Insurance bill seeks to curb lawsuits, worries consumer groups

Each chamber has a version of the legislation. In the House, state Rep. John Smithee, R-Amarillo, is carrying House Bill 3646, but it remains in committee. In the Senate, state Sen. Larry Taylor, R-Friendswood, is further along in the process after his chamber approved Senate Bill 1628 on Thursday.

The bills’ authors have said the measures were designed to prevent increases in property insurance premiums that could follow excessive and frivolous lawsuits stemming from hail damage claims.

Consumers “are going to pay a whole lot more for insurance” if the bill doesn’t become law, Taylor said.

Sherry Sylvester, a spokeswoman for Texans for Lawsuit Reform, lauded Taylor’s bill in a written statement, saying it “will stop the latest wave of lawsuit abuse in Texas – storm-chasing trial lawyers who go from hailstorm to hailstorm manufacturing lawsuits for attorney fees.”

Complaints to the Texas Department of Insurance are at an all-time low, but the number of lawsuits is increasing and the damages being sought have been more than the original claims, Sylvester said.

Taylor, Texans for Lawsuit Reform and the insurance industry all have been critical this session of trial lawyers, including Houston attorney Steve Mostyn, who is often seen as the face of the Texas plaintiffs’ bar.

Mostyn and his firm have sued the Texas Windstorm Insurance Association for hundreds of millions of dollars over damage caused by Hurricane Ike in 2008. He also filed about 1,000 hail cases — or about a fifth of the total — in Hidalgo County after a 2012 storm.

Mostyn said he hasn’t testified on the legislation and hasn’t been very active in the legislative process this session.

“I think the bill is horrible for businesses and consumers here,” he said, “but I am not the front on this.”

For their part, trial lawyers and other opponents have accused Taylor of creating burdensome requirements for would-be plaintiffs and for unfairly giving immunity to insurance agents and adjusters. The result, lawyers say, is stranding consumers with unpaid claims and little remedy to fight neglectful companies.

Bryan Blevins, president of the Texas Trial Lawyers Association, said his organization remains “opposed to the unfettered expansion of immunity for wrongdoers, the forcing of Texans to federal court and the marginalizing of the rights of consumers.”

On Wednesday, state Sen. Rodney Ellis, D-Houston, was critical of Taylor’s bill, saying it leaves too few restrictions on insurers, which would hurt consumers.

“We pretty much kiss the insurance companies as they come in,” Ellis said.

State Sen. Kirk Watson, D-Austin, tried and failed to pass an amendment Wednesday to limit those who could claim immunity.

Texas shouldn’t be immunizing “those who engage in unfair practices,” he said.

Alex Winslow, executive director of the consumer group Texas Watch, said the Taylor bill is dangerous because of its broad implications for residential and business customers.

Current law gives insurers guidelines for fair and prompt payment of claims and penalties for improper behavior, but the pending legislation would undermine and weaken the law, Winslow said.

“It makes it easier for insurance companies to cheat homeowners and businesses with valid property insurance claims,” he said. “Any claim covered under your property insurance policy is affected under this bill. It is not just hail.”

Some businesses that might have aligned themselves with Texans for Lawsuit Reform in previous sessions are now finding themselves siding with trial lawyers to make sure they can protect their right to sue bad actors in the insurance industry.

Among the businesses to oppose the legislation are La Quinta Inns & Suites, Roger Beasley Imports car dealerships, ​​builder Centex Homes and developer Trammell Crow.

A longtime lobbyist with several business clients said the legislation went too far and gives too much shelter to the insurance industry.

The lobbyist, who wasn’t authorized to speak on behalf of his clients, said, “This is without a doubt the worst piece of anti-business legislation supposedly being brought by a tort reform group that I have ever seen since working at the Capitol.”