Justia Insurance Law Opinion Summaries

MAO-MSO acquired rights to collect conditional payments that Medicare Advantage Organizations (MAOs) made if a primary insurer (such as automobile insurance carriers) has not promptly paid medical expenses. MAO-MSO sued those primary payers. The district court proof of required actual injury. Specifically, MAO-MSO needed to identify an “illustrative beneficiary”— a concrete example of a conditional payment that State Farm, the relevant primary payer, failed to reimburse to the pertinent MAO. MAO-MSO alleged that “O.D.” suffered injuries in a car accident and that State Farm “failed to adequately pay or reimburse” the appropriate MAO. The district court determined that these allegations sufficed for pleading purposes to establish standing.As limited discovery progressed, MAO-MSO struggled to identify evidence supporting the complaint. One dispute centered on whether O.D.’s MAO made payments related to medical care stemming from a car accident before State Farm reached its limit under O.D.’s auto policy so that State Farm should have reimbursed the MAO. The payment in question was to a physical therapist. State Farm argued that the physical therapy services had no connection to O.D.’s car accident and related only to her prior knee surgery.The district court determined no reasonable jury could find that the payment related to O.D.’s car accident, meaning that MAO-MSO lacked standing. The Seventh Circuit affirmed the dismissal. The Medicare Act may authorize the lawsuit but MAO-MSO fail to establish subject matter jurisdiction by establishing an injury in fact. View "MAO-MSO Recovery II, LLC v. State Farm Mutual Automobile Ins. Co." on Justia Law

The Seventh Circuit affirmed the district court's judgment declaring that Zurich had no duty to defend Ocwen in the underlying litigation brought by a consumer. In the underlying case, the consumer's complaint relied on the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA), as well as common law claims of defamation and invasion of privacy. Zurich insured Ocwen under a series of commercial general liability policies, but two provisions in the policies expressly excluded injuries resulting from conduct that violates certain laws.Setting aside the live-operator calls to the consumer's home and the manually dialed calls to her cell phone, and assuming that neither violated the TCPA, the court concluded that it remains true that if Ocwen caused "a telephone to ring … repeatedly or continuously with the intent to annoy, abuse, or harass any person at that called number," which the district court concluded Ocwen did, then it violated the FDCPA. Because the policy exclusion's catch-all clause swept in the FDCPA as an "other statute" that regulates the communication of information, Zurich had not duty to defend based on the factual allegations of the consumer's complaint. View "Zurich American Insurance Co. v. Ocwen Financial Corp." on Justia Law

In 2002, Dr. Phillips performed a hysterectomy on Bramlett; she died from complications days later. Bramlett’s family sued Phillips, his clinic, and the hospital. Phillips and his clinic held a $200,000 MedPro professional liability insurance policy. The hospital settled for about $2.3 million. Under Texas law, an insurer who rejects a settlement demand (Stowers demand) within policy limits that a reasonably prudent insurer would accept will later be liable for any amount awarded in excess of the policy limit. MedPro refused two $200,000 Stowers demands. A jury returned a $14 million verdict. In 2009, the Supreme Court of Texas capped Phillips’s liability at $1.6 million. The Bramletts sued MedPro. The parties settled for a confidential amount.MedPro asked its insurer, AISLIC, to cover the settlement. AISLIC refused. The district court rejected MedPro's claims under an exclusion, finding that MedPro’s rejections of the two Stowers demands were Wrongful Acts that MedPro could have reasonably foreseen would lead to a claim.On remand, the district court held that MedPro could invoke coverage without having to prove that it actually committed a “Wrongful Act,” and found that a claim was not first asserted against MedPro for its failure to settle for policy limits before the 2006 AISLIC Policy incepted. A jury found that MedPro did not commit a “Wrongful Act.” The Seventh Circuit affirmed. The district court properly held that MedPro was covered by the 2006 Policy before the jury decided the issue of exclusion. The earlier interpretation of the policy did not require a holding that MedPro never committed a “Wrongful Act” necessary to invoke coverage. MedPro can invoke coverage because the claim that it settled was not brought before the policy period began. View "Medical Protective Company of Fort Wayne v. American International Specialty Lines Insurance Co" on Justia Law

Prairie sued Coyle in Illinois state court concerning the replacement of valves purchased by Prairie. Coyle's insurer, Federated, sought a declaration that it had no duty to defend or indemnify Coyle in that suit. After Coyle answered Federated’s complaint, Federated moved for judgment on the pleadings. Coyle opposed the motion and later moved for leave to file supplemental briefs to show that the state-court action potentially fell within Federated’s coverage obligations. The district court denied Coyle’s motions to file supplemental briefs and granted Federated judgment on the pleadings. The court ruled that Prairie’s complaint did not allege “property damage” or an “occurrence” because Prairie only sought damages for the repair and replacement of defective products—purely economic losses. Prairie’s counsel had clarified at a discovery hearing that “Prairie was not making a claim for loss of use but rather for the costs of replacing the allegedly defective valves and the associate piping” and the defectiveness of the valves was foreseeable.The Seventh Circuit reversed. In granting Federated’s motion, the court relied on some of the new facts that Coyle had unsuccessfully moved to introduce through supplemental briefs while ignoring other facts. The court’s handling of the case ran afoul of local rules and the Federal Rules of Civil Procedure and deprived Coyle of its right to present material factual evidence bearing on the central issue in the case. View "Federated Mutual Insurance Co. v. Coyle Mechanical Supply Inc." on Justia Law

TDH’s contract to provide HVAC services at a Chicago construction site contained provisions agreeing to indemnify Rockwell, the owner. TDH provided a Certificate of Liability Insurance, identifying Columbia as the commercial general liability insurer, TDH as the insured, and Rockwell and Prairie (the manager) as additional insureds. While working at the site, TDH’s employee Guzman fell 22 feet through an unguarded opening in the second floor, sustaining serious injuries.Guzman sued Rockwell, Prairie, and others. Guzman did not sue TDH. Several defendants filed third-party complaints against TDH for contribution. Scottsdale insured Rockwell and has defended Rockwell and Prairie. Scottsdale filed suit, wanting Columbia to take over their defense.The district court declared that Columbia owes a duty to defend Prairie and Rockwell, ordered Columbia to pay Scottsdale $50,000 for defense costs through August 2019, and left the issue of indemnity for another day. The Seventh Circuit affirmed. The Columbia policy limitation that another organization would only be an additional insured with respect to liability arising out of TDH’s ongoing operations performed for that other organization does not eliminate Columbia’s duty to defend. Prairie’s and Rockwell’s liability for the fall potentially arises in part out of TDH’s then-ongoing operations performed for Prairie and Rockwell. It does not matter that the underlying suit does not name TDH. The underlying allegations do not preclude the possibility of coverage. View "Scottsdale Insurance Co. v. Columbia Insurance Group, Inc" on Justia Law

The Dais obtained a loan from Apex secured by a mortgage on their laundromat. The laundromat ceased operations; the Dais defaulted. Apex agreed to accept a deed in lieu of foreclosure if the property was marketable. A December 2008 inspection revealed that it was in disrepair, exposed to the elements, and open to vagrants. Apex took measures to preserve the property and returned the deed to the Dais in April 2009. In December 2010, two Chicago firefighters lost their lives battling a blaze at the abandoned laundromat. Their estates sued Apex. Apex and the estates settled. Apex's insurer, Federal, denied coverage, citing a policy exclusion for any liability or loss "arising out of property you acquire by foreclosure, repossession, deed in lieu of foreclosure or as mortgagee in possession.” The district court granted Federal summary judgment.The Seventh Circuit vacated, applying Pennsylvania law. Summary judgment was inappropriate given the open question of material fact: who possessed the property at the time of the fire. Apex instructed its realtor to post a notice informing the Dais how to obtain keys for the new locks. Apex urged the Dais to inspect and secure the property. In July 2009, Dai ordered a handyman to board up the property after being cited for building code violations. In October 2009, Dai entered into a settlement to cure the code infractions by November 2010. He failed to do so and served 180 days in jail. Apex had no contact with the property after April 2009. View "Apex Mortgage Corp. v. Great Northern Insurance Co." on Justia Law

Gunn brought a putative class action against Continental, which had issued a group long-term care insurance policy to Gunn’s employer, the federal judiciary, in Washington D.C. Gunn alleged that Continental breached its contract, committed torts, and violated consumer protection laws by raising his premiums dramatically. The district court dismissed the case on the pleadings based on Continental’s assertion of a filed-rate defense, relying on the Washington state Insurance Commissioner’s approval of the new, higher premiums for individual insureds in Washington.The Seventh Circuit reversed, noting that choice of law is critical in this case, which involves employees in every state. It is unclear which state’s or states’ law creates Gunn’s causes of action, whether that jurisdiction recognizes an applicable filed-rate defense and within what contours, and which state or states have authority to approve premium rates under the group policy. The court remanded to allow the district court to address those questions. View "Gunn v. Continental Casualty Co." on Justia Law

FCE administered health insurance policies underwritten by the Insurers. After a few years, the Insurers became dissatisfied with FCE’s performance and invoked the Agreement’s arbitration clause. In Phase I of the arbitration, the arbitrators awarded the Insurers damages of more than five million dollars. The Insurers attempted to confirm this award under the Federal Arbitration Act, 9 U.S.C. 9, but the district court concluded that the case was not yet ripe for adjudication. The arbitrators had not yet resolved all matters that had been submitted to them. In Phase II, the arbitrators denied the Insurers’ remaining claim for reimbursement of excessive administrative fees and FCE’s counterclaim for lost profits.The district court confirmed the arbitration results in their entirety. The Seventh Circuit affirmed. The court rejected FCE’s arguments that the Phase II Award superseded the Phase I Award such that the district court could confirm only the Phase II Award; that part of the Phase I Award must be vacated because the arbitrators exceeded their authority by hearing and deciding the Insurers’ indemnification claims; and that it was reversible error for the court to confirm the portion of the Phase I Award labeled as damages for “embezzlement.” View "Standard Security Life Insurance Co. of New York v. FCE Benefit Administrators, Inc." on Justia Law

Sigler totaled his 2001 Dodge Ram and filed a claim with GEICO, his auto insurer, for the loss. GEICO paid him for the value of the car, adjusted for depreciation, minus his deductible. Sigler claims he is entitled to sales tax and title and tag transfer fees for a replacement vehicle, though he did not incur these costs. He filed a proposed class action against GEICO seeking damages for breach of contract. The district court dismissed the suit, holding that neither the GEICO policy nor Illinois insurance law requires payment of these costs when the insured does not incur them.The Seventh Circuit affirmed. The premise of Sigler’s suit, that sales tax and title and tag transfer fees are always part of “replacement cost” in a total-loss claim regardless of whether the insured incurs these costs, misreads the policy and Illinois insurance regulations. GEICO’s policy does not promise to pay sales tax or title and tag transfer fees; the Illinois Administrative Code requires a settling auto insurer to pay these costs only if the insured actually incurs and substantiates them with appropriate documentation. View "Sigler v. Geico Casualty Co." on Justia Law

Doctors removed Haynes’s gallbladder. She was injured in the process and required additional surgery that led to more than $300,000 in medical expenses. Her father’s medical-benefits plan (the Fund) paid these because Haynes was a “covered dependent.” The plan includes subrogation and repayment clauses: on recovering anything from third parties, a covered person must reimburse the Fund. Haynes settled a tort suit against the hospital and others for $1.5 million. She and her lawyers refused to repay the Fund, which sued to enforce the plan’s terms under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(3). Haynes argued that she did not agree to follow the plan’s rules and was not a participant, only a beneficiary. The district judge granted the Fund summary judgment and enjoined Haynes and her lawyer from dissipating the settlement proceeds. The Fund had named each of them as a defendant.The Seventh Circuit affirmed. ERISA allows fiduciaries to bring actions to obtain “equitable relief … to enforce ... the terms of the plan.” The nature of the remedy sought—enforcement of a right to identifiable assets—is equitable. Having accepted the plan’s benefits, Haynes must accept the obligations The absence of a beneficiary’s signed writing, regardless of the beneficiary's age, does not invalidate any of the plan’s terms. View "Central States, Southeast & Southwest Areas Health & Welfare Fund v. Haynes" on Justia Law