Two longstanding precedents–including landmark workers’ comp case–‘should be overruled’
There’s times for almost any attorney who enjoys litigation when the best feeling in the world is to win a big court case for a deserving client.
Sometimes, though, the best thing a lawyer can do for a client is to negotiate a good, solid settlement and keep the case out of court. It’s sad to say, but sometimes the merits of a case may not “matter” as much as political sway–take the ruling by the US Supreme Court calling a corporation a person, thereby opening the floodgate to campaign finance as a gluttonous abandon never envisioned by the Founding Fathers.
Supreme Court overturns 20 years of ‘established law’
According to a Texas consumer activist group, such a ruling was recently handed down by the Texas Supreme Court:
In a major opinion today, the Texas Supreme Court overturned more than 20 years of established law to protect workers’ comp insurance providers from claims by injured workers. In the opinion, Texas Mutual Insurance Co. v. Timothy J. Ruttiger, the Court ruled that injured workers who have been subjected to bad faith claims handling by their workers’ comp insurance provider are not protected by the Texas Insurance Code’s provisions against “unfair settlement practices.”
“Once again, the Texas Supreme Court is upending established law, ignoring the legislature’s clear intent, and overturning its own precedents to shield big insurance companies from responsibility to hard working Texans,” said Alex Winslow, executive director of the citizen advocacy group Texas Watch. “Today’s decision allows insurance companies to purposely deny, delay, or underpay legitimate claims without fear of penalty or public accountability.”
Workers in Texas already face significant obstacles to accountability following a workplace injury. Workers are already forced into a broken and inadequate comp system that severely limits their legal rights and oftentimes does not provide adequate benefits. The Court’s decision today further restricts the ability of workers to be fully and promptly compensated for their injury.
Carrier calls Rutigger decision a win for employers
According to an Aug. 26 press release from Texas Mutual:
The Court reversed the Houston Court of Appeals and rendered judgment that Mr. Ruttiger take nothing on his Insurance Code and Texas Deceptive Trade Practices Act claims.
Justice Phil Johnson wrote in strong terms that a bad faith cause of action is inconsistent with the current workers’ compensation system.
“[If the plaintiff were to prevail, the precedent would build] additional costs into the system by increasing litigation expense to employees, insurers and employers,” Justice Johnson wrote. “The way the dispute was resolved after Ruttiger initiated the dispute resolution process is the way the Act is designed to function.”
The company’s position is further spelled out:
“The Texas Supreme Court has today given careful consideration to the many speedy remedies and protections that the Legislature has granted to injured workers,” Mary Barrow Nichols, General Counsel and Senior Vice President for Texas Mutual, said. “It found that permitting an injured worker to additionally recover with a lawsuit of this kind is inconsistent with these remedies and protections. This decision is a significant victory for Texas employers.”
Majority cites Legislature’s position in reform
A summary of the case at jdsupra.com sheds some light on what it terms a “ground-breaking decision.” First, pointing to one of the cases cited as basis to uphold the lower court’s finding (Aranda v. Ins. Co. of North America, 748 S.W.2d 210 [Tex. 1988]), the Supreme Court “majority would have overruled Aranda in section 5 of the opinion. Stating that “The [Workers Compensation] Act effectively eliminates the need for a judicially imposed cause of action outside the administrative processes and other remedies in the Act. Recognizing and respecting the Legislature’s prime position in enacting, studying, analyzing, and reforming the system, and its efforts in having done that, I conclude that Aranda should be overruled.” Aranda created a cause of action for breach of the duty of good faith and fair dealing between insurers and policyholders. Aranda itself was a workers compensation decision, and the cause of action has since expanded to other insurance policies in Texas.”
Adjuster conceded interviewing ‘only the employer’
The same account also adds some telling details of the original case: The “Ruttinger [case] involved an investigation by a carrier that failed to follow what the adjuster admitted was a standard investigation. At trial, the adjuster admitted that he did not interview the claimant or his doctor, only the employer. The adjuster also admitted that he should have interviewed all three. The jury found that the carrier violated the Texas Insurance Code by failing to conduct a reasonable investigation. It also found a ‘knowing’ violation, leading to trebling of damages.”
Dissent also cites Legislature, saying it clearly intended to preserve limited GFFD claims
The Texas Watch piece includes some highlights of the dissent:
Chief Justice Jefferson (joined by Green and Lehrmann) dissented, noting precedent makes both Insurance Code and common law claims viable (AETNA Casualty & Surety Co. v. Marshall, 724 S.W.2d 770 (Tex. 1987), and Aranda v. Ins. Co. of North America, 748 S.W.2d 210 (Tex. 1988), respectively). After the Comp Act was overhauled in 1989, its express language clearly stated the Legislature’s intent to preserve limited GFFD claims. The Act is not an exclusive remedy with respect to carriers (see Tex. Labor Code §§ 408.001 & 416.001, et seq.). The Legislature, while aware of the cases cited above, did not override them, and nothing in the Comp Act overcame the Insurance Code’s plain language. Therefore, there is no reason to hold that Insurance Code claims are now precluded. The Legislature has not made the Comp Act exclusive with respect to extra-contractual claims, and the Court’s preemption is without merit.
So even the Chief Justice found no reason to block bad-faith finding. May not be a giant decision for employers per se, but it’s certainly huge win for insurance carriers. And it reinforces the need for “mere workers” to get representation as early as possible in a workers’ comp case that may need litigating.
We can help you find an attorney
Frequently enough, a worker’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources: