Texas Disability Insurance Companies Can Be Subject to Bad Faith Claim

In Texas, insurance companies must treat those who purchase policies a certain way. Texas law calls it a duty of good faith a fair dealing. Experienced disability attorneys know this and make insurance companies honor their obligations under disability policies and under Texas law. Let’s look at a specific example found in the recent case of Hudspeth v. Enterprise Life Insurance Company.

The plaintiff there bought a new car together with a disability insurance policy through Enterprise Life Insurance Company that would make her car payments should she become disabled. Two months later, she was diagnosed with cancer and underwent surgery. Enterprise approved her claim and paid her car payment. The insurance company reminded the plaintiff that to retain future benefits, she had to file a continuing claim form signed by a physician “as soon as reasonably possible and in no event… later than one year from the time proof is otherwise required.”

She transferred from private health care to county-provided services and couldn’t secure an appointment with a county doctor for three months. Then the county doctor wouldn’t sign the continuing disability form without conducting further diagnostic tests. Another month passed before the plaintiff could see an oncologist for the first time, when a physician finally signed her continuing disability form.

A month earlier, Enterprise wrote the plaintiff a letter denying her continuing disability car payments because the insurance company had not received a continuing claim form for more than 50 days. The letter also instructed her to send any additional information that would cause the insurance company to reconsider its position.

Complying with the letter’s instructions, the plaintiff promptly mailed her completed continuing disability form to Enterprise in June 2006. Nevertheless, her claim was denied because, in the insurance company’s view, the policy had already been cancelled. The plaintiff’s car was repossessed in April 2007 for nonpayment of the note. The plaintiff sued, alleging that Enterprise’s denial of her June 2006 claim constituted a breach of its duty of good faith and fair dealing.

Court Rules That Enterprise Acted in Bad Faith

The Texas Court of Appeals in Houston determined that Enterprise had in fact violated the duty of good faith and fair dealing. The court recognized that insurance companies, like other entities, have a special relationship with the insured. This special relationship requires that Texas insurance companies go above and beyond what is required for ordinary contracts. The plaintiff proved that Enterprise had no reasonable basis for the denial or delay of payment. In fact, the policy provided that proof of continuing disability “must be furnished as soon as reasonably possible and in no event later than a year after proof is otherwise required.” Given this policy language, Enterprise had no reasonable basis for the denial or delay of the car payments. The court sent the case back to the trial court to consider what damages the plaintiff should receive.

Hudspeth v. Enterprise Life Ins. Co., 358 S.W.3d 373 (Tex. App.-Houston [1st Dist.] 2011, no pet.)

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Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

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No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

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Leza A.

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My husband used to say that I loved my career more than him (so wasn’t true) but, I would do things like cancel a trip (40th birthday trip) in order to get the job done at work/make it happen (New Home R/E Sales). My career was a “very” physical and also required to be mentally sharp at all times.

What I thought at the beginning of feeling ill was going to be out from work for maybe a few days to a week, didn’t happen. Then I got to the point of being out from work for a year and realizing this was going to be a challenging and long road. In dealing with the short/long term disability company was getting to the point I couldn’t handle it. So… I got on the computer when I had short breaks from being foggy minded (took weeks of searching). So the search for someone/company who could take the challenge to keep up with the demands of paper work from the disability company with my short/long term disability company and who was successful at fighting this kind of case and with my medical diagnoses of fibromyalgia (I had been denied after the first few months of short term disability). I found Dell & Schaefer Law Firm who had a successful out come with not only the disability company that I had but, also against working with a fibromyalgia case.

I am blessed to have come across Dell & Schaefer and then I was blessed to have/be working with Rachel Alters! I found it was/hasn’t been easy in any way to deal with a case of fibromyalgia but, I am so more than happy I have/am working with Dell & Schaefer “Rachel Alter”. If I was up to it (not with fibro) I would be dancing all night long celebrating (I loved to dance all the time before fibro)! The many… appeals, time and all the hard work it took, my/our case has been over turned! I was caught off guard when I received the call from Rachel Alter! When I answered it I was thinking we were needing more documentation or another specialists to state where I am with my illness but, I got the best news in years and I just started crying out of control with tears of happiness! Tears of happiness have not been a part of my life in many years. Yea!!!!!! FYI… This was a challenge for me to write due to not being able to sit or type due to my pain of fibromyalgia but, so worth sharing my experience with choosing Dell & Schaefer “Rachel Alter & Team” ! Again… I am so blessed to have contacted Dell & Schaefer!!! Thank You Dell & Schaefer “Rachel Alter & Team”… :-)

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