BILL ANALYSIS
S.B. 1596
By: Leedom (Turner of Coleman)
05-18-95
Committee Report (Unamended)
BACKGROUND
As an alternative to a contested case hearing or to a judicial
proceeding relating to assessment of a civil penalty, S.B. 1596
would permit nursing homes, convalescent homes or related
institutions to elect binding arbitration as a means to settle
disputes with the Department of Human Services (DHS) relating to
license renewal, suspension or revocation, or relating to the
closing of a facility or assessment of civil or administrative
penalties.
PURPOSE
S.B. 1596 establishes a binding arbitration mechanism for the
resolution of certain licensing and penalty disputes between the
Texas Department of Health and the institutions it licenses,
including nursing homes, convalescent homes and similar facilities.
RULEMAKING AUTHORITY
In Section 1 of the bill, the new Sec. 242.256, establishing the
duties of the arbitrator, requires that the arbitrator's order be
consistent with this act and with rules adopted under this act,
establishing the Dept. of Human Services's rulemaking authority
under this measure.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 242, Health and Safety Code, by adding
Subchapter H, as follows:
SUBCHAPTER H. ARBITRATION OF CERTAIN DISPUTES
Sec. 242.251. SCOPE OF SUBCHAPTER. Provides that this
subchapter applies to any disputes between a licensed
institution (nursing homes, convalescent homes and related
institutions) and the Texas Department of Human Services,
relating to renewal of a license under Section 242.033,
suspension or revocation of a license or closing of a facility
under Section 242.061 or 242.062, assessment of a civil
penalty under Section 242.065, or assessment of an
administrative penalty under Section 242.066.
Sec. 242.252. ELECTION OF ARBITRATION. (a-c) Permits an
affected institution to elect binding arbitration of
applicable disputes as an alternative to a contested case
hearing or to a judicial proceeding relating to the assessment
of a civil penalty. The institution must file with DHS not
later than 10 days after notice of a hearing. Election to
engage in arbitration is irrevocable and binding on the
institution and the agency.
Sec. 242.253. ARBITRATION PROCEDURES. (a-c) Requires the
arbitration to be conducted by the American Arbitration
Association or another nationally recognized association that
performs arbitration services. Requires the arbitration to be
conducted in accordance with the American Arbitration
Association's commercial arbitration rules in effect November
1, 1993. Requires the cost of the arbitration to be shared
equally by the department and the institution electing
arbitration, and that the arbitrator's fee may not exceed $500
Sec. 242.254. ARBITRATOR; QUALIFICATIONS. Requires the
arbitrator to be on an approved list of the American
Arbitration Association or another nationally recognized
association that performs arbitration services.
Sec. 242.255. ARBITRATOR; SELECTION. Requires the
arbitration to be conducted by one arbitrator, with the
appointment made in accordance with the American Arbitration
Association's commercial arbitration rules in effect November
1, 1993.
Sec. 242.256. DUTIES OF ARBITRATOR. Establishes the duties
or the arbitrator, including protecting the interests of the
department and institution; ensuring disclosure of all
relevant evidence, and rendering an order consistent with this
chapter and rules adopted under this chapter.
Sec. 242.257. SCHEDULING OF ARBITRATION. (a-b) Provides for
scheduling and notice of the arbitration within 90 days of the
arbitrator's selection. Authorizes the arbitrator to grant a
continuance at the request of the agency or institution and
prohibits the arbitrator from unreasonably denying request for
continuance.
Sec. 242.258. EXCHANGE AND FILING OF INFORMATION. Requires
the department and institution to exchange and file with the
arbitrator all documentary evidence, as well as information
relating to a proposed resolution of the dispute.
Sec. 242.259. ATTENDANCE REQUIRED. (a-b) Permits the
arbitrator to proceed in the absence of any party or
representative who, after notice of the proceeding, fails to
be present or to obtain a postponement. Prohibits an
arbitrator from making an order solely on the default of a
party, and requires the arbitrator to require the party who is
present to submit evidence, as required by the arbitrator,
before making an award.
Sec. 242.260. TESTIMONY; RECORD. (a-c) Authorizes the
arbitrator to require witnesses to testify under oath, and
requires the arbitrator to require such testimony if requested
by the department or institution. Requires the department to
make an electronic recording of the proceeding. Authorizes
the department or institution to make a stenographic record of
the proceeding, at own expense.
Sec. 242.261. EVIDENCE. (a-b) Authorizes the department or
institution to offer evidence as they desire, and requires
them to produce additional evidence necessary to understand
and resolve the dispute. Makes the arbitrator the judge of
the relevance and materiality of the evidence offered.
Provides that strict conformity to rules applicable to
judicial proceedings is not required.
Sec. 242.262. CLOSING STATEMENTS; BRIEFS. Authorizes the
department and institution to present closing statements as
they desire, but prohibits the records from remaining open for
written briefs unless requested by the arbitrator.
Sec. 242.263. EX PARTE CONTACTS PROHIBITED. (a-b) Prohibits
the department and institution, except as provided by
Subsection (b), from communicating with the arbitrator other
than at an oral hearing, unless the parties and the arbitrator
agree otherwise. Requires any oral or written communication,
other than under Subsection (A), from the parties to the
arbitrator to be directed to the association conducting the
arbitration for transmittal to the arbitrator.
Sec. 242.264. ORDER. (a-e) Authorizes the arbitrator to
enter any order that may be entered by the department, board,
commissioner, or court under this chapter in relation to a
dispute under Section 242.251. Requires the arbitrator to
enter the order not later than the 60th day after the last day
of the arbitration. Requires the arbitrator to base the order
on the facts established at arbitration and on the law as
properly applied to those facts. Requires the order to be in
writing, signed, and dated by the arbitrator and include a
statement of the arbitrator's decision on the contested issues
and DHS's and the institution's stipulations on uncontested
issues. Requires the arbitrator to file a copy of the order
with the department and to notify the department and
institution in writing of the decision.
Sec. 242.265. EFFECT OF ORDER. Makes an order under this
subchapter final and binding, and provides that, except as
provided by Section 242.267, there is no right to appeal.
Sec. 242.266. CLERICAL ERROR. Provides that the arbitrator,
for the purpose of correcting a clerical error, retains
jurisdiction of the award for 20 days after the date of the
award.
Sec. 242.267. COURT VACATING ORDER. Establishes conditions
for a court order vacating the arbitrator's order, upon
application by the institution or the agency, if the court
finds the order was procured by corruption, fraud, or
misrepresentation, the arbitrator's decision was arbitrary and
capricious, or beyond the arbitrator's jurisdiction. Upon a
vacated order, the dispute is remanded to DHS for another
arbitration proceeding. Sets time limits for the suit to be
filed to vacate an arbitrator's order. Venue is in the county
in which the arbitration was conducted.
Sec. 242.268. EMERGENCY ORDER OR CLOSING ORDER NOT STAYED.
Provides that an order issued under Section 242.062 is not
stayed, pending an arbitration under this subchapter.
SECTION 2. Establishes a two-year duration for this act, commencing
on Sept. 1, 1995, and expiring on August 31, 1997. Also provides
that it applies only to disputes described by 242.251, as added by
this act, with respect to which formal proceedings are commenced on
or after Jan. 1, 1996 and before Aug. 31, 1997. Further provides
that an arbitration proceeding commenced prior to the expiration of
this act is covered by the law as it existed on the date on which
the proceeding was commenced.
SECTION 3. Emergency clause.
SUMMARY OF COMMITTEE ACTION
S.B. 1596 was considered by the full committee in a formal meeting.
S.B. 1596 was reported favorably without amendment on the
recommendation that it do pass and be printed, by a record vote of
7 ayes, 0 nays, 0 nv, and 2 absent.