HOUSTON – In May, Texas Watch, a self-labeled consumer advocacy group, released an opinion piece arguing an “assault waged by insurance companies” in the state legislature has left many Hurricane Harvey victims still unable to resume their lives eight months later.
The May 14 op-ed, entitled “The insurance lobby has destroyed Texas property rights,” has since sparked a slew of rebuttals from tort reform groups, a trade association and strong criticism from a veteran attorney, who says “it’s the same old rhetoric from Texas Watch.”
“If they (Texas Watch) were really concerned about the rights of Texas insurance consumers, they would take a look at the ongoing abuses by a few bad Texas trial lawyers, contractors, and public adjusters preying on homeowners after Hurricane Harvey and other major storm events,” said Steve Badger, an insurance litigator with Zelle LLP.
Badger
“If Texas Watch really wants to help Texas consumers, they ought to give me a call and arrange a time to meet and talk about ways we can work cooperatively in helping Texas homeowners get their disputed Harvey claims resolved quickly and fairly.
“I can assure you that is the objective of every single one of my insurance company clients.”
Less than a week after the op-ed’s release, Texans for Lawsuit Reform responded with its own opinion piece, asserting Texas Watch “purposely” left out the fact that it used months-old data -- a move to mislead readers about the legislature’s actions to combat lawsuit abuse.
Texas Watch’s op-ed uses information from the Texas Department of Insurance’s Data Call about the number of claims paid and the number of claims closed without payment after Harvey, which only presents data through Oct. 31, 2017 – two months after Harvey made landfall.
New data won’t be available until next month.
“Texas Watch has a record of supporting storm-chasing lawyers and their agents who solicit clients door-to-door after natural disasters, telling Texans the best way to get insurance money is by hiring a lawyer,” TLR’s opinion piece states.
“What Texas Watch doesn’t tell you is that the vast majority of insurance claims are resolved without requiring the assistance of a lawyer or filing a lawsuit.
“Texas Watch also fails to mention that nothing keeps a blue tarp on a roof longer than a lawsuit. Based on previous data provided by TDI, we know that when a lawyer gets involved in a claim, it takes seven times longer to be resolved.”
Earlier this month, the Insurance Council of Texas also issued a rebuttal, declaring Texans are being “harmed by misinformation and half-truths about their recovery” and pointing out that insurers have paid billions for more than 700,000 Harvey claims.
“In the last couple of weeks, one so-called consumer group has taken data from (TDI) and either misunderstood it or used it to promote their own agenda,” states ICT’s opinion piece.
“In the process, they ignored the huge number of flood claims caused by Harvey, and failed to take an opportunity to educate consumers about the need for flood insurance and the difference between flood coverage and a homeowners’ insurance policy.”
The Texas Windstorm Insurance Association and private insurers do not provide flood coverage. If a property owner seeks recovery for flood damages, he or she must have a policy with FEMA’s National Flood Insurance Program.
Mark Hanna, an ICT spokesperson, says 90 percent of the claims from Harvey were flood related.
“The private insurance industry was fully prepared for Harvey and handled all of its claims remarkably well,” said Hanna.
“Many people had no insurance – especially flood insurance. There will always be claims that were difficult to handle and lawsuits will follow, but you rarely hear from the 95 percent whose claims were handled well and those policyholders are on the road to recovery.”
Compared to Hurricane Ike, TDI reported that there were 80 percent fewer complaints following Harvey.
While Texas Watch may finger tort reform for the reduction in litigation, specifically citing the passage of HB 1774 (the hailstorm lawsuit abuse bill) last year, TLR argues the legislature had “no choice but to shut down” the “storm-chasing lawyers” who were “swooping” into Texas communities after natural disasters in hopes of “scamming property owners into filing lawsuits.”
“These unnecessary lawsuits had nearly bankrupted (TWIA) after Hurricane Ike, and more recently, have been causing private insurers to stop offering coverage or raise premiums and deductibles in parts of the state,” TLR’s opinion piece states.
When the Record questioned Badger about his reaction to Texas Watch’s op-ed, the attorney posed a series of questions himself:
- “Where is Texas Watch in objecting to the Houston lawyer who signs up clients on a 45 percent contingency fee and then dumps their matters into appraisal -- knowing very well there is no need for a lawyer to handle an appraisal process? Once the lawyer takes his 45 percent for doing virtually nothing, it’s indeed a certainty that the homeowner will be forever left with a blue tarp on their roof.
- “Where is Texas Watch in objecting to the lawyers who pass along to their homeowner clients a $1,500 ‘estimate fee’ paid to a contractor -- knowing very well that the true value of the estimate is only $350 and the rest of the charge is a disguised referral payment to the contractor for giving the homeowner the lawyers name?
- “Where is Texas Watch in objecting to public adjusters who sign up hundreds of clients, make no effort to negotiate their claims for the agreed 10 percent fee, and the then flip everything to lawyers who then take another 30 percent or more?
- “Where is Texas Watch in objecting to lawyers who use marketing personnel hired for the express purpose of soliciting clients and drafting lawsuits, without a licensed lawyer ever putting eyes on the client’s file and determining if the matter has any merit? Does Texas Watch condone clear barratry and the practice of law by non-attorney staff members?
- “Where is Texas Watch in objecting to the lawyers who are refusing to settle their clients’ cases even when the insurance company agrees to pay the alleged damages and attorneys fees as stated in the pre-suit demand letter? Yes, this is really happening. These lawyers are holding the homeowner settlement hostage while they argue for a payment more than the alleged unpaid claim and incurred attorney’s fees.”
Badger says all the aforementioned “schemes” are taking place right now after Harvey.
“No insurance company wants to see their claims end up in litigation, but neither will my insurance company clients tolerate fraudulent claims or extortion schemes,” Badger said.
“Texas Watch ought to step back and consider whether its constituents and financial contributors are the ones actually destroying Texas property rights in their rush for riches by injecting themselves into the insurance claims process.”
Texas Watch did not respond to repeated requests for comment.