Articles Posted in Bad Faith Insurance

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.

A Texas insurance law lawyers needs to know the proper way to sue on bad faith insurance cases. The proper way will differ depending on the type of case. When the claim arises out of an uninsured motorist claim it is different than other types of bad faith claims. The Houston Court of Appeals [1st Dist.] recently addressed this issue. The style of the case in In re Progressive County Mutual Insurance Company. This is a mandamus proceeding. Here is some of the relevant information from that case.

Following an automobile collision with an uninsured motorist’s vehicle, Guia sued her insurer, Progressive. While investigation into the claim was ongoing, Guia sued Progressive for breach of the uninsured motorist provisions in her policy, violations of Chapter 542 of the Texas Insurance Code, violations of the Deceptive Trade Practices-Consumer Protection Act, and breach of the duty of good faith and fair dealing. Guia served Progressive with a number of discovery requests, some of which would not be relevant to the breach-of-contract claim. Progressive filed a motion to sever the breach of contract claim for uninsured motorist coverage from the extra-contractual claims. The trial court judge signed an order abating the motion to sever, allowing discovery to move forward on all claims, and deferring the other issues covered by the motion until the pretrial hearing. Progressive filed a writ seeking to compel severance and abatement.

Texas Rule of Civil Procedure 41 governs severance of claims. The rule provides, in part, that “actions which have been improperly joined may be severed . . . on such terms as are just. Any claim against a party may be severed and proceeded with separately.” Id. The predominant reasons for a severance are to do justice, avoid prejudice, and promote convenience. Claims are properly severable if: (1) the controversy involves more than one cause of action; (2) the severed claim is one that would be the proper subject of a lawsuit if independently asserted; and (3) the severed claim is not so interwoven with the remaining action that it involves the same facts and issues. Only the third element is in dispute here.

Arlington insurance attorneys want to know the proper way to state a claim against an insurance adjuster so as to keep a case in State Court rather than have an insurance company get the case removed to Federal Court. A recent case from the US District Court, Northern District, Dallas Division, shows how to be successful in this effort. The case is styled, Sara Esteban v. State Farm Lloyds and Aaron A. Galvan. Here is the relevant information from the case.

This case arises out of an insurer’s alleged failure to properly adjust and pay the full proceeds due on a claim made under an insurance policy. Esteban purchased an insurance policy fromState Farm to insure real property that she owned. A wind and hailstorm struck, causing significant damage to homes and businesses in the area. The Property suffered roof and water damage as a consequence of the storm, and Esteban submitted a claim to State Farm to cover the costs of repair. Galvan was assigned by State Farm to adjust Esteban’s claim. At all relevant times during the adjustment of Esteban’s claim, Galvan acted as an independent adjuster and was not an employee of State Farm. Esteban alleges that Galvan “improperly adjusted” her claim, and that his subsequent report “failed to include many of Esteban’s damages.” More specifically, Esteban charges that “his estimate did not allow adequate funds to cover repairs to restore her home” and that Galvan “misrepresented the cause of, scope of, and cost to repair the damage to Plaintiff’s Property, as well as the amount of and insurance coverage for Plaintiff’s claim/loss under Plaintiff’s insurance policy.” Esteban also insists that Galvan advised her as to how she could repair the Property in order to prevent further damage, but that this advice was negligent and false.

Esteban maintains that, as a consequence of Galvan’s misrepresentations, State Farm wrongfully denied portions of her claim and misrepresented the amount of damages, which in turn prevented her from properly repairing the Property and caused further damage. Specifically, while State Farm and Galvan represented that Esteban’s damages were only $1,932.72, Esteban insists that her damages exceed $33,000. Esteban asserts that State Farm has not performed its contractual duty under the Policy and that it has failed to settle her claims in a fair manner. She also insists that Defendants’ respective failures to properly adjust, inspect, or communicate with her regarding her claims, or to later fully compensate her, constitute violations of the Texas Insurance Code.

Not very many Texas insurance lawyers really understand what went on in the Farmers fraud case several years ago. The public in general did not know what was going on, only that Farmers was refusing to renew home- owners policy. This was causing the public to be upset. The whole story isn’t that difficult but it is essentially over.

Texas Watch ran an article in April 2014, titled “Judge Concerned About Sweetheart Deal For Farmers Insurance” and the story does not discuss the underlying facts that gave rise to what was discovered but it does talk about some of the repercussions. Here is what the article tells us.

A Texas district court judge refused to allow a sweetheart deal between Farmers Insurance and the State of Texas to move forward today. At a hearing in Judge Scott Jenkins‘ court, lawyers for Farmer Insurance and Attorney General Greg Abbott’s office argued in favor of a deal that allows the insurance giant to avoid paying interest on millions of dollars in excessive premiums.

Insurance lawyers who seek punitive damages in bad faith cases need to be able to determine when they apply. A 1995, Beaumont Court of Appeals case is a good one to read for this issue. The style of the case is, Liberty Mutual Fire Insurance Company v. Crane. Here is some of the relevant information from this case.

A claimant seeking these damages must establish:

1. That there was an absence of a reasonable basis for denying or delaying payment of the benefits of the policy.