Justia Insurance Law Opinion Summaries

The company issued the family auto insurance when they lived in New Jersey. The family moved to Pennsylvania, and made the company aware of the permanent relocation, before being involved in a traffic accident in Pennsylvania that killed one member of the family and injured others. The policy of the other driver has paid its limit. New Jersey law limits personal injury protection claims to $250,000 per person; under Pennsylvania law the family would be entitled to "stacked" underinsured motorist benefits. The district court granted the company declaratory relief, finding that New Jersey law applied to the contract. The Third Circuit remanded holding that Pennsylvaniaâs choice-of-law rules do not apply, but that New Jersey choice-of-law rules point to Pennsylvania law as governing the dispute. The court affirmed the grant of summary judgment to the company on a counterclaim alleging that it engaged in a bad faith denial of insurance coverage.

An intoxicated driver struck a pole, resulting in the death of his passenger. The passenger's estate sued defendant, claiming that defendant illegally sold liquor to 19-year-old, who provided it to the driver. Defendant's claim for defense and indemnification from its liability insurer was rejected because the policy contained a liquor liability exclusion. Defendant then sued its insurance agent, who sought a defense under his professional liability policy with AAIC. The agent had a gap in coverage before obtaining the AAIC policy and the parties disputed the retroactive coverage date. The district court granted summary judgment to AAIC. The Third Circuit affirmed. Since the agent allowed his coverage to lapse, the retroactive date was the inception date of the first AAIC policy issued (2006); the "wrongful act" occurred when the agent failed to exercise the proper degree of care in placing insurance for defendant. The agent began placing coverage for defendant in 2002, so the act did not occur "wholly after" the retroactive date.

Employee, suffering depression and related disorders, received short-term disability benefits for 26 weeks. The administrator denied the employee long-term disability benefits. The district court ruled in favor of the employee in a suit under the Employee Retirement Income Security Act, 29 U.S.C.1132(a)(1)(B) and denied the plan's claim for overpaid benefits. The Third Circuit vacated and remanded. The administrator acted consistently with a plan provision requiring it to determine whether employee was incapable of performing the requirements of any job for any employer ⦠for which the individual is qualified or may reasonably become qualified ⦠, other than a job that pays less than 60 percent of his former pay.The administrator acted without meaningful conflict of interest.The plan specifies the receipt of Social Security benefits as a particular fund from which reimbursement is to be made and gives rise to an equitable lien by agreement over those funds that are overpayments under the plan.

The insurance company sought a declaratory judgment that a plane crash that killed five people did not trigger coverage under a fleet insurance policy issued to an aircraft maintenance and charter company. The policy identifies the company's clients (including Wyndham) as "named insureds" and as "insured owners," but Wyndham did not participate in its negotiation. Wyndham filed a counterclaim seeking coverage. The crash involved a plane rented by a Wyndham employee to attend a work-related meeting, but did not involve the charter company in any way. The court held that Wyndham was entitled to coverage. The Third Circuit reversed. New Jersey law allows reformation, on the basis of mutual mistake, against a party that did not participate in negotiation of a contract and the insurance company sufficiently pled mutual mistake. Although the contract appears to provide third parties with coverage when using aircraft without the charter company's involvement, both contracting parties believed that the language did not expand coverage to entities unaffiliated with the charter company, such as Wyndham. The premium went down with the addition of the language at issue because the intent was to limit coverage for to aircraft owned, used by, or at the direction of the charter company.

Doctors and a patient challenged the Patient Protection and Affordable Care Act requirement, effective in 2014, that all non-exempt applicable individuals either maintain a certain minimum level of health insurance or pay a monetary penalty (26 U.S.C. 5000A) and a provision that penalizes certain employers if they fail to offer full-time employees the opportunity to enroll in an employer-sponsored insurance plan that satisfies the individual mandate's minimum essential coverage requirement (26 U.S.C. 4980H(a)).The district court dismissed for lack of standing. The Third Circuit affirmed. There is no evidence that the patient-plaintiff or doctors are in any way currently impacted by the law or that harm is imminent.

Developer refused to pay nearly $6.5 million under the prime contract ($5 million was due subcontractors) claiming deficient work. General contractor declined to pay a subcontractor, who sued on the surety bond. The surety asserted that term 6.f conditioned subcontractor's right to payment on contractor's receipt of payment. In the meantime, contractor settled with developer for $1 million--all it was able to pay--and subcontractor declined a pro rata share in return for a release of claims. The district court granted partial summary judgments in favor of subcontractor for an amount $91,790 less than the claimed $1,074,260. The Third Circuit reversed interpretation of the subcontract and rejection of surety's claim for proportional offset for legal fees incurred in the suit against developer, but affirmed denial of subcontractor's waiver claim, and remanded. The parties intended to share the risk of non-payment. Under 6f developer's payment to contractor is a condition precedent to contractor's obligation to pay subcontractor, yielding after six months to provide a mechanism that specifies when and for how much subcontractor may sue contractor. The contract created a mechanism for passing through subcontractor's remaining claims and pegging recovery to the amount that contractor received from developer for subcontractor's work.

The decedent, killed in a motorcycle accident in 2008, was covered by a life insurance policy, subject to the Employee Retirement Income Security Act, 29 U.S.C. 1101. The insurance company denied a claim by the decedent's widow, claiming that the decedent's anti-coagulant medications contributed to his death so that it fell within an exclusion for medical conditions. The district court concluded that the policy gave the company discretionary authority to determine eligibility and entered summary judgment in the company's favor. The Third Circuit reversed in part and remanded. Deferential review was not appropriate, given the language of the policy. The words "proof of loss satisfactory to Us," surrounded by procedural requirements, do not notify participants that the company has the power to re-define the entire concept of a covered loss on a case-by-case basis. The district court's interpretation of the medical exclusion, in favor of the company, was correct; the clause was not ambiguous.

Plaintiff purchased a credit disability insurance policy from defendant in connection with credit union financing of an automobile. Following an injury on the job, he received benefits in the form of credit union payments on the auto loan for about three years. The defendant then notified plaintiff that it would not continue to pay because he no longer met the definition of Total Disability under the policy. The district court certified a class action, found the definition of the term âTotal Disabilityâ ambiguous and construed it in favor the insured, entered an injunction that set up a claims review process for class members, then decertified the class. The Third Circuit affirmed with respect to the definition. The court vacated and remanded the rest of the judgment, holding that the court abused its discretion in issuing an injunction in which it retained jurisdiction over the class members' claims throughout the claims procedure process after the class was decertified.

The biological mother of three children lived with the children and their adoptive mother and named the adoptive mother as beneficiary on one of her life insurance policies through her employer. She did not name beneficiaries on other policies and, after she died, the insurers rejected claims on behalf of the children. The district court dismissed claims under the Employee Income Security Act (ERISA), 29 U.S.C. 1001, which lists children as default beneficiaries. The Third Circuit vacated and remanded. ERISA grants standing to participants and beneficiaries; whether the term "children," as used in the insurance contracts, includes biological children who have been adopted by a non-participant is ambiguous. There was evidence of the insured's intent to benefit the children, sufficient to create a colorable claim adequate to support standing.