Some Judicial Action In Those Bad-Faith Worker's-Comp Insurance Cases

In 2008 we wrote about the problems with Texas Mutual Insurance, a company accused of bad-faith dealings with people who had filed worker's comp claims through them.

Two recent court actions have advanced things a bit, including what could be an important showdown at the Texas Supreme Court.

The first action was a ruling from the Fifth Court of Appeals in Dallas, remanding a case where a district judge had penalized TMI for altering hospital records (details here). The appeals court said the summary judgment granted was excessive improper.

Given the long-standing enmity between TMI and the lawyers handling the cases we wrote about, it's perhaps not surprising that they have exceedingly different interpretations of the court's action.

"We are delighted, but not surprised, that the Court of Appeals recognized Texas Mutual's good faith and overturned the district court's judgment against our company," Mary Barrow Nichols, general counsel and senior vice president for Texas Mutual, said in a prepared release. "We were confident that we handled this case appropriately and that the appellate court would fully vindicate the company, as it has done."

Plaintiffs attorney Mike Doyle says the appeals court "didn't exonerate" TMI or its lawyers. "They didn't find that they didn't alter the records," he said. "They kind of dodged that question and said that what the trial court did was give the wrong penalty."

The case goes back to the trial judge to hash out.

Perhaps a bigger move, Doyle says, was a decision last week by the Texas Supreme Court to hear oral arguments in a different worker's-comp case against TMI. In that case, he says, the insurer is asking for immunity from all bad-faith claims against it. (Pretty nice immunity, if you can get it.)

"It's been sitting in the Supreme Court for 15 or 16 months, but now they have decided to hear oral arguments on it," he says.

Those arguments are scheduled for April 14.

The Texas Supreme Court doesn't exactly have a reputation for being on the side of insureds when they take on insurance companies, but we guess having a hearing is better than being in limbo.

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Richard Connelly
Contact: Richard Connelly