HB 219-FIRE AND EMERGENCY MEDICAL SERVICES  8:24:31 AM VICE CHAIR KELLER announced that the next order of business was HOUSE BILL NO. 219, "An Act exempting certain emergency medical and fire department services from regulation as insurance." 8:24:35 AM MICHAEL PASCHELL, Staff, Representative Eric Feige, Alaska State Legislature, presented HB 219 on behalf of Representative Feige, sponsor. He disclosed that he is the assistant chief and a board member of the Rural Deltana Volunteer Fire Department and Representative Feige is the chief of Chickaloon Fire Service, and both organizations possibly could be impacted by HB 219. MR. PASCHELL talked about the difficulty that local fire and emergency medical agencies have in raising money. He said fundraising events are common and include fish fries, pancakes dinners, bake sales, and bingo, and those putting on the events are usually the same volunteers who provide the emergency services. He said donations are welcomed because they take less time and input from the volunteers. Mr. Paschell said a popular method of fundraising among fire and emergency medical service (EMS) organizations in some parts of the country is to offer those who give donations on an annual basis a "no charge policy" when responding to an emergency; however, he indicated that there are laws in Alaska that thwart that type of practice. One option that is in place is to form a health services corporation; however, that is considered insurance, and those doing so are subject to regulations, including a prohibitive one requiring a minimum $100,000 bond in order to provide services. Some fire departments - often called subscription fire departments - offer ambulance service, in which individuals pay voluntarily for the service. Mr. Paschell said problems can arise when the fire department responds to an emergency outside of the area in which the subscription service is offered, and the person who gets charged complains that one person is getting a benefit over another. 8:29:08 AM MR. PASCHELL said HB 219 would exempt "these types of organizations" from regulation under the Division of Insurance. He noted there was a committee substitute (CS) in the committee packet. 8:29:47 AM REPRESENTATIVE SEATON moved to adopt the proposed committee substitute (CS), Version 27-LS0638\I, Bailey, 3/8/12, as a work draft. VICE CHAIR KELLER objected for the purpose of discussion. MR. PASCHELL explained that the changes proposed in Version I would insert language to expand the provisions to allow an agreement to provide services and include "community-based" [in subsection (g)] to limit the provisions of the bill to only locally based organizations. 8:30:40 AM REPRESENTATIVE SEATON asked if there are any large businesses that offer those air ambulance services that would fall under the nonprofit category, and "does that fall into this category, as well?" MR. PASCHELL answered that currently, "they" can operate as a large, non-profit health services organization, with a slightly different set of rules. He said the purpose of adding "community-based" [in Version I] is to ensure that HB 219 is not intended to include statewide or regional, large corporations. REPRESENTATIVE SEATON asked Mr. Paschell to confirm that the intent of the proposed legislation is to include community-based organizations that provide services within those communities. MR. PASCHELL answered that is correct. 8:32:35 AM MR. PASCHELL, in response to a question from Representative Johansen, offered information relating to Chickaloon Fire Service, which he said is in the Matanuska-Susitna Borough, but not within a fire district, and which operates as a subscription-based department. He said he does not know how many subscribers the department has, but said the volunteers provide what they can for a remote community. He said the Rural Deltana Volunteer Fire Department, which serves the area outside Delta Junction and currently has 31 members, works with both the city fire department and the Fort Greely Fire Department. He relayed that the City of Delta Junction instigated HB 219, because they had offered a service based on the aforementioned up-front fee, and were told by the Division of Insurance that that is insurance. He said the Rural Deltana Volunteer Fire Department operates on a strictly volunteer-basis, so the proposed legislation could affect the department, but would not do so under its current operating plan. 8:35:22 AM MR. PASCHELL, in response to follow-up questions, said the 31 members of the Rural Deltana Volunteer Fire Department are made up of volunteer fire fighters, auxiliary members, and board members; a person is a member by joining and serving the department. He said the reason that the Chickaloon Fire Service may be affected by HB 219 is because the department's current operations are subscription-based. 8:38:06 AM VICE CHAIR KELLER offered his understanding that there has been no response to the proposed legislation from insurance companies. 8:38:17 AM LINDA HALL, Director, Division of Insurance, Department of Commerce, Community, & Economic Development, indicated that the division helped in the language of the bill, because it felt the original version would fall under the division's definition of transacting insurance. She stated, "The idea of a subscription service falls under the definition of insurance." She drew attention to a letter in the committee packet, [dated 9/9/08, from Sarah McNair-Grove, an actuary with the department], in response to a question [about the relation of fire protection subscription service and insurance]. She indicated that the answer provided is much of what has prompted HB 219, which would allow small, community-based organizations to collect subscription amounts of money in order to provide services to their communities. She offered her understanding that it is not the intent of the sponsor to exempt large, commercial organizations that provide medical transport services. She stated: It's a policy for this body to determine whether you want these to have regulation under the Division of Insurance. ... If you have consumer complaints, there is another branch that will see those: ... the Consumer Protection Section in the Department of Law. If it doesn't fall under our title, then that section does take consumer complaints and investigate them. So, it's not like they will just fall through the cracks. MS. HALL said the division's concern is, for example, that if someone pays for ambulance service, then that service will still be in business several years later. 8:41:28 AM REPRESENTATIVE GRUENBERG asked if exempting these fire departments from Title 21 would have any potential unintended consequences. MS. HALL answered that she is not aware of any. She said she thinks Version I was intended to draw tighter lines around what is being exempted and to make it community-based. She reiterated that if these entities are not regulated under Title 21, there would still be a place for a harmed consumer to go to seek relief through the system. REPRESENTATIVE GRUENBERG said that is satisfactory, but asked that the division let the legislature know promptly if it becomes aware of any unintended consequences in the future. MS. HALL acquiesced. 8:44:42 AM REPRESENTATIVE GRUENBERG said he thinks the bill has merit. He asked if there are any other entities that legislature should consider exempting? MS. HALL said she cannot think of any at this time. In response to Representative Gruenberg, she said the division has no bills before the legislature this session. REPRESENTATIVE GRUENBERG thanked Ms. Hall for her service and noted that she is about to retire. 8:47:53 AM REPRESENTATIVE SEATON offered his understanding that "the prospective recipient of the services was within the community," but noted that the bill does not state that. He suggested adding "within the community" following "prospective recipient of the services". MS. HALL said she thinks the intent is there already; however, she said the language Representative Seaton suggested would clarify that intent. She indicated the word "local" was considered during early discussions of proposed bill language, but was not used. 8:50:25 AM MS. HALL, in response to a question from Representative Johansen regarding municipality size, said that while HB 219 does not specify that Anchorage would not be included, she thinks the intent of the bill is to benefit smaller communities. She ventured that the intent could be clarified in the language of the bill. In response to Vice Chair Keller, she confirmed that such clarification would be necessary only if the intent was to exclude large municipalities. 8:53:21 AM VICE CHAIR KELLER questioned why a large municipality should be restricted, because he pointed out that there may be a subset within a large municipality. 8:54:07 AM REPRESENTATIVE GRUENBERG recollected that the City of Anchorage used to have a volunteer fire department, but does not have one currently. He said he would not like to "bring them back under the ... [Division] of Insurance" without finding out if "they would want or feel that they ought to be regulated." He said input from the City of Anchorage is needed, particularly regarding the effect on Eagle River. 8:56:11 AM MS. HALL said [the division] does not regulate fire departments or ambulances. She said HB 219 would regulate the selling of subscription services, which is an insurance product. The proposed legislation proposes exempting such a product for small communities that may run a medical transport service or a volunteer fire department that is not funded. She said she assumes the Anchorage Fire Department is funded "in somebody's budget." REPRESENTATIVE GRUENBERG clarified that he is concerned about the Chugiak and Eagle River volunteer organizations, because they are not "as covered by the municipal fire department." He said he wants to know how the bill would affect them. He stated, "I agree with the vice chairman on this one." 8:58:33 AM REPRESENTATIVE JOHANSEN noted that in the last committee of referral, Representative Berta Gardner had asked the sponsor if he would oppose language that would allow a fire department to require subscription service in communities where property owners were already paying property taxes. He said that brought to mind the borough of Ketchikan, within which there are two professional fire departments and two volunteer fire departments. He said "everybody" pays property taxes, and city residents pay city taxes. Representative Johansen related that when a fire is big enough, a city department will cross over city lines into the borough's jurisdiction to help out. He said he would like more time to figure out all the "moving parts" to the bill. 9:00:49 AM REPRESENTATIVE SEATON said he does not think anybody is talking about a mandatory agreement, and he suggested using the phrase "a solicitation or a voluntary agreement" in the language of HB 219. He asked Ms. Hall for her opinion. 9:02:23 AM MS. HALL said she has not thought about that possibility and is not certain she is the one to give that advice. Notwithstanding that, she ventured that if the committee wants to ensure the solicitations cannot turn into mandatory assessments, then "it probably should say so." 9:03:00 AM VICE CHAIR KELLER removed his objection to the motion to adopt the proposed committee substitute (CS), Version 27-LS0638\I, Bailey, 3/8/12, as a work draft. There being no further objection, Version I was before the committee. 9:03:47 AM MR. PASCHELL, in response to Representative Johansen, said he has held discussions with numerous departments around the state about how the bill would impact them. He talked about a similar plan used in his home town in North Carolina. He offered his understanding that the Municipality of Anchorage has volunteer fire departments in Girdwood and Chugiak. He said the Fairbanks North Star Borough has a city-run municipal department that operates within the City of Fairbanks and nonprofit entities that operate throughout the borough, providing contractual services throughout the borough, with the exception of North Pole, which has municipality-provided services. He offered his understanding that the borough does the billing for services and pays the private non-profit entities a fee; therefore, it would be possible for the borough to set a policy such that "if you pay us $100, we won't bill you if we go out." MR. PASCHELL, regarding mutual aid, said, for example, most fire departments tend to respond to other agencies' needs. He said work is being done by the legislature to improve "that situation" statewide. He said the focus is on how to get base funding. He said that in the previous committee of referral's hearing of HB 219, Representative Berta Gardner had used the term, "double dipping." Mr. Paschell said that occurs in the City of Fairbanks, where the city funds the fire department, but charges when an EMS call is made. He offered an example. He concluded: We're not trying to address any of those types of things. It's only a way to say if you charge then we can provide money up front and it not be insurance. So, we're trying not to expand ... any services or change how any of the services are taking place. 9:09:01 AM MR. PASCHELL, in response to Representative Johansen, said he has not had direct communication with the Alaska Municipal League (AML) regarding HB 219. He said he does not see the proposed legislation as directly affecting AML. He related that he did speak to a fire chief who is also an AML member, and he said he could follow up with him. REPRESENTATIVE JOHANSEN indicated that he would be interested in hearing feedback from AML. He asked if any other volunteer fire department across the state, other than [the Rural Deltana Volunteer Fire Department and Chickaloon Fire Service], had offered feedback regarding HB 219. MR. PASCHELL said the impetus for the proposed legislation came from the City of Delta Junction. He surmised that some departments may not want to speak out because they don't want to broadcast that they are already using a system that could be perceived as violating insurance laws. He noted that he has spoken with the Salcha [Volunteer Fire Department], which is in support of [HB 219]. REPRESENTATIVE JOHANSEN said he is astonished by what he just heard, and he expects that if HB 219 does not pass, then the Division of Insurance will "figure out all of these people that are running under the radar." 9:13:13 AM MS. HALL, in response to Representative Gruenberg stated her understanding that if insurance is available, then the companies that sell the subscription plan bill the insurance, keep the proceeds, and will not bill the balance if there are inadequate limits of insurance. She added, "So, the insurance company's paying, as well as the subscriber." 9:14:17 AM REPRESENTATIVE SEATON suggested a conceptual amendment to add "within the community", following "recipient of the services", at the end of lines 8 and 12, on page 1 of Version I. VICE CHAIR KELLER asked Representative Seaton to hold off on making a motion to adopt that amendment in order to wait for the chair's return. 9:15:41 AM REPRESENTATIVE SEATON said he would also like to change "an agreement" to "a voluntary agreement", on page 1, lines 5 and 9. He said he would wait until the next hearing of HB 219 to move that amendment. 9:16:33 AM REPRESENTATIVE PETERSEN suggested asking Legislative Legal and Research Services to look at those two amendment suggestions and let the committee know whether the changes would produce the desired results. VICE CHAIR KELLER said the bill sponsor could take care of that. 9:16:58 AM REPRESENTATIVE JOHANSEN emphasized that he wants the important issues put on the table before the committee hears the bill again. He said he thinks of insurance as something necessary to have in case something bad happens and it involves "big money and big risks." 9:18:05 AM MS. HALL said she was shocked at the previous bill hearing to hear testimony that subscription services were being sold. She described the awkwardness of having both herself and those offering fire services in the same room. She said the division does not regulate the services, but does have a definition of insurance that "brings the subscription pieces under our Title." She said there is one air ambulance service today that has an actual insurance program, because it found someone to write a backstop, which allows the entity to continue its subscription services. 9:20:17 AM REPRESENTATIVE JOHANSEN expressed concern that in an unorganized area "that has a volunteer deal," if there is a law suit and no insurance, then the state would have to cover that. REPRESENTATIVE GRUENBERG asked Representative Johansen if he is considering an amendment. REPRESENTATIVE JOHANSEN confirmed that he is. REPRESENTATIVE GRUENBERG asked Representative Johansen to let him know if he decides to do that. He then asked the sponsor to "check if this is going to occur with Girdwood and Chugiak." 9:22:16 AM REPRESENTATIVE SEATON remarked that in the Kenai Peninsula Borough there are multiple cities and fire service areas, and he cautioned against excluding by area when smaller nonprofit service companies may be involved in the areas. REPRESENTATIVE GRUENBERG said he would like the time to be able to discuss with his community the amendment that Representative Johansen may offer, before the amendment is offered before the committee. MR. PASCHELL stated that he does not think that these departments realized that charging subscriptions and offering the services violated the insurance laws. He said those departments at this point are trying to figure out what to do. 9:24:51 AM VICE CHAIR KELLER opined that there is too much regulation. He said he thinks the bill is good, and he recommended that it be kept as broad as possible. 9:25:12 AM VICE CHAIR KELLER closed public testimony. 9:25:30 AM REPRESENTATIVE GRUENBERG announced that he would take it upon himself to check with Chugiak and Girdwood. [HB 219 was held over.]