Dallas Fort Worth Insurance Lawyer Blog

Small $$$ Insurance Claims And Staying Out Of Federal Court

November 16, 2009 | Mark S. Humphreys

It is not unusual for an attorney to wish he could land a case worth millions of dollars. Every person who gets taken advantage of by an insurance company wishes they could sue the company and be compensated for millions of dollars. But the reality of everyday wrongs in the area of insurance law involve sums of money totaling much smaller amounts than millions of dollars.

What most people do not realize is the costs sometimes involved in fighting insurance claims. Most of the time an insurance company is not all that concerned about the cost. Their goal is to discourage people from challenging their decisions on claims. A lawsuit in State Court may cost an insurance company anywhere from $100 per hour to $300 per hour. That same case in Federal Court may cost $300 to $600 per hour with more hours being spent.

So why do insurance companies try to get lawsuits that are filed in State Court, removed to Federal Court? Because their chances of winning is usually better or if they lose, the dollar amount they lose is generally less when in Federal Court.

Sueing The Texas Insurance Adjuster

November 15, 2009 | Mark S. Humphreys

There are many times where the insurance adjuster himself, commits a wrong against a policy holder. This is an important issue. Here is why. When an Insurance Law Attorney is representing a client in a claim there are a lot of strategies. One important strategy is to file a lawsuit in a court that is most favorable to achieving a favorable result. In that regard, State Court is almost always a better place to fight the insurance company than is Federal Court. Most insurance companies have home bases located out-of-state whereas 99% of adjusters will live in-state. This matters because the Federal Rules of Civil Procedure require that out-of-state defendants in a lawsuit be allowed to defend themselves in Federal Court unless there is more than one defendant and atleast one of the other defendants is an in-state resident.

For the reason explained in the first paragraph, it is important to be able to articulate a particular wrong that the in-state adjuster committed. The adjuster will be defended by an insurance company, usually the employer, thus a lawsuit against the adjuster in his individual capacity is not a futile act. Insurance company attorneys are going to always want to get the lawsuit removed to Federal Court if there is any way possible to do so. Repeating what was just said, this is because Federal Court is usually more favorable to the insurance company.

A case decided on October 27, 2009, discusses this issue. The case, Lakewood Chiropractic Clinic v. Travelers Lloyds Insurance Company and Sonja R. Victor, was a claim for benefits resulting from hurricane damages. Lakewood alleged that the adjuster, Sonja, violated several insurance statutes. Lakewood also alleged these same violations of Travelers. The problem here is that there was not a distinction made between what Sonja did and what Travelers did, that was wrong.

Under-Payment Of Texas Insurance Claims

November 14, 2009 | Mark S. Humphreys

Can it be a surprise? Insurance companies appear to be getting caught in under paying on claims. The Texas Windstorm Insurance Association (TWIA) seems to be caught in some controversy regarding its claims handling along the Texas Gulf Coast. Keep in mind the problems being experienced could just as easily be happening in Fort Worth, Dallas, Grand Prairie, Arlington, or even a small town like Weatherford out in Parker County.

This problem is written about in an article in the Houston Chronicle titled “Lawsuit Says Windstorm Insurer Rigged Process”. The article discusses TWIA using prices lower than market rates to estimate materials and repair costs. TWIA is said to also be unfairly limiting costs on roof repairs and discouraging the reopening of closed claims.

In a lawsuit resulting from some of the abuses by TWIA, documents and software is said to have been discovered that supports the claims that the abuses are being committed. One example of the abuse was discovered when one adjusting firm reported the market rate for roof repairs to be $230 to $255 per 100 square feet, but TWIA’s price was $182. In another situation it is said that they suggested using shingles off one house that were not in too bad shape, to put on another house. This does not sound right to most people but may actually be allowed depending on the language in the insurance policy.

Recent Texas Insurance Policy Interpretation

November 10, 2009 | Mark S. Humphreys

The Texas Supreme Court ruled on an insurance policy interpretation case on October 30,2009. This case is, Chrysler Insurance Company v. Greenspoint Dodge of Houston, Inc.

This case involves an insurance coverage dispute, the topic of which is liability policies insuring a corporation and its officers and others. The corporation was sued for defamation. One key here is that the policies at issue excluded coverage for defamatory statements made by the insured, that the insured knew to be false. The lower court said that the employees involved may not have been “principles”, but were “vice-principles” and thus were covered under the policy.

Some facts here are that a Noe Martinez was fired by Greenspoint after the Greenspoint’s general manager, comptroller, and used car sales manager defamed and disparaged Martinez. The general manager’s nephew was hired to take Martinez’s place. Martinez sued and won.

What To Do In Texas When The Insurance Company Says There Is No Coverage Under The Policy

November 8, 2009 | Mark S. Humphreys

An incident happens. Maybe your house in Dallas has someone inside who falls down the stairs. Maybe your car in Arlington is involved in a wreck. Maybe your business in Grand Prairie suffers a loss due to someone falling on the steps. Maybe the life insurance policy you purchased on your Mom in Weatherford is now denying coverage, after the funeral. What if the disability policy you had on your wife’s job in Fort Worth is denied, after she becomes disabled?

If any of the above happens you actually have two main things you can do. The first and most common is to just sue the insurance company for various violations of the Texas Insurance Code and violations of the Texas Deceptive Trade Practices Act. You can sue for breach of contract and fraud and misrepresentation and a few other things that are variations of the Insurance Code and DTPA causes of action.

The second thing that can be done is called a Declaratory Judgement cause of action. Attorneys refer to this as a “dec action”. This is where an attorney files papers with a Court saying, “Judge, declare this thing we have before you as (fill in the blank)”. A dec action is used quite often in insurance disputes. It is used both by attorneys for individuals requesting benefits under a policy and by insurance company attorneys asking the Court to declare that certain benefits do not exist within a policy.

Diminished Value Of Your Automobile In Texas

November 7, 2009 | Mark S. Humphreys

Pretend for a minute that you are driving your car in the Dallas Fort Worth area going west. You drive through Grand Prairie and Arlington and are on your way to Weatherford to enjoy the “First Monday” market. All of a sudden a dog runs in front of you and you swerve to miss it and hit a telephone pole. You are lucky in that no one is injured, but your car has $3800 worth of property damage. You are lucky again because you have collision coverage on your automobile and they repair your car and you are only out a $500 deductible.

Sounds ok so far, right. Well think about it for a minute. Your car was only a year old because you sell your car every two to three years and buy a new one. When you sell this one you will either have to disclose to the buyer the wreck or they will easily find out. So what does that mean? It means this: Your car is worth less because of the wreck than it would have been had it not been involved in a wreck. This is called the “diminished value”.

The nest question is: What can you do about it? This question was answered by the Texas Supreme Court in 2003. In 2003, the Court decided the case, American Manufacturers Mutual Insurance Company v. Schaefer. Maunufacturers was Schaefers insurance company. They fixed Schaefers car. Schaefer did not dispute the quality or adequacy of the repairs. But he did say that Manufacturers owed him an additional $2600 due to market perceptions that a damaged and subsequently repaired vehicle is worth less than one that has never been damaged. Again, this is called the diminished value and he expected Manufacturers to pay the extra money to compensate him for the lose.

Getting Insurance Company Records

November 6, 2009 | Mark S. Humphreys

In the State of Mississippi, a policy holder filed a lawsuit seeking access to Mississippi Insurance Department records. The lawsuit is seeking records that would show the dollar amount of Katrina claims denied by insurance companies.

The courts in Mississippi and other coastal areas have loaded up with lawsuits related to claims denials by insurance companies. The claims get denied for a range of reasons but a lot deal with issues of whether or not the damage to property is the result of floods, the result of winds, storm surge, or flying debris.

The person filing the lawsuit, a Kevin Buckel, is also trying to get passed into law in Mississippi, a Policyholders Bill of Rights. Each time this proposal has been introduced into the State Legislature, the legislation has died in committee.

Private Causes Of Action Against Texas Insurance Companies

November 4, 2009 | Mark S. Humphreys

Yesterdays blog discussed actions that can be taken by the Texas Department of Insurance when a person commits a deceptive act or practice under Chapter 541 of the Texas Insurance Code or Section 17.46, Business & Commerce Code. Here the discussion will be about a persons’ “private causes of action”.

Texas Insurance Code, Section 541.151, says that a person who sustains actual damages may sue the other person (insurance company or agent) who caused the damages. If the other persons’ actions are defined by Subchapter B to be an unfair or deceptive act or practice in the business of insurance or an unlawful deceptive trade practice in Section 17.46(b), Business & Commerce Code, then an action may be brought against that person.

A person who prevails is entitled to the amount of the actual damages suffered, plus court costs and reasonable and necessary attorney’s fees, according to Section 541.152. Plus, if the person committing the acts did so knowingly, then there may be an award in an amount up to three times the amount of actual damages.

The Texas Department Of Insurance Going Against Insurance Companies

November 3, 2009 | Mark S. Humphreys

Subchapter C, of the Texas Insurance Code deals with how the Texas Department of Insurance examines, investigates, and determines whether a person engaged in the business of insurance has engaged in an unfair method of competition or unfair or deceptive act or practice prohibited in the business of insurance. This is not a private cause of action, rather this is where the department is taking action.

Texas Insurance Code, Section 541.102, states that when the department has reason to believe a violation has occurred that it shall issue and serve on the person, 1) a statement of the charges, and 2) at least a six day notice of the hearing on the charges, including the time and place for the hearing. This hearing is required before the department issues a cease and desist order to the person.

Section 541.104 sets out the hearing procedures to be followed. Section 541.105 requires that a record be made of the hearing.

Insurance Fraud In Texas

November 1, 2009 | Mark S. Humphreys

Insurance Fraud is a crime in Texas. A person can go on-line to the Texas Department of Insurance to get a lot of information about insurance fraud.

According to the National Insurance Crime Bureau (NICB), insurance fraud is one of the most costly white collar crimes in America, ranking second only to tax evasion. NICB also says that 10% of all property and casualty insurance claims are fraudulent.

NICB has figures showing that property and casualty based insurance fraud costs Americans about $30 billion each year. To make a comparison, Hurricane Andrew, which was a devastating storm, only cost about $17 billion. Further if you added all types of insurance claims that are thought to be fraud, then the number jumps to $120 billion each year. What these numbers mean to the person buying insurance is an average of $200 to $300 each year in increased premiums. The hidden costs in the form of higher goods and services makes the costs to the average family about $1,000 per year.