Dallas Fort Worth Insurance Lawyer Blog

Abuse Of Discretion

October 22, 2016 | Mark S. Humphreys

Attorneys who handle ERISA claims can tell you how difficult these ERISA cases are to win. When someone makes a claim under an ERISA policy, the plan administrator renders a decision. The claimant is advised how to appeal the decision if the claimant does not like the result. When the claim is denied on appeal, the only thing left to do is to file a lawsuit.

The case is going to be in a Federal Court. The claimant is not entitled to a jury trial. A Federal Judge then reviews the materials / information that was before the plan administrator at the time they made their decision. The standard the Federal Judge uses in reviewing the decision is called an “abuse of discretion” standard. In other words did the plan administrator abuse the discretion given them by the plan when rendering their decision. No new information is allowed to be presented to the Federal Judge. Only the information used when the claim was originally filed and any information added at the time of appeal can be looked at under this abuse of discretion standard.

The other way for the case to proceed is “de novo.” Under the de novo review, a claimant essentially gets a second bite at the apple in retrying the case. In other words the claimant gets to provide new information for the Federal Judge to consider in reaching a decision.

State Farm And Bad Faith Insurance

October 20, 2016 | Mark S. Humphreys

Dallas and Fort Worth insurance lawyers know all too well the games some insurance companies play to beat the system. That knowledge has taken on new meaning after reading this story from BloomBerg. The story is titled, State Farm Faces Suit Over Claims It Bankrolled Judge.

Some customers of State Farm Mutual Automobile Insurance Co. claim the company conspired to help elect an Illinois Supreme Court justice candidate so he could vote to throw out a $1 billion award against the company. Now they will be able to bring their case as a group.

A federal judge on Sept. 16 ruled that 4.7 million State Farm policyholders can band together to sue the insurer for allegedly lying about its efforts to financially back Lloyd Karmeier for a seat on Illinois’ highest court. Customers contend in their class-action lawsuit that State Farm defrauded them by secretly bankrolling Karmeier’s 2004 campaign. In exchange, they allege, Karmeier provided a key appellate vote against upholding the $1 billion verdict in a case over the use of generic parts in car repairs.

Penalties For Delay In Paying Claim

October 18, 2016 | Mark S. Humphreys

Benbrook insurance attorneys can discuss the penalties for delays in paying a claim. These penalties are spelled out in the Texas Prompt Payment of Claims Act (TPPCL) and are found in the Texas Insurance Code.

The amount of an insured’s claim (and/or the amount for which an insurer is liable) is often based on third-party invoices that the insured has not incurred, in amounts the insured cannot necessarily predict, at the time the insured submits its notice of claim to the insurer. Consider duty to defend or environmental clean-up coverage, where the amount of the claim can increase every month.

Naturally, there are questions regarding when the 18% penalty begins to accrue on such claims. The TPPCA language does not provide specific guidance on these calculations, but courts in the Fifth Circuit have recently indicated the methodology is based on the date of the TPPCA violation and not necessarily the date the cost was incurred.

Pre-Suit Demands In Insurance

October 16, 2016 | Mark S. Humphreys

Mineral Wells insurance lawyers know that when making a pre-suit demand on an insurance company that making an excessive demand can be more harm than good. This is discussed in a Houston Court of Appeals [1st Dist.] opinion released in August 2016. The case is styled, United Services Automobile Association v. Hayes. The opinion is over 50 pages long and discusses various issues on appeal but one of those issues deals with excessive pre-suit demands.

Texas law holds that a creditor who make an excessive demand upon a debtor is not entitled to attorney’s fees for subsequent litigation required to recover the debt, even if it prevails in its suit. A demand is not excessive simply because it is greater than the amount eventually awarded by the fact finder. However, a claim for an amount greater than that which a jury later determines is actually due may indeed be some evidence of an excessive demand. Nevertheless, it cannot be the only criterion for determination, especially where the amount due is un-liquidated.

The dispositive question in determining whether a demand is excessive is whether the claimant acted unreasonably or in bad faith. Further, application of the excessive demand doctrine is limited to situations in which a creditor has refused a tender of the amount actually due or has clearly indicated to the debtor that such a tender would be refused.

Suing The Agent When A Claim Is Denied

October 15, 2016 | Mark S. Humphreys

Insurance lawyers in the Dallas and Fort Worth area know that insurance companies prefer to litigate cases in Federal Court while the opposite is true for lawyers representing an insured. A recent Northern District, Dallas Division case deals with suing the agent in Federal Court. The case is styled, B&B Car Wash and Mini Storage v. State Automotive Mutual Insurance Company, Jennifer Caldwell, and Danny Duncan d/b/a Duncan Insurance Agency.

This is a case about State Auto allegedly denying coverage for B&B’s wind and hail damaged storage facility. B&B owns a car wash, five storage buildings, and an RV shed. B&B purchased a State Auto policy from agents Jennifer Caldwell and Danny Duncan. The parties dispute the extent of coverage provided by that policy. B&B says it covers the entire complex and the defendants disagree.

After B&B filed its complaint, State Auto removed the case to Federal Court, arguing that, because B&B is a Texas citizen and State Auto is an Ohio citizen, complete diversity exists, and thus, federal jurisdiction. The next day, B&B amended its complaint to add Caldwell and Duncan as additional defendants, based on the fact that they sold the policy in question. Thus, because Caldwell and Duncan are both Texas residents, B&B filed a motion to remand the case to State Court since diversity jurisdiction no longer existed.

Insurance Agent Involved In Fraud

October 13, 2016 | Mark S. Humphreys

Insurance law attorneys can tell war stories about situations where an insurance agent has been caught stealing from customers. This was recently highlighted in an August 29, 2016, article published by the Insurance Journal. The article is titled “California Insurance Agent Nabbed For Fraud Scheme Involving 100-Plus Policies.”

Vicki Lee McGinley, 58, a licensed insurance agent in California, was arrested by the Kern County Sheriff’s department on seven counts of identity theft and seven counts of insurance fraud after allegedly misrepresenting policy and premium information to clients resulting in losses to her employers and increased premiums for her clients.

The California Department of Insurance Investigation Division began an investigation after receiving a complaint from McGinley’s previous employer.

Life Insurance Lawsuit

October 11, 2016 | Mark S. Humphreys

Life insurance lawyers will try to avoid what happened in an opinion from the Southern District of Texas in 2016. The opinion is styled, Hendrix v. Wal-Mart Stores.

Kimberly Hendrix sued Wal-Mart Stores, Inc., Associates Health and Welfare Plan, and The Prudential Insurance Company of America because they denied her claim under her late husband’s employer-sponsored life insurance.

Randy Hendrix worked for Wal-Mart until July 11, 2012, when he retired. On August 27, he died of a heart attack. His life was insured by a group policy that was sponsored by Wal-Mart. Hendrix filed a claim under the policy and Prudential denied the claim.

False Statements By Insurance Company

October 9, 2016 | Mark S. Humphreys

A Houston Division opinion discusses how to properly plead a lawsuit when an insurance company makes false statements. The opinion is styled, Mt. Olive Missionary Baptist Church v. Underwriters at Lloyds.

Mt. Olive alleges a storm caused damage to the Church including damage to the roof, HVAC, windows, exterior, interior, ceilings, furnishings, and more. After the storm a claim was filed under its insurance policy. A third party adjuster, Herring, was assigned to investigate and adjust the claim. Mt. Olive alleges that Herring failed to perform a thorough investigation of the claim, failed to prepare any estimates reflecting wind damage, and misrepresented that there was no damage to the Church. The claim was denied.

Mt. Olive sued in state court and the case was removed to federal court.

Uninsured/Underinsured Litigation

October 8, 2016 | Mark S. Humphreys

Lawsuits involving claims for uninsured/underinsured (UIM) benefits are in their own little category for the way the courts handle them. This is illustrated in a 2016, Tyler Court of Appeals opinion titled, In Re: AAA Texas County Mutual Insurance Company.

Vehicles driven by Thomas Jackson and Patricia Tompkins collided. Jackson filed a claim for UIM benefits with AAA. He later filed a lawsuit against AAA for breach of the insurance contract, violations of the DTPA, the Texas Insurance Code, and breach of duty of good faith and fair dealing. AAA filed a motion to sever and abate the extracontractual claims and the just denied the motion. This Mandamus action resulted.

AAA argued the judge abused his discretion in not allowing the case to be severed and abated.

Grand Prairie Insurance Lawyers Will See Total Loss Cases

October 6, 2016 | Mark S. Humphreys

Total loss cases dealing with automobiles have certain rules that apply. A Dallas Court of Appeals case discusses this issue. The opinion is styled, Sunny Letot v. United Services Automobile Association. There are multiple issues in this case but the opinion dealing with the total loss of an automobile is something many people will have the occasion to see.

The opinion is an appeal from a summary judgment in favor of USAA. The part of the opinion dealing with total loss was reversed by this appeals court.

Letot was involved in a wreck that resulted in the total loss of her vintage 1983 Mercedes. Letot was offered $2,494.02 by USAA which was rejected. However, USAA still mailed a check for that amount and the check was returned. The same day the check was mailed, USAA sent TxDoT a letter informing them the vehicle had been totaled. Letot had the vehicle scrapped to avoid incurring further storage fees. USAA later filed a report with TxDoT stating the initial report was filed in error.