Justia Insurance Law Opinion Summaries

Lawanda Small, a beneficiary and additional insured of her deceased husband's Allianz life insurance policy, filed a class action lawsuit against Allianz Life Insurance Company. She alleged that Allianz violated California Insurance Code sections 10113.71 and 10113.72 by failing to comply with notice procedures required to prevent policies from lapsing due to nonpayment of premiums. Small sought to represent two subclasses: the "Living Insured Subclass" seeking equitable relief to reinstate life insurance coverage, and the "Beneficiary Subclass" seeking damages from death benefits where the insured was deceased.The United States District Court for the Central District of California certified the class, finding that both subclasses satisfied the requirements of Federal Rule of Civil Procedure 23(a) and 23(b). The court granted summary judgment for Small and the class on their breach of contract and declaratory relief claims, ruling that Allianz improperly lapsed the policies by failing to comply with the Statutes. Allianz appealed, arguing that the district court erred in certifying the class and that the summary judgment orders violated the one-way intervention prohibition.The United States Court of Appeals for the Ninth Circuit reversed the district court's order certifying the class and vacated the summary judgment orders. The appellate court held that to recover for alleged violations of the Statutes, plaintiffs must show not only that the insurer violated the notice requirements but also that the violation caused them harm. The court found that individual questions of causation and injury predominated over common questions, making class certification inappropriate. Additionally, the court determined that Small was not an adequate representative with typical questions to represent both subclasses. The case was remanded for further proceedings. View "Small v. Allianz Life Insurance Co. of North America" on Justia Law

Plaintiffs, representing a class of drivers whose cars were totaled in accidents, alleged that their insurers, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company, failed to pay the actual cash value of their vehicles. They contended that State Farm applied two unlawful discounts: a negotiation discount, which reduced the value based on typical buyer negotiations, and a condition discount, which adjusted for the car's condition compared to similar vehicles.The United States District Court for the Western District of Washington initially certified two classes: a negotiation class and a condition class. However, following the Ninth Circuit's decision in Lara v. First National Insurance Company of America, the district court decertified both classes and granted summary judgment in favor of State Farm, concluding that the plaintiffs failed to demonstrate injury.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court reversed the district court's decertification of the negotiation class, holding that plaintiffs could prove injury on a class-wide basis by adding back the unlawful negotiation adjustment to determine the value each class member should have received. However, the court affirmed the decertification of the condition class, as determining injury required an individualized comparison of the unlawful condition adjustment and a hypothetical lawful adjustment.The Ninth Circuit also vacated the district court's summary judgment against the named plaintiffs, remanding the case for the district court to reassess whether the plaintiffs provided sufficient evidence of injury. The court clarified that plaintiffs could rely on the Autosource reports, minus the unlawful adjustments, as relevant evidence of injury. The court rejected State Farm's argument that Article III standing was a barrier to the plaintiffs' suit, affirming that the plaintiffs' claim of receiving less than owed under their insurance policies constituted a concrete injury. View "JAMA V. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY" on Justia Law

The plaintiffs, EB Holdings II, Inc. and QXH II, Inc., sought coverage from their insurers for legal fees and expenses incurred in defending against a lawsuit alleging fraudulent inducement in the purchase of notes backed by their long-term debt. The insurers denied coverage, claiming the plaintiffs made material misrepresentations in their insurance renewal application by failing to disclose significant long-term debt.The United States District Court for the District of Nevada granted summary judgment in favor of the insurers, concluding that Nevada law governed the affirmative defense of material misrepresentation. The court found that the plaintiffs had indeed made a material misrepresentation by not disclosing their long-term debt, thus barring coverage under the insurance policies.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's decision. The appellate court held that the district court erred in its choice-of-law analysis. The Ninth Circuit determined that Texas law, not Nevada law, should govern the affirmative defense of material misrepresentation. The court reasoned that the substantial relationship test set forth in the Restatement (Second) of Conflict of Laws § 188 pointed to Texas law, given that the underwriting process largely occurred through agents based in Texas and the plaintiffs were headquartered there.Applying Texas law, the Ninth Circuit found that there were material disputes of fact regarding the elements of the affirmative defense, including the plaintiffs' intent to deceive and whether the insurers provided timely notice of their refusal to be bound by the policy. Consequently, the court reversed the summary judgment and remanded the case to the district court for further proceedings. View "EB HOLDINGS II, INC. V. ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law

The case involves a putative class action of approximately 2,000 payees who received structured settlement annuities to resolve personal injury claims. The plaintiffs, Renaldo White and Randolph Nadeau, alleged that defendants Symetra Life Insurance Company and Symetra Assigned Benefits Service Company wrongfully induced them to cash out their annuities in individualized “factoring” arrangements, whereby they gave up their rights to periodic payments in return for discounted lump sums.The district court certified two nationwide classes under Federal Rule of Civil Procedure 23. The first class consisted of all persons who were annuitants of a structured settlement annuity (SSA) issued by Symetra and who subsequently sold to a Symetra affiliate the right to receive payments from that SSA in a factoring transaction. The second class was a subclass of the first, consisting of all members of the class whose contract defining the annuity at issue included language explicitly stating that the annuitants lack the power to transfer their future SSA payments.The United States Court of Appeals for the Ninth Circuit reversed the district court’s certification of the two nationwide classes. The court held that individual issues of causation will predominate over common ones when evaluating whether defendants’ acts and omissions caused the plaintiffs to enter factoring transactions and incur their alleged injuries. The court also held that the district court erred in certifying the nationwide subclass of plaintiffs whose original settlement agreements with their personal injury tortfeasors contained structured settlement annuity (SSA) anti-assignment provisions. The record indicates that the annuitants hail from a wide array of different states, and some of the settlement agreements have choice of law provisions denoting the law of a state other than the location where the contract was executed. The apparent variations in state law on the enforceability of anti-assignment provisions in SSAs and the need to apply multiple state laws to the subclass raised a substantial question of whether individual issues predominate and how the matter can be fairly managed as a class action. View "WHITE V. SYMETRA ASSIGNED BENEFITS SERVICE COMPANY" on Justia Law

The case involves M&T Farms, a California general partnership between two farmers, who purchased crop insurance under the Whole-Farm Revenue Protection Pilot Policy (the “WFRP Policy”) from Producers Agriculture Insurance Company (“ProAg”), an insurer approved and reinsured by the Federal Crop Insurance Corporation (FCIC). M&T Farms and a third farmer sell farm commodities through a storefront, B&T Farms, which owns their business name and goodwill and is also a California general partnership. M&T Farms filed a claim seeking the full policy amount, which ProAg denied. The FCIC concluded that the WFRP Policy does not allow a partner who files taxes on a fractional share of farming activity conducted by a partnership to be eligible for WFRP coverage for the fractional share of that farming activity.The United States District Court for the Northern District of California granted summary judgment in favor of the FCIC. M&T Farms challenged the FCIC’s decision that a partnership “holding the business name and good will of [others] (i.e., marketing and selling the commodities produced)” is engaged in “farming activity” under section 3(a)(4) of the WFRP Policy, and that therefore, any entity reporting a fractional share of the partnership’s activity on its tax returns is ineligible for WFRP Policy coverage.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The court held that the WFRP Policy contained an ambiguity regarding the definition of “farming activity.” The FCIC’s conclusion that a partnership selling its partners’ products and holding their goodwill and business name was engaged in “farming activity” under section 3(a)(4) of the policy had a reasonable basis and was also reasonable as a matter of policy. Because the FCIC’s interpretation of “farming activity” in the WFRP Policy was reasonable, it survived APA arbitrary and capricious review. The court also held that the term “farming activity” in the WFRP policy was genuinely ambiguous, the FCIC’s conclusion had a reasonable basis, and the FCIC’s conclusion was entitled to controlling weight. View "M & T FARMS V. FEDERAL CROP INSURANCE CORPORATION" on Justia Law

The case involves Bristol SL Holdings, Inc., the successor-in-interest to Sure Haven, Inc., a defunct drug rehabilitation and mental health treatment center, and Cigna Health and Life Insurance Company and Cigna Behavioral Health, Inc. Bristol alleged that Sure Haven's calls to Cigna verifying out-of-network coverage and seeking authorization to provide health services created independent contractual obligations. Cigna, however, denied payment based on fee-forgiving, a practice prohibited by the health plans. Bristol brought state law claims for breach of contract and promissory estoppel against Cigna.The district court initially dismissed Bristol’s claims, but the Ninth Circuit Court of Appeals reversed the dismissal, holding that Bristol had derivative standing to sue for unpaid benefits as Sure Haven’s successor-in-interest. On remand, the district court granted Cigna’s motion for summary judgment, ruling that the Employee Retirement Income Security Act of 1974 (ERISA) preempted Bristol’s state law claims.On appeal, the Ninth Circuit Court of Appeals affirmed the district court's decision. The court held that Bristol’s state law claims were preempted by ERISA because they had both a “reference to” and an “impermissible connection with” the ERISA plans that Cigna administered. The court reasoned that Bristol’s claims were not independent of an ERISA plan because they concerned the denial of reimbursement to patients who were covered under such plans. The court also held that allowing liability on Bristol’s state law claims would interfere with nationally uniform plan administration, a central matter of plan administration. View "Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Co." on Justia Law

In a dispute between Lexington Insurance Company ("Lexington") and the Suquamish Tribe ("Tribe"), the United States Court of Appeals for the Ninth Circuit affirmed the district court's summary judgment in favor of the Tribe. The dispute arose from several insurance companies and underwriters refusing to compensate the Tribe for its insurance claims for lost business and tax revenue and other expenses resulting from the suspension of business operations during the COVID-19 pandemic. The court held that the Suquamish Tribal Court had subject-matter jurisdiction over the Tribe’s claim against nonmember off-reservation insurance companies that participated in an insurance program tailored to and offered exclusively to tribes. The court concluded that the insurers' conduct occurred not only on the Suquamish reservation but also on tribal lands. The court further concluded that, under the Tribe’s sovereign authority over “consensual relationships,” as recognized under the first Montana exception to the general rule restricting tribes’ inherent sovereign authority over nonmembers on reservation lands, the Tribal Court had jurisdiction over the Tribe’s suit. View "LEXINGTON INSURANCE COMPANY V. SMITH" on Justia Law

The United States Court of Appeals for the Ninth Circuit upheld a district court's default judgment entered against defendants Akop and Anahit Arutyunyan. The defendants were accused by Transamerica Life Insurance Company of engaging in insurance fraud. The district court found that the defendants persistently failed to obey court orders related to discovery and entered a default judgment against them. In the course of the legal proceedings, the court applied escalating sanctions against the defendants for their repeated non-compliance with court orders, eventually leading to the entry of a default judgment. The defendants contested this decision, but the Ninth Circuit Court found that their appeal was frivolous. The court held that the district court had not abused its discretion in entering a default judgment as a sanction for the defendants' violations of court orders. The Ninth Circuit also ordered the defendants and their counsel to show cause why sanctions should not be imposed under various provisions given the frivolous nature of the appeal and multiple misstatements made by counsel during oral argument. View "TRANSAMERICA LIFE INSURANCE CO V. ARUTYUNYAN" on Justia Law

Plaintiff applied for disability insurance benefits on January 30, 2020, alleging disability since March 1, 2017,due to PTSD, depression, anxiety, insomnia, headaches, and a right knee injury. His application was denied initially and upon reconsideration. A medical expert confirmed that Plaintiff would be markedly limited when interacting with others. The medical expert suggested that Plaintiff’s Residual Function Capacity (RFC) includes “some limitations in terms of his work situation.” Once the Appeals Council denied review of the ALJ’s decision, Plaintiff sought judicial review. The district court affirmed the agency’s denial of benefits. On appeal, Plaintiff only challenged the ALJ’s finding that his mental impairments were not disabling.   The Ninth Circuit affirmed. The panel held that the ALJ did not err in excluding Plaintiff's VA disability rating from her analysis. McCartey v. Massanari, 298 F.3d 1072, 1076 (9th Cir. 2002) (holding that an ALJ is required to address the Veterans Administration disability rating) is no longer good law for claims filed after March 27, 2017. The 2017 regulations removed any requirement for an ALJ to discuss another agency’s rating. The panel held that the ALJ gave specific, clear, and convincing reasons for rejecting Plaintiff's testimony about the severity of his symptoms by enumerating the objective evidence that undermined Plaintiff’s testimony. The panel rejected Plaintiff's contention that the ALJ erred by rejecting the opinions of Plaintiff’s experts. The panel held that substantial evidence supported the ALJ’s conclusion that Plaintiff’s mental impairments did not meet all of the specified medical criteria or equal the severity of a listed impairment. View "JEREMY KITCHEN V. KILOLO KIJAKAZI" on Justia Law

Saloojas, Inc. (“Saloojas”) filed five actions against Aetna Health of California, Inc. (“Aetna”), seeking to recover the difference in cost between its posted cash price for COVID-19 testing and the amount of reimbursement it received from Aetna. Saloojas argues that Section 3202 of the CARES Act requires Aetna to reimburse out-of-network providers like Saloojas for the cash price of diagnostic tests listed on their websites. The district court dismissed this action on the ground that the CARES Act does not provide a private right of action to enforce violations of Section 3202.   The Ninth Circuit affirmed. The panel held that the CARES Act does not provide a private right of action to enforce violations of Section 3202. Saloojas correctly conceded that the CARES Act did not create an express private right of action. The panel held that there is not an implied private right of action for providers to sue insurers. The use of mandatory language requiring reimbursement at the cash price does not demonstrate Congress’s intent to create such a right. The statute does not use “rights-creating language” that places “an unmistakable focus” on the individuals protected as opposed to the party regulated. View "SALOOJAS, INC. V. AETNA HEALTH OF CALIFORNIA, INC." on Justia Law