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Bad Faith and Texas Mutual Insurance

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State Representative Burt Solomons (R-Carrollton) has been very concerned with workers' compensation issues in the Texas Legislature and doesn't want to see the bad faith avenue closed to workers. "If a carrier is unreasonably or illegally denying care, then not only should the Texas Department of Insurance hold the carrier accountable but the employee should also have an avenue to address the issue in a court of law."

Doyle calls any discussion of insurance company "immunity" preposterous. If a carrier has unfairly denied coverage to an injured worker, the idea that there would be no further punishment even when misconduct was committed knowingly or intentionally by an insurer or its agents is not fair to injured employees, he says.

"I think lack of accountability for anyone is a terrible idea, and for these folks, it's a really terrible idea."
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Timothy J. Ruttiger was a man whose previous biggest distinction probably was washing out of the Galveston Police Department when he T-boned another vehicle while driving a patrol car during his probationary period. At ten miles an hour, no less.

By June 21, 2004, after a series of jobs, he found himself working at A&H Electric Company in Galveston, on the job almost a year when he tripped over a two-by-four on the ground while carrying a bundle of metal conduit, fell and ended up needing hernia surgery.

In his deposition, Ruttiger explained that his wife took him to the University of Texas Medical Branch in Galveston; he called A&H owner April Beall from the doctor's office and asked her if he needed to file under workers' comp or insurance. According to court testimony, Beall told him to file it on workers' comp. Ruttiger filled out a comp form at A&H on his way home that day, and Beall signed it.

His operation was scheduled for July 12, but the day before, UTMB called and said the Texas Mutual adjuster had canceled Ruttiger's surgery. Ruttiger called the adjuster, Audie A. Culbert, who hung up on him after a brief conversation in which Culbert told him his claim was fraudulent, Ruttiger says.

Culbert denied the claim after talking to Beall, who told him other employees said Ruttiger had injured himself playing softball. Culbert made this determination without talking to Ruttiger or to Ruttiger's doctor.

As it turned out, while Ruttiger managed his daughter's softball team, he hadn't played in 15 years.

Six months later, after Ruttiger agreed to give up three months of workers' comp payments, Texas Mutual approved the surgery. "I was at the point where I was hurting so bad that it didn't matter," he said in the deposition. He was also having trouble paying his bills and had to borrow from his father.

Doyle filed a bad faith case on Ruttiger's behalf in the 122nd State District Court in Galveston. Evidence in the case showed that although Beall had signed Ruttiger's comp form, she told Culbert that Ruttiger had not reported an on-the-job injury. She also said that Henry Beall, April's son and a co-owner, had said Ruttiger came to work limping that day and that Ruttiger's immediate supervisor was never told of any injury.

In his statement, Henry Beall contradicted himself about whether Ruttiger had reported an on-the-job injury. He said he didn't have any proof about the softball game and that Ruttiger could have been simply coaching his daughter. He also couldn't confirm the limp.

Culbert said he couldn't reach the doctor, even though his own notes on the case show that on July 12, he received "a call from Teresa @ UTMB and she wanted pre-auth for an [sic] hernia repair."

Jurors in district court awarded Ruttiger a total of $4,700 for physical impairment, pain and suffering, $100,000 for mental anguish and $20,000 additional damages on finding TMI's conduct was committed knowingly. It also awarded $103,000 in attorneys' fees and $13,579 in prejudgment interest. Its awards for damage to credit reputation were later reversed by the appeals court.

Texas Mutual appealed and lost.

The Court of Appeals for the First District in Houston affirmed the lower court and wrote: "A reasonable juror could have believed that Culbert made his decision to deny Ruttiger's claim after conducting an extremely limited, one-sided investigation that produced nothing more than highly suspicious rumors and speculation from two, related employer representatives."

The case is now being appealed to the Texas Supreme Court. Texas Mutual argues that it discovered during the bad faith lawsuit that Ruttiger had hernias since 1998 and a roommate of his was saying Ruttiger was running a scam.

The appeals court held that because TMI first denied the claim for the wrong reasons, a jury could find that the carrier was seeking a pretext to uphold their refusal and the jury could disregard this latest information. Attorneys for Texas Mutual argue the court got this completely wrong.

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Margaret Downing is the editor-in-chief who oversees the Houston Press newsroom and its online publication. She frequently writes on a wide range of subjects.
Contact: Margaret Downing