Provident American Ins. Co. v. Castaneda

Decision Date18 January 1996
Docket NumberNo. 08-94-00340-CV,08-94-00340-CV
Citation914 S.W.2d 273
PartiesPROVIDENT AMERICAN INSURANCE COMPANY, Appellant, v. Denise CASTANEDA, Appellee.
CourtTexas Court of Appeals

Colbert N. Coldwell, Guevara, Rebe, Bauman, Coldwell & Garay, El Paso, Scott P. Stolley, Thompson & Knight, A Professional Corporation, Dallas, for appellant.

Ben H. Langford, El Paso, Timothy Patton, Pozza & Patton, San Antonio, for appellee.

Before BARAJAS, C.J., and LARSEN and CHEW, JJ.

OPINION

LARSEN, Justice.

This is an insurer's appeal from a judgment awarding plaintiff damages under the Deceptive Trade Practices Act and Insurance Code, article 21.21 violations for unfair claims-handling practices. The plaintiff/appellee, Denise Castaneda, was an insured under her father's health insurance policy with defendant/appellant, Provident American Insurance Company. The jury found that Provident American violated various provisions of the DTPA and Insurance Code and awarded Ms. Castaneda $50,000 in actual damages plus attorney's fees. Upon a jury finding that Provident American acted knowingly, plaintiff was awarded treble her actual damages. Provident American appeals the jury's findings in twelve points of error. We affirm in part and reverse and reform in part.

FACTS

In May of 1991, Ms. Castaneda's brother, Guillermo, visited Dr. Edward Juarez because Guillermo felt lethargic and his skin was jaundiced. Dr. Juarez suspected hepatitis and anemia. Dr. Juarez ordered tests and prescribed bed rest and special attention to Guillermo's diet pending the test results. The Castaneda family applied for medical insurance with Provident American a few days after Guillermo's visit to Dr. Juarez; a family's policy was issued effective June 17, 1991. 1 Until that time, the family had no medical insurance coverage. The policy contained two limitations relevant to this lawsuit: first, it did not cover expenses resulting from sickness that first "manifests" within thirty days of the policy's effective date; second, the policy did not cover sickness or disorder involving certain internal organs, including the gallbladder, unless the loss occurs more than six months after the policy's effective date.

In early July, a family member told the Castanedas he had been diagnosed with Hemolytic Spherocytosis ("HS"). HS is an inherited disorder causing misshapen red blood cells. The affected cells are destroyed as they pass through the spleen causing anemia and jaundice. About 90 percent of persons suffering from HS develop gallstones. Doctors usually treat HS by removing the patient's spleen, which stops destruction of the red blood cells. If the HS patient is one of the 90 percent who develop gallstones, doctors usually remove the gallbladder. This relative's doctor recommended that the entire Castaneda family receive testing for HS, which is hereditary. On July 20, 1991, Mrs. Castaneda took Denise and Guillermo Castaneda to Dr. Roberto Canales, a hematologist. Dr. Canales determined that the Castaneda siblings had HS, and referred them to Dr. Jose Castillo for surgical treatment. In early August, Dr. Castillo operated on both Denise and Guillermo Castaneda removing their spleens and gallbladders.

The Castanedas submitted claims for their children's operations to Provident American. On October 30, 1991, Provident American denied both claims on the basis of the six-month policy exclusion period for sickness or disorder involving the gallbladder. Ms. Castaneda's father wrote to Provident American explaining that his children did not have conditions or diseases of the gallbladder, rather, the gallbladder removals were secondary to HS. Provident American reopened the claims, and then again denied them on the ground that the HS disorder had "manifested" within thirty days of the policy's effective date. On December 12, 1991, Provident American sent a letter to the Castanedas stating that Provident American was willing to reconsider Ms. Castaneda's claim if the Castanedas provided further information including Dr. Canales' records and the names of other doctors who had treated Ms. Castaneda. It appears from the record that the Castanedas provided this information, but Provident American never reopened consideration. Provident American claimed that it believed there should have been records from Ms. Castaneda's earlier treatment for suspected hepatitis, and from Doctors Varela and Juarez, but Provident American did not receive those records. The evidence does not show whether the Castanedas were informed of Provident American's reason for not re-opening the claim, or if the Castanedas were asked specifically for these particular records. Although Mr. Castaneda and Ms. Castaneda's doctors attempted to correspond with Provident American after the December 12, 1991 letter, they received no further information on Ms. Castaneda's claim until Mr. Castaneda sent a letter complaining of Provident American's conduct to the Texas Department of Insurance. Provident American responded to the Department on April 15, 1992, pursuant to Department rules. There, Provident American indicated that Ms. Castaneda's medical history showed previous diagnosis of yellowish skin and hepatitis which indicated that symptoms of HS had manifested within and prior to the policy's thirty-day waiting period.

Ms. Castaneda claimed various violations of the Texas Deceptive Trade Practices Act and Texas Insurance Code, article 21.21. She eventually sued the carrier under these theories and recovered judgment. As a covered beneficiary under the policy Ms. Castaneda's parents purchased, Ms. Castaneda is a consumer with respect to Provident American's policy pursuant to the Texas Deceptive Trade Practices Act and therefore has standing to sue under the Act. See Aetna Cas. & Sur. Co. v. Marshall, 724 S.W.2d 770, 772 (Tex.1987); Birchfield v. Texarkana Mem. Hosp., 747 S.W.2d 361, 368 (Tex.1987) (infant was consumer of services because services were purchased for her and she "acquired" the services); TEX.BUS. & COM.CODE ANN. § 17.45(4) (Vernon 1987). Provident American does not dispute Ms. Castaneda's standing under the DTPA or the Insurance Code.

Charge Error

In Points of Error One, Two, Three, Five, Eight, and Nine, Provident American argues that the trial court committed reversible error in submitting the jury charge. The trial court made three liability inquiries: the first contained eleven alternative definitions of "deceptive act and practice" and inquired if Provident American had engaged in a deceptive act or practice that was a producing cause of damages to Ms. Castaneda; the second contained two definitions of "unconscionable conduct" and inquired if Provident American had engaged in such conduct that was a producing cause of damages to Ms. Castaneda; the final liability question in three sub-parts defined "false, misleading, or deceptive act and practice" and inquired if Provident American had engaged in a false, misleading, or deceptive act or practice that was a producing cause of damages to Ms. Castaneda. The charge contained only one answer blank for each liability question. The jury answered "yes" to each of these questions, and further found that Provident American engaged in the conduct found in the first and third liability questions knowingly. Provident American asserts that some sub-parts submitted in each liability question are not legally recognized causes of action, and some sub-parts are not supported by legally or factually sufficient evidence. It urges that the lack of separate answer blanks for each sub-part makes it impossible to determine whether the jury found liability on a legally recognized, factually supported theory. Similarly, it argues that the jury's award of actual and additional damages is unsupportable because it is impossible to determine if the damages are based on legally and factually supported liability findings.

At Least One Sub-part Submitted in Error

We find that the trial court submitted certain sub-parts of the liability questions erroneously. For example, the first liability question contained a sub-part defining "unfair or deceptive act or practice" as:

Engaging in any false, misleading, or deceptive act or practices.

'False, misleading, or deceptive acts or practices' means an act or series of acts that have the tendency to deceive an average ordinary person, even though that person may have been ignorant, unthinking, or gullible....

This definition tracks § 17.46(a) of the DTPA. TEX.BUS. & COM.CODE ANN. § 17.46(a) (Vernon 1987). A consumer does not have a legally recognized cause of action for unfair insurance claims practices under § 17.46(a). Allstate Ins. Co. v. Watson, 876 S.W.2d 145 (Tex.1994); Hart v. Berko, Inc., 881 S.W.2d 502, 509 (Tex.App.--El Paso 1994, writ denied). Under § 16 of article 21.21 of the Insurance Code, a plaintiff may recover treble damages for violations of those "practices defined" by § 17.46 of the DTPA, which means only those practices expressly made actionable in § 17.46(b) and not any unlisted practice determined to be false, misleading, or deceptive pursuant to § 17.46(a). TEX.BUS. & COM.CODE ANN. § 17.46 (Vernon 1987 and Supp.1996). Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 135 (Tex.1988). Thus, at least that part of the question allowing the jury to find liability based on a theory that § 17.46(a) is not a legally recognized cause of action in an unfair claim case. The trial court erred in submitting it.

Error is Not Harmful

In order to determine whether an error in the jury charge is harmful, however, an appellate court must consider the pleadings of the parties, the evidence presented at trial, and the charge in its entirety. Island Recreational Development Corporation v. Republic of Texas Savings Association, 710 S.W.2d 551, 555 (Tex.1986); Hart, 881 S.W.2d at 511. Error is reversible only when, viewed in the totality of the circumstances, it...

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