Mortgage Accidental Death Insurance

Dallas life insurance attorneys will find this case valuable to know. It is a 2006, Texas Supreme Court case styled, Minnesota Life Insurance Company v. Vasquez. Here is the relevant information.
In November 1998, Minnesota Life issued a Mortgage Accidental Death Insurance policy to Joe and Elia Vasquez, promising to pay their home mortgage in the event either died due to an accident. In June 2000, Joe Vasquez became ill, was hospitalized, suffered a seizure, and lapsed into a coma. Twelve days later, he emerged from the coma and was transferred to a hospital room. Later that day, while no one else was present, he apparently fell, hit his head, and died.
On October 6, 2000, Elia Vasquez filed a claim with Minnesota Life requesting payment of the balance due on her mortgage (about $41,000) and submitted copies of the death certificate and autopsy report. After reviewing the documents, Minnesota Life sought advice from a medical consultant as to whether Mr. Vasquez’s death resulted from an accident “independently of all other causes,” as required by the policy. The consultant advised that he needed to see the relevant medical records.
To obtain the records, Minnesota Life employed PMSI, a vendor specializing in that line. PMSI requested the medical records several times without success. Minnesota Life kept Ms. Vasquez informed of these activities, though notices were occasionally sent to her old address.
On January 25, 2001, Ms. Vasquez’s attorney sent Minnesota Life a $110,000 demand letter for violations of the Texas Insurance Code. Minnesota Life’s efforts to obtain the records continued to flounder until it finally sent its own demand letter to the hospital.
The records were at last produced on March 25, 2001. As it turned out, they disclosed no additional details about Mr. Vasquez’s death. Deciding there was no other way to determine exactly what occurred, Minnesota Life paid the remaining balance on the Vasquez’s mortgage on March 28th.
Two days later, Minnesota Life was served with Ms. Vasquez’s suit.
Two unfair settlement practices were alleged but only one will be discussed:
● failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear.
It is undisputed that all Minnesota Life ever knew about the cause of death here was what appeared in the autopsy report and death certificate. Those documents described an “accident” in which Joe Vasquez “fell and hit back of head”. But both documents listed his cause of death as “seizure disorder with encephalopathy followed by blunt force trauma to the head.”
The policy here provided coverage if “death results directly and independently of all other causes . . . from an accidental injury”. As the documents here listed both a seizure disorder and a blow to the head as the cause of death, they unquestionably disclosed an “accidental injury,” but not one that was the sole cause of death “independently of all other causes.”
Similarly, the policy excluded payment of benefits if “death results from or is caused directly or indirectly by . . . bodily or mental infirmity, illness or disease”. Again, by listing both a seizure and an accident, the documents suggested that a bodily infirmity or illness had contributed at least indirectly to the death.
Though somewhat cryptic, these official documents were all the insurer had. Both listed a seizure disorder and a blunt force as a single cause of death. One of these (the blow to the head) was an accidental injury, the other (the seizure disorder) was not. While the documents said only that the head injury “followed” the seizure disorder, listing both as a single cause reasonably suggested the two were related and that both played a role in the death. Nothing in these documents suggested the insured’s seizure disorder was so remotely connected with the subsequent injury that it could not constitute legal cause. Nor did either suggest that all forces generated by any seizure “had come to rest” before the blow to the head, or merely placed the insured in the wrong place at the wrong time.
As these documents were all the insurer had, if coverage was not reasonably clear from them, it was not reasonably clear at all. Since the policy covered death caused independently of any bodily infirmity, it was not reasonably clear here. Accordingly, the court held there was no evidence that the insurer failed to pay the claim after coverage had become reasonably clear.
In this case, the court did not find evidence of “bad faith” in the way Minnesota handled the claim and Vasquez had the extra-contractual award of damages taken away.