Source: https://www.dallasfortworthinsurancelawyerblog.com/prompt-pay-law/
Timestamp: 2019-04-23 18:28:15+00:00

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Courts interpreting the TPPCA have been split regarding the precise date to begin calculation of the 18% penalty for early claims-handling deadline violations.
Some courts held that the day after the earliest deadline violation is the date the penalty interest should start to accrue. For example, in Primrose Operating, the jury found that the insurer violated §§542.055(a) and 542.056. The federal district court held that the penalty began to accrue on the very first date of violation, i.e., the day after the deadline in §542.055(a): date of notice of claim + 15 days + 1 day.
Other courts have interpreted the TPPCA to mean the penalty can only be enforced through a violation of §542.058, and thus used §542.058’s 60-day period in determining the date the penalty begins to accrue even when an earlier TPPCA violation occurred. For example, where insurers violated §542.055(a), some courts calculated the accrual of the penalty as follows: date of notice of claim + 60 days + 1 day. Other courts have calculated accrual as: date of notice of claim + 15 days + 60 days + 1 day.
First, in Cox Operating, where the jury found the surplus lines insurer violated both §§ 542.055(a) and 542.056(a), the Fifth Circuit concluded that the penalty should begin to accrue 30 days after the date the insurer received notice of the claim (i.e. the penalty was based on the violation of §542.055(a) – the earliest violation).
Second, in Weiser-Brown, where the insurer violated §542.056(a) (for failing to notify the insured of acceptance or rejection of the claim within 15 days of receiving information necessary to secure proof of loss), but did not violate §542.055, the Fifth Circuit affirmed that the penalty began to run 15 days after the insurer received the information necessary to secure proof of loss.

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