Justia Insurance Law Opinion Summaries

As an assembler with Eaton Corporation, McClain purchased the highest level of long-term disability insurance, which was “designed to replace ... 70 percent of [her] monthly base pay.” She stopped working in January 2008, due to a back injury she suffered on the job in June 2007. She received benefits during the first 24 months under the First Tier of the Plan’s coverage, which defined disability as being “totally and continuously unable to perform the essential duties of your regular position with the Company, or the duties of any suitable alternative position with the Company.” After 24 months, the Plan to an “any occupation” standard, providing Second Tier coverage if “you are totally and continuously unable to engage in any occupation or perform any work for compensation or profit for which you are, or may become, reasonably well fit by reason of education, training or experience--at Eaton or elsewhere.” The Plan denied her claim for benefits because her treating physician opined McClain could work part-time, and a market study identified various part-time positions in the area for which she was qualified. The district court rejected her suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The Seventh Circuit affirmed, finding that the determination was not arbitrary.View "McClain v. Eaton Corp. Disability Plan" on Justia Law

Plambeck owned two Kentucky chiropractic clinics that treated patients injured in car accidents, including some State Farm customers. All of the treating chiropractors were licensed to practice in Kentucky. Plambeck was not, although he was licensed elsewhere, and did not treat any patients in Kentucky. State Farm assumed that Plambeck had a license because Kentucky law requires chiropractic practitioners and owners of chiropractic clinics to hold one. When State Farm discovered that Plambeck lacked a state license, it stopped paying the clinics and sued Plambeck to recover all payments since 2000. The district court granted summary judgment to State Farm and awarded $557,124.78 in damages. The Sixth Circuit reversed. Kentucky common law claims for recovery of funds mistakenly paid are based on unjust enrichment. Because State Farm and the clinics never had a contractual relationship, the only applicable theory would require State Farm to show that it paid money to the clinics not due “either in law or conscience.” State Farm did not offer such proof. View "State Farm Auto. Ins. Co. v. Newburg Chiropractic" on Justia Law

In 2000, Rochow sold his interest in Universico to Gallagher and became President of Gallagher. As an employee of Gallagher, Rochow was covered under a LINA disability policy. In 2001, Rochow began to experience short term memory loss, chills, sweating, and stress at work. Gallagher demoted Rochow to Sales Executive-Account Manager. Because of his inability to perform his job, Gallagher forced Rochow to resign in January, 2002. In February 2002, Rochow experienced amnesia, was hospitalized, and was diagnosed with HSV-Encephalitis, a rare, severely debilitating brain infection. LINA repeatedly denied Rochow benefits stating that Rochow’s employment ended before his disability began. In 2004, Rochow sued Cigna, LINA’s parent company, alleging breach of fiduciary duty under ERISA, 29 U.S.C.1104(a). In 2007 the Sixth Circuit affirmed a decision that denial of Rochow’s claims was arbitrary, not the result of a deliberate, principled reasoning process, and did not appear to have been made solely in the interest of the participants and beneficiaries or the exclusive purpose of providing benefits to participants and beneficiaries as required by ERISA. Rochow died in 2008. In 2009, the district court ordered an equitable accounting of profits and disgorgement of $3,797,867.92 under an equitable theory of unjust enrichment. The Sixth Circuit affirmed. View "Rochowl v. Life Ins. Co. of N. America" on Justia Law

YA, a nonprofit corporation serving at-risk youth, transported young people to an event using vans that it owned. After the event four people were unable to board because a van was full. A YA employee requested that 16-year-old Lee, a YA participant who had driven to the event in a separate vehicle, drive them home. Lee agreed. Lee did not possess a valid driver’s license and the car that he was driving had been stolen during a carjacking. Police saw Lee driving erratically, ran a license plate check, and gave chase. Lee lost control and hit a tree. Lee survived, but all four passengers were killed. Their estates filed suit. YA requested defense and indemnification under policies issued by Indemnity: a commercial general liability policy with a $1 million limit and a commercial excess liability policy with a $2 million limit. Indemnity provided a defense, but disputed coverage and sought a federal declaratory judgment. YA counterclaimed that Indemnity breached its duty of good faith and violated the Kentucky Unfair Claims Settlement Practices Act, by misrepresenting coverage and failing to affirm liability within a reasonable time. The district court held that Indemnity was obligated under the CGL policy but not under the excess policy. The state court action settled with Indemnity’s payment of the $1 million limit of the CGL policy, plus $800,000 of the excess policy. The federal court dismissed the bad-faith counterclaims, reasoning that, as a matter of law, Indemnity’s coverage position had not been taken in bad faith. The Sixth Circuit affirmed. View "Philadelphia Indem. Ins. Co. v. Youth Alive, Inc." on Justia Law

Bennett was walking her dog in Garfield Heights, Ohio when she was struck on the left knee by a vehicle driven by Pastel. The accident threw Bennett onto the car’s hood. Bennett sued Pastel’s insurer, State Farm, which characterized as “ridiculous” her assertion that she was an “occupant” of the car, as that term is defined by State Farm’s policy, at the time she was on the vehicle’s hood. The district court granted summary judgment to State Farm. The Sixth Circuit reversed. The policy defines “occupying” as “in, on, entering or alighting from.” The court stated that “we have no reason to explore Bennett’s relationship with the car… the policy marks out its zone of coverage in primary colors.” View "Bennett v. State Farm Mut. Auto. Ins." on Justia Law

Kennedy family members own a controlling interest in corporate entities that comprise Autocam. John Kennedy is Autocam’s CEO. The companies are for-profit manufacturers in the automotive and medical industries and have 661 employees in the U.S. The Kennedys are practicing Roman Catholics and profess to “believe that they are called to live out the teachings of Christ in their daily activity and witness to the truth of the Gospel,” which includes their business dealings. Regulations under the Patient Protection and Affordable Care Act of 2010 (ACA), 124 Stat. 119, require that Autocam’s health care plan cover, without cost-sharing, all FDA-approved contraceptive methods, sterilization, and patient education and counseling for enrolled female employees. Autocam and the Kennedys claim that compliance with the mandate will force them to violate their religious beliefs, in violation of the Religious Freedom Restoration Act, 42 U.S.C. 2000bb. The district court denied their motion for a preliminary injunction. The Sixth Circuit affirmed for lack of standing. Recognition of rights for corporations under the Free Speech Clause 20 years after RFRA’s enactment does not require the conclusion that Autocam is a “person” that can exercise religion for purposes of RFRA. View "Autocam Corp. v. Sebelius" on Justia Law

GM provides its salaried retirees with continuing life insurance benefits under an ERISA-governed plan. MetLife issued the group life insurance policy and periodically sent letters to participants advising them of the status of their benefits. The plaintiffs, participants in the plan, allege that those letters falsely stated that their continuing life insurance benefits would remain in effect for their lives, without cost to them. GM reduced their continuing life insurance benefits as part of its 2009 Chapter 11 reorganization. The plaintiffs sued MetLife under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a)(2) & (a)(3) and state law. The district court dismissed. The Sixth Circuit affirmed. MetLife did not tell participants that the benefits were fully paid up or vested upon retirement, but that their benefits would be in effect for their lifetimes, which “was undeniably true under the terms of GM’s then-existing plan.” The court rejected claims of estoppel, of breach of fiduciary duty, unjust enrichment, breach of plan terms, and restitution. View "Merrill Haviland v. Metro. Life Ins. Co." on Justia Law

National contracted to produce “Kids Fun Day” events before 2010 Cleveland Indians games, including a collapsible inflatable slide. National purchased a required comprehensive liability insurance policy naming the Indians as additional insureds, from NHIC through an independent broker, CSI. On the application a box was checked, indicating use of a “bounce houses or inflatables.” A “Certificate of Liability Insurance” issued six weeks before the slide collapsed, causing a death. Neither National nor the Indians had received the full policy at the time of the accident. After the accident, National learned that, despite its specific application request, CSI had failed to procure a policy that expressly covered inflatables. In an email exchange, an employee of CSI stated, “Oh, ok. Sorry, I guess I missed it.” Later CSI stated: “inflatable’s [sic] are excluded on the policy you purchase[d] from us. Whoever own the inflatable’s [sic] are [sic] to carry insurance on them and name you … I don’t believe I’ve ever seen you indicate on your applications that inflatable’s [sic] are at your events, but please note, the exclusion is listed on the quotes we sent over to you.” The district court found NHIC not liable to the Indians and that CSI could not be liable in negligence. The Sixth Circuit reversed as to CSI and remanded the negligence and negligent misrepresentation claims. View "Cleveland Indians Baseball Co. v. NH Ins. Co." on Justia Law

In 1997, Crum, a small company near insolvency, agreed to service Martin’s light-duty vehicles. Martin was a subsidiary of Massey Coal, a publicly-traded corporation. The agreement allowed Crum to enter Martin’s property to pick up vehicles; Martin required Crum to enter into an indemnification agreement and Crum agreed to Martin’s terms. Crum obtained insurance coverage required by the agreement from Universal. Philip, a Crum employee, rode with a Martin employee to pick up a truck from Martin property. A boulder rolled down hill, hit the vehicle, severely injuring Philip. The U.S. Mine Safety and Health Administration cited Martin for having loose rock above the roadway. Philip and Crum sued Martin; Martin counterclaimed based on the indemnification. Universal declined to defend on the counterclaim. After mediation, Martin agreed, without admitting liability, to pay $3,650,000. The parties also entered an “agreed judgment” against Crum for $3,650,000, on Martin’s counterclaim. Martin agreed not to pursue Crum for that judgment and sued Universal. The Sixth Circuit agreed with the district court that Universal had no duty to indemnify Martin because there was enough evidence to show that Crum was not actually liable to Martin. The indemnification was unenforceable as against public policy; it was the product of a significant disparity in bargaining power and attempted to shift liability for compliance with at least one mining-safety statute. View "Martin Cnty. Coal Corp. v. Universal Underwriters Ins. Co." on Justia Law

Retirees, dependents of retirees, and the union filed a class action suit against the retirees’ former employer, M&G, after M&G announced that they would be required to make health care contributions. The district court found M&G liable for violating a labor agreement and an employee welfare benefit plan and ordered reinstatement of the plaintiffs to the current versions of the benefits plans they were enrolled in until 2007, to receive health care for life without contributions. The Sixth Circuit affirmed. The district court properly concluded that the retirees’ right to lifetime healthcare vested upon retirement after concluding that documents, indicating agreement between the union and the employers to “cap” health benefits and several “side” letters were not a part of the applicable labor agreements. View "Tackett v. M&G Polymers USA, LLC," on Justia Law