Now that the 86th Texas Legislative Session is over, it’s time to review what happened to proposed legislation we highlighted earlier this year related to civil litigation that may affect your business.
Filing a Claim in Arbitration After the Statute of Limitations Expires
HB 1744, filed by John Smithee of Amarillo, would have made clear in Chapter 171 of the Texas Civil Practice and Remedies Code that a party could not assert a claim in arbitration if the party would have been barred from bringing the claim in court due to the expiration of the applicable statute of limitations. It included an exception for claims that were timely filed in court but then ordered to arbitration. HB 1744 was filed on February 13. The House Judiciary and Civil Jurisprudence Committee unanimously approved it on April 23, but the full House did not take any action.
Broadening the Right to Recover Attorney’s Fees in Contract Disputes
HB 370 aimed to fix a loophole in Texas law that prohibited the recovery of attorney’s fees on a breach of contract claim against a non-corporate entity. The bill was filed on November 15, 2018, and did not make it out of the Judiciary and Civil Jurisprudence Committee. A companion bill filed in the Senate, SB 471, also failed to make it out of the State Affairs Committee.
Affidavits to Support the Reasonableness and Necessity of Medical Expenses
HB 1693 would clarify that affidavits concerning the reasonableness and necessity of medical expenses served under Texas Civil Practices and Remedies Code 18.001 are not evidence of, and does not support a finding of, causation for the asserted cause of action. Additionally, the bill would move up the deadlines for plaintiffs and defendants to serve affidavits and counter-affidavits concerning the reasonableness and necessity of medical expenses. The bill’s author offered an amendment that provided that if medical services are provided for the first time by a provider after the date the defendant files an answer, the party offering the affidavit must serve a copy of the affidavit by the earlier of the date the party must designate an expert witness under a court order or the Texas Rules of Civil Procedure. The amended version of the bill passed the full House and Senate, and Governor Abbott signed it on June 10. The law goes into effect September 1, 2019.
HB 2096 and SB 1567 would amend Chapter 22 of the Texas Government Code and require the Supreme Court of Texas to “adopt rules to provide for the mandatory disclosure of third-party litigation financing agreements to the parties in a civil action in connection with which third-party litigation financing is provided.” The bills define “third-party litigation financing” as any provision of financing where repayment is conditioned on, and sourced from, the proceeds obtained from a civil lawsuit. The definitions of “financing” and “third-party litigation financing” in both bills are also broad enough to capture litigation funding agreements between a claimant and a third-party funder, as well as funding agreements between an attorney or law firm and a funder. However, both bills expressly carve out contingency fee agreements between a lawyer and client from the definition of “third-party litigation financing agreement.” Also excluded are any “extension(s) of credit” to an attorney or law firm where repayment is not contingent on the outcome of any specific civil lawsuit or lawsuits. The House Judiciary and Civil Jurisprudence Committee considered HB 2096 in a public hearing, but the bill was left pending. SB 1567 was referred to the State Affairs Committee but no action was taken.
Tilting the Scales in Your Favor
As the Saturday morning cartoon G.I. Joe said, “Now you know. And knowing is half the battle.” Depending on your point of view – or even particular circumstances – the good (or bad) news out of this Legislative session is that litigation-related bills did not dramatically alter the landscape going forward.