Justia Insurance Law Opinion SummariesArticles Posted in U.S. 6th Circuit Court of Appeals
Adler v. Elk Glenn, LLC
The district court entered summary judgment relieving Kentucky Farm Bureau Mutual Insurance of its duty to defend Elk Glenn against certain breach of contract and related claims arising from the sale of a residential lot. The Sixth Circuit dismissed an appeal. A certification to appeal under Rule 54(b) requires the district court to determine that there is no just reason for delay, which requires the district court to balance the needs of the parties against the interests of efficient case management. The district court’s only reason supporting immediate appeal was the “real prejudice” Kentucky Farm Bureau would suffer. That reference, without further explication, does not provide reasoning supporting the necessity of immediate review. Without proper certification for an interlocutory appeal under Rule 54(b), an order disposing of fewer than all claims in a civil action is not immediately appealable. The Sixth Circuit declined to order the district court to make the necessary findings supporting jurisdiction. View "Adler v. Elk Glenn, LLC" on Justia Law
Cent St, SE & SW Areas Health & Welfare Fund v. First Agency, Inc.
Central States, an employee benefit plan governed by the Employee Retirement Income Security Act, provides health insurance for Teamsters and their families. Guarantee Trust provides sports injury insurance for student athletes. Each of 13 high school and college athletes, all children of Teamsters, holds general health insurance from Central and sports injury insurance from Guarantee. Each suffered an injury while playing sports (most often football) between 2006 and 2009, and sought coverage from both companies. Each time Guarantee refused to pay the athlete’s medical expenses, and each time Central paid the bill under protest. The district court entered a declaratory judgment under ERISA, 29 U.S.C. 1132(a)(3)(B), that, when coverage of student athletes overlap, Guarantee must pay, and ordered Guarantee to reimburse Central for the payouts to the 13 students. The Sixth Circuit, affirmed in part characterizing the case as a “you first” paradox, or ‘gastonette.” An ERISA plan may coordinate benefits with another policy, but may not redefine the coverage of another policy. Absent the Central plan, the Guarantee policy would cover the sports injuries at issue without question. An ERISA plan must keep doing what it would do in another plan’s absence. That amounts to coordinating benefits, not redefining coverage. View "Cent St, SE & SW Areas Health & Welfare Fund v. First Agency, Inc." on Justia Law
MI Catholic Conference v. Sebelius
Plaintiffs are non-profit entities affiliated with the Catholic Church who have religious objections to certain preventive care standards under the Patient Protection and Affordable Care Act, 42 U.S.C. 300gg-13, particularly the requirement that their employer-based health insurance plans cover all FDA-approved contraception, sterilization methods, and counseling. All are eligible for either an exemption from the requirement or an accommodation to the requirement, through which the entities will not pay for the contraceptive products and services and the coverage will be independently administered by an insurance issuer or third-party administrator. Nonetheless, they alleged that the contraceptive-coverage requirement violated the Religious Freedom Restoration Act; the Free Speech, Free Exercise, and Establishment Clauses of the First Amendment; and the Administrative Procedure Act. Two district courts denied the appellants’ motions for a preliminary injunction. The Sixth Circuit affirmed, finding that the plaintiffs did not demonstrate a strong likelihood of success on the merits of any of their properly raised claims; because they did not demonstrate a strong likelihood of success on the merits of their claims, they also do not demonstrate that they will suffer irreparable injury without the injunction. View "MI Catholic Conference v. Sebelius" on Justia Law
Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of MI
Hi-Lex has about 1,300 employees. Blue Cross Blue Shield of Michigan (BCBSM) served as a third-party administrator (TPA) for Hi-Lex’s Health and Welfare Benefit Plan since 1991. Under the Administrative Services Contracts (ASCs) between the parties, BCBSM agreed to process healthcare claims for Hi-Lex employees and grant those employees access to BCBSM’s provider networks. BCBSM received an “administrative fee” set forth in ASC Schedule A on a per-employee, per month basis. In 1993, BCBSM implemented a new system, “retention reallocation,” to retain additional revenue. Regardless of the amount BCBSM was required to pay a hospital for a given service, it reported a higher amount that was then paid by the self-insured client. Hi-Lex allegedly was unaware of the retention reallocation until 2011, when BCBSM disclosed the fees in a letter and described them as “administrative compensation.” Hi-Lex sued, alleging breach of fiduciary duty under the Employee Retirement Income Security Act, 29 U.S.C. 1104(a). The court awarded Hi-Lex $5,111,431 in damages and prejudgment interest of $914,241. The Sixth Circuit affirmed that: BCBSM was an ERISA fiduciary and breached its fiduciary duty under ERISA section 1104(a), that BCBSM conducted “self-dealing” in violation of section 1106(b)(1), and that Hi-Lex’s claims were not time-barred. View "Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of MI" on Justia Law
ProMedica Health Sys., Inc. v. Fed. Trade Comm’n
Lucas County has about 440,000 residents and includes Toledo. Two-thirds of the county’s patients have government-provided health insurance, such as Medicare or Medicaid; 29 percent have private insurance, which pays significantly higher rates to hospitals than government-provided insurance. General acute-care (GAC) inpatient services include “primary services,” such as hernia surgeries, radiology services, and most inpatient obstetrical (OB) services. “Secondary services,” such as hip replacements and bariatric surgery, require more specialized resources. “Tertiary services,” such as brain surgery and treatments for severe burns, require even more specialized resources. “Quaternary services,” such as major organ transplants, require the most specialized resources. Different hospitals offer different levels of service. In Lucas County ProMedica has 46.8% of the GAC market and operates three hospitals, which together provide primary (including OB), secondary, and tertiary services. Mercy Health Partners has 28.7% of the GAC market and operates three hospitals in the county, which provide primary (including OB), secondary, and tertiary services. University of Toledo Medical Center (UTMC) has 13% of the GAC market with a single teaching and research hospital, focused on tertiary and quaternary services. It does not offer OB services. St. Luke’s Hospital had 11.5% of the GAC market and offered primary (including OB) and secondary services. In 2010 ProMedica merged with St. Luke’s, creating an entity with 50% of the market in primary and secondary services and 80% of the market for obstetrical services. The FTC challenged the merger under the Clayton Act, 15 U.S.C. 18. The Commission found that the merger would adversely affect competition and ordered ProMedica to divest St. Luke’s. The Sixth Circuit upheld the order. View "ProMedica Health Sys., Inc. v. Fed. Trade Comm'n" on Justia Law
United Steel, Paper, Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int’l Union v. Kelsey-Hayes Co.
Plaintiffs worked until 2006, when the plant closed, and retired under a collective bargaining agreement (CBA); that provided that the employer would provide health insurance, either through a self-insured plan or under a group insurance policy and identified the employer’s contribution to the premium. The CBAs provided that the coverage an employee had at the time of retirement or termination at age 65 or older other than a discharge for cause “shall be continued thereafter provided that suitable arrangements for such continuation can be made… In the event… benefits … [are] not practicable … the Company in agreement with the Union will provide new benefits and/or coverages as closely related as possible and of equivalent value." In 2011 TRW (the employer’s successor) stated that it would discontinue group health care coverage beginning in 2012, but would be providing “Health Reimbursement Accounts” (HRAs) and would make a one-time contribution of $15,000 for each eligible retiree and eligible spouse in 2012, and in 2013, would provide a $4,800 credit to the HRAs for each eligible party. The HRAs shifted risk, and potentially costs, to plaintiffs. TRW did not commit to funding the HRAs beyond 2013. Plaintiffs sued, claiming that the change breached the CBAs, in violation of the Labor-Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. The district court certified a class and granted summary judgment, ruling that the CBAs established a commitment to lifetime health care benefits. The Sixth Circuit affirmed View "United Steel, Paper, Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. Kelsey-Hayes Co." on Justia Law
Savers Prop. & Cas. Ins. Co. v. Nat’l Union Fire Ins. Co.
A contract for reinsurance between National and Meadowbrook required both parties to submit any reinsurance disputes to a three-member arbitration panel to be comprised of “two arbitrators and an umpire” who were “active or retired disinterested officials of the insurance or reinsurance companies, or Underwriters at Lloyd’s, London, not under the control of either party.” After Meadowbrook initiated arbitration, National named Rosen and Meadowbrook named Schlaybaugh as arbitrators. They deadlocked in selecting an umpire, exchanged slates of candidates, and chose Greene, who disclosed that he was a personal friend of Rosen and that both were members of the reinsurance industry group The panel adopted orders that, “Ex parte communications with any member of the Panel shall cease upon the filing of the parties’ initial pre-hearing briefs.” The panel issued a unanimous Interim Final Award, resolving issues of liability in favor of National, but did not calculate a final damages award at that time. Rosen resumed ex parte communications and National disclosed those communications. After the panel rejected Meadowbrook’s submissions concerning damages, Meadowbrook claimed that it had disenfranchised Schlaybaugh. National claimed that a swift decision was needed, that Schlaybaugh was on vacation and could not be reached, and that his participation would have made no difference. The district court enjoined proceedings. The Sixth Circuit reversed, noting that judicial review of arbitral decisions is narrow and deferential. View "Savers Prop. & Cas. Ins. Co. v. Nat'l Union Fire Ins. Co." on Justia Law
Cultrona v. Nationwide Life Ins. Co.
Nicole discovered Shawn’s body in their Ohio home. Shawn had gone out drinking the night before, while Nicole spent the night at a friend’s house. The Medical Examiner’s Office reported the cause of death as “[a]sphyxia by extreme and restricted position (positional asphyxia)” and the manner of death as “[a]cute ethanol intoxication ... ACCIDENT: Prolonged and extreme hypertension of neck and torso while intoxicated.” Shawn’s blood-alcohol level at the time of autopsy was .22%. Nicole filed a $212,000 claim for accidental-death benefits with the Plan, which covers “injury” as a result of an “accident,” defined as “an unintended or unforeseeable event or occurrence which happens suddenly and violently.” No benefits will be paid if the “Covered Person [is] deemed and presumed, under the law of the locale … to be under the influence of alcohol or intoxicating liquors.” Nationwide directed denial of Nicole’s claim, citing Exclusion 12, but quoting an earlier version that provided: “The Covered Person being deemed and presumed … to be driving or operating a motor vehicle while under the influence…” Later, based on amended Exclusion 12, Nationwide upheld the denial; its appeals panel affirmed. Nicole filed suit, asserting claims under the Employee Retirement Income Security Act and a common-law breach-of-fiduciary-duty claim. The district court entered judgment in favor of the defendants, but agreed with Nicole that the appeals panel had breached its statutory duty to provide her with Plan-related documents upon written request, and imposed a penalty of $55 per day ($8,910). The Sixth Circuit affirmed. View "Cultrona v. Nationwide Life Ins. Co." on Justia Law
Lester v. Allstate Prop. & Cas. Ins. Co.
After a fire damaged her house, Lester filed a claim with Allstate. The company asked Lester and her husband to answer questions under oath. Lester responded that they would submit to examinations only if Allstate first showed them its investigative files. Allstate refused to turn over the files, stating that doing so “could jeopardize the integrity” of its inquiry. Allstate eventually gave Lester 10 days to schedule an examination, warning that, if she did not submit to an examination, it would deny the claim. Lester never responded, but sued the company. The district court granted Allstate summary judgment. The Sixth Circuit affirmed, noting that the insurance policy requires Lester to “submit to examinations under oath” at Allstate’s request and that Tennessee law permits denial of a claim when the policyholder refuses to participate in an examination under oath. The company’s refusal to share its investigative files before examining her is reasonable and did not breach a duty of good faith. Tennessee presumes that failure to participate in an examination results in prejudice to the insurer, and makes it the policyholder’s burden to demonstrate that the company suffered no harm. Lester never introduced any evidence to rebut the presumption. View "Lester v. Allstate Prop. & Cas. Ins. Co." on Justia Law
Javery v. Lucent Tech., Inc. Long-Term Disability Plan
Javery began working for Lucent as a software engineer in 1998 and participated in Lucent’s Employee Retirement Income Security Act, 29 U.S.C. 1001, qualified disability plan, administered by CIGNA. In November 2002, he reported back pain. His family doctor, Dr. Dorado, prescribed medicine and testing, and recommended some time off work. In January 2003, after Lucent transferred him from Ohio to Illinois, Javery sought treatment from another physician, Seymour. The pain worsened. In May 2005, Javery stopped working on Dr. Seymour’s advice. Lucent approved and paid short term disability benefits from until those benefits expired in November 2005. Lucent notified CIGNA that it believed Javery might be eligible for long term benefits. Javery applied, submitting extensive medical evidence of his pain and resulting cognitive impairment and of his successful application for Social Security disability benefits, but the claim was denied. In addition to claiming that Javery had not shown that he was “disabled” as that term is defined in the Plan, CIGNA claimed that Javery should be judicially estopped from pursuing his ERISA claim because Javery failed to disclose the claim in his Chapter 13 personal bankruptcy action. The district court upheld the denial. The Sixth Circuit reversed. View "Javery v. Lucent Tech., Inc. Long-Term Disability Plan" on Justia Law