By: By Hazel Meaux
Texas is taking a pounding, and it's time for the Legislature to take action.
First, we get hit with high-intensity storms. Next, we get soaked by personal injury lawyers looking to line their pockets by filing skyrocketing numbers of hailstorm-related lawsuits - many of which show a nearly identical, cookie-cutter pattern in approach, claims and demands.
A recent report from the Texas Department of Insurance (TDI) shows weather-related litigation jumped 1,400 percent statewide after 2011, even though the number and severity of hailstorms showed no change that would have logically produced such an eye-popping increase.
That should be of concern to every one of us. After all, when personal injury lawyers are allowed to game the system, we all pay, and we all lose.
And pay we do.
In some parts of the state, consumers are paying more for homeowners' insurance, while coverage options are limited because of hailstorm litigation. TDI reports that seven insurers have reduced, limited or stopped writing policies, while 12 companies have hiked rates for homeowners' policies as a direct result of lawsuits.
So, what can be done to protect homeowners with legitimate claims, while protecting consumers who need coverage? How do we rein in hailstorm lawsuit abuse? House Bill 1774 and Senate Bill 10, now pending at the Texas Capitol, offer reasonable solutions.
For example, some personal injury lawyers routinely ignore a legal requirement that they notify an insurer of the lawyer's intent to sue. Under the legislation, the lawyers would risk their fees if they fail to follow this law. By putting teeth in this requirement, a homeowner with a serious claim could expect a quicker settlement offer and resolution, potentially avoiding a long and expensive legal fight. That protects the consumer while guarding against a lawyer gaming the system.
It's also important that insurers face penalties if they delay or underpay a consumer's claim. To keep those penalties from turning into an incentive for unnecessary lawsuits, HB 1774 and SB 10 would adjust the penalty to strike a balance - still above the market interest rate but not to a point that creates an enticement for litigation.
And finally, Texas law disallows court shopping, but that hasn't stopped storm-chasing personal injury lawyers. They're skirting the law by casting a wide net with their litigation, ensnaring individual Texans - suing, for instance, an administrative assistant in the insurer's local office in addition to the insurance company. This tactic keeps the lawsuit in a state court, even if the company being sued is based out of state. By some estimates, as many as 14,000 Texans have been ensnared in this way, even though they had nothing to do with the dispute. The proposed legislation would protect individual Texans in this situation, keeping them from being used as a pawn, without restricting a consumer's ability to sue in a proper court.
The bottom line is these proposed reforms are designed to protect property owners - period. And, there is a clear path to the courthouse for those with legitimate disputes with their insurers.
Texas once had the biggest lawsuit abuse problem in the country. Thankfully, those days are largely behind us, but not completely. Hailstorm lawsuits are one way personal injury lawyers are working to turn back the clock on lawsuit abuse. We can't let that happen.
For the sake of Texas consumers, we urge legislators to take action now.
Meaux serves on the board of Texans Against Lawsuit Abuse, a statewide consumer and small business organization that raises awareness about the cost and consequences of lawsuit abuse and advocates for lawsuit reform.