Justia Insurance Law Opinion Summaries

Religious, not-for-profit organizations challenged the “contraceptive mandate” of the Patient Protection and Affordable Care Act of 2010 (ACA), 42 U.S.C. 300gg-13(a)(4), arguing that the ACA’s accommodations for religious organizations impose a substantial burden on their free exercise of religion, and that the ACA and accompanying regulations are not the least restrictive means of furthering a compelling government interest, in violation of the plaintiffs’ rights under the Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. 2000bb. The district court entered a preliminary injunction. The Seventh Circuit reversed, stating: It is the operation of federal law, not any actions that the plaintiffs must take, that causes the provisions of services that the plaintiffs find morally objectionable. The accommodation has the legal effect of removing from objectors any connection to the provision of contraceptive services. View "Grace Schools v. Burwell" on Justia Law

"For more than one hundred and thirty years," the Mississippi Supreme Court has held that an insurance company may void a policy when the insured made material misrepresentations during the application process. While driving his mother’s 2003 Chevy Silverado in Rankin County, sixteen-year-old William Busby crashed into Kenneth Tarlton’s car, which in turn collided with a car driven by Katrice Jones-Smith. When William’s mother, Michelle, applied to Safeway Insurance Company for an insurance policy on the Silverado, the application required her to warrant that she had provided the names of all regular frequent drivers of the covered vehicles, as well as all residents of her household fourteen years old or older. Michelle failed to disclose that fifteen-year-old William resided in her home, and Safeway issued her a policy on the Silverado at a premium that was lower than the premium would have been had Safeway known about William. When Safeway learned that Michelle made a material misrepresentation when she applied for the motor-vehicle-liability policy at issue here, it had the policy declared void. The Supreme Court found no reason to disturb the trial court's grant of summary judgment in this case in favor of Safeway, so it affirmed. View "Jones-Smith v. Safeway Insurance Company" on Justia Law

Pursuant to a scheduling order issued by the magistrate judge that included a report of the parties’ discovery conference, the initial date agreed for disclosures was April 6, 2011. It was undisputed that plaintiff Sun River had a "D&O" insurance policy, which potentially covered securities-related counterclaims asserted by defendants, thus requiring Sun River to disclose the policy pursuant to the scheduling order. No disclosure of the policy was made until eighteen months later, only after counsel for defendants repeatedly pressed the issue based on other information raising suspicions of an undisclosed policy, and then filed a motion to compel its production. By that time coverage under this “claims made” policy had lapsed. When the omission came to light, defendants moved for an order sanctioning Sun River under Rule 37(b)(2)(A) by dismissing Sun River’s claims against defendants and entering a default judgment for defendants on their counterclaims against Sun River. The magistrate judge held an evidentiary hearing on the motion, taking testimony from Sun River's former attorneys, in-house counsel James Pennington and outside counsel (and counsel-of-record) Stephen Csajaghy regarding events surrounding their failure to timely disclose the policy. The magistrate judge ultimately recommended that the motion for sanctions be granted insofar as it sought a default judgment against Sun River on defendants’ counterclaims, but denied insofar as it sought dismissal of Sun River’s claims against defendants, which were not affected by the operative nondisclosure. The district court agreed with the magistrate judge about counsel’s performance with respect to disclosure of the D&O Policy, but concluded that Sun River should not be held responsible in the matter. Instead, the district court decided counsel were culpable for the disclosure violation and should be held personally liable for the attorney fees expended by defendants in pursuing the motion for sanctions. The attorneys moved for reconsideration, arguing: (1) Rule 37(c) did not authorize sanctions on counsel; (2) counsel acted with substantial justification, precluding the imposition of sanctions; (3) any sanction should have been imposed on Sun River, Pennington’s employer at the time of the initial nondisclosure, rather than on counsel; and (4) due process precluded the imposition of a sanction on Csajaghy, who had withdrawn and was not present at a July 2013 pretrial conference when the district court redirected the focus of the requested sanction from Sun River to counsel. The district court reaffirmed the sanction against both counsel and reduced it to judgment. The Tenth Circuit reversed as to the sanction against Pennington, and affirmed it against Csajaghy. While the district court found that the failure to disclose the insurance policy was not substantially justified, it did not find that Pennington acted in bad faith, vexatiously, wantonly, or for oppressive reasons. The district court did not abuse its discretion in concluding that Csajaghy’s unfounded assumption about Pennington’s review of the D&O Policy was insufficient to establish a substantial justification for his failure to disclose the policy. View "Sun River Energy v. Nelson" on Justia Law

In 2009, Liu, a physician in a residency program, elected basic life insurance coverage from LINA through his employer’s ERISA plan and elected supplemental coverage in an amount four times his salary. Asked whether, within the last five years he had been diagnosed with “Cancer, Tumor, Leukemia, Hodgkin’s Disease, Polyps or Mole,” he answered “no.” One month after submitting his application, Liu received a cancer diagnosis. On March 1, 2010, the insurance became effective. On April 23, 2010, Liu died. LINA paid the basic benefit of $46,858.49, but reviewed Liu’s medical records, which revealed that Liu had been experiencing symptoms without a diagnosis before submitting his November 12 application. LINA then issued a denial, stating: While the form was completed accurately at the time ... a diagnosis of cancer prior to the coverage approval date was not disclosed … [the] Form states ... any changes in your health prior to the insurance effective date must be reported. His wife responded that Liu was told he would not have to provide evidence of good health, but did not identify the person who made the alleged representation. The court rejected the wife’s suit on summary judgment. The Eighth Circuit affirmed. Liu breached an application requirement by failing to notify LINA of a cancer diagnosis he received before a policy issued. View "Huang v. Life Ins. Co. of N. Am." on Justia Law

In the underlying tort action, heirs of Mario Garcia filed suit against LCS, alleging claims of medical malpractice under state law and constitutional violations under 42 U.S.C. 1983. LCS then filed this action seeking a declaration that Lexington is required to defend and indemnify LCS in the underlying section 1983 action. The court concluded that the section 1983 claim is excluded from coverage by both the Commercial General Liability (CGL) and the Commercial Umbrella Liability (CUL) policies where the complaint fell within the meaning of the medical services exclusion in the CGL policy and the professional liability exclusion in the CUL policy. The court held that Lexington owes no duty to defend or indemnify LCS under the CGL policy; Lexington owes no duty to defend or indemnify LCS under the CUL policy; the district court did not err in granting summary judgment for Lexington under the CUL policy, but the district court erred in its judgment with respect to the CGL policy. Accordingly, the court affirmed in part, vacated in part, and remanded. View "LCS Corrections Services, Inc. v. Lexington Ins." on Justia Law

Pursuant to federal law, California’s Medi-Cal program requires beneficiaries to use other health coverage (OHC) they may have before accessing Medi-Cal benefits. The state Department of Health Care Services (DHCS) maintains a database with codes that indicate whether a Medi-Cal beneficiary has OHC and, to some extent, the scope of that coverage. The codes are available to providers when a beneficiary seeks services. Medi-Cal beneficiaries filed suit. Because DHCS allegedly permits Medi-Cal providers to refuse nonemergency services to beneficiaries with OHC, and because the codes are not always correct and the information is limited, beneficiaries may be improperly denied service and referred to other providers even when there is no OHC available for the requested service; beneficiaries may experience delays in receiving nonemergency care and may be subject to a higher copayment than permitted under Medi-Cal. Plaintiffs argued that the assignment of an OHC code should trigger notice and a hearing. The trial and appeals courts rejected their arguments. Neither Welfare and Institutions Code 10950 nor regulation 50951 nor the California Constitution requires DHCS to provide a hearing or notice when it assigns an OHC code. Plaintiffs did not establish any violation of a ministerial duty subject to enforcement by a writ of mandate. View "Marquez v. Dept. of Health Care Servs." on Justia Law

Equinox on the Battenkill Management Association, Inc., appealed a superior court's grant of summary-judgment denying insurance coverage. The appeal arose from a declaratory judgment action against management association’s insurer, Philadelphia Indemnity Insurance Company, Inc., to determine coverage under a commercial general liability policy for damage to cantilevered balconies on condominium units it managed in Manchester. The issue this case presented for the Vermont Supreme Court's review centered on whether "Gage v. Union Mutual Fire Insurance Co,." (169 A.2d 29 (1961)) was still good law with regards to the meaning of "collapse" and whether "Gage" controlled the result here. After review, the Court concluded that the policy language in this dispute was broader than the language in Gage and that therefore Gage did not control. The Court reversed the trial court’s summary judgment and remanded the case for that court to resolve disputed questions of fact and interpret the applicable policy language. View "Equinox on the Battenkill Management Assn., Inc. v. Philadelphia Indemnity Ins. Co." on Justia Law

Sequeira did not work on January 1, 2010, because it was a paid holiday. He was hospitalized the next day with a sudden illness and died on January 6 without returning to work. Sequeira’s widow sought benefits under a supplemental life insurance policy that was issued to Sequeira’s employer on January 1, 2010. The trial court ruled that she was not entitled to benefits because the policy required her husband to be “on the job, at his employer’s place of employment, performing his customary duties” between January 1 and his death. The court of appeal reversed. The policy is ambiguous regarding whether Sequeira needed to perform his work responsibilities on New Year’s Day or anytime after that in order for his wife to receive benefits. The court should, therefore, interpret the policy in favor of Sequeira’s reasonable expectations, which are that he should not have to work on New Year’s Day or when he is sick in order to receive coverage that he has paid for. View "Sequeira v. Lincoln National Life Ins. Co." on Justia Law

Plaintiff filed suit against Clarendon, alleging that Clarendon acted in bad faith in handling the claims against its insured. The district court granted Clarendon’s motion for summary judgment and subsequently entered judgment in favor of Clarendon. The court concluded that no reasonable juror could conclude that Clarendon acted in bad faith because Clarendon was diligent in its efforts to settle the claims against its insured and there exists no causal connection between the actions of Clarendon and the entry of the excess judgment against its insured. Accordingly, the court affirmed the judgment. View "Mesa v. Clarendon Nat'l Ins. Co." on Justia Law

Bollinger filed suit against its insurers, seeking to enforce the parties' insurance contract after the United States sued Bollinger over a multimillion dollar contract to upgrade Coast Guard vessels. The district court granted summary judgment for the insurers. The court concluded that the contract between the parties did not require XL to defend Bollinger from the claims the United States brought, and Continental’s excess policy cannot give rise to coverage. The court declined to reach Bollinger's numerous other arguments raised on appeal. Accordingly, the court affirmed the judgment. View "XL Specialty Ins. Co. v. Bollinger" on Justia Law