At a time when our state legislature should be working to address our state budget crisis, it instead took time to pass a new law that gives millions ( potentially billions ) of dollars to insurance companies by stripping away the rights of individuals and small businesses to bring almost any kind of lawsuit. Proponents of the bill have deceptively named it “Loser Pays”, but that name is a sham.
The law is worded to guarantee that the insurance company wins no matter what. The new law will apply to almost every type of case including breach of contract, insurance claims, property rights, personal injury, and oil and gas leases.
Under this law, HB274, the victim of a drunk driver could have to pay the attorney’s fees of the drunk even if the victim WINS at trial! MADD ( Mothers Against Drunk Driving ) testified against HB274 in front of a Texas Senate subcommittee.
Here is how the victim wins, but LOSES, in a drunk driving case.
Assume a drunk driver crashes into your car as you are taking your child to school. Your damages, including medical bills for you and your child, total $150,000 but the defendant?s insurance company only offers $100,000. The defendant also demands a confidentiality agreement to prevent you from ever discussing the accident if you accept the settlement. You decide to go to trial. Unfortunately, the insurance company’s attorney is really good, and he convinces the jury the accident was partially your fault ( for not watching out for the drunk as much as you should have. ) He also convinces the jury to reduce your lost wages because “you could have gone back to work sooner” instead of taking care of your injured child at home. Regardless, you win and the jury awards you $79,000.00.
You just lost under HB274!
Even though the jury awarded you $79,000, you get nothing. In fact, you may owe the drunk driver $21,000 or more. Because you won less than 80% of the defendant’s settlement offer, the law defines you as the “Loser”. You now have to pay the defendant’s litigation expenses. Since the insurance company hired the best, high priced lawyers, experts, and court costs, that bill could easily be in excess of $100,000.
Incredibly, it gets even worse.
The law is written to protect the Defendant/Insurance Company, even when it loses. Under HB274, if the plaintiff wins big ( i.e. more than the insurance company’s settlement offer ) the defendant still gets a free pass and will never have to pay the plaintiff’s attorney’s fees. This is because section 38.015(d) of the law says the court cannot consider contingency fee contracts as evidence of attorney’s fees.
The only way most individuals or small businesses can afford to hire an attorney is through a contingency fee contract (where the attorney gets paid only if his or her client wins at trial). Since almost all claimants are forced to hire an attorney under a contingency fee contract, the law gives defendants and insurance companies a loophole even when they lose.
In summary:
If the injured person (or small business) “loses”, he/it will have to pay the insurance company’s attorneys fees, expert witnesses, court costs, etc.
If the injured person (or small business) wins, but wins less than 80% of the settlement offer, he/it still pays the defendant’s attorney’s fees, and litigation expenses. (I.e. the winner still loses)
If the injured person (or small business) wins more than 80% of the insurance company’s settlement offer, he/it is the ?prevailing party.? However, because HB274 will not let a contingency fee contract be considered as evidence of attorney’s fees, the insurance company gets a free pass and never has to pay the victim’s attorney’s fees even when the defendant loses.
It is shameful for the Republican Party to promote a law as “Loser Pays” when the law they drafted is rigged to prevent anyone other than the insurance company from ever winning. HB274 goes beyond political gamesmanship. It goes beyond favoritism and acceptable political payback to special interests. If this law is passed, every victim of a drunk driver, every homeowner whose storm damage claim is denied, and every business owner with a contract dispute, will be forced to risk financial ruin if they dare to assert their constitutional right to trial by jury.
Our elected officials would do well to remember the words of Thomas Jefferson who wrote:
“I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.”
Each of our elected officials have published phone numbers, fax numbers and email. Lets remind them of Mr. Jefferson’s wise words. Lets remind them that our faith is better placed in each other, and in the collective wisdom of our fellow citizens who serve on our civil juries, than in the schemes of lobbyists, and powerful insurance companies.
