Justia Insurance Law Opinion Summaries

The Eighth Circuit affirmed the district court's grant of defendants' motion to dismiss plaintiff's suit seeking reimbursement of premiums, enhanced damages and fees, alleging claims of unjust enrichment, breach of contract, and civil conspiracy. The court held that plaintiff had standing because, if the policy was deemed void ab initio due to non-compliance with state law, then plaintiff will have suffered a compensable economic injury fairly traceable to defendants' actions. Even if the policies were not void, standing still existed because plaintiff had described a concrete and redressable economic injury properly alleged to have been caused by defendants. The court also held that plaintiff's unjust enrichment was time-barred under Arkansas' three-year statute of limitations and tolling of the statue of limitations was not applicable in this case; plaintiff's breach of contract claim was not time-barred; but the breach of contract claim failed as a matter of law because the policy unambiguously granted the insurer an unconditional right to terminate the policy on thirty-days' notice. View "Graham v. Catamaran Health Solutions LLC" on Justia Law

After Exxon settled the underlying personal injury lawsuit, it sought reimbursement from ERS and ORIC, contending that ERS's contractual obligation to insure Exxon as an additional insured and the insurance policy issued by ORIC required ERS and ORIC to pay for the settlement of the suit and the cost of litigation. The Fifth Circuit affirmed the district court's judgment as to ERS's duty to pay the deductible; reversed the portion of the judgment pertaining to the interest award and remanded for calculation of a new interest award; vacated the portion of the judgment that held ORIC jointly and severally liable with ERS for the entire judgment and remanded for modification; reversed the denial of Exxon's attorney's fees for the initial appeal and remanded for determination of amounts; and affirmed the denial of Exxon's previously unrequested attorney's fees. View "ExxonMobil Corp. v. Electrical Reliability Services, Inc." on Justia Law

Prime Hospitals provide inpatient services under the Medicare program, submitting payment claims to private contractors, who make initial reimbursement determinations. Prime alleged that many short-stay claims were subject to post-payment review and denied. Prime appealed through the Medicare appeal process. Prime alleged short-stay claims audits were part of a larger initiative that substantially increased claim denials and that the Center for Medicare & Medicaid Services (CMS) was overwhelmed by the number of appeals. CMS began offering partial payment (68 percent) in exchange for dismissal of appeals. Prime alleged that it executed CMS's administrative settlement agreement so that CMS was contractually required to pay their 5,079 Medicare appeals ($23,205,245). CMS ultimately refused to allow the Prime to participate because it was aware of ongoing False Claims Act cases or investigations involving the facilities. Prime alleged that the settlement agreement did not authorize that exclusion. The district court denied a motion to dismiss Prime’s suit but transferred it to the Court of Federal Claims. The Federal Circuit affirmed in part. The breach of contract claim is fundamentally a suit to enforce a contract and does not arise under the Medicare Act, so the Claims Court has exclusive jurisdiction under the Tucker Act, 28 U.S.C. 1491. That court does not have jurisdiction, however, over Prime’s alternative claims seeking declaratory, injunctive, and mandamus relief from an alleged secret and illegal policy to prevent and delay Prime from exhausting administrative remedies. View "Alvarado Hospital, LLC v. Cochran" 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

Novae issued Cunningham an insurance policy. While insured by Novae, Cunningham entered into an agreement with AP to provide claims-handling services. In 2004 AP sued Cunningham in Texas state court, alleging misrepresentation and negligently-handled claims, resulting in unwarranted or underpriced policy renewals. While that litigation was ongoing, AP filed for bankruptcy. Novae then denied Cunningham’s request for coverage and remained largely uninvolved in the state litigation because the policy did not obligate it to defend. In 2012 Cunningham and AP’s bankruptcy trustee entered into a settlement, including a stipulation to the entry of a $5.12 million judgment against Cunningham; an assignment to AP of Cunningham’s purported right to recover against Novae; and a covenant not to execute on the judgment against Cunningham. The settlement stated that Illinois law would govern its interpretation. The Texas court entered judgment in accordance with the settlement. APs bankruptcy trustee then sued Novae in Illinois, asserting the assigned rights. The Seventh Circuit affirmed summary judgment for Novae. In Texas “assignments of choses in action that tend to increase and distort litigation” violate public policy and are invalid. The type of settlement at issue is collusive and distorts the adversarial process. View "Hendricks v. Novae Corporate Underwriting, Ltd." on Justia Law

Novae issued Cunningham an insurance policy. While insured by Novae, Cunningham entered into an agreement with AP to provide claims-handling services. In 2004 AP sued Cunningham in Texas state court, alleging misrepresentation and negligently-handled claims, resulting in unwarranted or underpriced policy renewals. While that litigation was ongoing, AP filed for bankruptcy. Novae then denied Cunningham’s request for coverage and remained largely uninvolved in the state litigation because the policy did not obligate it to defend. In 2012 Cunningham and AP’s bankruptcy trustee entered into a settlement, including a stipulation to the entry of a $5.12 million judgment against Cunningham; an assignment to AP of Cunningham’s purported right to recover against Novae; and a covenant not to execute on the judgment against Cunningham. The settlement stated that Illinois law would govern its interpretation. The Texas court entered judgment in accordance with the settlement. APs bankruptcy trustee then sued Novae in Illinois, asserting the assigned rights. The Seventh Circuit affirmed summary judgment for Novae. In Texas “assignments of choses in action that tend to increase and distort litigation” violate public policy and are invalid. The type of settlement at issue is collusive and distorts the adversarial process. View "Hendricks v. Novae Corporate Underwriting, Ltd." on Justia Law

Plaintiff filed suit against defendants, alleging claims of breach of fiduciary duty, breach of contract, and negligence. The Eighth Circuit affirmed the district court's motion to dismiss the breach of contract and negligence claims because plaintiff failed to plead sufficient facts to state a plausible claim for breach of contract or negligence. In this case, the language of the policy was unambiguous in describing what the parties intended their contract to be—the policy itself and the written application for the policy. Because the loan forms plaintiff relied on to support the breach of contract claim were not part of the insurance policy, the claim failed. Likewise, the negligence claim failed because it relied on the loan forms being part of the insurance contract. View "Torti v. John Hancock Life Insurance Co." on Justia Law

A tree fell on Kaitlyn and Joshua. Kaitlyn died. She was pregnant. Doctors delivered the baby, but he died an hour later. Joshua survived with serious injuries. A state jury found the Somerset Housing Authority liable and awarded $3,736,278. The Authority belonged to the Kentucky Housing Authorities Self-Insurance Fund, which provided a policy with Evanston. Evanston sought a declaratory judgment limiting its liability under the Fund’s policy to $1 million. Meanwhile, through mediation of the state court case, Evanston agreed to pay the “policy limits” in return for an agreement to dismiss the state court action and release the Authority from further liability. Evanston claimed that $1 million was the coverage cap; the defendants claimed it was $2 to $4 million. The district court determined that there was complete diversity and ruled for Evanston on the merits. The Sixth Circuit affirmed. The district court properly aligned the parties given their respective interests in the primary dispute at the time of filing, so that diversity jurisdiction was not destroyed. The policy obligates Evanston to provide a maximum of $1 million of coverage per “occurrence,” with an aggregate limit of $2 million for more than one occurrence. The contract defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” When one tree falls at one time, that is one occurrence and one accident. View "Evanston Insurance Co. v. Housing Authority of Somerset" on Justia Law

After a jury found that Charter Oak was liable for breach of contract and deceit for its handling of plaintiff's underinsured motorist (UIM) claim, the district court partly granted judgment as a matter of law and approved some of the compensatory damages, as well as all of the punitive damages. The Eighth Circuit affirmed, holding that the independent duty rule did not bar plaintiff's deceit claim; there was sufficient evidence to support the jury's verdict that there was deceit and the deceit harmed plaintiff; the evidence supported the jury's finding that Charter Oak's breach of contract prevented plaintiff from submitting her UIM claim sooner and award of interest on UIM monies from the delay; the district court did not err by failing to conform plaintiff's pleadings, and properly nullified the award for mental and emotional harm; the district court properly applied South Dakota law and applied a 15% interest rate on the $900,000 payment of the UIM claim; and the evidence supported the award of punitive damages and the award was not excessive. View "Dziadek v. The Charter Oak Fire Ins." on Justia Law

After plaintiff was injured in a car accident while driving a loaner vehicle from Billion, she filed suit against Billion's insurer, Travelers, for coverage under the commercial insurance policy. The Eighth Circuit affirmed the district court's dismissal of the suit for failure to state a claim. Although plaintiff did not allege facts showing that her tort or punitive damages or attorneys fees would exceed $75,000, it was not legally impossible that she could recover at least that amount. Therefore, the district court had jurisdiction over the suit. The court held that, reading the endorsement together with the declarations page, the district court properly found the policy did not cover auto medical payments; because plaintiff was not insured under the auto medical coverage provision of the policy, the district court properly dismissed her remaining claims; and the district court did not abuse its discretion in denying her motions to reconsider or amend. View "Peterson v. The Travelers Indemnity Co." on Justia Law