Dallas Fort Worth Insurance Lawyer Blog

Insurance Regulation

January 9, 2016 | Mark S. Humphreys

Duncanville insurance lawyers keeping abreast of insurance laws may find this article from the Insurance Journal interesting. The title is, “Best, Worst States For Insurance Regulation.”

Vermont, Utah, Iowa, Virginia and Kentucky get an “A” and North Carolina an “F” in one think tank’s annual grading of states on how they regulate the property/casualty insurance industry.

The 2015 Insurance Regulation Report Card, the R Street Institute’s annual publication, assigns scores in 10 different areas including solvency monitoring, anti-fraud efforts, rating and underwriting freedom, minimizing politicization of regulation, consumer protection and fostering competitive markets.

Cedar Hill, Texas Insurance Lawyer

January 7, 2016 | Mark S. Humphreys

This 2014, Texas Supreme Court opinion should be of local interest. The case is styled, In re National Lloyd’s Insurance Company.

In this narrow holding, the Texas Supreme Court held that the trial court abused its discretion by ordering the defendant insurance company to produce evidence related to insurance claims of third parties.

After her Cedar Hill home was damaged by storms, Mary Erving filed claims with her homeowners insurance company, National Lloyds Insurance Company. Although National Lloyds paid the claims, Erving became concerned that her claims had been undervalued. As a result, Erving sued National Lloyds for breach of contract, breach of duty of good faith and fair dealing, fraud, conspiracy to commit fraud, and violations of the Texas Deceptive Trade Practices Act, and Chapters 541 and 542 of the Texas Insurance Code.

Concurrent Causation Clauses

January 5, 2016 | Mark S. Humphreys

Attorneys handling hail damage claims need to read this case. It is a 2015, Texas Supreme Court opinion styled, JAW The Point, L.L.C. v. Lexington Insurance Co.

In this case, the “anti-concurrent causation” (ACC) exclusion reads:

loss or damage caused directly or indirectly by any [excluded cause or event], regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

Rejection Of UIM And PIP Coverages

January 3, 2016 | Mark S. Humphreys

All insurance law lawyers are going to understand how Personal Injury Protection (PIP) and uninsured motorist (UIM) coverage works. For some of the situations that may be confusing, a recent opinion from the Court of Appeals, Houston [14th Dist.] may be helpful to read. It is styled, Donald Cain v. Progressive County Mutual.

This is an appeal from a motion for summary judgment. The main issue is whether the policy at issue falls within the plain meaning of the term “renewal insurance policy” in Texas Insurance Code, Sections 1952.101(c) and 1952.152(b).

Corliss Madison obtained an auto policy from Progressive. At that time, she rejected in writing UIM coverage and PIP coverage. Madison and Larry Bradford were named insureds under the policy. When the policy expired six months later, Madison entered into another insurance policy for the next six-month period. Madison then entered into seven more successive insurance policies every six months over the next four years.

Insurance Company Must Conduct A Reasonable Investigation

January 2, 2016 | Mark S. Humphreys

Grand Prairie insurance lawyers must know what it takes for an insurance company to be found liable for bad-faith. A 5th Circuit Court of Appeals opinion is educational in this respect. It is a 2014 opinion styled, Santacruz v. Allstate Texas Lloyd’s, Inc.

The 5th Circuit reversed a summary judgment in favor of Allstate because the reviewing panel found that Allstate had failed to make a reasonable investigation before denying the claim. The result is unusual not only because Allstate’s bad-faith summary judgment was reversed, but also the reason for reversal was not that Allstate had no reasonable basis for the denial but rather, it failed to conduct a reasonable investigation before denial. Under Texas’ bad-faith standard, the insurer must demonstrate both.

In this case, a rainstorm blew several shingles off Santacruz’s roof, causing leaks and exgensive damage to personal property. The insured promptly reported the incident to Allstate who informed the insured that it could not send an adjuster for several days. However, because more storms were forecast, Santacruz, upon the advice of his contractor, informed Allstate that he had to repair the roof immediately to prevent further damage. Allstate repeated that it needed to inspect the roof before it could be repaired. Santacruz proceeded with repairs that day. A few days later, an Allstate adjuster came and took pictures of the roof and interior but did not further investigation. Allstate denied the Santacruz’s claim, who then sued Allstate for breach of the duty of good faith and fair dealing and intentional infliction of emotional distress.

ERISA – Cooperating With Plan Administrator

December 31, 2015 | Mark S. Humphreys

Attorneys handling ERISA claims will tell you the difficulties of ERISA claims and the ways to make sure those difficulties do not ruin the claim. A 2014, 5th Circuit Court of Appeals case needs to be read to see ways of avoiding some of the difficulties. The style of the case is, Hollingshead v. Aetna Health Inc.

This case reached the 5th Circuit Court of Appeals after the U.S. District Court dismissed the plaintiff’s putative class action complaint for failure to state a claim for violations of the Employee Retirement Income Security Act.

Through his employer, plaintiff Joe Hollingshead participated in a self-funded ERISA benefit plan with Aetna as the Plain’s claims administrator. The Plan included a number of coordination of benefits provisions, indicating how benefits would be paid in the event that Plan participants had medical coverage from more than one source. Under the Plan, certain sources of insurance coverage were considered “primary,” while other sources were considered “secondary.” In the event that the Plan was secondary, its benefits were to be determined after those of the primary plan. Practically, this meant that benefits under the Plan could be reduced. In fact, the Plan contained a provision explaining that failure to provide Aetna with necessary information and documentation could cause payment of benefits to be delayed or even denied. Under the Plan, no-fault auto insurance was considered primary.

Insurance – Direct Action

December 29, 2015 | Mark S. Humphreys

Dallas area insurance lawyers need to read a Texas Supreme Court, 2014 opinion. It is styled, In re Essex Insurance Company.

This is a mandamus proceeding wherein the Court reaffirmed Texas’s “no direct action” rule barring third-party plaintiffs from suing a tortfeasors’s liability insurance company directly until the tortfeasor’s liability has been finally determined by agreement or judgment. In this case, Rafael Zuniga sued San Diego Tortilla (SDT)) after a serious injury sustained while operating a tortilla machine. SDT’s liability insurance company, Essex, agreed to defend SDT, subject to a reservation of rights to deny coverage based in part on an exclusion for bodily injury to the named insured’s employees. Zuniga and SDT asserted that Zuniga was working as an independent contractor.

After Essex rejected Zuniga’s offer to settle for policy limits, Zuniga filed an amended petition adding Essex and seeking a declaration that the policy requires Essex to indemnity SDT for its liability to Zuniga. Essex filed to dismiss the claims against it under Texas Rule of Civil Procedure 91a, arguing that the “no direct action” rule, Zuniga’s lack of standing, and lack of ripeness bar Zuniga from suing Essex until SDT’s liability has been determined. The trial court denied the motion to dismiss. Essex filed a petition for writ of mandamus, which the appeals court denied, but which this court granted.

Agents And Cheaters

December 27, 2015 | Mark S. Humphreys

Attorneys who handle many insurance cases can tell stories of clients being ripped-off by insurance agents. Some pocket premiums rather than send the premiums to the insurance company. Some forge signatures on applications. Some fill out false information on applications without telling their customer. Some tell you that you have the coverage you are requesting when you do not.

Having said the above, the vast majority are honest hard working people. The problem is the few who are crooks. The Insurance Journal will report on cases where a person tries to take advantage of an insurance company. But the Insurance Journal will also report on agents who take advantage of their customers. A recent article is titled, Michigan Insurance Broker Sentenced on Racketeering Charge.

A Troy, Mich., insurance broker was sentenced last week to 14 months to 20 years in prison on one count of racketeering, the state attorney general’s office announced.

“Other Insurance” Clauses

December 26, 2015 | Mark S. Humphreys

Lawyers handling insurance cases are aware of clauses in the insurance contract that are different from other types of contracts. The Claims Journal published an article in November of 2015, that discusses “other insurance” clauses. The title of the article is, “Insurance Policy ‘Escape” Type ‘Other Insurance’ Clause Given Short Thrift by California Court.”

An insurer is ordinarily free to restrict the risks it will underwrite and is responsible only for losses within the coverage wording of its policies of insurance. The courts at least say they will not rewrite the terms of a policy for any purpose, including to make them conform to judges’ notions of sound public policy. For judges to do so would exceed their authority. In brief, plain policy language limiting coverage must be respected by the courts.

But – and in law there seems always to be a “but” — an exception to these general rules of policy wording enforcement is recognized regarding “other insurance” clauses generally and “escape” other insurance clauses in particular. “Escape” clauses purport to provide that coverage evaporates in the presence of other insurance, departing from the historical purpose of “other insurance” clauses – to prevent multiple recoveries when more than one policy provided coverage for a particular loss. Partly because “escape” clauses are objects of judicial distrust, the modern trend is to require multiple insurers on a single risk to contribute on a pro rata basis regardless of the type of “other insurance” clauses in their policies.

Bad Faith Insurance And The Fight

December 24, 2015 | Mark S. Humphreys

Insurance lawyers in the Dallas and Fort Worth areas who are honest and straight forward with their clients, will let them know up front that winning a case on allegations of “bad faith” are an up hill fight. The Texas Supreme Court and the various appellant courts look negatively on bad faith claims. This is illustrated in the 1993 case, State Farm Lloyd’s v. Nicolau. It is important to realize there are still cases wherein bad faith allegations can win, but it is equally important that the facts of each case have to be carefully scrutinized and discussed before one should believe they can prevail on a bad faith claim.

Here is a little about the Nicolau case. The part from the dissent has to be calculated in discussing a case.

This is a suit against a homeowner’s insurer alleging malicious bad faith, etc., for refusing to pay the full amount of a claim. A jury found for Mr. and Mrs. Nicolau on various contractual, tort and statutory theories, also finding actual and punitive damages. The trial court rendered judgment n.o.v. on all claims except breach of contract. On appeal, the 13th Court of Appeals in Corpus Christi reinstated the jury’s findings and rendered judgment against State Farm (including punitive damages). Held: judgment of Court of Appeals reversed in part and judgment rendered striking the exemplary damages (because there was no legally sufficient evidence of malice); judgment of was affirmed insofar as it awarded Mr. and Mrs. Nicolau actual damages for State Farm’s bad faith.