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

Exchange is a reciprocal insurance exchange, under 40 PA. STAT. 961. Members purchase insurance policies and receive indemnification for losses out of Exchange’s pool of funds. A 2012 Complaint alleged that Exchange is owned by subscribers and has no independent officers or governing body; that Indemnity is a public corporation that serves as Exchange’s attorney-in-fact; that Indemnity is permitted to retain up to 25% of Exchange’s premiums; that the balance of premiums is to be used for insurance losses and operational costs and may be distributed to Exchange members as dividends at Indemnity’s discretion; that members who pay premiums in installments must pay service charges and are subject to late payment and policy reinstatement fees; that, beginning in 1997, Indemnity began to retained for itself service charges paid to Exchange, which belonged to Exchange; and that, beginning in 2008, Indemnity misappropriated fees, totaling more than $300 million. The complaint was filed for Exchange by certain members and “on behalf of” all other members. Contending that the words “on behalf of” converted the case into a class action, Indemnity removed the case to federal court. The district court remanded to state court. The Third Circuit affirmed, stating that the case was brought under state rules that bear no resemblance to Rule 23 in that they allow for suits by entities, not a conglomerate of individuals, and does not meet the statutory definition of “class action.” View "Erie Ins. Exch. v. Erie Indem. Co" on Justia Law

In 1980 Pacific purchased a certificate of reinsurance from a predecessor of Global. The Certificate included a sentence that reads, “As a condition precedent, the Company [i.e., Pacific] shall promptly provide the Reinsurer [i.e., Global] with a definitive statement of loss on any claim or occurrence reported to the Company and brought under this Certificate which involves a death, serious injury or lawsuit.” In the early 1990s, claimants began inundating Buffalo Forge with asbestos-related lawsuits. It notified Pacific, its excess carrier, of these claims in April 2001. By 2004, its primary policy was exhausted. In 2005, Pacific instructed its broker to keep its reinsurers informed about developments in the Buffalo Forge matter. The district court applied Pennsylvania law. Under New York law, when a reinsurance contract expressly requires a reinsured to provide its reinsurer with prompt notice of a claim or occurrence as a condition precedent to coverage and the reinsured fails to do so, that failure excuses the reinsurer from its duty to perform, regardless whether the reinsurer suffered prejudice as a result of the late notice. The Third Circuit reversed and applied New York law and concluded that the agreement is fairly susceptible to only one reasonable interpretation. View "Pac. Emp'rs Ins. Co. v. Global Reinsurance Corp. of Am." on Justia Law

Sweeney owned a transmission shop and referred customers to Tradewell, who owned a nearby car rental business. Sweeney would sometimes simply refer customers to Tradewell or drive them to Tradewell’s business. If employees were available, Tradewell would have them take a car to Sweeney’s shop. Sweeney would sometimes pick up a car from Tradewell and deliver it to the customer and would occasionally use the car for personal errands. This was encouraged by Tradewell, who asked Sweeney to make sure the cars were running properly. In 2004 Sweeney, returning from a personal errand, was injured in an accident while driving a car owned by Tradewell that was intended for delivery to a customer the following morning. Sweeney sought underinsured motorist benefits pursuant to his policy with Liberty. Liberty sought a declaration that Sweeney was not entitled to coverage. On remand, the district court granted Liberty summary judgment, finding that “intended use” and “regular use” provisions did not bar coverage, but Liberty could deny coverage based on the “auto business” provision. The Third Circuit reversed, in favor of Sweeney, noting that Sweeney was on a personal errand, not engaged in “auto business” and did not have unfettered use of the cars. View "Liberty Mut. Ins. Co. v. Sweeney" on Justia Law

Attorneys Post and Reid were retained to defend a medical malpractice action. At trial, plaintiffs introduced evidence suggesting that Post and Reid had engaged in discovery misconduct. Fearing that the jury believed that there had been a “cover-up” involving its lawyers, and concerned with the “substantial potential of uninsured punitive exposure,” the hospital, represented by new counsel, settled the case for $11 million, which represented the full extent of its medical malpractice policy limits. The settlement did not release Post, Reid, the law firm where they began representation of the hospital, or their new firm from liability. The hospital threatened Post with a malpractice suit and sought sanctions. Post eventually brought claims of bad faith and breach of contract against his legal malpractice insurer. The district court awarded $921,862.38 for breach of contract. The Third Circuit affirmed summary judgment in favor of the insurer on the bad faith claim and remanded for recalculation of the award, holding that, under the policy, the insurer is responsible for all costs incurred by Post in connection with the hospital’s malpractice claim from October 12, 2005 forward and for all costs incurred by Post to defend the sanctions proceedings from February 8, 2006 forward. View "Post v. St. Paul Travelers Ins. Co." on Justia Law

Liberty entered into a Master Declaration and Easements, Covenants, Conditions and Restrictions for a shopping mall. PMI purchased the property and entered into a Declaration that gave Liberty the right to prior approval of future purchasers and an option to purchase. PMI borrowed $3.5 million from Nationwide, using the property as collateral. Nationwide purchased title insurance from Commonwealth, containing the ALTA 9 endorsement. PMI defaulted and conveyed the property to Nationwide, which attempted to sell to Ironwood. Liberty’s successor, Franklin, refused to approve Ironwood under its rights conferred by the Declaration, based on Ironwood’s planned use as a school. Nationwide claimed that the restrictions upon which Franklin justified refusal rendered the property unusable and unsalable. Commonwealth denied the claim. The district court dismissed. The Third Circuit remanded, holding that Commonwealth is obligated to cover the claim if the restriction causing Nationwide’s harm was covered by the ALTA 9 Endorsement and not expressly excepted on Schedule B. The district court then ruled in favor of Nationwide. The Third Circuit affirmed and remanded for determination of damages owed Nationwide, relying on the plain language of the ALTA 9 rather than deferring to industry custom and usage. View "Nationwide Life Ins. v. Commonwealth Land Title Ins. Co." on Justia Law

Humana sued, alleging that Glaxo was obligated to reimburse Humana for expenses Humana had incurred treating its insureds’ injuries resulting from Glaxo’s drug, Avandia. Humana runs a Medicare Advantage plan. Its complaint asserts that, pursuant to the Medicare Act, Glaxo is in this instance a “primary payer” obligated to reimburse Humana as a “secondary payer.” The district court dismissed, agreeing with Glaxo that the Medicare Act did not provide Medicare Advantage organizations with a private cause of action to seek such reimbursement. The Third Circuit reversed and remanded. The Medicare Secondary Payer Act, in 42 U.S.C. 1395y(b)(3)(A), provides Humana with a private cause of action against Glaxo. Even if the provision is ambiguous, regulations issued by the Centers for Medicare and Medicaid Services make clear that the provision extends the private cause of action to MAOs. View "Humana Med. Plan Inc. v. GlaxoSmithKline LLC" on Justia Law

Title insurance purchasers, on behalf of themselves and similarly situated consumers, claimed that insurers collectively fixed title insurance rates in violation of the Sherman Act. Title insurers in Delaware are required to file their insurance rates with the state Department of Insurance, Del. Code tit. 18, 2504(a). Insurers may comply with the state’s rate filing requirements through a licensed rating organization. Defendants, title insurers, are members of and file their rates through the Delaware Title Insurance Rating Bureau, which is licensed by the DOI; the statutory scheme authorizes cooperative action. The district court dismissed, holding that the complaint is barred by the filed-rate doctrine (which precludes antitrust suits based on rates currently filed with federal or state agencies), lack of standing, and federal antitrust liability exemptions. The Third Circuit affirmed. View "McCray v. Fidelity Nat'l Title Ins. Co." on Justia Law

Title insurance purchasers, on behalf of themselves and similarly situated consumers, claimed that insurers collectively fixed title insurance rates in violation of the Sherman Act and the New Jersey Antitrust Act. In New Jersey, the Department of Banking and Insurance approves and regulates title insurance rates, N.J. Stat. Ann. 17:1C-19(a)(1). Insurers may collectively file rates for approval through a licensed rating organization, thereby authorizing cooperative action. The district court dismissed, holding that the complaint is barred by the filed-rate doctrine (which precludes antitrust suits based on rates currently filed with federal or state agencies), lack of standing, and federal and state antitrust liability exemptions. The Third Circuit affirmed. View "Swick v. Censtar Title Ins. Co." on Justia Law

While working as a dentist, Fleisher obtained long-term disability insurance coverage under separate policies. He obtained the North American policy by membership in a professional organization. The Standard policy is an employee benefit, governed by the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B) and provides for monthly benefits to a maximum of "$10,000 before reduction by Deductible Income," defined to include "[a]ny amount you receive or are eligible to receive because of your disability under another group insurance coverage," but to exclude benefits paid under "any individual disability insurance policy." In 2008, Fleisher became disabled and claimed benefits under both policies. Shortly after Fleisher began collecting under both policies, Standard reduced his monthly benefits from $10,000 to $8,500 based on its determination that the North American policy was another group insurance coverage, and that the $1,500 in benefits he receives under it is deductible income. The district court dismissed his ERISA suit. The Third Circuit affirmed, finding the decision supported by substantial evidence and not unreasonable. View "Fleisher v. Std. Ins. Co." on Justia Law

The company and its affiliates filed for Chapter 11 bankruptcy and sought to resolve asbestos-related liability through the creation of a personal-injury trust under 11 U.S.C. 524(g). As part of its reorganization plan, it sought to transfer rights under insurance liability policies to the trust. The Insurers had provided liability policies to the debtors prior to bankruptcy and objected that the transfer violated the policies' anti-assignment provisions. The bankruptcy and district courts held that 11 U.S.C. 1123(a)(5)(B) preempts those provisions. The Third Circuit affirmed. Section 524 trusts are the only national statutory scheme available to resolve asbestos litigation through a quasi-administrative process. The plain language of 11 U.S.C. 1123(a) evinces clear intent for a preemptive scope that includes transfer of property to a 524 trust; that preemption reaches private contracts enforced by state common law. View "In Re: Fed-Mogul Global, Inc." on Justia Law