Justia Insurance Law Opinion Summaries

Plaintiffs Marla Knudsen and William Dutra, representing a class of similarly situated individuals, filed a class action lawsuit under the Employee Retirement Income Security Act (ERISA) against MetLife Group, Inc. They alleged that MetLife, as the administrator and fiduciary of the MetLife Options & Choices Plan, misappropriated $65 million in drug rebates from 2016 to 2021. Plaintiffs claimed this misappropriation led to higher out-of-pocket costs for Plan participants, including increased insurance premiums.The United States District Court for the District of New Jersey dismissed the case for lack of standing. The court concluded that the plaintiffs did not demonstrate a concrete and individualized injury. It reasoned that the plaintiffs had no legal right to the general pool of Plan assets and had not shown that they did not receive their promised benefits. The court found the plaintiffs' claims that they paid excessive out-of-pocket costs to be speculative and lacking factual support.The United States Court of Appeals for the Third Circuit affirmed the District Court's dismissal. The Third Circuit held that the plaintiffs failed to establish an injury-in-fact, as their allegations of increased out-of-pocket costs were speculative and not supported by concrete facts. The court noted that the plaintiffs did not provide specific allegations showing how the misappropriated drug rebates directly caused their increased costs. The court emphasized that financial harm must be actual or imminent, not conjectural or hypothetical, to satisfy Article III standing requirements. Consequently, the plaintiffs lacked standing to pursue their ERISA claims. View "Knudsen v. MetLife Group Inc" on Justia Law

The case involves a dispute between an insurer, GEICO, and a windshield repair shop, Glassco, regarding the Florida Motor Vehicle Repair Act. From 2016 to 2019, Glassco performed nearly 1,800 windshield repairs for GEICO’s insureds, who assigned their insurance payment rights to Glassco. GEICO paid these claims at a discounted rate, leading to litigation. GEICO sought to recover payments and claimed that Glassco violated the Repair Act by not providing written estimates and other disclosures.The U.S. District Court for the Middle District of Florida ruled in favor of Glassco, concluding that GEICO did not have a private right of action under the Repair Act because it was not a "customer" as defined by the statute. The court also held that Glassco’s violations did not render its invoices void. GEICO appealed, and the U.S. Court of Appeals for the Eleventh Circuit certified two questions to the Supreme Court of Florida regarding the insurer's rights under the Repair Act.The Supreme Court of Florida answered both certified questions in the negative. First, it held that Fla. Stat. § 559.921(1) does not grant an insurance company a cause of action when a repair shop fails to provide a written repair estimate. The court emphasized that the statute defines a "customer" as the person who signs the repair estimate, and GEICO conceded it did not meet this definition.Second, the court held that the Repair Act violations do not void a repair invoice for completed windshield repairs, nor do they preclude a repair shop from being paid by an insurance company. The court noted that the statute allows for penalties and damages to be adjusted if repairs were authorized and properly performed, indicating that voiding invoices was not intended as a remedy. The court also found that subsequent amendments to the Repair Act rendered previous case law, which might have supported GEICO’s position, obsolete. View "Government Employees Insurance Company v. Glassco Inc." on Justia Law

In October 2020, Elliot Fama, employed by Sanford Contracting, was working on a project in Scarborough, Maine. After work, he and his co-worker, Robert Clarke, consumed alcohol at a hotel and a tavern. Later, in the hotel parking lot, Clarke struck Mr. Fama, causing him to fall and sustain fatal injuries. Laureen Fama, Mr. Fama’s widow, settled a workers’ compensation claim in Massachusetts for $400,000.Laureen Fama then filed a lawsuit in Cumberland County Superior Court against Bob’s LLC, which operated the tavern, and Clarke. She alleged liquor liability, wrongful death, loss of consortium, and battery. The defendants moved for summary judgment, arguing that the workers’ compensation settlement precluded the lawsuit. The Superior Court denied these motions, leading to the current appeal.The Maine Supreme Judicial Court reviewed the case. It held that under Maine’s Workers’ Compensation Act (MWCA), Ms. Fama’s settlement barred her from suing Clarke, as the Act’s immunity provisions extend to co-employees. Consequently, Clarke was exempt from the lawsuit. The court further held that because Clarke could not be retained as a defendant, the claims against Bob’s LLC failed under the “named and retained” provisions of Maine’s Liquor Liability Act (MLLA).The court vacated the Superior Court’s order denying summary judgment and remanded the case for entry of judgment in favor of Bob’s LLC and Clarke. View "Fama v. Bob's LLC" on Justia Law

In March 2013, Woodsboro Farmers Cooperative contracted with E.F. Erwin, Inc. to construct two grain silos. Erwin subcontracted AJ Constructors, Inc. (AJC) for the assembly. AJC completed its work by July 2013, and Erwin finished the project in November 2013. However, Woodsboro noticed defects causing leaks and signed an addendum with Erwin for repairs. Erwin's attempts to fix the silos failed, leading Woodsboro to hire Pitcock Supply, Inc. for repairs. Pitcock found numerous faults attributed to AJC's poor workmanship, necessitating complete deconstruction and reconstruction of the silos, costing Woodsboro $805,642.74.Woodsboro sued Erwin in Texas state court for breach of contract, and the case went to arbitration in 2017. The arbitration panel found AJC's construction was negligent, resulting in defective silos, and awarded Woodsboro $988,073.25 in damages. The Texas state court confirmed the award in September 2022. In December 2018, TIG Insurance Company, Erwin's insurer, sought declaratory relief in the United States District Court for the Southern District of Texas, questioning its duty to defend and indemnify Erwin. The district court granted TIG's motion for summary judgment on the duty to defend, finding no "property damage" under the policy, and later ruled there was no duty to indemnify, as the damage was due to defective construction.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that there were factual questions regarding whether the damage constituted "property damage" under the insurance policy, as the silos' metal parts were damaged by wind and weather due to AJC's poor workmanship. The court determined that the district court erred in granting summary judgment for TIG and concluded that additional factual development was needed. The Fifth Circuit reversed the district court's decision and remanded the case for further proceedings. View "TIG Insurance Company v. Woodsboro Farmers Coop" on Justia Law

In 2007, Dennis Collins, Suzanne Collins, David Butler, and Lucia Bott purchased long-term care insurance policies from Metropolitan Life Insurance Company (MetLife). They also bought an Inflation Protection Rider, which promised automatic annual benefit increases without corresponding premium hikes, though MetLife reserved the right to adjust premiums on a class basis. In 2015, 2018, and 2019, MetLife informed the plaintiffs of significant premium increases. The plaintiffs filed a class action in 2022, alleging fraud, fraudulent concealment, violations of state consumer protection statutes, and breach of the implied covenant of good faith and fair dealing under Illinois and Missouri law.The United States District Court for the Eastern District of Missouri dismissed the case, ruling that the filed rate doctrine under Missouri and Illinois law barred the plaintiffs' claims. Additionally, the court found that the plaintiffs bringing claims under Missouri law failed to exhaust administrative remedies. The plaintiffs appealed, arguing that the filed rate doctrine did not apply, they were not required to exhaust administrative remedies, and their complaint adequately alleged a breach of the implied covenant.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court's dismissal. The appellate court held that the plaintiffs' complaint failed to state a claim upon which relief could be granted. The court found that MetLife's statements about premium expectations were not materially false and that the plaintiffs did not sufficiently allege intentional fraud or fraudulent concealment. The court also concluded that the statutory claims under the Missouri Merchandising Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act were barred by regulatory exemptions. Lastly, the court determined that the implied covenant of good faith and fair dealing was not breached, as MetLife's actions were expressly permitted by the policy terms. View "Collins v. Metropolitan Life Insurance Co." on Justia Law

A school bus owned by First Student, Inc., and insured by National Union Fire Insurance Company of Pittsburgh, PA, collided with two underinsured vehicles in Rhode Island, injuring Tiffany Briere and her minor daughter. Briere submitted a claim for underinsured motorist benefits to National Union, which was denied on the grounds that First Student had rejected such coverage. Briere then sued National Union, arguing that Rhode Island law required the policy to offer underinsured motorist coverage.The United States District Court for the District of Rhode Island granted summary judgment to National Union and First Student. The court found that the Rhode Island statute requiring underinsured motorist coverage did not apply because the insurance policy was not "delivered or issued for delivery" in Rhode Island. The policy had been issued by a New York-based broker and delivered to FirstGroup's headquarters in Ohio. Consequently, the court ruled that the policy was exempt from the statutory requirement.The United States Court of Appeals for the First Circuit reviewed the case and vacated the district court's summary judgment. The appellate court held that National Union had waived its defense based on the delivery requirement because it had not mentioned this ground in its initial denial letter to Briere. The court emphasized that insurers must notify their insureds of all grounds for denying coverage in their denial letters. Since National Union failed to do so, it could not later rely on the delivery requirement defense. The case was remanded for further proceedings to address other potential defenses and issues not considered by the district court. View "Briere v. National Union Fire Insurance Co. of Pittsburgh, PA" on Justia Law

Joan Stormo and her siblings hired attorney Peter Clark for a real estate transaction, but Clark's actions caused the deal to fall through. Stormo sued Clark for malpractice and won. Clark's insurer, State National Insurance Company, denied coverage based on a prior-knowledge exclusion and Clark's delay in reporting the lawsuit. Stormo, as Clark's assignee, then sued State National for breach of contract and unfair claim-settlement practices.The U.S. District Court for the District of Massachusetts found that factual questions necessitated a trial on the breach-of-contract claim but granted summary judgment to State National on the unfair claim-settlement practices claim. The jury found for Stormo on the breach-of-contract claim, awarding over $1 million in damages. However, the district court granted State National's motion for judgment as a matter of law, ruling that Clark's late notice of the claim voided coverage under the policy.The United States Court of Appeals for the First Circuit affirmed the district court's judgment. The court held that under Massachusetts law, a claims-made policy like Clark's does not require the insurer to show prejudice from late notice to deny coverage. Since Clark failed to provide timely notice, State National had no duty to indemnify or defend him. Consequently, Stormo's claims for breach of contract and unfair claim-settlement practices failed. View "Stormo v. State National Insurance Co." on Justia Law

Ramon Vasquez, Jr., sustained injuries while working in a restaurant and subsequently filed a workers' compensation claim, which was accepted by AmTrust North America, Inc. AmTrust paid $177,335.59 in benefits. Vasquez then initiated third-party litigation against several defendants, resulting in a $400,000 settlement. AmTrust, having intervened as subrogee, sought to recover its lien from the settlement proceeds. Vasquez argued that AmTrust was not entitled to any of the settlement proceeds based on prior case law.The Eighth Judicial District Court of Clark County held that AmTrust did not meaningfully participate in the third-party litigation and thus had to bear a portion of the litigation costs and fees under the Breen formula. The court also ruled that AmTrust could not recover from the portion of the settlement allocated to noneconomic damages, as per Poremba. Consequently, the district court adjudicated AmTrust’s lien at $0 and dismissed its complaint.The Supreme Court of Nevada reviewed the case and found that the Breen formula, which required insurers to bear a portion of litigation costs, conflicted with NRS 616C.215(5). The court held that there is no requirement for an insurer to intervene or participate in the third-party claim to recover on its lien. The court also overruled the Breen formula and Poremba to the extent they conflicted with the statute, stating that an insurer's lien applies to the total proceeds of any recovery, including noneconomic damages. The Supreme Court of Nevada reversed the district court’s order and remanded the case for further proceedings consistent with this opinion. View "Amtrust North America, Inc. v. Vasquez" on Justia Law

Zurich American Insurance Company issued a builder’s risk insurance policy for the construction of an academic building for City Colleges of Chicago. Infrastructure Engineering, Inc. (IEI), a subcontractor, designed a rainwater collection system for the project. During construction, a rainstorm caused significant flooding and damage to the building. Zurich paid the claim to CMO, the general contractor, and then sued IEI for breach of contract, alleging that IEI’s design caused the damage.The Cook County circuit court granted summary judgment in favor of IEI, agreeing with IEI’s argument that Zurich was not entitled to subrogation because the payment was made to CMO, not City Colleges, and CMO repaired the damage. Zurich appealed, and the appellate court reversed the circuit court’s decision, holding that Zurich was entitled to subrogation under the policy’s provisions, which allowed Zurich to step into City Colleges’ shoes.The Supreme Court of Illinois reviewed the case and affirmed the appellate court’s judgment. The court held that City Colleges, as the owner of the damaged property, had an insurable interest and sustained a loss when the building was damaged. The court found that Zurich, having paid for the repairs through CMO, was entitled to subrogation rights under the clear terms of the builder’s risk policy. The court rejected IEI’s argument that City Colleges did not sustain a loss or receive payment, emphasizing that CMO acted as City Colleges’ agent in handling the claim and repairs. The case was remanded for further proceedings consistent with this opinion. View "Zurich American Insurance Co. v. Infrastructure Engineering, Inc." on Justia Law

In this case, a primary insurer, Westport Insurance Corporation, and an excess insurer, Pennsylvania National Mutual Casualty Insurance Company, disputed liability for a judgment against their mutual insured, Insurance Alliance (IA). IA was sued by Lake Texoma Highport LLC for failing to procure requested insurance coverage, resulting in significant property damage. IA had a primary insurance policy with Westport and an excess policy with Penn National. Westport controlled the defense and rejected multiple settlement offers from Highport. A jury found IA liable, resulting in a $13.7 million judgment.The United States District Court for the Southern District of Texas determined that Penn National breached its duties to defend and indemnify IA. However, a jury found that Westport violated its Stowers duty by not accepting reasonable settlement offers. The district court ruled that Penn National's breaches occurred after Westport's Stowers violation and thus did not impact the case outcome.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed that Penn National breached its duties but held that Westport's Stowers duty was triggered by Highport's settlement offers, which Westport unreasonably rejected. The court found that the district court's jury instructions were correct and that Penn National had standing to assert a Stowers claim. The court also concluded that the district court did not err in its jury instructions or in setting aside the jury's verdict regarding the May 2009 demand.Ultimately, the Fifth Circuit affirmed the district court's judgment, holding that Westport was liable for the excess judgment due to its Stowers violation, and Penn National was entitled to reimbursement for the amount it paid on IA's behalf. View "Westport Insurance Corporation v. Pennsylvania National Mutual Casualty Insurance Company" on Justia Law