Med. Protective Group v. Herrin , No. 06-06-00048-CV (Tex. App. Oct. 3, 2007)
Prior to agreeing to settle a malpractice case, the physician allegedly asked the agent for the insurer whether the settlement would result in the cancellation or non-renewal of his policy. The physician claimed that the agent told him no. The agent claimed that he told the physician that the policy would not be cancelled as a result of the settlement. However, two years later the insurer refused to renew the physician's policy due to the high "frequency " and "severity" of claims.
Even though the physician was able to obtain other coverage without a lapse in coverage, the physician sued the insurer, claiming that the insurer violated the Texas Deceptive Trade Practices Act (DTPA) and committed fraud. The jury ruled that the insurer violated the DTPA but that the physician suffered no direct damage as a result. However, the jury awarded the physician damages for mental anguish on the DTPA count and additional monetary damages on the fraud count.
Texas Court of Appeals first held that awards for mental anguish are not permitted under the DTPA and, as such, reversed this award. The Appellate Court then rendered a judgment in favor of the insurer on the fraud claim, finding that there was no evidence that connected the insurer's alleged fraudulent conduct with the physician's alleged pecuniary losses.