Hail Storm Lawsuit Abuse Prompts Creation Of New Texas MDL Courts

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A five-member panel appointed by the Texas Supreme Court has decided to create a new MDL court system to deal with lawsuits brought against insurance companies in relation to hail storms around Texas. The insurers claim they are attempting to protect themselves from predatory litigation tactics that could eventually cause them to no longer offer insurance in some parts of Texas.

Sunday, April 12, 2015 - Lawsuits stemming from a smattering of hail-producing storms around Texas have been consolidated under new multidistrict litigation courts created by the Texas Supreme Court. The Court appointed a five-member panel to vote upon the consolidation, which was not supported by the plaintiffs who claims that the defendants simply want an MDL system that will keep their lawsuits in varying stages of litigation to stymie a possible resolution.

The pretrial multidistrict litigation courts were favored by the panel as they claim the amount of lawsuits, which total almost 1,600 cases, needed to be conjoined in an effort to streamline discovery and the judiciary process. There have been numerous complaints from insurance companies that plaintiff lawyers are attempting to take advantage of insurance companies after major storms, sometimes suing for more than twice the estimated cost of damage.

The creation of the three-court MDL system is the first of its kind in Texas, and was sought after by the defendants Farmers Insurance Co. Farmers, which is being sued in most of the cases for allegedly acting in bad faith when handling potential insurance claims by Texans who had been affected by hail storms.

Plaintiffs opposed to the creation of the MDL courts for the hail storm lawsuits claimed that because the storms happened in 44 different counties and took place at varying times, the only common facts under which to consolidate the lawsuits in this instance are commonalities in business practices for the insurance company. They argued that this creates a troublesome precedent for future lawsuits that may have benefited from avoiding multidistrict litigation, but under the system employed in this case would be instead wrangled into a larger suit because they fell into similar business brackets as other suits that bear an unsubstantiated resemblance to each other.

The court did take these concerns into consideration when ruling on the MDL courts, stating that it was "reluctant" in basing its decision on the commonalities of business practices. However, the size of the potential class and the benefits to be gained by consolidation were more important to the court and worthy of a decision supporting the move.

In response to the plaintiffs claims that the MDL was created as a move by the defendants to prolong litigation with ongoing claims, the panel elected to cut off claims to be included in the litigation at June 11, 2014. 27 cases were left out of the MDLs altogether as their complaints did not include any reference of their clients taking issue with the business practices of the defendants.

The hail storm lawsuits are not run-of-the-mill however, as there have been allegations of lawsuit abuse by attorneys in Texas relating to insurer practices following major storm. A bill currently in the Texas Senate is attempting to protect homeowners from insurance companies that no longer want to offer homeowners insurance to people living in the areas where the practice of adjusters offering policyholders to lawyers in order to sue exist. Following a storm in McAllen, Texas, 22 percent of insurance claims proceeded to file lawsuits, more than 10 times more than the average of two percent.

The consolidation of many of these lawsuits seek to curb that practice and allow lawsuits made against insurance companies to be dealt with uniformly. Plaintiffs may not be happy with the diminished returns early, but it‘s possible that their future insurance rates may be safe from skyrocketing in the future.