A federal appeals court Wednesday affirmed a lower court ruling in a Munich Re unit’s favor in a coverage dispute with a Florida public entity risk management program that contended the reinsurer was forbidden from second-guessing its decision to pay a claim.

Munich Re reinsured Fort Myers-based Public Risk Management of Florida for public officials errors and omissions between April 1, 2008, and April 1, 2009, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Public Risk Management of Florida v. Munich Reinsurance America, Inc.

PRM’s members included the city of St. Pete Beach, which was sued by a couple over the issue of whether they must provide public access to their beach parcel.

The litigation led to a jury award that included $725,000 for violation of the couple’s Fourth Amendment rights. PRM agreed to indemnify the city for the claim, then sought that amount plus more than $200,000 in defense costs from Munich Re America, which denied the claim.

PRM filed suit against Munich Re America in U.S. District Court in Tampa, which ruled in the reinsurer’s favor.

PRM argued on appeal that the reinsurance agreement included a “follow the fortunes” clause under which the reinsurer was forbidden to second guess an insurer’s “good faith decision” to pay a claim.

A three-judge appeals court panel affirmed the lower court’s ruling, saying that “it would be inconsistent with the plain, unambiguous terms of the Reinsurance Agreement to infer that Munich should be bound by PRM’s coverage decision.”

The complaint’s allegations “clearly demonstrate that PRM had no duty to defend the City under the 2008/2009 Coverage Document, and the facts developed in the trial in the underlying case clearly demonstrate that PRM had no duty to indemnify the City under the 2008/2009 Coverage Document,” the ruling said.

Attorneys in the case did not respond to requests for comment.

Earlier this month, the 11th Circuit affirmed a lower court ruling in a Munich Re unit’s favor in litigation over its coverage denial for a marine vessel’s failed engine.