82nd Legislative Session in Review

By Jim Dunnam

With the 82nd legislature fast approaching, the Litigation Section would like to keep members apprised of trends and issues to watch for next session.  If interim activity is any indication, the House Committee on Judiciary & Civil Jurisprudence seems interested in barratry issues as well as Mesothelioma actions.  While there is not a great deal of activity during the interim, we will keep you updated as committees meet and discuss areas of importance to the Litigation Section.  For now, let’s take a look back at the last session.  The following legislative efforts could have impacted litigation practices:

Legislative Actions that Passed:

S.B. 1563 by Senator Shapleigh combined with H.B. 783 by Representative Pickett and H.B. 751 by Representative Callegari amended Chapter 75 of the CPRC by creating immunity for a public utility that allows public use of its premises for recreation in limited geographical areas and where the municipality obtains insurance on the premises for that utility.  The bill was created in response to land use issues in El Paso County, where utility easements were seen as very attractive for several reasons, including increased connectivity between the mountain and the river, conversion to a more attractive use, and acquisition of new park/trail areas for little expense. Before the bill’s passage, public utilities were reluctant to allow access trails over their land because of potential liability in the case of an injury.

H.B. 148 introduced by Representative Smith expanded the barratry definition in the Texas Penal Code, Chapter 38, Section 38.12, to additionally prohibit telephone or in person contact of an accident victim by a chiropractor within 31 days of an accident.  Barratry occurs when a professional, including attorneys, chiropractor, physician, surgeon, private investigator or any person licensed, certified, or registered by a health care regulatory agency, solicits employment, either directly or indirectly, from an accident victim who has not sought their expertise.

H.B. 673 introduced by Representatives Solomons and Watson made many changes to worker’s compensation rules.  In Texas, the Office of Injured Employee Counsel (OIEC) represents the interest of workers’ compensation claimants by providing assistance to injured employees during administrative disputes, assisting claimants who are not represented by an attorney, and advocating on the employees behalf as a class to the commissioner of workers’ compensation and the commissioner of insurance. This legislation created protections for the OIEC, where the OIEC is allowed now to refuse assistance where someone abuses or threatens staff.  This bill also clarified the OIEC ombudsman role; to offer assistance to rather than appearing on the behalf of, an injured employee in a dispute resolution or enforcement action hearing.  The bill further allowed OIEC in conjunction with the TDI Commissioner to adopt certain written notices.

H.B. 694 introduced by Representatives Kuempel and Hegar amended the Gonzales Healthcare Systems hospital district enabling legislation to elect board directors to serve staggered terms and changed the district’s election process to conform to the procedure provided under the Election Code. The bill required competitive bidding, authorized and detailed procedures for the Board to borrow money for the district, and secured repayment with bonds.  The legislation further outlined procedures for the dissolution of the district. The original version of the bill exempted hospital districts from providing worker’s compensation if providing an alternative plan.  The final version did not include this language.

H.B. 1058 introduced by Representatives Solomons and Lucio addressed death benefits in section 408.182 of the Labor Code.  The Code has allowed workers’ compensation death benefits after the death of an injured employee to non-dependent parents, where no dependent parent received the benefits; however the standard for receiving those benefits differed for the non-dependent parents.  Prior to passage of this bill, non-dependent parents must receive burial benefits for eligibility. The bill removed this caveat to resolve the conflict between dependent and non-dependent parents. The bill further bars a claim for death benefits from an injured employee’s eligible parent if the parent fails to file the claim before the first anniversary of the date of the injured employee’s death from a compensable injury, unless good cause exists for the failure to file the claim. Parents may now claim death benefits regardless of burial benefits, limited to 104 weeks, and filed timely.

H.B. 4167 introduced by Representative Gutierrez did not pass however it was amended into S.B. 408, which passed.  The bill amended the “innocent retailer” provisions for nonresident manufacturers. In 2003, the Legislature enacted H.B. 4 as part of the civil action reforms, which included a general rule that a seller who does not manufacture a product is not liable for harm caused by that product. There are a number of exceptions, including when the manufacturer of the product is not subject to the jurisdiction of the court. The burden is on the claimant to prove that the manufacturer is not subject to the jurisdiction of the court. The gathering of facts necessary to make the jurisdictional determination may place an undue burden on the claimant not originally anticipated with the passage of H.B. 4. S.B. 408 provides that if after service on a nonresident manufacturer through the secretary of state in the manner prescribed by Subchapter C (Long-arm Jurisdiction in Suit on Business Transaction or Tort), Chapter 17 (Parties; Citation; Long-arm Jurisdiction), the manufacturer fails to answer or otherwise make an appearance in the time required by law, it is conclusively presumed for the purposes of Subsection (a)(7)(B) that the manufacturer is not subject to the jurisdiction of the court unless the seller is able to secure personal jurisdiction over the manufacturer in the action.

H.B. 4545 introduced by Representatives Raymond and Van de Putte extended the time for filing a petition in a worker’s compensation case for judicial review of an appeals panel decision.  The bill provided balance between insurance companies and injured workers in contested workers’ compensation cases. Insurance companies become aware of any adverse appeals panel decisions more quickly as they have mailboxes at TDI. Injured workers are notified via U.S. mail, meaning the postmark may be a few days after the decision date. Such delays reduce the time for injured workers to retain counsel and make a decision whether to pursue the claim in the courts. The bill provided a reasonable extension and a clear deadline of seeking further legal remedies. Setting a 45-day post-mailing limit avoids potential unintended consequences.  H.B. 4545 mirrors a well-established standard already in TDI workers’ compensation rules. The petition must be filed on the 45th day, from the day on which the division mailed the decision.  A mailing date is considered the 5th day after the date of decision.

Legislative Actions Not Passed:

S.B. 152 introduced by Senator Ellis would have returned Emergency Room cases back to an ordinary standard of negligence rather than “willful or wanton.” Gross negligence standards grant favored status, special privileges, and immunities to emergency care physicians and health care providers. In 1993, H.B. 4 increased emergency care liability standards to gross negligence, meaning injured patients must show the health care provider or physician intended to harm them with conscious indifference and malice. S.B. 152 would have restored the standard for emergency room physicians and healthcare providers to an ordinary negligence standard. S.B. 152 provides that the standard of proof in Section 74.153(a) (related to a suit involving a health care liability claim against a physician or health care provider for injury to or death of a patient arising out of the provision of emergency medical care) does not apply to claims against any individual or entity described or covered by certain sections of the Civil Practice and Remedies Code who is regularly in the business of providing emergency medical care.  The bill was left pending in the State Affairs Committee.

S.B. 153 also introduced by Senator Ellis would have clarified 202 deposition procedures in medical malpractice cases.  Sections 74.351(s) and (u), Civil Practice and Remedies Code, would have been amended to stay all discovery in a health care liability claim until the claimant has served the expert report and curriculum vitae, except for the acquisition by the claimant of certain information, including medical or hospital records or other documents or tangible things, related to the patient’s health care through: A written discovery; depositions on written questions; and discovery from nonparties. It also would have required that no claimant(s) might take more than two depositions of any person or party before service of the expert report.  S.B. 153 was referred to the State Affairs Committee.

S.B. 222 by Senator West added consumer arbitration agreement requirements and disclosures.  Proponents argued that the Texas Arbitration Act, codified as Chapter 171, Civil Practice and Remedies Code (CPRC), compels arbitration in the absence of an agreement or as a consequence of agreements among parties of disparate bargaining power, i.e. consumers and businesses.  They argued these agreements derogate consumer’s rights, including the constitutional right to a trial by a jury.  Due to a series of Texas Supreme Court decisions, the intention and meaning of the Act has shifted to extend to consumers and employees, resulting in compulsory participation in binding arbitration.  They maintained that few people understand the significance of arbitration clauses set forth in larger agreements, and due to the wide practice of inserting boilerplate language into agreements, consumers and employees have no choice but to accept the terms.  Of further concern is the lack of judicial review available for arbitrators’ decisions.  This means there is little oversight and no transparency in contrast to judicial decisions which are appealable and widely available for public review.  Authors also argue that the private arbitration companies that have developed to handle the glut of actions have a conflict of interest, where they must keep the businesses happy to continue receiving clients.  The Act would have changed multiple sections of the CPRC regarding arbitration.  The bill was referred to the Jurisprudence Committee.

S.B. 394 introduced by Representatives Lucio and Zerwas allowed for the court to appoint an attorney in a proceeding initiated by an insurance carrier, and included language regarding the allowable billing for that court appointed attorney.  Specifically the bill addressed the issue where an employee, injured on the job, must visit two doctors to receive an “impairment rating.” Once this is submitted to the employee’s insurance carrier the carrier can contest the payment of benefits in District Court - even if both doctors are in agreement of the need for treatment and the cause of the injury. If this occurs, the injured employee must seek legal representation. In some cases, the injured employee is unable to find counsel due to a lack of availability or financial resources. As a result, the injured employee who prevailed throughout the administrative process may ultimately lose to a default judgment in district court.  S.B. 394 would have amended the Labor Code to require a court, at the claimant’s request, to appoint an attorney for claimant representation where the trial is initiated by the carrier, and where the case related to a judicial review of a final decision of an appeals panel for benefits. The mechanism authorizes pre-trial hearings to determine whether the claimant made a good faith effort to obtain counsel before the appointment.  Further, the bill would have made the carrier liable for reasonable and necessary attorney fees where the claimant prevails.  The subsequent injury fund is liable for attorney fees, on which the insurance carrier prevails, with a formula for allocating costs where there is a split decision.  Finally, the bill provides that the award of attorney’s fees to the claimant’s court-appointed attorney from the subsequent injury fund is not subject to the commissioner of workers’ compensation’s rules relating to guidelines for maximum attorney’s fees.  The bill passed out of the Senate and was reviewed in a formal meeting within the Business & Industry Committee.  Passing out of this committee, the bill went to Calendars and did not reach the House floor for debate.

S.B. 445 introduced by Senator Wentworth allowed jurors to take notes during trial and also submit questions to a judge before the end of the trial.  Specifically, it was argued jurors should be allowed to ask questions and take notes to further assist each in competently fulfilling their duty to determine the credibility of the evidence presented.  Jurors would have been provided materials for note-taking by the court.  A juror would have submitted all notes to the bailiff at the end of each day for safekeeping.  After closing arguments, the court would collect and destroy the confidential notes.  Notes would not be included in the record.  Jurors could also submit questions anonymously before jury deliberations begin.  Counsel for each party would be given an opportunity, out of the presence of the jury and witnesses, to object to the questions.  Questions would be read by the court verbatim then answered orally in open court and made part of the record.  Counsel would be able to cross-examine witnesses after a juror question; and the court authorized, for good cause, to prohibit or limit the submission of questions to witnesses. The bill passed the Senate but was never heard in the House. 

S.B. 780 introduced by Senator Watson required disclosure of the vote taken by the Supreme Court when they grant a petition for review or application in an order granting, refusing, dismissing or denying a petition for review.  In advocating for the bill, supporters argue that the Texas Supreme Court’s grant of a petition for review is one of the most important decisions made by the Court and one in which the public interest in disclosure is heightened by the selection of judges through privately funded elections. They posited that the Supreme Court has no valid interest in keeping the voting records secret, given that the votes themselves do not reveal internal deliberations of the justices or confidential information about parties to the case.  The bill passed through the Judiciary Committee and passed the Senate to the House where it stalled in the Judiciary & Civil Jurisprudence Committee.

S.B. 1070 introduced by Senator Wentworth addressed rules regarding jury assembly and administration at the Supreme Court level.  The legislative request for reform of the process cited a need to promote integrity in the process, require technology use to save time and costs and to resolve conflicting provisions in current statute. The bill required the secretary of state (SOS) to compile a master jury list and make it available to counties electronically on a quarterly basis. The bill required periodic updates of the master jury list by eliminating duplicate names, removing the names of convicted felons, deceased persons, persons who have served on a jury recently, and persons no longer residing in the county, and adding the names of persons qualified to serve as a petit juror that are not currently on the list. The bill further authorized the Texas Supreme Court to adopt rules to govern the use of the major jury list, the administration of jury panels, and rules that allow for the adoption of a written jury plan for each county.  The issue was left pending in committee.

SB 1500 introduced by Senator Duncan would allow hospitals in counties with a population less than 50,000 people and certain other designees, to hire doctors.  It also raised the presumed amount of the cap on damages that extend to now-employees of public hospitals from the Tort Claims limit of $100k to $250k.  Proponents of the legislation argued that these hospitals should be able to hire doctors where independent doctors are not practicing in the area due to costs of private practice and lack of income opportunities.  Safeguards were proposed to ensure adequate autonomy of the doctors as well as oversight provisions.  Opponents worried that hiring physicians would impact their ability to exercise independent judgment in cases where the physician disagrees with administration.  The bill received a favorable report after testimony in the State Affairs Committee and once received from the Senate was referred to the House County Affairs Committee.  There it was reported favorably after consideration in public hearings and formal meetings however once placed in the General State Calendar it did not receive a floor vote before the end of session.

S.B. 1855 introduced by Senator Carona would have changed the current offer of settlement statute for medical malpractice from one-sided to two-way so plaintiffs could invoke several provisions and included language to allow party to recover costs and expenses where such would exceed a damages “cap.” The bill would have amended Chapter 42 § 42.004.  The legislation was referred to State Affairs and did not receive a hearing.

H.B. 42 introduced by Representative Corte was also filed as an amendment to SB 1007 and prohibited claimants who do not have auto liability insurance from recovering punitive and noneconomic damages, with some exceptions.  The issue was referred to the Judiciary & Civil Jurisprudence Committee, received a hearing, and was left pending in the Committee.

H.B. 808 introduced by Representative Gallego amended the Health and Safety Code to require an athletic club, as defined, to make available an automated external defibrillator, with some exceptions for specific entities.  The bill would have required the club to make reasonable efforts to ensure employees were trained in the proper use of the device and make such employees present during business hours of each facility.  The bill further exempted the club or other person from liability for civil damages arising from the use, attempt to use, or failure to use the device on the premises of the club, and allowed a person to raise any other defenses available at law.  The bill was referred to the Public Health Committee and set on the General State Calendar for a vote.  The vote was postponed and did not reach the floor before the end of the Session.

H.B. 933 and 3727 introduced by Representatives Dutton and Burnam respectively clarified the sovereign immunity waiver for activities involving a motor vehicle and also clarified discovery procedures in tort claims suits.  Both were referred to the Judiciary & Civil Jurisprudence Committee and were left pending in committee.

H.B. 1288 introduced by Representative Eiland amended the CPRC, Chapter 95, to include a definition of “improvement to real property” and also added “constructive knowledge” to the dangerous condition provision.  It was referred to the Judiciary & Civil Jurisprudence Committee and did not receive a hearing.

H.B.1811/S.B. 1123 introduced by Representative Eiland and Senator Duncan respectively addressed the standard of causation found in the Texas Supreme Court case Borg Warner v. Flores regarding Mesothelioma victims. Specifically, the Senate version established a standard requiring a claimant prove a defendant’s product or conduct was a substantial factor in causing an injury and that the exposed person’s cumulative exposure to asbestos was the proximate cause of the claimant’s Mesothelioma. SB 1123 was referred to the State Affairs Committee and after amendments was voted upon in the Senate and engrossed.  Once received from the Senate, the measure was referred to the Judiciary & Civil Jurisprudence Committee in the House where it received public hearing and testimony.  The bill was left pending in Committee.

H.B. 1956/SB 1119 introduced by Representative Smithee and Senator Hinojosa respectively amended the “Paid or Incurred” provision of the CPRC to apply only to medical malpractice cases.  The Judiciary and Civil Jurisprudence Committee considered public testimony in a hearing on H.B. 1956 and left the matter pending.  The Senate bill came out of the State Affairs Committee after public hearings and was placed on the intent calendar, but removed.

H.B. 1962 introduced by Representative Legler limited the liability of trustees in nursing homes and allowed for payments to the trustee through emergency assistance funds for costs incurred in fulfilling fiduciary duties.  After testimony in the Judiciary & Civil Jurisprudence Committee, the measure was left pending.

H.B. 2702 introduced by Representative Dunnam limited the rulemaking authority of the Supreme Court and provide for legislative approval and oversight over any rules created.  Specifically, the Supreme Court would have been limited to promulgating a specific rule or rules of civil procedure, or an amendment or amendments to a specific rule or rules only during the first 95 days of a regular legislative session.  The rule or rules would have only been effective once approved by a joint resolution of the legislature adopted during the same regular session.  The measure was considered during a hearing with public testimony of the Judiciary & Civil Jurisprudence Committee.  The bill was left pending.

H.B. 2733 introduced by Representative Smithee allowed the recovery of attorney fees in an uninsured and underinsured motorist claim without the necessity of a final judgment in the underlying case.  It would have addressed the Brainard decision.  Specifically, Sec. 1952.1062 explicitly states an insurer may not require as a prerequisite to asserting a claim under UM/UIM coverage a judgment or other legal determination establishing the other motorist’s liability or insurance status.  In addition, an insurer may not require as a prerequisite to payment of benefits under UM/UIM a judgment or other legal determination establishing the other motorist’s liability or the extent of the insured’s damages before benefits are paid under the policy.  Further, an insurer must attempt in good faith to effectuate a prompt, fair and equitable settlement of a claim once liability and damages have become reasonably clear.  There were provisions in the following sections on prejudgment interest and attorney fees.  The bill was an amendment to S.B. 1007 and was left in the Insurance Committee pending.

H.B. 2889 introduced by Representative Martinez capped damaged arising out of an accident involving an ambulance, where the ambulance was being used to provide ambulance services, to $250k or the total amount of economic damages.  The measure did not limit liability for acts determined intentional or grossly negligent.  The bill was left pending in the Judiciary and Civil Jurisprudence Committee after a considering public testimony.

H.B. 3515 introduced by Representative Dunnam created a new criminal offense for a failure to report barratry or solicitation of employment.  Currently Penal Code, sec. 38.12, the barratry statute, prohibits the solicitation of certain legal or professional services by an attorney or other professional.  A covered individual cannot solicit professional employment by a person or family member of a person injured in an accident or disaster before the 31st day after the date of the accident or disaster.  The bill would have created a class C misdemeanor with a maximum fine of $500 where a lawyer would commit an offense if the lawyer, while representing a client, acquired knowledge that would reasonably cause the lawyer to believe that another person had committed barratry or solicitation of employment under the Penal Code and failed to report the knowledge to the appropriate oversight entity within two business days of acquiring the knowledge.  Supporters advocated the additional protection afforded victims of accidents and disasters from invasive solicitations.  The bill would have conferred a duty to report violations resulting in additional prosecutions and a deterrent effect for other potential violators.  The bill would ensure professional services received by victims are with the most qualified professionals as opposed to the most aggressive marketers.  Supporters finally argue the new offense would increase public confidence in the integrity of the legal profession.  Opponents fear an improper and burdensome affirmative duty that would require attorneys to act as informants for the state as well as fostering an atmosphere of suspicion and moral hazard within the profession.  The bill was seen as singling out the legal profession unfairly to report barratry offenses committed by members of all professions and further burdening the State Bar.  The Criminal Jurisprudence Committee considered the bill and sent the measure to the House floor where it was passed as amended and sent to the Senate.  Once in the Senate, the measure was referred to Jurisprudence, received similar public testimony and consideration and was voted upon on the Senate floor after a favorable Committee report.  The House concurred in Senate amendments and the bill was signed in the House and Senate.  The bill was vetoed by Governor Rick Perry.

H.B. 2696 introduced by Representative Gattis added requirements for arbitrators and standards for the appeal of an arbitration award.  Specifically, the bill set out requirements that arbitration agreements must be clear and prominent.  In addition, dispute resolution by means of arbitration cannot be a condition of a contract.  The bill further clarified the principal that an arbitration clause would be null if a court found the agreement unconscionable or unconstitutional at the time of the writing.  The bill created objective qualification standards for arbitrators and subjected such to judicial review as well as arbitration judgments.  The measure was considered in public hearing within the Judiciary and Civil Jurisprudence Committee, and was left pending.

H.B. 3915 introduced by Representative Fletcher created a civil cause of action for barratry.  The bill would have allowed those who paid a fee to an attorney involved who can show by a preponderance of the evidence barratry conduct, to recover all amounts paid to the attorney and an additional two times the amount paid and reasonable court costs and attorney fees, as well as prejudgment and post-judgment interest as provided by law.  The action was left pending after public hearing in the Judiciary and Civil Jurisprudence Committee.

H.B. 4097/S.B. 2160 introduced by Representative Eiland and Senator Harris respectively sought to limit the multidistrict litigation process (MDL) to asbestos and silica or pharmaceutical claims only.  MDL refers to a special legal procedure designed to speed the process of handling complex cases or complex product liability suites.  Cases subject to MDL are sent back and forth between courts for pre-trial proceedings with trials held in the originating court.  MDL cases involve one or more common questions of fact and could involve thousands of plaintiffs.  A number of issues plague the system.  This bill sought to provide a necessary change in current law to limit the type of cases subject to MDL to mass torts; the original subset of cases for which MDL was designed and for which the authors assert MDL works best.  The issue was reported favorably after hearings in the Judiciary & Civil Jurisprudence Committee however languished in Calendars.

H.B. 4249 introduced by Representative Leibowitz clarified expert report requirements in medical malpractice cases to reflect reports due within 120 days of the date the defendant’s original answer is due.  It also clarified information that the defendant must include to sustain any objection regarding the sufficiency of a report.  Finally, it clarified that the report does not limit any party to allegations or opinions expressed in the four corners of the report. Under current law, doctors are essentially granted immunity by successfully evading service of an expert report. Some defendants, in both health care and other cases, designate health care providers as responsible third parties. Such a designation pressures a plaintiff to add the health care providers as additional defendants. There exists no current deterrent to a defendant filing an interlocutory appeal of an order denying a challenge to an adequate expert report. Authors asserted that defense attorneys are abusing the system by filing interlocutory appeals in every case. As interpreted by the courts, current law also requires a claimant to disclose the action of the defendant upon which the claim is based before access to enough information to make the disclosure. The bill would have changed the deadline for a claimant to serve an expert report on a party from 120 days after the petition was filed to 120 days after the answer was filed. The bill required an objection to the sufficiency of an expert report to clearly state the specific elements of the report that are alleged to be deficient. The bill established that an expert report served by a health care liability claimant does not limit a party to allegations or opinions expressed in the report. The bill was reported favorably from the Judiciary & Civil Jurisprudence Committee but did not reach the House floor for debate and vote.

H.B. 4548 introduced by Representative Raymond required recusal of a justice in a case where one party before him/her was a political contributor and required additional disclosures.  The issue was left pending in the Judiciary & Civil Jurisprudence Committee after consideration in a public hearing.

H.B. 4549 introduced also by Representative Raymond consolidated all appeals jurisdiction into the Supreme Court, effectively abolishing the Court of Criminal Appeals.  After public testimony the bill was left pending in the Judiciary & Civil Jurisprudence Committee.