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.)

Leave a comment or ask us a question

Questions About Hiring Us

Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

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.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

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.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

Dell & Schaefer Client Reviews   *****

Shaun D.

I can’t thank Rachel and Machal enough, my disability case was stopped by the insurance company on Veterans Day 2016 so at that point I went for the appeal myself. Each level of appeal I lost even though I needed back surgery again, my only regret is not contacting Dell & Schaefer sooner.

Disability companies are not your friend and when they play their paper work games and medical reviews, that’s when you want an attorney like Rachel on your side. Anyone reading this and wondering what to do if you have a denial letter from the disability company or an upcoming review, please call Rachel and let her handle everything. This firm works hard and it shows with their attention to detail and the concern for the client.

***** 5 stars based on 202 reviews

Speak With An Attorney Now

Request a free legal consultation: Call 800-682-8331 or Email Us