Legislature(1995 - 1996)
04/25/1996 01:50 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE FINANCE COMMITTEE
APRIL 25, 1996
1:50 P.M.
TAPE HFC 96 - 138, Side 1, #000 - end.
TAPE HFC 96 - 138, Side 2, #000 - end.
TAPE HFC 96 - 139, Side 1, #000 - end.
TAPE HFC 96 - 139, Side 2, #000 - end.
TAPE HFC 96 - 140, Side 1, #000 - #98.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:50 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Senator Dave Donley; Amber Ala, Staff, Senator Dave Donley;
Dugan Petty, Director, Division of General Services,
Department of Administration; Teri Fronsen, (Testified via
teleconference), Attorney, Women's Law Project,
Philadelphia, Pennsylvania; John George, American Council of
Life Insurance, National Association of Independent
Insurers, Juneau; Marcia McKenzie, Program Coordinator,
Council on Domestic Violence and Sexual Assault, Juneau;
Lauree Hugonin, Executive Director, Alaska Network on
Domestic Violence and Sexual Assault, Juneau.
SUMMARY
SB 175 An Act relating to correctional institutions and
their administration; providing the Department of
Corrections with the authority to require
prisoners to assist in paying for medical
treatment; relating to the authority of a law
enforcement agency to charge a prisoner for
medical costs for a preexisting condition; and
relating to service of criminal sentences.
SB 175 was rescheduled to April 26, 1996 A.M.
meeting.
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SB 197 An Act prohibiting increases in health insurance
premiums if the insured is a victim of domestic
violence."
SB 197 was HELD in Committee for further
discussion.
HB 91 An Act amending the area within designated marine
park units of the Alaska state park system, and
adding marine park units to the Alaska state park
system.
CS HB 92 (RES) was reported out of Committee with
"no recommendation" and with a fiscal note by the
Department of Natural Resources.
HB 482 An Act relating to state procurement practices and
procedures; and providing for an effective date.
CS HB 482 (FIN) was reported out of Committee with
a "no recommendation" and with zero fiscal notes
by the Department of Administration, the
Department of Commerce and Economic Development,
the Department of Community and Regional Affairs,
the Office of the Governor, the Department of
Health and Social Services, the Department of
Labor, the Department of Law, the Department of
Military and Veterans Affairs, the Department of
Corrections, the Department of Education, the
Department of Environmental Conservation, the
Department of Fish and Game, the Department of
Natural Resources, the Department of Public
Safety, the Department of Revenue, and Statewide
Budget Office all dated 2/09/96, and fiscal impact
notes by the Department of Transportation and
Public Facilities dated 2/09/96 and the Department
of Administration.
HOUSE BILL 91
"An Act amending the area within designated marine park
units of the Alaska state park system, and adding
marine park units to the Alaska state park system."
Representative Brown MOVED to RESCIND action on failing to
adopt HB 91. There being NO OBJECTION, it was so ordered.
Representative Brown MOVED to report CS HB 91 (RES) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
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CS HB 91 (RES) was reported out of Committee with "no
recommendations" and with a fiscal note by the Department of
Natural Resources.
HOUSE BILL 482
"An Act relating to state procurement practices and
procedures; and providing for an effective date."
DUGAN PETTY, DIRECTOR, DIVISION OF GENERAL SERVICES,
DEPARTMENT OF ADMINISTRATION, stated that HB 482 was the
result of an effort which began in the Summer, 1995, in
order to streamline the State's procurement practices. A
Procurement Advisory Council was established. The
responsibility of the council is to:
* Look at the procurement law and note the changes
needed to be implemented to streamline it.
* Rewrite regulations and review all procurement
policies to conform with the revised regulations
and statutes.
* Target non-responsive procurement practices.
Mr. Petty spoke in support of HB 482 and provided an
analysis of the substantive changes between current law and
HB 482. [Copy on file]. Mr. Petty provided four amendments
which the Department requests be adopted. [Copies on file].
Representative Parnell asked why Legal Services was not
subject to the competitive bid process. Mr. Petty replied
that it did not make sense to award Legal Services contracts
through the competitive bid process. An invitation to bid
usually is awarded to the low-responsive bidder. The only
specifications would be that the bid complies with the
document. Although, the process for legal services does not
allow consideration of factors other than cost.
Representative Parnell questioned if the Department of Law
currently uses the Request For Proposal (RFP) process. Mr.
Petty suggested that they do for some of their contracts.
Often times, a suit will be brought against the State
requiring legal services to defend the State.
Representative Parnell indicated concern with a contract
copy which the Department of Law entered into in 1983,
stipulating that the State should not pay more than $75
thousand dollars for the contract. By 1995, the State added
an amendment to that contract bringing the amount up to
$19.9 million dollars. He objected to the disparity
implicated, and requested proof that the Department of Law
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is not "sole sourcing" contracts. The procurement process
needs to be competitive.
Mr. Petty pointed out that Legislative Audit had
investigated the Legal Services contracts, finding problems
with the Department of Law's procurement process.
Representative Kelly asked the difference between "sole
source" and "single source" return. Mr. Petty replied that
"sole source" means that there is only one source available
to do the work. The statute currently reads "sole source".
HB 482 proposes a "single source" allowing the State to
enter into a contract with a "single source" after
determination is made that the bid process would not be
practical to use.
Representative Kelly questioned the need for a business
proposing to bid to be required to have a valid Alaska
business license. Mr. Petty interjected, to receive the
license would cost $50 dollars including and a returned
application.
Representative Kelly recommended adding language clarifying
that the bidding contender would only need to have applied
for an Alaskan business license. Mr. Petty repeated that
under current law, if a bidder submitted a bid, and they did
not have the license, the bid would not be considered. In
order to be on that list, there must be a business license.
If the business has a license, has operated a business for
six months in Alaska, and is a resident of the State, or if
in a partnership, all are residents of the State, they would
then qualify for the Alaska Bidders Preference which
provides a 5% evaluation preference. To change the law
would encourage people to compete from other states; that
was not the intent of the original legislation when passed.
Mr. Petty added, current statutes requires that the
Department not send bids to out-of-state bidders.
Representative Mulder asked if the Division of General
Services kept a list of legal service contracts in the
State. Mr. Petty noted that they do keep on file, the
professional service contracts over $25 thousand dollars.
Those reports are kept in the Department of Administration
(DOA). That Division is required by law to keep a
procurement report. Representative Mulder inquired the
number of contracts currently on file within the Department.
Mr. Petty offered to provide that information.
Representative Therriault referenced Section #23, Page 11,
the delivery of supplies. Mr. Petty noted that "supplies"
is well defined in statute as equipment and services. He
referenced AS 36.36.90 which requires that supply purchases
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be delivered to locations within the State. The Department
shall determine that a point of delivery outside the State
must be in the best interest of the State. The Department
is not proposing a change under that statute to the existing
reference. Current procurement code has sections that are
applied to preferences for Alaskan business.
(Tape Change, HFC 96-138, Side 2).
Representative Kohring agreed with the legislation's intent
to save costs, although, pointed out the excessive fiscal
notes attached. Mr. Petty commented that some of the fiscal
notes reflect savings. The central purchasing fiscal notes
require action which will take additional time to show a
savings. He added, to date, the State of Alaska has widely
decentralized procurement. Regardless of the fiscal notes,
the legislation will make the State run more effectively.
Mr. Petty spoke to Amendment #1. [Copy on file]. Amendment
Hanley noted that the "a" should not be deleted. Mr. Petty
agreed. Representative Parnell MOVED the amended Amendment
Mr. Petty spoke to Amendment #2. [Copy on file]. Amendment
legislation with the Senate version. Representative Navarre
MOVED to adopt Amendment #2. There being NO OBJECTION, it
was adopted.
Co-Chair Hanley asked if bidder preferences would be
cumulative. Mr. Petty replied that some would be
cumulative. The net effect does not always accomplish the
intended net result. The Department requests to have a
uniform way of applying the preferences. Discussion
followed between Co-Chair Hanley and Mr. Petty regarding the
possible bidder preferential percentage reaching 20%.
Representative Brown MOVED to change the semicolon in
Amendment #2 to a comma so that it would be grammatically
correct. There being NO OBJECTION, it was amended.
Mr. Petty explained Amendment #3. [Copy on file]. He noted
that the amendment would reduce the rent threshold
requirement for lease concessions from 15% to 10%.
Representative Kohring suggested that drop was too steep.
Mr. Petty replied, under authority granted, leases have been
extended for 5 years in return for a 10% rent concession. A
number of lessors were below market, and he thought that a
15% rent concession would be fair.
Representative Kohring questioned the percentage of profit
on a lease payment received by the lessee through the State
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of Alaska. Mr. Petty explained that the State considers the
indirect costs to be about 35% of the lease; beyond that
would be operating and maintenance costs. The 35% number is
the one used by the State to determine the profit margin.
Representative Brown asked if there would be rent
adjustments in the 10 year extensions. Mr. Petty pointed
out that the base rent in the extensions would be reduced by
10%, and that the Consumer Price Index (CPI) always would
affect the base rent.
Representative Brown MOVED to adopt Amendment #3. There
being NO OBJECTION, it was adopted.
Mr. Petty explained Amendment #4. [Copy on file]. He
stated that the added language would conform to that
established in the Senate State Affairs Committee. The
intent would be to use the Government Service Information
(GSI) schedules when purchasing from State vendors.
Co-Chair Hanley recommended amending the amendment by adding
"made" and then insert "from persons located in the state".
Representative Mulder MOVED to adopt the amended amendment.
There being NO OBJECTION, it was adopted as amended.
Representative Martin MOVED to adopt Amendment #5, 9-
GH2020\F.3, Bannister, 4/24/96. [Copy on file]. He pointed
out that the amendment would provide a title change while
addressing lobbying concerns. Co-Chair Hanley noted that
the amendment would prohibit the agencies listed from hiring
a contract lobbyist.
Representative Navarre commented that the language on Page
2, Line 5, would prohibit having employees lobby.
Representative Brown disagreed, indicating that it is
necessary for the agencies listed to have some contact with
the Legislature regarding their interests. Following
discussion among Committee members, Representative Brown
MOVED to delete Page 2, Line 5. There being NO OBJECTION,
the amendment was amended.
Mr. Petty advised that the proposed amendment did not
address procurement issues. He stated that the Division
would not support the amendment from a procurement
perspective, suggesting that these were operational
decisions which should be made by each individual agency.
Representative Navarre OBJECTED to Amendment #5 in order
that Legal Services could provide an opinion on the single
subject rule prohibition. He noted that he supported the
intent. Co-Chair Hanley advised that he would request a
legal opinion and if there was a problem, that portion would
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be removed from the bill. Representative Navarre agreed and
WITHDREW the OBJECTION to the amendment.
Representative Brown asked why only Alaska Industrial
Development and Export Authority (AIDEA) had been referenced
in the title. Representative Martin responded that the
intent was to place AIDEA under the procurement code. Co-
Chair Hanley understood the intent was to include AIDEA
under the prohibition on hiring.
(Tape Change, HFC 96-139, Side 1).
Co-Chair Hanley pointed out that Senator Pearce had
submitted the amendment. He noted that he agreed with the
intent, although, questioned the referenced section.
Representative Mulder MOVED to amend Amendment #5, Page 1,
Line 2, striking "," and then deleting material: "Including
entities owned and operated by the Alaska Industrial
Development and Export Authority,"; and deleting Lines 16
through 18 beginning with the "," on Line 16. There being
NO OBJECTION, it was amended.
Representative Navarre recommended that Legal Services
provide an opinion on the amended amendment. There being NO
OBJECTION, Amendment #5 was adopted.
Representative Parnell spoke to Amendment #6. [Copy on
file]. Mr. Petty noted that Amendment #6 would add language
to allow for accredited youth education programs to be
exempted from the procurement statute. Representative
Parnell MOVED to adopt Amendment #6. There being NO
OBJECTION, it was adopted.
Co-Chair Foster MOVED to report CS HB 482 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 482 (FIN) was reported out of Committee with "no
recommendations" and with zero fiscal notes by the (2)
Department of Administration dated 2/9/96, the Department of
Commerce and Economic Development dated 2/9/96, the
Department of Community and Regional Affairs dated 2/9/96,
the Department of Health and Social Services dated 2/9/96,
the Department of Labor dated 2/9/96, the Department of Law
dated 2/9/96, the Department of Military and Veterans
Affairs dated 2/9/96, the Department of Corrections dated
2/9/96, the Department of Education dated 2/9/96, the
Department of Environmental Conservation dated 2/9/96, the
Department of Fish and Game dated 2/9/96, the Department of
Natural Resources dated 2/9/96, the Department of Public
Safety dated 2/9/96, the Department of Revenue dated 2/9/96,
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Statewide dated 2/9/96 and a fiscal impact note by the
Department of Transportation and Public Facilities dated
2/9/96, and the Department of Administration.
SENATE BILL 197
"An Act prohibiting increases in health insurance
premiums if the insured is a victim of domestic
violence."
AMBER ALA, STAFF, SENATOR DAVE DONLEY, testified in support
of SB 197. She noted that the bill would protect victims of
domestic violence from insurance company discrimination such
as refusing to provide coverage, concealing a policy, or
increasing premiums on the basis of domestic violence. SB
197 would require the insurer to disclose the reason
insurance coverage was denied or cancelled.
Ms. Ala reported that SB 197 was drafted with the advise and
support of the Division of Insurance. She continued, the
statutory provisions contained in SB 197 were necessary to
protect victims of domestic violence. Eight states have
passed legislation similar to SB 197. Alaska's pro-active
measures follow the nation-wide trend by adopting
legislation that protects innocent victims of domestic
violence from insurance discrimination.
Ms. Ala continued, currently, there is no protection in
Alaska for victims of domestic violence against insurance
premium increases, cancellation, or denial. SB 197 would
protect innocent victims of domestic violence from being
unfairly discriminated against by insurance companies.
Insurers discriminating against domestic violence victims
has been a serious problem in the "lower 48"; SB 197 would
prevent similar occurrences in Alaska.
In response to Representative Martin, Ms. Ala stated that an
insurance company could identify a person as a victim of
domestic violence through medical records which specifically
indicate that person was abused. Records can be released
through court orders which an insurance company has access
to. Representative Martin pointed out that most medical
records are confidential. Ms. Ala advised that insurance
companies do check out medical records. Representative
Brown pointed out that medical records are maintained by
large credit reporting firms; they have risk factors
checked. People who apply for medical insurance often have
to reveal or give permission to get their medical records as
a condition of obtaining insurance.
JOHN GEORGE, AMERICAN COUNCIL OF LIFE INSURANCE, NATIONAL
ASSOCIATION OF INDEPENDENT INSURERS, JUNEAU, stated that
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insurance companies support passage of a bill which protects
victims of domestic violence from discrimination by
insurance companies. He elaborated, there are no known
cases of discrimination in the State of Alaska, adding that
the legislation is trying to "fix" something which is not
"broken".
Mr. George stated that insurance companies support the
current version of the bill, although would request that
property and casualty insurance be removed. Representative
Brown asked if it was possible that someone was denied
insurance because a portion of that decision took into
account the domestic violence risk factor. She suggested
that the bill had become "inoperative" by changes made in
the House Labor and Commerce Committee, which deleted
"only". Mr. George interjected that change had been
proposed by Senator Donley.
SENATOR DAVE DONLEY replied that language had been
recommended by the Division of Insurance in order to
guarantee that the legislation would not unfairly impact
them. Mr. George clarified that a person is underwritten
depending on their condition, not how their condition
originated.
Representative Brown asked if everyone living in a violent
household had the same rate. Mr. George stated that the
bill as currently written would not allow that
consideration. A person is underwritten depending on their
condition, from information provided from their medical
records.
Representative Parnell asked the problem with including
property casualties. Mr. George responded, allegations are
based on the frequency of claims. He reiterated that the
insurance industry would like to support the bill. He
recommended removing "property casualty"; to date there have
no cases in Alaska.
Representative Martin voiced concern with the insurance
companies becoming the "goat" of domestic violence
situations. Mr. George reiterated that it would be
difficult for an individual to receive information from an
insurance company. Insurance companies do not ask if the
party has been a victim of abuse, although, there could be
an inadvertent disclosure. He reiterated that the actual
condition could not be used against a client.
Representative Martin maintained that the legislation would
place the insurance company in a vulnerable position.
Senator Donley stressed that the legislation only specifies
that if there is discrimination against someone because they
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are a victim of domestic violence, that act is against the
law. It would be essential that a reason other than
domestic violence be shown indicating why the insurance had
been cancelled or raised. Mr. George reiterated that the
bill as proposed is supported by insurance companies.
Discussion followed between Representative Martin and
Senator Donley regarding potential suits to insurance
companies. Senator Donley reminded Representative Martin
that the bill allows to rate for actual injuries and not the
circumstances leading to the injury. The bill had been
drafted to address inappropriate underwriting in the
insurance industry.
(Tape Change, HFC 96-139, Side 2).
Senator Donley responded to Representative Therriault,
noting that it was inappropriate to use domestic violence as
a classification of people. Insurance companies should be
allowed factual reasons for their rating determinations.
Representative Brown asked how the language in Subsection
(b) would be applied. She understood that language would
allow discrimination against the abused party based on
medical conditions. There could be assigned a risk factor.
Senator Donley agreed that it would if those people were
treated differently than anyone else. He stressed that
domestic violence is not an appropriate reason to be
discriminated against.
Representative Parnell suggested that Subsection (b) would
modify Subsection (a), stating that the provision of (a) may
not prevent an insurer from underwriting a rating for
medical conditions. It would not be the domestic violence
relationship that would be underwritten but rather the
medical condition.
TERI FRONSEN, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
WOMEN'S LAW PROJECT, PHILADELPHIA, PENNSYLVANIA, testified
as a consumer representative for the legal and economic
status of women. She pointed out that she had represented a
woman in Pennsylvania who was denied insurance from two
different insurance companies because of a "so-called"
history of domestic violence. She was denied life
insurance, health insurance and mortgage disability
insurance.
In a 1994 survey, the Commonwealth Fund reported four
million battered women. Calls to sixteen major insurance
companies in the United States revealed that eight
considered domestic violence an underwriting standard in
both issuance and reading of policies. Some of those
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insurance companies have modified their policy following
Congressman Shumer's efforts, although, they still consider
domestic violence a factor to be considered. Companies are
behaving on misperceptions about what domestic violence is.
Ms. Fronsen pointed out that women are confined to these
circumstances for all sorts of reasons, including economics,
housing, children, and fear of retaliation. Violence does
not leave when you leave the household. Domestic violence
advocates have worked hard to educate people to the fact
that domestic violence is a crime. Law enforcement
personnel have treated it as a private matter. She stressed
that it is a crime; and, under the law, it should be treated
that way. With respect to insurance companies, they also
need to know that it is a crime. It is not a medical
condition. She reiterated that it is a crime and should not
be used as a basis for denying or treating victims
differently.
Ms. Fronsen urged the Committee to move forward with the
proposed model legislation and support the bill. [Testimony
on file].
In response to Representative Martin's comment, Ms. Fronsen
noted her concern regarding confidentiality, and that
information not be disseminated by the insurance company in
a way to cause harm to a victim. In some situations,
information has been provided to the batterer. Insurers
also provide information to data bases that collect risk
information.
Ms. Fronsen noted that it was not in the clients best
interest to not record the violence. She pointed out that
the abused person may need to seek legal help. The purpose
of the legislation is to clarify that insurance companies
can not use information on domestic violence to take adverse
insurance action.
Discussion followed between Representative Therriault and
Ms. Fronsen regarding the application of when violence
occurs within the home. The law stipulates when there is
abuse.
LAUREE HUGONIN, EXECUTIVE DIRECTOR, ALASKA NETWORK ON
DOMESTIC VIOLENCE AND SEXUAL ASSAULT, JUNEAU, explained that
advocates working to end violence against women, encourage
battered women to document their injuries by seeking medical
care and by requesting that violent incidents be noted in
their medical records.
Identification of abused women through routine screening and
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accurate diagnosis can break the cycle of violence. Early
intervention can prevent or ameliorate many of the long-term
health and social consequences associated with
victimization.
Ms. Hugonin continued, national health initiatives require
medical institutions to develop domestic violence protocols,
plans for training and improving their facilities response
to domestic violence. Surveys indicate that insurance
discrimination against victims of domestic violence is
widespread. An informal survey by the staff of the
Subcommittee on Crime and Criminal Justice of the U.S. House
Judiciary Committee in 1994, found that eight out of sixteen
of the largest insurers in the country were using domestic
violence as a factor when deciding whether to issue a policy
and how much to charge for that policy.
She concluded, it seems that the industry as a whole is not
interested or willing to look at medical conditions without
regard to cause. The reality is that every woman is at risk
of becoming a victim of domestic violence. Just as their is
no excuse for domestic violence, there is no excuse, legal
or otherwise, for the insurance industry to justify and
continue the discriminatory practice.
MARCIA MCKENZIE, PROGRAM COORDINATOR, COUNCIL ON DOMESTIC
VIOLENCE AND SEXUAL ASSAULT, JUNEAU, spoke to the concerns
that the Council on Domestic Violence and Sexual Assault has
regarding the current version of the legislation. She
advised that the confidentiality protection for domestic
violence victims had been removed. A provision should be
added for coverage and rating based on a medical condition
as long as there is no discrimination. Ms. McKenzie
stressed that violent behavior was criminal and deliberate
and that abuse received was not the result of a medical
condition.
(Tape Change, HFC 96-140, Side 1).
She added, the Council was concerned that insurance
companies would not be responsible to inform the applicant
why they had been denied coverage. Ms. McKenzie urged
Committee members to amend the bill to reinstate the
provisions of confidentiality, prohibiting the "so-called"
non-discriminatory consideration of medical conditions and
requiring the insurers to inform applicants of the reason
coverage would be denied.
CS SB 197 (L&C) was HELD in Committee for further
consideration.
ADJOURNMENT
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The meeting adjourned at 4:40 P.M.
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