Justia Insurance Law Opinion Summaries

This case involves a catastrophic wildfire that occurred in 2016 in the Great Smoky Mountains National Park in Eastern Tennessee. The fire spread into Gatlinburg and Sevier County, resulting in the destruction of over 2,500 structures and the death of 14 people. The appellant insurance companies paid claims to policy holders and then filed claims under the Federal Tort Claims Act (FTCA) against the National Park Service (NPS), alleging negligence for failure to follow multiple mandatory fire-management protocols and for the failure to issue mandatory warnings to the public.The government moved to dismiss the case for lack of subject-matter jurisdiction, arguing that it was immune from suit under the discretionary-function exception to the FTCA. The district court granted the motion on all three claims relating to fire-management protocols, but denied the motion on claims relating to the duty to warn. The insurance companies appealed, and the government cross-appealed.The United States Court of Appeals for the Sixth Circuit reversed the district court's order granting the government's motion to dismiss the insurance companies' incident-command claim. The court affirmed the district court's dismissal of the fire-monitoring claim and the Wildland Fire Decision Support System (WFDSS) claim as part of the discretionary fire-suppression decision-making process. The court also affirmed the district court's denial of the government's facial challenge to the insurance companies' duty-to-warn claims, and remanded these claims for further proceedings. View "American Reliable Insurance Co. v. United States" on Justia Law

The case involves the United States of America, et al. ex rel. Michael Angelo and MSP WB, LLC (Relators-Appellants) against Allstate Insurance Company, et al. (Defendants-Appellees). The relators alleged that Allstate Insurance violated the False Claims Act by avoiding its obligations under the Medicare Secondary Payer Act. They claimed that Allstate failed to report or inaccurately reported to the Centers for Medicare & Medicaid Services (CMS) information regarding its beneficiaries, which led to Allstate failing to reimburse Medicare for auto-accident-related medical costs incurred by beneficiaries insured by Allstate.The United States District Court for the Eastern District of Michigan dismissed the case with prejudice, deeming the relators' second amended complaint deficient in numerous respects. The relators then moved for reconsideration, which the district court denied. They also filed a motion to amend or correct under Rule 59(e), asking the district court to amend its judgment to dismiss the case without prejudice to allow them to file another amended complaint. The district court denied the motion on all grounds.The United States Court of Appeals for the Sixth Circuit affirmed the district court's decision. The court found that the relators failed to state a claim for a violation of the False Claims Act. The court noted that the relators did not provide sufficient facts demonstrating that Allstate had an "established duty" to pay money or property owed to the government. The court also found that the relators did not demonstrate Allstate's understanding that its conduct violated its obligations under federal law. Furthermore, the court found that the relators' claim for conspiracy also failed as they did not provide any specific details regarding the alleged plan or an agreement to execute the plan. The court also affirmed the district court's decision to deny the relators leave to amend their complaint again. View "United States ex rel. Angelo v. Allstate Insurance Co." on Justia Law

The case involves Karen Frohn, who applied for and received a life insurance policy from Globe Life and Accident Insurance Company on behalf of her husband, Greg Frohn. After Greg's death, Karen submitted a claim for death benefits, which Globe denied. Karen then sued Globe, both individually and on behalf of a putative class of beneficiaries, challenging the denial of her claim.Globe moved for summary judgment, arguing that it was entitled to rescind the life insurance policy because Karen was not truthful in her application for insurance. The district court granted Globe’s motion, barring Karen from recovery on her claims against Globe. Karen also asked the court to redact certain portions of that order, but the district court published it without any redactions. Karen appealed these decisions.The United States Court of Appeals for the Sixth Circuit affirmed the district court's decision. The court found that Karen had voluntarily waived her husband's physician-patient privilege by signing an Authorization for Release, allowing Globe to access Greg's medical records. The court also found that Globe was entitled to rescind the policy under Ohio law because Karen had made material misrepresentations in the insurance application. The court concluded that Globe's defense barred Karen's breach-of-contract and bad-faith claims. View "Frohn v. Globe Life and Accident Ins Co" on Justia Law

The case involves Dennis Neate, a former employee of the James B. Oswald Company (Oswald), an insurance firm. Neate left Oswald to work for Hylant Group, Inc., another insurance firm, and some of his clients followed him. Oswald accused Neate of violating his non-solicitation agreement and sued in federal district court. The court issued a preliminary injunction ordering Neate and others to comply with Oswald’s non-solicitation agreement. Neate appealed.Previously, the district court granted a preliminary injunction after an evidentiary hearing. The injunction prohibited Neate and others from violating their agreements with Oswald, retaining or using Oswald's confidential information, and soliciting or accepting business from Oswald's clients. The injunction also required all defendants to return all of Oswald's property.The United States Court of Appeals for the Sixth Circuit vacated and remanded the case. The court found that the district court failed to properly apply Ohio law in determining the reasonableness of the non-solicitation agreement. The court also found that the injunction did not meet the specificity requirements of Federal Rule of Civil Procedure 65(d)(1), as it incorporated the non-solicitation agreement by reference. However, the court agreed with the district court that Oswald had shown a likelihood of success on its trade-secrets claims. View "James B. Oswald Co. v. Neate" on Justia Law

The case involves Century Aluminum Company and its subsidiaries (Century), and Certain Underwriters at Lloyd's, London (Lloyd's). Century uses river barges to transport alumina ore and other materials for its aluminum smelting operations. In 2017, the Army Corps of Engineers closed key locks on the Ohio River, causing Century to seek alternative transportation. Century filed a claim with Lloyd's, its maritime cargo insurance policy provider, for the unanticipated shipping expenses. While Lloyd's paid $1 million under the policy's Extra Expense Clause, it denied coverage for the rest of the claim.The case was first heard by the United States District Court for the Western District of Kentucky. Century sought a declaration that its denied claims were covered by the insurance policy and requested damages for Lloyd's alleged breach of contract among other violations of Kentucky insurance law. Lloyd's sought summary judgment, arguing that the policy did not cover the claims. The district court sided with Lloyd's.The appeal was heard before the United States Court of Appeals for the Sixth Circuit. Century argued that the policy's All Risks Clause, Risks Covered Clause, Shipping Expenses Clause, and Sue and Labour Clause required Lloyd's to cover the additional shipping expenses. The court rejected these arguments, affirming the district court's ruling. The court held that under the All Risks Clause and Risks Covered Clause, Century's alumina did not suffer any physical loss or damage. As for the Shipping Expenses Clause, it covered the risk of a failed delivery, not an untimely one. Lastly, under the Sue and Labour Clause, Century was required to mitigate Lloyd's exposure under the policy, but it did not obligate Lloyd's to pay anything for reducing losses that fall outside the policy. View "Century Aluminum Co. v. Certain Underwriters at Lloyd's, London" on Justia Law

In the case before the United States Court of Appeals for the Sixth Circuit, State Farm Mutual Automobile Insurance Company ("State Farm") brought a lawsuit against Michael Angelo, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The lawsuit claimed that Angelo submitted fraudulent bills to the insurance company. Angelo later filed a separate action against State Farm under the False Claims Act ("FCA"), alleging that the insurance company wrongfully avoided paying medical benefits. This action was unknown to State Farm at the time because FCA complaints are required to be filed under seal.The two parties entered into a settlement agreement in February 2021, resolving the RICO action. As part of the agreement, Angelo agreed to take all necessary steps to dismiss certain claims against State Farm. After the settlement agreement was signed, the FCA complaint was unsealed and served on State Farm. State Farm then sought to enforce the settlement agreement, arguing that it required Angelo to dismiss the FCA action as well.Angelo argued that the settlement agreement did not apply to the FCA action because the FCA claims were unrelated to the settled RICO claims. However, the district court disagreed and ordered Angelo to seek the government's consent to dismiss his FCA claims against State Farm. Angelo appealed this decision, claiming it violated his First Amendment rights and the FCA.The Court of Appeals affirmed the district court's decision, stating that the settlement agreement clearly encompassed the FCA action. The court also held that the district court had not erred in requiring Angelo to seek the government's consent to dismiss his FCA claims. Angelo's First Amendment claim was deemed forfeited as it was raised for the first time in a motion for reconsideration and was thus untimely. View "State Farm Mutual Automobile Insurance Co. v. Angelo" on Justia Law

United provided Patterson's medical insurance under a plan subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1101. Patterson received a summary plan description, an ERISA-mandated synopsis of important plan terms but was not given a plan document with all of a plan’s governing language. The summary said that if a beneficiary recovered from a third party for an insured incident, the plan had a right to reimbursement. Patterson was injured in a traffic accident. United covered his medical expenses and notified Patterson it would invoke the reimbursement right. Patterson sued the other driver in state court and joined the plan, seeking a declaratory judgment that it had no reimbursement right. United’s lawyers claimed that no plan document existed. Patterson recovered and settled with the plan for $25,000. Months later, Patterson’s wife suffered injuries in another traffic accident. United paid her medical expenses. Patterson’s wife sued the driver in state court. She obtained a declaratory judgment after the plan's lawyers produced a plan document, stating that it took precedence over the summary and not including a reimbursement right.Patterson then filed a purported class action under ERISA, seeking the return of the $25,000. The district court dismissed the complaint. The Sixth Circuit affirmed in part. Patterson had standing to sue only on his own behalf but has cognizable claims for breach of fiduciary duty and engagement in prohibited transactions. View "Patterson v. United Healthcare Insurance Co." on Justia Law

The Plan is an employee welfare benefit plan under the Employee Retirement Income Security Act (ERISA). W&S denied Laake’s claim for extended long-term disability (LTD) benefits, indicating that Plan limited LTD benefit to 24 months if the disabling condition is due to any mental, nervous, psychiatric condition or chronic pain.” The Plan refers to “chronic pain syndrome.” No medical doctor had ever diagnosed Laake with “Chronic Pain Syndrome.” Although the Plan fails to define “Chronic Pain Syndrome,” Schedule C—which lists conditions that are excluded from extended LTD benefits—explicitly incorporates the Diagnostic and Statistical Manual of Mental Disorders, which does not specifically include “Chronic Pain Syndrome,” but does detail the symptoms and features of “Pain Disorder.” W&S did not ask Laake’s physicians in its questionnaires about the Mental Illness exclusion or “Chronic Pain Syndrome.” None of her physicians indicated that there was any psychological basis for her pain.The district court determined that Laake was entitled to benefits, imposed penalties against W&S, and awarded Laake attorney’s fees and costs, 29 U.S.C. 1132(g)(1). The Sixth Circuit affirmed. In denying benefits without any explanation or supporting evidence, W&S acted arbitrarily and capriciously. Because W&S provided notice that implied one basis for its denial of benefits, but in its final decision included an entirely new basis, it failed to substantially comply with ERISA’s notice requirements. The court noted a finding that W&S engaged in particularly “egregious conduct throughout the course of this litigation.” View "Laake v. Western & Southern Financial Group Flexible Benefits Plan" on Justia Law

After gallbladder surgery, Tranbarger began suffering from multiple medical conditions, including physical pain and chronic fatigue. At work, Tranbarger continued as an accounts receivable manager, a primarily sedentary position. Her supervisor modified some of her responsibilities to accommodate her reduced capacity. Tranbarger resigned in July 2016, citing pain and fatigue.Through her employer, Tranbarger was enrolled in Lincoln's disability insurance plan. About 14 months after resigning, Tranbarger filed a claim for long-term disability benefits. Tranbarger was entitled to benefits if she could show “total disability” such that she was “unable to perform each of the [m]ain [d]uties” of an accounts receivable manager during a six-month “Elimination Period” following her resignation. Tranbarger presented a Social Security ruling in her favor, doctors’ notes, and statements from individuals otherwise familiar with her condition. Lincoln denied Tranbarger’s claim. She sued under the Employee Retirement Income Security Act (ERISA).The Sixth Circuit affirmed a judgment in favor of Lincoln. Tranbarger did not demonstrate a continuous inability to perform the main duties of an accounts receivable manager during the six months following her resignation. Although she provided diagnoses from the Mayo Clinic and established that she suffered pain and fatigue, there was little evidence about whether Tranbarger could perform her job functions. View "Tranbarger v. Lincoln Life & Annuity Co. of New York" on Justia Law

A False Claims Act qui tam action was filed under seal against SHH and its nursing facilities, alleging that SHH provided unreasonable and unnecessary services to claim the highest possible Medicare reimbursement. Three co-relators also alleged that SHH retaliated against them for internally reporting fraudulent billing practices. SHH received a Department of Justice notification that it was the subject of a fraudulent claims investigation, requesting information about recent terminations of SHH employees, including the relators. It did not explicitly refer to the retaliation allegations.Two years later, SHH obtained liability coverage. Allied's claims-made policy applies only to claims first made during the policy period. SHH's application checked "none" when asked to “provide full details of all inquiries, investigations, administrative charges, claims, and lawsuits filed” within the last three years. SHH checked “no” to whether “[SHH], any Subsidiary, any Executive or other entity proposed for coverage kn[ew] of any act, error or omission which could give rise to a claim, suit or action.” An application exclusion, incorporated into the policy, stated that if such information existed, any inquiry, investigation, administrative charge, claim, or lawsuit arising therefrom or arising from such violation, knowledge, information, or involvement is excluded from coverage.The qui tam action was unsealed. SHH notified Allied and sought coverage for defense costs. Allied denied coverage. SHH sued. SHH later settled the relators' retaliation claim ($2.2 million) and finalized a $10 million settlement for the claims-submissions violations. The district court granted SHH partial summary judgment, awarding $2,336,786.35. The Sixth Circuit reversed. The plain language of SHH’s policy excluded coverage. View "SHH Holdings, LLC v. Allied World Specialty Ins. Co." on Justia Law