Justia Insurance Law Opinion Summaries

Defendant was injured in 2007 while driving an automobile insured under an ASIC policy that indemnifies against injuries caused by negligent uninsured or underinsured motorists. After determining that the tortfeasors were underinsured, defendant received authorization from ASIC to settle pursuant to Rhode Island's UM/UIM insurance statute, R.I. Gen. Laws 27-7-2.1. Within three months, defendant and the tortfeasors agreed to a settlement of $1 million. ASIC refused to pay under the UM/UIM provisions and sought a declaratory judgment that the claim did not comply with a policy requirement that a claim be made within three years after the date of the accident. The district court granted ASIC judgment on the pleadings. The First Circuit certified to the state supreme court the question of whether the policy limitation is enforceable under state law. The court noted that, by requiring the three-year limitations period to run from the date of the accident, the policy may require some insureds to file suit before their claims are ripe--before the insurer determines whether it will cover the claim. The limitations period may even require some insureds to file suit before it becomes clear that the tortfeasor is underinsured.

Airline insurance (USAUI) issued to Pace covered certain risks assumed by Pace in contractual arrangements with other companies, which generally consisted of charter programs. The policy referenced "legally obligated to pay as damages." Pace entered into a charter program contractual arrangement with Patriot, which entered into an agreement to transport L&M customers to destinations that L&M had booked for travelers. L&M purchased a required surety bond. In 2002, L&M claimed that Patriot had unlawfully refused to provide aircraft for scheduled flights, and Patriot contended that L&M not fulfilled payment obligations. Patriot terminated the agreement and, two months later, filed for bankruptcy under Chapter 11. L&M filed a proof of claim. The bankruptcy court disallowed the claim. In 2005, L&M filed suit, claiming coverage by policies, including the USAUI policy. The district court held that the policy did not provide coverage for a breach of contract claim. The First Circuit affirmed, finding no ambiguity in policy language.

A federal jury awarded Fortin $125,000 in damages against a police officer after finding that the officer negligently used force in arresting Fortin in 2007. In a post-judgment ruling, the district court reduced the award to $10,000, the maximum set by the Maine Tort Claims Act for the personal liability of government employees, Me. Rev. Stat. tit. 14, 8104-D. On appeal, Fortin argued that the MTCA cap is inapplicable here because the officer was covered by an insurance policy that triggered a higher limit under the Act. The First Circuit determined that the issues were unresolved under state law and certified two questions to the Maine Supreme Court. Whether Fortin is limited to recovery of $10,000 depends on the unexplored relationship among several provisions of the MTCA governing damage awards against government employees. Analysis may also require determining what interpretive rule should be applied to ambiguous insurance policies providing MTCA liability coverage.

Decedent worked for the company from 1982 until 1997, when, at age 52, he was treated for degenerative disc changes, alcohol abuse, and depression. He never returned to work and died in 2008. He was enrolled in his employer's group life, administered by defendant under the Employee Retirement Income Security Act, 29 U.S.C. 1001, was a participant in a long-term disability benefits plan, and had purchased an individual life insurance policy from defendant. He applied for premium waivers under the life insurance policies and received disability benefits under Social Security Disability Insurance and under the employer's plan. Defendant granted a waiver of premiums under the individual policy, but denied a waiver under the group policy. Decedent did not learn about the denial until seven years later. In 2006 and 2008, defendant again denied the application. The estate filed suit in 2010 to recover life insurance benefits and enforce rights under the group policy. The district court granted summary judgment for defendant. The First Circuit reversed, noting defendant's many mistakes in handling the claim and that defendant did not reserve to itself discretion as to interpretation and administration of its plan. Decedent was "totally disabled" for purposes of the plan.

Plaintiff, an RN, stopped working at the hospital and went on disability only a few months after starting work. Her symptoms were attributed to chronic pancreatitis, chronic pain syndrome or fibromyalgia; she took "impressive amounts of narcotics" to manage her pain, which caused negative side effects. After about five years, the company terminated benefits, finding that she was not totally disabled, as defined by the policy. The district court upheld the termination in a suit under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B). The First Circuit remanded for further review, reasoning that plaintiff's activities, shown on surveillance tapes, and the lack of clinical documentation were overstated.

Puerto Rico requires all motor vehicle owners to pay for compulsory, state-issued auto insurance when they purchase or renew their vehicle registrations, even if they have obtained equivalent private insurance, with limited exceptions P.R. Laws tit. 26, 8051. Privately-insured vehicle owners who pay twice for coverage are entitled to reimbursements of state payments. A lot of the money is not returned during the two-year period for refunds; no statute or regulation provides notice of how to obtain reimbursement and only some insurers provide their insureds with notice of how to obtain reimbursements. After the two-year period, the money is transferred into trust for five years before being transferred to the commonwealth treasury. Individuals entitled to reimbursement receive no notice. The district court entered summary judgment, rejecting challenges to the law. The First Circuit reversed in part, holding that the law violates the notice requirements of the Due Process Clause and directing entry of a declaratory judgment and injunctive relief to that effect. The court rejected substantive due process and takings claims and left claims under Puerto Rico trust law to the Puerto Rico courts.

During a fight in a bar, the insured hit an individual with a glass mug, resulting in emergency surgery and permanent scars. The parties negotiated a settlement of civil liability that included the injured party's promise not to pursue criminal charges. The homeowner's insurance policy at issue covers only accidental injuries and prohibits the insured from making voluntary payments. The company invoked the voluntary payment clause and refused to pay the settlement or attorney fees. The district court ruled in favor of the company. The First Circuit affirmed, finding that, even if there was a duty to defend, the company did not breach that duty. The company had investigated the claim, as required, and the actions of the parties' efforts to avoid criminal prosecutions prevented its participation in negotiations.

Hospital records state that decedent died of a nonsurvivable head injury following an accidental fall at a casino. An insurer refused to pay, claiming that the fall was likely caused by a stroke, so that death was not "accidental" within the meaning of the policy. The company's expert testified accordingly. The district court entered judgment in favor of the company. The First Circuit affirmed. The district court did not err in admitting the expert's testimony; it fell within the scope of his previously disclosed report. The estate was not prejudiced by any difference between the report and testimony.

A employee made a series of attempts to obtain benefits under the company's long-term disability policy. A copy of the plan, which he obtained during internal appeals, contained no limitation on filing suit to challenge denials, but did reserve the right to make alterations to the plan. The plan was later amended to include a one-year limitation on bringing suit. Employee did not receive notice of the change. In 2005 the plan issued a final written rejection. In 2008 the employee filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1109 and 1132. The district court dismissed. The First Circuit reversed. While the plan did not engage in deceptive conduct that would implicate equitable estoppel, equitable tolling applies based on the failure to give notice of the change. The employee was reasonably diligent.

Plaintiff, sued by a competitor and by consumers for unfair trade practices, false and misleading advertising, and deceptive labeling, among other claims, sought indemnity and defense costs from its insurer. The insurer claimed that the suit fell within an exclusion for "antitrust violations, price fixing, price discriminations, unfair competition, deceptive trade practices and/or monopolies." The district court ruled in favor of the insurer. The First Circuit affirmed, finding that the policy headings were not determinative and that the paragraph at issue clearly excluded coverage.