Legislature(1995 - 1996)
03/22/1996 03:25 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 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.
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