Justia Insurance Law Opinion Summaries

The case involves Continental Indemnity Company (Continental) and its attempt to collect a default judgment against BII, Inc. (BII) from Starr Indemnity & Liability Company (Starr), BII's insurer. Continental had paid a workers' compensation claim for an employee injured at a construction site where BII was a subcontractor. Continental then sought reimbursement from BII, which had failed to maintain its own workers' compensation insurance. When BII did not pay, Continental secured a default judgment against BII and sought to collect from Starr under Illinois garnishment procedures.The district court in the Northern District of Illinois dismissed the garnishment proceeding against Starr, finding that it lacked subject matter jurisdiction. The court reasoned that the dispute over the scope of coverage under the Starr-BII insurance policy was too distinct from the underlying suit between Continental and BII. Continental appealed this decision to the United States Court of Appeals for the Seventh Circuit.The Seventh Circuit affirmed the district court's decision. The court found that the garnishment proceeding introduced new factual and legal issues, making it essentially a new lawsuit. The court explained that while federal courts have ancillary enforcement jurisdiction to consider proceedings related to an underlying suit, the subject of those proceedings must still be sufficiently related to the facts and legal issues of the original action. In this case, the court found that the garnishment proceeding fell outside the scope of ancillary enforcement jurisdiction. The court suggested that Continental could file a new civil action against Starr to litigate the dispute over the insurance policy's coverage. View "Continental Indemnity Company v. BII, Inc." on Justia Law

The case revolves around a dispute over no-fault personal protection insurance (PIP) benefits. Charles Williamson was injured when he was hit by a car and applied for PIP benefits from the Michigan Automobile Insurance Placement Facility (MAIPF), which operates the Michigan Assigned Claims Plan (MACP). The MAIPF assigned Williamson’s claim to AAA, but AAA refused to pay. After Williamson's death, his daughters, Porsha Williamson and Lateshea Williamson, continued the lawsuit as co-personal representatives of his estate. The Estate claimed benefits for attendant care that was purported to have been provided after Charles Williamson’s death. AAA moved for summary disposition, arguing that the Estate knowingly presented material misrepresentations in support of its claim for no-fault benefits and was therefore barred from recovering all no-fault benefits.The trial court granted AAA’s motion, but the Court of Appeals reversed the decision. The Court of Appeals held that statements made during discovery cannot constitute fraudulent insurance acts under the no-fault act. AAA then applied for leave to appeal in the Michigan Supreme Court.The Michigan Supreme Court, in a unanimous opinion, held that false statements submitted during discovery, after a lawsuit for recovery has been filed, may be statements offered in support of a claim to the MAIPF or the assigned insurer. The court disagreed with the Court of Appeals' ruling that only prelitigation statements can constitute statements in support of a claim under MCL 500.3173a(4). The court concluded that the Estate’s interrogatory answers, which indicated that the Estate sought no-fault benefits for services rendered after Williamson passed away, were in support of a demand for coverage under the MACP based on bodily injury sustained in a motor vehicle accident. The case was reversed and remanded for further proceedings. View "Estate Of Williamson v. AAA Of Michigan" on Justia Law

The case involves Illinois Casualty Company (ICC) and thirty-three models who contested whether arbitration was appropriate based on the assignment of several business insurance policies that ICC issued to B&S of Fort Wayne, Inc., Showgirl III, Inc., and Reba Enterprises, LLC (collectively, "Insured Clubs"). The models alleged that the Insured Clubs used their images for social media advertisements without their consent. The Insured Clubs had insurance policies with ICC, which they tendered for defense and indemnification. ICC denied coverage, leading to a settlement agreement between the Insured Clubs and the models, assigning the Insured Clubs’ rights against ICC to the models.The trial court compelled arbitration between ICC and the models. On appeal, the Indiana Court of Appeals reversed, finding that none of the models’ claims fell within the provision of the arbitration agreement. The models sought transfer to the Indiana Supreme Court.The Indiana Supreme Court held that an agreement to arbitrate in accordance with American Arbitration Association (AAA) rules constitutes “clear and unmistakable” intent to delegate arbitrability to an arbitrator. However, the court found that because no agreement to arbitrate existed between ICC and the Insured Clubs before 2016, the models could not compel arbitration for claims deriving from this period. The court affirmed in part and reversed in part, ruling that models with claims from 2016 and later could compel arbitration, but those with pre-2016 claims could not. View "Illinois Casualty Co. v. Burciaga" on Justia Law

The case revolves around a former coal miner, Richard McLain, who developed a serious lung condition after working underground for nearly two decades. McLain filed a claim under the Black Lung Benefits Act, alleging that his years of mine work had left him totally disabled from a pulmonary perspective. His former employer, Old Ben Coal Company, had been liquidated through bankruptcy, so Liberty Mutual Insurance Company, the surety guaranteeing Old Ben’s debts under the Act, contested liability on the coal company’s behalf.The case was initially heard by an administrative law judge (ALJ), who determined that McLain was disabled within the meaning of the Black Lung Benefits Act. The ALJ's decision was based on a thorough review of the medical record and a set of medical findings regarding how to distinguish between lung disorders arising from coal dust and those arising from tobacco smoke. Old Ben appealed the ALJ’s decision to the Benefits Review Board, arguing that the ALJ erroneously treated the 2001 preamble as if it were binding law and made factual findings unsupported by the medical record. The Review Board affirmed the benefits decision in full.The case was then brought before the United States Court of Appeals for the Seventh Circuit. The court affirmed the decision of the Benefits Review Board, emphasizing the broad discretion ALJs enjoy when evaluating competing medical theories, the weight ALJs may properly attribute to the perspective of the Department of Labor on such issues, and the significant deference owed to ALJs’ medical findings and scientific judgments on appeal. The court found no error in the ALJ's application of a regulatory preamble or in the factual findings that were challenged by Old Ben. View "Safeco Insurance/Liberty Mutual Surety v. OWCP" on Justia Law

The case involves Ferrellgas Partners L.P. and its subsidiaries (collectively "Ferrellgas") and Zurich American Insurance Company ("Zurich"). Ferrellgas had an insurance policy with Zurich, which included a provision for the advancement of defense costs for litigation. Ferrellgas was involved in a separate lawsuit with Eddystone Rail Company, LLC ("Eddystone") over a breach of contract. Ferrellgas sought to have Zurich cover the defense costs for the Eddystone litigation under their insurance policy.In the lower court, the Superior Court of the State of Delaware, Ferrellgas filed a motion for summary judgment seeking a declaratory relief obligating Zurich to advance defense costs for the Eddystone litigation. Zurich also filed a motion for summary judgment seeking a declaration that it had no obligation to advance defense costs. The Superior Court denied Ferrellgas' motion and granted Zurich's motion, finding that the Eddystone litigation was excluded from coverage under the Zurich policy.On appeal, the Supreme Court of the State of Delaware affirmed the decision of the Superior Court. The Supreme Court found that the Eddystone litigation was a claim seeking relief for a breach of contract that occurred after the commencement of the Run-Off Coverage Period in the Zurich policy. As such, Zurich had no duty to advance defense costs for this matter due to the Run-Off Exclusion in the policy. The court also found that Ferrellgas' appeal was timely filed. View "Ferrellgas Partners, L.P. v. Zurich American Insurance Company" on Justia Law

The case revolves around a dispute over who should pay for the personal injury protection (PIP) benefits of Justin Childers, who was severely injured in a car accident. Initially, Childers' PIP benefits were covered by American Fellowship Mutual Insurance Company, but the company was declared insolvent in 2013. The Michigan Property and Casualty Guaranty Association (MPCGA) then assumed responsibility for Childers' PIP benefits. The MPCGA, after an investigation, concluded that Progressive Marathon Insurance Company was next in line to provide Childers' PIP benefits. However, Progressive denied Childers' claim.The trial court granted summary disposition to Progressive, ruling that while the actions were not time-barred, Progressive was not within statutory priority for Childers' benefits. The Court of Appeals reversed this decision, concluding that the one-year limitations period did not apply because the MPCGA is not generally subject to the no-fault act, and the MPCGA did not bring the action under the no-fault act. Instead, the Court of Appeals reasoned that the MPCGA’s right to proceed against Progressive came from the guaranty act, which allows the MPCGA to claim reimbursement from another insurer in the chain of designated priority insurers.The Michigan Supreme Court, however, disagreed with the Court of Appeals. It held that the one-year limitations period in MCL 500.3145(1) applies where either an insured or the MPCGA brings an action for PIP benefits against a lower priority no-fault insurer after the higher priority insurer becomes insolvent. The court concluded that both the action brought by Childers' conservator and the MPCGA's action were time-barred. The court reversed part of the Court of Appeals' opinion, vacated the remainder, and remanded the case to the trial court for further proceedings. View "Childers v. Progressive Marathon Insurance Company" on Justia Law

A roofing contractor in Texas, Stonewater Roofing, Ltd. Co., filed a lawsuit against the Texas Department of Insurance and its Commissioner, Cassie Brown, seeking to invalidate Texas’s licensing and dual-capacity regulations for public insurance adjusters. Stonewater, which is not a licensed public insurance adjuster, argued that these laws violated free speech and due process rights under the First and Fourteenth Amendments of the U.S. Constitution. The trial court dismissed the case, siding with the state regulator, who argued that the laws regulated professional conduct, not speech, and that Stonewater failed to state valid void-for-vagueness claims under the Fourteenth Amendment’s Due Process Clause.The Court of Appeals for the Seventh District of Texas reversed the trial court's decision, holding that the regulations triggered First Amendment scrutiny because the business of public insurance adjusting necessarily involves speech. The court also held that Stonewater’s vagueness challenges survived because the Public Insurance Adjusters Act did not clearly proscribe Stonewater’s alleged conduct.The Supreme Court of Texas reversed the court of appeals' judgment. The court held that the challenged statutes do not regulate or restrict speech but, rather, representative capacity with a nonexpressive objective: employment to act on behalf of an insured in negotiating for or effecting the settlement of a claim. The court also held that the statutes are clear enough in proscribing Stonewater’s alleged conduct to preclude both its as-applied and facial vagueness challenges. The court concluded that Stonewater failed to state cognizable First and Fourteenth Amendment speech and vagueness claims, and therefore, the trial court properly granted the state regulator's dismissal motion. View "TEXAS DEPARTMENT OF INSURANCE v. STONEWATER ROOFING, LTD. CO" on Justia Law

The case involves Truck Insurance Exchange (Truck), the primary insurer for companies that manufactured and sold products containing asbestos. Two of these companies, Kaiser Gypsum Co. and Hanson Permanente Cement (Debtors), filed for Chapter 11 bankruptcy after facing thousands of asbestos-related lawsuits. As part of the bankruptcy process, the Debtors proposed a reorganization plan that created an Asbestos Personal Injury Trust (Trust) to handle all present and future asbestos-related claims. Truck, contractually obligated to defend each covered asbestos personal injury claim and to indemnify the Debtors for up to $500,000 per claim, opposed the Plan, arguing that it exposed them to millions of dollars in fraudulent claims due to different disclosure requirements for insured and uninsured claims.The District Court confirmed the Plan, concluding that Truck had limited standing to object to the Plan because it was “insurance neutral,” meaning it did not increase Truck’s prepetition obligations or impair its contractual rights under its insurance policies. The Fourth Circuit affirmed this decision, agreeing that Truck was not a “party in interest” under §1109(b) of the Bankruptcy Code because the plan was “insurance neutral.”The Supreme Court of the United States reversed the Fourth Circuit's decision, holding that an insurer with financial responsibility for bankruptcy claims is a “party in interest” under §1109(b) of the Bankruptcy Code and may raise and appear and be heard on any issue in a Chapter 11 case. The Court reasoned that §1109(b)’s text, context, and history confirm that an insurer such as Truck with financial responsibility for a bankruptcy claim is a “party in interest” because it may be directly and adversely affected by the reorganization plan. The Court also rejected the “insurance neutrality” doctrine, stating that it conflates the merits of an objection with the threshold party in interest inquiry. The case was remanded for further proceedings consistent with the Supreme Court's opinion. View "Truck Insurance Exchange v. Kaiser Gypsum Co." on Justia Law

The case involves a personal injury action initiated by Torrey Kath against Michael Prochnow and Prochnow Farms. After the parties filed a "Stipulation of Dismissal with Prejudice," the district court dismissed the case. Kath then filed a separate declaratory judgment action against Agraria Insurance Company, doing business as Farmers Union Mutual Insurance Company (FUMIC), seeking an order that FUMIC had a duty to indemnify Prochnow under an insurance policy. While FUMIC's motion in the declaratory judgment action was pending, Kath and Prochnow filed a "Joint Rule 60 Motion to Vacate Dismissal with Prejudice" in the original case, seeking an amended judgment.The district court had previously dismissed the case with prejudice. However, Kath and Prochnow filed a motion to vacate the dismissal, which the court granted. FUMIC then filed a motion to intervene, arguing that Kath and Prochnow were seeking to impair its rights. The district court ruled that it lacked jurisdiction to decide on FUMIC's intervention motion because the case had been dismissed.The Supreme Court of North Dakota disagreed with the district court's decision. The court noted that Kath and Prochnow's motion to vacate the dismissal re-invoked the district court's jurisdiction. Furthermore, FUMIC's intervention motion initiated a special proceeding, which also invoked the court's jurisdiction. Therefore, the Supreme Court held that the district court erred in ruling that it lacked jurisdiction to consider FUMIC's motion to intervene. The case was remanded for the district court to decide on FUMIC's motion to intervene and, if necessary, to conduct additional proceedings consistent with its disposition of the motion. View "Kath v. Prochnow" on Justia Law

The case involves SKAV, L.L.C., the owner of a Best Western hotel in Abbeville, Louisiana, and Independent Specialty Insurance Company. The hotel was damaged by Hurricane Laura in August 2020, and SKAV filed a claim on a surplus lines insurance policy it had purchased from Independent Specialty. The policy contained an arbitration clause requiring all disputes to be settled by arbitration. However, SKAV sued Independent Specialty in the Western District of Louisiana, alleging that the insurance company had failed to adequately cover the hotel's hurricane damage under the policy's terms. Independent Specialty moved to compel arbitration, but the district court denied the motion, citing a prior decision that concluded that § 22:868 of the Louisiana Revised Statutes voids an arbitration provision in a contract for surplus lines insurance.The case was appealed to the United States Court of Appeals for the Fifth Circuit. The main dispute was the effect of § 22:868 of the Louisiana Revised Statutes on the insurance policy's arbitration clause. The statute bars insurance policies from depriving Louisiana courts of jurisdiction and permits, in limited circumstances, forum- and venue-selection provisions. The court noted that there were conflicting decisions on this issue from district courts in Louisiana and New York.The Fifth Circuit Court of Appeals affirmed the district court's decision. The court concluded that the arbitration clause in the surplus lines insurance policy was void under § 22:868. The court reasoned that the Louisiana Legislature's 2020 amendments to the statute did not reverse the state's longstanding anti-arbitration policy. The court also rejected Independent Specialty's argument that the issue of the arbitration clause's validity must itself go to arbitration, stating that when a statute prevents the valid formation of an arbitration agreement, the court cannot compel arbitration, even on threshold questions of arbitrability. View "S. K. A. V. v. Independent Specialty Insurance Co." on Justia Law