Washington, DC – Bruce Wood, associate general counsel and director of workers’ compensation of the American Insurance Association (AIA), recently made the following statement on the Texas Supreme Court’s decision, after rehearing, in Texas Mutual Ins. Co. v. Ruttiger. The case was about the application of bad faith common law doctrine to the Texas workers’ compensation system.
Mr. Wood’s statement follows:
“AIA applauds today’s decision by the Texas Supreme Court, which overturns the Court’s 1988 split decision in Aranda, thereby effectively ending common law bad faith actions with respect to workers’ compensation in Texas. This decision can be expected to enhance market stability and eliminate unnecessary litigation over claims practices – conduct that with the 1989 law changes now is within the purview of the Workers’ Compensation Division and its parent agency, the Department of Insurance.
“In its initial decision last year, the Court favorably addressed several challenges to bad faith causes of action in Texas, but split on the question of reversing Aranda. AIA argued in its Amicus brief , urging the importance of resolving the Aranda question without further delay and that it would be unprecedented and futile to remand on this question, which ultimately must be resolved by the high court. The Texas Supreme Court’s ruling today agreed, deciding to eliminate Aranda causes of action in Texas and thereby recognizing the extensive regulation overhaul of the workers’ compensation system in Texas which took place in 1989.
“This decision in Texas Mutual brings to a successful conclusion AIA’s efforts to reverse Aranda, which began over three years ago.”