Justia U.S. 4th Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Medical Mutual Insurance Co NC v. Rebecca Littaua
Plaintiff, Medical Mutual Insurance Company (“Med Mutual”) was the insurance carrier for numerous defendants in medical malpractice suit. Med Mutual provided the defense for the state case but, during discovery, alleged that one of the insureds had made a material modification to the Decedent’s medical records. Med Mutual brought the federal action seeking a declaratory judgment concluding that it has no obligation to provide insurance coverage for the defense of the state case. The district court declined to exercise jurisdiction over a declaratory judgment action while a parallel action was pending in state court. The Fourth Circuit affirmed the district court’s decision. The court explained when a Section 2201 action is filed in federal court while a parallel state case is pending, the court has recognized that “courts have broad discretion to abstain from deciding declaratory judgment actions.” When deciding whether to hear such a declaratory judgment action, the court considers four factors: (1) whether the state has a strong interest in having the issues decided in its courts; (2) whether the state courts could resolve the issues more efficiently than the federal courts; (3) whether the presence of “overlapping issues of fact or law” might create unnecessary “entanglement” between the state and federal courts; and (4) whether the federal action is mere “procedural fencing”. Here, the factors favoring abstention are at least as strong, if not stronger, than those favoring retention and Med Mutual has not demonstrated an abuse by the district court of its broad discretion. View "Medical Mutual Insurance Co NC v. Rebecca Littaua" on Justia Law
Kinsale Insurance Company v. JDBC Holdings, Inc.
A fire erupted at a cannabidiol oil extraction factory, leased and operated by JDBC Holdings, Inc, d/b/a The CBD Factories (“JDBC”). JDBC filed a claim for insurance coverage with Kinsale Insurance Company (“Kinsale”)., Kinsale filed a suit in the U.S. District Court for the Northern District of West Virginia alleging that it was not bound to provide coverage. The district court denied Kinsale’s motion for summary judgment, granted in part JDBC’s motion for partial summary judgment, and declared that Kinsale was bound to provide coverage. The district court certified its Order as a final judgment pursuant to Fed. R. Civ. P. 54(b) and stayed JDBC’s counterclaims for breach of contract and bad faith pending appeal.The Fourth Circuit held that it lacked jurisdiction to consider the appeal because the district court’s order was not a final decision. The court reasoned that though the district court resolved the key question of whether Kinsale was liable for providing coverage for the damage at the JDBC facility, “the order does not embody the essential elements of a money judgment because the court has not found all of the facts necessary to compute the amount of damages due.”Further, the court found that even if the district court’s order was a final judgment, the district court abused its discretion in concluding that there was no just reason for the delay to certify the partial summary judgment order for the court’s review. Therefore, the court dismissed the appeal and remanded the matter for further proceedings. View "Kinsale Insurance Company v. JDBC Holdings, Inc." on Justia Law
DENC, LLC v. Philadelphia Indemnity Ins.
DENC, Inc. ("DENC") sued Philadelphia Indemnity Insurance Company ("Philadelphia"), claiming breach of contract and violations of the North Carolina’s Unfair and Deceptive Trade Practices Act (“UDTPA”) based on Philadelphia's refusal to cover DENC's claim for collapse damage. The district court found Philadelphia improperly denied coverage and therefore breached the terms of the insurance policy and violated the UDTPA. However, the district court declined to award treble damages because DENC didn’t show that Philadelphia’s UDTPA violation proximately caused any injury. Both parties appealed.The Fourth Circuit affirmed on all liability issues, finding that the district court did not err in applying the appropriate standards. However, the Fourth Circuit reversed the district court's denial of treble damage to DENC, holding that the district court erred in assessing proximate cause under the UDTPA.Under N.C. Gen. Stat. Sec. 75-16, a court must award treble damages if a defendant violates the UDTPA. However, damages are limited to those proximately caused by the defendant's violation. Here, the Fourth Circuit agreed with the district court that Philadelphia's denial letter was deceptive; however, the district court erred when it engaged in a separate proximate cause analysis. The Fourth Circuit found that the denial letter was aggravating conduct that accompanied the breach, requiring treble damages. View "DENC, LLC v. Philadelphia Indemnity Ins." on Justia Law
1988 Trust For Allen Children v. Banner Life Insurance Co.
The Fourth Circuit affirmed the district court's certification of the class and the approval of the insurance class action settlement. The settlement agreement requires Banner to refund to class members a portion of the money they had paid, with a minimum of $100 per class member, and provides some nonmonetary benefits, with a total value of roughly $40 million.The court concluded that the Allen Trust's argument that the district court improperly placed upon it the burden of overcoming the settlement provides no basis for reversal; the district court did not abuse its discretion in determining that the Dickman class met the requirements of class certification under Federal Rule of Civil Procedure 23(a); and the district court did not abuse its discretion in determining that the settlement was fair, reasonable, and adequate under Rule 23(e)(2). View "1988 Trust For Allen Children v. Banner Life Insurance Co." on Justia Law
Uncork and Create LLC v. The Cincinnati Insurance Co.
The Fourth Circuit held that, under West Virginia law, the insurance policy language requiring a "physical loss" or "physical damage" unambiguously covers only losses caused by, or relating to, material destruction or material harm to the covered property. In this case, the insured seeks coverage for lost business income and other expenses resulting from the Covid-19 virus and a related, state government order temporarily halting non-essential business activities. Although the court, like the district court, recognized that the insured and other businesses suffered severe losses during the period that the closure order was in effect, the court concluded that under the unambiguous terms of the policy, coverage is not available for the insured's loss of business income and related expenses absent material destruction or material harm to the covered property. Accordingly, the court affirmed the district court's dismissal of the complaint. View "Uncork and Create LLC v. The Cincinnati Insurance Co." on Justia Law
Wilson v. UnitedHealthcare Insurance Co.
Wilson participates in a health insurance plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). Wilson’s minor son, J.W., a beneficiary of the Plan, received in-patient mental health treatment. The Plan denied coverage. Wilson filed suit under ERISA, 29 U.S.C. 1132(a)(1)(B). The court affirmed the denial of coverage for treatment from December 1, 2015, through May 15, 2016, concluding the plan administrator acted reasonably under the relevant factors. The court dismissed, for failure to exhaust administrative remedies, Wilson’s claims arising from treatment received from May 15, 2016, through J.W.’s discharge on July 31, 2017.The Fourth Circuit affirmed the denial of the claims for 2015-2016 as not medically necessary. J.W. did not require intensive psychological intervention and saw a licensed psychiatrist only about one time each month. The court vacated the dismissal of Wilson’s claims for the administrator’s coverage determinations that were made before January 26, 2017, and that were not for services provided 2015-2016. The court affirmed the dismissal of Wilson’s claim for coverage determinations the administrator made after January 26, 2017, (regardless of when the corresponding services were provided) because Wilson failed to exhaust his administrative remedies for those claims. View "Wilson v. UnitedHealthcare Insurance Co." on Justia Law
United Financial Casualty Co. v. Ball
Milton employees were performing work at Perry’s home. Milton’s owner authorized Perry to move Milton’s truck, which was blocking the driveway. Perry accidentally struck Ball, a Milton employee, who sustained serious injuries. Milton had a commercial automobile liability insurance policy issued by United, which provided $1 million in liability coverage to Milton and to any person using Milton’s vehicles with its permission. United sought a declaratory judgment that it had no obligation to cover Perry’s liability, based on “Worker’s Compensation” and “Employee Indemnification and Employer’s Liability” exclusions.The district court granted United judgment, finding Ball sustained his injuries while working within the course of his employment. The court rejected Ball’s argument that West Virginia Code 33-6-31(a) required United to extend liability coverage to Perry as a permissive user of an insured automobile. The Fourth Circuit held that because Ball’s negligence claim was against a third party, rather than against his employer for workers’ compensation the exclusions did not apply. On remand, United argued that while the exclusion was unenforceable up to the $25,000 minimum liability coverage required by West Virginia law, it remained enforceable as to any amount above that statutory minimum. Ball and Perry argued that United was required to provide Perry with coverage of up to $1 million. The district court granted United summary judgment. The Fourth Circuit certified the question to the state’s highest court. View "United Financial Casualty Co. v. Ball" on Justia Law
RLI Insurance Co. v. Nexus Services, Inc.
An immigration bond allows the release of a detained individual based on a surety’s contractual undertaking to the United States to either deliver the individual as demanded or forfeit the sum specified in the bond. Nexus runs a bonds program: It screens immigrants and maintains contact with them throughout their release. Nexus lacks the Department of Treasury’s commercial-surety certification and needs another surety to take on the liability to the government. RLI performs that function for a fee. Nexus agreed to indemnify RLI for all losses. The parties’ Commercial Surety General Indemnity Agreement involves nearly 2,500 bonds and contains several clauses designed to keep RLI whole. One obligates Nexus to provide collateral sufficient to cover all of RLI’s exposure,Nexus argued that RLI’s exposure should be measured on each bond individually, that RLI is not actually “exposed” to any risk, and Nexus does not need to deposit collateral until there is reason to believe that RLI will have to pay on a particular bond because an immigrant fails to appear in court.The Fourth Circuit affirmed in favor of RLI. Although it is not known which immigrants will breach, some will. The Agreement must secure against aggregate risk—the likelihood Nexus will be able to (timely) indemnify RLI for all future breached bonds. Nexus’s financial condition, its historical willingness to indemnify RLI, and the historical rate of bonds breached bear on that likelihood and should inform the collateral calculus. View "RLI Insurance Co. v. Nexus Services, Inc." on Justia Law
Skyline Restoration, Inc. v. Church Mutual Insurance Co.
First Baptist retained Skyline to provide emergency remediation services to address wind damage to First Baptist’s real estate. Skyline then received the right to collect any proceeds from First Baptist's insurance policy with Church Mutual. Church Mutual subsequently disputed coverage in part and Skyline filed suit to recover the value of services provided to First Baptist but not paid by Church Mutual.The Fourth Circuit affirmed the district court's dismissal of Skyline's claims because they were barred by the applicable North Carolina statute of limitations. The court found that the applicable statute of limitations is three years from the date of loss, and agreed that Skyline's claims for declaratory judgment and breach of contract are time barred because Skyline brought this action in November 2019, more than three years after the time of loss; October 2016. The court denied as moot Church Mutual's motion to strike part of Skyline's reply brief. View "Skyline Restoration, Inc. v. Church Mutual Insurance Co." on Justia Law
Shupe v. Hartford Life & Accident Insurance Co.
In 2003, Shupe was an Executive Sous Chef for Hyatt when he began experiencing symptoms of osteomyelitis, an infection in his spinal cord. He was 37 years old. After rounds of antibiotics and surgery, he was unable to maintain his employment and left his position in July 2004 due to pain from chronic osteomyelitis, degenerative disc disease in the lumbar spine, and spinal stenosis that was so severe that he could not stand for an extended period of time. Hyatt’s long-term disability plan, a “qualified” plan under the Employee Retirement Income Security Act of 1974, paid Shupe disability benefit for 11 years. Hartford then terminated his benefits, finding that there were alternative occupations that Shupe could physically perform, was qualified for, and pay greater than 60% of his prior salary, so that he did not meet the plan’s definition of “disabled.”The district court rejected Shupe’s 29 U.S.C. 1132(a)(1)(B) suit on summary judgment. The Fourth Circuit reversed, in favor of Shupe. His post-termination evaluations, coupled with Shupe’s contemporaneous medical history, all uniformly conclude that Shupe was incapable of full-time sedentary employment. Hartford’s assessment was an “outlier.” View "Shupe v. Hartford Life & Accident Insurance Co." on Justia Law