Justia U.S. 9th Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Alpert v. NationStar Mortgage LLC
The Ninth Circuit filed an order deferring submission and certifying the following questions to the Washington State Supreme Court: 1. Should the filed rate doctrine apply to claims by a Washington homeowner against a loan servicer arising from the placement of lender placed insurance on the Washington homeowner's property where the servicer purchased the insurance from a separate insurance company who filed the insurance product with the Washington State Office of the Insurance Commissioner? 2. In the event the filed rate doctrine does apply to this type of transaction, do the damages requested by plaintiff fall outside the scope of the filed rate doctrine, or rather do they "directly attack agency-approved rates," such that they are barred under McCarthy Finance, Inc. v. Premera, 347 P.3d 872, 875 (Wash. 2015)? View "Alpert v. NationStar Mortgage LLC" on Justia Law
Benson v. Casa de Capri Enterprises, LLC
The Ninth Circuit certified to the Arizona Supreme Court the following questions: 1. In a garnishment action by a judgment creditor against the judgment debtor's insurer claiming that coverage is owed under an insurance policy, where the judgment creditor is not proceeding on an assignment of rights, can the insurer invoke the doctrine of direct benefits estoppel to bind the judgment creditor to the terms of the insurance contract? 2. If yes, does direct benefits estoppel also bind the judgment creditor to the arbitration clause contained in the insurance policy? View "Benson v. Casa de Capri Enterprises, LLC" on Justia Law
AXIS Reinsurance Co. v. Northrop Grumman
The Ninth Circuit reversed the district court's grant of summary judgment to AXIS in an action seeking reimbursement of an insurance payment that it made, as a secondary excess insurer, to Northrop. AXIS argued that underlying insurers paid an uncovered claim arising from Northrop's settlement of alleged Employment Retirement Income Security Act (ERISA) violations, thereby "improperly eroding" their policies' liability limits and prematurely triggering AXIS's excess coverage.The panel held that, consistent with the limited caselaw and secondary sources that have addressed excess insurer claims of "improper erosion," "improper exhaustion," "wrongful exhaustion," and similar challenges to the payment decisions of underlying insurers, an excess insurer may not challenge those decisions in order to argue that the underlying liability limits were not (or should not have been) exhausted absent a showing of fraud or bad faith, or the specific reservation of such a right in its contract with the insured.In this case, the panel held that no reasonable insured in Northrop's position would understand that it might have to justify its underlying insurers' payment decisions as a prerequisite to obtaining excess coverage from AXIS. The district court misapplied the panel's unpublished decision in Shy v. Insurance Company of the State of Pennsylvania, 528 F. App'x 752 (9th Cir. 2013), ignored the weight of authority rejecting "improper erosion" as a valid basis for denying coverage, and misconstrued the "covered loss" provision in AXIS's excess policy as a reservation of the right to second-guess other insurers' payments. Accordingly, the panel remanded for further proceedings. View "AXIS Reinsurance Co. v. Northrop Grumman" on Justia Law
Schmitt v. Kaiser Foundation Health Plan of Washington
Plaintiffs, who have hearing loss severe enough to qualify them as disabled, filed suit claiming that Kaiser's health insurance plan's categorical exclusion of most hearing loss treatment discriminates against hearing disabled people in violation of Section 1557 of the Patient Protection and Affordable Care Act (ACA). The district court ruled that Kaiser's plans do not exclude benefits based on disability because the plans treat individuals with hearing loss alike, regardless of whether their hearing loss is disabling.The Ninth Circuit agreed with the district court that plaintiffs have failed to state a plausible discrimination claim. The panel explained that the ACA specifically prohibits discrimination in plan benefit design, and a categorical exclusion of treatment for hearing loss would raise an inference of discrimination against hearing disabled people notwithstanding that it would also adversely affect individuals with non-disabling hearing loss. However, the exclusion in this case is not categorical. The panel stated that, while Kaiser's coverage of cochlear implants is inadequate to serve plaintiffs' health needs, it may adequately serve the needs of hearing disabled people as a group. Therefore, the panel affirmed the district court's dismissal of the second amended complaint. The panel reversed the district court's dismissal without leave to amend and remanded. View "Schmitt v. Kaiser Foundation Health Plan of Washington" on Justia Law
Zurich American Insurance Co. v. Ironshore Specialty Insurance Co.
The Ninth Circuit certified to the Nevada Supreme Court the following questions: Whether, under Nevada law, the burden of proving the applicability of an exception to an exclusion of coverage in an insurance policy falls on the insurer or the insured? Whichever party bears such a burden, may it rely on evidence extrinsic to the complaint to carry its burden, and if so, is it limited to extrinsic evidence available at the time the insured tendered the defense of the lawsuit to the insurer? View "Zurich American Insurance Co. v. Ironshore Specialty Insurance Co." on Justia Law
Lewis v. Liberty Mutual Insurance Co.
After plaintiffs were awarded more than $45 million in a products liability suit brought against EcoSmart, EcoSmart declared bankruptcy and plaintiffs brought a direct action against EcoSmart's insurer, LMIC, for payment on the judgment. LMIC argued that its policy with EcoSmart had a forum-selection clause designating Australian courts as the exclusive forum. The district court granted LMIC's motion to dismiss on grounds of forum non conveniens.The Ninth Circuit held that, because plaintiffs stand in the shoes of EcoSmart, their third-party creditors' rights are derivative of the rights and limitations held by the bankrupt insured, and thus the forum-selection clause applies. The panel also held that plaintiffs have not shown that the clause violates California public policy or that Australia is an inadequate forum for suit. Accordingly, the panel affirmed the district court's judgment. View "Lewis v. Liberty Mutual Insurance Co." on Justia Law
California Insurance Guarantee Assoc. v. Azar
The Ninth Circuit reversed the district court's judgment in favor of Medicare in an action brought by CIGA, seeking declaratory relief after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers' compensation benefits CIGA was administering.The panel held that Medicare, as a secondary payer, was entitled to seek reimbursement from a beneficiary's primary payer, typically private insurance. However, CIGA was not a primary plan, and specifically was not a workmen's compensation law or plan. Rather, the panel held that CIGA was an insolvency insurer of last resort. The panel explained that insurance regulation was a field traditionally occupied by the states, and it must presume that the Medicare secondary payer provisions do not preempt state insurance laws unless Congress clearly manifested its intent to do so. Furthermore, nothing in the Medicare statute or its implementing regulations suggested that Congress meant to interfere with state schemes to protect against insurer insolvencies. View "California Insurance Guarantee Assoc. v. Azar" on Justia Law
Apollo Education Group, Inc. v. National Union Fire Insurance Co.
The Ninth Circuit certified the following question of state law to the Supreme Court of Arizona: What is the standard for determining whether National Union unreasonably withheld consent to Apollo's settlement with shareholders in breach of contract under a policy where the insurer has no duty to defend? View "Apollo Education Group, Inc. v. National Union Fire Insurance Co." on Justia Law
State Farm Mutual Automobile Insurance, Co. v. Mizuno
The Ninth Circuit certified the following question of state law to the Supreme Court of Hawai'i: Under Hawai'i law, is a permissive user of an insured vehicle, whose connection to the insured vehicle is permission to use the vehicle to run errands and drive to work, entitled to uninsured motorist (UM) benefits under the chain-of-events test because he was injured by an uninsured motorist? View "State Farm Mutual Automobile Insurance, Co. v. Mizuno" on Justia Law
Universal Cable Productions, LLC v. Atlantic Specialty Insurance Co.
After Hamas fired rockets from Gaza into Israel, Universal moved the production of their televisions series out of Jerusalem at significant expense. Universal filed an insurance claim for coverage of those costs under a television production insurance policy and the insurer, Atlantic, denied coverage based on the policy's war exclusions.The Ninth Circuit reversed the district court's grant of summary judgment for Atlantic in part and held that Atlantic breached its contract when it denied coverage by defining Hamas' conduct as "war" or "warlike action by a military force." Because the district court did not address the third war exclusion regarding whether Hamas' actions constituted "insurrection, rebellion, or revolution," the panel remanded for the district court to address that question in the first instance. Consequently, the panel vacated the district court's grant of summary judgment on Universal's bad faith claim because it turned on the district court's erroneous analysis of the first two war exclusions. The panel remanded for further proceedings. View "Universal Cable Productions, LLC v. Atlantic Specialty Insurance Co." on Justia Law