PIANY legislative roundupó2006 regular session
The following bills all have been passed by both houses of the New York Legislature and in most cases have been acted on by the governor. Below you will see bills dealing with:
PIANY-backed bill cuts wait for loss runs in half
PIANY worked tirelessly to get agents and brokers quicker information, because every moment counts. Companies fought doggedly against PIANY's original idea for "instant" loss runs. The new 10-day rule should provide better turn-around time, which becomes crucial in achieving certain placements and in coping with hard-market conditions. PIANY wishes to thank the sponsorsAssemblyman Gary Pretlow and Sen. Dale Volkerfor the long, involved process of securing this change. Every member who has voiced support throughout the process also has brought us closer to successs. PIANY also says "hats-off" to the companies that are now providing real-time electronic inquiry transactions whereby loss data is instantly accessible.
NYPIUA, other provisions get one-year extenders; HO Panel stands by
The "extender" bill, S.8347/A.11401-a was signed into law June 30, 2006, as Chapter 115. It was sponsored in their respective houses by the chairs of the Insurance committees, Assemblyman Alexander 'Pete' Grannis and Sen. James Seward.
Also extended was the Temporary Panel on Homeowners Insurancea legislatively created body to advise the Insurance Department and the Legislature on issues relating to this prime consumer coverage. Issues in need to study include state and federal CAT funds, disaster preparedness and mitgation, flood vs. property coverage litigation and approval of catastrophe rating factors.
PIANY has called on the Insurance Department to reactivate the current Panel. In the absence of any explicit direction in this year's "extender" legislation, much still could be accomplished during the legislative "off-season." The Panel could resume its time-tested process of research and discussion among experienced industry professionals united in a common search for solutions.
Another step recommended by PIANY would have homeowners companies issue annual notices about flood insurance coverage. This bid won a degree of support but did not make the "final cut" for inclusion in legislation.
One-year extenders (all to June 30, 2007) also were enacted for the current insurance rating laws and the personal auto "2 percent" nonrenewal rules. A late-session push to revive flex-rating for personal auto was not successful.
New York will permit "security freezes" on credit files
Signed into law as Chapter 63, Laws of 2006, is the Identity Theft and Mitigation Act. The bill,
For insurance agents and companies, freezes will present a challenge. The consumer will need to take steps to lift the freeze in order to let the credit data be accessed for purposes of underwriting and rating new business, and for the purpose of updating credit information for possible "re-tiering" current policyholders to a better rate.
PIANY members will want to consider whether to set up special workflow procedures for such applicants and clients, and explain the potential effect of a "freeze" to their personal lines customers. Members also will want to know how their carriers plan to address any applications that run into a "freeze."
After the law takes effect, credit reporting agencies will be required to honor written requests for a "freeze" within five days (this time frame decreases to four days in 2008 and three days in 2009). Consumers then will be provided with a special PIN or password that will let them lift the freeze for specific parties or specific periods of time. Such requests must be honored by the credit bureaus within three days.
Some parties will continue to have access to a consumer's credit data, including existing creditors and their assignees, government agencies pursuing law enforcement and other official purposes. Among the exemptions also are certain "prescreening" activities as permitted by the federal Fair Credit Reporting Act. However, according to the Federal Deposit Insurance Corp., prescreening cannot be used to solicit responses for insurance, employment or other purposes. Therefore, an entity cannot use a prescreened list solely to send promotional material.
New York's bill did not exempt insurers from the parties that will be "frozen out" of access to credit data. In this respect, New York's law will be unlike those in a number of states which do exempt insurance underwriting. This feature of the bill prompted strong opposition from insurers, which lobbied for a veto or a last-minute chapter amendment granting them access.
Congress is currently considering federal legislation that might pre-empt certain state laws regarding security freezes and notices of security breaches. H.R. 3997 would permit consumers to initiate freezes only if they have been a victim of identity theft. Currently some five states impose this limitation, while around 18 (including New York) have laws that do not restrict freezes to identity theft victims. An alternative federal bill, H.R. 4127, would leave the "who can freeze" issue up to the states.
More privacy protectionsrecords disposal and Social Security numbers
Business record disposal. S.5178-a/A.8456-b, signed into law as Chapter 65, Laws of 2006, requires business entities to destroy certain personal information in their records when disposing such records. It was signed on June 7, 2006, and takes effect 180 days thereafter. Like the "security freeze," this measure was sponsored by Assemblywoman Audrey Pfeffer and Sen. Charles Fuschillo.
[Insurance producers are subject to separate requirements that they safeguard personal information in their possession, and must have written security procedures. PIANY recently made available to members a number of resources to enable their compliance with the various privacy rules. One feature is an online questionnaire which producers can use to generate their written security programs. You can find this in PIANY's Privacy Compliance Central (http://www.pia.org/IRC/privacy/).]
Social Security numbers. S.6909-c/A.10076-d by Sen. Thomas Morahan and Assemblywoman Audrey Pfeffer was signed on Sept. 13, 2006. Its provisions become effective Jan. 1, 2008.
The bill is designed to prevent disclosure of Social Security numbers to unauthorized parties. It sets various standards for the use, display and transmission of Social Security numbers.
Privacy of phone records
Known as the "Consumer Communication Records Privacy Act," the bill generally prohibits the procurement of, sale or use of telephone record information without the authorization of the customer. It provides for enforcement by the state's attorney general. The bill was signed Aug. 16, 2006, to take effect immediately.
Do-not-call and do-not-fax
Do-not-call. A.11141/S.7887 was signed July 26, 2006, as Chapter 263, effective immediately upon signature. It was sponsored by Sen. Charles Fuschillo and Assemblywoman Audrey Pfeffer.
The bill amends New York’s General Business Law to conform with current Federal Trade Commission (FTC) rules that took effect Jan. 1, 2005. It requires telemarketers to use the Do-Not-Call Registry obtained from the FTC no more than 31 days prior to the date any call is made. New York law had not been updated and still required telemarketers only to use the most current quarterly update of the registryeven though the federal regulation, being more restrictive, has governed such calls since it took effect.
Do-not-fax. S.8060/A.11554, by Sen. Stephen Saland and Assemblyman William Magee, was signed July 26, 2006, as Chapter 277, to take effect 30 days after signature.
The bill deletes from New York law a provision that, at one time, allowed unsolicited advertising faxes to be sent during overnight hours. This provision already had been pre-empted by the tough federal Do-not-fax rules, which do not exempt faxes sent overnight from its standards.
Narrow workers’ compensation bills fail to enact overall reforms
Group trust assessments/medical treatmentsVETOED. S.5612-b/A.8713-b was vetoed by Gov. Pataki on Aug. 16, 2006. It was opposed by insurers because it would have increased the dollar threshold for medical treatments that could be charged to workers’ compensation without prior approval. The legislation resulted from late-session negotiations involving Labor and the state Business Council, which recently has entered the group trust field.
The bill attempted to yoke together two unrelated items which have been urgently sought by certain parties to the wider workers’ compensation negotiations. (Many other interested parties had preferredthat no specific items should be agreed to in the absence of comprehensive reforms to the system.) The bill was sponsored by Sens. George Winner and Nicholas Spano and Assemblyman Herman ‘Denny’ Farrell.
Current law allows workers to get services such as consultations with a specialist, surgery, diagnostic procedures and physical therapy only with prior approval by their employer or the Workers’ Compensation Board, if the cost will exceed $500. This bill would have raised that figure to $1,200.
Current law also provides different methods of calculating the liability of commercial insurers, as distinct from group self-insurance trusts, for assessments to pay for the Second Injury Fund, the Reopened Case Fund and running the Workers’ Compensation Board. The bill would have changed the formula for group trusts so they would pay on a more similar basis to that already approved for insurance companies.
PIANY’s concern that the bill might place more assessment burden on private insurers was allayed when companies obtained changes to the section of the bill dealing with how the various groups are assessed. The bill would have held private carriers harmless from any increase in the proportion of assessments that they would have to pay. The bill was strongly supported by the group trusts, some of which are clearly stressed financially. Its potential effect was illustrated in support documents issued by the Public Entity Risk Management Association Inc. (PERMA), a self-insured group which claims to be “New York’s largest provider of workers’ compensation coverage for municipalities.” PERMA advised members that, currently, “in addition to paying the annual assessment, we also must calculate a balance sheet liability for future assessments on the basis of reserves for future indemnity payments. Currently this requires PERMA to add $12.6 million to its reserves, a sum that is expected to grow to more than $16 million for Fiscal Year 2006. ... When the legislation passes into law, PERMA will be able to move at least $16 million from the liability side of our balance sheet to the asset side. This change would nearly quadruple our surplussignificantly boosting our financial position and allowing more flexibility in calculating our members’ contributions.”
Given the news in the first half of 2006 that five group trusts are closing amid financial woes, the legislation apparently would have “boosted” the appearance of their financials. As of early June, 27 more trusts were listed by the Workers’ Compensation Board as “underfunded.”
Limited liability entities. The governor on June 13, 2006, signed A.7066 by Assemblyman William Colton. It clarifies in law how members of limited liability companies may be treated for purposes of workers’ compensation coverage. The bill has little practical effect, as it merely codifies the policy of the Workers’ Compensation Board regarding these individuals and updates Workers’ Compensation Law to reflect these new types of entities.
The bill includes partners of limited liability partnerships and members of limited liability companies or professional service limited liability companies in the statutory description of individuals who are not subject to the law unless an election has been filed. It treats partners of limited liability partnerships and members of limited liability companies and professional service limited liability companies in the same manner as partners of other types of partnerships with regard to workers’ compensation coverage.
Media sales representatives. A.5399-a clarifies when media sales representatives are acting as independent contractors and not as employees for purposes of workers’ compensation. It was sponsored by Assemblyman Peter Abbate, with Sen. Dean Skelos sponsoring the bill in the Senate. It was signed Aug. 17, 2006, to take effect on Jan. 1, 2007.
Indexed benefitsVETOED. S.1072-b by Sen. James Alesi would have given volunteer firefighters who have suffered permanent total disability a benefit that rises each year to reflect increases in the Consumer Price Index. Insurers would be reimbursed for the increases from the fund for reopened cases or a new state fund. Assemblyman Joseph Morelle sponsored the Assembly version. The increases would have applied to weekly benefit periods that commence after Jan. 1, 2007. The bill was vetoed by Gov. Pataki on Aug. 16, 2006.
Expedited hearingsVETOED. S.4186 by Sen. Joe Maziarz would have required the chair of the Workers’ Compensation Board to transfer a workers’ compensation case to a special part for expedited hearing if such case had not been resolved within two years. Currently, such referrals are discretionary. Assemblyman Felix Ortiz also sponsored the measure, which was vetoed by Gov. Pataki on July 26, 2006.
Spinal implants. A.8840-c by Assemblywoman Susan John was signed on Aug. 17, 2006. The bill provides for a more adequate rate of payment for spine fusion surgery, including the cost of any surgical implants used. Proponents said it is needed to preclude the threat that hospitals will stop doing these procedures under workers’ compensation. According to the bill’s sponsor, “the use of spinal implants is the preferable method of performing fusion surgery and has become the medical standard of care. From a financial standpoint, however, performing fusion surgery with implants involves a higher surgical cost, that cost is more than recouped in savings derived from a shorter hospital stay, more effective rehabilitation and better results. The ability of the patient to return to work sooner presents additional savings for employers and insurers with a workers’ compensation injury or disability.” The bill took effect retroactively to April 1, 2006, and will sunset March 31, 2011.
Lyme diseaseVETOED. On Sept. 13, 2006, the governor vetoed S.718-a by Sen. Kenneth LaValle. Under this bill, Lyme disease would have become an occupational disease compensable under workers’ compensation for employment involving farming, landscaping and pruning operations, the care or handling of animals or other related occupations which create exposure to organisms carrying Lyme disease. The bill would have taken effect immediately. Assemblyman Richard Brodsky was the Assembly sponsor.
World Trade Center rescue and recovery. S.8348 by Sen. John Marchi establishes the ground rules for awarding workers’ compensation benefits to people who became ill after they participated in rescue and recovery efforts after the destruction of the World Trade Center. It allows claims to be pursued that otherwise would be time-barred. It requires a casual relationship to be providen and that the illness must have arisen in the course of employment. The bill took effect immediately and applies starting with Sept. 11, 2001; it would affect both open and closed claims.
Benefits for certain hospital workersVETOED. On Aug. 16, 2006, Gov. Pataki vetoed S.6802, by Sen. George Maziarz. The bill would have enhanced workers’ compensation benefits for employees of private voluntary hospitals who were injured or killed while engaging in rescue activities at or near the World Trade Center site. The workers would have gotten 75 percent of their former wages with no maximum cap, rather than the standard 66 2/3 percent, capped at a maximum weekly amount of $400.
Volunteer ambulance services
The bill amends Subdivision 1 of Section 209 of the General Municipal Law, by adding general ambulance services organized pursuant to Section 122-b of that law to the list of companies, squads, patrols or units which are considered an “ambulance service.”
According to the sponsors’ memo: “Volunteer ambulance squads, which perform a vital function in communities throughout the state, are currently not covered by insurance when they are called to perform duties outside of their regular district in a neighboring community. However, nonvoluntary squads are currently insured under similar situations. An ambulance that has certain immunities and privileges within their district should have the same immunities and privileges while performing the same kinds of duties in a neighboring community. Without this guarantee, volunteer ambulances will cease to help neighboring communities, creating a potential shortage of available ambulances.” The bill was signed July 26, 2006 (Chapter 191), effective immediately.
Act of Violence coverage
This is an optional coverage that an insurer may offer, but is not required to. Except for the ransom or reward payment coverage, it may be offered only as part of a homeowners’ policy or a motor vehicle physical damage insurance policy. If an insurer chooses to offer the coverage, it may do so either as part of the basic coverage under the policy or as an optional endorsement. In either case, the insurer would first have to file the rates and forms with the Insurance Department.
An OGC Opinion
06-08-11 clarifies the legislative intent of the new law authorizing insurers to provide “Act of Violence” coverage.
Disaster preparedness. A.2808-a by Assemblyman Ruben Diaz was signed July 26, 2006 (Chapter 171), effective immediately. Sen. Michael Balboni sponsored the bill in the Senate.
The bill requires the state’s disaster preparedness commission to develop public service announcements to be distributed to television and radio stations throughout the state informing the public how to prepare and respond to disasters including terrorist acts. It requires such announcements to be in English and other languages.
Another bill, S.6913-a by Sen. Michael Balboni, was signed Sept. 13, 2006 to become effective Jan. 1, 2007. It provides for state and local disaster plans to address the needs of people with pets and service animals.
Real estate disclosure. While not strictly an insurance-related bill. A.4135-c by Assemblyman Joseph Morelle is interesting for its approach to disclosure by real estate professionals of the role they are playing in a given transaction involving residential property. Specifically, it provides for uniform writtendisclosure in cases where the salesperson represents both buyer and seller. This bill establishes two separate disclosure forms, one for sale transactions and one for lease transactions, and adds new definitions including that of “dual agent.” The bill was signed Aug. 17, 2006, effective Jan. 1, 2007. Sen. John DeFrancisco sponsored it in the Senate.
The bill does not include provisions seen in certain similar bills that would have required real estate professionals to disclose prior losses or other potentially adverse conditions at the property.
Before this new law, law enforcement officers were only required to make such notations when citing a driver for operating a motor vehicle while under the influence of alcohol or drugs. “These notations are intended to put the court and district attorneys on notice of the possible consequences of otherwise unremarkable violations of the Vehicle and Traffic Law,” according to the bill’s sponsors. Assemblyman Adam Bradley sponsored the bill; Sen. Vincent Leibell sponsored the Senate version. It was signed Aug. 17, 2006, effective 90 days after signature.
Low-speed vehicles. S.7447-b was signed Sept. 13, 2006, effective 120 days thereafter. It includes within the definition of low-speed vehicle, for the purposes of the Vehicle and Traffic Law, trucks with a maximum performance speed of greater than 20 but not greater than 25 miles per hour, and whose gross weight rating is less than three thousand pounds.
The bill prohibits a contract which provides coverage for hospital, surgical or medical care coverage from excluding coverage for diagnosis and treatment of medical conditions otherwise covered by the policy solely because the treatment is provided to diagnose or treat autism spectrum disorder. Autism spectrum disorder is defined as a neurobiological condition that includes autism, Asperger syndrome, Rett’s syndrome or pervasive developmental disorders. The bill takes effect Jan. 1, 2007, and applies to policies issued, renewed or amended on and after that date.
Timothy’s Law. The long-debated "Timothy's Law" requires health insurers to cover more mental health care for children and adults. The bill has a Jan. 1, 2007, effective date, which presents compliance problems. The New York Health Plan Association has issued a statement at http://www.nyhpa.org/uploads/news_mental%20health%20parity%20statement.pdf regarding this situation, wherein health insurers and health plans are supposed to have rates and contract provisions in place by Jan. 1. For more information on Timothy's Law, you can reference Circular Letter No. 3 (2007). The bill was signed Dec. 22, 2006.
Health insurance rates. A.9308-a extends provisions of the Insurance Law that limit the premium differential for sole proprietors who purchase group health insurance through Chambers of Commerce and other associations and reduces the differential. The original law allowed the premium rate for these individuals to be no greater than 120 percent of the rate established for the same coverage issued totraditional groups. This bill reduces the cap to 115 percent; the provision is now set to expire on Dec. 31, 2008. The bill was sponsored by Assemblyman Joseph Morelle and Sen. James Seward. It was signed July 26, 2006 (Chapter 201).
Fraud. S.8450, by Sen. Dean Skelos, establishes an Office of Medicaid Inspection General and requires annual reports by the superintendent of insurance on health insurance fraud. Assemblyman Richard Gottfried sponsored the measure in the Assembly. The bill was signed July 26, 2006, with various effective dates.
Medicaid. Receiving a swift veto from Gov. Pataki was a bill, A.11808, that would have required the Department of Health to submit changes in the state’s Medicaid program to the Legislature, which could hold public hearings on the proposed changes.
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