Justia Insurance Law Opinion SummariesArticles Posted in US Court of Appeals for the Fourth Circuit
Affinity Living Group, LLC v. Starstone Specialty Insurance Co.
After Affinity was sued for allegedly submitting Medicaid reimbursement claims for services that they never provided, it sought coverage for the suit under its insurance policy with StarStone. StarStone denied coverage because the lawsuit's claims did not fall within the policy's coverage for "damages resulting from a claim arising out of a medical incident." The district court agreed and granted judgment on the pleadings against Affinity on a declaratory judgment claim and breach of contract claim.The Fourth Circuit first found that it had appellate jurisdiction over the appeal, because Affinity properly appeals from a "final" decision. In this case, Affinity properly appealed the district court’s order dismissing its contractual claims after voluntarily dismissing extra-contractual claims that were necessarily precluded by the order. On the merits, the court applied North Carolina law and held that the allegations in the underlying complaint fall within the insurance policy's coverage provision. The court found that the False Claims Act action "arises out of" a medical incident as required to fall under the coverage provision of StarStone's policy. Accordingly, the court vacated the district court's order granting StarStone's motion for judgment on the pleadings and vacated the order denying Affinity's motion for partial summary judgment. View "Affinity Living Group, LLC v. Starstone Specialty Insurance Co." on Justia Law
Trustgard Insurance Co. v. Collins
The Fourth Circuit vacated the district court's declaratory judgment in favor of the insurer, holding that the district court abused its discretion when it assumed jurisdiction under the Declaratory Judgment Act. In this case, without addressing the decision to exercise its discretionary jurisdiction, the district court reached the merits despite a thin and ambiguous record. The court held that the district court created both a substantial question about whether Article III jurisdiction existed and a serious potential to interfere with ongoing state proceedings. Therefore, the court remanded with instructions to dismiss the action without prejudice. View "Trustgard Insurance Co. v. Collins" on Justia Law
United Financial Casualty Co. v. Ball
Neither the Worker's Compensation exclusion or the Employee Indemnification and Employer's Liability exclusion in a standard commercial automobile insurance policy barred coverage for the liability of a third-party permissive user of an insured vehicle who caused personal injuries to an employee of a named insured. While employees of Milton Hardware were performing construction work at the home of Rodney Perry, Milton Hardware's owner authorized Perry to move one of Milton Hardware's trucks. In doing so, Perry accidentally struck a Milton Hardware employee, Greg Ball, and caused him serious injuries. Ball requested indemnification from Milton Hardware's insurer, United Financial, but United Financial denied coverage. The district court granted a declaratory judgment in favor of United Financial, holding that the policy it issued to Milton Hardware did not cover Perry's liability for Ball's injuries.The Fourth Circuit vacated and held that, because Ball's negligence claim against Perry was a claim against a third party, rather than a claim against his employer for workers' compensation, the Worker's Compensation exclusion did not apply. The court also held that the policy's broader exclusion for Employee Indemnification and Employer's Liability, which on its face would apply to exclude coverage for Perry's liability to Ball, was inoperable because its limitation of coverage contravened West Virginia Code 33-6-31. Therefore, the court remanded for further proceedings. View "United Financial Casualty Co. v. Ball" on Justia Law
Pennsylvania National Mutual Casualty Insurance Co. v. Beach Mart, Inc.
Applying North Carolina law, the Fourth Circuit reversed the district court's judgment in favor of Penn National, holding that the district court erred by applying the prior publication exclusions to eliminate Penn National's duty to defend Beach Mart in the underlying lawsuit. In this case, a prior publication exclusion, like the one here, will not bar coverage for offensive publications made during the policy period which differ in substance from those published before commencement of coverage. Furthermore, because the prior publication exclusions could not eliminate Beach Mart's duty to defend, the district court erred in dismissing Beach Mart's counterclaims. Accordingly, the court remanded with instructions. View "Pennsylvania National Mutual Casualty Insurance Co. v. Beach Mart, Inc." on Justia Law
Gateway Residences at Exchange, LLC v. Illinois Union Insurance Co.
Gateway filed suit to collect a $900,000 judgment from a contractor's liability insurer, Illinois Union. The Fourth Circuit held that the district court had diversity jurisdiction over the case and rightly refused to remand to state court. On the merits, the court held that Gateway's argument that Illinois waived certain defenses by failing to promptly inform Gateway of its coverage denial under Virginia Code section 38.2-2226 failed, because Illinois Union had not denied coverage because of the contractor's breach. In this case, the relevant policy covered only claims reported to the insurer during the policy period, and the policy expired 19 months before Illinois Union learned about Gateway's claim. Therefore, the court affirmed the district court's grant of summary judgment for Illinois Union. View "Gateway Residences at Exchange, LLC v. Illinois Union Insurance Co." on Justia Law
Williamson Farm v. Diversified Crop Insurance Services
The Fourth Circuit affirmed the district court's decision to vacate an arbitration award that the Farm won against a private insurance company that sold federal crop insurance policies to the Farm. The court held that, despite the strong presumption in favor of confirming arbitration awards pursuant to the Federal Arbitration Act (FAA), the insurance company met its heavy burden to prove that the arbitrator exceeded her powers by awarding extra-contractual damages, contrary to both the policy and binding authority from the Federal Crop Insurance Corporation (FCIC). In this case, the arbitrator exceeded her powers by both interpreting the policy herself without obtaining an FCIC interpretation for the disputed policy provisions, and awarding extra-contractual damages, which the FCIC has conclusively stated in multiple Final Agency Determinations could not be awarded in arbitration and can only be sought through judicial review. View "Williamson Farm v. Diversified Crop Insurance Services" on Justia Law
Minnieland Private Day School v. Applied Underwriters Captive Risk Assurance Co.
A Reinsurance Participation Agreement (RPA) executed by AUCRA and Minnieland was an insurance contract under Virginia law. The Fourth Circuit held that the district court did not violate the court's prior mandate by looking at the EquityComp program as a whole; the RPA and insurance policies constituted an integrated transaction and must be read as one contract; and the integrated contract was a contract of insurance under Virginia Code 38.2–312. Finally, the court noted that it was not the first to determine that the program marketed by Applied Underwriters was insurance. View "Minnieland Private Day School v. Applied Underwriters Captive Risk Assurance Co." on Justia Law
Griffin v. Hartford Life & Accident Insurance Co.
The Fourth Circuit affirmed the district court's grant of summary judgment to Hartford Life in an action brought under the Employee Retirement Income Security Act (ERISA). Plaintiff filed suit seeking a continuation of the long-term disability benefits that Hartford Life had terminated based on its conclusion that plaintiff was no longer "disabled," as that term was used in the plan. The court affirmed the district court's conclusion that Hartford Life, not Hartford Fire, determined that plaintiff was no longer eligible for long-term disability benefits, and Hartford Life's decision to terminate his long-term disability benefits was not an unreasonable exercise of discretion. In this case, the record demonstrated that plaintiff received a fair and thorough consideration of his claim and Hartford Life's conclusion was reasonably supported by the available evidence where, among other things, video surveillance evidence showed plaintiff walking at a quick pace and moving without observable bracing or support. View "Griffin v. Hartford Life & Accident Insurance Co." on Justia Law
Gordon v. Cigna Corp.
The Fourth Circuit affirmed the district court's grant of summary judgment for the insurance company that insured Steven Gordon. After Steven died, his wife filed suit seeking the full coverage amount for the insurance policy he had been paying for through his company. The court held that no reasonable jury could find that either of the CIGNA Defendants had a fiduciary duty toward the Gordons with respect to soliciting supporting materials for coverage beyond the guaranteed issue amount or notifying new employees that they had not completed the evidence of insurability requirement; even assuming without deciding, that the cause of action for breach of trust by a fiduciary under the Employee Retirement Income Security Act (ERISA) was cognizable, her claim would fail because there was no evidence that the CIGNA Defendants knowingly participated in any breach; and the district court did not err by granting summary judgment before allowing plaintiff to conduct discovery. View "Gordon v. Cigna Corp." on Justia Law
Levine v. Employers Insurance Co. of Wausau
Purnell hired Plaintiffs (Gabarette and Castillo) as independent contractors to deliver furniture in Virginia. Because it was a last-minute request, Plaintiffs did not have a vehicle available, so Purnell permitted them to use a truck that Purnell had rented from Penske. Driving to their destination, Plaintiffs stopped on the side of the interstate so Castillo could check on the security of the furniture load. Another driver struck the rented truck, killing Castillo and injuring Gabarette. Purnell’s motor vehicle insurance policy, issued by Wausau, included an uninsured/underinsured motorists (UIM) endorsement required by Virginia law, with coverage limited “to those autos shown as covered autos.” For UIM coverage—as opposed to liability coverage—the policy restricted coverage to “Owned Autos Only” and listed three vehicles on the “Schedule of Covered Autos You Own,” not including the rented Penske truck. The Declarations Pages provided that Wausau would “pay in accordance with the Virginia Uninsured Motorists Law, all sums the insured is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle.” For UIM purposes, an insured party is “[a]nyone . . . occupying a covered auto.” The UIM endorsement defines “covered auto” as “a motor vehicle, or a temporary substitute, with respect to which the bodily injury or property damage liability coverage of the policy applies.” The district court granted Wausau summary judgment regarding UIM coverage. The Fourth Circuit affirmed, based on the plain language of the policy. View "Levine v. Employers Insurance Co. of Wausau" on Justia Law