NAIFA-Florida Session Dispatch Final Report
By Timothy J. Meenan, NAIFA-Florida Lobbyist
The 2016 regular Session of the Florida Legislature came to a timely end, as scheduled, on March 11. Unlike last year, the last week of session was void of any surprise early endings by chambers or irreconcilable budget disputes.
With this year being an election year, and with the newly redrawn districts and chaos created as a result, we saw a lower number of bills filed, and many legislators avoiding the significantly controversial issues. We saw bills filed relating to Assignment of Benefits, Health Care Balance Billing, Stranger Originated Life Insurance Regulation, Automobile Insurance, Flood Insurance, Health Care Mandates, and everything in between. No AOB bill was passed, but we remain committed to continuing our efforts to combat this problem. We gained the support and attention of the CFO and the Governor’s office on the issue while defending against proposals from the Trial Bar and restoration companies to make the AOB problem worse.
Following are the issues we diligently pursued during the 2016 legislative session:
KEY BILLS ENACTED THIS SESSION
AGENTS MAY CHARGE A FEE ON INDIVIDUAL HEALTH INSURANCE POLICIES
NAIFA priority legislation, Senate Bill 1386 by Senator Richter (House Bill 1303 by Representative Jones) was passed by the Legislature. The bill allows an agent to charge a fee in lieu of the commission on individual health insurance products.
Current law, written and lobbied by NAIFA in 2004, allows an agent to receive a fee for advising a client on group health insurance or a group health benefit plan, in lieu of receiving the commission from the insurer or health benefit plan. Given the dwindling or non-existent commissions available to agents who counsel clients about individual health coverage outside of the exchange, the current statute to charge a fee was extended to individual health coverage. The new law broadens the allowance for an agent fee to apply to all health insurance products. Just as the existing law requirement, the new law provides that when an agent contracts to receive a fee from a health insurance customer, any commission the agent receives from the insurer will be given to the policyholder.
The amendment to allow agent fees on all health insurance, was added to Senate Bill 1386 and House Bill 1303, which were bills relating to the limit of life insurance that a funeral director can sell for pre-need funeral arrangements.
The bill will take effect as soon as it is signed by the Governor.
AGENT/CLIENT CITIZENS INFORMATION PROTECTED
HB 931, by Representative Passidomo, was passed by both chambers and sent to the Governor for approval.
Current law allows Citizens or the MAP to release to licensed general lines agents the following information: name, address, and telephone number of the residential property owner or insured; location of the risk; rating information; loss history; and policy type. The agent receiving the information must retain the confidentiality of the information.
The bill allows Citizens or MAP to release the specified information to a licensed reinsurance broker, a licensed rating organization, a modeling company, or a licensed general lines agent, for the sole purpose of analyzing risks for underwriting or developing rating plans in the private insurance market. The bill specifies that the licensed agent receiving this information cannot use the information for the direct solicitation of policyholders.
The bill further requires that to maintain a Citizens’ appointment, an agent must also continue to maintain an appointment with a private insurer that is writing or renewing in Florida. (Current law requires that the agent must have a private insurer appointment “at the time of the initial appointment by” Citizens.)
A number of changes for Citizens’ take-out process are also imposed, including:
- A requirement that Citizens publish a schedule of take-out cycles.
- That private insurers must include in their take-out offers to Citizens policyholders, a comparison of coverages and rate between the insurer’s policy and Citizens policy.
- A requirement that private insurers must agree to offer similar coverage to that being offered by Citizens.
- That Citizens compile a list of companies requesting to take out a policy and make the list available to the agent of record.
- A requirement that allow a Citizens policyholder who accepts a take-out offer, the ability to reapply to Citizens and be treated as a renewal through the clearinghouse if within 36 months of leaving Citizens, the take-out company increases its rate by more than that allowed for Citizens (10% per year).
The primary component of these bills – the limitation on how a general lines agent can use underwriting information obtained from Citizens — was being pushed by FAIA, and should result in a reduction in the opportunities for insurers targeting commercial residential policies from “poaching” those policies from the agent of record.
BALANCE BILLING BILL PASSES PROTECTING CONSUMERS FROM SURPRISE BILLS
A NAIFA priority, HB221 by Representative Trujillo addresses policyholders with health insurance being billed by out-of-network health providers for covered benefits that are received at an in-network hospital. The anti-balance billing provisions of HB 221 apply to hospitals, ambulatory surgical centers, specialty hospitals and urgent care centers, and provide:
- The insurer is solely responsible for payment to a non-participating provider for emergency services; coverage for emergency services cannot require prior authorization and must be provided regardless of whether the service is furnished by a participating or nonparticipating provider.
- The insurer is liable for payment of fees to a non-participating provider for non-emergency services provided in a facility which has a contract with the insurer when the insured has no ability and opportunity to choose a participating provider at the facility.
- Under those circumstances, the health service provider cannot bill the patient, except for copayments or deductibles.
- The insurer must pay the provider consistent with the current standards applicable for HMOs. A dispute will be resolved in either a court or by the dispute resolution process.
- If dispute resolution is engaged and the final payment awarded is more than 10% more favorable than an offer made by a party, the party refusing to accept that offer must pay the costs of the dispute resolution process.
- A hospital must post certain information on its website, including the names and hyperlinks for direct access to the websites of all health insurers and HMOs which the hospital contracts as a network provider or preferred provider and a statement discussing the new balance billing prohibitions.
- Insurers must update their websites monthly with information on all participating providers, including facilities, board specialties, languages spoken, and affiliations with local hospitals.
HEALTH INSURANCE REGULATORY MODERNIZATION BILL PASSES
SB 1170, by Senator Detert, makes numerous changes throughout the statutes repealing or revising state law requirements to reflect current federal law. The federal Patient Protection and Affordable Care Act (PPACA) effectively allows states to adopt and enforce laws that do not directly conflict with PPACA, but preempts any state law that does conflict. As a result, provisions in Florida law that are in conflict with PPACA are preempted and provisions that merely duplicate PPACA continue to be viable and enforceable by OIR.
The bills repeal:
- The medical loss ratio standard for major medical health insurance policies;
- The requirement for insurers to issue a certificate of creditable coverage;
- The requirement for certain insurers to provide an outline of coverage.
We were successful in opposing a provision of the bill that would have eliminated health insurance conversion and continuation statutes in Florida. Those changes could have been problematic for groups of less than 20 and would have affected the rates of continuation insureds significantly. We were successful in stopping those statutes from being repealed, and current law remains; Florida conversion and continuation laws will remain in effect.
LIFE INSURANCE UNCLAIMED PROPERTY
Senate Bill 966 by Senator Benacquisto (House Bill 1041 by Representative Hager) was passed by the Legislature.
The bill requires life insurers to determine whether their life or endowment insurance policyholders have died by annually comparing them against the United States Social Security Administration Death Master File (DMF), for all policies in force on or after January 1, 1992. The bill requires the insurer to verify the death, verify if the deceased had other products with the company, determine if benefits are due, and attempt to locate and contact beneficiaries. If the policy proceeds remain unclaimed five years after the date of death of the insured, the property escheats to the state as unclaimed property. If proceeds are reported and remitted to DFS Bureau of Unclaimed Property by May 1, 2021, there will be no penalties or additional interest imposed on the insurer. Insurers that have already entered into a settlement on this issue will follow the requirements of the settlement.
The bill is effective upon becoming law.
FUNERAL INSURANCE LIMIT INCREASED
Senate Bill 1386 by Senator Richter (House Bill 1303 by Representative Jones) was passed by the Legislature.
Current law allows a funeral director to obtain a license limited to selling life insurance covering the prearranged cost of a funeral up to $12,500, updated annually for inflation by the CPI since 2003. At this point, that amount slightly exceeds $16,000. Due to the rising cost for funerals, and the fact that small dollar life policies are becoming less common, it is reasonable that the limit for this coverage could be increased by a reasonable amount, continuing to cover only prearranged funeral costs.
Initially, parties sought legislation that would push the limit to $25,000. NAIFA asked this amount be decreased, and both sponsors subsequently filed amendments to bring the limit down to $21,000.
The act will take effect upon becoming a law.
TRANSPARENCY BILL PASSES TO HELP CONSUMERS GET A CLEAR VIEW OF COSTS
HB1175 by Representative Sprowls passed the Legislature on March 11 and will be transmitted to the Governor. Among the bill’s key features:
- Requires facilities (hospitals, urgent care centers, etc.) and health care practitioners to make information available to the public on their websites on payments made to that facility for defined bundles of services and procedures. Final statements to patients must clearly explain patient responsibility and due dates, and must make patient records available electronically.
- Florida Center for Health Information and Transparency is established collect, compile, analyze, and assemble data in order to allow consumers to compare outcomes and other performance measures for health care services.
- Requires insurers and HMOs to make estimated payments as well as cost sharing available on their websites for in-network and out-of-network providers. Every policy must include a notice that the information is available with website addresses.
SINKHOLE-ONLY INSURANCE COMPANIES AUTHORIZED
Senate Bill 1274 by Senator Latvala (House Bill 1327 by Representative Ingoglia) was passed by the Legislature.
The bill establishes new standards for “sinkhole only” domestic insurers that solely transact personal residential property insurance for the peril of sinkhole.
The bill creates a new type of sinkhole coverage. Among the key features, the bill allows:
- An authorized insurer to issue a “limited sinkhole coverage insurance” policy providing personal lines residential coverage for the peril of sinkhole loss on any structure or the contents of personal property;
- Coverage for only losses from the perils of sinkhole loss as the term “sinkhole loss” is currently defined in law;
- Coverage that excludes loss of contents or ALE; coverage may be limited to stabilization of the building and repair of the foundation;
- An insurer to limit coverage to stabilize the building and repair the foundation;
- An insurer may offer policy limits and deductibles that are agreed to by the insured; Except that policy limits must be at least $50,000, unless the amount exceeds the replacement cost of the property;
- Prohibits Citizens from writing this coverage.
- Requires the insured’s signed acknowledgement of reading and understanding the policy limitations;
- Does not apply to commercial lines residential, commercial lines nonresidential coverage, or excess coverage for the peril of sinkholes;
- Lowers surplus requirements for a new or existing domestic insurer that only transacts limited sinkhole coverage insurance for personal lines residential property to a minimum of $7.5 million;
- Does not require a form filing;
- Removes the due diligence requirement on the exportation of policies to surplus lines insurers until July 1, 2020;
- Until October 1, 2019, these limited sinkhole coverage insurers will not be subject to file and use rate review by the Office of Insurance Regulation, but must set its rates in compliance with s. 627.062, F.S.
The effective date of the bill is July 1, 2016.
LEGISLATURE PASSES DIRECT PRIMARY CARE EXEMPTION
House Bill 37 by Representatives Costello and Miller, Senate Bill 132 by Senator Grimsley, passed the Legislature.
The bill creates a specific exemption from the Insurance Code for direct primary care agreements. The bill defines the term “direct primary care agreement” to be a contract between a primary care provider and a patient, or the patient’s legal representative or employer. The bill defines a “primary care provider” as including a health care provider under chapters 458 (physician), 459 (osteopathic physician), 460 (chiropractor), or 464 (nurse), or a primary care group practice that provides medical services “commonly provided without referral….”
The bill specifies that a direct primary care agreement does not constitute insurance and is not subject to the Insurance Code, and that a primary care provider or agent thereof is not required to obtain a certificate of authority or license to sell or market a direct primary care agreement.
The bill requires that a direct primary care agreement must:
- Be in writing and be signed by the primary care provider and by the patient or legal representative or employer;
- Allow a party to terminate the agreement by giving 30 days’ written notice, except that the agreement may allow immediate termination for violation of the physician-patient relationship or a breach of the agreement;
- Specify a monthly fee, describe the scope of services covered by the fee, the duration of the agreement and any automatic renewal provisions;
- Offer a refund of advance payments if the provider ceases to provide services;
- State that the agreement is not health insurance, that the provider will not file any claims against the patient’s health insurer, and that the agreement does not qualify as minimum essential coverage required under PPACA.
The bill has an effective date of July 1, 2016.
TRADE SECRET PROTECTIONS FOR STATE SUBMISSIONS INCLUDES FINANCIAL DATA
The House and Senate passed a package of bills that expands the definition of the term “trade secret.” The bills expand the definition of the term “trade secret” to expressly include financial information in the list of protected information classified as a trade secret.
HB 57, a linked public records component to HB 55, reenacts several public records exemptions of trade secret information to conform to the new definition created in HB 55. These exemptions protect financial information deemed to be trade secret from public disclosure.
This bill strengthens the protection of agents’ information if subjected to an agency market conduct exam if the agent marks such documents “trade secret” and follows other trade secret submission requirements.
POLE BARNS AND FIRE SAFETY
House Bill 431 by Representative Raburn (Senate Bill 822 by Senator Stargel) passed the Legislature. The bill makes changes related to regulations included in the Fire Prevention Code on agricultural property. The bill defines an “agricultural pole barn” as a nonresidential farm building in which 70 percent or more of the perimeter walls are permanently open and allow free ingress and egress. The bill exempts pole barns from the FFPC, the National Codes and the Life Safety Code. The bill also establishes classes for use for which certain agricultural structures are exempt from the FFPC, the National Codes and the Life Safety Code:
- Class 1: A nonresidential farm building that is used by the owner 12 times per year or fewer for agritourism activity with up to 100 persons occupying the structure at one time. This class is not subject to inspection or the Florida Fire Prevention Code.
- Class 2: A nonresidential farm building that is used by the owner for agritourism activity with up to 300 persons occupying the structure at one time. A structure in this class is subject to annual inspection for classification by the local authority having jurisdiction. This class is not subject to the Florida Fire Prevention Code.
- Class 3: A new or an additional structure or facility constructed, or an existing structure, which is used primarily for housing, sheltering, or otherwise accommodating members of the general public. A structure or facility in this class is subject to annual inspection for classification by the local authority having jurisdiction. This class is subject to the FFPC.
DEPARTMENT OF FINANCIAL SERVICES
The bills provide for the use of an internet system for electronic acceptance of service of process documents by DFS and electronic transmission of such documents from DFS to insurers. The proposals also authorize DFS to receive service of process documents for unauthorized insurers. HB 651 was heard on final passage in the House and was passed by a vote of 114 to 1. The bill was sent over to the Senate, where the Senate replaced its companion, SB 992, with the House version. After being read a second time in the Senate, 4 amendments were adopted onto HB 651.
The amendments made the following changes to the bill:
- Extended the repeal date for the medical malpractice exemption from being assessed by the CAT fund under emergency conditions from 2016 to 2019.
- Limited the requirement for the quarterly filing of the agent affidavit with the Florida Surplus Lines Service Office to each surplus lines agent that has transacted business during a calendar quarter.
- Added specified travel insurance to a list of insurance and risks to which for which certain rate filing requirements do not apply.
- Imposed a prohibition on certain public officers from voting on or participating in a matter related to a law firm or professional organization in which they have an interest and requires the official to make a public statement regarding his or her abstention from voting.
AUTO INSURANCE LAWS REVVED UP AND AMENDED
House Bill 659 by Representative Santiago (Senate Bill 1036 by Senator Brandes) was passed by the Legislature.
- Allows the use of a single zip code as a rating territory if they are actuarially sound and the rate is not excessive, inadequate or unfairly discriminatory.
- Authorizes the Auto JUA to cancel policies within the first 60 days for non-payment and prohibits insureds from cancelling coverage in the first 90 days, except in certain circumstances.
- Allows an insured to apply the unearned premium from a cancelled policy to any other policies issued by the insurer or the insurer’s group.
- If an insured has agreed to recurring credit or debit card payments, the bill allows an exception to the requirement that an insurer collect two months of premium prior to issuing a PIP and PD policy.
- Adds payments by a “draft” to the list of acceptable payment methods for motor vehicle insurance contracts.
- Authorizes motor vehicle insurers to charge $15 if an electronic premium remittance is rejected by the credit card company.
- Exempts clinics that are managed by a licensed health care practitioner owned by a publicly traded corporation that has $250 million or more in total annual sales of health care services, for receiving reimbursement from insurers for PIP medical services.
- Requires the Division of Insurance Fraud to provide a data report on the preinsurance inspection program, and submit it to the Governor, the Senate and the House by December 1, 2016.
The bill is effective July 1, 2016.
ONLINE PROCUREMENT STAYS CLEAN AND MAINTAINS COMPETITIVE PROCUREMENT
We monitored SB 350 relating to Procurement Procedures for Educational Institutions to ensure that it did not include language requiring statewide purchasing of health insurance for school boards. In previous years, there have been attempts to combine all school districts and require them to purchase health insurance as one entity. This would significantly harm competition in the industry and would unfairly advantage one agent and one insurer.
No such language was filed to the bill and the bill was passed in both chambers and signed into law by the Governor.
ORSA AND CORPORATE GOVERNANCE DISCLOSURES
Senate Bill 1422 by Senator Simmons (House Bill 1163 by Representative Hager) was passed by the Legislature. The bill requires insurers to submit specified financial information to OIR.
The National Association of Insurance Commissioners (NAIC) has adopted two new model acts pertaining to solvency oversight: the Own Risk and Solvency Assessment (“ORSA”) Model Act and the Corporate Governance Annual Disclosure (“Corporate Governance”) Model Act. ORSA requires insurers to conduct their own internal assessment of reasonably foreseeable and relevant material risks. Unless it changes the date, ORSA will become an NAIC accreditation standard effective January 1, 2018. Corporate Governance requires insurers to provide the OIR with a detailed narrative describing governance practices.
The bill implements the requirements of ORSA and Corporate Governance. Both ORSA and Corporate Governance require insurers to file confidential information with their respective state regulators. Senate Bill 1416 is linked to Senate Bill 1422 to provide exemptions from Florida’s public records laws for confidential financial information that will be submitted by insurers to the OIR under the main bills.
FATE OF TELEHEALTH DELEGATED TO A NEW TASK FORCE
After witnessing a number of telehealth-related squabbles last session, we were fully anticipating telehealth legislation to be filed early on. To our surprise, the legislature didn’t file telehealth legislation until later in the session, and that legislation was informative, at best, imposing little change in the way of opening Florida up to telehealth advances.
The final bill creates a telehealth task force within the Agency for Health Care Administration (AHCA). The task force will be composed of 21 uncompensated members, and will deliver a report to the Governor, President of the Senate, and Speaker of the House by June 30, 2017.
BROKERS’ BILL PASSES
Senate Bill 286 by Senator Brandes (House Bill 817 by Representative Raulerson) was passed by the Legislature.
The bill provides a definition for mergers and acquisitions brokers, and provides an exemption from registration with the Office of Financial Regulation for the brokers facilitating the offer or sale of securities in connection with the transfer of ownership of an eligible privately held company.
ABUSE-DETERRENT OPIOID ANALGESIC DRUG PARITY
SB 422 relating to Health Insurance Coverage for Opioids was filed by Senator Benacquisto. After an unsuccessful attempt at a similar bill last year, Senator Benaqcuisto succeeded in passing her legislation this year. The bill permits a health insurance policy to impose a prior authorization requirement on abuse-deterrent opioid analgesic drugs only if that same prior authorization requirement is imposed on each opioid analgesic drug product without an abuse-deterrent labeling claim.
Additionally, the bill prohibits health insurance policies from requiring an opioid product without an abuse-deterrent labeling claim be prescribed before an opioid with an abuse-deterrent labeling claim may be prescribed. The bill was filed to address the national problem of abuse and to offer an alternative to those suffering from substance use disorders relating to prescription opioid pain relievers. The bill was passed by both chambers and sent to the Governor for approval.
Down Syndrome Mandate, Prior Authorization, and Retroactive Denials:
The Senate added several unfriendly provisions to the final Balance Billing legislation in a floor amendment that would accomplish two things, both of which may result in increased premiums. First, the amendment would mandate that all large group health insurance plans and all health maintenance contracts would be required to cover all developmental disabilities to provide speech therapy, occupational therapy, physical therapy, and applied behavior analysis. These treatments are currently mandated for autism spectrum disorder, but the amendment first expanded the mandate to all other “developmental disabilities, “but was later amended to apply to only those with Down Syndrome.
The second provision of the Senate amendment would prohibit a health insurer or HMO from retroactively denying a claim due to ineligibility of an insured or subscriber who does not receive federal premium tax credits, if the insurer or HMO has verified the eligibility and issued authorization. For an insured or subscriber who receives advance payments of federal premium tax credits, the insurer or HMO cannot retroactively deny a claim due to ineligibility for services authorized by the insurer or HMO rendered during the first 30 days of a federally required grace period. Essentially, the amendment would allow individuals to take advantage of this loophole by obtaining coverage on the Exchange, obtaining health care services before paying his or her premium, and canceling the policy without ever paying the premium, but having received services.
The Retroactive Denial language was removed from the bill but was replaced with a requirement to use a Prior Authorization form for plans that do provide an electronic prior authorization process for use by its contracted providers. The requirement does not take effect until January 2017 or six months after the form has been promulgated by rule, whichever is later.
KEY BILLS THAT DIED THIS SESSION
ASSIGNMENT OF BENEFITS
Four main bills addressing the assignment of benefits were in play, but none of them passed. The bills went through various iterations as the session progressed, but for the most part, the following describes the main provisions of the bills.
SB 596 by Senator Hukill was the strongest legislation with the main provisions:
- The transfer of the right to enforce payment is prohibited and anything that prevents or inhibits an insurer from communicating with its policyholder is prohibited;
- The insurer must be notified of the assignment within 3 business days; and an estimate for materials and services must be provided.
- Within 3 business days following the insurer being notified, the policyholder has a right to rescind without penalty, except for reimbursement for work already performed to mitigate or repair;
- The assignment cannot transfer the authority to adjust, negotiate, or settle the claim to anyone who is not otherwise authorized to do so; and provides that the law will apply to all assignments which are executed after the effective date.
CS/SB 1248 by Senator Diaz de la Portilla, would have:
- Provided that it does not prohibit the use of post-loss, partial assignments.
- Specified that a vendor cannot adjust claims unless they are licensed public adjusters.
- Prohibited a person offering or accepting any compensation greater than $25 for the referral of business for the repair or restoration of insured property.
- Provided that someone who provided emergency remediation services must provide a scope of services and materials.
- Provided that the Department of Financial Services will enforce the prohibition of referral fees and the provisions requiring notifications by cease and desist orders a fine up to $10,000 per violation.
HB 1097 by Representative Caldwell would have: prohibited an assignment, except for emergency repairs, until the insured has notified the insurer of the loss; provided that the insured could cancel within 3 days of the insurer being notified; required the assignee to deliver a copy of the assignment to the insurer within 3 days of its execution; required the assignee to accept duties of the policy. The bill, however also contained several reductions to the timelines that insurers have to process claims.
The bill would have shortened certain timeframes, requiring insurers to fulfill claim related duties more quickly, as follows:
- Upon receiving communication with respect to a claim, an insurer must provide the Homeowner Claims Bill of Rights within 10 days, rather than the current 14.
- Upon receiving proof of loss statements, an insurer must begin its reasonably necessary investigation within 7 working days, rather than the current 10.
- After receiving proof of loss, upon written request, the insurer must provide confirmation that the claim is covered in full, partially covered, denied, or being investigated, within 20 days rather than the current 30.
- Upon initial notice of claim, an insurer must pay or deny the claim, or part of the claim within 60 days, rather than the current 90.
HB 1097 does not change the current statutory safeguard for exigent circumstances when an insurer would be unable to meet the timeframe, and it keeps the current statutory language excusing an insurer from strict compliance with the timeframe when it “is caused by factors beyond the control of the insurer which reasonably prevent” the insurer from complying.
HB 671 by Representative Broxson would have created new grounds for discipline against a licensee who:
- Gives or receives referral fees or other items of value as an inducement for business that is paid by property insurance proceeds;
- Interprets insurance coverages or duties of the policy, unless the licensee is separately licensed as an adjuster under part VI of ch. 626, F.S.; and
- Fails to give an insured a detailed estimate of the cost of services and materials provided in connection with a property insurance claim before executing the contract authorizing the work.
A top priority of NAIFA, we worked throughout session for attorney fee reform and to end this AOB abuse, which is driving up rates in Florida.
STRANGER ORIGINATED LIFE INSURANCE REGULATION BILL DIES
House Bill 445 by Representative Stevenson made it to Second Reading on the House floor, and Senate Bill 650 by Senator Legg died in an Appropriations Subcommittee.
The bills would have explicitly prohibited Stranger Originated Life Insurance (“STOLI”) and would render any transaction that meets the definition of STOLI to be void, and would provide that the transaction is a third degree felony. The bills would also make numerous changes to the products, requirements, and business of viatical arrangements, including:
- Increase the non-contestability period from two years to five years, subject to certain exceptions;
- Increase maximum administrative fines that the OIR may impose for certain violations and create new felony offenses for certain viatical settlement practices;
- Establishes new disclosure and annual reporting requirements and conflicts of interest prohibitions for viatical settlement providers (VSPs);
- Require VSPs to file their advertising and marketing materials with the OIR prior to entering into viatical contracts and to maintain documentation of compliance with their anti-fraud plans; and
- Require VSPs to provide certain documentation to insurers for verification of coverage, prior to entering into a viatical settlement contract.
STOLIs are a scheme where unscrupulous investors prey on elderly life insurance policyholders. In addition to creating a moral hazard of giving benefits to someone who has no insurable interest, STOLIs can prevent an applicant from qualifying for other life insurance by using up the limit for which a person would otherwise qualify. They can also create a tax liability for an elderly person, who will have to pay the tax out-of-pocket, for a product that provided no benefit to them.
NAIFA is encouraged that we moved this important bill through all House committees to the House floor; we will again seek passage next year.
TRANSPORTATION NETWORK COMPANY REGULATION
HB 509 contained most the provisions from a national compromise between some of the TNCs – primarily Uber – and the national property and casualty trades.
The Senate bill attempted to help close a current “gap” in insurance coverage when a TNC driver is logged onto the company’s digital network, is available to riders, but is not engaged in providing a prearranged ride. The TNC insurance coverage covers the rider and other cars in an accident while the driver is transporting a passenger and even, likely, while the driver is en route to pick up a specific rider. However, the TNC coverage does cover the time when the driver is logged onto the network and “trolling” for rides. Additionally, the driver’s personal automobile liability insurance is unlikely to cover that gap because the driver is engaging in the use of the vehicle for commercial purposes, which are excluded from most personal policies.
The House bill was similar to the NAIC model bill when the driver is “trolling” for rides but is not engaged in providing a ride, requiring primary automobile liability insurance to cover, at a minimum, $50,000 coverage for one person up to $100,000 for all persons in one accident, and $25,000 in property damage from one accident. The bill requires minimum coverage of $1 million for death, bodily injury, and property damage at all times when the driver is engaged in TNC services.
The Senate bill, while maintaining the same general concepts, imposed different regulations. When the driver is logged in and available, regardless of whether he/she is actually providing a ride or not, there must be liability coverage of $125,000 for death or bodily injury per person and $250,000 per incident, and $50,000 for property damage (plus requirements of no-fault law). For “all other times,” there must be liability insurance of at least $25,000 for death or bodily injury per person and $50,000 per incident, and $10,000 for property damage (plus requirements of no-fault law).
While this issue did not pass, it is a NAIFA priority to support this legislation and bring clarity to this dangerous situation in Florida.
“FAMILY GLITCH” FIX FAILS
House Bill 543 by Representative Stark made it to the House floor, but its companion, Senate Bill 910 by Senator Braynon, died in its first committee.
These bills would have made it clear that a small business can buy a health insurance policy that covers only its employees, and is not required to cover the employees’ family members. Currently, Florida’s small group statute is not absolutely clear about whether a small employer is allowed to buy health policies that cover only its employees, without being required to also provide the coverage for their family members as well.
Small employers are exempt from the PPACA’s mandate to provide coverage, but they often want to provide some coverage for their workers. When a small employer provides coverage for its employees but cannot afford to pay the additional coverage for the employees’ family members, they offer the family coverage as an option, if the employee wants to pay for it. The problem is that because of that offer of coverage, the family members technically have access to employer coverage — even though it’s unaffordable – and under PPACA, that access to coverage means they don’t qualify for the tax credits that make the Federal Marketplace plans affordable. This has left many spouses and children uninsured in what has come to be called the “family glitch.”
A NAIFA priority, we expect this issue to be back next year.
A MULTITUDE OF MANDATES DEFEATED, ONCE AGAIN
HB 221 would have required a physician to screen a minor for Autism Spectrum Disorder any time a parent or guardian expressed concern or a belief that the minor was exhibits symptoms of the disorder. The bill would have mandated direct patient access to a specialist for screening and would have required policies to cover visits to such a specialist.
While SB780/HB583 began as bills to ban health plans from offering a mail order pharmacy discount option, ultimately they were amended in committee to require Any Willing Pharmacy for HIV drugs only (House) and HIV plus other chronic conditions (Senate). In the end, the bills died after the House bill failed to advance beyond its first subcommittee.
Representative Larry Lee, Jr. attempted to amend current law to require all health plans and contracts to include a pharmacy or pharmacist in its policy if that pharmacy or pharmacist agreed to the insurer’s terms and reimbursement rates. The bill would have significantly hindered an insurer’s ability to negotiate to the advantage of the consumer and would have forced them to include any willing pharmacy in their plan.
SB 1084 by Senator Gaetz would have enabled providers to override step therapy provisions imposed by a health plan. SB 1084 passed two committees, and its companion measure, HB963 by Representative Harrison, was never heard in the House. That did not prevent Senator Gaetz, however, from attaching SB1084 to another health care bill he controlled, SB212, which ultimately died.
An omnibus health care bill, combining several bills into one, by Senator Don Gaetz, died when the House failed to act on the Senate’s changes to the measure. SB212/HB 85 would have allowed patients to contract directly with a doctor instead of through a health insurance company, allowed ambulatory surgical centers to keep patients for 24 hours and required insurers have a “clear and convenient” process for health providers to request an override of the step-therapy protocol — a system that requires patients try an approved treatment or drug prior to moving to an alternate medication. The step therapy provisions were also included in SB1084, a standalone step therapy bill by Senator Gaetz, which also failed.
HB 89 filed by Representative Jose Diaz in the House and SB 248 filed by Senator Garcia in the Senate ultimately failed this session. The bill would have expanded Florida Kidcare to include coverage for “lawfully residing children.” It would have removed the current five-year waiting period imposed on children lawfully present in Florida, making them immediately eligible for health care coverage through the program. The bill contained a specific declaration that eligibility would not be extended to undocumented immigrants under the changes made by the bill.
INTERSTATE PURCHASE OF HEALTH INSURANCE BILL FAILS
HB 1317 filed by Representative Miller, would have permitted a foreign insurer from any state to sell individual health insurance in Florida if:
- The foreign insurer held a valid certificate to transact individual health insurance in its Individual domicile state.
- health insurance offered for sale under these provisions complied with all laws of the domicile state and is offered for sale in the domicile state.
- The foreign insurer filed an annual report that included the state of domicile, the number of individual health insurance products sold in Florida, a list of the Florida counties in which the foreign insurer sold individual health insurance, the number of individuals covered, and the total premium collected on individual health insurance sold in Florida.
The proposal required such a policy to include a statement in 12-point type that it is being issued by a foreign insurer and is governed by the laws of another state and is not subject to any insurance laws or rules of Florida.
The concern with this bill would create problems in the Marketplace and would be confusing to Florida consumers causing them to expect fundamental protections available under Florida laws from the foreign insurer. The bill was heard in its first committee of reference and received a vote of 7 to 5. We were successful in stopping the bill from being heard in any additional committees. NAIFA testified in opposition to this bill, but applauds Representative Miller for engendering debate on the high cost that mandates bring to overall health insurance rates.
LIABILITY INSURANCE REPORTING
Senate Bill 774 by Senator Montford died in the Senate Rules Committee, and House Bill 577 by Representative Lee died in the Regulatory Affairs Committee. Both bills had passed their respective insurance committees before stalling.
Current law requires a liability insurer to provide within 30 days of a written request certain specified information in a statement under oath made by a corporate officer or the insurer’s claims manager or superintendent. SB 774 and HB 577 would add “company employee adjuster,” as a third category of persons would meet the statutory requirement, as long as the adjuster consults with the appropriate personnel in the company’s underwriting department and claims department to verify the information disclosed in the statement.
BAD FAITH REFORM FAILS
Neither SB 632 by Senator Richter nor HB 5 by Representatives Hill and Passidomo passed a Committee. The bills would have created a new condition precedent for bringing a third party claim against an insurer for failure to settle a liability insurance claim in good faith. The bills would have required the insured or claimant, as a condition precedent, to provide the insurer with a written notice of loss.
Current law requires that an insurance company must attempt to settle claims in good faith, or it could be subject to a civil action. The law makes no distinction between a first-party case and a third-party case, nor does it define any “safe harbor” behavior for the insurer to follow that would conclusively constitute good faith claim settlement.
The bills provided that the insurer is not in violation of its duty to attempt to settle in good faith if the insurer: meets the disclosure requirements of section 627.4137 (a statement, under oath, with the name of the insurer, each insured, liability coverage limits, a statement of expected defenses, and a copy of the policy); and, within 45 days of receiving the written notice of loss, offers to pay the lesser of either (1) what the claimant is willing to accept or (2) the applicable liability coverage limits in exchange for a full release of the insured from any liability arising from the incident.
RESIDENTIAL WINDSTORM BILL BLOWN AWAY BEFORE IT EVER GOT A CHANCE
Senator Bullard filed a bill that would have removed a provision requiring a mortgage holder or lien holder to approve a policyholder’s decision to exclude windstorm or hurricane coverage from his or her property insurance policy. Florida law currently requires any residential structure which is the subject of a mortgage or a lien to obtain written acknowledgement and approval of the property owner’s decision to exclude windstorm or hurricane coverage from his or her property insurance policy.
REPEAL OF FLORIDA’S MOTOR VEHICLE NO-FAULT LAW
Senate Bill 1112 by Senator Brandes and House Bill 997 by Representative Hager both died in their first committees of reference, without a hearing. The bills would have provided for the repeal of the Florida Motor Vehicle No-Fault Law (PIP) as of January 1, 2019.
SAFELITE AUTO GLASS AMENDMENT
Safelite sought legislation through an amendment that went through several iterations. Originally, the amendment, would have prohibited a vehicle repair shop from directly seeking payment from an insurer for glass repair or replacement unless it first meets the following:
- The insurer consents to the repairs.
- The policyholder signs a document containing specified disclosures.
- The repair shop seeks reimbursement only for services detailed in the repair invoice.
The amendment also provided that at least 15 business days prior to the initiating litigation or arbitration to enforce the payment of benefits assigned, the shop must obtain written consent from the customer, with specified language.
As the Legislative Session progressed, the amendment was revised several times, but it was ultimately removed from all bills.
FROZEN FORMULARY BILL STOPPED COLD
SB 1142 by Senator Hays amended the insurance code to require a Prescription Benefits Manager, insurer, or HMO to provide brand drugs at a preferred cost to individuals with chronic or complex conditions, or rare diseases for the duration of the calendar year. The bill would have prohibited PBMs, insurers, and HMOs from the standard practice of modifying drug formularies throughout the year.
The bill provides an exception only in a situation where the United States FDA issues a statement concerning the safety of the drug or if the drug manufacturer has notified its discontinuance of the drug.
The bill would have prevented a PBM, insurer, or HMO from imposing limitations on maximum coverage of drug benefits, prohibited the PBM, insurer, or HMO from increasing the insured/subscriber’s out-of-pocket costs, and would have prevented the reclassification of the drug to a more restrictive tier.
Additionally, the bill would have expanded mandated care to small employer carriers, requiring such to provide continuity of care for medically stable patients. The insurance and PBM industry opposed the bill, explaining that new drugs are introduced into the market all the time, creating a constant flux in brand name and generic drug availability and cost. We were successful in our campaign against the bill, pointing out that an insurer should not be forced to pay the often exorbitant name brand price for drugs when there is a comparable generic or alternative available. This measure would increase health care rates.
HMO SOLVENCY REQUIREMENT PROPOSAL DIES
SB 638, would have set a premium to surplus ratio limit for Health Maintenance Organizations at 10 to 1. The bill explained how the premium should be calculated and how to identify the amounts necessary to calculate the premium. Additionally, if an HMO were to exceed the premium to surplus ratio, the Office of Insurance Regulation would have to suspend the Certificate of Authority or establish the maximum annual gross premium the HMO may write in order to maintain the ratio. The proposed bill would have included an exception for those HMOs with a surplus of $40 million and which have written HMO contracts in each of the immediately preceding 5 calendar years.
FLOOD COVERAGE BILL DROWNS
House Bill 929 by Representative Ahern made it to Second Reading on the House floor, and Senate Bill 584 by Senator Brandes died in Senate Appropriations.
Both bills would have extended until October 1, 2025, the allowance for insurers to use rates without first obtaining approval from the OIR. Currently, an insurer has until October 1, 2019, to use a rate without the OIR’s approval, so long as the rate is not excessive, inadequate, or unfairly discriminatory.
The bills also would extend and broaden the exemption permitting the export of coverage to a surplus lines carrier without meeting statutory requirements that apply to other lines. The exemption is extended to July 1, 2020 (2025, for SB 584), from the current deadline of July 1, 2017. The exemption would be broadened to eliminate the conditions related to comparability of premiums, policy contents, and deductibles, and the condition related to notifying a policyholder of the availability of coverage from Citizens, which is prohibited by law from offering flood coverage.
In addition to those provisions, Senate Bill 584 would authorize the Division of Emergency Management to administer a matching grant program for up to $50 million annually for technical and financial assistance grants to local governments to implement certain flood risk reduction policies and projects. Also, flood mitigation projects would be added to the list of eligible projects under the Florida Communities Trust (FCT) program.
PROPERTY INSURANCE APPRAISAL UMPIRE BILL STRIKES OUT
House Bill 79 by Representative Artiles was passed by the House and sent to the Senate, but its companion, Senate Bill 336 by Senator Richter died in the Appropriations Committee. The bill would have established qualifications and oversight for appraisers and appraisal umpires.
Generally, under an appraisal process: The insurer and policyholder each appoint an appraiser, who evaluates the loss; If the two appraisers cannot agree on the amount, they together choose an umpire; After each appraiser presents their loss assessment, the umpire provides a written decision; A decision agreed to by two of the three will set the amount of the loss.
Current law does not regulate who may serve as a property insurance appraiser or property insurance appraisal umpire.
House Bill 79 provided definitions for “appraisal,” “property insurance appraiser,” and “property insurance appraisal umpire.” The bill imposed certain limits on who may be an appraiser, and they imposed a new license requirement for umpires, including a license requirement by DFS.
RENTERS INSURANCE DISCLOSURE DENIED OCCUPANCY ON THE GOVERNOR’S DESK
Senator Gibson, along with the Senate Committee on Banking and Insurance, proposed a bill that would have required rental agreements entered into after January 1, 2017, to include a statement as to whether or not the tenant was required to obtain renters insurance. If the insurance is required in the agreement, the agreement must also include the type and level of coverage required. If the agreement did not require the tenant to obtain renters insurance, the bill would have required the agreement to include the following notice: “The tenant is not required to obtain renters insurance; however, the tenant is strongly advised to obtain renters insurance to cover damage to or loss of personal property.”