3 Important Bills I am Following in Texas
Wed Mar 14, 2007 at 06:27:59 PM PDT
Something happened recently that was very important for everyone who drives in Texas. All Texas auto insurance policyholders, and thus all drivers, should get on the phone or internet and contact their State Representatives and Senators and tell them to support H.B.2013. This Bill is necessary to fix a major anti-consumer decision by the Texas Supreme Court.
Two other bills discussed below, HB 3281 and HB 2226, are also crucial for Texans. The first is an important rollback of a part of the 2003 "tort reform" package that killed the jury trial in Texas, and the second encourages and funds solar power, to a degree, in Texas.
First let's discuss HB 2013 . . .
Why is HB 2013 important? Well, when you have an auto accident in Texas, and you are injured and the other driver has no insurance, what do you do? If you have the coverage in your policy, you make a claim on your uninsured motorist coverage. What happens if, as often happens, you and your insurance company disagree on the value of the claim? What if you have $50, 000.00 in medical bills and your insurance company will not pay you more than three or four thousand bucks to settle your case? In the past, a breach of contract lawsuit against your insurance company was a decent option. An auto insurance policy has historically been treated by Texas courts like any other contract. You could find an attorney with little difficulty because Texas law allowed for you to not only recover the uninsured motorist benefits under your policy, but you could also recover attorney's fees on top of your claim. So, for example, if you broke your arm in a wreck, and your insurance company offered you next to nothing, and you thought your claim was had a reasonable value of much more, and you won your case at trial, you could also recover attorney's fees on top of what the court awarded. So, by the time you got through trial, you might recover another $20,000 to $30, 000.00 in attorney's fees. This provided a strong incentive for insurance companies to make reasonable settlement offers. Indeed, this is the wisdom of a law allowing for the award of attorney's fees in contract cases. That possibility has gone away now.
Thanks to the violently pro-business Texas Supreme Court, Texans can no longer recover attorney's fees in such cases. In Brainard v. Trinity Universal Ins. Co., the court decided that–without getting into the legal details--from now on, if you want to sue your insurance company for breach of their contract with you to pay uninsured motorist benefits, you can not recover attorney's fees. So what, you ask? Well, think about it from the insurer's perspective.
In the past, when you could recover attorney's fees, insurance companies knew that the plaintiff's attorney on the other side was billing away at a rate of at least $150.00 per hour. A hundred hours of work in preparation for trial would yield attorney's fees of $15, 000.00 on top of whatever the claim was worth if the plaintiff won. Now that lever is gone. So, if you are the insurer, you are now much more likely to tell your insured to go file a lawsuit if they disagree with you about the value of the claim rather than enter into meaningful and fair negotiations. Now the only way for most insureds to retain an attorney in that case is to agree to pay them on a contingency fee basis – that is, the attorney only gets paid his or her fee and expenses if they recover money for you. Under that arrangement, if the attorney agrees to accept 1/3 of the total recovery, plus case expenses, and you recover, say, $30, 000.00 on your claim, you have to pay roughly ½ of your recovery to the attorney – $10,000 in fees, and likely at least another $5000 for case expenses (depositions, experts, filing fees, etc.) through an average lawsuit. In the past, you could recover your $30, 000.00 plus the attorney's fees, and so you were able to pocket much closer to the actual value of your claim. Therefore, the Brainard decision really affects consumers dramatically in uninsured and underinsured motorist claims. The incentive for an insurer to make a reasonable settlement offer is gone. They know that fewer and fewer attorneys will take these cases because they are far less valuable. When attorneys are not available on certain types of claims, consumers suffer. Insurers know that they can force lowball settlement offers down insured's throats because once their insureds hear about Brainard and its effect from attorneys, insureds will start to accept 60-70% of the value of their claims in settlement instead of spending a year or two in litigation just to get to the same point.
Well, happily, something is being done – maybe. Texas State Representative and the chairman of the House Insurance Committee, John Smithee, R-Amarillo, has filed a bill, H.B. 2013, to try to reverse the effect of Brainard. Every State Representative and every State Senator should be supporting this Bill – it affects almost all of their constituents directly. Smithee reasoned that it seemed unfair that it would cause some unnecessary work for policyholders to recover from their own carriers, and would cause delay and financial burdens on policyholders and the judicial system. That's an understatement, to be sure.
The Bill would be the first to undo the damage to the Texas legal system wrought by the Texas Supreme Court in many a legislative session. It would restore the attorney's fees that the decision eliminated. This issue has been around for a long time, bubbling its way up through the Texas courts. It is a shame that it took such a devastating Supreme Court decision to get anyone's attention. I am sure that insurance industry lobbyists are swarming to derail this legislation. They'll offer platitudes about claims being handled just like they always have. Don't forget they made similar promises about paying claims after Katrina and Rita blew through. Then they fought tooth and nail against paying anything. But make no mistake, Brainard was an important win for the industry. They will fight to keep it, so it is urgent for Texans and their elected representatives to get behind H.B. 2013.
In addition to my great interest in HB 2013 which would undo the devastatingly and virulently anti-consumer Supreme Court decision about uninsured motorist coverage, there are (at least) 2 other bills I am interested in this session:
The first one is HB 3281. The meat of the bill is this:
A BILL TO BE ENTITLED
AN ACT
relating to the recovery of medical or health care expenses in civil
actions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTIONA1.AASection 41.0105, Civil Practice and Remedies
Code, is repealed.
Why is that important? Section 41.0105 is part of the HB 4 so-called "tort reform" which was enacted in the 2003 session. That section limits the recovery of economic damages to what was actually "paid or incurred" by the injured victim. So, if you had $1 million in medical bills and are a total vegetable, and the hospital wrote it all off because you couldn't pay it, the insurance company would argue that you should recover no medical bills at all. That's an extreme example, though. Here's the real problem with it. In the past, if you had medical bills that were paid by a health insurer, you could still recover at trial your full itemized bills without reducing them to what a health insurer paid. So, if you had $1000 in bills, and your health insurer paid $600 and you owed nothing more, you could still be awarded $1000 in medical bills. Why is that significant--it sounds unfair. Well, that may be, but as a practical matter, when you recovered that $1,000, it allowed you to pay back your health insurance company. Your health insurance company didn't cause the accident, so they shouldn't be the primary payor on those charges. When that buffer existed, liability insurers would pay more on your medical expenses, and you could more easily settle your case and reimburse the health insurer.
Now, if you're only getting the amount that the health insurer actually paid, and still have to pay your attorney's fees and expenses out of the recovery, there's a lot less money to go around. Health insurers are getting less in reimbursements, and liability insurers, who should be primary on these cases, are getting away with murder -- and not lowering their premiums either. So, the entities that really suffer are, once again, the consumer, and also the health insurance system, including medicaid and medicare, who often pay these bills and then seek reimbursement. They get less back, and our taxes go up and our health insurance premiums skyrocket, and the liability insurers laugh all the way to the bank. Texans should get behind HB 3281.
Another bill I am interested in has to do with the promotion in the State of Texas of the use of solar power. That bill, HB 2226, appears to create a solar energy rebate program and develop a fund to encourage solar energy research and implementation.
According to Vote Solar News, the bill may have a chance:
You might think that hippy-dippy solar would be a hard sell in the heart of oil country. You'd be wrong. Vote Solar helped develop a poll--and the results should give hope to all cynics. When asked: Do you think the Texas Legislature should encourage investment in solar power in Texas? A mind-boggling 84% of Texans said yes. And even more encouraging, 81% would spend up to a dollar a month to help make that happen. That, friends, is enough to build a world-class solar market in the heart of oil country. When we say people want solar, this is what we mean.
I would love to see these two bills get some traction.
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