Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

The Commissioner appealed the tax court's determination related to a deficiency in petitioners' federal income tax involving distributions from petitioners' variable universal life insurance policy. The Commissioner asserted that surrender charges could never be considered under I.R.C. 402(b)(2), and maintained that petitioners actually received the full stated policy values of their respective policies. The court affirmed the tax court's determination that the "amount actually distributed" when petitioners received ownership of the policies after their employer wound down their employees' benefit trust was "the fair market value of what was actually distributed." Further, the surrender charges associated with a variable universal life insurance policy could permissibly be considered as part of the general inquiry into a policy's fair market value. Accordingly, the court affirmed the decision. View "Schwab v. CIR" on Justia Law

Plaintiffs claimed that PacifiCare was not entitled to any reimbursement payments out of the wrongful death benefits paid by an insurance policy to them. PacifiCare counterclaimed, arguing that it was entitled to reimbursement under both the terms of its contract with the deceased (Count I) and directly under the Medicare Act (Count 11), 42 U.S.C. 1395. At issue was whether a private Medicare Advantage Organization (MAO) plan could sue a plan participant's survivors, seeking reimbursement for advanced medical expenses out of the proceeds of an automobile insurance policy. Because interpretation of the federal Medicare Act presented a federal question, the district court had subject matter jurisdiction to determine whether that act created a cause of action in favor of PacifiCare against plaintiffs. The district court properly dismissed the causes of action arising under the Medicare Act for failure to state a claim where section 1395y(b)(2) did not create a federal cause of action in favor of a MAO and where, under section 1395y(b)(3)(A), the Private Cause of Action applied in the case of a primary plan which failed to provide for primary payment, which was not applicable in this instance. The court affirmed the district court's dismissal of Count II for failure to state a claim as well as its decision to decline to exercise supplemental jurisdiction over Count 1. View "Parra v. Pacificare of Arizona" on Justia Law

ANI, a risk retention group, filed suit seeking declaratory and injunctive relief against the Commissioner and the Division of Insurance under 42 U.S.C. 1983. ANI claimed that an order of the Commissioner violated the Liability Risk Retention Act (LRRA), 15 U.S.C. 3902(a)(1). The court held that the Commissioner's Order, which barred ANI from writing first dollar liability insurance policies in Nevada, was preempted by the LRRA. Therefore, the court affirmed the district court's entry of declaratory and injunctive relief in favor of ANI. However, the LRRA did not confer a right to be free from state law that could be enforced under 42 U.S.C. 1983, making fees under 42 U.S.C. 1988 unavailable. Thus, the court vacated the fee award. Finally, the court remanded so that the district court could enter a new summary judgment order consistent with this opinion. View "Alliance of Nonprofits for Ins. v. Kipper, et al" on Justia Law

Plaintiff filed a subrogation suit against defendants for recovery of insurance payments to its insured, Taube-Koret, for environmental response costs Taube-Koret incurred in cleaning up pollutants released on its property. The court concluded that plaintiff had no standing to bring suit under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601-9675, section 107(a) because it did not incur any "costs of response" related to the removal or remediation of a polluted site, and because the common law principle of subrogation did not apply to section 107(a); plaintiff could not bring a subrogation claim under section 112(c) because it did not allege that Taube-Koret was a "claimant"; and plaintiff's state law claims were time-barred. Accordingly, the court affirmed the district court's dismissal of plaintiff's third amended complaint with prejudice under Rule 12(b)(6). View "Chubb Custom Ins. Co. v. Space Systems/ Loral, Inc., et al" on Justia Law

Plaintiffs purchased variable universal life insurance policies from defendant. Plaintiffs subsequently filed a class action suit against defendant under the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), for levying excessive cost of insurance charges. The court concluded that claims of breach of contract and breach of the duty of good faith and fair dealing were not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security. The court reversed the district court's dismissal of the two contract claims, on the condition that plaintiffs amend their complaint to remove any reference to deliberate concealment or fraudulent omission. The court affirmed the dismissal of the class claim for unfair competition in violation of California law. View "Freeman Investments, L.P., et al v. Pacific Life Ins. Co." on Justia Law

Petitioner petitioned for review of the Board's denial of an application for benefits under the Railroad Retirement Act (RRA), 45 U.S.C. 231 et seq. The court held that short periods of temporary employment, inadequately performed, did not constitute substantial gainful employment that would disqualify a claimant for benefits. The court further held that when considering the RRA's requirement of continuous disability, the court must look to the history of the claimant's disability and the claimant's success or lack thereof in sustaining meaningful employment. Accordingly, the court concluded that petitioner was entitled to benefits. View "Stephens, Jr. v. U.S Railroad Retirement Board" on Justia Law

Debtors filed for bankruptcy protection under Chapter 13. At issue was whether debtors could exclude an annuity debtor received under the Railroad Retirement Act of 1974 (RRA), 45 U.S.C. 451m(a), when calculating their "projected disposable income," which determined the amount they must repay creditors to qualify for Chapter 13 relief. The court concluded that the Bankruptcy Appellate Panel's decision was reviewable. Applying a trust law understanding of the statute pursuant to Hisquierdo v. Hisquierdo, the court held that the RRA's anti-anticipation clause, which provided that the payment of an annuity shall not be "anticipated," referred to premature receipt of payment, and thus did not preclude the inclusion of the RRA annuity payments in Chapter 13 debtors' projected disposable income. View "In re: Robert Scholz & Carolyn Scholz" on Justia Law

Plaintiff, injured in a bicycling accident, disputed Unum Life Insurance Company's calculation of his pre-disability earnings upon which his disability benefits were based. The court agreed with the district court that the applicable standard of review was abuse of discretion. The district court also correctly held that Unum was responsible both for evaluating benefits claims and paying them, it operated under a conflict of interest, which must be weighed as a factor in determining whether there was an abuse of discretion. However, in determining what weight ought to be given the conflict, the district court erred in three ways: First, it failed to apply the traditional rules of summary judgment to its analysis of whether and to what extent a conflict of interest impacted Unum's benefits determination. Second, it incorrectly held that certain internal memoranda between Unum's claims analyst and its in-house counsel were not discoverable. Finally, it did not take into account substantial evidence that Unum's conflict of interest infiltrated the entire decision-making process and therefore ought to be accorded significant weight. Accordingly, the court remanded for further proceedings. View "Stephan v. Unum Life Ins. Co." on Justia Law

This case involved a dispute over the proceeds of a life insurance policy. At issue was whether the federal interpleader remedy shields a negligent stakeholder from tort liability for its creation of a conflict over entitlement to the interpleaded funds. After analyzing the Supreme Court's reasoning in State Farm Fire & Cas. Co. v. Tashire, the Ninth Circuit Court of Appeals held that it did not, and that a claimant may seek to recover all damages directly and proximately caused by the negligent stakeholder's conduct. In so holding, the Court reversed the district court and remanded for further proceedings. View "Lee v. W. Coast Life Ins. Co." on Justia Law

At issue before the Ninth Circuit Court of Appeals in this case was whether an adverse claim to a stake may be so lacking in substance that a neutral stakeholder cannot interplead in good faith. Interpleader is proper when a stakeholder has at least a good faith belief that there are conflicting colorable claims. Appellee in this case was an insurance company that sought to interplead disputed insurance proceeds. Seeking to interplead the insurance funds, Appellee filed a counterclaim against Appellant and a third party complaint against Appellant's former husband. The district court found that interpleader was appropriate. The Ninth Circuit affirmed, holding that Appellee interpleaded in good faith, and consequently, the district court's judgment in interpleader was proper. View "Michelman v. Lincoln Nat'l Life Ins. Co." on Justia Law