Insurance Company Delay In Paying A Claim

When an insurance company delays in paying a claim, there are often times remedies.  Each case has to be looked at to determine what can be done.  This issue is discussed in a 2023 opinion from the Southern District of Texas, Victoria Division.  The opinion is styled, Naomi Odom v. Central Mutual Insurance Company.

This is a case wherein Odom suffered hurricane damage and made a claim for benefits.  Central Mutual made an initial payment and then two additional payments.  Later, another payment was made.

Odom was unsatisfied and eventually filed suit alleging breach of contract and other extra-contractual claims.  Central Mutual invoked appraisal and upon completion of the appraisal, paid substantially more money on the claim.

Central Mutual made an additional payment in the amount of $3,655.83 for what it contends is the maximum amount of interest to which Odom is entitled.

Odom re-opened the case after the appraisal and sought further amounts including amounts alleged to be due under the Texas Prompt Payment of Claims Act (TPPCA).

Central Mutual filed a motion for summary judgement alleging Odom has received all she is due under the TPPCA.

To prevail under a claim for TPPCA damages under section 542.060, the insured must establish: (1) the insurers liability under the insurance policy, and (2) that the insurer has failed to comply with one or more sections of the TPPCA in processing or paying the claim.  Unlike breach of contract or extracontractual claims, the use of the appraisal process does not excuse an insurer from liability for TPPCA damages if it was liable under the terms of the policy but delayed payment beyond the applicable statutory deadline.

In this case, the Parties do not dispute Central Mutual’s liability under the insurance policy or Central Mutual’s delay in processing and paying at least part of Odom’s claim.  Rather, the Parties contest whether Odom is entitled to interest in excess of the $3,655.83 already paid.  Central Mutual argues that since it paid Odom all the interest “that could possibly be recovered” under the TPPCA, summary judgment should be entered on “Odom’s claim for interest.”  Odom argues that Central Mutual has miscalculated the interest by using the wrong underlying amount upon which interest is due, the wrong interest rate, and the wrong accrual date; therefore, she is entitled to far more interest than what has been paid.

Under Texas law, an insurer that violates the TPPCA may still be entitled to summary judgment if it paid the insured the full amount of interest that the insured could claim under the TPPCA.  Courts make a distinction between when an insurer makes an interest payment in settlement of an insured’s TPPCA claim and when an insurer makes a payment of all conceivable interest owed resulting in the extinguishment of any TPPCA cause of action.  In this case, the latter applies because Central Mutual asserts that it has paid Odom all the interest that could possibly be recovered.

The Court holds that Odom has raised a genuine issue of material fact that she is entitled to more interest than what Central Mutual has paid.  Odom presents the entire calculation and argues that at the very least, she is owed an additional $10,593.37.  Odom argues that Central
Mutual’s calculation is flawed, because it uses the wrong accrual date, interest rate and underlying amount upon which interest should be calculated.  Because there is a genuine issue of material fact as to how much interest Odom is entitled to, Central Mutual’s Motion for Summary Judgment on Odom’s TPPCA claim must be denied.

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