger’s claim was not moot, as she had allegedly been harmed by incurring appraisal costs. The court granted class certification, accepting Clippinger’s argument that damages could be determined by simply refunding the amount of the negotiation adjustment for each class member, and found that common questions predominated over individual ones.The United States Court of Appeals for the Sixth Circuit, sitting en banc, reversed the class certification order. The court held that, even if the negotiation adjustment was flawed, determining whether State Farm breached its contract for each class member would require individualized evidence about the actual cash value of each vehicle. The court concluded that these individualized valuation questions would predominate over any common issues, making class certification improper under Federal Rule of Civil Procedure 23(b)(3). The Sixth Circuit further held that the district court’s proposed formula for damages improperly abridged State Farm’s substantive right to present individualized defenses, violating the Rules Enabling Act. The case was remanded for further proceedings. View "Clippinger v. State Farm Auto. Ins. Co." on Justia Law

Two insurance companies, Century Indemnity Company (CIC) and The Home Insurance Company (Home), both issued policies to a common insured covering the same risks. CIC also served as a reinsurer for Home. After Home became insolvent in 2003, it entered liquidation proceedings under New Hampshire’s Insurers Rehabilitation and Liquidation Act. In 2023, the New Hampshire Insurance Commissioner, as Home’s liquidator, settled Home’s liability to the insured for a specified amount, enabling the insured to assert a Class II claim against Home’s estate. However, because Home’s assets were insufficient, the insured would not receive the full settlement amount.CIC, anticipating that it might have to pay the insured for the shortfall between Home’s settlement amount and the actual distribution from Home’s estate, filed a contingent contribution claim against Home. CIC sought to offset this contribution claim against its reinsurance obligation to Home. The Liquidator disallowed CIC’s contribution claim, arguing that Home’s liability was satisfied by the allowed claim, regardless of the amount actually paid. The parties submitted to a referee the question of whether CIC’s contribution right should be based on the full settlement amount or only on the distributions made. The referee concluded that the settlement amount was controlling. CIC moved to recommit the referee’s order, but the Merrimack County Superior Court denied this motion, adopting the referee’s reasoning.On appeal, the Supreme Court of New Hampshire considered whether the statutory scheme abrogated common law rules on contribution and whether CIC’s contribution rights should be based on the settlement amount or actual distributions. The court held that the Act provides a comprehensive scheme that abrogates inconsistent common law principles. It concluded that CIC’s contribution rights are determined by the settlement amount, not the actual distributions. The court affirmed the Superior Court’s decision. View "In the Matter of Liquidation of Home Ins. Co." on Justia Law

The dispute centers on insurance coverage for environmental remediation costs incurred by a county at an airport property it owned. The activities causing contamination began during and after World War II, including industrial waste disposal and manufacturing by various tenants. In the 1990s and beyond, state authorities ordered the county to investigate and clean up hazardous groundwater pollution. The county sought coverage under a series of insurance policies issued by its insurer between 1966 and 1975, which provided both excess and umbrella liability coverage. The core disagreement was whether the insurer’s liability for property damage was limited to $9 million per occurrence, as the county argued, or subject to a $9 million annual aggregate limit, as the insurer contended.Initially, the United States District Court for the Central District of California allowed the insurer to withdraw an admission that no aggregate limit applied. The district court ultimately sided with the insurer, holding that the policies imposed an annual aggregate limit on property damage claims and relying on a California appellate decision, Garamendi v. Mission Insurance Co., to support this view. After granting the insurer’s motion, the district court dismissed the county’s claim for declaratory relief, reasoning that no further controversy existed and that any determination of future benefits would be speculative.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that, under California law, the aggregate limit provisions in these policies were ambiguous regarding whether they applied to property damage. The court found that Garamendi did not bind its interpretation, considering the policies’ language and extrinsic evidence, including industry practice and the insurer’s own statements. Concluding the policies did not specify an aggregate limit for property damage, the Ninth Circuit reversed the district court’s judgment and remanded for further proceedings. View "COUNTY OF SAN BERNARDINO V. INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA" on Justia Law

The defendant, who immigrated to the United States from Vietnam, operated a staffing agency that provided temporary laborers to various clients in Massachusetts. She managed most of the agency’s operations, including payroll, and worked closely with her daughter, who had accounting training. Between 2015 and 2019, the defendant withdrew over $3.7 million in cash from business accounts, frequently in increments just below the $10,000 federal reporting threshold, and used this cash to pay workers. Evidence at trial showed that the agency paid employees additional cash wages not reported to tax authorities, resulting in unpaid employment taxes and underreported payroll to the company’s workers’ compensation insurer, which led to lower insurance premiums.A federal grand jury in the District of Massachusetts indicted the defendant on four counts of failing to collect or pay employment taxes and one count of mail fraud. After a jury trial, she was convicted on all counts and sentenced to eighteen months’ imprisonment and two years of supervised release. She appealed, challenging the admission of evidence regarding the structuring of cash withdrawals, the district court’s refusal to give a jury instruction on implicit bias, the instructions related to tax obligations and good faith, and the sufficiency of the evidence supporting the mail fraud conviction.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the convictions. The court held that evidence about the structuring of cash withdrawals was properly admitted as intrinsic to the charged offenses and relevant to intent. The refusal to instruct on implicit bias was not an error because the district court’s voir dire and instructions substantially covered the issue. The court found no reversible error in the jury instructions regarding tax law and good faith, and concluded that any error was harmless. Finally, the evidence of mail fraud was found sufficient, as it was reasonably foreseeable that the mail would be used in the insurance audit process. View "US v. Giang" on Justia Law

After being injured in a car accident while riding in a vehicle insured by Progressive, the respondent received medical treatment from several providers. The total amount billed for her treatment was $27,786.17. However, as a Medicaid recipient, her providers agreed to accept $1,323.60—paid by Medicaid—as full satisfaction for her medical expenses. The respondent demanded payment of the full $10,000 policy limit under the "Medpay" provision of her Progressive auto insurance policy, but Progressive paid only the $1,323.60 Medicaid had paid, arguing that this was the only amount the respondent actually "incurred."The Circuit Court for Chester County denied Progressive’s motion to dismiss the breach of contract claim and, after a bench trial, found for the respondent. The court determined the term "incurred" was ambiguous and should be interpreted in favor of the insured, entitling the respondent to the full amount charged for her medical care. The South Carolina Court of Appeals affirmed, holding that the full amount billed constituted expenses "incurred," even though the providers accepted less due to Medicaid.The Supreme Court of South Carolina granted certiorari and reversed. It held that the term "expenses incurred" in the policy is unambiguous and means the amount for which the insured is legally obligated to pay. The Court determined the respondent incurred only the amount Medicaid paid, as she had no obligation to pay the providers more. Accordingly, Progressive was required to pay only $1,323.60, and not the higher amounts billed or the policy limit. The Court remanded for entry of judgment in favor of Progressive. View "Jones v. Progressive Northern Insurance Company" on Justia Law

The plaintiff purchased an auto insurance policy covering two vehicles, providing information about her address, where the vehicles were typically garaged, and who resided with her. After being injured as a passenger in an accident involving an unidentified driver, the plaintiff sought personal protection insurance benefits from her insurer. The insurer investigated and discovered that the plaintiff had not accurately disclosed the garaging location of the vehicles and the presence of other resident-relatives in her household. These misstatements would have resulted in a significantly higher insurance premium had they been truthfully reported. As a result, the insurer rescinded the policy from its inception and refunded all premium payments to the plaintiff.The plaintiff then filed suit in the Washtenaw Circuit Court, arguing that the insurer had unlawfully denied her benefits and breached the contract. The insurer moved for summary disposition, asserting the policy was void due to material misrepresentations. The trial court denied this motion and instead ordered reformation of the policy to reflect the correct address and an increased premium, requiring the plaintiff to repay the difference. The insurer appealed. The Michigan Court of Appeals reversed the trial court’s order, finding that the plaintiff’s misrepresentations were material and that the equities favored rescission, not reformation. The plaintiff’s motion for reconsideration was granted as to clarifying the applicable standard of review but the appellate court again ruled for the insurer.Upon further appeal, the Michigan Supreme Court affirmed the Court of Appeals. It clarified that appellate courts should review the trial court's grant or denial of rescission for abuse of discretion, not de novo, after first ensuring there is no genuine issue of material fact. The Court held that rescission was the proper remedy given the plaintiff’s material misrepresentations and the absence of any wrongdoing by the insurer, and that the trial court had abused its discretion in ordering reformation. View "Sherman v. Progressive Michigan Insurance Company" on Justia Law

The plaintiff brought a suit under Puerto Rico law after her mother died while residing in an assisted living facility. The plaintiff alleged that the facility's staff, including a licensed practical nurse, incorrectly informed treating physicians that her mother was a Jehovah's Witness. As a result, necessary blood transfusions were not administered, and the mother died from heart failure. The facility’s insurer had denied coverage for the incident under its general liability policy, claiming that the alleged wrongful acts were excluded as “professional services.”The United States District Court for the District of Puerto Rico first granted partial summary judgment for the insurer, finding that certain actions—such as failing to call 911—were excluded as “professional services,” but allowed the case to proceed on claims related to record-keeping and miscommunication, concluding those were not “professional services” under existing precedent. After the case was reassigned, the new district judge reaffirmed that ruling, and a damages trial resulted in a verdict against the facility. Subsequent to a decision by the Puerto Rico Supreme Court in Rivera-Matos v. Commonwealth, which clarified the scope of “professional services” exclusions, the district judge permitted the insurer to relitigate the coverage issue, ultimately finding that the exclusion did apply to the acts in question and entering judgment for the insurer.On appeal, the United States Court of Appeals for the First Circuit held that the plaintiff had forfeited her argument that the Puerto Rico Supreme Court’s decision should not be applied retroactively, as she had not raised it below. The court further found no plain error in the application of the new precedent. The judgment of the district court in favor of the insurer was affirmed. View "Garcia-Navarro v. Universal Insurance Company" on Justia Law