Justia Insurance Law Opinion Summaries

Plaintiff, 37-years-old, suffered from anorexia nervosa for more than twenty years. At issue was whether defendant was required to pay for her care at a residential treatment facility, either under the terms of her insurance plan or under California's Mental Health Parity Act (Parity Act), Cal. Health & Safety Code 1374.72. The court held that plaintiff's plan did not itself require that defendant pay for residential care for her anorexia nervosa. The court held, however, that the Parity Act provided that defendant "shall provide coverage for the diagnosis and medically necessary treatment" of "severe mental illnesses," including anorexia nervosa. Therefore, defendant was foreclosed from asserting that plaintiff's residential care was not medically necessary. Accordingly, the court held that defendant was obligated under the Parity Act to pay for plaintiff's residential care, subject to the same financial terms and conditions it imposed on coverage for physical illnesses.

Plaintiffs, a class of economically vulnerable Arizonians who receive public health care benefits through the state's Medicaid agency, sued the U.S. Secretary of Health and Human Services (Secretary) and the Director of Arizona's medicaid agency (director)(collectively, defendants), alleging that the heightened mandatory co-payments violated Medicaid Act, 42 U.S.C. 1396a, cost sharing restrictions, that the waiver exceeded the Secretary's authority, and that the notices they received about the change in their health coverage was statutorily and constitutionally inadequate. The court affirmed the district court's conclusion that Medicaid cost sharing restrictions did not apply to plaintiffs and that Arizona's cost sharing did not violate the human participants statute. The court reversed the district court insofar as it determined that the Secretary's approval of Arizona's cost sharing satisfied the requirements of 42 U.S.C. 1315. The court remanded this claim with directions to vacate the Secretary's decision and remanded to the Secretary for further consideration. Finally, the court remanded plaintiffs' notice claims for further consideration in light of intervening events.

Plaintiff appealed the district court's dismissal of her ERISA, 29 U.S.C. 1001 et seq., action against defendant as not timely filed. Plaintiff was employed by defendant as a stockbroker in 1979 and starting in 1982, plaintiff had been disabled periodically from her employment. Plaintiff applied for long-term disability benefits around January 15, 1987. The court held that plaintiff's claim did not accrue in 1990 with regard to the ERISA statute of limitations, as the district court found, but rather accrued when her claim was finally denied on January 14, 2004. Therefore, plaintiff's action, filed on February 16, 2006, commenced within the four-year statutory limitations period for ERISA claims. The court also held that the limitations provision in the policy here did not apply to disability cases in which the claimant contested the amount of benefits or claims that the benefits have been miscalculated. Accordingly, the court vacated the judgment of the district court and remanded for further proceedings.

Plaintiffs appealed the district court's order granting American Bankers Insurance Company's (American Bankers) motion to set aside default judgment for excusable neglect under Fed. R. Civ. P. 60(b)(1). Plaintiffs argued that once the district court concluded that American Bankers acted culpably in failing to respond to the complaint, it was precluded as a matter of law from setting aside the default judgment. The court found that a district court could exercise its discretion to deny relief to a defaulting defendant based solely upon a finding of defendant's culpability, but it need not do so. The court concluded that the district court's finding that American Bankers acted culpably did not preclude it, as a matter of law, from setting aside the default judgment under Rule 60(b)(1) based upon excusable neglect. Therefore, the court held that the district court applied the correct legal standard and that it did not abuse its discretion.

In consolidated appeals, defendants appealed the denial of their motions for judgment on the pleadings where plaintiffs brought a diversity suit to enforce California Civil Code 2527 and 2528, which required defendants to supply the results of bi-annual studies of California's pharmacies' retail drug pricing for private uninsured customers to their clients, who were third-party payors such as insurance companies and self-insured employer groups. At issue was whether the court was bound by the Erie doctrine to follow the state appellate court decisions striking down section 2527 and if not, whether section 2527 violated the First Amendment or the California Constitution's free speech provision. The court held that the Erie doctrine did not require it to follow the state appellate court decisions and that section 2527 did not unconstitutionally compel speech under either the United States or California Constitutions. Accordingly, the court affirmed the judgment.

Federal Insurance Company (FIC) sued for damage to property destroyed during the inland leg of international intermodal carriage where FIC was the subrogee of the shipper which contracted with an ocean carrier, APL Co. Ptc. Ltd. (APL), to ship goods from Singapore to Alabama. The district court ruled that a covenant not to sue in the through bill of lading required FIC to sue the carrier, APL, rather than the subcontractor. At issue was what legal regime applied to the shipment's inland leg under the through bill of lading and whether the applicable legal regime prohibited the covenant not to sue. The court held that the district court did not err by enforcing the covenant not to sue and granting summary judgment to the subcontractor where the requirements that FIC sue APL directly was valid under the Hague Rules and the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. 30701.

Plaintiff filed an action against defendants (collectively, the Plan) for refusing to pay certain long-term disability benefits. At issue was whether the district court erred in granting summary judgment for defendants and dismissed plaintiff's claims without prejudice due to his failure to exhaust available administrative remedies under the Plan. The court held that the district court adopted the Plan's reading of ERISA, 29 C.F.R. 250.503-1(i) without the benefit of the Secretary of Labor's interpretation of that provision. Therefore, deferring to the Secretary's plausible approach, the court held that where a claimant sought review of his or her disability claims, the quarterly meeting rule was restricted to multiemployer plans. Accordingly, the Plan was required to render a decision within 90 days of plaintiff's administrative appeal and failed to do so. Consequently, plaintiff's claims must be deemed exhausted and the judgment was reversed and remanded.

The court agreed to hear this case en banc in order to reconsider its precedent as to which parties could be sued as defendants in actions for benefits under 29 U.S.C. 1132(a)(1)(B), part of ERISA. Some of the court's previous decisions had indicated that only a benefit plan itself or the plan administrator of a benefit plan covered under ERISA was a proper defendant in a lawsuit under that provision. The court concluded that the statute did not support that limitation, however, and that an entity other than the plan itself or the plan administrator could be sued under that statute in appropriate circumstances. Therefore, the court held that Reliance Standard Ins. Co. was a proper defendant in a lawsuit brought by plaintiff under ERISA and overruled its prior decisions to the contrary. To apply that decision and to resolve other issues raised in the appeal, the court transferred this case back to the three-judge panel to which the case was previously assigned.

Defendants, the chairman and chief executive officer of Lunde Electric Company ("company"), appealed convictions stemming from the misappropriation of employee 401(k) contributions to pay the company's operating expenses. At issue was whether there was sufficient evidence to support defendants' convictions under 18 U.S.C. 664, for embezzlement or conversion of elective deferrals, and 18 U.S.C. 1027, for false or misleading statements in a required Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C 1001 et seq., document. The court held that there was sufficient evidence to support defendants' convictions on Counts 17 and 18 under section 664 where there was sufficient evidence for the jury to conclude that the 1991 Profit Sharing Plan had been restated before defendants retained their employees' elective deferrals in the company's general account; where defendants commingled their employees' contributions with the company's assets to prop up their failing business and therefore, intentionally used their employees' assets for an unauthorized purpose; where they sent participants account statements showing 401(k) balances which were in fact non-existent; where defendants' decision to deviate was the wilful criminal misappropriation punished by section 664; and where defendants were alerted repeatedly about their obligation to remit the deferrals and defendants hid their actions from employees. The court also held that there was sufficient evidence to support defendants' convictions on Count 21 under section 1027 where defendants' initial decision to mislead their own employees about the solvency of their retirement plans by filing false account statements and false Form 5500s were the behaviors targeted by section 1027.

Plaintiff sued defendant seeking a declaratory judgment to the effect that defendant's liens were not valid, in whole or in part, where plaintiff received a substantial settlement from her insurer when she suffered serious injuries in a car accident and received extensive health care services from defendant. At issue was whether the district court properly granted summary judgment to defendant because it had a right to recover the money spent on plaintiff's medical care under 25 U.S.C. 1621e. The court reversed and held that section 1621e, which allowed healthcare providers to recover expenses from third-party tortfeasors, relevant insureres, or other third parties, did not apply to the action where defendant sought to enforce a right of recovery against plaintiff to whom it provided services.