EXISTING PENALTIES & PROCEDURES IN TEXAS LAW: INSURANCE

SUMMARY
Texas has many tough civil and criminal laws that empower insurance companies to dispose of
underserving policyholder lawsuits and prosecute substantiated fraud.
The Texas Insurance Code was heavily tort reformed more than 20 years ago, equipping insurers
with the ability to seek sanctions on policyholders in the form of costs and attorneys fees.
Policyholders are required to give specific notice more than 60 days before filing suit, presenting
insurers with the opportunity to make a qualified offer of settlement if, after their assessment,
they feel they do face liability for their conduct, including consequences if the policyholder
wrongly rejects the offer. Insurers may also seek the early mediation of cases under the Insurance
Code. If insurers are sued, they can immediately move to dismiss the suit under Rule 91a with
the ability to recover all fees and costs if they prevail. If the case is under $100,000, insurers can
move to expedite it under Rule 169, saving costs and time.
Our laws have been carefully crafted and balanced to protect insurers and policyholders alike for
many years. There are many tools currently at the insurance industrys disposal to punish any
policyholders who may seek to abuse the legal system. The Legislature has passed these laws,
but if insurers are not enforcing them, this is an indication that those policyholders claims have
merit and should be properly adjudicated.

TABLE OF CONTENTS
I.

Texas Insurance Code p. 1

II.

Texas Business & Commerce Code ..... p. 8

III.

Texas Penal Code .. p. 12

IV.

Texas Rules of Civil Procedure .... p. 15

V.

Texas Civil Practice & Remedies Code p. 19

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I.

TEXAS INSURANCE CODE

Sec. 541.153. FRIVOLOUS ACTION. A court shall award to the defendant court costs and reasonable
and necessary attorney's fees if the court finds that an action under this subchapter is groundless and
brought in bad faith or brought for the purpose of harassment.
Sec. 541.154. PRIOR NOTICE OF ACTION. (a) A person seeking damages in an action against
another person under this subchapter must provide written notice to the other person not later than the
61st day before the date the action is filed.
(b) The notice must advise the other person of:
(1) the specific complaint; and
(2) the amount of actual damages and expenses, including attorney's fees reasonably
incurred in asserting the claim against the other person.
(c) The notice is not required if giving notice is impracticable because the action:
(1) must be filed to prevent the statute of limitations from expiring; or
(2) is asserted as a counterclaim.
Sec. 541.155. ABATEMENT. (a) A person against whom an action under this subchapter is pending
who does not receive the notice as required by Section 541.154 may file a plea in abatement not later than
the 30th day after the date the person files an original answer in the court in which the action is pending.
(b) The court shall abate the action if, after a hearing, the court finds that the person is entitled
to an abatement because the claimant did not provide the notice as required by Section 541.154.
(c) An action is automatically abated without a court order beginning on the 11th day after the
date a plea in abatement is filed if the plea:
(1) is verified and alleges that the person against whom the action is pending did not
receive the notice as required by Section 541.154; and
(2) is not controverted by an affidavit filed by the claimant before the 11th day after the
date the plea in abatement is filed.
(d) An abatement under this section continues until the 60th day after the date notice is
provided in compliance with Section 541.154.
(e) This section does not apply if Section 541.154(c) applies.
Sec. 541.156. SETTLEMENT OFFER. (a) A person who receives notice provided under Section
541.154 may make a settlement offer during a period beginning on the date notice under Section 541.154
is received and ending on the 60th day after that date.

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(b) In addition to the period described by Subsection (a), the person may make a settlement
offer during a period:
(1) if mediation is not conducted under Section 541.161, beginning on the date an
original answer is filed in the action and ending on the 90th day after that date; or
(2) if mediation is conducted under Section 541.161, beginning on the day after the
date the mediation ends and ending on the 20th day after that date.
Sec. 541.157. CONTENTS OF SETTLEMENT OFFER. A settlement offer made by a person against
whom a claim under this subchapter is pending must include an offer to pay the following amounts,
separately stated:
(1) an amount of money or other consideration, reduced to its cash value, as settlement
of the claim for damages; and
(2) an amount of money to compensate the claimant for the claimant's reasonable and
necessary attorney's fees incurred as of the date of the offer.
Sec. 541.158. REJECTION OF SETTLEMENT OFFER. (a) A settlement offer is rejected unless
both parts of the offer required under Section 541.157 are accepted by the claimant not later than the 30th
day after the date the offer is made.
(b) A settlement offer made by a person against whom a claim under this subchapter is pending
that complies with this subchapter and is rejected by the claimant may be filed with the court
accompanied by an affidavit certifying the offer's rejection.
Sec. 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT OFFER. (a) If the court finds that
the amount stated in the settlement offer for damages under Section 541.157(1) is the same as,
substantially the same as, or more than the amount of damages found by the trier of fact, the claimant may
not recover as damages any amount in excess of the lesser of:
(1) the amount of damages stated in the offer; or
(2) the amount of damages found by the trier of fact.
(b) If the court makes the finding described by Subsection (a), the court shall determine
reasonable and necessary attorney's fees to compensate the claimant for attorney's fees incurred before the
date and time the rejected settlement offer was made. If the court finds that the amount stated in the offer
for attorney's fees under Section 541.157(2) is the same as, substantially the same as, or more than the
amount of reasonable and necessary attorney's fees incurred by the claimant as of the date of the offer, the
claimant may not recover any amount of attorney's fees in excess of the amount of fees stated in the offer.
(c) This section does not apply if the court finds that the offering party:
(1) could not perform the offer at the time the offer was made; or

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(2) substantially misrepresented the cash value of the offer.

(d) The court shall award:
(1) damages as required by Section 541.152 if Subsection (a) does not apply; and
(2) attorney's fees as required by Section 541.152 if Subsection (b) does not apply.
Sec. 541.160. EFFECT OF SETTLEMENT OFFER. A settlement offer is not an admission of
engaging in an act or practice defined by Subchapter B to be an unfair method of competition or an unfair
or deceptive act or practice in the business of insurance.
Sec. 541.161. MEDIATION. (a) A party may, not later than the 90th day after the date a pleading
seeking relief under this subchapter is served, file a motion to compel mediation of the dispute in the
manner provided by this section.
(b) The court shall, not later than the 30th day after the date a motion under this section is filed,
sign an order setting the time and place of the mediation.
(c) The court shall appoint a mediator if the parties do not agree on a mediator.
(d) The mediation must be held not later than the 30th day after the date the order is signed,
unless:
(1) the parties agree otherwise; or
(2) the court determines that additional time not to exceed 30 days is warranted.
(e) Each party who has appeared in the action, except as agreed to by all parties who have
appeared, shall:
(1) participate in the mediation; and
(2) except as provided by Subsection (f), share the mediation fee.
(f) A party may not compel mediation under this section if the amount of actual damages
claimed is less than $15,000 unless the party seeking to compel mediation agrees to pay the costs of the
mediation.
(g) Except as provided by this section, the following apply to the appointment of a mediator and
the mediation process provided by this section:
(1) Section 154.023, Civil Practice and Remedies Code; and
(2) Subchapters C and D, Chapter 154, Civil Practice and Remedies Code.
Sec. 541.253. FRIVOLOUS ACTION. The court may award to the defendant court costs and reasonable
attorney's fees in relation to the work expended on a finding by the court that a class action under this
subchapter was brought by an individual plaintiff in bad faith or for the purpose of harassment.

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Sec. 701.051. DUTY TO REPORT. (a) Not later than the 30th day after the date the person makes the
determination or reasonably suspects that a fraudulent insurance act has been or is about to be committed
in this state, the person:
(1) shall report the information in writing to the insurance fraud unit of the department,
in the format prescribed by the fraud unit or by the National Association of Insurance Commissioners;
and
(2) may also report the information to another authorized governmental agency.
(b) A report made to the insurance fraud unit constitutes notice to each other authorized
governmental agency.
(c) A person who is a member of an organization primarily dedicated to the detection,
investigation, and prosecution of insurance fraud fully complies with the person's obligations under
Subsection (a) by authorizing the organization to report on the person's behalf information required to be
reported under Subsection (a). The person retains any liability resulting from the failure of the
organization to report in a manner that complies with Subsection (a).
Sec. 701.052. IMMUNITY FOR FURNISHING INFORMATION RELATING TO A
FRAUDULENT INSURANCE ACT. (a) A person is not liable in a civil action, including an action for
libel or slander, and a civil action may not be brought against the person, for furnishing information
relating to a suspected, anticipated, or completed fraudulent insurance act if the information is provided
to:
(1) an authorized governmental agency or the department;
(2) a law enforcement officer or an agent or employee of the officer;
(3) the National Association of Insurance Commissioners or an employee of the
association;
(4) a state or federal governmental agency established to detect and prevent fraudulent
insurance acts or to regulate the business of insurance or an employee of the agency;
(5) a special investigative unit of an insurer, including a person who contracts to
provide special investigative unit services to the insurer or an employee of the insurer
who is responsible for the investigation of suspected fraudulent insurance acts; or
(6) an organization described by Section 701.051(c), if the person is a member of the
organization and:
(A) the person has reported the information as required by Section 701.051(a);
or
(B) the organization has reported the information to the insurance fraud unit as
required by Section 701.051(c) on behalf of the person and in a manner that fully complies with the
person's obligations under Section 701.051(a).
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(b) A person may furnish information as described in Subsection (a) orally or in writing,
including through publishing, disseminating, or filing a bulletin or report.
(c) Subsection (a) does not apply to a person who acts with malice, fraudulent intent, or bad
faith.
(d) A person to whom Subsection (a) applies who prevails in a civil action arising from
furnishing information as described in Subsection (a) is entitled to attorney's fees and costs.
(e) This section does not affect any common law or statutory privilege or immunity.
(f) Repealed by Acts 2005, 79th Leg., Ch. 1282, Sec. 3, eff. September 1, 2005.
Sec. 701.101. INSURANCE FRAUD UNIT. (a) The purpose of the department's insurance fraud unit
is to enforce laws relating to fraudulent insurance acts.
(b) The insurance fraud unit may receive, review, and investigate in a timely manner insurer
antifraud reports submitted under Chapter 704.
(c) The insurance fraud unit shall report annually to the commissioner in writing regarding:
(1) the number of cases completed by the insurance fraud unit; and
(2) recommendations for regulatory and statutory responses to the types of fraudulent
activities encountered by the insurance fraud unit.
Sec. 701.102. INVESTIGATION OF CERTAIN ACTS OF FRAUD. If the commissioner has reason
to believe a person has engaged in, is engaging in, has committed, or is about to commit a fraudulent
insurance act, the commissioner may conduct any investigation necessary inside or outside this state to:
(1) determine whether the act occurred; or
(2) aid in enforcing laws relating to fraudulent insurance acts, including by providing
technical or litigation assistance to other governmental agencies.
Sec. 701.103. DISCIPLINARY ACTION; REPORT TO OTHER AGENCIES. (a) The
commissioner shall take appropriate disciplinary action as provided by this code if the commissioner
believes a fraudulent insurance act has occurred. The commissioner shall report information concerning
the commissioner's belief that a person has committed a fraudulent insurance act to an authorized
governmental agency.
(b) The commissioner shall:
(1) provide all material, documents, reports, complaints, or other evidence to an
authorized governmental agency on request; and
(2) assist the authorized governmental agency as requested.

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Sec. 701.109. REQUEST FOR INVESTIGATION BY INSURER. (a) An insurer who conducts an
independent investigation of suspected insurance fraud is not required to complete that investigation
before requesting that the commissioner conduct an investigation.
(b) When requesting the commissioner to conduct an investigation, the insurer shall draft a
report of the insurer's findings and submit the report and any related investigation file to the
commissioner as soon as practicable on the conclusion of the insurer's independent investigation.
Sec. 4102.103. CONTRACT FOR SERVICES REQUIRED. (d) A license holder may not enter into a
contract with an insured and collect a commission as provided by Section 4102.104 without the intent to
actually perform the services customarily provided by a licensed public insurance adjuster for the insured.
Sec. 4102.158. CONFLICTS OF INTEREST PROHIBITED. (a) A license holder may not:
(1) participate directly or indirectly in the reconstruction, repair, or restoration of
damaged property that is the subject of a claim adjusted by the license holder; or
(2) engage in any other activities that may reasonably be construed as presenting a
conflict of interest, including soliciting or accepting any remuneration from, having a financial interest in,
or deriving any direct or indirect financial benefit from, any salvage firm, repair firm, construction firm,
or other firm that obtains business in connection with any claim the license holder has a contract or
agreement to adjust.
(b) A license holder may not, without the knowledge and consent of the insured in writing,
acquire an interest in salvaged property that is the subject of a claim adjusted by the license holder.
(c) A license holder may not represent an insured on a claim or charge a fee to an insured while
representing the insurance carrier against which the claim is made.
(d) A license holder may not directly or indirectly solicit, as described by Chapter 38, Penal
Code, employment for an attorney or enter into a contract with an insured for the primary purpose of
referring an insured to an attorney and without the intent to actually perform the services customarily
provided by a licensed public insurance adjuster. This section may not be construed to prohibit a license
holder from recommending a particular attorney to an insured.
(e) A license holder may not act on behalf of an attorney in having an insured sign an attorney
representation agreement.
(f) A license holder must become familiar with and at all times act in conformance with the
criminal barratry statute set forth in Section 38.12, Penal Code.
Sec. 4102.160. CERTAIN PAYMENTS PROHIBITED. A license holder may not:
(1) advance money to any potential client or insured; or
(2) pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, to a person
who is not a licensed public insurance adjuster a fee, commission, or other valuable consideration for the
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referral of an insured to the public insurance adjuster for purposes of the insured entering into a contract
with that public insurance adjuster or for any other purpose.
Sec. 4102.164. ACCEPTANCE OF REFERRAL PAYMENTS PROHIBITED. (a) A
licensed public insurance adjuster may not accept a fee, commission, or other valuable consideration of
any nature, regardless of form or amount, in exchange for the referral by a licensed public insurance
adjuster of an insured to any third-party individual or firm, including an attorney, appraiser, umpire,
construction company, contractor, or salvage company.
(b) The commissioner shall adopt rules necessary to implement and enforce this section.

II.

TEXAS BUSINESS & COMMERCE CODE

Sec. 17.46. DECEPTIVE TRADE PRACTICES UNLAWFUL. (b) Except as provided in Subsection
(d) of this section, the term "false, misleading, or deceptive acts or practices" includes, but is not limited
to, the following acts: (31) a licensed public insurance adjuster directly or indirectly soliciting
employment, as defined by Section 38.01, Penal Code, for an attorney, or a licensed public insurance
adjuster entering into a contract with an insured for the primary purpose of referring the insured to an
attorney without the intent to actually perform the services customarily provided by a licensed public
insurance adjuster, provided that this subdivision may not be construed to prohibit a licensed public
insurance adjuster from recommending a particular attorney to an insured.
Sec. 17.50. RELIEF FOR CONSUMERS. (c) On a finding by the court that an action under this section
was groundless in fact or law or brought in bad faith, or brought for the purpose of harassment, the court
shall award to the defendant reasonable and necessary attorneys' fees and court costs.
Sec. 17.505. NOTICE; INSPECTION. (a) As a prerequisite to filing a suit seeking damages under
Subdivision (1) of Subsection (b) of Section 17.50 of this subchapter against any person, a consumer shall
give written notice to the person at least 60 days before filing the suit advising the person in reasonable
detail of the consumer's specific complaint and the amount of economic damages, damages for mental
anguish, and expenses, including attorneys' fees, if any, reasonably incurred by the consumer in asserting
the claim against the defendant. During the 60-day period a written request to inspect, in a reasonable
manner and at a reasonable time and place, the goods that are the subject of the consumer's action or
claim may be presented to the consumer.
(b) If the giving of 60 days' written notice is rendered impracticable by reason of the necessity
of filing suit in order to prevent the expiration of the statute of limitations or if the consumer's claim is
asserted by way of counterclaim, the notice provided for in Subsection (a) of this section is not required,
but the tender provided for by Subsection (d), Section 17.506 of this subchapter may be made within 60
days after service of the suit or counterclaim.

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(c) A person against whom a suit is pending who does not receive written notice, as required by
Subsection (a), may file a plea in abatement not later than the 30th day after the date the person files an
original answer in the court in which the suit is pending. This subsection does not apply if Subsection (b)
applies.
(d) The court shall abate the suit if the court, after a hearing, finds that the person is entitled to
an abatement because notice was not provided as required by this section. A suit is automatically abated
without the order of the court beginning on the 11th day after the date a plea in abatement is filed under
Subsection (c) if the plea in abatement:
(1) is verified and alleges that the person against whom the suit is pending did not
receive the written notice as required by Subsection (a); and
(2) is not controverted by an affidavit filed by the consumer before the 11th day after
the date on which the plea in abatement is filed.
(e) An abatement under Subsection (d) continues until the 60th day after the date that written
notice is served in compliance with Subsection (a).
Sec. 17.5051. MEDIATION. (a) A party may, not later than the 90th day after the date of service of a
pleading in which relief under this subchapter is sought, file a motion to compel mediation of the dispute
in the manner provided by this section.
(b) The court shall, not later than the 30th day after the date a motion under this section is filed,
sign an order setting the time and place of the mediation.
(c) If the parties do not agree on a mediator, the court shall appoint the mediator.
(d) Mediation shall be held within 30 days after the date the order is signed, unless the parties
agree otherwise or the court determines that additional time, not to exceed an additional 30 days, is
warranted.
(e) Except as agreed to by all parties who have appeared in the action, each party who has
appeared shall participate in the mediation and, except as provided by Subsection (f), shall share the
mediation fee.
(f) A party may not compel mediation under this section if the amount of economic damages
claimed is less than $15,000, unless the party seeking to compel mediation agrees to pay the costs of the
mediation.
(g) Except as provided in this section, Section 154.023, Civil Practice and Remedies Code, and
Subchapters C and D, Chapter 154, Civil Practice and Remedies Code, apply to the appointment of a
mediator and to the mediation process provided by this section.
(h) This section does not apply to an action brought by the attorney general under Section
17.47.

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Sec. 17.5052. OFFERS OF SETTLEMENT. (a) A person who receives notice under Section 17.505
may tender an offer of settlement at any time during the period beginning on the date the notice is
received and ending on the 60th day after that date.
(b) If a mediation under Section 17.5051 is not conducted, the person may tender an offer of
settlement at any time during the period beginning on the date an original answer is filed and ending on
the 90th day after that date.
(c) If a mediation under Section 17.5051 is conducted, a person against whom a claim under
this subchapter is pending may tender an offer of settlement during the period beginning on the day after
the date that the mediation ends and ending on the 20th day after that date.
(d) An offer of settlement tendered by a person against whom a claim under this subchapter is
pending must include an offer to pay the following amounts of money, separately stated:
(1) an amount of money or other consideration, reduced to its cash value, as settlement
of the consumer's claim for damages; and
(2) an amount of money to compensate the consumer for the consumer's reasonable and
necessary attorneys' fees incurred as of the date of the offer.
(e) Unless both parts of an offer of settlement required under Subsection (d) are accepted by the
consumer not later than the 30th day after the date the offer is made, the offer is rejected.
(f) A settlement offer tendered by a person against whom a claim under this subchapter is
pending that complies with this section and that has been rejected by the consumer may be filed with the
court with an affidavit certifying its rejection.
(g) If the court finds that the amount tendered in the settlement offer for damages under
Subsection (d)(1) is the same as, substantially the same as, or more than the damages found by the trier of
fact, the consumer may not recover as damages any amount in excess of the lesser of:
(1) the amount of damages tendered in the settlement offer; or
(2) the amount of damages found by the trier of fact.
(h) If the court makes the finding described by Subsection (g), the court shall determine
reasonable and necessary attorneys' fees to compensate the consumer for attorneys' fees incurred before
the date and time of the rejected settlement offer. If the court finds that the amount tendered in the
settlement offer to compensate the consumer for attorneys' fees under Subsection (d)(2) is the same as,
substantially the same as, or more than the amount of reasonable and necessary attorneys' fees incurred by
the consumer as of the date of the offer, the consumer may not recover attorneys' fees greater than the
amount of fees tendered in the settlement offer.
(i) If the court finds that the offering party could not perform the offer at the time the offer was
made or that the offering party substantially misrepresented the cash value of the offer, Subsections (g)
and (h) do not apply.

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(j) If Subsection (g) does not apply, the court shall award as damages the amount of economic
damages and damages for mental anguish found by the trier of fact, subject to Sections 17.50 and 17.501.
If Subsection (h) does not apply, the court shall award attorneys' fees as provided by Section 17.50(d).
(k) An offer of settlement is not an admission of engaging in an unlawful act or practice or
liability under this subchapter. Except as otherwise provided by this section, an offer or a rejection of an
offer may not be offered in evidence at trial for any purpose.
Sec. 17.506. DAMAGES: DEFENSES. (d) In an action brought under Section 17.50 of this subchapter,
it is a defense to a cause of action if the defendant proves that he received notice from the consumer
advising the defendant of the nature of the consumer's specific complaint and of the amount of economic
damages, damages for mental anguish, and expenses, including attorneys' fees, if any, reasonably incurred
by the consumer in asserting the claim against the defendant, and that within 30 days after the day on
which the defendant received the notice the defendant tendered to the consumer:
(1) the amount of economic damages and damages for mental anguish claimed; and
(2) the expenses, including attorneys' fees, if any, reasonably incurred by the consumer
in asserting the claim against the defendant.

Sec. 27.02. CERTAIN INSURANCE CLAIMS FOR EXCESSIVE CHARGES. (a) A person who
sells goods or services commits an offense if:
(1) the person advertises or promises to provide the good or service and to pay:
(A) all or part of any applicable insurance deductible; or
(B) a rebate in an amount equal to all or part of any applicable insurance
deductible;
(2) the good or service is paid for by the consumer from proceeds of a property or
casualty insurance policy; and
(3) the person knowingly charges an amount for the good or service that exceeds the
usual and customary charge by the person for the good or service by an amount equal to or greater than all
or part of the applicable insurance deductible paid by the person to an insurer on behalf of an insured or
remitted to an insured by the person as a rebate.
(b) A person who is insured under a property or casualty insurance policy commits an offense if
the person:
(1) submits a claim under the policy based on charges that are in violation of
Subsection (a) of this section; or
(2) knowingly allows a claim in violation of Subsection (a) of this section to be
submitted, unless the person promptly notifies the insurer of the excessive charges.
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(c) An offense under this section is a Class A misdemeanor.

III.

TEXAS PENAL CODE

Sec. 35.02. INSURANCE FRAUD. (a) A person commits an offense if, with intent to defraud or
deceive an insurer, the person, in support of a claim for payment under an insurance policy:
(1) prepares or causes to be prepared a statement that:
(A) the person knows contains false or misleading material information; and
(B) is presented to an insurer; or
(2) presents or causes to be presented to an insurer a statement that the person knows
contains false or misleading material information.
(a-1) A person commits an offense if the person, with intent to defraud or deceive an insurer
and in support of an application for an insurance policy:
(1) prepares or causes to be prepared a statement that:
(A) the person knows contains false or misleading material information; and
(B) is presented to an insurer; or
(2) presents or causes to be presented to an insurer a statement that the person knows
contains false or misleading material information.
(b) A person commits an offense if, with intent to defraud or deceive an insurer, the person
solicits, offers, pays, or receives a benefit in connection with the furnishing of goods or services for which
a claim for payment is submitted under an insurance policy.
(c) An offense under Subsection (a) or (b) is:
(1) a Class C misdemeanor if the value of the claim is less than $100;
(2) a Class B misdemeanor if the value of the claim is $100 or more but less than $750;
(3) a Class A misdemeanor if the value of the claim is $750 or more but less than
$2,500;
(4) a state jail felony if the value of the claim is $2,500 or more but less than $30,000;
(5) a felony of the third degree if the value of the claim is $30,000 or more but less than
$150,000;
(6) a felony of the second degree if the value of the claim is $150,000 or more but less
than $300,000; or
(7) a felony of the first degree if:
(A) the value of the claim is $300,000 or more; or

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(B) an act committed in connection with the commission of the offense places a
person at risk of death or serious bodily injury.
(d) An offense under Subsection (a-1) is a state jail felony.
(e) The court shall order a defendant convicted of an offense under this section to pay
restitution, including court costs and attorney's fees, to an affected insurer.
(f) If conduct that constitutes an offense under this section also constitutes an offense under any
other law, the actor may be prosecuted under this section, the other law, or both.
(g) For purposes of this section, if the actor proves by a preponderance of the evidence that a
portion of the claim for payment under an insurance policy resulted from a valid loss, injury, expense, or
service covered by the policy, the value of the claim is equal to the difference between the total claim
amount and the amount of the valid portion of the claim.
(h) If it is shown on the trial of an offense under this section that the actor submitted a bill for
goods or services in support of a claim for payment under an insurance policy to the insurer issuing the
policy, a rebuttable presumption exists that the actor caused the claim for payment to be prepared or
presented.
Sec. 38.12. BARRATRY AND SOLICITATION OF PROFESSIONAL EMPLOYMENT. (a) A
person commits an offense if, with intent to obtain an economic benefit the person:
(1) knowingly institutes a suit or claim that the person has not been authorized to
pursue;
(2) solicits employment, either in person or by telephone, for himself or for another;
(3) pays, gives, or advances or offers to pay, give, or advance to a prospective client
money or anything of value to obtain employment as a professional from the prospective client;
(4) pays or gives or offers to pay or give a person money or anything of value to solicit
employment;
(5) pays or gives or offers to pay or give a family member of a prospective client
money or anything of value to solicit employment; or
(6) accepts or agrees to accept money or anything of value to solicit employment.
(b) A person commits an offense if the person:
(1) knowingly finances the commission of an offense under Subsection (a);
(2) invests funds the person knows or believes are intended to further the commission
of an offense under Subsection (a); or
(3) is a professional who knowingly accepts employment within the scope of the
person's license, registration, or certification that results from the solicitation of
employment in violation of Subsection (a).

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(c) It is an exception to prosecution under Subsection (a) or (b) that the person's conduct is
authorized by the Texas Disciplinary Rules of Professional Conduct or any rule of court.
(d) A person commits an offense if the person:
(1) is an attorney, chiropractor, physician, surgeon, or private investigator licensed to
practice in this state or any person licensed, certified, or registered by a health care
regulatory agency of this state; and
(2) with the intent to obtain professional employment for the person or for another,
provides or knowingly permits to be provided to an individual who has not sought the
person's employment, legal representation, advice, or care a written communication or a
solicitation, including a solicitation in person or by telephone, that:
(A) concerns an action for personal injury or wrongful death or otherwise
relates to an accident or disaster involving the person to whom the communication or solicitation is
provided or a relative of that person and that was provided before the 31st day after the date on which the
accident or disaster occurred;
(B) concerns a specific matter and relates to legal representation and the person
knows or reasonably should know that the person to whom the communication or solicitation is directed
is represented by a lawyer in the matter;
(C) concerns a lawsuit of any kind, including an action for divorce, in which
the person to whom the communication or solicitation is provided is a defendant or a relative of that
person, unless the lawsuit in which the person is named as a defendant has been on file for more than 31
days before the date on which the communication or solicitation was provided;
(D) is provided or permitted to be provided by a person who knows or
reasonably should know that the injured person or relative of the injured person has indicated a desire not
to be contacted by or receive communications or solicitations concerning employment;
(E) involves coercion, duress, fraud, overreaching, harassment, intimidation, or
undue influence; or
(F) contains a false, fraudulent, misleading, deceptive, or unfair statement or
claim.
(e) For purposes of Subsection (d)(2)(D), a desire not to be contacted is presumed if an accident
report reflects that such an indication has been made by an injured person or that person's relative.
(f) An offense under Subsection (a) or (b) is a felony of the third degree.
(g) Except as provided by Subsection (h), an offense under Subsection (d) is a Class A
misdemeanor.
(h) An offense under Subsection (d) is a felony of the third degree if it is shown on the trial of
the offense that the defendant has previously been convicted under Subsection (d).

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(i) Final conviction of felony barratry is a serious crime for all purposes and acts, specifically
including the State Bar Rules and the Texas Rules of Disciplinary Procedure.

IV.

TEXAS RULES OF CIVIL PROCEDURE

Rule 13. Effect of Signing of Pleadings, Motions and Other Papers; Sanctions
The signatures of attorneys or parties constitute a certificate by them that they have read the pleading,
motion, or other paper; that to the best of their knowledge, information, and belief formed after
reasonable inquiry the instrument is not groundless and brought in bad faith or groundless and brought for
the purpose of harassment. Attorneys or parties who shall bring a fictitious suit as an experiment to get an
opinion of the court, or who shall file any fictitious pleading in a cause for such a purpose, or shall make
statements in pleading which they know to be groundless and false, for the purpose of securing a delay of
the trial of the cause, shall be held guilty of a contempt. If a pleading, motion or other paper is signed in
violation of this rule, the court, upon motion or upon its own initiative, after notice and hearing, shall
impose an appropriate sanctions available under Rule 215-2b, upon the person who signed it, a
represented party, or both.
Courts shall presume, that pleadings, motions, and other papers are filed in good faith. No sanctions under
this rule may be imposed except for good cause, the particulars of which must be stated in the sanction
order. "Groundless" for purposes of this rule means no basis in law or fact and not warranted by good
faith argument for the extension, modification, or reversal of existing law. A general denial does not
constitute a violation of this rule. The amount requested for damages does not constitute a violation of
this rule.
Rule 91a.1. Motion and Grounds
Except in a case brought under the Family Code or a case governed by Chapter 14 of the Texas Civil
Practice and Remedies Code, a party may move to dismiss a cause of action on the grounds that it has no
basis in law or fact. A cause of action has no basis in law if the allegations, taken as true, together with
inferences reasonably drawn from them, do not entitle the claimant to the relief sought. A cause of action
has no basis in fact if no reasonable person could believe the facts pleaded.
Rule 91a.7. Award of Costs and Attorney Fees Required
Except in an action by or against a governmental entity or a public official acting in his or her official
capacity or under color of law, the court must award the prevailing party on the motion all costs and
reasonable and necessary attorney fees incurred with respect to the challenged cause of action in the trial
court. The court must consider evidence regarding costs and fees in determining the award.
Rule 167.1. Generally
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Certain litigation costs may be awarded against a party who rejects an offer made substantially in
accordance with this rule to settle a claim for monetary damages - including a counterclaim, crossclaim,
or third-party claim - except in:
(a) a class action;
(b) a shareholder's derivative action;
(c) an action by or against the State, a unit of state government, or a political subdivision of the
State;
(d) an action brought under the Family Code;
(e) an action to collect workers' compensation benefits under title 5, subtitle A of the Labor Code;
or
(f) an action filed in a justice of the peace court or small claims court.
Rule 167.2. Settlement Offer
(a) Defendant's declaration a prerequisite; deadline.
A settlement offer under this rule may not be made until a defendant - a party against whom a claim for
monetary damages is made - files a declaration invoking this rule when a defendant files such a
declaration, an offer or offers may be made under this rule to settle only those claims by and against that
defendant. The declaration must be filed no later than 45 days before the case is set for conventional trial
on the merits.
Rule 167.4. Awarding Litigation Costs
(a) Generally. If a settlement offer made under this rule is rejected, and the judgment to be awarded on
the monetary claims covered by the offer is significantly less favorable to the offeree than was the offer,
the court must award the offeror litigation costs against the offeree from the time the offer was rejected to
the time of judgment.
(b) "Significantly less favorable" defined. A judgment award on monetary claims is significantly less
favorable than an offer to settle those claims if:
(1) the offeree is a claimant and the judgment would be less than 80 percent of the offer; or
(2) the offeree is a defendant and the judgment would be more than 120 percent of the offer.
(c) Litigation costs. Litigation costs are the expenditures actually made and the obligations actually
incurred directly in relation to the claims covered by a settlement offer under this rule for the
following:
(1) court costs;
(2) reasonable deposition costs, in cases filed on or after September 1, 2011;

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(3) reasonable fees for not more than two testifying expert witnesses; and
(4) reasonable attorney fees.
(e) No double recovery permitted. A party who is entitled to recover attorney fees and costs under another
law may not recover those same attorney fees and costs as litigation costs under this rule.
(f) Limitation on attorney fees and costs recovered by a party against whom litigation costs are awarded.
A party against whom litigation costs are awarded may not recover attorney fees and costs under another
law incurred after the date the party rejected the settlement offer made the basis of the award.
(g) Litigation costs to be awarded to defendant as a setoff. Litigation costs awarded to a defendant must
be made a setoff to the claimant's judgment against the defendant.
Rule 166a. Summary Judgment

(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to
obtain a declaratory judgment may, at any time after the adverse party has appeared or answered,
move with or without supporting affidavits for a summary judgment in his favor upon all or any
part thereof. A summary judgment, interlocutory in character, may be rendered on the issue of
liability alone although there is a genuine issue as to amount of damages.
(b) For Defending Party. A party against whom a claim, counterclaim, or cross-claim is asserted
or a declaratory judgment is sought may, at any time, move with or without supporting affidavits
for a summary judgment in his favor as to all or any part thereof.
Rule 169. Expedited Actions
(a) Application.
(1) The expedited actions process in this rule applies to a suit in which all claimants, other than
counter-claimants, affirmatively plead that they seek only monetary relief aggregating $100,000
or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and
attorney fees.

(2) The expedited actions process does not apply to a suit in which a party has filed a claim
governed by the Family Code, the Property Code, the Tax Code, or Chapter 74 of the Civil
Practice & Remedies Code.
(b) Recovery. In no event may a party who prosecutes a suit under this rule recover a judgment in excess
of $100,000, excluding post-judgment interest.
(c) Removal from Process.
(1) A court must remove a suit from the expedited actions process:

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(A) on motion and a showing of good cause by any party; or

(B) if any claimant, other than a counter-claimant, files a pleading or an amended or
supplemental pleading that seeks any relief other than the monetary relief allowed by
(a)(1).
(2) A pleading, amended pleading, or supplemental pleading that removes a suit from the
expedited actions process may not be filed without leave of court unless it is filed before the
earlier of 30 days after the discovery period is closed or 30 days before the date set for trial.
Leave to amend may be granted only if good cause for filing the pleading outweighs any
prejudice to an opposing party.
(3) If a suit is removed from the expedited actions process, the court must reopen discovery under
Rule 190.2(c).
(d) Expedited Actions Process.
(1) Discovery. Discovery is governed by Rule 190.2.
(2) Trial Setting; Continuances. On any party's request, the court must set the case for a trial date
that is within 90 days after the discovery period in Rule 190.2(b)(1) ends. The court may continue
the case twice, not to exceed a total of 60 days.
(3) Time Limits for Trial. Each side is allowed no more than eight hours to complete jury
selection, opening statements, presentation of evidence, examination and cross-examination of
witnesses, and closing arguments. On motion and a showing of good cause by any party, the court
may extend the time limit to no more than twelve hours per side.
(A) The term "side" has the same definition set out in Rule 233.
(B) Time spent on objections, bench conferences, bills of exception, and challenges for
cause to a juror under Rule 228 are not included in the time limit.
(4) Alternative Dispute Resolution.
(A) Unless the parties have agreed not to engage in alternative dispute resolution, the
court may refer the case to an alternative dispute resolution procedure once, and the
procedure must:
(i) not exceed a half-day in duration, excluding scheduling time;
(ii) not exceed a total cost of twice the amount of applicable civil filing fees; and
(iii) be completed no later than 60 days before the initial trial setting.
(B) The court must consider objections to the referral unless prohibited by statute.
(C) The parties may agree to engage in alternative dispute resolution other than that
provided for in (A).
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(5) Expert Testimony. Unless requested by the party sponsoring the expert, a party may only
challenge the admissibility of expert testimony as an objection to summary judgment evidence
under Rule 166a or during the trial on the merits. This paragraph does not apply to a motion to
strike for late designation.

V.

TEXAS CIVIL PRACTICE & REMEDIES CODE

Sec. 9.011. SIGNING OF PLEADINGS. The signing of a pleading as required by the Texas

Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge,
information, and belief, formed after reasonable inquiry, the pleading is not:
(1) groundless and brought in bad faith;
(2) groundless and brought for the purpose of harassment; or
(3) groundless and interposed for any improper purpose, such as to cause unnecessary
delay or needless increase in the cost of litigation.

Sec. 9.012. VIOLATION; SANCTION. (a) At the trial of the action or at any hearing
inquiring into the facts and law of the action, after reasonable notice to the parties, the court may on its
own motion, or shall on the motion of any party to the action, determine if a pleading has been signed in
violation of any one of the standards prescribed by Section 9.011.

Sec. 10.001. SIGNING OF PLEADINGS AND MOTIONS. The signing of a pleading or

motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to
the signatory's best knowledge, information, and belief, formed after reasonable inquiry:
(1) the pleading or motion is not being presented for any improper purpose, including
to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) each claim, defense, or other legal contention in the pleading or motion is warranted
by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law
or the establishment of new law;
(3) each allegation or other factual contention in the pleading or motion has evidentiary
support or, for a specifically identified allegation or factual contention, is likely to have evidentiary
support after a reasonable opportunity for further investigation or discovery; and

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(4) each denial in the pleading or motion of a factual contention is warranted on the
evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief.

Sec. 10.004. VIOLATION; SANCTION. (a) A court that determines that a person has
signed a pleading or motion in violation of Section 10.001 may impose a sanction on the person, a party
represented by the person, or both.
(b) The sanction must be limited to what is sufficient to deter repetition of the conduct or
comparable conduct by others similarly situated.
(c) A sanction may include any of the following:
(1) a directive to the violator to perform, or refrain from performing, an act;
(2) an order to pay a penalty into court; and
(3) an order to pay to the other party the amount of the reasonable expenses incurred by
the other party because of the filing of the pleading or motion, including reasonable attorney's fees.
(d) The court may not award monetary sanctions against a represented party for a violation of
Section 10.001(2).
(e) The court may not award monetary sanctions on its own initiative unless the court issues its
order to show cause before a voluntary dismissal or settlement of the claims made by or against the party
or the party's attorney who is to be sanctioned.
(f) The filing of a general denial under Rule 92, Texas Rules of Civil Procedure, shall not be
deemed a violation of this chapter.

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