In my blog yesterday I said that insurance companies will try to take advantage of you any way they can. Today I would like to talk about diminution in value claims and how insurance companies take advantage of the uninformed driver.

I have a friend who was in an auto accident several years ago and sustained significant damage to his vehicle. He was not at-fault and the other driver’s insurance company paid to have his vehicle repaired. He was satisfied with the repairs and went along with his life. When we were talking about his wreck the other day, I asked him if the at-fault party’s insurance company paid him for his vehicle’s diminution in value and he said “no, what is that”.

Diminution in value is the difference in value your vehicle is worth after it has sustained physical damage. For instance, if you went to the dealership and there were two identical vehicles, same year, model, mileage, etc… but one of the vehicles had been in an accident; a reasonable person would chose the vehicle that had no prior history of damage. Well, the difference in the value between those two cars is what we call diminution in value. After I explained this to my friend he became very upset that the insurance company did not offer to pay for this and I told him that this happens all the time.

Aside from this example there are other factors that can cause repaired cars to lose value:

• Use of parts produced by someone other than the original manufacturer of the car
• Poor repair job
• Not being pre-owned certified
• Not being eligible for factory transferable warranty on damaged vehicles
• An increase in disclosure and title obligations

There are three categories of diminished value that damaged or repaired cars can fall into: insurance related diminished value, shop related diminished value, and inherent diminished value.

If you have been in an accident and your vehicle has sustained property damage, make sure you make a separate claim for diminution in value. Insurance companies will not tell you about this type of claim nor do they like paying for it. Most insurance companies will require you to have your own estimate done and then submit it to them for evaluation.

In 2003, Tort Reform legislation was passed in Texas. Specifically, Section 41.0105 of the Texas Civil Practices and Remedies Code, often referred to as “Paid vs. Incurred”, has created much confusion for those who practice personal injury litigation. The law states that “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant”.

What Does it Mean?

Say for instance that you were in an accident and you went to the hospital and the hospital charged you $10,000 for the services rendered. Say you had Medicaid and they paid $5,000 to the hospital and the hospital got a write off for the remaining balance so that you owed them no money. Some people interpret the new law so that the triers of fact only get to consider the amount paid by Medicaid, the $5,000. While others interpret the law to mean that the triers of fact get to consider the entire amount incurred, the $10,000. Recent decisions by the Courts of Appeal seem to ignore the “collateral source rule”, which says that a tortfeasor should not benefit because you have insurance, and side with those who believe the triers of fact should only get to consider the amount actually paid.

Why is This Interpretation Wrong?

The most obvious answer is that a defendant should be responsible for his actions and not be the recipient of a windfall because of an injured party’s foresight to buy medical insurance. Also, most citizens are responsible and carry medical insurance and pay premiums on that insurance. Therefore, they should be the ones who reap the full benefits of the insurance coverage they have purchased. Meaning that if a hospital gives a discount because you carry a certain insurance policy, you should be the one who reaps the benefits of that discount because you are the person who has been paying the premiums all these years. To pass this benefit along to the tortfeasor is unjust and should be against public policy.

Rick Perry’s 2007 Veto

Because of the obvious confusion created by the language of Section 41.0105, House Bill 3281 was introduced in 2007. This bill would have corrected the disadvantage to injured parties and limited Section 41.0105’s application to only Medical Malpractice and Healthcare liability claims. However, after passing the House with a vote of 139-0 and passing the Senate with a vote of 28-2, our governor, Rick Perry, vetoed the bill. Why you ask? One can only conclude that Rick Perry stands for big business and insurance companies and has little concern for consumers.  Because of Perry’s veto, we are left to deal with this ambiguous statute.  How it’s interpreted depends on whose court you are lucky or unlucky enough to land.

Over the years the understanding of deferred adjudication has morphed from a simple opportunity provided to defendants to avoid having a crime go on their criminal record to something much more complicated.

Deferred adjudication is a form of judge-ordered community supervision where a defendant acknowledges that they committed a crime, but are not convicted. This allows the defendant to avoid all the consequences of formally being found guilty and sentenced. The judge basically defers the decision of guilt and places the defendant under conditional supervision for a period of time. In order for a defendant to qualify he or she must plead guilty or no contest, must obtain consent from the prosecutor to waive the right to a jury trial (only a judge can grant deferred adjudication), and must have committed a crime that allows deferred adjudication.

Any defendant who has committed a misdemeanor crime, except flying/driving/boating while intoxicated, is eligible for deferred adjudication. The rules for felony defendants are much stricter. A felony defendant cannot qualify for deferred adjudication if they are charged with:

• Driving/flying/boating while intoxicated
• Intoxication assault or manslaughter
• Repeat drug offense enhanced with drug free zone findings
• Repeat sex offense

The period of time that a defendant is under supervision depends on what type of crime they committed. The maximum time for a Class C misdemeanor is 180 days, for a Class A or B misdemeanor the maximum time is 2 years, and for a felony offense the maximum time is 10 years. However, for a felony sex offense the time can be no shorter than 5 years. If a defendant violates his or her supervision the prosecutor may file a motion to adjudicate. Upon this, a hearing will be held and if the defendant is found to have violated his probation the judge can set a punishment fitting for the crime committed.

A positive to deferred adjudication is that the defendant avoids a formal conviction. One common misunderstanding, however, I have seen with defendants is that their record will be clear after the completion of deferred adjudication. It is true that after successful completion of the deferral period, the case will be dismissed. However, the arrest will still be on the defendant’s record unless he successfully files a petition of non disclosure to have his record sealed. If the defendant was charged with a class c misdemeanor and successfully completes deferred adjudication, he can have the charge expunged from his records.