Texas Supreme Court Overturns “Bad Faith” Tort
In a landmark decision, the Supreme Court of Texas overturned a precedent which allowed workers to sue insurance companies for bad faith handling of claims. The decision was 5 to 4 in favor of Texas Mutual Insurance Co., the state’s largest workers’ compensation company. The judgment removed the rights of a worker to sue an insurance company for acting in bad faith. Timothy Ruttiger of Galveston had originally made a workers’ compensation claim saying that he was injured on the job. The Texas Mutual Insurance Co. originally denied the claim because they believed that Ruttiger injured himself playing softball. Ultimately, the company decided to settle out of court. Ruttiger took exception to the decision to make him wait for his payment so he decided to sue the company. His issue was that this delay caused his hernias to worsen, damaged his credit, and caused him mental and physical pain. The original jury in Houston awarded Ruttiger $173,500 plus attorney fees for his suit against the insurance company. Referencing the insurance code and deceptive trade practices laws, the Supreme Court ruled that Ruttiger should receive nothing. Also, by overturning the 1988 Aranda vs. Insurance Co. of North America, the court decided that the workers’ compensation system is capable of satisfying a claimant’s suit. “One of the legislature’s unquestioned goals was to make decisions about benefits as objective as possible, and thereby reduce disputes and litigation over them,” the majority ruled. “The Aranda cause of action with its subjective standards for damages is antithetical to such a system, and it has no dispute resolution process other than litigation with its associated delays and expense.”
