Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

In 2013, Johnny Ray Penegar, Jr. was diagnosed with mesothelioma, and Medicare partially covered his treatment costs. He filed a workers' compensation claim against his employer, UPS, and its insurer, Liberty Mutual. After his death, his wife, Carra Jane Penegar, continued the claim and added a death benefits claim. The North Carolina Industrial Commission (NCIC) ruled in her favor, ordering Liberty Mutual to cover all medical expenses related to the mesothelioma and reimburse any third parties, including Medicare. The NCIC's decision was affirmed by the North Carolina Court of Appeals and the Supreme Court of North Carolina denied further review. In 2020, Penegar and Liberty Mutual settled, with Liberty Mutual agreeing to pay $18,500 and to handle any Medicare liens.Penegar filed a class action lawsuit in the Western District of North Carolina under the Medicare Secondary Payer Act (MSP Act), alleging that Liberty Mutual failed to reimburse Medicare, leading to a collection letter from the Centers for Medicare and Medicaid Services (CMS) demanding $18,500. Liberty Mutual moved to dismiss, arguing Penegar lacked standing and that the settlement precluded her claims. The district court agreed, finding Penegar lacked standing and dismissed the case.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The court held that Penegar did not suffer a cognizable injury in fact at the time she filed the lawsuit. The NCIC had ordered Liberty Mutual to reimburse Medicare directly, not Penegar, distinguishing her case from Netro v. Greater Baltimore Medical Center, Inc. Additionally, the CMS letter only posed a risk of future harm, which is insufficient for standing in a damages suit. Finally, any out-of-pocket expenses Penegar incurred were already compensated by Liberty Mutual before she filed the lawsuit, negating her claim of monetary injury. View "Penegar v. Liberty Mutual Insurance Co." on Justia Law

The case involves Koppers Performance Chemicals, Inc., a New York-based corporation that manufactures wood preservation chemicals, and Argonaut-Midwest Insurance Company. In 2014, Phillip H. Riley and his wife sued Koppers and other lumber industry entities in South Carolina state court, alleging that Riley developed cancer from exposure to a chemical used in the lumber provided by Koppers. Koppers sought coverage under four commercial general liability policies issued by Argonaut. Argonaut, however, disclaimed any duty to defend or indemnify Koppers, arguing that the policies limited coverage to Koppers' Hawaii operations and did not cover the claims in the Riley lawsuit.The case was initially heard in the District of South Carolina, where the court granted Argonaut's motion for summary judgment and denied Koppers' motion for partial summary judgment. The court found that the insurance policies were limited to Koppers' Hawaii operations and that the original complaint did not allege a potential for coverage under the policies, thus Argonaut had no duty to defend.Upon appeal, the United States Court of Appeals for the Fourth Circuit reversed the lower court's decision. The appellate court found that the insurance policies did not unambiguously limit coverage to Koppers' Hawaii operations. Furthermore, the court held that Argonaut was required to consider extrinsic evidence it specifically requested from Koppers when assessing its duty to defend. The court vacated the district court's order granting Argonaut's summary judgment motion and denying Koppers' partial summary judgment motion on the issue of Argonaut's duty to defend, and remanded the case for further proceedings. View "Koppers Performance Chemicals, Inc. v. Argonaut Midwest Insurance Co." on Justia Law

The case involves Erie Insurance Company and its affiliates (collectively, Erie) and the Maryland Insurance Administration (MIA). In 2021, the MIA initiated two separate administrative investigations into Erie following complaints alleging racial and geographic discrimination. The first investigation broadly examined Erie’s market conduct, while the second focused on the specific allegations in the individual complaints. In 2023, the MIA issued four public determination letters stating that Erie had violated state insurance laws. These letters referenced documents obtained during the market conduct investigation, which had not yet concluded. Erie requested and was granted administrative hearings on all four determination letters.Erie then filed a lawsuit against the MIA and its commissioner in federal district court, alleging due process violations under 42 U.S.C. § 1983 and violations of Maryland state law. Erie sought a declaration that the determination letters were unlawful, an injunction preventing the defendants from disseminating the letters, and a requirement for the defendants to publicly withdraw them. The district court dismissed Erie's complaint, citing the principles of abstention outlined in Younger v. Harris, which generally discourages federal courts from interfering with ongoing state proceedings.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision. The court found that Erie had an adequate opportunity to raise its constitutional claims in the administrative hearings and subsequent state court review, as required for Younger abstention. The court also rejected Erie's argument that this case fell within an exception to Younger abstention due to extraordinary circumstances or unusual situations. The court concluded that Erie had not demonstrated that the MIA's actions were motivated by bias or that the administrative proceedings would not afford Erie constitutionally adequate process. View "Erie Insurance Exchange v. Maryland Insurance Administration" on Justia Law

A massage parlor, Elegant Massage LLC, filed a class action lawsuit against State Farm Mutual Automobile Insurance Company, asserting claims of breach of contract and other related claims. The suit stemmed from State Farm's denial of insurance coverage to businesses that had to shut down partially or fully due to Virginia executive orders during the COVID-19 pandemic. Elegant Massage claimed that the forced closure constituted a "direct physical loss" under its insurance policy. The district court certified the class and denied State Farm’s motion to dismiss. State Farm appealed.The United States Court of Appeals for the Fourth Circuit used its pendent appellate jurisdiction to review the district court's denial of State Farm’s motion to dismiss in conjunction with the appealable class certification order. The appellate court referred to the precedent set in Uncork & Create LLC v. Cincinnati Insurance Co., which held that a similar business closure during the pandemic did not constitute a "direct physical loss" requiring material destruction or harm to the property. The court found that this precedent was directly applicable to the case at hand.Consequently, the court of appeals held that the district court had erred in denying State Farm's motion to dismiss. It ruled that the temporary closures ordered by the executive did not result in a "direct physical loss" under the policy terms. As a result, the court also found no basis for class certification. The court reversed the district court’s decisions and instructed it to dismiss the entire case. View "Elegant Massage, LLC v. State Farm Mutual Automobile Insurance Co." on Justia Law

In this case, a South Carolina court-appointed receiver brought an action against Travelers Casualty and Surety Company and other insurers, alleging breaches of insurance policies issued to a defunct company within a state receivership. Travelers removed the action to federal court, asserting diversity jurisdiction. However, the district court granted the receiver’s motion to remand the case back to state court. The court held that it lacked subject-matter jurisdiction because the case involved property of a state receivership exclusively under the jurisdiction of the state court (based on the doctrine articulated in Barton v. Barbour), and the removal lacked unanimous consent of all defendants due to a forum selection clause in some of the insurance policies issued to the defunct company.Upon appeal, the United States Court of Appeals for the Fourth Circuit dismissed the appeal, holding that the district court's conclusions in support of remand were at least colorably supported. The court found that the district court's reliance on a lack of subject-matter jurisdiction and procedural defect as grounds for remand were colorably supported, and thus, not reviewable under 28 U.S.C. § 1447(d). The court also concluded that it lacked jurisdiction to review the district court's remand order and dismissed the appeal. View "Protopapas v. Travelers Casualty and Surety Co." on Justia Law

A former patients of Pediatric Partners for Attention and Learning, Inc. and its founder, Dr. Joni Johnson, sued them in state court after discovering that the clinic’s in-house psychologist, Sharonda Avery, was not a licensed psychologist. The clinic and Dr. Johnson asked their professional liability insurance carrier, Medical Mutual Insurance Company of North Carolina, to defend and indemnify them in those lawsuits. Medical Mutual responded by filing a declaratory judgment action in federal court, arguing that it could rescind the policy covering Pediatric Partners and Dr. Johnson due to Dr. Johnson’s material misstatements in her insurance applications. The United States Court of Appeals for the Fourth Circuit ruled that Medical Mutual has no duty to indemnify or defend Dr. Johnson or Pediatric Partners under Virginia law due to material misstatements made by Dr. Johnson in her policy applications. The court affirmed the district court's decision that Dr. Johnson's misrepresentation that none of her employees had been subject to disciplinary investigative proceedings was a material misstatement, and therefore, Medical Mutual could rescind its professional liability policy covering Pediatric Partners and Dr. Johnson. View "Medical Mutual Insurance Co. of North Carolina v. Gnik" on Justia Law

The case involves Susan Harriman and Associated Industries Insurance Company. Harriman was an investment advisor who was sued for defamation by Palmaz Scientific after she shared damaging information about the company with her clients. Harriman sought coverage from Associated, with which her employer had an insurance policy, for her defense against the defamation allegations. Associated, however, denied coverage, arguing that the policy only covered wrongful acts committed in the rendering or failure to render professional services on behalf of the company. The United States Court of Appeals for the Fourth Circuit affirmed the lower court's summary judgment in favor of Associated. The court held that Associated was never obligated to defend Harriman because the claims triggered both its policy and a separate policy Harriman had with Travelers Insurance Company, making Travelers the primary coverage provider. The court also held that Harriman failed to present evidence that would allow a factfinder to conclude that Associated lacked a reasonable basis for its coverage decision, thereby dismissing her bad faith claim. View "Harriman v. Associated Industries Insurance Company, Inc." on Justia Law

This case involves Jeremy Schulman, a former shareholder at the Maryland law firm Shulman, Rogers, Gandal, Pordy & Ecker. Schulman sued insurance companies AXIS Surplus Insurance Company, Endurance American Specialty Insurance Company, and Prosight Syndicate 1110 at Lloyd’s, for breach of contract, detrimental reliance, and lack of good faith, claiming that they wrongfully denied his claim for coverage under his law firm's professional liability insurance policy. The dispute hinges on whether Schulman's indictment in a criminal case qualifies as a "claim" under his professional liability insurance policy, and whether a letter from the insurance companies promising to cover certain costs relating to a subpoena also covered costs related to the later indictment. Schulman also alleges that the insurers acted in bad faith.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, granting summary judgment to the defendants. The court held that Schulman's indictment in the criminal case did not constitute a "claim" under his professional liability insurance policy, and that the insurers' letter did not promise to cover costs related to the indictment. The court also held that Schulman's claim of bad faith could not succeed because he was not entitled to coverage under the policy and the insurers did not breach any tort duty by denying coverage. View "Schulman v. Axis Surplus Ins. Co., Inc." on Justia Law

In the United States Court of Appeals for the Fourth Circuit, the case involved defendant Glenda Taylor-Sanders, a licensed insurance agent, who pleaded guilty to one count of wire fraud. Taylor-Sanders had used her position to defraud several trucking companies and an insurance finance company, BankDirect Capital Finance, by misappropriating funds meant for insurance premiums and obtaining loans under the guise of non-existent insurance policies. She used the funds for personal expenditures, leading to the lapse of some of the trucking companies' insurance policies.In her plea agreement, Taylor-Sanders agreed to pay full restitution to all victims harmed by her relevant conduct, and she waived all rights to contest the conviction and sentence in any appeal, unless it was due to ineffective assistance of counsel or prosecutorial misconduct. However, she later attempted to withdraw her guilty plea, arguing that she didn't fully understand the implications of her plea and that she never acted with the requisite intent to defraud. The district court denied her motion to withdraw the plea, concluding that her claim was not credible and that she had not provided a fair and just reason to withdraw her guilty plea.After being sentenced to 66 months' imprisonment and ordered to pay over $700,000 in restitution, Taylor-Sanders appealed her conviction, sentence, and the restitution order. She argued that her guilty plea wasn’t knowing and voluntary, that the district court miscalculated her offense level, and that the district court made several errors when awarding restitution.The Court of Appeals found that Taylor-Sanders's guilty plea and plea waiver were valid and the issues she raised on appeal fell within the scope of her appeal waiver. The court distinguished between claims that a sentence is "illegal" because the district court lacked the authority to issue the sentence (which remain reviewable despite an appeal waiver) and claims that a sentence was "imposed in violation of law" because it has otherwise merely "been touched by a legal error" (in which case the court will enforce the appeal waiver). The court dismissed Taylor-Sanders's appeal in its entirety. View "US v. Taylor-Sanders" on Justia Law

Plaintiff’s son had a rare heart condition. He died at the age of twenty-seven, awaiting a heart transplant, which Rose says that Defendants—who administered her son’s employer-based health benefits program—wrongfully denied. So she sued on behalf of his estate, seeking monetary relief under both Section 502(a)(1)(B) and Section 502(a)(3). The district court dismissed both claims. As to Plaintiff’s (a)(1)(B) claim, the court held that money was not one of the “benefits” that her son was owed “under the terms of his plan.” And, as to her (a)(3) claim, the court held that her requested monetary relief was too similar to money damages and was thus not “equitable.”   The Fourth Circuit affirmed in part and vacated in part. The court explained that the district court correctly held that money was not one of the “benefits” that Plaintiff’s son was “due” “under the terms of his plan.” So it was right to dismiss her (a)(1)(B) claim. But the court explained that it must vacate its complete dismissal of Plaintiff’s (a)(3) claim. The court explained that while the district court correctly noted that compensatory, “make-whole” monetary relief is unavailable under Section 502(a)(3), it did not consider whether Plaintiff plausibly alleged facts that would support relief “typically” available in equity. The court thus remanded for the district court to decide in the first instance whether Plaintiff can properly allege such a theory based on a Defendant’s unjust enrichment, including whether an unjust gain can be followed to “specifically identified funds that remain in Defendant’s possession” or to “traceable items that the defendant purchased with the funds.” View "Jody Rose v. PSA Airlines, Inc." on Justia Law