Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Plaintiffs worked until 2006, when the plant closed, and retired under a collective bargaining agreement (CBA); that provided that the employer would provide health insurance, either through a self-insured plan or under a group insurance policy and identified the employer’s contribution to the premium. The CBAs provided that the coverage an employee had at the time of retirement or termination at age 65 or older other than a discharge for cause “shall be continued thereafter provided that suitable arrangements for such continuation[] can be made… In the event… benefits … [are] not practicable … the Company in agreement with the Union will provide new benefits and/or coverages as closely related as possible and of equivalent value." In 2011 TRW (the employer’s successor) stated that it would discontinue group health care coverage beginning in 2012, but would be providing “Health Reimbursement Accounts” (HRAs) and would make a one-time contribution of $15,000 for each eligible retiree and eligible spouse in 2012, and in 2013, would provide a $4,800 credit to the HRAs for each eligible party. The HRAs shifted risk, and potentially costs, to plaintiffs. TRW did not commit to funding the HRAs beyond 2013. Plaintiffs sued, claiming that the change breached the CBAs, in violation of the Labor-Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. The district court certified a class and granted summary judgment, ruling that the CBAs established a commitment to lifetime health care benefits. The Sixth Circuit affirmed View "United Steel, Paper, Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. Kelsey-Hayes Co." on Justia Law

A contract for reinsurance between National and Meadowbrook required both parties to submit any reinsurance disputes to a three-member arbitration panel to be comprised of “two arbitrators and an umpire” who were “active or retired disinterested officials of the insurance or reinsurance companies, or Underwriters at Lloyd’s, London, not under the control of either party.” After Meadowbrook initiated arbitration, National named Rosen and Meadowbrook named Schlaybaugh as arbitrators. They deadlocked in selecting an umpire, exchanged slates of candidates, and chose Greene, who disclosed that he was a personal friend of Rosen and that both were members of the reinsurance industry group The panel adopted orders that, “Ex parte communications with any member of the Panel shall cease upon the filing of the parties’ initial pre-hearing briefs.” The panel issued a unanimous Interim Final Award, resolving issues of liability in favor of National, but did not calculate a final damages award at that time. Rosen resumed ex parte communications and National disclosed those communications. After the panel rejected Meadowbrook’s submissions concerning damages, Meadowbrook claimed that it had disenfranchised Schlaybaugh. National claimed that a swift decision was needed, that Schlaybaugh was on vacation and could not be reached, and that his participation would have made no difference. The district court enjoined proceedings. The Sixth Circuit reversed, noting that judicial review of arbitral decisions is narrow and deferential. View "Savers Prop. & Cas. Ins. Co. v. Nat'l Union Fire Ins. Co." on Justia Law

Nicole discovered Shawn’s body in their Ohio home. Shawn had gone out drinking the night before, while Nicole spent the night at a friend’s house. The Medical Examiner’s Office reported the cause of death as “[a]sphyxia by extreme and restricted position (positional asphyxia)” and the manner of death as “[a]cute ethanol intoxication ... ACCIDENT: Prolonged and extreme hypertension of neck and torso while intoxicated.” Shawn’s blood-alcohol level at the time of autopsy was .22%. Nicole filed a $212,000 claim for accidental-death benefits with the Plan, which covers “injury” as a result of an “accident,” defined as “an unintended or unforeseeable event or occurrence which happens suddenly and violently.” No benefits will be paid if the “Covered Person [is] deemed and presumed, under the law of the locale … to be under the influence of alcohol or intoxicating liquors.” Nationwide directed denial of Nicole’s claim, citing Exclusion 12, but quoting an earlier version that provided: “The Covered Person being deemed and presumed … to be driving or operating a motor vehicle while under the influence…” Later, based on amended Exclusion 12, Nationwide upheld the denial; its appeals panel affirmed. Nicole filed suit, asserting claims under the Employee Retirement Income Security Act and a common-law breach-of-fiduciary-duty claim. The district court entered judgment in favor of the defendants, but agreed with Nicole that the appeals panel had breached its statutory duty to provide her with Plan-related documents upon written request, and imposed a penalty of $55 per day ($8,910). The Sixth Circuit affirmed. View "Cultrona v. Nationwide Life Ins. Co." on Justia Law

After a fire damaged her house, Lester filed a claim with Allstate. The company asked Lester and her husband to answer questions under oath. Lester responded that they would submit to examinations only if Allstate first showed them its investigative files. Allstate refused to turn over the files, stating that doing so “could jeopardize the integrity” of its inquiry. Allstate eventually gave Lester 10 days to schedule an examination, warning that, if she did not submit to an examination, it would deny the claim. Lester never responded, but sued the company. The district court granted Allstate summary judgment. The Sixth Circuit affirmed, noting that the insurance policy requires Lester to “submit to examinations under oath” at Allstate’s request and that Tennessee law permits denial of a claim when the policyholder refuses to participate in an examination under oath. The company’s refusal to share its investigative files before examining her is reasonable and did not breach a duty of good faith. Tennessee presumes that failure to participate in an examination results in prejudice to the insurer, and makes it the policyholder’s burden to demonstrate that the company suffered no harm. Lester never introduced any evidence to rebut the presumption. View "Lester v. Allstate Prop. & Cas. Ins. Co." on Justia Law

Javery began working for Lucent as a software engineer in 1998 and participated in Lucent’s Employee Retirement Income Security Act, 29 U.S.C. 1001, qualified disability plan, administered by CIGNA. In November 2002, he reported back pain. His family doctor, Dr. Dorado, prescribed medicine and testing, and recommended some time off work. In January 2003, after Lucent transferred him from Ohio to Illinois, Javery sought treatment from another physician, Seymour. The pain worsened. In May 2005, Javery stopped working on Dr. Seymour’s advice. Lucent approved and paid short term disability benefits from until those benefits expired in November 2005. Lucent notified CIGNA that it believed Javery might be eligible for long term benefits. Javery applied, submitting extensive medical evidence of his pain and resulting cognitive impairment and of his successful application for Social Security disability benefits, but the claim was denied. In addition to claiming that Javery had not shown that he was “disabled” as that term is defined in the Plan, CIGNA claimed that Javery should be judicially estopped from pursuing his ERISA claim because Javery failed to disclose the claim in his Chapter 13 personal bankruptcy action. The district court upheld the denial. The Sixth Circuit reversed. View "Javery v. Lucent Tech., Inc. Long-Term Disability Plan" on Justia Law

As an assembler with Eaton Corporation, McClain purchased the highest level of long-term disability insurance, which was “designed to replace ... 70 percent of [her] monthly base pay.” She stopped working in January 2008, due to a back injury she suffered on the job in June 2007. She received benefits during the first 24 months under the First Tier of the Plan’s coverage, which defined disability as being “totally and continuously unable to perform the essential duties of your regular position with the Company, or the duties of any suitable alternative position with the Company.” After 24 months, the Plan to an “any occupation” standard, providing Second Tier coverage if “you are totally and continuously unable to engage in any occupation or perform any work for compensation or profit for which you are, or may become, reasonably well fit by reason of education, training or experience--at Eaton or elsewhere.” The Plan denied her claim for benefits because her treating physician opined McClain could work part-time, and a market study identified various part-time positions in the area for which she was qualified. The district court rejected her suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The Seventh Circuit affirmed, finding that the determination was not arbitrary.View "McClain v. Eaton Corp. Disability Plan" on Justia Law

Plambeck owned two Kentucky chiropractic clinics that treated patients injured in car accidents, including some State Farm customers. All of the treating chiropractors were licensed to practice in Kentucky. Plambeck was not, although he was licensed elsewhere, and did not treat any patients in Kentucky. State Farm assumed that Plambeck had a license because Kentucky law requires chiropractic practitioners and owners of chiropractic clinics to hold one. When State Farm discovered that Plambeck lacked a state license, it stopped paying the clinics and sued Plambeck to recover all payments since 2000. The district court granted summary judgment to State Farm and awarded $557,124.78 in damages. The Sixth Circuit reversed. Kentucky common law claims for recovery of funds mistakenly paid are based on unjust enrichment. Because State Farm and the clinics never had a contractual relationship, the only applicable theory would require State Farm to show that it paid money to the clinics not due “either in law or conscience.” State Farm did not offer such proof. View "State Farm Auto. Ins. Co. v. Newburg Chiropractic" on Justia Law

In 2000, Rochow sold his interest in Universico to Gallagher and became President of Gallagher. As an employee of Gallagher, Rochow was covered under a LINA disability policy. In 2001, Rochow began to experience short term memory loss, chills, sweating, and stress at work. Gallagher demoted Rochow to Sales Executive-Account Manager. Because of his inability to perform his job, Gallagher forced Rochow to resign in January, 2002. In February 2002, Rochow experienced amnesia, was hospitalized, and was diagnosed with HSV-Encephalitis, a rare, severely debilitating brain infection. LINA repeatedly denied Rochow benefits stating that Rochow’s employment ended before his disability began. In 2004, Rochow sued Cigna, LINA’s parent company, alleging breach of fiduciary duty under ERISA, 29 U.S.C.1104(a). In 2007 the Sixth Circuit affirmed a decision that denial of Rochow’s claims was arbitrary, not the result of a deliberate, principled reasoning process, and did not appear to have been made solely in the interest of the participants and beneficiaries or the exclusive purpose of providing benefits to participants and beneficiaries as required by ERISA. Rochow died in 2008. In 2009, the district court ordered an equitable accounting of profits and disgorgement of $3,797,867.92 under an equitable theory of unjust enrichment. The Sixth Circuit affirmed. View "Rochowl v. Life Ins. Co. of N. America" on Justia Law

YA, a nonprofit corporation serving at-risk youth, transported young people to an event using vans that it owned. After the event four people were unable to board because a van was full. A YA employee requested that 16-year-old Lee, a YA participant who had driven to the event in a separate vehicle, drive them home. Lee agreed. Lee did not possess a valid driver’s license and the car that he was driving had been stolen during a carjacking. Police saw Lee driving erratically, ran a license plate check, and gave chase. Lee lost control and hit a tree. Lee survived, but all four passengers were killed. Their estates filed suit. YA requested defense and indemnification under policies issued by Indemnity: a commercial general liability policy with a $1 million limit and a commercial excess liability policy with a $2 million limit. Indemnity provided a defense, but disputed coverage and sought a federal declaratory judgment. YA counterclaimed that Indemnity breached its duty of good faith and violated the Kentucky Unfair Claims Settlement Practices Act, by misrepresenting coverage and failing to affirm liability within a reasonable time. The district court held that Indemnity was obligated under the CGL policy but not under the excess policy. The state court action settled with Indemnity’s payment of the $1 million limit of the CGL policy, plus $800,000 of the excess policy. The federal court dismissed the bad-faith counterclaims, reasoning that, as a matter of law, Indemnity’s coverage position had not been taken in bad faith. The Sixth Circuit affirmed. View "Philadelphia Indem. Ins. Co. v. Youth Alive, Inc." on Justia Law

Bennett was walking her dog in Garfield Heights, Ohio when she was struck on the left knee by a vehicle driven by Pastel. The accident threw Bennett onto the car’s hood. Bennett sued Pastel’s insurer, State Farm, which characterized as “ridiculous” her assertion that she was an “occupant” of the car, as that term is defined by State Farm’s policy, at the time she was on the vehicle’s hood. The district court granted summary judgment to State Farm. The Sixth Circuit reversed. The policy defines “occupying” as “in, on, entering or alighting from.” The court stated that “we have no reason to explore Bennett’s relationship with the car… the policy marks out its zone of coverage in primary colors.” View "Bennett v. State Farm Mut. Auto. Ins." on Justia Law