80R5685 AJA-D

By: Truitt H.B. No. 2665

A BILL TO BE ENTITLED

AN ACT

relating to mediation of certain disputes arising in connection with a personal automobile insurance policy.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle B, Title 5, Insurance Code, is amended by adding Chapter 525 to read as follows: CHAPTER 525. MEDIATION OF CERTAIN AUTOMOBILE INSURANCE DISPUTES

Sec. 525.001. DEFINITION. In this chapter, "mediation" means a nonbinding forum in which an impartial mediator facilitates communication between parties to promote reconciliation, settlement, or understanding between the parties.

Sec. 525.002. APPLICABILITY OF CHAPTER. (a) This chapter applies to any insurer that issues a personal automobile insurance policy, including a county mutual insurance company, a Lloyd's plan, and a reciprocal or interinsurance exchange.

(b) This chapter does not apply to a dispute:

(1) that turns on a question that primarily relates to interpretation of a policy term of an insured's policy or to a matter that is solely a question of law;

(2) that involves the actions of an agent or broker in which the insurer is not alleged to have been responsible for the conduct;

(3) that is based on a complaint the commissioner determines is frivolous; or

(4) in which a party is alleged to have committed fraud.

Sec. 525.003. MEDIATION OF CERTAIN DISPUTES. If a dispute arises from a claim for damage to a motor vehicle under a personal automobile insurance policy and the claimant and the person against whom the claim is being asserted are each insured under a personal automobile insurance policy issued by the same insurer, the claimant may request that the insurer participate in mediation of the dispute with the claimant under this chapter.

Sec. 525.004. INSURER REQUIRED TO PARTICIPATE. If an insured requests mediation under this chapter, the insurer shall participate in the mediation.

Sec. 525.005. MEDIATOR. (a) By agreement, the claimant and the insurer shall select a mediator who is qualified to serve under Section 154.052(a), Civil Practice and Remedies Code.

(b) Sections 154.053 and 154.055, Civil Practice and Remedies Code, apply to a mediator under this chapter.

(c) A mediator may not impose the mediator's own judgment on the issues for that of the parties.

Sec. 525.006. LOCATION AND SCHEDULE OF MEDIATION. (a) The parties by agreement shall select a venue and schedule for mediation under this chapter. If the parties are unable to agree on a venue and schedule, the mediator shall select a venue and schedule.

(b) Except by written agreement of all the parties, the mediation must be held in this state.

(c) Except as provided by this subsection, the mediation must be completed not later than the 60th day after the date on which the insurer receives the claimant's request to mediate. The deadline may be extended by written agreement of the parties.

Sec. 525.007. COSTS. Except as provided by Section 525.008, the insurer shall pay the reasonable costs of the mediation.

Sec. 525.008. GOOD FAITH. (a) The parties to the mediation shall negotiate in good faith.

(b) An insurer that fails to appear for a scheduled mediation conference for which the insured appears shall pay the insured for the insured's actual expenses incurred in attending the conference plus the value of the insured's lost wages, if any.

(c) An insured who has good cause for a failure to appear at a mediation conference may reschedule the conference one time, at a time set by the mediator. If an insured fails to demonstrate good cause for a failure to appear at a mediation conference, the mediator shall, at the request of the insurer, terminate the mediation and the insured shall pay all costs of the mediation incurred before the time of the failure to appear that terminates the mediation.

Sec. 525.009. LAW APPLICABLE; CONFLICT OF LAWS. (a) Except as provided by Subsection (b) of this section, Section 154.073, Civil Practice and Remedies Code, applies to mediation under this chapter.

(b) This chapter controls over any other law relating to or requiring mediation between the complainant and the insured.

Sec. 525.010. EFFECT ON CIVIL SUIT. (a) A court may not, because a dispute is submitted to mediation under this chapter, stay a civil action arising wholly or partly out of the same facts.

(b) The statute of limitations applicable to the claimant's right to bring a civil action arising wholly or partly out of the same facts as a dispute that is the subject of the mediation is tolled for the period beginning on the date the insurer receives the request for mediation and ending on the later of:

(1) the date the dispute is resolved; or

(2) the date the mediation is either completed or terminated.

Sec. 525.011. COURT COSTS; ATTORNEY'S FEES. If a dispute mediated under this chapter is decided by a court judgment, the court shall award the party that prevails court costs and reasonable and necessary attorney's fees.

Sec. 525.012. WAIVER PROHIBITED. The provisions of this chapter may not be waived by contract. A provision of an insurance policy or other contract that purports to waive a provision of this chapter is void and unenforceable.

Sec. 525.013. UNFAIR OR DECEPTIVE ACT OR PRACTICE. An insurer that refuses to participate in mediation under this chapter or that does not negotiate in good faith in connection with the mediation commits an unfair or deceptive act or practice in the business of insurance for the purposes of Chapter 541.

SECTION 2. Chapter 525, Insurance Code, as added by this Act, applies only to a dispute involving a claim for damages under an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2008. A dispute involving a claim for damages under an insurance policy that is delivered, issued for delivery, or renewed before January 1, 2008, is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2007.