Texas insurance lawyers are always asking the above question when someone comes to see them about an insurance company doing them wrong.
To start with, as the contracting party, the insurance company can be liable based on the contract that exists between them and their customer.
There are also several statues, under which, the insurance company can be held liable. For example, under Texas Insurance Code, Section 541.151, the statute states “any person” engaged in the business of insurance may be liable for unfair insurance practices. Reading further, the Texas Insurance Code, Section 541.002(2), defines the term “person” to include various insuring entities.
The Texas Prompt Payment of Claims statute found at Texas Insurance Code, Section 542.051 states that the statute applies to insurance companies.
Similarly, the prohibitions on unfair discrimination specifically include insurance companies. These statutes include Texas Insurance Code, Sections 544.001, which states:
This subchapter applies to:
(1) any legal entity engaged in the business of insurance in this state, including:
(A) a capital stock insurance company;
(B) a mutual insurance company;
(C) a title insurance company;
(D) a fraternal benefit society;
(E) a local mutual aid association;
(F) a statewide mutual assessment company;
(G) a county mutual insurance company;
(H) a Lloyd’s plan;
(I) a reciprocal or interinsurance exchange;
(J) a stipulated premium company;
(K) a group hospital service corporation;
(L) a farm mutual insurance company;
(M) a risk retention group;
(N) an eligible surplus lines insurer; and
(O) an agent, broker, adjuster, or life and health insurance counselor; and
(2) a health maintenance organization.
544.051, which states:
This subchapter applies to any individual, corporation, association, partnership, or other legal entity engaged in the business of insurance, including:
(1) a fraternal benefit society;
(2) a county mutual insurance company;
(3) a Lloyd’s plan;
(4) a reciprocal or interinsurance exchange;
(5) a farm mutual insurance company; and
(6) an agent, broker, adjuster, or life and health insurance counselor.
544.101, which states:
In this subchapter:
(1) “Health benefit plan issuer” means an insurance company, association, organization, group hospital service corporation, or health maintenance organization that delivers or issues for delivery an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an evidence of coverage that provides health insurance or health care benefits. The term includes:
(A) a life, health, and accident insurance company operating under Chapter 841 or 982;
(B) a general casualty insurance company operating under Chapter 861;
(C) a fraternal benefit society operating under Chapter 885;
(D) a mutual life insurance company operating under Chapter 882;
(E) a local mutual aid association operating under Chapter 886;
(F) a statewide mutual assessment company operating under Chapter 881;
(G) a mutual assessment company or mutual assessment life, health, and accident association operating under Chapter 887;
(H) a mutual insurance company operating under Chapter 883 that writes coverage other than life insurance;
(I) a Lloyd’s plan operating under Chapter 941;
(J) a reciprocal exchange operating under Chapter 942; and
(K) a stipulated premium company operating under Chapter 884.
(2) “Underwriting guideline” means a written, electronic, or oral rule, standard, marketing decision, or practice that is used by a health benefit plan issuer or an agent of a health benefit plan issuer to examine, bind, accept, reject, renew or refuse to renew, cancel, or limit coverages available to classes of consumers or charge a different rate for the same coverage.
and 544.152 which states:
(a) This subchapter applies only to:
(1) a life insurer that delivers, issues for delivery, or renews a life insurance contract or policy in this state, including a group contract, policy, or certificate of life insurance; and
(2) a health benefit plan issuer that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including:
(A) an insurance company;
(B) a group hospital service corporation operating under Chapter 842;
(C) a fraternal benefit society operating under Chapter 885;
(D) a stipulated premium company operating under Chapter 884;
(E) a health benefit plan issuer under Chapter 1501;
(F) a health maintenance organization operating under Chapter 843;
(G) an employer under a multiple employer welfare arrangement as defined by Section 3, Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1002), or an analogous benefit arrangement, to the extent permitted by the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
(H) an issuer of a Medicare supplemental policy as defined by Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss); and
(I) an approved nonprofit health corporation that holds a certificate of authority issued under Chapter 844.
(b) This subchapter does not apply to the issuer of:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a period during which an employee is absent from work because of sickness or injury;
(D) as a supplement to liability insurance;
(E) only for limited benefits; or
(F) only for dental or vision care;
(2) hospital confinement indemnity coverage;
(3) a credit insurance policy;
(4) workers’ compensation insurance coverage;
(5) medical payment insurance coverage provided under a motor vehicle insurance policy; or
(6) a long-term care policy, including a nursing home fixed indemnity policy, unless the commissioner determines that the policy provides benefit coverage so comprehensive that the policy is a health benefit plan as described by Subsection (a)(2).