Justia Insurance Law Opinion Summaries

Kevin Klabon, a technician for CMI Legacy, LLC, was injured in a car accident while driving a company van. The accident was caused by Rodrigo Canchola-Rodriguez, an underinsured driver. Klabon received workers' compensation benefits from CMI's carrier, Pinnacol Assurance, and settled with Canchola-Rodriguez's insurer for $25,000. He then sought additional underinsured motorist (UIM) benefits from CMI's commercial auto insurer, Travelers Property Casualty Company of America, which valued his claim at $78,766 but paid only $45,766.68.Klabon sued Travelers in state court for unreasonable denial and delay of UIM benefits, alleging bad faith and breach of contract. Travelers removed the case to federal court and moved for summary judgment, arguing that Klabon's receipt of workers' compensation benefits barred his UIM claim under Colorado's Workers' Compensation Act (WCA). The United States Magistrate Judge certified the question to the Colorado Supreme Court, given conflicting precedents and significant public policy implications.The Colorado Supreme Court concluded that an employee injured by a third-party tortfeasor and who receives workers' compensation benefits is not barred from suing their employer's UIM insurer. The court held that the WCA's exclusivity provisions immunize only employers and their workers' compensation carriers, not separate UIM insurers. The court also determined that a suit to recover UIM benefits does not constitute a suit against the employer or co-employee and thus is not barred by the WCA. The court answered the certified question in the negative, allowing Klabon to pursue his claim against Travelers. View "Klabon v. Travelers Property Casualty Company of America" on Justia Law

Plaintiffs M.S. and L.S. sought insurance coverage for mental health treatments for their child, C.S., under a health benefits plan provided by M.S.'s employer, Microsoft Corporation. The plan, administered by Premera Blue Cross, is subject to ERISA and the Parity Act. Premera denied the claim, stating the treatment was not medically necessary. Plaintiffs pursued internal and external appeals, which upheld the denial. Plaintiffs then sued in federal district court, alleging improper denial of benefits under ERISA, failure to produce documents in violation of ERISA’s disclosure requirements, and a Parity Act violation for applying disparate treatment limitations to mental health claims.The United States District Court for the District of Utah granted summary judgment to Defendants on the denial-of-benefits claim but ruled in favor of Plaintiffs on the Parity Act and ERISA disclosure claims. The court found that Defendants violated the Parity Act by using additional criteria for mental health claims and failed to disclose certain documents required under ERISA. The court awarded statutory penalties and attorneys’ fees to Plaintiffs.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court vacated the district court’s grant of summary judgment on the Parity Act claim, finding that Plaintiffs lacked standing to bring the claim. The court reversed the district court’s ruling that Defendants violated ERISA by not disclosing the Skilled Nursing InterQual Criteria but affirmed the ruling regarding the failure to disclose the Administrative Services Agreement (ASA). The court upheld the statutory penalty for the ASA disclosure violation and affirmed the award of attorneys’ fees and costs to Plaintiffs. View "M.S. v. Premera Blue Cross" on Justia Law

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

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

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

American Building Innovation LP (ABI) was hired by Balfour Beatty Construction, LLC (Balfour Beatty) as a subcontractor for a school construction project. ABI had a workers’ compensation insurance policy when it began work, but the policy was canceled due to ABI’s refusal to pay outstanding premiums from a previous policy. This cancellation led to the automatic suspension of ABI’s contractor’s license. Despite knowing it was unlicensed and uninsured, ABI continued working on the project.The Superior Court of Orange County found that ABI was not duly licensed at all times during the performance of its work, as required by California law. ABI’s license was suspended because it failed to maintain workers’ compensation insurance. ABI later settled its premium dispute and had the policy retroactively reinstated, but the court found this retroactive reinstatement meaningless because it occurred long after the statute of limitations for any workers’ compensation claims had expired. The court ruled that ABI could not maintain its action to recover compensation for its work due to its lack of proper licensure.The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the lower court’s judgment. The court held that ABI was not entitled to retroactive reinstatement of its license because the failure to maintain workers’ compensation insurance was not due to circumstances beyond ABI’s control. ABI’s decision not to pay the premiums and its false representations to the Contractors’ State License Board were within its control. Consequently, ABI was barred from bringing or maintaining the action under section 7031 of the Business and Professions Code. The court also affirmed the award of attorney fees to Balfour Beatty under the subcontract’s prevailing party attorney fee provision. View "American Building Innovations v. Balfour Beatty Construction" on Justia Law

Mychal Byrd was injured in an automobile accident caused by an unknown motorist and subsequently died from his injuries. Byrd's medical expenses, totaling $474,218.24, were covered by the Gilster-Mary Lee Corporation Group Health Benefit Plan, a self-funded plan subject to ERISA. Byrd had an automobile insurance policy with Nationwide Insurance Company, which provided $50,000 in uninsured-motorist coverage. After Byrd's death, his family sued Nationwide in state court to collect the insurance proceeds. The Plan intervened, removed the case to federal court, and claimed an equitable right to the insurance proceeds.The United States District Court for the Eastern District of Missouri granted summary judgment in favor of the Plan, determining that the Plan was entitled to the insurance proceeds under the plan document. The plaintiffs, initially proceeding pro se, did not respond to the motion for summary judgment. After obtaining counsel, they moved for reconsideration, which the district court denied. The plaintiffs then appealed the decision.The United States Court of Appeals for the Eighth Circuit reviewed the case and concluded that the district court lacked subject-matter jurisdiction. The appellate court determined that the plaintiffs' claim did not fall within the scope of ERISA's civil enforcement provisions because the plaintiffs were neither plan participants nor beneficiaries. Consequently, the claim was not completely preempted by ERISA, and the federal court did not have jurisdiction. The Eighth Circuit vacated the district court's judgment and remanded the case with instructions to return it to Missouri state court. View "Kellum v. Gilster-Mary Lee Corporation Group Health Benefit" on Justia Law

Paul Carnes, an employee of Consolidated Grain and Barge Co., was diagnosed with degenerative disc disease in 2019 and received medical treatment for it. HMO Louisiana, Inc., the administrator of Consolidated Grain’s employer-sponsored health plan governed by ERISA, paid for some of Carnes’s treatments but not all. Carnes filed a workers’ compensation claim against his employer, which was settled without the employer accepting responsibility for his medical claims. With an outstanding medical balance of around $190,000, Carnes sued HMO Louisiana, alleging it violated Illinois state insurance law by not paying his medical bills and sought penalties for its alleged "vexatious and unreasonable" conduct.The United States District Court for the Central District of Illinois dismissed Carnes’s complaint on the grounds that his state law insurance claim was preempted by ERISA. The court allowed Carnes to amend his complaint to plead an ERISA claim, but instead, Carnes moved to reconsider the dismissal. The district court denied his motion and ordered the case closed. Carnes then appealed the final order.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court’s decision, agreeing that Carnes’s state law claim was preempted by ERISA. The court noted that ERISA’s broad preemption clause supersedes any state laws relating to employee benefit plans, and Carnes’s claim fell within this scope. The court also found that ERISA’s saving clause did not apply because the health plan in question was self-funded, making it exempt from state regulation. The court concluded that Carnes’s attempt to frame his suit as a "coordination of benefits dispute" was an impermissible effort to avoid ERISA preemption. Consequently, the court affirmed the dismissal of Carnes’s case. View "Carnes v. HMO Louisiana, Inc." on Justia Law

Joel M. Guy, Jr. murdered his parents in 2016 with the intent to collect the proceeds from his mother’s insurance plans. His mother had life insurance and accidental death and dismemberment insurance through her employer, naming Guy and his father as beneficiaries. Guy was convicted of first-degree premeditated murder, felony murder, and abuse of a corpse by a Tennessee jury.The United States District Court for the Eastern District of Tennessee determined that Guy would be entitled to the insurance proceeds if not disqualified. However, the court ruled that Guy was disqualified under Tennessee’s slayer statute or federal common law, which prevents a murderer from benefiting from their crime. The court granted summary judgment in favor of Guy’s family members, who argued that Guy was not entitled to the benefits. Guy appealed, arguing that ERISA preempts Tennessee’s slayer statute and that no federal common-law slayer rule applies.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court held that ERISA does not explicitly address the issue of a beneficiary who murders the insured, and thus, either Tennessee law or federal common law must apply. The court found that both Tennessee’s slayer statute and federal common law would disqualify Guy from receiving the insurance proceeds. The court affirmed the district court’s decision, concluding that Guy’s actions disqualified him from benefiting from his mother’s insurance plans under both state and federal law. View "Standard Insurance Co. v. Guy" on Justia Law

Angela Midthun-Hensen and Tony Hensen sought insurance coverage for therapies for their daughter K.H.'s autism from Group Health Cooperative between 2017 and 2019. The insurer denied coverage, citing a lack of evidence supporting the effectiveness of speech therapy for a child K.H.'s age and sensory-integration therapy for autism at any age. The family's employer-sponsored plan only covered "evidence-based" treatments. After several medical reviews and appeals upheld the insurer's decision, the parents sued, alleging violations of the Employee Retirement Income Security Act (ERISA) and state law regarding autism coverage.The United States District Court for the Western District of Wisconsin ruled in favor of the insurer, finding no violations of state law or ERISA. The plaintiffs then focused on their claim that the insurer's actions violated the Mental Health Parity and Addiction Equity Act (MHPAEA), which mandates equal treatment limitations for mental and physical health benefits. They argued that the insurer applied the "evidence-based" requirement more stringently to autism therapies than to chiropractic care, which they claimed lacked scientific support.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court found that the insurer's reliance on medical literature, which varied in its recommendations based on patient age, was permissible under the Parity Act. The court also noted that the plaintiffs failed to demonstrate that the insurer's treatment limitations for mental health benefits were more restrictive than those applied to "substantially all" medical and surgical benefits, as required by the statute. The court concluded that the plaintiffs' focus on a single medical benefit was insufficient to prove a violation of the Parity Act. View "Midthun-Hensen v. Group Health Cooperative of South Central, Inc.," on Justia Law