Storm-chasing trial lawyers are constantly evolving their tactics. While these efforts have proven lucrative for the handful of lawyers willing to push the boundaries of lawful practice and professional ethics, they have widespread consequences for the Texans being caught in the maelstrom of their litigation tactics.

In 35 to 40 percent of hail and wind-related lawsuits filed in Texas since the beginning of 2013, an agent, adjuster or employee has been named as a defendant along with the insurance company. This level of litigation against adjusters is unprecedented. The lawsuits against these individuals are not filed because the plaintiffs’ lawyers actually think the individuals did something wrong. Instead, these individuals are sued for tactical purposes.

One small Texas-based adjuster does business in Texas and 19 other states. He has been sued 407 times in recent years, and 404 of those suits were in Texas. He gave this testimony to the Legislature:

“Although I have been in insurance adjusting for many years, it was the rare day that an independent adjuster was sued in a disputed claim. In fact, it was the rare day that one of our claims ended up in litigation. Claims got amicably resolved. That was the norm.

“My adjusters—good, talented and honest people—are getting sued for no reason whatsoever.

“Despite all these lawsuits and allegations of bad conduct levied against us in boilerplate lawsuits, not once—never— have we ever been asked to pay a dime for settlement or had our allegedly bad conduct taken to a jury.”

A person who manages a nationwide adjusting firm says this about his recent experience in Texas:

“The allegations made against our adjusters are very serious. They are accused of committing fraud, being deceptive, dishonest and intentionally trying to deny or underpay claims. This affects their morale, their ability to earn a living and occasionally their credit ratings.

“There is no jurisdiction like Texas… This is a Texas problem that requires a Texas solution.”

In many cases, the plaintiff ’s lawyer has sued the agent, adjuster or employee to avoid having the case removed from state to federal court. Naming an individual as a defendant, along with an out-of-state insurance company, makes it difficult for the insurance company to move the case to federal court under the U.S. Constitution’s diversity of citizenship provision. And because suing the individual also makes the litigation more cumbersome and expensive, the trial lawyer’s leverage over the insurance company is enhanced because it adds length and cost to the lawsuit, whether or not the lawsuit is against an in-state or out-of-state defendant.

Recently, the most prolific of the storm-chasing trial lawyers, Steve Mostyn, added a new wrinkle to his mass-litigation model. He began sending letters to the lawyers representing the individual defendants (usually adjusters) saying their alleged liability to his clients could not be resolved through the out-of-court appraisal process. So even if the plaintiff ’s claim against the insurance company is dismissed after an appraisal award is paid by the insurance company, Mostyn attempts to keep the claim alive against the individual defendant.

Mostyn concludes his letter by saying: “In an effort to resolve this matter [against the individual] without lengthy discovery and litigation, the Plaintiff is willing to settle her claims against you, and only those claims against you, for $5,000.00.” He doesn’t bother to say what he thinks the agent, adjuster or employee did wrong to warrant a $5,000 payment to Mostyn and his client.

These obscenely abusive lawsuits against adjusters will be particularly problematic when the next catastrophic event occurs (like another hurricane or a series of tornadoes), as it is common for adjusters to come to Texas from other states to help resolve the sheer volume of insurance claims quickly and efficiently. Faced with the near-certain prospect of becoming a defendant in multiple unnecessary lawsuits, adjusters will have to decide if they are willing to take on the amplified risk of becoming entangled in this mass-litigation scheme through no fault of their own.

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Texans for Lawsuit Reform
1701 Brun Street
Houston, TX 77019

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