Legislature(2003 - 2004)
03/05/2003 03:15 PM House L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 5, 2003
3:15 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Nancy Dahlstrom
Representative Carl Gatto
Representative Norman Rokeberg
Representative Harry Crawford
MEMBERS ABSENT
Representative David Guttenberg
COMMITTEE CALENDAR
HOUSE BILL NO. 135
"An Act relating to marital and family therapists."
- MOVED HB 135 OUT OF COMMITTEE
HOUSE BILL NO. 120
"An Act excluding service contracts from regulation as
insurance; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 135
SHORT TITLE:MARITAL & FAMILY THERAPISTS
SPONSOR(S): REPRESENTATIVE(S)WILSON
Jrn-Date Jrn-Page Action
02/26/03 0307 (H) READ THE FIRST TIME -
REFERRALS
02/26/03 0307 (H) L&C, HES
02/26/03 0307 (H) REFERRED TO LABOR & COMMERCE
03/05/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 120
SHORT TITLE:SERVICE CONTRACT SALES ARE NOT INSURANCE
SPONSOR(S): REPRESENTATIVE(S)COGHILL
Jrn-Date Jrn-Page Action
02/24/03 0286 (H) READ THE FIRST TIME -
REFERRALS
02/24/03 0286 (H) L&C
02/24/03 0286 (H) REFERRED TO LABOR & COMMERCE
03/05/03 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE PEGGY WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor of HB 135, explained the major
changes in each section of the bill.
LARRY HOLMAN, Chairperson
Board of Marital and Family Therapy;
Immediate Past President
Alaska Association for Marriage and Family Therapy
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 135, explaining
how the board and the professional organization collaborated on
the bill's provisions; answered questions about title protection
for marital and family therapists.
VIVIAN FINLAY, Member
Board of Marital and Family Therapy
Wasilla, Alaska
POSITION STATEMENT: Testified in favor of HB 135, noting that
the board resolved to support these changes two years ago; spoke
to the changes in the confidentiality exemption.
BILL PLATTE, Member
Board of Marital and Family Therapy
Juneau, Alaska
POSITION STATEMENT: Testified in favor of HB 135 and described
how therapists handle reports of imminent harm to law
enforcement officers and potential victims.
REPRESENTATIVE JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor of HB 120, presented the bill
and explained the need to separate service contracts out of the
insurance industry with its high level of regulation.
STAN RIDGEWAY, Deputy Director
Division of Insurance
Department of Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 120, discussing
the differences between service contracts, warranties, and
maintenance agreements; described the work of the division's
consumer complaint office.
ACTION NARRATIVE
TAPE 03-17, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:15 p.m. Representatives
Anderson, Lynn, Dahlstrom, and Crawford were present at the call
to order. Representatives Gatto and Rokeberg arrived as the
meeting was in progress.
HB 135-MARITAL & FAMILY THERAPISTS
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 135, "An Act relating to marital and family
therapists."
Number 0085
The committee took an at-ease from 3:16 to 3:18 pm.
[The following paragraph is reconstructed from the sponsor
statement and sectional analysis because it was not recorded on
the tape.]
REPRESENTATIVE PEGGY WILSON, Alaska State Legislature, sponsor
of HB 135, stated that the law establishing the Board of Marital
and Family Therapy has been in place for 10 years, and it's time
to update the language. She said HB 135 will upgrade Alaska
laws on marriage and family therapy so they are on a par with
other states' laws and are consistent with other forms of
counseling services in the state. Section 1 adds the board to
the list of boards that may request the Division of Occupational
Licensing to contract for substance abuse treatment for licensed
therapists. Section 2 authorizes the board to order a licensed
marital and family therapist to submit to a physical or mental
examination if there is a credible question about the
therapist's capacity to practice safely.
Number 0123
REPRESENTATIVE WILSON said Section 3 addresses the direct
clinical contact time required for licensing. The requirement
is changed from three years to 1,500 working hours and allows
one-on-one client contact to be counted. Section 4 makes
exceptions to the confidentiality rule in two situations: if
there is a threat of physical harm to an identified victim or a
disclosure to the board regarding unethical or unlawful conduct.
Number 0200
REPRESENTATIVE WILSON explained that Section 5 prohibits sexual
contact between therapist and client during treatment and for
two years after treatment ends. She said this is important
because a client in a vulnerable frame of mind could be harmed
by a sexual relationship with a therapist. By way of
comparison, she said social workers are prohibited from sexual
contact with a client for their lifetimes. Section 6 allows the
suspension of a license if the therapist refuses the examination
ordered under Section 2 of the bill. Section 7 requires a
disclosure statement so the client learns in advance some key
details of therapy: the fees, the therapist's professional
education, and the confidentiality exceptions. Representative
Wilson concluded that the section also prohibits a licensed
therapist from practicing if the person lacks the appropriate
qualifications under the law.
Number 0377
REPRESENTATIVE LYNN began discussion of what he would later
offer as Amendment 1. He raised a question about the language
in the new subsection (5), page 3, lines 29-31, which reads:
"(5) a communication to a potential victim or to law enforcement
officers where a threat of imminent serious physical harm to an
identified victim has been made by a client;". He asked about
the use of the word "or" instead of "and" on line 29. He said
the therapist should warn both the victim and the law
enforcement officer.
Number 0400
REPRESENTATIVE WILSON said she would not oppose such an
amendment.
REPRESENTATIVE GATTO noted that substituting the word "and" for
"or" would require that both the potential victim and the police
both be notified, never singularly. He said he doesn't think
that's the intent of the law.
Number 0516
LARRY HOLMAN, Chairperson, Board of Marital and Family Therapy;
Immediate Past President, Alaska Association for Marriage and
Family Therapy, spoke in support of HB 135. He explained that
this bill is the result of a collaboration between the
regulatory board, which is charged with protecting the public,
and the professional association, which promotes the marriage
and family therapist profession. He said it's an unusual
collaboration because the interests are different but both
groups want to achieve the same results. He said the issue of
sexual relationships has not been clearly spelled out in the
board's regulations, and that both groups wanted no
misinformation or misunderstanding about the ethics of these
cases. The groups also wanted to update the initial laws from
when therapists were first regulated; today the laws fall short
of the standards for other professions both in Alaska and
nationwide. He said all of Alaska's other regulatory boards and
mental health professions have laws similar to HB 135. He
explained that the Board of Marital and Family Therapy supports
these inclusions as vital to the protection of the public. The
Alaska Association for Marriage and Family Therapy supports HB
135 because its goal is to maintain credibility and high ethical
standards for therapists. Each provision derives from years of
practice.
MR. HOLMAN commented on the possible amendment discussed earlier
that would substitute "and" for "or" on page 3, line 29. He
said the intent of that language is really to make it clear to
someone that there may be imminent serious physical harm. He
said "and" is not necessary and "or" is sufficient.
Number 0754
VIVIAN FINLAY, Member, Board of Marital and Family Therapy,
noted that she is a licensed marriage and family therapist
practicing in Wasilla. She said the group's professional ethics
prohibit sexual contact between the therapist and the client
during treatment and for two years after treatment ends. She
said she wanted to make sure that the law is at least as strong
as the group's ethical code. If an association ethic is
violated, a therapist would lose the state license. In March
2001, the Board of Marital and Family Therapy discussed these
changes and resolved to support future legislation. She also
commented on the possible amendment regarding notifying a
potential victim and law enforcement about imminent harm.
Professional standards already require therapists to report
serious threats to a potential victim or a law enforcement
officer. She suggested leaving the "or" in place because
therapists' ethical standards do not require both.
Number 0870
REPRESENTATIVE GATTO asked about the liability for not reporting
imminent harm.
MS. FINLAY said her understanding is that if therapists don't
follow state regulations, they can be investigated, and their
licenses can be revoked.
Number 0905
REPRESENTATIVE LYNN asked Ms. Finlay to confirm that the
profession's ethical requirements require reporting to the
victim or law enforcement but not to both. He then asked if the
profession's ethical standards should be raised to require both.
MS. FINLAY confirmed that the association's standards require
reporting to one or the other person but not both. She
explained that therapists have to do what is most appropriate in
the situation. If a person threatens to go home and kill
somebody at home, the therapist would likely contact the
potential victim. Because no crime has been committed, the
therapist doesn't necessarily notify the police, but the person
might want to do that as well.
Number 0961
CHAIR ANDERSON described a less volatile scenario in which a
husband talks about hitting his wife sometime. Chair Anderson
suggested that in this circumstance, contacting the wife would
be reasonable but contacting the police wouldn't be reasonable.
MS. FINLAY said it's a judgment call for the therapist; this is
why ethics aren't black and white. Therapists probably wouldn't
report that instance because there's no threat of harm happening
immediately.
REPRESENTATIVE LYNN said he objects to situational ethics.
Number 1136
BILL PLATTE, Member, Board of Marital and Family Therapy,
explained that therapists are obligated to report imminent
threats of harm. He said in his 23 years of experience as a
marital and family therapist, every time he's reported, it was
to law enforcement. He added that there have been times when
reporting to the potential victim would have been problematic.
He said he favors the "or" as written in HB 135.
CHAIR ANDERSON asked why Mr. Platte wouldn't call the spouse if
the other spouse was threatening murder.
MR. PLATTE replied, in that specific situation, that he would
contact both the threatened spouse and law enforcement. He
would do everything in his power to protect the potential
victim.
Number 1219
REPRESENTATIVE LYNN asked for a hypothetical situation in which
Mr. Platte wouldn't contact the spouse.
MR. PLATTE explained that he wouldn't contact the spouse in a
situation when the potential victim might act inappropriately;
in that case, he would prefer to involve law enforcement right
away.
REPRESENTATIVE GATTO agreed that if the victim decided to
retaliate and the therapist didn't act, the therapist would be
held liable.
CHAIR ANDERSON said the "and" would force the therapist to
contact both the potential victim and law enforcement every
time, and the therapist could be sued if the person didn't do
so.
REPRESENTATIVE LYNN said in this kind of dispute, every key
person should be notified. It would be a judgment call as to
which party was contacted first.
Number 1323
CHAIR ANDERSON reviewed the language in question in context of
the bill, Section 4, page 3, which addresses confidentiality.
The section states that a therapist can never reveal the content
of communications with a client except for four reasons plus two
additional reasons added by Representative Wilson. The language
in question says that the therapist can break that pledge of
confidentiality and notify the potential victim, law
enforcement, or both, and not be held liable for releasing the
information. He pointed out that this section deals with
release of information and confidentiality. He said that adding
an "and" to this section does not force the therapist to call
both parties.
MR. PLATTE agreed with Chair Anderson.
Number 1419
REPRESENTATIVE LYNN said he would prefer to raise the required
reporting from a judgment call to a higher ethical standard.
Number 1429
CHAIR ANDERSON reiterated that this section of the bill, which
deals with licensure, releases therapists from confidentiality
in certain cases. He suggested that required reporting is
probably covered in other state law, perhaps in the criminal
statutes.
Number 1462
REPRESENTATIVE ROKEBERG asked Mr. Platte about the new Section 7
on page 5 that requires a disclosure statement to clients. He
inquired whether this statement is already provided by
therapists and whether this disclosure would change the
relationship with a potential client. He asked several
questions about the administrative procedures associated with
this disclosure.
MR. PLATTE replied that this disclosure is already in place and
being used by therapists. Any therapist who does managed care
or employee-assistance work already has a form like this.
There's nothing in this section that would cause a problem to a
potential client, he added. For managed-care clients, a signed
copy is already kept in the file. He said following the
requirements of this section it would be a minor adjustment.
His disclosure form is one page in length.
REPRESENTATIVE ROKEBERG asked Mr. Platte to provide the
committee with an example of a disclosure statement.
Number 1583
REPRESENTATIVE GATTO referred to language on page 5, lines 24-
26, "the Board of Marital and Family Therapy, which regulates
all licensed marital and family therapists". He asked if there
are marital and family therapists practicing in the state who
are not licensed.
MR. PLATTE replied that there are unlicensed therapists, but
that they are not allowed to call themselves "licensed marital
and family therapists." He explained that they can practice
counseling in the state, but he didn't think they could call
themselves "marital and family therapists."
REPRESENTATIVE GATTO disagreed, saying he believes that a person
can use the title "marital and family therapist."
Number 1657
MR. HOLMAN explained that a person can practice any kind of
therapy in Alaska without a license. He said marital and family
therapists do not have a "title law." Psychologists do have a
title law, and only licensed psychologists can use that title.
REPRESENTATIVE GATTO said that answered his question. The
unlicensed therapists would not have to provide the disclosure
required under this bill. He reflected that there are two
separate groups of marital and family therapists, licensed and
unlicensed, and many clients will not notice the distinction.
Number 1725
REPRESENTATIVE ROKEBERG commented that there are certain
occupations that have specific prohibitions against unlicensed
people using the titles. For example, the committee looked at
HB 9 on home inspectors, which required that a person using that
title must meet the provisions of law. He asked why there
hasn't been a specific request from licensed marital and family
therapists to protect their title.
Number 1844
MR. HOLMAN agreed that it's a great idea to protect the title of
licensed marital and family therapists. He explained that the
board and the association have been focused on provisions of
this particular bill for the past several years. He said one of
his goals as the chairperson of the board is to begin to look at
title protection. One protection in place now for licensed
therapists is that people who practice without a license do not
qualify for third-party payments and cannot work for managed
care. Insurance companies will not pay for unlicensed
professionals unless they work under the direct supervision of a
licensed professional.
CHAIR ANDERSON asked if there have been cases of counselors
abusing the title of marital and family therapists.
MR. HOLMAN replied that it's not a huge problem. He said
several people had their licenses revoked; they continued to
practice therapy, but they didn't call themselves marital and
family therapists. There is not widespread misuse of the title
because the therapist cannot get payment and there aren't that
many clients willing to pay for this counseling out of pocket.
REPRESENTATIVE ROKEBERG replied to a question from Chair
Anderson, saying that he was not going to propose an amendment
on the subject of title protection. It might require opening up
the entire bill.
Number 1939
REPRESENTATIVE WILSON commented that on page 5, line 9, a
marital and family therapist may not charge for services unless
the person provides the disclosure statement. She said many
unlicensed therapists in small communities are qualified but
don't pay the $700 licensure fee because of the small number of
clients.
Number 1982
MS. FINLAY said this clean-up bill and the language quoted by
Representative Wilson on page 5, line 9, only apply to licensed
therapists. If the person is a member of the Alaska Association
for Marriage and Family Therapy, he/she has to be licensed in
Alaska, and then must use the required disclosure statement.
REPRESENTATIVE GATTO said he is reading this bill to see whether
he could become a marital and family therapist without getting a
license.
Number 2139
CHAIR ANDERSON summarized the committee's intentions on HB 135,
saying several committee members indicated they would like to
prohibit unlicensed marital and family therapists from
practicing but they do not want to initiate the change at this
stage of the legislation.
Number 2168
REPRESENTATIVE ROKEBERG asked about Section 1 on pages 1-2 of
the bill, in which this board can refer licensed persons who
abuse alcohol or drugs for treatment. He asked if there's a
cost associated with this treatment and, if so, whether there
should be a fiscal note attached.
REPRESENTATIVE WILSON replied that if the person is in alcohol
rehabilitation, the person can be referred to marital
counseling.
Number 2214
REPRESENTATIVE LYNN reiterated his concerns about reporting
imminent harm to the potential victim and the police.
Number 2225
REPRESENTATIVE LYNN moved to adopt Amendment 1, on page 3, line
29, in paragraph (5), line 29, deleting "or" and adding "and".
Number 2277
CHAIR ANDERSON objected.
REPRESENTATIVE WILSON commented that it's important not to put
the person doing the counseling in a position of extreme
liability. For example, a therapist can always locate the
police but may not be able to notify the potential victim.
CHAIR ANDERSON explained his objection to the amendment. He
applauded the intent of the amendment, which is when serious
physical harm is threatened, the potential victim and the police
must both be contacted. But, he said, it does not belong in
this section of the bill.
REPRESENTATIVE LYNN said he is less concerned about the
liability to the therapist and more concerned about the harm to
a potential victim. If the therapist made a documented effort
to contact both, then there would be no liability.
A roll call vote was taken. Representative Lynn voted in favor
of Amendment 1. Representatives Crawford, Dahlstrom, Gatto,
Rokeberg, and Anderson voted against it. Therefore, Amendment 1
failed by a vote of 1-5.
Number 2357
REPRESENTATIVE LYNN moved to report HB 135 out of committee with
individual recommendations and the accompanying zero fiscal
note. There being no objection, HB 135 was reported from the
House Labor and Commerce Standing Committee.
The committee took an at-ease from 4:05 p.m. to 4:11 p.m.
HB 120 - SERVICE CONTRACT SALES ARE NOT INSURANCE
Number 2379
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 120, "An Act excluding service contracts from
regulation as insurance; and providing for an effective date."
TAPE 03-17, SIDE B
Number 2370
REPRESENTATIVE JOHN COGHILL, Alaska State Legislature, the
sponsor of HB 120, said service contracts are being treated as a
form of insurance in Alaska. Service contracts are not
insurance, he said, and in this bill he proposes excluding
service contracts from Title 21, Insurance. He pointed to the
language on page 1, Section 1, line 5, of the bill that states
in part, "(e) This title does not apply to a service contract
offered, issued". He explained that the service contract could
then be regulated through other existing laws, for example,
contractual law or the Unfair Trade Practices and Consumer
Protection Act.
Number 2300
REPRESENTATIVE COGHILL said that regulating service contracts as
insurance requires bonding and many pages of regulations. A
service contract for an appliance or a computer doesn't involve
a risk pool; it's simply a contract to repair the item under
certain circumstances. He explained that he considered a model
law used by other states but rejected that approach because he
didn't want to create more regulations and government. He said
he wants to clarify that service contracts should not be
regulated under insurance law, as done by the last
administration. He said he's looking for the simple approach.
His only question involved whether HB 120 should include
automobile service contracts that are covered under AS
45.25.620, Motor Vehicle Transactions.
Number 2210
CHAIR ANDERSON noted that the sponsor's bill packet included
information from the Department of Law listing various contract
and consumer protection laws.
REPRESENTATIVE COGHILL gave an example of one company, Sears,
which sells service contracts in Alaska. Its subsidiary
company, Sears Protection Company, will not sell service
contracts in Alaska because the Division of Insurance treats it
like an insurance company.
Number 2146
STAN RIDGEWAY, Deputy Director, Division of Insurance,
Department of Community and Economic Development, explained that
the division has been dealing with complaints about service
contracts, receiving several calls per month. This bill covers
service contracts on property, but the division gets calls
regarding a multitude of other types of contracts, for example,
ambulance service, towing service, and legal services. This
legislation could cull some of the smaller service contracts for
which regulation might be overbearing. The current bill is very
broad and covers extended warranties and service contracts on
all property including automobiles, homes, and home appliances.
He said the bill appears to be directed at items like stereos,
home appliances, or hot tubs, which range in value from $200 to
$2,000. These dollar amounts are quite different from the those
involved in a home or automobile warranty. He said insurance
has a very broad and complicated definition, but simply put,
it's a contract to pay or provide a benefit for an unforeseeable
loss. Service contracts, including those covered by HB 120,
fall under that definition.
Number 2045
MR. RIDGEWAY said he'd like to work with the sponsor to see if
they can narrow the scope of the bill and remove home warranties
and automobile extended-service contracts and warranties. He
recommended focusing on what the bill intends to cover, while
giving some of the higher dollar items and more confusing
contracts the protection of insurance. He said there are lots
of hybrids in this field: some insurance companies sell service
contracts, and some automobile insurance covers towing and
rental reimbursement. He strongly recommended clarifying the
scope of service contracts up front, keeping the fiscal note
low, and meeting the needs of Sears and other companies that
would like to provide these contracts.
Number 2008
CHAIR ANDERSON asked Representative Coghill if he would agree to
hold the bill over to work with the Division of Insurance.
REPRESENTATIVE COGHILL said yes.
Number 1997
REPRESENTATIVE ROKEBERG asked Mr. Ridgeway if home warranties
come under the Division of Insurance's purview.
MR. RIDGEWAY said yes, they do, but admitted upon questioning by
Representative Rokeberg that the division has not been enforcing
the sale of home warranties by unlicensed sellers.
REPRESENTATIVE ROKEBERG asked Mr. Ridgeway if his division was
concerned that consumers wouldn't have a regulatory agency to
look after their interests if service contracts were removed
from oversight by the Division of Insurance.
Number 1953
MR. RIDGEWAY responded that the Division of Insurance has a lot
of work to do, and HB 120 could help clarify where it should
direct its efforts. He said it's not a turf battle. He said
the division just wants to clarify what a service contract is,
for legal services, ambulance, homeowners, automobiles - all of
those areas.
REPRESENTATIVE ROKEBERG proposed considering a change in
language in HB 120, on page 1, line 8, after "property", to add
"or services unless sold as part of an insurance product". He
asked if that language would remove all service contracts from
the department. He asked if Mr. Ridgeway would support such a
change.
Number 1899
MR. RIDGEWAY said that one major issue is that anyone who sells
service contracts should have an insurance license. Some people
who sell extended warranties for automobile dealers and home
warranties do have insurance licenses. But currently there are
many sellers of service contracts who are not licensed. He said
he's not saying that they need to be licensed; rather, the
division wants to clarify it so that staff can deal with it.
Number 1867
REPRESENTATIVE LYNN explained that he's an associate broker with
a real estate company, and occasionally he sells a home warranty
in addition to a home. He asked if he needs an insurance
license in addition to his real estate license.
MR. RIDGEWAY replied that currently the division's
interpretation of the insurance statute is that yes, he would
need an insurance license.
REPRESENTATIVE ROKEBERG asked what kind of fee and paperwork is
involved in registering to sell insurance.
Number 1825
MR. RIDGEWAY said the cost of an insurance license is around
$200. The Motor Vehicle Transactions law, AS 45.25, does not
exclude automobile service contracts from insurance regulation;
it simply tells people selling these service contracts what kind
of guidelines they have to follow. He referenced model
legislation by the NAIC [National Association of Insurance
Commissioners] that has a different approach to service
contracts that would require smaller companies to purchase a
bond or reimbursable insurance that would pay the consumers in
case the company went out of business. But, he added, the
division doesn't want to go there. He said he wants to make it
as simple as possible to exempt these types of contracts from
the insurance code.
Number 1765
REPRESENTATIVE ROKEBERG confirmed Mr. Ridgeway's point that
under AS 45.25.620, automobile service contracts are still an
insurance product regulated by the Division of Insurance. He
asked Mr. Ridgeway to explain his statement about a required
bond for selling insurance.
MR. RIDGEWAY said the bond was an option available if the state
adopted the NAIC model legislation for consumer protection.
Number 1737
REPRESENTATIVE DAHLSTROM confirmed that an insurance agent or
broker must also pass extensive tests in order to be licensed,
in addition to paying a fee.
REPRESENTATIVE LYNN asked how many licensed real estate
practitioners are in Alaska.
REPRESENTATIVE ROKEBERG said there are 1,800 to 2,000 in the
Anchorage municipality.
REPRESENTATIVE LYNN wondered what percentage of real estate
agents in the past have sold home warranties along with selling
or listing the house.
MR. RIDGEWAY reiterated that this part of the insurance code is
not being enforced.
REPRESENTATIVE ROKEBERG expressed his frustration with laws that
are not enforced.
Number 1651
REPRESENTATIVE GATTO asked Mr. Ridgeway to comment about the
recourse available to a consumer who paid $100 for a lifetime of
oil changes and then discovered the company disappeared a week
later.
MR. RIDGEWAY said that is an example of a maintenance agreement,
which is not covered under the Division of Insurance. It is
different from a service contract that is designed to repair or
replace a product. He added that people tend to use these terms
interchangeably: referring to a maintenance agreement as a
service contract, and a service contract as a warranty. He
explained that warranties are not insurance. Warranties are
provided only by the manufacturer; they come with the product at
no additional cost.
Number 1581
REPRESENTATIVE ROKEBERG said the Division of Insurance had no
authority to investigate individual consumer complaints until
about three years ago, when the legislature gave the division
additional authority. Before this change, the division could
only act on a pattern of activity. He asked Mr. Ridgeway if the
division's ability to follow up on consumer complaints was
relatively limited.
Number 1525
MR. RIDGEWAY said there are two separate issues. The division
has a section that deals only with consumer complaints. Those
complaints are usually a misunderstanding between the
policyholder and the underwriter or the agent. Division staff
are able to resolve most of these complaints in a relatively
short period of time. The division's ability to look at
practices of the insurance industry is totally different from
helping a consumer resolve an issue. If HB 120 passed and
service contracts were excluded from the division's oversight,
then the division's consumer protection section would not take
complaints about service contracts.
REPRESENTATIVE ROKEBERG summarized two key issues raised in HB
120. People must be licensed to sell home warranties, and auto
warranties fall under the jurisdiction of the division. He
noted that Representative Coghill can choose to deal with only
certain types of service contracts; he can either limit or
expand the scope of the bill.
Number 1418
REPRESENTATIVE COGHILL said again that he's willing to hold the
bill over. He noted that HB 120 does not exclude automobile
warranties under Title 45, Motor Vehicle Transactions, and that
provision would remain as is.
Number 1395
CHAIR ANDERSON announced that HB 120 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:45 p.m.
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