By Holly Hayes As discussed in my previous post, Texas House Bill 2256 was signed into law on June 19, 2009. The bill provides a procedure for mediation of “balance billing,” which is the practice of billing insured patients for amounts or balances not covered by the insurer. HB 2256 also includes the following section on “bad faith” mediation: SUBCHAPTER C. BAD FAITH MEDIATION Sec. 1467.101. BAD FAITH. (a) The following conduct constitutes bad faith mediation for purposes of this chapter: (1) failing to participate in the mediation; (2) failing to provide information the mediator believes is necessary to facilitate an agreement; or (3) failing to designate a representative participating in the mediation with full authority to enter into any mediated agreement. (b) Failure to reach an agreement is not conclusive proof of bad faith mediation. (c) A mediator shall report bad faith mediation to the commissioner or the Texas Medical Board, as appropriate, following the conclusion of the mediation. Sec. 1467.102. PENALTIES. (a) Bad faith mediation, by a party other than the enrollee, is grounds for imposition of an administrative penalty by the regulatory agency that issued a license or certificate of authority to the party who committed the violation. (b) Except for good cause shown, on a report of a mediator and appropriate proof of bad faith mediation, the regulatory agency that issued the license or certificate of authority shall impose an administrative penalty. On a related note, Victoria Pynchon conducted recently an interesting survey about “bad faith” in negotiations. Lawyers, mediators, and clients came up with a list of 35 examples of what they considered “bad faith.” Find the survey results here. We welcome your comments about this post! Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.

Disputing was cited once again by a Law Review Article. See Litigating Alternative Dispute Resolution in the Fifth Circuit, 41 Tex. Tech L. Rev. 739 (2009). Authors Donald R. Philbin Jr. and Audrey Lynn Maness do an excellent job at surveying Fifth Circuit decisions related to arbitration. Check it out! Technorati Tags: arbitration, ADR, law, Fifth Circuit

Ever wondered how technology is changing the discovery process? This weekend, I stumbled upon an article written by Peter S. Vogel about the impact of electronically stored information (“ESI”) on litigation and arbitration. Here is an excerpt: In 2006, the federal rules of civil procedure (and since then, many state rules as well) were changed to specifically deal with ESI. If you have been reading any reports of trials, you will know that there have been some very high-profile companies that have lost millions of dollars as a result of destruction of emails (Zubulake v. UBS), failing to provide all 14,000 backup tapes of emails during discovery (Coleman v. Morgan Stanley), or hiding more than 41,000 relevant emails (Qualcomm Inc (Nasdaq: QCOM) . v. Broadcom). All of these cases could have avoided such litigation disaster had the lawyers and IT been communicating. When evidence has been destroyed (spoliated), a judge or arbitration panel can grant a verdict against the destroying party, fine the party, or issue an adverse inference to the jury. An adverse inference directs the jury to assume that the reason the party destroyed the evidence was that it was adverse to its claims in the lawsuit. Most of the time, juries will accept the judge’s instructions and agree that the evidence destroyed was damaging, which is what happened in the Zubulake and Coleman cases. Mr. Vogel concludes that: Judges and arbitration panels are having to come to grips with the fact that they have to understand ESI, since every case has some critical evidence that is only electronic. However, only about 5 percent of the cases filed actually go to trial, and most litigation is settled during the discovery process. Read the full article: The Stunning Impact of E-Discovery on IT, E-Commerce Times, Peter S. Vogel, July 9, 2009. Technorati Tags: arbitration, ADR, law, e-discovery

The United States Court of Appeals for the Fifth Circuit held that a party waived its right to arbitrate by waiting one year after the suit was filed before seeking to compel arbitration. In Petroleum Pipe Americas Co., v. Jindal Saw Ltd., (No. 08-20461) (5th. Cir. July 9, 2009) Defendant Jindal Saw Ltd. (“Jindal”) is an Indian manufacturer of pipelines and plaintiff Petroleum Pipe Americas Corp. (“PPA”) is a Texas corporation whose affiliate regularly purchases pipelines from Jindal since 2004. Those purchase orders do not contain an arbitration clause. In 2006, the parties resolved a dispute over allegedly defective pipelines (P110 pipe) with a Settlement Agreement, which includes the following clause: The parties agree to have the dispute if any to have the same arbitrated [sic] than litigated. All disputes arising in connection with the present contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by a Sole Arbitrator . . . . The law governing the contract and the arbitration procedure shall be English law. The place of arbitration shall be London. On May 30, 2007, PPA sued Jindal in state court for breach of contract and breach of warranty based on allegedly defective pipelines L80 and N80, but not any of the P110 pipe. Jindal removed promptly to federal court, filed an answer and counterclaimed for: (1) breach of the Settlement Agreement and purchase orders, (2) unjust enrichment or restitution for the amount Jindal paid to PPA under the Settlement Agreement, (3) promissory estoppel, and (4) money had and received. The court encouraged settlement of the dispute, and over the next several months, the district court held a series of off-record conferences with the parties. However, on May 29, 2008, ten days after the last conference and a year after PPA had sued, Jindal moved to compel arbitration. PPA resisted the order and argued that (1) the the claims did not fall within the scope of the Settlement Agreement and (2) Jindal waived its right to arbitrate by substantially invoking the judicial process. The district court denied the motion to compel arbitration and Jindal now appeals. The Fifth Circuit now decides whether Jindal has waived its right to arbitrate. First, the court pointed out that a court finds waiver “when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party.” The court then cited three factors to consider in the finding of prejudice: (1) whether discovery occurred relating to arbitrable claims; (2) the time and expense incurred in defending against a motion for summary judgment; and (3) a party’s failure to timely assert its right to arbitrate. After discussing the arguments presented by the parties, the court held that “Jindal substantially invoked the judicial processby waiting to move to arbitrate until the district court’s pronouncements in the May 19 conference and that PPA was prejudiced thereby.” Accordingly, the court affirmed the district court’s judgment to stay arbitration and compel arbitration. Technorati Tags: arbitration, ADR, law, Fifth Circuit, arbitration waiver