Legislature(2005 - 2006)SENATE FINANCE 532
03/20/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB 206 | |
| SB289 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 206 | TELECONFERENCED | |
| + | SB 289 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
March 20, 2006
9:03 a.m.
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately
9:03:25 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Bert Stedman
Senator Lyman Hoffman
Also Attending: DEAN GUANELI, Chief Assistant Attorney General,
Legal Services Section, Criminal Division, Department of Law;
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community, and Economic Development; JOHN CYR,
Business Manager, Public Safety Employees Association;
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
SB 206-DETENTION OF MATERIAL WITNESSES
The Committee heard from the sponsor, the Department of Law, and
a representative of a peace officer association. The bill was
held in Committee.
SB 289-INSURANCE
The Committee heard from the sponsor and the Department of
Commerce, Community, and Economic Development. The bill was held
in Committee.
9:04:02 AM
CS FOR SENATE BILL NO. 206(JUD)
"An Act relating to contempt of court and to temporary
detention and identification of persons."
This was the first hearing for this bill in the Senate Finance
Committee.
9:04:08 AM
Senator Bunde, sponsor of the bill, testified that the genesis
of this bill was based on recent situations in Anchorage, which
he was concerned could occur in other areas of the state. These
situations involved a gang-related shooting and attempts by
police officers called to the scene to retain witnesses for the
purpose of gathering information about the crime. Alaska Statute
currently does not include a material witness provision and the
potential witnesses disregarded officers' requests to remain at
the scene and to cooperate in efforts to collect information.
Senator Bunde stated that this legislation would provide police
the ability to detain witnesses in similar situations and
possibly defuse the "immediate tension".
Senator Bunde assured that the legislation is also intended to
not restrict the rights of the average citizen or abuse their
constitutional rights. He cautioned against the potential
negative impact on innocent parties when providing law
enforcement additional authority in their efforts to solve
crimes.
Senator Bunde indicated that this bill has undergone review and
changes have been made to achieve the balance of providing
assistance to law enforcement without infringing on the public.
He acknowledged the Department of Law efforts to this end.
Senator Bunde then overviewed the Senate Majority press release
pertaining to this bill, which reads as follows.
Summary:
· Increases the penalty for contempt of court for
failure to honor a subpoena or refusal to answer as a
witness in connection with a felony crime or
appearance before the grand jury.
· Adds a section to AS 12.50 allowing a peace officer to
temporarily detain a person under circumstances that
give the officer reasonable suspicion that:
o The person witnesses a crime or was in the
vicinity of a crime such as a homicide or
manslaughter;
o The person may have information of material aid
in the investigation of that crime, and;
o The temporary detention is reasonably necessary
to obtain or verify the identification of the
person, to obtain an account of the crime, to
protect a crime victim from imminent harm, or for
other exigent circumstances.
· Allows a police officer who has detained a person
under these circumstances to:
o Photograph the person;
o Serve a subpoena on the person to appear before
the grand jury if the person fails to provide
valid government-issued identification;
o Take the person's fingerprints if the person is
detained in connection with the investigation of
a murder, attempted murder or misconduct
involving weapons in the first degree under AS
11.61.190.
· Prohibits the peace officer from requiring the person
to sign a subpoena issued under this section, and
requires the peace officer to advise the person that
failure to honor the subpoena is punishable as
criminal contempt of court.
· Allows a person receiving a subpoena to request the
district attorney to withdraw the subpoena if the
person provides a valid government-issued photographic
identification prior to the grand jury proceeding.
· Makes it a class B misdemeanor to refuse or resist the
taking of photos or fingerprints under this section.
Benefits:
· Balances the need to protect individual freedom with
the ability to prosecute crime and to provide
defendants with witnesses on their behalf.
Background:
· A material witness is crucial to either the defense or
prosecution. Unfortunately, material witnesses often
refuse to cooperate with law enforcement officials,
significantly impeding the ability to bring
indictments or prosecute crime. SB 206 protects
material witnesses from unreasonable arrests or
confinement and helps ensure the availability of
crucial testimony.
9:08:50 AM
Senator Stedman asked the impact of this bill in domestic
violence instances in which children are involved or present.
9:09:13 AM
Senator Bunde replied that this provision would apply to
situations involving the most serious crimes, such as
manslaughter and misconduct involving weapons.
9:09:31 AM
DEAN GUANELI, Chief Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law, testified that
this bill would clarify law that is currently unclear relating
to material witnesses. Peace officers would have direction as to
their authority in situations involving witnesses at the scene
of a crime. Possible witnesses can "drift into the background",
making it difficult for law enforcement to gather information.
9:10:42 AM
Mr. Guaneli indicated several such instances have occurred in
the past.
Mr. Guaneli explained the proposed Article 3. Temporary
Detention and Identification of Persons., inserted to AS 12.50
in Section 2 of this bill. AS 12.50.201(a) would provide that a
peace officer may temporarily detain a person in reasonable
situations. The courts recognize this authority as a part of
common law, but the exact authority is not defined. This
legislation would not only inform police of what actions they
could take, but what actions they could not take as well.
9:12:12 AM
Senator Bunde stated that the provisions of this legislation
would apply in domestic violence situations involving a weapon.
9:12:34 AM
Mr. Guaneli continued that the proposed AS 12.50.201(b)
specifies the actions a peace officer is allowed with regard to
material witnesses of different crimes. In any crime committed
against a person, this authority is limited to determining the
identification of the possible witness and what may have been
witnessed. Only in circumstances in which law enforcement is
investigating a murder or an attempted murder, such as the
result of a drive-by shooting, could police detain the potential
witness.
9:13:52 AM
Mr. Guaneli told of one case involving domestic violence. Police
witnessed a couple running, then getting into a car and driving
away. Police thought the woman in this pair was the victim of a
domestic violence assault and stopped the car to determine if
this was the case. This action by law enforcement was deemed
proper.
Mr. Guaneli informed that in the investigation of misdemeanor
crimes, police could not take fingerprints of material
witnesses.
9:14:59 AM
Senator Stedman expressed concern about felony domestic violence
crimes. The victimized spouse may leave the home to avoid
further confrontation because restraining orders do not offer
sufficient protection. He asked if the victim would then be
detained by authorities and if so, what would be the fate of any
children involved.
9:16:11 AM
Mr. Guaneli agreed that domestic violence restraining orders are
not always effective. This bill is not intended to prevent a
domestic violence victim from seeking safety. Rather it would
allow police to determine who was in the vicinity when the crime
occurred and what they may have witnessed. In most instances,
the domestic violence victim telephones the police. This bill is
more applicable to those witnesses who do not wish to be
identified or cooperative, such as gang members or friends and
relatives of gang members.
9:17:47 AM
Senator Bunde emphasized this provision only allows detention of
material witnesses long enough to gather verified identification
and possibly a statement. It would not require a victim to
remain near the perpetrator.
9:18:17 AM
Co-Chair Green understood that additional language is necessary
to address the provision relating to fingerprinting of material
witnesses.
9:18:32 AM
Mr. Guaneli told of discussions to limit this provision, in part
to be less vulnerable to a court challenge. Law enforcement only
requires fingerprints of witnesses to accurately identify these
people. The use of those prints should be limited to that
purpose and destroyed afterwards. Currently, the Department of
Public Safety maintains two databases: "known" fingerprints and
"unknown" fingerprints. The known database includes prints
obtained from certain job applicants, members of the Alaskan Bar
Association and other public protection professionals. The
database of unknown prints contains those collected from crime
scenes in which the identity of the person has not been
determined.
Mr. Guaneli noted that for the purposes of this legislation, the
fingerprints taken of a material witness could only be compared
to the known database. If a match is found, the identity of the
witness could be verified and the prints could be destroyed. If
a fingerprint record were not found, the prints taken would also
be destroyed.
9:21:08 AM
Co-Chair Green anticipated an amendment clarifying this matter
would be submitted for future consideration.
9:21:13 AM
Senator Hoffman asked how the fingerprints taken from a material
witness would be used to make a positive identification. He also
asked the number of other states that have similar statutes
allowing for the fingerprinting of material witnesses.
9:21:33 AM
Mr. Guaneli replied that the witness would be identified by
police officers at the scene of the crime if an officer had
reason to believe the person could be of assistance in solving
the crime. He did not know the number of other states with
similar laws. A national trend is progressing to improve the
ability of police to gather information at crime scenes.
9:22:45 AM
Senator Hoffman requested information regarding similar laws in
other states.
9:23:00 AM
Mr. Guaneli indicated several days would be needed to undertake
an exhaustive search.
9:23:21 AM
Senator Stedman commented that issues in Anchorage, Mat-Su and
Fairbanks are different than those effecting Southeastern
communities. He supported the concept allowing police to detain
people to obtain a list of names and addresses for future
questioning.
9:24:09 AM
Senator Bunde, referencing Senator Hoffman's question, informed
that other states have a material witness provision and he had
submitted a request for information on these statutes.
9:24:32 AM
Mr. Guaneli asserted that this provision is based on the
obligations of citizens to provide testimony in court. It allows
police to issue a subpoena to a citizen who fails to present
valid identification. Unless testimony would be self-
incriminating, people have a duty to testify when called upon to
do so.
9:25:45 AM
Senator Hoffman contended that individuals have different
abilities to recall a situation. He exampled exercises in which
a person passes through a room and the group in that room are
asked to describe that person. These witnesses usually have
significantly different recollections.
Senator Hoffman asked the point that police must accept a
witness' inability to recall or accurately describe what they
saw. This gave him concern.
9:26:40 AM
Mr. Guaneli replied that a balance must be achieved. A person
walking a dog in the vicinity of a crime who claims to not have
witnessed anything relevant to the crime could be deemed
truthful by a peace officer immediately. However, another person
running away from the scene of the crime would require further
investigation. That person could be fleeing because they heard
or saw shots fired and feared for their safety, or fleeing to
avoid police capture.
Mr. Guaneli inferred the adage of attracting more flies with
honey than with vinegar to explain how law enforcement could
achieve more cooperation from citizens by being respectful.
Because of this, police have an incentive to treat with respect
those people who had no connection with the crime.
9:28:55 AM
Senator Bunde pointed out that a person at the scene of a crime
who provided proper identification to law enforcement could be
contacted at a later date for further questioning. That person
could have observed something initially thought to be
irrelevant, but later determined to be a "piece of the puzzle".
9:29:46 AM
JOHN CYR, Business Manager, Public Safety Employees Association,
testified about the multiple law enforcement officials belonging
to the organization. The Association supports this bill. It
would allow for the identification of people present at a crime
scene. Too often, potential witnesses refuse to cooperate and
leave the scene, making the police officers' job difficult. This
legislation would provide clarity. The need is obvious. The
impacts of gang-related, methamphetamine-related and organized
crime related situations are beginning to become apparent in
Alaska. "Bad people" want to remain unknown.
9:32:24 AM
Co-Chair Green indicated that amended language would be
forthcoming.
9:32:31 AM
Senator Bunde remarked that while this bill was generated as a
result of situations occurring in Anchorage, the Alaska State
Troopers have indicated it could have statewide application.
9:32:59 AM
Co-Chair Green ordered the bill HELD in Committee.
9:33:02 AM
CS FOR SENATE BILL NO. 289(L&C)
"An Act relating to the payment of insurer examination
expenses, to the regulation of managed care insurance
plans, to actuarial opinions and supporting documentation
for an insurer, to insurance firms, managing general
agents, and third-party administrators, to eligibility of
surplus lines insurers, to suitability of life and health
insurance policies and annuity contracts, to unfair
discrimination under a health insurance policy, to prompt
payment of health care insurance claims, to required notice
by an insurer, to individual deferred annuities, to direct
payment to providers under a health insurance policy, to
mental health benefits under a health care insurance plan,
to the definitions of 'title insurance limited producer'
and of other terms used in the title regulating the
practice of the business of insurance, and to small
employer health insurance; repealing the Small Employer
Health Reinsurance Association; making conforming
amendments; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Senator Bunde introduced bill, sponsored at request of the
Department of Commerce, Community and Economic Development,
Division of Insurance. The provisions of the bill are technical.
9:33:49 AM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development testified as
follows.
SB 289 contains numerous changes to Title 21 that are
designed to provide protection to consumers who purchase
life annuity and health insurance, to ensure that State
statutes are consistent with federal law and National
Association of Insurance Commissioners' [NAIC] model acts
and standards, to update Division procedures and
transactions and to make Alaska licensing more consistent
with national standards.
[Regarding life and health insurance:] Sections 3 through
23 … deal with group health insurance. Today, under current
law, only group health insurance plans are required to
comply with the managed care protections in AS 21.07. These
protections include requirements for both internal and
external appeal processes for claim denials. The amendments
to these sections would make the protections also
applicable to individual health contracts.
There are some other, what I think are non-substantive
changes, which are designed to make terminology consistent
with federal and state law. We replace "health care" with
"medical care", remove "group" to make these provisions
also apply to individual contracts, and replace "enrollee"
with "a covered person".
To get into what I think is a controversial section of this
bill, Section 32, sets a minimum requirement for
suitability standards. I'd like to save discussion on that
to the end. …
Section 33 [pertains to provider non-discrimination and
extends the provision to individual policies rather than
just group health insurance policies.]
Section 34 deals with prompt payment of health claim
provisions.
Section 36 is the NAIC standard non-forfeiture for
individual deferred annuities. What we've done here is to
address in [Sections] 37 and 38 the annuity products with
excessive surrender charges. In effect these changes limit
surrender charges to about a ten-percent grading down to
zero after ten years and will no longer allow unrealistic
maturity ages such as 115. That's not a particularly
realistic date that people who live longer are alive.
Section 41 adds the HIPA [Health Insurance Portability and
Accountability Act] mental health parity provisions that
are currently in federal law. They're renewed [as the]
Alaska law sunsets so we need to add those back.
Section 42 to 44 … we would repeal the Small Employer
Health Reinsurance Association. Today there are only two
lives are reinsured in that Small Employer Reinsurance
Association. The administrative costs of running the
association range from $10,000 to $12,000 a year. We have
discussed this with industry and it appears that this
particular association has outlived its usefulness.
Industry is not at all opposed to us repealing this
particular provision. Section 52, at the end of the bill,
provides for a transition to wind up the affairs of the
association and how we would deal with that.
Those are the basic concepts in the health and life
changes. The balance of the bill makes changes in other
provisions regarding the oversight of the entities we
regulate and license.
Section 25 is an adoption of the NAIC model actuarial
opinion guidelines. Today this is already done in the life
and health industry. This particular section would adopt
the guidelines for property casualty insurers. A domestic
insurer would be additionally required to file with the
Division of Insurance, an actuarial opinion summary, which
includes their estimate, or range of reasonable estimates
of, reserves and explains any adverse development. This
gives the Division an additional tool to more quickly
identify an insurer that could be in a troubled financial
condition. And again, we have worked with industry on this.
We've had some questions that have been resolved and I have
letters indicating that from those particular trade
associations.
Section 29 requires some changes in our Managing General
Agent laws to streamline and be more consistent with
national standards.
Section 30 streamlines notification requirement for third-
party administrators [indiscernible]. This was a request
from an industry last year. We didn't get it in time to put
in our bill to allow them to notify us of main contacts,
not if they have a hundred people who might deal with
Alaskan claims. They didn't want to have to change their
list weekly if they had employee changes. So it modifies
the requirement.
Section 31 allows the Division to publish a list of
eligible surplus [indiscernible] on our website instead of
by paper. It provides authority to reinstate a company
under specific conditions, which would include payment of a
late fee. Today we don't have that flexibility if a surplus
line insurer does not make the appropriate filings with us
by the deadline, they have to start all over again and that
seems to have been a very cumbersome process. We would like
to make that easier to work with so it isn't a particular
burden.
[Section] 35: expand the authority for electronic
communications.
Generally then the last five sections deal with various
repealers and effective dates.
[Pertaining to Section 32:] As I mentioned at the
beginning, as we go through a bill of this technical nature
and discussions, there have been some pieces that have
resulted in questions: the confidentiality of actuarial
opinions, the annuity surrender charges. The one that I
think remains are the suitability standards. I have had
considerable discussion with industry over what's
appropriate, what's not appropriate. We have seen in
industry some examples of behavior that is probably been
detrimental to consumers. What I have proposed and will
propose in this section is to modify the language that is
currently in the suitability section to pertain only to
long-term care products and to annuities.
NAIC has adopted regulations in both of those areas. It's
my understanding that the long-term care regulations have
been adopted in 31 states. I would like to, and I have
committed to, using that same philosophy in adopting long-
term care regulations.
The annuity regulations are also an NAIC model. We've seen
examples of trade practices that are being violated in the
selling of annuities to seniors. Earlier this month at the
meeting of NAIC in Orlando, the model was changed to no
longer only apply to those 65 and older. But we're moving
that age requirement so the suitability for annuities would
apply regardless of the age of the purchaser: the consumer.
I would propose, because those are the two areas that there
really already are standards nationally that we limit
suitability to those two areas.
We have in the Division had cases that we've had taken
legal action and been upheld under current statutes. The
suitability language gives us I think more consistency and
will specifically authorize us to adopt regulations. And I
would like very much to adopt the NAIC regulations.
9:43:24 AM
Senator Stedman, referencing Section 32 "targeting" long-term
care insurance, asked if a differentiation between fixed and
variable annuities is provided.
9:43:55 AM
Ms. Hall informed that the suitability standards for long-term
care products include provisions relating to the "ability to
pay". These products have increased in price. Guarantees of
pricing were given "early on". A consumer must purchase the
product and continue to pay premiums until the insurance is
needed. As products became more expensive, consumers were
lapsing their coverage and in effect losing the money they had
invested. The suitability addresses "need", evaluation of other
assets, and the ability of a plan to allow consumers to pay over
a long term so the coverage is available when the consumer is in
need of long-term care.
Ms. Hall noted no differential between fixed and variable
annuities. The Division currently regulates both. Some dual
regulations apply to the securities aspect of annuities in which
the Division coordinates with the Division of Banking and
Securities. Some joint investigations have been undertaken on
individuals selling products.
9:45:21 AM
Senator Stedman asked about the definition of "reasonable
grounds" and how it would be addressed in regulation.
9:45:37 AM
Ms. Hall gave an example of a contract she recently reviewed,
which included a form compliant with the model regulation. The
company set its own suitability standards and utilized a
"consumer form that asked particular questions". The Division
would not promulgate regulations requiring companies sell a
certain product to a certain consumer. Rather the regulations
would provide a guideline to ensure that the product is
appropriate for the financial needs and situation of the
individual consumer.
9:46:21 AM
Senator Stedman knew of several recent incidences in the states
of Florida and New York involving major insurance carriers
"called to task" on excessive replacement on some annuities and
other policy issues.
9:46:44 AM
Ms. Hall informed that the Division participated in a multi-
state settlement with a company that replaced one annuity with
another for the enhancement of that company. That settlement
included assurance that consumers would not detriment from such
actions.
9:47:43 AM
Senator Stedman then asked the background of the provision in
this bill allowing for electronic receipts. He voiced concern
that some documents are better received in paper format for
recordkeeping purposes.
9:48:49 AM
Ms. Hall responded that the Division is attempting to update
statute to allow for electronic communication. Companies that
utilize an increasing amount of electronic communication have
requested this change. The provision would require proof of
receipt for these transactions.
Ms. Hall agreed that consumers sometimes need direct information
about policies. However, some consumers prefer electronic
communications and this provision to either request or grant
permission to receive documentation through this technology. The
consumer would make the choice.
9:50:20 AM
Senator Stedman understood the trend of the insurance industry
to be more efficient. But in many instances, consumers receive
information in the mail and do not understand it. Insurance is
almost a foreign language to many people. He asked if companies
would be required to follow electronic communications with a
hard copy.
9:51:16 AM
Ms. Hall answered that the provision would not require back-up
mailings, as this would be somewhat redundant. Insurance
information is confusing, but would not necessarily be more or
less confusing if received electronically.
Ms. Hall stated that many consumers purchase insurance policies
online thinking they were spending less money. But the policies
often differ and the comparison is "apples to oranges". The
Division receives complaints about this, but could only advise
consumers to seek the advice of an insurance agent to explain
the various policies.
9:52:29 AM
Senator Stedman asked about situations in other states, as he
assumed this is a national trend.
9:52:41 AM
Ms. Hall affirmed that the use of electronic communication is a
national trend, not only in the insurance industry. In some ways
this form of communication is more efficient.
9:53:23 AM
Senator Bunde surmised that if a consumer provides the company
with an email address, communication in this manner would be
suitable. It would be assumed that this consumer has the ability
and knowledge to receive information in this format. If a
consumer does not provide such an address, traditional hard copy
mail would be appropriate. He did not deem an "opt in" provision
necessary if an email address were provided.
9:54:20 AM
Co-Chair Green noted the Division provided a proposed amendment
to address the suitability provision [copy not provided]. The
language of this amendment had not been distributed as Co-Chair
Green was unconvinced it should be offered.
Co-Chair Green announced that her husband is and insurance
agent, although she was unsure if his business would be affected
by the provisions of Section 32.
9:54:54 AM
Senator Stedman announced that he is licensed as an agent of
life and health insurance and owns a minority interest in an
independent agency.
Senator Stedman spoke to reference in the legislation requiring
insurers produce an actuarial analysis to allow the Division to
determine suitability and viability of the insurer. He asked if
the intent is to judge the solvency of a company as well as to
alert of predatory pricing in the event the carrier incurs
financial losses in one area of the nation and attempts to
increase prices elsewhere to offset that loss and increase cash
flow. He reminded that this occurred in the workers'
compensation field several years prior. He asked if this
legislation would implement a "check and balance" to the system.
9:56:12 AM
Ms. Hall replied that the actuarial opinion guideline adopted in
this legislation addresses "reserving". Carriers are already
required to provide in their financial statements, an actuarial
opinion. An actuarial analysis of reserves is mandated
currently. This legislation would provide the "back ground, the
work papers" of the actuarial analysis to allow the Division
"one additional tool." This information would identify potential
financial impairment that could be a source of preditorial
pricing. She told of one instance in which the prices of a major
carrier were "massaged" and the company almost doubled the
amount of its reserves.
9:57:44 AM
Senator Stedman deemed this a good requirement.
9:57:53 AM
Co-Chair Green expressed concern about the proposed amendment to
Section 32. This practice occurs regularly for every product
sold for a variety of reasons, including underwriting,
assessment of risk and the consumer. Changes are unnecessary and
should not be included in this bill. The proposed amendment
should be amended.
Co-Chair Green announced the bill would be held in Committee to
address this issue. She found the proposed language
"troublesome".
9:59:38 AM
Senator Stedman agreed that the practice is usually acceptable
in the context of most major and reputable carriers.
Occasionally, suitability is "pushed aside" to achieve other
corporate objectives. Significant documentation has been done
over the last several years to justify recommendations for
exchanges and replacements. If those were not documented in "the
file", supervising officers would make notification.
Senator Stedman did not oppose amending the provision. He asked
if Co-Chair Green intended to delete the language of Section 32,
or amend it.
10:01:13 AM
Co-Chair Green was unsure of her intentions. She was concerned
about the provision.
10:01:27 AM
Senator Bunde commented that the Senate Labor and Commerce
Committee, which he serves as chair, sponsored this legislation
at the request of the Division. It would provide consumer
protection, make Alaska licensing more consistent with national
standards and promote more efficient administrative procedures
and industry oversight. His support of this legislation was not
unconsidered.
10:02:05 AM
Co-Chair Green agreed the consolidation and consistency language
were appropriate. The majority of the legislation provided
conforming changes.
10:02:20 AM
Co-Chair Green ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 10:02:22 AM
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