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On the Sunday after Hurricane Harvey’s floodwaters finally began draining out of the nation’s fourth-largest city, CBS’ 60 Minutes re-aired its deep look at the aftermath of Hurricane Sandy as a prelude to what Texans might expect when they try to get their insurance companies to pay up.
The piece, entitled “The Storm After The Storm,” prominently featured Houston trial lawyer Steve Mostyn, who represented thousands of homeowners who sued their insurance companies for allegedly shortchanging them on their claims after the 2012 storm slammed New Jersey.
Mostyn’s phones have been ringing off the hook ever since — not only from worried Harvey victims but from those impacted more recently by Hurricane Irma in Florida.
Republicans and allies who have fought to limit lawsuits say Mostyn has gamed the system and forced policyholders to pay higher rates, which is why they backed bills in 2011 and 2017 that erect new barriers to storm-related lawsuits.
A major donor to Democrats in Texas and beyond — and long a thorn in the side of state GOP leaders — Mostyn sat down last week with The Texas Tribune to discuss the legal landscape in this age of superstorms, recent restrictions on storm-related lawsuits and his role as a Democratic fundraiser in ruby red Texas.
Here are excerpts of the interview with Mostyn:
Texas Tribune: What are some of the challenges you see ahead?
MOSTYN: Because of Irma, a lot of the adjusters that were here in Harvey were from Florida and Alabama and those areas, I’ve got reports they’ve left jobs mid-job. They’re wanting to go home to secure their homes, but also there’s going be more work there than they can handle, so you have two major catastrophes back to back.
TT: Harvey happened in your hometown. Will this produce a lot of business for you like Ike (2008) did?
MOSTYN: We already represent a few large commercial properties, where at this point we’re trying to help them file their claims properly ... I’ve got a lot of lawyers calling me and wanting to refer a bunch of cases. Well, you really need to let them get through the claims process first. We’ve already gotten calls from law firms in Florida wanting to do the Florida cases and the electricity is not even back on, so they need to let that happen first.
TT: The Legislature enacted lawsuit restrictions in 2011 after Ike, and your hailstorm lawsuits were cited as a primary reason the Legislature this year passed House Bill 1774, which erects new hurdles for homeowners and lowers certain penalties on insurance companies in court cases. How will that impact your business?
MOSTYN: As long as they don’t control the legislatures in the other 49 states, I’m going to be OK ... We told them in 2015 and we told them in 2017 that our hail cases represent less than a half a percent of what we do. I mean 96 percent of what we do now is outside the state of Texas. It wasn’t just about that.
Remember there is a big lobby out there that is being paid to do this. There’s a big lobby for the insurance industry that wanted to do get this done.
TT: Is it fair to say that the Republicans in Texas have been successful in hurting your business here?
MOSTYN: Absolutely. It’s true they’ve hurt the practice here ... anytime industries that are in the billions of dollars can limit their exposure, you’re going to see that happen at the Legislature if they can get it passed.
TT: How will HB 1774 impact people after Harvey?
MOSTYN: When you lower the penalties ... if you lower them down to almost nothing and make it difficult for people to hire lawyers, then the conduct will get worse, so it’s going to be more difficult to get paid for [storm-related claims] because they don’t quite have the same [legal] tools in the chest that they used to ... whatever length of rope you give the insurance companies — not all of them but a large, large number of them — they’ll run as far as they can run.
TT: Besides typical insurance policy lawsuits, do you see any other storm-related lawsuits on the horizon?
MOSTYN: There’s been some contact about some of these folks, where there was construction going on in some of these neighborhoods and they had blocked off all the [storm drains]. They did that so they wouldn’t get pollution into the [drainage] systems, and some of those companies didn’t go in and remove them and so some of those neighborhoods flooded.
We’ve had calls about people in Meyerland who bought homes, and on the home disclosure there’s the box checked off that the house has never flooded and maybe it’s flooded twice.”
TT: Who would be liable in that scenario?
MOSTYN: It would be back against the seller probably. And maybe the Realtor if the Realtor made representations.
TT: Do you believe climate change has helped your storm lawsuit business?
MOSTYN: There are certainly more catastrophic storms than we’ve ever seen, and to the extent we’re doing storm cases it certainly helps our business. You’ve seen the most catastrophic hailstorms that we’ve ever seen across the country. There’s been more severe rain events across the country than we’ve ever had … and catastrophic storms are covered by insurance claims.
TT: For years you’ve been the top Democratic donor in Texas statewide elections. Some say you’re pulling back from that role. True?
MOSTYN: We’re trying to get some other people to step up. We kind of feel like we’ve primed and primed and primed the well, and that some other folks need to step up and do some things ... we’ll be there to do our part for sure and other folks have got to do their part ... We’re just a little bit slowing down. We were running pretty hard for 20 years, 25 years.
TT: You’re getting tired of it?
MOSTYN: I want to go watch Friday night football with my son and go to my little girl’s swim meets and I want to do all those things ... and we’re at the point where, you’re running, running, running, and you look up one day and you say, we’re doing fine, but are we really enjoying the things we want to be enjoying?
We’ve asked other people to do it and they want to do it and I want other people to get credit for doing it. I mean this is a giant, giant state. If we were trying to flip Vermont, we’d be done.
Disclosure: Steve Mostyn has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors is available here.
Read related Tribune coverage:
In 2013, Democratic mega-donor Steve Mostyn formed the Texas Association of Consumer Lawyers. He says he formed the group because he wants more cash to go straight into campaign coffers. [Full story]
A new law passed this year aims to crack down on frivolous insurance lawsuits. House Bill 1774 also reduces the penalty fees that insurance companies face for late payments if the policyholder files a lawsuit. [Full story]
The Texas Windstorm Insurance Association, the state’s insurer of last resort for Texas’ coastal regions, faced years of legal challenges over the cost of damage caused by Hurricane Ike. A 2013 settlement had brought the total of claims paid by TWIA to more than $500 million. [Full story]