Court Opinion

ID: 9647088
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:22:56.012575+00
Date Added: 2024-06-11T18:11:45.340544
License: Public Domain

SPECTOR, Justice,
dissenting.
Seven years ago, this Court squarely held that “an insurer’s unfair refusal to pay the insured’s claim causes damages in at least the amount of the policy benefits wrongfully withheld.” Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 134 (Tex.1988). Today the majority retreats from this holding and concludes that a compensation carrier’s bad faith refusal to pay benefits does not cause any actual damages that would support an award of punitive damages.
The majority’s decision cannot be justified on the basis of the exclusivity provision in the Workers’ Compensation Act. The same year we decided Vail, we soundly rejected the argument that the exclusivity provision should prevent recovery of bad faith damages against compensation carriers:
[T]he Act does not contemplate that the failure of a carrier to act in good faith or the carrier’s intentional tort can be meaningfully redressed by the mere addition of 12% or 15% to the past due compensation. Such nominal penalties are of questionable value as an incentive for the carrier to act reasonably in processing an employee’s claim.
Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 215 (Tex.1988). In so holding, we specifically recognized that punitive damages should be available on the same terms as in other tort actions:
*668[Ojrdinary tort damages, including exemplary damages, are recoverable for a breach of the duty of good faith and fair dealing upon a showing of the same elements that permit a recovery of those damages in other tort actions.
Id. (emphasis added).
The majority avoids this rule on the basis of language in Aranda stating that bad faith recovery is available when a carrier’s bad faith “is separate from the compensation claim and produced an independent injury.” Supra at 667 (quoting Aranda, 748 S.W.2d at 214). Here, though, the carrier’s bad faith clearly is separate from the compensation claim. Faith Davis is not asserting that Twin City breached the workers’ compensation agreement between her employer and Twin City. Twin City honored that agreement when it settled Davis’ compensation claim.
The present dispute arose only later, when Twin City wrongfully denied benefits covered under the settlement agreement. Davis then brought this suit alleging that Twin City’s conduct “constitutes a breach of Defendant’s duty of good faith and fair dealing arising from the relationship established between Defendant and Plaintiff by the Compromise Settlement Agreement and Release.” Given this context, Twin City’s conduct should be governed by the same rules applicable to any other insurer. See Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987).
The jury found that Twin City’s bad faith caused Faith Davis $3,500 in actual damages. Under our precedents, these are tort damages, and they fully support the jury’s additional award of punitive damages as a means of deterring future acts of bad faith. I would adhere to Vail, Aranda, and Arnold, and would uphold the award of punitive damages. Accordingly, I dissent.