Legislature(1995 - 1996)
05/05/1995 03:10 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR & COMMERCE STANDING COMMITTEE May 5, 1995 3:10 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Norman Rokeberg, Vice Chairman Representative Jerry Sanders Representative Beverly Masek Representative Kim Elton Representative Gene Kubina Representative Brian Porter MEMBER ABSENT All members present COMMITTEE CALENDAR HB 328: "An Act relating to reduced fees and group discounts for visits to the state museum and its branches; and providing for an effective date." PASSED OUT OF COMMITTEE *CSSB 53(JUD): "An Act relating to regulation of risk retention or purchasing groups; to preemption of the regulation of insurance agents and insurance producers; to the general powers of the director of the division of insurance; to insurance examination hearings; to insurer certificates of authority; to annual and quarterly statements, taxes, and prohibited acts of insurers; to reinsurance credit allowed a domestic insurer; to risk based capital for insurers; to insurer assets and liabilities; to insurer investments; to insurance holding companies; to regulation, licensing, examination, and trade practices of insurance producers, managing general agents, third-party administrators, brokers, independent adjusters, and reinsurance intermediary managers; to surplus lines insurance; to criminal insurance acts; to premium increases in automobile insurance; to insurance rating; to assigned risk pools; to filing and approval of certain insurance policy forms; to required insurance coverage for acupuncture, nurse midwives' services, mammography, and phenylketonuria; to health insurance provided by small employers; to transfer of an insurer's status as a domestic insurer; to quarterly statements of benevolent associations, fraternal benefit societies, and health maintenance organizations; to reciprocal insurers; to the definition of `member insurer' for purposes of the Alaska Life and Disability Insurance Guaranty Association; to electronic insurance data transfer and insurance funds transfer; to the definitions of `managing general agent' and `person' applicable to insurance law; to automobile assigned risk plans; placing a person employed by the division of insurance as an actuary or assistant actuary into the exempt service; amending Alaska Rule of Civil Procedure 45; and providing for an effective date." PASSED OUT OF COMMITTEE (* First public hearing) WITNESS REGISTER GEORGE DOZIER, Legislative Assistant to Representative Pete Kott Alaska state Legislature Capitol Building, Room 432 Juneau, AK 99801-1182 Telephone: (907) 465-3777 POSITION STATEMENT: Gave sponsor statement for HB 328 JOHN LITTEN Sitka Tours 211 Crabapple Sitka, AK 99835 Telephone: (907) 747-8443 POSITION STATEMENT: Testified in support of HB 328 FRANK PIVAL, Division Manager Gray Line of Alaska 3241 Hospital Drive Juneau, AK 99801 Telephone: (907) 586-9625 POSITION STATEMENT: Testified in support of HB 328 SHEILA PETERSON, Special Assistant to the Commissioner Department of Education 801 West Tenth Street, Suite 200 Juneau, AK 99801-1894 POSITION STATEMENT: Testified in support of HB 328 BRUCE KATO, Chief Curator Alaska State Museum Department of Education 395 Whittier Street Juneau, AK 99801-1746 Telephone: 465-4866 POSITION STATEMENT: Answered questions on HB 328 DAVE STEBING, Assistant Attorney General Commercial Section Civil Division Department of Law 1031 West Fourth Avenue, Suite 200 Anchorage, AK 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Testified on SB 53 SHERMAN ERNOUF, Administrative Assistant to Senator Tim Kelly Alaska State Legislature Capitol Building, Room 101 Juneau, AK 99801-1182 Telephone: (907) 465-3844 POSITION STATEMENT: Answered questions on SB 53 MARIANNE K. BURKE, Director Central Office Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 Telephone: (907) 465-2515 POSITION STATEMENT: Answered questions on SB 53 KEN SYKES, Market Analyst Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811 Telephone: (907) 465-2564 POSITION STATEMENT: Answered questions on SB 53 JOAN BROWN, Administrative Officer Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 Telephone: (907) 465-2597 POSITION STATEMENT: Answered questions on SB 53 MIKE FORD, Attorney Legislative Legal Services Legislative Affairs Agency 130 Seward Street, Suite 404 Juneau, AK 99801-2105 POSITION STATEMENT: Answered questions on SB 53 PREVIOUS ACTION BILL: HB 328 SHORT TITLE: DISCOUNT FOR STATE MUSEUM VISIT BY GROUPS SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 05/02/95 1740 (H) READ THE FIRST TIME - REFERRAL(S) 05/02/95 1740 (H) LABOR AND COMMERCE 05/03/95 (H) L&C AT 03:00 PM CAPITOL 17 05/04/95 (H) L&C AT 03:00 PM CAPITOL 17 05/05/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: SB 53 SHORT TITLE: OMNIBUS INSURANCE REFORM SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 01/25/95 83 (S) READ THE FIRST TIME - REFERRAL(S) 01/25/95 84 (S) L&C, JUD 02/28/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203 03/02/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203 03/02/95 (S) MINUTE(L&C) 03/07/95 515 (S) L&C RPT CS 1DP 4NR NEW TITLE 03/07/95 516 (S) ZERO FISCAL NOTE (DCED) 03/27/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 03/27/95 (S) MINUTE(JUD) 04/05/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 04/05/95 (S) MINUTE(JUD) 04/06/95 891 (S) JUD RPT CS 2DP 3NR NEW TITLE 04/06/95 892 (S) PREVIOUS ZERO FN (DCED) 04/10/95 (S) RLS 01:00 PM FAHRENKAMP ROOM 211 04/10/95 (S) MINUTE(RLS) 04/18/95 1058 (S) RULES TO CALENDAR 4/18/95 04/18/95 1065 (S) READ THE SECOND TIME 04/18/95 1065 (S) JUD CS ADOPTED UNAN CONSENT 04/18/95 1066 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/18/95 1066 (S) READ THE THIRD TIME CSSB 53(JUD) 04/18/95 1067 (S) PASSED Y16 N3 E1 04/18/95 1067 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 04/18/95 1068 (S) COURT RULE(S) FAILED Y12 N7 E1 04/18/95 1068 (S) TAYLOR NOTICE OF RECONSIDERATION 04/19/95 1088 (S) HELD ON RECONSIDERATION TO 4/20 04/20/95 1122 (S) RECON TAKEN UP - IN THIRD READING 04/20/95 1123 (S) PASSED ON RECONSIDERATION Y17 N3 04/20/95 1123 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 04/20/95 1123 (S) COURT RULE(S) SAME AS PASSAGE 04/20/95 1126 (S) TRANSMITTED TO (H) 04/21/95 1417 (H) READ THE FIRST TIME - REFERRAL(S) 04/21/95 1417 (H) LABOR & COMMERCE, JUDICIARY 04/28/95 (H) JUD AT 01:00 PM CAPITOL 120 04/28/95 (H) L&C AT 03:00 PM CAPITOL 17 05/01/95 (H) L&C AT 03:00 PM CAPITOL 17 05/01/95 (H) MINUTE(L&C) 05/03/95 (H) L&C AT 03:00 PM CAPITOL 17 05/04/95 (H) L&C AT 03:00 PM CAPITOL 17 05/05/95 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 95-56, SIDE A Number 000 The House Labor and Commerce Committee was called to order by Chairman Pete Kott at 3:10 p.m. Members present at the call to order were Representatives Kott, Masek, Sanders, Elton and Rokeberg. Members absent were Representative Porter and Kubina. CHAIRMAN PETE KOTT stated that a quorum was present. He announced the committee would hear HB 328 followed by CSSB 53(JUD). HB 328 - DISCOUNT FOR STATE MUSEUM VISIT BY GROUPS Number 017 The first order of business was HB 328, "An Act relating to reduced fees and group discounts for visits to the state museum and its branches; and providing for an effective date." CHAIRMAN KOTT noted the bill was sponsored by the committee. GEORGE DOZIER, LEGISLATIVE ASSISTANT TO REPRESENTATIVE PETE KOTT, ALASKA STATE LEGISLATURE, testified that HB 328 was a very simple bill. It grants specific statutory ability to the Alaska State Museum for the negotiation of group discounts and group rates for visits to the museum. MR. DOZIER said until recently this had been a practice of the museum. However, the Department of Law has taken a position indicating this is not a permissible practice. This bill would restore the situation to the status quo. Number 037 REPRESENTATIVE JERRY SANDERS inquired if there was reference to the size of the group. Number 041 MR. DOZIER responded the bill didn't mention size. It simply grants authority to the museum to negotiate and grant group rates. He said he imagines it would be from two individuals on up. REPRESENTATIVE SANDERS asked if this would give the opportunity for someone in a small group to complain. Number 056 MR. DOZIER said he didn't think this would provide legal grounds for complaints. The negotiation remains within the discretion of the museum, and doesn't require the museum to grant group rates. Number 062 CHAIRMAN KOTT added there could be some discretion applied by the museum. He said if you had two or three people, they probably wouldn't receive a group rate. Number 078 JOHN LITTEN, SITKA TOURS, testified from Sitka, via teleconference, in support of HB 328. He noted his company is a bus company. Mr. Litten said museums, unique as they might be, need the ability to remain affordable as well as competitive with other attractions. When his company packages their tours in Sitka, they pay admission into places such as the Rapture Center, Bald Eagle Center, Russian Dancers, the Russian Cathedral and the Sheldon Jackson State Museum. The wholesalers that buy the tours from him want to pick and choose those attractions by their cost and affordability. Therefore, it becomes very important that the state museums have the ability to negotiate prices for volume operators to remain competitive. In the past, you had to have a volume approximately 10,000 people before you really had a break on the cost of going through the door. Number 119 CHAIRMAN KOTT said this answered a question which asked earlier. He said they are negotiating a discount, based on volume, through the season. Number 126 REPRESENTATIVE SANDERS inquired if all of the tours currently go through the museum as a matter of course. Number 131 MR. LITTEN replied that certain cruise lines have the state museums on their tours, primarily Holland America in Juneau which uses the state museum exclusively. In the past often when state starts looking at fees for admission into the museums, they are operating on their calendar year. The tour companies are in the position where they must forecast and set their tariff as much as a year to eighteen months ahead of time. They've had problems with the lack of flexibility on the state's behalf as they'll implement or increase fees right before the season starts. The tour companies don't have the chance to incorporate that in which forces the operators to bypass the attraction for the entire year. HB 328 would benefit organizations so they would have the ability to negotiate and wouldn't be facing that situation. Number 153 CHAIRMAN KOTT asked if the fees were negotiated on an annual basis or if they were they based on a head count. Number 157 MR. LITTEN stated the fees were negotiated annually as well as on a head count basis. For example, if they bring in 10,000 people the price might go down from $2.00 to $1.80. Number 168 FRANK PIVAL, DIVISION MANAGER, GRAY LINE OF ALASKA, explained that Gray Line of Alaska is a subsidiary of Holland America Cruise Lines. Testified in support of HB 328. He explained it is a budgetary situation for their company. They pay fees to many different entities. He gave an example of a situation that has occurred when the fees were changed. He said last year they were paying $1.60 to the museum and the price then jumped to $3.00. His company told him they would have to drop something from the tour because the budget was already set in concrete. In 1986, they dropped the museum from their tours when the price changed from $1.00 to $2.00. Number 189 CHAIRMAN KOTT asked what he thought the most substantial effect would be if HB 328 were not adopted. Number 192 MR. PIVAL responded they probably wouldn't include the museum this year. This would hurt their tour because the museum is an integral part of the city tour and the passengers would feel they were missing something. He added that for the tours that don't include the museum, they refer passengers to it. Number 204 SHEILA PETERSON, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF EDUCATION (DOE), testified in support of HB 328. As Mr. Dozier indicated this problem arose when the department changed their regulations and increased the fees to $3.00. She said they did not have the flexibility to negotiate group rates. In the past they would negotiate group rates with the minimum amount of people being 1,500 per season. This then increased to 15,000 people per season. She said the way their regulations are written, children under 19 are admitted free. Anyone over 19 is $3.00. They would like the ability to negotiate group rates as was done in the past. Number 222 CHAIRMAN KOTT asked if those prices were the same for both the Sheldon Jackson State Museum and the Alaska State Museum. MS. PETERSON answered yes. There being no further witnesses, CHAIRMAN KOTT closed public testimony on HB 328. Number 233 REPRESENTATIVE BEVERLY MASEK noted there was a zero fiscal note. She referred to line 5 of the bill which states, "The department may establish by regulation..." and asked if this would put an added cost to the state. Number 241 CHAIRMAN KOTT stated the operative word is "may." They are taking the conservative approach, thus the reason for the zero fiscal note. Number 244 MS. PETERSON replied the department had promulgated new regulations which became effective in April of this year. They don't anticipate writing more regulations to negotiate group contracts if HB 328 is passed. Number 251 REPRESENTATIVE MASEK asked if the state museum was for profit or non-profit. Number 257 MS. PETERSON explained these are state museums funded through the state. They do have program receipt authorization. They received approximately $140,000 last year in museum fees. Ms. Peterson noted the legislature has given the department the program receipt authorization to receive those funds. Number 265 REPRESENTATIVE MASEK said if the price is going to be reduced for group rates, would that affect the overall amount of money the state would contribute. She asked what the fees are used for. Number 272 MS. PETERSON stated that the DOE feels if they do not have the authority to negotiate with groups, these groups may not come in large groups to the museum. The DOE will possibly lose revenue. She noted that Bruce Kato, Director of Museums, could answer what the actual fees were used for. Number 278 BRUCE KATO, CHIEF CURATOR, ALASKA STATE MUSEUM, DEPARTMENT OF EDUCATION, stated the funds were used for contractual services, as well as for supplies. Through the years the museum has lost funds from those two accounts. In 1986, when they began to charge admission, those funds were used to compensate some of the losses in their program. The legislature has the authority of $158,600 that it allows the museum to use. REPRESENTATIVE GENE KUBINA joined the meeting at 3:25 p.m. Number 287 REPRESENTATIVE MASEK surmised this would effect all museums statewide. MR. KATO clarified that there are only two state museums within DOE, the Alaska State Museum located in Juneau and the Sheldon Jackson Museum located in Sitka. Number 294 REPRESENTATIVE NORMAN ROKEBERG inquired if the museum in Fairbanks was run by the university. MR. KATO replied this was correct. Number 297 CHAIRMAN KOTT encouraged anyone who had not been through the state museum in Juneau to do so. REPRESENTATIVE ELTON made a motion to move HB 328 out of the House Labor and Commerce Committee with individual recommendations and with the attached zero fiscal note. Number 306 CHAIRMAN KOTT asked if there were objections. Hearing none, HB 328 passed out of the House Labor and Commerce Committee. SB 53 - OMNIBUS INSURANCE REFORM Number 306 The last order of business was CSSB 53(JUD), "An Act relating to regulation of risk retention or purchasing groups; to preemption of the regulation of insurance agents and insurance producers; to the general powers of the director of the division of insurance; to insurance examination hearings; to insurer certificates of authority; to annual and quarterly statements, taxes, and prohibited acts of insurers; to reinsurance credit allowed a domestic insurer; to risk based capital for insurers; to insurer assets and liabilities; to insurer investments; to insurance holding companies; to regulation, licensing, examination, and trade practices of insurance producers, managing general agents, third-party administrators, brokers, independent adjusters, and reinsurance intermediary managers; to surplus lines insurance; to criminal insurance acts; to premium increases in automobile insurance; to insurance rating; to assigned risk pools; to filing and approval of certain insurance policy forms; to required insurance coverage for acupuncture, nurse midwives' services, mammography, and phenylketonuria; to health insurance provided by small employers; to transfer of an insurer's status as a domestic insurer; to quarterly statements of benevolent associations, fraternal benefit societies, and health maintenance organizations; to reciprocal insurers; to the definition of 'member insurer' for purposes of the Alaska Life and Disability Insurance Guaranty Association; to electronic insurance data transfer and insurance funds transfer; to the definitions of 'managing general agent' and 'person' applicable to insurance law; to automobile assigned risk plans; placing a person employed by the division of insurance as an actuary or assistant actuary into the exempt service; amending Alaska Rule of Civil Procedure 45; and providing for an effective date." CHAIRMAN KOTT stated they first would hear testimony from the teleconference line in Anchorage. Number 325 DAVE STEBING, ASSISTANT ATTORNEY GENERAL, COMMERCIAL SECTION, CIVIL DIVISION, DEPARTMENT OF LAW, was first to testify on the measure. He informed the committee his client is the Division of Insurance (DOI). He said he was prepared to talk on anything relating to the independent counsel provision. He gave the following background on the provision: It's a provision which was added into the division's omnibus at a late date without the division's knowledge. This independent counsel provision, which is found in the omnibus, near the end of the bill, would add a new section to the insurance code at 21.89.100. The proposed legislation implements an Alaska Supreme Court decision from 1993, which is called CHI of Alaska v. Employers Reinsurance. The citation for that case is A44P22.11.13. That case, in brief, stems from the proposition that an insurer or a purchaser of insurance has a unilateral right to select independent counsel to represent them, and they can do that at the insurance companies expense. That is kind of a controversial decision. The Alaska Supreme Court has followed the California Supreme Court in a case called the Cumis decision. The Cumis decision was issued in 1984, and its right to independent counsel has been referred to in various states thereafter as the Cumis Council. MR. STEBING continued that Alaska now has the Cumis Counsel and this the proposed legislation added on to the omnibus bill seeks to implement the CHI decision. The CHI decision is not identified anywhere in the legislation but is clearly what is sought to be implemented. The proposed language in this provision is essentially the same as California's. California's law was controversial and was intended to resolve problems which arose when the Cumis Counsel remedy came into existence. He explained some of the problems which the Wall Street noted in an article was that attorneys were abusing this right by creating conflicts of interest and there were even some multi million dollar fraud situations. MR. STEBING stated this was a controversial provision. He is not convinced this is a pro-consumer provision. The DOI is charged with protecting Alaskan insurance consumers. Some might think they're charged with protecting insurance companies and that is not true. However, DOI is supposed to provide a level playing field and facilitate a healthy insurance industry. However, the Alaska Supreme Court in the Northern Adjusters decision of 627 P 2nd.205 of 1981, said the purpose of Title 21 was to protect Alaskan insurance consumers. With that in mind, he believes that this provision presents some problems in trying to implement the CHI decision and its focuses on when a conflict of interest arises between an attorney and the insured. MR. STEBING said it was his opinion the reference in subsection (b) to narrowly defines conflict of interest. This is an advantage to insurance companies in that they are excluding from conflict of interest, a claim for punitive damages and a claim of damages in excess of policy limits. Those are two classic instances of a conflict of interest. He said over the past few years they have spent hundreds of hours collectively working on this, and at the last minute this provision is added on that presents some controversy. MR. STEBING felt there would be a problem with the DOI having to determine when a conflict of interest arises. This would be a matter subject to conflict and could be litigated. The Alaska Division of Insurance is charged with enforcing all of Title 21, which includes all provisions within the title. He said there may be some problems with enforcement. In closing, he noted that the California is in the California Civil Code of Procedure. He said this law would be better placed in the Code of Civil Procedure rather than in the insurance code. Number 417 REPRESENTATIVE ROKEBERG asked where the provision was located in the Senate committee substitute (CS). Number 420 MR. STEBING said he wasn't sure if it was in the current version of the bill. Number 427 CHAIRMAN KOTT said it is not in the current version of the bill. MR. STEBING said it was his understanding this was an amendment. Number 430 REPRESENTATIVE ROKEBERG asked Chairman Kott if there was an amendment. CHAIRMAN KOTT responded there would be. REPRESENTATIVE ROKEBERG asked if that would be to insert the Cumis rule. MR. STEBING responded, "To insert the independent counsel provision." REPRESENTATIVE ROKEBERG said, "Which is consistent with the Alaska Supreme Court, is that correct?" MR. STEBING said it seeks to implement the CHI decision. REPRESENTATIVE ROKEBERG questioned whether or not Mr. Stebing agreed with that. Number 434 MR. STEBING responded that he believes it has some problems. It may define conflict of interest more narrowly than the Supreme Court intended. REPRESENTATIVE ROKEBERG inquired who the parties of interest were. Number 441 MR. STEBING responded he hadn't had any feed back from anyone. He reiterated that the provision was added onto the same bill last year without the knowledge of the division. REPRESENTATIVE ROKEBERG commented they had been discussing amendments instead of the bill. CHAIRMAN KOTT stated they had been discussing a proposal. Number 453 REPRESENTATIVE SANDERS questioned why the provision was taken out of the bill. MR. STEBING said he wasn't sure. He was told that someone outside of the Division of Insurance had it added last year which was unknown to the division. When the bill was reintroduced this year, it was removed. He said this amendment would require a title change and could slow the process for the omnibus bill. Number 475 CHAIRMAN KOTT noted this was a Senate Labor and Commerce Committee bill. He and asked Sherman Ernouf if he would like to comment on this. SHERMAN ERNOUF, ADMINISTRATIVE ASSISTANT TO SENATOR TIME KELLY, ALASKA STATE LEGISLATURE, testified that the Senate Labor and Commerce Committee had introduced SB 53 at the request of the Division of Insurance. It's important to the DOI that this passes the legislature this legislative session for accreditation purposes. He said they removed the independent counsel provisions in the Senate Labor and Commerce CS. He said he would try to answer any questions the committee had. Number 485 REPRESENTATIVE SANDERS inquired on the background as to why they removed it. Number 490 MR. ERNOUF responded they had removed it because of the very questions that were being raised now. They wanted to make sure SB 53 passes this session. REPRESENTATIVE ROKEBERG asked why it was put in. MR. ERNOUF responded no. REPRESENTATIVE ROKEBERG asked who added it. Number 494 MR. ERNOUF replied at the time the bill was drafted they got proposed language from the DOI. When the committee took testimony, it became a controversial issue so the bill was amended to take out that provision. Number 500 CHAIRMAN KOTT thanked Mr. Ernouf for his testimony and asked the director of the DOI, Marianne Burke to join them. CHAIRMAN KOTT referred to the Senate version, CSSB 53(JUD) and asked why on page 4, line 9, the wording, "The director may close an examination hearing to the public when the director finds the closure is necessary to protect a person against unwarranted injury or is in the public interest," was inserted. He asked what type of situation would warrant conclusion that closing examination hearings are in the public's interest. MARIANNE K. BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, responded if information of a proprietary nature were being discussed in a hearing that would give the insurance companies competitors an advantage, then the meeting would be closed. Number 515 CHAIRMAN KOTT referred to page 7, line 6, and asked what the purpose was of filing with the National Association of Insurance Commissioners (NAIC). MS. BURKE responded the purpose of going towards a central filing was for the added efficiency of filing throughout the United States. The insurers must still file with the department. She said they hope to get to the point where it will all be electronically submitted so not only Alaska would be able to access data base, but other states would as well. Currently, they receive "tons" of paper. CHAIRMAN KOTT asked what would justify a waiver. Number 532 MS. BURKE replied it would have to be a most unusual circumstance. At this time she couldn't think of a situation. Perhaps being technically impossible or impractical for them to meet their filing deadlines. CHAIRMAN KOTT asked if there were procedures in place to electronically file the annual reports, and if there wasn't wouldn't there be some fiscal application? MS. BURKE explained the NAIC is working on the data base themselves, and would be filing it. With the membership in the NAIC, the division would have the ability to access it. CHAIRMAN KOTT asked how a foreign company comply with the filing. Number 535 MS. BURKE said a foreign company is really a company domiciled in another state. NAIC is nationwide so every company would have the ability to comply. CHAIRMAN KOTT asked how an alien company would file. MS. BURKE said there are efforts underway to have a consistent and uniform way of providing information. The filing requirement for alien companies, those outside the U.S., the filing requirement are not precisely the same as inside the U.S. REPRESENTATIVE PORTER joined the committee at 3:45 p.m. Number 547 REPRESENTATIVE ELTON said his understanding is that the NAIC is a professional organization. He said he would like the rationale explained to him about mandating, in state law, that a private business report to a professional organization and further saying that if you don't do that, the state imposes a fine of $100. Number 558 MS. BURKE said this is a group of insurance commissioners who have joined together and have been in existence since the 1870s. She explained that if a company only does business in the state of Alaska the director could exempt them from this. However, if an insurer is doing business nationwide, it would be to their advantage to also cut down on the number of filings. They could do this electronically. Ms. Burke said to her knowledge, there has been encouragement on the part of the insurers for the electronic filing. Currently, there are penalties for late filing or non filing of the paper form. Number 576 REPRESENTATIVE ELTON asked the chair's intention and commented that he didn't want to take up a lot of time today if they were going to move the bill. However, he would like an answer as to why they were mandating filing with a professional organization, and if they don't, why would the state would collect $100 per day. He said if they weren't planning on moving it today, the staff could get back to him. Number 581 CHAIRMAN KOTT responded it was his intent to move the bill today. Number 584 KEN SYKES, MARKET ANALYST, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified the NAIC is a clearing house whose main purpose is to carry out the McCarran- Ferguson Act. The reason the division asks companies doing business on a national basis to file with NAIC is to cut down on paperwork for departments who regulate the domestics that have to send this information out if required. He said this is public information within the division's purview. Once they receive a certain companies financial statements, anyone would be entitled to a copy of that financial statement. Instead of the department handling 100,000 requests from different individuals, the NAIC is equipped to handle this electronically. MR. SYKES referred to the question regarding foreign companies and told the committee that the foreign companies look to file with the NAIC because there is a type of insurance called surplus lines. This means in some states you'd go into that state and say, "I would like to do business in your state." In other states you could go in and say, "I want to do business in your state but I don't want to go through your registration process." From there, that state can go to the NAIC or back to the domiciliary state and obtain the electronic information. He said this is a check and balance between the both the NAIC and the stated domicile. MR. SYKES continued that the NAIC also collects electronic data filings from those alien companies outside the United States under the acronym NAIIO. The NAIIO handles companies such a Lloyd's of London, Madagascar Indemnity, etc. Number 607 REPRESENTATIVE PORTER asked if this was an unusual requirement based on what other states require. MR. SYKES answered no. Number 609 CHAIRMAN KOTT referred to page 8, lines 1 and 2, and said talks of a monetary refund. He asked why not carry that over into the second and subsequent years as far as a tax refund. MS. BURKE said there is that option. The insurer may prefer to have the tax refund paid to them or they could carry it over, it gives latitude. CHAIRMAN KOTT acknowledged having the latitude but asked if it would be cleaner if the money was left for the subsequent year rather than having to go through the paperwork. MS. BURKE said there is the paperwork, tracking credits and keeping those monitored through the next year. She said there are costs associated either way. CHAIRMAN KOTT inquired if it was common to have a tax premium credit at the end of the year. MS. BURKE responded that it wasn't. Number 626 CHAIRMAN KOTT referred to page 28, line 5, Section 27 and asked why the language was changed from "domestic insurer may acquire," versus how it was previously "may not acquire." TAPE 95-56, SIDE B Number 000 REPRESENTATIVE KUBINA said, "You're going from `not' though to `may,' instead of `may not' it's `may acquire.'" REPRESENTATIVE PORTER said, "In number one, you're going from `it's got to exceed,' to `cannot exceed.' It's double shift." MS. BURKE said, "We're adding does not exceed" in the next.... REPRESENTATIVE KUBINA commented that it is a double negative. Number 011 CHAIRMAN KOTT referred to page 30, lines 18 and 19, "An insurer subject to registration under (a) of this section shall register annually by April 1 of each year" and asked why the date of April 1 was chosen. He asked if this was accommodating the insurers. MS. BURKE responded the insurers have a December 31, year end, to give them sufficient time and it also to gives the division enough time. Number 025 CHAIRMAN KOTT referred to page 31, lines 13 and 14, "(1) additional educational or experience requirements may not apply to a licensee who has been licensed by the division of insurance before January 1, 1980;" and inquired as to why 1980 was selected as the cutoff date. MS. BURKE replied that the language was agreed to by the Association of Independent Agents and Insurance Brokers. Number 039 MR. SYKES added that at the agents and brokers convention, this language came from their educational committee. They felt this to be an appropriate cutoff date and proposed it to the division. Since they will be responsible for certifying courses and helping to carry on this chapter, the division honored the request. Number 046 CHAIRMAN KOTT said further down the page on line 29, it states, "The director shall establish a continuing education advisory committee." He asked whether there would be some kind of a fiscal application. MS. BURKE said the educational advisory committee is not envisioned as being part of the division. This would be part of the professional groups themselves and they bear their own costs. CHAIRMAN KOTT referred to line 31 and asked what a limited lines insurance representative was. Number 064 MR. SYKES answered that AS 21.27.150 is the current statute, and explained a limited lines insurance license are for the those insurance lines which typically do not have a high exposure. For instance that would be a travel agency which sells a limited type of insurance called travel insurance. It only covers a specific item like domestic tickets or your trip insurance. Another line is credit life and credit disability insurance which can only be sold if it is tied to a credit transaction. It cannot be sold in conjunction with any other product. Title insurance is another. Number 085 REPRESENTATIVE ELTON asked who enforces this. MS. BURKE replied the industry wants this and would be part of the licensing process. Prior to renewal, the division would access the data to show they had met the requirements for their continuing education. It is tied to a licensing process which is the same as is done with just about every profession in the state with the exception of attorneys. Number 106 CHAIRMAN KOTT referred to page 32, subsection (h) and said it states, "The director may make arrangements, including contracting with an outside agency, for administrative services," and asked if this would have a fiscal application. MS. BURKE said she would defer the question to her staff who handles fiscal notes. Number 116 JOAN BROWN, ADMINISTRATIVE OFFICER, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified the way the continuing education provisions are envisioned is that there would be a course fee. The division would establish regulations for a course approval fee and probably there probably would be an associated filing fee for the completion of the course. The NAIC is developing a continuing education clearing house, where (indisc.--coughing). There are also national contractors where providers register with them. The agents or producers file their paperwork with them. They in turn file with the division. Continuing education has the potential of becoming paper intensive. They want to get rid of the paper. She said any fees would be born by the producers. Number 139 CHAIRMAN KOTT referred to Section 56 and asked if the 10 percent was a standard within the industry. He asked it that basically something the NAIC is purporting to push. MS. BURKE responded yes. Number 146 CHAIRMAN KOTT referred to page 39, line 26, of Section 56, "(1) at least 20 days before expiration of a personal insurance policy;" and asked if that includes auto insurance. MS. BURKE replied there was a section which specifically address auto insurance. Number 153 CHAIRMAN KOTT commented that this brought him to the next section. He said he understood that there was a requirement when the insurance industry raises their rates, they must provide the consumer with the reason for the increase on their annual statement. MR. SYKES explained there is only two reasons for an insurer to raise the rates. Based on the language in this section, the insurer would has to let the insured know within 20 days whether the raise in rates was based on a change in risk or a raise in premium. Number 177 CHAIRMAN KOTT asked if the reason for change would be if you had been cited and convicted for a traffic violation. MS. BURKE stated that would be a raise in risk. CHAIRMAN KOTT asked if this was supported by the NAIC. MR. SYKES answered yes. Number 187 REPRESENTATIVE ROKEBERG inquired if the 20 day period was a national standard or something the NAIC had agreed to. MR. SYKES answered that it was a national standard. Number 197 REPRESENTATIVE ROKEBERG commented that 20 days wasn't much notice particularly if you were to have major increase. He asked if this would also apply to cancellation notices. MR. SYKES said there is notification and cancellations. However, cancellation is a different animal in relation to this section. When you cancel, you are given five or six situations under which you could cancel, and the time of notice varies based on the situation. Number 215 CHAIRMAN KOTT referred to Section 63 and asked Mr. Sykes to explain the difference between a criminal insurance act and a fraudulent insurance act. MR. SYKES would defer to AS 09.11.100 where it states the differences between the criminal act and a fraudulent act. He told the committee the division had a number of prosecutions last year and they had gotten an education on this. They said please (indisc.) definitions for which you need to do to get more convictions. Number 230 CHAIRMAN KOTT said in Section 66, they have omitted "is guilty of a felony." He asked what the current violation is the violator would be convicted of. MR. SYKES said they revised the statutes in Chapter 36, which speaks to trade practices. What that his means anyone doing the business of insurance in the state of Alaska is subject to any provision under Chapter 36. The division has updated what they consider to be criminal or fraudulent acts to coincide with the criminal statutes of AS 09.11.100. Number 255 CHAIRMAN KOTT referred to the word "phenylketonuria" in Section 75 and asked the meaning. He then commented that it was brain damage, due to an accumulation of toxic metabolic products. REPRESENTATIVE ELTON asked why Section 3, gives the director the extraordinary authority to precede the Governor on a catastrophe. Number 274 MS. BURKE pointed out the perfect examples of this is the earthquake in California or the explosion in Oklahoma. They need to be able to waive some provisions to get claim adjusters on site to begin payment and investigation of claims in meeting the needs of the victims as quickly as possible. This specifically addresses these types of issues. It does put some limits that it can't go on forever. Number 283 REPRESENTATIVE ELTON said he understood the reasoning. However, you could apply the same reasoning toward an outbreak of some horrendous disease in Western Alaska or Southeast Alaska. He asked if this was standard language that other states use. MS. BURKE replied this is language to facilitate the division's continuing accreditation. Dealing with an outbreak you might not have to have the same licensing and noticing requirements to deal with that outbreak as you would to have someone authorized to start making payments. For example, there are provisions as to how those payments must be made. REPRESENTATIVE ELTON asked if other states had this language. MS. BURKE responded yes. Number 300 REPRESENTATIVE ELTON referred to page 10, line 7, and asked why the language dealing with confidentiality was included. Number 322 MS. BURKE responded that the amount of information the division requires to be presented for them to affectively monitor the solvency of the insurer, requires that they divulge a lot of proprietary confidential information. If that information were made available to competitors, it would impose disadvantages. Number 334 REPRESENTATIVE ELTON asked why they can't say, "The director may not release for proprietary business information," rather than having the broad language saying the "upon the director's discretion." Number 341 MS. BURKE said, "An all inclusive list would -- say for some proprietary information, there are also terms and conditions of reinsurance agreements. That is it really proprietary." REPRESENTATIVE ELTON referred to page 32, Section 36, and inquired if there was a penalty for noncompliance. MS. BURKE replied there is. The violations of license and statutes can result in loss of license or imposing penalties. Number 356 REPRESENTATIVE ELTON noted that on page 34, Section 42, and said it seems odd to him. We're saying that the director may issue or renew a license with restrictions on the scope of that person's license if the director determines the person has violated provisions for this title. He can't do that unless he has the consent of the applicant of the licensee. Number 365 MR. SYKES responded, "In this provision here, we do get into a situation where a licensee may not cause a substantial -- or may not be a substantial danger or harm to the public, but we want to his activities and his exposure to the public so we may put a condition on his license that he transact certain types of insurance and that he report to us the people he is doing business with. Also, additional reporting requirements for who he is producer for." Number 380 REPRESENTATIVE ELTON said he understands that. However, the initial words in paragraph (c), you have that ability but only if you have the consent of the applicant or the licensee. MR. SYKES responded this was in lieu of one of the more stringent provisions within the licensing code. For example, revocation or suspension. Number 388 REPRESENTATIVE ELTON noted that if you have this stutter step toward a more full enforcement action, it seems you would be invalidating the stutter step if it's left to the discretion not just of the director but also of the person who is being licensed. If the licensee doesn't agree to the limitations, you would be forced to go to.... MS. BURKE said, "To revocation". REPRESENTATIVE ELTON asked if that seemed strange to Ms. Burke. REPRESENTATIVE ELTON explained that the way he understands regulation of the insurance industry is regulation is accomplished by 50 different states. There is not a national regulatory body which enforces national standards. It seems to him that the state is leaning toward a body of law which applies NAIC standards. His concern is that there is no central federal body of law regulating the industry. It seems they will be consolidating that central authority into a professional organization. That professional organization has the ability to either accredit or not accredit Alaska. The choice Alaska makes is we better go along with what they want because if we don't, we might lose our accreditation and access to information. He asked how NAIC makes their mind up. He asked if they are they inundated with lobbyists from the industry. MR. BURKE said, "You ask how these come about." She said the staff in Alaska is active in pulling together and proposing these standards. They are on many committees that they have input. They have effectively gotten things this state and this division feels are critical to do their job. A number of these are uniform from state to state. Number 434 MR. SYKES added that the division goes through the same process that the legislature does. For example, the Division of Alaska participates on a number of committees dealing with health care, property, casualty, licensing. They participate with other states, and solicit the input of the other 50 states to find a common ground, a common thread and then draft broad language that would be a minimum standard that all states could impose. Once they have the minimum standard, all states vote on it. MR. SYKES commented on the lobbying efforts from the insurance industry. The lobbyist might be looking for a provision which might be too protective of the consumer. Ms. Burke has the final vote on that language. He said the division sits on committees, just like the legislature, they send things to subcommittees. Their process in adopting uniform laws, which are just minimum standards, that the NAIC looks at a state enacting just the minimum language and then allows for amendments to fit their particular situation. Number 456 REPRESENTATIVE ELTON said as he went through the bill several things had struck him. They were adopting standards which are NAIC standards, extending the scope to reinsurance groups and purchasing groups, mandating filings with the NAIC, and determining how risk retention groups are reformed. This is all because of NAIC. Number 470 REPRESENTATIVE ROKEBERG asked Mr. Sykes to give the committee an update on the movement to bring the regulation of the national insurance business under federal statute because of the privacy of the state on New York and the insurance commissioner of the state of New York and their influence on the national trade groups. Number 476 MR. SYKES responded that there was a movement under Dingle. Dingle wanted to looked at bringing the regulation of insurance under federal statute with, federal (indisc.), and with the repeal of the McCarran-Ferguson Act. At that time the DOI director, Mr. David Walsh, was also President of the NAIC. He led the charge of that organization to the federal government to show why the NAIC and the processes with the 50 states worked better as a regulatory framework than as a federal government. They were able to show that in the process of accreditation, if you look at all the laws in the 50 states, you have a minimum standard that is the same language throughout. That is enforced the same way throughout except for one other provision that may be unique to that area. Obviously, we don't have the population base of New York and we don't have the number of domestic companies like New York. However, the minimum standards that we have - the (indisc.) standards that we have - the risk retention, etc., are laws that were developed by the 50 states. There were actual problems, i.e. insolvencies by risk retention. Number 496 CHAIRMAN KOTT asked how long we have been a member of the NAIC. MS. BROWN said she believes it has been as long as there has been a state insurance department. She said they have been accredited since 1992. CHAIRMAN KOTT asked if there was a break in accreditation. MS. BROWN said it was a new program and Alaska was the fifteenth state to become accredited. Number 513 There being no further testimony, CHAIRMAN KOTT stated he had a couple of amendments. He said he would offer Amendment 2 first as he believes the department desires it to be in the bill. Chairman Kott indicated the amendment is extensive and deals with consumer credit. He moved Amendment 2 be adopted. Number 426 REPRESENTATIVE KUBINA objected for the purpose of hearing from the department. MS. BURKE explained consumer credit insurance is, for the most part, directed at the least sophisticated buyer of insurance. She referred to fliers that people may have received with their credit card billings and said they relate to getting insurance for paying off your unpaid bill in the event of disability or death. It is also the type of insurance that if you go to buy a car, quite often they'll say, "Well you must secure the debt with insurance." She said there are a number of other products on the market that can do the same sort of thing. The proposed Amendment 2 was a gain of product of the NAIC, but it was spearheaded by the Alaska DOI personnel. They feel this is an extremely important protection for the consumer. It requires disclosure that the DOI feels is absolutely essential for the protection of the consumer, for example, that they do not have to buy that particular product. They can buy term life or other types of insurance. The freedom is there for the consumer. Ms. Burke indicated the amount of coverage a company offers may not be sufficient to pay off your debt. It alerts the consumer to the fact that it may not be sufficient. MS. BURKE said it is not a area of the product line that is properly regulated at this point, it is directed at unsophisticated purchasers. She said the DOI feels it is extremely important that the DOI be able to insist on minimum disclosures of what the people are buying and if they have options. Number 557 REPRESENTATIVE ROKEBERG asked if the insurance includes mail orders in terms of marketing. He said if that is the case, how would the DOI be able to enforce that on an interstate bases. MS. BURKE said there is telemarketing and the DOI would require that the product be regulated by the DOI. For example, if they do have an advertisement for a particular product by telemarketing, the DOI will be aware of it. If it is misleading, it would be subject to the same sort of misleading and fraudulent statutes that currently exist. Ms. Burke said it currently goes on and they may get complaints about it. They don't have a lot of (indisc.) to do anything about it. MS. BURKE said she would like to point out that they have incorporated suggestions made by marketers office product to the extent that it didn't totally erode the regulatory nature of this product. She said the DOI is not requesting that they file it before they do it. There was a complaint lodged that if they had to file a copy of every single piece of paper they sent out, it would be onerous. The DOI did amend that portion to say that they would still have the right to regulate it and if it were false or misleading, they would take appropriate action. CHAIRMAN KOTT asked if the amendment was in the original version of the bill. MS. BURKE indicated it was. She said they did make some minor changes to accommodate comments that were made in a Senate Judiciary Committee meeting. It was deleted in Senate Judiciary. Ms. Burke noted a lot of testimony was given from organizations in the lower 48 via teleconference. She said the DOI wasn't aware that they would be objecting to this. There was no testimony in opposition to the provisions last year in the hearing process. Ms. Burke said Senator Taylor requested that people providing testimony via teleconference present that to them in writing since it was so voluminous. They did and that is the information that the DOI incorporated again to the extent that they could without eroding the product. Number 584 REPRESENTATIVE SANDERS asked if he could assume that the controversial part is not in Amendment 2. CHAIRMAN KOTT said that is a safe assumption. Number 593 REPRESENTATIVE ROKEBERG asked if it was deleted in Senate Judiciary Committee this year. MS. BURKE responded that it was, but Senator Taylor also agreed to introduce a separate piece of legislation. She noted it hasn't been introduced to date. Number 595 REPRESENTATIVE PORTER asked if would be a fair statement to say that the bill is a product of incorporating some of the suggestions that lead to the other one being taken out. He said, "This isn't precisely what was taken out, this is a softened up version, if you will." MS. BURKE responded, "That's correct." REPRESENTATIVE ELTON said, "I was willing to take on faith, kind of 60 or some page bill with over 90 sections in the waining(sp.?) days of the legislative session, and I mean absolutely no disrespect to the division or the department or anybody else, but -- and they're pulling all the right chains for me -- consumer protection, outside groups are nervous about it. I mean I kind of -- made me feel good when Mari K. didn't want something and some of the others I thought `well, you know why are all these national groups...' Obviously, were maybe doing something right. So the arguments that I have heard from the department all want me to vote with my heart and say, `Hey, right on, lets do it.' But, Mr. Chair, I guess -- I mean I'm probably going to make a statement here and I am going to go with my head rather than my heart, in that I don't think it's good public process to get a bill this big, move it out of committee and add a 16 page amendment to it that I haven't had a chance to read. I mean I've read this one and I thought my god, I'm going to pat myself on the back for getting through it. I was willing to not object to moving it out. I think if we do this despite the fact, then I think we're probably doing the right thing. Without seeing any of the backup material of what made people nervous, without a good explanation of what was in that's now out of it that was making people nervous that kind of process just pushes me over the edge. I'm going to... If somebody makes a move to amend with this, I'll object for whatever good it may do. I guess if somebody had come to me a week ago and said, `Kim, this is very important for these reasons' and given me an opportunity to think about it, make at least a few phone calls, I'd have probably gone `yea,' and I would have been an enthusiastic supporter. I probably will be an enthusiastic supporter when it comes back, but I'm not right now." Number 630 REPRESENTATIVE ROKEBERG stated he agrees with Representative Elton. REPRESENTATIVE SANDERS said he also does. TAPE 95-57, SIDE A Number 001 CHAIRMAN KOTT withdrew Amendment 2. He then distributed Amendment 1. He asked the drafting attorney to come forward. Number 037 MIKE FORD, ATTORNEY, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE AFFAIRS AGENCY, informed Chairman Kott he is the drafting attorney for SB 53. CHAIRMAN KOTT explained the committee had before them a work draft of the bill, dated 3/30/95, Version G. He said the official bill packet has the same CS, 9-LS0467\G. There appears to be some difference between the two versions. He asked Mr. Ford if he was correct in that assumption. MR. FORD said he was just informed of that by Mr. Dozier. He said he believes there was a change in the title made by the Senate Labor and Commerce Committee. Mr. Ford said he can't explain why the title in the committee files is different than the printed copy, but it is. It could be that there has been an error in printing. He both should be the same. CHAIRMAN KOTT said if there is a difference, it probably would be in the title. MR. FORD said that is the error that has been pointed out to him. He said he would have to check his file as to what the problem is. He said he has a G Version of CSSB 53(JUD). He said he believes that is the version before the committee. Occasionally, there are errors in printing. He said that could be the problem and he indicated he would have to check his file. CHAIRMAN KOTT asked Mr. Ford if he is looking at the copy that has "WORK DRAFT" stamped on it. MR. FORD indicated he wasn't. He was looking at a printed (indisc.). REPRESENTATIVE ROKEBERG said the difference is on line 8 of the title. Number 076 CHAIRMAN KOTT said the amendment basically resolves the Supreme Court case that has ruled that in litigation where there is a conflict of interest between the insurance company and the insured, the latter is entitled to retain independent counsel. The amendment requires independent counsel to have at least 40 years experience in civil litigation, including substantial defense experience in the subject at issue in the civil action. Unless the policy states otherwise, the prepaid independent counsel is limited to the right that the insurer pays to attorneys in the regular course of doing business in this area. In subsection (f), it makes changes to require independent counsel to consult with the insurer on all matters related to the case and disclosure of the relevant matters except those which are privileged and relevant to the disputed coverage. It also defines what does not constitute a conflict of interest. Chairman Kott noted this was in the original bill with the exception that some (indisc.) changes were made. He asked Mr. Ford if he would like to elaborate further. MR. FORD said he has seen the language before in a different version. His only concern is that the title of the Senate bill is fairly narrow. At present, it describes all the provisions in the bill in a manner that was intended to preclude the addition of other material unless it fits within those specific categories. Mr. Ford said he would be concerned that this material would not fit under the existing title. Number 120 CHAIRMAN KOTT said he would concur with that assessment. He said Amendment 1 or Amendment 2 would not conform to the title and would require a resolution. He said he has been told there was support for a title change if the committee desires to do that. MR. FORD said aside from that, he doesn't have any legal concerns. Number 140 CHAIRMAN KOTT moved Amendment 1. REPRESENTATIVE ROKEBERG objected. He asked for a brief at ease. The meeting was called back to order at which point a roll call vote was taken. Representative Kott, Sanders, Elton, Kubina and Porter voted in support of the amendment. Representative Rokeberg voted against the amendment. So Amendment 1 was adopted. Number 167 There was some confusion as to the committee members having the right version before them. REPRESENTATIVE KUBINA moved, for the record, that the version before the committee was 9-LS0467\G, Judiciary, Senate Judiciary Committee, and it is NOT marked "WORK DRAFT." CHAIRMAN KOTT said there is a motion to adopt the correct version. Hearing no objection, it was so ordered. Number 179 CHAIRMAN KOTT said, "To ensure that we are correct, I'm going to ask that we rescind our action in adopting Amendment Number 1." Hearing no objection, it was so ordered. CHAIRMAN KOTT then moved Amendment 1. He asked if there was an objection. REPRESENTATIVE ROKEBERG objected and called for a 30 second at ease. He informed the committee that he had taken the time to review a law review article. He said he would like to know what the opinion is of the DOI before it is adopted. MS. BURKE said the DOI feels that it is more of an attorney legal issue and they don't have a position. REPRESENTATIVE ROKEBERG asked if Mr. Stebing was still on line via teleconference. He said in the testimony given by him, it seemed he wasn't an advocate of the amendment. MS. BURKE said that is true. He has some strong legal considerations and concerns on the issue. He has expressed those concerns. REPRESENTATIVE ROKEBERG said according to information he has there was a 3 - 2 split in the Alaska Supreme Court, and the ruling was contained in the CHI case ruling which indicated that this goes against the preponderant adoption and state jurisdictions throughout the country. The arguments brought fourth by the descending justices and the Chief Justice of the Alaska Supreme Court indicated this would be (indisc.) public policy. He said he would prefer that the amendment be held until this could be clarified. Number 225 REPRESENTATIVE KUBINA noted that he doesn't have a problem with either amendment. CHAIRMAN KOTT said there is a motion to adopt Amendment 1. He asked for a roll call vote. Representative Kott, Porter, Kubina, Elton and Sanders voted in support of the amendment. Representative Rokeberg voted against the amendment. So Amendment 1 was adopted. REPRESENTATIVE KUBINA moved Amendment 2. CHAIRMAN KOTT asked if there was an objection. Hearing none, Amendment 2 was adopted. CHAIRMAN KOTT said the committee had before them CSSB 53(JUD), as amended by the House Labor and Commerce Committee. Number 247 REPRESENTATIVE KUBINA moved to pass SB 53 out of the House Labor and Commerce Committee. CHAIRMAN KOTT said there is a motion to move CSSB 53, as amended, out of committee with individual recommendations and accompanying fiscal notes. Hearing no objection, HCS CSSB 53(L&C) was passed out of committee. ADJOURNMENT CHAIRMAN KOTT adjourned the meeting.