Someone in Grand Prairie, Arlington, Dallas, Irving, Carrollton, Farmers Branch, Lewisville, Hurst, Euless, Bedford, or anywhere else in the metroplex area would just get mad and frustrated with an insurance company treating them wrong, by continuing to ask for paperwork and documents that they don’t really need to evaluate and settle a claim. Usually the insurance company is just trying to wear you out. Here is a case where they did not get away with it.
In 2004, the Corpus Christi Court of Appeals issued an opinion in the case styled, Minnesota Life Insurance Company v. Elia L. Vasquez. Elia sued Minnesota Life for knowing violations of the Texas Insurance Code and for mental anguish associated with those violations. We will deal with the knowing violations part of the opinion. Here are some of the allegations and facts.
Elia alleged that Minnesota Life unreasonably delayed payment of the proceeds of an accidental death policy that insured the life of her deceased husband. Minnesota Life contended that the cause of death was not clearly accidental and the delay was caused by its need to obtain additional medical records. The hospital from which the records were sought was unresponsive and did not turn over the requested documents to Minnesota Life for five months. Upon receipt of these records, Minnesota Life paid Elia’s claim.
After a trial in the state court, the jury found a knowing violation of the insurance code. The jury awarded actual damages of $250,000, plus attorney’s fees of $37,000, plus other damages not addressed here.
Minnesota Life contended that the evidence supporting the jury’s finding of a knowing insurance code violation was legally and factually insufficient. The jury was instructed to find that the company had engaged in an unfair or deceptive practice if it failed to “attempt in good faith to effectuate a prompt, fair and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear” or if it failed “within a reasonable time (A) to affirm or deny coverage of a claim to a policyholder or (B) submit a reservation of rights to a policyholder.” These instructions correspond to the statutory language of the Texas Insurance Code Sections 541.060(a)(2)(A) and 541.060(a)(4)(A) and (B). A knowing violation occurs if the company had “actual awareness of the falsity, deception, or unfairness of the conduct in question,” which may be inferred if “objective manifestations indicate that a person acted with actual awareness.” This complies with Texas Insurance Code, Section 541.002(1). Case law tells us that, “Actual awareness implies that a party knows that what she is doing is false, deceptive or unfair but continues in her course of action regardless.”
Texas Insurance Code, Section 541.060(a)(2) requires a good faith attempt to promptly settle claims once liability has become “reasonably clear.” Following the death of Mr. Vasquez, Minnesota Life requested proof-of-loss documents from Elia. These documents, a death certificate and a medical examiner’s report, both indicated that the cause of death was accidental and were quickly supplied by Elia. At this point, Minnesota Life’s liability under the policy was “reasonably clear,” and it therefore had a duty to comply with the Insurance Code and make a good faith effort to complete its investigation and settle the claim promptly.
Minnesota LIfe argued that its liability did not become “reasonably clear” until it actually received the additional hospital records for which it was waiting. As the court pointed out, “By this argument, Minnesota Life is essentially asking this Court to adopt a rule allowing insurance companies to delay settlement of a claim until liability is absolutely and conclusively established, not just ‘reasonably clear.'” This interpretation, equating “reasonably clear” with “completely certain” would allow insurance companies, aware that they likely will have to pay a claim, to delay indefinitely concluding their own research of a claim without violating the Texas Insurance Code. The Texas Supreme Court has noted, “An insurer will not escape liability [under the insurance code] merely by failing to investigate a claim so that it can contend that liability was never reasonably clear … [An] insurance company may also breach its duty of good faith and fair dealing by failing to reasonably investigate a claim.” This court pointed out that Minnesota Life was fully entitled to make additional inquiries and investigations into the cause of death for Mr. Vasquez, as there was allegedly some concern that a seizure may have contributed to the cause of death. However, once the proof-of-loss documents noting an accidental cause of death were received, Minnesota Life’s liability became “reasonably clear” and it was under a duty to use its best efforts in good faith to avoid further delay.
This case serves as a good example of what insurance companies will often try to do but are not suppose to do. They routinely try to wear claimants down to either get away with denying the claim or getting the claimant to accept less than they are entitled to, just to get it over with. At the first sign of delay an experienced Insurance Law Attorney should be sought. Documentation of what is happening helps. Rather than relying on memory, a claimant should write down events when they happen including in the information, persons, letters, e-mails, and other communications that may be helpful in making an insurance company pay for wrongs they may be committing.
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