PANEL TAKES UP MODIFIED HAILSTORM SUIT LEGISLATION
(AUSTIN) — The Senate Business and Commerce Committee Thursday considered a modified version of a bill intended to address what supporters say is an increase in lawsuit abuse surrounding hailstorm and other weather related claims. Author and committee Chair Senator Kelly Hancock of North Richland Hills said the changes to the filed legislation came after working with stakeholders to address concerns in the bill as filed. "Through the process, what we're saying in this is that we heard you, we made significant changes, and I will say significant changes," he said.
North Richland Hills Senator Kelly Hancock’s SB 10 attempts to rein in what he describes as “an explosion” of unfounded hailstorm lawsuits.
Hancock described the issues surrounding hailstorm litigation in the state. He said that a few unscrupulous lawyers and contractors are engaging in what he called "storm-chasing", where they incite policy holders to sue their insurers rather than using the standard claims process. Over the interim, Lt. Governor Dan Patrick charged Hancock and his committee with investigating the issue and proposing solutions. They received data from the Texas Department of Insurance that Hancock says demonstrated a mounting problem. "The report shows the lawsuit-to-claim ratio increased a staggering 15 times over immediately after storm-chasing lawyers created an explosion of lawsuits in 2011," he said. "That’s a 1400 percent increase." In some cases, he said, lawsuits were filed before insurance claims. While he stressed this activity is limited to a few bad actors, he said the results have wide ranging effects including increasing premiums for home owners and some insurers reducing or even eliminating coverage due to excessive litigation.
His bill, SB 10, would bar attorneys from collecting fees involving these suits if the insurer can prove the plaintiff was incited to file suit by their attorney, a practice known as barratry. The bill considered before the committee Thursday had some significant differences from the filed version. Gone is a section delineating under which part of the state code a suit can be filed, and the bill clarifies that it applies only to nature-related claims, not any insurance claims. It also separates the dispute involving the claim and the dispute about barratry claims into two separate, stand-alone trials. "This in effect ensures that the claimant's suit is not delayed in any way or affected by the proceeding against their attorney," said Hancock. Both trials, however, would be in front of the same jury.
Among the other bills considered by the committee on Thursday was one that would require companies contracting with the State of Texas to participate in the federal E-Verify system. This is a database that checks whether or not a person applying for a job is eligible to work in the United States. In 2014, then-Governor Rick Perry issued an order requiring state agencies to use the system, but no such requirement exists for companies that the state hires as contractors. Schwertner's bill addresses that. "For the large amounts of state dollars at risk and at stake, it is imperative that taxpayer dollars are used to employ only those who are legally eligible to work in the United States," he said. Schwertner's bill, SB 23, includes protections for companies that hire ineligible workers based on errors from the E-verify database, and wouldn’t apply to subcontractors or suppliers used by the primary contractor. It would also require the Comptroller to bar a contractor for five years from future business with the state if it finds out the contractor violated the requirements of the bill.
The Senate will reconvene Monday, March 13 at 2 p.m.