Life Insurance And The Texas Insurance Code

Weatherford insurance attorneys see all kinds of gimmicks by insurance companies in their attempts to not pay claims. One of these is to try and cause a beneficiary under a life insurance policy to believe they are not a proper party to make the claim. The U.S. District Court, Tyler Division issued an opinion dealing with this issue. The style of the case is, Marcia Slack v. The Prudential Insurance Company of America.
Marcia sued Prudential for violations of the Texas Insurance Code, among other things, for their refusal to pay benefits on a life insurance policy her deceased husband had purchased wherein she was the named beneficiary. The fact pattern is a little complicated but one of the challenges to her lawsuit made by Prudential was that she did not have standing to under the Texas Insurance Code.
Prudential filed for Motion for Judgment on the Pleadings and argued that Marcia does not have standing to assert a claim under the Texas Insurance Code because she is merely a third party to the Policy. Prudential also contended that “claims under the Texas Insurance Code do not survive following the insured’s death.” Prudential attempted to bolster its argument by stating that (1) Plaintiff does not assert that any of Defendant’s representations reached Plaintiff (and instead were only made to Mr. Slack), (2) Plaintiff only asserts that Mr. Slack paid the Policy premiums, (3) Plaintiff was not designated as the beneficiary until after Mr. Slack took out the Policy, and (4) Plaintiff did not allege any reliance on Defendant’s representations.
In response, Marcia argues that one does not have to be a consumer under the DTPA to bring a claim under the Texas Insurance Code. Marcia references a Texas Supreme Court holding that “‘any person’ injured by another’s deceptive acts or practices in the business of insurance has a cause of action and the statute defines ‘person’ broadly to include ‘any individual.'” Marcia adds weight to her argument by asserting that her objectives align with her late husband’s objectives. Finally, Marcia argues that as the intended beneficiary under the Policy, she has standing under the Insurance Code even if she does not have standing under the DTPA because she is a “person” as defined by Section 541.002(2) of the Texas Insurance Code.
Under Fifth Circuit jurisprudence, there is no requirement that a Plaintiff be a consumer to bring a claim under the Texas Insurance Code. Instead, any “person” who suffers an injury during her course of dealing with someone in the practice of insurance has standing under the Insurance Code. Person is defined broadly as any individual, corporation, association, partnership, . . . and any other legal entity engaged in the business of insurance, including agents, brokers, adjusters and life insurance counselors. Marcia as an individual clearly fits into the category of a person.
Further, a person has standing under the Insurance Code if she is an intended third-party beneficiary under an insurance policy.
Prudential’s argument that Marcia’s claim under the Insurance Code is futile was unpersuasive. Life insurance claims necessarily survive the death of the insured because only then can beneficiary receive the benefits of the policy.
As such, the Court denied Prudential’s motion.