Justia Insurance Law Opinion Summaries

The Second Circuit reversed the district court's award of $64 million to Utica. In this case, the jury found that the Fireman's Fund breached its obligations under reinsurance contracts issued to Utica. The court agreed with Fireman's Fund that the reinsurance contracts, by their terms, demonstrate as a matter of law that Fireman's Fund did not owe to Utica the obligations allegedly breached. The court explained that the umbrella policies unambiguously define their attachment point by reference to the underlying limits of liability "as stated in the Schedule[s]." Therefore, where the losses in question did not exceed the limits stated for bodily injury in the Schedules, Fireman's Fund had no obligation under the reinsurance contracts to pay for those losses. The court remanded for further proceedings. View "Utica Mutual Insurance Co. v. Fireman's Fund Inc." on Justia Law

The Louisiana Supreme Court granted review in this case to determine whether the Louisiana Commissioner of Insurance was bound by an arbitration clause in an agreement between a health insurance cooperative and a third-party contractor. The Louisiana Health Cooperative, Inc. (“LAHC”), a health insurance cooperative created in 2011 pursuant to the Patient Protection and Affordable Care Act, entered an agreement with Milliman, Inc. for actuarial and other services. By July 2015, the LAHC was out of business and allegedly insolvent. The Insurance Commissioner sought a permanent order of rehabilitation relative to LAHC. The district court entered an order confirming the Commissioner as rehabilitator and vesting him with authority to enforce contract performance by any party who had contracted with the LAHC. The Commissioner then sued multiple defendants in district court, asserting claims against Milliman for professional negligence, breach of contract, and negligent misrepresentation. According to that suit, the acts or omissions of Milliman caused or contributed to the LAHC’s insolvency. Milliman responded by filing a declinatory exception of lack of subject matter jurisdiction, arguing the Commissioner must arbitrate his claims pursuant to an arbitration clause in the agreement between the LAHC and Milliman. The Supreme Court concluded, however, the Commissioner was not bound by the arbitration agreement and accordingly could not be compelled to arbitrate its claims against Millman. The Court reversed the appellate court's judgment holding to the contrary, and remanded the case for further proceedings. View "Donelon v. Shilling" on Justia Law

The Tenth Circuit Court of Appeals certified a question of law to the Colorado Supreme Court. The certified question arose from a dispute in which plaintiff Amica Life Insurance Company sought a declaratory judgment that it was not required to pay defendant Michael Wertz benefits under a life insurance policy naming Wertz as the beneficiary. The policy, which was issued in compliance with a standard enacted by the Interstate Insurance Product Regulation Commission (the “Commission”), contained a two-year suicide exclusion, and the insured committed suicide more than one year but less than two years after Amica had issued the life insurance policy to him. Wertz contended that the policy’s two-year suicide exclusion was unenforceable because it conflicted with Colorado statute, section 10-7-109, C.R.S. (2019). Wertz asserted that the Colorado General Assembly could not properly delegate to the Commission the authority to enact a standard that would effectively override this statute. After review, the Colorado Supreme Court agreed with Wertz, and accordingly, answered the certified question narrowly: the General Assembly did not have the authority to delegate to the Commission the power to issue a standard authorizing the sale of life insurance policies in Colorado containing a two-year suicide exclusion when a Colorado statute prohibited insurers doing business in Colorado from asserting suicide as a defense against payment on a life insurance policy after the first year of that policy. View "Amica Life Insurance Company v. Wertz" on Justia Law

The Patient Protection and Affordable Care Act established online exchanges where insurers could sell their healthcare plans. The now-expired “Risk Corridors” program aimed to limit the plans’ profits and losses during the first three years (2014-2016). Under 31 U.S.C. 1342, eligible profitable plans “shall pay” the Secretary of the Department of Health and Human Services, while the Secretary “shall pay” eligible unprofitable plans. The Act neither appropriated funds nor limited the amounts that the government might pay. There was no requirement that the program be budget-neutral. The total deficit exceeded $12 billion. At the end of each year, the appropriations bills for the Centers for Medicare and Medicaid Services included a rider preventing the Centers from using the funds for Risk Corridors payments. The Federal Circuit rejected Tucker Act claims for damages by health-insurance companies that claimed losses under the program.The Supreme Court reversed. The Risk Corridors statute created an obligation to pay insurers the full amount set out in section 1342’s formula. The government may incur an obligation directly through statutory language, without details about how the obligation must be satisfied. The Court noted the mandatory term “shall,” and adjacent provisions, which differentiate between when the Secretary “shall” act and when she “may” exercise discretion. Congress did not impliedly repeal the obligation through its appropriations riders. which do not indicate “any other purpose than the disbursement of a sum of money for the particular fiscal years.”The Risk Corridors statute is fairly interpreted as mandating compensation for damages, and neither Tucker Act exception applies. Nor does the APA bar a Tucker Act suit. The insurers seek specific sums already calculated, past due, and designed to compensate for completed labors. Because the Risk Corridors program expired this litigation presents no special concern about managing a complex ongoing relationship. View "Maine Community Health Options v. United States" on Justia Law

In 2015, Elizabeth Byars was visiting a residence in Huntsville, Alabama owned by Hannelore Sims ("Hannelore") when she was attacked by a pit bull kept by Hannelore's adult grandson Cody Sims ("Cody"), who also resided at the property. The pit bull was allegedly owned by Belinda Jones (whose relationship to Cody and Hannelore was not made clear from the trial court record). Byars sued Hannelore, Cody, and Jones seeking to recover damages for her injuries. Cody was served with notice of Byars's lawsuit, but he failed to answer the complaint. The trial court entered a default judgment against Cody, awarding Byars $200,000. Byars thereafter amended her complaint to assert a claim against State Farm. Specifically, Byars alleged that State Farm had issued a homeowner's insurance policy insuring Hannelore's property and that, because a judgment had been entered against Cody, Byars could assert a claim against State Farm under the direct-action statute. State Farm moved to dismiss, arguing that the direct- action statute did not allow Byars to simply amend her complaint to add State Farm as a defendant. Rather, State Farm argued, Byars was required to initiate a separate action to pursue any claim she might have against State Farm. State Farm petitioned the Alabama Supreme Court for mandamus relief when the trial court denied its motion. In denying State Farm's petition, the Supreme Court determined State Farm failed to meet its burden or establishing that it had no adequate remedy aside from a writ of mandamus. View "Ex parte State Farm Fire & Casualty Co." on Justia Law

The Supreme Court accepted a state-law question certified to it by the United States District Court for the Northern District of Ohio, Eastern Division and answered that an insured is not permitted to seek full and complete indemnity under a single policy providing coverage for "those sums" that the insured becomes legally obligated to pay because of property damage that takes place during the policy period when the property damage occurred over multiple policy periods.Insured sued Insurer seeking an order requiring Insurer to pay all defense costs incurred in defending the underlying lawsuit and the amounts Insured paid to settle the action. Insurer filed a counterclaim seeking a declaration that Insured was not entitled to allocate all defense costs and indemnity to a single policy period when multiple policies and corresponding policy periods were triggered. At issue was whether contract language providing coverage for "those sums" should be treated like contract language providing coverage for "all sums." The Supreme Court answered the question of state law as set forth above but cautioned against using the answer as a blanket rule applicable to all policies with "those sums" language. View "Lubrizol Advanced Materials, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania" on Justia Law

At issue in this appeal was whether the alleged conduct of an insured, Harold McCutcheon, Jr. (McCutcheon), as described in a personal injury lawsuit filed against his estate by Richard Carly, obligated McCutcheon’s insurer, appellant Erie Insurance Exchange (Erie) to defend the estate against Carly’s complaint. In 2013, McCutcheon broke into the home of his ex-wife, Terry McCutcheon, in order to shoot and kill her, and then kill himself. He communicated these intentions in a note he left for his adult children. McCutcheon succeeded in executing this plan, first shooting and killing Terry and, eventually, shooting and killing himself. However, after McCutcheon killed Terry but before he killed himself, Carly arrived on the scene. Carly, who had been dating Terry, approached the front door of her home, rang the doorbell and received no answer. Carly became concerned, placed his hand on the doorknob “in order to enter and the door was suddenly pulled inward by [McCutcheon] who grabbed [Carly] by his shirt and pulled him into the home.” McCutcheon was “screaming, swearing, incoherent, and acting ‘crazy.’” Then, “a fight ensued between the two and at the time, [McCutcheon] continued to have the gun in his hand” which he apparently had used to kill Terry. During this “struggle” between the two men, McCutcheon was “knocking things around, and in the process [he] negligently, carelessly, and recklessly caused the weapon to be fired which struck [Carly] in the face,” causing severe injuries. In addition, “other shots were carelessly, negligently and recklessly fired” by McCutcheon, “striking various parts of the interior of the residence and exiting therefrom.” Carly filed suit against McCutcheon’s estate, and the estate — administered by McCutcheon’s adult children — sought coverage of the lawsuit under two insurance policies issued by Erie to McCutcheon: the Erie Insurance Home Protector Policy (homeowner’s policy) and the Erie Insurance Personal Catastrophe Liability Policy (personal catastrophe policy). The Pennsylvania Supreme Court held Carly’s allegations were sufficient to trigger Erie’s duty to defend, and accordingly, affirmed the superior court's order. View "Erie Ins. v. Moore, et al" on Justia Law

After Murphy Oil sold an oil refinery to Valero, a fire occurred on the property. Valero demanded indemnification from Murphy, and Murphy sought a defense from its general commercial liability insurer, Liberty Mutual. After Liberty Mutual refused, Murphy Oil filed suit for a declaratory judgment and damages.The Eighth Circuit held that the district court properly ruled that there is no possibility that the policy covers the property damage alleged in the complaint, and thus there is no duty to defend. In this case, Unigard Sec. Ins. Co. v. Murphy Oil USA, Inc., 962 S.W.2d 735, 740 (Ark. 1998) (Unigard I) controls, because the statute of limitations for tort liability ran before Valero filed its complaint. Furthermore, like in Unigard I, any liability of Murphy Oil in the underlying suit represents the "economic loss" from Murphy Oil's breach of contract and is not covered by the policy. The court also held that the general contract liability exclusion specifically precludes coverage of the breach-of-contract claim, and exceptions to the contractual liability exclusion do not apply. Finally, the court rejected Murphy Oil's "customized" Alienated Premises Endorsement claim. Accordingly, the court affirmed the district court's grant of summary judgment to Liberty Mutual. View "Murphy Oil Corp. v. Liberty Mutual Fire Insurance Co." on Justia Law

The Court of Appeals held that the statute of limitations begins to run on an underinsured motorist claim when the insurer breaches the contract to provide underinsured motorist benefits by denying the insured's claim, thereby breaching the insurance contract.Margaret Shilling was injured in an automobile accident with Barbara Gates, an underinsured motorist. Gates was insured by Agency Insurance Company of Maryland (Agency) under a policy that provided up to $20,000 per person in bodily injury coverage. Shilling was insured by Nationwide Mutual Insurance Company under a policy that included uninsured and underinsured motorist coverage in the amount of $300,000 per person in bodily injury coverage. After Agency and Shilling settled Shilling sued Nationwide seeking the balance of unpaid damages not covered by Agency's $20,000 settlement. Nationwide moved to dismiss, arguing that the claim was time barred under the three-year statute of limitations set forth in Md. Code Ann. Cts. & Jud. Proc. A 5-101. The circuit court granted the motion to dismiss. The court of special appeals ultimately reversed, holding that the suit was not time-barred. The Court of Appeals affirmed, holding that the statute of limitations begins to run upon the insurer's breach of the insurance contract, which occurs when the insurer refuses to pay underinsured motorist benefits. View "Nationwide Mutual Insurance Co. v. Shilling" on Justia Law

After the City hired Henderson to design and install a bio-solids building, panels on the building's roof were damaged during a windstorm. Henderson filed a claim with Travelers, asserting that Travelers was required to cover the roof's damage under the City's builder's risk insurance policy with Travelers. The jury ultimately found in favor of Henderson, awarding damages and fees.The Eighth Circuit affirmed the district court's denial of Travelers' motion for judgment as a matter of law, holding that the faulty workmanship exclusion does not include an anticoncurrent-cause provision; the windstorm and faulty workmanship operated in tandem to cause the resulting damage, and thus the windstorm and the faulty workmanship were two independent cause that contributed to the loss; and thus a reasonable juror could have found that faulty workmanship was not the sole proximate cause of the loss. The court also affirmed the district court's denial of Travelers' motion for a new trial or remittitur, holding that the district court did not plainly err in instructing the jury on the issue of proximate cause and the total award was not so excessive as to shock the judicial conscience. View "Joseph J. Henderson & Sons, Inc. v. Travelers Property Casualty Insurance Co." on Justia Law