Justia Insurance Law Opinion Summaries

Plaintiff challenged the denial of his claims for long-term disability benefits by defendant, who served as both the administrator of claims and the payor of benefits in the long-term disability plan in which defendant participated. At issue was whether there was a conflict of interest where defendant was both administrator and payor of benefits of the plan governed by ERISA, 29 U.S.C. 1001-1461. The court found that defendant considered the medical information submitted by plaintiff's doctors and relied upon the advice of several independent medical professionals to conclude that plaintiff failed to make a sufficient showing of disability under the plan and, even where plaintiff's own doctors offered different medical opinions than defendant's independent doctors, the plan administrator could give different weight to those opinions without acting arbitrarily or capriciously. Therefore, the court held that a reasonable basis supported defendant's benefits decisions and that the conflict of interest did not render the decisions arbitrary or capricious.

Kurt R. Ward, Attorney at Law, LLC, appealed the district court's order denying its motion for judgment on the pleadings and granting the Plan Parties' (the Bert Bell/Pete Rozelle NFL Player Retirement Plan, the Retirement Board of the Plan, and the Bank of New York Mellon Corporation) cross-motion for judgment on the pleadings. Both parties' motions sought a declaration about whether the Plan Parties had to pay the disability benefits of two of the Ward Firm's retired NFL player clients into the firm's client trust account pursuant to state court jurisdiction for unpaid attorney's fees despite a provision in the Plan prohibiting any "benefit under the Plan" from being assigned or reached by creditors through legal process. The court held that its prior panel precedent held that bargained-for provisions barring assignments in ERISA welfare benefits were valid and enforceable and that the Ward Firm had not directed the court's attention to any such intervening en banc or Supreme Court decision. Accordingly, the court affirmed the judgment and held that the district court did not err in declaring that the spendthrift provision in the Plan prevented the Plan Parties from depositing the disability benefits owned by two retired NFL players into the Ward Firm's trust account.

Plaintiff filed a declaratory judgment action against its insurer to determine whether its professional liability policy issued to plaintiff provided coverage for plaintiff's erroneous disbursement of client funds from its trust account. At issue was whether the district court properly granted the insurer's motion for summary judgment denying coverage where the district found no coverage under the policy. The court held that plaintiff's erroneous transfer of its clients' trust funds to a third party was an act or omission in the conduct of its professional fiduciary duties to its clients that would give rise to a claim of negligence against it by those clients and for which it would have been liable for damages. Such a claim for a negligent act or omission was covered by the plain terms of the policy issued by the insurer to plaintiff. Accordingly, the entry of summary judgment for insurer was reversed and the case remanded for entry of summary judgment for plaintiff. The district court's award of costs against plaintiff was also reversed.

Plaintiff, Alea London Limited ("Alea"), filed a declaratory judgment action against American Home Services, Inc. ("AHS") alleging that it had no duty to defend or indemnify AHS when AHS was sued by A Fast Sign Company, Inc. ("Fastsigns") for sending unsolicited faxes in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"). At issue was whether Alea had a duty to defend and indemnify AHS in the suit; whether the $500 per-claimant deductible in the Alea policy applied to coverage for AHS's advertising injury liability; whether the punitive damages exclusion in the Alea policy applied to any treble damages awarded against AHS under the TCPA; and whether the Alea policy covered costs but not attorneys' fees awarded against AHS. The court held that Alea had a duty to defend and indemnify AHS where any ambiguity in the policy was construed against Alea, the drafter of the policy, and in favor of coverage. The court also held that the "Optional Provisions Endorsement" plainly set forth a $500 per-claimant deductible for all "Advertising Injury Liability." The court further held that the punitive exclusion was ambiguous and must be construed against Alea in favor of coverage. The court finally held that Alea was not obligated to indemnify AHS for attorneys' fees awarded to Fastsigns where there was no language in the policy that lead to the conclusion that Alea would indemnify AHS for its opponents' attorneys' fees.