Justia Insurance Law Opinion Summaries

MASC filed an action in the district court seeking a declaration that South Carolina municipalities were entitled to assess municipal business license taxes based on, or measured by, the total flood insurance premiums collected in the particular municipality by insurance companies under an arrangement with FEMA. The district court denied the insurance companies' motion for summary judgment on grounds of preemption and sovereign immunity. The flood insurance premiums were federal property that could not be taxed and the participating private insurance companies, in their operation of and participation with the National Flood Insurance Program, were federal instrumentalities so closely connected with the federal government that they were immune from taxation. The federal government did not consent to this tax, and it was therefore invalid. Accordingly, the court reversed the district court's grant of partial summary judgment to MASC and denial of summary judgment to the insurance companies. View "Municipal Assoc. of SC v. USAA General Indemnity Co." on Justia Law

The Trustee in bankruptcy of ESA appealed from the affirmance by the district court of the award of summary judgment by the bankruptcy court to Hanover. The bankruptcy court concluded that ESA's transfer of $1.375 million to Hanover within 90 days of ESA's filing a petition for bankruptcy was not an avoidable preference under 11 U.S.C. 547(b). The court held that, although the bankruptcy court erred in finding that the earmarking defense applied in this case, the court found no error in its determination that Hanover was entitled to the new value defense under section 547(c) to the Trustee's claim of a preferential transfer. Therefore, the court affirmed the judgment of the bankruptcy court awarding summary judgment to Hanover. View "ESA Environmental Specialists, Inc. v. The Hanover Ins. Co." on Justia Law

Relator, a sales manager for Takeda, brought a qui tam action against his employer under the False Claims Act, 31 U.S.C. 3729-3733, alleging that Takeda violated the Act by causing false claims to be presented to the government for payment under Medicare and other federal health insurance programs. The district court dismissed relator's claims under Rule 12(b)(6). The court held that the district court did not err in dismissing the third amended complaint because relator failed to plausibly allege that any false claims had been presented to the government for payment. The court also held that the district court did not abuse its discretion in denying relator leave to file a fourth amended complaint. Accordingly, the court affirmed the judgment. View "US ex rel. Noah Nathan v. Takeda Pharmaceuticals" on Justia Law

Plaintiff filed this action, asserting claims for, inter alia, breach of contract and violation of the Maryland Credit Grantor Closed End Provisions (CLEC), Md. Code Ann., Com. Law 12-1001 et seq. The district court was persuaded that the National Bank Act (NBA), 12 U.S.C. 24, 484(A), and federal regulations preempted the CLEC, and that plaintiff failed to state a claim for breach of contract. The court held that the district court erred in deeming plaintiff's CLEC claim against Capital One preempted by federal law and regulations where Capital One was subject to the terms of the CLEC in loans it acquired through assignment. The court also held that a breach of contract claim had been adequately pleaded and therefore, the district court erred in dismissing the claim. Accordingly, the court vacated and remanded for further proceedings. View "Decohen v. Capital One N.A." on Justia Law

The issue before the Fourth Circuit concerned commercial arbitration of insurance disputes in foreign tribunals. Appellant-Cross-Appellee ESAB Group, Inc. contended that South Carolina law "reverse preempts" federal law (namely, a treaty and its implementing legislation) pursuant to the McCarran-Ferguson Act. ESAB Group faced numerous products liability suits arising from alleged personal injuries caused by exposure to welding consumables manufactured by ESAB Group or its predecessors. These suits presently were proceeding in numerous state and federal courts in the United States. ESAB Group requested that its insurers defend and indemnify it in these suits. Several, including Zurich Insurance, PLC (ZIP), refused coverage. As a result, ESAB Group brought suit against its insurers in South Carolina state court. The district court then found that ZIP had the requisite minimum contacts with the forum to permit the exercise of personal jurisdiction and that the exercise of jurisdiction over ZIP was otherwise reasonable. Because it had referred to arbitration all claims providing a basis for subject-matter jurisdiction, the district court declined to exercise supplemental jurisdiction over the remaining claims. ESAB Group timely appealed the district court's exercise of subject-matter jurisdiction. ZIP filed a cross-appeal, challenging the district court’s exercise of personal jurisdiction and its authority to remand the nonarbitrable claims to state court. Upon review, the Fourth Circuit affirmed as to the district court’s exercise of subject-matter jurisdiction, and found no error in the district court's order compelling arbitration. Likewise, the Court rejected ZIP's arguments that the district court erred in exercising personal jurisdiction over it and in remanding nonarbitrable claims to state court. View "ESAB Group, Incorporated v. Zurich Insurance PLC" on Justia Law

Plaintiffs-Appellees Wheeling Hospital and Belmont Hospital along with other medical providers, filed this putative class action in West Virginia state court against the Ohio Valley Health Services and Education Corporation, Ohio Valley Medical Center and East Ohio Regional Hospital, (collectively, the "OV Health System Parties"), and Appellant The Health Plan of the Upper Ohio Valley, Inc. The plaintiffs sued in order to collect amounts allegedly owed to them by employee benefit plans established by the OV Health System Parties, for which The Health Plan acted as administrator. After pretrial activity, The Health Plan moved to dismiss the claims brought against it by the hospital plaintiffs pursuant to an arbitration agreement between the parties. The district court denied this motion, holding that The Health Plan had defaulted on its right to arbitrate. The Health Plan appealed. Upon review, the Fourth Circuit concluded that the district court erred in its determination that The Health Plan defaulted on its right to arbitrate. The Court therefore reversed the district court’s denial of The Health Plan’s motion to dismiss. View "Wheeling Hospital, Inc. v. Health Plan of the Upper Ohio Valley, Inc. " on Justia Law

Franklin Insurance commenced this action against its insured, School Board, for a declaratory judgment that Franklin Insurance owed no duty to defend the School Board in an action commenced by the School Board employees for violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. 216(b), nor any duty to indemnify the School Board for any judgment that might be entered in the action. The court concluded that the failure to comply with FLSA was a wrongful act and that, while a judgment awarding unpaid wages would not be a covered loss under the policy because payment of those wages was a preexisting duty, any obligation to pay liquidated damages and attorneys' fees would cause the School Board a loss from a wrongful act, covered by the policy. Accordingly, the court reversed the district court's grant of summary judgment in favor of Franklin Insurance.

In this case, an insurer sought a declaratory judgment that it was required to indemnify its insured for no more than 40% of a state court judgment because it had covered its insured for no more than 40% of the time in which the state court plaintiff was exposed to lead poisoning. The district court agreed that the insurer was responsible for only a portion of the judgment, notwithstanding the fact that its insured was held jointly and severally liable for the entire judgment in the underlying state proceeding. Plaintiff challenged the district court's decision to allocate the insurer's liability on a pro rata basis. Plaintiff next argued that even if pro rata allocation was appropriate, the district court should have used the date of her first elevated blood lead level rather than her date of birth to calculate her period of exposure. The insurer challenged the district court's refusal to reduce its period of coverage to 22 months. Applying Maryland law, the court affirmed the district court's judgment with respect to plaintiff's arguments. With respect to the matter raised by the cross-appeal, the court reversed. The principle underlying the court's decision was that an insurance company could not be held liable for periods of risk it never contracted to cover. Accordingly, the court reversed in part and affirmed in part.

Plaintiff commenced this action under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., claiming that the administrator of the Principal Life policies had misconstrued the policies in calculating his predisability earnings and that, with a proper calculation, his predisability earnings were far greater. The district court, ruling on cross-motions for summary judgment, entered judgment in favor of Principal Life. The court affirmed. Even though the court recognized that the policy language, defining those expenses that could be subtracted from gross income to arrive at predisability earnings, was somewhat confusing and, to be sure, needlessly verbose, the court concluded that the administrator's interpretation was a reasonable one.

In this appeal, accounting firm Bryan Brothers sought coverage under a professional liability insurance policy issued by Continental Casualty Company for liability arising from illegal acts of a former Bryan Brother's employee. Under the policy, it was a condition precedent to coverage that no insured had knowledge, prior to the inception of the policy, of an act that was reasonably likely to become the basis for a claim. The court held that because Bryan Brothers had such knowledge, the claims at issue were not covered. Therefore, the court affirmed the district court's grant of summary judgment to Continental Casualty Company.