Dallas Fort Worth Insurance Lawyer Blog

What If You Make A Misrepresentation?

January 18, 2014 | Mark S. Humphreys

An experienced insurance law attorney will tell that insurance misrepresentations made by the insured do not always mean “no coverage.”

A 1956, Texas Supreme Court case is a good illustration of the above. The style of the case is, Womack v. Allstate. Here is the relevant information.

This is a summary judgment case. On January 4, 1952, Allstate issued a policy of public liability automobile insurance to Mrs. L. N. Coffee, the wife of William T. Coffee. Malcolm Womack and others, recovered judgment in the 99th District Court of Lubbock County against William T. Coffee for the damages which they sustained on July 20, 1952, when the automobiles in which they were riding collided with a vehicle operated by the latter. Womack instituted this suit to recover the amount of the judgment from Allstate, alleging that at the time of the accident William T. Coffee was driving, with the consent of the insured, the automobile covered by Allstate’s policy. The trial court entered summary judgment for Allstate, and the Court of Civil Appeals affirmed. This court reversed the summary judgment.

Prompt Payment Of Claims Law

January 16, 2014 | Mark S. Humphreys

Tarrant County insurance attorneys should be familiar with the Texas Prompt Payment of Claims Act. Here is a little information taken from a State Bar of Texas publication that attorneys and their clients should know. The article was discussing the legality of ordering an insurance company to pay restitution for it’s failure to promptly pay claims.

In 1999, the Texas State Legislature enacted House Bill 610, commonly known as the Prompt Pay Act. It’s general purpose was to require payors under the act, such as insurance companies including health insurance companies, to pay or deny the bills of medical providers within forty-five days after receipt of a bill, provided the claim was “clean,” as defined by the Act. If an insurance company violated this Act, they were subject to the various penalties provided for in the legislation itself. In addition, certain violations might subject an insurance company to administrative penalties under former article 1.10E of the Insurance Code, which is currently Texas Insurance Code, Section 843.342(k). However, these penalties are not the exclusive penalties for violating the Prompt Pay Act. The Act contains a “dragnet” provision clearly reading, “in addition to any other penalty or remedy authorized by this code or another insurance law of this state.”

The language in the dragnet provision indicates the Texas Insurance Commissioner can resort to the power of restitution for violations of the Prompt Pay Act, since restitution is an “other remedy” authorized by the Insurance Code in Section 82.053. Senate Bill 403 allowed the Insurance Commissioner to order restitution to “each entity operating in the state that is harmed by a violation of, or failure to comply with, this code or a rule of the commissioner. Since a medical provider would be an “entity operating in this state,” the Insurance Commissioner could order an HMO, for example, to pay “restitution” to any medical provider that was harmed by a violation of the Act.

Insurance Agent Getting Wrong Policy

January 14, 2014 | Mark S. Humphreys

Parker County insurance lawyers need to understand the responsibility that insurance agents have regarding getting coverage for one of their customers. A 1992, Texas Supreme Court case is good reading for understanding their responsibility. The style of the case is, May v. United Services Association of America. Here is some of the relevant information.

This case involves the scope of an insurance agent’s common-law duty to a customer in rendering advice about and procuring a policy for health insurance. May asserted only common-law causes of action, making no claim under the Texas Deceptive Trade Practices-Consumer Protection Act, or any other statute. While the jury found favorably for the Mays on a claim of the agent’s negligence, it failed to find for the Mays as to misrepresentation. On this verdict, the trial court rendered judgment for the Mays, but the court of appeals reversed. This court affirmed the judgment of the court of appeals because there was no evidence in the record before them that the agent breached the duty to use reasonable care, skill and diligence in procuring insurance in any way that proximately caused harm to the Mays.

On March 16, 1983, Faith May visited with insurance agent Wiley about the policy at issue. Wiley explained the basic provisions of the policy to her.

Agent Misrepresentations

January 12, 2014 | Mark S. Humphreys

Dallas insurance lawyers need to understand when an agent can be held liable for mis-representations regarding an insurance policy. A 1998, San Antonio Court of Appeals case is a good read for understanding when this can be done. The style of the case is, Moore v. Whitney-Vaky Insurance Agency. Here is some relevant information.

Moore contends the trial court erred in granting summary judgment because Whitney-Vaky owed him a common law and statutory duty to disclose any limitation in his insurance coverage.

Moore repossessed an apartment complex known as Oakhills Village. After he reacquired the complex, McLain, an agent for Whitney-Vaky, asked whether he could handle the insurance for the complex. Moore did not recall specifically discussing any types of coverage with McLain; however, Moore had been responsible for obtaining insurance for businesses in the past and expected to receive fire, extended coverage, liability and workmen’s compensation coverage. When he received the policy from McLain, Moore did not discuss the contents of the policy with him; however, Moore thought when he bought liability insurance that he was being covered for any liability that may occur. Moore admitted that McLain never told him that the liability policy would cover all lawsuits against him.

Prompt Payment Of Claims And Attorney Fees

January 11, 2014 | Mark S. Humphreys

Fort Worth insurance attorneys need to have an understanding of how the Texas Prompt Payment of Claims Act works. Here is a case that explains how it works in relation to attorney fees. It is a 2013, United States 5th Circuit Court of Appeals case styled, The City of College Station, Texas v. Star Insurance Company. Here is some of the relevant information.

Star Insurance Company (“SIC”) refused to defend or indemnify its insured, the City of College Station (“the City”), in a lawsuit brought by Weingarten Realty Investors (“WRI”), a real-estate investment trust not party to this appeal. The City settled the underlying litigation with WRI and sued SIC to recover defense costs, indemnification, and statutory penalty interest. Applying Texas law, the district court concluded that SIC had no duty to defend or indemnify the City in the litigation with WRI and, consequently, no penalty liability for late payment. This appeals court reversed the trial court and remanded for further proceedings consistent with their ruling.

The actual facts of the case are not important. What is important is that the court ruled in favor of the insurance company and that on appeal this appeals court ruled that not only should the insurance company paid for a defense in the case, but their failure to do so results in the insurance company having to pay for violations of the Prompt Payment of Claims Act on those attorney fees.

Pain & Suffering

January 9, 2014 | Mark S. Humphreys

Attorneys who handle injury cases need to know this case. It is a 2013, case from the Corpus Christi Court of Appeals. It is styled, Schaffer v. Nationwide. Here is the relevant information.

In February 2006, Schaffer, who was driving north-bound on United States Highway 77 and was beginning to merge onto Interstate Highway 37 in northwest Corpus Christi, Texas, collided with a truck driven by Brady Lovins. Schaffer alleges that she suffered injuries to her lower back as a result of the accident. To treat her injuries, Schaffer underwent: physical therapy, first in April to June 2006 and, again, from September 2007 to January 2008; a series of lumbar steroid and other injections in the summer and fall of 2006 and throughout 2007; and, finally, lumbar fusion spinal surgery in February 2008. Schaffer alleges that she continued to suffer severe pain even after her surgery.

In connection with the accident, Schaffer sued Lovins for negligence. Schaffer also sued Lovins’s employer, Tracey Barrett d/b/a Barrett Pools, for vicarious liability because Barrett owned the truck Lovins was driving. Finally, Schaffer sued Nationwide for underinsured motorist benefits owing under her auto and umbrella policies with the company.

Additional Living Expense

January 7, 2014 | Mark S. Humphreys

Insurance lawyers in the Dallas – Fort Worth area need to be able to discuss coverage for “additional living expense” ALE with clients.

In 2005, the United States District Court for the Southern District of Texas issued an opinion in the case styled, Howard v. State Farm Lloyds. Here is some of what the case says.

The insured, Howard, filed a mold claim with her insurer, State Farm, under a standard homeowner’s policy. Under the terms of the policy, the insurer extended coverage to the insured for ALE she incurred as a result of inability to live in her residence pending remediation. Shortly thereafter the insured presented a six-month lease on another residence along with a copy of a check for $12,500 allegedly representing first and last months rent at $4,500 per month plus deposits on the residence. Based on these and similar representations, the insurer paid total ALE benefits to the insured of more than $126,000 over a two year period. As it turned out, the ALE benefits included overpayments of more than $80,000 procured through submission of false documents. The insured subsequently sued her insurer for breach of contract, breach of duty of good faith and fair dealing, and violations of the Texas Deceptive Trade Practices Act (DTPA) and Sections of the Texas Insurance Code, including violations of the Prompt Payment of Claims Act. The insurer counter-claimed and filed a motion for summary judgment on the affirmative defense of concealment and fraud.

Insurance Agent Misrepresentations

January 5, 2014 | Mark S. Humphreys

Dallas insurance lawyers know the ways insurance agents can be held liable for the misrepresentations they make to insureds. A 1994, El Paso Court of Appeals case is good to review. It is styled Hart v. Berko. Here is some of the relevant information.

This is a suit brought under provisions of the Texas Deceptive Trade Practices Act and the Texas Insurance Code by the policy owner against its insurance agent for damages arising out of a dispute over alleged representations concerning the amount of fire insurance coverage in effect at the time of a substantial fire loss.

In January of 1990, Berko, Inc. d/b/a El Encanto (Berko), through its Vice President, Sara Blaugrund (Blaugrund), requested that Phil Hart (Hart), employed by D.J. Enterprises, Inc. d/b/a Associated Insurance Agency (D.J.), increase the amount of insurance coverage on its building from $242,000 to $650,000. According to Blaugrund, Hart represented to her that he had obtained fire coverage of $600,000 on the building. On February 27, 1990, the building was completely destroyed by a fire. On the day after the fire, Hart notified Blaugrund that the building had only $242,000 coverage.

Insurance Company “Knowing” Conduct And Mental Anguish Damages

January 4, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers need to have an understanding how the courts look at mental anguish damages as compensation for insurance code violations.

The 1995, Texas Supreme Court case, State Farm Life Ins. Co. v. Beaston case is a reference point. Here is some of the relevant information from that case.

Terri and David Beaston bought life insurance policies from State Farm. The Beastons failed to pay the premium on David’s policy due. His policy lapsed and the thirty-one day grace period expired. Three days after the expiration of the grace period, David died in an automobile accident. State Farm refused to pay the benefits under his life insurance policy, claiming that coverage had expired before his death.

Mental Anguish Insurance Claims

January 2, 2014 | Mark S. Humphreys

Fort Worth insurance lawyers need to be able to recognize a claim wherein conduct arises to a level allowing recovery for mental anguish damages. The 1999, Fort Worth Court of Appeals case styled, “Mid-Century v. Foreman” is helpful. Here is some of the relevant information.

Joyce Foreman was involved in a car accident with Karl Buehner. Foreman’s policy included $250,000 in underinsured (UIM) benefits. Foreman settled with Buehner’s insurance for the limits of $20,000. Because of extensive medical bills, Foreman filed an UIM claim with Mid-Century. Fisher, the Mid-Century adjuster, mailed an acknowledgement of the claim and a request for information. Foreman told Fisher that they had previously settled their liability claim and that they had hired a lawyer. As a result, Fisher stopped all contact with Foreman.

Foreman sued Mid-Century to recover contractual and extra-contractual damages. After reviewing Foremans’ medical records, the claim was denied.