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First Substitute H.B. 235

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 20% or greater than the arbitration award or $5,000, 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 a proportionate share of the fees and costs of 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 proportionately share the fees 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 20% or $5,000 greater than the
             110      arbitration award, which is greater, the plaintiff is responsible for all of the nonmoving 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.


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