In a defeat for the insurance industry, the 11th U.S. Circuit Court of Appeals has affirmed a lower court ruling barring 17 insurance companies from canceling policies due to a massive fraud investigation into a Fort Lauderdale, Fla., viatical company.

Last week, a three-judge panel sided with Coral Gables attorney Roberto Martinez, the receiver for Mutual Benefits Corp., and upheld a ruling by Southern District of Florida Judge Federico A. Moreno that a lawsuit filed by the insurers should be dismissed because it failed to show specific fraud in each of the 1,700 policies in question.