By Timothy J. Meenan, NAIFA-Florida Lobbyist
Session Dispatch #5
Things should be winding down as we enter into the 9th and final week of the legislative session, but there is still plenty of work to be done. The joint budget committees met throughout the weekend and were able to agree to budget terms for public schools and state worker salary increases, they bumped budgets for environmental concerns and hospital funding to the budget chairs. The chambers have until midnight Tuesday, May 2, to finalize a bill in order for session to end on time. It is very possible that session will be extended to finalize the budget.
In addition to the excitement of the final week, the Commissioner of Agriculture, Adam Putnam, announced his official intent to run for Governor in 2018.
Below is a summary of legislation of interest to NAIFA and its members:
I. NAIFA PRIORITIES
Agent Continuing Education & Prohibition on Unlicensed Transaction of Life & Health Insurance
SB 986 (Stargel); HB 925 (Miller)
SB 986 and HB 925 are identical bills from the Department of Financial Services (DFS). We have worked with DFS and have included NAIFA priority language in the department’s bill package. The bills allow members of NAIFA Florida to receive up to two hours a year in continuing education credit for active participation in their professional or trade association. The bills include life, health and property insurance agents, public adjusters, and bail agents. To qualify, a member must attend four hours of association meetings every year to qualify for the two hours of Continuing Education. Additionally, the bill includes language prohibiting the unlicensed transaction of life and health insurance and clarifies that the exemption from agent licensure only applies if the person explaining coverage is an employee or a member of the group or business in question.
The House bill was heard on final passage and approved with a vote of 118 to 0. The Senate bill is currently awaiting being heard on second reading on the Senate floor. The House included language on the bill relating to unclaimed property that is controversial, so we anticipate that Senator Stargel will substitute the Senate bill (without the unclaimed property language) for the House bill and send it back to the House for final passage.
AOB Reform Not Heard
HB 1421 (Grant)
The Senate Rules Committee held what many believe to be the final Rules Committee meeting on Friday, April 28. The committee heard a number of bills, including SB 1684 by Senator Farmer, relating to insurer rates. Senator Farmer field a strike-all amendment which included the following components:
- Costs of all attorney fees, both defense and plaintiffs, paid by insurers would be disallowed from being included in the base rate filing of any insurer.
- The right to repair a claim by selecting the contractor that would do the work would be eliminated as an option to homeowners insurers.
- Codification of the ability for contractors to utilize an AOB, requiring timeframes for remitting the AOB to the insurer, the right to an insured to rescind an AOB, and other procedural issues that institute AOB as an accepted tool, such as requiring an inspection of the property within 7 days of receiving the AOB from the vendor.
- No changes in attorney fees for AOB vendors is included in the bill, essentially endorsing the concept that AOB vendors under assignments get unlimited attorney fees.
- Authorizes the payment of referral fees, by an AOB vendor, of up to $750 to other contractors for referring the work.
- Requiring insurers to annually report loss severity, number of days between the first notice of loss and the initial inspection by the insurer, the amount of settlements, the amount of fees paid to the claimants and the insurers’ attorneys, and other onerous data.
While this bill was the antithesis of what the insurance industry needs to fix AOB, it was the only AOB bill moving in the Senate. Senator Brandes filed an amendment to the amendment in Rules Committee to clarify that Florida’s liberal attorney fee statute applies only to the policyholder or the omnibus insured, which would cut off the right to attorney’s fees for all assignees and vendors. The Rules Committee ran out of time before this bad bill, or the Brandes amendment, was heard. The Senate certainly could call another rules Committee meeting, although that’s rare during the final week of session.
Bottom line on AOB: The only way for it to pass would be to attach it to another bill, of which there are almost no other bills to attach this to, and the Senate is not likely to take the House AOB bill. Our goal is to manage this for no change so nothing bad happens. Senator Brandes was hoping to put the house AOB bill and the Senate’s PIP repeal bill on his Omnibus bill, but his bill, SB 454 (an “act relating to insurance”) is also trapped in Senate Rules Committee. If that bill gets pulled out of the Rules Committee, it will likely mean fireworks.
II. LIFE & HEALTH
SB 1600 (Young); HB 1205 (Stevenson)
SB 1600 and HB 1205 revise the viatical settlement statutes making it more difficult for life settlement companies to engage in Stranger Originated Life Insurance (“STOLI”) policies. The bills define a STOLI and makes agreements to further or aid a stranger originated transaction void and unenforceable.
The bills provide a fix for the Florida Supreme Court decision in the Pruco case by specifically stating that a life insurer may contest a life insurance policy that was obtained in STOLI transaction.
The bill makes clear that the two-year incontestability clause does not prevent an insurer from contesting the issuance of STOLI policy on lack of insurable interest after the 2 years has passed.
CS for SB 1600 did not make it onto the Senate Rules Committee agenda for April 28, which would have been the bill’s last committee stop. Instead, the STOLI language has been attached to SB 1012, relating to insurer anti-fraud programs. HB 1205 passed a vote on the full House floor on April 26. We are optimistic this could pass!
House Amends and Moves Legislation Addressing Workers’ Compensation
SB 1582 (Bradley); HB 7085 (Insurance & Banking Subcommittee)
HB 7085 addresses the recent decisions declaring some components of Florida’s Workers Compensation law unconstitutional. The bill would permit direct payments of attorneys by or on behalf of claimants and increases the total combined temporary wage replacement benefits (TTD/TPD) from 104 weeks to 260 weeks. It also allows a Judge of Compensation Claims (JCC) to award an hourly fee that departs from the statutory percentage based attorney fee schedule under certain situations. Among several other components, HB 7085 also permits insurers to uniformly reduce premiums by no more than 5% if they file an informational-only notice within 30 days. Insurance industry representatives believe that the ability of a judge to award additional attorneys’ fees makes this bill less than ideal, and likely means that litigation will continue to expand causing rates to increase.
The House bill passed a vote on the floor on April 19. A number of amendments were offered on the bill, with two amendments actually being passed and added to the bill. The amendments, both by the bill sponsor, Rep. Burgess, limits attorney fees to $150 per hour and requires any vacancy on the three-member panel to be filled by the Governor within 120 days of the vacancy; if the Governor fails to fill the vacancy, the bill requires the Chief Financial Officer to do so within 120 days.
SB 1582 requires insurance carriers to authorize or decline requests for authorization from health care providers within a three-day period and provides that a request is deemed to be authorized if the carrier fails to respond. Like the House bill, the Senate bill increases the temporary partial disability benefits from 104 weeks to 260 weeks, in compliance with the Florida Supreme Court’s decision in Westphal v. City of St. Petersburg. SB 1582 retains the statutory fee schedule for setting claimant attorney’s fees but allows the JCC to consider certain factors and permit deviation from the attorney fee schedule.
The Senate bill was passed by the Appropriations Committee with a committee substitute two weeks ago. The CS created a presumption that firefighters who have multiple myeloma or non-Hodgkin’s lymphoma are presumed to have contracted such occupational disease in the course and scope of employment as a firefighter. The presumption extends workers’ compensation benefits to firefighters with either of the above-named conditions. Additionally, the CS provides corresponding appropriations and allows eight full-time equivalent positions be funded to the Office of Insurance Regulation. SB 1582 passed its final committee of reference, the Senate Rules Committee, and is on the Special Order Calendar for May 1.
The two bills are far apart. The House bill seeks to curb attorney’s fees and is seen as more industry friendly than the Senate bill, which is seen as more friendly to the trial bar. The House bill has been sent to the Senate, and it is probable that the Senate will take the House bill, file a strike-all amendment to make it identical to the Senate bill, and then send the bill back to the House.
SB 814 (Broxson)/HB 307 (Drake)
CS/HB 307 changes the claim coverage caps for life insurance, deferred annuity contracts, and health insurance. The bill increases the FLAHIGA administrative assessment from $250 to $500 per insurer year. The Senate bill, however, does not contain this language. The bill also increases FLAHIGA’s liability for claims of insolvent health insurers from $300,000 to $500,000 per life for basic hospital expense, basic surgical, or major medical health policies. The domestic health plan association (FAHP) added an amendment to delay the doubling of the cap for medical coverages until 2020 due to their concerns regarding the impact of the Penn Treaty assessments on top of any health insurers that could become insolvent due to their sales on the federal exchange. The bill additionally provides FLAHIGA coverage for annuities held by a custodian or trustee as part of an individual retirement account.
The House bill was read on final passage last week and passed by a vote of 118-0. The Senate bill passed its final committee, Senate Appropriations, this week. The bill will be placed on the Senate Calendar, pending placement on the Special Order Calendar.
Direct Primary Care Likely to Pass
SB 240 (Lee)/ HB 161 (Burgess)
HB 161 and SB 240 provide a number of rules and regulations for direct primary care agreements, as well as exempting direct primary care from the insurance code. The bill makes clear that direct primary care does not constitute insurance and does not satisfy the individual mandate in the Affordable Care Act. HB 161 passed the House floor with a vote of 107-6. The Senate bill has passed all of its committees of reference and is awaiting a second reading on the Senate floor.
Discount Plan Organizations
SB 430 (Bean)/ HB 577 (Pigman)
SB 430 and HB 577 make a number of changes to existing rules regarding discount medical plan organizations. First, the bills amend the definition of discount plan to include any plan that does not charge a fee to plan members. It also clarifies that any third-party entity who contracts with a provider to administer a discount plan must be licensed as a discount plan organization. The bills also adds a rule that a discount plan organization must maintain records of each member for 5 years after issuing the plan. Finally, the bills add a number of rules regarding plan cancellation, which are as follows: must cancel the membership within 30 days after receipt of the cancellation request, may not charge the member any fees after the effective cancellation date, and must provide pro rata reimbursement of periodic charges made for month after cancellation date. It also clarifies that if a member cancels his membership in the discount plan organization consisted with the open enrollment rules established by an employer, the member shall receive a pro rata reimbursement of all periodic charges.
HB 577 passed through all three of its committees of reference and was read a third time on the House floor on April 20, passing unanimously. The bill was substituted for the Senate bill and read for a second time on the Senate floor. The bill now awaits a final vote on the Senate floor.
Retroactive Denial of Claims Bill Likely to Fail
SB 102 (Steube)/ HB 579 (Hager)
Similar bills SB 102 and HB 579 would prohibit insurers and health maintenance organizations from retroactively denying claims if at any time the insurer or health maintenance organization had verified the eligibility of an insured at the time of treatment. SB 102 passed all of its committees of reference and is scheduled for a vote on the Senate floor on April 27. HB 579 has passed its first of three committees of reference but has not yet been scheduled for a hearing in its next committee, House Commerce. Due to the House bill’s lack of movement we believe this bill to be dead for this Session.
Prior Authorization Measure Fails
SB 530 (Steube)
SB 530 mandates that health insurers and pharmacy benefit managers on behalf of health insurers must provide on their website detailed descriptions of requirements and restrictions to obtain prior authorization for coverage of a procedure, treatment, or prescription drug in clear, easily understandable language. It mandates that prior authorization forms be made available on their website, as well as mandating that the form may not require information that is not necessary for the determination of medical necessity for coverage. The bill also prevents the implementation of new requirements or restrictions to obtaining prior authorization unless the changes have been made accessible for at least 60 days on the insurer’s website and affected policyholders and health care providers are given at least 60 days written notice before the changes are implemented. SB 530 additionally creates a period of 72 hours for non-urgent care situations and 24 hours for urgent care situations to authorize or deny a prior authorization request.
SB 530 then creates a new statute dealing with fail-first protocols. This section mandates that an insurer must publish on its website a procedure by which an insured and health care provider may request a protocol exemption. The insurer’s website must also include other miscellaneous information regarding the request. The section then goes on to create a window of time in which the insurer must authorize or deny a protocol exception request or respond to an appeal, which is 72 hours for non-urgent care situations and 24 hours for urgent care situations. Following a decision to authorize or deny, the insurer must specify the approved procedure, treatment, or drug benefits in the case of an authorization, or in the case of a denial, send a detailed, written explanation of the reason for the denial and the procedure to appeal the health insurer’s determination. The bill also mandates an insurer to grant a protocol exception request in certain circumstances.
SB 530 passed all three of its committees of reference and has passed a vote on the Senate floor as well. However, the bill does not have an identical House Companion. HB 877 by Rep. Harrison has similar language regarding the fail-first protocols, but there is no companion with the prior authorization language. We believe the bill to be dead due to the lack of a House companion.
Frozen Formulary Bill
SB 182 (Mayfield)/ HB 95 (Masullo)
SB 182 and HB 95 prohibits health insurers and HMOs from removing a covered prescription drug from its formulary except during coverage renewal with some limited exceptions. The bills also prohibit an insurer or HMO from reclassifying a drug to a more restrictive drug tier during the policy year. SB 182 passed all of its committees of reference and is scheduled for a vote on the Senate floor on April 27. The House bill passed its first committee of reference, House Health Innovation, on February 22, but has not moved since. We are on alert for efforts to attach this bill another health bill that is more likely to pass.
Motor Vehicle Insurance/ PIP Repeal Measure
1766 (Lee, T); HB 1063 (Grall)
Legislation to eliminate PIP and replace it with mandatory bodily injury has been passed by the full House, and continues to receive no movement in the Senate. The Senate bill still must be heard, or withdrawn, from the Appropriations Subcommittee Health and Human Services and the full Appropriations Committee in the Senate. Neither bill contains language fixing bad faith abuse. A priority of the House Speaker, PIP could become a late session “trade” with the Senate; if so, the Senate could remove the committee from both committees and place it on the special order with a motion on the Senate floor. The Senate President appears to have been moved by opposition by Hospitals and plaintiffs lawyers practicing PIP and may be the reason for the bills stumble.
HB 1063 eliminates PIP and replaces it with Mandatory BI with limits of 25/50/10 limit for death or injury to one person of $25,000, up to two persons of $50,000, and $10,000 of physical damage coverage. No medical payments coverage is required or contemplated in the House bill. The House bill passed a vote on the floor on April 19. The implementation date is July 1, 2018.
SB 1766 repeals PIP, but includes a $5000 benefit for mandatory Med Pay, along with mandatory bodily injury and property damage liability coverage. The Senate bill phases in the bodily injury coverage: From the effective date of the act through December 31, 2019 the limits are 20/40/10; from January 1, 2020 through December 31, 2021 the limits are 25/50/10; from January 1, 2022 and thereafter the limits are 30/60/10.
Pre-Owned Auto Inspection
SB 1316 (Bracy)/ HB 1299 (Dubose)
SB 1316 and HB 1299 allow insurers to opt out of inspection requirements for pre-owned motor vehicles. They also would allow insurers to establish their own pre-insurance inspection requirements if they opt out. HB 1299 was amended and passed with a vote of 12 to 1 with a committee substitute through the House Insurance and Banking Subcommittee. The CS for HB 1299 amends the original bill and creates express authority for an insurer to elect not to participate in the required pre-insurance inspection. The amended bill limits the consumer’s expense to $5 in those instances where an insurer opts out of the inspection and the consumer implements their own inspections instead. The bill heads to the Commerce committee next for its last stop, but Commerce will not meet again.
The Senate bill was amended in its first committee hearing to conform to the House language capping the consumer expense for an inspection at $5. SB 1316 was not placed on the Rules Committee agenda for April 28. However, this bill language was amended to SB 1012, relating to insurance anti-fraud programs, and then placed on the Special Order Calendar for April 28, but was temporarily postponed by the full Senate. This bill may pass on the fraud bill.
IV. PROPERTY & CASUALTY
Unfair Insurance Trade Practices/ Rebate Bill
SB 1032 (Mayfield); HB 1029 (Yarborough)
SB 1032 and HB 1029 raise the cap from $25 to $100 for promotional items that can be given by insurance agents or insurance companies to policyholders, prospective policyholders, and others for the purpose of conducting a promotional or advertising program. The bills limit the value of promotional items and prohibit items exceeding $100 in total value from being given. Further, the bills prohibit an insurer or its agent from giving an aggregate total value exceeding $100 in a single calendar year to a single individual. The bills allow movie tickets, promotional items, loss mitigation services, and other things of value to be provided.
The Senate bill did not make it onto what might be the final Rules agenda for April 28, meaning its locked in that Committee. CS for SB 1032 expanded the bill to permit a licensed insurer or its agent to make charitable contributions up to $100 per calendar year on behalf of each insured or perspective insured. The CS also clarified that any item given by title insurance agents, title insurers, or title insurance agencies may not exceed a value of $25. The sponsors attempted to attach this language to SB 454, in the Senate Rules Committee on April 28, but the committee ran out of time and did not hear that bill. HB 1029 passed a vote on the House floor unanimously. It is possible this language will be attached to the Fraud bill, and will be amended on the Senate Floor this week and sent back to the House for final passage.
SB 420 (Brandes); HB 813 (Lee)
SB 420 and HB 813 mandate that the Florida Commission on Hurricane Loss Prevention Methodology revise hurricane loss prevention models every four years. The House and Senate bills differ in two respects. First, the House bill requires a surplus lines insurer to be rated by A.M. Best in order to be eligible to write flood policies without a diligent effort and the Senate bill requires a rating from any rating agency acceptable to the OIR. Second, the House bill contains different language regarding the written notice that must be sent to private flood insurance purchasers.
The House bill requires an agent to notify the insured that if they leave the N.F.I.P. and later return, they will pay the full risk rate, not the N.F.I.P. subsidized rate, and must obtain a signed disclosure to that effect. This notice must be obtained 21 days after the expiration of the N.F.I.P. policy, or seven days before the expiration of any timeframe during which the applicant may return to the N.F.I.P. under a subsidized rate, should federal law change. However, the agent may avoid obtaining the disclosure if the N.F.I.P. allows insureds, at some point in the future, to return to the program at any time and still obtain the subsidized rate. HB 813 unanimously passed a vote on the House floor on April 26, and is now down in the Senate. The Senate bill has passed all of its committees of reference and is awaiting placement on the Special Order Calendar.
This bill has a good chance of being enacted.
Public Adjuster Licensing
SB 922 (Garcia); HB 911 (Shaw)
HB 911 passed the House floor unanimously on April 26, and is down in the Senate. The bill has been amended to remove language which would create a public adjusting firm license. The amended bill:
- Deletes the 48-hour cooling off period from a Public Adjuster contacting an insured (this was struck down by litigation a few years ago).
- Prohibit a PA from collecting its fee on the portion of the claim that is the deductible.
- Allows Public Adjusters to hire all lines adjusters and make them Public Adjuster Apprentices.
- Prohibit anyone other than a PA or an attorney, for money, filing an insurance claim for an insured or a third-party claimant.
- Allow all lines adjusters to solicit customers for Public Adjusters.
- Allow an employee of a residential property insurer to handle a claim of $500 or less without being a licensed company adjuster.
- Limit an all lines adjuster to only being appointed as an independent adjuster, a company employee adjuster, or a public adjuster apprentice, but never more than one at a time.
- Eliminates the public adjuster apprentice requirements, including serving for 12 months as an apprentice before becoming a public adjuster.
- Limit public adjusting firms to maintaining no more than 4 public adjuster apprentices (who are all lines adjusters) and require a supervising public adjuster to be responsible for no more than one public adjuster apprentice.
- Eliminate the prohibition on public adjuster apprentices from soliciting new business for a public adjuster. Now all lines adjusters appointed as apprentices will be allowed to solicit door to door.
- Eliminate the ability of a licensed general lines agent to recommend persons to serve as temporary adjusters after a storm.
- Allow the primary adjuster of an independent adjusting firm contracted with an insurer to adjust claims on behalf of an insurer to recommend individuals for temporary adjuster licenses after a storm.
- Require adjuster records to be maintained for 5 years, instead of 3 years, after completion of an adjustment.
The Senate companion bill, SB 922, passed its final committee of reference, Senate Appropriations, on April 25. The bill now awaits placement on the Special Order Calendar.
This bill has a good chance of passing.
SB 334 (Steube); HB 469 (Harrison)
SB 334, and HB 469 require the payment of prejudgment interest in certain court awards. SB 334 requires that in a negligence action in which a plaintiff recovers economic damages and costs as the result of personal injury, the court shall include interest on each component of economic damages, back to the date of loss of an economic benefit to the plaintiff. That bill is on the Senate Calendar, and has not yet received placement on the special order of the Senate.
HB 469 allows recovery of prejudgment interest on both economic and non-economic damages. That bill still must be heard in the House Judiciary Committee, and we were successful in keeping it off the last Judiciary Committee agenda. Unless they take extraordinary measures, or file floor amendments, this issue is dead for this Session.