By: Lucy Nashed
Lawyer-driven hail litigation is the worst lawsuit abuse in Texas today. The Texas Legislature must stop this lawsuit abuse while protecting the right of every Texas consumer to sue their insurance company if it acts unfairly or in bad faith.
For the last five years, storm-chasing lawyers have descended upon neighborhoods from the Rio Grande to the Red River, unleashing case runners on unsuspecting property owners with one goal in mind: to round up as many plaintiffs as possible to fuel their massive lawsuit mills.
“Don’t talk to your insurance company before you talk to a lawyer!”
“Don’t think you have damage? Our experts will find it and make your insurance company pay!”
“Already got your roof replaced? We can get you more money!”
This is the new frontier in “sue first, ask questions later.” The business model is to recruit, sue and settle in bulk, conjuring disputes out of thin air where policyholders previously didn’t think there were problems. By pushing the boundaries of legal ethics — and with no state law to stop them — these storm chasers have generated 36,000 lawsuits since 2012.
As was the case with litigation around asbestos, black mold and the Texas Windstorm Insurance Association, a small group of bad actors has hijacked the legal process intended for legitimate disputes, all under the guise of consumer protection. But the reality is that weather-related lawsuit abuse has nothing to do with helping property owners.
So who really wins when storm-chasing lawyers are given free rein to abuse our legal system?
It’s not Texas families and businesses, who are just trying to repair their properties as quickly as possible after a storm. The Texas Department of Insurance (TDI) found that lawsuits take seven times longer to resolve than regular insurance claims; that’s close to two years to resolve what would normally take 90 days through the regular insurance claims process. To use a well-known visual, nothing keeps a blue tarp on a roof longer than a lawsuit.
It’s not customers of the 12 insurance companies that have increased rates as a result of this litigation abuse, according to TDI. Nor is it the former policyholders of the seven insurers that have reduced, limited or stopped writing policies in Texas because of this litigation. No, those consumers were left scrambling to find new coverage, often at two or three times the price they paid before. Put simply, lawsuit abuse creates an unnecessary and hidden tax on goods and services. Today, these families and businesses are watching their hard-earned dollars disappear into trial lawyers’ pockets. Tomorrow, you and I could be seeing the same.
It’s certainly not the 14,000 individuals who have been sued by storm-chasing lawyers, not because they’ve done anything wrong, but in order to increase litigation costs and pressure to settle bogus claims, and allow the attorneys to manipulate which court the case can be tried in. From insurance adjusters to back-office insurance company employees, some have been personally sued dozens of times. Ever tried to apply for a mortgage or car loan while party to one lawsuit, let alone 12? Or been served with lawsuit papers at your kid’s little league game? Rather than face the near-guarantee of being sued unnecessarily, those who can are choosing not to work in Texas, and others are leaving the industry all together. These individuals are literally being harassed out of their livelihoods by storm-chasing lawyers who use them as litigation pawns, and it is unacceptable.
And finally, it’s not the people of Texas, whose confidence in the fairness and honesty of our legal system erodes every day this lawsuit abuse continues unfettered. Texas has come a long way since the days of “jackpot justice,” but unscrupulous lawyers are nothing if not entrepreneurial. We have to stay vigilant against evolving abuses of the legal system, otherwise it’s one step forward and two steps back.
The only people who win when we allow this lawsuit abuse to continue are storm-chasing lawyers, who stand to make an estimated $400 million in ill-gotten legal fees based on the cases they’ve filed to date. They have a vested interest in protecting their paychecks at the expense of every Texas property owner.
The good news is the Legislature can deliver a win to Texas property insurance consumers by passing Senate Bill 10 and House Bill 1774. These bills create much-needed accountability for storm-chasing lawyers, addressing specific areas of the law that are being abused and making common-sense reforms to bust their mass-litigation business model. For example, lawyers would finally be held accountable for making wildly exaggerated demands, and the bills would require them to provide notice before filing lawsuits so disputes can be resolved more quickly.
At the same time, SB 10 and HB 1774 preserve a clear path to the courthouse for Texans who have legitimate disputes with their insurers, preserving the strongest consumer protections in the nation for Texas property owners. And insurance companies will still face significant damages and financial penalties for shirking their responsibilities to policyholders.
With these changes, Texas consumers will now have added protection from all bad actors — insurers who unfairly deny and delay claims and lawyers who unnecessarily manufacture litigation.
That’s a win-win for all Texans. Except for storm-chasing lawyers.