Source: https://www.ticerlawfirm.com/Articles/Proof-Of-Loss-and-EUOS.shtml
Timestamp: 2020-01-25 02:53:38
Document Index: 562544038

Matched Legal Cases: ['art. 21', '§ 3', 'art. 21', 'art. 21', 'art. 21', '§3', '§3', '§21', 'art. 5546', 'art. 5', 'art. 5', 'art. 5', 'art. 5']

An Examination Under Oath (hereinafter "EUO") is a condition precedent found in many first party policies, more typically automobile and homeowners policies . See State Farm General Ins. Co. vs. Lawlis, 773 S.W.2d 948 (Tex. App. - Beaumont 1989, orig. proceeding). The typical language permitting an EUO is as follows:
An EUO is an examination of the insured under oath, before a notary where the testimony is transcribed and submitted to the insured for signature before a notary. Potomac Fire Ins. Co. vs. Turner, 67 S.W.2d 1080 (Tex. Civ. App. - San Antonio 1934, no writ). The request for EUO should be set at a reasonable time and place and may include a request for documents. Ayoub vs. American Guarantee & Liability Ins. Co., 605 F. Supp. 713 (S.D.N.Y.1985); Pierce vs. Globe & Rutgers Fire Ins. Co., 182 F. 586 (Wash. 1919). See also Humphrey vs. National Fire Ins. Co., 231 S.W. 750, 754 (Tex. Comm'n App. 1921, judgment adopted). The request for an EUO should include the scope the examination, understanding that the basis for an EUO is to be reasonable. See generally Aetna Casualty & Surety Co. vs. Garza, 906 S.W.2d 543 (Tex. App. - San Antonio 1995, writ dism'd by agr.).
An insured has a right to counsel at the EUO. Humphrey, 231 S.W. at 755. A proof of loss is not a substitute for an EUO. Provident Fire Ins. Co. vs. Asky, 162 S.W.2d 684, 685 (Tex. 1942). Likewise a recorded statement is not a replacement for an EUO. Lawlis, 773 S.W.2d at 949; Watson vs. National Surety Corp., 468 N.W. 2d 448 (Ia. 1991 ). See also Ramsey vs. Lucky Stores, Inc., 853 S.W.2d 623 (Tex. App. - Houston [1st Dist.] 1993, no writ).
An EUO provision is material. Humphrey, 221 S.W.2d at 752. While a notice provision in an insurance policy must be evaluated by a standard of "actual prejudice" in order to avoid the claim, an EUO provision is not analogous.
An EUO can be required of at least the named insured(s). West vs. State Farm Fire Ins. Co., 868 F.2d 348, 349 (9th Cir. 1988). Substitutes for the insured(s) will not work even if a proper or legal delegation has been made. Sims vs. Union Assurance Soc., 129 F. 804 (Ga. - App. 1903) (bankruptcy receiver) and Palace Café vs. Hartford Fire Ins. Co., 305 U.S. 634 (1938) (adjuster hired by insured). If the policy permits more than one EUO, multiple exams may be permitted.
Lastly, the insured in most cases can insist that the EUO be signed by the insured. Turner, 67 S.W.2d at 1080. Where the transcription of the EUO is incomplete or inaccurate, there is no requirement for the insured to sign. Century Ins. Co. vs. Hogan, 135 S.W.2d 224, 227 (Tex. Civ. App. - Austin 1939, no writ). Other Texas courts have a harsher view. Perrotta vs. Farmers Ins. Exchange, 47 S.W.3d 569 (Tex. App. - Houston [1st Dist.] 2001, no pet.) (discussed infra).
The EUO can be waived. Where the insurer denies the claim prior to requesting an EUO, the provision can be waived. See Beckley vs. Ostego County Farmers Cooperative Fire Ins. Co., 159 N.Y.S.2d 270, dism'd 2 N.Y.2d 711 (1957). The condition can also be waived by failure to abide by statutory deadlines and rules or an outright breach of the policy by the insurer prior to the EUO demand. See Tex. Ins. Code Ann., art. 21.55 § 3 (Vernon 2004). Compliance may also be excused due to the death, illness, and/or mental disability of the insured.
False swearing in an EUO may or may not void the policy. Vernon vs. Aetna Ins. Co., 189 F. Supp. 233 (S.D. Tex. 1960), revs'd 301 F. 2d 86 (5th Cir. 1962), cert. denied 371 U.S. 819 (1962). Tex. Ins. Code Ann., art. 21.19 (false swearing and misrepresentations) only applies to proofs of loss and death claims according to the district court and Fifth Circuit opinions in Vernon. Id. at 235. In contrast, EUOs taken pre-suit and pre-claim denial may result in forfeiture. U.S. Fire Ins. Co. vs. Skatell, 596 S.W.2d 166, 168 (Tex. Civ. App. - Texarkana 1980, writ ref-d n.r.e.). If the requirements of Article 21.19 are not met, false swearing in an EUO may void the policy.
The case most frequently cited in almost all EUO opinions is Humphrey, 231 S.W. at 750. The facts in Humphrey are straightforward. Julia Humphrey, insured under a fire insurance policy by National Fire Insurance Company, suffered damage to her personal property in a rented home in Galveston. Id. at 751. The trial court rendered judgment in favor of Humphrey. Id. The Court of Appeals reversed, finding that Humphrey had "knowingly refused" to submit to an EUO as requested. Id.
In the Commission of Appeals following a writ of error granted by the Supreme Court, Humphrey contended the EUO was immaterial and was unenforceable unless the failure to give the EUO caused the actual destruction of the property damaged. Id. The Court rejected Humphrey-s argument finding the EUO provision material: "-the provision in question is a material one in such contracts, and that if the same were breached, the insurer would be deprived of a valuable right for which it had contracted." Id. at 752. Emphasis Added.
However, the penalty for failure to satisfy the EUO condition (breach) is abatement not forfeiture according to the Humphrey-s court. Id. Thus, the insurer must plead abatement rather than defenses in bar: "-that such refusal should be pleaded in abatement and separately from defenses in bar of recovery in all events at any time." Id. citing Aachen & Munich Fire Ins. Co. vs. Arabian Toilet Goods Co., 10 Ala. App. 395, 64 So. 635 (1914). Emphasis Added. The Humphrey-s court went on to cite several other cases from other jurisdictions embracing abatement rather bar. 231 S.W. at 753.
The Court stated the rule that abatement must be done in "due order," that is before the merits are determined. Id. Accordingly, the Court found no abatement was requested, only the refused EUO defense alleged in a subsequent answer. Id. Therefore, abatement was waived and so was reliance on the EUO provision. Id. at 753-754. The basis for this holding was that the Insurer could wait until limitations had passed and then demand an EUO conceivably causing a dismissal of Plaintiff-s claim and ultimate loss due to a statute of limitations defense.
The Court further held such notice was unreasonable as Ms. Humphrey had a right to counsel who was entitled to attend the EUO. Id. at 755. The Court specifically rejected the notion of a private examination and quoted from a Missouri appellate court: "When insurance companies proceed to take these examinations, it is tantamount to a declaration of intention to contest the claim-" Id. citing Thomas vs. Burlington Ins. Co., 47 Mo. App. 169, 1891 WL 1841 (Mo. App. 1891). Emphasis Added. The Court viewed the insurer-s EUO demand as at least an implicit attempt to "take an undue advantage of the Plaintiff-to manufacture a mere technical defense," which "cannot be allowed to succeed." Id.
In concluding the review of Ms. Humphrey-s case, the Court stated: "We find it difficult to escape the conclusion that the insurance company was more desirous of preserving the defense than of ascertaining the information it alleged it desired." Id.
The jury found in favor of Asky, finding he timely submitted a sworn proof of loss and the insurer led Asky to believe he had done all necessary to comply with the proof of loss requirement. Id. at 684. The Court of Appeals affirmed. The Texas Commission of Appeals disagreed holding that an EUO and/or next level interview and/or submission of an affidavit, and/or documentation were not a substitute(s) for sworn proof of loss: the two (2) provisions, proof of loss and EUO, "would be meaningless repetition of words" if one was a substitute for the other. Id. at 686. The Court also concluded that the insurer had no duty to advise Asky of the need for a proof of loss.
The landmark case of State Farm vs. Lawlis is frequently cited for more than just the issue of EUOS. In Lawlis, the Caldwells, husband and wife, sued State Farm for a fire loss sustained in their home, alleging breach of contract and violations of bad faith insurance practices. 773 S.W. at 948-949. State Farm timely sought abatement for a failure to satisfy a condition precedent, submission to an EUO. Id. at 949. The Caldwells responded by arguing that they had substantially complied with the EUO provision because Ms. Caldwell had submitted herself to a four (4) hour recorded interview with State Farm-s adjuster. Id. The interview though was "neither sworn nor subscribed." Id.
Aetna attempted to excuse its conduct by telling the Court that the issue was whether payment was delayed without a reasonable basis not whether furnishing the policy was delayed "without a reasonable basis." Id. The Court agreed with Aetna but pointed out that it could not excuse its delay when it refused a reasonable and proper request by the insured, i.e. furnishing a copy of her policy before an EUO was taken. Id. Stated simply, Aetna cannot escape liability by refusing to provide an item the insured needs in order to satisfy the condition precedent.
Furthermore, the Court found Aetna-s conduct was unconscionable under the DTPA when it deprived Ms. Garza of the "best source of information regarding the rights and obligations under an insurance policy itself." Id. at 553. Aetna-s own witnesses conceded that Ms. Garza would be at a disadvantage if she had no copy of the policy from which to refer. Id.
One case frequently overlooked dealing with EUOs and discovery is In Re Texas Farmers Ins. Exchange, 990 S.W.2d 337 (Tex. App. - Texarkana 1999, orig. proceeding). The facts are uncomplicated: On May 13, 1996, the Chappells- home was damaged by fire and they made a claim on their Farmers- policy. Id. at 338. Following the receipt of a May 31, 1996 report from its own fire investigator that the fire was not accidental, Farmers hired attorney Greg Scott to conduct an EUO of the Chappells. Id. Scott conducted the EUOs about one month after being hired and the claim was denied on September 17, 1996 about forty-five (45) days after the EUOs were taken. Id. The claim was denied because Farmers believed that the Chappells had set the fire and/or had knowledge of same. Id. The denial letter also asserted that the Chappells made material misrepresentations in presenting their claim. Id.
Farmers sought mandamus relief which was denied except for the date of anticipation. Id. at 340. The Texarkana Court of Appeals noted Scott-s testimony at the hearing that an EUO was "a presuit investigation tool which has been used by insurers in Texas for about 70 years." Id. at 341. The Court ruled that Scott, in taking the EUO, was conducting a routine investigation and shielding his investigation merely because Scott was an attorney would permit insurers to hire lawyers to do investigations to prevent disclosure. Id.
With regard to the date for anticipation of litigation, the appellate court noted that Scott testified that he was not told Farmers anticipated litigation on the date it received the investigator-s report or prior to the EUO. Id. at 342. Rather, the EUO was for purposes of evaluating the Chappells- claim. Id. Furthermore, the Court noted that Farmers did "not claim that it had already determined that it would likely deny the claim immediately after receiving" the investigator-s report. Id.
The latest case on EUOs is Lidawi and appears to answer at least one unanswered question in Texas regarding EUOs. Lidawi v. Progressive Mutual Ins. Co., 112 S.W.3d 725 (Tex. App. - Houston [14th Dist.] 2003, no pet.). In Lidawi, the Houston Court of Appeals (14th Dist.) held that an insurer could compel separate EUOs from a husband and wife pursuant to the EUO provision. Id. at 727.
On appeal, the Court of Appeals affirmed the trial court in part. The appellate court proceeded to hold that when a contract is silent on a matter, a reasonable interpretation will be made. Id. at 731. Furthermore, the Court held that "Texas courts will also supply missing terms when necessary to effectuate the purposes of the parties under the agreement." Id. In ruling in favor of Progressive on the issue of separate EUOs, the Court of Appeals relied heavily on Shelter Ins. Co. v. Spence, 656 S.W.2d 36, 38 (Tenn. Ct. App. 1983) for the notion that it was more likely that accurate factual information could be obtained from separate EUOs. Id.
The Court in permitting separate EUOs failed to take into account the language approved of by the Texas Supreme Court in Humphrey: "-The liability of the Defendant having become fixed by the happening of the event, upon which the contract was to mature, conditions which prescribe methods and formalities for ascertaining the extent of it or for adjusting it, are not to be subjected to any narrow or technical construction but construed liberally in favor of the insured." Humphrey, 231 S.W.2d at 754 citing Porter vs. Ins. Co., 164 N.Y. 504, 509-510, 58 N.E. 641 (1900).
In addition, there is no discussion in Lidawi of Humphrey-s language regarding construction of a term and/or ambiguity in an insurance policy. The Houston Court of Appeals in contradiction of longstanding rules on interpreting insurance policies simply adopts the insurer-s interpretation because it is good policy and will prevent collusion. Lastly, the Lidawi Court notes that the Texas Rules of Civil Procedure regarding spouses does not require sequestration in lawsuits but there is "no principled reason why a spousal exemption should extend to the realm of investigation, and we discern none." Id. at 732, n.3. This statement defies logic and reverses the insured-s burden; if sequestration for a husband and wife among others is not required in actual litigation, there is no meaningful distinction for separate EUOs. In either proceeding the truth is being sought.
Another reason to file suit and allow the trial court to intervene is to flush out whether the EUO is a being used as a pretext. If the insurer is using the EUO as a pretext to build its denial and get a free pre-litigation deposition, the condition should be considered waived, as a denial of the claim waives the condition. Beckley, 159 N.Y.S.2d at 270. As the Humphrey-s court noted: "When insurance companies proceed to take these examinations, it is tantamount to a declaration of intention to contest the claim-" Humphrey, 231 S.W. at 755 citing Thomas, 47 Mo. App. at 169. A request for an EUO from a common sense perspective hardly indicates the insurer is being receptive to the claim especially where the insurer has had numerous interviews with insured(s) and requested various documents.
Perhaps the most effective tool for precluding an EUO is Tex. Ins. Code Ann., art. 21.55, the prompt payment statute. Article 21.55 is a part of almost every insurance policy and if not, the statute applies to almost every kind of policy. The application of EUOs and Article 21.55 works this way: Section 3 of Article 21.55 mandates that a claim must be accepted or rejected in most cases within fifteen (15) business days (exception arson) after the insurer receives "all items, statements, and forms required by the insurer." Tex. Ins. Code Ann., art. 21.55 §3(a). An insurer cannot continue to request items merely to extend Section 3(a). Colonial County Mutual Ins. Co. vs. Valdez, 30 S.W.3d 514 (Tex. App. - Corpus Christi 2000, no pet.). If the insurer has made no further request and the time period has passed, Article 21.55 has been violated, the insurance policy breached by the insurer, and the insured is excused from complying with an EUO request. See generally Gulf Ins. Co. vs. Parker Products, Inc., 498 S.W.2d 677, 679 (Tex. 1973)(breach by one party generally excuses performance of conditions by nonbreaching party). Article 21.55 is an effective tool to thwart an improper EUO or untimely EUO requests.
The importance of dealing with EUOs to secure payment of your client-s claim should not be ignored. One writer has stated the obvious and understood with respect to EUOs: "This technique is now quite common as a method for the insurer to obtain free discovery and seek ostensible reasons to refuse payment prior to suit." William J. Chriss, Compliance With Conditions Under Texas Property Insurance Policies - Waiver, Estoppel, Excuse, 1st Annual Advanced Insurance Law Course (March 25-26, 2004)" p. 4. One can either gain a general understanding of EUOs or allow your client to suffer the consequences.
To gain an overview of proofs of loss one should start with Hanover Ins. Co. v. Hagler, 532 S.W.2d 136 (Tex. Civ. App. - Dallas 1975, writ ref-d n.r.e.).
"It is a settled principle of law in Texas that a stipulation in an insurance contract requiring notice and proof of loss within a reasonable time and on reasonable terms is valid and must be complied with to recover under the policy." Hanover Ins. Co. v. Hagler, 532 S.W.2d at 137. The purpose of this clause is to allow the insurer to investigate the loss "while the occurrence is fresh in the minds of witnesses, to prevent fraud, and to enable it to form an intelligent estimate of its rights and liabilities so that it may adequately prepare to defend any claim that may arise." Id. See also Allan D. Windt, Insurance Claims and Disputes §3.3, p. 185 (West 2001). Just like an EUO, the submission of a proof of loss is a condition precedent. Hagler, 532 S.W.2d at 137.
More than an EUO, an insurer will not, with some exceptions, be very successful in asserting denial of a claim based upon a failure to provide a proof of loss. As Windt notes in his respected treatise on insurance, there are six (6) reasons why an insurer will "rarely be able to deny coverage because of a failure to comply timely with such provision." Windt, p. 185. Perhaps, the most frequent legal excuse permitting noncompliance is "substantial compliance." Texas Farm Bureau Underwriters v. Hasting, 449 S.W.2d 283, 285 (Tex. Civ. App. - El Paso 1969, no writ).
In Rogers v. Aetna Casualty and Surety Co., Rogers-, the insured, pool house was being constructed and was damaged by fire. 601 F.2d 840, 842 (5th Cir. 1979). Rogers promptly notified Aetna of the loss. Id. Aetna investigated the fire, visiting the fire scene at least twice. Id. at 844. Over a two month period, Rogers sent and Aetna received five (5) letters "detailing all information about the claim as it became available." Id. Aetna raised the failure to submit a proof of loss as a defense to payment. The Court summarily rejected the defense based on Rogers- substantial compliance. Id. The rule, the Court noted, was as follows: "The rule is that, when defective proofs of loss are furnished to the company, it must, within a reasonable time, object to the proofs, and point out the defects, so that the insured may, if he so desires, amend same, and cure the defects." Id. citing Anchor Casualty Co. v. Bowers, 385 S.W.2d 568, 569-570 (Tex. Civ. App. - Houston 1964), rev-d on other grounds, 393 S.W.2d 168 (Tex. 1965). Note though that substantial compliance must take place within the time period allowed for filing the proof of loss. Hagler, 532 S.W.2d at 140.
A third reason to excuse submission of a proof of loss is when the need for same is "obviated" by the insurer-s conduct or knowledge. Windt, p. 186. For example, if the insurer denies the claim within the time period when the proof of loss is due or the insurer leads the insured to believe no proof of loss is required, submission is excused. Hagler, 532 S.W.2d at 138. A partial payment may likewise provide a legal excuse. Id. at 138-139.
Fourth, mere mistakes or exaggeration may also not bar recovery. Windt, p. 187. However, a willful misrepresentation may so qualify. See Tex. Ins. Code Ann. §21.19 (Vernon 1981). The materiality of the misrepresentation and prejudice to the insurer appears to be the test. Delta Lloyds Ins. Co. v. Williamson, 720 S.W.2d 232, 233 (Tex. App. - Beaumont 1986, no writ). But see Lee v. National Life Assurance Co., 632 F.2d 524 (5th Cir. 1980) and Aetna Casualty & Surety Co. v. Guynes, 713 F.2d 1187 (5th Cir. 1983).
The sixth and last basis for an exception is waiver and estoppel. This excuse is just another form or shade of the first basis to excuse performance. One Texas case deals with the insurer-s failure to furnish proof of loss forms to the insured and failure to communicate with the insured knowing he was hospitalized. Henry v. Aetna Casualty and Surety Co., 633 S.W.2d 583, 584-585 (Tex. App. - Texarkana 1982, writ ref-d n.r.e.).
An insurer has a duty to point out defects in a proof of loss within a "reasonable time" so that the insured can amend the notice and file it timely. For example, if the proof of loss is not sworn to and the insurer fails to object and provide the insured an opportunity to cure, the requirement is waived. Austin Bldg. Co. v. Nat-l Union Fire Ins. Co., 403 S.W.2d 499, 506 (Tex. Civ. App. - Dallas 1966, writ ref-d n.r.e.). It may likewise amount to substantial compliance. Id. Moreover, failing to list this condition as a basis for denial waives the defense to the extent a defense exists. Id.
Another ground of waiver similar to an EUO occurs when the insurer denies the claim within the time period required to provide a proof of loss. Austin Bldg. Co., 403 S.W.2d at 506. However, denial after the proof of loss is due is not waiver. U.S. Fidelity & Guaranty Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971); Galveston County v. Hartford Fire Ins. Co., 231 S.W.2d 684, 685-686 (Tex. Civ. App. - Galveston 1950, writ ref-d). But an admission of partial liability after the proof of loss is due may be a waiver but such waiver may be fact intensive. See Bimco Iron & Metal, 464 S.W.2d at 357. The consideration in this context must be whether the proof of loss was required for the particular damage being sought. Hagler, 532 S.W.2d at 138-139.
This statute was formally Tex. Civ. Stat. Ann., art. 5546(a) but was amended in 1985 and placed in the Texas Civil Practice and Remedies code. Case law indicates that this provision is applicable to proofs of loss. Texas Farm Bureau Mutual Ins. Co. v. Carnes, 416 S.W.2d 863, 869 (Tex. Civ. App. - Corpus Christi 1967, writ ref-d n.r.e.); Fidelity & Deposit Co. v. Fidelity Finance Co., 111 S.W.2d 809, 811-812 (Tex. Civ. App. - Dallas 1937, writ dism-d).
Absent pleading to the contrary, compliance with notice including proofs of loss is presumed. Specifically, Tex. R. Civ. P. 93 mandates that a verified denial must be filed to properly contest any presumed or pled allegation that a proof of loss has been provided. The denial cannot be generic in nature but must state the filing of the proof of loss was insufficient. Anchor Cas. Co. v. Bowers, 393 S.W.2d 168, 170 (Tex. 1965). The presumption of a valid proof of loss may not be conclusive for the insured where the failure to assert a verified denial is not raised by the insured or the issue of the proof of loss is tried by consent. Aetna Ins. Co. v. Durbin, 417 S.W.2d 485, 487-488 (Tex. Civ. App. - Dallas 1967, no writ).
"Personal Injury Protection," often referred to as "PIP," refers to no fault coverage provided in automobile policies. This coverage provides for payment of medical bills and lost wages for damages incurred up to three (3) years after the accident.
C. "Covered person" as used in this Part means:
B. Modification. The General Provision part of this policy entitled "Our Right to Recover Payment: does not apply to this coverage.
(b) "Personal injury protection" consists of provisions of a motor vehicle liability policy which provide for payment to the named insured in the motor vehicle liability policy and members of the insured-s household, any authorized operator or passenger of the named insured-s motor vehicle including a guest occupant, up to an amount of $2,500 for each such person for payment of all reasonable expenses arising from the accident and incurred within three years from the date thereof for necessary medical, surgical, X-ray and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services, and in the case of an income producer, payment of benefits for loss of income as the result of the accident; and where the person injured in the accident was not an income or wage producer at the time of the accident, payments of benefits must be made in reimbursement of necessary and reasonable expenses incurred for essential services ordinarily performed by the injured person for care and maintenance of the family or family household. The insurer providing loss of income benefits may require, as a condition of receiving such benefits, that the insured person furnish the insurer reasonable medical proof of his injury causing loss of income. The personal injury protection in this paragraph specified shall not exceed $2,500 for all benefits, in the aggregate, for each person.
(h) When any liability claim is made by any guest or passenger described in paragraph (b) hereof against the owner or operator of the motor vehicle in which he was riding or the owner-s or operator-s liability insurance carrier, the owner or operator of such motor vehicle or his liability insurance carrier shall be entitled to an offset, credit or deduction against any award made to such guest or passenger in an amount of money equal to the amounts paid by the owner, operator or his automobile liability insurance carrier under "personal injury protection" as defined in this Act to such guests or passengers; provide, however, that nothing herein shall be construed to authorize a direct action against a liability insurance company if such right does not presently exist at law.
The purpose of PIP is no fault designed to cover the immediate expenses that result from physical injuries due an "automobile accident." Creighton v. Fidelity & Cas. Co., 581 S.W.2d 815 (Tex. Civ. App. - Fort Worth 1979, no writ). It is automatically provided unless rejected with a minimum of $2,500.00. Tex. Ins. Code Ann., art. 5.06-3(a) and (b). Ortiz v. State Farm Mutual Automobile Ins. Co., 955 S.W.2d 353, 356-357 (Tex. App. - San Antonio 1997, writ denied).
A question has arisen from time to time as to who can reject PIP to make a rejection valid. The statute provides the rejection is valid "if any insured named in the policy shall reject the coverage in writing." Tex. Ins. Code Ann., art. 5.06-3(b). The Texas Supreme Court has recently spoken to this issue. In Old American County Mutual Fire Ins. Co. v. Sanchez, the Court was faced with the issue of whether the spouse of the named insured was the proper person to make a PIP and uninsured rejection valid. 149 S.W.3d 111, 113 (Tex. 2004). The Court found the spouse-s rejection valid as the spouse (wife) was a named insured in the policy even though she was not specifically named. Id. at 116. The Court concluded Ms. Sanchez-s rejection was valid since the named insured was the individual named in the declarations page "-and she was-that individual-s spouse, if a resident of the same household." Id. at 118 citing Texas Family Automobile Policy (1956).
As to lost wages, the insured is entitled to recover eighty percent (80%) of lost wages. This differs from Medical Payments Coverage (Medpay) which does not provide such coverage. Finally, the collateral source applies to PIP benefits. Lawrence v. State Farm Mutual Automobile Ins. Co., 984 S.W.2d 351, 353-354 (Tex. App. - Austin 1999, no writ)("A unique feature of the Texas statute is its retention of the collateral source rule with regard to other medical and wage continuation benefits that the recipient might be entitled to receive.").
PIP covers injuries and lost wages due to a "motor vehicle accident". Obviously, a vehicle accident involving two or more vehicles qualifies but what about other twists?
The Courts of Appeal provide varying interpretations of what constitutes a "motor vehicle accident." In Berry v. Dairyland County Mutual Ins. Co., the Fort Worth Court of Appeals interpreted the term broadly. 534 S.W.2d 428, 431-433 (Tex. Civ. App. - Fort Worth 1976, no writ). The Court held that the term encompassed a collision between two vehicles, a collision between a car and a fixed or stationary object, injury suffered by a person while engaged in the use of a vehicle, and injury to a person while occupying a vehicle. Id. at 432-433. Additionally, injury that occurred from alighting a vehicle likewise embraced the term. Id. at 433.
Subsequent cases narrowed any liberal construction of the term "motor vehicle accident." In Flores v. Dairyland County Mutual Ins. Co., the Eastland Court of Appeals refused to extend coverage to an insured who was injured after alighting from his vehicle closing the door, taking four (4) steps, and falling on the curb resulting in a broken ankle. 595 S.W.2d 893 (Tex. Civ. App. - Eastland 1980, writ ref-d n.r.e.). In Le v. Farmers Texas County Mutual Ins. Co., the Houston First District Court of Appeals held no PIP and UIM benefits due a passenger who was shot in a drive by shooting. 936 S.W.2d 317, 324-325 (Tex. App. - Houston [1st Dist.] 1996, writ denied).
Then along came a trio of Texas Supreme Court cases which clarified these holdings. In Farmers Texas County Mutual Ins. Co. v. Griffin, a declaratory judgment action was filed by the insurer involving the duty to defend and indemnify an insured regarding a drive by shooting of a pedestrian. In Griffin, the Court construed the term "auto accident." 955 S.W.2d 81, 82 (Tex. 1997). The Court, in construing "auto accident" as opposed to "motor vehicle accident," held that such facts do not qualify as an auto accident requiring the insurer to defend its insured. Id. at 83. This holding likewise would apply in the PIP context.
Two years later in Mid-Century Ins. Co. v. Lindsey, the Supreme Court held that UIM benefits were available to an insured who was injured when a child crawled from the bed of a pick up through the sliding window to the cab hitting a gun in the cab gun rack which discharged striking the insured. 997 S.W.2d 155, 157 (Tex. 1999). Lindsey addressed construction of the term "accident" and "arising out of" the "use" of the truck as it related to underinsured coverage. Id. at 154. The insured had previously recovered the policy limits of the truck owner-s insurance. Id. The Court concluded after discussing the terms "accident", "auto accident", and "motor vehicle accident", that the incident qualified for underinsured coverage. Id. at 158-159. In doing so, the Court noted that if the vehicle had moved and the gun discharged there would be no question of coverage and if the gun-s discharge would have occurred regardless of the vehicle then there would be no coverage. Id. at 158-159. The distinction was that the vehicle must have some causal connection to the injury versus being the mere situs for the accident. Id. at 163-164. This case supports a broader view of PIP coverage.
The latest of these three cases is Texas Farm Bureau Mutual Ins. Co. v. Sturrock, 146 S.W.3d 123 (Tex. 2004). In Sturrock, the insured drove to work where he parked and turned off the engine; while exiting his vehicle, Sturrock, the insured, found his foot entangled in the "raised portion of the truck-s door facing." Id. at 125. As a result, Sturrock injured himself trying to prevent a fall. Id. Sturrock filed a PIP claim. Id.
The Court made an extensive discussion of Griffin and Lindsey, recognizing the holding in Lindsey would seem to support coverage for Sturrock. Id. at 126-127. In finding PIP coverage due to a motor vehicle accident, the Court embraced the Texas Department of Insurance-s position that adopting a narrow reading of motor vehicle accident would "contravene" the purpose of the PIP statute. Id. at 129. Much like Lindsey, the Court held that "the vehicle must be more than the mere situs of the accident or injury-producing event." Id. citing Lindsey, 997 S.W.2d at 156. For PIP purposes, the Court held that a "motor vehicle accident occurs when (1) one or more vehicles are involved with another vehicle, an object, or a person; (2) the vehicle is being used, including exit or entry, as a motor vehicle; and (3) a casual connection exists between the vehicle-s use and the injury-producing event." Sturrock, 146 S.W.3d at 134. The Court though did disapprove of Berry to the extent it was inconsistent with its opinion. Id. at 129, n. 6. Ultimately, it appears that the Supreme Court has adopted Berry with a nexus requirement between the vehicle and injury producing event.
In broadest terms, PIP benefits cover reasonable expenses arising from the accident and incurred within three (3) years from the date thereof. Tex. Ins. Code Ann., art. 5.06-3(b). These include: "medical, surgical, x-ray and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services, and in the case of an income producer, payment of benefits for loss of income as a result of the accident-" Id.
The question of what constitutes "incurred" has been broadly interpreted. For example, an insured who was treated at a military hospital free was still entitled to receive the reasonable value of the services received. Geico v. Vail, 623 S.W.2d 170, 172 (Tex. App. - Beaumont 1981, writ ref-d n.r.e.).
Regarding lost wages, the claimant need not be on the job when the injury occurred. The only requirement is that one need be employed. Slocum v. United Pacific Ins. Co., 615 S.W.2d 807, 810 (Tex. Civ. App. - Houston [1st Dist.] 1981, writ ref-d n.r.e.). In Slocum, the claimant accepted a job just before the motor vehicle accident and was injured the day before he was to start work. Id. The Court though, found the claimant did not qualify as a wage earner. Id.
A vehicle which is owned but unscheduled under the policy will not provide coverage. Springfield v. Aetna Casualty & Surety Ins. Co., 612 S.W.2d 285 (Tex. Civ. App. - Austin 1981, writ ref-d n.r.e. per curiam, 620 S.W.2d 557 (Tex. 1981)(holding that insurers have a right to know and charge premiums for such coverage). See also Moore v. State Farm Mutual Automobile Ins. Co., 792 S.W.2d 818 (Tex. App. - Houston [1st Dist.] 1990, no writ). In another case, an insured was allowed to recover PIP benefits under his motorcycle policy but not his auto policy (motorcycle not listed). State Farm Mutual Automobile Ins. Co. v. Maynord, 689 S.W.2d 292 (Tex. App. - Fort Worth 1985, writ ref-d n.r.e.).
Basic stacking *that is multiplying the amount of PIP coverage by the number of vehicles insured* is not permitted. Guerrero v. Aetna Casualty & Surety Co., 575 S.W.2d 323 (Tex. Civ. App. - San Antonio 1978, no writ); Carter v. Republic Ins. Co., 579 S.W.2d 326 (Tex. Civ. App. - Fort Worth 1979, writ ref-d n.r.e.). However, if there are two separate policies which cover the same claim, the insurer is required to pay up to the limit of each policy. Travelers Indemnity Co. v. Lucas, 678 S.W.2d 732, 735-736 (Tex. App. - Texarkana 1984, no writ). In simple terms, double recovery is not permitted. USAA v. DiCarlo, 670 S.W.2d 756, 757-758 (Tex. App. - El Paso 1984, writ ref-d n.r.e.).
Tex. Ins. Code Ann., art. 5.06-3(e) sets out two exclusions to PIP: (1) causing injury to oneself intentionally; and (2) while in the commission of a felony or seeking to elude "lawful apprehension or arrest" by law enforcement officials. These exclusions mirror those found in the liability portion of the automobile policy.
Under the PIP statute, the insurer has thirty (30) days to pay after "satisfactory proof thereof is received by the insurer-" Id. at (d). However, Article 21.55 which is now a part of most policies specifies fifteen (15) days after the insurer receives the same sort of proof. A question arises which one authority controls. Only one Texas case has addressed this issue finding the PIP statute controlled. Lush v. Mid-Century Ins. Co., 1998 WL 609766 (Tex. App. - Amarillo 1998, n.w.h.). This case has not been cited by any other court and the conclusory analysis by the Amarillo Court of Appeals is not helpful. Caution should rule when relying on this case.
Subsection (h) of Article 5.06(3) permits the amount of PIP benefits paid to be used as an offset for amounts paid to a guest or passenger under a liability claim. For PIP payments and uninsured/underinsured claims for an insured, the result is less clear. See generally Kim v. State Farm Mutual Automobile Ins. Co., 966 S.W.2d 776, 778-779 (Tex. App. - Dallas 1998, no writ). But in Mid-Century Ins. Co. v. Kidd, the Texas Supreme Court held that the PIP benefits can be used as offset where the damages do not reduce UM/UIM policy limit benefits. 997 S.W.2d 265 (Tex. 1999). See also Dabney v. Home Ins. Co., 643 S.W.2d 386, 388-389 (Tex. 1982). The Kidd Court held "that a non-duplication-of-PIP-benefits provision in an automobile insurance policy is valid and enforceable." 997 S.W.2d at 267.