British American Insurance Company v. Claudette Lewis ( 1996 )

British American Ins. v. Lewis

IN THE

TENTH COURT OF APPEALS

No. 10-94-325-CV

     BRITISH AMERICAN INSURANCE COMPANY,

                                                                                              Appellant

     v.

     CLAUDETTE LEWIS,

                                                                                              Appellee

From the 66th District Court

Hill County, Texas

Trial Court # 32831

O P I N I O N

      Charles Lewis sustained a hand injury on April 16, 1992, while employed by Austin Bridge & Road. His employer's workers' compensation carrier, British American Insurance Company, began paying him benefits for the injury. Following his hand injury, Charles was hospitalized twice under psychiatric care as a precaution against suicide. Nevertheless, he killed himself on July 25 by a self-inflicted gunshot. Claudette Lewis, his wife, sued British American after it denied her claim for death benefits under the Workers' Compensation Act. She alleged that British American had violated its common-law duty of good faith and fair dealing as well as article 21.21 of the Texas Insurance Code. The jury found an intentional breach of the duty of good faith and fair dealing, a knowing violation of article 21.21, and awarded Claudette $250,000 for past and future mental anguish, plus reasonable attorney's fees equal to twenty percent of her recovery. After Claudette elected to recover based on a knowing violation of article 21.21, the court entered a judgment against British American for $964,520.55, which included $250,000 actual damages, $500,000 additional damages, $150,000 attorney's fees, and $64,520.55 in prejudgment interest. British American's principal points attack the legal and factual sufficiency of the evidence supporting the liability and damage findings. We will affirm.

SOME SUICIDES ARE COMPENSABLE

      On April 16, 1992, the date of Charles' hand injury, and at the time of his death on July 25, section 3.02 of article 3808 provided:

            An insurance carrier is not liable for compensation if:

. . .

      (2)  the injury was caused by the employee's wilful intention and attempt to injure himself or to unlawfully injure another person; . . . .

Act of December 12, 1989, 71st Leg., 2d C.S., ch. 1, § 2.51, 1989 Tex. Gen. Laws 1, 14, repealed by Act of May 12, 1993, 73rd Leg., R.S., ch. 269, § 5(2), 1993 Tex. Gen. Laws 987, 1273 (current version at Tex. Labor Code Ann. § 406.032(1)(B) (Vernon Pamph. 1996)) [hereinafter section 3.02].

      In 1943, the Texas Supreme Court adopted the following legal test to determine whether a suicide was compensable under the workers' compensation statutes:

[W]here there follows as a direct result of the accident an insanity of such violence as to cause the victim to take his own life through an uncontrollable impulse or in a delirium of frenzy without conscious volition to produce death, there is a direct and unbroken causal connection between the physical injury and the death; however, where the suicide is the result of voluntary and willful choice determined by a moderately intelligent mental power with knowledge of the purpose and effect of the act, even though dominated by a disordered mind, a new and independent agency breaks the chain of causation.

Jones v. Traders & General Ins. Co., 140 Tex. 599, 169 S.W.2d 160, 162 (1943). In 1975, however, the Texas Supreme Court rejected the Jones test in favor of the following:

[W]here the effects of injuries suffered by the deceased result in his becoming dominated by a derangement of the mind which impairs the ability to resist the impulse to take his own life to the extent that the decedent was in fact unable to control it, the suicide cannot be termed as willful under [the Act].

Saunders v. Texas Employers' Ins. Ass'n, 526 S.W.2d 515, 517-18 (Tex. 1975). Thus, under the Saunders test, "if the effects of an injury or its treatment so acts upon the will of the injured workman so that [his will] is not operating independently at the time of the suicide, then the chain of causation would appear to be unbroken and the fact that the decedent knew of the physical consequences of his act would be irrelevant." Id. at 517. The Texas Supreme Court has neither altered nor abolished the Saunders test since adopting it.

THE INJURY AND ITS AFTERMATH

      Charles Lewis, a thirty-three-year employee of Austin Bridge & Road, sustained a serious hand injury on April 16, 1992, when his hand was caught in a compressor belt and crushed. At the time of the injury, Lewis was working in the company shop while he awaited a decision on his request for a driver's license waiver, which would allow him to continue to drive a truck even though he suffered from an impairment of his eyesight. When Claudette Lewis arrived at the hospital in Fort Worth, she found that her husband—who usually worked from fifty to ninety hours a week and had missed only three days of work in thirty-three years—was "agitated and nervous" and "flat scared to death." Dr. Sorokolit, an orthopedic surgeon, performed surgery on Charles' hand on April 16 and released him from the hospital the next day.

      When the Lewises returned to their home in Whitney, Charles immediately began a pattern of behavior that was most unusual for him, according to his wife. Claudette, who described her husband as someone who enjoyed being outdoors, gardening, yard work, caring for his cats, and a man with a hearty appetite, said that Charles had difficulty sleeping, was morose and lethargic, stayed inside the house and walked a lot, lacked an appetite, and showed no interest in his usual activities. On May 3, Claudette found him in bed on his hands and knees, "thrashing around," "rocking from side to side," and "just staring right through you." He had either removed or attempted to remove the metal pin from his middle finger, which had been inserted during surgery, and he and the bed linens were covered in blood. Claudette immediately took him to the emergency room at the Whitney hospital, where he was seen by Dr. Gipson and Dr. Hartman and admitted. At admission, Charles' blood pressure was extremely high, and Dr. Hartman began a course of treatment to lower it.

      Jim Pipkin, the vice-president of workers' compensation claims and senior claim adjuster for British American, had already approved temporary compensation benefits and medical expenses related to Charles' hand injury when he learned that Charles had been admitted to the Whitney hospital. Pipkin immediately hired Linda Raney, an employee of Excel Rehabilitation Consultants, to "investigate the circumstances," help manage and coordinate Charles' care, and report back to British American. When Raney visited Charles in the hospital, she found him to be "uncommunicative, unresponsive, primarily even to his family members." After talking with the doctors and the Lewis family, Raney contacted Pipkin and recommended that Charles receive immediate psychiatric evaluation and treatment. Pipkin approved the request and Raney arranged for Dr. Ricardo Schack, a psychiatrist in Waxahachie, to see Charles on an emergency basis. When Charles was discharged from the Whitney hospital on May 7, Claudette and several family members drove him that same day to Dr. Schack's office.

      Dr. Schack, who examined Charles on May 7, found that he was suffering "severe psychological distress due to disability." Based on his initial evaluation, Dr. Schack believed that Charles should be immediately hospitalized, but relented because "the family wanted him to work through things on an outpatient basis." Dr. Schack saw Charles again on May 11, found that he was responding well to the medication prescribed on May 7, and agreed that he could remain an outpatient. Because of his high blood pressure, Charles continued to see Dr. Hartman in Whitney, who monitored his blood pressure on a regular basis in conjunction with Dr. Schack's treatment.

      However, Charles continued his aberrant behavior at home. On May 14 Dr. Schack phoned Linda Raney and told her that he was going to see Charles again on May 18 and that he believed a brief hospital stay might be necessary to determine which type of medications would best stabilize his condition. On May 18 Dr. Schack admitted Charles to Willowbrook Hospital in Waxahachie because he was not eating, was reclusive and distant from his family and friends, depressed, despondent, unable to sleep or concentrate, and just the evening before admission had pulled the metal pin out of his middle finger. As a precaution, Dr. Schack treated him under close supervision in the Psychiatric Intensive Care Unit because he was "voicing suicidal ideation." Dr. Schack discharged him "against medical advice" on May 30, at which time he found Charles not to be "actively suicidal," but "at risk."

      When Charles returned home, according to Claudette, his behavior became even more irrational, with pronounced signs of paranoia. He remained in bed most of the time, lying in a "fetal position"; he believed that "people [were] watching what he [was] doing," that the staff at Willowbrook Hospital had tried to poison him and had "bugged" his room; and he refused to allow any of his children to touch him, believing they were "against him." He continued to be reclusive, listless, and avoided eating to the extent that his weight had dropped at least twenty-five to thirty pounds. Claudette became increasingly alarmed when Charles tried to obtain access to a firearm. He not only asked her to unlock the gun case at home, purportedly so that he could pawn one of his guns, but she also learned he had asked one of his friends for a pistol. During this period at home, Dr. Schack saw him on June 1 and June 4 at his office in Waxahachie.

      Dr. Schack saw Charles again at his office on June 15 and, faced with signs of his increasing instability, recommended his immediate hospitalization. Claudette and some of the children drove Charles from Dr. Schack's office to Willowbrook Hospital, with him "ranting, raving and screaming" all the way there. On the way to the hospital, they had to prevent him from jumping from the car while it was moving. Dr. Schack readmitted Charles to Willowbrook Hospital on June 15, where he was again placed under close supervision as a precaution against suicide. Dr. Schack discharged him on June 21, noting in the discharge summary that he was no longer evidencing suicidal tendencies and could be treated as an outpatient.

      Dr. Schack saw Charles for office visits on June 22, June 29, and July 6, stating in his progress notes for the June 29 visit that Charles was "actually doing the best that he has done since I have known him." Charles, however, continued his reclusive and abnormal behavior at home. Although Claudette professed that she was not dissatisfied with Dr. Schack's treatment of her husband, she nevertheless talked to Linda Raney about obtaining a "second opinion" from another psychiatrist. Raney obtained Jim Pipkin's approval of a second psychiatric referral, and on July 7 Charles saw Dallas neuropsychiatrist Dr. Jeffrey Glass, whom Raney had recommended.

      In an effort to break Charles' pattern of behavior, Claudette said that Dr. Hartman told her: "You have coddled; you have begged; you have pleaded"; and "it's not working." He suggested that she "get tough" and "push him." Claudette said that even Dr. Schack suggested, metaphorically, that she should "give him a swift kick in the butt." Relying on these suggestions from the doctors, Claudette said she began to be "more forceful" with Charles, and "quit waiting on him hand and foot." In fact, on July 24—the day before his death—she told him: "Charles, if you don't get out of that bed and come back to the land of the living and help me in this yard and help me keep this place, I'm going--I may get in that car and leave and never come back."

      On Saturday, July 25, Charles ate breakfast and immediately went back to bed. Claudette had to go to the grocery store, and just before she left, Charles questioned her about how long she would be gone. As Claudette returned from the store, an ambulance sped past her, and she noticed a number of cars and people at her residence. She soon learned that Charles had shot himself in the head in the backyard of their home and was dead.

DENIAL OF DEATH BENEFITS

      Jim Pipkin received notice by phone of Charles' suicide on Monday, July 27. He could not remember who called him, but believed the call came from someone who worked for Austin Bridge & Road. On July 28, the day of Charles' funeral, Pipkin mailed to the Texas Workers' Compensation Commission (TWCC) in Austin a notice that British American was terminating Charles' temporary compensation benefits for his hand injury, giving his death as the reason for termination. In the portion of the TWCC form devoted to "NOTICE OF REFUSED OR DISPUTED CLAIM," Pipkin stated:

FATAL BENEFITS HAVE NOT BEEN REQUESTED AND WOULD NOT BE APPROPRIATE DUE TO THE MANNER AND MEANS OF [CHARLES'] DEATH, HIS DEATH IS NOT RELATED TO HIS JOB AND BECAUSE IT FALLS WITHIN A STATUTORY EXCEPTION OF COVERAGE. SEE ART. 8308 SEC. 3.02 (1989).

Claudette received a copy of the TWCC notice on the Friday following her husband's funeral. Later, she discussed the matter with her children, sought legal advice, and decided to pursue her right to death benefits.

TWCC HEARINGS

BENEFIT REVIEW CONFERENCE  

      She participated in a Benefit Revenue Conference (BRC) on November 23, 1992, at which both she and British American were represented by legal counsel. At the hearing, Claudette presented a letter from Dr. Schack, dated November 19, in which he stated:

[T]here is very little question in my mind that Mr. Lewis was an extremely proud man that was devastated by the fact that he could no longer work, and the most frightening thing to him was not being able to provide for his family. He was extremely proud, and, in my opinion, he indeed suffered [from] a derangement caused by his accident that cornered him into taking his own life.

This was an extremely uncharacteristic behavior for Mr. Lewis, who was not prone to theatrical actions, and there is very little question in my mind that the suicide was due to his work related injury.

      Relying on the Texas Supreme Court's holding in Saunders, Claudette argued that she was entitled to death benefits because Charles' mental derangement, which ultimately caused him to commit suicide, related to his on-the-job hand injury and substantially impaired his ability to resist killing himself. British American contended that it was not liable for death benefits because Charles' death resulted from a willful intent to injure himself. Leah Kitchens, the BRC hearing officer, recommended in her December 22, 1992, report that "this claim for death benefits be accepted as compensable by [British American]."

      On November 30, prior to the issuance of the BRC hearing officer's report, Pamela Peavy—the attorney who represented British American at the BRC hearing—wrote Pipkin to inform him that Claudette's claim for death benefits was scheduled for a Benefit Contested Case Hearing in January 1993. In her letter, Peavy reviewed the relevant time deadlines for the upcoming hearing and recited for Pipkin pertinent facts that were reflected in British American's claim file, including the following:

      •    In his report of the May 7 initial evaluation, Dr. Schack indicated that Charles "was profoundly depressed due to the injury to his hand," and that Dr. Schack's initial diagnosis was "major depression, single episode; hand injury; and severe psychosocial stressors due to disability";

      •    In a May 11 letter to Linda Raney, Dr. Gipson informed her that "there is no question in his [the doctor's] mind that [Charles'] depression was secondary to his injury";

      •    Charles was hospitalized twice as a precaution against suicide; and

      •    Dr. Jeffrey Glass' August 4 letter to Pipkin, regarding his initial psychiatric evaluation of Charles on July 7, indicated that Charles denied ever having been nervous, suicidal, depressed, or having any sleep or appetite disturbances prior to his hand injury; that Claudette had confirmed that his mental problems began with his hand injury; and that Dr. Glass' diagnosis was that Charles suffered from a "post-traumatic stress disorder."

      Under the heading "POSITIVE AND NEGATIVE ASPECTS OF CASE," Peavy also gave Pipkin her frank assessment:

Negative aspects of this case include the fact that [Charles] began suffering from depression and had suicidal ideations shortly after the compensable injury to his hand. Also, it would appear that [British American] accepted liability for the psychological problems subsequent to the compensable injury to his hand as [British American] referred [him] to psychiatrists including Dr. Schack. The fact that [British American] had referred [Charles] to Dr. Schack poses a problem, as it was Dr. Schack who specifically stated that [Charles'] derangement was caused by the accident which resulted in his suicide.

Speaking from her perspective as British American's counsel, Peavy failed to list anything "positive" about the case.

      Finally, in a section of her letter devoted to matters meriting further preparation or investigation, Peavy advised Pipkin that:

      •    British American should obtain an "independent review" of Charles' psychiatric records from Dr. William Skinner, a psychiatrist whom Linda Raney had recommended; and

      •    Linda Raney, who had spoken to Dr. Jeffrey Glass, believed that he would also attribute Charles' suicide to the "depression which was caused by the injury to his hand."

Peavy also told Pipkin that, prior to serving written interrogatories on either Dr. Skinner or Dr. Glass, she would talk to them "to get a feel for their positions," as it would be inadvisable to serve written interrogatories on a potential witness who would agree with Dr. Schack's opinion that Charles' mental derangement was attributable to his hand injury.

      Peavy began to prepare for the Benefit Contested Case Hearing even before the BRC hearing officer had issued a ruling. Rather than obtaining a review of Charles' medical records by Dr. Skinner, the psychiatrist recommended by Linda Raney, Peavy hired Dr. Clay Griffith, a Dallas "forensic" psychiatrist, to review the records. In Peavy's letter to Dr. Griffith, dated December 2, 1992, she enclosed copies of Charles' medical records—except those from the Whitney hospital—as well as Linda Raney's records from Excel Rehabilitation Consultants. In connection with Raney's records, Peavy noted:

The records from Excel provide additional information that will not be found in the medical records. Such information includes summaries of conversations that Mr. Lewis had with his wife, a history of marital tension, and that on the day of the suicide, Mrs. Lewis told her husband that she would leave him if he did not make an attempt to get better.

Peavy also furnished Dr. Griffith a copy of the "relevant provisions" of the Texas Workers' Compensation Act and "a copy of the Texas case which addresses the compensability of suicides." Peavy also had several phone conversations with Dr. Griffith prior to the Benefit Contested Case Hearing.

BENEFIT CONTESTED CASE HEARING

      Claudette testified at the Benefit Contested Case Hearing on January 29, 1993, and Peavy cross-examined her about whether there was "marital tension" in her thirty-five-year marriage to Charles and whether she had threatened to leave him just before he killed himself. Peavy admitted at trial that she knew Claudette would be "sensitive" to this type of cross-examination and that it would be "emotionally painful" for her. During Peavy's cross-examination, Claudette became so upset and distraught that she began crying, and the hearing officer had to recess the proceedings until she could regain her composure. At Peavy's request, the hearing officer agreed to withhold a ruling until British American could include a copy of Dr. Griffith's written report in the record.

      Peavy later filed Dr. Griffith's written report with the hearing officer and sent a copy to Claudette's counsel. Dated March 18, 1993, and written in the form of a letter to Peavy, Dr. Griffith's report contained the following statements, which we quote at length:

The following is a summary of my review of the medical and personnel records concerning Charles L. Lewis. These records have provided me with adequate information to be able to form an opinion concerning whether or not Mr. Lewis' on-the-job injury . . . on April 16, 1992 is directly related to his suicide on July 25, 1992. . . .

. . .

It is my medical opinion that there is no evidence in these records to substantiate the claim that Charles L. Lewis' on-the-job injury on April 16, 1992 was directly related to his suicide on July 25, 1992. I found no evidence that he suffered from "an insanity of such violence as to cause (him) to take his own life through an uncontrollable impulse or in a delirium of frenzy without conscious volition to produce death......"

The records do, however, indicate that Mr. Lewis was noncompliant with his prescribed medications even before his on-the-job injury on April 16, 1992, i.e., "Mrs. Lewis did indicate that Mr. Lewis has a history of high blood pressure but was not taking his medicine at the time of the injury." This noncompliance with medications and reluctance to treatment continued on throughout his rehabilitative period.

The records also indicate that Mr. Lewis' family was interfering in his rehabilitation and well being on a number of occasions. The first time I noted this was on May 30, 1992, when Ms. Lewis took Mr. Lewis out of the hospital against medical advice even though he was still at "risk" for committing suicide; she said she "felt" he would be better off recovering at home. It was also noted in his second hospitalization in June that prior to that hospitalization his "wife forced him to go to the supermarket with her." Another notation said, "she is angry at him for his irrational fear of the same type of loss and struggle that has occurred in his family," and in my opinion there is nothing irrational about this fear.

Linda Raney's reports were extremely revealing to me. I got the distinct impression that Ms. Lewis lacked sensitivity, compassion, and insight in trying to understand what her husband was going through. She seemed more concerned about herself and her feelings and in fact it was stated, "she had become increasingly agitated with the fact that in her opinion, Mr. Lewis was not trying to get well." Then the day before he committed suicide we learn that Ms. Lewis was upset when Mr. Lewis asked her not to go to town to take care of personal errands, which she did every Friday. The final insult, in my opinion, to Mr. Lewis' emotional well being, or lack of, came the following morning when she (Ms. Lewis) became angry (once again) and threatened to leave Mr. Lewis (which she had done on other occasions) if "he did not take charge of his life."

In conclusion, Mr. Lewis' pride or self-worth, as described by one of his physicians, "was directly related to his ability as a provider," which suddenly came to an abrupt halt when he injured his hand. Rather than having emotional and physical support, his "family" suddenly became the authorities on how to best treat and take care of him. They led him here and there, told him what they thought he should do and how he should do it, they showed anger and irritation, and then threatened to leave him if he didn't shape up. He was also angry at his "family" and did verbalize this to one of the health care providers. He then finally decided on a course of action - suicide, which is the most hostile, final act a person can commit. I believe that when Ms. Lewis threatened to leave him one more time, and she did leave, that he deliberately and willfully and consciously took the gun out of the locked? gun cabinet and put an end to his life.

If more specific details are needed, I will be happy to discuss them with you.

(Emphasis added).

      On April 9, 1993, the Benefit Contested Case Hearing officer, Cheryl Dean, entered her final order relating to Claudette's claim for death benefits, which included these findings:

      •    "When [Charles Lewis] committed suicide his impulse to commit suicide was one which arose at a time when he was unable to realistically evaluate such a course of action due to a mental derangement which impaired his ability to resist"; and

      •    "This condition, which arose out of the effects of a compensable injury, resulted in a suicide which was not occasioned by the willful intention . . . to kill himself as contemplated by the statute."

(Emphasis added). In the order the hearing officer concluded that:

[Charles Lewis'] death is compensable under the Act, and his widow, Claudette Lewis, is his legal beneficiary, and is entitled to death benefits. . . . [British American] is hereby ORDERED to initiate death benefits in accordance with this decision and the Texas Workers' Compensation Act.

Following the hearing, Claudette demanded that British American furnish her a copy of Dr. Griffith's report.

TO PAY OR NOT TO PAY

      On April 29, Peavy wrote Pipkin to summarize the results of the TWCC hearings and to advise British American of its legal alternatives:

While the Texas Workers' Compensation Act is explicit in its provision [section 3.02(2)] that willful and intentional injuries are not compensable, the Texas Supreme Court has carved out a liberal exception to the explicit provisions of the Act. In Saunders v. Texas Employers' Insurance Association, the Supreme Court held that where the effects of compensable injuries result in a person becoming dominated by a derangement of the mind which impairs the ability to resist the impulse to take one's own life to the extent that one is unable to control such an impulse, a suicide would not be termed as willful under the Workers' Compensation Act. . . . The Supreme Court stated that the essential question in determining whether or not a suicide was compensable was whether the record establishes a sufficient mental derangement causally related to the original injury.

      Peavy then reviewed for Pipkin the facts that "worked in favor of Claudette's position that [Charles'] psychological deterioration and ultimate suicide were causally related to his compensable injury":

      •    He had no history of depression or suicidal tendencies prior to the hand injury;

      •    He began to suffer from depression and voice suicidal ideations shortly after the hand injury;

      •    British American accepted liability for his psychological problems subsequent to the hand injury by referring him to Dr. Schack, who became his treating physician;

      •    Throughout his treatment, Dr. Schack's opinion was that the hand injury led to the depression and suicidal tendencies that ultimately resulted in his suicide;

      •    Claudette had the advantage, "with regard to the weight and credibility assigned to the expert reports and medical records," that Dr. Schack was the treating psychiatrist and "not merely hired to provide an expert opinion at the Commission level"; and

      •    "[Charles'] behavioral problems prior to and subsequent to his admission to the psychiatric hospital by Dr. Schack are well documented by the medical records."

      Summarizing her review of the case, Peavy advised Pipkin that:

[T]here appears to be no viable avenues for appeal as the Contested Case Hearing Officer properly followed the procedural and substantive law applicable in a claim for death benefits resulting from a suicide. Furthermore, the Contested Case Hearing Officer's decision is supported by evidence submitted by [Claudette] in this claim. Actually, until Saunders is overruled, it appears that there is a rather wide avenue for claimants to recover death benefits resulting from a suicide.

      On May 12, 1993, British American complied with the order entered by the Benefit Contested Case Hearing officer by paying Claudette's claim for death benefits. This was nine and one-half months after her husband's death.

THE TRIAL

      On May 13, the day after the company paid her claim, Claudette sued British American for violating its duty of good faith and fair dealing and article 21.21 of the Texas Insurance Code. At trial in May 1994, Claudette called as her first witness Susan Norwood, British American's designated corporate representative and senior claims representative. Although Norwood had not personally adjusted the claim relating to Charles' hand injury or Claudette's claim for death benefits, she generally discussed various provisions of the Workers' Compensation Act relating to the denial of claims and admitted that any adjuster has a duty to reasonably investigate a claim before denying it and that that duty continues even after denial. This would include, she said, reviewing information contained in the adjuster's claim file before denial.

      Furthermore, Norwood admitted that her office "primarily" uses a manual, prepared by the Austin law firm of Flahive, Ogden & Latson, as a ready reference to the provisions of the Workers' Compensation Act and to its interpretation and application under various circumstances. After Claudette produced a 1992 copy of the Flahive-Ogden manual, Norwood searched its index for the word "suicide" and found not only a reference to, but the following synopsis of, the Texas Supreme Court's 1975 opinion in Saunders:

This case announces a new standard for suicide cases. If the effect or the treatment of injury impairs the employee's ability to resist the impulses to take his own life, then suicide could not be willful infliction of harm, and, hence, it would not come under this exclusion [i.e., section 3.02(2)] to compensability.

As for the manual's synopsis of the opinion in Saunders, Norwood admitted that any adjuster would want to look at and consider its interpretation of the exception in section 3.02(2). Norwood said that she was not aware that Pipkin had done anything wrong in denying death benefits before Claudette had ever filed a claim.

      Jim Pipkin, who had twenty-eight years of experience in adjusting workers' compensation claims, also testified at trial. He admitted to having a "working knowledge" of the Workers' Compensation Act and that, as an adjuster, he had a duty to make a "reasonable investigation" of a claim before acting on it. Moreover, he admitted to having approved compensation benefits and medical expenses related to Charles' hand injury and to having pre-approved his psychiatric treatment.

      Claudette's counsel questioned Pipkin about the various medical reports and letters that were contained in British American's claim file on July 28, 1992, the date on which Pipkin denied the not-yet-filed claim. At the time Pipkin denied the claim, his claim file contained:

      •    A letter from Dr. Gipson to Linda Raney, dated May 11, 1992, advising her that Charles' depression was "secondary to his hand injury" and that he should be watched for suicide;

      •    Dr. Schack's initial May 7 evaluation in which he reported that Charles had become "profoundly depressed when his hand was caught by a compressor belt and crushed, which was quite devastating to him. Since then, he has been extremely depressed and had been handled with benzodiazephines with minimal improvement";

      •    Linda Raney's letter to Pipkin, dated May 22, 1992, advising him that Dr. Sorokolit, the surgeon who operated on Charles hand, had told Ruby, Charles' daughter, that her father "began having symptoms of a major reactive depression" after Dr. Sorokolit told him that, due to his hand injury, he would "never be able to make a fist again"; and that Claudette had denied that Charles had any psychiatric problems prior to his hand injury;

      •    Dr. Schack's admission summary, prepared for Charles' first hospitalization for psychiatric treatment on May 18, 1992, in which he related Charles' depression and suicidal ideation to his hand injury: "[Charles] likened his life prior to the accident like traveling down the road and then after the accident occurred feels like he has fallen off a cliff and ``has gone plum down to the bottom of your shoe'";

      •    Dr. Schack's discharge summary, related to Charles' first psychiatric hospitalization, which also attributed Charles' depression and suicidal ideation to his hand injury; Dr. Schack also noted that Charles denied ever having any suicidal ideations or psychiatric hospitalizations prior to the hand injury;

      •    Dr. Schack's admission summary, prepared at the time of Charles' second hospitalization for psychiatric treatment on June 15, 1992, in which he related Charles' depression, paranoia, and suicidal ideation to his hand injury and, once again, stated that Charles had denied having any history of such problems prior to his hand injury; and

      •    Dr. Schack's discharge summary, related to Charles' second psychiatric hospitalization, in which he also attributed Charles' depression, paranoia, and suicidal ideation to his hand injury, and noted that Charles denied any history of such problems prior to the hand injury.

      Pipkin admitted that, between Charles' death on July 25 and the time he denied the claim on July 28, he did not review any of the medical records in Charles' claim file. Furthermore, he admitted that he never talked to either Dr. Gipson, Dr. Schack or Dr. Glass before denying the claim. Yet, Pipkin acknowledged that he had the responsibility "to at least make a reasonable investigation concerning the facts and circumstances surrounding [Charles'] death." Pipkin claimed, however, that he had previously reviewed the medical records in the claim file—presumably, when they were received by him—and that he remembered, "essentially," what they contained.

      With respect to the information contained in the claim file, Pipkin testified as follows on direct examination by Claudette's counsel:

      Q   Okay. We can establish, can we not, Mr. Pipkin, that at the time you made the decision to deny the claim, that there was no medical information contained within the [claim] file describing Mr. Lewis' depression as being the result of anything other than his injury on the job?

      A   Not that I recall.

. . .

      Q   At the time of denial, sir, there was no medical record in your file which indicated that the doctors held any opinion other than that the depression Mr. Lewis was experiencing was directly attributable to his on the job injury?

      A   Not that I recall.

. . .

      Q   Okay. And you will agree, will you not, that as of the date of denial, July 28th, there was no medical record to support the contrary of the position that Mr. Lewis' depression was related to the injury?

      A   Correct.

      Q   Okay. Doesn't really matter, though, does it, because you didn't rely on medical records in making your decision to deny the claim, did you?

      A   Correct.

      Under continued question by Claudette's counsel, Pipkin proceeded to explain his reasons for denying the not-yet-filed claim for death benefits:

      Q   You made a decision, as I remember your deposition, based upon the one and only fact, and that was that Mr. Lewis had died because of suicide?

      A   Yes.

      Q   And it was your opinion that all suicides are willful acts?

      A   That is correct.

      Q   And that under no circumstances could this have been a suicide that was not the result of a willful act?

      A   Correct.

      Q   A personal opinion?

      A   I suppose so.

. . .

      Q   Okay. At no time did you feel the need, prior to denying this claim, to contact any of the physicians to ask them about their stated opinions, did you?

      A   Right.

      Q   Okay. At no time did you--did you contact Dr. Schack, Dr. Gipson, or anyone associated with Willowbrook Hospital?

      A   I don't think so.

. . .

      Q   . . . . Advise the jury, Mr. Pipkin, if you relied upon any medical records contained within your possession as of the date of July 28, 1992 in making your decision that Mr. Lewis' death was [not] related to his job?

      A   No.

      Q   Am I to assume that you did not rely on any medical records in your possession as of that date?

      A   I don't think so.

      Q   Okay. It's clear, Mr. Pipkin, is it not, that you chose not to rely upon the medical records, but the fact of the matter is that the medical records, themselves, evidence a clear causal relationship between Mr. Lewis' injury and his ultimate suicide?

      A   I didn't think so.

. . .

      Q   It's not your opinion that they don't--that there is not a relationship? There is not a relationship evidenced in the medical records, even though we have established that the first record that you received from Dr. Gipson discusses, one, depression secondary to his injury, and the suicide; correct?

      A   Yes.

      Q   And then two, we have Dr. Schack's records which also describe that Mr. Lewis' depression and psychiatric problems were related to his injury; correct?

      A   Correct.

      Q   And that as a result of the psychiatric problems, he was susceptible to suicide?

      A   Yes.

. . .

      Q   I'm asking you, Mr. Pipkin, there is not a single medical record that was in your possession as of July 28, 1992, the date you denied the claim, that supports your position that Mr. Lewis' suicide was not related to his injury of April [16,] 1992?

. . .

      A   Correct.

. . .

      Q   Now, Mr. Pipkin, . . . you continued to receive medical records after the day that you made the decision to deny the claim; correct?

      A   That is very possible, yes.

. . .

      Q   Were any of the medical records that you received, as you recall them, of such nature that it caused you to reconsider or reevaluate your position?

      A   No.

      Q   Okay. Is it true, Mr. Pipkin, that you had already made the decision and you felt like at that point in time there was no need to continue to consider the medical records as they came in because in your mind a suicide is not compensable?

      A   Yes.

      Although Pipkin claimed in his deposition that he had never been advised of any "additional factors" an adjuster should consider before determining whether a suicide constitutes a willful act, he admitted that Peavy had advised him in her letter following the Benefit Contested Case Hearing that the Saunders test is a "factor" to be considered. Pipkin acknowledged, in fact, that prior to denying the claim for death benefits he never conducted any personal investigation of the circumstances surrounding Charles' suicide. Despite his prior admissions, Pipkin continued to cling to his opinion that all suicides are non-compensable because they result from willful acts and that he had conducted a reasonable investigation before denying the claim.

      On cross-examination, Pipkin said that once he learned of Charles' suicide he contacted Kenneth Stephens' law office and the law firm of Flahive, Ogden & Latson:

      Q   . . . What was the purpose of contacting these lawyers?

      A   The purpose was that I knew I was supposed to suspend temporary income benefits [for the hand injury], but I wasn't sure what to do about the possible claim for fatal benefits, and I wanted to get our lawyers' opinion.

      Q   Okay. Do you recall the exact specifics that were discussed with those lawyers?

      A   I can remember one exact specific and that is all.

. . .

      Q   Mr. Pipkin, what was that one specific you do recall?

      A   It was wording on the--legalese looking wording on Plaintiff's Exhibit 3 [i.e., the TWCC notice mailed on July 28, 1992, denying the not-yet-filed claim for death benefits].

[Pipkin claimed that he got the "exact wording" from the attorneys he talked to.]

. . .

      Q   What was the general content of the conversations you had with these lawyers before you filed [the notice of] this disputed claim?

      A   The general content was to call the attorneys, explain the situation, the facts as we knew them at that time, and what I thought that British American's position should be, and did they agree, or if they did not agree, whichever. That is why I called them.

      Q   And did they disagree?

      A   No, they agreed with our position. In fact, they supported it.

      Q   Did you rely upon this advice of the counsel?

      A   Oh, yes.

      Pamela Peavy, the attorney who represented British American at the TWCC hearings, also testified at trial. Under direct examination by Claudette's counsel, Peavy acknowledged that Dr. Clay Griffith, the psychiatrist she hired to render an opinion on Charles' medical records, would need to know the "correct legal standard" to apply before he could formulate an opinion. As an explanation of her letter to Dr. Griffith, in which she mentioned Linda Raney's records about "marital tension" and Claudette's threat to leave Charles shortly before his death, Peavy said that she was looking at all the events in Charles' life to see if there could be "another independent reason for his having committed suicide." She at first admitted, and then denied, that in seeking Dr. Griffith's opinion she was attempting to find some independent event that would "break the causal connection" between Charles' hand injury and his suicide.

      Although admitting that the legislature had made no substantive change in section 3.02 from its predecessor statute, Peavy nevertheless refused to recognize the Saunders test as applicable in determining whether Charles' suicide was the result of an intentional and willful act. Instead, she essentially claimed that "the black letter law of the statute"—i.e., section 3.02(2)—made all suicides non-compensable because they always result from an intentional and willful act.

      Peavy testified that both she and Randy Johnson, another attorney in her firm, spoke to Pipkin at or about the time he was making a decision about denying death benefits. She said that she and Johnson were both aware of the Saunders opinion when they talked to Pipkin. Peavy never testified that she or Johnson had ever advised Pipkin to deny the claim.

      Tony Korioth, the general counsel for the Texas Municipal League Intergovernmental Risk Pool, testified in Claudette's behalf. After reviewing British American's claim file, Pipkin's deposition, and various letters between the company and its attorneys, Korioth said the company had breached its duty of good faith and fair dealing by denying the claim before it had ever been filed or investigated and because the company's file contained information that indicated the claim was clearly compensable under the Saunders test. He discussed the Saunders test and its continuing applicability in determining whether suicides are compensable under the workers' compensation law. Korioth, who sets the standards for the adjusters who adjust claims against the Intergovernmental Risk Pool, found it significant that British American's claim file contained no evidence or notes indicating that Pipkin had reviewed the file before denying the claim. Korioth was "bothered," he said, by British American's denial of the not-yet-filed claim for death benefits; he characterized the company's action in that regard as an obvious "act of intimidation"—i.e., British American was trying to keep Claudette from filing a claim with the implicit threat, "If you dare file a claim, we're going to take you all the way to the ends of the earth."

      Dr. Ricardo Schack also testified at trial, briefly reviewing for the jury Charles' symptoms and treatment. He confirmed that the facts and circumstances surrounding Charles' emotional problems established a clear causal connection between his suicide and the prior hand injury, and that he had no history of psychiatric problems prior to the injury. Dr. Schack explained Charles' irrational behavior this way:

[His] self-esteem was so hinged on his ability to support his family, that he believed . . . he had become an embarrassment to his family, and he was so bereaved by this, and so ashamed of not being able to take care of it, that he developed a depressive condition as a consequence of having gone through this episode.

Charles' mental derangement, he said, precluded him from resisting the impulse to kill himself.

      Dr. Schack also refuted the comments and opinions in Dr. Griffith's written report concerning Claudette's lack of sensitivity, compassion, understanding, and insight into her husband's problems:

      A   [A] more dedicated, loyal wife, I truly have not met. I had the sense that [there] was nothing that she would not do for her husband. And what makes it sad and sometimes unspeakably cruel when they do, is that she was more. In many of these things, it's kind of like when a parent has a child fall off a horse, and, you know, it's very easy, a kid doesn't want to get back on a horse, and this is part of that. Despite the fact that you're not sure that what you're doing is right all the time, you make that kid get back on the horse and ride it again because that is the right thing to do. And that was the distinct sensation that I had when she would kind of try to push [Charles] at times, and would push him along and try to get him out of the depression, because I think in her heart she truly believed that that was the only way he was ever going to get better.

. . .

      Q   . . . There was an indication by Dr. Griffith that in his mind the final insult was when Mrs. Lewis did what? What does he say?

      A   That she was going to leave if he "didn't take charge of his life," but it was again like forcing the kid on the horse. Get off your duff; walk off; we need to get through this. I mean, it's no different from people having broken legs or anything, and during rehabilitation you have to make them do things that they would normally not feel like doing.

      Q   You said the words "unspeakably cruel" a few moments ago. What are you talking about there?

      A   For me, and I have to speak very candidly, after you have seen somebody pour so much energy, so much emotional energy into the welfare of their husband, and to have somebody take a pot shot from left field, and say that she basically was not a good wife, was not dedicated, was distant, and that is--you know, that is not only not accurate, but it is very cruel, because I'm sure that Mrs. Lewis, like anybody would under these circumstances, would be struggling as to whether she did the right thing or the wrong thing. None of us have all the answers. You do what you believe is best at that time, and I believe that Mrs. Lewis was doing what she believed was best for her husband, not for what she wanted, but what she believed was good for her husband.

. . .

      Q   . . . Doctor, as a psychiatrist, did . . . Dr. Griffith's report offend you in any way?

      A   I was stunned by it.

      Q   And why were you stunned by it?

      A   Because I found his opinions to be out of line completely with the reality of the case.

      Q   Do you believe . . . the allegations as stated in the [report] of Dr. Griffith . . . would cause any type of psychological damage to Mrs. Lewis or her family?

      A   I believe them to be inherently cruel.

      Q   How would that cause damage psychologically to the family?

      A   This, in my mind, is a family that is already trying to get over a devastating event. The leader of a family has killed himself, and now you're in the position where they have a person in a position of authority, like a physician, pointing the finger specifically at Mrs. Lewis and saying, it was your fault because you were not a good enough wife; you were not a supportive enough wife. That I find unbelievable, that somebody could be that callous and say something of that nature.

      Q   Doctor, . . . I would like for you to assume that Mrs. Lewis was cross-examined by a representative of [British American] concerning the issue of whether or not on the date that Mr. Lewis died she threatened to leave him. . . . [D]o you find that type of questioning to be the type of questioning where it would cause emotional harm to or damage to Mrs. Lewis?

      A   Yes.

      Q   And can you explain to the jury how you would feel that questioning to be damaging?

      A   It is a very cheap shot to take advantage of somebody's shame and guilt about something that could have happened of this nature, and it is the kind of doubt that in any person with a normal conscience would torture you for the rest of your life.

      Claudette described her husband as a person and the nature of their marriage relationship for the jury:

Charles was a very hardworking man. He was a good man. . . . When anybody needed him for anything, he was there. He was a good daddy. He was a good husband. He was the best friend I ever had, and he had a lot of friends in Hillsboro. . . . Charles was the boss. I did nothing without asking him. We discussed everything, and then he told me what to do, and I did what he told me to do, and that is the way it was from day one. . . . Because he was usually right. It was usually right to do what he said to do, so I did it. . . . [H]is children worshipped the ground he walked on.

Although she said her marriage was "good" and "solid," Claudette admitted that during their thirty-five years together she had threatened to leave Charles on several occasions. She described the circumstances that prompted her to actually leave their home in 1959, the only time she had ever left her husband:

In 1959, I was pregnant with my third child. I was about maybe 18. . . . It was just a frivolous little argument we had. He made me mad and I went home to mother's. . . . He pulled up in the driveway the next afternoon. I got the kids and got in the car with him and we went back home. Nothing was ever said.

      Claudette said she was "shocked" and "devastated" by Peavy's questions at the Benefit Contested Case Hearing concerning her so-called "marital problems" and her threat to leave Charles the day before he killed himself. She confirmed that she became so emotional under Peavy's questioning the hearing officer had to recess the proceeding until she could regain her composure. She explained her reactions both at and after the hearing this way:

It was embarrassing that she come up and asked me a question like that. It embarrassed me. It made me feel very, very embarrassed, very--she made me feel dirty. . . . [She] tried to take my 35 year marriage and turn it into something that was dirty, that was ugly, which it didn't happen. We were not having marital problems, and it just made me feel about an inch tall when she come up with that question. . . . I felt dirty; I felt guilty. I felt like I'd been--I felt like she'd slandered me and my husband.

According to Claudette, she "cried all the time" for two or three weeks following the hearing.

      Claudette, who demanded and obtained a copy of Dr. Griffith's report after British American filed it with the hearing officer, commented on the report and her reactions to it:

I thought it was very slanderous. It made me mad. It made me mad that an insurance company would get a doctor to make a report like that about me with never seeing me, never seeing Charles, never seeing our family. I was mad, I was embarrassed. . . . The way they said that in--Dr. Griffith said in his opinion that I pushed Charles into the suicide, just as if I had pulled the trigger on Charles. He just stopped short of calling me a murderer. He said my family was getting disgusted with Charles and ashamed of him, and tired of messing with him, and to me that was very slanderous. . . . There was not one word of truth to that. . . . It caused me a lot of pain. It caused my children pain. It caused my sister-in-law pain. Because we knew how hard we had worked. We knew how much we loved Charles and we couldn't understand how a doctor could make a report just by reading something on a paper that someone had sent to them. I couldn't understand how an insurance company could do that to me or anybody. . . . I'm complaining about the report and I'm complaining about British America Insurance to do that, to have a doctor make a report like that about someone that--he didn't know me; he didn't know the situation, except what was on paper. I just felt like they were slandering me. I felt like they were slandering my family. It was embarrassing. It made me feel--it made me feel guilty that he would say, just stop short of saying that I pulled the trigger.

      As for the continuing effects of the Griffith report's allegations, Claudette said they were still bothering her at the time of trial. On cross-examination, when asked whether she had undergone any medical or psychiatric treatment for her emotional reactions to Dr. Griffith's report, Claudette replied that she had just not "given in and gone" for treatment.

      After the plaintiff rested her case-in-chief, British American presented the testimony of Randy Johnson and Jack Latson, the two attorneys whom Jim Pipkin claimed he talked with by phone before mailing the TWCC notice denying death benefits. Much of their testimony is the same on various matters. For example, both said that Pipkin had called seeking advice, and that they discussed with him the denial of the claim and the wording of the notice of denial. Each admitted to being familiar with the Saunders test and the Flahive-Ogden workers' compensation manual when they talked to Pipkin. During their testimony, each ventured the opinion that Pipkin, in denying the claim, had not violated the duty of good faith and fair dealing or committed any unfair practice under article 21.21 of the Texas Insurance Code. Both admitted that they periodically represent British American as a client, and Johnson acknowledged that he formerly practiced law in the same firm as British American's trial counsel.

      Moreover, Johnson and Latson both agreed that the legislature made no substantive changes from the prior statute when it enacted section 3.02—the statutory exception relied on by British American in denying the claim. We quote excerpts of their testimony that set forth their respective views on the applicability of the Saunders test and on the compensability of suicide under the workers' compensation law, as it existed on the date Pipkin denied death benefits:

JOHNSON'S TESTIMONY  

      (On Direct Examination)

      A   Jim [Pipkin] wanted to know whether or not I was in agreement that suicides are not compensable under the new law, the same as they had been under the old law.

      Q   What did you tell him?

      A   The first time I talked to him I told him my opinion was that they are not compensable. Then I talked to him a second time, after I checked the statute [section 3.02], and had also talked to Jack Latson about it, and again told him that, in my opinion, suicides are not compensable under the new law.

      (On Cross-Examination)

      Q   What I'm saying is that, assuming that [section 3.02] is the same law as the old law. Okay? Worded the same. And assuming that there are cases, say, the Supreme Court of Texas has considered, interpreting the very same provision. Okay? You would want to be able to advise your client concerning how the Supreme Court had interpreted that provision?

      A   Depending on the situation, that is something I would take into account in responding to whatever question they might have, yes.

      Q   Well, what if [the Supreme Court] discussed the fact of whether or not suicides were the type of death which could or could not be considered compensable under the Act?

      A   Counsel, I think I know where you're going with this, and your inference is that Saunders says that suicides are compensable, and Saunders does not hold that suicides are compensable. And regardless of what is stated in Saunders, based on the facts that were given to me by Jim Pipkin, in light of Saunders and its interpretation of that language, my opinion was and still is that suicides are not compensable.

      Q   Okay.

      A   Saunders talks about a situation [where] you don't have an intentional taking of [one's life], and that takes it out of the definition of suicide. Suicide by definition is an intentional taking of [one's] own life. That particular incident, suicide, . . . intentional taking of [one's own] life, in my opinion, is not compensable under the old law or new law.

. . .

      A   I'm telling you that when you deal with a suicide, the black letter law, the statute, [section] 3.02(2), it says that suicides are not compensable. And Saunders establishes an exception, a very narrow exception, but it's dealing with a situation where you're not really dealing with a suicide any more, you're dealing with someone who, because of their situation, is not acting with willful intention. If you have a suicide, then you have a willful intention. If you have a willful intention, it's not compensable under the Act.

      (On Redirect Examination)

      Q   All right. [Mrs. Lewis' counsel] asked you about whether you had all this information [in British American's claim file] in front of you when you gave your initial opinion to Mr. Pipkin on the telephone. You remember him asking you about that?

      A   I do.

      Q   Once the file came [to your law office] a couple of days later, did that change your opinion?

      A   It did not.

LATSON'S TESTIMONY  

      (On Direct Examination)

      Q   And are you aware that [Mrs. Lewis' counsel] has hired Tony Korioth to be an expert witness and give some opinions in this case?

      A   Yes, sir.

. . .

      Q   . . . Did Mr. Korioth provide you information to review on this particular case?

      A   Yes. When you hired me, I called Tony up and asked if it would be okay if I came over to his office and got his file that he had been provided by [Mrs. Lewis' counsel].

. . .

      Q   Mr. Latson, do you have an opinion as to whether this case fits the Saunders test?

. . .

      A   [My] opinion is it does not fit the Saunders test, and that the suicide was willful and is not covered by the Workers' Comp Act.

      Q   Now, in most suicides, and in particular this one, do you have an opinion as to whether that is something that is a willful intention and attempt to injure oneself?

. . .

      A   By definition, a suicide is something that someone intends. It's a choice that the person makes. I think Mr. Lewis had a choice not to commit suicide or to commit suicide. I think he exercised the choice to kill himself.

      (On Cross-Examination)

      Q   What I'm saying is, the general rule is that no suicides are compensable?

      A   That's correct.

      Q   But that is the issue with regard to willful and intentional suicide; correct?

      A   That's correct. And I am of the opinion that all suicides are willful. I cannot feature a circumstance in which an intention to cause oneself harm is not the result of choice.

THE VERDICT

      The jury found that British American intentionally breached the common-law duty of good faith and fair dealing and knowingly engaged in unfair or deceptive acts or practices prohibited by article 21.21 of the Texas Insurance Code. It awarded Claudette $125,000 for past mental anguish, $125,000 for future mental anguish, and reasonable attorney's fees equal to twenty percent of her recovery. However, the jury failed to award her any exemplary damages in the bifurcated portion of the proceeding.

THE JUDGMENT

      After Claudette elected to recover based on a knowing violation of article 21.21, the court rendered a judgment against British American for $250,000 actual damages, $500,000 additional damages, $150,000 attorney's fees, and $64,520.55 prejudgment interest.

MOOT POINTS

      British American has assigned points of error attacking the findings relating to the intentional breach of the duty of good faith and fair dealing, a theory of recovery on which the judgment does not rest. All of these points are moot because they cannot serve as a basis for reversing the judgment. Ponton v. Munro, 818 S.W.2d 865, 867 (Tex. App.—Corpus Christi 1991, no writ). We therefore overrule, without discussion, points one through three, seven-A, and twelve.

UNFAIR OR DECEPTIVE ACTS OR PRACTICES

      The jury answered "yes" to the following questions:

      QUESTION NO. 3:

Did BRITISH AMERICAN INSURANCE COMPANY engage in any unfair or deceptive act or practice that resulted in damages to CLAUDETTE LEWIS?

"Unfair or deceptive act or practice" means any of the following:

            1.   Engaging in any false, misleading, or deceptive acts or practices.

"False, misleading, or deceptive acts or practices" means an act or series of acts that have the tendency to deceive an average, ordinary person, even though that person may have been ignorant, unthinking, or gullible; or,

            2.   Making directly or indirectly causing to be made, any assertion, representation, or statement with respect to insurance that was untrue, deceptive, or misleading; or,

            3.   Making any misrepresentation relating to insurance.

"Misrepresentation" means any of the following:

                  a.   any untrue statement of a material fact; or,

                  b.   any failure to state a material fact that is being misleading, when these statements are considered in the light of the circumstances under which they are made; or,

                  c.   the making of any statement in such manner or order as to mislead a reasonably prudent person to a false conclusion of a material fact.

            4.   Not attempting in good faith to effectuate a prompt, fair, and equitable settlement of a claim when liability has become reasonably clear; or,

            5.   Failing to process a claim in good faith; or,

            6.   Failing to adopt and implement reasonable standards for prompt investigation of claims arising under its policy.

            7.   Failing to properly and equitably pay a claim when liability becomes reasonably clear.

QUESTION NO. 4:

Did BRITISH AMERICAN INSURANCE COMPANY knowingly commit any of the conduct that you have found resulted in damages to CLAUDETTE LEWIS in your answer to Question No. 3?

            In answering this question, consider only the conduct that you have found resulted in the damages to CLAUDETTE LEWIS.

EVIDENTIARY POINTS  

      British American attacks both the legal and factual sufficiency of the evidence supporting the affirmative answers to Questions 3 and 4. The factual-sufficiency complaints, points eight and eleven, were preserved in a motion for a new trial. Points four through seven and points nine and ten encompass the no-evidence complaints, which were preserved by objections to the charge and in the motion for judgment notwithstanding the verdict.

      British American made only two distinct no-evidence objections to the submission of Question 3: (1) there is no evidence of any unfair or deceptive acts or practices, and (2) there is no evidence of a breach of the duty of good faith and fair dealing and, for that reason, Claudette cannot recover on her statutory claims as a matter of law. However, in its argument under the combined no-evidence points, British American also attacks Question 3 and the accompanying definition of "unfair or deceptive act or practice" on the following grounds:

      •    The global submission of Question 3 requires a remand because one cannot identify and "discuss the theory followed by the jury in reaching its answer";

      •    Subparts (1) through (3) of the definition do not define acts or practices as required by section 16 of article 21.21 and thus will not support a recovery; and

      •    Subparts (4) through (7) of the definition list acts or practices that "are not actionable as a private cause of action."

None of these complaints were included in the objections to the charge or in the motion for judgment notwithstanding the verdict. Thus, they have been waived and will not be considered on appeal. Tex. R. Civ. P. 274; Allen v. American National Insurance Company, 380 S.W.2d 604, 608-09 (Tex. 1964).

      The charge placed the parties on notice that the jury's answers to the questions, as actually submitted, would form the basis of any judgment to be rendered. Allen, 380 S.W.2d at 609. Therefore, we will measure the legal and factual sufficiency of the evidence against the charge actually given. Southern Life & Life Ins. Co. v. Alfaro, 875 S.W.2d 740, 744 (Tex. App.—San Antonio 1994, no writ) (on rehearing). To hold otherwise would abrogate the waiver provision of Rule 274. Id.

      Point four alleges that the court erred when it denied British American's motion for an instructed verdict at the close of the plaintiff's case-in-chief. This complaint was waived when British American elected not to stand on the motion but, instead, presented evidence. Star Houston, Inc. v. Shevack, 886 S.W.2d 414, 417 n.2 (Tex. App.—Houston [1st Dist.] 1994), writ denied per curiam, 907 S.W.2d 452 (Tex. 1995). Point four is overruled.

      British American contends in point seven that the court erred when it overruled a special exception to the pleading of Claudette's statutory claims. Although the court held a pretrial hearing on special exceptions, the record reflects that at the hearing British American essentially withdrew its special exception to the pleading of Claudette's statutory claim. The record also reflects that Claudette amended her petition following the hearing without British American ever re-urging its special exception. Clearly, British American never obtained an adverse ruling on its exception. Under the circumstances, it waived any complaint about a pleading defect relating to the statutory claims. Tex. R. Civ. P. 90, 91; Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982). Point seven is overruled.

      On July 28, 1992, Jim Pipkin affirmatively represented to the Texas Workers' Compensation Commission and to Claudette, who received a copy of the notice of denial, that Charles' death was "not related to his job"—i.e., his death was not causally connected to his hand injury. Yet, the evidence is undisputed that at the time of denial British American had absolutely no evidence to substantiate such a representation. Not only did British American's claim file contain overwhelming evidence that Charles' treating physicians and psychiatrists attributed his depression and predisposition to suicide to his hand injury, but the company's own actions recognized that causal relationship. Pipkin, who pre-approved and authorized payment for Charles' psychiatric treatment as secondary to his hand injury, readily admitted at trial that, "as of the date of denial, July 28th, there was no medical record to support the contrary of the position that Mr. Lewis' depression was related to the [hand] injury." The jury could have reasonably found from the evidence that British American's unsubstantiated affirmative representation, that Charles' death was not causally connected to his hand injury, was false and misleading and made knowingly in an attempt to deceive. Thus, the evidence is both legally and factually sufficient to support a finding that British American knowingly engaged in unfair or deceptive acts or practices, as defined in sections 1 and 2 of the definition accompanying Question 3.

      Moreover, the jury could have reasonably found from the evidence that British American's unsubstantiated representation was a knowing misrepresentation relating to insurance. Accordingly, the evidence is both legally and factually sufficient to support a finding that British American knowingly engaged in unfair or deceptive acts or practices, as defined in subsections 3(a) and 3(c) of the definition accompanying Question 3.

      The record contains ample evidence from which the jury could have also reasonably found that British American failed to make a good-faith attempt to effectuate a prompt, fair, and equitable settlement after its liability became reasonably clear. We do not address the points attacking the legal and factual sufficiency of the evidence supporting the findings of an intentional violation of the common-law duty of good faith and fair dealing because the judgment is not based on those findings. However, section 4 of the definition accompanying Question 3 provides that "[u]nfair or deceptive act or practice" includes "[n]ot attempting in good faith to effectuate a prompt, fair, and equitable settlement of a claim when liability has become reasonably clear." (Emphasis added). In reviewing the good-faith component of section 4, we nevertheless will apply the Aranda test: (1) whether British American had a reasonable basis for denying or delaying payment of the claim; and (2) whether British American knew or should have known that it had no reasonable basis for denying or delaying payment. Aranda v. Insurance Co. of North America, 748 S.W.2d 210, 213 (Tex. 1988).

      British American contends that it acted in good faith in originally denying the claim and then persisting in the denial. First, it essentially argues that the facts surrounding the suicide provided a reasonable basis for disputing its liability. Second, British American claims it acted in good faith in disputing liability because it relied on the advice of its legal counsel. In analyzing British American's contentions of good faith, we start with the basic premise that the jury, as fact-finder, could assess the witnesses' credibility and elect to believe all, none, or only part of their testimony. Lockley v. Page, 142 Tex. 594, 180 S.W.2d 616, 618 (1944).

      Pipkin admitted at trial that, before denying the claim, he never investigated the circumstances surrounding Charles' death or even reviewed the evidence in his claim file. He also admitted that the claim file contained absolutely no evidence that would support the denial and that, in fact, all of the medical reports in the file attributed Charles' depression and suicidal tendencies to his hand injury. Peavy's letter of November 30 not only confirmed the lack of supporting evidence at the time of denial but effectively placed British American on notice—four months after denial—that its action was still unsupported by any evidence. Evidence that "the insurer unreasonably disregards the evidence of coverage" will support a finding that no reasonable basis existed to deny or delay payment. Lyons v. Millers Cas. Ins. Co. of Texas, 866 S.W.2d 597, 601 (Tex. 1993).

      Before addressing British American's second contention—that it acted in good faith because it relied on the advice of its legal counsel—we note that there can be no reasonable legal dispute over whether the Saunders test was applicable in interpreting section 3.02 at the time of Charles' death. When the legislature reenacts a statutory provision without any material or substantive change from the prior law, a presumption arises that the legislature knew and adopted the interpretation placed on the prior act by the courts and intended the new provision to be interpreted accordingly. First Employees Ins. Co. v. Skinner, 646 S.W.2d 170, 172 (Tex. 1983). Clearly, the legislature made no substantive change in the prior law when it enacted section 3.02 as part of the 1991 version of the Workers' Compensation Act; Johnson, Latson, and Peavy—British American's counsel—admitted as much at trial. Thus, a legal presumption arose at the time of section 3.02's enactment that the legislature knew of the Saunders decision and intended to adopt and apply its interpretation of the prior statute to section 3.02(2). Id.

      Furthermore, British American is charged with the knowledge of a reasonable insurance carrier that markets workers' compensation policies. Jim Pipkin, who at the time was the senior claim adjuster for British American and its vice-president of workers' compensation claims, was likewise charged with the knowledge of a reasonable claim adjuster commensurate with his twenty-eight years of experience and employment status. Being charged with the reasonable knowledge of the law, no insurance carrier or claim adjuster of Pipkin's status and experience could reasonably feign ignorance of the Saunders test and its application to section 3.02. Indeed, the 1992 Flahive-Ogden manual, which the evidence shows is apparently "THE" manual for Texas workers' compensation insurance carriers and their adjusters, effectively precludes any reasonable argument to the contrary. Thus, Pipkin's "personal opinion" that all suicides are non-compensable under section 3.02, because they result from an intentional act on the part of the victim to take his own life, could not provide a reasonable basis for denying or delaying payment of death benefits. Furthermore, Pipkin and British American should have known that his personal opinion provided no reasonable basis for denial or delay. Nor will Pipkin's personal opinion support a claim that he and the company acted in good faith when it failed to attempt to effectuate a prompt, fair, and equitable settlement after its liability became reasonably clear, either at the time of denial or after he received Peavy's November 30 letter.

      Pipkin testified, however, that before denying the claim he contacted British American's legal counsel, explained the facts, and that they agreed the claim should be denied. He could remember only "one exact specific" of his conversations with the attorneys, and that was the "legalese looking" wording of the notice of denial. He said that he got the "exact wording" of the denial from the attorneys. In fact, the only personal note Pipkin placed in the claim file after talking to counsel corresponds exactly to the wording he used in the notice of denial. Significantly, his personal note does not contain any indication that the attorneys advised him to deny the claim. Consequently, the jury could have elected to believe Pipkin's assertion that he contacted counsel to obtain the "exact wording" of the denial, which is supported by his personal note in the claim file, but reasonably discarded his unsupported claim that he had consulted the attorneys on the claim's merits, explained the facts known by him at that time, and relied on their legal advice in denying it. Although Peavy, Johnson, and Latson offered support for Pipkin's actions at trial, they never explicitly testified that they advised him to deny the claim. Accordingly, the jury could have reasonably rejected Pipkin's assertion that the attorneys agreed with his action in denying the claim and that he acted and relied on their advice in doing so. Furthermore, assuming that Peavy, Johnson, and Latson advised Pipkin to deny the claim based on the "black letter" language of section 3.02(2), without regard to the Saunders test, neither Pipkin nor British American could have reasonably relied on such patently incorrect legal advice.

      Nor was the jury required to believe the testimony of Peavy, Johnson, and Latson. Their law firms regularly represented British American on an on-going basis, and Peavy had actually represented the company in the two TWCC hearings. In judging their credibility and weighing the evidence, the jury was entitled to assay their testimony for possible bias and self-interest. Lockley, 180 S.W.2d at 618. Moreover, Pipkin's admissions could have cast serious doubt on the attorneys' credibility and impartiality, especially on their assertions that Pipkin had explained the facts relating to the claim during their phone conversations. Pipkin admitted, as already noted, that he did not examine the claim file or investigate the circumstances surrounding Charles' suicide before denying the claim. Consequently, the jury could have reasonably rejected Pipkin's assertion that he had explained to the attorneys the facts "as we knew them at that time." Contrary to the testimony of Johnson and Latson, the jury could have reasonably believed that Pipkin was unaware of any facts surrounding the suicide and thus did not give the attorneys any factual background concerning the merits of the claim. Instead, the jury could have reasonably believed that Pipkin decided to deny the claim, without regard to the facts or circumstances, and consulted the attorneys solely on the wording of the notice of denial—the "one exact specific" he could recall of his discussions with the attorneys.

      In summary, the jury could have reasonably believed and found from the evidence that: (1) Pipkin unreasonably disregarded evidence of coverage in denying the claim and persisting in its denial; (2) Pipkin did not solicit or rely on the advice of British American's legal counsel in denying the claim and persisting in its denial; (3) British American's liability was reasonably clear at the time of denial and after it received Peavy's November 30 letter; and (4) British American had no reasonable basis, and knew or should have known that it had no reasonable basis, for denying the claim or persisting in its denial after it received Peavy's November 30 letter.

      Thus, the evidence is both legally and factually sufficient to support a finding that British American acted in bad faith when it failed to attempt to effectuate a prompt, fair, and equitable settlement of the claim after its liability became reasonably clear, as defined in section 4 of the definition accompanying Question 3.

      Based on the evidence, the jury could have also reasonably believed and found that British American had failed to process the claim in good faith. As we have noted, the jury could have reasonably found that Pipkin unreasonably disregarded evidence of coverage and denied the not-yet-filed claim without any investigation or regard for the facts. This, alone, would support a finding that British American failed to process the claim in good faith. Furthermore, the jury could have reasonably believed and found that British American attempted to intimidate Claudette into not pursuing her claim for death benefits by denying the claim before it was ever filed. Tony Korioth, an expert with broad and varied experience in the field of workers' compensation law and insurance, characterized the company's precipitous denial of the non-existent claim as an obvious "act of intimidation," carrying with it the implicit threat, "If you dare file a claim, we're going to take you all the way to the ends of the earth." Moreover, Peavy had access to Dr. Glass' August 6, 1992, letter in which he advised Pipkin that Charles' family was struggling with feelings of "guilt and neglect" and that Claudette, in particular, "feels very guilty" that she may have provoked her husband's suicide. Considering this fact, the jury could have reasonably believed and found that Peavy purposefully cross-examined Claudette about her threat to leave Charles on the day before his death as another act of intimidation, i.e., by deepening her sense of guilt, she might forego pursuing her claim in a public trial after conclusion of the TWCC hearings. Likewise, the jury could have reasonably believed and found that Peavy had used Dr. Griffith's report for the purpose of deepening Claudette's sense of guilt and humiliation in furtherance of the intimidation.

      Thus, the evidence is both legally and factually sufficient to support a finding that British American failed to process the claim in good faith, as defined in section 5 of the definition accompanying Question 3.

      For the reasons previously stated in connection with section 4 of the definition, the evidence is both legally and factually sufficient to support a finding that British American failed "to adopt and implement reasonable standards for prompt investigation of claims arising under its policy" and "to properly and equitably pay a claim when liability becomes reasonably clear," as defined in sections 6 and 7 of the definition accompanying Question 3.

      Consequently, the evidence is both legally and factually sufficient to support findings that British American engaged in unfair or deceptive acts or practices (Question 3) and that it did so knowingly (Question 4). We thus overrule evidentiary points five and six and eight through eleven.

MENTAL ANGUISH

      Points thirteen through eighteen attack the legal and factual sufficiency of the evidence to support findings that Claudette suffered $125,000 in past mental anguish and $125,000 in future mental anguish. In connection with the damage question, the court defined "mental anguish" as "emotional pain, torment, and suffering. It is more than ordinary annoyance, embarrassment, or anger." Under this definition, Claudette had to demonstrate something more than mere worry, anxiety, vexation, embarrassment, or anger; in fact, mental anguish requires a "high degree of mental suffering and an intense pain of body or mind." First Title Co. of Waco v. Garrett, 802 S.W.2d 254, 260 (Tex. App.—Waco 1990), reversed on other grounds, 860 S.W.2d 74 (Tex. 1993). British American argues under its combined points that the evidence is both legally and factually insufficient to support an award of past or future mental anguish and that, even if the evidence is sufficient, the amount of damages awarded is so excessive as to require a remittitur.

      First, as for the complaint that the award of past and future mental anguish is excessive, the law provides no precise legal measure for such a recovery. Necessarily, then, the responsibility for determining the amount to be awarded was within the jury's discretion. Wells v. Henderson, 78 S.W.2d 683, 687 (Tex. Civ. App.—Beaumont 1935, writ ref'd). Because there is no evidence that the jury acted out of passion, prejudice or other improper motive, the amounts awarded for past and future mental anguish will not be set aside or remitted as excessive. Id.

      With regard to the evidentiary support for an award of past and future mental anguish, British American contends the evidence shows nothing more than that Claudette suffered from "mere worry, anxiety, vexation, embarrassment, or anger," and that she has thus failed to demonstrate the requisite "high degree of mental suffering and an intense pain of body or mind." Garrett, 802 S.W.2d at 260. However, the record contains evidence that her mental distress entered the realm of suffering required to sustain a recovery for mental anguish.

      Claudette characterized the allegations in the Griffith report as "just stopping short of calling her a murderer." The jury could have reasonably interpreted them in that same vein. Thus, the jury could have reasonably believed and found from the evidence that an allegation essentially charging Claudette with murdering her husband, or a least with complicity in his death, was particularly damaging to her psychologically. Dr. Schack, in fact, described the report's innuendoes—if not explicit allegations—that Claudette was responsible for her husband's death as the type of charges that would "torture" her for the rest of her life. He believed the allegations in the report were the type that would cause her "emotional harm and damage." That Claudette was struggling with deep emotional pain is established by Dr. Glass' memorandum of August 6, 1992, which summarized a meeting with Claudette and other family members within a week after Charles' death, and by Pipkin's approval of the family's psychiatric consultation with Dr. Glass. In his memorandum, Dr. Glass describes family members as being "extremely distraught." As for the outward manifestation of her intense emotional pain, Claudette said that she "cried all the time" for two or three weeks following the Benefit Contested Case Hearing, where Peavy had cross-examined her about marital strife and her threat to leave Charles the day before he committed suicide. Although Peavy's cross-examination obviously upset Claudette, the record shows that Dr. Griffith's allegations of insensitivity, selfishness, and complicity in her husband's death are what produced her high degree of emotional pain and mental torment. Thus, the evidence is legally and factually sufficient to show that Claudette suffered something more than insignificant or ordinary worry, anxiety, vexation, embarrassment or anger, but suffered from a "high degree of mental suffering and an intense pain of body or mind." Garrett, 802 S.W.2d at 260.

      There is no evidence that Claudette even knew of the Griffith report's existence until after April 9, 1993, the date the Benefit Contested Case Hearing officer entered her final order. Clearly, she did not obtain a copy of the report until sometime after the final order was entered. Her emotional reactions to the report's allegations are set forth earlier in the opinion. Moreover, she claimed still to be haunted by the allegations at the time of trial, more than a year after Dr. Griffith prepared the report. Based upon Dr. Schack's opinion testimony, the manner and means of Charles' death, Claudette's testimony, and the nature of the allegations essentially charging Claudette with complicity in her husband's death, the evidence is legally sufficient to support a finding that Claudette suffered past mental anguish and would continue to do so in the future. Moreover, considering the evidence as a whole, it is factually sufficient to support an award of past and future mental anguish. Points thirteen through eighteen are overruled.

CONSTITUTIONALITY OF ADDITIONAL DAMAGES

      British American contends in point nineteen that section 16(b)(1) of article 21.21 of the Insurance Code, which required the court to award additional damages after the jury found a knowing violation of article 21.21, is facially unconstitutional. Act of March 19, 1985, 69th Leg., R.S., ch. 22, § 3, 1985 Tex. Gen. Laws 395, amended by Act of May 19, 1995, 74th Leg., R.S., ch. 414, § 13, 1995 Tex. Gen. Laws 2988, 3000. The crux of its argument is that the provision ignores and circumvents the requirements of Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994), by arbitrarily requiring the court to set the amount of additional damages at twice the amount of actual damages. By avoiding the requirements of Moriel, British American says, the Texas Legislature has violated federal and state constitutional guarantees of due process, due course of law, trial by jury, freedom from excessive fines and penalties, as well as the "open courts" provision of the state constitution.

      What is at issue is the right of the legislature to enact a penalty provision for knowingly engaging in unfair or deceptive acts or practices proscribed by the Texas Insurance Code. The legislature predetermined, in this instance, that the penalty shall be twice the amount of actual damages.

      We start our analysis with the presumption that the penalty provision is constitutional, i.e., the legislature acted within its powers and did not act unreasonably or arbitrarily. Texas Workers' Compensation Com'n v. Garcia, 893 S.W.2d 504, 520 (Tex. 1995) (citing Smith v. Davis, 426 S.W.2d 827, 831 (Tex. 1968)). Likewise, we begin with the premise that the state's police power grants it the authority "to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals, or the public safety." City of Round Rock v. Smith, 687 S.W.2d 300, 302 (Tex. 1985) (citing Lombardo v. City of Dallas, 124 Tex. 1, 73 S.W.2d 475, 479 (1934)). This power extends to declaring what shall be public policy in insurance matters. Castillo v. Canales, 141 Tex. 479, 174 S.W.2d 251, 253 (1943). Acting under its police power, the legislature enacted article 21.21 of the Insurance Code for the express purpose of prohibiting unfair or deceptive acts or practices in the business of insurance. Tex. Ins. Code Ann. art. 21.21, § 1 (Vernon Supp. 1996). One of the remedies the legislature chose for protecting the public interest was to mandate a penalty against any person who knowingly engages in such prohibited practices. Id. art. 21.21, § 16(b)(1). The legislature established the formula for calculating the amount of the penalty at twice the amount of actual damages determined by the fact-finder. Id.

      The legislature has broad discretion in determining not only what the public interest requires but what measures are necessary for its protection. State v. Richards, 157 Tex. 166, 301 S.W.2d 597, 602 (1957). "If there is room for a fair difference of opinion as to the necessity and reasonableness of a legislative enactment on a subject which lies within the domain of the police power, the courts will not hold it void." Id. The penalty provision bears a rational relationship to a legitimate state interest and thus meets federal due-process requirements. See Ferguson v. Skrupa, 372 U.S. 726, 83 S. Ct. 1028, 1032, 10 L. Ed. 2d 93 (1963); State Farm Fire and Cas. Co. v. Price, 845 S.W.2d 427, 440 (Tex. App.—Amarillo 1992, writ dism'd by agreem't). It also meets our state's constitutional guarantee of due course of law because "there is room for a fair difference of opinion as to the necessity and reasonableness" of the enactment in protecting the public interest. Richards, 301 S.W.2d at 602. In any event, the state's police power may even override certain fundamental liberties, such as due process, when the enactment is narrowly and precisely drawn and is reasonably necessary to secure the health, safety, or general welfare of the public. Barbier v. Connolly, 113 U.S. 27, 5 S. Ct. 357, 359, 28 L. Ed. 923 (1884); City of New Braunfels v. Waldschmidt, 109 Tex. 302, 207 S.W. 303, 305 (1918).

      British American insists that the penalty provision violates its constitutional right to a jury trial because the court, rather than the jury, arbitrarily determines the amount of penalty to be assessed. This contention misconstrues the legislative scheme inherent in the provision. First, the fact-finder must find not only the amount of any actual damages but also find a knowing violation of article 21.21. Tex. Ins. Code Ann. 21.21, § 16(b)(1). Only then can the amount of the penalty be calculated and assessed by the court. Id. In reality, then, the jury's findings also establish the amount of penalty as a matter of law. When viewed in this light, the right to a jury trial is satisfied and preserved because the defendant is afforded access to a jury for the determination of disputed fact issues affecting liability for both actual damages and the additional penalty. Garcia, 893 S.W.2d at 527-28 (citing Middleton v. Texas Power & Light Co., 108 Tex. 96, 185 S.W. 556, 562 (1916)).

      Moreover, the legislature has the constitutional authority, subject to guarantees of open courts and due process, to define the parameters of a cause of action, and issues not relevant to the cause of action defined need not be submitted to a jury. Garcia, 893 S.W.2d at 528. Here, the legislature has established a statutory cause of action for unfair or deceptive trade practices in insurance matters and preserved British American's right to a jury trial on the basic cause of action; under the legislative scheme, however, there is no fact issue for the jury to determine with respect to the amount of the penalty, which is a simple mathematical calculation by the court based on the jury's findings of a knowing violation and actual damages. Thus, the penalty provision does not violate the right to a trial by jury.

      Likewise, there is no merit to the claim that the penalty provision violates Texas' open-courts guarantee. The test applied to this particular constitutional provision is as follows:

[L]egislative action withdrawing common law remedies for well established common law causes of action . . . is sustained only when it is reasonable in substituting other remedies, or when it is a reasonable exercise of the police power in the interest of the general welfare.

Id. at 520 (quoting Trinity River Auth. v. URS Consultants, 889 S.W.2d 259, 262 (Tex. 1994)). As noted above, the legislature clearly acted within its police power in enacting article 21.21, including the penalty provision for a knowing violation. Richards, 301 S.W.2d at 602.

      British American's complaint that the penalty assessed violates the constitutional provision prohibiting excessive fines and penalties is also meritless. Under the statutory scheme, the greater the actual damages proximately caused by the unfair or deceptive act or practice, the greater the penalty for knowingly engaging in such act or practice—and vice versa. The legislature's proportionment of the penalty at twice the amount of actual damages is neither unreasonable nor so onerous that it constitutes an excessive fine or penalty. Price, 845 S.W.2d at 440.

      As for the contention that the penalty provision circumvents the standards in Moriel, we note in passing that those standards are designed to assure due process in the assessment of penalties by a jury. See Moriel, 879 S.W.2d at 16-17. As already noted, the legislature in exercising its police power is presumed to have acted rationally, reasonably, and with due regard for constitutional principles. Garcia, 893 S.W.2d at 520. British American has not shown that it acted otherwise.

      For all of these reasons, we overrule point nineteen.

PREJUDGMENT INTEREST

      British American complains in point twenty that the court erred when it calculated prejudgment interest. In a motion to modify the judgment, it contended that Claudette was only entitled to prejudgment interest on actual damages, not on additional damages. Because this was the only complaint presented to the trial court, other arguments British American raises in point twenty have not been preserved for our review. Tex. R. App. P. 52(a); Young, 682 S.W.2d at 237.

       We conclude that the court acted properly when it awarded prejudgment interest on both actual and additional damages under the authority of C & H Nationwide, Inc. v. Thompson, 903 S.W.2d 315 (Tex. 1994), and Ellis County State Bank v. Keever, 888 S.W.2d 790 (Tex. 1994). The Supreme Court had held earlier in Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 137 (Tex. 1988), that a court could not award prejudgment interest on the penalty assessed in a suit under article 21.21. It based the holding in Vail on its prior decision in Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 555 (Tex. 1985) (holding that prejudgment interest may not be awarded on punitive damages). However, the legislature enacted section 6(a) of article 5069-1.05, which states:

Except as provided by Subsections (b), (c), and (d) of this section, prejudgment interest accrues on the amount of the judgment during the period beginning on the 180th day after the date the defendant receives written notice of a claim or on the day the suit is filed, whichever occurs first, and ending on the day preceding the date judgment is rendered.

Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(a) (Vernon Supp. 1996) (emphasis added).

      Section 6(a) modified the holding in Cavnar so as to allow prejudgment interest on future damages. Thompson, 903 S.W.2d at 324. Nevertheless, section 41.006 of the Texas Civil Practice and Remedies Code provided that "[p]rejudgment interest may not be assessed or recovered on an award of exemplary damages." Tex. Civ. Prac. & Rem. Code Ann. § 41.006 (Vernon Supp. 1994). Section 41.006 limited section 6(a) of article 5069-1.05. Keever, 888 S.W.2d at 797. Thus, in all actions to which section 41.006 applied, prejudgment interest could not be recovered on punitive damages. Id. The legislature, however, has expressly exempted all actions brought under article 21.21 of the Insurance Code from the application of chapter 41 of the Civil Practices and Remedies Code, which included section 41.006. Tex. Civ. Prac. & Rem. Code Ann. § 41.002(b)(2) (Vernon Supp. 1996). Because section 41.006 was clearly inapplicable to Claudette's action, the provisions of section 6(a) of article 5069-1.05 were unaffected, and the court thus properly awarded prejudgment interest on both actual and additional damages. Point twenty is overruled.

      All points of error having been overruled, we affirm the judgment.

                                                      BOB L. THOMAS

                                                      Chief Justice

Before Chief Justice Thomas,

      Justice Cummings, and

      Justice Vance

Affirmed

Opinion issued and filed January 10, 1996

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