Justia Contracts Opinion Summaries

Plaintiff sought insurance coverage for gastric lap band surgery. Defendant, a health-care insurer that covered Plaintiff by virtue of Plaintiff’s husband’s employment with the federal government, refused to cover the full cost of the surgery. Plaintiff brought tort and breach of contract claims against Defendant in the Puerto Rico Court of First Instance. Defendant removed the action to the federal district court, asserting, inter alia, that the Federal Employees Health Benefits Act of 1959 (FEHBA) completely preempted Plaintiff’s local-law claims, thus conferring original jurisdiction on the federal court. Defendant then moved to dismiss the case, arguing that the FEHBA demanded exhaustion of administrative remedies. Plaintiff, in the meantime, requested that the district court remand the case to the Court of First Instance. The district court (1) denied Plaintiff’s motion to remand, holding that the FEHBA completely preempted Plaintiff’s claims and, thus, federal jurisdiction attached; and (2) dismissed the action for Plaintiff’s failure to exhaust administrative remedies. The First Circuit Court of Appeals reversed the district court’s judgment of dismissal and its order denying remand, holding that the court erred in concluding that the FEHBA afforded complete preemption. View "Lopez-Munoz v. Triple-S Salud, Inc. " on Justia Law

This case arose from a contract between Roanoke Healthcare Authority (doing business as Randolph Medical Center) and Batson-Cook Company, a general contractor, to renovate the medical center, located in Roanoke. Batson-Cook received written notice from Roanoke Healthcare that work on the renovation project had been suspended. Batson-Cook notified one of its subcontractors, Hardy, of the suspension and stated that "[t]he contract has been suspended by [Roanoke Healthcare] through no fault of Batson-Cook ... or its subcontractors. [Roanoke Healthcare] is currently out of funding and has subsequently closed the facility while seeking a buyer." Liberty Mutual, the project's insurer, alleged in its answer that Roanoke Healthcare failed to pay Batson-Cook $241,940.51 for work performed pursuant to the contract. Batson-Cook sent Hardy a change order the change order deducted from the subcontract the $147,000 in equipment and materials another subcontractor Hardy hired, Johnson Controls, Inc. (JCI), had furnished for the renovation project and for which it has not received payment. JCI notified Liberty Mutual, Roanoke Healthcare, Batson-Cook, and Hardy by certified letters of its claim on a payment bond. The letters identified Batson-Cook as the general contractor and Hardy as the debtor. Liberty Mutual denied the claim. JCI sued Liberty Mutual, alleging JCI was entitled to payment on the payment bond Liberty Mutual had issued to Batson-Cook. Upon review, the Supreme Court concluded JCI was a proper claimant on the payment bond. Therefore, the circuit court erred in entering a summary judgment in favor of Liberty Mutual and denying JCI's summary judgment motion. View "Johnson Controls, Inc. v. Liberty Mutual Insurance Company " on Justia Law

Alfa Life Insurance Corporation ("Alfa") and Brandon Morris, an agent for Alfa, appealed a judgment entered against them following a jury verdict for Kimberly Colza, the widow of Dante Colza. In 2010, Morris met with Dante to assist him in completing an application for a life-insurance policy. There was disputed evidence as to whether Morris asked Dante whether he had had a moving traffic violation, a driver's license suspended, or an accident in the prior three years, it was undisputed that Morris entered a checkmark in the "No" box by that question. The evidence indicated that Dante applied for the Preferred Tobacco premium rate. Dante named Kimberly as the beneficiary under the policy. At the close of the meeting, Kimberly wrote a check payable to Alfa for $103.70, the monthly Preferred Tobacco premium rate. Kimberly testified at trial that Morris informed them that Dante would be covered as soon as they gave Morris the check. Dante was later examined by the medical examiner. During the examination, Dante informed the examiner that his family had a history of heart disease and that he had had moving traffic violations within the past five years. The day after he had his medical examination, Dante was killed in an accident. Two days later, Alfa received the medical examiner's report, which indicated that Dante's family had a history of heart disease, that Dante's cholesterol was above 255, and that Dante had had moving traffic violations in the past five years. In light of the report, Alfa's underwriters determined that Dante was not eligible for the Preferred Tobacco rate for which he had applied; rather, the proper classification would have been the Standard Tobacco rate (which had a higher premium). Additionally, in light of the moving vehicle violations, Dante was a greater risk to insure and a "rate-up" of $2.50 per $1,000 worth of coverage was required. Alfa notified Kimberly by letter that no life-insurance coverage was available for Dante's death "because no policy was issued and the conditions of coverage under the conditional receipt were not met." Kimberly sued Alfa seeking to recover under the terms of the conditional receipt (an acknowledgment of the policy). She alleged, among other claims, that Alfa had breached the contract and had acted in bad faith when it refused to pay life-insurance benefits on Dante's death. Kimberly also sued Morris, alleging, among other claims, that he had negligently failed to procure insurance coverage for Dante. After a trial, the jury found that Alfa had breached the contract and had in bad faith refused to pay the insurance benefits due, and that Morris had negligently failed to procure insurance. Upon review, the Supreme Court concluded Alfa and Morris were entitled to a judgment as a matter of law on those claims, and the trial court erred by submitting the claims to the jury for consideration. View "Alfa Life Insurance Corporation v. Colza " on Justia Law

Northern, operated by VanDuinen, was a general contractor on public construction projects, legally required to obtain surety bonds. Hanover was Northern’s bonding agent and required Northern to enter into an Indemnity Agreement, which VanDuinen signed in his individual capacity and as Northern’s President. The Midway Airport Project was financed by the FAA and managed by Parsons. In 2008 Northern won the bid and began subcontracting. in 2009 subcontractors complained that Northern failed to pay them in accordance with the bonds and contracts. Work was halted, resulting in a separate complaint, by Parsons, for failure to complete the Project as required. The FAA opted to retain possession of remaining contract funds, $127,086.00, pending resolution of the disputes and completion of the work. Hanover received claims from subcontractors McDaniel ($127,452.78) and Rex Electric ($78,495.00) and a claim for performance from Parsons. Hanover demanded collateral under the Agreement. Northern refused to post collateral or to indemnify Hanover. In 2009 McDaniel filed for bankruptcy; the bankruptcy trustee sued Hanover seeking payment for work performed. In 2012, Hanover paid the trustee $127,452.78 to resolve both McDaniels’s and Rex Electric’s claims. Hanover resolved Parson’s claim by stepping in as general contractor and arranging for completion of the Project. Parsons paid Hanover the $127,086.00 of contract funds the FAA had withheld. Hanover sued Northern and VanDuinen. The district court granted summary judgment in Hanover’s favor. The Seventh Circuit affirmed. The Agreement is unambiguous. Northern breached it, and Hanover is entitled to contractual damages. View "Hanover Ins. Co. v. Northern Bldg. Co." on Justia Law

Plaintiff Ashley Hoffman was insured under an automobile insurance policy issued by defendant Travelers Indemnity Company of America. Following an automobile accident, plaintiff received medical treatment at Baton Rouge General Medical Center and sought reimbursement for the hospital bill under her Travelers' medical payments coverage. The Supreme Court granted certiorari to determine whether the Travelers’ policy, which provided for payment of medical expenses "incurred," allowed plaintiff to be reimbursed for the full, nondiscounted amount of the hospital bill when the charges were contractually reduced pursuant to the hospital’s agreement with plaintiff's health insurer, AETNA Insurance Company. The Court answered that question in the negative and reversed the rulings of the lower courts. View "Hoffman v. Travelers Indemnity Company of America" 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

Dozens of suits were filed against Irving Oil Limited (IOL) alleging environmental contamination by methyl tertiary butyl ether (MTBE) occurring from 1979 to the present. At the time of this opinion, all of the MTBE suits against IOL had been settled. In 2009, IOL filed a complaint asking the superior court to declare that ACE INA Insurance (ACE) had a duty to defend and indemnify in the MTBE suits. The superior court granted IOL’s motion for summary judgment in part and denied it in part, concluding that it could not declare that IOL was entitled a judgment on the duty-to-defend count as a matter of law. IOL appealed. The Supreme Court dismissed IOL’s appeal and ACE’s cross-appeal, holding that although a decision that an insurer does not have a duty to defend its insured is ordinarily immediately appealable under the death knell exception to the final judgment rule, the exception did not apply in this case because there were no MTBE cases pending against IOL. View "Irving Oil Ltd. et al. v. ACE INA Ins." on Justia Law

Dennis Hagenow was injured in an automobile accident with Betty Schmidt. Hagenow and his wife (Plaintiffs) filed an uninsured motorist claim with American Family Mutual Insurance Company. American Family denied the claim, determining that Schmidt’s vehicle was not an uninsured motor vehicle under Plaintiffs’ policy. Plaintiffs subsequently filed a breach of contract action against American Family. American Family moved for summary judgment, arguing (1) because Schmidt had automobile insurance at the time of the collision, she was not an uninsured motorist (UM) under the policy; and (2) Plaintiffs were not “legally entitled to recover” under the policy because a jury in Plaintiffs’ underlying action against Schmidt found Schmidt not liable for Plaintiffs’ damages. The district court denied the motion. The Supreme Court reversed, holding (1) Plaintiffs were not “legally entitled to recover” under Iowa law or their UM policy; and (2) Schmidt’s vehicle was not an uninsured motor vehicle under the terms of Plaintiffs’ UM provision. Remanded. View "Hagenow v. Am. Family Mut. Ins. Co." on Justia Law

John Zeverino owned a semi-tractor that was leased to Taylor Truck Line. In 2009, the tractor was involved in a multi-vehicle accident that occurred while Zeverino was on his way to a maintenance facility for repairs to the tractor. Acceptance Casualty Insurance Company and Great West Casualty Company both issued liability insurance policies for the semi-tractor. Acceptance provided a non-trucking use policy, and Great West provided a commercial truckers’ policy. Each insurer filed a motion for summary judgment asserting the other was responsible for coverage for the accident. The circuit court concluded that the Acceptance policy provided coverage. The court of appeals affirmed. The Supreme Court affirmed, holding that Acceptance’s non-trucking use policy provided coverage for the accident, and neither of the two exclusions in Acceptance’s policy precluded coverage. View "Casey v. Smith" on Justia Law

Steven Thomas & Sons (T&S), LLC did excavation and soil compaction work for an addition to a school building in the Kimball School District. The School District was later informed that problems in the building caused by settling issues were due to negligently performed work by T&S. The School District brought suit against T&S and other defendants. T&S’s commercial general liability insurer, Employers Mutual Casualty Company (EMC) withdrew from contributing to T&S's defense, asserting that the policy excluded coverage for continuous or progressive property damage that occurred before the effective date of the policy, and the problems to the building were observed before the 2007 policy date. In 2005 and 2006, T&S was insured by AMCO Insurance Company. Ultimately, AMCO paid defense costs and indemnified T&S for its share of the arbitration award in favor of the School District. AMCO subsequently brought a declaratory judgment action against EMC seeking a ruling that EMC had a joint duty to defend T&S and a declaration that EMC’s policy exclusion was void as against public policy. The circuit court granted summary judgment in favor of EMC. The Supreme Court affirmed, holding that EMC’s exclusion did not violate public policy. View "AMCO Ins. Co. v. Employers Mut. Cas. Co." on Justia Law