Today, the U.S. Supreme Court refused to hear an appeal from Louisiana Citizens Property Insurance Corporation. This appeal followed a Louisiana Supreme Court decision upholding a local court decision ordering Citizens to pay $105 million in penalities to thousands of policyholders it harmed after Hurricane Katrina. Citizens had been set-up in 2003 as a state-sponsored “insurer of last resort” to provide homeowners insurance to those who could not find coverage in the private market. You will no doubt recall that following the 2005 storm, many individuals were left destitute, without food, water or a roof over their heads. As this report showed, Citizens policyholders had a particularly horrendous time – probably the worst of anyone - trying to file claims or get them paid. And that’s saying something. Citizens has the money, but says it’s gong to continue to try to fight this in federal court.
Now, unfortunately, the bad news. On Friday, the Texas Supreme Court issued a shocking 5-4 decision, which completely eradicates the rights of injured workers to sue workers’ compensation insurance carriers that act in bad faith, suddenly overturning decades-long Texas law. Writes the Austin American-Statesman:
The 5-4 decision favored Texas Mutual Insurance Co. of Austin, the state's largest workers' compensation insurance carrier. The case was one in which Texas Mutual had initially denied an injured worker's claim, saying he was hurt playing softball and not at work, before the company eventually settled the case.
The worker, Timothy Ruttiger of Galveston, later sued the insurance company, claiming the delay in getting his benefits damaged his credit, worsened his hernias and caused mental anguish, pain and suffering.
A Houston jury awarded Ruttiger $173,500, plus attorney fees, but last summer the Texas Supreme Court ruled that Ruttiger take nothing under the insurance code and deceptive trade practices law. But the higher court sent back the bad-faith claim for reconsideration by a Houston appellate court.
Before the appellate court acted, the Supreme Court granted a request for a rehearing.
On Friday, the decision eliminated the bad-faith provision that had been law for 23 years. …
Alex Winslow with the Texas Watch Foundation's Court Watch project said that the decision is another example of the Supreme Court's conservative activism.
“Five robed justices have gone out of their way to second-guess the clear and decades-long intent of the Legislature,” he said in a news release.