Hopper v. Argonaut Insurance Company, No. 03-12-00734-cv (Tex. App.-Austin, October 18, 2013)
Last year, the Texas Supreme Court abolished the common-law duty of good faith and fair dealing in the workers' compensation context because it found that reforms of the WC statutory scheme in the early 1990's provided adequate safeguards that had been lacking when the high court adopted the WC bad-faith remedy in the 1988 Aranda case. See Texas Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 451 (Tex. 2012). However, the Ruttiger Court declined to foreclose all statutory bad-faith remedies under section 541 of the Texas Ins. Code because the WC reforms had addressed only procedural shortcomings in the claims-investigation and settlement process. The Court left alone statutory prohibitions against insurers' misrepresentations of the content their insurance policies.
Now come the Hoppers, who try and fail to bring a valid WC bad-faith claim under section 541. The circumstances of the claim are tragic. Mr. Hopper sustained a wrist injury, for which he received WC benefits. The chronic-pain drug fentanyl was prescribed, and he died of an overdose several years after his injury. His wife and two children sought WC death benefits, claiming that his death from the medication was work-related. The WC insurer denied the claim for two years, challenging both the work-related nature of Mr. Hopper's death and his family's status to bring the claim. Finally, after a benefit-review finding favorable to the beneficiaries, the insurer agreed to accept the claim. Not satisfied, the claimants brought a bad-faith action under section 541 against the insurer.
At trial, the family argued that the insurer misrepresented several facts about Mr. Hooper's death and the family's right to assert a WC claim, and these false statements, they argued, remain actionable after Ruttiger. However, the trial court found, and the appellate court agreed, that only misrepresentations about the terms of the insurance policy survive the Ruttiger decision. The claimants alleged only misrepresentations committed in the investigation process. According to the Ruttiger Court, the WC reforms provided adequate safeguards against insurance malfeasance of every kind in the claims process, including misrepresentations, such that bad-faith remedies were no longer needed. Thus, the Hopper court found no basis for the claims to go forward.
Given the standardized form of WC policies, it is very doubtful that claimants will be able to state a claim of misrepresentation of the policy. Hopper may be WC claimants' last gasp after Ruttiger.
David S. White