Mayo v. John Hancock Mutual Life Insurance Co. of Boston
711 S.W.2d 5, 1986 Tex. LEXIS 538, 29 Tex. Sup. Ct. J. 400 (1986)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A plaintiff's recovery of actual damages and a statutory penalty for an insurer's failure to timely pay a claim does not bar a separate action for treble damages based on the insurer's distinct unfair or deceptive trade practices, as these constitute different 'acts or practices' under the law.
Facts:
- Steve Mayo was covered by a group insurance policy from John Hancock Mutual Life Insurance Company through his employer, which provided maternity benefits.
- The policy provided for a continuation of coverage for dependents who were 'totally disabled' at the time of employment termination.
- Steve Mayo's employment was terminated on December 19, 1980.
- At the time of his termination, his wife, Diane Mayo, was pregnant.
- Diane Mayo gave birth on January 27, 1981.
- John Hancock denied the Mayos' claim for maternity benefits.
Procedural Posture:
- Steve and Diane Mayo sued John Hancock in a Texas trial court for breach of contract and violations of several Texas statutes.
- The trial court severed the claims, ordering a trial on the breach of contract and Art. 3.62 claims first.
- A jury found in favor of the Mayos on the first set of claims, awarding them actual damages, a 12% penalty, and attorney's fees.
- In the severed action concerning the DTPA and Art. 21.21 claims, John Hancock filed a motion for summary judgment.
- The trial court granted summary judgment in favor of John Hancock, dismissing the Mayos' remaining claims.
- The Mayos, as appellants, appealed to the Texas Court of Appeals, which affirmed the trial court's summary judgment in favor of John Hancock, the appellee.
- The Mayos then appealed to the Supreme Court of Texas.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a plaintiff's recovery of actual damages and a 12% penalty under Texas Insurance Code Art. 3.62 for an insurer's failure to timely pay a claim preclude a subsequent suit for treble damages under the Deceptive Trade Practices Act and Texas Insurance Code Art. 21.21 for the same underlying dispute?
Opinions:
Majority - Wallace, Justice
No. A plaintiff's recovery of damages for an insurer's failure to timely pay a claim does not bar a separate suit for damages based on distinct deceptive trade practices. The court reasoned that the Deceptive Trade Practices Act's (DTPA) prohibition on double recovery applies only to the 'same act or practice.' The act of failing to pay a claim within 30 days, which violates Texas Insurance Code Art. 3.62, is a different 'act' from engaging in false, misleading, or deceptive practices, which violates Art. 21.21 and the DTPA. Because the statutory claims are based on different wrongful conduct, the Mayos are entitled to pursue their separate claims for deceptive practices, though any future award of actual damages must be offset by the amount already recovered to prevent a double recovery of the same medical expenses.
Analysis:
This decision clarifies the scope of the DTPA's anti-double-recovery provision, establishing that plaintiffs can bring multiple statutory claims against an insurer arising from the same transaction, provided the claims are based on different wrongful acts. It prevents insurers from using a penalty for a simple payment delay to shield themselves from more significant liability for deceptive conduct. This ruling strengthens consumer protection by allowing separate recoveries for distinct statutory violations, encouraging insurers to both pay claims promptly and act honestly in their dealings with policyholders.
Unlock the full brief for Mayo v. John Hancock Mutual Life Insurance Co. of Boston