Justia Insurance Law Opinion Summaries

Brandi Goodwin, a part-time nursing assistant at Fisher Titus Hospital, contracted COVID-19 in December 2020, leading to symptoms such as shortness of breath and chest pain. She filed for short-term disability benefits, which Unum Life Insurance Company approved and extended until June 2021. However, when Goodwin applied for long-term disability benefits, Unum denied her claim, citing a pre-existing condition (vertigo) and normal test results that did not support her continued complaints.The United States District Court for the Southern District of Ohio upheld Unum's denial of long-term disability benefits. Goodwin then appealed the decision, arguing that Unum's denial was procedurally and substantively unreasonable.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court assessed whether Unum's decision-making process was procedurally sound and whether the decision was supported by substantial evidence. The court found that Unum considered all relevant evidence, including new medical opinions and test results, and provided rational reasons for changing its benefits determination from short-term to long-term. The court also noted that Unum's reliance on file reviewers over treating physicians was not unreasonable and that Goodwin did not provide concrete evidence of bias affecting Unum's decision.The Sixth Circuit concluded that Unum's decision to deny Goodwin long-term disability benefits was both procedurally and substantively reasonable. Therefore, the court affirmed the district court's judgment in favor of Unum. View "Goodwin v. Unum Life Ins. Co. of Am." on Justia Law

BlueCross BlueShield of Tennessee (BlueCross) is an insurer and fiduciary for an ERISA-governed group health insurance plan. A plan member in New Hampshire sought coverage for fertility treatments, which BlueCross denied as the plan did not cover such treatments. The Commissioner of the New Hampshire Insurance Department initiated an enforcement action against BlueCross, alleging that the denial violated New Hampshire law, which mandates coverage for fertility treatments. BlueCross sought to enjoin the state regulatory action, arguing it conflicted with its fiduciary duties under ERISA.The United States District Court for the Eastern District of Tennessee denied BlueCross's request for relief and granted summary judgment to the Commissioner. The court found that the Commissioner’s enforcement action was against BlueCross in its capacity as an insurer, not as a fiduciary, and thus was permissible under ERISA’s saving clause, which allows state insurance regulations to apply to insurers.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s decision. The Sixth Circuit held that the Commissioner’s action was indeed against BlueCross as an insurer, aiming to enforce New Hampshire’s insurance laws. The court noted that ERISA’s saving clause permits such state actions and that BlueCross could not use its fiduciary duties under ERISA to evade state insurance regulations. The court also referenced the Supreme Court’s decision in UNUM Life Insurance Co. of America v. Ward, which established that state insurance regulations are not preempted by ERISA when applied to insurers. Thus, the Sixth Circuit concluded that ERISA did not shield BlueCross from the New Hampshire regulatory action. View "BlueCross BlueShield of Tennessee v. Nicolopoulos" on Justia Law

Wehr Constructors, Inc. (Wehr) entered into a contract with St. Claire Medical Center (St. Claire) to build an addition to the hospital. Wehr's performance was allegedly deficient, leading to significant construction defects. St. Claire terminated the contract and sought damages from Wehr's performance-bond carrier, Travelers Casualty and Surety Company (Travelers Surety). Travelers Surety then involved Wehr in the litigation. Wehr sought defense coverage from its insurers: Phoenix Insurance Company (Phoenix), St. Paul Surplus Lines Insurance Company (St. Paul), and Travelers Property Casualty Company of America (Travelers Property).The United States District Court for the Eastern District of Kentucky ruled that none of Wehr’s insurers had a duty to defend Wehr in the lawsuit initiated by St. Claire. The court held that Phoenix’s duty to defend was not triggered because St. Claire did not assert claims directly against Wehr. It also found that St. Paul had no duty to defend because Wehr did not specifically agree to perform as a construction manager, a requirement under the St. Paul policy. Although Wehr did not seek summary judgment against Travelers Property, the court noted that Travelers Property also had no duty to defend for the same reasons as Phoenix.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s decision regarding St. Paul, agreeing that Wehr did not specifically agree to serve as a construction manager. However, it reversed the decision regarding Phoenix, holding that Phoenix had a duty to defend Wehr because the damages alleged by St. Claire potentially fell within the policy coverage, and Wehr was a party to the suit. The court vacated the decision regarding Travelers Property and remanded for further proceedings to determine whether Travelers Property had a duty to defend, given the ambiguity in the district court’s ruling and the stipulation by the parties. View "Phoenix Insurance Co. v. Wehr Constructors, Inc." on Justia Law

US Framing International LLC entered into a subcontract with Continental Building Company for framing services on two student-housing projects. Disputes arose, leading US Framing to leave the Knoxville project. Continental then filed an insurance claim alleging US Framing's breach of the subcontract. US Framing sued Continental and its officers, claiming insurance fraud under Tennessee law. The district court dismissed the case, stating US Framing failed to plead any injury directly caused by the alleged fraudulent insurance claim.The United States District Court for the Eastern District of Tennessee initially reviewed the case. The court granted Continental's motion to dismiss, concluding that US Framing did not demonstrate any direct injury resulting from Continental's insurance claim. US Framing then appealed the decision.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that US Framing did not plausibly allege any economic damages directly resulting from Continental's alleged insurance fraud. The court also determined that US Framing could not recover attorney's fees or statutory penalties, as it did not establish itself as a prevailing party entitled to such relief. The court's decision was based on the interpretation of Tennessee law, which requires a direct causal link between the alleged fraud and the claimed damages. View "US Framing International LLC v. Continental Building Co." on Justia Law

Karl Tobien, a door-to-door salesman, was attacked by a dog while working in Ohio. He filed two federal lawsuits: one against the homeowners in the Southern District of Ohio, which was dismissed by agreement, and another against Nationwide General Insurance Company in the Eastern District of Kentucky. Tobien claimed Nationwide violated Kentucky’s Unfair Claims Settlement Practices Act, acted in bad faith, and sought punitive damages after the company denied his insurance claim.The United States District Court for the Eastern District of Kentucky dismissed Tobien’s lawsuit for improper venue, concluding that most relevant events occurred in Ohio. Tobien appealed, arguing that the Eastern District of Kentucky was a proper venue and that the district court should have transferred the case to the Southern District of Ohio instead of dismissing it.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo and upheld the district court’s decision. The court determined that Tobien failed to show that a substantial part of the events giving rise to his claims occurred in the Eastern District of Kentucky. The court also found that transferring the case to the Southern District of Ohio would not be in the interest of justice, as Ohio law would apply and Tobien’s claims would fail under Ohio law. Consequently, the Sixth Circuit affirmed the district court’s dismissal of Tobien’s lawsuit. View "Tobien v. Nationwide Gen. Ins. Co." on Justia Law

As a nurse at the University of Louisville Hospital, Milby was covered by a long-term disability insurance policy. In 2011, Milby sought and received disability benefits for 17 months. During a subsequent eligibility review, the plan engaged MCMC, a third-party reviewer. MCMC opined that the “opinions of [Milby’s treating physicians] are not supported by the available medical documentation” and that she could perform sustained full-time work without restrictions as of 2/22/2013. Neither MCMC nor its agent was licensed to practice medicine in Kentucky. The plan terminated Milby’s benefits effective February 2013. Milby’s suit against her disability insurance provider remains pending. She also filed suit alleging negligence per se against MCMC for practicing medicine in Kentucky without appropriate licenses. MCMC removed the case to federal court, claiming complete preemption under the Employee Retirement Income Security Act (ERISA). The trial court denied Milby’s motion for remand to state court and dismissed. The Sixth Circuit affirmed. The state-law claim fits in the category of claims that are completely preempted by ERISA: it is in essence about the denial of benefits under an ERISA plan and the defendant does not owe an independent duty to the plaintiff because the defendants were not practicing medicine under the specified Kentucky law. View "Milby v. MCMC, LLC" on Justia Law

Fleet Owners Fund is a multi-employer “welfare benefit plan” under the Employee Retirement Security Act (ERISA), 29 U.S.C. 1001, and a “group health plan” under the Patient Protection and Affordable Care Act (ACA), 26 U.S.C. 5000A. Superior Dairy contracted with Fleet for employee medical insurance; the Participation Agreement incorporated by reference a 2002 Agreement. In a purported class action, Superior and its employee alleged that, before entering into the Agreement, it received assurances from Fleet Owners and plan trustees, that the plan would comply in all respects with federal law, including ERISA and the ACA. Plaintiffs claim that, notwithstanding the ACA’s statutory requirement that all group health plans eliminate per-participant and per-beneficiary pecuniary caps for both annual and lifetime benefits, the plan maintains such restrictions and that Superior purchased supplemental health insurance benefits to fully cover its employees. Fleet argued that the plan is exempt from such requirements as a “grandfathered” plan. The district court dismissed the seven-count complaint. The Sixth Circuit affirmed, concluding that plaintiffs lacked standing to bring claims under ERISA and ACA, having failed to allege concrete injury, and did not allege specific false statements. View "Soehnlen v. Fleet Owners Insurance Fund" on Justia Law

In the 1990s, Stryker purchased a Pfizer subsidiary that made orthopedic products, including the “Uni-knee” artificial joint. It was later discovered that those devices were sterilized using gamma rays, which caused polyethylene to degrade. If implanted past their five-year shelf-life, the knees could fail. Expired Uni-Knees were implanted in patients. Stryker, facing individual product-liability claims and potentially liable to Pfizer, sought defense and indemnification under a $15 million XL “commercial umbrella” policy, and a TIG “excess liability” policy that kicked in after the umbrella policy was fully “exhausted.” XL denied coverage, arguing that the Uni-Knee claims were “known or suspected” before the inception of the policy. Stryker filed lawsuits against the insurers, then unilaterally settled its individual product-liability claims for $7.6 million. Stryker was adjudicated liable to Pfizer for $17.7 million. About 10 years later, the Sixth Circuit held that XL was obliged to provide coverage. XL paid out the Pfizer judgment first, exhausting coverage limits. TIG declined to pay the remaining $7.6 million, arguing that Stryker failed to obtain “written consent” at the time the settlements were made. Stryker claimed that the policy was latently ambiguous because XL satisfied the Pfizer judgment first, Stryker was forced to present its settlements to TIG years after they were made. The district court granted Stryker summary judgment. The Sixth Circuit reversed, finding the contract unambiguous in requiring consent. View "Stryker Corp. v. National Union Fire Insurance Co." on Justia Law

The State of Michigan contracted with E.L. Bailey to construct a prison kitchen. After delays, the parties sued each other for breach of contract. Bailey had obtained surety bonds from Great American Insurance Company (GAIC) and had agreed to assign GAIC the right to settle claims related to the project if Bailey allegedly breached the contract. Exercising that right, GAIC negotiated with the state without Bailey’s knowledge, then obtained a declaratory judgment recognizing its right to settle. The Sixth Circuit affirmed, rejecting, for insufficient evidence, a claim that GAIC settled Bailey’s claims against the state in bad faith. Although “there can be bad faith without actual dishonesty or fraud,” when “the insurer is motivated by selfish purpose or by a desire to protect its own interests at the expense of its insured’s interest,” “offers of compromise” or “honest errors of judgment are not sufficient to establish bad faith.” There was no evidence that GAIC’s settlement of Bailey’s claims was undertaken with selfish purpose at Bailey’s expense. GAIC and Bailey shared an interest in securing the highest settlement possible from the state. Even if GAIC misunderstood Michigan law, leading it to miscalculate its liability and accept a lower settlement, “honest errors of judgment are not sufficient to establish bad faith.” View "Great American Insurance Co. v. E.L. Bailey & Co." on Justia Law

Okuno was working as an art director with a clothing company when she developed symptoms including vertigo, extreme headaches, memory loss, and abdominal pain. Though she had previously been diagnosed with fibromyalgia and degenerative disc disease, Okuno contends that these maladies had been “stable and well-controlled” for years and did not prevent her from working. After visits to multiple specialists, numerous tests, and two visits to the emergency room, Okuno was eventually diagnosed with narcolepsy, Crohn’s disease, and Sjogren’s syndrome, an autoimmune disease. After diagnosis, she struggled with negative drug interactions and the side effects associated with her many treatments. Unable to continue working, Okuno went on short-term disability and applied for benefits under her employer’s long-term disability plan, issued and administrated by Reliance. Reliance denied the application on the basis that depression and anxiety contributed to Okuno’s disabling conditions. After exhausting her administrative appeals, Okuno brought a claim under the Employee Retirement Income Security Act (ERISA). 29 U.S.C. 1132(a)(1)(B). The district court found in favor of Reliance on cross-motions for judgment on the administrative record. The Sixth Circuit reversed, reasoning that her physical ailments, including Crohn’s disease, narcolepsy, and Sjogren’s syndrome, are disabling when considered apart from any mental component. View "Okuno v. Reliance Standard Life Ins. Co." on Justia Law