Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Viktor Barengolts was driving a tractor-trailer on Route 30 in Wheatland Township, Illinois when he rear-ended the Bernals in their pickup truck, causing serious injuries and property damage. The Bernals sued Unlimited Carrier, the company whose placard appeared on the tractor at the time; Viktor Barengolts; and Michael Barengolts, who owned the tractor. Viktor contacted Artisan, his insurance provider, which denied coverage, stating that the Contingent Liability Endorsement excluded coverage because he was driving the tractor on behalf of Unlimited Carrier at the time of the accident. The policy lists Viktor as an insured and Michael as an additional insured. Michael’s tractor is covered. Counsel for Unlimited Carrier wrote to Artisan, demanding that it defend the Barengoltses. Artisan refused. Michael disclosed that he did not sign a lease with Unlimited Carrier for use of the tractor until eight days after the accident. Counsel for the Barengoltses again unsuccessfully tendered the defense and sought indemnity. NAICO, the insurer for Unimited Carrier, defended the Barengoltses under a reservation of rights and paid settlements totaling $98,750 to the Bernals. The Seventh Circuit affirmed that Artisan had a duty to defend, that it breached that duty, and that Artisan was estopped from asserting defenses under its policy, stating that Artisan gambled and lost. View "Nat'l Am. Ins. Co. v. Artisan & Truckers Cas. Co." on Justia Law

McCormick bought a single-premium variable life-insurance policy that permits borrowing against its cash value. Loans are secured by moving an equivalent amount from sub-accounts that the policyholder can invest to a “general account” that draws 4% interest. The policyholder owes 4.7% on any borrowed sums, so the net is 0.7% per annum, plus foregoing the opportunity to exercise discretion about how to invest the borrowed sum. If the owner does not pay the annual interest, “it will be added to the principal of the loan and will bear interest.” McCormick borrowed against cash value and did not pay interest. Independence, the insurer, added the unpaid interest “to the principal of the loan” (which caused additional sums to be moved from investments into the general account) and charged interest on the higher indebtedness. Compound interest has increased the debt by $44,000, which, if not repaid, will reduce the death benefit. McCormick sought a declaration that the $44,000 is not owed, because, when unpaid interest was added to principal and moved to the general account, it was “paid” automatically. The court entered judgment for Independence. The Seventh Circuit vacated with instructions to dismiss. Removal rested on diversity of citizenship, and $75,000 is the minimum amount in controversy for that jurisdiction. View "McCormick v. Independence Life & Annuity Co." on Justia Law

Dugan was involved in an automobile accident with a vehicle owned by Rainey and claimed more than $200,000 in damages. Rainey’s insurer, American Family, offered $100,000 (the limit under Rainey’s policy). The Dugans accepted, then sought recovery from Nationwide pursuant to the underinsured motorist provisions of their policy, which insured four vehicles and provided underinsured motorist coverage limits of $100,000 per person and $300,000 per accident for each of the four covered vehicles. The policy declarations page lists each of the vehicles separately with the separate underinsured motorist limit applicable to each vehicle and the separate premium charged for each vehicle. The Dugans made a demand of $400,000, the aggregate limit of the four underinsured motorist coverage limits. Nationwide denied payment, stating that express policy language limited their recovery to $100,000, less the $100,000 American Family payment. Nationwide sought a declaratory judgment and the Dugans counterclaimed, claiming that, because the policy’s language was ambiguous, they were entitled to aggregate, or “stack,” the underinsured motorist limits applicable to each vehicle, subject to the $100,000 setoff. The Seventh Circuit affirmed that, even if the policy permitted stacking, Illinois law entitles Nationwide to apply its setoff four times, once against each “separate, stackable policy” limit, thereby exhausting Nationwide’s underinsured motorist coverage View "Nationwide Agribusiness Ins. v. Dugan" on Justia Law

Procaccio purchased its workers' compensation insurance from West Bend. This litigation concerns three policy years: 2006, 2007, and 2010. Procaccio contends that West Bend’s offset procedure effectively nullified its Illinois Contracting Classification Premium Adjustment Program (ICC) credit for these policy years, resulting in substantial overcharges. The district court agreed and awarded a large sum in damages. The court concluded that the insurance policy contained no agreement to adjust the Schedule Modification credit after the ICC credit became due; West Bend needs parol evidence to prove its version of the parties’ agreement, but the insurance contract was fully integrated so any evidence of an oral understanding with Procaccio’s president is inadmissible; and while West Bend had the unilateral right to issue endorsements, that authority is cabined by contractual and statutory restrictions on its ability to alter its rates. The court further concluded that, even if the Schedule Modification credit was artificially inflated for these policy years, West Bend was not permitted to reduce it based on Procaccio’s ICC credit. Accordingly, the court affirmed the district court's judgment. View "West Bend Mut. Ins. Co. v. Procaccio Painting & Drywall" on Justia Law

Wheaton College, a nondenominational Illinois college, hires from a various Christian traditions and admits students of varied faiths, but requires all to sign a “Covenant” that requires them to “uphold the God-given worth of human beings, from conception to death.” The Covenant does not mention contraception, but Wheaton believes that “emergency contraception” is forbidden on religious grounds if it can destroy a fertilized ovum. Wheaton also opposes intrauterine devices (IUDs) that prevent implantation of a fertilized ovum. Wheaton excludes coverage of emergency contraception and IUDs from its health plans, but covers “traditional contraception.” Of the 20 types of FDA-approved female contraceptives, Wheaton disapproves only emergency contraceptives and certain IUDs. Wheaton challenged the Affordable Care Act as violating the Religious Freedom Restoration Act, 42 U.S.C. 2000bb-1, and the First Amendment, by making it complicit in the provision of emergency-contraception. The district court denied a preliminary injunction. The Seventh Circuit affirmed, stating: What had been Wheaton’s plan, concerning emergency contraception, the Affordable Care Act made the government’s plan when Wheaton refused to comply with the Act’s provision on contraception coverage. When notified that a health insurance provider has religious objections to providing coverage for some government-approved medical procedure, the government directs the insurer to provide the coverage itself. View "Wheaton College v. Burwell" on Justia Law

Plaintiffs (a class of 1,593) alleged that Visteon failed to deliver timely notice to ex-employees, offering them an opportunity to continue health insurance at their own expense, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). An employer has 44 days after the end of a person’s employment to provide notice and essential details, 29 U.S.C. 1166(a)(2). The court found that Visteon had provided untimely notice to 741 former employees, and that the notice averaged 376 days late for those persons. The court awarded $2,500 to each class member who had received untimely notice (a total of about $1.85 million), a sum that does not depend on how long the delay was for any given person. While the suit was pending, Visteon was reorganized in bankruptcy. The plan provides that debts of this kind will be paid 50¢ on the dollar, so each of the 741 will receive $1,250. The court also ordered Visteon to pay class counsel $302,780 as attorneys’ fees plus costs of about $11,000. The Seventh Circuit affirmed the award of attorneys’ fees, but otherwise dismissed plaintiffs’ challenge to the penalty as untimely, having been filed several months after the district court’s delayed entry of judgment. View "Pierce v. Visteon Corp." on Justia Law

Kielar, a pharmacist, got many patients from Dr. Barros, whose office was in the same building, and began defrauding two insurance companies. Kielar forged prescriptions for Procrit under Barros’s name and submitted them for payment, knowing that Procrit had neither been prescribed, nor provided, to the individuals under whose policies he sought reimbursement. The insurers lost $1,678,549. Kielar was indicted for health care fraud, 18 U.S.C. 1347, with a forfeiture allegation, 18 U.S.C. 982(a)(7) that identified properties subject to forfeiture, including a Florida property. Kielar asserted that he needed the proceeds of its sale to pay legal fees. The court granted a motion to release lis pendens and ordered that the proceeds of the sale be placed in escrow with the U.S. Marshals Service. Kielar unsuccessfully requested that the court allow him to use the sale proceeds “for taxes, legal fees and other expenses.” He was convicted of six counts of health care fraud; three counts of aggravated identify theft, 18 U.S.C. 1028A(a)(1); and of using false records to impede a federal investigation, 18 U.S.C. 1519. The Seventh Circuit affirmed, rejecting arguments that the court erred in failing to hold a hearing on his request to release his escrowed funds, by limiting cross-examination of Barros, and by preventing Kielar from calling a former patient as a defense witness. View "United States v. Kielar" on Justia Law

In 2009, CE filed a class action suit under the Telephone Consumer Protection Act, 47 U.S.C. 227, against King. King had commercial general liability and umbrella policies from three insurance companies, but all three disclaimed any obligation to defend or indemnify, based on provisions in the policies that appeared to exempt liability under the Telephone Consumer Protection Act from coverage. The district court certified the class. On remand, CE and King agreed to settle the case for $20 million, the limit of the insurance policies. Their agreement, approved by the district court, provided that only one percent of the judgment ($200,000) could be executed against King. Upon learning of the proposed settlement, the insurers sought a state court declaratory judgment. A state court ruled that the insurance policies do not cover liability under the Act, but CE is appealing that decision. After the settlement agreement in the federal case, but before its approval, the insurers moved to intervene under Fed.R.Civ.P. 24(a), (b), hoping to delay approval of the settlement until there was a state-court determination. The Seventh Circuit affirmed denial of the motion to intervene as untimely. View "Valley Forge Ins. Co. v. King Supply Co., LLC" on Justia Law

In 2010, Advance obtained a policy from Cincinnati Insurance on Middleton properties. After a 2011 hailstorm, Larson, Advance’s president, filled out a form reporting damage. Larson inspected the roof with Jorgenson, a Cincinnati claims representative. Jorgenson’s estimate “note[d] some dents to soft metal roof vents and AC fins but stated that he “did not observe any damage to roofing.” Jorgenson estimated $1,894.74 for repairs and sent Larson a check, calculating a $1,000 deductible. Six months later, Advance was considering selling the building. The potential buyer, Welton, had the roof inspected. The inspector’s report prompted Advance to ask Jorgenson to reopen Advance’s claim. He arranged for a new inspection. The resulting report noted roof panel denting that “will not affect the performance of the panels (roofs) or detract from the panels[’] (roofs[’]) life expectancy.” Months later, Advance sold the building, without any further developments relating to its claim. Advance sued. The district court held that the policy did cover the hail damage, but that Cincinnati’s refusal to acknowledge coverage was not in bad faith. The parties stipulated to the cost of a replacement roof, $175,500. The court entered a final judgment in that amount in favor of Advance. The Seventh Circuit affirmed. View "Advance Cable Co., LLC v. Cincinnati Ins. Co." on Justia Law

Orr died in a motorcycle accident. His daughters sought benefits under a group life insurance policy governed by the Employment Retirement Income Security Act and issued by USIC to Orr’s former employer. The policy provided accidental death, subject to exclusions, including one for loss resulting “directly or indirectly from … intoxication[.]” USIC asserted that Orr’s death resulted from his intoxication. The letter explained that autopsy and toxicology reports revealed that Orr’s blood alcohol level at the time of the accident exceeded the legal limit and that USIC’s medical consultant opined that Orr “would have been impaired in attention, coordination, and balance,” as a result. The letter advised the Orrs of their right to seek review and included a copy of USIC’s Life Claims Denial Review Procedure, stating, in boldfaced, all-caps print, that a request for review must be submitted in writing within 60 days and warning: “If … you do not complete both the first and second review before filing a lawsuit, a court can dismiss your lawsuit.“ The document encourages claimants to call with any questions. The Orrs filed suit before completing the review process. The Seventh Circuit affirmed summary judgment in favor of USIC on grounds of failure to exhaust administrative remedies. View "Orr v. Assurant Emp. Benefits" on Justia Law