BILL REQ. #:  H-3898.1 

Read first time 01/10/2006.   Referred to Committee on Judiciary.

     AN ACT Relating to early settlement offers in actions for injuries resulting from health care; amending RCW 7.70.070; and adding new sections to chapter 7.70 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 7.70 RCW to read as follows:
     The definitions in this section apply throughout sections 2 through 6 of this act unless the context clearly requires otherwise.
     (1) "Allegedly responsible party" means a health care provider alleged by the claimant to be responsible for at least some portion of an injury to the claimant resulting from alleged professional negligence in the provision of health care.
     (2) "Amount recovered" means the total compensation, including the reasonable value of nonmonetary compensation, that an attorney has obtained on behalf of a claimant through settlement, arbitration, or judgment, minus the reasonable costs and expenses incurred by the attorney in prosecuting or settling the claim.
     (3) "Claimant" means any natural person who, in his or her own right, or vicariously, is seeking compensation in connection with a claim under this chapter for personal injury or wrongful death as a result of alleged professional negligence in the provision of health care.
     (4) "Collateral source" means compensation or benefits paid or payable to the claimant or on the claimant's behalf, to compensate the claimant for the injury complained of, regardless of the right of recoupment of any other entity, through subrogation, trust agreement, lien, or otherwise.
     (5) "Contingent fee" means compensation, however calculated, that is payable only if an amount is recovered.
     (6) "Early settlement offer" means a settlement offer made in accordance with section 2 of this act.
     (7) "Economic damages" has the meaning provided in RCW 4.56.250.
     (8) "Entity" includes an individual or person.
     (9) "Noneconomic damages" has the meaning provided in RCW 4.56.250.

NEW SECTION.  Sec. 2   A new section is added to chapter 7.70 RCW to read as follows:
     (1) In any civil action for damages brought under this chapter against a health care provider based on alleged professional negligence, an allegedly responsible party may make an early settlement offer at any time prior to one hundred twenty days after the claim is filed with a court. To qualify as an early settlement offer, the offer must include a good faith offer to compensate the claimant for the claimant's current and future economic damages suffered as a result of the allegedly responsible party's act or omission, less collateral source benefits available to the claimant, and for reasonable hourly attorneys' fees for the claimant. The early settlement offer must be in writing and communicated to the claimant by certified mail. The offer must remain open for acceptance for a minimum of thirty days from the date the offer is received by the claimant.
     (2) An allegedly responsible party may amend or issue an additional early settlement offer prior to one hundred twenty days after the action is commenced. The claimant may extend the time for receiving the offer beyond this period.
     (3) An attorney who receives an early settlement offer shall provide a true and complete copy of the offer to his or her client.
     (4) A claimant who agrees in writing to an early settlement offer may not bring or continue a civil action, based on the same alleged professional negligence, against the allegedly responsible party who made the early settlement offer or any other allegedly responsible parties who joined in the early settlement offer under subsection (5) of this section.
     (5) An offer under subsection (1) of this section may include other allegedly responsible parties who were involved in the events that gave rise to the civil action, regardless of the theory of liability on which the claim is based, with their consent. If, after an early settlement offer is made and accepted, the participants in the offer dispute their relative contributions to the payments to be made to the claimant, such disputes shall be resolved through binding arbitration in accordance with chapter 7.04 RCW.
     (6) The claimant may reject an offer of compensation made under subsection (1) of this section and elect to bring or maintain a civil action for damages. Upon rejection of an offer of compensation that complies with the requirements of subsection (1) of this section, the claimant may recover damages in the civil action only if the claimant proves by clear and convincing evidence that the allegedly responsible party caused the injury by reckless, willful, or wanton conduct.

NEW SECTION.  Sec. 3   A new section is added to chapter 7.70 RCW to read as follows:
     (1) An attorney who represents a person alleging personal injury or death resulting from professional negligence in the provision of health care, and who represents the person on a contingent-fee basis, shall send a demand for compensation by certified mail to each allegedly responsible party prior to commencing a court action. In the event that multiple allegedly responsible parties are known to the attorney, a demand must be sent on the same date to each party. The demand must specify the amount of compensation sought and must set forth the material facts, documentary evidence, and other information relevant to the demand, including:
     (a) The name and address of the claimant or of the person on whose behalf the claim is being made;
     (b) A brief description of how the injury or loss occurred;
     (c) The names and, if known, the addresses and telephone numbers of all known witnesses to the injury or loss;
     (d) Copies of photographs in the claimant's possession which relate to the injury or loss;
     (e) The basis for claiming that the party to whom the demand is addressed is responsible or partially responsible for the injury or loss;
     (f) A description of the nature of the injury or loss, including the dates and nature of the care or services provided, and the names and addresses of all physicians and other health care providers that provided medical care or services to the claimant or injured party;
     (g) Medical records relating to the injury, including those involving a prior injury or preexisting medical condition which would be discoverable by the allegedly responsible party during the course of litigation or, in lieu thereof, executed releases authorizing the allegedly responsible party to obtain the records directly from those health care providers who provided treatment to the claimant; and
     (h) Documentation of any medical expenses, lost wages, personal losses, and other economic and noneconomic damages suffered as a consequence of the injury or loss.
     (2) The attorney shall mail copies of each demand to the claimant and to each allegedly responsible party.
     (3) A claimant's attorney who learns of an additional allegedly responsible party after making a demand for compensation under subsection (1) of this section shall send a demand for compensation to the newly discovered allegedly responsible party and simultaneously mail a copy of the demand to each of the other allegedly responsible parties and to the claimant.
     (4) In the event that a claimant's attorney learns of an additional allegedly responsible party more than ninety days after making a demand for compensation under subsection (1) of this section, the attorney shall not be required to send a demand to that party nor do the fee limitations imposed under section 5 (1) and (2) of this act apply with regard to an amount recovered from that party, except as provided by this subsection. An attorney who fails as a result of a breach of the standard of care to learn of an additional allegedly responsible party within ninety days of sending a demand for compensation to another allegedly responsible party shall not collect a fee in excess of that allowed under section 5 (1) and (2) of this act with respect to an amount recovered from the additional allegedly responsible party.

NEW SECTION.  Sec. 4   A new section is added to chapter 7.70 RCW to read as follows:
     An allegedly responsible party is under no obligation to issue a response to a demand for compensation made under section 3 of this act. The fact that a demand for compensation was or was not made, the fact that an early settlement offer was or was not made, and the amount of any demand or settlement offer made are inadmissible at a trial arising from the injury or loss.

NEW SECTION.  Sec. 5   A new section is added to chapter 7.70 RCW to read as follows:
     (1) An attorney who represents a claimant who has accepted an early settlement offer under section 2 of this act shall not collect an amount as compensation for the attorney's services that is more than the attorney's reasonable hourly fees for the services performed.
     (2) An attorney who represents a claimant who has rejected or failed to accept an early settlement offer shall not collect a contingent fee that is greater than twenty percent of the amount of the early settlement offer plus the percentage of the amount recovered in excess of the early settlement offer as was agreed to by the claimant and the attorney.
     (3) A claimant's attorney who has failed to make a demand for compensation under section 3 of this act, or who has omitted from the demand any information required under section 3 of this act of a material nature which the attorney had in his or her possession, or which was readily available to him or her, or of which the attorney had knowledge, shall not collect a contingent fee greater than twenty percent of the amount recovered.
     (4) A claimant's attorney who has failed to provide his or her client a true and complete copy of an early settlement offer received by the attorney, as required under section 2 of this act, shall not collect a contingent fee greater than twenty percent of the amount recovered.
     (5) An attorney shall disclose, plainly and in writing, to claimants whom the attorney proposes to represent on a contingent-fee basis: (a) The fee limitations imposed by this section; and (b) the fact that such limitations are maximum limits and that the attorney and claimant may negotiate a lower fee.
     The attorney shall also provide to each claimant a copy of this act.
     (6) The fee limitations imposed by this section may not be waived.
     (7) This section applies to all attorneys practicing in this state, including attorneys prosecuting claims filed in federal court, to the maximum extent permitted by federal law.

NEW SECTION.  Sec. 6   A new section is added to chapter 7.70 RCW to read as follows:
     A fiduciary relationship applies with respect to a fee agreement between an attorney and a claimant.

Sec. 7   RCW 7.70.070 and 1975-'76 2nd ex.s. c 56 s 12 are each amended to read as follows:
     (1) The court shall, in any action under this chapter, determine the reasonableness of each party's attorneys fees. The court shall take into consideration the following:
     (((1))) (a) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
     (((2))) (b) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
     (((3))) (c) The fee customarily charged in the locality for similar legal services;
     (((4))) (d) The amount involved and the results obtained;
     (((5))) (e) The time limitations imposed by the client or by the circumstances;
     (((6))) (f) The nature and length of the professional relationship with the client;
     (((7))) (g) The experience, reputation, and ability of the lawyer or lawyers performing the services;
     (((8))) (h) Whether the fee is fixed or contingent.
     (2) An attorney's contingency fee is limited to the maximum permissible fee allowed under section 5 of this act.