Dallas Fort Worth Insurance Lawyer Blog

Most homeowners in Grand Prairie, Arlington, Irving, Fort Worth, Dallas, Duncanville, De Soto, Cedar Hill, Mansfield, and other Dallas County and Tarrant County cites will have a policy of insurance on their home. Most of the time that homeowners policy is going to have a medical payments coverage in the policy.
Medical payments coverage will usually provide payments for "reasonable and necessary" medical expenses up to the limits of the coverage which is usually $1,000 to $5,000. It is coverage that should pay medical bills without regards to who is at fault for the injuries sustained.
Here is a case dealing with the coverage. The case is styled, Cynthia Farris, as next friend of Vidal de Jesus Farias, a minor v. Allstate Insurance Company and Allstate Property and Casualty Insurance Company. This opinion was issued by the Corpus Christi Court of Appeals on June 2, 2011.
Here is some background.
The dispute pertains to an incident where Farias's eleven year old son was bitten by a dog owned by Jose Ocanas, an insured of Allstate. Farias alleged the following:
On or about October 3, 2005, 11 year old Vidal de Jesus Farias was walking his family dog near his home. Without provocation, defendant Ocana's dog attacked Vidal and bit him several times in the legs and buttocks. Defendant Ocanas' housekeeper watched the whole thing and did nothing to get the dog off of Vidal even though Vidal was screeming for help.
Farias sued the homeowner Ocanas for allegations of inappropriate conduct in this matter and further alleged that Allstate was liable for breach of contract, breach of the duty of good faith and fair dealing, negligence, and violating several provisions of the Texas Insurance Code, including sections 542.003, 542.055, 542.056, 542.057, and 542.058.
Allstate entered entered a general denial denying all of the allegations contained in Farias's original petition. Allstate later filed a traditional motion for summary judgment, alleging that Farias had failed to state a cause of action under Texas law. Specifically, Allstate contended that Farias's lawsuit "fails because Texas law does not recognize a direct cause of action in a third-party scenario against the insurer for the mishandling of a third-party claim." Allstate argued that: (1) violations of chapter 542 of the insurance code do not apply to third-party scenarios; (2) Farias's breach of the duty of good faith and fair dealing causes of action do not apply in a third-party scenario; (3) Farias cannot maintain a breach of contract action against Allstate because there is no privity between Farias and Allstate and because Farias is not a third-party beneficiary; and (4) Farias's negligence cause of action must fail because Allstate did not owe a duty to either Farias or Vidal.
Allstate also argued that Farias was not a third-party beneficiary under the insurance contract between Allstate and Ocanas and that "there is no distinction between medical payments coverage and other insurance coverage which entitles a third party to bring a direct cause of action against the insurer for denial of medical benefits payments."
The court began its analysis by examining the "Medical Payments Coverage" clause of the insurance contract between Ocanas and Allstate. The clause provides as follows:
COVERAGE D (Medical Payments to Others)
We will pay necessary medical expenses incurred and medically determined within three years from the date of an accident causing bodily injury. Medical expenses means reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services. This coverage does not apply to you and regular residents of your household. This coverage does not apply to residence employees. As to others this coverage applies only:
1. to a person on the insured location with the permission of an insured.
2. to a person off the insured location, if the bodily injury:
a. arises out of a condition on the insured location or the ways immediately adjoining.
b. is caused by the activities of an insured.
c. is caused by a residence employee in the course of the residence employee's employment by an insured.
d. in caused by an animal owned by or in the care of an insured.
Farias argued that this language expressly provides a benefit for Vidal as a third-party beneficiary and, thus, confers standing upon her to sue Allstate for breach of contract on behalf of Vidal.
In discussing this issue regarding third-party beneficiaries the court said the following.
A stranger to a contract may enforce the contract as a third-party beneficiary if the parties to the contract intended to secure a benefit to that third party and entered into the contract directly for the third party's benefit. The person claiming to be a third-party beneficiary must establish the existence of a contract and standing as a third-party beneficiary. A party is presumed to contract only for its own benefit; thus, any intent to benefit a third party must be clearly apparent. There is a presumption against, not in favor of, third-party beneficiary agreements. Once some evidence has been produced to show a contract and standing as a third-party beneficiary, it is incumbent upon the opposing party to prove any defenses that would limit or bar recovery by the third-party beneficiary.
Here, the "Medical Payments Coverage" clause does not specifically mention Farias or Vidal, nor does the plain language of the insurance policy indicate that Farias or Vidal were contemplated when Ocanas and Allstate entered into the insurance contract so that Farias or Vidal could bring any direct claim against Allstate. Moreover, the Texas Supreme Court has held that "an injured party cannot sue the tortfeasor's insurer directly until the tortfeasor's liability has been finally determined by agreement or judgment."
In making its ruling the court stated, "The record does not reflect that Ocanas's 'liability has been finally determined by agreement or judgment.'" Because Ocana's liability had not been finally determined by agreement or judgment and because the language of the "Medical Payments Coverage" clause does not overcome the strong presumption against conferring third-party beneficiary status to Farias, the court concluded that Farias lacked standing in this matter.
The writer of this blog, who is an experienced Insurance Law Attorney, does not agree with all the issues in this opinion. Maybe an appeal to the Texas Supreme Court will result in a different outcome.

Here is one for people in Weatherford, Grand Prairie, Fort Worth, Dallas, Aledo, Richardson, Garland, Mesquite, Irving, and anywhere else in Texas to know. It regards insurance settlements and hospital liens.
This is an opnion issued on March 17, 2011, by the Texas Court of Appeals, First District, Houston. The style of the case is, Memorial Hermann Hospital System v. Progressive County Mutual Insurance Company.
In this case, Progressive settled a claim brought against one of its insureds arising out of injuries in a car accident. Memorial filed a hospital lien for the cost of medical treatment to the injured person half an hour before Progressive issued the settlement check. Under the Texas Hospital Lien Law, a hospital "has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attibuted to the negligence of another person." Texas Property Coce, Section 55.002. To secure the lien, Section 55.005 requires the hospital file notice with the county clerk before payments to the entitled party. The statute also declares that the county clerk "shall index the record in the name of the injured individual."
A hospital lien usually attaches to settlement proceeds, and an insurance company usually names the hospital lienholder as a payee on the settlement check. But in this case, because the clerk had not yet indexed the lien, Progressive maintains that it was unaware of the lien and, therefore, it did not name Memorial as a payee.
In this case Memorial contends that the lien is secured on filing, and thus it was entitled to allocation of the settlement proceeds. The court agreed.
Progressive had issued the check at 3:23 PM on December 12, 2007. Thirty minutes before, Memorial had filed its notice of lien with the Harris County Clerk's Office. Before issuing the check, Progressive conducted a lien search on the county clerk's website. It had conducted two searches, one at 2:25 PM and the other at 3:30 PM.
According to the county clerk, the process of recording and indexing the lien usually takes two business days after filing. In this case, the lien was not indexed until December 17, 2007.
This case concerns the proper reading of the hospital lien statute. In interpreting the statute, the court, according to the Texas Government Code, Section 311.023, is to consider the legislatures intent in: the object sought to be obtained; the circumstances of the statute's enactment; the legislative history; the common law or former statutory provisions, including laws on the same or similar subjects; the consequences of a particular construction; administrative construction of the statute; and the title, preamble, and emergency provision. Per Section 311.021, the court also presumes that the legislature intended a just and reasonable result; a result feasible of execution; the entire statute to be effective; and the public interest to be favored over any private interest.
The court stated, "We read the plain language of Section 55.005 as providing that a lien is secured when the lienholder properly files with the county clerk a written notice of lien that complies with the statutory requirements." The court then further discusses what the language of Section 55.005 means.
They tell us that, "Subsection (c) requires the county clerk to index the lien, but does not set any deadline." Progressive argued that Section 13.002 of the Property Code, which declares that a properly recorded instrument is "notice to all persons of its existence" and "subject to inspection by the public," is evidence that the legislature intended that proper recordation be necessary to provide the public notice. According to Progressive, the provision's emphasis on recording, rather than filing, supports the conclusion that the lien is not effective until it is properly recorded.
This court says, "The Propery Code, however, specifies that the duty of proper recordation belongs to the county clerk. Section 11004(a)." This section gives the clerk "within a reasonable time after delivery" as leeway in getting the document filed.
In this writer's opinion, the court got this case completely wrong. The purpose of having a lien filed is to put the world on notice of the lien. All the world had to do is search the county records. Yet if the clerk has not filed the lien, how does the world know of it's existence.
There are remedies to this situation, but to work it out, an experienced Insurance Law Attorney is needed.

Young athletes in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Irving, Cleburne, Mesquite, Garland, Weatherford, and other places in Texas, usually have some sort of insurance coverage in case they get injured when involved in school sporting events. But exactly what does this coverage provide?
A student athlete in Clark County School District in Nevada, is finding the answer to be "not enough." This is in an article published by the Las Vegas Sun and written by Steve Green. The article, titled, "High School Football Injury Sparks Lawsuit Over Insurance Coverage" was published on December 1, 2010. The athlete is LaQuan Phillips, who was a Green Valley High School football player who got injured in a game on September 5, 2008. Phillips suffered a spinal injury and has incurred more than $195,000 in medical expenses, which does not include future medical expenses and rehabilitation recommended by his medical providers. This figure also does not include compensation for Phillips pain and suffering and/or lost quality of life.
The insurance policy at issue in this case was issued by National Union Fire Insurance Company of Pittsburg, Pa. The policy is issued to the school district and is suppose to cover student athletes, cheerleaders and students in non-sports extracurricular activities and provides up to $2.5 million in coverage.
According to the article, attorneys for Phillips filed suit against National Union and the school district after a demand was made for the policy limits of $2.5 million.
The lawsuit alleges breach of contract and the implied covenant of good faith and fair dealing. It also charges a violation of the state Unfair Claims Practices Act, saying "defendant violated (a) fiduciary duty to plaintiff by seeking and interpreting medical evaluations of the plaintiff's condition in a manner best calculated to deny benefits, and failing to look to facts and interpretations which would enable a finding of coverage."
The school district was hit by a claim of negligence for allegedly failing to ensure that a policy purchased for providing catastrophic coverage was structured to cover injuries other than - or less than - total paralysis of a limb or limbs.
Both defendants were also accused of "unconscionability" for knowing that students and parents would have no advance knowledge of the policy's coverages, exclusions and deductibles, but nonetheless defined terms in the policy in "impermissable and unconscionably narrow and restricted ways, resulting in premiums being paid for insurance which would pay no benefit for injuries reasonably understood to be paralyzing or 'catastrophic', thereby creating an illusion of coverage where none existed."
As a side note, in Texas, the Texas Business & Commerce Code, Section 17.45(5) defines "Unconscionable action and course of action" as "means an act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree."
The case described in the Las Vegas Sun article deals with Nevada law.
The insurance company lawyers are currently concentrating on getting the case moved to Federal Court.
The school district says that Phillips is trying to impose a duty on the school district that the law does not impute to them.
The essence of what is to be drawn from this case is this. A person has got to understand what protections are provided by them in any insurance policy they have or that another, such as the school district has, that may provide coverage for them. A copy is usually easy to get and if it is not easy to read then an experienced Insurance Law Attorney should be consulted. It is hard to say what the outcome of this case may be and of course it is Nevada law, not Texas law, that will be applicable to the case.

It does not matter whether you live in little ole Weatherford, Texas, or some of the bigger communities like Dallas, Fort Worth, Arlington, or Grand Prairie. Health insurance is a concern of everybody.
A recent lawsuit in Colorado illustrates the anger that can be taken out against an insurance company that does one of its insureds wrong. The article is in the Denver Post. The title of the article is "Canceled Insurance Leads To $37 Million Verdict For Woman."
A jury in the city and county of Boulder returned a verdict of $37 million to a woman whose health insurance policy was canceled after she was seriously injured in a car accident.
The reason the insurance company cited for termination of the insurance coverage was that the woman failed to disclose previous medical treatment on her health insurance application. It turns out she had previously visited an emergency room for shortness of breath and she had received treatment for Time Insurance Company, which also does business as Assurant Health.
In the lawsuit, a claim was made for $7 to $8 million based on the evidence. The jury returned with one of the largest verdicts in Colorado history.
An appeal is certain to follow.