Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Plaintiff Steven Lucas filed suit against Liberty Life Assurance Company of Boston (Liberty Life), asserting that the company violated the Employee Retirement Income Security Act of 1974 (ERISA) when it denied his claim for long term disability benefits. Finding that the denial of benefits was not arbitrary and capricious, the district court entered judgment in favor of Liberty Life. Plaintiff appealed the district court's decision. Plaintiff was an employee of the Coca-Cola Company. Liberty Life both administered and insured Coca-Cola's long-term disability benefits plan. Under the plan, it has discretionary authority to determine eligibility for benefits. Plaintiff suffered a work-related injury requiring spinal surgery and, after a short period back on the job, stopped working. He filed a claim for long-term disability benefits in August 2005. In September 2007, Liberty Life terminated Plaintiff's benefits after determining that he was not eligible for continued benefits under the "any occupation" provision: while he might not be capable of performing his own occupation, he was capable of performing some occupation comparable to his former position. Plaintiff filed an administrative appeal with Liberty Life, but the company upheld the denial of benefits. Upon review, the Tenth Circuit concluded that Liberty Life's decision was supported by substantial evidence, and that Plaintiff failed to show that it was arbitrary and capricious. Accordingly, the Court affirmed the district court's decision.

Defendant-Appellant Alan Tukes appealed his federal conviction for bank robbery, arguing that the government’s evidence was insufficient to prove that the bank was insured by the Federal Deposit Insurance Corporation (“FDIC”) at the time of the crime. At trial, a prosecutor asked the bank’s branch manager: “Now, the Compass Bank, is that a bank that is federally insured by the [FDIC]?” She responded: “Yes, it is.” When asked whether the bank “has” any documentation proving its insured status, she replied: “Yes. We have a certificate.” When asked whether the certificate “hangs” in the branch, the manager replied in the affirmative. The district court admitted the certificate, dated November 8, 1993, into evidence. The government offered no additional evidence of the bank’s insured status. At summation, Defendant argued that the government had not proven that the bank was FDIC insured at the time of the robbery. The jury returned a guilty verdict. Viewing the evidence in the light most favorable to the government, the Tenth Circuit concluded "it is clear that a rational juror could have concluded beyond a reasonable doubt that the bank was insured at the time of the robbery." The Court affirmed Defendant's conviction.

Eric Walters was a federal employee covered by a Standard Option health insurance plan (the Plan) administered by Blue Cross Blue Shield of Kansas City (Blue Cross). In November 2007 he went to Weight Loss Healthcare Centers of America, Inc. (Weight Loss) to inquire about surgical treatment for obesity. Because Weight Loss had no contractual arrangement with Blue Cross as either a preferred provider or a participating provider, Walters would expect to pay more than if he used a provider that had a contract. Nevertheless, Walters had outpatient laparoscopic surgery at Weight Loss to help him better control his weight. Although Walters obtained preauthorization from Blue Cross for the surgery, there was no indication in the record that he requested or received information about his out-of-pocket costs. Weight Loss billed Blue Cross for the procedure. The Blue Cross Plan paid $2,300 according to the Plan’s benefit for out-of-network providers. Weight Loss appealed the payment to the federal Office of Personnel Management (OPM), which held that Blue Cross’s interpretation of Walters’s Plan was correct and it had paid the proper amount. The district court affirmed OPM’s decision. Upon review, the Tenth Circuit determined that OPM reasonably interpreted the Plan language. However, the Court reversed the district court’s decision because OPM neither (1) reviewed the evidence that would show whether Blue Cross had correctly calculated the Plan allowance, nor (2) explained why such review was unnecessary.

Plaintiffs Russell and Jennifer Johnson blamed Liberty Mutual for failing to hold onto a pair of tail lights that they said would have helped them win a personal injury lawsuit they wanted to bring. Plaintiffs never asked Liberty Mutual to keep the tail lights, never mentioned their intent to sue, and allowed years to pass without a word. In their case against Liberty Mutual, they faulted the company for failing "to divine their hidden (and perhaps not yet formed) intentions." Upon review of the record by the Tenth Circuit, the Court concluded that because Plaintiffs could not identify a statutory or contractual basis for their claim, "they ask[ed the Tenth Circuit] to create one for them in the common law of tort." But the Court held the common law doesn’t require such "uncommon foresight," and affirmed the lower court's decision to dismiss their case.

Plaintiffs Aviva Life & Annuity Company and American Investors Life Insurance Company (collectively, "Aviva") contended the Federal Deposit Insurance Corporation (FDIC) acted in an arbitrary and capricious manner in rendering insurance determinations concerning certain of Plaintiffs’ bank deposit accounts. They appealed a district court’s order upholding the FDIC’s determinations. In 2008, the Kansas Bank Commissioner closed Columbian Bank & Trust Company and appointed the FDIC as receiver. At that time, Plaintiffs maintained twelve deposit accounts at Columbian. The bulk of those funds were held in two accounts (the “Challenged Accounts”). The remaining accounts bore a variety of titles. Shortly after its appointment as receiver, the FDIC determined that each Plaintiffs’ respective accounts identified as “operating” accounts, which included the Challenged Accounts, would be aggregated as corporate accounts. The FDIC further determined that the accounts designated as “benefits” accounts would be separately insured as annuity contract accounts. Upon review of the FDIC's determination and the applicable legal authority, the Tenth Circuit found that the FDIC ultimately concluded the deposit account records clearly and unambiguously indicated the Challenged Accounts were owned in the manner of “corporate accounts.” Plaintiffs’ extrinsic evidence was not, therefore, “relevant data” for purposes of the FDIC’s final insurance determination: "[t]he absence of any discussion pertaining to this evidence in the FDIC’s final determination is therefore unsurprising, and in no way arbitrary or capricious." The Court affirmed the FDIC's determination.

This case stems from a fire that destroyed a Michigan apartment building. The owner, Rapid Funding, LLC (a Colorado company), submitted a claim to its insurer James River Insurance Company (an Ohio company). James River denied the claim because it determined that the building's pre-fire value was less than zero. Rapid Funding sued in Colorado federal district court for breach of contract and insurance bad faith and received the full $3 million amount of the policy plus $2.35 million in punitive damages. James River argued on appeal that the damages verdict was based on valuation testimony that should have been excluded at trial. Upon review of the applicable legal authority and briefs submitted by the parties, the Tenth Circuit held that the valuation testimony was erroneously admitted, and the error was not harmless. The Court reversed and remanded the case for a new trial limited to the damages issue.

In one of Plaintiff Leprino Foods Company's warehouses, flavoring compounds derived from nearby-stored fruit products contaminated a large quantity of cheese. Leprino's "all-risk" insurance policy with Defendant Factory Mutual Insurance Company excluded contamination unless with was caused by "other physical damage." When Factory Mutual refused coverage on the basis of the contamination exclusion, Leprino sued. A jury determined that the contamination was caused by other physical damage and therefore was covered by the Factory Mutual insurance policy. On appeal, Factory Mutual contended the verdict was not supported by the evidence presented at trial. Specifically, Factory mutual argued that: (1) expert testimony was not presented to prove causation; (2) the jury instructions pertaining to Leprino's cold-storage guidelines were given in error; and (3) Leprino's damages should have been reduced by its settlement with the warehouse. Upon review of the trial record and applicable legal authority, the Tenth Circuit found that Leprino presented sufficient evidence with regard to expert testimony to prove causation. The Court did not find jury instructions to be erroneous. The Court did agree that Leprino's damages should be reduced by the amount of the settlement received from the warehouse. The Court therefore affirmed part and reversed part of the lower court's decisions and remanded the case for recalculation of damages.

Plaintiff Melissa Qualls appealed a district Court's order that affirmed the Social Security Administration's decision to deny her application for disability insurance benefits. Plaintiff alleged she became disabled in 2004. Her "date last insured" was December 31, 2008, "thus she had the burden of proving that she was totally disabled on that date or before." Though Plaintiff suffered from multiple sclerosis, the Administrative Law Judge (ALJ) found that she was not disabled because "she could make a successful adjustment to other light and sedentary work that exists in significant numbers in the national economy." On appeal, Plaintiff argued that the ALJ failed to perform a proper credibility determination prior to rendering his judgment. Upon review of the Administration's record, the Tenth Circuit found that the Commissioner's decision was supported by substantial evidence, and the the law was properly applied. The Court affirmed the Commission's decision to deny Plaintiff further insurance benefits.

Plaintiff Geral Brown appealed a district court's order that granted summary judgment to Defendant Hartford Insurance Company (Hartford). Plaintiff sued Hartford under the Employee Retirement Income Security Act (ERISA) for the company's termination of his long-term disability benefits. Following his injury, Plaintiff filed for Social Security Disability benefits as required by his benefit plan, and the Social Security Administration awarded him benefits. The plan then offset the monthly benefit it paid to Plaintiff by the amount of the Social Security benefit. The Hartford denied Plaintiff's administrative appeal. After examining and weighing the evidence, the trial court granted summary judgment to the Hartford. The Tenth Circuit concluded that the plan administrator's decision was supported by substantial evidence. Accordingly, the Court affirmed the decision of the district court.

BancInsure, Inc. appealed a declaratory judgment in favor of Columbian Financial Corporation and a former director, Carl McCaffree (collectively the Insureds). The insurance policy at issue here was a "claims-made" policy covered any claim made to BancInsure against any Columbian officer or director for a "Wrongful Act" as defined by the policy. A disputed provision of the policy pertained to the scope of coverage if Columbian was placed in receivership or otherwise ceased to engage in active banking business. The parties interpreted the provision differently. The Insureds contended that if Columbian went into receivership, the policy covered all claims made through the end of the original policy period, although only for Wrongful Acts committed before the receivership. BancInsure contended that the policy covered only claims made before the receivership. The operation of the disputed provision became relevant in August 2008 when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Soon thereafter, Columbian’s management sent BancInsure a letter to notify it of potential claims by the FDIC and others. The parties disputed many of the claims against Columbian which led to Columbian filing suit to the district court to determine which claims were covered under the policy. The sole issue on appeal to the Tenth Circuit was whether the district court had jurisdiction. Though no party disputed jurisdiction, the Tenth Circuit found that there was no actual controversy between the parties when the district court below rendered its judgment. The court therefore lacked jurisdiction. The Tenth Circuit reversed the lower court’s decision and remanded to case with instructions to the court to vacate its judgment.