Justia Insurance Law Opinion SummariesArticles Posted in U.S. Court of Appeals for the Fifth Circuit
Slade v. Progressive Security Insurance
Plaintiffs filed suit alleging that defendants unlawfully used WCTL to calculate the base value of total loss vehicles. Plaintiffs alleged that using WCTL, instead of lawful sources such as the National Automobile Dealers Association (NADA) Guidebook or the Kelly Blue Book (KBB), resulted in their vehicles being assigned a lower base value and accordingly resulted in plaintiffs receiving lower payouts on their insurance claims. Plaintiffs contended that damages can be calculated by replacing defendants' allegedly unlawful WCTL base value with a lawful base value, derived from either NADA or KBB, and then adjusting that new base value using defendants' current system for condition adjustment. The Fifth Circuit found that plaintiffs' damages methodology was sound and did not preclude class treatment. The Fifth Circuit reversed the district court's certification of a fraud class where plaintiff failed to show that class issues will predominate. Defendant argued for the first time on appeal that by accepting defendants' condition score calculation as is, plaintiffs may have impermissibly waived unnamed class members' ability to assert a future claim contesting defendants' computation of the condition factor. Because this argument was not expressly raised to the district court, and may present important certification questions, the Fifth Circuit remanded the certification order as to the contract and statutory claims. View "Slade v. Progressive Security Insurance" on Justia Law
State Farm Fire & Casualty Co. v. Flowers
State Farm filed suit seeking a declaratory judgment that a homeowner's insurance policy issued by State Farm to Cedric Flowers was void ab initio as a result of material misrepresentations made by him in his application for the policy. The district court granted State Farm's motion for summary judgment. In this case, the district court noted that, in both his answer to State Farm's complaint and his response to State Farm's request for admission, Cedric Flowers admitted to telling the agent who took his insurance application that he was the owner of the property and to stating as much in his application. Because there was no actual controversy over whether Cedric Flowers made a material misstatement on his insurance application, the court affirmed the judgment. View "State Farm Fire & Casualty Co. v. Flowers" on Justia Law
Ariana M. v. Humana Health Plan of Texas
Plaintiff, a dependent eligible for benefits under the Eyesys Vision Inc. group health plan, filed suit challenging Humana's denial of benefits. The district court ultimately granted summary judgment for Humana. The court found that Texas's anti-discretionary clause does not change the court's normal abuse of discretion deference pursuant to Pierre v. Connecticut General Life Insurance Co./Life Insurance Co. of North America. The court concluded that the district court did not err in finding that Humana's consideration of the Mihalik criteria was proper because the record supported a finding that the Mihalik criteria are in line with national standards. Finally, the court concluded that it was not unreasonable on this record to conclude that plaintiff could be treated with a less costly, equally effective outpatient treatment. Therefore, substantial evidence supported Humana's finding that further treatment for plaintiff at the Avalon Hills facility was not medically necessary. The court found plaintiff's remaining arguments were without merit and affirmed the judgment. View "Ariana M. v. Humana Health Plan of Texas" on Justia Law
Decatur Hospital Authority v. Aetna Health, Inc.
Wise Regional, a Texas municipal hospital authority, filed suit against Aetna, an insurance plan administrator, in state court over a dispute regarding medical insurance claims Wise Regional submitted on behalf of its patients. Aetna removed to federal court under 28 U.S.C. 1442, but the district court remanded to state court, awarding attorneys' fees. The court concluded that it had appellate jurisdiction over the remand order because Aetna relied upon the federal officer removal statute in its notice of removal; remand was proper because Aetna's notice of removal was untimely; and the district court did not abuse its discretion in awarding attorneys' fees where Aetna lacked an objectively reasonable basis for seeking removal of this action almost five months after expiration of the thirty-day deadline for removal. Accordingly, the court affirmed the judgment. View "Decatur Hospital Authority v. Aetna Health, Inc." on Justia Law
In Re: Louisiana Crawfish Producers
Plaintiffs filed suit against oil and gas companies and their insurers, claiming that the companies' dredging activities caused damage to the fisheries the fishermen used. The district court granted summary judgment for Florida Gas and Southern Natural because plaintiffs did not create a genuine issue of material fact as to whether the companies' activities constituted "dredging" so as to support maritime tort claims. The district court then denied plaintiffs' motion for reconsideration. The court affirmed the district court's judgment as to Florida Gas because none of plaintiffs' evidence created a genuine issue of material fact as to whether Florida Gas participated in dredging activities. However, the court reversed the district court's judgment as to Southern Natural because plaintiffs presented new, conclusive evidence in their motion for reconsideration pertaining to Southern Natural that they were justified in not presenting earlier. In this case, plaintiffs provided three types of new evidence upon reconsideration: Southern Natural's deposition transcript; documentary evidence offered during Southern Natural's deposition; and Southern Natural's responses to requests for admission. The court disagreed with the district court's analysis, particularly as it pertained to Southern Natural's deposition transcript and responses to requests for admission. The court explained that these items were clearly probative and, if the district court would have considered the contents of Southern Natural's deposition or its admissions, plaintiffs would have defeated summary judgment as to Southern Natural. View "In Re: Louisiana Crawfish Producers" on Justia Law
Kipp Flores Architects, LLC v. Mid-Continent Casualty Co.
After KFA filed suit against Hallmark for copyright infringement, Hallmark commenced a "no asset" bankruptcy case. KFA, relying on its "deemed allowed" claim, 11 U.S.C. 502(a), as a final judgment, subsequently filed suit against Mid-Continent, debtor's liability insurer, arguing that the unobjected-to claim constituted a final judgment and was res judicata as to Mid-Continent. The court concluded that the text and structure of the Bankruptcy Code, Rules and Official Forms, and relevant case law all support affirming the district court's grant of summary judgment to KFA. The court held that KFA did not have a "deemed allowed" claim that constituted res judicata against Mid-Continent because in this no asset bankruptcy case, nothing in the court proceedings required claims allowance, no notice was provided to parties in interest to object to claims, and no bankruptcy purpose would have been served by the bankruptcy court's adjudicating KFA's claim. Accordingly, the court affirmed the judgment. View "Kipp Flores Architects, LLC v. Mid-Continent Casualty Co." on Justia Law
Aldous v. Darwin National Assurance Co.
The district court granted summary judgment to Darwin, concluding that plaintiff was judicially estopped from claiming defense costs in excess of $668,068.38. The district court further found that Darwin was entitled to recover "overpayments" on an equitable "money had and received" theory. Both parties appealed. The court concluded, after thorough review, that plaintiff never took the position that her defense costs in the underlying suit were limited to $668,068.31 and that the prior court never accepted such a position. Therefore, the district court's contrary determination represented an abuse of discretion and the application of judicial estoppel was inappropriate. The court further concluded that summary judgment should not have been granted against plaintiff on the breach of contract claim where the district court relied in part on the judicial estoppel ruling; the proper measure of covered defense costs remains an unsettled question of fact and plaintiff was not entitled to a declaratory judgment; and the court rejected plaintiff's remaining claims. In light of the court's judicial estoppel ruling, the court concluded that the district court's grant of summary judgment on Darwin's claim for money had and received cannot stand. Finally, the court rejected Darwin's breach of contract claim. Accordingly, the court reversed and remanded for further proceedings. View "Aldous v. Darwin National Assurance Co." on Justia Law
Richard v. Anadarko Petroleum
In this insurance coverage dispute, Liberty Mutual, OES's insurer, denied OES's claim for reimbursement of funds OES spent defending against, and ultimately settling, the underlying tort suit. On appeal, Liberty Mutual claimed that the district court erred by permitting OES and Anadarko to equitably reform their master services contract (MSC), and that the district court interpreted the OES-Liberty Mutual policy erroneously by concluding that the policy obligated Liberty Mutual to reimburse OES for all of the attorney's fees OES incurred in connection with the tort suit, rather than a pro-rata portion of those fees. The court affirmed as to the MSC issue. In this case, OES and Anadarko met the higher clear-and-convincing evidence burden of establishing mutual error in the contract's creation. However, the court concluded that the insurance policy only obligated Liberty Mutual to pay a pro-rata share of the attorney's fees, and modified the attorney's fees award, determining that the policy entitled OES to attorney's fees totaling $168,695.96. View "Richard v. Anadarko Petroleum" on Justia Law
Federal Insurance Company v. Singing River Health
This insurance coverage dispute between Federal and Medical Insureds related to various underlying lawsuits arising from SRHS's alleged underfunding of its Retirement Plan and Trust. Federal sought a declaration that it had limited liability and SRHS counterclaimed, seeking declaratory relief and alleging waiver, estoppel, civil conspiracy, breach of contract, tortious breach of contract, breach of fiduciary duty, breach of the duty of good faith and fair dealing, bad faith, interference with contract and business relations, and conversion. The court rejected Medical Insureds' argument that Moeller v. American Guarantee & Liability Insurance Co. and the policy language required Federal to pay Defense Costs without regard to policy limits; concluded that the district court erred in determining that Defense Costs did not erode the policy limit, and Federal was entitled to judgment on this issue; and concluded that the constitutional claims fell within the Employee Benefits Program Laws exclusion 7(e) and the district court did not err in determining that there was no Executive Liability, Entity Liability, and Employment Practices Liability (ELI/EPL) Coverage as to the identified claims. Accordingly, the court reversed the district court's grant of summary judgment for Medical Insureds, rendered judgment for Federal, and affirmed the district court's grant of partial summary judgment for Federal regarding ELI/EPL Coverage. View "Federal Insurance Company v. Singing River Health" on Justia Law
OneBeacon Insurance Co. v. T. Wade Welch & Associates
OneBeacon filed suit for declaratory judgment, seeking to rescind an insurance policy or obtain a declaration that the prior-knowledge exclusion barred coverage. The Welch Firm counterclaimed, asserting violations of the common law Stowers duty and the Texas Insurance Code. DISH intervened. The jury returned a verdict in favor of DISH and the Welch Firm. OneBeacon timely appealed and the Welch parties cross-appealed. The court affirmed the district court’s orders denying OneBeacon’s motion and renewed motion for judgment as a matter of law based on the policy’s prior-knowledge exclusion; concluded that the district court did not err in holding that DISH’s July 14, 2011, letter demanding policy limits in exchange for a full release of its claims against the Welch Firm was a valid Stowers demand which OneBeacon rejected; concluded that the district court did not err in entering judgment on the jury’s award of additional damages on the ground that OneBeacon “knowingly” violated Section 541.060 of the Texas Insurance Code; concluded that OneBeacon's challenges to the jury's $8 million award was not properly before the court; and concluded that the district court did not err in requiring the Welch Firm to choose between additional damages under Chapter 541 and exemplary damages under Stowers. View "OneBeacon Insurance Co. v. T. Wade Welch & Associates" on Justia Law