Texas 2009 - 81st Regular

Texas House Bill HB2539 Compare Versions

Only one version of the bill is available at this time.

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1	1	81R11555 TJS-F
2	2	By: Eiland H.B. No. 2539
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a disaster recovery insurance claims mediation program.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Chapter 542, Insurance Code, is amended by
10	10	adding Subchapter H to read as follows:
11	11	SUBCHAPTER H. DISASTER RECOVERY INSURANCE CLAIMS MEDIATION PROGRAM
12	12	Sec. 542.351. PURPOSE. This subchapter establishes a
13	13	nonadversarial mediation program to promote effective, fair, and
14	14	timely handling of unresolved residential property insurance
15	15	claims arising from damage caused by hurricanes, cyclones,
16	16	tornados, or other disasters in an area designated a disaster area
17	17	by the president of the United States.
18	18	Sec. 542.352. GENERAL DEFINITIONS. In this subchapter:
19	19	(1) "Administrator" means the department or its
20	20	designee.
21	21	(2) "Business day" means a day other than a Saturday, a
22	22	Sunday, or a holiday recognized by this state.
23	23	(3) "Insurer" has the meaning assigned by Section
24	24	801.001.
25	25	(4) "Mediator" means an individual designated by the
26	26	administrator to mediate disputes under this subchapter.
27	27	(5) "Party" means an insured or insurer that
28	28	participates in mediation under this subchapter.
29	29	(6) "Program" means the disaster recovery insurance
30	30	claims mediation program established under this subchapter.
31	31	(7) "Residential property insurance" has the meaning
32	32	assigned by Section 2301.002, and includes coverage under:
33	33	(A) an industrial fire insurance policy, as
34	34	described by Section 912.310;
35	35	(B) a residential windstorm and hail insurance
36	36	policy under Chapter 2210; and
37	37	(C) a policy issued by the Texas FAIR Plan under
38	38	Chapter 2211.
39	39	Sec. 542.353. CLAIMS. (a) For purposes of this subchapter,
40	40	"claim" means a first-party insurance loss that is disputed or for
41	41	which the insurer has denied payment.
42	42	(b) A claim is limited to a loss that is:
43	43	(1) covered under a residential property insurance
44	44	policy that is in effect at the time of the loss; and
45	45	(2) incurred as a result of a declared disaster.
46	46	(c) The total amount of a loss under Subsection (b) must be
47	47	at least $1,000. The difference between the positions of the
48	48	parties must be at least $500 after any applicable deductible is
49	49	applied.
50	50	(d) A claim includes a dispute regarding the cause of a loss
51	51	that may be resolved through a forensic mediation conference in
52	52	which experts on meteorology, engineering, geography, and
53	53	construction present information regarding:
54	54	(1) the extent of damage caused by wind or other peril;
55	55	(2) the structural soundness of the property before
56	56	and after the disaster; and
57	57	(3) the cost of repairs.
58	58	Sec. 542.354. APPLICABILITY OF SUBCHAPTER; EXCEPTIONS. (a)
59	59	This subchapter applies only to first-party claims resulting from
60	60	damage to property located in this state that is covered under
61	61	residential property insurance issued by:
62	62	(1) an insurer;
63	63	(2) an eligible surplus lines insurer;
64	64	(3) the Texas Windstorm Insurance Association; or
65	65	(4) the Texas FAIR Plan.
66	66	(b) This subchapter does not apply to:
67	67	(1) a policy issued under the national flood insurance
68	68	program;
69	69	(2) a commercial insurance policy;
70	70	(3) a private passenger automobile insurance policy;
71	71	or
72	72	(4) liability coverage under a residential property
73	73	insurance policy.
74	74	Sec. 542.355. GENERAL POWERS AND DUTIES OF DEPARTMENT AND
75	75	COMMISSIONER; RULES. (a) The department may designate and
76	76	contract with a person to serve as its administrator to develop and
77	77	oversee the program.
78	78	(b) The commissioner may adopt rules as reasonable and
79	79	necessary to implement this subchapter.
80	80	(c) The commissioner shall enforce this subchapter.
81	81	Sec. 542.356. REPORTING REQUIREMENTS. (a) In the biennial
82	82	report submitted to the governor and the legislature under Section
83	83	32.022, the commissioner shall report regarding the status of the
84	84	program, including:
85	85	(1) statistics about the number of cases suitable for
86	86	mediation, the number sent to mediation, the number of mediations
87	87	accepted, and the number of mediations rejected; and
88	88	(2) other similar information concerning the
89	89	operation of the program.
90	90	(b) At three-month intervals, the department shall collect
91	91	from any administrator with which it contracts for services under
92	92	this subchapter information regarding:
93	93	(1) the number of persons to whom mediation was
94	94	offered;
95	95	(2) the number of insurers that accepted and declined
96	96	mediation;
97	97	(3) the number of settlement offers;
98	98	(4) the number of completed settlement agreements and
99	99	the amounts initially claimed and ultimately settled;
100	100	(5) the number of settlement agreements offered but
101	101	rescinded during the rescission period; and
102	102	(6) any other information required by the
103	103	commissioner.
104	104	(c) Not later than the fifth day after the conclusion of a
105	105	mediation conference, the mediator shall file with the
106	106	administrator a status report indicating whether the parties
107	107	reached a settlement. If the parties reached a settlement, the
108	108	mediator shall include a copy of the settlement agreement with the
109	109	status report. The settlement agreement is subject to the
110	110	confidentiality requirements of Section 542.371.
111	111	Sec. 542.357. PROGRAM IMPLEMENTATION. (a) After a
112	112	disaster is declared by the president of the United States, the
113	113	commissioner, by order, may implement the disaster recovery
114	114	insurance claims mediation program under this subchapter.
115	115	(b) The program is available to a party only after the party
116	116	has had adequate time, as determined by the commissioner, to
117	117	inspect the damaged property, assess the damage, obtain
118	118	information, and attempt to resolve a claim without resorting to
119	119	the program.
120	120	(c) Mediation is not required under the program with regard
121	121	to a claim that:
122	122	(1) based on agreed facts between the parties
123	123	concerning the cause of the loss, is not covered under the policy;
124	124	or
125	125	(2) the insurer has alleged to be fraudulent and has
126	126	reported as fraudulent to the department.
127	127	(d) The commissioner's order must include a termination
128	128	date for requests for mediation regarding losses incurred because
129	129	of the declared disaster. The commissioner may extend the
130	130	termination date by order.
131	131	Sec. 542.358. NOTICE TO INSUREDS OF RIGHT TO MEDIATION. (a)
132	132	Each insurer shall provide, in the manner prescribed by
133	133	commissioner rule, notice to its insureds of their right to mediate
134	134	claims following an order of the commissioner under Section
135	135	542.357.
136	136	(b) The insurer shall send the notice to a policyholder:
137	137	(1) whose reported loss under a policy issued by the
138	138	insurer has not been paid as of the effective date of the order; or
139	139	(2) who has disputed a denial or partial denial of a
140	140	claim during the mediation period established by the commissioner's
141	141	order.
142	142	(c) Notice under this section must be in the form prescribed
143	143	by the commissioner by rule, and must include instructions about
144	144	how to request mediation, including the address, telephone number,
145	145	fax number, and Internet website for requesting mediation through
146	146	the administrator. The notice must state that, except as provided
147	147	by Section 542.363, the administrator may schedule a mediation
148	148	conference not earlier than the 21st day after the date of the
149	149	notice.
150	150	(d) The commissioner may by rule require additional
151	151	information to be included in the notice.
152	152	Sec. 542.359. REQUEST FOR MEDIATION. (a) An insured may
153	153	request mediation by completing a request form prescribed by the
154	154	department for that purpose and delivering the form to the
155	155	administrator.
156	156	(b) The insured must include in a mediation request form:
157	157	(1) the name, mailing address, and telephone numbers
158	158	of the insured, including a cell phone number, if any;
159	159	(2) the location of the property that is the subject of
160	160	the dispute, if different from the mailing address provided;
161	161	(3) the name of the insurer, the claim number, and the
162	162	policy number of the insured; and
163	163	(4) a brief description of the dispute.
164	164	(c) If an insurer receives a request for mediation from an
165	165	insured, the insurer shall:
166	166	(1) instruct the insured to call the department's
167	167	toll-free number as established by Section 521.051; or
168	168	(2) provide the insured with the mediation request
169	169	form not later than one business day after receiving the request for
170	170	mediation.
171	171	(d) The administrator shall notify the parties on receipt of
172	172	a completed mediation request form that mediation has been
173	173	requested. The administrator shall use an electronic notification
174	174	process to inform insurers of mediation requests, mediation
175	175	conference schedules and locations, and statistics relating to
176	176	participation in mediation. The administrator shall provide
177	177	parties notice of the date, time, and location of a mediation
178	178	conference not later than the 14th day before the date on which the
179	179	conference is scheduled.
180	180	(e) An insurer may reject a mediation request if the dispute
181	181	does not involve a claim as described by Section 542.353. If the
182	182	insurer rejects the request, the insurer shall notify the insured
183	183	and the administrator in writing of the rejection and specify the
184	184	reasons for the rejection.
185	185	Sec. 542.360. FEES. (a) Except as provided by Subsection
186	186	(c), the insurer shall pay reasonable fees for scheduled mediation
187	187	conferences. The total fee for mediation under this subchapter is
188	188	$350, with $300 paid as the mediator fee and $50 as the
189	189	administrator fee.
190	190	(b) The administrator shall bill insurers separately for
191	191	mediation fees and administrative fees. The administrator shall
192	192	bill insureds for mediation fees as provided by Subsection (e) and
193	193	Section 542.365.
194	194	(c) If the parties reach an agreement before the mediation
195	195	conference is scheduled, no mediation fee is owed.
196	196	(d) If the mediation conference is canceled for any reason
197	197	by the insured or the insurer after the conference has been
198	198	scheduled, the insurer shall pay the mediator $100 as the mediator
199	199	fee and the administrator the entire $50 administrator fee, except
200	200	as provided by Subsection (e).
201	201	(e) If the insured fails to appear at the mediation
202	202	conference and does not show good cause for the failure to appear,
203	203	the mediation conference shall be considered to have been held, and
204	204	the insurer shall pay the fees in accordance with Subsection (d).
205	205	If the insured wishes to schedule a new conference after failing to
206	206	appear without good cause, the insured shall pay the fees for the
207	207	new mediation conference. A new mediation conference may be
208	208	rescheduled only on the insured's payment of the mediation fees in
209	209	the amounts specified under Subsection (a).
210	210	Sec. 542.361. PAYMENT OF EXPENSES. Except as provided by
211	211	Section 542.365, any expenses associated with participation in a
212	212	mediation conference, such as travel, telephone, postage, meals,
213	213	lodging, facilities, and other related expenses, shall be borne by
214	214	the party or other person incurring the expense.
215	215	Sec. 542.362. SELECTION OF MEDIATOR. (a) The
216	216	administrator shall select mediators from a list created by the
217	217	administrator of qualified mediators. To be qualified, a mediator:
218	218	(1) must meet the requirements under Section 154.052,
219	219	Civil Practice and Remedies Code;
220	220	(2) must follow the standards provided by the ethical
221	221	guidelines for mediators promulgated by the supreme court;
222	222	(3) may not be the subject of an administrative action
223	223	by another agency or governmental entity, regardless of whether the
224	224	action relates to mediation; and
225	225	(4) may not have been found guilty of or have plead
226	226	nolo contendere to a felony or a crime punishable by imprisonment
227	227	for one year or more under a law of any state or country, without
228	228	regard to whether a judgment or conviction has been entered by the
229	229	court having jurisdiction of the case.
230	230	(b) The administrator, in the administrator's sole
231	231	discretion, may remove a mediator from the list of qualified
232	232	mediators. The circumstances in which the administrator may remove
233	233	a mediator from the list include:
234	234	(1) alleged instances of dishonest, incompetent,
235	235	fraudulent, or unethical behavior on the part of the mediator;
236	236	(2) an instance in which the mediator allegedly failed
237	237	to respond promptly and completely to requests from the
238	238	administrator, or in which the acts or omissions of the mediator are
239	239	counter to the standards provided by this chapter; or
240	240	(3) a determination that the mediator does not meet
241	241	the requirements of Subsection (a)(3) or (4).
242	242	(c) Each mediator shall be selected in a manner determined
243	243	by the administrator. In the notice regarding the scheduling of a
244	244	mediation conference sent under Section 542.359(d), the
245	245	administrator shall provide biographical information about the
246	246	mediator to the parties. In selecting a mediator, the
247	247	administrator shall consider the costs associated with travel to
248	248	the mediation conference for the mediator and the parties. A
249	249	mediator serves at the sole discretion of the administrator.
250	250	(d) Each party may object once to the appointment of a
251	251	mediator without showing cause why the mediator should not serve.
252	252	If a party objects to the appointment of a mediator, the
253	253	administrator shall dismiss that mediator and appoint a replacement
254	254	mediator.
255	255	(e) A party may request that a mediator be disqualified for
256	256	good cause without exhausting the party's right to object to a
257	257	mediator under Subsection (d). A request under this subsection
258	258	must be submitted to the administrator in writing at any time before
259	259	the conclusion of the mediation conference. A party may show good
260	260	cause by demonstrating that:
261	261	(1) there is a conflict of interest between a party and
262	262	the mediator;
263	263	(2) the mediator cannot competently handle the
264	264	mediation conference; or
265	265	(3) other reasons exist why the mediation conference
266	266	would be impaired under the continued service of the mediator.
267	267	(f) A complaint regarding a mediator must be submitted to
268	268	the administrator in writing.
269	269	Sec. 542.363. SCHEDULING OF MEDIATION CONFERENCE;
270	270	RESOLUTION PERIOD BEFORE CONFERENCE. (a) Not later than the 30th
271	271	day after the date the administrator receives a request for
272	272	mediation, the administrator shall contact the parties and schedule
273	273	a mediation conference. If practicable, the administrator shall
274	274	schedule the conference to occur not later than the 45th day after
275	275	the date on which the administrator receives the mediation request
276	276	form.
277	277	(b) If a residential property insurance claim remains
278	278	unresolved, the administrator shall notify the parties that the
279	279	dispute will be referred to a mediation conference if the parties do
280	280	not resolve the dispute not later than the 21st day after the date
281	281	of the administrator's notice. The administrator, for good cause,
282	282	may extend the resolution period under this subsection for an
283	283	additional seven days.
284	284	Sec. 542.364. MEDIATION CONFERENCE LOCATION. To the extent
285	285	practicable, the mediation conference shall be located in or near
286	286	the area that was the subject of the disaster declaration by the
287	287	president. The administrator may designate within a particular
288	288	county multiple locations for mediation conferences.
289	289	Sec. 542.365. DUTIES OF PARTIES; EFFECT OF FAILURE TO
290	290	APPEAR. (a) Each party to a mediation conducted under this
291	291	subchapter must negotiate in good faith and must have the authority
292	292	to settle claims, subject to the rescission period under Section
293	293	542.367.
294	294	(b) An insurer that fails to appear for a scheduled
295	295	mediation conference at which the insured appears shall pay:
296	296	(1) the insured for the insured's actual expenses
297	297	incurred in attending the conference, plus the value of any lost
298	298	wages; and
299	299	(2) the total fees for the rescheduled conference.
300	300	(c) An insured who fails to appear for a scheduled mediation
301	301	conference for good cause may reschedule once for a time set by the
302	302	administrator. If the insured subsequently fails to appear, that
303	303	insured loses the insured's right to mediate the claim under this
304	304	subchapter, and shall pay all the fees charged by the administrator
305	305	up to the time of the conference at which the insured failed to
306	306	appear.
307	307	Sec. 542.366. CONDUCT OF MEDIATION CONFERENCE. (a) An
308	308	insured is not required to retain counsel to participate in a
309	309	mediation conference. The insured or the insured's representative
310	310	shall inform the administrator if the insured will be represented
311	311	by counsel at the mediation conference not later than the seventh
312	312	day before the date the mediation conference is scheduled to occur.
313	313	(b) The administrator shall inform the insurer as soon as
314	314	practicable if the insured will be represented by counsel. If the
315	315	insured is represented by counsel at the mediation conference, the
316	316	insurer's counsel may also be present. If the insured is not
317	317	represented by counsel, the insurer's counsel may not be present.
318	318	(c) A party may have the assistance of persons at the
319	319	mediation conference who may assist in the presentation of the
320	320	claim, including public insurance adjusters, contractors,
321	321	engineers, and interpreters. A party who wishes to use the
322	322	assistance of such a person must notify the administrator not later
323	323	than the seventh day before the date the mediation conference is
324	324	scheduled to occur.
325	325	(d) Representatives from the department may be present to
326	326	observe the mediation conference but are not parties to the
327	327	conference.
328	328	(e) Video and audio electronic recordings of mediation
329	329	conferences are prohibited.
330	330	Sec. 542.367. MEDIATION NONBINDING; RESCISSION PERIOD. (a)
331	331	Except as provided by Subsection (c), mediation conducted under the
332	332	program is nonbinding, and the insured and the insurer are not
333	333	required to accept an agreement proposed during the mediation.
334	334	(b) If the parties agree to a settlement for the disputed
335	335	matters resolved as a result of the mediation, the insured may
336	336	rescind the agreement until the end of the third business day after
337	337	the date of the settlement if the insured has not, in relation to
338	338	the settlement agreement:
339	339	(1) cashed or deposited any check or draft disbursed
340	340	to the insured; or
341	341	(2) agreed in writing to accept an electronic funds
342	342	transfer.
343	343	(c) If counsel for the insured is present at the mediation
344	344	conference and the parties concur in a settlement agreement that is
345	345	signed by the insured's counsel, the agreement is immediately
346	346	effective on the insured and may not be rescinded.
347	347	(d) If the insured rescinds a settlement agreement, the
348	348	agreement may not be admitted in evidence or disclosed unless the
349	349	insured and all other parties to the agreement expressly agree to
350	350	its disclosure.
351	351	(e) If the settlement agreement is not rescinded by the
352	352	insured, the agreement acts as a release of all specific claims for
353	353	damages that were known at the time of the mediation and were
354	354	presented and agreed to at the mediation conference.
355	355	(f) This section does not affect rights under existing law
356	356	for residential property insurance claims for damage that was
357	357	undetected as of the date of the mediation conference.
358	358	Sec. 542.368. OTHER DISPUTE RESOLUTION. If the insured
359	359	elects not to participate in mediation, or, if after participating
360	360	in the program the parties do not resolve the claim, the parties may
361	361	proceed:
362	362	(1) under the appraisal process, if applicable, in the
363	363	insured's insurance policy;
364	364	(2) by litigation;
365	365	(3) by any other dispute resolution procedure
366	366	available under the laws of this state; or
367	367	(4) by unmediated private negotiation.
368	368	Sec. 542.369. EFFECT OF INSURER REFUSAL TO MEDIATE. (a) In
369	369	addition to any other remedy available under Chapter 82, the
370	370	commissioner, on a determination that an insurer has engaged in an
371	371	arbitrary or unreasonable refusal to mediate, may enter an order
372	372	requiring that the insurer participate in mediation in all cases
373	373	determined by the commissioner to be appropriate for mediation
374	374	under this subchapter.
375	375	(b) An insurer that the commissioner has ordered to
376	376	participate in mandatory mediation under Subsection (a) may seek
377	377	judicial review of the order not later than the 30th day after the
378	378	date the order was entered by the commissioner. The commissioner's
379	379	order to participate in mediation may not be stayed during the
380	380	pendency of a judicial proceeding for more than 60 calendar days
381	381	after the date the order was entered. The basis of the
382	382	commissioner's decision to require an insurer to mediate may not be
383	383	made public unless judicial review is sought.
384	384	(c) An arbitrary or unreasonable refusal by an insurer to
385	385	participate in mediation under this subchapter is a deceptive trade
386	386	practice under Chapter 541 and an unfair claims settlement practice
387	387	under Subchapter A.
388	388	Sec. 542.370. EFFECT ON LITIGATION. (a) Referral to
389	389	mediation or the pendency of mediation under this subchapter does
390	390	not operate as a basis to prevent or stay the filing of civil
391	391	litigation arising wholly or partly out of the facts that are the
392	392	basis of the mediation.
393	393	(b) Any applicable statute of limitations or limitation on
394	394	the insured's right to sue is tolled, beginning on the date the
395	395	insurer was notified of the mediation conference under Section
396	396	542.363 and ending on the date:
397	397	(1) mediation is completed or declined;
398	398	(2) the insured loses the right to mediate because of a
399	399	failure to appear; or
400	400	(3) if a settlement agreement is completed, the
401	401	rescission period established under Section 542.367 expires.
402	402	Sec. 542.371. CONFIDENTIALITY REQUIREMENTS. (a)
403	403	Statements made by the parties, negotiations between the parties,
404	404	and documents produced during a mediation conducted under this
405	405	subchapter are confidential.
406	406	(b) Mediation documents, including settlement agreements,
407	407	obtained by the department are confidential and are not subject to
408	408	disclosure under Chapter 552, Government Code. This subchapter
409	409	does not affect the discoverability or admissibility of documents
410	410	that are otherwise discoverable or admissible.
411	411	(c) The confidentiality required under this section does
412	412	not restrict department access to documents or other information
413	413	the department seeks in order to evaluate the program or to comply
414	414	with reporting requirements.
415	415	SECTION 2. This Act takes effect immediately if it receives
416	416	a vote of two-thirds of all the members elected to each house, as
417	417	provided by Section 39, Article III, Texas Constitution. If this
418	418	Act does not receive the vote necessary for immediate effect, this
419	419	Act takes effect September 1, 2009.