Dallas Fort Worth Insurance Lawyer Blog

Fraud Claims Against Insurance Companies

October 20, 2015 | Mark S. Humphreys

Fort Worth insurance lawyers need to have an understanding of the requirements for suing an insurance company for fraud. A 2015, United States District Court, Austin Division, case is a good place to start for grasping the requirements. The case is styled, Bige, Inc. v. Penn-America Insurance Company; Specialty Insurance Managers, Inc; Eric Kehs.

Bige alleges Penn-America sold them a Policy, representing it included wind and hailstorm coverage for damage to the Property. Bige further alleges the Property sustained damage from a storm. Bige submitted a claim to Penn-America for the damage.

Bige states Penn-America hired or assigned Kehs to adjust the claim, but Kehs failed to fully investigate the claim. Bige alleges, although Penn-America and Kehs acknowledged damage to the Property, Kehs conducted a substandard and improper inspection of the Property, which yielded a grossly inaccurate and unrealistic assessment of the cause, extent and dollar amount of the damage to the Property. Specifically, Kehs determined the amount of damage was less than Bige’s deductible under the Policy. Bige further alleges, upon receipt of the inspection reports, Penn-America failed to review the assessment thoroughly, resulting in a failure to provide coverage due under the Policy. Bige further alleges, following receipt of Bige’s demand letter, Penn-America and Kehs refused to conduct further investigation that was not “outcome-oriented.”

Flood Claims And Statute Of Limitations

October 18, 2015 | Mark S. Humphreys

Fort Worth insurance lawyers will not see as many flood claims as attorneys along the Texas coast but they still need to have some knowledge of how they work. The United States District Court, Galveston Division, issued an opinion and order in a dispute concerning a National Flood Insurance Policy. The style of the case is, Afredo Mamani and Patricia Gonzalez v. AIG National Insurance Company, Inc.

Before the Court was a Motion for Summary Judgment filed by AIG. The motion sought to dismiss Mamain and Gonzalez (Plaintiff”) complaint based on a statute of limitations defense.

Plaintiffs’ residential rental property was damaged by flood waters during Hurricane Ike. At the time, the property was insured under a Standard Flood Insurance Policy issued by AIG, a WYO carrier under the National Flood Insurance Program. AIG sent an adjuster to the property. The adjuster spoke with Mamani and the tenants who had remained during the hurricane. After examining the claimed flood damages the adjuster determined that any covered damage was insufficient to meet the Plaintiffs’ deductible. Consequently, AIG made no payment under the policy.

Misrepresentation In Selling An Insurance Policy

October 17, 2015 | Mark S. Humphreys

Kennedale insurance lawyers need to read this recent opinion from the United States District Court, Dallas Division. It is styled, Renee Davis and Reginald Davis v. State Farm Lloyds and Leah Suzanne McGee.

This is a case that was filed in State Court against State Farm and the agent, McGee, and removed to Federal Court by the Defendants based on Federal diversity jurisdiction. Davis sought to have the case remanded to the State Court. This court denied that request. There are more than a couple issues in this case but the part dealing with misrepresentation by the agent is what will be discussed.

Davis alleges that their insured property was damaged but that State Farm “failed to pay the full proceeds of the policy” and failed to settle the claim in an adequate and timely manner. With respect to the insurance agent McGee, Davis alleged that McGee “constantly assured Plaintiffs that they were adequately insured even though a reasonable and prudent insurance agent would testify otherwise.” They further allege that McGee “misrepresented to Plaintiffs that the insured person was covered by such peril although State Farm denied such coverage.” It thus appears that Davis claim they have been wrongfully denied full coverage for the damages sustained to their property, although there is no information as to the event that caused the damage, the nature or extent of the damage, and the circumstances underlying State Farm’s alleged denial of full coverage. As a result Davis sued McGee for negligent misrepresentation, among other causes.

Fraud Allegations And Federal Court

October 15, 2015 | Mark S. Humphreys

Insurance lawyers in the Dallas / Fort Worth area can tell you that when alleging fraud against an insurance company, agent, or adjuster, that the allegations for Federal Court have to be very specific. These specifics are discussed in a recent opinion from the U.S. District Court, Western District of Texas, Austin Division. The style of the case is, Bige, Inc. v. Penn-America Insurance Company; Specialty Insurance Managers, Inc.; Eric Kehs. When the allegations are not properly pleaded in the lawsuit papers, the insurance attorneys will seek the Federal Court to dismiss the lawsuit in what is called a Rule 12(b)(6) motion. In discussing the requirements in Federal Court for allegations of Fraud, the opinion said the following:

When evaluating a motion to dismiss for failure to state a claim under Rule 12(b)(6) the complaint must be liberally construed in favor of the plaintiff and all facts pleaded therein must be taken as true. Although Federal Rule of Civil Procedure 8 mandates only that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief,” this standard demands more than unadorned accusations, “labels and conclusions,” “a formulaic recitation of the elements of a cause of action,” or “naked assertions” devoid of “further factual enhancement.” Rather, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” The Supreme Court has made clear this plausibility standard is not simply a “probability requirement,” but imposes a standard higher than “a sheer possibility that a defendant has acted unlawfully.” The standard is properly guided by “two working principles.” First, although “a court must accept as true all of the allegations contained in a complaint,” that tenet is inapplicable to legal conclusions” and “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Second, “determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Thus, in considering a motion to dismiss, the court must initially identify pleadings that are no more than legal conclusions not entitled to the assumption of truth, then assume the veracity of well-pleaded factual allegations and determine whether those allegations plausibly give rise to an entitlement to relief. If not, “the complaint has alleged-but it has not ‘shown’-‘that the pleader is entitled to relief.'”

Pleading fraud as a cause of action requires pleading “with particularity” pursuant to Federal Rule of Civil Procedure 9(a). Fifth Circuit precedent interprets Rule 9(b) strictly, requiring the plaintiff to “specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.”

Properly Suing An Insurance Adjuster

October 13, 2015 | Mark S. Humphreys

Lake Worth insurance lawyers know that one way of keeping out of Federal court, which is where insurance companies prefer to litigate, and staying in State court is to be able to state a legal cause of action against an insurance adjuster. This was successfully done in a recent U.S. District Court, Western District of Texas, San Antonio Division. The style of the case is, Joyce Birch v. Stillwater Insurance Company and Jimmie Pospisil.

This law suit arises out of damage caused to Birch’s home during a hailstorm. Birch submitted a claim to Stillwater for roof and water damage that her home sustained during the storm. The adjuster was Pospisil.

Birch sued Stillwater and Pospisil alleging Pospisil improperly adjusted the claim by failing to include many of her damages, disallowing funds to cover repair and restoration expenses, and reducing the number of shingles reported as damaged. That Pospisil’s failure to properly adjust the claim resulted in a failure to pay the full proceeds of Birch’s insurance policy and adequately settle the claim. She then sued for violations of the Texas Insurance Code, Section 541.

Delay In Paying Claim

October 11, 2015 | Mark S. Humphreys

Most Saginaw insurance lawyers have had a client to call and complain about an insurance company to delay in paying a claim. This is often a violation of the Prompt Payment of Claims Act. The U.S. District Court, Northern District of Texas, Dallas Division issued an opinion in August of 2015, that in part, explains how that Act applies. The opinion is styled, Mainali Corporation v. Covington Specialty Insurance Company, et al. This is a case that was filed in State Court and removed to Federal Court by Covington based on diversity jurisdiction. Mainali was attempting to have the case remanded to the State Court.

This lawsuit arises in connection with a fire that damaged Mainali’s property, a Chevron station and convenience store. According to Mainali’s original petition, Covington insured the Property under a policy that covered fire damage and business interruption losses; Covington assigned Engle Martin and Associates, Inc. as the adjustment company to oversee the claims adjustment process; and Engle Martin assigned Summers as the individual field adjuster. Mainali alleges that Summers failed to conduct a reasonable investigation, denied coverage for damage to the Property and business losses, and underestimated the damage; after underestimating the damage, Summers and Engle Martin reduced the amount payable to Mainali under the Policy; relying on Summers’ inadequate investigation and conclusions regarding the damage, Covington agreed to pay only a portion of the amount due on the claim; and because of Covington’s refusal to pay for repairs and business losses, Mainali was unable to reopen the Chevron station and convenience store, causing Mainali to suffer additional damage in the form of lost business income. Mainali also alleges that Covington, Engle Martin, and Summers failed to conduct a reasonable investigation of Mainali’s claim, thereby violating Texas Insurance Code, Section 541.060(a)(1); failed to attempt to settle the claim in a fair manner, even though they were aware of their liability under the Policy, thereby violating Section 541.060(a)(2)(A); failed to provide prompt and reasonable explanation for the denial of the claim, thereby violating Section 541.060(a)(3); refused to pay the claim without conducting a reasonable investigation of the claim, thereby violating Section 541.060(a)(7); misrepresented the Policy to Mainali by making an untrue statement of material fact, thereby violating Section 541.061(1); misrepresented the Policy to Mainali by failing to state a material fact necessary to make other statements not misleading, thereby violating Section 541.061(2); misrepresented the Policy to Mainali by making a statement that would mislead a reasonably prudent person to a false conclusion of material fact, thereby violating Section 541.061(3); failed to acknowledge receipt of the claim, thereby violating Section 542.055(a)(1); failed to timely commence an investigation of the claim thereby violating Section 542.055(a)(2)-(3); failed to notify Mainali in writing of the acceptance or rejection of the claim not later than the 15th business day after receipt of all items, statements, and forms, thereby violating Section 542.056(a); delayed payment of the claim, thereby violating Section 542.058(a). Plus other causes of action.

As it relates to the last four allegation, violations of the Texas Prompt Payment of Claims Act, the Court stated, “Summers cannot be held liable under any section of Chapter 542. Chapter 542 only applies to specifically listed “insurers,” and Summers, an adjuster, is not an insurer.”

Excluded Drivers On The Insurance Policy

October 10, 2015 | Mark S. Humphreys

Benbrook insurance attorneys know to check auto insurance policies for “excluded drivers.” An excluded driver has no coverage when he is operating a vehicle. The Eastland Court of Appeals issued an opinion in August of 2015, that should be read. The opinion is styled, Allied North America Insurance Brokerage of Texas, L.L.C. v. Diamond Pump & Transport, LLC and the Insurance Company of the State of Pennsylvania.

James Garrett died as the result of injuries that he received when Aaron Sanchez, a driver for Diamond Pump & Transport, LLC, ran into the motorcycle that Garrett was riding. The truck that Sanchez was driving at the time belonged to Diamond and was insured by the Insurance Company of the State of Pennsylvania. However, ICSOP had named Sanchez as a driver who was excluded from coverage under the policy. Allied North America Insurance Brokerage of Texas, L.L.C. was Diamond’s insurance agent that placed the policy with ICSOP. This appeal concerns the validity of the named driver exclusion.

This lawsuit began when the representative of Garrett’s estate, joined by Garrett’s heirs, filed a wrongful death suit against Diamond. Because ICSOP had issued Diamond’s vehicle insurance policy, and after it had issued a reservation of rights notice, ICSOP provided Diamond with a defense in connection with the Garrett lawsuit. Later, the Garrett plaintiffs amended their petition and added Sanchez as a defendant. Because it had listed Sanchez as an excluded driver in the policy, ICSOP then withdrew its defense and denied liability.

Insurance Companies Doing Wrong Again

October 8, 2015 | Mark S. Humphreys

Insurance Companies doing wrong again is a constant theme with Texas insurance lawyers. Day in and day out, claims get processed properly, but too many times they are not. The Texas Tribune published an article in September 2015, that illustrates one of the times an insurance company does wrong. The title of the article is, “Workers’ Comp Insurer Fined $250,000.00.”

The article tells us that for years, Crystal Davis battled an insurance company for workers’ compensation benefits after her husband, Wayne, was killed on the job in 2012.

As a result of her struggles, the Texas Department of Insurance has slapped that insurer with what is believed to be the largest fine ever issued for workers’ compensation violations in the state — $250,000. None of the money goes to Davis — a stay-at-home Tyler mom with two children — but the state is requiring that a large chunk of it be used to help children of injured or killed workers.

Insurance Agent Stealing Premiums

October 6, 2015 | Mark S. Humphreys

An insurance attorney who has handled very many insurance cases will end up having a case where the agent took money from their customer but never got the insurance. The agent will give the customer a receipt and maybe hand them a “binder” to indicate the coverage is in effect, but just pocket the money, hoping the customer does not have to make a claim and never knows the difference.

The Insurance Journal published an article in September of 2015, where an agent pocketing money was the topic. The title of the article is, “Miami Agent Arrested for Operating With Expired License, Stealing Premium Funds.”

The article tells us that the Florida Division of Insurance Fraud announced the arrest of Tania Michel, 41, for failing to notify the Department of Financial Services of a federal fraud conviction, continuing to work in the insurance industry after having her license expire, and knowingly misappropriating premium funds while working at an insurance agency.

Suing Insurance Company – Proper Pleadings

October 4, 2015 | Mark S. Humphreys

Saginaw insurance lawyers will know that a lot of cases against insurance companies end up in Federal Court. The pleading standard in Federal Court is high. Understanding the Rule 12(b)(6) is important. This is illustrated in a 2015, opinion from the U.S. District Court, Northern District of Texas, Dallas Division. The style of the case is Infectious Disease Doctors,P.A. v. BlueCross BlueShield of Texas, A Division of Health Care Service Corporation, et al.

In this case the pleadings were found to be adequate. What is important to realize is most insurance companies will have their lawyers file motions to get the case thrown out of court on technicalities. You must be prepared for this.

To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” A claim meets the plausibility test “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” While a complaint need not contain detailed factual allegations, it must set forth “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” The “factual allegations of a complaint must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true even if doubtful in fact.” When the allegations of the pleading do not allow the court to infer more than the mere possibility of wrongdoing, they fall short of showing that the pleader is entitled to relief.