A federal appeals court affirmed in part and reversed in part a district court decision involving a daycare that challenged a Berkshire Hathaway Inc. subsidiary’s insurance business practices related to a workers comp policy in the Commonwealth of Virginia.

Minnieland Private Day School Inc., a private daycare based in Woodbridge, Virginia, entered a reinsurance participation agreement in 2013 with Berkshire Hathaway subsidiary Applied Underwriters Captive Risk Assurance Company Inc. According to the three-year agreement, one or more insurers, all of which were Berkshire Hathaway subsidiaries, would issue workers comp policies to the daycare. The agreement also established a “segregated protected cell” through which Minnieland would share the issuing insurers’ profits and losses related to Minnieland’s policies, according to court documents in Minnieland Private Day School Inc. vs. Applied Underwriters Captive Risk Assurance Company Inc.

Minnieland paid premiums of about $58,810 per month for 33 months. In November 2015, Applied Underwriters billed Minnieland $471,213, which the daycare paid despite the fact that Applied Underwriters refused to disclose the basis for the premium increase, but when the daycare received a second large premium bill the next month, it did not pay, and the workers comp policy was terminated.

Minnieland filed a lawsuit against Applied Underwriters in December 2015, alleging the company failed to comply with the Virginia’s insurance and workers comp laws, including that the reinsurance participation agreement was an attempt to circumvent the law. The daycare sought a declaration that the reinsurance participation agreement was an insurance contract and was void, what amount it owed to Applied Underwriters under the agreement and that premiums, deposits and charges assessed were excessive. Minnieland also sought damages for fraud and breach of contract.

Applied Underwriters moved to compel arbitration under the reinsurance participation agreement, which specified that disputes would be handled via binding arbitration in the British Virgin Islands. Minnieland argued Virginia insurance law prevents disputes to be moved out of Virginia’s jurisdiction.

The U.S. District Court for the Eastern District of Virginia in Alexandria initially sided with Applied Underwriters. Minnieland moved for reconsideration, saying Virginia insurance statutes rendered void arbitration provisions in the agreement and highlighting other regulatory and legal proceedings in which the Applied Underwriters had refused to dispute or conceded that the agreement was an insurance contract for the purposes of other state laws. The court concluded that Applied Underwriters was judicially estopped from arguing that the reinsurance participation agreement did not constitute an insurance contract and that there was no arbitrable issue.

Applied Underwriters appealed, saying the district court erred in denying its motion to compel arbitration and incorrectly held that the doctrine of judicial estoppel barred it from asserting that the agreement does not constitute a “contract of insurance” for purposes of Virginia law.

A three-judge panel of the 4th Circuit Court of Appeals in Richmond, Virginia, handed down a mixed decision Friday.

“We hold that the district court correctly denied Applied Underwriters’ motion to compel arbitration, but incorrectly applied the doctrine of judicial estoppel in holding that the RPA constitutes an ‘insurance contract,’” the court said. “The parties have not had the opportunity to fully brief and argue whether, if judicial estoppel does not apply, the RPA is an insurance contract under Virginia law.”

The court remanded the case to the district court for consideration of the application of judicial estoppel in the case and for further proceedings consistent with its opinion.

Representatives for Minnieland were not immediately available to comment.

Berkshire Hathaway subsidiaries faced a similar challenge in New York earlier this year involving reinsurance participation agreements.