HOUSE JUDICIARY STANDING COMMITTEE March 31, 2000 1:22 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Joe Green Representative Norman Rokeberg Representative Lisa Murkowski Representative Eric Croft Representative Beth Kerttula MEMBERS ABSENT Representative Jeannette James COMMITTEE CALENDAR HOUSE BILL NO. 211 "An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date." - HEAR AND HELD; ASSIGNED TO SUBCOMMITTEE HOUSE BILL NO. 244 "An Act relating to disclosure of information by the attorney general about possible unfair trade practices; and relating to liability for allegations relating to unfair trade practices." - MOVED CSHB 244(JUD) OUT OF COMMITTEE HOUSE BILL NO. 58 "An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date." - HEARD AND HELD HOUSE JOINT RESOLUTION NO. 5 Proposing amendments to the Constitution of the State of Alaska creating a highway fund and a harbor fund. - HEARD AND HELD PREVIOUS ACTION BILL: HB 211 SHORT TITLE: HEALTH CARE INSURANCE Jrn-Date Jrn-Page Action 4/22/99 914 (H) READ THE FIRST TIME - REFERRAL(S) 4/22/99 914 (H) L&C, JUD, FIN 5/10/99 (H) L&C AT 3:15 PM CAPITOL 17 5/10/99 (H) HEARD AND HELD 5/10/99 (H) MINUTE(L&C) 10/22/99 (H) L&C AT 10:00 AM ANCHORAGE LIO 10/22/99 (H) MINUTE(L&C) 2/04/00 (H) L&C AT 3:15 PM CAPITOL 17 2/04/00 (H) -- Meeting Canceled -- 2/16/00 (H) L&C AT 3:15 PM CAPITOL 17 2/16/00 (H) Heard & Held 2/16/00 (H) MINUTE(L&C) 2/16/00 (H) MINUTE(L&C) 3/03/00 (H) L&C AT 3:15 PM CAPITOL 17 3/03/00 (H) Moved CSHB 211(L&C) Out of Committee 3/03/00 (H) MINUTE(L&C) 3/08/00 2446 (H) L&C RPT CS(L&C) NT 1DP 2DNP 3NR 3/08/00 2446 (H) DP: ROKEBERG; DNP: CISSNA, BRICE; 3/08/00 2446 (H) NR: MURKOWSKI, HARRIS, HALCRO 3/08/00 2446 (H) ZERO FISCAL NOTE (DCED) 3/24/00 (H) JUD AT 1:00 PM CAPITOL 120 3/24/00 (H) Heard & Held 3/24/00 (H) MINUTE(JUD) 3/31/00 (H) JUD AT 1:15 PM CAPITOL 120 BILL: HB 244 SHORT TITLE: UNFAIR TRADE PRACTICES/DEFAMATION Jrn-Date Jrn-Page Action 5/16/99 1486 (H) READ THE FIRST TIME - REFERRAL(S) 5/16/99 1486 (H) JUD 3/31/00 (H) JUD AT 1:15 PM CAPITOL 120 BILL: HB 58 SHORT TITLE: OIL & GAS AUDITS Jrn-Date Jrn-Page Action 1/22/99 65 (H) READ THE FIRST TIME - REFERRAL(S) 1/22/99 65 (H) O&G, RES, FIN 1/22/99 65 (H) 2 FISCAL NOTES (DNR, REV) 1/22/99 65 (H) GOVERNOR'S TRANSMITTAL LETTER 3/04/99 (H) O&G AT 10:00 AM CAPITOL 17 3/04/99 (H) HEARD AND HELD 3/04/99 (H) MINUTE(O&G) 3/05/99 376 (H) JUD REFERRAL ADDED AFTER RES 3/11/99 (H) O&G AT 10:00 AM CAPITOL 17 3/11/99 (H) -- MEETING CANCELED -- 4/20/99 (H) O&G AT 5:00 PM CAPITOL 17 4/20/99 (H) > 4/22/99 (H) O&G AT 5:00 PM CAPITOL 17 4/22/99 (H) MOVED OUT OF COMMITTEE 4/22/99 (H) MINUTE(O&G) 4/23/99 943 (H) O&G RPT 4DP 4NR 4/23/99 944 (H) DP: PORTER, SMALLEY, HARRIS, WHITAKER; 4/23/99 944 (H) NR: OGAN, KEMPLEN, PHILLIPS, BRICE 4/23/99 944 (H) 2 FISCAL NOTES (DNR, REV) 1/22/99 3/06/00 (H) RES AT 1:00 PM CAPITOL 124 3/06/00 (H) Moved Out of Committee 3/06/00 (H) MINUTE(RES) 3/08/00 2444 (H) RES RPT 4DP 3NR 3/08/00 2445 (H) DP: COWDERY, WHITAKER, JOULE, MASEK; 3/08/00 2445 (H) NR: MORGAN, HARRIS, HUDSON 3/08/00 2445 (H) 2 FISCAL NOTES (DNR, REV) 3/31/00 (H) JUD AT 1:15 PM CAPITOL 120 BILL: HJR 5 SHORT TITLE: DEDICATED HIGHWAY AND HARBOR FUNDS Jrn-Date Jrn-Page Action 1/19/99 17 (H) PREFILE RELEASED 1/8/99 1/19/99 17 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 17 (H) TRA, JUD, FIN 2/10/00 (H) TRA AT 1:00 PM CAPITOL 17 2/10/00 (H) Heard & Held 2/10/00 (H) MINUTE(TRA) 3/07/00 (H) TRA AT 1:00 PM CAPITOL 17 3/07/00 (H) Moved CSHJR 5(TRA) Out of Committee 3/07/00 (H) MINUTE(TRA) 3/15/00 2484 (H) TRA RPT CS(TRA) NT 1DP 1DNP 4NR 1AM 3/15/00 2484 (H) DP: HALCRO; DNP: MASEK; NR: COWDERY, 3/15/00 2484 (H) KEMPLEN, KOOKESH, HUDSON; AM: KOHRING 3/15/00 2484 (H) FISCAL NOTE (GOV) 3/15/00 2484 (H) REFERRED TO JUDICIARY 3/24/00 (H) JUD AT 1:00 PM CAPITOL 120 3/24/00 (H) 3/31/00 (H) JUD AT 1:15 PM CAPITOL 120 WITNESS REGISTER JACK C. McRAE, Senior Vice President Blue Cross Blue Shield of Alaska A Premera Health Plan P.O. Box 327 Seattle, Washington 98111-0327 POSITION STATEMENT: Testified on HB 211. MIKE D. WIGGINS, Vice President of National Accounts Aetna U.S. Healthcare 601 Union Street, Suite 800 Seattle, Washington 98101 POSITION STATEMENT: Testified on HB 211. JIM JORDAN, Executive Director Alaska State Medical Association 4107 Laurel Street Anchorage, Alaska 99508 POSITION STATEMENT: Testified on HB 211. MIKE HAUGEN, Representative Alaska Physicians & Surgeons, Inc. 4325 Laurel Street, Suite 206 Anchorage, Alaska 99508 POSITION STATEMENT: Testified on HB 211. GORDON E. EVANS, Representative/Lobbyist Health Insurance Association of America 211 4th Street, Suite 305 Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 211. REGINA C. LEVY, Private Senior Citizen 915 West 22nd Avenue Anchorage, Alaska 99503 POSITION STATEMENT: Testified in support of HB 244. THOMAS WARD 12001 Portage Drive Anchorage, Alaska 99515 POSITION STATEMENT: Testified in support of HB 244. Julia Coster, Assistant Attorney General Commercial Section Civil Division Department of Law 1031 West 4th Avenue, Suite 200 Anchorage, Alaska 99501-1994 POSITION STATEMENT: Answered questions in relation to HB 244. ACTION NARRATIVE TAPE 00-43, SIDE A Number 0001 CHAIRMAN PETE KOTT called the House Judiciary Standing Committee meeting to order at 1:22 p.m. Members present at the call to order were Representatives Kott, Green, Rokeberg, Murkowski, Croft and Kerttula. No other committee members arrived after the meeting was called to order. HB 211 - HEALTH CARE INSURANCE CHAIRMAN KOTT announced the first order of business would be HOUSE BILL NO. 211, "An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date." The committee stood at ease from 1:24 p.m. to 1:25 p.m. in order to determine which proposed committee substitute to take up. Number 0163 REPRESENTATIVE NORMAN ROKEBERG made a motion to adopt the proposed committee substitute for HB 211, version 1-LS0472\N, Ford, 3/30/00, as a work draft. There being no objection, Version N was before the committee. [THE RECORD REFLECTS THAT THE COMMITTEE WOULD ALSO BE DISCUSSING CSHB 211(L&C), VERSION 1-LS0472\K.] REPRESENTATIVE ROKEBERG, sponsor of the bill, started by giving some background on HB 211. He and his staff, as well as various people throughout the state and country, have been working on the bill for about one and a half years. It is a major piece of legislation. There were four hearings in the House Labor and Commerce (L&C) Committee, some held during the interim; after moving out of that committee, the bill generated a renewed interest and therefore a new committee substitute. REPRESENTATIVE ROKEBERG called HB 211 the Alaska Patients' Bill of Rights. He said he does not want to duplicate but dovetail the Alaska Statutes with a federal law that is in a conference committee on Capitol Hill right now, which will have a major impact on ERISA-[Employee Retirement and Income Security Act] covered health insurance groups that are not necessarily covered by state law. He believes that it would be appropriate to have the benefit of the legislation, and it would be consistent in relation to the regulatory schemes for the non-ERISA and ERISA groups in the state. In addition, he noted, state legislation and case law have not been applicable to ERISA groups, and there is a growing trend of cases which seem to indicate that the fate of issues in relation to health care may be against ERISA groups. Therefore, in order to keep the primacy of state insurance regulatory proceedings, he thinks there needs to be legislation in this area. REPRESENTATIVE ROKEBERG explained that the bill would establish a lay standard for payment and access to emergency room services; would provide for the full disclosure of treatment options and choice of health care providers; would provide for a PPO [Preferred Provider Organizations] plan to have a point-of-service option, which would give the right-of-choice for a physician on the part of a subscriber to a medical plan; would provide for a statutory requirement for the procedures to revolve around an in-house, pre- approval process; and would provide for tight standards in terms of responses and level of review. He noted that a level of review could be a peer review or a standard of educational background, which is controversial. The bill would also provide for an outside grievance procedure, if the internal review mechanism is denied, by mandating that each health insurance company operating in the state have an outside third-party utilization review to make a final judgment. If there is disagreement with the final judgment, there is mediation and ultimately the court system. He noted that the third-party review has to be with a peer specializing in the malady from which the patient is suffering. REPRESENTATIVE ROKEBERG noted that there are two contentious issues in relation to the bill. One is in regard to liability. The initial drafts of the bill contained a duty on the parts of the health care provider and insurance entity to perform certain steps, thereby raising the level of liability and causing action if there is a breech of those duties. This is really important, particularly in the Lower 48, where there are health maintenance organizations [HMOs] and where there have been denials of benefits and actual suffering as a result of the failure to receive services in a timely fashion or at all. Number 0715 REPRESENTATIVE ERIC CROFT asked Representative Rokeberg whether the bill precludes "it." REPRESENTATIVE ROKEBERG replied, "No." It establishes a new set of duties, which would give rise to a new set of actions. In theory, he said, it raises the ability to make a cause of action against a managed care entity. REPRESENTATIVE ROKEBERG further stated the other area of major conflict is related to a statutory definition of "medical necessity." It comes about because health care providers wish to have a statutory definition to give them the right to make decisions on what is truly necessary for the care of a patient. The insurance companies by and large want to be in a position for maximum flexibility to make judgments on what is necessary and what is not necessary. This is a major point of contention and merits consideration of this committee and this legislature. The insurance companies are opposed to including it, while the health care providers are in favor of it. He has an amendment that provides for a default definition in the event that there is a contractual definition. He is not sure, however, that the definition would work practically. REPRESENTATIVE ROKEBERG further stated that Version N contains a number of amendments provided by a summit held recently in Juneau consisting of the parties involved. Based on recommendations by Blue Cross Blue Shield of Alaska, the liability and medical necessity sections have been deleted to help move the legislation along. He said he is still waiting for input from the Alaska State Medical Association, but, by and large, Version N reflects most of what came out of the summit. He would like to see the bill pass this year because of the federal legislation, even though there are conflicting reports from Capitol Hill on whether or not it will come down. He believes that it will, however. In response to discussion about putting the bill into a subcommittee, he said he would be happy to do so with a date-certain in order to save the committee's time and to take up any amendments. Number 1102 REPRESENTATIVE GREEN noted that the bill has created some heat for two different groups. He asked Representative Rokeberg whether the changes from Version K to Version N were mutually agreed to. REPRESENTATIVE ROKEBERG replied, "No." The majority of the amendments adopted are a reflection of what was discussed at the summit, but there are some that don't reflect what was discussed at the summit. He reiterated that he is still waiting for feedback from the Alaska State Medical Association. The two primary issues of liability and medical necessity are not in Version N. Number 1197 REPRESENTATIVE GREEN indicated that he is concerned because despite the efforts of the sponsor and the summit there is still disagreement. He would support putting the bill into a subcommittee. REPRESENTATIVE ROKEBERG replied that if the bill is brought back by Wednesday [April 5, 2000], he doesn't have a problem with putting the bill into a subcommittee. Number 1237 CHAIRMAN KOTT concurred with Representative Green's assessment of the bill, especially given that it would require a vote of more than a simple majority to pass because it changes a rule of appellate procedure. In other words, it would require consensus. Number 1262 REPRESENTATIVE ROKEBERG pointed out that the court rule change is out of the bill if the liability provisions are kept out. REPRESENTATIVE CROFT asked Chairman Kott whether he plans to take testimony and then refer the bill to a subcommittee. CHAIRMAN KOTT replied, "Yes, that is the intent." Number 1300 REPRESENTATIVE CROFT asked Representative Rokeberg how he intends to dovetail this bill with a federal bill that hasn't passed yet. REPRESENTATIVE ROKEBERG replied the idea is to keep the topics the same in order to maintain primacy. He doesn't expect the language to be the same. REPRESENTATIVE CROFT stated that Congress is trying to work out major differences in their legislation in a conference committee. He asked how the state can establish liability when Congress doesn't know what they are going to do yet. REPRESENTATIVE ROKEBERG suggested omitting the issue and amending the statutes next year. CHAIRMAN KOTT opened the meeting to public testimony. Number 1407 JACK C. McRAE, Senior Vice President, Blue Cross Blue Shield of Alaska - A Premera Health Plan [BCBS of AK], testified via teleconference from an off-net site in Seattle, Washington. The BCBS of AK fully supports HB 211 as currently drafted with the liability and medical necessity language removed. The medical necessity issue is so volatile that the issue has not been taken on at the federal level. It is an issue that almost every legislature has set aside and has dealt with it as a contract issue between the medical community and insurance carriers. In reference to the issue of liability, the bill - as drafted - would impact the non- ERISA clients who already have a cause of action for liability, and the BCBS of AK is opposed to creating another cause of action for liability. MR. McRAE further stated that BCBS of AK supports the bill [Version N] and the concept of a patients bill of rights. They are comfortable with the external review; the prudent lay person in emergency rooms, and a variety of other parts of the bill. He recognizes that small changes would probably be made, as with any piece of legislation, but the BCBS of AK supports Version N and would support it through the process. Number 1511 REPRESENTATIVE ROKEBERG asked Mr. McRae to explain to the committee members why BCBS of AK rejected the language in the original version of the bill in relation to medical necessity. The definition, he noted, came from the American Medial Association. MR. McRAE replied that there is a lot of confusion related to medical necessity. BCBS of AK feels that they have to have some say in what medical necessity consists of, which is why they put language in their contracts; in turn, some providers sign the contracts and some don't sign the contracts. For example, there are differing opinions of providers on what is cosmetic surgery; in that way, BCBS of AK needs to be involved to communicate to their medical directors what they feel is cosmetic surgery and what is not. Another example is experimental and investigative medicine when a specific procedure hasn't been approved by the FDA [Food and Drug Administration]. In that way, for some cases BCBS of AK needs to step in and have some authority over the medical necessity. He further stated that there have been a large number of studies conducted on patients bill of rights. There is legislation in almost every state which does not include language on medical necessity because of the volatility surrounding the issue. He also noted that the federal legislation is being assessed. The cost in relation to medical necessity is also substantial. He cited a figure in upwards of 6 percent. The goal of BCBS of AK, he said, is to ensure that health care dollars are going to the subscriber that needs the service, and to try and keep the cost-drivers out of legislation, which is what they are trying to do here. Number 1634 CHAIRMAN KOTT asked Mr. McRae how many other states have implemented a patients bill of rights. MR. McRAE replied he doesn't have that information in front of him; he would provide it to the committee later. He does know that the state of Washington passed legislation this year. CHAIRMAN KOTT asked Mr. McRae whether the state of Washington included or excluded medical necessity. MR. McRAE replied that they excluded it. Number 1660 CHAIRMAN KOTT asked Mr. McRae whether the state of Washington included or excluded liability. MR. McRAE replied they included a form of liability. He explained that the insurance industry in the state of Washington has almost come to a halt this year to the point that an individual cannot buy a policy. As a result, over 40 insurance companies have left the state because of statutes passed starting in 1993. In that regard, a lot of trade-offs were made in the legislative session this year in relation to the different issues surrounding a patients bill of rights, and in relation to the opening up of the individual insurance market. Number 1700 REPRESENTATIVE GREEN asked Mr. McRae whether medical insurance companies are limited in their amount of profits or premiums that they can charge. MR. McRAE replied that BCBS of AK submits their rates to the Division of Insurance [Department of Community and Economic Development] for evaluation in relation to being actuarially sound, which means that the costs and rates are justified in relation to the services rendered. There is a check and balance in the system. He noted that rates have gone up because health care costs and utilization costs have gone up and are going up, and BCBS of AK doesn't see that trend stopping. Number 1751 REPRESENTATIVE GREEN stated that common carrier pipelines have an upper limit in the amount that they can make, and they are regulated. He asked Mr. McRae whether the insurance industry has an upper limit or whether the industry is approved as actuarially sound. MR. McRAE replied that he isn't aware of anything in statute that places a limit on returns. Number 1797 REPRESENTATIVE GREEN asked Mr. McRae whether he has a disposition to say what the broad range might be in grouping all the insurance companies together. MR. McRAE replied that he has no idea. He couldn't even take a guess, and he has no idea where that number would come from. Number 1805 REPRESENTATIVE GREEN asked Mr. McRae whether liability would automatically increase premiums or whether it would just decrease profits. MR. McRAE replied that when BCBS of AK submits regulations for actuarial approval that are not realistic the Department of Community & Economic Development responds accordingly. In that way, the BCBS of AK would not just decrease their profits, but instead any increase in medical cost and utilization is built in to the price structure that is given to the Division of Insurance. As a result, profits would not change, but prices would increase in the state. Number 1847 REPRESENTATIVE ROKEBERG stated that, according to his understanding, under statute the BCBS of AK is a non-profit organization. MR. McRAE answered that the BCBS of AK is a non-profit organization in Alaska and Washington. In fact, all of the BCBS associations are non-profit. There are no stockholders and any capital that is reserved is for future claims. REPRESENTATIVE ROKEBERG asked Mr. McRae whether "any capital" is profit. MR. McRAE replied that any funds that BCBS of AK holds above the premium charged minus the medical expenses incurred are reserves held for future medical expenses. REPRESENTATIVE GREEN noted that it is the same as margins for a cooperative electric company. Number 1888 REPRESENTATIVE BETH KERTTULA asked Mr. McRae to provide a copy of a contract, so that the committee members can take a look at the definitions used. MR. McRAE replied, "Sure." He requested clarification as to whether Representative Kerttula is interested in mainly the medical necessity language. REPRESENTATIVE KERTTULA said that is what she is most interested in, but it probably would be helpful to the committee members to see a copy of a contract. Number 1943 MIKE D. WIGGINS, Vice President of National Accounts, Aetna U.S. Healthcare, testified via teleconference from an off-net site in Seattle, Washington. He is also the account manager for the Alaska Care Health Plan. He said Version N is the result of compromise from a number of different factions in the state. The bill, in its current form, addresses many complex issues including patient provider protection, a patient's right to choose a provider, confidentiality of a patient's medical information, and a patient's right to have complex medical issues reviewed externally to carriers. The bill also preserves the tools necessary for insurance companies to help them manage the rapidly increasing cost of medical services today. Number 2002 REPRESENTATIVE KERTTULA asked Mr. Wiggins whether he likes the bill. MR. WIGGINS replied that it is a bill they think that they can live with. There have been a lot of compromises made, and they didn't always get their way. Number 2030 JIM JORDAN, Executive Director, Alaska State Medical Association, testified via teleconference from an off-net site in Anchorage. The physician community is concerned with the issues of medical necessity and accountability of the managed care entities that make medical decisions. In relation to the issue of medical necessity, the physician community thinks that it boils down to a policy decision in relation to who would practice medicine - the physician or some insurance company. The physician community feels that the definition developed by the American Medical Association is appropriate because it turns the whole arena of medical necessity in terms of what is prudent health care. In relation to the issue of accountability or liability and it being a cost-driver, a number of estimates associated with the federal legislation and the legislation enacted in the state of Texas, which the language in Version K was based on, indicate that the costs are not that high. He noted that in the state of Texas there have been five lawsuits to date since 1997, a jurisdiction that is much larger than Alaska. Some may say it is too early to tell, but the state of Texas has a two year statute of limitations just like Alaska. He doesn't see the issue of accountability/liability as being a cost-driver. MR. JORDAN further stated, in relation to comments made on other causes of actions, that it is his understanding that the cause of actions that may be available in state courts currently for decisions made by insurance companies are contractual in nature as opposed to tort. He's been told by counsel that the differences between action in tort and action in contract could be the subject of a law review, which indicates that there are substantial differences. Number 2198 MR. JORDAN further stated, in relation to ERISA, that Representative Rokeberg had indicated there is a change in the legal environment in relation to the ability of a state to regulate this area. It currently assumes that, if a person is involved in a plan, ERISA would preempt state regulations. The result of that is that any litigation brought forward in regard to a medical decision made by an insurance company is (indisc.). The only recompense that would be available is the amount of the denied service, and frankly, he said, that just doesn't seem fit or a just manner in which to compensate a person who is injured in such a manner. Number 2249 MR. JORDAN further stated, in relation to the summit, that yes, there was agreement in some of the areas. However, there appears to be some material changes in Version N, which he just received this morning, as the result of wordsmithing as Representative Rokeberg mentioned earlier. Granted, there are areas where there was agreement, but there are numerous other areas of issue in addition to the liability and medical necessity issues, which warrant subcommittee treatment. Number 2285 CHAIRMAN KOTT noted that the written testimony committee members have from the Alaska State Medical Association is dated March 17, 2000, and is signed by Dr. Peter Lawrason. He is assuming that the comments in the letter were directed at Version K, the version passed out of the House L&C Committee. MR. JORDAN replied that is correct. The Alaska State Medical Association continues to support Version K, as opposed to Version N. Number 2313 REPRESENTATIVE LISA MURKOWSKI asked Mr. Jordan whether Version N is a starting point in that the two sides are in agreement but the differences between liability and medical necessity need to be hashed out. She also asked Mr. Jordan whether the Alaska State Medical Association does not support Version N. MR. JORDAN replied that the Alaska State Medical Association does not support Version N, and there appear to be other areas of concern in Version N that need to be discussed at length. He added that the issue of including or not including medical necessity works its way back through Version N in a number of ways. As mentioned earlier, the federal legislation does not include a definition of medical necessity, which allows for an external review entity to go outside the four corners of a contract. He noted that one reason why the medical community feels so strongly about the definition of medical necessity is to try and provide some consistency. Number 2407 CHAIRMAN KOTT commented that he had heard Mr. Jordan indicated that the "word smith" changes made to Version N might have some materialistic effects. He isn't sure if that is true, however. Number 2413 REPRESENTATIVE ROKEBERG stated that he has not received a response from the Alaska State Medical Association in relation to Version N, exclusive of the two areas of contention - liability and medical necessity. He noted that a lot of Version N represents agreements arrived at during the summit, but that might not be true for everything in the bill. Number 2438 REPRESENTATIVE CROFT asked where in Version N it limits the definition of medical necessity in a contract. MR. JORDAN answered that the concept of Version N allows for the provisions of a contract to be entertained and reviewed by an external appeal agency. It does not allow for this to go outside the four corners of a contract. REPRESENTATIVE CROFT stated then a person can only complain to an external appeal tribunal in relation to not meeting a contract. In that way, a person cannot complain that a contract is unfair because it didn't allow for medical necessity. MR. JORDAN replied, "Yes, that is correct." TAPE 00-43, SIDE B Number 0001 REPRESENTATIVE ROKEBERG asked Mr. Jordan whether going outside a contract on utilization review is linked to the definition of medical necessity. MR. JORDAN replied that federal legislation does not define medical necessity and allows for an external agency to go outside the contractual definition of medical necessity. Version N only allows for an external appeal agency to look inside the contract in regard to the definition of medical necessity, and is bound by it. Number 0074 REPRESENTATIVE GREEN asked Mr. Jordan whether the Alaska State Medical Association agrees with Version K. He further asked: Is that why they don't agree with Version N? MR. JORDAN replied, "Yes." Number 0106 REPRESENTATIVE CROFT asked Mr. Jordan whether the following provisions tie it to the plan rather than to an objective definition of medical necessity: ... a fair, de novo determination based on coverage provided by the plan and by applying terms as defined by the plan ... [page 8, lines 6-7, of Version N] ... an external appeal agency shall determine whether the managed care entity's decision is (A) in accordance with the medical needs of the patient involved, as determined by the managed care entity, ... [page 8, lines 10-12, of Version N] MR. JORDAN replied, "Yes." Number 0140 REPRESENTATIVE ROKEBERG pointed out that the paragraphs Representative Croft is referring to were written assuming that medical necessity would either be in or out. For the external review language, he thinks, it was assumed that it was in. In trying to interpret what Mr. Jordan said, going outside a contract in relation to an external review at the federal level is allowed, but because this bill included medical necessity that type of language wasn't needed. There is some wordsmithing in the bill that committee members may find objectionable. Number 0200 MIKE HAUGEN, Representative, Alaska Physicians & Surgeons, Inc., testified via teleconference from an off-net site in Anchorage. The group, he said, is oppose to some of the changes made in Version N. [He did not expand on which changes.] Number 0214 REPRESENTATIVE CROFT asked Mr. Haugen to provide a list of the wordsmithing changes and/or technical changes that might cause problems in addition to the medical necessity and liability issues. MR. HAUGEN replied that Version K [page 3, Section 21.07.010] provides for patient and health care provider protection. In that way, physicians know what's expected of them to prevent "fighting" over whether a service is medically necessary versus what is covered under a plan. He noted that it has been indicated that the section is fixable and they are amenable to a shorter version that would provide for those services that would be excluded from a plan. The net result would be the same; that being, what is expected from a physician. CHAIRMAN KOTT asked Mr. Haugen to provide a written, detailed analysis to the committee the areas of concern other than the liability and medical necessity issues. MR. HAUGEN indicated that he would do so. Number 0311 GORDON E. EVANS, Representative/Lobbyist, Health Insurance Association of America, came before the committee to testify. He said the association agrees with Version N. In response to Mr. Jordan's earlier comments in relation to Version N, Mr. Evans said it is important to take a look at all of the language in the paragraphs because they take into consideration a definition of medical necessity. He specifically referred to paragraph (4) and the subparagraphs starting on page 8, line 29, of Version N. The association believes that a government definition of medical necessity would undermine utilization management and increase costs by turning over coverage determinations based on medical necessity solely to the treating physicians who have both economic and non- economic incentives to inflate reimbursements. MR. EVANS further noted that defining medical necessity would eliminate the utilization review process - a process that is fundamental to managed care. He explained that for most contracts medical necessity is referred to but not defined, and the definition in Version K is far too broad. It should be consistent with the best practices and guidelines of the appropriate medical societies, but it doesn't have to be defined, which is what paragraphs (3) and (4) under the external appeal process refer to [page 8, starting on line 19, of Version N]. The representatives of the medical society, he said in conclusion, are only doing what they usually accuse the insurance industry of doing - cherry picking. Number 0417 REPRESENTATIVE CROFT said this whole issue is really not a disagreement about Version K and Version N or a disagreement between physicians and insurance companies; it is really a question of how to define the policy. It seems that there is agreement on the external appeal process in that it is not limited to the policy, but there is disagreement on defining the extra "bid." Is that right? MR. EVANS replied that that is exactly what subparagraph (D) does [page 8, line 28, of Version N]. It says that the plan has to be taken into consideration, but it also says that the external appeal agency may take into consideration other evidence that goes outside the plan, as defined in Version N. Number 0450 REPRESENTATIVE CROFT asked Mr. Evans whether the definition of medical necessity in Version K is from the American Medical Association. He further asked Mr. Evans what the problems are with the definition. The definition of medical necessity in Version K reads as follows: "medical necessity" means those health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or its symptoms in a manner that is (A) consistent with generally accepted standards of medical practice; (B) clinically appropriate in terms of type, frequency, extent, site, and duration; and (C) not primarily for the convenience of the patient, physician, or other health care provider; [Page 16, starting on line 30, of Version K] MR. EVANS replied that subparagraph (A) is the main problem with the definition. The Health Insurance Association of America would prefer the following language from South Carolina: Consistent with the most appropriate practice guidelines, which may include generally accepted practice guidelines, evidence-based practice guidelines or any other practice guidelines developed by the federal government, national or professional medical societies, boards and associations. MR. EVANS noted that the above language does not limit the definition to just the generally accepted standards of medical practice, which is what the physicians want. Otherwise, they think that people are telling them how to practice medicine when it is fair to say that not all physicians practice medicine the same. Number 0558 REPRESENTATIVE ROKEBERG stated that it is well recognized that the American Medical Association's definition of medical necessity does not allow for an insurer to put a sideboard on it, which is necessary in a managed care type of situation. This bill, he said, is about managed care entities; it is not about fee-for-service. The idea is to give the best quality and most affordable health care available in a plan. The ultimate balancing act and goal is to be cognizant of the cost-drivers, while at the same time ensure quality care. He commented that he'd like to see a little bit of a sideboard in relation to the definition of medical necessity. Number 0664 CHAIRMAN KOTT asked Mr. Evans whether the language from South Carolina was agreed to by all parties during the summit. MR. EVANS replied that the language was not brought up at the summit. He just received the definition today. He was told that it comes from the National Association of Insurance Commissioners external review model Act. Number 0694 REPRESENTATIVE GREEN asked Mr. Jordan and Mr. Haugen whether the language from South Carolina is acceptable. REPRESENTATIVE ROKEBERG replied, "No." It may be acceptable, but it is only part of the issue. REPRESENTATIVE GREEN stated that the language from South Carolina only deals with subparagraph (A) in relation to the generally accepted standards of medical practice. Number 0692 MR. JORDAN responded that he'd like to see the totality of the language in context. CHAIRMAN KOTT indicated that the committee would provide a copy of the language from South Carolina to Mr. Haugen and Mr. Jordan for their review. Number 0825 MR. EVANS clarified that the Health Insurance Association of America does not want any reference to medical necessity or liability in the bill. Number 0860 CHAIRMAN KOTT closed the meeting to public testimony. CHAIRMAN KOTT assigned HB 211 to a subcommittee consisting of Representatives Green, Murkowski and Croft in order to "iron out" some of the differences and unintended consequences. He also asked that Representative Rokeberg participate by presenting the amendments. He noted that he had to exclude himself from the subcommittee because staff [Lesil McGuire] has advised him of a possible conflict of interest. Ms. McGuire's father is a physician and there may be some ethical issues in that regard. Number 0932 REPRESENTATIVE MURKOWSKI remarked that she does not object to serving on the subcommittee, but it is important to recognize that the "magic bullet" will have to come from the physicians and insurers. Unless they are committed to participate in the process, she's not sure that the subcommittee will be able to report a solution. Number 0969 CHAIRMAN KOTT stated that he hopes that the parties can come together and work out an arrangement. He asked that Mr. Jordan and Mr. Haugen provide written comments to the committee on the areas of concern, other than that related to medical necessity and liability, by Monday, April 2, 2000,. MR. JORDAN indicated that he would do so. CHAIRMAN KOTT reminded Mr. McRae to provide the committee with a copy of a contract. MR. McRAE indicated that he would do so. CHAIRMAN KOTT sent HB 211 to a subcommittee and asked that the subcommittee members report back to the full committee by Wednesday, April 5, 2000. The committee stood at ease from 2:37 p.m. to 2:40 p.m. HB 244 - UNFAIR TRADE PRACTICES/DEFAMATION Number 1140 CHAIRMAN KOTT announced the next order of business would be HOUSE BILL NO. 244, "An Act relating to disclosure of information by the attorney general about possible unfair trade practices; and relating to liability for allegations relating to unfair trade practices." Number 1158 REPRESENTATIVE CROFT, sponsor of the bill, noted that he and Representative Fred Dyson, cosponsor of the bill, have been interested in consumer protection issues for some time now. House Bill 244 is a small fix in two different areas. First, those who work with consumer protection complaints have been frustrated with the amount of information available to them from the Department of Law. The department is prohibited by statute from communicating with anyone about the status of an investigation. He thinks that is mainly to protect the business entity from disclosure about the complaint until probable cause has been determined. In other words, he said, "You don't want ... everyone using the fact that [there have] been complaints against Joe Green's roofing company until you know whether they're substantiated or not." There were good reasons for the statute, he said, but in his opinion it is too broad and it doesn't allow the Attorney General to communicate the status of a complaint, which leads to the feeling that a complaint has been thrown into a black hole to the point that even good work isn't apparent to the general public. REPRESENTATIVE CROFT said that second, there is a lot of worry among complainants that if they talk about the suit at all they might be subject to slander or libel actions from the affected business. In that type of case, he noted, that the complainants would probably win, because in slander-and-libel law when a matter is of public concern the courts have held under the Free Speech Clause that a person can't be held liable for making a mistake. In other words, if it is important enough for public discussion, which he thinks is the case with consumer protection, it is not a matter of making a mistake; it is a matter of knowing or having been reckless with regard to the truth. Number 1363 REPRESENTATIVE KERTTULA asked Representative Croft what happens with the information once the complainant gets it. Can the complainant divulge it? REPRESENTATIVE CROFT replied that according to Ms. Julia Coster [Assistant Attorney General, Commercial Section, Civil Division, Department of Law] that is a possibility, but it is not a client situation. It is not protected by the attorney-client privilege because the client is the state. He's trying to define an area where a complainant could get some information, but a complainant would not have an absolute right to everything that's going on. There is a worry that information the Attorney General tells a complainant could be deposed because often a complainant is a key witness. The intent of the bill is to give discretion to the Office of the Attorney General to communicate limited facts, which is why the language reads "may" instead of "shall" [page 2, line 1, of the bill]. He imagines that limited facts would be communicated rather than everything in order not to compromise the case. Number 1463 REPRESENTATIVE GREEN asked Representative Croft whether there would be any divulging of information that wouldn't be a matter of public record. REPRESENTATIVE CROFT replied that at this point, no information is a matter of public record until a determination has been made. The statute says that the Attorney General cannot communicate with anyone the identify of who was complained against, which is to protect a business until they are ready to file a case. He thinks it is a rational law, but he thinks that it is a little bit overly broad. REPRESENTATIVE KERTTULA asked Representative Croft whether the Attorney General could give the name of the person being investigated to the complainant, if so-desired, under the new law [Section 2, of the bill]. REPRESENTATIVE CROFT replied yes, the Attorney General could only communicate with the person who has filed a complaint - the complainant. REPRESENTATIVE KERTTULA pointed out that once the complainant gets the information, the complainant can divulge the information to anybody. REPRESENTATIVE CROFT replied, "They could." But the complainant has an interest in seeing the case brought to a successful completion. The complainant, he thinks, doesn't have an interest in ruining the case. A little bit of information helps the complainant feel like something is being done. He doesn't think that the risk of using that information to compromise the case is very significant. Number 1570 REPRESENTATIVE MURKOWSKI asked Representative Croft whether there would be any concern in relation to assigning rights to a claim, for example. In other words, would anybody be excluded that should not be? REPRESENTATIVE CROFT deferred the question to Ms. Julia Coster of the Department of Law. CHAIRMAN KOTT opened the meeting to public testimony. Number 1617 REGINA C. LEVY, Private Senior Citizen, testified via teleconference from Anchorage in support of HB 244. She has been waiting for "Lady Justice" to come her way for over five years now. She continues her long fight for justice in consumer protection issues despite the fact that she is almost 72 years old. She firmly believes that consumer protection, as well as the contracting laws of the state are inadequate at best. Instead, they protect the corrupt contractors and do nothing for their victims. MS. LEVY further stated that she has ambivalent feelings about testifying today. One side is eager to tell her story again, while the other side says, "What for?" It is nothing but a complete waste of time if the past is to prove true once again. But when common sense takes control of her she realizes that the committee members need to know what victims like herself have gone through. Only then can they debate the bill fully aware of the experiences that victims have endured, the lessons learned, and the horrors of the cost of litigation with nothing to show for it but a worthless piece of paper called a judgment. But, most importantly, she feels that the current laws in statute protect the corrupt contractors and leave the victims with no recourse whatsoever. That is a fact that leaves her angry, frustrated, helpless and mad against the current legal system and the legislators that support the system with no thought for the victims. MS. LEVY explained that she contracted-out with J&B Roofing in the fall of 1994, at which point she knew nothing about roofing or roofing contracts. The contractor came to her home and presented himself as an "expert," and put a $20,000 roof on her home with a rating of a 2 on a scale of 1 to 10, with 10 being the best rating. The price to her was $18,000 because of a senior citizen discount, and it will have to be completely redone at her expense. She filed an official complaint with the Better Business Bureau in the spring of 1995, which was taken to the Office of the Attorney General, but she never heard anything more about it. She asked: Doesn't the Attorney General want to do something to protect the people from being taken just like her? But at that point she was still very young and naive about the legal system, Ms. Levy said. MS. LEVY further stated that on December 1, 1998 she gave an in- depth testimonial at the very first consumer protection round table, at which time, she spoke to the assistant attorneys general in attendance - Julia Coster and Daveed Schwartz. When she asked about speaking out in fear of retaliation, Representative Dyson had clarified the concern with Mr. Schwartz, who indicated that it is a possibility. In support of HB 244, she feels that she has every right to know the status of her complaint, and what the Attorney General is doing, if anything, or did he just trash-can it? She spent more than $28,000 on attorney fees to get a judgment that is nothing more than a worthless piece of paper, and now that she has filed an official complaint she cannot know what's going on. Why not? MS. LEVY continued. After all this time, she has no idea what the courts have done in relation to her complaint. As the victim, there should be some means of disclosure by the Attorney General to keep her informed rather than push her to the side, wipe her off and take her out of the picture. In other words, treat her like she was nothing when in fact she is one of thousands of people in Anchorage who have been taken by corrupt contractors. She further noted that J&B Roofing has changed their name to avoid all accountability for their criminal actions, which left hundreds of creditors without any recourse to get what is rightfully due. The corporate veil that this company hides behind protects and shields them from all intruders. Corporation laws, she said, protect the criminal, for she can't reveal information on the company to anyone even if asked for fear of being sued. That is why she will not speak of their new name. She has had enough of the legal system and how it protects the corrupt contractors and leaves the victims with anger, frustration and out of funds. House Bill 244 would take some of the pressure off of those who have the courage to speak out, which would give victims who have judgments against corrupt contractors the ability to speak out to warn the innocent and unsuspecting without any fear of repercussions. She said, "Put yourself in my place. Wouldn't you be grateful that somebody who had a very unpleasant experience with a contractor speak out and save you years of litigation, many thousands of dollars in attorney fees, and also the cost that you along would have to bear to make good again the damage done to your property by a corrupt contractor?" MS. LEVY further stated that after she went public at the consumer protection seminar and the Senior Voice and the Eagle River Star published articles in the paper, she was immensely afraid that she would be found in some ditch or that her home would be fire bombed or that her tires would be slashed. The only reason that did not happen is because the contractor would be a prime suspect, for she has no enemies; she is a law-abiding senior citizen. Since this has happened she has been working as a researcher at the local court house, and has put together a database of lawsuits the company is involved with. The company has been involved in 26 lawsuits from September 1, 1994 to January 27, 1999 under different names. She often wonders how less litigation there might have been if HB 244 was in effect back then. It is imperative that the people have HB 244 in place and working for them. She has downloaded the various name changes the company has made trying to distances themselves from the Johnson name, but it is easy to see that the company remains the same regardless of how many name changes have been made. That information was faxed earlier to the committee. She hopes that it is used by the committee members when debating the bill, for it is imperative that victims are able to speak out. She's not talking about rocket science; it is just plain common sense. MS. LEVY further stated that since she started her quest for justice, she has become well known with local public officials and have written numerous letters to the Governor and on down to no avail. House Bill 244 is the first and only positive legal script dealing with consumer protection that has come out of Juneau in years. It would protect victims of corrupt contractors so that they can keep abreast of any complaints made to the Attorney General and can speak up freely without any fear of repercussions, and hopefully it would put the fear of God into some of the corrupt contractors. House Bill 244, she said, is not the answer to all consumer protection problems, but is a start in the right direction. She urged the committee members to pass the bill without hesitation. The people need it for their protection. She thanked Representative Eric Croft and Representative Fred Dyson for drafting the bill, and the committee members for listening to her. In closing, she has been a one-person campaign for over five years now to bring these creditors to the bar of justice and be held accountable for their criminal activity, yet despite her best efforts she has been left with bitter disappointment, total frustration and completely disillusioned with the legal system. She has found out the hard way that those who have the power and authority to do something just turn and look the other way. Thank you very much. Number 2406 CHAIRMAN KOTT thanked Ms. Levy for her excellent testimony. TAPE 00-44, SIDE A Number 0060 THOMAS WARD testified via teleconference from Anchorage in support of HB 244. The bill is long overdue to protect the citizens of Anchorage. First of all, contractors should have a better criteria for licensing. As an ex-real estate person, he had to take numerous classes and continuing education classes to make his job acceptable to the public. Contractors, on the other hand, only need to provide $25 for a license to be in business. There is also no way to cancel insurance after obtaining it, when it is a known fact that in the event of an accident the consumer is sued, if the contractor doesn't have insurance. He agrees with HB 244 in that the Attorney General should inform the consumer on what is going on. He further noted that it only takes a $500-bond for $10,000 and the contractor is in business. MR. WARD told members he also had testified in 1998, along with Ms. Regina C. Levy, because he had been trying for a year to get money back from a bond. He didn't get it all back, but it cost him only $8,000 to talk to an attorney at $150 an hour. It is important for the consumer to get his money in due time. He even threatened the insurance company with litigation to pass on the money that he was entitled to, for he too has a judgment against a contractor. He firmly agrees with HB 244. It is a small step for the legislature to take, but a large step for the citizens who should be informed at all times and who should have a way to investigate these contractors. It is a shame that more people aren't testifying. Ms. Regina C. Levy has a list indicating that there are $136,000 out of several contractors in the last year. Lord only knows, he said, how many thousands of dollars have been stolen from the people. Thanks you very much for listening. He hopes that this is a step in the right direction. Number 0383 JULIA COSTER, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, testified via teleconference from Anchorage. She does not have formal testimony to present; she is prepared to answer any questions. Number 0407 REPRESENTATIVE KERTTULA asked Ms. Coster whether she feels comfortable that the Office of the Attorney General would have enough latitude to discuss the matter but that they would be careful enough not to provide too much information so that it could conceivably hurt a case later on [Section 2(c), of the bill]. MS. COSTER replied, "That's right." The Department of Law in concerned in that they would not want to disclose information that would compromise an investigation. She feels comfortable because the language in the bill is permissive as opposed to mandatory. She thinks that the department could disclose information on whether or not they were investigating [an act or practice], and that probably wouldn't compromise an investigation. Number 0480 REPRESENTATIVE ROKEBERG asked Ms. Coster what the practice is now legally in terms of warning the public about potential fraud. It seems to him that people may come to the state from outside, start their activities and move around the state, at which time, the Department of Law may become aware of them. Is the department restrained from warning the public because an action has been filed against an act or practice? How does the department reconcile that conflict with the same concept of not talking about an alleged perpetrator? MS. COSTER replied the confidentiality provisions in the Consumer Protection Act allow the Office of the Attorney General to issue a warning relating to conduct constituting an unlawful act or practice under the Act. The Department of Law uses that provision when they see conduct that is illegal on its face. She cited a telemarketer selling goods or services so that the department can tell the conduct is a violation of the Act as an example. In that case, the department may issue a warning relating to a systematic type of violation, but they probably would not disclose the name of the business; they may just disclose the type of conduct that is the violation. The department has that right, but they use it carefully. Number 0621 MS. LEVY said, according to her understanding, the criteria that the Attorney General sets forth to take on a case or initiate action is related to the number of people involved, the amount of money involved and the egregious behavior of those involved. The company that she had dealings with has more than met every one of the criteria. In fact, the company has exceeded every one of the criteria. She wondered what her recourse is after going to the Attorney General who responds negatively to pursuing a case. The people have a right to know and be protected from corrupt contractors, and the only way to do that is to get them out of business. CHAIRMAN KOTT deferred Ms. Levy's question to Representative Croft. REPRESENTATIVE CROFT stated the frustration is because the statute prohibits Ms. Julia Coster of the Department of Law from communicating to anyone the status of a complaint. He's not sure what to do about a complaint that has been rejected after the bill is passed and after the Office of the Attorney General is allowed to communicate to a complainant freely about the investigation of an act or practice. But the first thing to fix is to allow the Office of the Attorney General to communicate whether or not they are pursuing a complaint. Number 0797 MS. LEVY said she agrees with allowing the Office of the Attorney General to tell her the status of a complaint, but she would like to know what to do when they reply in the negative to pursuing a case. She wants to know for the people who are at risk. REPRESENTATIVE CROFT replied, "I think then we raise holly heck." MR. WARD stated, even though he and Ms. Levy are two small voices in the wilderness, he just talked with a woman the other day who got hoodwinked on her driveway because she trusted someone. He noted that he was a contractor for twenty-five years, but he can still walk in his hometown with his head held high. Number 0866 MS. LEVY stated a big problem for the state in relation to this issue is because there isn't a consumer protection agency. There are 1.5 attorneys working on consumer protection now, but when there was a consumer protection agency there were 15 attorneys and a full staff. Alaska, the largest and wealthiest state, is the only state without a consumer protection agency in the country. That is why the state is a haven for crooks and scammers. They know nobody will do anything about it. She cited the roofing company that she has been dealing with had been operating in the state since 1970. They just kept changing their name when things got too hot, or if things got really bad they left. But they always returned because they know that they can get away with it. The state needs a consumer protection agency. Number 0942 MR. WARD noted that AARP is behind this issue. He and Ms. Levy volunteer as part of a task force that is willing to work for free to help do research, the leg work. It wouldn't cost the state any money. MS. LEVY interjected and stated it would cost the state some attorneys, but the task force members would do the leg work. Her experiences have turned her into a mini-paralegal. CHAIRMAN KOTT commented that Ms. Levy is not a force that he would want to deal with based on what he has heard today. MS. LEVY replied nobody wants to come up against her because she believes in truth in justice. She treats the other person the way she wants to be treated. In this case, she is speaking for thousands of victims in the Anchorage area, not just for herself. Number 0990 REPRESENTATIVE ROKEBERG pointed out that both general and speciality contractors of the state have to be licensed with the Division of Occupational Licensing [Department of Community & Economic Development] but there is no board or method for a consumer to file a complaint to revoke a license. He noted that HB 418, which removes program receipts from the general fund and designates them as program receipts, gives future legislators the opportunity to enact a regulatory scheme that would allow for consumer protection. He also noted that the Alaska Association of Home Builders is very interested in establishing a board. REPRESENTATIVE CROFT suggested that he work with Representative Rokeberg on the issue. Number 1076 REPRESENTATIVE CROFT offered Amendment 1, which reads as follows: Page 1, line 13 after "about the", insert "status of the" REPRESENTATIVE CROFT explained that Amendment 1 would take care of Ms. Coster's concern in relation to the intent language being too broad. CHAIRMAN KOTT asked whether there was any objection. There being none, Amendment 1 was adopted. Number 1110 REPRESENTATIVE CROFT stated that Ms. Coster also wants language at the end of Section 3 to indicate that it doesn't limit any other defense. Section 3 reads as follows: Sec. 45.50.525. Limits on cause of action for statements. A person may not bring an action for defamation of character, libel, slander, or damage to reputation against a person who makes an allegation that an act or practice is or may be unlawful under AS 45.50.471 unless the person who made the statement knew that the statement was not true, made the statement with reckless disregard for the truth of the statement, or made the statement to obtain a competitive business advantage. MS. COSTER told members she wants language that says this section doesn't extinguish any existing defense in law to the actions listed in the section. REPRESENTATIVE CROFT made a motion to adopt the foregoing as a conceptual amendment [Amendment 2]. CHAIRMAN KOTT asked whether there was any objection to the conceptual amendment; there was no response. [Although the adoption of conceptual Amendment 2 was never ordered, no objection was ever stated.] Number 1165 REPRESENTATIVE MURKOWSKI asked Ms. Coster to comment on the reason why this is being limited to disclosing information to the complainant. MS. COSTER replied that it is a policy call that Representative Croft can address. She commented that the Department of Law really doesn't want to disclose information on an investigation to hardly anyone because it could be compromised. For instance, a witness could be contaminated for asking questions, or the defense could get rid of evidence as the result of the press asking questions. She believes that Representative Croft focused on the complainants so that they would know whether or not an investigation was being pursued. Number 1245 REPRESENTATIVE CROFT stated that the bill is narrow so that the Office of the Attorney General can only tell a narrow class of people - the complainant(s). Yes, that class of people could divulge the information, but they seem like the least likely to want to compromise the investigation. In that regard, he is comfortable in letting them have some information about the case. Number 1289 REPRESENTATIVE KERTTULA asked what the standard is for libel now. Number 1300 REPRESENTATIVE CROFT answered that, according to his understanding, there are two constitutional restrictions in relation to the statement of libel. There has to be some sort of malice. After that, if it is a matter of public concern, the New York Times standards apply. If it is not a matter of public concern, simple negligent standards apply. But, if it is a matter of public concern, it has to be a person knew of a falsehood and was reckless about the falsehood. In effect, the bill declares consumer protection a matter of public concern and apply the actions in Section 3, of the bill. Number 1367 REPRESENTATIVE GREEN made a motion to move HB 244, as amended, out of committee with individual recommendations and attached zero fiscal note. There being no objection, CSHB 244(JUD) moved from the House Judiciary Standing Committee. HB 58 - OIL & GAS AUDITS CHAIRMAN KOTT announced the next order of business would be HOUSE BILL NO. 58, "An Act relating to certain audits regarding oil and gas royalty and net profits and to audits regarding costs relating to exploration incentive credits and oil and gas exploration licenses; and providing for an effective date." CHAIRMAN KOTT brought up HB 58 in order to set it aside temporarily. [HB 58 was held.] HJR 5 - DEDICATED HIGHWAY AND HARBOR FUNDS CHAIRMAN KOTT announced the next order of business would be HOUSE JOINT RESOLUTION NO. 5, Proposing amendments to the Constitution of the State of Alaska creating a highway fund and a harbor fund. CHAIRMAN KOTT brought up HJR 5 in order to set it aside temporarily. [HJR 5 was held.] ADJOURNMENT Number 1413 There being no further business before the committee, the House Judiciary Standing Committee meeting was adjourned at 3:25 p.m.