Texas Arbitration and Mediation Legislative Update | July 2011

The following bills relating to alternative dispute resolution and health care were introduced by the 82nd Texas legislative session. The last day of the regular session was Monday, May 30, 2011. Click on the bill number to read its text and on the status link to find the bill’s legislative history.

I. ADR Bills that Passed

• SB 1216 provides that a court “may order arbitration only if the court determines that the contract containing the agreement to arbitrate is valid and enforceable against the party seeking to avoid arbitration.” Bill status. The bill analysis, as introduced, explains that:

Where evidence can be produced demonstrating that a party was defrauded or forced into signing an arbitration clause, the courts refuse to compel arbitration. However, due to the questionable holding of the United States Supreme Court in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-404 (1967), the foregoing is not true in cases where the arbitration clause is part of a larger contract. Under the holding of Prima Paint, if A holds a gun to B’s head and forces him to sign a contract with 15 terms, one of which is an arbitration agreement, the case will be referred to the arbitrator specified in the contract. The courts treat the contract as valid even though it was obtained at gunpoint. Worse, the issue of the contract’s validity must then be tried by the arbitrator specified by the invalid agreement, who is not likely to be impartial if B was enough of a bad actor to pull a gun on A in the first place. This is an illogical inversion of the entire theoretical underpinning of arbitration. If A did not agree to the entire contract, how can he be said to have agreed to a provision contained therein? A person who is tricked or forced into signing an arbitration agreement has not voluntarily surrendered his right to appear in court.

• SB 218 relates to procedures in certain suits affecting the parent-child relationship and the operation of the child protective services and foster care systems. The bill would affect mediated agreements in family law cases. Bill status.

• SB 529 relates to the regulation of motor vehicle dealers, manufacturers, and distributors. The bill would require the board of the Texas Department of Motor Vehicles, in an action brought against a manufacturer or distributor by a franchised dealer whose franchise provides for arbitration, to order the parties to submit the dispute to mediation. Bill status.

• HB 1887 relates to tax administration of and procedures for property tax protests and appeals. The bill requires the district court, on motion by a party to an appeal, to enter an order requiring the parties to attend mediation and authorizes the court to enter an order requiring the parties to attend mediation on its own motion. Bill status.

• [UPDATE:] H.B. No. 1951 relates to the continuation and operation of the Texas Department of Insurance. The bill requires the Insurance Commissioner to develop and implement a policy that encourages the use of alternative dispute resolution. Bill status; analysis.

II. Health Care Bills that Passed

• HB 300, the Texas Medical Privacy Act, relates to the privacy of protected health information; providing administrative, civil, and criminal penalties. The Act expands the protections mandated by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Find the HRO Bill Analysis here.

III. ADR Bills that Did not Pass

• HB 911 relates to the application of foreign laws and foreign forum selection in this state. The goal of HB 911 is to require a court in Texas to uphold and apply only the laws ordained by the constitutions and laws of the United States and the State of Texas with regard to family law matters, prohibiting any other interpretation by Texas courts. Bill status. Similar to HB 1240; bill status.

• HB 3087 relates to payment for services provided by certain physicians and health care providers to individuals covered by managed care plans. Bill status.

• HB 1150 relates to an affidavit required to be filed in a cause of action against a licensed attorney. Bill status.

• SB 562 relates to the waiver of sovereign immunity for certain claims arising under written contracts with state agencies. Bill status.

• HB 3794 relates to disputes under insurance policies. Bill status.

• HB 3444 relates to required disclosure for appointment of certain impartial third parties. Bill status.

• SB 1508 relates to the right of certain debtors to elect to mediate a dispute before the debt is accelerated or a contract lien on real property is foreclosed. Bill status.

• SB 1432 relates to the operation of the Texas Windstorm Insurance Association and to the resolution of certain disputes concerning claims made to that association. The bill would require in bold face type, a conspicuous notice concerning the mandatory arbitration of coverage and claim disputes. Bill status. Similar to HB 272; bill status.

• SB 1328 relates to optional dispute resolution methods for school districts and parents of students seeking or receiving special education services. Bill status.

• HB 3024 relates to the Fair Access to Insurance Requirements (FAIR) Plan. The bill would required a person who holds a policy issued by the association may not serve as an arbitrator or judge in an arbitration or judicial or administrative proceeding in which the association is a party. Bill status.

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