Dallas Fort Worth Insurance Lawyer Blog
This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.
Among other causes of action, Jackson has sued Farmers under an insurance policy for violation of the “Prompt Payment of Claims Act.” Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled a violation of the Prompt Payment of Claims Act against Farmers. The Court reviewed the papers filed with the Court and discussed and ruled as follows.
Crystal Jackson purchased a life insurance policy from Farmers. Wharlest Jackson was the sole beneficiary of the policy. Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.
Farmers filed the Motion for Partial Dismissal on various causes of action and the Prompt Payment of Claims Act cause of action is discussed here.
Farmers argues that Wharlest’s amended complaint fails to show “how Farmers investigation was improper and untimely and how its rejection of the claims was wrongful.” Farmer’s also notes how “Plaintiff . . . fails to allege any relevant date or dates, which would be necessary to allege when payment was ostensibly required.” Wharlest argues that he has pled that he timely made a claim under the Policy, and that Defendant “failed to pay the claim within 60days,” therefore violating the Prompt Payment of Claims Act.
Wharlest alleges that Farmers violated Section 542.051 of the Texas Insurance Code. However, that section is the definitions section of the Prompt Payment of Claims Act. Wharlest also mentions Section 542.058, which states that:
Except as otherwise provided, if an insurer, after receiving all items, statements, and forms reasonably requested and required under Section 542.055, delays payment of the claim for a period exceeding the period specified by other applicable statutes or, if other statutes do not specify a period, for more than 60 days, the insurer shall pay damages and other items provided by Section 542.060.
Wharlest alleges that Farmers violated the Prompt Payment of Claims Act “by failing to properly and timely investigate the claim in compliance with the Act, and by failing to pay said claim.” Defendant’s wrongful rejection of the claim necessarily means it failed to pay within 60days, thus constituting an automatic violation of Section 542.058.” Under Chapter 542 of the Texas Insurance Code, a plaintiff must show: (1) “a claim under an insurance policy,” (2) “for which the insurer is liable,”and (3) “the insurer failed to follow one or more sections of Chapter 542 with respect to the claim.” However, as this Court has already concluded, Wharlest has failed to allege facts that show how Farmer’s rejection of Wharlest’s claim was wrongful. Thus, Wharlest has failed to allege element (2), and therefore element (3), of a Prompt Payment of Claims Act claim. Therefore, Wharlest does not state a claim for a Prompt Payment of Claims Act violation.