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ALI sends in lobbyists as Texas lawmakers consider denouncing group's insurance Restatement

Lawsuits

By Nicholas Malfitano | May 14, 2019

Txcapitol

AUSTIN, Texas – New records show that the American Law Institute has hired lobby assistance to oppose legislation filed by Texas lawmakers to discourage the Restatement of the Law of Liability Insurance from being relied upon by courts.

According to information on file with the Texas Ethics Commission, the ALI hired James W. Dow and Nelson H. Nease of Cross Oak Group in Austin, Texas, last week, in apparent response to bills created in the Texas legislature earlier this year that seek to refute the ALI's controversial liability insurance Restatement.

Dow lobbies on behalf of clients in business development and government affairs. He also does private business consulting on behalf of major corporations and private equity in aerospace, financial services, public pensions and healthcare.

Nease advocates for a diverse array of clients, and also serves as a natural gas market development consultant to a national trade association, as an energy consultant and policy advisor to a private foundation and as a clean energy consultant to a 501(c)(3).

Among Dow and Nease’s current clients are Ameritex Pipe & Products, Andy Roddick Foundation, Gatesco, Inc., Music Mania, LLC, Texas Association of Anesthesiologists Assistants, Texas Craft Brewers Guild and Texas Neurological Society.

The Philadelphia-based ALI has long published Restatements with the goal of providing summaries to judges who deal with certain issues, but some have wondered whether the group has started proposing new laws rather than restating existing ones. The Restatement concerns when insurers can be found liable in civil lawsuits and has been called “litigation fuel.”

Notably, an insurer would need to cover punitive damages in some instances, rather than the insured who engaged in the reckless behavior – even if they’re not covered in the policy (a National Council of Insurance Legislators discussion provided a deep dive into other issues).

Three measures targeting the Restatement have been filed since February, per legislative records from Texas.

HCR 58, supported heavily by the National Association of Mutual Insurance Companies, was filed on Feb. 8 and was referred to the Judiciary and Civil Jurisprudence Committee on March 12. The resolution was sponsored by Rep. Tom Oliverson (R–130) and read, in part:

“The ALI’s most recent Restatement is neither consistent with well-established insurance law nor respectful of the role of state legislators in establishing legal standards and practice for the insurance industry, and it is not worthy of recognition by the courts as an authoritative reference."

HCR 58 seeks to “discourage courts from relying on the Restatement as an authoritative reference regarding established rules and principles of law.”

According to Texas legislature records, the resolution is out of committee and a favorable report on it was filed to the Judiciary and Civil Jurisprudence Committee on May 2.

HB 2757 - introduced by Rep. Jeff Leach (R–67), the Judiciary and Civil Jurisprudence Committee Chairman on Feb. 8 - concerns Texas’ rules of decision. That bill seeks to amend Civil Practice and Remedies Code Section 5.001 and take effect on Sept. 1 of this year, and read:

It states: “In any action governed by the laws of this state concerning rights and obligations under the law, the American Law Institute’s Restatements of the Law are not controlling.”

This bill currently holds “In Committee” status and was scheduled for a public hearing on May 13.

SB 2303, introduced by State Sen. Larry Taylor (R–24) on March 8, also deals with the Restatement. The bill looks to add Civil Practice and Remedies Code Section 1.004 and take effect immediately upon a two-thirds majority vote, or alternatively on Sept. 1 of this year, and reads:

“Sec. 1.004. USE OF RESTATEMENT PROHIBITED. Except as specifically provided by this code, a Restatement of the Law published by the American Law Institute shall not be considered in any action governed by the laws of this state.

That bill also has a status of “In Committee” and was referred to the Committee on State Affairs on March 21.

These measures also follow and coincide with similar ones initiated in other states, which also oppose the Restatement. Those include legislative actions and judicial rulings in Kentucky, Tennessee, Ohio, Delaware and Kansas, all of which sought to prevent the Restatement from being used as a guide in each state’s courts.

ALI Deputy Director Stephanie Middleton was not available to provide comment on the hiring of the lobbyists in Texas. Previously, Middleton explained that during the many drafts and meetings concerning the Restatement, the insurance industry’s positions on points of controversy were “fully considered and many times adopted.”

Middleton stated the ALI Restatement project had “both insurer and policyholder side participants with expertise in this area of law, and together they worked to find language that is clear and balanced, and explanations that are transparent as to the rules in various jurisdictions.”

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

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