Dallas Fort Worth Insurance Lawyer Blog

ERISA And Administrator Conflict Of Interest

August 17, 2017 | Mark S. Humphreys

Here is an ERISA case from the United States Fifth Circuit Court of Appeals. It is styled, Lashondra Davis v. Aetna Life Insurance Company. It is an appeal from a summary judgment in favor of Aetna.

The facts can be read from the case. The important issue in this case, is how the Court analyzed the allegation that the plan administrator abused his discretion and there was a conflict of interest with the plan administrator being both who evaluates the claims for benefits and pays benefits claims.

The Court stated that in determining whether there was an abuse of discretion, we also consider whether the plan administrator had a conflict of interest. A plan administrator has a conflict of interest if it “both evaluates claims for benefits and pays benefits claims.” However, a conflict of interest is but one factor among many that a reviewing judge must take into account. A conflict of interest should prove more important where circumstances suggest a higher likelihood that it affected the benefits decision. A reviewing court may give more weight to a conflict of interest where the circumstances surrounding the plan administrator’s decision suggest procedural unreasonableness — that is, where the method by which the plan administrator made the decision was unreasonable.

ERISA And Fiduciary Status

August 15, 2017 | Mark S. Humphreys

Here is a read for lawyers handling ERISA cases. It is an opinion from the Southern District, Houston Division. The opinion is styled, Keith v. Metropolitan Life Insurance Company.

For the facts in this case, read the opinion. This writing is a discussion of the law as it relates to fiduciaries in ERISA cases.

The threshold question in an ERISA claim for breach of fiduciary duty is not whether the actions of some person employed to provide services under a plan adversely affected a plan beneficiary’s interest, but whether that person was acting as a fiduciary (that is, was performing a fiduciary function) when taking the action subject to complaint. The issue of ERISA fiduciary status is a mixed question of fact and law. Under ERISA, one is a fiduciary under 29 U.S.C., Section 1002(21)(A) to the extent that:

Hail Damage Lawsuit And Abatement

August 13, 2017 | Mark S. Humphreys

The Northern District of Texas, Dallas Division issued an opinion dealing with hail damage and abatement of the case to compel appraisal. This is becoming more and more common in hail damage claims. The case is Nabors v. American Reliable Insurance Company, et al.

This claim arises out of water and hail damage to Nabors home. The insurance company is American. It is a declaratory judgment action regarding the scope of the policy’s coverage as well as damages for breach of contract and violations of the Texas Insurance Code against American. American filed a motion to abate the proceeding and compel appraisal.

In this case, there was also a dispute over whether or not the adjuster assigned to the claim by American was properly joined as a defendant in this lawsuit or whether the joinder was merely an effort to defeat diversity jurisdiction in order to have the case remanded to State Court. As in other cases in this blog, the examination by the Court was in favor of American.

Uninsured Motorist Coverage And Full Trial

August 12, 2017 | Mark S. Humphreys

Lawyers handling insurance disputes involving uninsured motorist (UM) coverage should already know the law discussed in a recent case from the Southern District, Houston Division. The case is, Eleazar Cantu, Jr. v. State Farm Mutual Automobile Insurance Company.

Cantu was injured when he fell off a truck driven by an uninsured motorist. Cantu sued the driver, two other UM individuals, and State Farm and took a default judgment in the amount of $65,095.12. Cantu demanded State Farm pay $30,000, the policy limit, and when State Farm declined to pay, Cantu sued State Farm.

State Farm moved for partial summary judgment, arguing that it is not responsible for paying the default judgment in the uninsured-motorist lawsuit because it did not consent to be bound by that judgment. Mr. Cantu responded and cross-moved for partial summary judgment, arguing that State Farm’s knowledge of and participation in that lawsuit indicated its consent to be bound by the default judgment.

Deposing Insurance Representative

August 10, 2017 | Mark S. Humphreys

Most insurance lawyers will want to depose an insurance company representative not long after a lawsuit is filed. This situation arose in recent a Corpus Christi Court of Appeals case. The opinion is styled, In Re Safeco Insurance Company Of America. There is a glaring problem with this opinion. It does not discuss the underlying reasons for wanting to take the deposition of the insurance company corporate representative. There is no discussion of the merits or lack thereof in the underlying case. What is does illustrate is the power of the courts to allow the deposition even when the insurance company does not want the deposition to be allowed. It also discusses the elements that are looked at in reaching a determination.

By petition for writ of mandamus, Safeco seeks to vacate the trial court’s order granting a motion to compel the deposition of its corporate representative. This Court requested and received a response to the petition from the real party in interest, Marvin Bryant. The writ was denied.

Mandamus is an extraordinary remedy. Mandamus relief is proper to correct a clear abuse of discretion when there is no adequate remedy by appeal. The relator bears the burden of proving both of these requirements.

Insurance Lawsuits And Loss Reserves

August 8, 2017 | Mark S. Humphreys

Insurance lawyers need to know about this 2017 case from the Eastern District, Sherman Division. It is styled, Hidden Cove Park and Marina et al v. Lexington Insurance Company, et al. The case concerns the discovery of an insurance company’s loss reserves.

The Court held a telephonic conference regarding a discovery dispute a regarding redacted records. The Court ordered Lexington to produce the un-redacted clam notes and to allow Hidden Cove to depose Lexington’s 30(b)(6) deponent, limited to the information included in the previously redacted claim notes.

After severe storms caused damage to properties insured under a policy issued by Lexington, Hidden Cove sued Lexington alleging failure to properly conduct an investigation into the cause of the loss, failure to issue timely payments, and wrongfully delaying or denying the claim, all pursuant to Chapter 542 of the Texas Insurance Code, and breach of contract and breach of common law duty of good faith and fair dealing. The central issue is the parties’ interpretation of the “Flood” exclusion contained in the policy and its effect on the claim.

Under-Insured Coverage And Settlement Credits

August 6, 2017 | Mark S. Humphreys

Insurance lawyers in Fort Worth and elsewhere need to read this case regarding settlement credits and under-insured (UIM) coverage. It is from the Houston Court of Appeals [14th Dist.]. It is styled, Farmers Texas County Mutual Insurance Company v. Okelberry, et al.

Steven Okelberry and his wife, Patricia has UIM coverage with Farmers. Steven and his two sons were injured in an accident caused by an 18 wheeler insured by Home State. Steven suffered a neck injury requiring surgery and possibly future surgeries.

Home State settled Steven’s property damage claim for $20,066.12 out of a total policy limits of $750,000. Steven and his two sons sued the 18 wheeler company and its driver for their personal injuries.

Federal Court Pleadings Against Adjusters

August 5, 2017 | Mark S. Humphreys

A successful pleading against an insurance adjuster was found in a Western District, Austin Division opinion issue in May 2017. The opinion is styled, Affordable Portable Structures, Inc. and JFJ Group, Inc. v. The Cincinnati Insurance Company and Alfred Gray.

Affordable was insured by Cincinnati when a storm caused damage to property owned by Affordable. Cincinnati hired Alfred Gray to adjust the claim, who hired Rimkus Consulting Group, to prepare a report. According to Affordable, Rimkus is known to provide results oriented reports that are favorable to insurance companies and minimize damage estimates.

Affordable hired a consultant who estimated Affordable’s damages at $698,111.69. Gray turned in an estimate for $25,935.38 — less than 3.5% of the figure that Affordable’s consultant estimated. Affordable alleged that Gray is an inexperienced adjuster and, as such, knew or should have known that the Rimkus report vastly underestimated the amount of damage caused to the property. Accordingly, Gray’s decision to conduct no further investigation was unreasonable and did not constitute a good faith attempt to effectuate a prompt, fair, and equitable settlement.

Prompt Payment And Appraisal

August 3, 2017 | Mark S. Humphreys

What is the result oi an insurance company pays a claim after an appraisal even if you don’t agree with the appraisal? This issue is addressed in a Houston Court of Appeals [14th Dist.] opinion. It is styled, National Security Fire & Casualty Co. v. Hurst.

This is an appeal from a jury trial in favor of Hurst against National. This appeals court reversed the jury trial results.

Dissatisfied with the initial estimate and payment, Hurst sued National and others for claims arising out of a wind and hail storm damage to his home. This lawsuit also claimed violations of the Texas Prompt Payment of Claims Act. National hired adjusters who assessed the damage and paid Hurst $3,524.56 (accounting for the $1,000 policy deductible), which Hurst accepted. Hurst proceeded to file suit on September 7, 2010.

Clarifying Claims Against Adjusters

August 1, 2017 | Mark S. Humphreys

Claims against insurance adjusters need to be specific. This is exemplified in a case from the Southern District of Texas, McAllen Division. The opinion is styled, Jorge Vallejo v. Allstate Vehicle and Property Insurance Company, et al.

Vallejo filed suit in State Court suing Allstate and the adjusters, asserting claims for violations of the Texas Insurance Code. Vallejo alleges Allstate assigned dates of loss of February 6, 2016 and May 31, 2016 to the claims. Jeff Doll was assigned to the February claim and Doll sent a letter to Vallejo on June 17, 2016 but did not schedule an inspection until July 11. As of July 28, 2016, the claim was still not processed.

Vallejo also alleges Ronald Sledge erroneously estimated the value of the claim and that his estimate failed to fully quantify Vallejo’s damages, thus demonstrating that Sledge did not conduct a thorough investigation of the claim.