Part 1. TEXAS DEPARTMENT OF INSURANCE
Chapter 1. GENERAL ADMINISTRATION
Subchapter P. NEGOTIATION AND MEDIATION OF A CLAIM OF BREACH OF CONTRACT
28 TAC §§1.1807, 1.1809, 1.1815
The Commissioner of Insurance adopts amendments to §§1.1807, 1.1809, and 1.1815, concerning negotiation and mediation of certain breach of contract claims asserted by contractors against the Department. Sections 1.1807, 1.1809, and 1.1815 are adopted without changes to the proposed text published in the January 5, 2007, issue of the Texas Register (32 TexReg 25).
The adopted amendments are necessary to implement HB 1940, enacted by the 79th Legislature, Regular Session, effective September 1, 2005, which amended Chapter 2260 of the Government Code to shorten some of the timeframes related to negotiation and mediation of breach of contract claims against the state. Chapter 2260 of the Government Code requires state agencies to adopt rules to govern the negotiation and mediation of certain claims for breach of contract. Title 28 Chapter 1 Subchapter P of the Texas Administrative Code establishes procedures regarding negotiation and mediation of certain claims of breach of contract asserted by a contractor against the Department under the Government Code Chapter 2260. The amendments to the rules change the required timeframes for complying with Chapter 2260 to be consistent with the newly enacted legislation.
The adopted amendment to §1.1807(c) changes the number of days that the notice of counterclaim must be delivered to the contractor after the Department's receipt of the contractor's notice of claim from 90 days to 60 days. The adopted amendment to §1.1809(b) changes the number of days that the parties shall begin negotiations from 60 days following the later of (i) the date of termination of the contract; (ii) the completion date, or substantial completion date in the case of construction projects, in the original contract; or (iii) the date the Department receives the contractor's claim of notice to 120 days following the date the Department receives the contractor's notice of claim.
The adopted amendment to §1.1809(h) changes the number of days that the parties may agree to mediate the dispute from before the 270th day to the 120th day after the Department receives the contractor's notice of claim or before the expiration of any extension agreed to by the parties.
The adopted amendment to §1.1815(a) changes the number of days that the parties may agree to mediate the dispute at any time before the 270th day to the 120th day after the Department receives notice of the claim of breach of contract or before the expiration of any extension agreed to by the parties in writing.
In accordance with SECTIONS 9 and 10 of HB 1940, the adopted amendments are effective for any claims involving a breach of contract entered into by a unit of state government on or after the effective date of the Act, which is September 1, 2005. A claim involving a breach of contract entered into by a unit of state government before the effective date of the Act is governed by the law in effect immediately before that date.
The Department did not receive any comments on the proposal.
The amendments are adopted under the Government Code Chapter 2260 and the Insurance Code §36.001. Section §2260.052(c) provides that each unit of state government with rulemaking authority shall develop rules to govern the negotiation and mediation of a claim of breach of contract. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on April 19, 2007.
TRD-200701476
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: May 9, 2007
Proposal publication date: January 5, 2007
For further information, please call: (512) 463-6327