Dallas Fort Worth Insurance Lawyer Blog

ERISA – Total Disability

August 20, 2016 | Mark S. Humphreys

ERISA lawyers know how tough these ERISA claims are. This is illustrated in a case from the Texas Southern District styled, Sarmiento v. Metropolitan Life Insurance Co.

Tammy Sarmiento sued for wrongful denial of benefits under ERISA, 29 U.S.C. 1332. The plan is through her employer, American Airlines. Her claim for long-term benefits was denied by the plan administrator. The Plan automatically ends long-term disability benefits (a) when the employee is no longer totally disabled as defined by the Plan and (b) after twenty-four months if the disability is for a mental-health disorder.

Tammy worked as a staff assistant. In August of 2011, she stopped working because she was having short-term memory loss. She was diagnosed with encephalopathy, major depression disorder, and frontal lobe syndrome. Under the Plan, encephalopathy is a physical condition. She applied for and received short-term and long-term benefits.

You’ve Got To Sue The Adjuster Properly

August 18, 2016 | Mark S. Humphreys

For Mansfield insurance adjusters, a 2016 opinion from the U.S. District Court, Houston Division, is an example of one way to properly sue an adjuster. The style of the case is, Robinson v. Allstate Tex. Lloyds & Timothy James Wesneski.

Robinson, a Texas citizen is insured with Allstate. She alleges she filed a claim with Allstate after her house was damaged during a storm on November 25, 2015. She alleges Wesneski, a Texas citizen and the adjuster Allstate hired to investigate the claim, conducted a substandard investigation. She alleges that Wesneski’s inadequate investigation caused her claim to be improperly evaluated and underpaid. Wesneski found that the amount of damage to Robinson’s property at $484.93, below the amount of the policy deductible. Robinson hired a private adjuster, who estimated the damage caused by the storm to be $25,818.77.

Robinson filed this lawsuit in Texas state court, naming Allstate and Wesneski as defendants. Robinson asserted that Wesneski violated the Texas Insurance Code and the Texas DTPA. She alleges Wesneski failed to conduct a reasonable and adequate investigation, which caused Allstate to undervalue her insurance claim. Allstate caused the case to be removed to Federal Court based on Allstate not being a Texas citizen and that Wesneski was joined just to defeat diversity jurisdiction and Robinson filed a Motion to Remand.

Life Insurance And Lifestyle

August 16, 2016 | Mark S. Humphreys

Life insurance attorneys know that in Texas, a life insurance claim cannot be denied after two years have passed. However, what happens when a person purchases life insurance and then his policy gets rejected because the underwriters don’t like the persons lifestyle. According to an article published by Insurance Journal, this denial is occurring. The article is titled, Marijuana Ties May Signal Risky Lifestyle To Insurers.

A few weeks ago, Derek Peterson got a letter from Mutual of Omaha, turning him down for life insurance.

“Our decision was based on,” the letter said, then trailed off (Monty Python-style) and picked up in all caps:

First Party Claim vs Third Party Claim

August 14, 2016 | Mark S. Humphreys

Oak Cliff insurance lawyers need to understand the difference between a first party claim and a third party claim. A 1996 Beaumont Court of Appeals opinion may help. The case is styled, Rumley v. Allstate Indemnity Co.

The wife, Joyce Rumley, sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their insurer, Allstate. Allstate paid PIP benefits but refused to pay liability because the policy contained a family member exclusion. At the time the Texas Supreme Court had granted writ of error but had not yet issued an opinion in National County Mutual Ins. Co. v. Johnson. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Texas DTPA.

Allstate filed a Motion for Summary Judgement on the grounds that Wife’s claim was a third-party claim for which Defendants owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment and wife appealed.

Life Insurance – Unusual Situation

August 13, 2016 | Mark S. Humphreys

This San Antonio Court of Appeals opinion is one for life insurance lawyers to read and know about. It is a 1996 opinion styled, Mendoza v. American National Insurance Co.

Jerry Mendoza purchased a $25,000.00 life insurance policy on August 1, 1991. The October premium was not paid. The policy provided for a thirty-one day grace period. On November 1, 1991, the last day of the grace period, American National’s district manager, Sitka, verbally agreed to extend the grace period until November 4, 1991. The policy, however, specifically provided that only American National’s president, vice president or secretary had the authority to extend this time period. Jerry Mendoza died in an automobile accident on November 3, 1991. The premium was never paid. In a prior appeal, this Court affirmed a summary judgment in favor of American National on Plaintiff’s breach of contract, negligence and bad faith claims. This appeal concerns the trial court’s granting of summary judgment on Plaintiff’s claims for intentional infliction of emotional distress, Insurance Code and DTPA violations.

In order to qualify as a consumer under the DTPA, a person must seek to acquire goods or services by purchase or lease and those goods or services must form the basis of the complaint. Lack of privity between plaintiff and defendant does not preclude a plaintiff from establishing consumer status. The Insurance Code provides standing to “any person” who has been injured by another’s engaging in an unfair or deceptive act or practice in the business of insurance as declared in the Code; rules and regulations of the Code; or Section 17.46 of the DTPA. Therefore, a plaintiff may assert causes of action under the Insurance Code for violations of Section 17.46 of the DTPA even though the plaintiff is not a “consumer.” Carrion, a named beneficiary of the policy, would clearly be injured as a result of Sitka’s alleged misrepresentation. Therefore, Carrion has standing under the Texas Insurance Code. Mendoza’s mother, in her capacity as representative of his estate, however, does not have standing to assert Insurance Code or DTPA claims because those claims do not survive Mendoza’s death and his mother is not a “consumer” in her own right.

Who Is An Agent Of An Insurance Company?

August 11, 2016 | Mark S. Humphreys

The answer to the question can be found by Arlington insurance lawyers in the 1994, Texas Supreme Court opinion styled, Celtic Life Insurance Company v. Coats.

The insured’s owner met with a soliciting agent of Celtic to discuss the potential purchase of insurance. The owner advised the agent he wanted a policy providing benefits for psychiatric care equal to or better than the $20,000 coverage provided under the company’s existing policy. The owner explained to the agent that the coverage was needed because his oldest son had previously required psychiatric care, and he was concerned that his youngest son might require similar care. The agent advised the owner that he understood his needs. The agent then proposed the purchase of a specific policy written with Celtic with a maximum lifetime hospital benefit of $1,000,000. However, the agent did not point out the the psychiatric benefits under the policy were limited to $10,000. The policy was purchased by the insured.

The policy issued and premiums were paid. Later, the owner’s son was admitted to the hospital for psychiatric care. The owner filed a claim and assured by the agent the care would be covered. Celtic, however, paid only $10,000 of the $27,000 in medical expenses.

A List That Adjusters Have Violated

August 9, 2016 | Mark S. Humphreys

The Texas Insurance Code has a list of violations ofter committed by insurance adjusters that most Fort Worth Insurance Attorneys know well. This list is found in Section 541.060 and covers most wrongs adjusters commit.

(a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:

(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;

Punitive Damages In Insurance Cases

August 7, 2016 | Mark S. Humphreys

Insurance attorneys in Weatherford can tell you that an insurance company will often times mistreat their customers. The question would be, does the conduct arise to the level as to allow punitive damages and if so, how do you know that and what are the punitive damages.

Their are a couple places in the Texas Insurance Code to look for answers. The first place is under “definitions” which is found in Section 541.002.

(1) “Knowingly” means actual awareness of the falsity, unfairness, or deceptiveness of the act or practice on which a claim for damages under Subchapter D is based. Actual awareness may be inferred if objective manifestations indicate that a person acted with actual awareness.

Unfair Claims Settlement Practices

August 6, 2016 | Mark S. Humphreys

Weatherford insurance lawyers know resources to research to discover or confirm whether or not an insurance company adjuster doing their job properly. The Texas Insurance Code has specific sections that deal with unfair claims settlement practices that an adjuster may employ.

Sec. 541.060. UNFAIR SETTLEMENT PRACTICES. (a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:

(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;

Exclusions In Homeowners Policies

August 4, 2016 | Mark S. Humphreys

Fort Worth insurance attorneys will advise their clients to carefully read the exclusions in their homeowners policy. A 2006, Houston Court of Appeals [14th Dist.] case illustrates why. The opinion is styled, Fire Insurance Exchange v. Sullivan.
The insured brought suit against Fire Insurance Exchange for breach of contract, bad faith, violations of the DTPA and the Texas Insurance Code. A pipe in the attic had burst at the home of the insured, to which the carrier’s claims adjuster assessed the repairs at $2,944.75. The insured obtained a second estimate which was an additional $5,000. The insured hired an attorney who sent a written claim to the carrier, and after claiming they did not receive a satisfactory response from the carrier, the insured hired a contractor. The contractor found several additional leaks, which the insured reported to the carrier. The carrier assigned a second claims adjuster who concluded nearly the entire house had mold growth. Subsequently, the carrier issued two checks to the insured, totaling $82,430.57. The insured was unsatisfied with this amount and brought suit alleging the delay and mishandling of the claims by the carrier resulted in the deterioration of the home. In the trial court, the jury found that the carrier had breached the dwelling coverage portion of the policy, but not the personal property and additional living expenses coverage provisions. However, the jury awarded costs for mold remediation and repair of the home, as well as property damage. Ultimately, the trial court concluded that the insured was entitled to: (1) recover damages on the breach of contract and DTPA claims; (2) recover penalty under the Prompt Payment of Claims Act; and recover reasonable attorney fees. The trial court awarded $85,864.78 in total damages. The carrier appealed.
This Court reversed the trial court judgment in favor of the insured and rendered judgment that the insured take nothing on the claims against the carrier. The court improperly disregarded the jury’s finding that accidental leakage or discharge caused only 45% of cost of mold remediation; the trial court should have disregarded the jury finding on cost to clean or replace personal property since the policy provided no coverage for that loss; the cost to remediate damage to personal property could not be awarded to insureds under the DTPA or the Prompt Payment of Claims Act; any liability for interest stopped when the insurer tendered more than the amount it owed prior to trial; the insureds could not recover attorney fees on claims for breach of contract or DTPA; and the parties stipulation limited liability for attorney fees to 40% of interest. The potential total liability of carrier to the insured was $64,534.50, which was less than the amount the carrier had previously tendered to the insured. The court also noted that the jury did not find that the carrier breached the personal property portion of the policy and failed to attribute any cause of the damage to the covered causes. Therefore, the jury’s award for damages for that breach under the Prompt Payment Act should have been disregarded. Finally, the court found that the carrier’s unconditional payments should have been applied before assessing attorney’s fees and interest.