The 2013 Texas Legislative Session “Half-Time” Report
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Every two years, the Texas Legislature convenes for approximately five months. The 83rd legislative general session was gaveled to a start at noon on Tuesday, January 8, 2013, and the 140 day clock is now running. The last day to file legislation was March 8, 2013.
It has been estimated that about 6,000 bills were introduced during the current session — some 4,000 in the House and 2,000 in the Senate. The enactment rate for new legislation is generally under 10 percent.
The Texas Attorney-Mediators (TAM) Coalition follows and provides input on proposed legislation that would affect mediation. If one of the bills described below spurs you to action, you may contact the group through Co-Chairs Mike Amis of Dallas or Elaine Block in Houston. The Texas Arbitration Council follows legislation that would have an impact on arbitration. You can contact that group through Richard Evans, the group’s legislative consultant in Austin.
ARBITRATION
H.B. 33. Introduced by Representative José Menéndez (D-San Antonio) on November 11, 2012, this is an act relating to alternative methods of dispute resolution in certain disputes between the Department of Aging and Disability Services and an assisted living facility licensed by the department. Our information is that this bill was filed early by a veteran and very respected legislator, has a low number, probably has the support of the industry group (Texas Assisted Living Association) representing service provider facilities, and most likely the support of the agency itself. H.B. 33 is a refinement of what in the last session was introduced as H.B. 2041.
This bill directs the Health and Human Services Commission to establish by rule an informal dispute resolution process to address disputes between a facility and the department as a result of a survey review conducted by the department . . . The bill amends Chapter 247, TEXAS HEALTH AND SAFETY CODE, to provide that an affected facility may elect binding arbitration with respect to a dispute involving renewal of a license, suspension or revocation of a license, assessment of a civil penalty or assessment of an administrative penalty. If litigation is pending pertaining to one of these topics, the election must be filed in that court not later than the 10th day after the answer is due. The Department also may elect arbitration under this subchapter.
The arbitration and the appointment of the arbitrator shall be conducted in accordance with rules adopted by the chief administrative law judge of the State Office of Administrative Hearings, who shall consider appropriate rules developed by any nationally recognized association that performs arbitration services. The party that elects arbitration shall pay the cost of the arbitration, and total fees and expenses paid for an arbitrator may not exceed $1,000 per diem.
The State Office of Administrative Hearings may designate and contract with a nationally recognized association to conduct arbitrations under this subchapter. Each arbitrator must either be on an approved list of that national association or be otherwise qualified as provided in the rules to be adopted. The subchapter goes on to specify the arbitration procedures, from soup to nuts.
H.B. 288. Introduced by Representative Zedler (R-Arlington) on December 14, 2012, this bill is an act relating to the application of foreign and international laws and doctrines in this state and requiring a court of this state to uphold and apply certain laws, including the doctrine requiring courts to refrain from involvement in religious doctrinal interpretation or application.
The bill amends Title 6, TEXAS CIVIL PRACTICE AND REMEDIES CODE, to prohibit a court, arbitrator or administrative adjudicator from basing a ruling or decision upon a foreign or international law or doctrine, or upon a prior ruling or decision that was based on a foreign or international law or doctrine. The bill defines “foreign or international law or doctrine” to mean a law, rule, legal code or principle of a jurisdiction outside the legal traditions of the states and territories of the United States, including international laws, that do not have a binding effect on this state or the United States. Finally, the bill requires that a court (doesn’t mention arbitrator) uphold and apply the Constitution of the United States, the constitution of this state, federal laws, and the laws of this state, including the doctrine that is derived from the First Amendment to the United States Constitution and known as the church autonomy doctrine, which in part requires courts to refrain from involvement in religious doctrinal interpretation or application.
This writer will not speculate what the purpose of this bill is, and we will have to wait until further dialogue and debate to ascertain that. It may simply mean that decisions may not be based on the Koran. A colleague in New York opines that this type of legislation would appear to prevent rabbinical or other ecclesiastical courts from being considered arbitral tribunals. There apparently is case law in many states (and particularly in New York) that considers a rabbinical court (bais din or beit din) as an arbitral tribunal, and enforces its awards, where the parties voluntarily submit to jurisdiction, and the proceedings are consistent with due process, and do not conflict with public policy.
S.B. 355. Introduced by Senator Royce West (D-Dallas) on February 4, 2013, this bill would amend Section 231.002 of the Texas Family Code to remove a Title IV-D agency, for purposes of enforcement or modification of a child support order, from being subject to a mediation or arbitration clause in the order, or subject to a mediation or arbitration agreement affecting the order to which the agency was/is not a party. The bill also removes that agency from liability for any costs associated with mediation or arbitration.
S.B. 296, and its companion H.B. 586. Introduced by Senator Deuell (R-Mesquite) on January 29, 2013, this bill would amend Chapter 114 of the TEXAS CIVIL PRACTICE AND REMEDIES CODE to define procedures for adjudication of claims under written contract with state agencies. First, there must be a “written contract stating the essential terms of the agreement for providing good or services to the state agency that is properly executed on behalf of the state agency,” and the amount in controversy in an action for breach of that contract, exclusive of interest, must exceed $250,000.
This bill provides for the waiver of sovereign immunity of those claims, and provides a means for “adjudication” of same – the bringing of a civil suit and prosecution to final judgment . . .” and includes the bringing of an arbitration proceeding and prosecution to final resolution in accordance with any mandatory procedures established in the contract.”
The bill limits damages to the balance due and owing, change orders and interest allowed by law. It includes recovery of consequential damages and/or exemplary damages, and allows for recovery of attorney’s fees only if the contract so provides.
H.B. 750, and its companion, S.B. 285. Introduced by Representative Hilderbran (R-Kerrville) on January 28, 2013, these bills would amend Title 1 of the Family Code to prohibit a ruling of a court, arbitrator, or administrative adjudicator from being based on a foreign law, if the application of that law would violate a right guaranteed by the Constitution. They would also void a marriage contract provision which specifies that a foreign law shall govern or that forum shall be in a place where a foreign law would govern, if that foreign law would violate a constitutional right.
This appears to be a version of the ever-popular-in Texas anti-Sharia bills. While it is at least limited to family law cases, it reflects a little education on the part of the business lobby that they shouldn’t be messing with things like this in the broader context: a specific section says neither bill applies to any corporation that enters into such a contract with a foreign law choice of law. To the extent either bill covers a real foreign law, federal supremacy will take care of that.
H.B. 1307, and its companion, S.B. 567. Introduced by Representatives Geren (R-Tarrant) and Ritter (R-Jefferson) on February 14, 2013, Section 13.017 (at page 12 of this 113 page bill), this bill amends Section 5 of the TEXAS WATER CODE to permit the Office of Public Utility Counsel to appear or intervene in alternative dispute resolution as a party on behalf of residential consumers in a utility commission proceeding, or on behalf of small commercial consumers in any proceeding. This section also permits the Office of Public Utility Counsel to intervene in alternative dispute resolution that involves an action taken by an administrative agency in a proceeding in which the counselor is authorized to appear or in which the counselor determines a residential or small commercial consumer is in need of representation.
H.B. 1329. Introduced by Representative Marquez (D-El Paso) on February 14, 2013, this bill amends Chapter 174 of the LOCAL GOVERNMENT CODE to require, upon request, an arbitration board in a proceeding involving a county public employer (i.e. county firefighters and police officers) to administer oaths and issue subpoenas and subpoenas duces tecum. It establishes related provisions for subpoenas and their effect, including making failure to appear a misdemeanor offense with a fine of $1,000 and/or confinement in county jail for up to 30 days.
H.B. 1407. Introduced by Representative Smithee (R-Amarillo) on February 18, 2013, this bill amends Chapter 542 of the TEXAS INSURANCE CODE to allow a person filing a claim against a person insured for liability under an auto insurance policy to require the insurer to submit to binding arbitration. It is mandatory: “An insurer may not deliver, . . . or renew . . . a private passenger automobile insurance policy . . . unless the policy . . . includes a provision that requires the insurer to participate in binding arbitration . . .” The bill also establishes related procedures and provisions for such binding arbitration. Some of the more interesting features include the following:
Sec. 542.353. PROMPT SETTLEMENT OF THIRD-PARTY PROPERTY DAMAGE CLAIMS.
(a) The commissioner by rule shall adopt minimum standards to ensure prompt and equitable settlement of a third-party property damage claim in circumstances in which:
1) the insured ’s liability for the property damage is reasonably clear; and
2) the amount of the claim is within the policy limits.
Sec. 542.355. ARBITRATION OF CLAIMS.
(a) A third-party property damage claimant may require that an insurer submit a dispute concerning the payment of, the amount of, or the denial of a third-party property damage claim to binding arbitration in accordance with the procedures established under this section.
(b) AA third-party property damage claimant who elects binding arbitration under this section:
1) waives the right to bring against the insured or insurer an action, other than an action to enforce the arbitration award, with respect to the claim; and
2) agrees to accept payment for the claim within the applicable policy limits.
(c) The commissioner by rule shall adopt a program for arbitration of third-party property damage claims.
The rules must establish:
1) procedures for requesting and conducting an arbitration under this section;
2) procedures for selecting one or more arbitrators to conduct the arbitration;
3) the qualifications of arbitrators authorized to conduct arbitrations under this section; and
4) a procedure for payment of the costs of arbitration, including payment of arbitrators ’ fees, the amount of the fees, and which party or parties are liable for the payment of the fees.
(d) The department shall maintain and publish a list of arbitrators qualified to conduct arbitrations under this section.
(e) Except to the extent of any conflict with this section and the rules adopted under this section, Chapter 171, Civil Practice and Remedies Code [Texas General Arbitration Act], applies to an arbitration conducted under this section.
Finally, we are aware that the Texas Department of Insurance (“TDI”) recently solicited comments on a “rule concept” regarding mandatory pre-dispute binding arbitration. TDI staff wants to be able to continue rejecting policy forms that have mandatory pre-dispute binding arbitration. TDI’s authority is not clear, so its Commissioner told the staff to get clarification. Based on what the staff learned, TDI determined that it needed legislative direction before making a decision. We’ve been in touch with a couple of insurance trade associations (Texas Association of Health Plans and Texas Association of Life and Health Insurers) that are fighting this effort, apparently by having legislation filed to prevent TDI from adopting such a rule or policy. I have not yet seen any such proposed legislation, but the deadline for introducing new bills is March 1, 2013.
MEDIATION AND OTHER ADR
S.B. 399. Introduced by Senator Hancock (R-Dallas) on February 5, 2013, this bill appears to be a continuation of the effort to put into place an ombudsman program as a sub-set of alternative dispute resolution. The bill amends Chapter 160 of the TEXAS CIVIL PRACTICE AND REMEDIES CODE to permit an employer to establish an ombudsman program, and establishes rules and procedures to which such a program must adhere.
This bill appears to have some momentum, as it was referred to the Business and Commerce Committee on February 13, 2013, and is set for its first public hearing on February 19, 2013. That is rather rapid.
H.B. 1358, and its companion, S.B. 843, introduced by Representative Todd Hunter (R-Corpus Christi), a long time supporter of ADR, the ADR Section and mediator groups, on February 5, 2013. These bills amend Chapter 843 of the TEXAS INSURANCE CODE to enable a pharmacist or pharmacy aggrieved by an audit outcome report to require the auditor to participate in mediation under Chapter 154, TEXAS CIVIL PRACTICE AND REMEDIES CODE. The mediation must be conducted by a person qualified as an impartial third party under Section 154.052 of the Code. This bill is lengthy, so I reproduce only the mediation provisions below:
Sec. 843.515. MEDIATION.
(a) A pharmacist or pharmacy aggrieved by an audit outcome report may require an auditor to participate in mediation under Chapter 154, Civil Practice and Remedies Code.
(b) The pharmacist or pharmacy must elect mediation and notify the auditor not later than the 30th day after the date the pharmacist or pharmacy receives the audit outcome report. The mediation must be completed not later than the 90th day after the date the pharmacist or pharmacy receives the audit outcome report.
(c) The mediation must be conducted by a person qualified as an impartial third party under Section 154.052, Civil Practice and Remedies Code.
Sec. 843.516. REMEDIES NOT EXCLUSIVE.
This section may not be construed to waive a remedy at law available to a pharmacist or pharmacy.
Sec. 843.517. WAIVER PROHIBITED.
The provisions of this subchapter may not be waived, voided, or nullified by contract.
Sec. 843.518. LEGISLATIVE DECLARATION.
It is the intent of the legislature that the requirements contained in this subchapter regarding audit of claims to providers who are pharmacists or pharmacies apply to all health maintenance organizations and pharmacy benefit managers unless otherwise prohibited by federal law.
H.B. 1408. Introduced by Representative Smithee (R-Amarillo) on February 18, 2013, this bill amends Chapter 2211 of the TEXAS INSURANCE CODE to allow the Fair Access to Insurance Requirements (FAIR) Plan Association to require mediation or moderated settlement conference as a prerequisite to an insured filing an action against the Association for denial of coverage or a dispute over the amount paid. Among the interesting provisions for alternative dispute resolution:
Sec. 2211.175. DISPUTES CONCERNING DENIED COVERAGE.
(a) If the association denies coverage for a claim in part or in full and the claimant disputes that determination, the claimant, must provide the association with [timely] notice that the claimant intends to bring an action against the association concerning the denial of the claim.
(b) If a claimant provides [timely] notice of intent to bring an action under Subsection (a), the association may require the claimant, as a prerequisite to filing the action against the association, to submit the dispute to alternative dispute resolution by mediation or moderated settlement conference, as provided by Chapter 154, Civil Practice and Remedies Code.
(c) The association must request alternative dispute resolution of a dispute described by Subsection (b) not later than the 60th day after the date the association receives from the claimant notice of intent to bring an action.
(d) Alternative dispute resolution under this section must be completed not later than the 60th day after the date a request for alternative dispute resolution is made under Subsection (c). The 60-day period described by this subsection may be extended by the commissioner by rule in accordance with Section 2211.180 or by the association and a claimant by mutual consent.
(e) If the claimant is not satisfied after completion of alternative dispute resolution, … the claimant may bring an action against the association in a district court in the county in which the loss that is the subject of the coverage denial occurred.
(f) If a claimant brings an action against the association concerning a denial of coverage, the court shall abate the action until the notice of intent to bring an action has been provided and, if requested by the association, the dispute has been submitted to alternative dispute resolution, in accordance with this section.
(g) A moderated settlement conference under this section may be conducted by a panel consisting of one or more impartial third parties.
(h) If the association requests mediation under this section, the claimant and the association are responsible in equal shares for paying any costs incurred or charged in connection with the mediation.
(i) If the association requests mediation under this section, and the claimant and the association are unable to agree on a mediator, the mediator is the mediator agreed to …. If the claimant and the association are unable to agree on a mediator, the commissioner shall select a mediator from a roster of qualified mediators maintained by the department. The department may:
1. require mediators to register with the department as a condition of being placed on the roster; and
2. charge a reasonable registration fee to defray the cost incurred by the department in maintaining the roster and the commissioner in selecting a mediator under this section.
(j) The commissioner shall establish rules to implement this section, including provisions for expediting alternative dispute resolution, facilitating the ability of a claimant to appear with or without counsel, establishing qualifications necessary for mediators to be placed on the roster maintained by the department under Subsection (i), and providing that formal rules of evidence shall not apply to the proceedings.
* Engaged in all aspects of Alternative Dispute Resolution, Bill Lemons is a full-time Arbitrator and Mediator. He is on the Employment Law, Commercial Dispute, Banking and Financial Services, Construction and Large Complex Case panels of the American Arbitration Association; a Fellow of the College of Commercial Arbitrators; a Distinguished Neutral of CPR (International Institute for Conflict Prevention and Resolution); and a Panelist for the American Health Lawyers Association ADR Service. Internationally, he is a Panelist for the International Centre for Dispute Resolution (AAA), and is a Member of the Chartered Institute of Arbitrators in London. He served as Chair of the ADR Section, and currently is national President of the Association of Attorney-Mediators. A graduate of the University of Houston Law Center. Bill is a former Shareholder with what is now COX SMITH MATTHEWS in San Antonio, and before that was in-house labor counsel for Braniff Airways, Inc. in Dallas, Texas.
Read original articleTags: Alternative Dispute Resolution
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