Justia Insurance Law Opinion Summaries

Lupu refinanced his home loan and mortgage with Loan City, which transferred both to IndyMac, then they went to Fannie Mae, next to OneWest, and finally to the current holder, Ocwen. After defaulting, Lupu sued to void the instruments evidencing his debt, challenging the use of the MERS System, a private mortgage registry that allows its members to avoid county-level public recordation when transferring mortgage interests. MERS is named as the mortgagee, as its members’ nominee, so members can transfer mortgage interests among themselves without recording. The system is generally in accord with Pennsylvania law. At one point, Lupu alleged forgery, The district court dismissed his action. A Stewart Title policy insured Loan City, its successors, and assignees, requiring Stewart to pay costs, attorneys’ fees and expenses incurred in defense of the title or the lien, but not “those causes of action which allege matters not insured against.” Steward denied Ocwen's request for defense coverage, except with respect to the forgery claim, stating “Lupu’s arguments concerned the securitization of the note secured by the insured mortgage and the validity of assignments of the insured mortgage rather than the execution and witnessing of the insured mortgage.” The Third Circuit ruled in favor of Stewart, predicting that state courts would not apply the “complete defense" rule, whereby a single covered claim triggers an obligation for the title insurer to defend the entire action. The court applied Pennsylvania’s rule that potentially covered claims are identified by “comparing the four corners of the insurance contract to the four corners of the complaint.” View "Lupu v. Loan City LLC" on Justia Law

LifeWatch is one of the two largest sellers of telemetry monitors, a type of outpatient cardiac monitoring devices used to diagnose and treat heart arrhythmias, which may signal or lead to more serious medical complications. An arrhythmia can be without noticeable symptoms. Other outpatient cardiac monitors also record the electrical activity of a patient’s heart to catch any instance of an arrhythmia but they vary in price, method of data capture, and mechanism by which the data are transmitted for diagnosis. LifeWatch sued the Blue Cross Blue Shield Association and five of its member insurance plan administrators under the Sherman Act, 15 U.S.C. 1, claiming they impermissibly conspired to deny coverage of telemetry monitors as “not medically necessary” or “investigational,” although the medical community, other insurers, and independent arbiters viewed it as befitting the standard of care. The Third Circuit reversed the dismissal of the complaint. LifeWatch plausibly stated a claim and has antitrust standing. That so many sophisticated third parties allegedly view telemetry monitors as medically necessary or meeting the standard of care undercuts Blue Cross’s theory that nearly three dozen Plans independently made the opposite determination for 10 consecutive years. Read in the light most favorable to LifeWatch, the complaint alleges competition among all outpatient cardiac monitors such that they are plausibly within the same product market. LifeWatch has alleged actual anticompetitive effects in the relevant market. View "Lifewatch Services Inc. v. Highmark, Inc." on Justia Law

Viviani left Stone Mansion with Hoey. Their vehicle crashed, killing Viviani and seriously injuring Hoey. Hoey sued Viviani’s estate, which tendered the defense to Encompass, which paid Hoey $600,000. Hoey released her claims. Encompass sued Mansion, alleging: it stands in the shoes of the insured estate; Mansion served Viviani alcohol while he was visibly intoxicated; under Pennsylvania’s Dram Shop law, a business that serves alcohol to a visibly intoxicated person is legally responsible for any damage that person might cause; and under the Uniform Contribution Among Tortfeasors Act (UCATA).In email correspondence, Mansion’s counsel informed Encompass that “I will be authorized to accept service.” Encompass sent counsel a copy of the filed complaint and an acceptance form via email. Counsel replied, “I will hold the acceptance ... [for] the docket n[umber].” That same day, Encompass provided the docket number. Mansion later claimed that, because it had not been properly served, it could remove the case to federal court. Encompass sought remand. The court concluded that the forum defendant rule precludes removal only if any of the parties in interest properly joined and served as defendants is a citizen of the state and that counsel did not accept service. The court then dismissed: The Dram Shop law indicates that a licensee is liable only to third persons (Hoey), for damages inflicted upon the third person (off premises) by the licensee's customer when the licensee furnishes that customer with alcohol when he was visibly intoxicated. … Encompass is acting as if it were Viviani in order to recover under [UCATA]. Because there is no potential cognizable Dram Shop claim between Viviani/Encompass and Mansion, there is no contribution claim.The Third Circuit upheld removal of the case, rejecting an argument that it is “inconceivable” that Congress intended the rule to permit an in-state defendant to remove an action by delaying service of process. Stone Mansion’s conduct did not preclude removal. The court reversed the dismissal. Encompass does not argue that it is entitled to recovery in tort against Stone Mansion but presents a distinct claim for contribution under the UCATA. Pennsylvania’s Dram Shop law does not prohibit this manner of recovery. View "Encompass Insurance Co v. Stone Mansion Restaurant Inc" on Justia Law

Plaintiffs suffer from asbestos disease as a result of exposure to Grace's Montana mining and processing operations and sought to hold Grace’s insurers (CNA), liable for negligence. CNA sought to enforce a third-party claims channeling injunction entered under Grace’s confirmed plan of reorganization to bar the claims. Bankruptcy Code section 524(g) allows an injunction that channels asbestos mass-tort liability to a trust set up to compensate persons injured by the debtor’s asbestos; channeling injunctions can also protect the interests of non-debtors, such as insurers.The Third Circuit rejected the Plaintiffs’ argument that the Plan and Settlement Agreement’s terms preserved all of CNA’s duties as a workers’ compensation insurer in order to avoid preempting the state’s workers’ compensation laws. The court then applied a three-part analysis: Section 524(g)(4)(A)(ii) allows injunctions to “bar any action directed against a third party who is identifiable . . . and is alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the debtor [that] . . . arises by reason of one of four statutory relationships between the third party and the debtor.” CNA is identified in the Injunction, satisfying the first requirement. Analysis of the second factor requires review of the law to determine whether the third-party’s liability is wholly separate from the debtor’s liability or instead depends on it. The Bankruptcy Court must make that determination, and, with respect to the “statutory relationship” factor, should review the law and determine whether CNA’s provision of insurance to Grace is relevant legally to the Montana Claims. View "W.R. Grace & Co. v. Carr" on Justia Law

Sports Medicine performed shoulder surgery on “Joshua,” who was covered by a health insurance plan, and charged Joshua for the procedure. Because it did not participate in the insurers’ network, Sports Medicine was not limited to the insurer’s fee schedule and charged Joshua $58,400, submitting a claim in that amount to the insurers on Joshua’s behalf. The claim form indicated that Joshua had “authorize[d] payment of medical benefits.” The insurer processed Joshua’s claim according to its out-of-network cap of $2,633, applying his deductible of $2,000 and his 50% coinsurance of $316, issuing him a reimbursement check for the remaining $316, and informing him that he would still owe Sports Medicine the remaining $58,083. Sports Medicine appealed through the insurers’ internal administrative process and had Joshua sign an “Assignment of Benefits & Ltd. Power of Attorney.” Sports Medicine later sued for violations of the Employee Retirement Income Security Act (ERISA), and breach of contract, citing public policy. The district court dismissed for lack of standing because Joshua’s insurance plan included an anti-assignment clause. The Third Circuit affirmed, holding that the anti-assignment clause is not inconsistent with ERISA and is enforceable. View "American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield" on Justia Law

Migliaro purchased a Standard Flood Insurance Policy (SFIP) under the National Flood Insurance Program, 42 U.S.C. 4011(a), from Fidelity for his property, which sustained flood damage in October 2012's Hurricane Sandy. Fidelity’s adjuster recommended a payment of $90,499.11, which Fidelity paid. Five months later, Migliaro submitted a proof of loss, claiming an additional $236,702.57. On July 15, 2013, Fidelity sent Migliaro a letter titled “Rejection of Proof of Loss,” stating: This is not a denial of your claim. Your field adjuster provided you with an estimate and Proof of Loss regarding covered damages. If there are additional covered damages identified, please forward documentation and they will be considered. Migliaro did not provide additional documentation or submit a second proof of loss but filed suit. Migliaro's July 2015 complaint was dismissed as untimely. Because SFIP claims are ultimately paid by the government, SFIPs are identical and state: You may not sue ... unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim. The Third Circuit affirmed. Although the rejection of a proof of loss is not per se a denial of the claim, it does constitute a denial if the policyholder treats it as such by filing suit against the carrier. View "Migliaro v. Fidelity National Indemnity Insurance Co." on Justia Law

Migliaro purchased a Standard Flood Insurance Policy (SFIP) under the National Flood Insurance Program, 42 U.S.C. 4011(a), from Fidelity for his property, which sustained flood damage in October 2012's Hurricane Sandy. Fidelity’s adjuster recommended a payment of $90,499.11, which Fidelity paid. Five months later, Migliaro submitted a proof of loss, claiming an additional $236,702.57. On July 15, 2013, Fidelity sent Migliaro a letter titled “Rejection of Proof of Loss,” stating: This is not a denial of your claim. Your field adjuster provided you with an estimate and Proof of Loss regarding covered damages. If there are additional covered damages identified, please forward documentation and they will be considered. Migliaro did not provide additional documentation or submit a second proof of loss but filed suit. Migliaro's July 2015 complaint was dismissed as untimely. Because SFIP claims are ultimately paid by the government, SFIPs are identical and state: You may not sue ... unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim. The Third Circuit affirmed. Although the rejection of a proof of loss is not per se a denial of the claim, it does constitute a denial if the policyholder treats it as such by filing suit against the carrier. View "Migliaro v. Fidelity National Indemnity Insurance Co." on Justia Law

Kelly was in a collision a drunk driver, who had been drinking at Princeton Tavern. Princeton's dram shop liability policy was issued by State National. Kelly sued Princeton in state court, obtained a default judgment, and settled for $5 million. When that lawsuit was filed, Princeton requested that its broker, Carman, notify State of its obligation to defend and indemnify. Carman did not do so. Lacking notice, State refused to cover Princeton’s liability. Princeton assigned its rights to sue Carman; Kelly sued Carman in state court for negligence and breach of contract and filed a separate state-court action, seeking a declaratory judgment that Carmen's insurer, Maxum, was obligated to defend and indemnify. Maxum removed the Declaratory Action to federal district court, asserting diversity jurisdiction. Kelly and Carman are Pennsylvania citizens. Maxum (a Georgia company) argued that the two are together interested in securing Maxum’s coverage so that diversity of citizenship would exist once Carman was realigned to join Kelly as a plaintiff. The district court remanded to state court, reasoning that the state tort action constituted a parallel proceeding. The Third Circuit reversed. Contemporaneous state and federal proceedings are parallel under the Declaratory Judgment Action when they are substantially similar; the proceedings here were not. The nonexistence of a parallel state proceeding weighed significantly in favor of the district court entertaining the Declaratory Action but did not require it. Considerations of practicality and wise judicial administration counseled against abstention. View "Kelly v. Maxum Specialty Insurance Group" on Justia Law