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

BDC lent $800,000 to a company owned by the Suggs, who personally guaranteed the loan and secured it with a $200,000 mortgage on their Shaker Heights home. Bank of America and MidFirst Bank held more senior mortgages on the home. The Suggs’ home suffered serious water damage from a burst pipe in 2014. State Farm insured the home for up to $352,130. State Farm denied their claim on the ground that the Suggs had failed to heat their home at a temperature required by their policy.The Suggs sued State Farm in an Ohio state court and sued all three lenders with mortgages on their home, explaining that these lenders “have an interest in the policy proceeds” because the policy entitled them to payment even if State Farm had a valid defense against the Suggs. BDC did not appear. After the case settled, the state court found that BDC had no right to the proceeds. BDC did not seek relief in the state court but filed a federal suit alleging that State Farm, its lawyers, and the Suggs’ lawyers colluded to defraud it. The district court dismissed the suit under Ohio’s claim-preclusion law. The SIxth Circuit affirmed. BDC cannot meet the demanding test required to attack the state court’s judgment in this collateral fashion. View "Business Development Corporation of South Carolina v. Rutter & Russin, LLC" on Justia Law

Tymoc died in a single-car accident. At the time of the accident, Tymoc was traveling between 80-100 miles per hour; the speed limit was 60 miles per hour speed. As Tymoc attempted to pass multiple cars, the gap between a car in the right lane and a box truck in the left lane closed. Tymoc veered to the right, causing his vehicle to drive off the road, roll down an embankment, striking multiple trees, and flip over several times.Through his employer, Tymoc was covered by Unum life insurance; the policy provided both basic life insurance coverage and an additional accidental death benefit. Unum approved a $100,000 payment of group life insurance benefits but withheld $100,000 in accidental death benefits, explaining that Tymoc’s conduct—speeding and reckless driving—caused his death, thereby triggering the policy’s crime exclusion. In a suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001– 1191d, the district court entered in Fulkerson’s favor as to the accidental death benefits. The Sixth Circuit reversed. Reckless driving falls within the unambiguous plain meaning of crime. View "Fulkerson v. Unum Life Insurance Co. of America" on Justia Law

The Indian Health Service (IHS), operates direct healthcare facilities and funds Contract Health Services (CHS) programs for persons of American Indian descent, 25 U.S.C. 1603(5), (12). Under 25 U.S.C. 5301, tribes may manage and staff their own IHS facilities, contract with private insurers for tribal coverage, and operate their own CHS programs. IHS health programs are “the payer of last resort.” Medicare, Medicaid, or private insurance must pay before IHS reimbursement is available. The 2003 Medicare Prescription Drug Improvement Act authorized HHS to demand Medicare pricing from hospitals providing services to tribes through CHS programs, 42 U.S.C. 1395cc. The Tribe, which administers a CHS program, contracted with BCBSM for healthcare coverage. The Sixth Circuit previously reversed the dismissal of the Tribe’s lawsuit based on BCBSM’s alleged failure to insist on “Medicare-like rates” for care authorized by the Tribe’s CHS program and provided by Medicare-participating hospitals. On remand, the district court granted BCBSM summary judgment, concluding that the Tribe’s payments for CHS care through BCBSM's plans were not eligible for Medicare-like rates. The district court interpreted federal regulations as limiting the requirement of Medicare-like rates to payments for care that was authorized by CHS, provided by Medicare-participating hospitals, and directly paid for with CHS funds. The Sixth Circuit reversed. On remand, the district court must first address whether the Tribe’s CHS program authorized the care for which they assert they were entitled to Medicare-like rates. If the CHS program authorized this care, the court should then consider BCBSM’s alternative arguments. View "Saginaw Chippewa Indian Tribe of Michigan v. Blue Cross Blue Shield of Michigan" on Justia Law

Cardinal, a distributor of wholesale pharmaceutical products, purchased commercial umbrella insurance policies from National Union. Various plaintiffs have filed more than 3,000 lawsuits against Cardinal and other manufacturers, distributors, and dispensers of prescription opioids. The majority of federal cases are consolidated in coordinated, multi-district proceedings in the Northern District of Ohio. Plaintiffs “assert a wide variety of federal and state causes of action, many seeking to recover for increased payments, services, treatment, and/or care allegedly necessitated by the opiate-related addictions, overdoses, and deaths of those they serve.”National Union has reserved its right to deny coverage for opioid litigation claims. Cardinal sought a declaratory judgment in the Franklin County, Ohio Court of Common Pleas. National Union removed the suit to the Southern District of Ohio. The district court granted Cardinal’s motion and remanded the case to state court. The Sixth Circuit affirmed. The district court found no evidence of procedural fencing and properly declined to weigh that factor in favor of federal jurisdiction. The court noted a preference to allow state courts to answer questions of insurance contract interpretation and the actively developing nature of insurance coverage claims related to opioid litigation in Ohio state courts. The district court adhered to the principles of federalism and comity and engaged in a reasoned analysis of each factor in declining jurisdiction. View "Cardinal Health, Inc. v. National Union Fire Insurance Co. of Pittsburgh" on Justia Law

Under the “individual mandate” within the Patient Protection and Affordable Care Act of 2010, non-exempt individuals must either maintain a minimum level of health insurance or pay a “penalty,” 26 U.S.C. 5000A, the “shared responsibility payment” (SRP). The McPhersons did not maintain health insurance for part of 2017, and Juntoff did not maintain health insurance in any month in 2018. They did not pay their SRP obligations. In each of their Chapter 13 bankruptcy cases, the IRS filed proofs of claim and sought priority treatment as an “excise/income tax”: for Juntoff, $1,042.39, and for the McPhersons, $1,564.The bankruptcy court confirmed their plans, declining to give the IRS claims priority as a tax measured by income. The Bankruptcy Appellate Panel reversed. DIstinguishing the Sebelius decision in which the Supreme Court determined that the SRP constituted a “penalty” for purposes of an Anti-Injunction Act analysis and a “tax” under a constitutionality analysis, the Panel concluded that the SRP is not a penalty but a tax measured by income. It is “calculated as a percentage of household income, subject to a floor based on a specified dollar amount and a ceiling based on the average annual premium the individual would have to pay for qualifying private health insurance.” View "In re: Juntoff" on Justia Law

Star, a mine staffing company, bought workers’ compensation insurance from Granite. Early in each policy year, Star gave Granite an estimate of its total payroll, which Granite used to calculate an estimated premium. Star paid the preliminary installment. After each year, Granite audited Star’s records to produce an exact payroll number, then charged additional premiums or made reconciliation payments. A 2018 audit revealed that Star had significantly underestimated its 2017 payroll, as it had for 2016. To avoid a similar situation with the 2018 policy, Granite adjusted its estimated premium for Star halfway through the year. In accordance with industry guidelines, Granite increased Star’s 2018 estimated premium to reflect 2017’s actual payroll numbers, giving Star four weeks to pay the difference. Star never paid. Granite canceled the policy three months early. Star closed its business. To determine Star’s final premium—and whether it owed a reconciliation payment—Granite needed to complete its year-end audit. Star would not comply. Granite’s final bill, including the updated estimated premium, prorated for early cancellation, was $1,485,323, including an “audit noncompliance charge” (double 2018’s total estimated premium).Granite sued for breach of contract. The Sixth Circuit affirmed summary judgment for Granite, rejecting Star’s argument that the noncompliance charge is an unenforceable penalty. Kentucky’s insurance regulator approved the rates that Kentucky insurance companies charge, barring their review. View "Granite State Insurance Co. v. Star Mine Services, Inc." on Justia Law

After more than a decade of employment, a seizure disorder ended Dr. Autran’s career as a P&G research scientist. Autran received total-disability benefits under P&G’s Health and Long-Term Disability Plan in 2012-2018. The Committee terminated those benefits after concluding that Autran no longer qualified as totally disabled within the meaning of the Plan, and awarded him his remaining 19 weeks of partial disability benefits. Autran sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). He died while the suit was pending.The Sixth Circuit upheld summary judgment in favor of the Committee. Because the Plan delegates discretionary authority to the Committee to decide benefits claims, the court applied the deferential arbitrary-and-capricious test. The Committee had rational reasons to depart from the earlier total-disability finding. Among other new evidence, a doctor who performed many objective tests on Autran for over six hours found no basis to conclude that he suffered from a debilitating condition. Thorough medical opinions gave the Committee a firm foundation to conclude that Autran did not, in the Plan’s words, suffer from a “mental or physical condition” that the “medical profession” would consider “totally disabling.” View "Autran v. P&G Health & Long Term Disability Benefit Plan" on Justia Law

Plaintiffs in this consolidated appeal are businesses that operate Michigan-based restaurants and entertainment venues that made claims against their commercial property insurance policies, held by Cincinnati Insurance, based on COVID-19 losses. These policies contained three provisions under which Cincinnati Insurance would compensate a policyholder only if the policyholder suffered direct physical loss or damage to its covered property, or if loss to a non-policy holder’s property prevented access to a policyholder’s property. Cincinnati Insurance denied their claims, indicating that neither the presence of the COVID-19 virus nor shutdown orders issued by the Michigan governor constituted physical loss or damage.The district court dismissed the plaintiffs’ claims, finding that, under Michigan law, “direct physical loss” to property covers only tangible harm or damage to property, rather than mere loss of use. The Sixth Circuit affirmed, reasoning that the Michigan Supreme Court would agree with its interpretation of the law–that COVID-19-related shutdown orders do not constitute “direct physical loss or direct physical damage” to property because “a loss of use simply is not the same as a physical loss.” The plaintiffs alleged “not tangible, physical losses, but economic losses.” View "Dino Drop, Inc. v. Cincinnati Insurance Co." on Justia Law

In response to the COVID-19 pandemic, Kentucky temporarily (for about six weeks) barred healthcare corporations like Estes, which operates two dental clinics from providing nonemergency care. Estes lost substantial income as a result. Estes’ property insurance policy required Cincinnati Insurance to pay Estes for lost business income that results from a “direct” “physical loss” to its dental offices.The Sixth Circuit affirmed the dismissal of Estes’ suit against Cincinnati, noting that circuit courts have uniformly interpreted this “physical loss” language not to cover similar pandemic-related claims under the laws of many other states. The court concluded that Kentucky’s highest court would agree with those decisions. The phrase “physical loss” would convey to the “average person” that a property owner has been tangibly deprived of the property or that the property has been tangibly destroyed. COVID-19 and the government shutdown orders caused only intangible or economic harm. View "Estes v. Cincinnati Insurance Co." on Justia Law

In 1955-1976, WPC, a manufacturer of industrial valves, bought primary and excess level liability insurance policies from OneBeacon’s predecessor. In 2001, asbestos lawsuits started coming against WPC. OneBeacon began its defense. The parties reached an impasse over several issues.WPC sought declaratory relief in Ohio state court concerning OneBeacon’s obligations. WPC also sued OneBeacon in federal court, alleging breach of contract. OneBeacon unsuccessfully moved to dismiss or stay the case. The district court rejected OneBeacon’s argument that the federal and state proceedings were parallel. WPC amended its state complaint, adding breach of contract claims. The state court held that OneBeacon had not committed the alleged breaches. OneBeacon again moved to dismiss WPC’s federal lawsuit, arguing that the state court’s ruling precluded WPC’s federal claims. The court acknowledged that the state court judgment likely satisfied the elements of claim preclusion, but declined to dismiss. The court stayed the case, noting that WPC’s amended state court complaint made the state and federal proceedings parallel. After OneBeacon filed its federal notice of appeal, the Ohio Court of Appeals reversed in part, finding that OneBeacon breached some of the policies. Pennsylvania subsequently liquidated OneBeacon and stayed all litigation.The Sixth Circuit reversed, first holding that exercising appellate jurisdiction here will in no way “hinder [the] operation” of Pennsylvania’s claims process and priority scheme. Claim preclusion bars the federal suit. View "William Powell Co. v. National Indemnity Co." on Justia Law