Opinion ID: 1213610
Heading Depth: 1
Heading Rank: 7

Heading: Texas Insurance Code Claim

Text: Last, we address the Medical Center's claims for misrepresentation under the Texas Insurance Code. The jury found that Lexington committed an actionable misrepresentation. The district court overturned the verdict and granted a JMOL to Lexington on these claims. The alleged misrepresentation was a statement, made by Lexington in its January 2004 letter denying the Cornelius claim, that it will deny any claim unless the insured strictly complies with the insurance policy's notice requirements. This statement was allegedly false because Lexington's conduct with respect to other claims supported by loss runs indicates that it does not in fact require such strict compliance. Lexington's stated reason for denying the claim would therefore be a sham. The district court found that there was nothing misleading in Lexington's letter. The letter referred to the Medical Center's failure to report the suit as soon as practicable, and to the failure to forward suit papers immediately. The Medical Center also cited the three letters acknowledging notice of claims on the basis of loss runs as evidence of Lexington's disparate treatment of claims. The district court found, though, that the letters simply acknowledged receipt of claims, while the reasons cited for denial of the Cornelius claim related to distinct policy provisions. As explained above, the Medical Center, without legitimate dispute, failed to comply with the policy provisions cited in the January 2004 letter. The effect of that noncompliance remains an open issue, though, because of the question of prejudice. In addition, the June 2003 letters that responded to other claims did not create a waiver of the requirement to forward papers immediately. There also was not a waiver of the right to receive notice of the suit. While the issue of prejudice remains to be determined, the Medical Center cites no Texas case in which an insurer has been held to have committed either intentional or negligent misrepresentation by citing valid reasons for rejecting a claim. Even if the Medical Center ultimately prevails because Lexington was not prejudiced, mere breach of contract, without more, does not constitute a `false, misleading, or deceptive act.' Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996) (quoting Ashford Dev., Inc. v. USLife Real Estate Serv., 661 S.W.2d 933 (Tex.1983)). The Medical Center did not show either that the statement in the letter was false, or that the statement caused it any damage. The jury's verdict on this point was unsustainable.