Justia Insurance Law Opinion Summaries

Plaintiffs own a large ten-thousand-square-foot house in Austin, Texas. They insured their home with Crestbrook Insurance Company. Their policy included “Biological Deterioration or Damage Clean Up and Removal” coverage (“mold coverage”). In April 2019, Plaintiffs discovered a widespread mold infestation in their home. Although Crestbrook covered many of their losses, it denied a generalized claim for mold growing in Plaintiffs’ walls and heating, ventilation, and air conditioning system. On cross-motions for summary judgment, a magistrate judge issued a report and recommendation in favor of Crestbrook, and the district court adopted the magistrate judge’s conclusions. At issue on appeal is whether the optional mold coverage Plaintiffs purchased in their Crestbrook policy, which provided $1.6 million in mold damage insurance in exchange for $4,554.53 in additional premiums, covers a generalized mold loss.   The Fifth Circuit affirmed. The court held that the district court incorrectly applied the Texas insurance coverage burden-shifting framework. However, Crestbrook is entitled to summary judgment regardless. The court wrote that the insurance company has demonstrated that a generalized mold claim is excluded under the policy. Plaintiffs have not met their burden of showing that an exception to the exclusion in their insurance contract brings their claim back within coverage View "Buchholz v. Crestbrook" on Justia Law

Appellant Southern Orthopaedic Specialists, L.L.C. (“Southern Orthopaedic”) sued its insurer, State Farm Fire & Casualty Company (“State Farm”), to recover business interruption losses caused by covid-related shutdowns. It also claims that State Farm negligently misrepresented the scope of the policy’s coverage. The district court dismissed these claims as foreclosed by the policy and Louisiana law.   The Fifth Circuit affirmed. The court held that Southern Orthopaedic’s pleadings fall short. They do not allege that covid caused “tangible or corporeal” property damage. Nor do they allege that the presence of covid particles required physically repairing or replacing any part of Southern Orthopaedics’s property. Nor do they claim that the presence of covid necessitated lasting alterations to the property. Without allegations of this nature, Southern Orthopaedic cannot meet the requirement of pleading an “accidental direct physical loss” under the policy. View "S Orthopaedic Spclt v. State Farm Fire" on Justia Law

Plaintiff is a former federal employee and participant in a health-insurance plan (“Plan”) that is governed by the Federal Employees Health Benefits Act (“FEHBA”). The Plan stems from a contract between the federal Office of Personnel Management (“OPM”) and Blue Cross Blue Shield Association and certain of its affiliates (together, “Blue Cross”). Blue Cross administers the Plan under OPM’s supervision. Plaintiff suffered from cancer, and she asked Blue Cross whether the Plan would cover the proton therapy that her physicians recommended. Blue Cross told her the Plan did not cover that treatment. So Plaintiff chose to receive a different type of radiation treatment, one that the Plan did cover. The second-choice treatment eliminated cancer, but it also caused devastating side effects. Plaintiff then sued OPM and Blue Cross, claiming that the Plan actually does cover proton therapy. As against OPM, she seeks the “benefits” that she wanted but did not receive, as well as an injunction directing OPM to compel Blue Cross to reform its internal processes by, among other things, covering proton therapy in the Plan going forward. As against Blue Cross, she seeks monetary damages under Texas common law. The district court dismissed Plaintiff’s suit.   The Fifth Circuit affirmed. The court held that neither the advance process nor the proton-therapy guideline poses an immediate threat of injury, so injunctive relief is therefore unavailable. Further, the court found that FEHBA preempts Plaintiff’s common-law claims against Blue Cross. Accordingly, the court held that no relief is available under the relevant statutory and regulatory regime. View "Gonzalez v. Blue Cross Blue Shield" on Justia Law

Plaintiffs-Appellees, emergency care physician groups in Texas (the “Plaintiff Doctors”), have provided various emergency medical services to patients enrolled in health insurance plans insured by Defendants-Appellants UnitedHealthcare Insurance Company or UnitedHealthcare of Texas, Incorporated (collectively, “UHC”). The Plaintiff Doctors are not within UHC’s provider network. In their operative complaint, the Plaintiff Doctors allege (among other claims) that UHC has failed to remit the “usual and customary rate” for the emergency care that the Plaintiff Doctors provide to patients insured by UHC in violation of the Emergency Care Statutes. UHC moved to dismiss the Plaintiff Doctors’ complaint, which was denied in part by the district court. The district court rejected UHC’s argument that the Emergency Care Statutes did not authorize a private cause of action. UHC immediately sought interlocutory review of two issues: (1) whether the Emergency Care Statutes authorize an implied private cause of action, and (2) whether the Plaintiff Doctors’ claim under the Emergency Care Statutes is otherwise preempted by ERISA.   The Texas Supreme Court answered the certified question in the negative, holding that the Texas Insurance Code “does not create a private cause of action for claims under the Emergency Care Statutes.” Therefore, the Fifth Circuit found that the Plaintiff Doctors’ claim for violation of the Emergency Care Statutes must be dismissed. Because there is no private cause of action under the Emergency Care Statutes, the second issue before the court—whether the Plaintiff Doctors’ claim under the Emergency Care Statutes is otherwise preempted by ERISA—is now moot. View "ACS Primary v. UnitedHealthcare" on Justia Law

PHI Group, Inc. (“PHI”), offers helicopter services for numerous global customers in the oil and gas, air medical, technical services, and healthcare industries. Zurich American Insurance Company (“Zurich”) sold an “all-risk” insurance policy covering PHI. PHI sued Zurich in a civil action in diversity to recover economic losses for the partial interruption of its business during the COVID pandemic. The district court dismissed PHI’s claims because its losses were not caused by a physical loss or damage to corporeal property, its claims were not novel in the post-pandemic legal environment, and the Fifth Circuit has resolved comparable cases similarly.   The Fifth Circuit affirmed. The court explained that PHI alleged a material difference in the insurance policies in Q Clothier and here. In Q Clothier, the policy covered “direct physical loss of or physical damage” to property, while here, the policy covers “direct physical loss or damage” to property. But the Fifth Circuit has found no ambiguity here, regardless of whether “physical” modifies only loss or both loss and damage. Further, PHI has not established any facts that indicate that coronavirus caused direct physical loss or damage, which remains at the crux of any recovery under its insurance policy. Regardless of the contamination exclusion, PHI does not have a plausible claim for coverage. An exclusion cannot create coverage that does not exist under the plain meaning of the policy. View "PHI Group v. Zurich American Insurance" on Justia Law

In a case involving the denial of coverage for an automobile accident, the Fifth Circuit addressed whether uninsured motorist coverage can be denied simply because the driver, who was the son of the insured, was not listed on the policy? The court answered that question “no.” The other is whether the policy can be voided because the insured committed a material misrepresentation by failing in her application for insurance to name, as required, those of driving age who lived in her household? The court answered that question, “yes.”   The Fifth Circuit affirmed the district court’s ruling granting Viking Insurance’s motion for summary judgment in Plaintiffs’ suit seeking damages for a wrongful denial of benefits. The court concluded that if an insurer declines to exercise the greater power to void a policy, it still retains the lesser power to exercise a contractual right to deny coverage. The court explained that here, a knowing misstatement in the application about the drivers in the household was material if it would have caused Viking either not to issue the policy or to increase the premium. The court accepted that materiality is not affected by the relationship between the false statement and the specific coverage being sought in litigation. It is enough that the falsity was material to the decision of the company to issue the policy at the agreed price. Consequently, Viking could have voided the policy. By not voiding, Viking’s policy remained in effect. Accordingly, Viking had the right to deny Plaintiffs’ claim. View "Bradley v. Viking Insurance" on Justia Law

This insurance coverage dispute arises from underlying litigation in a single-vehicle accident that led to a lawsuit by J.O. against his employer, Riata Cattle Company, Inc. (“Riata”). J.O. sued Riata in Texas state court, alleging that he suffered bodily injury when Riata’s truck, which he was driving, malfunctioned and crashed due to Riata’s failure to repair and maintain it. J.O. also alleged that Riata committed negligence and gross negligence by failing to provide him with safety equipment, failing to warn him of any dangers, failing to inspect or repair the equipment, and other negligence theories. Riata sought coverage defense from its auto liability insurer, National Liability & Fire Insurance Company (“National Liability”), which is currently defending Riata in the underlying litigation under a reservation of rights letter. National Liability subsequently filed a declaratory judgment action in federal court, seeking a determination that it owes Riata neither a defense nor indemnity under the insurance policy (the “Policy”). National Liability contends it is entitled to a declaratory judgment because the Policy excludes coverage for employees of Riata. Riata seems to concede this argument but contends that the “Form F” endorsement on the Policy compels National Liability to defend and indemnify Riata.The Fifth Circuit affirmed. The court explained that J.O. is an employee of Riata, and according to the applicable Policy, National Liability is excluded from providing insurance coverage to Riata for the underlying litigation. And Form F does not change the employee exclusion in the Policy. View "Ntl L & Fire Ins Co v. Riata Cattle Co" on Justia Law

During the covid-19 pandemic, state and local authorities in Louisiana ordered nonessential businesses to close for a time. This required Plaintiff to temporarily shut his jewelry stores and event spaces in New Orleans. To recoup income lost during the closure, Plaintiff claimed reimbursement under his insurance policy’s coverage for “direct physical loss of or damage to” his property. Plaintiff’s insurer, Axis, denied the claim.   Plaintiff sued Axis along with his insurance agent and broker. The district court dismissed Plaintiff’s claims, concluding that Plaintiff suffered no covered loss or damages and that his agent and broker violated no duty to advise Plaintiff about pandemic-related coverage.   The Fifth Circuit affirmed. The court explained that what denied Plaintiff use of his property was the government’s closure orders. Such losses do not involve a “tangible alteration to, injury to, or deprivation of property.” The district court therefore correctly dismissed Plaintiff’s claims against Axis. Further, contrary to Plaintiff’s arguments, what creates a Louisiana insurance agent’s duty to procure particular coverage is not a “close relationship” with the insured but an insured’s “specific” request for “the type of insurance coverage . . . needed.” Here, Plaintiff did not allege he specifically requested pandemic-related coverage from either the wholesale broker or insurance agent, therefore Plaintiff’s claims against those Defendants were properly dismissed. View "Adler & Sons v. Axis Surplus Ins Co" on Justia Law

The Louisiana Independent Pharmacies Association (“LIPA”) sued Express Scripts on behalf of its members, seeking a declaratory judgment on whether La. Rev. Stat. Ann. Sections 22:1860.1 and 46:2625 are preempted by Medicare Part D.1 Express Scripts moved to dismiss LIPA’s request for declaratory judgment regarding the reimbursement provision for failure to state a claim, see Fed. R. Civ. P. 12(b)(6), on the basis that Medicare Part D preempts the reimbursement provision for prescriptions covered by Part D plans The district court concluded, however, that Express Scripts failed “to meet its burden of showing preemption or any other basis for dismissal.” Express Scripts moved to certify the order denying its motion to dismiss for interlocutory appeal under 28 U.S.C. Section1292(b). The district court granted certification,   The Fifth Circuit vacated the district court’s order concluding that the court lacks both federal question and diversity jurisdiction. The court explained that here, LIPA seeks a declaration that Express Scripts’ state law and related contractual obligation to reimburse LIPA’s member pharmacies for the provider fee is not preempted by federal law. Applying the well-pleaded complaint rule requires the court to imagine a hypothetical coercive lawsuit brought by Express Scripts against LIPA’s member pharmacies. But none is conceivable, thus, because Express Scripts has no possible ground for a coercive lawsuit, no federal question arises for purposes of jurisdiction in LIPA’s declaratory judgment case. Accordingly, the court concluded that LIPA must make the same showing to satisfy the amount in controversy requirement. View "LA Indep Pharmacies v. Express Scripts" on Justia Law

Plaintiff-Appellant XL Insurance America, Inc. (“XL”), as subrogee of Boh Bros. Construction Co., L.L.C. (“Boh Bros.”), challenged the district court’s summary judgment in favor of Defendant-Appellee Turn Services, L.L.C. (“Turn”).   On appeal, Turn devotes significant ink to its contention that Boh Bros.’s responsibility for repairing the dolphin does not equate to a proprietary interest in it.   The Ninth Circuit vacated and remanded. The court held that Robins Dry Dock is not implicated by the $1.2 million that XL paid Boh Bros. to cover the repairs. The court explained that for nearly a century, Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), has limited plaintiffs’ ability to recover “purely economic claims . . . in a maritime negligence suit.”1 “[A]bsent physical injury to a proprietary interest”—or one of a few other limited exceptions—plaintiffs asserting such claims are out of luck. The court explained the “spectre of runaway recovery lies at the heart of the Robins Dry Dock rubric.”   Further, the court concluded that it is clear that the doctrine would be inapplicable here if XL had paid the money directly to Plains because Plains had a proprietary interest in the damaged dolphin. That the money passes through the hands of an intermediary—here, Boh Bros.—is irrelevant to the concerns animating Robins Dry Dock. View "XL Insurance America v. Turn Services" on Justia Law