Mineral Wells attorneys who handle insurance claims need to be aware of the laws regarding the payment of insurance claims.
The Texas Insurance Code, Sections 542.051 – 542.061 is known as the Prompt Payment of Claims Act. These sections detail the time limits insurance companies have for responding to and paying a claim. The time limits will vary with the type of claim and the circumstances of the claim. The rules can be confusing. But what is important is that the Prompt Payment of Claims Act also sets the penalties for an insurance company failing to follow the rules. These penalties include not only having to pay the claim but to pay the court costs and attorney fees involved in getting the claim paid. As extra punishment for failing to follow the rules the insurance company is liable of an additional penalty of 18% owed on the claim. This 18% would be in addition to the 5% prejudgment interest that accrues on a judgment.
The United States District Court for the Southern District of Texas, Galveston Division issued a report and recommendation in April of 2013, dealing with the Prompt Payment of Claims Act. The style of the case is, Pointewest Center, LLC. v. National Surety Company and here is some of the relevant information.
Before the Court was a “Motion for Partial Summary Judgment” of National Surety Corporation (NSC); the Motion sought the dismissal of the Texas Prompt Payment of Claims Act (TPPCA) cause of action asserted by Pointewest by arguing that Pointewest gave insufficient written notice of its claim to NSC. The Court now issued this Report and Recommendation.
On March 18, 2013, the District Court adopted the Court’s Report and Recommendation issued on January 16, 2013, and dismissed Pointewest’s extra-contractual claims. Consequently, the Court was of the opinion that Pointewest’s TPPCA claim has already been dismissed. Apparently, the Parties did not share that opinion.
Notwithstanding, this Court then recommended that the TPPCA claim be, if it is still pending, definitively dismissed. The Texas Supreme Court has repeatedly instructed that an insurer will not be faced with a tort suit for challenging a claim of coverage if there was any reasonable basis for its denial of that coverage. As previously found, NSC adequately adjusted Pointewest’s claim and stood ready and willing to consider any evidence of additional liability, however, Pointewest never began work on the roof to determine if the damage exceeded NSC’s estimate. Since Pointewest’s claim remained “open” and NSC’s payment was unconditional, the facts in the case would not support any submission of bad faith to the fact finder: NSC acted reasonably by withholding any further payment until Pointewest could verify its right, if any, to more money. That would be determined at the trial of Pointewest’s pending breach of contract claim.
It was, therefore, the RECOMMENDATION of the Court that “Motion for Partial Summary Judgment” of National Surety Corporation be GRANTED and Pointewest’s claim under the Texas Prompt Payment of Claims Act, if still pending, be DISMISSED.
One thing to bear in mind about this case is that it is a lower court opinion.
What is important also is that each case rests on it’s own set of facts and thus each case needs it’s facts looked at in light of those facts and the law.
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