Insurance Law Section
ILS Events Calendar

Jun

7

Insurance Law Section Council Meeting (San Antonio)

5:00pm - 7:00pm Hyatt Regency Hill Country Resort & Spa, San Antonio, TX

Jun

8

14th Annual Advanced Insurance Law Course

June 8-9, 2017 @ Hyatt Hill Country Resort & Spa in San Antonio, Texas (More)

To Protect Itself, Insurer Must Consider Agency Principles Before Issuing Payment to Joint Payees
by Eric Scott Peabody

Insurers frequently issue checks to multiple payees – usually to some combination of the insured, adjuster/third-party administrator, mortgagee or lienholder, and attorneys.  Carriers had long considered themselves protected when issuing payment to joint payees by simply including all payees on the check; if a bank cashed the check without the signature of all payees – or with the forged signature of a payee – liability for that error rested squarely with the bank. See, e.g., Benchmark Bank v. State Farm Lloyds, 893 S.W.2d 649, 651 (Tex. App.–Dallas 1994, no writ) (payment to joint payees discharged obligation under policy). But a set of 2014 opinions from the Texas Supreme Court and the Dallas Court of Appeals created significant uncertainty for insurers on this issue.  McAllen Hospitals, L.P. v. State Farm County Mutual Insurance Co. of Texas, 433 S.W.3d 535 (Tex. 2014); ViewPoint Bank v. Allied Property & Casualty Ins. Co.,439 S.W.3d 626 (Tex. App.–Dallas 2014, pet. denied).  In McAllen Hospitals, the court held that an insurer’s checks issued jointly to patients and a hospital (which had given notice of its liens pursuant to the Texas Hospital Lien statute) did not discharge its payment obligation to the hospital when the patients deposited the checks without obtaining the hospital’s endorsement.  433 S.W.3d at 540-41.  The court appli...(Continue)

 
 
Section News
14th Annual Advanced Insurance Law Course

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Recent Decisions
Insured Loses Claim For Prompt Payment Penalties  
Barbara Technologies Corp. v. State Farm Lloyds Tx 4-San Antonio 4/19/17—
The Court found that a prompt payment claim is lost when an insurer invokes the appraisal process and timely pays the appraisal award.
US Supreme Court Determines that Governmental Office Can Issue Regulations that Preempt State Subrogation Laws  
Coventry Health Care of Missouri, Inc. v. Nevils US Sup 4/18/17—
Justice Ginsburg delivered Court's opinion in favor of contractual preemption with Justice Thomas expressing concern regarding potential presidential overreach in contract formation.
District Court Denies Motion to Abate Case Based on Alleged Failure to Satisfy Condition Precedents  
Total Rx Care, LLC v. Great Northern Insurance Co. ND Tx 4/14/17—
Court finds that insured did not have to offer certain individuals for EUOs or produce confidential documents prior to filing suit.
Court Enforces Arbitration Clause in Maritime Liability Policy and Dissolves Temporary Restraining Order  
Gemini Insurance Company v. Certain Underwriters at Lloyd's SD Tx 4/13/17—
Court finds that arbitration and service of suit clause could be harmonized to require English arbitration with potential enforcement by American courts.
Court Rules Against Insured Based on Incorrect Jury Charge  
Groba v. German American Farm Mutual Insurance Co. Tx 1-Houston 4/13/17—
The Court affirmed a jury verdict for the insurer because the jury charge did not address the insured's theory of liability asserted at trial and the jury had ruled in favor of the insurer on the charge that was submitted.
Court Adopts Magistrate Ruling Regarding Failure to Provide Proof of Loss  
Wilson v. Allstate Insurance Company ED Tx 4/10/17—
Court finds that failure to comply with policy's proof of loss provision serves as a complete bar to litigation.
Court Denies Motion to Remand Because Insurance Adjuster was Improperly Joined  
Elizondo v. Great Lakes Insurance SE SD Tx 4/10/17—
Court finds that allegations against in-state adjuster were insufficient to state Insurance Code claims
Supreme Court Remands Bad Faith Case For New Trial  
USAA Texas Lloyds Co. v. Menchaca Tx Sup 4/7/17—
The Supreme Court has announced five rules intended to clarify the relationship between contract claims under an insurance policy and tort claims under the Insurance Code.
Court denies Motion to Remand and strikes Amended Petition naming non-diverse adjuster  
Lewis Mechanical Sales v. Union Standard Insurance Group, LLC SD Tx 4/7/17—
Court denies Motion to Remand and grants Motion to Dismiss because diversity jurisdiction at time of removal and that plaintiff's subsequent attempts to amend were improper
The Effect of the Family Member Exclusion Determined at the Time of the Accident Not the Claim  
Johnson v. State Farm Mutual Insurance Co. Tx 3-Austin 4/6/17—
The Court finds that a rental car qualifies as a vehicle that is available for the regular use of the insured and his family when applying the family member exception to UM/UIM coverage.
More Recent Decisions