The Supreme Court of Texas issued a decision in Texas Mutual Insurance Company versus Timothy J. Ruttiger that reversed the Houston Court of Appeals’ ruling and required Ruttiger take nothing on his Insurance Code and Texas Deceptive Trade Practices Act claims.
According to Justice Phil Johnson’s written opinion, a bad faith cause of action is contradictory with the current workers’ compensation system.
“An extra-statutory cause of action builds additional costs into the system by increasing litigation expense to employees, insurers and employers,” Justice Johnson wrote. “The way the dispute was resolved after Ruttiger initiated the dispute resolution process is the way the Act is designed to function.”
Lawsuits claiming “bad faith” against all insurance carriers, including Texas Mutual, have been rising since the Ruttiger case first entered the court system. Texas Mutual challenged Ruttiger’s workers’ compensation claim in 2004 because his employer reported that the injury resulted from a softball game outside of work. Texas Mutual and Ruttiger eventually agreed to a compromise over the claim.
In 2006, the trial court found Texas Mutual’s adjuster acted in bad faith by trusting the employer over Ruttiger, and the court awarded monetary compensation to Ruttiger beyond the amounts Texas Mutual had already paid him to cover medical costs and lost wages. Extra money was also awarded to Ruttiger for his “mental anguish over having his claim disputed.”
The First Court of Appeals upheld the earlier decision, which was then appealed by Texas Mutual to the Supreme Court.
“The Texas Supreme Court has today given careful consideration to the many speedy remedies and protections that the Legislature has granted to injured workers,” says Mary Barrow Nichols, general counsel and senior vice president for Texas Mutual. ”It found that permitting an injured worker to additionally recover with a lawsuit of this kind is inconsistent with these remedies and protections. This decision is a significant victory for Texas employers.”