August 31, 2014

Credit Disability Insurance

Duncanville insurance attorneys need to be able to discuss credit disability issues with a prospective client. A 1996, Austin Court of Appeals opinion helps to understand credit disability issues. The case is styled, American National Insurance Co. v. Paul. Here is some of the relevant information.
The Pauls purchased a van from Dodge. In the negotiations, Mr. Paul asked the salesman whether the purchase price included credit disability insurance. The salesman did not know. There was no further discussion regarding credit disability insurance. The Pauls came into the car dealership later, stated that they were in a hurry and needed to buy the van over the lunch hour. The Pauls met the finance agent who prepared documents which included an application for credit disability insurance provided by American National. The total purchase price included premium payments for this coverage. The finance agent did not orally disclose the existence of the credit insurance application and the Pauls did not read the paperwork.
The insurance application contained a paragraph entitled "Applicant's Statement" which required the applicant to affirm that she was in good health and had not consulted a doctor within three years for certain conditions. Mrs. Paul signed the statement even though at the time she suffered from Lou Gehrig's disease. As of April 1, 1994, Mrs. Paul became permanently and totally disabled and unable to continue working. On May 5, 1995, she applied for disability insurance benefits pursuant to the credit disability insurance policy which American National denied. When American National discovered her condition, they refunded the premium payment to Chrysler Credit which in turn refunded it to the Pauls.
The Pauls filed suit against American National and Dodge alleging violations of the DTPA, Insurance Code, and breach of contract.
At trial, the court rendered judgment in favor of the Pauls on their breach of contract claim against American National in the amount of $18,317.00, representing the present value of payments remaining on the van, plus any premium payments already refunded.
The court found that the finance agent was a duel agent for American National and Dodge and he engaged in unfair and deceptive acts or practices. Therefore, the court ruled that the Pauls were entitled to recover from American National and Dodge jointly and severally an additional $5,000.00 in emotional distress pursuant to the DTPA and Insurance Code. Finally, the court determined that American National and Dodge were jointly and severally liable for the Pauls' reasonable and necessary attorney's fees. American National and Dodge appealed.
Damages and attorney's fees for breach of contract awarded against American National were affirmed. Damages and attorney's fees against both American National and Dodge for alleged violations of the DTPA and Insurance Code were reversed. Plaintiffs were to take nothing against Dodge.
Mrs. Paul's statement in the application that she was in good health and had not consulted a doctor was a "representation" and not a condition precedent to the insurance policy. If language of a policy expressly provides that coverage does not take effect unless the applicant is in good health, the good health provision is enforceable as a condition precedent. The language in this policy was not a condition precedent.
In order to recover mental anguish damages under the DTPA or Insurance Code, in the absence of a resulting physical injury, a plaintiff must show that defendants committed the acts with a heightened culpable mental state, i.e., that the defendants acted "knowingly." "Knowingly" is defined as "actual awareness of the falsity, unfairness or deception of the act." In this case, the Pauls did not plead or prove a heightened culpable mental state. Therefore, the finding of mental anguish damages was in error and thus reversed. Also, since there were no other damage awards under the DTPA or Insurance Code, no attorney's fees may be awarded under those claims without other actual damages.

August 30, 2014

What If An Insurance Company Does A Bunch Of Things Wrong?

Arlington insurance attorneys need to be able to explain to clients what happens when an insurance company is found to do many things wrong. This is illustrated to a certain extent by a 1998 Texas Supreme Court case. The case is styled Waite Hills Services v. World Class Metal Works, Inc. Here is the relevant information from that case.
World Class chrome-plates truck hitches and muffler tips. Colony issued World Class a commercial general liability, commercial property, and commercial inland marine policy. In July 1990, a hole appeared in one of World Class's nickel-plating tanks, causing some nickel solution to spill out of the tank. World Class did not know what caused the hole, but it stopped work on its assembly line. A World Class employee contacted David Ingram, its insurance agent, to report the incident. Ingram contacted Vee Riley, an employee of Burns & Wilcox, to determine if the event was covered. Riley advised Ingram that the event was probably not covered if normal wear and tear caused the hole. Ingram so informed World Class.
World Class drained and salvaged the remaining solution, removed the existing tank liner and installed a new liner, repaired the hole in the tank's exterior, and engaged in clean-up efforts. These repairs allegedly cost World Class thirty days of operation.
Several months later a Colony adjuster investigating an unrelated claim suggested to World Class that the July loss should have been covered. World Class sent a claim to Colony, requesting payment under the policy. The claims examiner, Al Johnston of Waite Hill Insurance Group, denied coverage for the claim.
The jury awarded identical damages in response to the following two questions; one question apparently inquired about damages on the insurance policy and the other ostensibly inquired about tort and statutory damages.

QUESTION 1

What is the amount of loss, if any, payable to World Class Metal Works, Inc. under the policy?

Answer in dollars and cents: $ 55,000

QUESTION 6

What is the amount of money, if any, that is due to World Class Metal Works, Inc. from Colony Insurance Company?

Consider the following elements of damages, if any, and none other.

Do not add any amount for interest on past damages, if any.

a. The reasonable and necessary cost to repair World Class Metal Works, Inc.'s plating tank and to restore the plating lines to production.

Answer in dollars and cents, if any: $ 29,000

b. World Class Metal Works Inc.'s lost profits.

Answer in dollars and cents, if any: $ 14,000

c. The reasonable and necessary cost to replace lost solutions.

Answer in dollars and cents, if any: $ 12,000

Question one was based on the trial court's directed verdict on coverage under the policy. Question six was conditioned on affirmative findings by the jury on World Class's DTPA, Insurance Code, and good faith and fair dealing claims. The trial court rendered judgment for $110,000 in actual damages, together with attorneys' fees and costs. Colony appealed, claiming that the trial court's judgment awarded a double recovery. The court of appeals affirmed, holding that Colony waived its double recovery argument because it did not tender a substantially correct limiting instruction on the contract damages question submitted to the jury. Colony applied to this Court for writ of error.
The Texas Supreme Court reversed the judgment of the court of appeals. Colony was not required to object to the submission of more than one acceptable measure of damages to preserve error on the issue of actual damages double recovery. A party is generally entitled to sue and to seek damages on alternative theories, so such an objection would have been improper. A party is not entitled to a double recovery and Colony properly requested, before judgment, that the trial court require World Class to elect its remedy. Thus, Colony preserved its complaint for appellate review.
A double recovery exists when a plaintiff obtains more than one recovery for the same injury. While the jury in this case made separate findings of actual damages on the coverage claim and the DTPA, tort, and Insurance Code violation theories, those findings were conclusively for the same loss. The damages awarded World Class on its coverage claim could only have been for the money it was due under its policy. Yet, the specific damages elements listed under Question 6 are the same damages covered under the policy: repair and restoration of property, lost profits, and replacement of lost solutions. These were contract, as well as tort damages, and the jury awarded the identical amount in response to both damages questions. "Appellate courts have applied the one satisfaction rule when the defendants commit the same act as well as when the defendants commit technically differing acts which result in a single injury." World Class was injured by having to pay out-of-pocket for the repair costs that the policy covered. World Class may have suffered some tort losses, distinct from its claims on the policy. However, World Class offered no evidence, nor, as evidenced by Question 6, submitted a request for distinct tort losses. Thus, the trial court erred when it refused Colony's request that World Class elect a remedy.
Accordingly, this court granted the writ of error and, without hearing oral argument, reversed the court of appeals' judgment and remanded the cause to the trial court to render judgment consistent with this opinion.

August 28, 2014

Three Times Actual Damages - How That Works

Insurance law attorneys in Dallas and the Fort Worth area need to be able to discuss how trebling of damages works in insurance cases. The Texarkana Court of Appeals issued a 2006 opinion that helps to understand this issue. The style of the case is, Allstate Indemnity Company v. Hyman. Here is some of the relevant information.
The insured was involved in an automobile accident resulting in severe damage to the vehicle. The insured filed a claim with Allstate, but thought Allstate's offer was inadequate. The insured also filed a lawsuit against the driver of the other car and settled. The insured brought suit against Allstate for breach of contract. The jury in the trial court found in favor of the insured that Allstate breached the contract by not paying and also found a knowing violation of the Texas Insurance Code. The jury awarded actual damages of $21,600.00 ($18,000.00 for the vehicle and $3,600.00 for a rental vehicle for a reasonable period of time), enhanced damages of $54,000.00 and also awarded $25,000.00 in attorney fees. The trial court ordered an offset in the amount of the insured's settlement with the other driver. Both sides appealed.
This appeals court affirmed the trial court's judgment that Allstate was liable for breach of contract and a violation of the Texas Insurance Code, but reformed the judgment to provide for an award of $63,300.00 for damages. Rejecting Allstate's argument that the insured never triggered its duty to pay the claim because the insured failed to provide information and failed to cooperate, the court determined that the information sought by Allstate was not pertinent to the investigation of the claim and the decision to accept or not accept the claim, but was a procedure that Allstate would follow after it accepted liability for the loss. The court agreed with the insured's belief that if it signed the requested power of attorney, it would be agreeing to the amount Allstate wanted to pay and the insured would be left with no recourse. The court also rejected Allstate's argument that the insured impaired it's right of subrogation against the other driver. The court focused on the policy language, "if we make a payment," and noted that in this instance Allstate had not made a payment, and thus was not entitled to recover its subrogation rights. The court determined that the amount of recovery by the insured in its settlement with the other driver was less than the amount the jury had determined was the actual value of the insured's vehicle, thus holding that Allstate was entitled to an offset against the damage award in the amount of the value of the vehicle, less the deductible. In making its determination, the court examined the "one recovery rule" and the "made-whole doctrine." The court next addressed Allstate's alleged violation of the Texas Insurance Code and found that there was evidence to support the jury's findings that Allstate made post-loss misrepresentations and that the insured was entitled to extra-contractual damages. In a matter of first impression, the court determined that the Texas Insurance Code capped the plaintiff's recovery at three times the actual damages, not three times the actual damages plus additional damages, including court costs and attorney's fees. Lastly, the court, in determining that Allstate was entitled to an offset, applied the offset only after trebling the actual damages stating that if it applied the offset before trebling the damages, "there would effectively be no punitive award."

August 26, 2014

Insurance Attorneys - Here's One For You

Tarrant County insurance lawyers who keep up with what is going on in the world of insurance coverages will find an article published by BloombergBusinessweek in July to be entertaining. The title of the article is, "Even Pot Dealers Need Insurance. The Problem Is, Where to Get It?" Here is what the article discusses.

Pot dealers of yore never had to worry about this, but here it is: Even in states where selling marijuana is legal, pot retailers are finding they can't get standard-issue business insurance.

Big insurance companies aren't writing policies because the category is so new, it's hard to price the risk, Carole Walker, executive director of the Rocky Mountain Insurance Information Association, told the Denver Business Journal. The fact also remains that the sale and distribution of marijuana remains illegal under federal law, which puts insurers in a tricky spot.

Professionals with ties to the marijuana field--doctors, lawyers, accountants among them--have been threatened with license revocation despite operating within the bounds of their own state laws. Federal prosecutors continue to go after growers and dispensaries in the 23 states where medical marijuana is legal.

"You still have to have a certain tolerance for risk if you're getting involved in the industry," said Taylor West, deputy director of the non-profit National Cannabis Industry Association. "Progress has been made, but nothing has been done to change the fundamental fact that this is illegal."

Last year, the U.S. Department of Justice announced it would defer to state marijuana laws under some circumstances. That leaves a lot of room for interpretation, which, in turn, has made insurance more important for the business owners. "Because of the history of federal intervention, these business are looking for any way they can find to protect their investment," said Brian Vicente, a Denver-based partner at Vicente Sederberg, a law firm serving the marijuana industry.

In some cases, it's not optional. Washington State, where marijuana retailers opened their doors to recreational smokers last week, mandates that pot dispensaries carry liability insurance.

This all means that business is booming for the handful of insurance companies willing to wade into the field of marijuana insurance. J.B. Woods, president of Greenpoint Insurance Advisors, one in a budding field of insurance providers serving the marijuana industry, said the phone is ringing off the hook. "You have no idea how big this is going to get," Woods said.

But questions--and big gaps--remain. One of the products sold by at least two insurers is raid insurance, which pays legal and replacement costs if a raided business is found innocent. The coverage, of course, doesn't apply to federal raids. That would be illegal.

August 24, 2014

Insurance For Granny Scooters?

Irving insurance attorneys as well as all lawyers in the Dallas - Fort Worth area need to be aware of the changes in law related to insurance issues. BloombergBusinessWeek published an article in July that is interesting. The title of the article is. "Insurers Claim Granny Scooters Must Be Covered - Just Like Cars." Here is what the article says.

Two insurance companies have made an unusual argument in a Michigan case: They're insisting that the drivers of motorized mobility scooters should be required to get the same insurance as car and truck owners.
The case involves the claims of a paralyzed man who was hit by an SUV while crossing the street on his way to a doughnut shop. The insurance companies' position? Because the man didn't have auto insurance on his scooter, they shouldn't have to pay for any damage caused to him by the SUV.
The arguments by lawyers for State Farm Mutual Auto Insurance and Farm Bureau Insurance of Michigan have produced a mix of outrage and snide commentary in Michigan legal circles. Some lawyers warn the case could impact many of the estimated 300,000 elderly and disabled people nationally who depend on motorized scooters and powered wheelchairs to get around.
"If they pull this off in Michigan, you will start to see this all over the country," says Steven Gursten, a lawyer who represents auto accident victims and who has blogged about the case. "For every person dependent on a motorized scooter or wheelchair for transportation, God help them if they get hit by a car."
A spokeswoman for State Farm declined to comment. Farm Bureau issued a statement describing the accident as "very minor" and saying it had an ethical obligation to provide a "vigorous defense to all claims" using "all legal defenses available."
Accidents involving mobility scooters are not rare. This month, a 48-year-old Idaho woman was killed while riding one and trying to cross a street. In April, a 70-year-old Midland (Tex.) man died when his scooter was hit by a Ford Mustang pulling out of a parking lot. More than 60 mobility scooter deaths and 400 hospitalizations in Australia over a 10-year period--most involving elderly riders--prompted a government review seeking safety improvements.
Lawyers in Michigan, one of a dozen states with no-fault auto insurance, say they are unaware of a similar defense ever being employed in a case involving a mobility scooter. They also say the argument employs a perverse logic, since it appears insurers in that state, and others, do not offer auto insurance-like coverage for scooters.
"It might be a way for insurance companies to find a way to create new premiums on the one hand and deny lawsuits on the other," says Harold Perakis, the attorney for the scooter victim, 63-year-old George Veness. "I am really astounded. My client really needs help."
Veness was paralyzed in a 2004 work accident. In 2012 he was on his way to a Dunkin' Donuts near his home in Center Line, Mich., when he was hit by the driver of a Jeep Cherokee while crossing the street. He is seeking payments for medical procedures for injuries he says were caused by the accident and money for pain and suffering, according to Perakis.
In April, State Farm argued that Veness's complaint should be dismissed because his scooter should be considered "a sophisticated motor vehicle" that is operated by power other than muscle power and has more than two wheels--and therefore should have been insured like a car. Because it wasn't insured, he is not entitled to make a claim, the insurer said.
Perakis says he was recently informed by State Farm's lawyer that it was withdrawing that dismissal motion. However, the insurer is still refusing to pay the claim and could make the same argument as the case heads to trial, Perakis says.
A lawyer for the other insurer in the case, Farm Bureau, made a similar argument in a motion for dismissal the same month, adding that an additional factor requiring insurance is the fact Veness was attempting to cross a public road in his scooter. That motion is pending.

August 23, 2014

Health Insurance Claim Denied

Irving insurance lawyers who deal with health insurance policies already know what was talked about in a recent article. The article is from FoxBusiness. Here is what the article tells us.
Few things are scarier than racking up medical bills and then learning that your health insurance company won't pay.
It's a nightmare that could panic any policyholder. But before you worry about sinking into a black hole of medical debt, know that federal law offers a way to appeal.
"When a claim is denied, consumers should not view that as the end of the story," says Katherine Vukadin, an assistant professor at Texas Southern University's Thurgood Marshall School of Law in Houston.
The Affordable Care Act, or ACA -- the law popularly known as Obamacare -- gives a policyholder new rights to demand that an insurer reconsider any health claim denial.
And then, if your plan reviews the case and still won't budge, you can appeal to an independent third party, which will make a decision the insurer must accept.
Don't assume the process will be easy. "Appealing takes time and energy, on top of battling the underlying illness," Vukadin says.
Up to a Quarter of Claims are Denied
A 2011 study by the U.S. Government Accountability Office found that claim denial rates vary significantly among states and health insurers. Of the small number of states tracking such information, denials ranged between 11% and 24% of claims.
Amy Bach, executive director at United Policyholders, an insurance consumer advocacy group, says claims may be denied for reasons such as:
Improper coding of the procedure, or other errors on the part of the health provider.
Care that was performed outside of the health plan's network.
Care that the insurer deems was not medically necessary, or was experimental.
Compare health insurance costs to find the best plan for you.
Your Right to an Appeal
Obamacare rules mandate that after you or your doctor has filed a claim, your insurer has a limited time to explain in writing any decision to deny payment:
Within 15 days if you are seeking authorization ahead of treatment.
Within 30 days for medical services you've already received.
Within 72 hours for urgent medical matters.
Before the ACA, not every state had a system for appealing a denial, says Cheryl Fish-Parcham, deputy director of health policy for the health care consumer group Families USA. States that had a process often had restrictions.
"In some states, you could appeal only if a certain dollar amount was in question," she says.
With passage of the ACA, appeal rights have become much broader across all states.
How to File for an Internal Appeal
If the health insurance company says it won't pay, formally ask it to take another look at your claim. You must request this "internal appeal" within 180 days of being notified that your claim was denied.
You may write a letter to your insurer, asking for a full and fair review of its decision. Or, you may file for your internal appeal by completing forms required by the insurer.
Bach recommends getting your physician to write a letter that supports your case that the claim should be paid.
"Make sure the doctor uses the magic words 'medically necessary' and avoids any suggestion that the treatment is in any way experimental," she says.
A Prompt Response is Required
After your insurance company receives your request for an internal appeal, it must take another look at your claim and make a new decision in as short as 72 hours for urgent medical matters or up to 60 days for other types of care.
Note that the requirements on internal appeals apply to any health plan issued after March 23, 2010. Plans older than that date are said to be "grandfathered" and are not required to allow you to appeal. Insurers are supposed to notify consumers if they have a grandfathered plan.
"If the plans make certain changes, though, they are no longer grandfathered," notes Vukadin, who wrote a 2012 academic paper on the new rules.
Another 'No'? Then, Seek an External Review
If your claim is still rejected after your insurer's internal appeal, you can file for an "external review," in which an independent third party will go over your case.
Typically, the outside reviewers are health professionals who have experience managing the medical condition, procedure, treatment or other issue in question, Vukadin says.
An insurance company that holds firm to a denial must inform you how to initiate an external review, she says. You may, for example, be told to mail your request to a specified address.
You must file a written request for an external review within 60 days after your insurer sent its second decision. (Some plans may allow you more time.)
Patients with urgent health situations can ask for an external review at the same time as their internal appeal.
An External Review is Binding
You can seek an external review over some of the typical reasons for a disputed denial, such as if your insurance company views a treatment as experimental. You also can request an outside review if your insurer cancels your insurance because it accuses you of providing false information on your application.
External reviews are often free, though there can be a charge of no more than $25 in some circumstances, such as if your health carrier has contracted with an independent review organization.
Rules laid out on the Obamacare website, HealthCare.gov, state that standard external reviews are decided quickly -- in 60 days or less.
The external reviewer's ruling is final and is the last stop in the appeals process. The outside party will either uphold the insurance company's denial of your claim or reverse it in your favor. The insurer must accept the decision.
Getting Help
Appeals are often worth all the trouble. A 2006 study by the industry group America's Health Insurance Plans found external reviewers decide in favor of the consumer about 40% of the time.
But, too many people fail to appeal because of the difficulty of wading through the process, Vukadin says. Estimates vary, but studies have found that up to 95% of denied claims are not appealed, she says.
"Any time consumers do not appeal a wrongly denied claim, they may well be leaving money on the table," Vukadin notes.
Fish-Parcham says expert help is available if you feel overwhelmed. "People really benefit from having someone who is knowledgeable about the appeal system and skilled at navigating it."
Your state's insurance department may offer guidance. Many states have consumer assistance programs providing free help with filing an appeal.

August 21, 2014

Insurance Cases And Attorney Fees

As all insurance law lawyers know attorney fees in a first party insurance claim case are almost always recoverable. A 2007, Houston Court of Appeals [1st Dist.] case illustrates this. The style of the case is, Rosenblatt v. Freedom Life Insurance Company. Here is some of the relevant information from the case.
After sustaining injuries in an automobile accident, Rosenblatt asserted claims for healthcare benefits from Freedom Life. Rosenblatt sued Freedom Life, seeking damages for the company's delays in investigating his claims and in paying him compensation.
The case was ultimately submitted to the jury on Rosenblatt's common-law claim for bad faith and his claim that Freedom Life violated Section 541.060(a)(4)(A) of the Insurance Code and committed an unfair settlement practice by failing to affirm or deny coverage within a reasonable time.
The jury awarded Rosenblatt $10,000 in damages for future physical impairment and $20,000 for conduct committed knowingly. The jury awarded no damages for past and future mental anguish, physical pain, medical bills, and past physical impairment. In addition, and as challenged here, the jury awarded no ("zero") damages, in response to a three-pronged question concerning attorneys' fees, for trial, appeal to this Court, and appeal to the Supreme Court of Texas.
In his sole issue on appeal, Rosenblatt contends he is entitled to judgment as a matter of law for attorney fees because no evidence supports the jury's failure to award any damages in response to the question concerning attorneys' fees. Rosenblatt argued that the trial court was compelled to disregarded the jury's zero findings and to render judgment for statutorily authorized attorneys' fees of $500,000.
As the party seeking attorneys' fees, who therefore carried the burden of proof, Rosenblatt must demonstrate on appeal that the evidence conclusively established all vital facts in support of his claim as a matter of law.
Well-settled law precludes awarding attorneys' fees without statutory or contractual authority. Rosenblatt contends he is statutorily entitled to attorneys' fees as a matter of law because he prevailed and recovered damages on his claim that Freedom Life violated the above Insurance Code section.
The express language of Section 541.151(1) mandates, however, that the party seeking attorneys' fees establish that the fees sought are both "reasonable and necessary."
Because Rosenblatt has expressly declined a new trial, both in the trial court and on appeal, the dispositive question becomes whether Rosenblatt established, as a matter of law, that he is entitled to $500,000 as reasonable and necessary attorneys' fees. Specifically, did Rosenblatt provide evidence to support his claim for attorneys' fees that was "clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted"?
Rosenblatt's trial counsel, Tracy Conwell, referred several times during her testimony to the amount of $500,000, describing it as a "reasonable" amount of attorneys' fees for the work she had done in this case. In addition to relying on that testimony, Rosenblatt argues that Freedom Life (1) did not controvert Conwell's testimony and (2) conceded that the testimony was uncontroverted in responding to Rosenblatt's motion to disregard the jury's failure to award any attorneys' fees.
This court did not agree that Conwell's testimony conclusively established that $500,000 was a reasonable amount for attorneys' fees or that her testimony was uncontroverted, because Conwell controverted her own testimony. Despite testifying that $500,000 was a reasonable fee, Conwell also explained the terms of her contingency-fee contract, the total hours worked, and her hourly rate. She testified that a 40 percent fee, as described in her contract, was reasonable. Conwell did not perform a step-by-step calculation of a total amount from the terms and percentages stated in the contract, but invited the jury to make the calculation. As this Court recognized recently, if a party presents evidence of both a fixed amount as a reasonable attorneys' fee and a contingency-fee contract that results in a lesser fee and claims that the contract was reasonable and that the jury could rely on either calculation, that party may not argue on appeal that the evidence attesting to the reasonableness of the higher amount is uncontroverted.
Conwell also provided other amounts for the jury. She not only testified that her evidence suggested an award for attorneys' fees "in the neighborhood of $400,000, maybe $350,000," but also acknowledged that her contingency-fee contract could be interpreted as resulting in the significantly lesser sum of 40 percent of Rosenblatt's total recovery, or $12,000. In other testimony, Conwell estimated her personal total time at 997 hours at $250 per hour, which results in yet another calculation of approximately $250,000, to which was to be added her law clerks' fees, which Conwell "guess[ed] a reaonable rate would be anywhere between [$]25 and $75 an hour, " though she also invited the jury to "figure out a reasonable rate." Adding the law clerks' fees to the $250,000 and calculating them in accordance with the range Conwell suggested results in yet another total, with an approximate high of $340,000 and a low of $287,000.
Conwell also testified that the $500,000 estimate included "over" $100,000 in expenses. But the trial court sustained Freedom Life's objections to several items listed as expenses on the grounds that they were not recoverable.
Because Conwell's own testimony provided alternatives to the $500,000 amount that she opined was a reasonable fee and because her proposed amounts included nonrecoverable costs, this court could not agree that her testimony on the $500,000 amount was uncontroverted. To the contrary, Conwell's testimony that $500,000 was a reasonable award for attorneys' fees was both controvertible and controverted--by Conwell.
Because Conwell's testimony failed, therefore, to conclusively establish the $500,000 fee, as a matter law, her interested-witness testimony raised only a triable issue to be determined by trier of fact, in this case, the jury.
Because the evidence presented in support of Rosenblatt's claim for attorneys' fees is not conclusive as a matter of law and thus precludes that relief, this court could not render the judgment that Rosenblatt seeks.

August 19, 2014

Damages For Claim Denial

Mineral Wells insurance lawyers need to be able to discuss the value of a claim with a client when asked. It is often times difficult to do so. Sometimes part of the value is easy to determine while other parts are very difficult. For instance:
If a $200,000 house burns down and your insurance company denies the claim, it is easy to calculate the base value of the claim, i.e., the $200,000 for the value of the house. Losses such as mental anguish, if it can be proved the insurance company acted improperly in a knowing and intentional manner in the denial of your claim, is harder to determine.
The United States District Court, Northern District of Texas, issued an opinion in 2008, that helps determine damages as it relates to the attorney fees incurred by the claimant due to the wrongful denial of benefits by the insurance company. The style of the case is, Trammell Crow Residential Co. v. Virginia Surety Co., Inc. Here is some of the relevant information to know.
This was a case of first impression for the court. They had to determine whether a policyholder was entitled to damages under Chapter 542 of the Texas Insurance Code, also known as the Prompt Payment of Claims Act, beginning before the legal bills were submitted for payment. Trammell Crow sued its insurance company seeking a declarataion of Virginia Surety's duty to defend it in an underlying lawsuit involving claims alleging that Trammell Crow discriminated against persons with disabilities. After determining that Trammell Crow was owed a defense, the court turned to whether Trammell Crow was entitled to damages for Virginia Surety's alleged breach of Chapter 542 in refusing to provide a defense. Despite the court's determination that a duty to defend was triggered, Virginia Surety argued that Trammell Crow was not entitled to damages under Chapter 542 because Trammell Crow never submitted any legal bills or invoices for expenses incurred in defending the underlying litigation. Virginia Surety argued that without these bills Trammell Crow had not submitted information to make a final proof of loss as required under Chapter 542.
In rejecting this argument, the court looked to the original Texas Supreme Court opinion dealing with calculating attorney fees in Chapter 542 cases, Lamar Homes, and interpreted it to instruct that the invoices are only required to value the loss because the actual loss has already occurred when the defense was wrongfully refused. The court concluded that Trammell Crow was entitled to damages and interest under Chapter 542, and will allow Trammell Crow to present evidence of its damages at trial.

August 17, 2014

Insurance Claims And Subrogation

Tarrant County Insurance Attorneys need to understand how insurance claims work with subrogation issues. The Texas Supreme Court, in 2006, issued an opinion as it relates to subrogation and Personal Injury Protection (PIP) benefits. The style of the case is Allstate Indemnity Company v. Forth. Here is what the opinion says.
In this breach of contract suit, the Court considered whether an insured has standing to sue her insurance company for settling her medical bills in what the insured considered to be an arbitrary and unreasonable manner. In reversing the trial court and remanding the case for trial, the court of appeals concluded that the insured had standing even though the insured had no out-of-pocket expenses, and her health care providers had not, and now could not, collect any additional sum from her.
Because there are no allegations that the insured suffered damages or that the manner in which the insurance company settled the insured's medical expenses caused her any injury, this Court concluded that the trial court was correct to dismiss her suit, and accordingly reversed the court of appeals' judgment.
Pat Forth's daughter required medical treatment in 1997 as the result of an auto accident. The personal-injury-protection (PIP) of Forth's Allstate auto insurance policy, covered "reasonable medical expenses incurred for necessary medical services." Allstate settled Forth's medical bills for less than the actual amount billed. Forth sued Allstate for injunctive and declaratory relief, alleging that it arbitrarily reduced her bills without using an independent and fair evaluation to determine what amount of her medical expenses were reasonable. According to Forth, Allstate routinely discounts medical expenses by comparing those charges to a third-party contractor's computerized database. Allstate then offers about eighty-five percent of the medical expenses reflected in that database for the same treatment or procedure. Forth did not claim that Allstate's conduct had caused her any damage.
In the trial court, Allstate filed a motion to dismiss, arguing that Forth lacked standing because she had no claim for damages, and Allstate had not caused her any actual injury. The trial court granted Allstate's motion, and the court of appeals affirmed in part and reversed in part, holding that Forth lacked standing to seek prospective relief because Allstate no longer insured her, but that she could seek retrospective relief for any injury suffered while she was a policy holder. The court concluded that if a fair and independent evaluation of the medical bills revealed that Allstate paid less than the full amount of Forth's "reasonable expenses," then Forth could claim injury because the terms of the insurance contract required that reasonable expenses be paid.
The court of appeals relied on prior Court opinions to support its view that the insured had standing to sue her insurance company despite its settlement of her medical claims to the apparent satisfaction of the medical providers. Both cited cases held that the insurance companies' obligation to pay under the respective policies was triggered by the insured's incurrence of medical expenses and was not affected by the fact that the insured had not, in fact, had to pay those expenses. In both cases, a third party paid the medical expenses, but the respective courts concluded that such fact did not alter the obligation of the insurance company to pay under its policy. Unlike the insurance companies in the prior case, Allstate did not question whether Forth had incurred medical expenses and did not refuse to pay the medical providers. Instead, Allstate paid the medical bills according to its own evaluation.
Under Texas law, to have standing a party must have suffered a threatened or actual injury. Forth does not claim that she has any unreimbursed, out-of-pocket medical expenses. She does not assert that these providers withheld medical treatment as a result of Allstate reducing their bills, or threatened to sue her for any deficiency, or harassed her in any other manner. Moreover, Forth has no exposure in the future because limitations has now run on the medical claims. From all appearances, her medical providers have accepted the amount Allstate paid them without complaint, thereby satisfying Allstate's obligation under the policy.
Because Forth does not claim that the manner in which Allstate settled her claim caused her any injury, thus the Court concluded that she does not have standing in this case. Accordingly, the court of appeals' judgment was reversed and, without hearing oral argument, judgment rendered dismissing Forth's claims against Allstate.

August 16, 2014

Life Insurance Application

Life insurance application - Insurance attorneys need to know about the law related to life insurance applications. A 1994, Texas Supreme Court case discusses one aspect of this. The style of the case is, Fredonia State Bank v. General Life Insurance Company.
The principal issue in this case is whether an insurance company may assert the defense of misrepresentation for statements made in an application not attached to a life insurance policy.
The insured died as a result of a gunshot wound to the head. Prior to his death, he had purchased tow life insurance policies issued by General American. General American denied the beneficiary's claims for benefits. Fredonia State Bank, an assignee of one of the two policies and executor of the insured's estate, sued to collect the proceeds of the policy.
General American asserted as defenses that the insured had committed suicide and that the insured had made misrepresentations regarding his medical history, which were material to the risk assumed by American General.
The bank argued that the insured's application did not contain misrepresentations and that even if it did, the misrepresentations would not constitute a defense since the application was not attached to the policies when they were issued.
The jury found that (1) the insured did not commit suicide, (2) the medical portion of his application was not attached to the insurance policies, and (3) the insured did not misrepresent his medical history in order to obtain insurance. The trial court granted judgment for the bank. The Appellate Court reversed the trial court's judgment finding that the great weight and preponderance of the evidence was contrary to the jury's findings and that the insured had made misrepresentations in order to obtain insurance.
The Texas Supreme Court granted writ and ultimately reversed the appellate court's decision. According to the Court, the Texas Insurance Code precludes an insurance carrier from relying on misrepresentations contained in an application as a basis for denying claims, unless the application is attached to the insurance policy.
This requirement is intended to enable the insured to have the material terms of the contact at hand, so that he may correct any misrepresentations which may have been the basis of the insurance coverage.
What is relevant about this case is that it makes clear that when an insurance company alleges misrepresentation in an application as grounds for denying a claim for benefits, the application must be have been made part of the insurance contract.
Texas Insurance Code, Section 1101.003, says it clearly. "A life insurance policy must provide that the policy of the policy and the application for the policy constitute the entire contract between the parties."

August 14, 2014

Penalty For Late Payment Of Insurance Claim

Insurance attorneys in Dallas County need to be aware of the penalties that can be imposed on an insurance company for being late in paying a claim. Part of how this works is illustrated in a 2000, San Antonio Court of Appeals opinion. The style of the case is, Cater v. United Services Automobile Association. Here is the relevant information from this case.
Cater appeals the trial court's denial of her claim for statutory damages and attorneys' fees under Section 542.060 of the Texas Insurance Code. She asserts that United Services failed to pay her foundation claim inside the statutorily mandated time period, rendering it liable for the damages and fees.
In 1993, Cater filed a claim with United Services Automobile Association ("USAA") for damage to her foundation, which she believed was caused by a plumbing leak. USAA denied her claim based on its conclusion that the damage to her foundation was not caused by a plumbing leak. Cater subsequently sued USAA for violation of Texas Insurance Code, Section 542.051. In January, 1999, the parties mediated the claim and reached a settlement. The settlement agreement required USAA to pay Cater $40,000 in contract damages and required Cater to dismiss all other claims and demands she had against USAA. The agreement, however, explicitly excluded Cater's claim for additional damages and attorney fees from the dismissal requirement. Instead, the parties agreed to submit to a bench trial for a determination on her remaining issue.
On April 20, 1999, the Judge heard Cater's claim, ruled in USAA's favor, and filed findings of fact and conclusions of law to substantiate his ruling. It is from this ruling that Cater appeals. She asserts the trial court erred in granting judgment for USAA because USAA delayed payment to her. She claims this violation entitles her to recover an additional 18% of the contract claim plus reasonable attorney fees.
The Texas Insurance Code provides time deadlines that insurers must follow when responding to a claim. These deadlines are tied to the insurer's receipt of notice of a claim. The statute sets out when an insurer should act in dealing with a claim and guides an insurer's conclusion regarding a submitted claim.
The statute also deals with when an insurer should pay a claim and what happens should the insurer delay making that payment. It requires an insurer to pay the claim within five business days after the insurer has notified the insured that it has accepted the claim. If, however, an insurer delays payment for more than 60 days from the date it received all the information reasonably requested and required, the insurer must pay the claim, 18% per annum of the amount of that claim as damages, and reasonable attorney fees. This is stated clearly in Section 542.058(a). It is this damages provision under which the dispute in this case arises. According to Cater, if an insurer delays payment beyond sixty days, then the insurer is liable for damages and attorney fees. USAA, on the other hand, asserts the section applies only in cases where the insurer has not complied with the other deadlines in the statute. In other words, under USAA's interpretation of the statute, an insurer is not subject to the 18% penalty and attorney fees so long as the delayed payment is due, in fact, to a good faith denial of the claim.
A fundamental rule of statutory construction is that a court should first ascertain the legislature's intent in enacting the statute as expressed in its plain language. However, where an application of a statute's plain language leads to absurd results, we will not enforce the statute under a literal interpretation.
The plain language of the statute states that if an insurer delays payment of a claim sixty days after it has received all the information reasonably necessary to determine coverage, then the insured is entitled to recover damages as provided for in the statute.
A wrongful rejection of a claim may be considered a delay in payment for purposes of the 60-day rule and statutory damages. More specifically, if an insurer fails to pay a claim, it runs the risk of incurring this 18 percent statutory fee and reasonable attorneys' fees. In sum, State Farm took a risk when it chose to reject Higginbotham's claim. State Farm lost when it was found liable for breach of contract. Therefore, it must pay this 18 percent per annum interest and reasonable attorneys' fees.
The plain language of the statute is clear. The damages should be in the amount of 18 percent per annum of the amount of the damages, plus attorneys fees.
Cater and USAA agree that the accrual date used for calculating the statutory damages is April 20, 1994, the date upon which USAA rejected Cater's claim. Cater asserts that the damages should continue to accrue through the date a final judgment is rendered. However, she fails to take into account that the claim was paid on January 29, 1999. Therefore, Cater is entitled to 18% of the $40,000 as damages, that accrued during the time between April 20, 1994, and January 29, 1999.

August 12, 2014

Insurance Companies Can Be Forced To Pay Denied Claims

Weatherford insurance attorneys already know what lots of people are learning - that is an insurance company can be forced to pay claims they have denied when the denial is wrong. KXAN did an investigation into this issue in July 2014. Here is what their report tells us.
Most of us have to pay for some kind of insurance whether it is coverage for a car, home, or health. But sometimes the company you trust to be there when you need it most doesn't pay on a claim.
Last year Jason Brockdorf was hit by a driver who ran a red light. His car was damaged but that was not the only thing that took a hit.
"I was shocked, pretty out of it," said Brockdorf. "I got knocked in the head pretty hard. I think it was from the airbag but it could have been from my head hitting the window."
But Brockdorf says he hit a roadblock dealing with the other driver's insurance company, State Farm.
"It was a pretty big battle to get reimbursement for my lost wages, medical bills, Et cetera," Brockdorf said. "I didn't think they were acting in good faith...they weren't being cooperative at all."
Seven months after the accident, Brockdorf finally got his money from the insurance company. But his story is all too familiar for many Texans.
A KXAN investigation into insurance companies uncovered information which had never been released. It details which companies most often leave Texas consumers no choice but to turn to state regulators to get their claims paid.
Records obtained from the Texas Department of Insurance showed more than $27 million was paid out to consumers in 2013 after they went through department's consumer complaint process. That came after insurance carriers initially refused to pay.
"A lot of times it's a complex situation," says Mark Hanna with The Insurance Council of Texas, which represents companies providing home and auto insurance. "It's not black or white."
The data KXAN obtained from TDI also detailed which companies were forced to pay back money to consumers over the past five years. State Farm Mutual Auto Insurance has had to pay back more than $4.9 million in 761 cases from 2009 through 2013, the most of any auto insurance carrier.State Farm Lloyd's tops the list of home insurance carriers, paying back more than $6.1 million in 419 consumer claims initially denied over the last five years.
For health insurance carriers United Healthcare is tops, having to pay back $7,280,950.49 in 1,518 cases.
And American General had to pay back nearly $2.7 million in 39 life insurance claims it first declined to pay.
In these cases, millions of dollars had to be returned to the consumers because insurance companies did not pay out when TDI says they should have.
"There can be a lack of communication" Hanna said. "We're talking about a lot of money involved here and sometimes two sides cannot come to an agreement."
But Alex Winslow with the consumer watch dog group Texas Watch says insurance companies "routinely engage in underhanded tactics."
Winslow is highly critical of the insurance industry.
"Insurance companies have a profit motive," claims Winslow. "They have a business plan in place...to keep as much of your money in their pockets as long as they can...So the longer they drag out that claims process the more money they continue to make."
But consumers like Brockdorf say sometimes patience and persistence pays off.
No one from State Farm would talk to us on camera about Brockdorf's claim, or the amount of unpaid claims TDI has determined it should have paid in the first place. A spokesperson sent an email stating the company cannot discuss individual insurance claims, and it has a 99.9 percent customer satisfaction rate:
Regarding the TDI information, it's important to note that State Farm is the largest insurer in Texas, and our complaint ratio is one of the lowest among the large insurers in state.
In 2013, State Farm paid over $2.79 billion for more than 872,000 auto and homeowner claims in Texas, 99.9% of them to our customers' satisfaction. While we are proud of that record, there is room for improvement and we continue to work with the one-tenth-of-one percent of our customers who believe we can do a better job.
If you have a dispute with an insurance company you can file a complaint with the Texas Department of Insurance or contact an experienced Insurance Law Attorney.

August 10, 2014

Penalties For Delay In Paying Claim

Arlington insurance lawyers will usually know the penalties for insurance companies that do not promptly pay a claim. A 1997, United States 5th Circuit Court of Appeals case illustrates the penalties. The style of the case is, Higginbotham v. State Farm Automobile Insurance Company. Here is what the case tells us.
Higginbotham's Porsche was stolen on June 8, 1993, from an unsecured parking lot next to his residence. The car was recovered later that day but had been stripped of its top, seats, interior and exterior trim but was not damaged or destroyed with regard to mechanical connections, wiring harnesses or the engine. Higginbotham reported the theft to State Farm on June 9, 1993. State Farm denied his claim five months later on November 19, 1993.
Higginbotham filed suit for breach of contract, violations of the DTPA, violations of the Texas Insurance Code, negligence, breach of duty of good faith and fair dealing, and violation of the Prompt Payment of Claims Act which imposes an 18% penalty on the carrier under certain circumstances. At trial, the jury returned a verdict in favor of Higginbotham for $30,000.00, the amount of his coverage, but the Court directed a verdict in favor of State FArm on the bad faith and extracontractual claims under the DTPA and Insurance Code. Higginbotham appealed.
In a bad faith claim, the insured must establish the absence of a reasonable basis for denying or delaying payment of the claim and that the insurer knew or should have known that there was no reasonable basis for denying the claim. A bona fide controversy is sufficient reason for failure of an insurance company to make prompt payment of a loss claim. In this case, State Farm's investigation found a number of suspicious circumstances. Higginbotham was associated with Tommy Vander, the owner of Luxury Auto Unlimited. Vander had pled guilty in 1991 to felony theft of a stolen Porsche. Higginbotham began parking the Porsche in the unsecured parking lot two weeks before it was stolen. His girlfriend allegedly reported it stolen to the apartment complex four days before the alleged theft. Higginbotham's Porsche was recovered 25 miles from his residence but only 1.6 miles from Vander's shop. The car was stripped in a manner so as not to destroy mechanical connections, wiring harnesses or the engine. Based on these facts, State Farm had a reasonable basis to dispute the validity of the claim and, as a matter of law, State Farm did not act in bad faith.
Extracontractual claims under the DTPA and the Texas Insurance Code require the same predicate for recovery as bad faith causes of action. An insurance company will not be faced with a tort suit for challenging a claim if there was any reasonable basis for denial of that coverage.
The Prompt Payment of Claims Act provides that if an insurance company delays payment of a claim for more than 60 days, the insurance company shall pay, among other damages, 18% per annum as a penalty. In this case, State Farm delayed rejection of the claim for five months. An insurance company's good faith assertion of a defense does not relieve the insurance company of liability for penalties for tardy payment as long as the insurance company is finally judged liable. In this case, State Farm was judged liable on the coverage claim. State Farm did not notify Higginbotham of its rejection for five months. Therefore, it must pay the 18% penalty.

August 9, 2014

Insurance Claims And Breach Of Contract

Insurance lawyers in Texas must know how to assert bad faith claims. A 2005, Waco Court of Appeals case styled, United States Fire Insurance Company v. Fugate, is good reading for understanding how to properly assert a bad faith claim. Here is what the case tells us.
The insured and her family were injured in a collision with another vehicle. After the insured filed suit against the driver of the other vehicle, the parties settled. The insured then sued her employer's insurer, United States Fire Insurance Company (US Fire), alleging breach of the insurance contract seeking to recover underinsured and uninsured motorist (UIM) benefits under the employer provided insurance policy. The insured did not assert any bad faith claim against US Fire in her breach of the insurance contract lawsuit. After a jury trial and judgment in favor of the employee on the breach of the insurance contract claim, the insured filed a second lawsuit against US Fire asserting a claim under the bad faith statutes and seeking statutory penalties and attorney's fees on the ground that US Fire did not timely acknowledge her UIM claim. US Fire sought summary judgment in the bad faith cause of action, asserting that the claim was barred by res judicata because it could have been litigated in the first suit. The trial court granted Fugate's motion for summary judgment and awarded her statutory penalties and attorney's fees and this appeal followed.
The Waco Court of Appeals reversed and rendered judgment in favor of US Fire on its res judicata defense. The court held that the bad faith statutes of the Texas Insurance Code must be asserted contemporaneously with a breach of the insurance contract claim or be barred by res judicata. Finding that the second lawsuit for bad faith damages involved the same parties was premised upon the same claims as the breach of the insurance contract action and that the bad faith claims could have been raised in the first action because the claim for untimely acknowledgement of a UIM claim related to the breach of the insurance contract claim for UIM benefits, the court concluded that the second suit based solely on bad faith was therefore barred by res judicata.
The insurance laws can be complicated. That is why it is vital that an experienced Insurance Law Attorney be consulted when a claim is being made against an insurance company.

August 7, 2014

Insurance Company Backs Down

Parker County insurance attorneys need to keep up with events happening in the insurance legal world. An article from The Texas Tribune titled, "Insurer Drops Suit Against Tyler Widow" is worth knowing about. Here is what the article tells us.
Crystal Davis, a stay-at-home mom from Tyler, got some welcome news in her battle against an insurance company that sued to cut off the workers' compensation benefits she got after her husband was killed on the job.
Davis' lawyer called to inform her early Thursday evening that ACE American Insurance had dropped its lawsuit against her and her children. Davis' story was featured in The Texas Tribune's four-part series published this week, Hurting for Work, about the struggles people face after they or their loved ones are hurt or killed on the job in Texas.
"I feel like I'm dreaming. I'm relieved," she said. "My whole family is relieved."
Wayne Davis, a traveling sales and profit coach for Burger King, was killed in a traffic accident in September 2012 while driving to an appointment with a Burger King franchise in Coushatta, Louisiana. Like many Texans, his wife and children were entitled to receive death benefits under his employer's workers' compensation policy.
But Davis' case demonstrated that the promised benefits don't always materialize in Texas, where employees are only winning about a third of the major disputes against insurance companies in the state-regulated workers' compensation system.
Crystal Davis, a stay-at-home mom from Tyler, got some welcome news in her battle against an insurance company that sued to cut off the workers' compensation benefits she got after her husband was killed on the job.
Davis' lawyer called to inform her early Thursday evening that ACE American Insurance had dropped its lawsuit against her and her children. Davis' story was featured in The Texas Tribune's four-part series published this week, Hurting for Work, about the struggles people face after they or their loved ones are hurt or killed on the job in Texas.
"I feel like I'm dreaming. I'm relieved," she said. "My whole family is relieved."
Wayne Davis, a traveling sales and profit coach for Burger King, was killed in a traffic accident in September 2012 while driving to an appointment with a Burger King franchise in Coushatta, Louisiana. Like many Texans, his wife and children were entitled to receive death benefits under his employer's workers' compensation policy.
But Davis' case demonstrated that the promised benefits don't always materialize in Texas, where employees are only winning about a third of the major disputes against insurance companies in the state-regulated workers' compensation system.
The insurer argued in this case that Wayne Davis was not in his workday, even though he was in a company car fueled with company gas. When the dispute went to the Texas Division of Workers' Compensation, Crystal Davis beat ACE American at all three stages of the administrative process. But, under its right of "judicial review," the insurer sued her and her two children, Cash, 6, and Lucy, 3, to stop payment of the benefits.
Representatives of Burger King and ACE did not immediately return emails Thursday evening.
Davis' lawyer, attributed the sudden move to drop the lawsuit to the publicity the case generated.
"What people think matters,'' he said. "It's a different world."
Davis' lawyer theorized that ACE was emboldened to act aggressively because there is little consequence for pushing the envelope too far. He pointed in particular to a controversial Texas Supreme Court ruling that essentially eliminated lawsuits against insurance companies over so-called bad-faith handling of claims.
Davis said she was elated that her case is over but said she felt sympathy for others who are still battling it out in the workers' compensation system.
"Justice was served for Wayne. But for all of the people who have had their legitimate claims denied, my heart goes out to them," she said. "The outlook is bleak. The workers' compensation system is failing them.''