Texas Senate OKs bill to discourage weather-related lawsuits

A tort-reform bill that would discourage property owners from suing insurers over weather-related claims tentatively passed the Texas Senate on Tuesday.

Senators voted 21-8 to advance House Bill 1774 but still need to take a final vote before it can go to the governor’s office. The legislation — championed by Lt. Gov. Dan Patrick and Gov. Greg Abbott — is all but certain to win final passage.

If passed, it would reduce the penalties insurance companies face when they don’t pay enough in claims, decrease the chances they will have to pay the plaintiff’s attorneys fees and protect individual agents from the negative effects of being personally sued — most notably diminished credit scores.

Sen. Kelly Hancock, the North Richland Hills Republican who sponsored the House legislation in the Senate, told lawmakers Tuesday, it targets a small group of bad actors — trial lawyers who take advantage of home and business owners for big payouts. He said the bill preserves consumers’ rights by still allowing policyholders to file a lawsuit against their insurance company.

Sen. John Whitmire, a Democrat from Houston, challenged that claim, saying the bill would jeopardize consumers’ rights by interfering with their ability to hire legal counsel since they would risk paying costly attorneys fees.

“It’s a major change in getting to the courthouse and getting recovery,” he said, warning that the legislation could have unintended consequences. He urged his colleagues to monitor its effects and consider corrective measures in the future.

He added: “I think we will hear from our constituents across the state when we have storms and natural disasters. I think people are going to be in for a real surprise that we’re changing the current practice.”

Patrick deemed “hailstorm lawsuit abuse” a top priority for the legislative session, which ends May 29. Abbott later called it “the newest form of lawsuit abuse.”

An early version of the bill was written in a way that would’ve affected all kinds of insurance, including health. It has since been changed but the current version isn’t limited to hailstorms — it applies to any weather-related damage, including floods, wildfires and hurricanes.

The issue has reignited longstanding tensions between Texans for Lawsuit Reform, a powerful GOP-backed tort reform group that pushed the legislation and the Texas Trial Lawyers Association, which represents plaintiff’s attorneys who handle cases on behalf of policyholders. Supporters of the bill have accused some lawyers of filing frivolous lawsuits.

The tort reform group points to an uptick in the percentage of hailstorm claims resulting in lawsuits as an indication of unwarranted legal action. They cite a 2017 Texas Department of Insurance Report that shows from 2012 to 2015 there was a 1,400 percent increase in the number of hail and windstorm claims resulting in lawsuits.

But trial lawyers and consumer rights groups, who worry the legislation will tip the balance of power heavily toward already-powerful insurance companies, point to the same report to explain that Texas had a large number of hailstorms from 2012 to 2015. The report shows the insurance industry denied a higher percentage of claims during that time period.

Texas Watch, a consumer rights group opposing the bill, said in a statement Tuesday that the new measures would force many cases into backlogged federal courts and add costs and uncertainty for property owners who want to challenge insurers’ decisions in court.

“Under this new law, many insurance companies will pay property owners as little, as late as possible. Texans can expect only more delays and denials from the for-profit insurance industry,” said Ware Wendell, the group’s executive director, in a statement.

“Lucy Nashed, spokeswoman for Texans for Lawsuit Reform, said the legislation “strengthens protections for Texans against bad actors who exploit families and businesses after severe weather.”

“By passing House Bill 1774 to third reading, the Senate is helping put a stop to abusive lawsuits that are jeopardizing the affordability and availability of property insurance across the state and ensuring Texas policyholders will continue to have the strongest consumer protections in the nation against insurers who unfairly deny and delay claims,” Nashed said.

Read related stories:

• The Texas House passed HB 1774 earlier this month. State Representatives shot down several amendments that would have altered the scope of the bill.
• The legislation has pitted trial lawyers and consumer rights organizations against tort reform groups. Opponents to the bill worry the proposed legislation would encroach on consumer protections.
• Some Texas businesses have been vocal in their support of the bill. Others have been just as outspoken on their opposition.

Disclosure: Texans for Lawsuit Reform and the Texas Trial Lawyers Association have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.