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Norm's Desk

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Texas legislature trying to solve the "XL Specialty" problem

The Texas Supreme Court threw employers a curve ball last Summer with the In Re XL Specialty Insurance Co. and Cambridge Integrated Services Group Inc. case.  The case held that communications between an employer and a third party attorney for a workers compensation carrier were not privileged from discovery.  

This is a huge problem for employers actively involved in managing their workers compensation claims.  These employers usually have very large deductibles and actively participate and even manage the progress of the claim to keep their costs low.  Very often they select the counsel handling the matter and share information with the counsel about the claim and the claimant.  

Without a privilege to protect communications between the employer and the third party attorney, plaintiffs in bad faith cases could obtain all of those communications through the discovery process.  Obviously, this created a problem for insurance carriers and we have seen a number of them place strict restrictions on communications between employers and third party attorneys.  

The Texas Supreme Court suggested a way around their holding through the use of joint-defense agreements.  However, not all workers compensation carriers have been willing to agree to such relationships.

Enter the Texas legislature and HB 1468.  The bill was filed by Rep. Kenneth Sheets from Dallas and is currently in the Business and Industry Committee.  HB 1468 provides a simple fix to this issue by extending privilege status to these communications (something everyone assumed before XL Specialty).  

Please take the time to offer a note of support for this bill to the members of the Business and Industry Committee:

Position Member
Chair: Rep. René Oliveira
Vice Chair: Rep. Dwayne Bohac
Members: Rep. Rob Orr
  Rep. Eddie Rodriguez
  Rep. Jason Villalba
  Rep. Armando Walle
  Rep. Paul Workman

 Public hearings on the bill are scheduled for today April 2, 2013.


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