October 21, 2013

Texas courts are still addressing the impact of the Texas Supreme Court’s ground-breaking Ruttiger opinion and its effect on suits arising out of bad faith allegations based on Texas’ workers’ compensation claims.  In Hopper v. Argonaut Insurance Company, No. 03-12-00734, — WL — (Tex. App.—Austin Oct. 18, 2013), the plaintiffs were the wife and child of the recipient of worker’s comp benefits who died of a painkiller overdose approximately three years after the injury.  The insurer first disputed whether the claimants were in fact beneficiaries, and then whether the decedent’s death was related to the covered injury.  Two years after the decedent’s death, the claims were resolved following a benefit review conference, and the insurer agreed that the decedent’s wife and two of her children were beneficiaries, and that the compensable injury was a producing cause of the decedent’s death.

Nevertheless, the beneficiaries sued the insurer and the insurer’s adjuster for mishandling the claim and delaying payment of death benefits.  Among other claims, the beneficiaries asserted that the insurer and the adjuster made negligent, malicious, and knowingly false statements that the beneficiaries were not entitled to coverage.  The insurer and adjuster filed motions for summary judgment based in significant part on Texas Mutual Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), in which the Texas Supreme Court abolished the common law duty of good faith and fair dealing in workers’ compensation cases.  The trial court granted summary judgment and the Austin Court of Appeals affirmed, holding the beneficiaries’ misrepresentation-based statutory claims did not fall within the Ruttiger opinion’s narrow exception for false statements relating to the policy.  The court of appeals noted the beneficiaries’ allegations only concerned statements relating to whether the claim was covered.  Similarly, the court of appeals held that common law claims of fraud, negligent misrepresentation, and unconscionability failed because there was no evidence of improper conduct other than those allegations related to the claim-settlement process, and all such claims based on claims conduct were foreclosed by Ruttiger.