Justia Insurance Law Opinion Summaries

Plaintiffs in this consolidated appeal are businesses that operate Michigan-based restaurants and entertainment venues that made claims against their commercial property insurance policies, held by Cincinnati Insurance, based on COVID-19 losses. These policies contained three provisions under which Cincinnati Insurance would compensate a policyholder only if the policyholder suffered direct physical loss or damage to its covered property, or if loss to a non-policy holder’s property prevented access to a policyholder’s property. Cincinnati Insurance denied their claims, indicating that neither the presence of the COVID-19 virus nor shutdown orders issued by the Michigan governor constituted physical loss or damage.The district court dismissed the plaintiffs’ claims, finding that, under Michigan law, “direct physical loss” to property covers only tangible harm or damage to property, rather than mere loss of use. The Sixth Circuit affirmed, reasoning that the Michigan Supreme Court would agree with its interpretation of the law–that COVID-19-related shutdown orders do not constitute “direct physical loss or direct physical damage” to property because “a loss of use simply is not the same as a physical loss.” The plaintiffs alleged “not tangible, physical losses, but economic losses.” View "Dino Drop, Inc. v. Cincinnati Insurance Co." on Justia Law

Milton employees were performing work at Perry’s home. Milton’s owner authorized Perry to move Milton’s truck, which was blocking the driveway. Perry accidentally struck Ball, a Milton employee, who sustained serious injuries. Milton had a commercial automobile liability insurance policy issued by United, which provided $1 million in liability coverage to Milton and to any person using Milton’s vehicles with its permission. United sought a declaratory judgment that it had no obligation to cover Perry’s liability, based on “Worker’s Compensation” and “Employee Indemnification and Employer’s Liability” exclusions.The district court granted United judgment, finding Ball sustained his injuries while working within the course of his employment. The court rejected Ball’s argument that West Virginia Code 33-6-31(a) required United to extend liability coverage to Perry as a permissive user of an insured automobile. The Fourth Circuit held that because Ball’s negligence claim was against a third party, rather than against his employer for workers’ compensation the exclusions did not apply. On remand, United argued that while the exclusion was unenforceable up to the $25,000 minimum liability coverage required by West Virginia law, it remained enforceable as to any amount above that statutory minimum. Ball and Perry argued that United was required to provide Perry with coverage of up to $1 million. The district court granted United summary judgment. The Fourth Circuit certified the question to the state’s highest court. View "United Financial Casualty Co. v. Ball" on Justia Law

The emergency-care physician plaintiffs did not participate in the insurance company’s (UHC) provider network. Doctors must serve all patients requiring emergent care regardless of whether their patient is in-network. Texas law requires that emergency-care providers must be paid their “usual and customary rate[s]” for care provided to out-of-network plan enrollees, Tex. Ins. Code 1271.155(a), 1301.0053(a), and 1301.155(b). The Plaintiff-Doctors alleged that UHC violated those statutes. The district court declined to dismiss all of the claims. UHC sought an interlocutory review of whether the statutes include an implied private right of action and, if so, whether the Employee Retirement Income Security Act preempts the claims.The Fifth Circuit certified the first issue to the Texas Supreme Court after considering the closeness of the question and the existence of sufficient sources of state law; the relevance of considerations of comity; and practical limitations such as delay and framing the issue to produce a helpful response. The court stated that a court could plausibly read the emergency-care statutes to provide an implied right of action but that a Texas appellate court has found to the contrary. Whether there is an implied private right of action either enables or eliminates thousands of claims; the state of Texas has a strong interest. View "ACS Primary Care Physicians Southwest, P.A. v. UnitedHealthcare Insurance Co." on Justia Law

Before the South Carolina Supreme Court in this appeal was the trial court's dismissal of respondent Jeanne Beverly's claims pursuant to Rule 12(b)(6) of the South Carolina Rules of Civil Procedure. Beverly brought claims against Grand Strand Regional Medical Center, LLC. Blue Cross Blue Shield of South Carolina (BCBS) was a mutual insurance company that provided health insurance coverage through Member Benefits Contracts to its Members. Beverly was a BCBS Member. In 2005, Grand Strand and BCBS entered into a contract labeled "Institutional Agreement." The Institutional Agreement contained a clause entitled, "No Third Party Beneficiaries," that provided in part, "This Agreement is not intended to, and shall not be construed to, make any person or entity a third party beneficiary." Grand Strand and BCBS were the only parties to the Institutional Agreement. Grand Strand made two promises to BCBS in the Institutional Agreement that Beverly contended created rights she and other BCBS Members could enforce. Beverly was injured in an automobile accident on September 6, 2012. The same day, she received health care services at a Grand Strand emergency room for injuries she sustained in the accident. Beverly alleges she provided Grand Strand proof of her status as a BCBS Member. Some time later, Beverly received a bill directly from Grand Strand for $8,000. Beverly alleges the $8,000 bill does not reflect the discount Grand Strand promised in the Institutional Agreement. Beverly filed this action on behalf of herself and a class of similarly situated BCBS Members who were denied the right to have their bills processed and discounted according to Grand Strand's promises in the Institutional Agreement. The primary question before the Supreme Court was whether the "no beneficiary" clause in the Institutional Agreement overrode an otherwise manifestly clear purpose of the contracting parties to provide a direct benefit to non-contracting parties. "Mindful that we are reviewing a Rule 12(b)(6) dismissal order—not an order on the merits—we hold it does not." The Supreme Court affirmed the court of appeals' opinion reversing the 12(b)(6) dismissal. The case was remanded to circuit court for discovery and trial. View "Beverly v. Grand Strand Regional Medical Center, LLC" on Justia Law

In 2011, during the course and scope of his employment as a shipwright, Claimant Robert Arlet slipped and fell on an icy sidewalk on the premises of his employer, Flagship Niagara League (Employer), sustaining injuries. Employer had obtained a Commercial Hull Policy from Acadia Insurance Company (Insurer). Through the policy, Insurer provided coverage for damages caused by the Brig Niagara and for Jones Act protection and indemnity coverage for the “seventeen (17) crewmembers” of the Brig Niagara. Employer had also at some point obtained workers’ compensation insurance from the State Workers’ Insurance Fund (SWIF). Insurer paid benefits to Claimant under its Commercial Hull Policy’s “maintenance and cure” provision. Claimant filed for workers’ compensation benefits. Employer asserted Claimant’s remedy was exclusively governed by the Jones Act. Employer also filed to join SWIF as an additional insurer in the event the Workers' Compensation Act (WCA) was deemed to supply the applicable exclusive remedy, and Employer was found to be liable thereunder. SWIF denied coverage, alleging Employer’s policy was lapsed at the time of Claimant’s injury. Thereafter, Claimant filed an Uninsured Employers Guaranty Fund (UEGF) claim petition, asserting the fund’s liability in the event he prevailed, and Employer was deemed uncovered by SWIF and failed to pay. The Workers’ Compensation Appeals Board (WCAB) found that as a land-based employee, Claimant did not meet the definition of seaman under the Jones Act and was, therefore, entitled to pursue his workers’ compensation claim. The issue this case presented for the Pennsylvania Supreme Court's review was one of first impression: the right of an insurer to subrogation under the WCA. The Supreme Court concluded Insurer’s Commercial Hull Policy did not cover Claimant, because Claimant was not a “seaman” or crew member. The WCA’s exclusive remedy applied, but Insurer was seeking subrogation for payment it made on a loss it did not cover. "[T]he 'no-coverage exception' to the general equitable rule precluding an insurer from pursuing subrogation against its insured comports with the purposes and public policy supporting the rule and hereby adopt it as the law of this Commonwealth. ... any equitable rule precluding an insurer from seeking subrogation against its insured is best tempered by the exception adopted herein today." View "Arlet v. WCAB (L&I)" on Justia Law

Lereta maintained an ERISA-governed benefits plan, subject to the Employee Retirement Income Security Act (ERISA) that provided short-term disability (STD) and long-term disability (LTD) to its employees, including Newsom. Reliance issued the policies that funded these benefits and served as the benefits claims administrator. Newsom filed suit following Reliance’s determination that he was ineligible for LTD benefits.The district judge entered an order in favor of Newsom, awarding him LTD benefits. The Fifth Circuit affirmed as to Newsom’s eligibility for LTD benefits and alleged date of disability but vacated as to Newsom’s entitlement to LTD benefits. The court remanded with instructions for the district court to remand Newsom’s claim to the administrator for further proceedings. The district court did not err by interpreting the term “full time” and its reference to a “regular work week” to mean the “scheduled workweek” set by Lereta for Newsom. Although that factual record contains medical records Newsom submitted during Reliance’s evaluation of his claim, the merits evidence is at best incomplete and undermines the district court’s benefits determination; the court’s benefits determination does not fully square with the record. View "Newsom v. Reliance Stnrd Life Ins" on Justia Law

The Supreme Court affirmed the order of the circuit court enforcing a settlement agreement between Petitioner and his insurer, Respondent Allstate Company, and denying Petitioner's request to amend his complaint or allow the filing of a new complaint, holding that there was no error.The settlement agreement at issue related to water damages occurring at Petitioner's real property. Petitioner failed to execute and return the agreement, after which Respondent filed a motion to enforce settlement. Petitioner then filed a motion to amend the complaint or, in the alternative, allow the filing of a new complaint. The circuit court granted Respondent's motion to enforce the settlement and denied Petitioner's motion to amend. The Supreme Court affirmed, holding that the circuit court did not err as to any of its challenged rulings. View "Donahue v. Mammoth Restoration & Cleaning" on Justia Law

Grinnell Mutual Reinsurance Company appealed a district court judgment ordering it to pay Larry Pavlicek $214,045.55 under a commercial general liability insurance (CGL) policy Grinnell had with JRC Construction. Grinnell argued the district court misinterpreted the insurance policy, and that it was not required to indemnify JRC Construction because its work product was defective. In 2013, Pavlicek hired a contractor to construct a steel building on his property. JRC Construction installed the concrete floor and floor drain for the project. Another subcontractor installed the in-floor heating system for the concrete floor. After JRC completed the floor drain, it failed to properly install the concrete floor, and its attempts to repair the concrete damaged the drain. Pavlicek sued JRC for breach of contract relating to the defective work. In February 2020, Pavlicek filed a supplemental complaint against Grinnell, alleging it was required to satisfy the judgment as JRC’s insurer. Grinnell claimed it had no obligation to indemnify JRC under the CGL policy. The district court concluded JRC’s defective work on the concrete floor was not covered under the CGL policy, but damage to the floor drain was covered. Because removal and replacement of the floor and in-floor heat were necessary to repair the drain the court concluded the CGL policy covered all of those costs. The North Dakota Supreme Court found that although the CGL policy provided coverage to repair the floor drain, it did not cover the cost of replacing the concrete floor because that damage was the result of JRC’s defective work. The district court erred in finding the CGL policy covered the entire concrete floor replacement because replacement of the floor was the only way to repair the floor drain. Further, the Supreme Court found the district court erred in concluding the CGL policy provided coverage for replacement or repair of the in-floor heating system beyond that which may be necessary to repair the drain. View "Pavlicek v. American Steel Systems, Inc., et al." on Justia Law

After incurring a million-plus-dollar loss for sending gold coins to a thief who forged check payments and intercepted the shipment of those coins, Gage filed an insurance claim. The underwriters denied the claim citing a coverage exclusion for losses incurred “consequent upon” delivering insured property to any third party against payment by a fraudulent check.The Fifth Circuit certified questions to the Texas Supreme Court: Whether Gage's losses were sustained consequent upon delivering insured property to UPS against a fraudulent check, causing the policy exclusion to apply; if yes. whether UPS's alleged errors are considered an independent cause of the losses under Texas law. The Texas Supreme Court concluded the ordinary meaning of “consequent upon” is but-for causation and answered “yes” to the first question. On the second question, the Texas Supreme Court answered “no” by concluding UPS’s alleged negligence was a concurrent cause of loss, dependent upon Gage’s handing over of the gold coins against fraudulent checks. In light of those answers, the Fifth Circuit affirmed the district court. Gage’s losses were excluded from coverage. Gage’s extra-contractual claims were properly dismissed as they were predicated on coverage under the policy. View "Dillon Gage, Inc. v. Certain Underwriters at Lloyds" on Justia Law

After a fire destroyed Merechka's home, Vigilant denied his insurance claim, which sought $634,000 for the dwelling and $475,500 for its contents. During its investigation, Vigilant discovered that Merechka had filed for bankruptcy about four years earlier. According to his bankruptcy petition, he had around $9,000 in personal property, well short of the more than $600,000 (or $325,825, according to a third-party appraiser) that he reported to Vigilant. Without an explanation for the discrepancy, Vigilant suspected insurance fraud. Merechka assured Vigilant that he had acquired nearly all of his personal property after the bankruptcy using several sources of income: $700 per week he received for working for his brother, a $1,300 monthly social-security payment, and periodic payments from an investment account. The numbers did not add up, so Vigilant denied coverage under the policy’s concealment-or-fraud provision.Merechka sued. Vigilant filed a counterclaim, seeking reimbursement for the nearly $400,000 it had paid to Merechka’s mortgage lender. Applying Arkansas law, the district court determined that neither side owed anything. The Eighth Circuit reversed in part and remanded Vigilant’s claim. No reasonable juror could believe that Merechka acquired so much property in such a short time on his modest income; the circumstances indicate that the falsehood was intentional. View "Merechka v. Vigilant Insurance Co." on Justia Law