Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Allstate v. Moser, Moser was injured in a one car accident. Moser was a passenger, and her brother was driving. Allstate’s policy was issued in Colorado to Moser’s parents . It had $100,000 limits and contained a family exclusion. There was an accident in Kansas. Kansas had a compulsory insurance law which required that all policies provide at least $25,000 per person, up to $50,000 per accident. Allstate’s policy also provided that when the vehicle was operated in other states, the policy would comply with the liability insurance requirements in those states. Moser also had an umbrella policy which provided coverage in excess of $100,000 when the primary policy limits were exhausted. When Moser sued, Allstate filed a declaratory judgment action. In that action, it was determined that Allstate’s liability under the policy was limited to the minimum requirements under Kansas law – $25,000.

On appeal, the issue was whether Allstate’s liability was limited to $25,000 or whether the entire policy limit was available to Moser. The Tenth Circuit affirmed the trial court’s ruling that limited Allstate’s liability to $25,000. Because $25,000 was less than the policy limits, the underlying policy was not exhausted, and therefore the umbrella policy did not apply.

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The Tenth Circuit has determined that ERISA’s exception for governmental plans applies to plans sponsored by Indian tribes, so long as those plans meet the requirements of the definition. This means that ERISA preemption does not apply to insurance plans involving Indian tribes. Dobbs v. Anthem Blue Cross Blue Shield was the second time the case came before the Tenth Circuit. The first time, the Tenth Circuit remanded the case, asking the district court to make factual findings, and stating that “i]f the Dobbses’ benefit plan meets the new definition of governmental plan under § 1002(32), ERISA will not preempt their state-law causes of action against Anthem.” On remand, the district court found that the plan would be preempted under the new statutory language regarding governmental plans, but that the amendment was not retroactive.

The Tenth Circuit explained “law of the case” principles and stated that it had already determined by implication that the amendment would retroactively apply to the Dobbses’ claims. It questioned whether it could affirm a district court decision that rejects a prior panel decision as clearly erroneous, citing In re Smith, 10 F.3d at 724 (noting that the Tenth Circuit is bound by the precedent of prior panels absent en banc reconsideration or a superseding contrary decision by the Supreme Court). T he court discussed the general principles regarding when statutory amendments are applied prospectively or retrospectively.

The court reversed and remanded the case, once more asking the district court to make the factual determination it had previously asked it to make. 

Rather than looking to Mr. Dobbs’ duties, the court must determine whether all plan participants are employees ‘substantially all of whose services . . . are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).’

Finally, the court held that the Dobbses could not claim fraud as to benefits. Those claims relate to the contracted for benefits, thus, if the plan was subject to ERISA, those claims would be preempted.

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Federal Judge Vacates Reinsurance Award for Evident Partiality

A federal judge has vacated a reinsurance arbitration award on grounds of evident partiality, ruling that the failure of two arbitrators to disclose their involvement in a second arbitration involving affiliates of the parties in the first arbitration and a common witness constituted a material conflict of interest.

The rest of the story is here

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