Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

The Torres own land and a house in Mantoloking, New Jersey, that was covered by a National Flood Insurance Program Dwelling Form Standard Flood Insurance Policy (SFIP) issued by Liberty under the National Flood Insurance Act. The National Flood Insurance Program “is underwritten by the United States Treasury in order to provide flood insurance below actuarial rates.” The Torres’ property sustained substantial damage during Hurricane Sandy, and they submitted claims under the SFIP for that damage to Liberty. Liberty administered a total payment1 to the Torres of $235,751.68, which included the cost of removing debris from their house. The Torres sought an additional payment of $15,520 for the cost of removing sand and other debris deposited on their land in front of and behind their house. Liberty denied that claim on the ground that the SFIP does not cover it. The Third Circuit affirmed judgment in Liberty’s favor. The SFIP provides coverage for structures and other items of property but not for an entire parcel of land; the provision requiring Liberty to pay for removal of non-owned debris that is “on or in insured property” does not apply to expenses incurred in removing non-owned debris from land outside the home. View "Torre v. Liberty Mut. Fire Ins. Co." on Justia Law

Appellees in these consolidated appeals challenged under the Religious Freedom Restoration Act (RFRA) the requirement under the Patient Protection and Affordable Care Act (ACA) that contraceptive coverage be provided to their plan participants and beneficiaries. Appellees included a nonprofit institution of higher learning established by the Reformed Presbyterian Church and certain Catholic Dioceses and nonprofit organizations affiliated with the Catholic Church. Because they provided coverage to the Catholic nonprofits, the Dioceses, which were otherwise exempt, were required to comply with the contraceptive coverage requirement as to the nonprofits. The nonprofit appellees were eligible for an accommodation to the contraceptive coverage requirement, under which the contraceptive services will be independently provided by an insurance issuer or third-party administrator once the appellees advise that they will not pay for those services. Appellees argued that the accommodation places a substantial burden on their religious exercise because it forces them to facilitate the provision of insurance coverage for contraceptive services and has the impermissible effect of dividing the Catholic Church. The district courts granted Appellees’ motions for a preliminary injunction. The Third Circuit reversed, concluding that the accommodation places no substantial burden on Appellees, and therefore, Appellees did not show a likelihood of success on the merits of their RFRA claim. View "Geneva College v. Sec’y U.S. Dep’t of Health & Human Servs." on Justia Law

Judon was injured while riding in a commercial passenger vehicle that was insured by Travelers. Judon sought first-party medical benefits of $7,636.40. Travelers paid $5,000, up to the policy’s first-party medical benefits limit. Judon filed a class-action complaint in state court, alleging that Pennsylvania law required that the policy offer up to $25,000 in first-party medical benefits. Judon alleged that “there are hundreds of members of the class” who were wrongfully denied payment of first-party benefits. Travelers removed to federal court, under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), 1453, arguing that the parties were minimally diverse; the proposed class consisted of at least 100 putative members; and the amount in controversy exceeded $5,000,000. The district court remanded, finding that CAFA’s numerosity and amount-in- controversy requirements were disputed and placing the burden of proof on Travelers to establish jurisdiction. The Third Circuit affirmed in part and vacated in part. Judon’s complaint unambiguously pleaded that the numerosity requirement was satisfied, so the court should have placed the burden of proof on Judon to show, to a legal certainty, that the numerosity requirement was not satisfied. The court correctly applied the preponderance of the evidence standard to the amount-in-controversy requirement. View "Judon v. Travelers Prop. Cas. Co. of Am." on Justia Law

Schumann, as a qui tam relator under the False Claims Act (FCA), 31 U.S.C. 3729, and corresponding state laws, alleged that the drug company defendants improperly induced Medco Health, his employer, to offer certain of defendants’ drugs in its mail-order pharmacies and in health plans it managed; did not include those inducements when calculating the best price for their drugs, and thus submitted inaccurate best price reports to the government; overcharged the government based on those inaccurate best prices; and underpaid rebates owed based on those inaccurate best prices. The district court dismissed, holding that it lacked subject matter jurisdiction over Schumann’s claims because he did not have the requisite direct and independent knowledge to satisfy the original source exception to the FCA’s public disclosure bar. The Third Circuit affirmed. Schumann’s knowledge was not direct because it came from reviewing documents and discussing them with colleagues who participated in the underlying events. View "Schumann v. Astrazeneca Pharm., L.P." on Justia Law

Flintkote was a major supplier of asbestos-based products and was covered by insurance policies from London insurance firms, including Aviva, one of the world’s largest insurers. It became apparent that claims under these policies would result in protracted disputes regarding the scope of coverage. In 1985, Flintkote and several insurers, but not Aviva, entered into the Wellington Agreement, which required that coverage disputes be resolved through ADR consisting of open mediation, binding arbitration, and an expedited appellate process; that the insurers make payments to Flintkote; and that Flintkote reimburse with interest, if it also received those same payments from another insurer. In 1989, Flintkote and Aviva entered into a separate agreement, similar to the Wellington Agreement, including as to reimbursement for claims also paid by other insurers. The1989 Agreement explicitly reserves each party’s right to resolve disputes through litigation. Flintkote filed for bankruptcy in 2004. In 2006, invoking the Wellington Agreement, Flintkote initiated coverage-related mediation with the insurers. Aviva, although not obligated to participate, opted to join. During mediation, Flintkote reached settlements with some insurers, but not with Aviva. In 2012, Aviva and the remaining other insurers sought reimbursement or off-set with respect to prior payments and interest under the Wellington Agreement. Flintkote took no action. Aviva, acting separately, moved to lift the automatic bankruptcy stay. Before the Bankruptcy Court ruled on Aviva’s motion, Flintkote moved to compel arbitration pursuant the Federal Arbitration Act. The district court granted Flintkote’s motion to compel arbitration, concluding that Aviva was equitably estopped from avoiding arbitration by virtue of its participation in the lengthy mediation process. The Third Circuit reversed. View "Flintkote Co v. Aviva PLC" on Justia Law

The Providers supply outpatient cardiac telemetry (OCT) services, used by doctors to monitor cardiac arrhythmias. The device differs from conventional technology in that it transmits electrocardiographic (EKG) data in real time to certified technicians, who forward the data to a physician. OCT is approved by the FDA, and has long been covered by Medicare and commercial insurers. CIGNA administers employer sponsored health benefit plans. CIGNA pays its in-network providers directly for the services rendered to patients. In 2007, the Providers joined CIGNA’s network by Agreements that set the reimbursement rate and define “Covered Services.” In 2012, CIGNA issued a statement that it would no longer cover OCT “for any indication because it is considered experimental, investigational or unproven.” The 2012 Policy acknowledged that this new position would be trumped by any conflicting language in the coverage policies themselves. In arriving at the new policy, CIGNA relied on the same medical literature it had previously relied upon in concluding that OCT should be covered. The Providers claim that CIGNA indicated that its motive was financial, but refused to reconsider the 2012 Policy. The district court found that the Providers’ claims fell within the arbitration clause of the Agreement. The Third Circuit vacated. The clause at issue is limited in scope to disputes “regarding the performance or interpretation of the Agreement” and the claims at issue do not relate to the performance or interpretation of the Agreement.View "Cardionet Inc v. Cigna Health Corp." on Justia Law

Reifer suffered a worker’s compensation injury at IU-20 where she provided special education. Her injuries prevented her from returning to work. She retained Attorney Russo. Russo carried legal malpractice insurance with Westport in compliance with the Pennsylvania Rules of Professional Conduct. When IU-20 initiated disciplinary proceedings against Reifer, Russo failed to appear at the hearing. When IU-20 terminated her, Russo failed to appeal. Russo filed suit alleging violation of Reifer’s employment rights, which he lost for failure to exhaust state remedies. When Reifer sought alternate employment, Russo advised her to answer an application question as to whether she had ever been terminated in the negative. Reifer was terminated and disciplined for the false answer. Reifer commenced a malpractice claim against Russo. Russo’s “claims-made” policy only covered losses claimed during the policy period or within 60 days of the policy’s expiration. Russo failed to inform Westport of the action until several months after the policy lapsed and he failed to secure a replacement policy. Westport refused to defend Russo. Russo admitted liability. A jury awarded Reifer $4,251,516. Russo assigned to Reifer his rights under the Westport policy. Reifer sought a declaratory judgment that Westport was required to show it was prejudiced by Russo’s failure to notify and, failing to do so, owed a duty to defend and indemnify. The federal district court, sua sponte declined to exercise jurisdiction and remanded to state court. The Third Circuit affirmed. View "Reifer v. Westport Ins. Corp." on Justia Law

In 2006, Lincoln T. Griswold purchased an $8.4 million life insurance policy. Griswold established a Trust for the sole and exclusive purpose of owning the policy and named Griswold LLP as the Trust’s sole beneficiary. In 2008, the Trust sold its policy to Coventry First LLC. The written purchase agreement contained an arbitration clause. After learning that the policy was sold for an allegedly inflated price that included undisclosed kickbacks to the broker, Griswold sued. Coventry moved to dismiss the case for lack of standing or, in the alternative, to compel arbitration. The district court denied the motion, concluding that both Griswold and the LLP had standing and that the arbitration clause was unenforceable as to the plaintiffs, who were non-signatories. Coventry appealed. The Third Circuit (1) concluded that it lacked appellate jurisdiction to review the district court’s denial of Coventry’s motion to dismiss; and (2) affirmed the district court’s denial of the motion to compel arbitration against the plaintiffs, as they never consented to the purchase agreement. View "Griswold v. Coventry First LLC" on Justia Law

Plaintiffs, employed by defense contractor Qinetiq to work on a military base in Iraq, were enrolled in Qinetiq’s Basic Long Term Disability, Basic Life, and Accidental Death and Dismemberment insurance policies, governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, under a single contract with Prudential. Qinetiq paid the premiums. Plaintiffs also purchased, with their own funds, supplemental coverage under the same terms as the basic policies; there was a single summary plan description. An employee would file a single claim for basic and supplemental coverage benefits. The plan booklets provided that loss is not covered if it results from war, or any act of war, declared or undeclared. These exclusions applied to both the basic and supplemental policies. The plaintiffs were not otherwise uninsured for excluded injuries. Qinetiq obtained insurance required by the Defense Base Act, 42 U.S.C. 1651. After Prudential denied claims, the plaintiffs sued, alleging violations of the state consumer fraud acts and the Truth in Consumer Contract, Warranty, and Notice Act; breach of contract and breach of the implied covenant of good faith and fair dealing; and intentional or negligent misrepresentation or omission. They contended that Prudential fraudulently induced them to buy supplemental coverage knowing that any claim they filed would likely be subject to the war exclusions, rendering supplemental coverage effectively worthless. The district court dismissed, treating the basic and supplemental policies as components of a single plan, and holding that all state law claims were preempted by ERISA. The Third Circuit affirmed, holding that the supplemental coverage cannot be “unbundled” from ERISA coverage. View "Menkes v. Prudential Ins. Co. of Am." on Justia Law

The Medicare as a Secondary Payer Act, 42 U.S.C. 1395y(b)(2) precludes Medicare from providing benefits when a “primary plan” could be expected to pay. When the primary plan does not promptly pay medical expenses, Medicare makes conditional payments and is entitled to reimbursement. Under the New Jersey Collateral Source Statute (NJCSS), N.J. Stat. 2A:15–97, a tort plaintiff cannot recover damages from a defendant when she has already received funding from a different source. Taransky was injured when she fell at a shopping center. Medicare conditionally paid for her care. She sued the owner, seeking damages for bodily injury, disability, pain and suffering, emotional distress, economic loss, and medical expenses. She settled for $90,000, granting a full release, stating that liens or subrogation claims would be satisfied from settlement proceeds, and stating that Taransky would indemnify the owner with respect to such claims. Based on the NJCSS, Taransky then claimed that her Medicare expenses were not included in the settlement and obtained an order that the settlement was solely recovery for bodily injury, disability, pain and suffering, emotional distress, and non-economic, otherwise-uncompensated loss. A Medicare contractor demanded reimbursement of $10,121.15. Taransky refused to pay, arguing that a tortfeasor was not a “primary plan” and that reimbursement would be inequitable because she had not recovered medical expenses. An ALJ ruled against Taransky. The Medicare Appeals Council affirmed. The district court dismissed, holding that it lacked jurisdiction over proportionality and due process claims because she had not raised them before the agency; that the NJCSS did not apply to conditional Medicare benefits; and that the MSP Act authorized reimbursement from the settlement. The Third Circuit affirmed. View "Taransky v. Sec'y U.S. Dep't of Heath & Human Servs." on Justia Law