Saturday, March 8, 2014

Recent Insurance Law Decisions, Attorney's Fees, and lump crab cakes atop arugula and mustard-cumin pudding

Amzak Capital Mgmt. v. Stewart Title
Court: U.S. 5th Circuit Court of Appeals
Docket: 13-30675
Opinion Date: February 27, 2014
Judge: Jones
Areas of Law: Banking, Bankruptcy, Insurance Law, Real Estate & Property Law
Amzak appealed the district court's summary judgment on its loan loss claims against its title insurance policy provider and related entities. The court concluded that Amzak failed to show that it suffered actual loss because of a failure of title and STL could not be held responsible for any harm suffered by Amzak. The court formalized the holding in First State Bank v. American Title and likewise rejected the guarantee rationale of Citicorp Savings of Illinois v. Stewart Title Guaranty Co., and agreed with the district court's rejection of Amzak's argument that STL breached the title policy at the time of the loan because its mortgage was voidable at that time. The court also disposed of Amzak's negligence claim where STL's delay in making a complete filing of Amzak's mortgage was not a legal cause of Amzak's loss. Accordingly, the court affirmed the judgment of the district court.

Crain v. State Farm Mut. Auto. Ins. Co.
Court: U.S. 8th Circuit Court of Appeals
Docket: 13-1903
Opinion Date: March 6, 2014
Judge: Riley
Areas of Law: Insurance Law
Plaintiff filed suit against State Farm in Missouri state court, seeking to recover underinsured motorist (UIM) benefits under plaintiff's policy with State Farm (the Pontiac policy). State Farm removed to district court based on diversity of citizenship and then the district court granted summary judgment in favor of State Farm. The court affirmed the district court's conclusion that the State Farm policy unambiguously prohibited stacking UIM coverage limits. Plaintiff's argument was foreclosed in Daughhetee v. State Farm Mut. Auto. Ins. Co. where the court affirmed the lower court's determination that the language in an identical State Farm automobile policy unambiguously precluded policy stacking of UIM coverage limits under Missouri law.

Lester v. Allstate Prop. & Cas. Ins. Co.
Court: U.S. 6th Circuit Court of Appeals
Docket: 13-6070
Opinion Date: February 24, 2014
Judge: Sutton
Areas of Law: Insurance Law
After a fire damaged her house, Lester filed a claim with Allstate. The company asked Lester and her husband to answer questions under oath. Lester responded that they would submit to examinations only if Allstate first showed them its investigative files. Allstate refused to turn over the files, stating that doing so “could jeopardize the integrity” of its inquiry. Allstate eventually gave Lester 10 days to schedule an examination, warning that, if she did not submit to an examination, it would deny the claim. Lester never responded, but sued the company. The district court granted Allstate summary judgment. The Sixth Circuit affirmed, noting that the insurance policy requires Lester to “submit to examinations under oath” at Allstate’s request and that Tennessee law permits denial of a claim when the policyholder refuses to participate in an examination under oath. The company’s refusal to share its investigative files before examining her is reasonable and did not breach a duty of good faith. Tennessee presumes that failure to participate in an examination results in prejudice to the insurer, and makes it the policyholder’s burden to demonstrate that the company suffered no harm. Lester never introduced any evidence to rebut the presumption.

Univ. of Notre Dame v. Sebelius
Court: U.S. 7th Circuit Court of Appeals
Docket: 13-3853
Opinion Date: February 21, 2014
Judge: Posner
Areas of Law: Constitutional Law, Health Law, Insurance Law
The Affordable Care Act, 42 U.S.C. 300gg-13(a)(4), requires health insurance providers (including third party administrators) to cover certain preventive services without cost to the insured, including, “with respect to women … preventive care and screenings,” including all FDA-approved contraceptive methods, sterilization, and patient education for women with reproductive capacity. The University of Notre Dame selfinsures employees’ medical expenses; Meritain administers the employee health plan. For students’ medical needs, Notre Dame has a contract with Aetna. Because Catholic doctrine forbids the use of contraceptives, Notre Dame has never paid for contraceptives for employees or permitted Aetna to insure the expense of contraceptives. Because of those religious objections and the Religious Freedom Restoration Act, 42 U.S.C. 2000bb1(a), the government created a religious exemption, 45 C.F.R. 147.130(a)(1)(iv)). New regulations enlarged the exemption, so that Notre Dame came within its scope. To exercise its right to opt out of paying for coverage for contraceptives, the university completed a form that alerts insurers that Notre Dame is not going to pay, so they will have to pay. The government will reimburse at least 110 percent of the thirdparty administrator’s costs and Aetna can expect to recoup its costs from savings on pregnancy medical care. Several months after the regulations were promulgated, the University unsuccessfully sought a preliminary injunction. The Seventh Circuit affirmed, noting that the University had not indicated exactly what it wanted enjoined at this stage. The insurance companies were not parties, and, therefore, could not be enjoined from providing the required coverage. A religious institution has no right to prevent other institutions from engaging in acts that merely offend the institution and the University has complied by completing the required form.

Employee benefit plans -- Defined contribution 401(k) Plan -- Employee Retirement Income Security Act -- Breach of fiduciary duty -- Breach of statutory duties of prudence and loyalty -- Limitation of actions -- Action by former employee on behalf of Plan alleging, among other claims, that defendant-benefits committee members imprudently selected as investment options certain of plan sponsor's proprietary mutual funds and imprudently failed to remove those funds from the menu of investment options despite their continuing poor performance and high management fees -- Documents attached to defendants' motion to dismiss count asserting claims of imprudent selection and failure-to-remove as barred by ERISA's shorter three-year limitations period were insufficient to make requisite showing that plaintiff had actual knowledge of breaches where there was no showing that the attached documents had been provided to plaintiff or that plaintiff obtained knowledge of the facts in the documents from another source -- Claim of imprudent selection was barred by ERISA's six-year limitations period, which was triggered by defendants' initial selection of the funds for inclusion in the 401(k) plan -- Because claims concerning committee defendants' failure to remove certain funds were in all relevant respects identical to the allegations concerning the selection process, complaint contained no factual allegation of a material change in circumstances that would allow appellate court to distinguish between the alleged imprudent acts occurring at selection from the alleged imprudent acts occurring thereafter -- Accordingly, six-year limitations period for failure-to-remove claims was also triggered at time funds were initially selected as investment options
BARBARA J. FULLER, and all others similarly situated, Plaintiff-Appellant, SELETHIA PRUITT, et al., Plaintiffs, v. SUNTRUST BANKS, INC., THE SUNTRUST BANKS, INC. BENEFITS PLAN COMMITTEE, JORGE ARRIETA, HAROLD BITLER, MIMI BREEDEN, et al., Defendants-Appellees, TRUSCO CAPITAL MANAGEMENT, INC., et al., Defendants. 11th Circuit.

Guardianship -- Incapacitated person -- Attorney's fees -- Attorney who acted as co-counsel for ward in guardianship proceeding -- Trial court abused discretion in reducing amount of attorney's fees and charging attorney with costs on ground that attorney's services did not benefit ward -- Actions of attorney who contacted member of initial examining committee at ward's request to obtain a reassessment benefitted ward where reassessment brought to court's attention problems with committee's report, resulting in appointment of second examining committee -- Attorney's action of obtaining a reassessment by contacting an examining committee member was not clearly prohibited by law
In re Guardianship of Carol Padlina Rawl, an incapacitated person. LANCE M. McKINNEY, Appellant, v. GREGORY R. RAWL, as Guardian of the Property of Carol Padlina Rawl, an incapacitated person, Appellee. 2nd District.

Insurance -- Attorney's fees -- Trial court properly denied attorney's fees and costs where insurer did not wrongfully cause insureds to resort to litigation
ANA VIVAS, et al., Appellants, vs. STATE FARM FLORIDA INSURANCE COMPANY, Appellee. 3rd District.

Insurance -- Personal injury protection -- Exhaustion of benefits -- Where reasonableness of a medical provider's claim is still in dispute, post-suit exhaustion of benefits extinguishes provider's right to further payments, so long as exhaustion is prior to the establishment of the amount to which the medical provider is entitled under PIP -- Once PIP benefits are exhausted through payment of valid claims, insurer has no further liability on unresolved pending claims absent bad faith in the handling of the claim by the insurance company -- Appeals -- Certified questions from county court -- Court discharges jurisdiction of one of the two cases before it in which county court certified three questions, as district courts have already ruled on one issue and have answered the question uniformly, and county court expressly did not rule or make any judicial determination on issues raised in the other two certified questions -- Appeal in that case transferred to circuit court

Torts -- Automobile accident -- Discovery -- Law firm's financial relationship with plaintiff's treating physician -- Trial court did not depart from essential requirements of law by ordering law firm to provide list of payments made to plaintiff's treating physician over last 3 years
LYTAL, REITER, SMITH, IVEY & FRONRATH, L.L.P., Petitioner, v. JANET MALAY, as Personal Representative of the Estate of MAURICE BAKER, Respondent. 4th District.

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