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

Accretive provides cost control, revenue cycle management, and compliance services to non-profit healthcare providers. Accretive and Fairview entered into a Revenue Cycle Operations Agreement (RCA), accounting for about 12% of Accretive’s revenue during the class period, and a Quality and Total Cost of Care (QTCC) contract, promoted as the future for healthcare services. In 2012, the Minnesota Attorney General sued Accretive for noncompliance with healthcare, debt collection, and consumer protection laws. Accretive wound down its RCA contract short of its term, expecting a loss of $62 to $68 million. The AG released a damaging report on Accretive’s business practices. Fairview cancelled its QTCC contract. Accretive’s stock fell from over $24 to under $10 per share. Plaintiffs filed a class action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging that Accretive concealed its practices to artificially inflate its common stock. The parties negotiated a settlement of $14 million: $0.20 per share ($0.14 with attorneys’ fees and expenses deducted). Notice was sent to 34,200 potential class members. Only one opted out; only Hayes filed an objection. At the fairness hearing, the district court granted approval, awarding attorneys’ fees of 30% and expenses of $63,911.14. Hayes did not attend. The Seventh Circuit affirmed. View "Hayes v. Accretive Health, Inc." on Justia Law

The Strauss home in Mequon was built in 1994. They insured the home with policies issued by Chubb from October 1994 to October 2005. Water infiltrated and damaged the home through a defect present since the completion of construction; the damage went undiscovered until 2010, after those policies expired. Chubb denied coverage, contending that because the damage manifested in 2010 and the “manifestation” trigger applies to first-party property insurance, it could not be responsible for the damage. Chubb also asserted that the claim was submitted after expiration of the applicable statute of limitations. The district court concluded that the “continuous” trigger theory applied due to the language of the Policy such that coverage existed for the entire loss and that the claims were not time-barred. The Seventh Circuit affirmed. In Wisconsin, under the continuous trigger theory, a progressive loss “occurs continuously from exposure until manifestation.” Here, the loss was ongoing and occurred with each rainfall and the policy itself states that “[c]ontinuous or repeated exposure to substantially the same general conditions unless excluded is considered to be one occurrence.” The loss, for purposes of the statute of limitations, occurred all the way up until the damage manifested in October 2010. View "Strauss v. Chubb Indem. Ins. Co." on Justia Law

In 2006 Western Capital made a $2.77 million loan to finance a Chicago development, which failed. Western initiated foreclosure, resulting in allegations that Western had breached its contract, committed fraud, and violated consumer protection statutes. Western requested that its insurers cover costs associated with its defense. Philadelphia Indemnity is Western’s general liability insurer. The mortgages were insured by CT on the standard ALTA form, which covers losses sustained because of defects in title and lien priority, and requires CT to pay costs, attorneys’ fees and expenses incurred in defense of the title or the lien, but excludes “fees, costs or expenses incurred by the insured in the defense of those causes of action which allege matters not insured against by this policy.” The district court declined to enforce the limitation, applied the “complete defense” rule, and held that CT had a duty to defend the entire lawsuit. The Seventh Circuit reversed. An insurer’s duty to defend is contractual. Title insurance, unlike general liability insurance, only indemnifies against losses incurred by reason of defects in title and specifically limits the duty to defend to claims within that coverage. The Illinois Supreme Court has never applied the complete-defense rule to title insurance. View "Western Capital Partners, LLC v. Chicago Title Ins. Co." on Justia Law

Pine Top, an insurer, sued Banco, an entity wholly owned by Uruguay, claiming that Banco owes $2,352,464.08 under reinsurance contracts. The complaint sought to compel arbitration but alternately proposed that the court enter judgment for breach of contract. Pine Top moved to strike Banco’s answer for failure to post security under Illinois insurance law. The district court denied the motion and later denied the motion to compel arbitration. The Seventh Circuit affirmed, citing the Foreign Sovereign Immunities Act, which prohibits attaching a foreign state’s property, thereby preventing application of the Illinois security requirement, 28 U.S.C. 1609. Banco did not waive its immunity in the manner allowed by that law and Pine Top forfeited contentions that the McCarran-Ferguson Act allows a state rule to govern. On the arbitration question, the court held that denials of motions to compel arbitration under the Panama Convention are immediately appealable under 9 U.S.C. 16(a)(1)(B), but that the contract language, reasonably read, does not transfer the right to demand arbitration. View "Pine Top Receivables of IL, LLC v. Banco de Seguros del Estado" on Justia Law

Jones was murdered, leaving no will. He owned a life insurance policy through his employer. He did not designate a beneficiary. The policy provided that the proceeds ($307,000) would go first to a surviving spouse (Jones never married), second to surviving children, third to surviving parents, and fourth to his estate. Quincy claimed to be Jones’s son; Moore, claimed to be his daughter. The insurance company filed an interpleader action. After paying $24,000 for funeral expenses and $137,000 to Quincy, the company deposited the remainder with the court. Jones’s biological sister also claimed the proceeds, arguing that Jones was homosexual and had not fathered children. Jones’s income tax returns showed that he had claimed various children as dependents, sometimes omitting Quincy. A DNA test established that Moore was not his daughter. The district judge declined to order a test for Quincy because Jones had held Quincy out as his biological son and had signed an order in 1996 acknowledging Quincy (then six years old) as his son. The judge awarded Quincy the deposited funds.. The Seventh Circuit affirmed. Rule 35 would have allowed, but did not require, the judge to order a DNA test, given the presumption of paternity under Illinois law.View "MN Life Ins. Co. v. Jones" on Justia Law

Hennessy, a car parts manufacturer, beset by asbestos-related personal injury claims, sought coverage by National Union. The companies entered into a cost sharing agreement in 2008. As claims occurred, Hennessy asked National Union to indemnify its settlement and defense costs. To resolve their differences about what was owed, Hennessy demanded arbitration under the agreement, which instructs arbitrators to apply Illinois law. Hennessy filed suit under the Illinois Insurance Code 215 ILCS 5/155(1), which provides that, in cases involving vexatious and unreasonable delay, the court may award reasonable attorney fees, other costs, plus an additional amount. Hennessy claimed that National Union’s delays in providing coverage were vexatious and unreasonable. The district judge declined to dismiss, acknowledging a provision that “the arbitrators shall not be empowered or have jurisdiction to award punitive damages, fines or penalties,” but expressing a belief that Hennessy’s claim arose under statutory law rather than under the cost-sharing agreement. National Union appealed under 9 U.S.C. 16(a)(1)(A), (B), the Federal Arbitration Act. The Seventh Circuit reversed. Hennessy waived any right to ask the arbitrator to award punitive damages, fines, or penalties for an allegedly unreasonable delay. Having submitted a dispute to arbitration that explicitly excludes a particular remedy, a party cannot sue in court for that remedy.View "Hennessy Indus., Inc. v. Nat'l Union Fire Ins. Co." on Justia Law

Berrey was injured in an automobile accident at work. The at‐fault driver, who did not work with Berrey, carried liability insurance, but the cost of Berrey’s injuries exceeded the policy’s limit. Berrey received partial compensation under her employer’s workers’ compensation scheme but, because her employer was not responsible for the accident, state law granted the workers’ compensation carrier a lien on any recovery from the at‐fault driver. The at‐fault driver’s insurer paid its full policy limit directly to the workers’ compensation carrier. Travelers provided underinsured motorist coverage to Berrey’s employer. The policy covered an employee injured by a third-party who did not carry adequate auto insurance to fully compensate for the employee’s loss. Travelers paid Berrey the difference between her total calculated damages and the at‐fault driver’s policy limit. Berrey claims that Travelers improperly deducted the at-fault driver’s insurance payment from the total it owed to Berrey because that payment was made directly to the workers’ compensation carrier rather than to Berrey herself. The district court entered summary judgment in favor of Travelers. The Seventh Circuit affirmed, finding that the language of the policy supported Travelers’s calculation and that Berrey’s reading would undermine the purpose of underinsured motorist coverage.View "Berrey v. Travelers Indem. Co. of Am." on Justia Law

Lodholtz, injured in 2011 while working at a Pulliam plant in Indiana, filed suit against Pulliam in state court. Pulliam asked Granite State, its insurer, to defend and indemnify. Granite State declined, believing that Pulliam was not liable because Lodholtz could claim workers’ compensation. Lodholtz argued that he was employed by another firm although he was injured on Pulliam’s premises and obtained default judgment for $4 million. Pulliam assigned him its rights against Granite State, which had unsuccessfully moved to intervene in Lodholtz’s suit, then sought a federal declaratory judgment that it had no duty to indemnify. Meanwhile, the Indiana court of appeals affirmed, reasoning that Granite State had sought leave to intervene under a reservation of rights. Indiana courts forbid the insurer to control the defense of the insured without acknowledging coverage. The Indiana Supreme Court declined review. The federal district court subsequently ruled that because Lodholtz’s employer had “leased” Lodholtz to Pulliam, he had been Pulliam’s employee, and that the Indiana judgment should be “disregarded.” The Seventh Circuit granted a petition under 28 U.S.C. 1292(b) and dismissed Granite State’s suit. The U.S. Supreme Court is the only federal court with appellate authority over state courts, but would have had no authority in this case because it involved no issue of federal law.View "Lodholtz v. Granite State Ins. Co." on Justia Law

In 1987, two men were wrongfully convicted of arson and the brutal murders of two residents of Paris, Illinois and were sentenced to death. After years of pursuing post-conviction remedies, they were released in 2004 and 2008. They filed 42 U.S.C. 1983 and malicious prosecution claims against the city, police officers, and prosecutors. Defendants sought defense and indemnification from their insurers, which sought a declaratory judgment to clarify the duty to defend. In 2010, the district court granted two insurers summary judgment, but denied a motion by an excess insurer, which had issued policies that were in effect from 1985 to 1996--encompassing the wrongful investigations and prosecutions but not the exonerations. The district court held that malicious prosecution claims “occur” for insurance purposes when prosecution is instituted. The Seventh Circuit subsequently held that, under Illinois law, a claim for malicious prosecution “occurs” for insurance purposes on the date that the underlying conviction either is invalidated or terminated. In 2012, 33 months after the judgment, Defendants sought reconsideration. The district court denied the motion. The Seventh Circuit affirmed. Defendants were too late to use Rule 59(e), and “Rule 60(b) cannot be used to reopen the judgment in a civil case just because later authority shows that the judgment may have been incorrect.” View "Selective Ins. Co. v. City of Paris" on Justia Law

The Patient Protection and Affordable Care Act requires almost everyone to have health insurance and is enforced by a tax that most businesses must pay if they fail to provide insurance as a benefit, or that anyone not covered by an employer’s plan must pay in lieu of purchasing insurance, 26 U.S.C.4980H, 5000A. The Internal Revenue Service has stated that it will collect the tax in 2014 from uninsured persons, but not from certain businesses. Plaintiffs, a physician and an association of physicians, claimed violation of the separation of powers and the Tenth Amendment. Because they did not complain about their own taxes, the district court dismissed for lack of standing. The Seventh Circuit affirmed. Rejecting an argument that the challenged policies change demand for plaintiffs’ services, the court noted that plaintiffs “appear to believe” that insurance is free to workers--that wages do not adjust to reflect pensions, insurance, and other benefits. By the same logic, they could litigate any tax policy. In a market economy everything is connected to everything else through the price system. To allow a long, intermediated chain of effects to establish standing is to abolish the standing requirement. The Constitution’s structural features are not open to litigation by persons who do not suffer particularized injuries. Plaintiffs, who do not accept insured patients, want to reduce, not increase the number of persons who carry health insurance. Someone else would be more appropriate to argue that the IRS has not done what it should to accomplish the statute’s goal of universal coverage.View "Ass'n of Am. Physicians & Surgeons, Inc. v. Koskinen" on Justia Law