Legislature(1995 - 1996)
03/22/1996 03:25 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 22, 1996
3:25 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Beverly Masek
Representative Jerry Sanders
Representative Brian Porter
Representative Kim Elton
Representative Gene Kubina
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 434
"An Act relating to unclaimed property; and providing for an
effective date."
- PASSED CSHB 434(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 533
"An Act relating to the board of directors of the Alaska Aerospace
Development Corporation."
- PASSED CSHB 533(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 482
"An Act relating to state procurement practices and procedures; and
providing for an effective date."
- PASSED CSHB 482(L&C) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 197(L&C)
"An Act relating to insurance covering an insured who is a victim
of domestic violence and requiring certain disclosures by an
insurer."
- HEARD AND HELD
*HOUSE BILL NO. 489
"An Act regulating auctions and auctioneers; and providing for an
effective date."
- BILL POSTPONED
(* First public hearing)
PREVIOUS ACTION
BILL: HB 434
SHORT TITLE: UNCLAIMED PROPERTY
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/19/96 2486 (H) READ THE FIRST TIME - REFERRAL(S)
01/19/96 2486 (H) STATE AFFAIRS, LABOR & COMMERCE, JUD
01/19/96 2486 (H) ZERO FISCAL NOTE (REV)
01/19/96 2486 (H) GOVERNOR'S TRANSMITTAL LETTER
02/27/96 (H) STA AT 8:30 AM CAPITOL 102
02/27/96 (H) MINUTE(STA)
03/06/96 2990 (H) STA RPT CS(STA) 5DP
03/06/96 2990 (H) DP: JAMES, PORTER, GREEN, ROBINSON
03/06/96 2990 (H) DP: WILLIS
03/06/96 2990 (H) ZERO FISCAL NOTE (REV) 1/19/96
03/22/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 533
SHORT TITLE: ALASKA AEROSPACE DEVELOPMENT CORP. BOARD
SPONSOR(S): COMMUNITY AND REGIONAL AFFAIRS
JRN-DATE JRN-PG ACTION
02/28/96 2913 (H) READ THE FIRST TIME - REFERRAL(S)
02/28/96 2913 (H) LABOR & COMMERCE
03/18/96 (H) L&C AT 3:00 PM CAPITOL 17
03/18/96 (H) MINUTE(L&C)
03/20/96 (H) L&C AT 3:00 PM CAPITOL 17
03/20/96 (H) MINUTE(L&C)
03/22/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 482
SHORT TITLE: STATE PROCUREMENT PRACTICES & PROCEDURES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
02/09/96 2686 (H) READ THE FIRST TIME - REFERRAL(S)
02/09/96 2686 (H) L&C, STATE AFFAIRS, FINANCE
02/09/96 2687 (H) 2 FISCAL NOTES (ADM, DOT)
02/09/96 2687 (H) 5 ZERO FNS (2-ADM, DCED, DCRA, CORR)
02/09/96 2687 (H) 5 ZERO FNS (DOE, DEC, F&G, GOV, DHSS)
02/09/96 2687 (H) 5 ZERO FNS (LABOR, LAW, DMVA, DNR, DPS)
02/09/96 2687 (H) 2 ZERO FNS (REV, UA)
02/09/96 2687 (H) GOVERNOR'S TRANSMITTAL LETTER
03/18/96 (H) L&C AT 3:00 PM CAPITOL 17
03/18/96 (H) MINUTE(L&C)
03/20/96 (H) L&C AT 3:00 PM CAPITOL 17
03/20/96 (H) MINUTE(L&C)
03/22/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: SB 197
SHORT TITLE: INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES
SPONSOR(S): SENATOR(S) DONLEY, Ellis, Salo, Duncan, Pearce,
Zharoff, Lincoln; REPRESENTATIVE(S) Davies
JRN-DATE JRN-PG ACTION
01/05/96 2058 (S) PREFILE RELEASED - 1/5/96
01/08/96 2058 (S) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2058 (S) LABOR & COMMERCE
01/16/96 2144 (S) COSPONSOR(S): DUNCAN
02/15/96 (S) L&C AT 1:30 PM BELTZ ROOM 211
02/15/96 (S) MINUTE(L&C)
02/20/96 (S) MINUTE(L&C)
02/23/96 2512 (S) L&C RPT CS 5DP NEW TITLE
02/23/96 2513 (S) ZERO FISCAL NOTE TO SB & CS (DCED)
02/26/96 (S) RLS AT 12:45 PM FAHRENKMAP RM 203
02/26/96 (S) MINUTE(RLS)
02/28/96 2568 (S) RULES TO CALENDAR & 1NR 2/28/96
02/28/96 2571 (S) READ THE SECOND TIME
02/28/96 2572 (S) L&C CS ADOPTED UNAN CONSENT
02/28/96 2572 (S) COSPONSOR(S): PEARCE, ZHAROFF, LINCOLN
02/28/96 2572 (S) ADVANCED TO THIRD READING UNAN CONSENT
02/28/96 2572 (S) READ THE THIRD TIME CSSB 197(L&C)
02/28/96 2572 (S) PASSED Y18 N- E2
02/28/96 2579 (S) TRANSMITTED TO (H)
02/29/96 2955 (H) READ THE FIRST TIME - REFERRAL(S)
02/29/96 2956 (H) LABOR & COMMERCE, FINANCE
03/18/96 (H) L&C AT 3:00 PM CAPITOL 17
03/18/96 3186 (H) CROSS SPONSOR(S): DAVIES
03/20/96 (H) L&C AT 3:00 PM CAPITOL 17
03/20/96 (H) MINUTE(L&C)
03/22/96 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
RACHEL MARSHALL, Administrator
Unclaimed Property Section
Income and Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-5885
POSITION STATEMENT: Explained HB 434.
BOB BARTHOLOMEW, Deputy Director
Income and Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-2320
POSITION STATEMENT: Answered questions on HB 434.
AMY DAUGHERTY, Legislative Assistant
to Representative Alan Austerman
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
Telephone: (907) 465-4956
POSITION STATEMENT: Answered questions on HB 533.
REPRESENTATIVE ALAN AUSTERMAN
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
Telephone: (907) 465-4956
POSITION STATEMENT: Sponsor of HB 533.
DUGAN PETTY, Director
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
POSITION STATEMENT: Spoke on HB 482.
JAYNE ANDREEN, Executive Director
Council on Domestic and Sexual Assault
Box 111200
Juneau, Alaska 99801
Telephone: (907) 465-4356
POSITION STATEMENT: Testified in support of SB 197.
SENATOR DAVE DONLEY
Alaska State Legislature
Capitol Building, Room 11
Juneau, Alaska 99801
Telephone: (907) 465-3892
POSITION STATEMENT: Sponsor of SB 197.
KEN SYKES, Analyst III
Market and Conduct
Division of Insurance
Department of Commerce
and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Telephone: (907) 465-2564
POSITION STATEMENT: Answered questions in SB 197.
MARGARET DOWLING, Attorney
State Farm
Lessmeier and Winters
One Sealaska Plaza, Suite 303
Juneau, Alaska 99801-1249
Telephone: (907) 586-5912
POSITION STATEMENT: Testified against SB 197.
ACTION NARRATIVE
TAPE 96-27, SIDE A
Number 001
The House Labor and Commerce Standing Committee was called to order
by Chairman Pete Kott at 3:25 p.m. Members present at the call to
order were Representatives Sanders, Masek, Kubina, Elton, Rokeberg
and Kott. Representative Porter arrived late.
HB 434 - UNCLAIMED PROPERTY
Number 011
CHAIRMAN PETE KOTT announced the first order of business would be
HB 434, "An Act relating to unclaimed property; and providing for
an effective date," introduced by Rules by request of the Governor.
RACHEL MARSHALL, Administrator, Unclaimed Property Section, Income
and Excise Audit Division, Department of Revenue, explained HB 434
has to do with some cleanup areas. Many of recommendations in the
bill were from an audit done by the Office of Management and Budget
(OMB). The bill is also in line with the uniform law
commissioner's 1995 revision to the Uniform Unclaimed Property Act.
MS. MARSHALL said Section 1 cleans up language for property that is
dividend reinvestment plan oriented. It specifically addresses
mutual funds because they are not actively monitored by an owner.
Mutual funds become unclaimed property usually because a mailing
has not been received by the owner. By the time a second mailing
hasn't been received by the owner, it is flagged as unclaimed
property. Ms. Marshall noted this is in line with the Uniform Law
Commission's changes for 1995.
Number 284
MS. MARSHALL explained Section 2 was a recommendation by OMB which
streamlines reporting amounts. Currently, there are amounts that
are $25 for certain types of property and $50 for other types of
property. This would lump sum all types of property into a $100
aggregate. She said it is up to the holder, which is a company, an
association, a bank or financial institution, etc., reporting the
property to either itemize those amounts or they could list them,
for example, as 16 unclaimed checks in the amount $14, instead of
listing them as 2 cents, 4 cents, etc.
MS. MARSHALL said Section 3 provides for the filing dates to be the
same, November 1. Currently, life insurance companies report by
May 1, and remit the property November 1. All other companies
report the property November 1, and remit the property May 1. She
said this is very confusing for holders. Why not clean up all your
records all at once - once a year and call it good.
MS. MARSHALL referred to Section 4 and said it has to do with
increasing property values which holders are required a due
diligence requirement to contact the owner one last time prior to
recording it as unclaimed property and to make this dollar amount
consistent with the reporting amount, the aggregate amount and the
publication amount - all to be $100.
Number 417
CHAIRMAN KOTT referred to Section 4 and asked Ms. Marshall to
explain how it would work.
MS. MARSHALL explained that section is for the holders to send
their due diligence requirement. Depending on the property, the
dormancy period which is five years on the average, for five years
a bank statement has been going to you once a month - mail has been
sent to your address and it is being returned. This section asks
that property that is at a level of $100 or more, one more time you
must send them a notice before it is reported as unclaimed
property. For most of the other items under $100, you already have
significant flagging in your system that the owners have moved, but
because the value is $100, they would be asked to try to contact
the person one more time before the property is reported.
Currently, if it is under $50, you don't have to send out the due
diligence notice. By increasing the amount to $100 would be
consistent with the increase to the reporting amount and
publication amount. She noted 120 days before the unclaimed
property is reported by a holder, they would send the owner one
more written notice.
CHAIRMAN KOTT asked how many previous notices Ms. Marshall would
have sent.
MS. MARSHALL said she wouldn't have sent any. This is the
responsibility of the company holding the money. She noted it
varies depending on what type of property it is. If it is wages,
the company may have only sent that last paycheck one time. If it
is a bank, they automatically send a statement every month and have
for the last seven years.
Number 599
MS. MARSHALL referred to Section 5 and said the way the current law
reads, not later than March 1 of each year, the department is
required to publish the names of owners who have property in excess
of $50 or more. She stated the Uniform Law Commission has made a
change to the uniform law and the department is trying to follow
suit with that. More and more property is being reported every
year and her section is not given any more time to key the
information into the computer system and to work with the holders
in returning the property prior to publication. By having an extra
four months, the department would have enough time to administer it
and publish it when the resources are there to handle the incoming
phone calls. Although it says not later than March 1, with a staff
of three they have to start at the beginning of February in order
to hit Anchorage first and Fairbanks, because you can't publish
names around the whole state at the same time or the phone lines
would be clogged. Ms. Marshall said by moving the time to June 30,
it would leave the administrator or the department manageable time
to publish names when the office and resources can handle it. She
noted the Uniform Law Commission's change was no later than
November 1, so the department would still have a shorter deadline
than the commission's deadline.
Number 790
MS. MARSHALL referred to Section 6 and said it has to do with
requirements to publish a owner's last known addresses. She said
currently, the statute requires the owner's address be put in the
publication. She explained in order to clean up areas, the owners
are listed under the last known city. The reason this is important
is because the owners look for their name in each town they lived
in instead of using addresses. She said she lists the names by
city because it is much easier for people to be found.
CHAIRMAN KOTT asked if the publication is a handbook.
MS. MARSHALL explained the names are inserted in newspapers
statewide. They are inserted in the Bush Mailer which goes to 214
communities, the Anchorage Daily News, the Fairbanks News Miner and
the Juneau Empire. Ms. Marshall said each year they call the
newspapers and ask what their highest circulation date is and the
publication is inserted in that date.
CHAIRMAN KOTT asked if the names are published as a community
service item or if there is a cost.
MS. MARSHALL said she would be reviewing that area because the
names are supposed to be published for two consecutive weeks and
the department wants to make it one time.
CHAIRMAN KOTT asked what is done for the rural areas that are not
serviced by a newspaper.
MS. MARSHALL said she takes things to library. She also noted the
publications are given to the legislators and there has been a good
response.
Number 995
REPRESENTATIVE NORMAN ROKEBERG said he identified a constituent of
his in the publication he received. He stated it does work.
MS. MARSHALL noted the information is all public information. When
a legislator does call a constituent to inform them they have
unclaimed property, they are going to want to know what kind of a
dollar amount it is.
REPRESENTATIVE ROKEBERG asked if he could find out by calling the
Unclaimed Property Office.
MS. MARSHALL indicated he could as it is public information.
Number 1035
MS. MARSHALL said Section 7 is in line with making all the dollar
amounts consistent. Currently, the department publishes a name for
property of $50. That amount would be increased to $100. Not only
the cost for publishing has become expensive, but there are some
easier and less costly methods for putting peoples' names out in
order for them to be located. One is the Internet which doesn't
cost anything. She said they could provide the items of $99 by the
Internet and $100 or above would still be published.
CHAIRMAN KOTT questioned how many people have unclaimed property
below $99.
MS. MARSHALL said she isn't sure. She said the number would be a
lot less than then amounts above $100. Ms. Marshall said it may
reduce the publication by one page or maybe two. She noted it is
an eight page circular. It would probably be kept at eight pages
because she would also list the Internet address for the items
under $100 and give other ways to look for property of less than
$100.
Number 1173
MS. MARSHALL referred to Section 8 and said the people who are
reporting unclaimed property, the holders, sends the department
their report on November 1. She said she advertises it and then by
May 1, if those people haven't come forward then the holder sends
the department another report with the changes of the people who
have come forward. Ms. Marshall noted some of those people have
come forward and have not completed their paperwork so they are
still included on the list. Some are deleted off the list. They
have to add interest and deduct service charges on a second report.
The Uniform Law Commission and OMB have recommended that they do a
report/remit. The holder would send both the names and money
November 1. When people call after seeing their name in the paper,
the department would have their money and owners wouldn't have to
go to the holders. The way things currently are is by the time the
owners call the holders, the money has been sent to the department.
MS. MARSHALL referred to Section 9 and said this section has to do
with people who help locate owners. They are called heir finders,
fee finders and other names. Ms. Marshall said the department gets
an awful lot of complaints. Some finders charge people 35 to 50
percent of their unclaimed property. This section asks for two
items. She said property that is on its way to the department
cannot have a charge put on it until it has been in the
department's possession for 24 months, which is a nice window
period for the department to be able to return the property to the
owner. This time period would give the property time to work
through the system. It would have worked through due diligence
through the holder and through the publication period. After that
24 month period if the department still hasn't been able to locate
the owner, someone else could assist. Ms. Marshall explained many
states are going to a percentage the fee finders can collect. She
said 15 states have a 10 percent limit, 5 states have a 15 percent
limit, 5 states have a 20 percent limit and 2 have a 5 percent
limit. Ms. Marshall said the department wanted to be in line with
33 other states to have some kind of a cap on this fee. The fee
finders aren't doing all the work, the holders and the state are
and for the cost of a stamp and a phone call, they're charging a
lot of money.
Number 1359
REPRESENTATIVE JERRY SANDERS asked Ms. Marshall if she has an idea
as to what percentage of the returns are instigated by a finder.
MS. MARSHALL said she doesn't have that information. She noted
that sometimes the owner will send her copies of the agreement with
the fee finder, but that doesn't necessarily mean that the owner
actually pays them or all the property that they located was
included in that fee finder agreement. Ms. Marshall said if she
had to guess, she would say it may be between 5 and 10 percent.
She noted the larger the value of the property, the more someone is
hounded.
REPRESENTATIVE SANDERS said, "The reason I asked, and I may be
completely backwards if -- and you know, I'm not going to argue
this point. I just want to bring it up (indisc.). These people
are performing a service because they're looking these people up -
people who obviously haven't seen it in the paper and you obviously
haven't gone to find out where they moved to. So if these guys are
doing that and they do it for a high amount, I could understand
that. On the low amount, you know for $200 at 10 percent I
wouldn't write their name down for $20, you know and they wouldn't
either, and people might want their $200 back. So I'm wondering if
you might want to put in a variation there. Maybe 50 percent on
anything under $500 or something and 10 percent over that. It is
just something I wanted to bring out. I'm not going to push it, I
don't care, but everybody knows about it. Thank you."
CHAIRMAN KOTT noted he also had a concern in that area.
Number 1483
REPRESENTATIVE KIM ELTON said anymore, this isn't a tough business.
You can buy CD Roms that gives every name listed in every phone
book in the United States. All you have to do is a name search.
Number 1515
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division
Department of Revenue, explained that for the department, there are
three components to that change which is having to require that the
fee finder has to tell the owner the value of the property that
they found. The fee finder can't contact the owner for 24 months
so that the state can have a chance to try and refund the property
for free. The third part is the percentage cap which is the least
important of the three to the department. Mr. Bartholomew noted
the idea of the bill is to reduce some of the paperwork and get
back to the function of finding owners.
CHAIRMAN KOTT said there is a lot of technology that would make it
fairly simple to locate people, but even with that it obviously
isn't working otherwise there wouldn't be eight pages of unclaimed
property. There may be something more to it than just looking at
CD Roms.
Number 1593
MS. MARSHALL said the owners are being hit up for money before the
property comes to Unclaimed Property. Sometimes she hasn't even
had a chance to try and find them. Ms. Marshall said on a $5,000
claim, $1,400 is a lot.
REPRESENTATIVE SANDERS said he didn't have a problem with the 24
month time period. He asked Ms. Marshall if she what she thought
about changing the percentage rate to 25 or 50.
MS. MARSHALL indicated she would love to hear any recommendations
the committee has.
Number 1644
REPRESENTATIVE PORTER referred to money being held by the state for
two years and asked what the disposition of the interest is on the
money.
MS. MARSHALL said property is only paid interest if it is interest
bearing when it comes to the state.
Number 1671
MR. BARTHOLOMEW explained the department is required to deposit the
money into the general fund, but if it was an uncashed warrant that
was sitting in someone's desk drawer where interest wouldn't be
earned, the department would then not pay interest on the money
when it is returned to the owner. If a savings account was
received that was an interest bearing account, then interest would
be paid on that account as if it were left in the bank. Interest
is paid on property if it was earning interest when it was
submitted to the state. He noted the general fund would benefit
from the interest earned during that interim.
Number 1696
MS. MARSHALL explained Section 10 defines business associations to
include mutual funds.
MS. MARSHALL informed the committee Section 11 includes warrants
under intangible property.
MS. MARSHALL referred to Section 12 and said, "The state is
required to - once - a 120 days before November 1, the holder sends
out a written notice and once we get it we're supposed to send out
a written notice. It is a duplicate mailing notice. In the next
few months after we receive the property, we're gonna advertise it
anyway or have it out on the Internet. We're asking that that
written notice be deleted from the department's responsibilities.
OMB also had that in their recommendations for their audit this
year too."
MS. MARSHALL said Section 13 asks that this take effect in July.
Number 1750
CHAIRMAN KOTT questioned what section asks that the names be
published one time.
MS. MARSHALL informed him it is Section 5.
Number 1791
MR. BARTHOLOMEW informed the committee the department spends
$22,000 to $25,000 to do one statewide publication. Of the total
cost of the program, which is about $188,000, that is a lot of
money and to do it twice.... There would have to be an increase in
their budget to do it twice. He said they haven't actually been
doing it twice.
CHAIRMAN KOTT asked how successful the program is and how many
claims are actually returned to the rightful owner.
MS. MARSHALL said there is about a 30 percent return to the owner
and that is high.
MS. MARSHALL informed the committee there is a gentleman in
Anchorage where the department has had about $250,000 for him. The
department has a good address for him. Ms. Marshall said she asked
him to sign a form that says he wants his unclaimed property and
she'd be happy to send it to him. He has so much money he doesn't
know what to do with it and hasn't requested his money from
Unclaimed Property. She noted he is an attorney.
Number 1911
REPRESENTATIVE GENE KUBINA asked what happens to the $250,000.
MS. MARSHALL said it is in the general fund. She said when he dies
and his children want to come forward for it, they can have it.
REPRESENTATIVE KUBINA asked how long it has to be kept in the
general fund.
MR. BARTHOLOMEW said forever.
REPRESENTATIVE SANDERS said he thought it was for seven years.
MS. MARSHALL said that was the escheat law that went out in 1986.
This law came in September, 1986.
MR. BARTHOLOMEW explained there is a unclaimed property trust
account and a balance is kept in there almost equal to what the
department returns annually. The rest of it actually gets
deposited into the unrestricted general fund. If there was ever a
claim in excess of what is collected in a year, which is $2.5
million to $3 million, the department would have to get
authorization for all past deposits. Even if the example of the
$250,000 came in a year, the department would have plenty of
authority to return it out of those annual receipts. There may be
a smaller deposit into the general fund, but it wouldn't require an
appropriation. Close to $2 million a year would flow into the
general fund and a large run on the fund would shrink that deposit.
He noted he doubts there would ever be a year that would exceed the
deposits.
Number 2001
CHAIRMAN KOTT closed public testimony as there were no further
witnesses to testify on the measure.
Number 2021
REPRESENTATIVE SANDERS made a motion that on page 5, line 3, after
the word "property" add "provided the property is over $500;". It
would then read: "(1) the fee or compensation if not more than 10
percent of the value of the property provided the property is over
$500;".
REPRESENTATIVE ROKEBERG made a motion to amend the amendment to
say, "20 percent of the value..."
REPRESENTATIVE ELTON said he would like to make a friendly
suggestion that it read, "the fee or compensation is not more than
20 percent provided that any property with a value over $500 the
fee is not more than 10 percent."
REPRESENTATIVE ROKEBERG said he would rather have the 10 percent
first because people will read the statute that way. He said, "Not
more than 10 percent of the value of the property in the amount of
$500 or under 20 percent of the value of the property under $500."
CHAIRMAN KOTT said conceptually, we want to establish a fee of no
more than 10 percent of property valued at $500 or more, and less
than $500, the percentage will be no more than 20 percent.
CHAIRMAN KOTT asked if there was an objection to the friendly
amendment to the amendment to the amendment.
REPRESENTATIVE SANDERS said he would like to point out that at
$490, they get 20 percent which is almost $100. At $500, they get
10 percent which is $50.
Number 2185
CHAIRMAN KOTT said without objection, conceptual Amendment 1 is
adopted.
Number 2189
REPRESENTATIVE ROKEBERG made a motion to move CSHB 434, as amended,
out of committee with individual recommendations and the attached
zero fiscal note.
CHAIRMAN KOTT asked if there was an objection. Hearing none, CSHB
434(L&C), was moved out of the House Labor and Commerce Committee.
HB 533 - ALASKA AEROSPACE DEVELOPMENT CORP. BOARD
CHAIRMAN KOTT announced the next order of business would be HB 533
"An Act relating to the board of directors of the Alaska Aerospace
Development Corporation."
REPRESENTATIVE ROKEBERG made a motion to adopt CSHB 533(L&C), 9-
LS1731/F, Lauterbach, 3/20/96.
CHAIRMAN KOTT asked if there was an objection to the adoption of
the committee substitute. Hearing none, it was so ordered.
CHAIRMAN KOTT informed the committee about the amendments adopted
at the previous hearing on the measure. Amendment 1 on page 2,
deleted "the executive director of the Alaska Science and
Technology Foundation;". Amendment 2 was on page 1, line 8, where
two state residents was added. Amendment 3 was on page 2, line 28
and 29, where the board of directors of the corporation shall
select the chair and vice-chair. The last amendment was on page 2,
line 7, where "aerospace" was added. He explained those amendments
have been incorporated into the committee substitute.
Number 2356
REPRESENTATIVE ELTON said, "I think you held this bill because I
had a proposed amendment. My proposed amendment was going to be on
page 2, line 13, eliminate "nonvoting." So it would be one member
who has recognized... And then on page 2, line 6, three members.
So you're substituting the international expert for one of the four
who also have aerospace or commercial space industry (indisc.).
Talking to the sponsor and representatives of the sponsor, their
preference was simply delete paragraph 6, beginning on line 13.
The reason I'm offering the amendment is instead of paying for nine
people to travel or ten people to travel back and forth to the
board meeting, this is nine - (indisc.) pay for nine. The sponsor
indicated he had no -- he would prefer just eliminating paragraph
6 beginning on line 13 of page 2, rather than (indisc.)."
CHAIRMAN KOTT clarified the amendment which was to delete
subsection (6) on line 13, page 2, which also affects line 6, page
1, where ten would then become 9.
Number 2413
AMY DAUGHERTY, Legislative Assistant to Representative Alan
Austerman, said it was her understanding that they just wanted to
delete lines 13 and 14 on page 2, so that there would be just nine
members.
CHAIRMAN KOTT asked if the committee understood the amendment. He
then asked if there was objection.
Number 2428
REPRESENTATIVE KUBINA asked if the word "and" needed to be deleted
also.
The response was in the affirmative.
Number 2432
REPRESENTATIVE SANDERS objected for clarification. He questioned
the purpose of the amendment.
REPRESENTATIVE ELTON responded lower costs. Instead of
transporting ten people, you're transporting nine people to the
board meetings.
CHAIRMAN KOTT noted it would be the nonvoting member.
REPRESENTATIVE ROKEBERG asked if the famous person is supposed to
be a voting member.
REPRESENTATIVE ELTON said, "We're going to assume if there is a
famous person, they're going to be one of the other nine members."
REPRESENTATIVE SANDERS explained his only concern is that if this
is going to be a viable industry in the state, we're going to have
to deal internationally and we're going to need all the help we can
get. He said he wanted to make sure there will be some high
powered people on the board. He said he thought maybe the
committee was eliminating this person and he doesn't want to do
that.
REPRESENTATIVE ELTON said the effect of the amendment would be that
the international slot would be eliminated. The assumption would
be that in subsection (5), those four people with aerospace or
commercial space industry expertise would already have that
knowledge.
CHAIRMAN KOTT noted the sponsor concurs with the amendment.
TAPE 96-27, SIDE B
Number 001
REPRESENTATIVE ALAN AUSTERMAN said if he understands the amendment
right on line 6, page 2, the four members have been changed to
three members.
CHAIRMAN KOTT indicated that was incorrect. He explained the
effect of the amendment is to remove the one nonvoting member who
has recognized prominence and influence within the international
space industry. That would come out of the bill. Subsequently,
that would effect, on page 1, the make up. It would be reduced
from ten to nine.
REPRESENTATIVE AUSTERMAN said he endorses the amendment.
CHAIRMAN KOTT said without objection, that conceptual amendment
will be adopted.
Number 066
REPRESENTATIVE ROKEBERG made a motion to move CSHB 533(L&C), as
amended, Version F, with individual recommendations and a zero
fiscal note.
CHAIRMAN KOTT asked if there was an objection. Hearing none, CSHB
533(L&C), as amended was moved out of the House Labor and Commerce
Committee.
HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES
Number 102
CHAIRMAN KOTT announced the committee would hear HB 482, "An Act
relating to state procurement practices and procedures; and
providing for an effective date," introduced by the Governor. He
informed the committee there has been two other hearings on the
measure.
DUGAN PETTY, Director, Division of General Services, Department of
Administration, came forward to address the bill. At the last
meeting on the bill there were five concerns that Representative
Rokeberg had with various sections. He said he got together with
Representative Rokeberg and in the committee member's packets there
are four proposed amendments.
Number 129
REPRESENTATIVE ROKEBERG moved that Amendment 2 be adopted.
REPRESENTATIVE ELTON objected for the purpose of an explanation.
REPRESENTATIVE ROKEBERG said it relates to Section 4. This
particular section in the bill had a threshold of 5,000 square feet
to allow leases to go into the marketplace and to qualify for the
small procurement procedures. He said the change would be to go
from 5,000 square feet to 3,000 square feet. There is also the
addition of providing public notice to be prospective (indisc.) in
the market area. It is his understanding that under the small
procurement procedure basis they would only have to have three
potential offers. His concern was that they need to at least
publish that to invite anybody who would have space available an
opportunity to make an offer. They could do it under the
procedures of the small procurement code. Representative Rokeberg
said he thinks this is a good accommodation and recommends
approval.
Number 182
REPRESENTATIVE ELTON said the offering would not be threatened if
an offer was skipped. He said he is assuming the department would
be able to work off of the list that they maintain in their office.
If they happen to miss somebody that says, "Hey, I've got 3,000
feet," it is not going to threaten.
REPRESENTATIVE ROKEBERG indicated that is correct.
Number 203
MR. PETTY explained the department would either put a notice in the
paper or they would go off of their list of bidders on their
bidders list. If somebody had not been placed on the department's
bidder list because they had not applied or they missed the add in
the paper, they would be under no obligation to give them further
notice.
REPRESENTATIVE ELTON withdrew his objection to the adoption of
Amendment 2.
CHAIRMAN KOTT asked if there were further objections to the
adoption of Amendment 2. Hearing none, Amendment 2 was adopted.
Number 227
REPRESENTATIVE ROKEBERG moved that Amendment 3 be adopted.
CHAIRMAN KOTT said there is a motion to adopt Amendment 3 which
deals with Section 5.
REPRESENTATIVE ELTON objected.
REPRESENTATIVE ROKEBERG explained the amendment does two things.
The way the bill is currently drafted, it allows the department to
renegotiate a lease right up to the last day of the natural
expiration of the lease. The insertion would be on line 12. At
the end of the first paragraph in the amendment it reads, "and has
at least 6 months remaining under the lease term,". He explained
the reason he wanted this inserted is that in a larger urban area
where there is a dynamic lease market, he thinks it is essential
that the other lessors have an opportunity to bid on a major lease
hold acquisition if they are about ready to expire. As a practical
matter in the marketplace, landlords are aware of lease expirations
and track them and even plan for them to give themselves to
opportunity to bid on them. Without some type of a cutoff point,
this would disruptive to the natural flow of the marketplace.
Representative Rokeberg said although he would like to see a
slightly longer time period, he did agree on a six month provision.
REPRESENTATIVE ROKEBERG referred to the subsections and said a 15
percent savings was added and a 10 percent savings if there is ADA
requirement modifications. He explained the reason those figures
were inserted was to create a higher threshold. When we're talking
about rents that could be expressed in square footage of about
$1.50 a square foot, per month, a 10 percent decrease would only be
15 cents a square foot. He noted that may be substantial in some
instances, it depends on the market conditions. Representative
Rokeberg said he thinks a higher threshold will benefit the
department because they might be able to use the statute as a tool
to generate higher achievable savings.
Number 359
REPRESENTATIVE ELTON referred to the numerous effective dates of
the bill, and asked Representative Rokeberg if he means to change
the first report is due August 31, 1996, when the original bill
says the report is due in 1997.
REPRESENTATIVE ROKEBERG explained Mr. Petty assisted him in the
drafting of the amendments.
MR. PETTY said it probably was intended to be 1997, and then it
must cover the fiscal year for 1997.
Number 392
REPRESENTATIVE ELTON said he would offer that as a friendly
amendment. The report would be due August 31, 1997.
REPRESENTATIVE ROKEBERG explained it was a typographical error.
Number 400
REPRESENTATIVE ELTON withdrew his objection to Amendment 3.
CHAIRMAN KOTT asked if there were further objections. Hearing
none, Amendment 3 was adopted.
Number 409
REPRESENTATIVE ROKEBERG moved that Amendment 4 be adopted. He
explained the amendment make it symmetrical with the terms
expressed in Amendment 2. He indicated it is a conforming
amendment.
CHAIRMAN KOTT asked if there was an objection to Amendment 4.
Hearing none, Amendment 4 was adopted.
Number 438
REPRESENTATIVE ROKEBERG moved that Amendment 5 be adopted.
REPRESENTATIVE ELTON objected to the adoption of Amendment 5.
REPRESENTATIVE ROKEBERG explained Amendment 5 does two things. It
(indisc.-coughing) the time allowable for a claim up to 90 days.
The last sentence of the amendment exempts lease rate adjustments
that are stipulated in the lease. It would exempt those types of
things from the time period. Representative Rokeberg explained in
many leases for office space or space, there are escalation clauses
for utilities and things of this nature. Because of the delays in
receiving bills and accounting for them, etc., the back charges
many times are delayed and it is really difficult to meet an
artificial deadline. The state does have these types of escalation
in their leases based on percentages of consumer price indexes
(CPIs) and various other factors. Representative Rokeberg said he
thinks this is consistent with common business practices and the
department doesn't have an objection to it.
REPRESENTATIVE ELTON said that is three months that the state may
be at risk for office space. He said that seems like a long time
for him.
MR. PETTY informed the committee members that currently the statue
has no time limit on when a claim against the state and the
contract controversy may be brought for any type of contractual
circumstance for which there is a claim and a controversy. He said
they started out with 30 days. The question here is really trying
to have a reasonable period of time in which the contractor must
bring their claims so that they can't simply wait a year or two and
bring it in later. He indicated the department is comfortable with
90 days. Mr. Petty said with respect to the lease adjustment
circumstance, the department's bid document for lease includes a
specific clause that says, "So much of your cost are uncontrollable
for utilities or operational costs that are affected by inflation,
you can come in and request an increase if the consumer price index
has gone up high enough to warrant that." He said the fact that
somebody would overlook that or be late on it, the department
doesn't believe it should keep them from coming back and the
department honoring the bargain that was initially stuck.
Number 564
REPRESENTATIVE ELTON withdrew his objection.
REPRESENTATIVE ROKEBERG said there are two different things that
are being discussed with regards to the amendment. He said lease
hold interests are excluded from this 90 day (indisc.), it is the
other contracts in the whole global universe of other claims that
are covered by the 90 day....
CHAIRMAN KOTT said Amendment 5 has been adopted.
Number 599
REPRESENTATIVE ROKEBERG explained he had one more amendment and
then directed the committee to page 14, Section 40. He then moved
conceptual Amendment 6 which deletes page 14, line 31 and page 15
line 1. On page 15, line 2, delete the subsection 35 and add 34.
This deletes Section 34 as it is presented in the bill which
affects the Governor's office. Number 35 becomes 34.
REPRESENTATIVE ELTON objected. He said he wouldn't have a problem
with it if the same thing is done to the legislature that does
these same kinds of procurement and is exempted. It seems unfair
to say that the legislature can go out and hire a law firm in
Washington, D.C., to lobby Congress and not have to comply with the
procurement code, but the Governor's office does have to comply.
REPRESENTATIVE ROKEBERG stated if his colleague persists in this
line, he is going to suggest adding a further amendment to delete
subsection 33 from the bill which relates to Alaska Seafood
Marketing Institute (ASMI).
REPRESENTATIVE ELTON said we can make whatever amendment offers we
want. This amendment doesn't work and he can think of many
examples in which the Governors office have gone out for
procurement which are in the interest of the state. He said this
would essentially mean that after the Exxon Valdez oil spill, the
Governor's office would have to wait on some procurement for a.....
He then asked Mr. Petty how long the normal period of time is when
you go through the state procurement code
MR. PETTY said depending on the complexity, it could be 120 days to
300 days. He said one of the issues is it is simply not possible
to use the competitive bid or the RFP process to acquire
effectively some of these items. He said Section 40 doesn't
identify if it would be lobbying, public relations or advertising
for line agencies of government which is very particular to the
Governor's office. Mr. Petty said he thinks that it is a
recognition that at some level within the Executive Branch, there
are times when they must act, they must buy direct media or
advertising in a particular market to influence a vote in Congress
or to have lobbying that is effective within the political
influence that the Governor is obligated to exercise. It is simply
not possible to use a RFP process to buy that kind of direct media
or advertising or to get the kind of lobbyists to that is necessary
to effectively conduct the Governor's business in Washington, D.C.
Number 780
REPRESENTATIVE PORTER questioned what the current law is.
MR. PETTY explained the law requires that these type of contracts
go through the invitation to bid process or the RFP process or an
exception process such as a sole emergency or limited competition
procurement.
REPRESENTATIVE PORTER said the Governor's office has been dealing
with this impossibility for the last 40 years.
MR. PETTY said very ineffectively.
Number 798
REPRESENTATIVE ELTON said he doesn't think it is a partisan issue.
It seem to him that it ties the hands of the Governor, whoever it
is. In services like lobbying and public relations, you don't
necessarily want the cheapest. You want to go with the people who
can do the work and can do it quickly and in a timely manner. A
120 day wait is not a timely manner and the state procurement code
is designed to get you the least expensive. You can do all kinds
of waivers and other things, but the purpose here is to get the
best as fast you can.
REPRESENTATIVE ROKEBERG indicated confusion. This includes both
lobbying, public relations and advertising. He said he sees no
reason why advertising cannot be conducted under the standard
procurement procedures. If we need to change the procurement code
lets change the code and not start exempting. This would be the
35th exemption to the ASMI. He said if there is a circumstance
that is important, for example like the Exxon Valdez, he would
think the Governor has some discretionary funds he would draw on
immediately.
Number 900
MR. PETTY said the funding may be available within the budget, but
the expenditure of the fund would be governed by the procurement
code. If it were over 25,000, under current statute, it would have
to go out as an RFP or an invitation to bid, unless it went out
under the sole source limited competition or emergency process.
REPRESENTATIVE PORTER said there is the procurement code with 37
exceptions to it, all for different reasons and concerns. The
problem obviously isn't in the exceptions, the problem is the
procurement code. If we exempted the Governor's office, all
motivation for really changing it is gone.
Number 986
REPRESENTATIVE KUBINA said you wouldn't be exempting the Governor's
office. You're only exempting them on lobbying, public relations
and advertising. He said think what you guys have done, as the
majority in the legislature, this year hiring people that are
experts. He indicated they didn't go out and do a public bid and
allow RFPs go out on the fish and game experts that were hired.
REPRESENTATIVE PORTER pointed out there is a separation of powers
issue that comes into the procurement code. What we do is probably
what the Democratic majority did six years ago. That is the way it
has been for different majorities. Representative Porter said what
he is talking about is the effect of the procurement code on all
the other agencies.
REPRESENTATIVE KUBINA said the procurement code is obviously a very
complicated thing. He said look what happens with the federal
government procurement code. We're not talking about going out
buying nuts, bolts, tools and clean supplies. We ought to have
rules and we do have rules. He questioned how you can go on a
competitive bid for a lobbyist or public relations.
REPRESENTATIVE PORTER said he totally agrees with Representative
Kubina. If that is a realistic problem, why shouldn't it be a
problem for the Department of Public Safety, the Department of
Natural Resource, the Department of Corrections and not for the
Governor.
REPRESENTATIVE KUBINA said he isn't sure they're out buying
lobbyists or public relation firms.
REPRESENTATIVE SANDERS said the Department of Transportation does.
Number 1155
MR. PETTY explained that this is not intended to be an out for
(indisc.) agencies of government because he believes they are able
to anticipate their need for public relations. The Department of
Commerce does an effective job of acquiring their public relations
and advertising through an RFP process, but they have an ongoing
program where they can project that. Oftentimes that doesn't
happen at the Governor's office level. There simply isn't time to
do that kind of RFP process to make it work and that is why this
special exemption was only intended to cover the Governor's office.
There are circumstances that the Governor's office can anticipate
far enough down the line that they might be able to use an RFP
process. Mr. Petty explained the Governor's office deals in
political issues that are fundamentally different.
REPRESENTATIVE ROKEBERG suggested putting some of these people on
a retainer so you wouldn't have to go through the process. He said
he thought we already had a representative in Washington, D.C., Mr.
Katz.
REPRESENTATIVE ELTON said he is in an odd position where he doesn't
disagree with some of what he has heard. He said he would like to
note that if we go for the argument that the Governor's office
ought to share the same pain felt by the agencies, the logical
extension of that is so should the legislature because that will
might force the legislature to take a good look at the procurement
code and figure out how we can make it work for everybody. He said
if we do this, where tying the hands of one of the elected
officials in the state that probably has a very legitimate interest
in what is happening in Congress, just as the legislature does. He
said he would find this easier to accept if the rules were applied
equally to everybody and we're not doing that with the proposed
amendment.
CHAIRMAN KOTT asked if there were further questions for Mr. Petty
on the amendment. There were no further questions. Chairman Kott
asked if there still was an objection.
REPRESENTATIVE ELTON maintained his objection.
Number 1431
A roll call vote was taken. Representatives Masek, Porter,
Rokeberg, Sanders and Kott were in support of the amendment.
Amendment 6 was adopted.
Number 1488
REPRESENTATIVE ROKEBERG made a motion to pass HB 482, Version A, as
amended, out of committee with individual recommendations and the
accompanying fiscal note.
CHAIRMAN KOTT asked if there was an objection. Hearing none, CSHB
482(L&C) was moved out of the House Labor and Commerce Committee.
SB 197 - INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES
Number 1555
CHAIRMAN KOTT announced the next order of business would be CSSB
197(L&C), "An Act relating to insurance covering an insured who is
a victim of domestic violence and requiring certain disclosures by
an insurer."
JAYNE ANDREEN, Executive Director, Council on Domestic and Sexual
Assault, testified in support of SB 197. She said as the committee
already heard in previous testimony, insurance discrimination in
terms of domestic violence is not a problem that has been
identified in Alaska. However, they do have documentation that it
has been a significant problem in California, Delaware, Iowa,
Minnesota, Oregon, Pennsylvania and Washington. In 1994, the U.S.
Judiciary Subcommittee on crime and criminal justice found that 8
of the 16 major insurance companies were using the history of
domestic violence victimization as a factor on whether or not to
insure and how much to charge for insurance premiums. In March,
1995, the Pennsylvania Insurance Commission found that 28 percent
of insurers responding to a survey utilized domestic violence as a
underwriting criteria. Ms. Andreen said something she heard at the
previous meeting was that this is a problem that pertains only to
health insurance. She said they have found that is not the case.
There is documentation that battered women's shelters have been
denied professional and property liability. Not because they posed
an increased risk, but because many of their workers were former
victims of domestic violence. She said there is documentation of
this impacting life, mortgage and homeowners insurance. There is
also documentation of coverage being denied for injuries sustained
in domestic violence in spite of there being an existing policy in
place. Based on a study conduced in 1986, over 13,000 women living
in Alaska have obtained medical treatment because of injuries they
sustained in domestic violence. Ms. Andreen said they are
concerned that because there has been so much publicity on the
national level, victims here in Alaska have stopped and will stop
seeking necessary medical treatment. They will stop seeking
necessary counseling and will refrain, when they do seek services,
from identifying the cause of those injuries. Ms. Andreen said Ms.
Hugonin from the Network on Domestic Violence and Sexual Assault
talked about Maternal, Child and Family Health receiving a federal
grant to train medical providers on how to identify domestic
violence injuries. She said she is concerned that if they know
their records would be used to deny a victim future insurance that
they will stop identifying and documenting those injuries.
MS. ANDREEN referred to the previous meeting where there was a
question, "Doesn't this bill allow victims to stay in an unsafe
situation?" She said that is not the case. Victims do not choose
to live in a violent lifestyle. The first time there is violence,
the victim assumes that it is a one time event. The perpetrator is
usually apologetic and promises it'll never happen again.
Eventually, over a period of time a pattern is established and it
becomes harder and harder for a victim to leave. Ms. Andreen
pointed out that there is a number of economic, social, family
value, and safety issues that a victim has to factor in when
deciding to leave a relationship. Without this type of protection,
it is possible that loss of health insurance and other types of
insurance for a victim and her children could be a deciding factor
for a victim to stay in an abusive relationship where she already
has the insurance.
MS. ANDREEN stated she doesn't agree with the position established
by Mr. Lessmeier. She said she does acknowledge that State Farm
has voluntarily agreed, in other parts of the country, to stop its
discrimination policy, but when they talk about using medical
conditions as a criteria for determining whether or not someone is
eligible for insurance coverage, she is concerned this will
indirectly open the door to discriminate against victims of
domestic violence. She said it has been found with other insurance
companies that it is sometimes used to target the types of injuries
that result in domestic violence as the criteria for not insuring
(indisc.--coughing) increasing their premiums.
MS. ANDREEN said they support the need for the required disclosure
as a standard policy for all insurance, since a person applying for
an insurance policy must be notified that they're not receiving
that insurance. She said she doesn't believe it would be that much
more difficult to give the reason why. Ms. Andreen said she thinks
it would be very difficult for the general public to know that they
have the right to ask why they're being rejected. She explained
they also support the need for a strong confidentiality clause that
insurance companies need to keep any information they have about
domestic violence as confidential information because of the risk
it can place to the victim if that information is disclosed
elsewhere.
Number 1969
REPRESENTATIVE PORTER said as he reviewed the bill and Mr.
Lessmeier's concerns, the first question that came to his mind was,
"How does a insurance company determine that an injury was a result
of domestic violence?"
MS. ANDREEN said it is her understanding that it could happen in a
number of different ways. If it is an existing policy, then
insurance companies have access to the medical records. If the
person sought medical treatment or counseling services, where the
insurance company is being used to pay for that, the insurance
company has access to those records.
REPRESENTATIVE PORTER explained he has been involved in a couple of
cases, as an employer, and never had access to counseling records.
REPRESENTATIVE KUBINA asked Ms. Andreen if she meant records of the
counseling sessions or the billing for counseling.
REPRESENTATIVE PORTER clarified the subject of the counseling. He
said he is trying to figure out how it is that insurance companies
know that they are discriminating against domestic violence victims
as opposed to victims with repeated injury (indisc.).
Number 2029
SENATOR DAVE DONLEY, sponsor of SB 197, said if they don't know, it
is not a problem. We don't assume that they have the knowledge of
whether or not somebody is a victim and that the injury to them is
based on that. It is only prohibited if they know that somebody is
a victim and they discriminate because of that. So, if they don't
know, then that's clearly not the only reason that they're making
that assessment and it's not prohibited by the bill.
REPRESENTATIVE PORTER said, "You're saying that they may not keep
records -- they may not attempt to determine if it's domestic
violence, but yet they can't discriminate if it is domestic
violence. So, what I'm thinking is that there is probably -- and
I don't know much about insurance, but there is probably some
degree of increase in rates or whatever that's gonna happen if
somebody comes in with repeated costs against policy. It is like
your car insurance goes up if you had the second accident. That
being the case, if they can't ask if these injuries are as a result
of domestic violence, then how are they going to know whether
they're discriminating or not against victims of domestic
violence?"
Number 2186
SENATOR DONLEY explained they could have gotten the information
from another source, from an independent investigation, from police
records, or other things that may be available to them. He said it
is not a problem unless they know about it and it is the only
reason they discriminate against that individual.
MS. ANDREEN said it is her understanding, and she may be wrong,
that when you file a claim for health insurance coverage, you sign
a disclaimer saying that your medical records are available to the
insurance company for reviewing their claim. She said it is her
understanding that is the most common way that the information gets
passed through.
Number 2278
REPRESENTATIVE SANDERS said he has a concern that some women, in
some circumstances, when they have two or three kids, would stay in
abusive relationships partly for the insurance.
MS. ANDREEN explained that is one of the things that they are
concerned about. If they have, for example, an existing policy
through their husband's employer, and one of the things they're
concerned about in leaving the relationship is their economic
ability to support themselves and their children. (Indisc.) being
denied health insurance or other forms of insurance and/or looking
at higher premiums because they have this history. It will be a
factor that will help keep them in an abusive relationship.
REPRESENTATIVE SANDERS said he guesses he is looking at it in
another way. He said he is thinking that if her insurance was
yanked, it would get her to leave the situation. He said maybe he
is wrong, but he sees it that way.
Number 2436
REPRESENTATIVE ELTON said one way that information may get into an
insurance file record is that the insurance company doesn't really
have control on the information that may come in from a doctor. If
the doctor's report says, "A blunt force trauma imposed by spouse,"
then that would be part of the record. Then the provision would be
that they couldn't knowingly release that except under several
circumstance which are outlined.
TAPE 96-28, SIDE A
Number 001
REPRESENTATIVE ROKEBERG said if an insurer doesn't know what the
cause of repeated injuries are and they came up and said, "Well
this person is accident prone so we want to risk assess them by
increasing their premium because they have had -- three times
they've falling down the stairs and broken their leg. We don't
know how it happened but..." Representative Rokeberg said they
couldn't do that under this. He said it is being prohibited
whether they knew the approximate cause of the injury or not. If
somebody is accident prone, maybe they should have a higher
premium.
SENATOR DONLEY said this discussion came up in the Senate. That is
why the bill was drafted in concurrence with the Division of
Insurance to say on line 9 the word "only." That word is crucial
to addressing the concern Representative Rokeberg raised. If they
don't know, then it's not the only reason. It is only if they know
that it is caused by domestic violence or if the insured or
potential insured is a victim of domestic violence that they can
violate this prohibition. If they don't know, they're not in
violation because it is not the only reason that they're
discriminating. They don't have a duty to know, either.
Number 136
REPRESENTATIVE ROKEBERG asked if the premium could be increased if
there was more than that knowledge. If there was a clear pre-
existing health condition that was unrelated to any traumatic
injuries as a result of domestic violence, wouldn't the insurance
company have a chance to increase their premiums? Representative
Rokeberg questioned that if they start smoking, couldn't they
increase the premiums?
SENATOR DONLEY said the answer is yes, they can increase the
premium. In that case, it is not the only reason they're
increasing the premium. The only reason is that they're a victim
of domestic violence. The reason is because they have a pre-
existing condition or that they're smoking. He said that is not a
prohibited discrimination under the bill.
REPRESENTATIVE ROKEBERG asked if an insurance company underwrites
for people who have a pattern of injuries over a period of time
that were caused by domestic violence but the insurer didn't know
that.
SENATOR DONLEY said unless the insured knows they're a victim of
domestic violence, there is no violation.
REPRESENTATIVE ROKEBERG said then it is a matter of evidence and
proof if there is any kind of cause of action filed or claimed.
SENATOR DONLEY said at that point, under this legislation, if they
cancelled somebody or raised their rates, they would notify them
just as they do in their existing law as to why. If they were
denying original coverage, this bill says they would have to say
why they denied them coverage. They would have to articulate a
reason other than that they were a victim of domestic violence for
their discrimination. If they could do that, they wouldn't be in
violation of the law.
Number 312
REPRESENTATIVE PORTER referred to the required disclosure on page
2, and said it doesn't seem to apply to this case. It seems to say
the standard or requirement for the insurance company in general
for any termination of a policy. He asked Senator Donley if there
is any way to get at what he wants without having to create a whole
new operation for the insurance industry.
SENATOR DONLEY said his understanding, under the existing insurance
code, any time an insurance company cancels or raises an injured
person's rates, they're required to provide notice of why they did
so. The only additional element in the bill is if they deny
insurance to a new applicant, they would have to advise that person
as to why. Since the bill covers the full range of insurance
available, property, (indisc.--coughing) feasibility, it seems
important that they provide that disclosure. The only modification
would be for people whom they deny original coverage to.
REPRESENTATIVE PORTER inquired about the reason people are
discriminating against domestic violence victims, and whether it is
the fear of having costs from the injuries.
SENATOR DONLEY said it is profit. If you know that they have a
former spouse who is inclined to commit acts of violence or
property damage, it is only a good profit motive to cancel the
insurance so you don't have to pay a claim on something that
happens.
Number 577
MS. ANDREEN said it is her understanding that there are no actual
studies that shows domestic violence costs insurance companies more
money. It is more of a perception.
REPRESENTATIVE ELTON referred to the disclosure where we're adding
a new disclosure for original applicants. He said that is what
essentially happens if you apply for credit and are denied. You
have a right to know why you've been denied credit.
CHAIRMAN KOTT referred to applying for a credit card and you are
rejected. They would have to provide a reason for that rejection
without you prompting them.
REPRESENTATIVE ELTON said he thinks the difference is that they are
not necessarily required to tell you when they reject, but if you
ask they have to tell you. You have a right to ask and they must
tell you why you were denied.
Number 691
REPRESENTATIVE ROKEBERG referred to the definitions on page 2 and
asked if everything had to be defined for the new section.
KEN SYKES, Analyst III, Market and Conduct, Division of Insurance
Department of Commerce and Economic Development, explained the
division currently supports CSSB 197(L&C). He said it encompasses
all insurers, property, casualty and life and health, writing
business in the state of Alaska. He said that would be an answer
as to why we need all the definitions on page 2. He said there are
a myriad of definitions that apply to different entities in their
statute. This incorporates all of them. Mr. Sykes said the bill
makes the insurer write for a condition and not for a cause. In
other words, the condition of a bad heart, bruised ribs or a broken
arm, not that it was caused by an industrial accident or domestic
violence or just plain clumsiness. Insurers can deny for a myriad
of reasons. Mostly, you will find that they will not accept an
application based on frequency. If somebody has ten accidents
within a two month period, that is definitely a high risk. The
insurer is allowed to rate for that risk because of the ten
accidents as a frequency, but not because the individual cases of
those accidents because there may not be a relation between those
two. What you're looking at is the relationship of the condition.
Number 842
REPRESENTATIVE PORTER said what the bill asks is to not
discriminate because of domestic violence, but to allow an
insurance company to discriminate based on any other rational
reason that they now do. So if the two happen to coincide, it
doesn't mean that they're stuck with a risk because it's domestic
violence as opposed to clumsiness.
MR. SYKES said that is correct. It goes hand in hand with another
statute concerning unfair discrimination, AS 21.36.090(d).
MR. SYKES explained to the committee members that currently in
statute, if a insurance company wants to raise or cancel your
premium they must send you a notice within a specified time period
and they must also state the reason why they are either increasing
your premium, non-renewing your coverage or cancelling your
coverage. This hits at the first step. In other words, if I do
not accept your application for coverage, then I will tell you why.
Number 984
MARGARET DOWLING, Attorney, Lessmeier and Winters, was next to
address the committee on behalf of State Farm. She said State Farm
strongly supports legislation that would prohibit discrimination
against a victim of domestic violence, but the way the bill is
currently drafted it creates some practical problems. She said a
bill could be drafted in a more precise way that would address the
same public policy that seems to be driving the bill. For example,
State Farm's position is that the bill is drafted too broadly. She
said there is no problem in Alaska that they have knowledge of
where there is discrimination against victims of domestic violence.
Nationwide, the problem seems to limited to health life insurance
and disability insurance. Since that is the case, State Farm
believes it should be limited to those insurers in Alaska.
Otherwise there will be an incredible burden on a huge range of
insurance carriers.
MS. DOWLING explained the bill will create a special class of
people who would enjoy exemption from adjustments to premiums or
coverage based on their status as a victim of domestic violence.
She said even though this discrimination can't occur if the carrier
is aware of or has knowledge that this person is a victim of
domestic violence, the burden is shifted to the carrier to prove
that they didn't know that the person was a victim of domestic
violence. So there is a situation where the coverage is adjusted,
the person claims that they're a victim of domestic violence, the
burden shifts to the carrier to prove they don't know. Ms. Dowling
said in many cases, victims of domestic violence are reluctant to
reveal that they're a victim.
MS. DOWLING referred to confidentiality of records and said State
Farm sees that as raising some problems. Sometimes the carrier is
not going to know. There may be a record that reveals an injury
but doesn't link the injury to any particular case, this would
place the burden on the carrier to try and find out. She said this
shifts the burden to the carrier and puts them in an awkward
situation where they may actually be breaking the law by revealing
information that they did not know was records of a person who was
a victim of domestic violence. Ms. Dowling pointed out that is
not a provision that is necessary. At present, there is a common
law privilege, it is the patient/physician privilege that protect
confidentiality. This extends not to just victims of domestic
violence, but also people with other medical conditions. Ms.
Dowling said the bill is drafted too broad. The problem is you're
trying to fix a problem where there is no problem. She continued
to give testimony against the legislation.
Number 1378
REPRESENTATIVE ROKEBERG recommended the bill be held over or put in
a subcommittee. He said he has some concerns with the bill. He
said there are a lot more insurance companies that operate in the
state that the committee hasn't heard from.
REPRESENTATIVE PORTER referred to the disclosure section and
recommended the reason be given upon request as opposed to every
single one having to state a finding.
REPRESENTATIVE ELTON pointed out the committee passed out a major
procurement bill without hearing from any contractors. He said
some of the people who have testified know a lot of people in the
industry and he would have expected that the committee would have
heard from them.
CHAIRMAN KOTT indicated the bill would be held.
ADJOURNMENT
CHAIRMAN KOTT adjourned the House Labor and Commerce Committee
meeting at 5:10 p.m.
| Document Name | Date/Time | Subjects |
|---|