Correction: A previous version of this story stated that the Texas Windstorm Insurance Association had $25 million in reserve to pay for future catastrophes, based on information in a press release from Rep. Larry Taylor. According to TWIA however, there is around $177 million in the Catastrophe Reserve Fund.
A recent report on the ongoing litigation against the Texas Windstorm Insurance Association over Hurricane Ike damage shows “troubling legal settlement patterns,” according to one Texas lawmaker.
Rep. Larry Taylor (R-Friendswood) obtained information from the Texas Department of Insurance in preparation for a Nov. 1 hearing of the TWIA Legislative Oversight Board.
The information released Oct. 29 shows that over the past four years, TWIA has paid out more than $1.2 billion on individually litigated claims. Another $1.2 billion was already paid out in a class action settlement for slab claims for a total estimated loss of $2.5 billion.
“Sept. 13, 2012, marked the four year anniversary of Hurricane Ike, yet TWIA continues to pay out tens of millions of dollars and plaintiff attorneys continue to solicit additional lawsuits,” Taylor said in a press release.
TWIA has spent around $70 million in defense costs since 2008, another $69 million in expenses and $1.3 million in mediation related to Hurricane Ike settlements, the report shows.
In addition, $600 million has been paid in legal fees. There are more than 300 plaintiff firms handling Hurricane Ike litigation claims, but a small group of 10 law firms have handled almost 75 percent of the litigation.
At the top of the list is the Mostyn Firm in Houston, which has obtained more than $353 million in settlements of more than 3,000 cases.
Mostyn has in turn donated some of his millions to support President Barack Obama’s reelection. An NBC News story states that Mostyn recently wired $1 million to Priorities USA Action, bringing his total contributions to the main Super PAC backing Obama to $3 million.
Tony Buzbeen’s firm in Galveston came in at No. 2 on the list for garnering more than $55 million from the settlement of 628 cases.
Beaumont’s Weller Green Toups & Terrell also made the list for having settled 568 cases for $31 million.
In documents obtained by the Southeast Texas Record via Taylor’s office, Weller Green and the Mostyn firm are sending out mailings encouraging homeowners to sue TWIA.
“Don’t be left out!!! There is still a small window of time to recover what you are owed by the Texas Windstorm Association,” states one page of the mailing targeting Galveston home or business owners who may have Hurricane Ike damage based on the firm’s search of the Galveston County Appraisal District.
“Although we have passed the four year anniversary of Hurricane Ike … it has come to our attention, after handling hundreds of Hurricane Ike cases against Texas Windstorm Insurance Association, that there are many TWIA insureds who still may have not been properly compensated for roof claims (i.e. lifted or raised shingles among other things),” a cover letter states.
The mailing also includes a copy of a “Super Lawyers” article about firm partner Mitch Toups and his firm’s success in settling the slab claims. A contingency fee agreement and a self addressed and stamped envelope to the law firm is enclosed in the packet of documents.
Taylor, who is co-chair of the Joint TWIA Legislative Oversight Board, says those “extremely high” settlement amounts are “above and beyond” prior payouts made by TWIA.
“Coastal residents deserve to know how their dollars are being spent. I intend to get answers at the upcoming hearing because this natural disaster has turned into a man-made disaster with serious repercussions,” Taylor said.
“The bleeding of TWIA ratepayers has got to stop and it’s time TWIA management explain exactly how they’ve been running their business since Hurricane Ike devastated Texas. The payout patterns don’t make sense, the exorbitant costs are atrocious and the abuse of the public trust is at an end.”
According to David Durden, vice president of External Affairs for TWIA, the TWIA Catastrophe Reserve Trust Fund has approximately $177 million to pay for future catastrophic claims. In addition, TWIA has $850 million of reinsurance and $2.5 billion in class 1, 2 and 3 bonds, which are authorized by statute.
TOP 10 PLAINTIFF FIRMS RANKED BY SETTLEMENT PAYOUT
Plaintiff Firm Cases Pending Cases Settled Total Settlement Payout
Mostyn** 463 2,704 3,167 $352,560,193
Buzbee 0 628 628 $55,664,375
Eiland** 196 191 387 $40,132,375
Clark Dean 2 525 527 $35,494,732
Weller Green 170 398 568 $31,914,905
Merlin 1 343 344 $28,702,419
Speights 227 437 664 $28,289,108
Solis 5 519 524 $20,451,475
Arguello Hope 2 400 402 $17,955,549
Doyle Raizner 2 176 178 $15,342,177
* – These figures don’t include the costs associated with the Global and Class Action Settlements.
** – Mostyn & Eiland’s settlement payout amounts include $12,341,591, 185 cases pending, and 87 cases settled.
SOURCE: Data provided by the Texas Department of Insurance.