Justia Insurance Law Opinion Summaries

Plaintiffs M.S. and L.S. sought insurance coverage for mental health treatments for their child, C.S., under a health benefits plan provided by M.S.'s employer, Microsoft Corporation. The plan, administered by Premera Blue Cross, is subject to ERISA and the Parity Act. Premera denied the claim, stating the treatment was not medically necessary. Plaintiffs pursued internal and external appeals, which upheld the denial. Plaintiffs then sued in federal district court, alleging improper denial of benefits under ERISA, failure to produce documents in violation of ERISA’s disclosure requirements, and a Parity Act violation for applying disparate treatment limitations to mental health claims.The United States District Court for the District of Utah granted summary judgment to Defendants on the denial-of-benefits claim but ruled in favor of Plaintiffs on the Parity Act and ERISA disclosure claims. The court found that Defendants violated the Parity Act by using additional criteria for mental health claims and failed to disclose certain documents required under ERISA. The court awarded statutory penalties and attorneys’ fees to Plaintiffs.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court vacated the district court’s grant of summary judgment on the Parity Act claim, finding that Plaintiffs lacked standing to bring the claim. The court reversed the district court’s ruling that Defendants violated ERISA by not disclosing the Skilled Nursing InterQual Criteria but affirmed the ruling regarding the failure to disclose the Administrative Services Agreement (ASA). The court upheld the statutory penalty for the ASA disclosure violation and affirmed the award of attorneys’ fees and costs to Plaintiffs. View "M.S. v. Premera Blue Cross" on Justia Law

A motor vehicle collision occurred in Sussex County, Delaware, involving Joanne Dudsak, a New Jersey resident insured by New Jersey Manufacturers (NJM), and Christopher Koester, a Maryland resident insured by Allstate Insurance Company. NJM paid Personal Injury Protection (PIP) benefits to Dudsak and sought inter-company arbitration in Delaware to recover these costs. Allstate opposed, arguing that NJM's policy, being from New Jersey, did not qualify for arbitration under Delaware law, which requires the vehicle to be registered in Delaware for PIP subrogation rights.The arbitrator ruled in favor of NJM, awarding the full amount and rejecting Allstate's jurisdictional challenge. Allstate then filed a Petition to Vacate the Arbitration Award in the Delaware Chancery Court, arguing that the arbitrator exceeded his authority. NJM moved to dismiss the petition, claiming the issue was moot because Allstate had agreed to tender its policy limits, which would extinguish NJM's subrogation rights under Delaware law.The Delaware Chancery Court denied NJM's Motion to Dismiss, finding that a real dispute remained. The court then addressed the merits of Allstate's Motion for Summary Judgment. The court applied the standard of review under 10 Del. C. §5714(a)(5), which allows vacating an arbitration award if the arbitrated claim was barred by limitation and the objection was raised from the outset. The court found that §2118 of the Delaware PIP statute applies only to vehicles required to be registered in Delaware and does not cover out-of-state policies like NJM's. Consequently, the arbitrator exceeded his authority by accepting jurisdiction over the case. The court granted Allstate's Motion for Summary Judgment, vacating the arbitration award. View "Allstate Insurance Co. v. New Jersey Manufacturers Insurance Co." on Justia Law

Baxter Senior Living, LLC, an assisted living facility in Anchorage, Alaska, obtained an insurance policy from Zurich American Insurance Company covering various types of losses, including those caused by microorganisms. In response to the COVID-19 pandemic, Baxter implemented several operational restrictions and incurred additional costs. Despite these measures, the facility experienced COVID-19 cases among staff and residents. Baxter filed a claim with Zurich for loss of business income due to the pandemic, which Zurich denied.Baxter then filed a complaint in February 2022, alleging breach of contract and other claims, arguing that the presence of COVID-19 and related governmental orders caused a loss of use of its property, constituting "direct physical loss of or damage to" the property under the insurance policy. Zurich moved to dismiss the case, arguing that neither the presence of the virus nor the governmental orders constituted "direct physical loss of or damage to" property. The U.S. District Court for the District of Alaska certified two questions to the Alaska Supreme Court regarding the interpretation of this phrase in the context of the pandemic.The Alaska Supreme Court reviewed the certified questions and concluded that neither the presence of the COVID-19 virus at an insured property nor the operational restrictions imposed by pandemic-related governmental orders constitute "direct physical loss of or damage to" the property under a commercial insurance policy. The court emphasized that "direct physical loss" requires some physical alteration or deprivation of possession of the property, and "direct physical damage" requires a tangible alteration of the property. The court noted that the presence of the virus does not physically alter the property but merely attaches to it, and the operational restrictions do not cause a physical alteration or deprivation of possession. Therefore, the court answered both certified questions in the negative. View "Baxter Senior Living, LLC v. Zurich American Insurance Company" on Justia Law

A dental practice owned by Timothy A. Ungarean, DMD, purchased a commercial property insurance policy from CNA and Valley Forge Insurance Company. The policy was intended to cover business-related losses. In March 2020, due to the COVID-19 pandemic, Pennsylvania's Governor ordered non-essential businesses to close, which led to significant financial losses for Ungarean's practice. Ungarean filed a claim under the policy, which was denied by CNA on the grounds that there was no physical damage to the property.Ungarean then filed a class action complaint in the Court of Common Pleas of Allegheny County, seeking a declaration that the policy covered his pandemic-related business losses. The trial court granted summary judgment in favor of Ungarean, interpreting the policy's language to include loss of use of the property as a form of "direct physical loss." The court also found that none of the policy's exclusions applied to bar coverage.The Superior Court affirmed the trial court's decision, agreeing that the policy language was ambiguous and should be interpreted in favor of the insured. The court held that the loss of use of the property due to the government shutdown constituted a "direct physical loss."The Supreme Court of Pennsylvania reviewed the case and reversed the Superior Court's decision. The court held that the policy's language was unambiguous and required a physical alteration to the property for coverage to apply. The court found that the economic losses suffered by Ungarean due to the government shutdown did not meet this requirement. Consequently, the court ruled that Ungarean was not entitled to coverage under the policy and remanded the case to the Superior Court with instructions to enter summary judgment in favor of CNA. View "Ungarean v. CNA" on Justia Law

Plaintiffs Marla Knudsen and William Dutra, representing a class of similarly situated individuals, filed a class action lawsuit under the Employee Retirement Income Security Act (ERISA) against MetLife Group, Inc. They alleged that MetLife, as the administrator and fiduciary of the MetLife Options & Choices Plan, misappropriated $65 million in drug rebates from 2016 to 2021. Plaintiffs claimed this misappropriation led to higher out-of-pocket costs for Plan participants, including increased insurance premiums.The United States District Court for the District of New Jersey dismissed the case for lack of standing. The court concluded that the plaintiffs did not demonstrate a concrete and individualized injury. It reasoned that the plaintiffs had no legal right to the general pool of Plan assets and had not shown that they did not receive their promised benefits. The court found the plaintiffs' claims that they paid excessive out-of-pocket costs to be speculative and lacking factual support.The United States Court of Appeals for the Third Circuit affirmed the District Court's dismissal. The Third Circuit held that the plaintiffs failed to establish an injury-in-fact, as their allegations of increased out-of-pocket costs were speculative and not supported by concrete facts. The court noted that the plaintiffs did not provide specific allegations showing how the misappropriated drug rebates directly caused their increased costs. The court emphasized that financial harm must be actual or imminent, not conjectural or hypothetical, to satisfy Article III standing requirements. Consequently, the plaintiffs lacked standing to pursue their ERISA claims. View "Knudsen v. MetLife Group Inc" on Justia Law

The case involves a dispute between an insurer, GEICO, and a windshield repair shop, Glassco, regarding the Florida Motor Vehicle Repair Act. From 2016 to 2019, Glassco performed nearly 1,800 windshield repairs for GEICO’s insureds, who assigned their insurance payment rights to Glassco. GEICO paid these claims at a discounted rate, leading to litigation. GEICO sought to recover payments and claimed that Glassco violated the Repair Act by not providing written estimates and other disclosures.The U.S. District Court for the Middle District of Florida ruled in favor of Glassco, concluding that GEICO did not have a private right of action under the Repair Act because it was not a "customer" as defined by the statute. The court also held that Glassco’s violations did not render its invoices void. GEICO appealed, and the U.S. Court of Appeals for the Eleventh Circuit certified two questions to the Supreme Court of Florida regarding the insurer's rights under the Repair Act.The Supreme Court of Florida answered both certified questions in the negative. First, it held that Fla. Stat. § 559.921(1) does not grant an insurance company a cause of action when a repair shop fails to provide a written repair estimate. The court emphasized that the statute defines a "customer" as the person who signs the repair estimate, and GEICO conceded it did not meet this definition.Second, the court held that the Repair Act violations do not void a repair invoice for completed windshield repairs, nor do they preclude a repair shop from being paid by an insurance company. The court noted that the statute allows for penalties and damages to be adjusted if repairs were authorized and properly performed, indicating that voiding invoices was not intended as a remedy. The court also found that subsequent amendments to the Repair Act rendered previous case law, which might have supported GEICO’s position, obsolete. View "Government Employees Insurance Company v. Glassco Inc." on Justia Law

In October 2020, Elliot Fama, employed by Sanford Contracting, was working on a project in Scarborough, Maine. After work, he and his co-worker, Robert Clarke, consumed alcohol at a hotel and a tavern. Later, in the hotel parking lot, Clarke struck Mr. Fama, causing him to fall and sustain fatal injuries. Laureen Fama, Mr. Fama’s widow, settled a workers’ compensation claim in Massachusetts for $400,000.Laureen Fama then filed a lawsuit in Cumberland County Superior Court against Bob’s LLC, which operated the tavern, and Clarke. She alleged liquor liability, wrongful death, loss of consortium, and battery. The defendants moved for summary judgment, arguing that the workers’ compensation settlement precluded the lawsuit. The Superior Court denied these motions, leading to the current appeal.The Maine Supreme Judicial Court reviewed the case. It held that under Maine’s Workers’ Compensation Act (MWCA), Ms. Fama’s settlement barred her from suing Clarke, as the Act’s immunity provisions extend to co-employees. Consequently, Clarke was exempt from the lawsuit. The court further held that because Clarke could not be retained as a defendant, the claims against Bob’s LLC failed under the “named and retained” provisions of Maine’s Liquor Liability Act (MLLA).The court vacated the Superior Court’s order denying summary judgment and remanded the case for entry of judgment in favor of Bob’s LLC and Clarke. View "Fama v. Bob's LLC" on Justia Law

In March 2013, Woodsboro Farmers Cooperative contracted with E.F. Erwin, Inc. to construct two grain silos. Erwin subcontracted AJ Constructors, Inc. (AJC) for the assembly. AJC completed its work by July 2013, and Erwin finished the project in November 2013. However, Woodsboro noticed defects causing leaks and signed an addendum with Erwin for repairs. Erwin's attempts to fix the silos failed, leading Woodsboro to hire Pitcock Supply, Inc. for repairs. Pitcock found numerous faults attributed to AJC's poor workmanship, necessitating complete deconstruction and reconstruction of the silos, costing Woodsboro $805,642.74.Woodsboro sued Erwin in Texas state court for breach of contract, and the case went to arbitration in 2017. The arbitration panel found AJC's construction was negligent, resulting in defective silos, and awarded Woodsboro $988,073.25 in damages. The Texas state court confirmed the award in September 2022. In December 2018, TIG Insurance Company, Erwin's insurer, sought declaratory relief in the United States District Court for the Southern District of Texas, questioning its duty to defend and indemnify Erwin. The district court granted TIG's motion for summary judgment on the duty to defend, finding no "property damage" under the policy, and later ruled there was no duty to indemnify, as the damage was due to defective construction.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that there were factual questions regarding whether the damage constituted "property damage" under the insurance policy, as the silos' metal parts were damaged by wind and weather due to AJC's poor workmanship. The court determined that the district court erred in granting summary judgment for TIG and concluded that additional factual development was needed. The Fifth Circuit reversed the district court's decision and remanded the case for further proceedings. View "TIG Insurance Company v. Woodsboro Farmers Coop" on Justia Law

In 2007, Dennis Collins, Suzanne Collins, David Butler, and Lucia Bott purchased long-term care insurance policies from Metropolitan Life Insurance Company (MetLife). They also bought an Inflation Protection Rider, which promised automatic annual benefit increases without corresponding premium hikes, though MetLife reserved the right to adjust premiums on a class basis. In 2015, 2018, and 2019, MetLife informed the plaintiffs of significant premium increases. The plaintiffs filed a class action in 2022, alleging fraud, fraudulent concealment, violations of state consumer protection statutes, and breach of the implied covenant of good faith and fair dealing under Illinois and Missouri law.The United States District Court for the Eastern District of Missouri dismissed the case, ruling that the filed rate doctrine under Missouri and Illinois law barred the plaintiffs' claims. Additionally, the court found that the plaintiffs bringing claims under Missouri law failed to exhaust administrative remedies. The plaintiffs appealed, arguing that the filed rate doctrine did not apply, they were not required to exhaust administrative remedies, and their complaint adequately alleged a breach of the implied covenant.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court's dismissal. The appellate court held that the plaintiffs' complaint failed to state a claim upon which relief could be granted. The court found that MetLife's statements about premium expectations were not materially false and that the plaintiffs did not sufficiently allege intentional fraud or fraudulent concealment. The court also concluded that the statutory claims under the Missouri Merchandising Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act were barred by regulatory exemptions. Lastly, the court determined that the implied covenant of good faith and fair dealing was not breached, as MetLife's actions were expressly permitted by the policy terms. View "Collins v. Metropolitan Life Insurance Co." on Justia Law

Joan Stormo and her siblings hired attorney Peter Clark for a real estate transaction, but Clark's actions caused the deal to fall through. Stormo sued Clark for malpractice and won. Clark's insurer, State National Insurance Company, denied coverage based on a prior-knowledge exclusion and Clark's delay in reporting the lawsuit. Stormo, as Clark's assignee, then sued State National for breach of contract and unfair claim-settlement practices.The U.S. District Court for the District of Massachusetts found that factual questions necessitated a trial on the breach-of-contract claim but granted summary judgment to State National on the unfair claim-settlement practices claim. The jury found for Stormo on the breach-of-contract claim, awarding over $1 million in damages. However, the district court granted State National's motion for judgment as a matter of law, ruling that Clark's late notice of the claim voided coverage under the policy.The United States Court of Appeals for the First Circuit affirmed the district court's judgment. The court held that under Massachusetts law, a claims-made policy like Clark's does not require the insurer to show prejudice from late notice to deny coverage. Since Clark failed to provide timely notice, State National had no duty to indemnify or defend him. Consequently, Stormo's claims for breach of contract and unfair claim-settlement practices failed. View "Stormo v. State National Insurance Co." on Justia Law