Justia Insurance Law Opinion Summaries

Retired seamstress, Joseph, never had annual household income exceeding $40,000; her condominium, worth $169,990, was foreclosure. Joseph was born in Haiti. She did not speak English well. Jean referred Joseph to the Diverse insurance agency for a fee. In 2008, Diverse applied for a $10 million life-insurance policy on Joseph’s life to PHL. The application falsely stated Joseph’s net worth was $11,906,000 and her income was $497,000. The application listed a 2008 Irrevocable Trust as the proposed beneficiary and owner. Joseph signed an agreement establishing the Trust and appointed BNC as the trustee and Jean as the trust protector. Joseph did not know of the misrepresentations and likely signed blank documents. The Trust financed the premiums through a loan from PFG. In 2010, Jean directed BNC to surrender the Policy to PFG in satisfaction of the loan obligations. PHL sought to rescind the Policy for fraud. After Joseph died in 2011, the new policy owner claimed the proceeds. The district court granted rescission and held that PHL could keep the premium. The Eighth Circuit affirmed, rejecting arguments that PHL could not rescind the Policy because its own agent completed the application and that PHL was estopped from rescinding the Policy because it had reason to know of the misrepresentations. View "PHL Variable Ins. Co. v. Midas Life Settlements LLC" on Justia Law

The Court of Federal Claims ruled that MassMutual and ConnMutual were legally authorized to deduct policyholder dividends from their 1995, 1996, and 1997 tax returns in the year before the dividends were actually paid. The government agreed that both companies may deduct the policyholder dividend payments, but argued that the deduction may only be taken in the year when the dividends were actually distributed to the policyholders, because the liability to pay the dividends was contingent on other events, such as a policyholder’s decision to maintain his policy through the policy’s anniversary date. Even if the liability was fixed, the government alleged, these payments still could not have been deducted until the year they were actually paid because the dividends did not qualify as rebates or refunds, which would meet the recurring item exception to the requirement that economic performance or payment occur before a deduction may be taken (26 C.F.R. 1.461-5(b)(5)(ii)). The Federal Circuit affirmed. Because the policyholder dividends were fixed in the year the dividends were announced, they were premium adjustments, and that premium adjustments are rebates, thereby satisfying the recurring item exception. View "Mass. Mut. Life Ins. Co. v. United States" on Justia Law

In 2009, claimant sought workers' compensation benefits for a work-related injury. Claimant had preexisting multilevel degenerative disc disease and a history of intermittent low back pain with some bilateral radiation to his legs. SAIF, the employer's workers' compensation insurer, accepted a claim for a lumbar strain. Claimant subsequently sought acceptance of a combined condition, which SAIF ultimately denied on the ground that the accepted injury was no longer the major contributing cause of the combined condition. The Workers' Compensation Board upheld SAIF's denial, and claimant sought judicial review in the Court of Appeals. On appeal to that court, claimant contended that, in determining the compensability of his claim, the board erroneously had framed the inquiry in terms of whether the accepted condition continued to be the major contributing cause of his disability or need for treatment. In claimant's view, the proper inquiry was whether his accidental injury continued to be the major contributing cause of his combined condition. Claimant contended that there was no evidence that that injury was no longer the major contributing cause of his disability or need for treatment. While judicial review was pending before the Court of Appeals, claimant died of causes unrelated to his workplace injury, without a surviving spouse or other beneficiary entitled to a death benefit. The Court of Appeals held that claimant's estate, through his personal representative, was not authorized to pursue the claim to final determination under ORS 656.218(3) on the grounds that: (1) the estate was not one of the "persons" described in 656.218(5); and (2) the phrase "unpaid balance of the award" in the second sentence of subsection (5) restricted an estate's entitlement to permanent partial disability benefits that were awarded before a worker's death. The Supreme Court reversed the appellate court: in the absence of persons who would have been entitled to receive death benefits if the injury causing a deceased worker's disability had been fatal, an award of permanent partial disability benefits that is finally determined after the worker's death pursuant to ORS 656.218(3) is payable to the worker's estate under ORS 656.218(5). The case was remanded for further proceedings. View "Sather v. SAIF" on Justia Law

This dispute arose from the 2010 explosion and sinking of the Deepwater Horizon oil-drilling rig, which killed eleven people and resulted in extensive subsurface discharge of oil into the Gulf of Mexico for nearly three months. The issue in this case concerned the extent of insurance coverage afforded to the oil-field developer, BP, as an additional insured under primary- and excess-insurance policies procured by Deepwater’s owner, Transocean. The U.S. Court of Appeals for the Fifth Circuit certified to the Supreme Court two questions regarding the interplay between the insurance policies and provisions in a drilling contract giving rise to Transocean’s obligation to name BP as an additional insured. The Court held (1) BP is not entitled to coverage under the Transocean insurance policies for damages arising from the subsurface pollution because BP, not Transocean, assumed liability for such claims; and (2) based on the Court’s analysis of the first issue, it did not reach the second question. View "In re Deepwater Horizon" on Justia Law

Farm Bureau County Mutual Insurance Company filed this declaratory judgment action against Cristil Rogers, Farm Bureau’s insured, seeking a declaration that it had no duty to defend or indemnify Rogers in an underlying tort action and requesting court costs and attorney fees. Rogers answered and prayed for recovery of her court costs and attorney fees. The trial court denied Farm Bureau’s motion for summary judgment, concluding that Farm Bureau had a duty to defend Rogers in the tort action. The order did not expressly address the parties’ claims for attorney’s fees. The court of appeals dismissed Farm Bureau’s appeal for lack of jurisdiction, concluding that the order denying Farm Bureau’s motion for summary judgment was not final and appealable because Rogers did not file a cross-motion for summary judgment. The Supreme Court affirmed, holding (1) the fact that Rogers did not file a cross-motion for summary judgment did not preclude the trial court from entering a final judgment; but (2) in the absence of the trial court’s intent with respect to the parties’ claims for attorney’s fees, the order at issue did not dispose of all parties and claims. View "Farm Bureau County Mut. Ins. Co. v. Rogers" on Justia Law

Code of Regulations, title 10, section 2695.183 was promulgated in 2010 following complaints by homeowners who lost their residences in wildfires that they did not have enough insurance to cover the full cost of repairing or rebuilding their homes because, when they bought their insurance, the estimates of replacement value were too low. The Regulation prohibits a “licensee” from “communicat[ing] an estimate of replacement cost to an applicant or insured in connection with an application for renewal of a homeowners’ insurance policy that provides coverage on a replacement cost basis” that does not satisfy specific content and format provisions. Noncompliance “constitutes making a statement with respect to the business of insurance which is misleading and which by the exercise of reasonable care should be known to be misleading, pursuant to Insurance Code section 790.03.” Insurance Associations argued that the Insurance Commissioner lacked authority to define new unfair business practices; questioned whether the record established a high volume of complaints and whether the problem was caused by lack of knowledge; and complained that the expense of compliance would discourage carriers from providing insurance. They obtained a declaration that the Regulation was invalid. The court of appeal affirmed, finding that the Commissioner lacked authority under the Unfair Insurance Practices Act. View "Ass'n of Cal. Ins. Cos. v. Jones" on Justia Law

A reporter from the Star Tribune submitted a request for data to the Minnesota Joint Underwriting Association (MJUA), an entity created by the Legislature to provide insurance for people or entitled who are required to have insurance and are unable to obtain insurance through ordinary methods. MJUA sought a written advisory opinion from the Commissioner of the Department of Administration as to whether MJUA was a state agency subject to the Minnesota Government Data Practices Act (MGDPA). The Commissioner declined to issue an advisory opinion. MJUA then commenced a lawsuit for declaratory relief seeking a declaration that it was not a governmental agency subject to the MGDPA. The district court granted the Star Tribune’s motion for partial judgment on the pleadings and ordered MJUA to comply with the MGDPA, concluding that MJUA is a state agency. The court of appeals reversed in part, holding that MJUA is not a governmental entity subject to the MGDPA. The Supreme Court affirmed, holding that MJUA is not a state agency subject to the MGDPA. View "Minn. Joint Underwriting Ass’n v. Star Tribune Media Co." on Justia Law

Respondents brought an action against Appellant, their insurer, after Appellant denied their claim for property damage. The district court dismissed the action as untimely, concluding that although Respondents made service before the limitations period in the insurance policy expired, the action was untimely because they filed the affidavit of compliance after the policy’s limitations period had expired. The court of appeals reversed, concluding that that the affidavit of compliance may be filed after a limitations period has expired. The Supreme Court affirmed, holding that because Respondents filed the affidavit of compliance before the return day of the process, the service of process was effective, and Respondents’ suit was not barred by the limitations period in their insurance policy. View "Meeker v. IDS Prop. Cas. Ins. Co." on Justia Law

Wilson Paving & Excavating, Inc. was one of several subcontractors retained to perform services in connection with a renovation project at Sand Springs Memorial Stadium at Charles Page High School. Specifically, Wilson Paving contracted to dig trenches and lay pipe for a storm drainage system being installed under the athletic field. Wilson Paving utilized a local staffing agency, Labor Ready, to secure temporary workers to assist on the project. Steven Broom went to the offices of Labor Ready to obtain employment. Broom was directed by Labor Ready to work with Wilson Paving at Sand Springs High School. He reported to the high school and, at the instruction of Wilson Paving, began work laying pipe. The trench in which Broom was working collapsed twice - the first time covering him in dirt to his waist and the second time covering him in dirt to his neck. People on the job site freed Broom from the neck to the waist while waiting on emergency personnel to arrive. Once on the scene, emergency personnel could not enter the trench to rescue Broom until the trench was safely reinforced. During this time, Broom remained buried from the waist down. Emergency personnel eventually removed Broom from the trench, and he was transported to the hospital where he was treated for serious injuries, including rib fractures, collapsed lungs, pulmonary contusions, blood within the chest, fluid around the spleen and kidney, and a left kidney laceration. Before the trench collapsed, one of Wilson Paving's employees, Jack Bailey, was using a backhoe to dig the trench and to retrieve pipe from an area adjacent to the trench. Wilson Paving believed the trench collapse was due to the work of another contractor who had allegedly removed a monument and flag pole near the area of the collapse but failed to alert Bailey of such before he began digging the trench. Broom pursued and received workers' compensation benefits from Labor Ready for the injuries he sustained in the accident. Broom also sued Wilson Paving for his injuries in a third-party action to collect for his injuries as a result of Wilson's employee. The trial court found in favor of Broom and entered judgment against Wilson Paving for $1,150,000.00. Broom then sought post-judgment garnishment of Wilson Paving's Commercial General Liability Policy issued by Mid-Continent Casualty Company. The trial court entered summary judgment in favor of Mid-Continent, finding that coverage for Broom's injuries was precluded under the "earth movement" exclusion clause in Mid-Continent's policy. The Court of Civil Appeals found that the earth movement exclusion clause did not prevent coverage for Broom's injuries, but affirmed summary judgment on different grounds. Upon review, the Supreme Court held that Mid-Continent's Commercial General Liability Policy provided coverage for Broom's injuries. View "Broom v. Wilson Paving & Excavating" on Justia Law

France had a Chicago dental business and fraudulently billed insurers for city employees. France closed his practice after being injured in an accident and started collecting benefits from a disability income policy. In 1999, he exchanged monthly payments, for a limited time, for a lump sum of $300,000. He transferred this money to other people, including his wife, Duperon, before filing a Chapter 7 bankruptcy petition. He failed to disclose the payment or transfers. He later pleaded guilty to mail fraud, 18 U.S.C. 1341, and to knowingly making a false declaration under penalty of perjury, 18 U.S.C. 152(3). The district court sentenced France to 30 months in prison and ordered him to pay $800,000 in restitution. The bankruptcy trustee obtained title to ongoing disability insurance payments. France and Duperon divorced. A California court approved a settlement with payments for child support from the disability payments. France’s insurance company sued in California to resolve conflicting claims. The parties reached an agreement, which the bankruptcy court approved, purporting to control all other judgments, but did not mention the criminal restitution lien. The government filed Illinois citations to discover assets. France moved to quash, but the insurance company responded and began withholding $9,296 that had been going to France. The government moved to garnish the entire distribution under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. 3613(a). The Seventh Circuit affirmed a ruling allowing the government to garnish the entire disability payment. View "United States v. France" on Justia Law