Appellate: Civil; Business; Consumer; Insurance; Litigation.

National Plan Administrators, Inc. v. National Health Insurance Co.
9/28/07  05-0006
Justice Johnson

Fiduciary duty not established where parties agreed that agent could act as it did.

National Health Insurance Company, Inc. contracted with National Plan Administrators, Inc. (NPA), for NPA to perform third-party administrator duties, for cancer insurance policies, issued by National Health. When National Health decided to exit the cancer insurance market, NPA "rolled" most of the cancer policies to Hartford Insurance Company. National Health sued NPA, and obtained a jury finding, that NPA breached its general fiduciary duty to National Health. Held: Judgment rendered that National Health take nothing. NPA did not owe National Health a general fiduciary duty. The Court declines to impose a general fiduciary duty on NPA, when the parties expressly agreed that NPA could take actions, that would be in violation of such a duty. An agent has a duty to act in accordance with the express and implied terms of any contract, between the agent and the principal. An agent's duties of performance to the principal are subject to the terms of any contract between them. The parties, particularly sophisticated parties, have a right to define the terms of their business relationships, by contract. Common-law agency principles may be limited contractually. A contractual obligation does not generally give rise to a fiduciary duty.

State Bar of Texas Civil Digest
October 17, 2007