Opinion ID: 1213610
Heading Depth: 1
Heading Rank: 6

Heading: Waiver by Lexington of Having Suit Papers Immediately Sent

Text: Next, in light of our disposition of the preceding issue, we address a question arising from another subsection of the policy. Subsection V.C.2.c. required the Medical Center to send immediately to Lexington copies of any demands, notices, summonses, or legal papers received in connection with any suit or claim. The district court found as a matter of law that the Medical Center failed to comply with this requirement. The Medical Center does not contest that finding. There was a failure to forward immediately the 4590i letter relevant to the claim, as well as to send the legal papers arising from the suit. The district court then gave to the jury the question whether this failure to forward the papers was nonetheless excused, or in effect, waived under Texas law. The jury answered in the affirmative. In the post-verdict opinion explaining the grant of JMOL, the district court found that Lexington could and did waive the entitlement of immediate receipt of the suit papers. The uncontested definition of waiver given the jury was this: Waiver occurs when (1) the insurer waived by its conduct the enforcement of a particular policy provision, (2) the insured relied to its detriment on the insurer's conduct, and (3) it would be unjust to allow the insurer to enforce the policy provision under the given circumstances. Lexington argues on appeal that it could not have waived this part of the policy, because doing so would impermissibly change, re-write and enlarge the risks covered by the policy. Tex. Farmers Ins. Co. v. McGuire, 744 S.W.2d 601, 603 (Tex. 1988). The provision, though, is distinct from the notice provisions discussed earlier. Waiver of this provision would not substantively create insurance coverage where none exists by the terms of the policy, as in McGuire. Id. at 602-03; see also Ulico Cas. Co. v. Allied Pilots Ass'n, 262 S.W.3d 773, 778-80 (Tex.2008). It is a procedural requirement designed to give the insurer prompt notice of the details of claims and lawsuits filed. Though useful to the insurer, it does not change the kind or scope of claims and suits covered by the policy. Its violations would not affect coverage absent proof of prejudice. We are more troubled, though, by the district court's conclusion that the jury was entitled to find that Lexington had actually waived this provision. This finding was based entirely on the three letters, referred to earlier, which Lexington sent the Medical Center after receiving loss runs. The district court found that because these letters asked [the Medical Center] to forward copies of certain medical records and correspondence with counsel, but failed to request any legal documents related to the reported claim, the jury could have found that Lexington waived its right to immediate forwarding. We do not see how Lexington's sending a letter requesting internal hospital documents  which the policy does not appear to require  can mean that it waived its right to enforcement of an unrelated policy provision requiring immediate production of claim and suit papers. Waiver is the intentional relinquishment of a right actually known, or intentional conduct inconsistent with claiming that right. Ulico, 262 S.W.3d at 778. For all Lexington knew, there were not yet any such papers. The Medical Center has argued, and we agreed, that these letters were usable evidence that Lexington accepted loss runs as notices of claim. But quite differently, the elliptical nature of the loss runs would give Lexington no idea what documents the hospital had in its possession. It had to rely on the Medical Center to fulfill its policy obligations. If these letters from Lexington that have been found to reveal acceptance of loss runs as notice of claim also constituted waivers of receiving thorough documentation of the claim and any litigation, the insurer would be in a quandary. To avoid this result, perhaps the insurer could restate in all correspondence such other policy provisions as required further information, and state that such information was still needed. No Texas precedent shown to us suggests such a result. It was not reasonable for the jury to find that Lexington waived its rights under this provision. We conclude there was no waiver. On remand, Lexington will still need to show that it was prejudiced by the Medical Center's failure to abide by this policy provision.