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

Reliance Standard Life Insurance Company denied Plaintiff’s claim for long-term disability benefits after concluding that she was not “Totally Disabled” as defined by her disability insurance plan. Plaintiff brought an under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. Section 1132(a)(1)(B), arguing that the denial of benefits violated that Act. After conducting a bench trial under Federal Rule of Civil Procedure 52, the district court awarded judgment to Plaintiff. Reliance appealed, arguing that courts in the Fourth Circuit are required to resolve ERISA denial-of-benefits cases via summary judgment and that the district court erred in dispensing with this case through a bench trial. Reliance also argued that this Court must review the district court’s legal conclusions.   The Fourth Circuit affirmed. The court first held that because the plan at issue here did not require objective proof of disability, the court rejected Reliance’s contention that Plaintiff’s claim fails for the lack of such evidence. Further, the court wrote that the record supports the district court’s determination that Plaintiff’s disability was not limited to a “specific locale.” Accordingly, the court agreed that Plaintiff was “totally disabled” under the terms of the plan. View "Anita Tekmen v. Reliance Standard Life Ins." on Justia Law

Appellants, who were maimed in a hot air balloon accident in southeastern Pennsylvania in 2015, pursued appellate challenges to the District of Maryland’s rulings against them and in favor of T.H.E. Insurance Company (the “Insurer”) in an insurance coverage dispute. In federal court proceedings initiated in Maryland, Appellants sued certain of the Insurer’s named insureds, and a business called New Horizon Balloon Team (collectively, the “Insureds”) — for the gruesome injuries Appellants’ sustained in the balloon accident (the “damages lawsuit”). While the damages lawsuit was pending, the Insurer initiated these insurance coverage proceedings in the Eastern District of Pennsylvania, naming as defendants the three Insureds, plus Appellants. The district court awarded summary judgment in favor of the Insurer’s contention with respect to a $100,000 coverage limit for each balloon passenger. The Memorandum Opinion also rejected both of Appellants’ bad faith claims. Appellants appealed those rulings.   The Fourth Circuit affirmed. Applying Maryland principles of res judicata in this dispute, the court was satisfied that the coverage issue presented by the Insurer in these proceedings is not barred by the settlement agreement in the damages lawsuit. As such, the court agreed with the district court that Appellants are not entitled to a summary judgment award on the coverage issue on res judicata grounds. Further, the district court thus did not err in ruling Appellants were inside the balloon’s basket at the time of their injuries. As such, Appellants were “passengers” under the Policy and Coverage B’s limit of $100,000 per passenger applies. View "T.H.E. Insurance Company v. Melyndia Davis" on Justia Law

Southern Farm Bureau Life Insurance Company (“Farm Bureau”) issued a term life insurance policy to S.M. S.M.’s husband, Plaintiff, who was the policy’s primary beneficiary. Farm Bureau received a notification from the Post Office indicating that S.M.’s address had changed. Farm Bureau sent its semiannual bill to S.M. at her South Carolina address, informing her that her payment was due on November 23, 2016. S.M. did not pay the bill. Plaintiff sued Farm Bureau in federal district court, seeking the policy’s coverage amount as well as excess damages for alleged unfair and deceptive trade practices on the part of Farm Bureau. He argued that Farm Bureau had not complied with a statutory notice requirement prior to canceling the insurance policy for nonpayment and he was therefore entitled to the policy’s benefits. The parties filed cross-motions for summary judgment, and the district court granted summary judgment to Farm Bureau.   The Fourth Circuit affirmed finding that Farm Bureau complied with the statute’s notice requirement. The court wrote that a literal interpretation of the statute’s language—referring to a notice being sent to the “last known post-office address in this State”—would not put S.M. on notice at all. Rather it would have Farm Bureau send “notice” to an address where it knows she no longer resides. Additionally, there is substance in Farm Bureau’s argument that a rigidly literal reading of the words “in this State” would require insurers to implement burdensome and nonsensical notice policies. View "Robert Whitmire v. Southern Farm Bureau Life Insurance Company" on Justia Law

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

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, 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

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

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 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

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