Dallas Fort Worth Insurance Lawyer Blog

Breach Of The Insurance Contract By Itself Is Not Enough To Support A Bad Faith Claim

April 13, 2014 | Mark S. Humphreys

Dallas insurance lawyers need to know that when an insurance company breaks the contract it has with it’s insured, that is not enough by itself to support a claim for bad faith insurance. The 1988, Beaumont Court of Appeals case, Gulf States Underwriters v. Wilson, states this very clearly. Here is some of the relevant information from that case.

Wilson entered into an insurance contract with Gulf States effective June 29, 1979, and initially paid $85. This case has as its basis a dispute between Wilson and the insurance company over how this $85 should be classified: as a “deposit” against future premium shortfalls (according to Gulf States) or as a premium paid in advance (according to Wilson). The regular monthly premium was to be based on a percentage of cords of pulpwood Wilson’s employer produced each month. In late April 1982, Wilson paid $419 premium. Gulf States applied this payment to Wilson’s coverage from March 28, 1982, through April 29, 1982. Wilson was subsequently injured on May 1, 1982. On May 10, 1982, Gulf States mailed Wilson a notice of intention not to renew his policy. Wilson did not pay a premium on the next due date at the end of May. According to Gulf States, the letter did not actually cancel the policy, but rather, the policy lapsed for non-payment of the premium due at the end of May.

Gulf States theory at trial was that Wilson’s first payment of $85 was not the first month’s premium, but merely a “deposit” which was consideration for issuing the policy but did not effect coverage for any period of time. Following this logic, the first premium was not paid until the end of July 1979. That premium would apply retrospectively for coverage during July 1979. Gulf States thus maintains that the payment at the end of April 1982 was for insurance coverage during the month of April 1982. And, since Wilson paid no premium at the end of May, the policy lapsed as of the end of April 1982, so the injury on May 1, 1982, was not covered.

A Wrongful Denial Does Not Mean Bad Faith

April 12, 2014 | Mark S. Humphreys

All insurance cases have to looked at closely by insurance attorneys. Not every time an insurance company denied a claim means that the insurance company has breached its duty of good faith and fair dealing. The 2006, Texas Supreme Court case Minnesota Life Insurance Company v. Vasquez is a good illustration of this. Here is the relevant information on this case.

Minnesota Life issued a Mortgage Accidental Death Insurance policy to Joe and Elia Vasquez, promising to pay their home mortgage in the event either died due to an accident. In June 2000, Joe Vasquez became ill, was hospitalized, suffered a seizure, and lapsed into a coma. Twelve days later, he emerged from the coma and was transferred to a hospital room. Later that day, while no one else was present, he apparently fell, hit his head, and died.

On October 6, 2000, Elia Vasquez filed a claim with Minnesota Life requesting payment of the balance due on her mortgage (about $41,000) and submitted copies of the death certificate and autopsy report. After reviewing the documents, Minnesota Life sought advice from a medical consultant as to whether Mr. Vasquez’s death resulted from an accident “independently of all other causes,” as required by the policy. The consultant advised that he needed to see the relevant medical records.

Failure To Pay Claim And Bad Faith

April 10, 2014 | Mark S. Humphreys

Most insurance lawyers can tell a new client that the fact an insurance company refuses to pay a claim it should have paid does not make the insurance company liable for a bad faith insurance claim. The 1998, Texas Supreme Court case, Provident American Inc. v. Castanden, helps explain this.

Denise Castaneda sought damages from Provident for alleged violations of the Insurance Code and the Deceptive Trade Practices Act arising out of the denial of her claim for benefits under a health insurance policy and the manner in which her claim was handled. Because the evidence was legally insufficient to support the jury’s verdict, this court reversed and rendered judgment that Castaneda take nothing.

Denise Castaneda’s father, Guillermo Castaneda, Sr., applied for medical insurance with Provident in May 1991. He sought a policy that would cover the entire family including his daughter Denise, who was twenty-one years old at the time, her sister, and their brother Guillermo, Jr. During the application process, Guillermo Castaneda, Sr. failed to disclose that just two days before he applied for the policy, Guillermo, Jr. had received medical attention from a physician for jaundice, anemia, and suspected hepatitis. Denise had received medical treatment for jaundice and hepatitis several years prior to the date her father applied for health insurance.

Bad Faith And The Common Law

April 8, 2014 | Mark S. Humphreys

Lawyers handling “bad faith” insurance cases need to understand how bad faith is treated by Texas common law.

This blog spends a lot of space dealing with the Texas Insurance Code and how violations of those statutes is bad faith insurance. Under Texas law, there is also a common law cause of action for breach of the duty of good faith and fair dealing in cases where an insurance company has no reasonable basis for denial or delay of payment or fails to reasonably investigate its basis for denying a claim. This has been explained by the 1987, Texas Supreme Court case styled, Arnold v. National County Mutual Fire Insurance Co. The precise meaning of phrases such as “liability becomes reasonably clear” and “reasonable basis for denial” are not yet clearly defined, but they are continually being litigated in an effort to formulate more exact definitions. There are a trio of Texas Supreme Court cases dealing with this subject. This trio of cases purport to redefine the breach of the duty of good faith and fair dealing, but Texas courts have treated these cases in much the same fashion as they have for years. Under the new standard for looking at bad faith cases an unpublished Dallas Court of Appeals case observed: “Under the new standard, the insured must show that the insurer denied the claim after liability became reasonably clear. To show that liability was reasonably clear, the insured must show that the insurer had no reasonable basis for denial. As noted by a majority of justices on the Supreme Court, the change is merely semantic.”

The above should be confusing to most people. This writer would suggest that the above being confusing is ok. The reason it is ok is that insurance lawyers now have the statutes in the Texas Insurance Code that are ample ammunition for fighting wrongs committed by insurance companies.

Personal Injury Protection And Coverage

April 6, 2014 | Mark S. Humphreys

Personal injury attorneys in Dallas would want to know and understand this case. It is a 20024, Texas Supreme Court case styled, Texas Farm Bureau v. Sturrock. Here is the relevant information.

In this case, an insured was injured when his foot became entangled with his truck’s raised door facing while he was exiting the vehicle. The Court had to decide whether his injury resulted from a “motor vehicle accident” for purposes of personal injury protection (PIP) coverage under his Texas standard automobile insurance policy. This court held that a “motor vehicle accident” occurs when (1) one or more vehicles are involved with another vehicle, an object, or a person, (2) the vehicle is being used, including exit and entry, as a motor vehicle, and (3) a causal connection exists between the vehicle’s use and the injury-producing event. This court concluded that the insured’s injury here resulted from a “motor vehicle accident” within his policy’s PIP coverage. Accordingly, they affirmed the court of appeals’ judgment.

Jeff Sturrock drove his truck to work, parked, and turned off the engine. While exiting the truck, he entangled his left foot on the raised portion of the truck’s door facing. Sturrock injured his neck and shoulder in his attempt to prevent himself from falling from the vehicle. Sturrock filed a claim for PIP benefits under his vehicle’s insurance policy, issued by Texas Farm Bureau.

Occupying A Vehicle

April 5, 2014 | Mark S. Humphreys

Insurance lawyers in Dallas need to be able to tell a new client whether or not they have a claim worth pursuing. In 1963, the Waco Court of Appeals issued an opinion that insurance lawyers should know about. The style of the case is, Ferguson v. Aetna Casualty & Surety Company. Here is the relevant information from that case.

Ferguson sued Aetna Casualty upon the ‘medical payments provision‘ of a policy issued upon her automobile. Such policy provided medical payments for the named insured who sustains ‘bodily injury, caused by accident, while occupying or through being struck by an automobile.’ The term ‘occupying’ is defined in the policy as meaning ‘in or upon or entering into or alighting from an automobile.’

Ferguson had been to the beauty parlor. She left the beauty parlor, came out onto the parking lot where she had left her automobile. In front of the beauty shop was a board that went out into the parking area. Parked alongside of this board at the end of it was ‘an automobile’. Ferguson walked to the end of the board and reached out and grabbed the door handle of the car to support herself. While holding onto the handle for support, she stepped off the board and went down into the mud, breaking both legs and suffering other injuries. The car Ferguson had hold of was not her own, and she was not in the act of entering such car; she was merely holding onto the handle for support as she walked around the car on her way to her own car, which was parked further down on the parking lot. However, if Ferguson was ‘in or upon, or entering or alighting from’ this particular car, she would be covered by the policies..

Impact With A Motor Vehicle?

April 3, 2014 | Mark S. Humphreys

Attorneys handling auto claims involving auto insurance need to be aware of this case. It is a Texas Supreme Court case styled Nationwide Insurance Company v. Elchehimi. Here is some of the relevant information.

This breach of contract suit stems from the denial of coverage by Nationwide Insurance Company on a claim arising from a collision between insured Mohamad Elchehimi’s vehicle and an axle-wheel assembly separated from an unidentified semi-trailer truck. The trial court granted summary judgment in favor of Nationwide. Because there was no actual physical contact between Elchehimi’s vehicle and the unidentified truck as required by statute to trigger the uninsured motorist coverage, this court upheld that ruling.

Mohamad Elchehimi’s station wagon collided with a drive axle and attached tandem wheels that had separated from an eighteen-wheel semi-trailer truck. The unidentified truck, which was being driven in the opposite direction on a divided highway, did not stop. Momentum carried the axle-wheel assembly across the dividing median where it struck Elchehimi’s vehicle, injuring the occupants and damaging the car. Elchehimi had purchased from Nationwide a standard Texas personal automobile insurance policy, including the optional statutorily defined unidentified motorist coverage. Nationwide denied Elchehimi’s claim for uninsured motorist benefits because the impact between Elchehimi’s vehicle and the axle-wheel assembly was not “actual physical contact” with an unknown “motor vehicle” as required by the terms of the policy and the Texas Insurance Code.

Life Insurance And Interpleader

April 1, 2014 | Mark S. Humphreys

Life insurance lawyers will have to deal with situations where the proceeds of a life insurance policy are interpleaded into the registry of a court. A February 2014, 14th Court of Appeals opinion dealt with this issue. The style of the case is, Branch v. Monumental Life Insurance Company. Here is some of the relevant information.

Monumental filed this interpleader to resolve competing claims to the proceeds of a $10,000 policy insuring the life of Archie Branch Sr. (“Archie”). The policy was obtained during Archie’s marriage to Loretta Young Branch (“Loretta”), and Loretta was the named beneficiary. Archie and Loretta divorced on May 3, 2011. Six weeks later, Archie died.

According to Loretta, she demanded the insurance proceeds as the named beneficiary, but Monumental refused payment. Monumental learned that a newspaper obituary identified five people as Archie’s children.

What Texas Thinks About Insurance Issues

March 30, 2014 | Mark S. Humphreys

Most Texas insurance lawyers already know what a recent Texas Watch poll tells us. Here are some of the results of the poll.

A statewide public opinion survey of 603 voters reveals widespread public support for protecting the right of a policyholder to hire an attorney to pursue their interests when they believe an insurance company hasunfairly denied, delayed or underpaid a legitimate claim. The survey was sponsored by Texas Watch, an Austin-based consumer advocacy group, and conducted by Hill Research Consultants, a nationally respected Republican opinion-research firm. In the field March 21-25,2013, and using a 25% “cell-phone only” household sample, results have a margin of error of +4.0%. To avoid biasing results, particular care was taken in crafting the survey questionnaire to objectively describe thecurrent legislative climate and regulatory structure, fairly represent both insurance-industry and consumer-rights positions, and rotate the order of questions and arguments presented. Key findings include intense voter agreement–across political, ideological and geographic lines–that…

•Insurance companies “routinely” deny or under pay legitimate claims and unnecessarily delay legal proceedings in the hope policyholders will simply give up before receiving what they are due–78% agree, 55% “strongly”

Insured’s Want To Be Able To Hire An Attorney And Access The Courts

March 29, 2014 | Mark S. Humphreys

Texas insurance attorneys will be encouraged to read a recent report from Texas Watch. Texas Watch is a consumer advocate group that deals with insurance issues.

A February 14, 2013, press release tells us the following:

SPECIAL INTEREST PAC JUST CAN’T HANDLE THE TRUTH Access to the civil justice system is a fundamental right. It is embedded in our constitution because no one is above the law and everyone should be held to account for their actions.