Texas Mutual Ins. Co. v. Ruttiger
Court Watch—August 30th, 2011
Texas Mutual Ins. Co. v. Ruttiger
Stripping injured workers of their rights
Case No. 08-0751; Opinion delivered August 26, 2011
ISSUES
May claims against workers’ compensation (comp) insurers be brought pursuant to the Chapter 541 of the Texas Insurance Code for unfair settlement practices or misrepresentation, the Deceptive Trade Practices Act (DTPA), or the common law duty of good faith and fair dealing?
FACTS
In June 2004, Timothy Ruttiger reported to his supervisor that he was injured while carrying pipe and was diagnosed with having bilateral inguinal hernias. The comp carrier, Texas Mutual Insurance Company (TMIC), investigated, denied his claim, and initially refused to pay due to allegations that the hernias resulted from Ruttiger playing softball (they later paid after a benefit review conference). Ruttiger then sued TMIC and its adjuster for violations of Art. 21.21 of the Texas Insurance Code (now Ch. 541), the DTPA, and the common law duty of good faith and fair dealing (GFFD). The jury found TMIC liable on all counts. The trial court rendered judgment based on the Insurance Code causes of action and also provided for contingent recovery under the DTPA and GFFD if the appellate court ruled otherwise as to the Insurance Code causes of action. The appellate court found no evidence of credit reputation damages but otherwise affirmed the judgment. The Supreme Court granted TMIC’s petition for review on March 15, 2010.
HOLDING
Justice Johnson wrote for the majority (comprised of Hecht, Wainwright, Medina, Willett, and Guzman), holding (1) claims against comp carriers for unfair settlement practices may not be brought under the Insurance Code (or DTPA); and (2) claims for misrepresentation may be brought under the Insurance Code (although not supported here). The majority emphasized the specific nature of the Comp Act and feared rewarding injured workers who delay in accessing it. Because Justices Willett and Guzman declared themselves “agnostic” on the issue of GFFD in a concurrence, the case was remanded in part to address this issue.
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.
IMPACT
Ignoring clear legislative intent and case law, the Court has eviscerated bad faith claims for workers subjected to unfair settlement practices. Texans already suffer from a broken comp system, and the Court’s opinion adds insult to injury by further restricting workers’ rights to be fully and promptly compensated for their injuries.
