First Substitute H.B. 235

This document includes House Committee Amendments incorporated into the bill on Mon, Feb 7, 2005 at 9:32 AM by ddonat. --> This document includes House Floor Amendments incorporated into the bill on Fri, Feb 18, 2005 at 4:22 PM by chopkin. -->

Representative Stephen H. Urquhart proposes the following substitute bill:

1 INSURANCE ARBITRATION AMENDMENTS
2 2005 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Stephen H. Urquhart
5
6 LONG TITLE
7 General Description:
8 This bill modifies the Insurance Code by amending provisions related to using
9 arbitration for third party motor vehicle accident claims.
10 Highlighted Provisions:
11 This bill:
12 . authorizes a person injured in a motor vehicle accident to use arbitration to resolve a
13 third party claim if the claimaint has:
14 . previously and timely commenced the claim in a district court; and
15 . filed the notice to submit the claim to arbitration while the claim is still pending
16 in district court and before the plaintiff's initial disclosures have been filed;
17 . provides procedures for resolving the third party claim through arbitration;
18 . provides that an arbitration award may not exceed $25,000;
19 . provides that an arbitration award issued by a single arbitrator or an arbitration
20 panel shall be the final resolution of all claims unless either party files a notice for a
21 trial de novo within 20 days of service of the arbitration award;
22 . provides that if a plaintiff, as the moving party in a trial de novo, does not receive a
23 verdict that is at least H. $5,000 [ or ] and is at least .H 20% H. [ or ] .H greater than the
23a arbitration award
23a H. [ or $5,000 ] .H , the
24 plaintiff is responsible for the nonmoving party's costs;
25 . provides that if a defendant, as the moving party in a trial de novo, does not receive

26 a verdict that is at least 20% less than the arbitration award, the defendant is responsible for the
27 nonmoving party's costs;
28 . provides that a court may award reasonable attorney fees if the court finds that a
29 party's use of the de novo process was filed in bad faith;
30 . provides that if a defendant demands a trial de novo after an arbitration award, the
31 verdict at trial may not exceed $40,000;
32 . provides that if a plaintiff demands a trial de novo after an arbitration award, the
33 verdict at trial may not exceed $25,000;
34 . provides that arbitration awards shall bear postjudgment interest; and
35 . provides that an interim committee designated by the Legislative Management
36 Committee study the results of implementing arbitration in third party motor vehicle
37 accident claims.
38 Monies Appropriated in this Bill:
39 None
40 Other Special Clauses:
41 None
42 Utah Code Sections Affected:
43 ENACTS:
44 31A-22-321, Utah Code Annotated 1953
45 Uncodified Material Affected:
46 ENACTS UNCODIFIED MATERIAL
47
48 Be it enacted by the Legislature of the state of Utah:
49 Section 1. Section 31A-22-321 is enacted to read:
50 31A-22-321. Use of arbitration in third party motor vehicle accident cases.
51 (1) A person injured as a result of a motor vehicle accident may elect to submit all third
52 party claims to arbitration by filing a notice of the submission of the claim to binding
53 arbitration in a district court if:
54 (a) the claimant or the claimant's representative has:
55 (i) previously and timely filed a complaint in a district court that includes a third party
56 claim; and

57 (ii) filed a notice to submit the claim to arbitration before the plaintiff's initial
58 disclosures have been filed under Rule 26, Utah Rules of Civil Procedure; and
59 (b) the notice required under Subsection (1)(a)(ii) is filed while the action under
60 Subsection (1)(a)(i) is still pending.
61 (2) If a party submits a claim to arbitration under Subsection (1), the party submitting
62 the claim or the party's representative is limited to an arbitration award that does not exceed
63 $25,000.
64 (3) A claim for punitive damages may not be made in an arbitration proceeding under
65 Subsection (1), even if the claim is later resolved through a trial de novo under Subsection (9).
66 (4) (a) Unless otherwise agreed to in writing by the parties, a claim that is submitted to
67 arbitration under this section shall be resolved by a single arbitrator.
68 (b) All parties shall agree on the single arbitrator selected under Subsection (4)(a).
69 (c) If the parties are unable to agree on a single arbitrator as required under Subsection
70 (4)(b), the parties shall select a panel of three arbitrators.
71 (d) If the parties select a panel of three arbitrators under Subsection (4)(c):
72 (i) each side shall select one arbitrator; and
73 (ii) the arbitrators appointed under Subsection (4)(d)(i) shall select one additional
74 arbitrator to be included in the panel.
75 (5) Unless otherwise agreed to in writing:
76 (a) each party shall pay H. [ a proportionate ] an equal .H share of the fees and costs of
76a the arbitrator
77 selected under Subsection (4)(a); and
78 (b) if an arbitration panel is selected under Subsection (4)(d):
79 (i) each party shall pay the fees and costs of the arbitrator selected by that party's side;
80 and
81 (ii) each party shall H. [ proportionately ] pay an equal .H share H. of .H the fees
81a and costs of the arbitrator selected
82 under Subsection (4)(d)(ii).
83 (6) Except as otherwise provided in this section and unless otherwise agreed to in
84 writing by the parties, an arbitration proceeding conducted under this section shall be governed
85 by Title 78, Chapter 31a, Utah Uniform Arbitration Act.
86 (7) (a) Subject to the provisions of this section, the Utah Rules of Civil Procedure and
87 Utah Rules of Evidence apply to the arbitration proceeding.

88 (b) The Utah Rules of Civil Procedure and Utah Rules of Evidence shall be applied
89 liberally with the intent of concluding the claim in a timely and cost-efficient manner.
90 (c) Discovery shall be conducted in accordance with Rules 26 through 37 of the Utah
91 Rules of Civil Procedure and shall be subject to the jurisdiction of the district court in which
92 the matter is filed.
93 (d) Dispositive motions shall be filed, heard, and decided by the district court prior to
94 the arbitration proceeding in accordance with the court's scheduling order.
95 (8) A written decision by a single arbitrator or by a majority of the arbitration panel
96 shall constitute a final decision.
97 (9) An arbitration award issued under this section shall be the final resolution of all
98 claims between the parties unless either party, within 20 days after service of the arbitration
99 award:
100 (a) files a notice requesting a trial de novo in the district court; and
101 (b) serves the nonmoving party with a copy of the notice requesting a trial de novo
102 under Subsection (9)(a).
103 (10) (a) Upon filing a notice requesting a trial de novo under Subsection (9), the claim
104 shall proceed through litigation pursuant to the Utah Rules of Civil Procedure and Utah Rules
105 of Evidence in the district court.
106 (b) In accordance with Rule 38, Utah Rules of Civil Procedure, either party may
107 request a jury trial with a request for trial de novo filed under Subsection (9)(a).
108 (11) (a) If the plaintiff, as the moving party in a trial de novo requested under
109 Subsection (9), does not obtain a verdict that is at least H. $5,000 [ or ] and is at least .H 20%
109a H. [ or $5,000 ] .H greater than the
110 arbitration award, H. [ which is greater, ] .H the plaintiff is responsible for all of the nonmoving
110a party's
111 costs.
112 (b) Except as provided in Subsection (11)(c), the costs under Subsection (11)(a) shall
113 include:
114 (i) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
115 (ii) the costs of expert witnesses and depositions.
116 (c) An award of costs under this Subsection (11) may not exceed $2,500.
117 (12) (a) If a defendant, as the moving party in a trial de novo requested under
118 Subsection (9), does not obtain a verdict that is at least 20% less than the arbitration award, the

119 defendant is responsible for all of the nonmoving party's costs.
120 (b) Except as provided in Subsection (12)(c), the costs under Subsection (12)(a) shall
121 include:
122 (i) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
123 (ii) the costs of expert witnesses and depositions.
124 (c) An award of costs under this Subsection (12) may not exceed $2,500.
125 (13) For purposes of determining whether a party's verdict is greater or less than the
126 arbitration award under Subsections (11) and (12), a court may not consider any recovery or
127 other relief granted on a claim for damages if the claim for damages:
128 (a) was not fully disclosed in writing prior to the arbitration proceeding; or
129 (b) was not disclosed in response to discovery contrary to the Utah Rules of Civil
130 Procedure.
131 (14) If a district court determines, upon a motion of the nonmoving party, that the
132 moving party's use of the trial de novo process was filed in bad faith as defined in Section
133 78-27-56 , the district court may award reasonable attorney fees to the nonmoving party.
134 (15) Nothing in this section is intended to affect or prevent any first party claim from
135 later being brought under any first party insurance policy under which the injured person is a
136 covered person.
137 (16) (a) If a defendant requests a trial de novo under Subsection (9), the verdict at trial
138 may not exceed $40,000.
139 (b) If a plaintiff requests a trial de novo under Subsection (9), the verdict at trial may
140 not exceed $25,000.
141 (17) All arbitration awards issued under this section shall bear postjudgment interest
142 pursuant to Section 15-1-4 .
143 Section 2. Study.
144 (1) During the 2006 interim, the Legislative Management Committee shall designate an
145 appropriate interim committee of the Legislature to study the results of implementing the use of
146 arbitration in third party motor vehicle accident claims as provided under this bill.
147 (2) The designated interim committee shall:
148 (a) hear reports from persons impacted in using the arbitration authorized under this
149 bill; and

150 (b) consider any issues which need additional legislative remedies.