Legislature(1995 - 1996)
03/18/1996 03:12 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 197 - INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES Number 1745 CHAIRMAN KOTT announced the committee would address 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." Number 1750 SENATOR DAVE DONLEY, sponsor of the measure, said SB 197 would prohibit discrimination against victims of domestic violence by insurance carriers in Alaska. This has been a very serious problem in the Lower 48, and although insurance companies assure us that they don't currently practice this in Alaska and we don't have any evidence of it being in Alaska, we want to keep it from becoming a problem like it has outside Alaska. Representative Donley said there has been such a serious problem that seven to ten other states have already adopted similar legislation that is pending before Congress. He said he thinks four other states currently have legislation pending before them. Representative Donley said the bill has the support of many many public interest groups around the state. Number 1795 REPRESENTATIVE ROKEBERG questioned what the bill does. SENATOR DONLEY explained the bill says that if you're an insurance company you cannot deny insurance, increase rates or otherwise discriminate against a victim of domestic violence if that is your only reason for doing so. He said the bill has been carefully drafted in consultation with the Division of Insurance to make sure that the word "only" is included. So if they didn't know that a person was the victim of domestic violence, they wouldn't be in violation for any of those things because it wouldn't be the only reason they were making the decision they made if they were adjusting the rates. Senator Donley said some of the testimony in the record regarding some of the concerns from insurance companies, the division feels they are totally addressed by making sure the word "only" is kept in the bill. REPRESENTATIVE ROKEBERG asked what type of insurance. He asked what an example of the problem. SENATOR DONLEY explained the bill extends to all types of insurance. The biggest problem currently in the Lower 48 is what our statutes refer to as disability insurance which is commonly referred to as health insurance. He noted in the committee files there are some examples of what has happened in other areas. He indicated he has been asked, "If this hasn't been a problem in Alaska, why do you want to do it?" He said it is basically to keep it from happening in Alaska. Number 1925 REPRESENTATIVE SANDERS asked if it is possible that by the passage of the bill, it will encourage victims of domestic violence to remain in that situation rather than to encourage them to get out of the situation. SENATOR DONLEY said one thing that happens today is people are afraid to report domestic violence because they fear they would jeopardizing their access to insurance. He said he has heard that from men and women's groups and the shelters around the state. They actually think there could be a problem in the state right now, but the victims are afraid to report it because they are afraid they'll lose their insurance. That is another reason it would be difficult for them to get out of their situation. Number 1966 REPRESENTATIVE ROKEBERG referred to a letter in his committee file from Lessmeier and Winters regarding State Farm's position. He asked Senator Donley to comment. SENATOR DONLEY said he believes they recommended some different language. CHAIRMAN KOTT informed Representative Rokeberg that somebody from Lessmeier and Winters was on teleconference. Number 2004 CHAIRMAN KOTT asked Senator Donley how you would determine whether or not a person was a victim of domestic violence. He noted the question is in regards to releasing the records by the insurer. He read from the bill page 1, line 13, "except with the permission of the applicant or the insured as required by a court of competent jurisdiction." He asked how a company would know whether or not this would be record that would fall within this category. SENATOR DONLEY said he would like to have the Division of Insurance answer that question as he worked with them in coming up with the language. He said it was a specific request from the Network on Domestic Violence and Sexual Assault. Senator Donley said he was asked by Representative Masek's staff how it would be enforced. He explained it would be the same provision as any other insurance provisions. The division would identify that something is going on or they'd be responding to a complaint from a consumer. They would then have to do some sort of finding of fact that there was a domestic violence situation and then we'd proceed from that point. Number 2097 MICHAEL LESSMEIER, Attorney, Lessmeier and Winters, testified via teleconference. He informed the committee he was testifying on behalf of State Farm. Mr. Lessmeier explained State Farm has a serious concern about domestic violence and as a result of that concern, they've done a number of things across the country. One is to support tougher penalties for partner violence. Another thing that State Farm has done is they have initiated the corporate alliance to end partner violence which is a program of (indisc.) companies that is intended to increase public awareness for domestic violence. Another thing they have done is supported legislation that prohibits discrimination against victims of domestic violence. Mr. Lessmeier said they support what Senator Donley is trying to do, but they don't agree with how he is going about doing it. MR. LESSMEIER explained a concern is that the current version of SB 197 doesn't clearly state that an insurer must be allowed to underwrite or rate for a medical condition, the same as they would for someone who is not a victim of domestic abuse. Our concern is that it should be a non-factor; it shouldn't be a positive or negative factor. The language in the bill is not clear on that issue. He said they suggested some language that would solve that problem. MR. LESSMEIER said the second is that SB 197 is, in their view, are very unnecessary and very burdensome, for example subsection (b), which addresses the records disclosure. In many instances they don't know if somebody is a victim of domestic violence because there is nothing in their applications that so indicates. It is not one of their underwriting criteria. The question is, "What are we supposed to do in that situation." There are currently court rules, (indisc.) rules, that deal with physician/patient privilege. Mr. Lessmeier said their concern is they don't know how one would read, in years down the road, the provision that is set forth in subsection (b). MR. LESSMEIER said another problem is the subsection dealing with required disclosure. That is a major underwriting change that would literally apply across all lines of insurance. If the intent is a concern about domestic violence, this provision is extremely broad and goes far beyond that. Mr. Lessmeier said one of the questions they have is, "What are the needs for this?" If there is a need for it, why not try to accomplish this in another less burdensome way. For example, have required disclosure only if there is a request for it. MR. LESSMEIER said their final concern is the bill applies to all lines of insurance. It doesn't just apply to the lines where there have been problems. Those lines of insurance are life, health and disability. Mr. Lessmeier said that to their knowledge, there have been no complaints about any problems in Alaska. Mr. Lessmeier referred to the legislature passing a bill and said to use language that is specific and is applicable to the problems that have occurred. He noted the committee has their written comments. Number 2268 REPRESENTATIVE ELTON noted he was provided with the written comments. He referred to Mr. Lessmeier's concern with subparagraph (b) and said he doesn't understand what the problem is. He said if you don't know, then you can't violate provisions of subparagraph (b) because you can't release information that you don't know about. Representative said he doesn't understand the problem Mr. Lessmeier has with that paragraph. MR. LESSMEIER explained the difficulty is that indeed they may not know and may not have reason to know, but that still might not prevent somebody from taking action against (indisc.) that we shouldn't know. Those are the kinds of things that occur in the legal arena all day long. Mr. Lessmeier said the point they want to make is there is a legitimate concern about discrimination in this area. In attempting to solve that problem, lets not create so many other problems that we've created a larger problem than we saw. Number 2320 REPRESENTATIVE ELTON said he remains unconvinced because the subparagraph says that you may not disclose that information. He said he is having a difficult time understanding that if it is a prohibitive subparagraph that you may not disclose information, he has a tough time understanding why there is a problem Mr. Lessmeier may have with not disclosing information he knows nothing about. MR. LESSMEIER said that is not what the language says. The language says, "Records that reflect the fact." It doesn't say, for example, "a statement by someone that is a victim of domestic violence." He stated another concern they have, as a result of that, is they oftentimes in litigation may see, for example, different issues where there was a question about the causation of a particular injury; and, in looking back at the causation of a particular injury, they come upon records that indicate that there had been a preexisting injury and that the preexisting injury was allegedly caused by an instance of domestic violence. In that instance, one of the questions they would have is if you have (indisc.) license, could they go back and use that prior information. Mr. Lessmeier explained what he is saying is that we are creating an area where there is certainly potential for litigation. He said it is their belief that it is happening unnecessarily. MR. LESSMEIER said when you look (indisc.) domestic violence and you look at the concept, what you will see is an insurer, particularly a property and causality insurer, is the least likely to know about an instance of domestic violence. People in the work place, neighbors, family and friends are more likely to know than the insurance company is. They are also the least likely to disclose it. Number 2320 REPRESENTATIVE ELTON asked Mr. Lessmeier to expand on the arguments regarding the types of lines of insurance offered and expand on the fact that if there is no problem in some lines, then why would we need exclusion language in the bill. MR. LESSMEIER said if the bill is to solve a specific problem that is (indisc.), why not go after the problem where everybody thinks it is most likely to occur. He noted in Alaska, we're dealing with an abstract problem. Mr. Lessmeier said he doesn't think there has been any evidence that there has even been a complaint about this in Alaska. [END OF TAPE] TAPE 96-24, SIDE B Number 047 REPRESENTATIVE ELTON referred to the first paragraph of the letter from Mr. Lessmeier and said he notes that although State Farm strongly supports legislation that prohibits discrimination, you want to be sure that any legislative prohibition doesn't prevent an insurer from underwriting a rating for a medication condition, he assumed, not related to domestic violence. MR. LESSMEIER stated that it doesn't matter what it is related to. He said they just want to be able to underwrite for the medical industry. If they can't do that what happens is they end up in a situation where they may be discriminating for a condition as opposed to treating them neutrally. Once that happens, then they discriminate against other people that may have a condition that is unrelated to this particular condition. REPRESENTATIVE ELTON said he understands the concern, but the difficulty he is having is a portion of the bill provides for a required disclosure on what elements constitute the refusal of offering the insurance. He said it would seem to him that if you go through and make a decision based on other medical facts, you would disclose that, therefore, precluding any assertion that the denial was based on the fact this person was victim of domestic violence. MR. LESSMEIER said he thinks there is a concern about that being an issue with or without the required disclosure. There either is or there isn't evidence of underwriting based on a status separate and apart from this issue. He said if that is going on it would be easy to detect. If that is a legitimate concern, you solve that problem based on a specific situation rather then what this bill does which requires disclosure anytime there is a denial of coverage. REPRESENTATIVE ROKEBERG referred to the letter which included suggested language from Mr. Lessmeier, "(3) An insurer is granted immunity for criminal or civil liability resulting from compliance with this statute." He asked Mr. Lessmeier if he thinks he is putting himself in harms way of being sued because he would try to enforce the provisions of the statute. MR. LESSMEIER said that is one of the concerns he has and that is why he wanted that language in the bill. REPRESENTATIVE ROKEBERG asked Mr. Lessmeier to give him an example of how that would occur. MR. LESSMEIER explained a possible example would be someone claiming that this information should have been disclosed to someone else in order to protect someone. Number 150 REPRESENTATIVE ROKEBERG said he isn't sure he understand the entire concept of customary business practice in the insurance industry as far as disclosures of records and the files on a client. He asked what the industry standard is for this type of thing. MR. LESSMEIER said he doesn't know of any disclosure that occurs in the matter of course except, for example, the property and casualty business. He explained the only disclosure he is aware of that would occur would be in the context of litigation and once someone litigates an issue, then things are disclosed as a matter of course in the context of that litigation. He stated he isn't aware of any other disclosures. REPRESENTATIVE ROKEBERG asked if anybody can make inquiries about what is in his client's files. MR. LESSMEIER said they can make inquiries, but that information is typically not released. The only exception he knows of would be inquiries that are made by the Division of Insurance. He explained they are required to keep records and certain documentation to satisfy the Division of Insurance. The other exception to that would occur in instances of fraud where there is suspicion of fraud. REPRESENTATIVE ROKEBERG asked if the requirement in the bill is to provide confidentiality for those records. He also asked if that is a burden on the industry. MR. LESSMEIER explained part of the problem is that it is unclear to him as to what this would mean. He asked if they would be required to search records. For example, if there is a concern about fraud, would they be prevented from providing records to the national bureau that investigates those things or shares information. If they are involved in a civil case, would they be prevented from somehow using cases in the civil case. He stated that, as a matter of practice, people treat these records as confidential. CHAIRMAN KOTT announced the next person to testify would be Beverly Bowers. Number 294 BEVERLY BOWERS, Bering Sea Womens Group, was next to testify via teleconferece from Nome. She said in listening to Mr. Lessmeier's testimony she can appreciate what he is saying, but he is talking almost as though his very reasons are reasons to pass the bill. He said there hasn't been any complaints in Alaska but there are complaints in other places. This discrimination against victims of domestic violence is being done in other states and we know it can be done here in Alaska. Discrimination is very widespread in many different ways. As we talk of insurance we forget it also covers medical care and in going to get medical care, the reason for the injury is stated when a woman comes to the emergency room. The insurance company is aware of this. Nothing is ever kept a secrete, we know this is going to come out in some way. Ms. Bowers said this is a very widespread problem and we need to take this step to prevent this very thing from coming to Alaska. Alaska has a reputation of protecting its women and doing things in advance. Ms. Bowers urged passage of the legislation. Number 397 JOHN GEORGE, Lobbyist, American Council of Life Insurance, was next to address SB 197. He explained the American Council of Life Insurance is a life insurance trade association representing virtually all of the life insurance companies that do business in the state of Alaska. He informed the committee his clients have provided him with about a four page list of changes they would like made to the bill. Mr. George said he has also reviewed Mr. Lessmeier's shorter version of recommended changes and those changes accomplish virtually everything his clients have tried to do in their four pages of suggested changes. He said he is prepared to throw their support totally behind State Farm's proposal. REPRESENTATIVE ROKEBERG asked Mr. George how the concept of the bill would affect the life insurance underwriting industry in Alaska. MR. GEORGE said there are several ways. For instance, we know that there are cases where a spouse has procured insurance on their spouse in order to collect should that person die, which could be from domestic violence. There are cases where the policy was purchased years ago, but now we have this insurance policy out there and we could collect a lot of money if our spouse were to die. He said there may actually be a case where an insurer could be sued for writing a policy because that encouraged a murder. Mr. George noted the life insurers are also writers of health insurance. Mr. George said the things Mr. Lessmeier talked about being supportive of a domestic violence bill, something that is going to preclude insurers from discriminating. He said they have no problem and encourage that. Number 510 REPRESENTATIVE ELTON apologized for having to leave the meeting earlier for a few minutes. He indicated that when he came back it seemed he walked in on an argument against life insurance. He said it seems to him there are many reasons not to issue or even have a life insurance (indisc.) if we stretch as far as saying that may be a cause for murder. Representative Elton asked if he missed something. MR. GEORGE said there are a number of reasons the life insurance industry is commenting on this bill. That is one of the things. As he recalls, there is a probate bill that deals with that and precludes a spouse from collecting benefits under a life insurance policy if they were the cause of the death. The disclosure of information is a concern to them as well. They don't generally know about these things, they don't go and ask the question, but the way the bill is worded it might infer from a pattern of prior injuries that they were a result of abuse. Mr. George referred to disclosing that information and said there are not exceptions in law for who you can disclose it to unless you have permission of the insured or a court order. So arguably, if the Division of Insurance wanted to see those, and he believes they have a right to look at any record an insurance company has, then there is the question of whether they can have it or not. You better go get a court order. MR. GEORGE explained insurance companies reinsure risks. So they might take their entire book of business and ask another insurance company to take a portion of it. The other insurance company might say, "We want to see your underwriting files." They're possibly going to become an insurer but they're not the insurer on the business. He asked if it permissible to share that underwriting information or do you have to go through the entire book of business and pull those pieces out. Mr. George said the State Farm proposal is simple, it's straight forward, and it protects the victims of domestic violence from discrimination. Number 666 LAUREE HUGONIN, Executive Director, Alaska Network on Domestic Violence and Sexual Assault, was next to address SB 197. Ms. Hugonin explained that advocates working to end violence against women encourage battered women to document their injuries by seeking medical care and by requesting that the violent incident be noted in their medical records. She said health care providers are usually the first service professional and sometime non-family member to have contact with women who have been abused and are in a unique position to identify victims of domestic violence. If we are able to identify abused women through routine screening and accurate diagnosis, this can help in breaking the cycle of violence. Early prevention can prevent or ameliorate many of the long-term health and social consequences associated with victimization. Ms. Hugonin explained that she would review what they are doing in Alaska to help medical providers recognize domestic violence and to be able to identify it. MS. HUGONIN gave committee members a pamphlet called "One in Five Women," which is a pamphlet for health care providers to be able to know about domestic violence. She explained in 1995, the Division of Public Health, Maternal, Child and Family Health Section, receive a three year federal grant to train medical professionals and to develop a sustainable training team in the state. She said this is only one of two projects that were funded in the country and the only state project that was funded. MS. HUGONIN informed the committee that nationally, the American Medical Association, the American College of Obstetrics and Gynecology, the American College of Physicians, the American Trauma Society, the American Association of Emergency Physicians, and several other organizations are working to reduce injuries, prevent domestic violence and save lives by development of other professional medical educational materials. National health initiatives require medical institutions to develop domestic violence protocols, plans for training and improving their facilities response to domestic violence. She said battered women are finding the courage to reach out for their medical care and documentation. Medical care givers have now become committed to prevention of this lethal crime through identification and documentation. Unfortunately, in the Lower 48 medical care givers now know that doing the right and responsible thing of identifying and documenting abuse may result not only in the loss of health insurance coverage, but other important protection such as life, disability and home owners insurance. The reality is that every women is at risk of becoming a victim of domestic violence. Just as there is no excuse for that violence, legal or otherwise, there is no excuse for the insurance industry to justify this discriminatory practice. Ms. Hugonin said her organization is aware that currently it has not been identified as a problem in Alaska. We don't know that that means it doesn't exist. There is considerable concern that people are not coming forward with it as a problem because of a consequence of losing their insurance. Several states have passed legislation prohibiting discrimination and several other states have legislation pending. She urged support of SB 197 in its current form. Number 928 REPRESENTATIVE ELTON made a motion to adopt HCSCSSB 197(L&C). CHAIRMAN KOTT asked if there was an objection. REPRESENTATIVE ROKEBERG objected. Number 962 REPRESENTATIVE ELTON withdrew his motion. CHAIRMAN KOTT said the committee would address the committee substitute the following Wednesday.
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