AUTOMOBILE LIABILITY INSURER DID NOT ERR BY LEAVING CHIROPRACTOR OFF SETTLEMENT DRAFT

In Pain Control Institute, Inc. v. GEICO General Insurance Company, 2014 WL 5474777 (Tex.App. - Dallas October 29, 2014,) the Court examined the partial assignment of the Plaintiff’s causes of action and assignment of proceeds to their chiropractor (Pain Control Institute or PCI) for treatments after a motor vehicle accident.   GEICO, the automobile liability insurance carrier settled with the Plaintiff for $7,000, after PCI had previously advised GEICO it was treating GEICO’s insured and sent GEICO a copy of the assignment and the financing statement filed to “perfect our medical lien.”   GEICO also forwarded copies of its treatment bills to GEICO on three separate occasions before the settlement “for final settlement.” GEICO then issued a settlement draft for $7,000 paid directly to the Plaintiffs attorney without PCI’s name being added to the draft.  PCI filed suit against GEICO asserting GEICO violated the UCC by making payment to the Plaintiff without paying PCI.

The Court of Appeals affirmed the granting of GEICO’s motion for summary judgment and the denial of PCI’s cross motion for summary judgment because Texas is not a direct action state, “in other words, a tort claimant has no direct cause of action against the tortfeasor’s liability insurer until the insured-tortfeasor is adjudged liable to the tortfeasor.”  Consequently, PCI’s patient (i.e. GEICO’s insured) had no rights against GEICO to assign to PCI.  The Court of Appeals further reasoned that the UCC does not create any causes of action and the UCC does not apply to an assignment of rights concerning a tort claim for personal injuries.  Therefore, the trial court did not err in granting GEICO’s motion for summary judgment.