Attorneys Holding Insurance Company Liable For Unfair Business Practices

Misrepresentations to people in Grand Prairie, Fort Worth, Dallas, Duncanville, De Soto, Lancaster, Cedar Hill, and other places in Texas can be a reason to sue an insurance company when the misrepresentation causes harm.
This issue is discussed in a 1987, Texas Supreme Court case styled, The Aetna Casualty and Surety Company v. Robert W. Marshall.
In this case the court upheld a verdict wherein The Aetna Casualty and Surety Company, (Aetna) was found to be guilty of making a misrepresentation by contractually promising benefits and then refusing to pay them.
The facts are, briefly, that Marshall sustained an occupational injury to his back in 1976. Marshall filed his worker’s compensation claim, and after an award from the Industrial Accident Board and an appeal to the district court of Brazoria County, Marshall settled his claim with Aetna for $20,000 and the payment by Aetna of all past medical expenses. Additionally, the settlement included a provision for payment by Aetna of future medical costs, as follows:
Any future medical aid, surgery, hospital services, nursing, chiropractic service, medicines and rehabilitation benefits for the injuries made the basis of this lawsuit, provided that such medical care and treatment is incurred within five (5) years from the date of this Judgment and rendered by or at the direction of a competent physician will be paid by the defendant, Aetna Casualty & Surety Company.
Almost immediately after the settlement, Marshall encountered difficulties with Aetna in obtaining payment for his medical expenses. Evidence shows delays in payment of medical bills by Aetna varying from four to five months, up to seventeen months, as well as an outright refusal by Aetna to reimburse for some prescribed medication. At the time of the trial, medical bills totaling $355 were still unpaid. Aetna’s adjuster even called one of Marshall’s doctors, stating that it would not pay Marshall’s current bills nor any future bills submitted by the doctor. Aetna refused to allow Marshall to attend a pain clinic recommended by one of his doctors. Marshall offered evidence showing that Aetna had been repeatedly advised of its mistake.
Marshall elected to file suit under the Insurance Code with its provision for treble damages, alleging also a breach of a duty of good faith and fair dealing. The jury found in Marshall’s favor and this appeal resulted.
Texas Insurance Code, Section 541.151, makes actionable any violation of Texas Business & Commerce Code, Section 17.46. Marshall alleged that Aetna violated Section 17.46 by representing to him that it would provide benefits by the agreement and then failing to do so. Aetna argued that Marshall could not recover under that statute because he was not a consumer of goods or services and because a court judgment is not an insurance policy. The court pointed out that Section 541.151 did not incorporate the entire Deceptive Trade Practices Act which would require proof that Marshall was a consumer of goods or services. Instead, it provided a cause of action to a person who has been injured by an insurance carrier who engages in an act prohibited by Section 17.46.
The court said that Aetna’s contention that a judgment is not an insurance policy is likewise irrelevant. The question was simply whether Aetna engaged in conduct prohibited by Section 17.46. The jury found that Aetna misrepresented the medical benefits that it would pay under the agreed judgment. The terms of the agreement called for Aetna to pay Marshall’s medical bills incurred because of his back injury, while Aetna represented to Marshall that it had the right to pay only the bills from doctors whom they approved.
Current law in the Texas Insurance Code makes it less necessary for a wronged insured to seek remedies under the Texas Deceptive Trade Practices Act. But it is still good for an Insurance Law Attorney to have even more legal recourses against an insurance company when the company treats one of their insureds wrong.