Week Ahead in Insurance: Aug. 30, 2021

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(Reuters) - Here are some events of interest to the Insurance Law community this week. All times are local unless otherwise noted.

Monday, Aug. 30

10 a.m. – The U.S. Court of Appeals for the Federal Circuit will hear argument on whether military veterans whose mental-health issues preclude a felony conviction, and who are committed for mental-health treatment as a result, lose their eligibility for a “TDIU” rating – a finding that they are totally disabled because their service-connected impairments render them unemployable. Veteran Gary Philbrook applied for a TDIU evaluation while he was in custody at the Oregon State Hospital after stipulating to a judgment of “guilty (of attempted murder) except for insanity” under Oregon law in 2011. The Veterans Administration approved his application only after his release from custody in 2018. The U.S. Court of Appeals for Veterans Claims last year affirmed that Philbrook was not eligible before his release because the Veterans Benefits law bars TDIU ratings for “any period during which the veteran is incarcerated in a Federal, State, local, or other penal institution or correctional facility for conviction of a felony.” Philbrook argues that the Veterans Claims court erred in finding the statute unambiguous and clearly applicable to his situation.

The case is Philbrook v. McDonough, U.S. Court of Appeals for the Federal Circuit No. 20-2233. For Philbrook: Kenneth Carpenter, Esq. For McDonough: Ashley Akers, U.S. Justice Department.

Wednesday, Sept. 1

9 a.m. – The 5th U.S. Circuit Court of Appeals will hear Texas-based roofing manufacturer Siplast Inc’s appeal from a ruling that its liability insurer, Employers Mutual Casualty Company (EMCC), had no duty to defend or indemnify it against a lawsuit by the Archdiocese of New York, which alleged that a school’s five-year-old roof was leaking and that Siplast had refused to honor its 20-year replacement guarantee. EMCC said there was no potential for coverage because breach of contract is not an accidental occurrence, and because the policy excluded damage to the insured’s own “work” (that is, the roof). A federal judge in Dallas ruled for EMCC last year based solely on the exclusion, saying the Archdiocese was seeking only the $5 million roof-replacement cost. Siplast says the Archdiocese also alleged water damage to the school’s ceilings and interiors, and had specifically demanded monetary damages “in excess of” the $5 million replacement estimate.

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    The case is Siplast Inc. v. Employers Mutual Casualty Co., 5th U.S. Circuit Court of Appeals No. 20-11076. For Siplast: Christopher Thompson of Jackson Walker. For EMCC: Kevin Cain of Martin, Disiere, Jefferson & Wisdom.

    2 p.m. – In a case on remand from the U.S. Supreme Court, the 8th U.S. Circuit Court of Appeals will reconsider its previous ruling that North Dakota’s regulation of pharmacy benefit managers (PBMs) is federally preempted as a regulation of health plans governed by ERISA. The Supreme Court in February remanded the case for further consideration in light of its December decision in Rutledge v. Pharmaceutical Care Management Association (PCMA), which revived an Arkansas law regulating PBM reimbursement rates. The justices said the Arkansas law “did not require ERISA plans to provide any particular benefit to any particular beneficiary in any particular way." The PCMA argues that North Dakota’s law is still preempted because it is much broader than the Arkansas’ law. PCMA has drawn amicus support from the U.S. Chamber, America’s Health Insurance Plans, and the Association of Federal Health Organizations. Thirty state attorneys general and several pharmacy organizations have filed a brief in support of North Dakota.

    The case is Pharmaceutical Care Management Association v. Nizar Wehbi, et al., 8th U.S. Circuit Court of Appeals No. 18-2926. For PCMA: Michael Kimberly of McDermott Will & Emery. For Wehbi: Robert Smith of Katten Muchin Rosenman.

    Thursday, Sept. 2

    10 a.m. – The 2nd U.S. Circuit Court of Appeals will hear its first COVID-19 business property insurance case, an appeal by the Guy Hepner art gallery in Manhattan from a ruling that its all-risk policy from The Hartford’s Sentinel Insurance Co. did not cover its losses from city and state shutdown orders because they did not qualify as “property damage.” The gallery argues that loss-of-use losses are covered under the policy’s business income interruption, extra expense, and civil authority provisions, and has asked the 2nd Circuit to certify the coverage question to the state’s highest court due to its “significant importance” to thousands of other New York businesses. The National Restaurant Association’s affiliated Restaurant Law Center, the New York State Restaurant Association, the New York City Hospitality Alliance and Mario Badescu Skin Care have filed amicus briefs supporting Guy Hepner. Sentinel has amicus support from American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies.

    The case is 10012 Holdings Inc. DBA Guy Hepner v. Hartford Fire Ins. Co. et al., 2nd U.S. Circuit Court of Appeals No. 21-80. For Guy Hepner: John Golaszewski of Casas Law Firm. For Sentinel: Jonathan Freiman.

    Friday, Sept. 3

    2 p.m. – CVS Pharmacy’s opening brief on the merits is due at the U.S. Supreme Court, which agreed in July to consider whether the Affordable Care Act’s anti-discrimination provisions authorize private lawsuits over facially neutral practices that have a disparate impact on people with disabilities. CVS and CVS Caremark, a pharmacy benefits manager, argues that the law allows private lawsuits only for intentional discrimination. The 9th Circuit rejected that argument last year, reviving a proposed class action by California HIV/AIDS patients who allege that Caremark discriminated against them by requiring ERISA-plan participants to use CVS or its mail-order pharmacy, as opposed to all other in-network pharmacies, to get the in-network price for the highest-cost tier of drugs. CVS argues that the 9th Circuit’s decision is inconsistent with Supreme Court precedent interpreting Title VI of the Civil Rights Act of 1964, and that it deepens an existing circuit split between the 6th Circuit and the four other circuits which have considered the question.

    The case is CVS Pharmacy et al. v. John Doe et al., U.S. Supreme Court No. 20-1374. For CVS: Lisa Schiavo Blatt of Williams & Connolly. For Doe et al.: Gerald Sinclair Flanagan of Consumer Watchdog.

    Know of an event that could be included in Week Ahead in Insurance Law? Contact Alexia Garamfalvi at alexia.garamfalvi@thomsonreuters.com

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