PRINTER'S NO. 2325
No. 1880 Session of 1999
INTRODUCED BY LESCOVITZ, LAUGHLIN, BELARDI, PISTELLA, BATTISTO, M. COHEN, COLAFELLA, ROSS, STEELMAN AND RAMOS, SEPTEMBER 29, 1999
REFERRED TO COMMITTEE ON JUDICIARY, SEPTEMBER 29, 1999
AN ACT 1 Amending Title 2 (Administrative Law and Procedure) of the 2 Pennsylvania Consolidated Statutes, authorizing government 3 agencies to use alternative means of dispute resolution to 4 resolve certain issues in controversy. 5 The General Assembly of the Commonwealth of Pennsylvania 6 hereby enacts as follows: 7 Section 1. Title 2 of the Pennsylvania Consolidated Statutes 8 is amended by adding a section to read: 9 § 105.1. Administrative ADR Law. 10 The provisions of Subchapter C of Chapter 5 (relating to 11 administrative alternative dispute resolution) shall be known 12 and may be cited as the Administrative ADR Law. 13 Section 2. Chapter 5 of Title 2 is amended by adding a 14 subchapter to read: 15 SUBCHAPTER C 16 ADMINISTRATIVE ALTERNATIVE DISPUTE RESOLUTION 17 Sec. 18 571. Scope of subchapter.
1 572. Declaration of policy. 2 573. Definitions. 3 574. General authority. 4 575. Neutral persons. 5 576. Confidentiality. 6 577. Authorization of arbitration. 7 578. Arbitrators. 8 579. Authority of arbitrator. 9 580. Arbitration proceedings. 10 581. Arbitration awards. 11 582. Judicial review. 12 583. Support services. 13 § 571. Scope of subchapter. 14 (a) General rule.--Except as provided in subsection (b), 15 this subchapter shall apply to all government agencies. 16 (b) Exceptions.--None of the provisions of this subchapter 17 shall apply to: 18 (1) Proceedings before the Department of Revenue, 19 Auditor General or Board of Finance and Revenue involving the 20 original settlement, assessment or determination or 21 resettlement, reassessment or redetermination, review or 22 refund of taxes, interest or payments made into the State 23 Treasury. 24 (2) Proceedings before the Secretary of the Commonwealth 25 under the act of June 3, 1937 (P.L.1333, No.320), known as 26 the Pennsylvania Election Code. 27 (3) Proceedings before the Department of Transportation 28 involving matters reviewable under 42 Pa.C.S. § 933(a)(1)(ii) 29 (relating to appeals from government agencies). 30 (4) Proceedings before the State System of Higher 19990H1880B2325 - 2 -
1 Education involving student discipline. 2 § 572. Declaration of policy. 3 The General Assembly hereby finds and declares that: 4 (1) Administrative proceedings are intended to offer 5 prompt, expert and inexpensive means of resolving disputes as 6 an alternative to litigation in the courts of this 7 Commonwealth. 8 (2) Administrative proceedings are becoming increasingly 9 formal, costly and lengthy and result in unnecessary 10 expenditures of time by persons and businesses and in a 11 decreased likelihood of settlement of disputes. 12 (3) Alternative means of dispute resolution are used in 13 the private sector and, in appropriate circumstances, result 14 in decisions that are faster, less contentious and less 15 expensive. 16 (4) Such alternative means can result in more creative, 17 efficient and sensible outcomes especially with respect to 18 administrative decisions impacting on business. 19 (5) Alternative means of dispute resolution may be used 20 in a wide variety of administrative programs. 21 (6) Explicit authorization of the use of alternative 22 means of dispute resolution will eliminate any ambiguity 23 under existing law. 24 (7) The availability of a wide range of alternative 25 dispute resolution procedures, and an increased understanding 26 of the most effective use of such procedures, will enhance 27 the operation of government and better serve both the public 28 and business. 29 § 573. Definitions. 30 The following words and phrases when used in this subchapter 19990H1880B2325 - 3 -
1 shall have the meanings given to them in this section unless the 2 context clearly indicates otherwise: 3 "Alternative dispute resolution technique." A procedure that 4 is used instead of an adjudication to resolve issues in 5 controversy, including, but not limited to, settlement 6 negotiations, conciliation, facilitation, mediation, fact- 7 finding, minitrials and arbitration, or any combination thereof. 8 "Award." A decision by an arbitrator resolving the issues in 9 controversy. 10 "Dispute resolution communication." An oral or written 11 communication prepared for the purposes of a dispute resolution 12 proceeding, including a memorandum, notes or work product of a 13 neutral person, parties or nonparty participant, except a 14 written agreement to enter into a dispute resolution proceeding 15 or a final written agreement or arbitration award reached as a 16 result of a dispute resolution proceeding. 17 "Dispute resolution proceeding" or "proceeding." A process 18 in which an alternative means of dispute resolution is used to 19 resolve an issue in controversy in which a neutral person is 20 appointed and specified parties participate. 21 "Issue in controversy." An issue that is material to a 22 decision concerning an administrative program of an agency and 23 as to which there is disagreement between: 24 (1) an agency and a person who would be substantially 25 affected by the decision; or 26 (2) persons who would be substantially affected by the 27 decision. 28 "Neutral person." A person who, with respect to an issue in 29 controversy, functions specifically to aid the parties in 30 resolving the controversy. 19990H1880B2325 - 4 -
1 "Party." A named party in an administrative proceeding or a 2 person who will be significantly affected by the decision in the 3 administrative proceeding and who participates in the 4 proceeding. 5 "Roster." The list maintained by the Office of General 6 Counsel of persons qualified to provide services as neutral 7 persons. 8 § 574. General authority. 9 (a) General rule.--A government agency may use a dispute 10 resolution proceeding for the resolution of an issue in 11 controversy if all parties agree to such a proceeding. 12 (b) Exceptions.--A government agency may not use a dispute 13 resolution proceeding if the matter: 14 (1) involves a situation where maintaining an 15 established policy is of special importance so that 16 variations among individual decisions are not increased and 17 such a proceeding is not likely to reach consistent results 18 among individual decisions; 19 (2) significantly affects persons or organizations who 20 are not parties to the proceeding; 21 (3) involves a situation where a full public record of 22 the proceeding is important and a dispute resolution 23 proceeding cannot provide such a record; or 24 (4) involves a situation where the agency must maintain 25 continuing jurisdiction over the matter with the authority to 26 alter the disposition of the matter in light of changed 27 circumstances and a dispute resolution proceeding will 28 interfere with this requirement. 29 (c) Promulgation of agency policy.--In consultation with 30 other government agencies as appropriate and with professional 19990H1880B2325 - 5 -
1 organizations experienced in matters concerning dispute 2 resolution, each government agency shall adopt a policy that 3 addresses the use of alternative dispute resolution techniques. 4 Such professional organizations include, but are not necessarily 5 limited to: the Pennsylvania Bar Association, the American 6 Arbitration Association, the Pennsylvania Council of Mediators 7 and the Society for Professionals in Dispute Resolution. In 8 developing such a policy, each government agency shall examine 9 alternative means of resolving disputes in connection with 10 adjudications, rulemaking proceedings, enforcement actions, 11 issuing and revoking permits or licenses, contract 12 administration, litigation and other actions. 13 (d) Dispute resolution specialists.--The head of each 14 government agency shall designate a dispute resolution 15 specialist for the agency. The specialist shall be responsible 16 for the implementation of the provisions of this subchapter and 17 the agency policy developed under this subchapter. 18 (e) Training.--Each government agency shall provide for 19 training on a regular basis for the dispute resolution 20 specialist of the agency and other employees involved in 21 implementing the policy of the agency. The training shall 22 encompass the theory and practice of negotiation, mediation, 23 arbitration or related techniques. The dispute resolution 24 specialist may periodically recommend employees who would 25 benefit from similar training to the agency head. 26 (f) Procedures for grants and contracts.--Each government 27 agency shall review its standard agreements for contracts, 28 grants and other assistance and shall determine whether to amend 29 any such standard agreement to authorize and encourage use of 30 alternative dispute resolution techniques. 19990H1880B2325 - 6 -
1 (g) Voluntary use.--Alternative dispute resolution 2 techniques authorized under this subchapter shall be voluntary 3 procedures which may supplement rather than limit other 4 available dispute resolution techniques. 5 § 575. Neutral persons. 6 (a) Qualifications generally.--A neutral person may be a 7 permanent or temporary officer or employee of this Commonwealth 8 or any other person who is acceptable to the parties to a 9 dispute resolution proceeding. A neutral person shall have no 10 official, financial or personal conflict of interest with 11 respect to the issues in controversy, unless such interest is 12 fully disclosed in writing to all parties and all parties agree 13 that the neutral person may serve. 14 (b) Nature of service.--A neutral person who serves as a 15 conciliator, facilitator or mediator shall serve at the will of 16 the parties. 17 (c) Functions of Office of General Counsel.--The Office of 18 General Counsel shall perform the following functions in 19 consultation with appropriate government agencies and 20 professional organizations experienced in matters concerning 21 dispute resolution, including, but not limited to, those 22 specified in section 574(c) (relating to general authority): 23 (1) Establish standards for neutral persons, including 24 experience, training, affiliations, diligence, actual or 25 potential conflicts of interest and other qualifications, to 26 which agencies may refer. 27 (2) Maintain a roster of persons who meet such standards 28 and are otherwise qualified to act as neutral persons, which 29 shall be made available upon request. 30 (3) Enter into contracts for services of neutral persons 19990H1880B2325 - 7 -
1 that may be used by government agencies on an elective basis 2 in dispute resolution proceedings. 3 (4) Develop procedures that permit government agencies 4 to obtain the services of neutral persons on an expedited 5 basis. 6 (d) Use of agency employees.--A government agency may use 7 the services of one or more employees of other agencies to serve 8 as neutral persons in dispute resolution proceedings. The 9 agencies may enter into an interagency agreement that provides 10 for the reimbursement by the user agency or the parties of the 11 full or partial cost of the services of such an employee. 12 (e) Contracts and compensation.--A government agency may 13 enter into a contract with any neutral person on the roster. The 14 parties in a dispute resolution proceeding shall agree on 15 reasonable compensation for the neutral person. 16 § 576. Confidentiality. 17 (a) General rule.--Except as provided in subsection (b): 18 (1) A dispute resolution communication is privileged. 19 (2) Disclosure of a dispute resolution communication may 20 not be required or compelled through discovery or any other 21 process. 22 (3) A dispute resolution communication shall not be 23 admissible as evidence in any action or proceeding, 24 including, but not limited to, a judicial, administrative or 25 arbitration action or proceeding. 26 (b) Exceptions.-- 27 (1) A settlement document may be introduced in an action 28 or proceeding to enforce the settlement agreement expressed 29 in the document, unless the settlement document by its terms 30 states that it is unenforceable or not intended to be legally 19990H1880B2325 - 8 -
1 binding. For purposes of this section, a settlement document 2 is a written document signed by the parties to the agreement. 3 (2) To the extent that the dispute resolution 4 communication is relevant evidence in a criminal matter, the 5 privilege and limitation set forth in subsection (a) does not 6 apply to: 7 (i) a dispute resolution communication containing a 8 threat that bodily injury may be inflicted on a person; 9 (ii) a dispute resolution communication containing a 10 threat that damage may be inflicted on real or personal 11 property under circumstances constituting a felony; or 12 (iii) conduct during a dispute resolution procedure 13 causing direct bodily injury to a person. 14 § 577. Authorization of arbitration. 15 (a) General rule.--Arbitration may be used as an alternative 16 means of dispute resolution with the consent of all parties. 17 Consent may be obtained either before or after an issue in 18 controversy has arisen. A party may agree to submit only certain 19 issues in controversy to arbitration or to arbitration on the 20 condition that the amount of the award will be within a 21 specified range. 22 (b) Agreement to arbitration must be voluntary.--A 23 government agency may not require any person to consent to 24 arbitration as a condition of entering into a contract or 25 obtaining a benefit. 26 (c) Authority of agency employees.--An officer or employee 27 of a government agency may offer to use arbitration for the 28 resolution of issues in controversy if the officer or employee 29 has authority to enter into a settlement concerning the matter 30 or is otherwise specifically authorized by the agency to consent 19990H1880B2325 - 9 -
1 to the use of arbitration. 2 § 578. Arbitrators. 3 (a) Selection.--The parties to an arbitration proceeding 4 shall have the right to participate in selection of the 5 arbitrator. 6 (b) Qualifications.--The arbitrator shall be a neutral 7 person who meets the criteria of this subchapter. 8 § 579. Authority of arbitrator. 9 An arbitrator to whom a dispute is referred under this 10 subchapter may: 11 (1) Regulate the course of and conduct hearings. 12 (2) Administer oaths and affirmations. 13 (3) Compel the attendance of witnesses and production of 14 evidence at the hearing, but only to the extent that the 15 agency involved is otherwise authorized by law to do so. 16 (4) Make awards. 17 § 580. Arbitration proceedings. 18 (a) General rule.--The arbitrator shall set a time and place 19 for the hearing on the dispute and shall notify the parties not 20 less than 30 days before the hearing. 21 (b) Record of hearing.--A party who would like a record of 22 the hearing shall: 23 (1) Be responsible for the preparation of the record. 24 (2) Notify the other parties and the arbitrator of the 25 preparation of the record. 26 (3) Furnish copies to all identified parties and the 27 arbitrator. 28 (4) Pay all costs for the record, unless the parties 29 agree otherwise or the arbitrator determines that the costs 30 should be apportioned. 19990H1880B2325 - 10 -
1 (c) Conduct of arbitration.--The following shall apply to 2 all arbitration proceedings under this subchapter: 3 (1) The parties shall have the right to be heard, to 4 present evidence relevant to the controversy and to cross- 5 examine witnesses appearing at the hearing. 6 (2) The hearing shall be conducted expeditiously and in 7 an informal manner. 8 (3) The arbitrator may receive oral or documentary 9 evidence, except that irrelevant, immaterial, unduly 10 repetitious or privileged evidence may be excluded by the 11 arbitrator. 12 (4) The arbitrator shall interpret and apply relevant 13 statutory and regulatory requirements. 14 (d) Ex parte communications.-- 15 (1) A party shall not make or knowingly cause to be made 16 any communication with the arbitrator on the party's behalf 17 without notice unless the parties agree otherwise. 18 (2) If a communication is made in violation of this 19 subsection, the arbitrator shall prepare a memorandum of the 20 communication which shall become a part of the record and 21 shall allow an opportunity for rebuttal. 22 (3) If the arbitrator receives a communication which 23 violates this subsection, the arbitrator may, to the extent 24 consistent with the interests of justice and policies 25 underlying this subchapter, require the offending party to 26 show cause why the claim of such party should not be resolved 27 against such party as the result of the improper conduct. 28 (e) Award.--The arbitrator shall make the award within 30 29 days after the close of the hearing, or the date of the filing 30 of any briefs required by the arbitrator, whichever is later, 19990H1880B2325 - 11 -
1 unless the parties agree to some other time limit or the agency 2 provides by regulation for some other time limit. 3 § 581. Arbitration awards. 4 (a) General rule.--Unless the government agency provides 5 otherwise by regulation, the award in an arbitration proceeding 6 under this subchapter shall include a brief, informal discussion 7 of the factual and legal basis for the award, but formal 8 findings of fact or conclusions of law shall not be required. 9 (b) Service.--The prevailing party shall file the award with 10 all relevant agencies, along with proof of service on all 11 parties. 12 (c) Finality.--The award in an arbitration proceeding shall 13 become final 30 days after it is served on all parties. 14 (d) Binding nature.--A final award is binding on the parties 15 and may be enforced as an adjudication under this title. 16 (e) Use in other proceedings.--An award entered under this 17 subchapter in an arbitration proceeding may not serve as an 18 estoppel in any other proceeding for any issue that was resolved 19 in the proceeding. Such an award also may not be used as 20 precedent or otherwise be considered in any factually unrelated 21 proceeding, whether conducted under this subchapter, by an 22 agency or in a court, or in any other arbitration proceeding. 23 § 582. Judicial review. 24 (a) General rule.--Notwithstanding any other provisions of 25 this subchapter, a party adversely affected or aggrieved by an 26 award or order made in an arbitration or other dispute 27 resolution proceeding conducted under this subchapter may appeal 28 the award in accordance with Chapter 7 (relating to judicial 29 review). 30 (b) Agency decision on use of subchapter.--A decision by an 19990H1880B2325 - 12 -
1 agency to use or not use a dispute resolution proceeding under 2 this subchapter shall be a nonappealable order under Chapter 7. 3 § 583. Support services. 4 For the purposes of this subchapter, an agency may use the 5 services or facilities of other Commonwealth agencies with the 6 consent or agreement of the other agency. 7 Section 3. This act shall take effect in 60 days. 19990H1880B2325 - 13 -
1 SOURCE NOTES 2 2 Pa.C.S. § 571: Patterned after 2 Pa.C.S. § 501. 3 2 Pa.C.S. § 572: Patterned after act of November 15, 1990, 4 P.L. 101-552, § 2 (note to 5 U.S.C.S. § 571). 5 2 Pa.C.S. § 573: Patterned after 5 U.S.C. § 571. 6 2 Pa.C.S. § 574: Subsections (a) and (b) patterned after 5 7 U.S.C. § 572(a) and (b). 8 2 Pa.C.S. § 575: Patterned after 5 U.S.C. § 573. 9 2 Pa.C.S. § 576: Patterned after 5 U.S.C. § 574. The 10 unofficial citations for the statutes cited in subsection (j) 11 are: Act 1957- ____, 65 P.S. § 66.1 et seq.; and Act 1984-159, 12 35 P.S. § 7301 et seq. 13 2 Pa.C.S. § 577: Patterned after 5 U.S.C. § 575. 14 2 Pa.C.S. § 578: Patterned after 5 U.S.C. § 577. 15 2 Pa.C.S. § 579: Patterned after 5 U.S.C. § 578. 16 2 Pa.C.S. § 580: Patterned after 5 U.S.C. § 579. 17 2 Pa.C.S. § 581: Patterned after 5 U.S.C. § 580. 18 2 Pa.C.S. § 582: Patterned after 5 U.S.C. § 581. 19 2 Pa.C.S. § 583: Patterned after 5 U.S.C. § 583. G20L02DMS/19990H1880B2325 - 14 -