Texans for Lawsuit Reform

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In the News

Insurers, plaintiff's lawyers square off in Austin over hail storm bill

Houston Chronicle, February 3, 2017

By: James Drew

AUSTIN – Lobbyists representing insurance companies are pushing legislation they say will prevent premium increases by weeding out “abusive” lawsuits over damages caused by hail and other storms in what is shaping up as a battle royal with consumers and plaintiffs’ lawyers.

Gov. Greg Abbott raised the stakes when he used his State of the State address earlier this week to proclaim that “hailstorm litigation is the newest form of lawsuit abuse.” He urged the Republican-controlled legislature to send him a bill that he can sign into law to limit those types of lawsuits.

The looming clash pits insurance industry lobbyists and their allies from Texans for Lawsuit Reform, the group that has championed “tort reform” for several years, against the Texas Trial Lawyers Academy and Texas Watch, a nonprofit consumer group, which contend the industry’s bill is designed to boost profits and restrict consumer access to the courts.

In a decades-old conflict between insurers and advocates for consumers, the two sides went at it during the 2015 legislative session, when a hailstorm litigation bill backed by the insurance industry gained Senate approval but died in a House committee.

A recent report by the state Department of Insurance said there has been an increase in the rate of hail and windstorm claims in which policyholders sue insurers. Through 2011, the lawsuit rate was about one in 1,000 claims, or 0.1 percent. That has jumped since 2012 to one in 50 to 60 claims, or about 1.5 to 2 percent.

The data did not show a pattern of rate increases, but the Department of Insurance added: “Rates follow losses, however, so companies may not have reflected expected costs for hail litigation in their rates yet.”

Sen. Kelly Hancock, R-North Richland Hills, plans to soon file a new version of a bill limiting hail suits. He is chairman of the Business and Commerce Committee, which likely means the legislation will move faster than two years ago.

“Hail litigation has spiraled out of control in Texas, mainly because of a small group of bad actors,” said Hancock in a statement.

He added that the bill would “improve transparency, and protect Texas consumers from sky-high premiums without infringing on their right to make an insurance claim or sue their insurance company when it’s not holding up its end of a deal.”

Hancock’s bill is expected to roughly follow an outline that Texans for Lawsuit Reform released recently.

“We’ve talked to many, many members of the legislature – Republican and Democrat – about what we view as the problem and what we view as the solutions,” said Lee Parsley, TLR’s general counsel and lobbyist.

TLR has added former state Rep. Kenneth Sheets, a Dallas Republican, to its legal team. Sheets, who lost his re-election bid last year, is a former member of the House Insurance Committee. He will work on a “variety of issues, but he will not be lobbying,” said TLR spokeswoman Lucy Nashed.

The legislation is expected to make major changes to two sections of the state’s insurance code that penalize insurers for unfairly settling claims and not promptly paying them. The bill would make it harder for plaintiffs’ attorneys to name adjusters and agents as defendants to prevent lawsuits from being transferred to federal courts. Such “venue shopping” would be curtailed, the TLR says, by allowing insurance companies to assume the adjusters’ and agents’ liability.

The legislation would lower the penalty interest rate insurance companies have to pay when they have been found to have denied or underpaid a legitimate claim. But it would maintain the state code’s strict liability provision so that property owners can get penalty interest from insurance companies when they fail to pay a legitimate claim “timely and fully.” Property owners would also still be able to receive attorney fees from their insurers.

Beyond penalty interest, the legislation would contain a series of provisions making it harder and less lucrative for plaintiffs’ attorneys to sue insurance companies, according to the TLR.

It would limit and reduce attorney fees when their clients get less than they have demanded in lawsuits and bar the payment of attorney fees if insurance companies can prove that plaintiffs’ attorneys used intermediaries – commonly called “runners” – to recruit clients.

The bill would force plaintiffs’ attorneys to sue either under the state’s Deceptive Trade Practices Act or the Unfair Claim Settlements Practice Act, but not both. And it would require plaintiffs’ attorneys to file a notice to the insurance company before a lawsuit is filed that includes a “realistic demand” for the amount needed to repair or replace damaged property and the amount of attorney fees incurred. If the current deadline – at least 60 days before a lawsuit is filed – is broken, attorneys would not be able to collect fees.

Parsley, the TLR general counsel and lobbyist, stressed that the group’s proposals for the bill would protect the right of consumers to sue insurance companies if those firms do not settle a legitimate claim “fairly and timely.”

But Ware Wendell, executive director of Texas Watch and a lobbyist, said TLR’s plan offers the “illusion of a right without any real remedy” by making it more difficult for property owners to file lawsuits if insurance companies don’t treat them fairly.

“Insurance companies have gotten what they wanted on rates and coverage through the years. Now they are coming for policyholders’ claims protections. We can’t give them another inch. If they succeed, policyholders will be forced to take whatever the insurance company offers, if they even make an offer,” he said.

Wendell said consumers’ rights would be eroded.

“Insurance companies control every step of this process. They write the policy. They send out the claims adjuster, and they face no liability if they do everything right the first time as they should. They have complete control over whether they face liability. Adjust the claim, make the people a fair offer that is 100 cents on the dollar, and there is no suit,” he added.

Beaman Floyd, a lobbyist who is director of the trade group Texas Coalition for Affordable Insurance Solutions, said TLR’s lobbying is aimed at “abuse in the courthouse” while insurance companies will fight the potential for increases in hail and other storm lawsuits to drive up homeowners’ insurance rates and deductibles.

The members of Floyd’s trade group are Allstate, Farmers Insurance, Nationwide, State Farm Insurance, and United Services Automobile Association, known as USAA.

Alex Winslow, a spokesman for the Texas Trial Lawyers Academy, said the group would work with its business and consumer allies to fight attempts to roll back the access of policyholders to the courts or reduce penalties that deter insurers from treating consumers unfairly.

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Texans for Lawsuit Reform

9 hours ago

Texans for Lawsuit Reform

When 30-year-old Quinnton Allen violated his parole for possession of a firearm, a Houston judge not only allowed him to stay on parole but granted him a PR bond for a felony. Unfortunately, the decision to release him on bond may have cost a man’s life. Read and share: bit.ly/3OvDU5z ... See MoreSee Less

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29-year-old man murdered after judge grants felony PR bond to armed robber recently paroled from prison

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HOUSTON – “I’ve never had any of these defendants we’ve profiled on Breaking Bond on parole and on a felony PR bond charged with murder,” said Andy Kahan with Crime Stoppers. “This is a fi...
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That judge should be held accountable

His family should get a good lawyer & sue the city & the judge…

The judge should be held as an accomplice to the murder before the fact and sued in civil court for his contribution to the death of the citizen.

Texans for Lawsuit Reform

1 day ago

Texans for Lawsuit Reform

Texas ports are thriving today, but in the early 2000s, abusive personal injury lawsuits threatened to shut them down. As the Port of Houston begins a long-awaited expansion, read more about the common-sense lawsuit reform in 2007 that saved our state’s shipping industry in this week’s TLR blog, For the Record: bit.ly/3aeTy6n ... See MoreSee Less

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Texans for Lawsuit Reform

2 days ago

Texans for Lawsuit Reform

Wishing everyone a very happy Fourth of July! ... See MoreSee Less

Wishing everyone a very happy Fourth of July!
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Happy Independence Day America Today we celebrate our Republic 🇺🇸


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lawsuitreform avatarTLR@lawsuitreform·
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When 30-year-old Quinnton Allen violated his parole for possession of a firearm, a Houston judge not only allowed him to stay on parole but granted him a PR bond for a felony. The decision to release him on bond may have cost a man’s life. Read & RT:

29-year-old man murdered after judge grants felony PR bond to armed robber recently paroled from prison

HOUSTON – “I’ve never had any of these defendants we’ve profiled on Breaking Bond on parole and on a felony PR bond charged with m...

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Texans for Lawsuit Reform
1701 Brun Street
Houston, Texas 77019

Ph. 713-963-9363
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