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Insurance lawyers know that in a first pary insurance claim lawsuit, a claim for attorney fees can be made.  When the insurance company challenges the attorney fees claim of the insured, a natural response by the lawyer is to seek to get the information related to what the insurance company paid their lawyers in attorney fees.

Can that be done?  The question was answered by the Texas Supreme Court in this recent 2017, opinion.  It is styled, In Re National Lloyds Insurance Company, Wardlaw Claims Service, Inc., And Ideal Adjusting, Inc. Relators.

The discovery dispute in this mandamus proceeding arises in the context of multi-district litigation involving allegations of underpaid homeowner insurance claims.  The issue is whether a party’s attorney billing information is discoverable when the party challenges an opposing party’s attorney fee request as unreasonable or unnecessary but neither uses its own attorney fees as a comparator nor seeks to recover any portion of its own fees.  This Court held that under such circumstances, (1) compelling en masse production of a party’s billing records invades the attorney work product privilege; the privilege is not waived merely because the party resisting discovery has challenged the opponent’s attorney fee request; and (3) such information is ordinarily not discoverable.

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Lawyers who handle property damage claims learn real fast that the damages that exist on the property have to be properly segregated when making an insurance claim.  What does this mean?  The most common situation that arises is after a hail and wind storm.  An insured discovers damage to his home and makes a claim.  Nest, the insurance company says that all the damage is not covered.  A law suit results.

The law is clear that an insured has the burden of proving what damages occurred, when they occurred, and how they occurred.  Often times there is damage from a hail storm but some of the damage may have occurred in at a different time and in a different storm.  When this happens, it it he responsibility of the insured, not the insurance company to explain and prove when and how the damage occurred.

This is discussed in a 2006, Northern District of Texas case, styled, Atwill v. State Farm Lloyds.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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