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• TWIA Stands By Work Product Privilege In Hurricane Ike Litigation
  Jan 11, 2010

  An interesting article appeared in the Southeast Texas Record on January 7, 2010. In Hurricane Ike litigation, TWIA has raised the work product privilege as an excuse to refuse to produce documents containing communications between its representatives in relation to probable Hurricane Ike litigation.

  Conversely, the attorney for the League City plaintiff asserts that TWIA can not raise the work product privilege to cover documents containing communications between TWIA's representatives prior to the time TWIA anticipated litigation in the case.

  In this case, TWIA asserts that it anticipated litigation prior to Hurricane Ike making landfall because of its experience handling prior Texas hurricanes.

  The work product privilege is a privilege that exists to protect communications between a party and its representatives and only applies to materials prepared, mental impressions developed, and communications made in anticipation of litigation or for trial. The primary purpose for the work product privilege is to protect the mental processes, conclusions and legal theories of the attorney and provide a privileged area so the attorney can analyze and prepare the case for trial.

  Texas Rule of Civil Procedure 192.5(a) states that to qualify as work product, materials must have been prepared or mental impressions developed in anticipation of litigation or trial - that is, after the occurrence or transaction on which the suit is based.

  In most first insurance party claim cases, the date of occurrence can not arise prior to the carrier's denial of coverage. Thus, I anticipate that the court will rule that all documents containing communications between TWIA's representatives in relation to probable Hurricane Ike litigation, but that occurred prior to the denial of insurance coverage will be ruled discoverable.

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• Texas consumer advocate wants ban on health insurers' blanket clauses
  Dec 17, 2009

  Texas consumer advocate wants ban on health insurers' blanket clauses

  
  By TERRENCE STUTZ / The Dallas Morning News
  
  AUSTIN - The state's insurance consumer advocate is seeking to eliminate the blanket authority of health and disability insurers to decide what their policies cover, a shift that could have a major impact on health insurance in Texas.

  Public Insurance Counsel Deeia Beck has asked the state's insurance commissioner to end long-standing provisions in most health plans, called "discretionary" clauses, that give insurers the right to interpret their policies and decide what benefits must be paid.

  "Consumers are now at the mercy of health insurers," Beck said.

  The health insurance industry strongly opposes such a change. Insurance Commissioner Mike Geeslin has held a hearing on the proposal and is considering whether to move forward.

  Twenty-two states have banned the practice, either through state law or new regulations. The National Association of Insurance Commissioners has recommended to its members that the practice be stopped.

  "It's hard to defend giving insurance companies this kind of authority, where they have full discretion to interpret ambiguities in their policies," Beck said Wednesday. "No one disputes that an insurance carrier has the first right to make a determination on their claims. But there is a problem in how those decisions are reviewed and whether companies should be allowed to resolve all ambiguities in their favor."

  Beck said disagreements typically arise over cancer drugs, mental illness coverage and home-based diabetes treatment. But insurers have the final say, and costs often figure into their decisions.

  "Typically, they hire their own in-house physicians or they contract with physicians - who are paid by the insurance carrier - to review the medical records and make a judgment on whether a claim should be paid. It is an inherently unfair process," she said.

  Consumers unhappy with their insurer's decision can go to court. But to overturn a decision, the consumer must prove the insurer acted unreasonably, a legal standard that strongly favors the insurer in most cases.

  That requirement stacks the deck in favor of insurance companies and allows them to reject claims without worry, Beck said.

  Eliminating discretionary clauses will remove that advantage and force insurers to be even-handed in deciding whether to pay medical and disability claims, she added.

  A spokeswoman for the health insurance industry took issue with Beck's arguments, contending that dropping the clauses from policies would be a serious mistake that would harm consumers.

  "It would lead to more litigation, higher costs for insurance and not be in the best interests of consumers," said Jennifer Ahrens Cawley, executive director of the Texas Association of Life and Health Insurers, which has urged Geeslin to reject the proposal.

  "More lawsuits will increase the cost of health plans," she added. "And it is medium and small-sized employers who will bear the brunt of those higher costs in their plans and who may be forced to offer reduced benefits or no benefits at all."

  Cawley said insurers already fall under government regulations, fiduciary rules and court precedents that require consumer protections.

  "The obligation is already there for the insurer to make these benefit determinations in a uniform, nonarbitrary fashion," she said.

  She dismissed the decisions of other states to ban discretionary clauses, saying, "Texas has always demonstrated a strong sense of consumer protection" in its insurance laws, such as requiring prompt payment of claims by insurance companies.

  There are no independent studies on what has happened to insurance rates in those states, but an industry-funded study estimated that removal of discretionary authority for insurers will ultimately cause a 3 percent to 4 percent spike in premiums.

  Ben Gonzalez, a spokesman for the Department of Insurance, said the commissioner has a Dec. 28 deadline to decide whether the agency will start writing rules to limit or ban discretionary clauses. If Geeslin opts not to begin rule-making, insurers will retain their unrestricted right to determine benefits.

  Consumer advocates see Geeslin, an appointee of Republican Gov. Rick Perry, as leaning toward the industry in his decisions. Health care and insurance, including car and homeowners, are expected to be major topics in next year's state campaigns.

  Some states have addressed the discretion issue by requiring independent, third-party reviews of benefits disputes. Although Geeslin could take similar action in Texas, he is not expected to do so even if he strips insurers of their blanket authority to decide what claims are covered.

  Several legislators, including Sen. Rodney Ellis, D-Houston, and Rep. Mark Shelton, R-Fort Worth, are backing Beck's recommendation, according to officials in Beck's office.

  Beck's office produced examples of the provisions that are included in health insurance policies sold in Texas. One states: "The company has sole authority to manage this policy, to administer claims, to interpret policy provisions and to resolve questions arising under this policy. Any decision the company make in the exercise of its authority shall be conclusive and binding."

  Another reads: "Benefits under this plan will be paid only if the plan administrator or its designee decides in its discretion that the applicant is entitled to them."

  Beck has received strong support from leading consumer groups, including AARP and Texas Watch.

  "Many of our members are worried about their insurance coverage being there when they need it," said Tim Morstad of AARP.

  "In the last decade or so there has been a dramatic increase in the number of cases where individuals have been denied claims under these provisions," he said.

  Morstad said it can be frustrating for consumers who have a hard time finding out exactly why they were turned down by their insurer. And their chances for success in a lawsuit are slim because of the favorable legal position that insurers hold.

  Earlier this month, a federal appeals court upheld a Montana law barring insurers from using discretionary clauses in their insurance policies. The law had been challenged by leading insurance companies.

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General

• Extreme Makeover To Rebuild Home Damaged By Ike
  Jan 21, 2010

  Kemah family to be featured on Extreme Makeover: Home Edition

  Houston Business Journal

  A Kemah family whose house was severely damaged by Hurricane Ike had their home rebuilt as part of the largest project for national reality television show, Extreme Makeover: Home Edition.

  When Melissa and Larry Beach returned to their home in Kemah after evacuating due to Hurricane Ike, they found that their house had been severely damaged by flooding and wind.

  High school sweethearts Melissa and Larry Beach have fostered 80 children in their 23 years of marriage.

  FEMA gave the family of 15, including 13 children, two trailers for about a year. Since the fall of 2009, the Beaches have been living out of one small trailer in their backyard.

  ABC's Extreme Makeover: Home Edition and volunteers began the process of building a new home for the Beach family in Kemah on Jan. 7. The reveal of the 6,300-square-foot home took place a week later. The episode featuring the new home will air in March.

  The Beach family was nominated for the rebuild project by the Kemah city council, state representatives and local congressmen.

  Stafford-based Cosentino, maker of Silestone natural quartz, donated Silestone surface applications to all homes rebuilt as part of Extreme Makeover: Home Edition this season at a value of about $500,000.

  Cosentino employees and executives also were personally involved in the buildout of the Beach home.

  Blu Shields Construction, a division of Texas City-based Energy Solution Homes, also partnered with Extreme Makeover: Home Edition

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• J. Brantley Durrett, III Inducted into the Million Dollar Advocate Forum
  Dec 17, 2009

  J. Brantley Durrett has been inducted into the Million Dollar Advocates Forum. Established in 1993, the Million Dollar Advocates Forum is one of the most prestigious groups of trial lawyers in the United States. Membership is limited to attorneys who have won million dollar verdicts and settlements. There are over 3000 members throughout the country. Fewer than 1% of U.S. lawyers are members.
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• Houston Chronicle: Ike Case Hits New Obstacle
  Dec 17, 2009

  Ike case hits a new obstacle
  Homeowners say insurer put up roadblock to one kind of arbitration
  
  By PURVA PATEL
  HOUSTON CHRONICLE
  
  Dec. 12, 2009
  
  As Scott and Alison Putman battle their flood insurer over the amount of their claim, they're using their own money to rebuild the Kemah house they lost to Hurricane Ike.
  
  Alison Putman jumped through a lot of hoops to resolve a flood insurance claim after Hurricane Ike destroyed her waterfront Kemah home.
  
  She spent days combing through estimates, appealed to state regulators and even wrote letters to lawmakers.
  The insurer, which sold the policy on behalf of the federal flood insurance program, eventually agreed to meet her in appraisal, a kind of arbitration used to settle insurance disputes. But nearly six months later, Putman received a letter denying appraisal because she and the insurer, which declined to comment, didn't agree on what was damaged.
  
  "We would have filed a lawsuit if we'd known. We chose appraisal because it's supposed to be an expeditious and quicker route," said Putman, who has already spent more than $25,000 on fees for an appraiser to represent her.
  Being denied appraisal is yet another obstacle for some homeowners trying to resolve flood insurance claims more than a year after Ike damaged their homes. Some insurers, according to policyholders and their attorneys, are telling them they can't go to appraisal, which they hoped would resolve their flood insurance disputes more quickly and cheaply than suing.
  
  In appraisals, the home-owner and insurer each hire separate damage appraisers to review the insurer's offer and choose a third appraiser who acts as an "umpire" and makes a binding ruling.
  Flood experts noted that appraisal is usually used to determine the value of damaged property and not what is actually damaged. However, some policyholder advocates say a recent Texas Supreme Court ruling says otherwise and could affect future appraisals.
  
  Texas property owners filed more than 43,000 flood insurance claims as a result of Ike. About 700 claims remain open, according to FEMA. Most federal flood insurance is sold and managed directly by insurance companies under a "Write Your Own" program.
  
  A spokesman for the national flood program referred questions about Putman's claim to the local insurance agency that managed her policy.
  
  Harleysville Mutual Insurance Co., which inherited Putman's claims after buying the flood business of Delta Lloyds Insurance Co. of Houston in November, sent Putman a letter denying the appraisal Delta had originally approved.
  Delta Lloyds referred all questions to Harleysville Mutual, which declined to comment.
  In its letter, Harleysville Mutual noted that appraisal was inappropriate because it didn't agree on scope, or amount of work to be done.
  
  They can't control it
  
  Policyholder attorneys say insurers don't generally like appraisal because it's a settlement tool they can't control.
  The umpire's ruling is usually binding for the insurer but not the homeowner, said Martin Mayo, a policyholder attorney in Houston.
  
  "We usually file suit and ask the court to send us to appraisal because it gives the judge a chance to know that if it's decided in appraisal, he doesn't have to see the case again," Mayo said.
  
  Flood insurers often argue appraisal is meant to determine the cost of the work to be done, not the extent, and try to force homeowners to file a lawsuit, policyholder attorneys say.
  
  But going to court is often not worth the money or time for homeowners because they can pursue only the amount of money they're entitled to under the policy. Homeowners can't recover other costs, such as attorneys' fees, or sue for bad faith, policyholder attorneys said.
  
  But going to court is often not worth the money or time for homeowners because they can pursue only the amount of money they're entitled to under the policy. Homeowners can't recover other costs, such as attorneys' fees, or sue for bad faith, policyholder attorneys said.
  
  "This means that there are absolutely no ramifications to a flood insurer for delaying, underpaying or under-investigating a claim," said Dax Faubus, a policyholder attorney.
  
  A recent Texas Supreme Court ruling, however, may help homeowners push appraisals through.
  
  In State Farm Lloyds v . Johnson, the court ruled that an appraisal can still go on even if there are disputes over what's covered by the policy, said Brant Durrett, a Houston attorney who sent a letter to Harleysville Mutual on Putman's behalf. "You can still go forward and set an amount of loss, and then the insurer can later deny it based on it not being covered. But it's no reason to stop the appraisal and not make an award for what is covered," he said.
  
  Seeking litigation?
  
  Putman's case remains uncertain.Despite her insurer's late letter denying the appraisal, the process seems to have gone on anyway. Putman's representative at appraisal received an e-mail from the umpire saying she should be awarded $267,000. But it's unclear if Harleysville Mutual will honor it.
  
  "They seem to be setting it up to go to litigation," Putman said. "Appraisal is supposed to be cost-efficient and effective, but it will be neither if I have to spend another $20,000 to go to court."
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• ATRA's "Hellholes"; Bankrolled By Insurance, Tobacco, Big Pharma
  Dec 17, 2009

  ATRA's "Hellholes": Bankrolled by Insurance, Tobacco, Big Pharma
  
  Washington, DC-The American Tort Reform Association (ATRA) today peddled its debunked and recycled "Hellholes" annual report - an effort bankrolled by insurance, tobacco, and drug companies to attack the civil justice system and gain complete immunity for their negligent behavior.

  "For years, the most deceitful and predatory corporations have used front groups like ATRA to prevent everyday Americans from receiving justice," said American Association for Justice Communications Director Ray De Lorenzi. "As our country emerges from this current financial crisis, people realize more than ever why a strong civil justice system is needed to hold wrongdoers accountable. ATRA's report is yet another indication that corporations will say or do anything to weaken Americans' basic legal protections."

  ATRA has been funded by corporate giants such as Philip Morris, Dow Chemical, Exxon, General Electric, Aetna, Geico, State Farm, Pfizer, Johnson & Johnson and Nationwide - a "who's who" of corporations with the most to gain by shutting the courthouse doors on consumers. Legal Times has also reported that, "most of ATRA's funding comes from large corporate donors. Insurance firms ... are each good for $50,000 or $75,000, one unnamed lobbyist familiar with the Association told the publication." ["Proponents of Reform," Legal Times, 4/17/95; ATRA website: http://www.atra.org/about/members.php]

  Here's what the experts say about ATRA's report:

  •ATRA's 2007 report was accurately described by the New York Times [Liptak, 12/24/2007] as having "no apparent methodology" and that "the question is whether the report's arguments make sense . . . the report often falls short." The 2008 and 2009 editions made no changes in this regard.
  
  •"ATRA's hellhole campaign began in 2002, and it falls squarely within [the] tradition of scaring the public, but with a twist--this time the explicit goal is to appeal to the public as voters, to scare state politicians into making pro-defendant changes in the law in order to make the label go away, and to get rid of judges whose rulings made ATRA members unhappy. Judicial Hellholes are selected in whatever way suits ATRA's political goals. The choice is not based on research into the actual conditions in the courts." [Thornburg, West Virginia Law Review, Vol. 110 2008]
  Flaws in Past "Judicial Hellhole" Reports:

  •Wrong State. ATRA Forced to Admit Mistake in their 2005 "Hellhole" Report. Following the release of their 2005 "judicial hellhole" report, ATRA was forced to admit that they wrongly attacked the state of West Virginia for a major lawsuit that wasn't even filed in the state. According to the report, West Virginia's ranking as the third worst "hellhole" in America was based, in part, because of a lawsuit against the DuPont chemical company that was supposedly filed in the state. In fact, the lawsuit, which alleged that the company exposed consumers to toxic chemicals used to make their Teflon nonstick coatings, was not filed in West Virginia. When informed of the error by a reporter from the Charleston Gazette newspaper, ATRA posted a correction admitting the mistake on its website. However, the group refused to change West Virginia's ranking in the report. ["Tort reform group criticizes W.Va. for Fla. Lawsuit; Score unchanged despite admission error was made," Charleston Gazette (West Virginia), 12/15/05]
  
  •Report and Facts Don't Match. According to the Associated Press, the County Identified By ATRA as a Top "Judicial Hellhole" Actually Saw a "Sharp Decline" in Asbestos and Class-Action Lawsuits. Beginning in 2002, ATRA singled-out Madison County, Illinois for being one of the worst of these "hellholes" in America. However, according to the Associated Press, Madison County actually experienced a sharp decline in both asbestos and class-action lawsuits. [ATRA website, http://www.atra.org/reports/hellholes/; "Lawsuits fall in Madison City," Associated Press, 12/28/04]
  
  •The Cases Aren't There. One of ATRA's Top "Judicial Hellholes" Had Only Four Medical Malpractice Verdicts Favoring Plaintiffs Between 1996 and 2003. The Belleville News-Democrat reported that between 1996 and 2003, Madison County, Illinois - one of ATRA's top "judicial hellholes" - had only eleven medical malpractice and wrongful death cases that resulted in verdicts. Of these eleven verdicts, four favored plaintiffs. Moreover, only one of these pro-plaintiff verdicts exceeded $1 million. [Belleville News-Democrat, 7/18/04]
  
  •It Doesn't Make Sense. West Virginia has climbed up ATRA's rankings despite enacting tort reform. In 2002, West Virginia was not even on ATRA's list, in 2003 the state was ranked fourth, in 2004 and 2005 the state had climbed to third and in 2006 the entire state was ranked first. During this time, West Virginia passed caps on medical malpractice damages, elimination of third party bad faith, and significantly changed workers' compensation and joint and several rules.

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