Dallas Fort Worth Insurance Lawyer Blog

Funding Fraud Prosecutions In Texas

July 18, 2017 | Mark S. Humphreys

The Insurance Journal published a story on June 6, 2017, that is titled, Private Insurer Will No Longer Fund Fraud Prosecutions In Texas.

Thanks to new money and oversight from the Texas Legislature, the state can now pursue workers’ compensation fraud cases without relying on an unusual and much-criticized funding deal between a private insurance company and the Travis County district attorney’s office.

The fix comes nearly two years after The Texas Tribune and the Austin American-Statesman revealed the controversial relationship between Texas Mutual Insurance Co., the largest provider of workers’ compensation insurance in Texas, and government prosecutors in Austin. Under the exclusive funding deal, which stretched back at least to the early 2000s, the giant insurer paid millions to fund a four-person team to investigate and prosecute alleged “crimes committed against the company.”

Surplus Lines Insurance

July 16, 2017 | Mark S. Humphreys

Insurance lawyers will run across situation where the insurance company is a surplus lines insurance company.

Surplus lines insurance is dealt with, in part, it chapter 981 of the Texas Insurance Code. Specific points about surplus lines carriers are discussed throughout the insurance code.

The May 25, 2017, Insurance Journal ran a story dealing with surplus lines that was recently passed into law by the legislature and signed by Gov. Greg Abbot. The law takes effect on September 1, 2017. The title of the story is, Texas ‘Industrial Insureds” Surplus Lines Bill Signed Into Law.

You Have To Properly Word Pleadings Against An Insurance Adjuster

July 15, 2017 | Mark S. Humphreys

The Eastern District, Sherman Division, issued an opinion in May 2017, that, yet again illustrates how to NOT sue an insurance adjuster. The opinion is styled, Hidden Cove Park and Marina v. Lexington Insurance Company and Glenn Hollmuller.

Severe storms caused damage to Plaintiff Hidden Cove. Plaintiff sued defendants Lexington and the adjuster, Glenn Hollmuller, alleging the adjuster failed to properly conduct an investigation into the cause of loss, failed to issue timely payments, and wrongfully delayed or denied claims.

The lawsuit was filed in State District Court and for breach of contract, and various violations of the Texas Insurance Code Chapter 541 and Chapter 542.

Claims Against The Insurance Sales Agent

July 13, 2017 | Mark S. Humphreys

The Western District, San Antonio Division issued an opinion in a case that helps an insurance company keep his client’s case out of Federal Court by suing the insurance agent. The opinion is styled, The New World Baptist Church, LLC v. Nationwide Property and Casualty Insurance Company, Kevin P. McLoughlin, and Michael Robert Stull.

Plaintiff owns a church under a policy issued by Nationwide and sold by McLoughlin, an insurance agent. With respect to the sale of the policy, Plaintiff alleges that “Nationwide or its agent, McLoughlin, sold the policy, to Plaintiff. Nationwide and / or McLoughlin represented to Plaintiff that the policy included wind and hailstorm coverage for damage to Plaintiff’s business …. When Plaintiff negotiated the premium amount, McLoughlin represented that the policy Plaintiff purchased provided coverage for hail and wind losses. Unfortunately, Nationwide later represented that the policy sold by McLoughlin did not afford full coverage. Specifically, the policy sold by McLoughlin was not a full coverage policy, but rather, one with specific exclusions, …. McLoughlin’s violations of the Texas DTPA include causing confusion as to policy benefits, and representing that the policy had benefits or characteristics that it did not possess. … McLoughlin is liable to Plaintiff for common law fraud. … Specifically, McLoughlin represented to Plaintiff during the sale of the policy that the policy had benefits or characteristics it did not possess.”

Plaintiff suffered hail damage and made a claim for benefits and eventually a lawsuit was filed on the claim in State District Court and the was removed to Federal Court by the Defendants claiming that McLoughlin was improperly joined in order to defeat diversity jurisdiction.

Suing The Insurance Adjuster In Dallas Texas

July 11, 2017 | Mark S. Humphreys

Most insurance lawyers want to keep their cases out of Federal Court. One way of doing this, if the opportunity exists, is to find fault with the way an adjuster handled the claim. This is illustrated in a Northern District, Dallas Division opinion styled, Arlington Heights Memorial Post No. 8234 Veterans of Foreign Wars of the United States, Fort Worth, Texas v. Covington Specialty Insurance Company and Edward Martin Sewell, Jr.

Plaintiff initially sued Covington and Sewell in State Court for violations of the Texas Insurance Code, among other reasons. The lawsuit was filed, according to Plaintiff, due to the improper handling of a claim Plaintiff made after a hail and wind storm. Plaintiff alleges that Sewell (1) did not prepare any estimates or scopes of damages to the property or failed to provide those reports to the insured, (2) failed to hire any qualified experts to appropriately assess the damage, (3) delayed the claims process and failed to communicate with the insured, and (4) misrepresented the Policy’s coverage.

The Defendants removed the case to Federal Court based on 28 U.S.C, Section 1441(a), stating that Sewell was improperly sued in this case in an effort to defeat diversity jurisdiction. If the Defendants can prove that Sewell was improperly joined in the case, then the case will remain in Federal Court.

ERISA And Medical Necessity And Short Term Disability Benefits

July 9, 2017 | Mark S. Humphreys

ERISA lawyers will fight whether a prescribed treatment is medically necessary on a routine basis. The courts will interpret the policies in favor of the insurer. This case is from the Northern District, Dallas Division. It is styled, Charlize Marie Baker v. Aetna Life Insurance Co., et al.

Baker, who is undergoing the process of gender transition from male to female, sued Aetna to recover short-term disability (STD) benefits following breast augmentation surgery, under the employer’s ERISA plan. The Court denied Baker’s claim for benefits.

In considering Baker’s claim, Aetna relied on her medical records, including records from her plastic surgeon, Dr. Harris. The claim documentation forms asked Baker, “What is the primary medical condition that keeps you from working?” Baker responded, “cosmetic procedure.” Aetna denied Baker’s claim on the ground that her surgery was not caused by an illness, injury, or pregnancy-related condition, as required under the STD plan. Baker appealed this decision.

A Person Has To Ask For Policy Benefits To Get The Benefits

July 8, 2017 | Mark S. Humphreys

As strange as this one may seem, it is actually fairly common. This is a Southern District, Houston Division opinion styled, Gavion et al v. ACE American Insurance Company.

In 2009, Gavion swerved into the path of a train. He was driving under the policy of his mother’s employer. A passenger in the vehicle, Jackson, sued Gavion and ACE. ACE was later dismissed from the lawsuit and Gavion never appeared in the lawsuit to fight the claim of negligence against him. ACE was Gavion’s insurance company. Gavion never asked for ACE to defend him in the lawsuit. Jackson then took a default judgment against Gavion and Gavion assigned to Jackson the rights Gavion may have against ACE for not defending him in the lawsuit and then Jackson filed suit against ACE for not defending Gavion.

ACE filed a motion for summary judgment stating they had no duty to defend Gavion because Gavion never asked for help.

ERISA – Role Of Plan Administrator – Discretion

July 6, 2017 | Mark S. Humphreys

The case discussed here is from the Houston Division, Southern District. The style of the case is Connecticut General Life Insurance Company, et al v. Elite Center For Minimally Invasive Surgery LLC, et al. This is a Motion for Clarification.

Connecticut (Cigna) sued under ERISA, Section 502(a)(3) to enforce and redress violations of the healthcare benefit plan terms at issue in this case. The plans purportedly delegate Cigna to serve as the authorized claims fiduciary “to interpret and apply Plan terms,” including “the determination of whether a person is entitled to benefits under the plan and the computation of any and all benefit payments.” The plans also authorize Cigna to collect overpayments made on behalf of the plans by recovering funds or offsetting the overpayment amount from future benefits claims payments.

The Court applied an abuse of discretion standard, asking first if Cigna’s interpretation of the plan was legally correct and then whether Cigna abused its discretion in interpreting the plan language as it did. The Court found that Cigna’s interpretation of the plan was legally incorrect. Despite this, the Court did not rule on Cigna’s ERISA claim because the abuse of discretion question is fact intensive and inappropriate to decide at the motion to dismiss stage.

How NOT To Support A Claim

July 4, 2017 | Mark S. Humphreys

The Fort Worth court of Appeals issued an opinion in May 2017, that illustrates the wrong way to pursue a claim and lawsuit for storm and hail damage. The opinion is styled, Richard Seim and Linda Seim v. Allstate Texas Lloyds and Lisa Scott.

This a motion for en banc reconsideration.

The Seims sued Allstate and the adjuster, Scott for the denial of benefits after the Seims claim of hail and storm damage to their home. The Seims filed suit claiming damage to their property occurred from a August 2013 storm. They then filed an amended petition removing references to the August 2013 storm and asserted the damage stemmed from an April 2007 storm. They amended their petition again stating the damage occurred in April 2007, April 2008, and May 2012. They amended yet again stating the damage occurred in the August 2013 storm. Allstate filed a motion for summary judgment on numerous grounds.

Appraisal Clauses In Policies

July 2, 2017 | Mark S. Humphreys

Either the insurance company or the insured has a right to demand an appraisal in lots of property insurance contracts. The Waco Court of Appeals issued an opinion recently that discusses these appraisal clauses. The case is styled, In Re GuideOne Mutual Insurance Company.

This case is a writ of mandamus complaining of the trial court’s refusal order appraisal to proceed as allowed in the insurance contract.

Appraisal clauses, commonly found in homeowners, automobile, and property policies in Texas, provide a means to resolve disputes about the amount of loss for a covered claim. These clause are generally enforceable, absent illegality or waiver.