Bad faith insurance lawyers always want to see the policy a potential client has when a claim is denied. The words in the policy compared with the facts of the case will often determine whether or not the attorney can be helpful.
When a policy has words or wording that is difficult to understand, then the rules of “ambiguity” apply.
These rules apply to ambiguities in insurance policies:
When an insurance company delays in paying a claim, there is likely a violation of the Texas Prompt Payment of Claims Act. As a result it is important to have a good understanding of how the Prompt Payment of Claims Act is interpreted by the Courts.
The statute, at Section 542.054, provides that “This subchapter shall be liberally construed to promote the prompt payment of insurance claims.” This purpose is re-inforced in case law supporting this goal including, Dunn v. Southern Farm Bur. Cas. Ins. Co., a 1999, Tyler Court of Appeals opinion. And it is supported in the 1997, Texarkana Court of Appeals opinion, Bekins Moving & Storage Co. v. Williams. The Federal Courts follow this purpose as is illustrated in the 1997, Eastern District of Texas opinion, Teate v. Mutual Life Ins. Co. of New York.
The meaning of “liberal construction” has been applied expansively under other consumer statutes. This was seen in the 1981, Texas Supreme Court opinion, Cameron v. Terrell & Garrett, Inc., wherein the court said that a liberal construction mandates that court give statute most comprehensive application possible without doing violence to the statute’s terms.
Repeating what was stated in the post immediate to this one, “It is important to understand how difficult claims that are governed by the Employee Retirement Income Security Act (ERISA) can be. The law in this area of law is very tough for claimants.” This is illustrated again in a December 2020, opinion styled, Erica Talasek v. Unum Life Insurance Company of America, et al. The opinion is from the Southern District of Texas, Houston Division.
The insured, Ben Talasek, had life insurance through a Plan his employer, NOV, offered. NOV delegated authority and discretion to UNUM to handle claims and made benefit determinations.
Ben was covered by basic life insurance coverage and Ben also enrolled in a voluntary supplemental plan during November 2013. Unlike the basic life insurance, which did not require medical underwriting, the supplemental life insurance required an employee to submit evidence of insurability and obtain approval for coverage by Unum. On January 18, 2014, Unum sent Ben a letter informing him of an error in his application and the need for additional information. Around this time, Ben was diagnosed with pancreatic cancer. Ben called Unum on January 21, 2014 to check on the status of his application and was told about the January 18 letter. Ben corrected the error on the Evidence of Insurability Form and supplied additional information. Ben called Unum again on February 12, 2014 to check on the status of the application and was told that the standard turnaround time for a coverage decision was 4-6 weeks. On March 3, 2014,several weeks after receiving his cancer diagnosis, Ben provided blood and urine samples and basic health history as part of Unum’s requirement that he prove insurability prior to approval of coverage. He did not mention the cancer diagnosis.
The Employee Retirement Income Security Act (ERISA) is a confusing area of law for most people who have those type of policies and it is also confusing for attorneys. An opinion dealing with the time periods for filing a life insurance claim are discussed at length in a 2021 opinion from the Western District of Texas, Austin Division. The opinion is styled, Dusty Bauer and Allan Agababa v. National Union Fire Insurance Company of Pittsburg, PA and AIG Claims, Inc.
This lawsuit is concerning accidental death benefits owed upon the death of Shelly Bernstein (Decedent).
The Decedent had an accidental death benefit policy through his employer which was funded by National and AIG. The policy limited conditions under which the death benefits would be paid by providing contractual limitations periods. Some of those limitations periods read as follows:
Hail damage claims, like most claims are unique to themselves. Questions that have to be answered in favor of the homeowner include, 1) when did the damage occur, 2) is the damage real damage versus cosmetic damage, 3) was there any damage already existing on the roof, 4) is hail the sole cause of the damage or were there other causes of damage, 5) is wear and tear an issue? These and other factors are sometimes obvious. But, at other times an expert is needed.
The Southern District of Texas, Houston Division, issued a 2021, opinion which is a summary judgment opinion wherein an expert was needed. The opinion is styled, Dustin Farris v. State Farm Lloyds. This is a case where the expert did much more harm than good. The discussion of his opinion shows how obviously bad the expert report he wrote is bad.
The Court spent much time discussing how summary judgment is decided.
Here is a case from the Eastern District of Texas wherein the insureds did not show that the damages they received were the result of a covered damage. The case is styled, Tim Whatley and Sheila Whatley v. Great Lakes Insurance, SE and McClelland & Hine, Inc.
In this case, the Whatleys are suing based on their assertion that they suffered damage to their home as a result of Hurricane Harvey. The case was in Federal Court and had been referred to a Magistrate Judge, who issued a report granting Summary Judgment in favor of Great Lakes and McClelland. The Whatley’s sought review of the finding made by the Magistrate Judge.
The Whatleys (Plaintiffs) presented four objections to the Report regarding their breach of contract claim. First, Plaintiffs object “to the court’s finding and recommendation that there is no genuine issue of material fact to support the damage to ther oof and interior and interior of Plaintiffs’ home was caused by the windstorm conditions of Hurricane Harvey.” Second, Plaintiffs “object to the court’s finding and recommendation that there are no genuine issues of fact to support the roof and interior home damage was caused by a covered peril.” Third, Plaintiffs “object to the court’s finding and recommendation that there are no genuine issues of fact supporting causation; that the damage was caused by water through an opening created by the direct force of wind and hail.” Finally, “Plaintiffs object to the court’s finding and recommendation that expert Lester Saucier’s opinions on causation are speculation.”
Here is a somewhat lengthy opinion in a case involving the Employee Retirement Income Security Act (ERISA) and a disability claim. The opinion is from the Western District of Texas, Austin Division, and is styled, Jason Thomas Young v. Reliance Standard Life Insurance Company and Matrix Absence Management, Inc.
Plaintiff, Young, was insured by way of an ERISA disability plan through his employer when he was injured in an automobile accident. He applied for and received disability benefits. At a later date is recovered a substantial settlement from the insurance company of the person with whom he had the accident. The disability plan administrator then attempted to offset the monies Young received from payments Young was receiving for disability pay.
Young filed suit and the plan administrator rescinded their earlier decision to offset payments. After agreeing to make regular payments for disability without taking into account any offsets, the plan administrator filed a Rule 12(b)(1) and Rule 12(b)(6) motions to dismiss Young’s claim based on the assertion that the matter was now moot and that Young has no standing to continue the lawsuit.
Life insurance lawyers run into situations where a person eventually recovers life insurance benefits they are entitled to receive. A common situation where this occurs is when a life insurance lawyer sends a notice letter to the insurance company letting the insurance company know that the claim has not been paid and that if it is not paid immediately that a lawsuit will be filed. Then, the insurer pays. Is that the end of it?
Not necessarily. The Prompt Payment of Claims statute , Texas Insurance Code, Section 542.054, says in one sentence, “This subchapter shall be liberally construed to promote the prompt payment of claims.” This statute was used in the 1999, Tyler Court of Appeals opinion, Dunn v. Southern Farm Bur. Cas. Ins. Co. It was also used in the 1997, Texarkana Court of Appeals opinion, Bekins Moving & storage Co. v. Williams. And in the 1997, Federal Eastern District of Texas opinion, Teate v. Mutual Life Ins. Co. of New York.
The meaning of ‘liberal construction” has been applied expansively under other consumer statutes, as discussed in the 1981, Texas Supreme Court opinion, Cameron Terrell v. Garrett, Inc. Liberal construction mandates that courts give the statute the most comprehensive application possible without doing violence to the statute’s terms.
Claim Denial lawyers need to have a full understanding of the rules regarding the time periods for filing a lawsuit and how to avoid pitfalls in this area of the law. This is discussed in a Western District of Texas, Austin Division opinion styled, Kobra Dadfar and Esmail Roostaie v. Liberty Mutual Insurance Company.
This is a summary judgment opinion wherein the underlying case contains allegations of Insurance Code violations and breach of contract among other causes of action.
Liberty filed a motion for summary judgement alleging that Plaintiffs have let the statute of limitations expire and thus, the case should be dismissed.
Claim Denial Attorneys need to read this opinion from the Southern District of Texas, Houston Division. It is styled, Caramba, Inc. d/b/a Pueblo Viejo v. Nationwide Mutual Fire Insurance Company.
This is a summary judgment case in favor of Nationwide.
This insurance coverage dispute arises out of claim filed seeking damages for various violations of the Texas Insurance Code. The focus here is on Section 542.058. The timeline of Facts of the case by a reading of the case. Discussed here is the Courts reasoning in the case so that Insurance Lawyers can understand how the Courts interpret Section 542.058 when deciding the case.
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