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Update on Insurance Law - May 2015
Author: H. Norman Kinzy
There have been a number of recent court decisions which are of significance to the practice of insurance law. These include cases dealing with the “seat belt defense,” workers’ compensation, insurance coverage, defamation, products liability, health-care claims, premises liability, forum-non-conveniens, sovereign immunity, and relevance of other causes.
As always, each case involves different facts and law, and accordingly the following must be taken for general information purposes only, rather than for action upon any specific fact situation.
A Seatbelt Defense For Texas - And More: In Nabors Well Services, Ltd. v. Romero, No. 13-0136 (Tex. 2015) the Supreme Court made significant changes in Texas tort law. Although factually this case dealt with the availability of the “use or non-use of seatbelts” as a defense in apportioning responsibility in civil lawsuits, the effect of the case is much broader and pronounces a new rule for Texas practice in proportionate responsibility cases. Not only did the Supreme Court hold that a seatbelt defense is available to Texas litigants, but the Court concluded that for the purposes of Texas’ proportionate-responsibility statute, the Legislature intended and required that fact-finders consider relevant evidence of a plaintiff’s pre-occurrence, injury-causing conduct. Thus, it is no longer necessary that a plaintiff’s pre-occurrence acts be a cause of the accident in question, but only that a plaintiff’s pre-occurrence acts be proved a cause of plaintiff’s damages. The Supreme Court stated in Nabors that:
“We hold relevant evidence of use or non-use of seat belts, and relevant evidence of a plaintiff’s pre-occurrence, injury-causing conduct generally, is admissible for the purpose of apportioning responsibility under our proportionate-responsibility statute, provided that the plaintiff’s conduct caused or was a cause of his damages.”
Workers’ Compensation – Exclusive Jurisdiction Over Claims Matters: In In Re Crawford & Company, No. 14-0256 (Tex. 2015), the Supreme Court clarified its decision in Texas Mutual Insurance Company v. Ruttiger, and held that the numerous tort, contract, and statutory claims which were pled in a court case by an injured worker should have been dismissed in favor of the exclusive jurisdiction over such claims which resides within the Texas Department of Insurance Division of Workers’ Compensation. In so doing, the Supreme Court stated that “Whether the Act provides the exclusive process and remedies, therefore, does not depend on the label of the cause of action asserted…Nor does the Ruttiger rule depend on the nature of the relief the claimant seeks…..(but) Because all of these claims arise out of (the compensation carrier’s) investigation, handling, and settling of the (plaintiffs’) claim for worker’s compensation benefits, the Act provides the exclusive procedures and remedies for these claims….we hold that the Division had exclusive jurisdiction….(and) Because the (plaintiffs) failed to exhaust their administrative remedies under the Act prior to filing this action, the trial court lacked jurisdiction and should have dismissed it.” (parenthetical material added)
Standards For Ordinary Tort Liability Of Healthcare Providers And Premises Liability: In Ross v. St. Luke’s Episcopal Hospital, No. 13-0439 (Tex. 2015), the Supreme Court announced new standards for distinguishing between (1) claims against a healthcare provider for ordinary tort liability (which do not require that an expert report be filed) and (2) healthcare liability claims controlled by the Texas Medical Liability Act (which do require the filing of an expert report). In this case a non-patient visitor sued a hospital on a premises liability theory after she slipped and fell near the lobby exit doors. The Supreme Court held that her claim was one seeking “ordinary” tort liability which did not require the serving of an expert report, because there was no “relationship between the safety standards she alleged the hospital breached - standards for maintaining the floor inside the lobby exit doors - and the provision of healthcare, other than the location of the occurrence and the hospital’s status as a healthcare provider, which was not enough to fall within statutory definition of a healthcare liability claim.” In other words our Legislature did not intend for the expert report requirement to apply to every claim which occurs in a healthcare context, and without a “substantive relationship with the providing of medical or health care,” the Texas Medical Liability Act is not applicable.
“Forum Non Conveniens” Statute: In In Re Bridgestone Americas Tire Operations, LLC., No. 12-0946 (Tex. 2015), the Supreme Court dealt with dismissal of claims seeking recovery for accidents which occur outside of Texas, and an exception found in the Texas “forum – non – conveniens” statute: the “Texas-resident” exception. This case arose out of an accident which occurred in Mexico. Two minor plaintiffs, who were Mexican nationals, who did not live in Texas, and whose legal guardians resided in Mexico, sued for wrongful death recovery in a Texas court urging that their “next friend,” a maternal uncle who was a Texas resident (although the children were not), was entitled to maintain the suit on their behalf in Texas. However, our Supreme Court held that a next friend’s legal residency in Texas does not trigger the statute’s Texas-resident exception, because it is the infant, and not the next friend, who is the real and proper party.
Sovereign Immunity Not Available To Certain Government Contractors: In Brown & Gay Engineering, Inc. v. Olivares, No. 13-0605 (Tex. 2015), the Supreme Court discussed whether sovereign immunity of the state of Texas should be extended to contractors working for the state and held that sovereign immunity was not to be extended under the facts of the case. A third party sued a private engineering firm which had contracted with a governmental unit to design and construct a roadway. The court held that sovereign immunity is a common law doctrine and, absent an express legislative extension of sovereign immunity, immunity from liability is not available generally to private contractors which are engaged by the state government to perform functions for the state. The analysis turns on whether the private contractor exercises any independent discretion in its activities. In other words, private parties which exercise independent discretion in their duties for the state government are not entitled to sovereign immunity; conversely, a private company which operates solely upon the direction of the state government and exercises no independent discretion in its activities may be entitled to sovereign immunity.
Insurance – Property Damage – “Anti–Concurrent–Causation” Clauses: In JAW The Pointe, L.L.C., v. Lexington Insurance Company, No. 13-0711 (Tex. 2015), the Supreme Court dealt with the effect of an insurance policy’s “anti-concurrent-causation” clause which excluded coverage “for loss or damage caused directly or indirectly by” flooding, “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Although the loss was caused not only by an excluded flood (which triggered the enforcement of city ordinances), but also by covered wind, the court held that the anti-concurrent-causation clause excluded coverage for all losses. Because of the specific policy language at issue, the Supreme Court distinguished and held inapplicable Texas’s common law “concurrent-causation doctrine.” The court also reiterated that “[a]s a general rule there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered.”
Defamation – “Texas Citizens Participation Act”: In Lippincott v. Whisenhunt, No. 13-0926 (Tex. 2015) the Supreme Court discusses the recently enacted Texas Citizens Participation Act, under which a defendant may move to dismiss a claim involving the exercise of the right of free speech upon a showing that the communication was made in connection with a matter of public concern. The Court held that the plain language of the statute limited its scope to communications involving a “public subject,” and does not require that the form of the communication be public in nature. Thus, the benefit of the statute applies to both public and private communications as long as they relate to matters of public concern. In a companion case, In Re Steven Lipsky, No. 13-0928, the Supreme Court noted that the purpose of the Texas Citizens Participation Act is to protect citizens “who petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them,” and to accomplish its purpose, the statute endorses a summary process, requiring judicial review of the pleadings and limited evidence,” typically within 150 days following service of the law suit.
Healthcare – Compounding Pharmacies: In Randol Mill Pharmacy v. Miller, No. 13-1014 (Tex. 2015), the Supreme Court dealt with whether or not claims by a patient against a compounding pharmacy and its pharmacist employees (because of suffering a severe adverse reaction to a compounded drug administered by her physician), were healthcare liability claims requiring the submission of an expert report. The “compounding” of a drug is the process by which a pharmacist mixes or alters drugs to create a medication that is tailored to the needs of an individual patient and that is not otherwise commercially available. The Supreme Court held that such claims are covered by, and subject to, the Texas Medical Liability Act, even though the drug was compounded to the needs of an individual patient and was to be administered to the patient by her own physician. Accordingly, the failure of the plaintiff to serve the defendant pharmacists with an expert report required the dismissal of her claims.
Defendant Entitled To Offer Evidence Of Other Potential Causes: In JLG Trucking, LLC, vs. Garza, No. 13-0978, the Supreme Court reviewed a trial court’s exclusion of evidence of a subsequent automobile accident on the grounds that such evidence was not relevant to the plaintiff’s claim for injury alleged to have been caused by a prior accident. The Supreme Court reversed, and held that since the plaintiff bears the burden of proof to show that the accident forming the basis of plaintiff’s claims was the cause of plaintiff’s injuries, it is the plaintiff’s burden to offer evidence excluding any and all other “plausible causes of the injury or condition that could be negated” which might be offered by a defendant. Thus even if a defendant fails to offer expert testimony that some other preexisting condition or post-occurrence event was a cause of plaintiff’s injuries, such failure does not shift the burden of proof to the defendant, since the burden of proof still falls upon the plaintiff “to exclude with reasonable certainty other plausible causes of her injuries” which might be offered as such by a defendant.