Articles Posted in Bad Faith Insurance

Fort Worth insurance lawyers know the statutes dealing with insurance misrepresentations can be found in the Texas Insurance Code. Several sections deal with this issue. The different types of misrepresentations that are prohibited by statute are found in sections, 541.051, 541.052, 541.053, 541.055, 541.059, 541.060(a)(1), and 541.061.

These misrepresentations are also against the law under the DTPA, Section 17.46(b), which is incorporated into the Texas Insurance Code. Both the DTPA and Insurance Code prohibit misrepresentation by non-disclosure.

Section 541.051 broadly prohibits making any statement misrepresenting the terms of a policy, or the benefits, advantages, or dividends of a policy, making misrepresentations about the financial condition of an insurer, misrepresenting the true nature of any policy or class or policies, or making any misrepresentation to a policy holder for the purpose of inducing or intending to induce the policy holder to allow an existing policy holder to lapse, forfeit, or to surrender his insurance. This provision is sometimes referred to as the “anti-twisting” provision, because the latter portion is aimed at preventing one insurer stealing away the insureds of another insurer by making misrepresentations.

Dallas insurance attorneys know the statutes dealing with the requirements of time within which an insurance company must pay a claim. A 2000, Corpus Christi Court of Appeals case addresses this issue. The style of the case is, Colonial County Mutual Insurance Company v. Hector Valdez.

Hector Valdez bought a 1992 Plymouth Acclaim and arranged insurance for the car with Colonial through the Diego Luna Insurance Agency. An employee of the insurance agency told Hector that the car was insured “against theft, against accidents, against medical expenses, everything concerning the insurance.” A few months after obtaining this insurance, Hector sold the car to his son, Rene Valdez, for $7,000. Rene obtained a loan from Mercantile Bank in order to make the purchase. Hector called the Diego Luna Insurance Agency and told them Mercantile Bank would be calling them to make “changes” and “arrangements” on the insurance. Diego Luna testified that an employee of Mercantile Bank did call, and asked to verify insurance on the car for “a Mr. Valdez.” The bank was told that “Mr. Valdez” had insurance. Hector continued to pay insurance premiums on the car while Rene owned it. It is undisputed that Hector never told Colonial or Diego Luna Insurance Agency that he had sold the car to Rene. It is also undisputed that Hector was never informed, orally or in writing, that he could only insure the car if he owned it.

In November 1995 Hector’s policy was automatically renewed. On January 14, 1996 the car was stolen. Hector reported the theft and Colonial proceeded to investigate. During this investigation, Colonial discovered that Rene was the owner of the car. On March 19, 1996 Colonial sent Hector a letter informing him that “the handling of this claim is being conducted under a Reservation of Rights” because Colonial was investigating whether Hector had an “insurable interest” in the car.

Grand Prairie insurance attorneys need to know what insurance company unfair settlement practices are and how to recognize them. The Texas Supreme Court and lower courts have opinions issued describing what has happened in certain situations. However, the Texas Insurance Code has specific statutes that are helpful for insurance lawyers.

The Texas Insurance Code, Section 541.060 lists particular practices to be knowledgeable of. The statute prohibits engaging in any of the following unfair settlement practices with respect to a claim by an insured or beneficiary:

(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;

Fort Worth insurance lawyers need to know how to calculate damages under the Texas Deceptive Trade Practices Act (DTPA) and the Texas Insurance Code. A Beaumont Court of Appeals is a good case for instruction on this point. The style of the case is, National Lloyds Insurance Company v. Latosha A. Lewis.

The facts of the case are long and need to be read.

This case is an appeal from a jury trial where a jury found in favor of Lewis and against Lloyds for violations of the DTPA and the Texas Insurance Code. Lloyds appealed and the Court upheld the jury verdict with some minor adjustments.

Dallas insurance lawyers handling bad faith claims need to read this 2015 opinion from the Beaumont Court of Appeals. It is styled, National Lloyds Insurance Company v. Latosha A. Lewis.

Lloyds appealed the trial court’s judgment in favor of Lewis following a jury trial. In seven appellate issues, Lloyds challenged (1) the legal sufficiency of the evidence supporting the jury’s findings regarding causation, damages for mental anguish, breach of contract, and breach of the DTPA, and exemplary damages, (2) the trial court’s inclusion in the charge of an instruction regarding waiver and its refusal to include an instruction on spoliation, (3) and the trial court’s rendition of a judgment that allegedly failed to force Lewis to make an election of remedies. This Court affirmed the trial court’s judgment as modified.

The facts of this case are long and detailed and need to be read for a good example of what the courts deem to be bad faith. In the case, this court upheld an award of mental anguish damages to Lewis because of the conduct of Lloyds in handling her claim for damage.

A Fort Worth insurance lawyer needs to know when there was a misrepresentation of an insurance policy. A 1994, Corpus Christi Court of Appeals is worth reading on this topic. The style of the case is Celestino v. Mid-American Indemnity Insurance Company. Here is some of the information from that case.

Celestino is the assignee of Sabastian. The instant dispute involves Sebastian’s insurance policy, which Donald Donaho of the Donaho Insurance Agency (Donaho) purchased from Mid-American through underwriters Richard McNeil and Pro., Inc. With the full participation and cooperation of Sebastian, the Celestinos sued Mid-American.

As chief executive officer of Sebastian, Tommy Funk determines what insurance the company requires and obtains the necessary coverage. Funk maintained a primary policy for both workers’ compensation insurance and employer’s liability insurance as well as an umbrella policy for excess employer’s liability coverage. A later change in policies resulted in coverage with Mid-American.

Lawyers handling bad faith cases in the Dallas and Fort Worth areas need to recognize a bad faith case when they see it. This is not always easy. An El Paso Court of Appeals case from 1996, is an example. The style of the case is, Columbia Universal Life Insurance Co. v. Miles.

Miles met with his insurance agent to change his heath insurance coverage. The agent filled out the application by asking Miles the questions listed on the application. Miles testified that he provided the agent with a complete medical history. The agent said Miles only talked about the conditions that appeared on the application. It turned out that Miles had an extensive medical history that was not listed on the application including immune deficiency and other chronic illnesses. Miles says he signed the application without signing it.

Shortly after filling out the application, Columbia called Miles to conduct a personal history interview and to confirm the information on the application. Miles told Columbia that the information on the application was true and correct. He did not mention his other medical problems and the policy was issued.

Weatherford lawyers who handle bad faith claims need to be able to know how to calculate damages that may be assessed in a bad faith claim. There are lots of opinions that deal with this issue and they all have to be read if a lawyer is to get a good idea as to what will be an end result. An opinion issued in 1995, by the Texas Supreme Court is one that is worth reading. The style of the case is, Twin City Fire Insurance Company v. Davis. Here is some of the relevant information from the case.

Davis injured her lower back while she was working at her place of employment. She filed a worker’s compensation claim after she was injured. As part of her therapy, her treating doctor prescribed a “hot tub or jacuzzi.” Davis later, settled her worker’s compensation case with the worker’s compensation insurance carrier agreeing to pay five years of future medical expenses. Davis immediately made a claim under the terms of the settlement for the hot tub which had been prescribed by her doctor.

Twin City investigated the medical necessity of the hot tub by requesting a confirmation from the doctor. The doctor confirmed the prescription with Twin City. An outside consultant also supported the doctor’s recommendation. Davis then requested a pre-hearing conference before the IAB to challenge Twin City’s failure to honor the hot tub claim. Twin City denied the hot tub was a medical necessity.

Fort Worth insurance lawyers who handle bad faith insurance claims will tell you that the paperwork filed with a court are important to keeping the case in court. This was illustrated by a recent Eastern District case. The style of the case is, Weidner v. Nationwide Property & Casualty Insurance Company. Here is the relevant information.

This is an appeal from a United States Magistrate Judge report. The rulings deals with a Rule 12(c) motion which is a civil procedure judgment on the pleadings. The Magistrate found:

Plaintiffs’ claims arising under the Texas Insurance Code suffer from the same limitations. Plaintiffs assert (merely by stating the statute number) that Nationwide made, issued, or circulated or caused to be made, issued, or circulated an estimate, circular, or statement misrepresenting with respect to a policy issued or to be issued: (A) the terms of the policy; (B) the benefits or advantages promised by the policy; or (C) the dividends or share of the surplus to be received on the policy. TEX. INS. CODE § 541.051(1). There are no facts alleged by the Plaintiffs to plausibly suggest that Nationwide misrepresented the terms of the policy, benefits or advantages of the policy, or dividends to be received under the policy. Plaintiffs also assert that Nationwide used a name or title of a policy or class of policies that misrepresents the true nature of the policy or class of policies. TEX. INS. CODE § 541.051(4). Again, there are no facts alleged to support this assertion. Plaintiffs also contend that Nationwide misrepresented Plaintiffs’ insurance policy by “(i) making an untrue statement of material fact. § 541.060(1); (ii) failing to state a material fact that is necessary to make other statements made not misleading, considering the circumstances under which the statements were made. § 541.060(2); (iii) making a statement in such a manner as to mislead a reasonably prudent person to a false conclusion of a material facts. § 541.060(3)” Plaintiffs fail to allege what misrepresentations or omissions they are referring to, in what manner the statements were made, and in what way Plaintiffs were misled by the statements.

Insurance lawyers in Texas must know how to assert bad faith claims. A 2005, Waco Court of Appeals case styled, United States Fire Insurance Company v. Fugate, is good reading for understanding how to properly assert a bad faith claim. Here is what the case tells us.

The insured and her family were injured in a collision with another vehicle. After the insured filed suit against the driver of the other vehicle, the parties settled. The insured then sued her employer’s insurer, United States Fire Insurance Company (US Fire), alleging breach of the insurance contract seeking to recover underinsured and uninsured motorist (UIM) benefits under the employer provided insurance policy. The insured did not assert any bad faith claim against US Fire in her breach of the insurance contract lawsuit. After a jury trial and judgment in favor of the employee on the breach of the insurance contract claim, the insured filed a second lawsuit against US Fire asserting a claim under the bad faith statutes and seeking statutory penalties and attorney’s fees on the ground that US Fire did not timely acknowledge her UIM claim. US Fire sought summary judgment in the bad faith cause of action, asserting that the claim was barred by res judicata because it could have been litigated in the first suit. The trial court granted Fugate’s motion for summary judgment and awarded her statutory penalties and attorney’s fees and this appeal followed.

The Waco Court of Appeals reversed and rendered judgment in favor of US Fire on its res judicata defense. The court held that the bad faith statutes of the Texas Insurance Code must be asserted contemporaneously with a breach of the insurance contract claim or be barred by res judicata. Finding that the second lawsuit for bad faith damages involved the same parties was premised upon the same claims as the breach of the insurance contract action and that the bad faith claims could have been raised in the first action because the claim for untimely acknowledgement of a UIM claim related to the breach of the insurance contract claim for UIM benefits, the court concluded that the second suit based solely on bad faith was therefore barred by res judicata.

Contact Information