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Life insurance claims that are denied for missed payments of premiums is pretty common.  This issue was discussed in a Southern District of Texas, Houston Division, opinion styled, Colonial Penn Life Insurance Company v. Ashley E. Parker, et al.

Robert Parker applied for a whole life policy with Colonial on October 30, 2014.  Ashley Parker and Aden Barron were beneficiaries of the policy.  The policy was issued on November 20, 2014.

On June 22, 2015, seven months later, Parker died in a car wreck.  A claim for benefits were made on the life insurance policy.

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Here is a Northern District of Texas, Fort Worth Division opinion issued by Justice Reed O’Conner.  This opinion echoes similar opinions being issued in the Federal Courts in Texas.  The style of this case is, Twanya Braden v. Allstate Vehicle and Property Insurance Company.

Braden reported a claim for hail and windstorm damage to her house to Allstate.  A dispute arose as to the damages amount and appraisers set the amount of loss at $9,005.92.  Allstate had made a previous payment and after taking into account the deductible, Allstate paid the balance.

Allstate moved for summary judgment based on the claim having been properly paid pursuant to the appraisal amount and thus, there were no other issues for the Court to decide.

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The Law Office of Mark S. Humphreys, P.C., recently got a surprise for his client when contesting an ERISA life insurance claim.

The insured worked in Louisiana and had a life insurance policy through his employer. The insured was not married and did not have any children. Thus, the insured named his brother’s child as the beneficiary of his life insurance policy. The amount of the policy was $100,000. The insured was killed in a one vehicle accident. A claim was made for benefits. The plan administrator denied the claim benefit based on an exclusion if the deceased died as the result of intoxication. The toxicology report indicated proof of cocaine in the body of the insured at the time of the accident.

Mark hired a toxicology expert to write a report and contested the denial of benefits through the administrative process that has to be followed in ERISA claims. The report pointed out that the amount of cocaine in the system of the deceased was stated as being a “trace” amount. The toxicology expert report pointed out there was no way to prove intoxication had anything to do with the cause of death when the amount is just a “trace.”

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The Texas Prompt Payment of Claims Act was not violated in this situation.

The case is from the Southern District of Texas, Laredo Division.  It is styled, Jonnie Byrd v Liberty Insurance Corporation, et al.

Following a hail storm, Byrd made a claim against her homeowner’s policy with Liberty for damage to the roof and interior his home.  Liberty’s adjuster found no hail damage to the roof but did find water damage of a little over $3,000, which was less than the deductible.  Byrd then sent a demand letter seeking $55,731.  Liberty closed the file and Byrd sued for various causes of action including violation of the Prompt Payment of Claims Act.

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When a Plaintiff sues an insurance company in State Court, the insurance company is usually going to do everything it can to have the case removed to Federal Court.  Plaintiffs normally lose this fight over which court the case will be litigated.

Here is a case where the Plaintiff won the fight and primarily because of mistakes the insurance company lawyers made.  The case is from the Southern District of Texas, Houston Division.  It is styled, Jade Freeman v. State Farm Mutual Automobile Insurance Company ….

Freeman filed the case in State Court on February 21, 2018, suing State Farm.  On October 9, 2018, plaintiff filed her first amended petition adding Progressive as an additional defendant.  The lawsuit arose out of an auto accident and State Farm and Progressive were sued for breach of contract and violations of the Texas Insurance Code.  On November 20, 2018, Progressive filed its Removal Petition in this Court.  Freeman timely filed its Motion to Remand.

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Mark Humphreys law offices announce a recent settlement in two ERISA (Employee Retirement Income Security Act) cases in favor of clients.  The laws of ERISA are governed by Federal Law rather than State Insurance Law.  The laws are drastically in favor of the insurers.

One case involved a claim for Short Term Disability (STD) benefits and the other was for Long Term Disability (LTD) benefits.

The disability benefits were purchased by the employees through payroll deduction.  These benefits, part of employee benefits packages, can also include health coverage and life insurance coverage.

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Here is a case to watch closely.  The case is from the Eastern District of Texas, Sherman Division, and is styled, Charlotte Stephens v. Safeco Insurance Company of Indiana and Damon Edward Baker.

Stephens sued Safeco and Safeco’s adjuster, Baker, after a hail storm claim which resulted in a lawsuit being filed in State Court.  Safeco removed the case to Federal Court and invoked Texas Insurance Code, Section 542A.006.

542A.006 authorizes an insurer to elect to accept full responsibility of an adjuster’s acts or omissions and mandates that the adjuster be thereafter dismissed from any action to which they are a party.  This amendment spawns a novel question regarding removal based on diversity of citizenship under 28 U.S.C., Sections 1332(a), 1441(a), and 1446.  Namely, whether an action instituted in state court against a diverse insurer and a non-diverse adjuster — nonremovable to federal court due to the lack of diversity of citizenship — becomes removable upon, and solely because of, the diverse insurer’s election to accept complete liability of the nondiverse adjuster.  This Court found it did Not and remanded the case to State Court.  In this case, the Court found that the original joinder of the adjuster was proper.  Had the original joinder been improper the result would have been different.

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Insurance attorneys will find this Northern District, Dallas Division opinion helpful for seeing how the courts analyze situations where a complaint is trying to be amended in Federal court to add non-diverse defendants.  The case is styled, Charity Ogunro v. Allstate Vehicle And Property Insurance Company.

Ogunro filed this home insurance dispute in March 2018, naming Allstate and two adjusters.  Allstate elected legal responsibility for the adjusters and the adjusters were dismissed with prejudice, thus, giving diversity jurisdiction.

Ogunro then attempted to amend her complaint by alleging causes of action against the insurance agents who sold the policy.  By allowing the amendment, Ogunro would be able to defeat diversity jurisdiction because the agents are Texas residents and thus, this case would be remanded back to State Court.

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For an insurance attorney to know the insurance adjuster did something wrong when it comes to a lawsuit is not good enough.  When filing a lawsuit, the allegations of wrongdoing by the adjuster must be properly alleged in the lawsuit papers.  This is illustrated in the Southern District, Corpus Christi Division, opinion styled, Esteban Cruz v. State Farm Lloyds.

This case was filed against State Farm in State Court and State Farm caused the case to be removed to Federal Court based on diversity jurisdiction.

State Farm seeks dismissal of the extra-contractual claims for “failure to state a claim upon which relief can be granted” pursuant to Rule 12(b)(6).  Rule 8(a)(2) requires a short and plain statement of the claim showing that the pleader is entitled to relief.  This includes sufficient factual allegations to indicate that the claim is plausible.

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As has been said many times and will be said many more times, the insurance companies prefer to have their cases in Federal Court.  The rules of procedure, in the opinion or most lawyers, are more favorable to insurance companies.

The pleading standards are illustrated yet again in a Western District, El Paso Division opinion styled, Shiana Corporation v. Depositors Insurance Company and David Morgan.

Shiana suffered a loss from a wind and hail storm.  The insurance company, Depositors, hired adjuster Morgan to adjust the loss.  Morgan came back with an estimate of $49,268.48.  Shiana hired a public adjuster who adjusted the loss at $519,459.86.   A lawsuit resulted and was filed in State Court where it was promptly removed to Federal Court by Depositors who alleges that Morgan was improperly joined in an effort to defeat diversity jurisdiction.

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