Texas House Bill 2256 and Bad Faith Mediation in ‘Balance Billing’

By Holly Hayes

As discussed in my previous post, Texas House Bill 2256 was signed into law on June 19, 2009. The bill provides a procedure for mediation of “balance billing,” which is the practice of billing insured patients for amounts or balances not covered by the insurer. HB 2256 also includes the following section on “bad faith” mediation:

SUBCHAPTER C. BAD FAITH MEDIATION

Sec. 1467.101. BAD FAITH.

(a) The following conduct constitutes bad faith mediation for purposes of this chapter:

(1) failing to participate in the mediation;

(2) failing to provide information the mediator believes is necessary to facilitate an agreement; or

(3) failing to designate a representative participating in the mediation with full authority to enter into any mediated agreement.

(b) Failure to reach an agreement is not conclusive proof of bad faith mediation.

(c) A mediator shall report bad faith mediation to the commissioner or the Texas Medical Board, as appropriate, following the conclusion of the mediation.

Sec. 1467.102. PENALTIES.

(a) Bad faith mediation, by a party other than the enrollee, is grounds for imposition of an administrative penalty by the regulatory agency that issued a license or certificate of authority to the party who committed the violation.

(b) Except for good cause shown, on a report of a mediator and appropriate proof of bad faith mediation, the regulatory agency that issued the license or certificate of authority shall impose an administrative penalty.

On a related note, Victoria Pynchon conducted recently an interesting survey about “bad faith” in negotiations. Lawyers, mediators, and clients came up with a list of 35 examples of what they considered “bad faith.” Find the survey results here.

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Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.