Justia Insurance Law Opinion Summaries

Draper Paving, the subcontractor for a road project, employed Richard Slone as a dump truck driver and assigned him to work on the project. Slone died from injuries he received in an accident while working on the project. At the time of the accident, Draper Paving had taken out a motor vehicle insurance policy with Selective Insurance Company of America. Karen Slone Bratton and Selective Insurance filed separate declaratory judgment actions seeking to determine whether Slone fell within the scope of the Selective Insurance policy’s coverage. The circuit court concluded that Bratton was not entitled to insurance proceeds from Selective Insurance because Slone did not fall within the scope of the policy at the time of the accident. The Supreme Court reversed, holding that Slone was occupying both a dump truck and company pickup truck - both covered autos - at the time of the accident under the Selective Insurance policy. Because the policy’s coverage limit for each covered auto applied independently to multiple covered autos involved in the same accident, Bratton was entitled to proceeds under the Selective Insurance policy for both the dump truck and the company pickup truck. Remanded. View "Bratton v. Selective Ins. Co. of Am." on Justia Law

The Departments of Health and Human Services (HHS), Labor (DOL), and Treasury appealed a preliminary injunction that enjoins the government from enforcing the contraceptive mandate provisions of the Patient Protection and Affordable Care Act (ACA), 42 U.S.C. 300gg-13(a)(4), and its implementing regulations against nonprofit religious organizations that offer healthcare coverage to their employees. The district court’s order also enjoined the government from enforcing the challenged provisions against “any insurance provider (including insurance issuers and third-party administrators) offering health insurance to” the organizations. The Eighth Circuit affirmed, stating that by coercing the organizations to participate in the contraceptive mandate and accommodation process under threat ofsevere monetary penalty, the government has substantially burdened their exercise of religion. Even assuming that the government’s interests in safeguarding public health and ensuring equal access to health care for women are compelling,the contraceptive mandate and accommodation process likely are not the least restrictive means of furthering those interests. View "Dordt College v. Burwell" on Justia Law

In this breach of contract dispute, a jury found that St. Paul breached its insurance contract with plaintiff by failing to pay plaintiff’s insurance claim for costs associated with the “loss of control” of an oil well that plaintiff operated in Lavaca County, Texas. St. Paul was ordered to pay plaintiff damages and the district court subsequently awarded penalty interest to plaintiff under the Texas Prompt Payment of Claims Statute, Texas Insurance Code 542.051-.061. Both parties appealed. The court rejected St. Paul's contention that the district court misinterpreted and misapplied section 542.056 of the Prompt-Payment Statute when it determined that St. Paul violated that section of the statute. The court affirmed the district court’s factual finding that the few additional items at issue did not operate to nullify application of section 542.056, and that, based on the facts in this case, the district court correctly found that the fifteen-day deadline under section 542.056 began to run on November 6, 2009. As for plaintiff's contentions, the court held that the district court properly granted judgment as a matter of law, because there was no legally sufficient evidentiary basis for a reasonable jury to have found that St. Paul violated section 541. Accordingly, the court affirmed the judgment of the district court in all respects. View "Weiser-Brown Operating Co. v. St. Paul Surplus" on Justia Law

Vittorio and Lydia Gentile were policyholders under a Massachusetts automobile insurance policy issued by Commerce Insurance Company. Their grandson, Vittorio Gentile, Jr. (Junior), an “excluded operator” under the policy, was operating one of the Gentiles’ vehicles covered by the policy when he caused an accident that injured Douglas and Joseph Homsis. Commerce filed this action seeking a declaratory judgment that the Gentiles’ violation of the operator exclusion form relieved it of the duty to pay the Homsises under the optional bodily injury provisions of the insurance contract. A superior court judge concluded that Commerce was relieved of its duty to pay the optional coverage for the Homsis’ injures because the Gentiles had violated their duty of “continuing representation” as to whether Junior was, in fact, operating their vehicles. The Appeals Court affirmed both on that basis and on the basis that the Gentiles had breached the insurance contract. The Supreme Judicial Court affirmed on the ground that, by allowing Junior to operate their vehicle, the Gentiles committed a breach of a material term of the insurance contract. View "Commerce Ins. Co., Inc. v. Gentile" on Justia Law

Joseph and Janice Boyle sued C&N Corporation. C&N held an insurance policy issued by Zurich American Insurance Company requiring that C&N provide notice to Zurich of any lawsuit brought against it. C&N did not notify Zurich about the lawsuit, but the Boyles’ counsel did. Zurich did not defend against the suit. Judgement by default was entered for the Boyles. The Boyles then sued Zurich, asserting the claims of C&N, which had assigned to the Boyles. A superior court judge ruled that Zurich breached its contractual duty to defend C&N. The Supreme Judicial Court affirmed in part and reversed in part, holding (1) an insured’s failure to comply with a notice obligation in an insurance policy does not relieve the insurer of its duties under the policy unless the insurer demonstrates that it suffered prejudice as a result of the breach; and (2) the superior court judge did not err in determining that Zurich committed a breach of its contractual duty to defend C&N, as Zurich failed to show that it was prejudiced as a result of C&N’s failure to comply with the policy’s notice obligation in this case. View "Boyle v. Zurich Am. Ins. Co." on Justia Law

Defendant Cy Tapia, a teenager living with his aunt and grandmother, was driving a vehicle which crashed, inflicting severe and eventually fatal injuries on his passenger, Cory Driscoll. Before his death Driscoll and his mother filed an action for damages. The parties established that the vehicle driven by Tapia was owned by his grandfather and that Tapia was entitled to $100,000 in liability coverage under an auto policy issued to Melissa McGuire (Tapia’s sister), which listed the vehicle as an insured vehicle and listed Tapia as the driver of the vehicle. The policy was issued by petitioner-defendant 21st Century Insurance Company. 21st Century offered to settle the action for the policy limits of the McGuire policy ($100,000). However, plaintiff1 also believed that Tapia might be covered under policies issued to his aunt and grandmother, each offering $25,000 in coverage and also issued by 21st Century. Plaintiff communicated an offer to settle for $150,000 to Tapia’s counsel; 21st Century contended that it never received this offer (although there was certainly evidence to the contrary). Inferrably having realized the seriousness of its position, 21st Century affirmatively offered the “full” $150,000 to settle the case against Tapia. Plaintiff did not accept this offer, but a month later plaintiff’s counsel served a statutory offer to compromise seeking $3,000,000 for Cory Driscoll and $1,150,000 for his mother Jenny Driscoll. Shortly before the expiration of this offer, 21st Century sent Tapia a letter warning him that it would not agree to be bound if Tapia personally elected to accept the offer. Nonetheless, Tapia agreed to the entry of a stipulated judgment in the amounts demanded by plaintiff. 21st Century paid $150,000 plus interest to the plaintiff. Tapia then assigned any rights he had against 21st Century to plaintiff. This assignment and agreement included plaintiff’s promise not to execute on the judgment against Tapia so long as he complied with his obligations, e.g., to testify to certain facts concerning the original litigation and 21st Century’s actions. This bad faith action followed. Petitioner's unsuccessfully moved for summary judgment, and petitioned the Court of Appeal for a writ of mandate to overturn the trial court's denial. Upon review, the Court of Appeal found that plaintiff’s efforts to pursue essentially a “bad faith” action as assignee of the insured was misguided. Accordingly, petitioner was entitled to summary judgment. View "21st Century Ins. v. Super. Ct." on Justia Law

NJBSC is a Bergen County neurosurgical medical practice. NJBSC treated three patients who were members of health-care plans governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and administered by Aetna. Before surgery, each patient executed an assignment to NJBSC. Following treatment, Aetna allegedly underpaid or refused to pay claims for each of the patients. NJBSC filed suit The district court dismissed NJBSC’s complaint, holding that the assigned rights to payment did not give NJBSC standing to sue under ERISA. The Third Circuit reversed, holding that a patient’s explicit assignment of payment of insurance benefits to her healthcare provider, without direct reference to the right to file suit, is sufficient to give the provider standing to sue for those benefits under ERISA. View "N. Jersey Brain & Spine Ctr., v. Aetna Inc" on Justia Law

Rent-A-Roofer, Inc. (Appellant) settled a lawsuit filed by the National Research Corporation (NRC) without notifying its insurer, Farm Bureau Property & Casualty Insurance Company (the Insurer), of the lawsuit. Appellant later notified the Insurer of its involvement in litigation and made a demand under Appellant’s policy with the Insurer. The Insurer declined coverage on the grounds that Appellant breached the policy’s notice provision and the voluntary payments provision. Appellant subsequently brought this action against the Insurer, alleging breach of contract and bad faith. The district court granted summary judgment for the Insurer. The district court first concluded that for an insurer to deny coverage based on breach of a voluntary settlement condition, the insurer must show prejudice in connection with its claim. The court then ruled that, where Appellant failed to meet both the notice and voluntary payments provisions, prejudice had been established as a matter of law. The Supreme Court affirmed, holding that the district court correctly found that the Insurer was not liable for settlement by NRC against Appellant and not liable for Appellant’s defense costs. View "Rent-A-Roofer v. Farm Bureau Prop. & Cas. Ins. Co." on Justia Law

A few decades ago, an oil spill occurred on property in Salem, Massachusetts that was owned by Peabody Essex Museum. The pollution from the spill migrated to the land of a down gradient neighbor, Heritage Plaza. In 2003, Heritage Plaza discovered the subsurface contamination and notified the Museum. The Museum, in turn, gave prompt notice to state environmental authorities and to its insurer, United States Fire Insurance Company (U.S. Fire). The Museum filed a coverage suit against U.S. Fire and, in 2013, secured a judgment requiring U.S. Fire to pay the Museum over $1.5 million, including punitive damages under Mass. Gen. Laws ch. 93A. In this appeal, the parties challenged multiple district court rulings. The First Circuit affirmed the challenged rulings related to insurance coverage but reversed the finding of Chapter 93A liability and vacated the district court’s associated award of punitive damages, holding that U.S. Fire’s conduct under these circumstances was not the kind that the Massachusetts Supreme Judicial Court has condemned as egregious settlement misconduct that is actionable under Chapter 93A. View "Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co." on Justia Law

In 1989, the Supreme Court held that courts should apply de novo review in suits challenging denials of employee benefits governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1), but if the benefit plan provided expressly for a different, more deferential standard of review, that specific provision would control over the default rule of de novo review. Insurance companies and plan sponsors began including such provisions in most benefit plans, typically saying the insurer or plan administrator would exercise discretionary judgment in interpreting a plan or deciding whether to pay benefits. Courts would then apply a deferential standard of review under which a denial would stand unless it was “arbitrary and capricious.” Later, state laws were adopted to protect employees and plan beneficiaries from abuse of such discretion. An Illinois insurance law, prohibited provisions “purporting to reserve discretion” to insurers to interpret health and disability insurance policies. The Seventh Circuit rejected a preemption challenge and applied the state law in a case involving a challenge to an insurance provider’s definition of “disability,” The court did not address whether the denial of benefits was arbitrary and capricious. View "Fontaine v. Metropolitan Life Ins. Co" on Justia Law