Bill proposes to create new cause of action for unfair settlement practices of a workers’ compensation claim
In what may turn out to be a case of deja vu all over again, another newly-filed bill proposes to turn back the clock on enforcement of the Texas workers’ compensation scheme. HB 1702, filed by Representative Nicole Collier (D – Dallas), would amend Insurance Code section 541.060 to permit an injured worker or his beneficiary to bring a private cause of action against the workers’ compensation insurer for unfair settlement practices.
The bill would undo the law that has existed since 2012 when the Supreme Court of Texas decided Texas Mutual Insurance Company v. Ruttiger. In that case, the court held that a workers’ compensation claimant could not bring a cause of action under section 541.060. The court observed that the Texas Workers’ Compensation Act requires the Texas Department of Insurance, Division of Workers’ Compensation to monitor the actions of insurance carriers for compliance with the Act and myriad Division rules, and the Division has authority to assess administrative penalties of up to $25,000 per day for violations. It concluded that permitting a workers’ compensation claimant to recover damages by simply suing under the general provisions of section 541.060 “would be inconsistent with the structure and detailed processes of the Act.”
Before the Court issued the decision in Ruttiger, attorneys representing injured workers’ regularly sued insurance carriers for unfair settlement practices under section 541.060. In those days, such suits presented the chance for a big payday – similar to the way car wrecks do now. If Representative Collier’s bill becomes law, we may be headed back to those days.
We’ll continue to monitor HB 1702 and report on its status.