A Texas Supreme Court decision to review its ruling giving carriers the ability in certain cases to pay a settlement and then seek a refund from the insured has set up a major battle between two groups often on the same side in civil litigation–business interests and insurance companies.
The top Texas court decided in May by a 7-0 decision to reverse lower court rulings and give an insurer that funds a settlement of third-party claims against a policyholder the right to later attempt to recoup the settlement payment from the insured.
In Excess Underwriters at Lloyd's, London, et al., vs. Frank's Casing Crew & Rental Tools Inc., the high court allowed Lloyd's and first-party carriers to recoup payment by asking a court to make a “no coverage” determination. The payment in the case was $7.5 million. Oral arguments in the case will be held Feb. 15.
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