The Law Office of Mark S. Humphreys, P.C. is pleased to announce the settlement of a life insurance denial case. Mark’s client was the daughter of a lady who had applied for a small life insurance policy about a year and a half before the mother’s death. Her death was within the two year look-back period allowed to life insurers in the State of Texas. This “look-back”allows an insurance company to investigate for misrepresentations made in a life insurance policy if the insured’s death occurred within two years of the application date.
The lady had severe mental issues but also she had significant health issues that were not disclosed in the insurance application. The plus for Mark’s client is that the insurance company agent who took the application information would have been aware of the health problems of the insured because the agent was present in the house of the lady and actually would have seen the insured’s oxygen machine and medications, yet these were not disclosed in answers to relevant questions on the application for life insurance. Mark’s argument was that the agent is who made the misrepresentations, not the mother. The agent had financial incentive to make the misrepresentations because the only way the agent received commissions for the sell of the life insurance policy was if the sell was made.

An often seen reason for denying a claim for life insurance benefits is the accusation by the insurance company that the insured committed suicide.

As is pointed out in the 1982, 14th District Court of Appeals opinion, Parchman v. United Liberty Life Ins. Co., life insurance policies typically exclude suicide as an assumed risk.  However, this exclusion is virtually always limited to a suicide that takes place within two years of the inception date of the policy.

In the Parchman case, the policy excluded suicide as an assumed risk for two years from the policy date and provided a reduced benefit of the return of all premiums paid if death resulted from suicide within that period.

As most insurance law attorneys can tell a prospective client: An insurance agent does not have a responsibility to explain the terms of the policy.

As in most laws, there are exceptions based on the facts of each given situation.  The Western District of Texas, Austin Division, issued an opinion in 2019 worth reading.  It is styled, Riojas v. Nationwide General Insurance Company, et al.

While in the process of selling the Riojases a home loan in 2015, DHI, through its employee Brittany Present, allegedly told the Riojases that DHI would secure homeowners’ insurance for their home.  Brittany asked Lezam to obtain a policy, which he did through Nationwide.  All of the defendants in this case, allegedly told the Riojases that the policy provided full coverage for their home including water damage.

Insurance attorney need to stay current on the ways the Judges interpret the law and how that law is applied to the facts in a case.

When dealing with insurance contracts and the “covered and non-covered cause of loss” issue, this 2019, Northern District of Texas, Dallas Division opinion is worth reading.  It is styled, 2223 Lombardy Warehouse, LLC, et al. v. Mount Vernon Fire Insurance Company.

The policy language at issue in this case read:

The law office of Mark S. Humphreys, P.C. is pleased to announce the settlement of a case involving a Credit Life & Disability policy.

Mark’s client was the wife of a man who had died and she was the beneficiary named on the policy. The policy, a Credit Life & Disability policy, had been purchased when the husband bought a new vehicle. After his death, she made a claim for benefits which was denied due to the insurance company claim that her husband had misrepresented his health in his application for the policy. The problem for the insurance company was that the client had a copy of the application which did not have the misrepresentations. It appeared that the finance manager for the car dealership had altered the application in order to get commissions for selling the policy. In the end the insurance company paid more than three times the actual benefits.

Automobile dealerships are a source for a lot of Credit Life & Disability policies being sold.  The salesman and finance manager handling the sale are incentivized to sell these policies and often times have quotas they have to meet.  As a result, there is often times a lot of information on the application for these policies that is not entirely accurate.  Some rules governing these policies are found in the Texas Insurance Code, Sections 1153.151 through 1153.161.

The “Offer of Settlement Rule” is relatively new to Texas law and is codified in the Texas Civil Practice & Remedies Code, Section 42.002.  This rule was discussed to a small degree in a case from the Corpus Christi Court of Appeals.  The case is styled, Israel Salinas and Hilda Salinas v. State Farm Lloyds and Truman Dale Crews.

In June of 2014 the Salinas filed suit against State Farm alleging multiple cause of action resulting from hail storm damage to their home.  On September 14, 2014, State Farm offered the Salinas $29,500 under the Offer of Settlement Rule and the Salinas did not respond to the offer.

The case went to trial.  The jury found that State Farm breached the contract with the Salinas and awarded the Salinas $10,500 for breach of contract and $10,500 as punishment due to the knowing and intentional conduct of State Farm.  The Judge signed a judgment awarding those amounts plus, $9,066.82 as prejudgment interest, $10,500 for attorney fees, and $8,097.05 for costs of court, for a total of $38,163.87.

Demand letters to an insurance company can be used as evidence to make even a small case subject to federal jurisdiction.  This is illustrated in a case from the Western District of Texas, San Antonio Division.  It is styled, Veronica Horton v. Allstate Vehicle and Property Insurance Company, Pilot Catastrophe Services, John Suther.

In this case Horton made a claim with Allstate for property damage to her home after a storm.  Allstate hired Pilot and Suther to adjust the claim.  It was alleged that Suther and Pilot did not know what they were doing and made mistakes that can be found in the opinion, and that Allstate accepted their report and ignored Horton’s report.  That this was done intentionally.

Horton sent a demand letter to Allstate requesting payment of $28,384.28 in damages, calculated as follows: (1) $18,554.34 for repairs, (2) $4,629.94 in interest pursuant to the Texas Prompt Payment Act and $1,200 in attorney fees, both incurred up to the date of the letter.  The letter expressed to Allstate that they should pay the offer or risk exposure to a judgment of $100,000 to well over $1 million.

Insurance attorneys get another favorable ruling in a case.  The case is from the Western District of Texas, Austin Division.  It is styled, River of Life Assembly of God v. Church Mutual Insurance Company and Jim Turner Harris.

River of Life suffered storm related damage and made a claim against Church.  Church assigned adjuster Harris to the claim.  When the claim was denied, River of Life sued Church and Harris.

Church elected to take responsibility for Harris arguing that Harris was improperly joined and removed the case to Federal Court citing Texas Insurance Code, Section 542A.006(c) which allowed them to do so since having only Church as a defendant, diversity jurisdiction would not be defeated.

After reporting just a few days ago about a significant victory on an ERISA case, today we are reporting on a loss from the 5th Circuit.  This case is from Eastern District of Lousiana but the appeals court is the 5th Circuit which is the same appeals court for cases out of Texas and the court that Texas courts are to look to in rendering their decisions.  The case is styled, Amanda C. Foster v. Principal Life Insurance Company.

Amanda worked as an attorney when she started experiencing intractable migraine headaches that made work impossible.    Amanda applied to Principal for long term disability (LTD) benefits.  After multiple reviews by various healthcare providers Principal denied her claim, concluding Amanda was not disabled within the meaning of the policy.

As in most disability claims, the reports from various medical providers for the claimant are voluminous and lengthy, as are the reviews by the doctors hired by the insurer to review the claim.

The law office of Mark S. Humphreys, P.C. is pleased to announce a settlement in a case involving a disability policy.

In this case the insured lady had purchased a disability policy through an advertisement she had received in the mail.  The lady paid on the policy for a number of years when one day she was involved in a one vehicle automobile accident.  This lady was severely injured and was in a hospital for about a week.  Her injuries among other things included paralysis to one side of her body.  This paralysis to one side of the body is called hemiplegia.  Another term used to describe this condition is hemiparesis.  However, from a medical perspective, these two terms have distinct meanings.

Hemiplegia is total paralysis to one side of the body, while hemiparesis is a partial paralysis to one side of the body.