Insurance Law

Plaintiff filed a lawsuit under the Employee Retirement Income Security Act after his claim for long-term disability benefits was denied, arguing that the insurance company’s finding that he was not disabled within the meaning of the plan was arbitrary and capricious. The Seventh Circuit affirmed, finding that while the denial letters were not thorough in their explanation of the denial, the plan administrator nevertheless communicated rational reasons for its decision that were based on a fair reading of the plan and the plaintiff’s medical records and this met the requirements under ERISA. (JACKSON-AKIWUMI and PRYOR, concurring)

Plaintiff, an insurance company, sought declaratory judgment arguing that a commercial general liability policy it issued to the defendant did not cover expenses incurred by the insured to repair defective steel columns that the insured contracted with a third company to fabricate and install in a construction project. The Court of Appeals affirmed the judgment of the trial court finding that there was no duty to defend or indemnify, explaining that the defects in the columns did not constitute “property damage” as it was defined under the policy. (LEE, concurring and SCUDDER, concurring in part and dissenting in part) 

Plaintiff filed a malpractice lawsuit against a janitorial company that cleaned a medical facility that provided dialysis treatments after developing sepsis. The parties entered into an agreement where defendant agreed not to defend the case and plaintiff agreed to seek recovery only from defendant’s insurance company. The trial court held an uncontested bench trial and entered judgment for the plaintiff. The insurance company then removed the action to federal court and the district court concluded that a bacteria exclusion in the policy excluded coverage. The Seventh Circuit affirmed, finding that the district court did not err when it found that a bacteria exclusion in an insurance policy excluded coverage. (WOOD and SCUDDER, concurring)

Plaintiff incurred serious injuries in work-related car accident with tortfeasor who had no car insurance. Defendant-insured thereafter sought underinsured coverage under employer’s policy. Plaintiff-insurance company filed instant action to determine limits of its liability under said coverage. Policy had arbitration clause. Dist. Ct. did not err in finding that arbitration clause did not apply to plaintiff’s bad faith claim. Moreover, Dist. Ct. did not err in dismissing plaintiff’s breach of contract bad-faith claim, where there was nothing in policy that required plaintiff to settle defendant’s claim within set time frame, and policy did not incorporate any state insurance regulations or insurance statutes/regulations. Record showed that arbitration panel found that plaintiff had incurred $1,063,895 in damages arising out of accident, and Dist. Ct. did not err in reducing $1,000,000 underinsurance policy limit by Workers’ Compensation benefits received by defendant and by $100,000 settlement proceeds received by defendant in his state-court action against tortfeasor.