By: Steve Taylor
MCALLEN, RGV – Lawsuit abuse associated with hailstorm damage claims started in the Rio Grande Valley and should end there, says a former state representative candidate and insurance company owner.
Abraham Padron, owner of Safeguard Insurance, said there are still over 6,000 cases left pending in local courts following the catastrophic hailstorm that hit Hidalgo County on March 29, 2012.
According to the National Weather Service, the storms dumped hail up the size of baseballs for more than half an hour, drove that hail with 70 to 75 mph winds, added 4 to 6 inches of torrential rains, and produced frequent cloud-to-ground lightning.
Padron said he wished fewer lawyers got involved and that insurance companies had been given time to settle claims with their customers.
“Legislation is needed to stop the lawsuit abuse that occurred immediately after the 2012 hailstorm. I am hoping Senate Bill 10 and House Bill 1774 are passed by the Legislature. These bills will not only help Hidalgo County, they will help throughout the state,” Padron said.
Senate Bill 10 has been authored by state Sen. Kelly Hancock of North Richland Hills. House Bill 1774 has been authored by state Rep. Greg Bonnen of League City. Both legislators are Republicans. Their bills have been endorsed by Texans Against Lawsuit Abuse (TALA) and opposed by Texas Trial Lawyers Association (TTLA).
“I have great hopes things will get better for the insurance market in the Rio Grande Valley this legislative session. I am going to spend a lot of time in Austin, pushing for this legislation,” said Padron, who ran unsuccessfully against state Rep. Sergio Muñoz, D-Mission, in the 2016 Democratic Party primary.
“I have high expectations of our Valley legislators. I expect them to do the right thing, not just on insurance but on education, infrastructure, border security, our economy. We need them to step up and if they are not going to step up, then we need to run against them.”
Thus far, two Valley legislators have signed on to the hailstorm lawsuit reform legislation. State Sen. Eddie Lucio, Jr., D-Brownsville, is a co-author of SB 10. State Rep. Eddie Lucio, III, D-Harlingen, is a co-author of HB 1774.
Asked to explain why the new legislation is needed, Padron gave an example.
“If a house is worth $100,000 and has an $8,000 roof that was damaged by hailstorm, a lawyer will make a demand for $120,000 to repair the roof, hoping and expecting the insurance carrier will deny the claim. And, of course, 100 percent of the insurance carriers are going to deny the claim. Once it is denied, the attorney files a deceptive trade practices lawsuit, which entitles him to triple damages and 18 percent interest. All of a sudden, they end up settling through mediation for $30,000 or $40,000. The insured still gets the $8,000 that is coming to them and the lawyer gets the remainder. What we are trying to do is put a stop to that.”
Padron said he agrees there are some bad actors in the insurance market. He said he is not trying to protect them.
“I agree, there are some insurance companies that make mistakes and there should be litigation. We, as consumers, need to have the right to justice, to be able to sue a company that did not treat us right. But, at the same time we need to allow the company to take care of the claim. All we are asking is that before an attorney gets involved, we ask for a reasonable demand to take care of the insured person and pay some sort of legal fees, but you should not be able to ask for $120,000 on a $100,000 home,” Padron said.
Padron said he has been in constant contact with TALA and those involved in the crafting of the new insurance legislation.
“I think these bills will address a lot of these issues. I have told many of our state representatives: this mess started in the Rio Grande Valley and now it is spreading throughout the state of Texas. Well, we need to clean up our own mess. The way we are going to clean up this mess is by passing these bills. These bills allow insurance companies to come back to Hidalgo County, so we can go from having two companies to 20 companies, like we used to have, and, most importantly, for those homeowners with a $100,000 home an opportunity to have affordable insurance rates again. We are hoping that many of our local state representatives and senators will consider co-sponsoring the bill. Let’s fix the mess.”
Texas Trial Lawyers Association
TTLA sees things differently. Will Adams, vice president of legislative affairs for the Texas Trial Lawyers Association, issued this statement about SB 10 and HB 1774:
“Texas property owners rely on their insurance policy to rebuild their homes and reopen their businesses after a disaster. The Insurance Code clearly outlines the responsibilities insurance companies have to their customers. To enforce the full, fair, and prompt payment of claims, property owners must maintain the ability to hold their insurance company accountable.
“In cases where insurance companies can show fraud or abuse by a claimant, current law provides dozens of ways to dismiss those claims, allow insurers to recoup their costs, and sanction attorneys and public insurance adjusters. TTLA has and will continue to support efforts to strengthen those laws.
“TTLA is committed to working with the Legislature and all stakeholders to ensure claims are paid fully and fairly, as well as guaranteeing accountability for anyone who attempts to game the system.
“The bottom line is that, in exchange for paying their premiums year after year, property owners expect to have their claims paid fully and fairly. To enforce this basic obligation, Texans demand the right to hold their insurance company accountable.”
Texans Against Lawsuit Abuse
TALA has a different point of view to TTLA. Jennifer Harris, executive director and spokesperson for TALA, said:
“Today in Texas, storm chasing is the new ambulance chasing, and that’s why we laud Lt. Governor Dan Patrick and Sen. Kelly Hancock for making hail storm lawsuit reform a top priority this legislative session.
“Hail storm lawyers are writing a new chapter in the annals of Texas lawsuit abuse history, and already these questionable hail storm suits are not only making headlines, they’ve landed Texas back on the ‘hellholes’ list of legal jurisdictions known for abusive legal tactics.
“Storm-chasing personal injury lawyers are lining their pockets at the expense of everyday Texans, findings Texans Against Lawsuit Abuse documented in a study of the issue released in 2014. The high number of lawsuits increases consumer costs and, in some places, makes it harder to find necessary insurance coverage.
“Senate Bill 10 will help rein in these abusive hail storm lawsuit tactics that have caused tens of thousands of homeowners to lose their property insurance, while also working to ensure consumers are protected from skyrocketing insurance rates.”
Lt. Gov. Dan Patrick posted a video offering his support for Hancock’s bill. In the video, Patrick said:
“In the last several years we have seen claims from hailstorm cases skyrocket by a handful of attorneys in this state who are, quite frankly, doing nothing more than padding their own pockets and increasing premiums for home owners and business owners, increasing deductibles and, in some cases, forcing insurance companies out of business.
“One of the hallmarks of our great economy over the last 12 to 15 years has been lawsuit reform. We have ended frivolous lawsuits against business and doctors but with hailstorms the lawyers found another way to try to make a lot of money. And that is hurting all Texans.”
Patrick added: “You deserve proper coverage. You deserve the lowest premiums possible, the lowest deductibles possible. And, quite frankly, we need to end the skyrocketing claims we have seen over the last several years dealing with hailstorms.”
Editor’s Note: The main image accompanying this story shows the impact the March 29, 2017, hailstorms had on a Starbucks coffee shop in McAllen. The photo was taken by Alan Shoemaker of KRGV Channel 5.
Editor’s Note: This is the first in a two-part series on the aftermath of the hailstorm damage that occurred in Hidalgo County on March 29, 2012.