AUSTIN, Texas—The Supreme Court of Texas issued a decision today in Texas Mutual Insurance Company v. Timothy J. Ruttiger that strengthens a law affecting millions of Texans—the Workers’ Compensation Act.
The Court reversed the Houston Court of Appeals and rendered judgment that Mr. Ruttiger take nothing on his Insurance Code and Texas Deceptive Trade Practices Act claims.
Justice Phil Johnson wrote in strong terms that a bad faith cause of action is inconsistent with the current workers’ compensation system.
“[If the plaintiff were to prevail, the precedent would build] 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” on the part of all insurance carriers, Texas Mutual included, were on the increase when the Ruttiger case first came to the courts. In 2004, Texas Mutual disputed Mr. Ruttiger’s claim for an on-the-job injury because his employer reported that he was hurt at a non-work related softball game. Texas Mutual ultimately entered into a compromise agreement with Mr. Ruttiger over the claim. In 2006, a trial court found that the company’s adjuster had acted in “bad faith” by believing the employer instead of Mr. Ruttiger. The court awarded money to Mr. Ruttiger in excess of the amounts Texas Mutual had already paid him to cover his medical costs and replace his wages. He was also awarded extra money for his “mental anguish over having his claim disputed.”
The First Court of Appeals in Houston upheld the original decision, and Texas Mutual appealed 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,” Mary Barrow Nichols, General Counsel and Senior Vice President for Texas Mutual, said. “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.”
To see the full text of the decision, visit www.supreme.courts.state.tx.us/.
Source: Texas Mutual