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Update: April 3, 2006 4:40 p.m.
The Commerce Committee, chaired by Sen. Linda Scheid (DFL-Brooklyn Park), met Mon., Apr. 3, to consider two bills.
S.F. 3480, carried by Scheid, is the Commerce Department technical bill. The measure makes changes to form approvals, coverages, filings, utilizations and claims. Sections of the bill make changes in the Minnesota Comprehensive Health Association (MCHA), clarify the qualification of dependents under COBRA coverage, allow health carriers to offer the deductible coverage in Medicare Part K and L as a basic plan rider, include any plan established or maintained by a state, the U.S. government, a foreign country, or any political subdivision in the definition of qualifying coverage for small employers and add MCHA to the list of carriers subject to the requirements of the Utilization Review Act. The bill also makes a number of other technical changes.
Committee members adopted a series of amendments to the bill. One amendment, offered by Scheid, deleted language relating to home warranties, deleted language including warranties and service contracts in the Insurance Guarantee Association and deleted language providing that the election for continuation of coverage upon termination will included additional coverage if the policy contains the benefits. Members also adopted an amendment deleting notice requirements to employees from employers about coverage options.
Several additional amendments offered by Scheid were adopted. The first amendment modifies requirements for the appearance of the Minnesota uniform health care identification card. The second amendment specifies that an employee who is voluntarily or involuntarily terminated or laid off from employment and unable to exercise the option to continue coverage, and who is a resident of the state and who is otherwise eligible may enroll in MCHA. A third amendment requires a writing carrier of health insurance to perform all administrative and claims payment functions for a period of five years, rather than three years. A fourth amendment requires sponsors of license education courses to be approved by the commissioner of commerce and requires the commissioner to monitor and have jurisdiction over all reserves maintained for assigned risk plan losses. Another amendment provides that all rates, supplementary rate information, and forms furnished to the commissioner must be open to public inspection within 10 days of their effective date. A sixth amendment clarifies wording in the standards for automobile insurance claims handling. A seventh amendment modifies language relating to reporting to licensed data service organizations. The final amendment specifies coverages for Medicare supplement plans with 50 percent and 75 percent coverage.
Sen. Dan Sparks (DFL-Austin) offered, and the committee adopted, an amendment clarifying language relating to insurance of private passenger vehicles and rental vehicle coverage.
The bill was approved and advanced to the Senate floor.
Members also considered a bill, S.F. 3573, authored by Sparks, permitting reductions in premiums on small employer health insurance in Greater Minnesota. The measure provides that a health carrier may request approval by the commissioner of commerce to establish separate geographic areas determined by the health carrier. The bill was re-referred to the Health and Family Security Committee without recommendation.
Members of the Commerce Committee devoted most of the Wed., Mar. 29, meeting to hearing a variety of insurance bills.
S.F. 2787, authored by Committee Chair Linda Scheid (DFL-Brooklyn Park), modernizes insurance regulation. Portions of the bill authorize agents to get continuing education credit for types of courses that are oriented toward efficient business practices, change the date of an annual registration required for insurance companies that are part of an insurance holding company system and permits insurance agents to get continuing education credit for courses focused on professional development. The bill also provides for Minnesota joining the Interstate Insurance Product Regulation Compact. Scheid said the compact goes into effect after being joined by at least 26 states or by states that combined account for 40 percent of insurance premiums paid for products subject to the compact. Scheid said the purpose of the compact is to determine uniform standards for individual and group annuity contracts, life insurance, disability income insurance and long-term care insurance. She said joining the compact also avoids federal regulation of insurance products. The measure does allow states to opt out of a particular uniform standard by legislation or by rule, Scheid said.
Testimony for the bill was presented by Robyn Rowen, Minnesota Insurance Federation, and Dominic Sposeto, National Association of Insurance and Finance Advisors. Rowen spoke in support of the modernization portions of the bill and on the development of uniform standards. Joel Carlson, representing the Trial Lawyers Association, spoke in opposition to the measure and said the interstate compact portion of the bill would result in Minnesota's insurance being regulated by a body outside of Minnesota unaccountable to the consumers of the state.
The measure was approved and re-referred to the Judiciary Committee.
Scheid also carried a bill, S.F. 2293, regulating the filing and use of health insurance policy forms. The bill allows health insurers to use a policy form and the premiums rates to be used with it in the insurance market upon filing a "loss ratio guarantee." Scheid said the guarantee is the insurer's guarantee that the premium rates will yield a loss ratio of at least 65 percent. The bill further requires the insurer to refund premiums in the amount necessary to bring the actual loss ratio up to the guaranteed minimum loss ratio. The bill was advanced and sent to the full Senate.
The committee also heard two additional bills. S.F. 3079, authored by Sen. Linda Higgins (DFL-Mpls.), modifies the licensing provision for barbers and cosmetologists to allow an applicant who is an ex-felon to obtain a license if the applicant meets all other licensing requirements. The bill was approved and advanced to the Senate floor. S.F. 2941, sponsored by Sen. Ann Rest (DFL-New Hope), changes the tax on insurers' fire insurance premiums to a surcharge on policyholders of policies that cover fire. Under the bill, the surcharge equals 0.75 percent of gross premiums and assessments, less return premiums on direct business received by a company for homeowners' and commercial fire insurance policies in the state. The funds are to be deposited in a special account to pay for fire safety activities. The measure was approved and sent to the Crime Prevention and Public Safety Committee.
Two bills relating to state regulation of alcoholic beverages were approved by members of the Commerce Committee during a bifurcated hearing, Mon., Mar. 27.
S.F. 3081, sponsored by Sen. Sandra Pappas (DFL-St. Paul), is the omnibus liquor bill. The measure permits Minnesota farm wineries to produce fortified wines, such as port or sherry, allows brewpubs to distribute their product at other licensed brewpubs owned by the brewer and for distribution through licensed wholesalers to other retail licensees, allows Minneapolis to issue an on-sale intoxicating liquor license to a restaurant operator at the Minnesota Book and Literary Arts Building's Open Book facility, allows a bed and breakfast to serve wine to guests attending private events at the facility under its on-sale wine license if the bed and breakfast has a licensed commercial kitchen. The bill also authorizes a limited on-sale liquor license to a business that conducts culinary or cooking classes, eliminates a restriction on alcohol license issuance with respect to areas surrounding the premises of Metropolitan State University in Minneapolis, allows a municipality to impose different hours for off-sale of intoxicating malt liquor and 3.2 malt liquor and allows New Prague to issue an on-sale intoxicating liquor license for the New Prague Golf Club. S.F. 3256, carried by Sen. Jane Ranum (DFL-Mpls.), prohibits alcohol-without-liquid devices, which mix alcoholic beverages with pure or diluted oxygen to produce an alcohol vapor to be inhaled. Both bills were approved and forwarded to the full Senate.
Committee members, chaired by Sen. Linda Scheid (DFL-Brooklyn Park), also considered five other measures. Sen. Rod Skoe (DFL-Clearbrook) carried S.F. 3026, which allows service cooperatives to offer health insurance programs that provide reinsurance or stop loss coverage. S.F. 2524, sponsored by Sen. Tom Saxhaug (DFL-Grand Rapids), provides that there is no coverage under a foster care for adults provider's homeowner's insurance for loss arising out of the operation of foster care for adults services. S.F. 1674, authored by Sen. Dan Sparks (DFL-Austin), provides that a driver's personal automobile insurance policy will provide primary liability coverage when the driver rents a vehicle. Under current law, rental car companies provide primary liability coverage. Sen. Brian LeClair (R-Woodbury) offered an amendment providing that the rental company, not the renting driver, is responsible for losses directly caused by acts of nature. The amendment was adopted. All three bills were sent to the Senate floor.
Two bills were re-referred to the Finance Committee. S.F. 3331, carried by Sparks, modifies provisions relating to petroleum fund compensation for transport vehicles. S.F. 3022, authored by Sen. Gary Kubly (DFL-Granite Falls), reestablishes a state boxing commission to regulate all aspects of boxing and tough man contests.
Members of the Commerce Committee, chaired by Sen. Linda Scheid (DFL-Brooklyn Park), met Wed., Mar. 22, to consider several bills.
S.F. 2898, authored by Sen. Linda Berglin (DFL-Mpls.), conforms state law to the federal long-term care insurance partnership. The bill allows the implementation of a long-term care partnership program under which persons who exhaust the benefits of a qualifying long-term care insurance policy are allowed, when they apply for Medical Assistance payments, to protect the amount of assets equal to the policy benefits used. The bill also makes changes to long-term care insurance regulations. The measure was approved and re-referred to the Finance Committee.
S.F. 2823, sponsored by Sen. David Tomassoni (DFL-Chisholm), modifies provisions relating to the sale of forfeited vehicles and financial intermediary fees for information. Members approved the bill and re-referred the measure to the Crime Prevention and Public Safety Committee. S.F. 3121, carried by Sen. Dan Sparks (DFL-Austin), deletes a requirement that electronic financial terminals established and maintained in Minnesota by financial institutions in another state file a notice with the commissioner of commerce. Members approved the measure and sent the bill to the Senate floor.
The Commerce Subcommittee on Liquor, chaired by Sen. Sandra Pappas (DFL-St. Paul), held an abbreviated hearing Mon., Mar. 20, to consider a number of bills for possible inclusion in the panel's omnibus liquor bill. The hearing was especially brief because the floor session ran longer than expected.
S.F. 3081, sponsored by Pappas, allows Minnesota farm wineries to produce fortified wines. Under the bill, "fortified wine" is defined as a wine to which brandy, or neutral grape spirits, has been added during or after fermentation resulting in a beverage containing not less than one-half of one percent nor more than 24 percent alcohol by volume. Pappas said that port and sherry are examples of fortified wines. Current law restricts farm wineries to the production of table and sparkling wines. Pappas said the bill will be the vehicle for the omnibus bill.
Members also heard an additional eight bills. S.F. 3256, authored by Sen. Jane Ranum (DFL-Mpls.), prohibits alcohol without liquid devices. Ranum said the devices are machines or appliances that mix an alcoholic beverage with pure or diluted oxygen to produce an alcohol vapor that may be inhaled. The bill does not include inhalers, nebulizers, atomizers or other devices used for medical purposes to dispense medications. In addition, the bill exempts hospitals, state institutions, pharmaceutical companies, colleges and universities conducting scientific research. The bill was laid over for further consideration.
S.F. 2835, sponsored by Sen. Scott Dibble (DFL-Mpls.), changes the address for Metropolitan State University in Minneapolis for purposes of providing an exception to liquor license prohibitions. S.F. 2850, authored by Sen. Julianne Ortman (R-Chanhassen), authorizes the issuance of on-sale wine and beer licenses in connection with culinary or cooking classes. S.F. 2981, carried by Pappas, clarifies that a municipality may further limit the hours of on and off sales of alcoholic beverages, provided that further restricted on-sale hours for intoxicating liquor must apply equally to on-sale hours of 3.2 percent malt liquor.
S.F. 3071, sponsored by Sen. Linda Higgins (DFL-Mpls.), authorizes the city of Minneapolis to issue a license to the Minnesota Book and Literary Arts Building. S.F. 3116, authored by Sen. Thomas Neuville (R-Northfield), authorizes the city of New Prague to issue an on-sale intoxicating liquor license to the New Prague Golf Club. S.F. 3198, sponsored by Sen. Steve Murphy (DFL-Red Wing), allows a bed and breakfast to serve wine to guests attending events at the bed and breakfast, if the facility has a licensed commercial kitchen. S.F. 3230, sponsored by Sen. Yvonne Prettner Solon (DFL-Duluth), modifies the regulation of brewpubs. One of the provisions allows brewers to distribute its own products to other restaurants in which it has an ownership interest or through licensed wholesalers to other retail licensees.
Measures aimed at protecting consumers from identity theft were the subject of the Wed., Mar. 15, meeting of the Commerce Committee, chaired by Sen. Linda Scheid (DFL-Brooklyn Park).
S.F. 2002, authored by Sen. Dan Sparks (DFL-Austin), permits consumers to get monthly credit reports from reporting agencies, at a cost of up to $3 per report. The bill also allows consumers to place a security freeze on their credit reports; with a freeze in place, the credit report cannot be released to a third party without express authorization from the consumer. In addition, the measure establishes a court procedure for identity theft victims to get a court declaration of their victimhood. Sparks said the bill "provides a means for victims to protect their names" and helps banks protect themselves and consumers against new account fraud, a popular identity theft method.
While we all suffer from identity theft, older Minnesotans are a prime target of identity thieves, said Skip Humphrey, president of AARP Minnesota. People over 50 are targeted because they have more savings and longer credit histories, he said. Humphrey said an AARP showed that 80 percent of all Minnesotans are concerned about becoming victims of identity theft. He said a Federal Trade Commission survey indicated that, nationwide, businesses lose $50 billion annually and consumers lose $5 billion annually to identity theft.
Michelle Hummel described her experience as an identity theft victim. Though Hummel lives in Minnesota, her identity was stolen by a woman in Georgia. Hummel discovered the fraud within a month of its start and immediately acted. However, she said she is still dealing with the repercussions of the theft a year later. In addition to filing police reports in both states, Hummel said she instituted a seven-year fraud alert on her credit report. The commercially offered fraud alert does not work properly, she said, because her credit report has been accessed by lenders without her prior approval.
Representatives of several business organizations said they are also concerned about protecting consumers from identity theft. However, we need to balance that interest against the benefits of information sharing in our economy, said Bob Johnson, Insurance Federation of Minnesota. Our state's business community has a long history of working with law enforcement and prosecutors to pursue criminals, he said. Consumers today are more informed and have higher expectations than a generation ago, said Buzz Anderson, Minnesota Retailers Association. Among the expectations is instant credit, he said. Anderson said the credit freeze proposed by the bill could mean that a consumer would buy a product on instant credit and the retailer would receive a later denial of credit without being informed that the credit was being denied because of the freeze. In that situation, the retailer becomes the bad guy, Anderson said. He said credit alert programs, which are federally regulated, allow retailers to know that a credit alert is in place and to comply with the requirements of the alert to extend credit to the consumer.
Johnson, Anderson and representatives of banking and financial services organizations urged the panel to reject a provision repealing an exemption to the data security breach notification law enacted last year. Under the existing law, businesses subject to federal laws relating to consumer data in the financial services and health care fields are exempted from the requirement to notify consumers of security breaches. Keith Weigel, AARP, said consumers should have the security of knowing that they will be notified if the information might have fallen into the wrong hands, regardless of the nature of the institution whose security was breached. Committee members adopted an amendment removing the exemption repeal language.
Before acting on the bill, the committee considered four related proposals. S.F. 2145, sponsored by Sen. Mike McGinn (R-Eagan), allows consumers to permanently block the reporting on their credit reports of any information that is the result of identity theft. The bill requires consumers to submit a police report before the permanent block takes effect. Chris Abbas, Financial Crimes Task Force, said blocking fraudulent information makes it easier for consumers to clean up their credit reports after identity theft. More information, he said, also helps police track down identity criminals. McGinn also carried S.F. 2144. The bill requires credit card issuers to verify a consumer's address if the issuer receives an application that lists a different address from the one on a solicitation sent to the consumer. The language of both bills was incorporated into S.F. 2002.
Sen. Michael Jungbauer (R-East Bethel) authored two proposals. S.F. 2193 allows consumers to place security alerts on their credit reports. S.F. 2194 allows consumers to have their names removed from solicitation lists provided by credit reporting agencies to credit card issuers. Jungbauer said similar laws have been enacted in other states and the bills are modeled on California enactments. Jungbauer and Sparks agreed to discuss the provisions of the bills with an eye toward redrafting them as amendments to S.F. 2002.
S.F. 2002 was approved and re-referred to the Judiciary Committee.
Members of the Commerce Committee, chaired by Sen. Linda Scheid (DFL-Brooklyn Park), approved five measures at their Mon., Mar. 13, meeting.
S.F. 2319, carried by Sen. Don Betzold (DFL-Fridley), adopts the Uniform Securities Act (2002) recommended by the National National Conference of Commissioners on Uniform State Laws. The uniform act is designed to coordinate federal and state securities regulation. The bill was re-referred to the State and Local Government Operations Committee. S.F. 2523, sponsored by Sen. Tom Saxhaug (DFL-Grand Rapids), permits a bank that has its main office in the city of McGregor to open a branch bank in Shamrock Township. The bill was recommended for placement on the Consent Calendar.
Sen. Sandra Pappas (DFL-St. Paul) carried a bill, S.F. 2575, regulating international marriage brokers. The bill was advanced to the Judiciary Committee. S.F. 2576, sponsored by Sen. Dan Sparks (DFL-Austin), extends the state's "lemon law" to cover ambulances. S.F. 2527, authored by Sen. Michelle Fischbach (R-Paynesville), allows township mutual insurance companies to insure property in cities of the second class and removes a policy liability limitation concerning coverage extended to secondary property located outside the territorial limits of the company. Both S.F. 2576 and S.F. 2527 were sent to the Senate floor.
A report indicating that reducing restrictions on retail sales of alcohol could save consumers as much as $100 million per year was the sole topic of discussion at the Wed., Mar. 8, meeting of the Commerce Committee. However, committee members, led by Chair Linda Scheid (DFL-Brooklyn Park), also learned that reduced restrictions could mean fewer product choices for consumers, less revenue for municipalities and an uptick in alcohol abuse.
James Nobles and John Yunker, Office of the Legislative Auditor, summarized the report for the committee. The study indicates that Minnesota restricts retail liquor competition more than most states, while the state is comparable to most other states in its restrictions on the wholesale market. Most city-owned liquor stores in Minnesota have a monopoly on off-sale purchases, according to the report. The study adjusted retail prices in Minnesota and Wisconsin for taxes and insurance and found that Minnesota prices are higher by five to nine percent for wine and beer, but almost ten percent lower for distilled spirits.
The report concluded that while adopting retail laws similar to those in Wisconsin would save Minnesota consumers almost $100 million annually, it would endanger the $16 million in annual profits city-owned liquor stores provide their local governments. Reducing retail restrictions would also threaten private liquor stores, according to the study. Yunker said many studies suggest a link between lower beer prices and increases in problem alcohol use, while other studies indicate non-price factors are more responsible for alcohol abuse. However, even a small increase in alcohol abuse, he said, would offset consumer savings.
Minnesota's no-fault auto insurance provided the focal point for a hearing Tues., Feb. 28, of the Senate Commerce Committee and the House Commerce and Financial Institutions Committee. The panels, chaired by Sen. Linda Scheid (DFL-Brooklyn Park) and Rep. Tim Wilkin (R-Eagan), heard from Bob Johnson, Insurance Federation of Minnesota, and Brett Orlander, an attorney representing State Farm Insurance Co., who discussed a new study on no-fault insurance.
The cost of operating a car is significant for consumers statewide, Johnson said. He said the federation is in strong support of changing the system to aid consumers. Sixteen states in this counry, in the '70s, adopted no-fault systems. Today, only nine states have no-fault systems. No-fault systems were adopted to ensure speedier payments, to be more equitable and to lower costs, Johnson said. However, he said the insurance industry opposed the switch from a traditional tort system to the no-fault system.
Johnson said, at the time it was passed, back in 1975, there was a purpose clause in the law that described the Legislature's intent on passing the law. He said it was intended to eliminate law suits on minor accidents, but it never was intended to eliminate law suits on serious accidents. Johnson said, though, that the intention was never met because drivers had to buy medical coverage. The second intention was to require the medical coverage for appropriate medical care, but there are no cost controls on medical costs, Johnson said. The law should be written so medical care is paid at market rates.
Orlander spoke on the costs of litigation, particular smaller cases. One of the big problems for both sides is the costs associated with smaller cases such as having $4,000 in medical expenses, having to have a number of specialists involved and having to pay for expert witnesses and depositions.
One of the other intentions, Johnson said, was that all drivers have insurance. He said the number of uninsured is higher than it was in the earlier years and an issue that is driving that number is the affordability of auto insurance. He said the industry has been in support of reforming the system. The system is broken and it is failing to meet the intentions listed in the original bill, Johnson said. The net effect of the no-fault systems is to make consumers pay for two systems-no fault and a traditional tort system. In states that have reformed their systems and allowed consumers more choices, rates are coming down, he said.
Dr. David Moen, an emergency physician, said while there are flaws in the system, the revenue stream is vital for emergency services. He said there will be cost shifting if no-fault insurance is repealed.
A representative from the Minnesota Trial Lawyers Association, Wil Fluegel, said the current system has served the state well and does not need to be changed. Linda Way, director of emergency services, said repealing the no-fault system would have serious impact on the state's citizens and medical system. Other chiropractic, medical and emergency medical personnel urged members to not engage in a dramatic overhaul of the no-fault system. For instance, Phil Griffin, representing Preferred One, said that no matter what changes are made there will be financial repercussions.
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