Dallas Fort Worth Insurance Lawyer Blog

A Grand Prairie resident makes a claim to his insurance company for benefits. This could be a resident of Arlington, Dallas, Fort Worth, Weatherford, or any other city in Texas.
A question often comes up that goes like this, "How long does the insurance company have before they have to pay me?" The answer is "It depends." Sounds lawyerly, right. Well it does depend. It depends on a number of factors, including the type of claim, the circumstances surrounding the claim, the type of insurance and the type of insurance company. However, guidelines to go by, are laid out in the Texas Insurance Code, Section 542.051 thru 542.061.
This area of the Texas Insurance Code is know as the "Prompt Payment of Claims statute". It imposes certain deadlines for an insurance company to acknowledge, investigate, and accept or reject a claim. In situations where the insurance company violates the statute, they are punished by being liable for attorney's fees and an additional 18% per annum penalty on the amount of the claim. These penalties are set out in Section 542.060.
The 18% penalty described above along with responsibility for attorney's fees is substantial in and of itself but the next section, Section 542.061, says that other remedies are also available and that these other penalties are in addition to the penalty and attorney's fees. These penalties are found in the section of the Business & Commerce Code, dealing with violations of the Texas Deceptive Trade Practices Act and in the Texas Insurance Code, for violations by the insurance company related to unfair methods of competition and unfair or deceptive acts or practices found in Section 541.051 thru 541.061.
The Prompt Payment of Claims statute sets out the steps an insurance company must follow when presented with a claim by one of its policy holders. To recover a penalty under this statute, the insured person must establish that: (1) the insured had a claim under an insurance policy; (2) the insurance company is liable for the claim; and (3) the insurance company has failed to comply with a requirment of the Prompt Payment of Claims Act. This has been spelled out in the Texas Supreme Court case, Allstate Insurance Company v. Rhonda Bonner, decided in 2001.
If someone feels they are being violated by the insurance company as it relates to having their claim handled promptly, they should do two things. First, get in touch with an experienced Insurance Law Attorney. Do not be concerned with costs at this point. Most attorneys will talk to you at an initial conseltation at no charge and then, if further action is needed, the insurance company is going to have to pay for the attorney's fees, if they are at fault. And second, contact the Texas Department of Insurance and file a complaint. Most companies consider these very serious. They do not want to be investigated by the Texas Department of Insurance. Plus, this helps set up some relevant issues for a lawsuit if the matter is not resolved properly.

The Texas Insurance Code requires an insurance company to pay a claim within 60 days of receiving all the information it needs to make a determination of whether or not a claim should be paid and the amount to be paid. The requirement is found in the Texas Insurance Code, Section 542.058. In the event of a weather-related catastrophe, as defined by the Texas Commissioner of Insurance, the period is extended to 75 days. This is found in Texas Insurance Code, Section 542.059. The law here applies to all residents of Texas including those in Dallas, Fort Worth, Arlington, Grand Prairie, or even out in Weatherford or Parker County.
Section 542.059 was recently part of a lawsuit in a case decided on December 15, 2009. The case was styled, Philadelphia Indemnity Insurance Company v. C.R.E.S. Management, L.L.C.
In this lawsuit, CRES owned five properties that suffered multiple losses. Philadelphia had paid all claims on three of the properties but still disputed losses on the others. On the two properties that the dispute existed, Philadelphia did not dispute that they owed atleast part of the claim but not all of the claim. On the part not disputed, Philadelphia did not pay until after the applicable 75 day deadline.
CRES sued for the 18% interest due on the late paid amount. Philadelphia argued that they should not have to pay the penalty interest because they acted in "good faith" in trying to adjust the large, complex claims. Philadelphia then went into great detail explaining all they had done to try to settle and pay the claim as soon as possible.
The court ruled for CRES and ordered Philadelphia to pay the penalty and attorney's fees. The court reasoned that the relevant insurance code provision said what it said, and pointed out that there were excuses written into the code that allowed for extra time if needed and the requirements to be entitled to the extra time. Philadelphia did not argue that it satisfied any of the requirements to get the extra time.
This case is a good case for pointing out to policy holders that the law is on the policy holders side when an insurance does not promptly and properly pay a claim.

Almost all insurance disputes are going to have situations where an attorney is involved. Too many times these disputes end up in lawsuits. Prior posts on this blog have shown how most situations are going to require the insurance company to pay or reimburse attorneys fees where the policy holder prevails in their claim.
In 2007 a case, Lamar Homes, Inc. v. Mid-Continent Casualty Company, the Texas Supreme Court ruled that Section 542.060, Texas Insurance Code, applied to not just the underlying claim at issue in a lawsuit but to also attorneys fees in situations where the insurance company did not pay for attorneys on behalf of the insured persons or business.
Section 542.060 assesses an 18% annual penalty on the attorneys fees that the insurance company did not pay for.
This issue on the unpaid attorney's fees was fought again and re-stated in a case decided in December 2009. This case, Nautilus Insurance Company v. International House of Pancakes, Inc., was mainly a dispute as to how much the attorney's fees were and how much of the time, and thus, the fees were attributable to the case at issue, rather than another case.
International House of Pancakes argued that the fees of $14,973.55 were 95% related to the case and based on that number, the 18% penalty to be paid by Nautilus totaled $15,804.49. Furthermore, there was an additional $119,674.34 in attorney's fees for the present litigation. Nautilus Insurance Company did not agree with the time and money that was claimed to have been spent of the case and the lawsuit ensued.
The important thing for policy holders to take from this is that the insurance companies do get punished for their wrongful handling of claims and that with the assistance of an experienced Insurance Law Attorney, the insurance company can be forced to pay on claims they are suppose to pay and be forced to re-imburse the policy holder for attorneys fees plus penalties for their wrongful conduct.

Did you know that there is a law in Texas which requires a health care service provider to bill the patient or other responsible person for services, not later than the first day of the 11th month after the date the services are provided. This law is found in the Texas Civil Practices & Remedies Code, Section 146.002.

Whether a patient receives care at a hospital or clinic in Dallas, Texas, or in Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, the health care service provider is required to bill the patient or the issuer of health benefits plan for services within the time frame set out above. An exception would be the unlikely event that the contract between the health care provider service provider and the health care insurer provide a longer time to submit the bill for services. It is an unlikely for this exception to exist because from a practicle standpoint, no health care service provider is going to sign a contract requiring them to wait longer than 11 months before getting paid.

If the health care service provider is required to directly bill the third party payor who is operating under State or Federal law, including Medicare and Medicaid, the requirement is the same as stated above.

The context under which a health care service provider does not immediately bill for their services is usually going to arise in two situations. The first is, they forget about it. In other words the patient is seen and treated and the paperwork gets lost or set aside and the office simply makes a mistake in not sending in the bill for services. The second way it arises is where the provider learns of or believes the treatment arises from an accident wherein a 3rd party insurance company is going to have to pay the medical expenses of the injured patient. The normal situation for this is in the car wreck cases.

In a car wreck situation the medical provider treats the injured party then sends them the bill rather than billing the injured persons insurance provider. The health insurance company, whether it be a company like Blue Cross / Blue Shield or Humana, or Medicare or Medicade is going to pay substantially less on the bill because of the discounts they get. The 3rd party insurance is not entitled to the discounts and thus may be liable for much greater amounts including the total bill. Discounts can be as high as 90%. At first this may seem ok but, what if, in the end, say a year later, there is not a recovery in the car wreck from the 3rd party insurance company.

When Section 146.002 is violated, then Section 146.003 becomes applicable. Texas Civil Practice & Remedies Code, Section 146.003 says when 146.002 is violated, the health care service provider may not recover from the patient any amount that the patient would have been entitled to receive as payment. This means that the debt goes away.

This is another example where an experienced Insurance Law Attorney can make sure that a person is not taken advantage of, by an insurance company or a health care service provider.

Texas insurance companies are regulated by the Texas Department of Insurance. The written laws for most insurance companies are found in the Texas Insurance Code. These laws and regulations apply to all insurance companies in Texas. So whether the company is located or does business in Dallas, Fort Worth, Arlington, Irving, Grand Prairie, Carrolton, Mesquite, Weatherford, Granbury, or anywhere else in the State of Texas the same laws and regulations apply to the insurance company.

The worst acts of insurance companies may be criminal in nature, but the majority are violations of civil laws and statutes, and what are being addressed in this writing. Violations of these civil laws and statutes may result in fines to the companies and issuance of cease and desist orders, and revocation of licenses or suspensions of insurance licenses. Most of the penalties just mentioned are enforced through the Texas Department of Insurance or the Texas Attorney Generals Office.

The recourse for insureds against their own insurance companies for violations to them personally, are addressed in different parts of the Insurance Code and depend on exactly which statute the insurance company violated. Punishment for violations of Insurance Code, Chapter 541 are found in Section 541.152. Here, the plaintiff who prevails in their cause of action may obtain: 1) the amount of actual damages to the plaintiff, plus court costs and reasonable and necessary attorney's fees, and 2) any other relief the court determines is proper. What is important here and in other statutes that allow for the recovery of attorneys fees, is that if your cause is just and right, that at the end of your case, you can recover your court costs and attorneys fees. This is also why it is important to seek an experienced Insurance Law Attorney so that they can inform you whether you have a case worth pursueing.

If you are like most people, you might say "is that all, the insurance company cheats me, and all they have to do is pay what they should have paid in the first place plus my attorney and they just walk away". The answer to that is - it depends. If your case is the type that a Judge or Jury would find that the insurance company acted "knowingly". Then you could be entitled to an amount up to three times your actual damages. "Knowlingly" is defined in Section 541.002 as having an actual awareness of the falsity, unfairness, or deceptiveness of the act or practice on which the claim is based. This on its face seems fairly simple but the courts of this State make it much more difficult than it seems. This is another example or reason why an experienced Insurance Law Attorney is needed to look over a case.

Violations by the insurance companies of Subchapter B, Prompt Payment of Claims Act, are found in Section 542.060 of the Texas Insurance Code. In this section, an insurance company is liable for the amount of the claim, plus interest on the amount of the claim at a rate of 18% a year as damages, together with reasonable attorneys fees and court costs.

Depending on the nature of the wrong by the insurance company, the insurance company may also be subjected to liability for causes of action outside of the Insurance Code. Some of these other causes of action would be: 1) Breach of Contract, 2) Fraud, 3) Negligence, and 4) Misrepresentation, to name just a few. Plus, depending on the severity of their conduct the insurance companies could be subjected to punitive damages.

When it comes to holding an insurance company accountable for its actions, the law has a lot of "teeth" to it. However, a person is well advised to seek an attorney who regularly deals with Insurance Law to make sure their rights are fully protected and the insurance company is not getting away with doing wrong.

The recourse that a Texas insurance policy holder has against their insurance company depends on exactly what it is that the insurance company does that is wrong or illegal. The types of wrong that can be committed by insurance companies are too numerous to mention all of them here. However, there are a few wrongs committed by insurance companies that policy holders should be aware of when dealing with their insurance agent or the insurance company.

Again, keep in mind that there are many wrongs that can be committed by an insurance company. The most wrongs that can be found without reading all the laws related to insurance can be found in the Texas Insurance Code Section 541.051, Section 541.060 and Section 542.003.

These Sections are appropriately found in Subtitle C of the Texas Insurance Code which is titled "Deceptive, Unfair, And Prohibited Practices". Section 541.051 is in Chapter 541 and titled "Unfair Methods Of Competition And Unfair Or Deceptive Acts or Practices".
Under this section is the law saying an insurance company cannot misrepresent to you the terms of a policy, the benefits or advantages promised by a policy, or make any misrepresentations regarding dividends or sharing of other monies on the policy. This section makes it illegal for an insurance company to make a misleading representation or misleading statement regarding the financial condition of an insurance company. It also makes it illegal for an insurance company to use a name or title of a policy that misrepresents the true nature of the policy.

Section 541.060 is titled "Unfair Settlement Practices". This section is a common area of litigation and there are volumns of information that can be written about this section and will be the subject or future articles. Here, is where the insurance laws of Texas make it clear that an insurance company cannot; 1) misrepresent policy provisions relating to the coverage at issue, 2) fail to attempt in good faith to accomplish a prompt and fair settlement when the insurance companies liability has become reasonably clear, 3) fail to make clear to the policy holder a reasonable explanation of the reason within the policy itself why the insurance company is denying the claim, 4) fail to within a reasonable time affirm or deny coverage of a claim. The insurance company also cannot: 5) refuse of delay payment of a claim under the policy based on the belief there may be coverage under another policy, 6) refuse to pay a claim without conducting a reasonable investigation, 7) require a policy holder to produce a copy of their tax returns unless the claim involves a fire loss or the claim involves lost profits or income. This is just a portion of relevant law under Section 541.060.

Texas Insurance Code, Section 542.003 is found in Chapter 542, Subchapter A. Chapter 542 is titled "Processing And Settlement Of Claims". Subchapter A is titled "Unfair Claim Settlement Practices". Section 542.003 is titled "Unfair Claim Settlement Practices Prohibited". The titles speak for themselves.

Under 542.003 it is made illegal for an insurance company to engage in an unfair claim settlement practice. The following are acts constituting unfair claim settlement practices; 1) knowingly misrepresenting pertinent facts or policy provisions relating to coverage, 2) failing to acknowledge with promptness communications relating to a claim under an insureds policy, 3) failing to have and implement reasonable standards for the prompt investigation of claims, 4) failing to effect a prompt and fair settlement when liability has become reasonably clear and, 5) causing a policy holder to file a lawsuit to recover monies due under a policy because the insurance company was offering substantially less than what was ultimately recovered in the lawsuit.

The above is just a sample of some of the laws insurance companies must follow. These were chosen as an example because of their central location. There are many other located throughout the Insurance Code plus there are many more in other law books. All serve as reasons why anyone having problems with an insurance company should seek an experienced Insurance Law Attorney to make sure their rights are protected. Whether you are in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, only an experienced Insurance Law Attorney is going to fully understand and know about all the laws that may apply to any given situation.

The Texas Department of Insurance has the authority to punish insurance companies and agents who commit wrongs. The punishment can be fines or in some cases "cease and desist" orders are issued.

When an insurance company or one of their agents commits a violation of the Texas Insurance Code, the person who sustains actual damages may bring an action for those damages caused by the person or company engaging in the wrongful action. Section 541.151 of the Texas Insurance Code allows for this private cause of action. Any violation of Subchapter B, defined to be an unfair method of competition or unfair or deceptive act or practice in the business of insurance, or Section 17.46(b) of the Texas Business & Commerce Code, may bring this private cause of action against the insurance company or its agent.

A person who prevails in their claim against the insurance company or its agent may obtain the amount of actual damages plus court costs and reasonable and necessary attorneys' fees, plus any other relief the court determines is proper. If the insurance company is found to have knowingly committed the act complained of, the judge or jury may award an amount up to three times the amount of actual damages.

The above is not a limit of the claims that can be asserted against the insurance company or its agent. There are other claims that can be made in the appropriate situation for violations of other provisions of the Texas Insurance Code and violations of the Texas Deceptive Trade Practices Act. Further, depending on the circumstances, claims can be asserted for Breach of Contract, Fraud, Misrepresentation, Negligence, and several other causes of action.

The important thing to keep in mind in an insurance situation is, when you think you are being mistreated or something just does not seem right, you need to talk with an Insurance Law Attorney. There are lots of attorneys in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, and other large and small cities across the state who do Criminal Law, Family Law, Probate, Injury, Bankruptcy, etc., but not that many who do Insurance Law. Only an attorney who does lots of Insurance Law is going to fully understand all your rights under the various laws of the State.

Before discussing the topic of this writing, a little side note. When suing insurance companies, they of course do not want to be sued, but when that happens they prefer to fight their battles in Federal Court rather than State Court. The Plaintiffs, who are the people usually suing the insurance companies would prefer to be in State Court. There are many reasons for this but what is important to know is, one, only an experienced Insurance Law Attorney fully understand what was just said and, two, only an experienced Insurance Law Attorney knows ways of preventing an insurance lawsuit from being removed to Federal Court, if it can be done.

Texas Insurance Law requires that the insured person cooperate with their insurance company when the company is investigating a claim. This is true whether the claim is being made by the insured person against their insurance company for benefits or the claim is being made against the insured person by a third party. The reasoning for this is not difficult. The insurance company needs to know what happened so that they can evaluate the claim being made. An obvious example of the insurance refusing to pay on a claim is found in a recent Federal Court case, State Farm Lloyds vs. Tony Ray Brown.

In Brown, the insured, Brown, had shot another person in the face. Brown would not cooperate with his insurance company in any way when he was sued for the shooting. He did not turn the lawsuit papers over to his insurance company, he did not cooperate with their investigation as to the shooting being an accident or deliberate, he did not cooperate with the insurance company's efforts to determine if the victim had done anything wrong in causing or contributing to the shooting. Brown simply did nothing. The only thing the insurance company knew about the incident was what the victim and the victims lawyers said. This case was a blatant "lack of cooperation" and thus the Court voided the insurance coverage.

Here is the problem. When an insurance company investigates a claim that is being made against them, they are not just trying to determine the value of the claim. They are also investigating and looking for ways to keep from paying the claim or if they know they are going to have to pay, they are looking for ways to lessen the total amount to be paid on the claim. Any time an insurance company starts asking for lots of paperwork or wants to take a recorded statement and especially if they want to take a statement under oath, then these are signs they are looking to deny or diminish the value of your claim. That is also the time to seek the advise of an experienced Insurance Law Attorney.

An Insurance Law Attorney knows how to assist an insured in cooperating with their insurance company without the insured person saying something that would cause the coverage to be denied or the value of the claim being diminished. If you find yourself in a situation where the insurance company is asking for a recorded or under oath statement then you need to get in touch with an experienced Insurance Law Attorney.

For the most part insurance companies are regulated by State Law. Federal Laws in the insurance industry exist but I'm not going to talk about that here. You just need to know right now that if you are in Texas, that any insurance policy you have is probably controlled by Texas Insurance Laws. This is true most the time even if you actually purchased the insurance out of state or from an insurance company that is not based in Texas.

Whether you purchased an insurance policy in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or where ever in Texas the politicians in Austin and the Texas Insurance Commission regulate the policy. As long as you are now living in Texas, the laws and regulations of Texas are going to apply with few exceptions.

Prior to 2003, the rates paid and the policy forms used for writing insurance coverage were uniform through out the State and anybody who dealt with insurance policies on a frequent basis such as agents and attorneys knew what the policies said and how they should be applied. In 2003 the insurance companies prevailed with rate deregulation and also obtained the ability to deregulate policy forms. The insurance companies ran with this new found freedom, and as a result, there are many policy forms in the market today, which makes it difficult for consumers to compare different products. One attempt to compare different insurance products can be found at http:www.opic.state.tx.us/hoic.php

The above site may help you in shopping and comparing insurance policies but only an experienced Insurance Law Attorney is going to be able to assist you in the proper interpretation of the policy if and when the occasion arises that you are making a claim for benefits through the policy and the claim for benefits is being denied. Feel comfortable in contacting us when you need help.

In 1929, a case was decided that has had deep effects on the claims handling process in Texas. The case was G. A. Stowers Furniture Company vs American Indemnity Company. The case arose out of a situation in Galveston, Texas, but applies to any place in Texas including Dallas, Fort Worth, Arlington, Grand Prairie, Irving, Weatherford, or any other city or town in the State.

In this case, Stowers had a $5,000 insurance policy with American. A claim was made against Stowers wherein the claimant was willing to settle the claim for $4,000. The claim was potentially worth much more. American decided to deny the claim. American's thinking was that the worst that could happen to them was that if the case were tried and lost that American would be out $5,000 which was the top limit on the policy. So instead of settling the case for $4,000 the case went to trial and a judgment was taken against Stowers for over $14,000. American paid the policy limits of $5,000 and walked away leaving Stowers to make up the difference.

Stowers sued American saying American refused to act as a reasonable and prudent insurer would have acted and thus cost Stowers money. Stowers said it was unreasonable for American to have not settled the case for $4,000, when they could have, rather than expose Stowers to a judgment in excess of the policy limits. The court agreed with Stowers.

This law, now known as the "Stowers Doctrine" in Texas says that if an insurance company is given the opportunity to settle a case for an amount less than or equal to the policy limits and refuses to do so, then the insurance company and not its insured is responsible for any judgment in excess of the policy limits. The test is, would a reasonable and prudent insurance company go ahead and settle the case, given the facts of the case, rather than expose its policy holder to the risk of a judgment in excess of the policy limits.

There have been several adjustments to this law over the years that involve issues of liens and subrogation interests. Plus the exact language of any offer to settle for an amount equal to or less than the policy limits is scrutinized closely by the courts to see if the offer properly invokes the "Stowers Doctrine". If this "Stowers Doctrine" is properly taken into account and the claim is not paid by the insurance company then the policy holder has a claim against its insurance company for its conduct in the matter.

Continue reading "Texas Insurance Law On How Claims Are Paid" »

It is not an over-statement to say Texas Insurance Companies make lots of money and profits. Many of these companies are based in or have big offices in Dallas and Fort Worth. Having said that, every few years one will go out of business. When an insurance company goes out of business it is usually the result of a natural disaster such as a hurricane effecting an area where they have a lot of policies issued. Not once has it been because of too many lawsuits.

So what happens if your insurance company goes out of business? In Texas, when an insurance company becomes insolvent, meaning its liabilities or debts exceed its assets, the company is placed in receivership by a state District Court Judge and this authorizes the Texas Commissioner of Insurance to take charge of the company.

So what happens to your insurance claim? In Texas, all licensed insurers must be members of the guaranty association for their particular type of insurance. There are associations for title insurance, life and health insurance, annuities, property and casualty, auto, and home, etc.

The purpose of the guaranty associations is to pay lawful claims made to the insurance company that has been placed in receivership. The thing to keep in mind is they will play games with you and give you a feeling of "hopelessness". It has been our experience that it is definitly more difficult and time consuming, but in the end we have always been to get our clients situations worked out.

Continue reading "What If My Texas Insurance Company Goes Out Of Business?" »