Before agreeing to pay out $189 million in previously disputed claims, the Texas Windstorm Insurance Association (TWIA) spent close to $39 million on defense lawyers, according to documents recently released by TWIA to state Rep. Larry Taylor.
Coupled with the $87 million in attorney rewards paid as part of the settlement, the amount spent on legal fees in these cases comes to $126 million.
The records were released to Taylor last month after an attorney general’s opinion refuted an injunction on the records that had been granted by state District Judge Susan Criss. That injunction was granted at the request of Steve Mostyn, who led the plaintiff legal team in a mediated settlement finalized in July. Taylor sought the records in his role as co-chair of a legislative panel overseeing TWIA.
Mostyn declined to comment.
What Taylor landed were various spreadsheets that included the names and claims of TWIA policyholders, people who could not get insurance from any other agency because their property was situated in places vulnerable to weather or other dangers.
Also included was a list of plaintiffs' attorneys and the money they received as part of their payout.
The $87 million in legal fees came from an agreed upon figure of 40 percent of the policyholders' recovery, plus an $11.5 million fee as part of ending a class action suit that was part of the overall settlement.
Joe Nixon, a former Republican state lawmaker who represented Taylor in his quest for the records, said the records show a troubled system that needs reform.
“Now you can either handle claims properly and pay them out or deny them improperly and incur attorney fees on the other end,” said Nixon, who is an outspoken proponent of tort reform. “Now what we need to figure out is how can we reform the role TWIA plays in the state and how do we reform it in a way that protects the policyholder and also the state of Texas?”
He denied that Taylor’s public information request was an attempt to portray plaintiff’s lawyers in a bad light – which Mostyn alleged – but rather an earnest stab at learning what kind of reform might be needed. That question needs to be answered before the next disaster strikes Texas, he said.
Nixon also questioned the change of heart from Jim Oliver, TWIA's general manager. In December 2009, Oliver wrote a 9-page letter to members of the Windstorm Insurance Legislative Oversight Committee, outlining the legal tactics of Mostyn on behalf of an Ike plaintiff. Specifically, he called a petition Mostyn filed "hysteric" and noted that law firms such as Mostyn's "are using every means to influence public opinion."
The letter defended TWIA's practices as thoughtful and measured, and noted that when Hurricane Ike struck in 2008, he brought in 64 claims supervisors, managers and support personnel.
Oliver did not respond to questions regarding the $39 million in legal fees or the decision to settle the claims but offered a statement that said, in part, that TWIA attempted to handle the legal disputes "fairly, but strategically."
Contact Steve Miller at 832-303-9420 or firstname.lastname@example.org.
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