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A federal appeals court on Friday partially overturned a lower court decision and reinstated a claim that a Zurich Insurance Group Ltd. unit had failed to make a timely coverage decision on behalf of a health care organization.
The appellate court also reinstated a bad faith claim against the insurer.
Macon, Georgia-based Omni Health Solutions LLC filed an insurance claim with Zurich unit Zurich American Insurance Co. in 2011, seeking coverage for a damaged and leaky roof, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Omni Health Solutions, LLC v. Zurich American Insurance Co.
Eventually, Zurich agreed that covered damage existed, but the parties were unable to agree on a loss amount, the ruling said.
The parties continued to dispute the amount of loss Zurich owed Omni, despite a multi-year appraisal process that led to binding awards for structural damage and for business income loss, the ruling said.
Omni filed a lawsuit against Zurich in state court, which was eventually transferred to U.S. District Court in Macon. The district court granted Zurich summary judgment on charges it had failed to make a timely coverage decision, failed to make full payment of a structural appraisal award and failed to pay the diminished value of Omni’s property. It also ruled against Omni on its bad faith claim.
A three-judge appeals court panel affirmed the district court’s ruling in Zurich’s favor with respect to the charge that it had failed to pay the full amount of the structural damage award and the charge it had failed to pay for the diminished value of Omni’s property.
But it ruled that the district court had erred in granting summary judgment to Zurich regarding its alleged failure to make a timely coverage decision, and in dismissing the bad faith claim as it relates to that charge.
“Plaintiff is entitled to make an argument on appeal” disputing Zurich’s characterization of this claim, as well as to assert new arguments, the ruling said.
Omni attorney C. Wilson DuBose of the DuBose Law Group LLC in Madison, Georgia, said in a statement, “We were pleased that the 11th Circuit reversed the trial court’s grant of summary judgment on the breach of policy claim and related bad faith claim and look forward to proceeding to trial on those claims.”
Zurich’s attorneys did not respond to a request for comment.