"Loser Pays” In Texas: USAA Denies Medical Payouts

An article came across my desk that the United Services Automotive Association of San Antonio, Texas (USAA) is once again defending itself against charges that they utilize a "cost containment program" to improperly reduce or deny medical payouts to insurance customers injured in auto accidents. USAA denies these allegations.

In a nutshell, their strategy is like so many other insurance companies. They sell you a policy, collect premiums, but then minimize payment of claims. When you need your insurance company most, its number one priority it to employ the "Three D's" - delay handling your claim, deny you were injured, and defend this position in a long legal battle. It profits from your money by paying out as little as possible when you need it most.

Here is how it works. Let's assume you are injured in an auto accident and are unable to work. Your damages are $125,000 in medical expenses and lost wages. USAA tells you a second opinion is required but, you must use its third party who concludes that some of your medical treatment was not necessary. USAA offers you $75,000. You have two choices - accept the offer or file a lawsuit. USAA hopes you take the money and walk away. You choose to file a lawsuit. Let's assume the defendant convinces the jury that the accident was partially your fault and that you could have returned to work sooner than you did. Let's also assume you still win your case, but the jury awards $54,000. That is 72% of the insurance company's offer. Hold on; it gets better. Texas proposed a new bill which just passed the House. I wrote about it last week. It is H.B. 274, also known as "loser pays". Under this bill, if a plaintiff rejects a settlement offer and the jury verdict is less than 80% of the offer, the plaintiff must pay the defendant's attorney's fees from the time the offer was rejected. Because you only won 72% of the insurance company's offer, you now must pay the insurance company's litigation fees EVEN THOUGH YOU WON!!

As I was writing this, the Texas House and Senate reached some kind of compromise on the "loser pays" legislation. I don't have the full details, but the changes made will supposedly allow judges in civil court cases to rule on whether a case is without merit much sooner, limit discovery, hasten hearings and assess court costs more equitably. Although winners of lawsuits may still be required to carry some of the burden of legal costs, on the surface the compromise appears to be a better alternative to the version that the House passed on May 9. But, is it enough to protect innocent victims? Mike Gallagher, a trial attorney who helped negotiate the consensus bill believes so. "You can be assured that you can go to the courthouse and not face the prospect of ruination by pursuing a constitutional right," he told the committee. That the Texas trial lawyers had a seat at the negotiating table gives me some comfort, but I will have to wait and see about the particulars of this new round on Texas tort reform.

Texas trial lawyers have been fighting for the rights of innocent victims while politicians like Governor Rick Perry has been touting tort reform. Insurance companies have made a killing under paying claims because they know only a small fraction of their policy holders will fight. USAA and other insurance companies are already limiting and screwing the injured public with their deceitful claims handling practices. Will this compromise be enough to stop the government from further screwing Texan citizens? Since it is in Texas, it leaves me dubious.

Texans should contact their state representatives for complete details. Make sure that passing of this bill will not strip away precious Constitution rights. Insurance companies will continue to deny, delay, and defend legitimate claims unless the taxpayers do something about it - NOW!