Justia Insurance Law Opinion SummariesArticles Posted in U.S. Court of Appeals for the Fourth Circuit
Woodson v. Allstate Insurance Co.
Plaintiffs filed suit in state court against Allstate after it denied coverage for damages caused by Hurricane Irene to plaintiffs' waterfront home. Allstate removed to federal court, raising a statute of limitations defense. The district court did not address the limitations issue and ultimately entered judgment for plaintiffs. The Fourth Circuit concluded that plaintiffs' breach of contract claim was time barred because they did not file the complaint within one year of the denial of coverage, as required by the National Food Insurance Act of 1968 (NFIA), 42 U.S.C. 4001(a), and its regulations. Plaintiffs' argument that the statute should be tolled by their filing of a complaint in state court is foreclosed by Shofer v. Hack Co. Furthermore, the facts neither support a forfeiture or a waiver on behalf of Allstate. The Fourth Circuit also concluded that plaintiffs' claim for bad faith handling of their insurance claim under the North Carolina Unfair and Deceptive Trade Practices Act N.C. Gen. Stat. 75-1.1 et seq., was preempted by federal law and therefore barred. Accordingly, the Fourth Circuit reversed the judgment of the district court. View "Woodson v. Allstate Insurance Co." on Justia Law
Interstate Fire and Casualty v. Dimensions Assurance Ltd.
Favorite Healthcare Staffing is an employment agency that provides nurses and other health care professionals to Laurel Regional Hospital. The contract between the Agency and the Hospital (the “Staffing Agreement”) states that the Agency-provided practitioners assigned to the Hospital are the employees of the Agency, not the Hospital. At issue in this case is whether a nurse employed by a staffing agency and assigned to work at a hospital qualifies as an “employee” of the hospital under the hospital’s insurance policy (the "Dimensions Policy"). The district court answered in the negative and granted summary judgment in favor of the hospital's insurer. The court concluded, however, that the term “employee” as used in the Dimensions Policy is not ambiguous and that it includes those workers who qualify as employees under the right-to-control test. Therefore, Dimensions has an independent obligation to provide coverage to those workers who meet the definition of “employee,” without regard to how those workers may be classified under the Staffing Agreement executed by the Hospital and the Agency. Because the evidence contained in the record establishes that the nurse is the Hospital’s employee under the right-to-control and the borrowed-servant standards, the court concluded that she is a “protected person” who qualifies for coverage under the professional-liability portion of the Dimensions Policy. Accordingly, the court vacated and remanded. View "Interstate Fire and Casualty v. Dimensions Assurance Ltd." on Justia Law
St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc.
Because of an internal oversight, American Bank failed to respond to a summons and the state court entered a $98.5 million default judgment against it. Eight months after receipt of the summons, American Bank notified its insurer, St. Paul, of the lawsuit and St. Paul denied coverage due to late notice. American Bank was subsequently able to have the default judgment vacated and the suit dismissed, but at an expense of $1.8 million. St. Paul now seeks a declaratory judgment that it had no duty to pay for American Bank's defense, and American Bank counterclaims. The court affirmed the district court's entry of judgment for St. Paul where, among other things, American Bank did not provide St. Paul with notice as soon as practicable, as required by the terms of its insurance policy, and because the late notice caused St. Paul prejudice. Therefore, St. Paul was within its right to deny coverage. View "St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc." on Justia Law