Insurance & Commerce - Senate

Motion to adopt the amendment. Second all in favor say aye at. Posing sign sent to your movement is adopted please feel free to present your bill the. SB three twenty four all right members this would allow a a nonprofit agricultural membership organization otherwise known as farm bureau to implement their own health insurance plan amongst their members. Any questions let me. Centreboard. Thank you Mr chair is this going to shift dollars from public pay plans. From public pay plans like Medicaid Medicaid expansion plans is going to shift dollars away from those I would think not minutes of I've I'm not sure how to answer I feel like there's a seller joke in here somewhere but now. Senate. But not about a question for you Senator Mendez this affect all ages with farm bureau or the dish on your people or what so. Was it at all members would be eligible to participate the understanding all members okay. And I think they would probably like to present with me today but I'm. Was walking down here when you session presents a sit down at the table so now's a good time for us to ask you last question evidently yeah Senate Johnson complicated actually with. Senate is right Sir I thought I read this and then I certainly I was confused but I want to get on confused again what this bill does it allows. This nonprofit agriculture membership organization to contract with a reinsurance organization Hey if I I would call it a. No it's not this the harder for commission is shaking his head. So it's essentially in someone else can check their head to make sure because again I didn't anticipate presenting today but it's a self insured plan it's just you're allowing a set group of people to get together and and buy health insurance as a poll correct. All right then I'll pass we're going to pass over this center I'm I'm not sure I'm not I'm just here's the thing I'm all for it in saying that we have this plan and then we contract with a reinsurance company to. Basically lay off our losses and manage and I'm cool with that but I want to make sure that was what it laws so if I'm missing something I want to bring it back there and if you and I when I was walking down here I was calling chaired so herb farm bureau so we'll have that with antibiotics thank you thank you Mr. Thank you senator land when trying to catch by surprise you would just. What a list that was here. Okay the. Senator Hammer is not here for S. B. one seventy eight. About H. B. thirteen sixty. McGee. Please enter several record. Mickey status six house bill thirteen sixteen I brought the world's best logician along with me again please a committee all of amenities and sell your please present your bill Sir. Go ahead and an additional. Richmond very state representative. So this is how we came to you previously with the you're a certain members of the committee requested an amendment to clarify. what dwellings this bill would Encapsulation and we adopted them for we have a. But that amendment in writing and Committee please we'd appreciate if they did not. Now that that a majority engrossed correct that is correct okay so any questions. Six centerman needs a refresher centerman this bill simply takes the a restriction that residential intrusions only be allowed to wire single family and duplex is and takes into three and four plexus same the same electoral process and requirements just eliminate that restriction okay thank you if anyone here to speak for against it. Hi motion do pass a second all in favor sign sign hi ho saying sign center your bill is passed thank you very much thank you committee H. B. thirteen sixty. H. B. thirteen thirteen is anyone here for that. All. SP three forty eight. Yes. Your. Go ahead Senator Johnson. Senator Johnson you're free to present SP three forty eight thank you Mr chairman is B. three three forty eight clarifies that the denial of a claim can't be for lack of prior authorization specific circumstances and the real gets in on page two and it says. That you can't die for lack of prior authorization if the Department authorize the item or service and agreed to respond to the inquiry regarding claims within sixty days after receipt of the written documentation by the Medicaid recipients. He's just a cleanup language thing would related to a prior authorization. I will attempt to answer questions for our. Grants and we. Senator Johnson was there fiscal impact just out of curiosity did why did not we did not receive one from the Department I would like to think that in the whole scheme of things might even have a positive impact because it would cut down some of the additional paperwork requirements. Senator. So just what I'm understanding is they cannot deny a claim because of a lack of a prior authorization is an author okay. Which I think might even be an efficiency that could that have a cost saving somewhere but I'm not I don't do not have any kind of a of an analysis of well I would submit to you that privatization eliminating it would be in efficiency for all parties involved but I appreciate the bill thank you thank you. Any other questions for centre Johnson. Seeing no one here signed up to speak for or against the bill Senator you're pretty close. Thank you Mr chairman I closed and I move do pass. I have a motion to passenger Johnson second by Senator Boyd All the favor same sign. All those oppose ayes have it center Johnson SP three forty eight has passed. Senator Rapert. Three one three three two three one fifty one okay SP three fifty one. And. Fifty two. Are you gonna skip over three fifty eight. After this one okay thank you. Can we do have an amendment for three fifty one. Thank. Senator Rapert. You're free to present your bill The Amendment thank you thank you Mr chair the the amendment just adds a co sponsor in the house senator us's language early on this statute the the original language that uses ninety statues give a cause of action the amendment will will exclude the language of the bill that I'm trying to run the day. Thank. Thank you the will of committee. Hi motion do pass class senator void center Penzo second all those in favor say aye. Posing sign will present the bill as amended as minute thank you Mister chair. Committee this this bill. As as nearly as I can figure out how to write is is a constituent let issue to my left and Health Hendren himself per second and is jim Brown is a constituent of mine that owns owns property within our area and yes we to lunch one day to address the the the battle he had with trying to get his insurance company to come to terms on their contract agreements so I I sat down to lunch we probably visited for a couple hours and at the end of it I said I I need some some definitive language from your attorney is use of turning that he paid for and so I had is attorney who is out of the state of Texas whose license to practice law in Texas Missouri Oklahoma and Arkansas to send me a letter. That. Basically identifies four different issues. And the issues at this bill addresses is issued his issue to there's no private cause of action for violations of Arkansas insurance rule regulation forty three. As well as common law bad faith has been the thing by the courts and is not a deterrent to abuse of action by insurers. So what we did is we draft the I drafted of a bill with his assistance to is he a practice of law enforced eight and so we drafted a bill to to kind of I Senator we having these problems in Missouri Oklahoma Texas and he said not to the extent that we have in Arkansas the laws in the courts that are just they don't give the insured the ability to defend themselves and so well I worked on some language with this with the Missouri and Texas in mind. I such shop around look area and is like throwing for one day in the ocean all everybody jumped on from insured the insurer to attorneys they said this is been a problem in Arkansas for long as I can remember and so we work together we drafted the language of what you see in front of you and Mister chairman okay with you I'd like to to let Mister brown kind of give his short testimony of courage and be short without a long day short testimony and then we'll go to the attorney to help understanding will bill Mr roundly please every sample record. I'm jim Brown this is the. Hello I'm jim Brown own commercial buildings in northwest Arkansas. the hard part for this is going to be condensing into our conversation into a few minutes but I had Health hit five buildings of. Addressing. This. in may of twenty twenty. And we filed a claim of the insurance company responded immediately they hired an adjuster sent people out properly they wrote an estimate for about twenty percent of what it would cost to do the work. We. The of roofing company that was going to do the work of finally declined because they couldn't do it for what the insurance company was wanting to pay they're wanting us to put a coating over a roof that was saturated which is flies in the face of any kind of building code or whatever so we exercise our rights in the appraisal process. if there is a one. Low one rule that gives the insured. Any kind of a level playing field it is the appraisal process. I have to insurance companies in one of the policies it was mandatory and binding. In the other policy it was optional and non binding so the net result is. That we after a year and a half for able to settle a claim with the one that had the appraisal process the other one we were forced into litigation and where we remain today. the of the problems that you you if the church if if the policy has appraisal in it then you were. The thing to address for the consumer standpoint then our deadlines because. After the rule forty three. The deal is satisfied and they give you a estimate and a check then there is the I mean they can do anything they want they can they can go silent daycare they can give you. Reason after reason what we have to ask we have to kick it upstairs we have to have another be it we have to have a and the a forensic engineer we have to do this we have to do that and each one of those things takes another month or two months or three much and so we finally reached a point to where we could get. To the appraisal table and that took another six months so I know it sounds is I'm only interested in time but in that year and have a had a building that half of which was sitting UP I couldn't read it because it was under a defective roof so sixteen thousand feet in the original Walmart building I might add store one of was sitting empty and it was just my hand retired there's nothing I could do about it in the second case the insurance company flatly declined the appraisal process. And got an engineer of an. Some scrutiny should be given to hired gun engineering firms of. But that said of after a fifteen percent of the cost to do it estimate and. what I believe to be a engineer that was. in their favor Basically I was told well should be. And so here I am and I'm maybe if I could answer questions if somebody has something but but for now I think she had a question for you yes. I apologize let me try to catch it to understand what you're talking about okay so when you say appraisal you mean an estimate for damages to to to to fix a roof no Sir of appraisal. Is a provision in the policy that is very much like arbitration. but in the policy you're they're required to participate. And they're required. For it to be binding so it's too appraisers debating the merits the scope and the cost of that the job of the roof of the yes Sir by the end of the claim of the root and then if they can't agree then a I'm tired is brought in and if two of the three agreed that it becomes by. If and only if your policy provides the appraisal process as part of it. You gonna let that. That's I think that's the extent of the answering that question do you have another question no okay the. So again the appraisal process is critical there there's another aspect to this and that is Arkansas unlike all the states is surrounded do not allow public adjusters no okay I'm sorry yeah that doesn't address the bill this bill doesn't address public address adjuster issue okay I will Over his back on the talking points of the bill so this bill ultimately gives the average the the normal Arkansas consumer regular people who just want to be treated fairly by the insurance company that they pay premiums to to protect their their assets the property. It gives them the ability for them to go to the table in good faith and fair dealing. Allows recovery when insurance companies fail to deal with their policy holders in good faith. The kinds of actions that are unfair treatment that are insurance companies are allowed to do in the state is create delay and confusion in the claims process act negligence any negligently with poor judgment and processing claims create nightmare red tape causing confusion in the claims process. Not establishing proper internal procedures for handing claims misrepresenting facts when customers that ask about coverage issues wrongfully denied coverage create new processes that we have we against regular people who are policies when they make the claims and violate insurance department regulations that control claim handling right now I know none of those issues Hammer you're covered under Arkansas law toward participate if you if you if you have a way on your left hand side you've got breach of contract and way on the on the right hand side you've got. Bad faith we are law let's let's see insurance company however right beside bad faith they will let us go to it with the let it linger right there an example that would be this is a good example from a can from a Arkansas president that says let's say you have an insurance policy that covers your house burns down. Thankfully no one is injured but now you're homeless their insurance company knows this. They will delay the process your claim and make a lowball offer when it that it that is well short of what you're entitled to hoping you will take it. In order to get a roof over your head right now the sort of any sort of action cannot be recovered for. But is not good faith and fair dealing by their insurance company with you the policy holder this bill would allow or allow for you to recover for the actions of your insurance company trying to the state simply starve you out. So. The next part of testimony will be a local turning out of four city yes Sir he's he's handle these he's practices law so I'd like for him to win. Ma'am Mr yes please order something record my name is Austin easily I'm returning for sitting Senator Murdoch's district I was a deputy prosecutor for seven years until recently also engage in civil practice for number years overseas Arkansas we have a little small three man firm with my father my brother in law engaging in primarily primarily civil practice and I currently serving the Arkansas Supreme Court committee on civil practice that involves the Supreme Court rules changes I I know you folks have been here for a long time today and some are trying to be as brief as possible in our world clearly defined rules are very important particularly in an industry that's as large as the insurance industry Insurance should not be an adversarial process it shouldn't use your insurance company should not be your adversary they should be your friend that you're going to in times of in times of need and insurance companies have as you folks have have three sides their business they have the marketing side their underwriting side in their claim side it's perfectly fine for an insurance company to make money on in their marketing through their marketing and through their underwriting it's not okay for insurance company could treat the claims process as a way to make money and what this bill does is sets clear and definitive rules that help level the playing field for the consumers in your constituents In preparing for my remarks today I read a term called bargaining in the shadow of the law and I think that that provides a pretty good perspective about what we're dealing with here if this bill were to cut board to become law the insurance company and the consumers what have a set We're a set of rules of policies and procedures that they get that everybody has to operate under and when the insurance company in the insured no that it allows them to have that the back of their mind and it's more likely that claim settle more quickly what does that mean. That means frankly less cases for me less cases for lawyers if you have more certainty in the law trials are tried in on certain areas we have more certainty in the law trial lawyers are not going to be a part of the process we may be saying why am I here talk about this bill because it's the right thing to do this this is a good bill for consumers in good bill I've seen too many clients and folks and friends be of quite frankly abused by the insurance process I have some examples you like here. Yes yes yes yes Sir As to the this bill just to give you an idea will Mr brown testified a moment ago he talked about how one of his commercial buildings that had to have a loss it was engaged in litigation and the process took a long time and in the cloud and the claims process took a long time well it's a commercial building right now what he's got Is the ability to collect his is policy premiums will if the as policy benefits if. That process is strong along Mr brown is losing lost profits which recall consequential damages and this bill allows him to recover that or he would not have that ability otherwise That's the the I'm trying to keep a brief summary that guy's been here today for a long time and myself questions of if penalizing. We have any questions Senator Johnson. Thank you Mr chairman of Mr usually hi. Have a concordance that sent a situation where they're dealing with the claim and. Page the interest company all other adjusters Well I won't say all but significant number of are now out of state. And. a lawyer friend of mine said that that seems to be a new trend where most of in the past you know usually you would be dealing with someone that was in Arkansas but now you're probably gonna be dealing with someone's out of state and this particular case the insured was had sent the information to the company on the claim and then they changed the gestures and the new adjuster more less said what we need this information and the interest of all parties Senate what we needed again and I'm I see this in your when you when you see it said in the bill it talks about hinder delay performance I'm. One I have that's what that would mean to may but but more importantly for five years ago when interest rates were quite low the propensity of this to happen because of the not as much of the time value of money now that time value money is a lot higher are we looking at perhaps this getting worse rather than better if we didn't have some sanctions such as this bill provides yeah I would believe so yes Sir I mean it's pretty basic economics I think what's which you've already St I mean it will what you are recognized at hi you have to ask the insurance executives as to rule you know what they're decisions may be in that regard I certainly think that'll make sense for insurance company if there's not a any repercussions for delay to continue delay in a lot of money let it gain interest and and work for them. Okay so answer my quick question is yes yes all right thank you very much thank you Mr thank you senator. Any other questions Senator Murdock. If it's not too involved of a council can you take me through a simple example of what because what I'm used to is policies have been a defined amount for a particular property or if there is a loss you you know it's pretty defined in in in in that usually in that front sheet of of of of the policies I'm involved with what you're talking about these once there's a claim. And the dealings of how the insurance companies dealing with the claim that the policy holder and. So it so take me through what what you mean exactly. If I understand your question Sir Murdock what specifics an example or maybe specific scenarios where this law would come into effect sure I'll give you an example of a situation that occurred injured in your district hotel burned the The shortly before the hotel burned there was an important document that the insurance company wanted the insured signed that document submitted to the insurance company the insurance company says it went to a spam folder a couple weeks later hotel burned insurance company says we never received that happened two thousand sixteen we're still fighting on that case today since that time the insured the hotel owner has neither a hotel to make money. Your benefits to rebuild the hotel to make money he's been dependent on his wife's income and supplemental income and scratching and scrounging to try to make ends meet that's to happen in your district I'll be happy to talk to you about it more specifically after the hearing today it within this bill those kinds of arguments of will be a win my spam folder so I didn't receive it the. Don't fly those those kinds of things don't don't flock and that case quite frankly would be it would have been more likely settled way before I got involved when you talk about the insurance company looking at the opportunity or that the probability they will be on the hook for consequential damages if they didn't investigate. Fairly and settle that case fairly and deal with the insured fairly from the job so that kind of a scenario is ended up picture perfect example of the kind of scenario that would help your constituent in this case and the insured across state of Arkansas. Okay on on the case you're talking about right right there they're not of a loss of income they could purchase to go along with their the regular insurance a rider there is. If there are certain policies for that is I'm sure that's offered The problem is there should not have been a loss of income if the insurance company had had acted appropriately in that case he should have had a purchase of insurance for loss of income because the claim should debate this will law contemplates not having to purchase in loss of income insurance under that scenario so yes Sir there is there will be that option but Marty would be that would not have been appropriate in this case it should be been an issue in this case he should have purchases he should have been paid for the insurance the purchased I thank you questions Senator yes thank you centerman. I mean Senate break this down okay so you're paying your insurance policy right something happens your house a primarily talking about homeowners insurance here are you talking about all kinds of different levels of insurance I think this bill applies. Commercial building property in auto primary property and auto primarily okay so we're talking about property auto insurance primarily you the file a claim you have an adjuster come in and then it's a denied claim is denied of payment for an amount that's. I guess really. An insult versus a legitimate payment that's that's the part of what's contemplated here yes senator okay what else anything I mean just as real simply have it is not the problem you're trying to fix. It's more the. Unfair and an acting in bad faith not just evaluating a claim differently that's that's reasonable I mean surely an insurance company an insurer can evaluate a claim different that's that's that's how we're talking about I think primarily we're talking about here is The kind of acting in bad faith details the specific about acting in bad faith means that I would be a subjective term that. I mean I can act in bad faith for good faith I'm not sure I follow you on that well okay I can maybe I can give you another example another one of us have constituents over in our in our area is actually an insurance agent had a claim and the isn't homeowners claim on it on his house he had a a leak all of sudden and he filed a claim with the insurance company insurance committee said well great sent some pictures and some some pictures and I just said was initially claimed not and no adjuster came out there was no investigation there's a looking into it it was just how we're going to we see some pictures were not that claim and that kind of the lack of an investigation the moving the goal posts maybe tell insured before the loss this is what is needed for you to have this insurance to comply with this insurance and after a claim is made yeah but you didn't meets this requirement where that where was that requirement will not apply for insurance or or wasn't there those kinds of Act bad faith actions so okay so let me just follow up with the questions so I'm assuming that this is a market place that's regulated by the insurance department this might be a question for the insurance department but you kinda seem to go from zero to one hundred in bringing this type of an action perhaps have you considered other steps are I would just need to know what is in the regulatory space as it involves the same areas that you're talking about that already exists within state statute that aren't good enough and did you look at trying to and I would don't know if those exist or not I'm assuming that they do and did you look at trying to beef those up verses bringing this type of an approach creating this type of a cause of action will quite frankly center I'm I have been involved in those any previous apps. And and so I I couldn't tell you I've I've I've seen yes in a yeah so just maybe those are questions of the insurance department may want to come to the table and answer at some point thank you yes fixation or you want to will call Mr Ray moved up in a minute six Senate center I could talked as to my practice it actually in if you would like to or we can move on I mean I I have a lot of experience these kinds of things and I can tell you that the law as it currently stands is uncertain it's unclear and it does not provided the insured with a level playing field the end and. Quite frankly and in the I don't view this law as a large step because it simply is asking and requiring the insurance company to deal fairly and in good faith so I don't see it is a large step. Any other questions the committee. Saying nine. Mr Randall would you like to come up interview questions. Thank you both ran general counsel Arkansas insurance department I think the primary function of this bill if you look at the regulatory space that we regulate all insurance companies is through our trade practices act which is a twenty three sixty six two oh one what this bill does it allows attorneys to sue insurance companies for violations of an act that we regulate that the insurance department regulates the rules into statutes I don't I don't know if the gentleman over here filed a complaint the insurance department but we have more than adequate jurisdiction under our trade practices act in Arkansas ensure support rule forty three to review investigate and penalize insurance companies for some of the act actions that were described by this gentleman and by this other gentleman that we've got under our current jurisdiction what this bill does it allows private individuals to sue insurance companies under causes of action that we would normally regulate so that's extensively what it does. Yes center Murdock. So moved Arkansas are you saying that the the department feels like this one that you already have this I yes if it's so if if the gentleman will come to you. What these complaints then you would investigation you would oversaw and possibly do something to mitigate the issue is that what you're absolutely fine absolutely. Centroid. Thank you Mr so help me understand the basics. Do you have to have a law in order to sue him and you know is it is well let me explain that under the trade practices act as it's now written not not not being amended under this bill it says no person shall bring a cause of action for violations of the trade practices act as a separate because of private action it was intended by this legislature to have the insurance department be the sole regulator over that space and so what this bill is doing its opening the door to allow plaintiffs lawyers and attorneys to sue insurance companies for violations of an act that we've regulated for the last forty five years. Senator John. Counter not to pick a bone with you but it allows insured to six. Thank the use of lawyers not necessarily can be very relevant or not but the point is I don't think that we're looking at is this what's the first this is what's covered in rule forty three is that now if you look at twenty three sixty six two oh two which is the first part of the trade practices act it says any violation of this subchapter shall not be subject to a private cause of action the intention was that the insurance apart would be the sole regulator of it and not private litigation what this bill is doing is changing that it's allowing people to sue for violations of the trade practices act that were historically under the Director Chargers text of the insurance department I'm not saying it's good or bad I'm just telling you what it's doing so will based on on the it the situation that the two previous witnesses and presented at once submit that perhaps you could say it's bad that's no reflection on you or the Commissioner rifle department but that it it seems to me like we're not looking at a black and white thing we're looking at some shades of grey and that the center yeah Bryant's bill is. To use my term maybe putting some teeth in this that will protect consumers special in situation as I mentioned that with interest rates creeping up there's more more incentive for an insurance company to to delay or drag their feet or whatever even though I might eventually pay the claim and the I don't think that you guys want to have to. Go over every single one with a stopwatch and see how long these particular claims take but I've I've I appreciate what you said in describing the law you're not trying to shaded in anyway but it appears that you get comes across in somewhere that we don't need this and I think if that were the case these two witnesses that Senator Bryant brought would not have to show up here they're they're situations would not be relevant to this but I'm I'm. I doubt while ago I gave an example of one I was aware of and to me it's an example of well that was that really you know delaying resent to. Hindering or delaying you know one case someone say yes it absolutely was and there's a time value that money that someone that doesn't have it is hurting someone that got it was benefiting but the in the case if if it were a zero time in court should never take for the time value of money money you have now is a whole lot more bail money you get later but I'm just I'm not seeing this is a a problem if and once again to this that by having his cause of action you're not you're not handing somebody a check you this is something that's gonna be the side at least by judging potentially by jury so I'm just I'd I just want to understand why there might be a any reason why the department might to be either in opposition or think it's on the we're not in opposition I'm just saying that we have jurisdiction already to handle these complaints that were raised by the comments made by the various commentators okay well you did hear the witnesses tell the stories were you familiar with either of those I'm actuation the first time I've heard in the city Hey so okay all right thank you Sir thank you Mr thank you centerman. No I mean I think Mr Mr rants comments were in direct response to my questions which was educate me please about the insurance department and their role in this space that currently exist and what the current state statutes are and and that's what I requested and that's what the answers were given were based on my questions and to those comments so yes there is and so my question I guess goes them back to are there are there changes to that existing structure that we have of regulation through the insurance department that needs to be changed or adjusted or amended to respond to the concerns that were brought up here today by this bill I think you could probably consider amending Arkansas and your support rule forty three to address some of the gentleman's concerns about the appraisal process being too long right being delaying up that would be one solution and payment yes I mean we can be for approval forty three to handle more of those issues would be my answers your question thank you. It is my. So I think just a couple questions just to be objective answer speak great so I'm asking policy position but on the. Does this impact just casualty property casual uses impact healthcare policies about that up because I don't think that was the goal that's a good question after one I asked the senator and the answer is only pasta auto and property and casualty not life now okay. and then my my question is on so there is I think in what was presented as. Two different types of policy one you know specified appraisal I don't really understand the other but it didn't do so much and so everyone worked great and one didn't with those two policies carry different cost because they are different policies they could they could again that this is the first time I've heard of this issue as I explained Senator Irvin it should be an issue we would be willing to explore and regulation improvements over the appraisal process I'm not happy about hearing stories gentleman relayed and as a regulator so it does seem to be improved I I would we do not have anything rule forty is the free that addresses the appraisal process okay so. But there I mean it but my guess where I'm going with that is is if those are two different policies carrying different. yeah rates and and whatever else committee it's kind of like a liability versus a you know full coverage you made and you know you make it and that's what I don't know school masking is essentially did you make an election that made it more complicated for you then otherwise would be because went fine in one scenario did go fine and the other what I don't want to do is not like that some sponsors intent is to raise rates right for everyone because we mandated it right you're the. The policy written in a particular way that prior to you had a choice about I could then I would have to answer actuary in compliance person to see if there's differences in cost between the two different appraisal processes for to it give you an answer this is the first time I've heard about this act thank. Any other questions Senator board. mystery just again take me back to the basics so if if I had an issue and I made a complaint. Do you have a commission with the hearing process do you have investigators just I don't need a long thing but just we do you file a complaint with the insurance department through our website complaint system is assigned to an investigator the investigator since the complaint to the insurance company for a response is reviewed by our consumer services department if we feel like the answers are not adequate it is sent to legal division for enforcement so it is a there is a set out regulatory process Senator void that we handle in terms of our complaints. In order to get some along the same lines center board as we look at the consumer's protection in this because obviously the insurance companies to be more in this and the consumers many times of those that are suffering with the example you gave about the hotel in my district that burned in there for the that home that a business owner was out of business and in our area hotels are not at a premium so we we do need those facilities so talk a little bit to me both about the response time the level of care giving to making sure that those claims are taking care of what I hear you saying this rule troubling when I say troubling just as I'm trying to hear this case you hear this bill is that you're saying you don't have this to happen you haven't heard of these things you is is. Our on the appraisal on talk about the appraisal issue not this other hotel example on the hotel example if you look at rule forty three of the Arkansas insurance department we have very specific time lines of when claims can be denied when spring claims can be paid it is a thirty six page rule that governs all the claims handling standards I believe a lot of that would apply to the hotel situation but as to the gentleman's comments sitting over here about the appraisal process we really don't have very much in a rule about that particular things what I'm saying. Do you think that you need more to you than the law to to to protect consumers business owners from these type situations that can be located those the law currently give the insurance company a chance to. what would you call it when you extend something when it goes on and on and on actually Tory yes I don't know why would you choose but okay I. I think we have adequate authority in both of our rules and our statute to take whatever consumer protection enforcement actions that we need to take I'm not against this bill at all don't get me wrong I'm neutral on it I'm just answering questions by committee members so. Boyd. maybe said this and I. Didn't hear it but you have an example of like the number of complaints and how many actions may will how can we see the numerically that the department is functioning. We produce statistics each week I believe so I can get you that information on consumer services in legal division enforcement practices and so I don't know what the current numbers or this week or last week shall be glad to supply the to Senate report if you would like to now sure. Any other questions. Wait wait Senator Wright thank you thank you Mr I I want to just go Mr Mr. Well maybe maybe in address and I just wanna make it up something I learned in in. In getting to where we are language in the bill is is that. Rule forty three while it is encompassing it it stopped short of actually being able to do anything until you get the malicious intent. And that's now that is not my interpretation rule forty three so how we do not require any men's radio or malicious intent as a prerequisite for a violation of rule forty three we do not I've been here for twenty seven years and not so okay so I. In the absence of this when they go because you can see sue them in church still have the right to sue. When I feel like that that we're not getting cut you know protections for the state but at the court of law says unless you show me malicious intent which means you they've got in writing that the insurance company is a directly trying to affect the insured. Most of these cases are unsustainable court the well we don't have the requirement of malicious intent we don't have to find it for violation of rule forty three are trade practices act that may be required in terms of all private lawsuit brought against an insurance company for bad faith or something like that but that's not anything that we have to satisfy to proceed with our prosecution against the insurance company so thank you. Any other questions. We have one more signed up to speak The against the bill Mr Kevin crass with the from the law firm. Please enter civil records are. Thank you Mr chairman of my name is Kevin caress a lawyer at the firm call Friday Eldredge and Clark here in Little Rock I've been practice in thirty nine years primarily on the defense side but I've actually brought claims against the insurance companies I'm here today on behalf of the shelter insurance and also than the national association of mutual insurance companies and the American property and casualty insurance association you know I practice in this area for a long time and I just have to respectfully disagree with Mr Easley's view that the current law doesn't adequately allow an insured like Mr brown who's been perhaps mistreated by his insurance company to to bring a claim and recover there the law actually says that that that they can bring to a contract claim violated the policy the law allows a twelve percent penalty and attorney's fees and I can tell you that is a Hammer that's held over the insurance companies head to make sure they properly handle these claims now or they're bad facts like Mr brown's and and need hope motel operator I'm sure there are we could bring in probably hundreds of thousands of claims that have been handled without any incident then the law also allows in this didn't exist when I started practicing law in eighty four Supreme Court recognized in the case called Browning arms FOR it in the verses Browning all arms that an insurance company can be liable for the bad faith in the handling of the claim so when they say you got to have this to have a good faith and fair dealing the law has had for nearly thirty five years in obligation at the insurance company act in good faith and if they don't the insured can add that on to the contract claim in in addition to that. recover punitive damages and they often do so let me say the first point I'd make is this law is not needed and it in honest I'm not and sympathetic to Mr brown or the motel operator but you're talking about a broad brush here that would radically change the the environment of disputes between insurers and their insurance company Mr easily is quite correct that the law would be nice if we had clear specific rules that there were no disputes about what they mean. And that's a really to you all in your drafting of the law is not an easy challenge we all argue about what a word means but I suggest when he says this bill makes it clear you don't have to go much further than Page one line twenty nine when he says it's a violation of good faith if the insurance company refrain from conduct. OR a ride it is expected from a contractual relationships that we consider a long time and not agree on what that means whose expectation whose expectation based on what ultimately this relationship is governed by a policy and I I was told by an insured who had a fire in his business that none of us know our insurance agents as well as we should we don't spend enough time with their insurance agents making sure we know what our coverage covers and what we get and it's only after that fire that you say wonder if we have any loss of business income of coverage and it turns out our agent didn't sell it to us but any rate this this statute with all due respect to Mr easily if he drafted it creates more questions than I have time to address with you and I and I don't know of anybody else to back that up but. You for example he the way this thing is written under our law you can only recover punitive damages if it goes beyond negligence so simple car wreck case somebody runs a stop sign no no sooner did damages but if that person is intoxicated and runs a stop sign then there's a level of intent. A recklessness that entitles you to punitive damages under this bill Page two lines one through about nine or ten he says you can recover punitive damages if the insurance company is merely negligent that's a radical change in the law. And then one other point and I I mean I could go to each one of these lines but like Page two line twenty seven. It says the if there's been a or I'm sorry line seventeen if the insurance company doesn't conform to apple couple industry standards customs or practices when settling the claim. We could spend years litigating what that means so my point is I don't believe this law is necessary in it because you do have these bad fact cases and I've often heard the old adage bad facts lead bad law that's not really a good thing it should be a broader look man and one or two sets a bad facts and in this case we believe the common law and statutory law protects the insured's the insurance department is there to to to handle complaints and again alternately have the ability to put the insurance company out of business here and then in the end and and you know this is I don't want to make it sound about money because this this is more than money but the example he gave this under this statute if that motel operator didn't by loss of business persecuted business interruption insurance. Only bought enough to cover the value of the property under this statute they would be able to concur to recover what he calls consequential damages in other words loss of income that's a completely different policy that requires a completely different risk analysis and ultimately requires a different premium so in our judgment this is not the solution to Mr brown's problem or the motels problem is creating more problems than we have time to talk about ultimately it has the potential to not only increase premiums for all the other insurance but to create certain risks the just not even insurable because people insurance companies cannot subject themselves to this new round of claims for things they didn't agree to under the contract so that's my must must view of this with all due respect to the proponents in those that think there's a need for I submit there's not a need and if there is a need this is not the solution I'll be happy to answer any questions. Okay any questions committee Senator Dismang. So so so that was my question I mean is it a matter that the policy didn't cover particular items or. I don't know who I'm asking the question to exactly but it was a difference in a how they utilize the appraisal between the two policies that and they've been kind of dollars of the policies were somewhat different. It would mean I guess the question is that intentional is it because that you know garners you a lower rate you mean it. I guess some of the facts to make sure I understand if that makes sense as well that you I mean is that what you're something would be yes yes your honor you can buy insurance it just covers say the the replacement value of the property. And and so that appraisal as I understood it he was saying what's the roof fourth and you know I've had roof cases any argue about is it a replacement of the roof has that roof depreciated there's you know there's some case law on that too but to your question if I buy the property damage or property insurance it says I want to replace my building in the event of a fire. Then he saying tack on additional benefits such as consequential damages for loss of income that's a deer in other words he's re right he's adding elements to a policy through this claim process. That. But then I think I remember me the I guess the argument was for entitled to those because the insurance company drug their feet drag their feet or whatever happened. In settling. The claim based on the appraisal I guess that's where I'm confused well that's when he would be entitled to bring a claim under bad faith there's a common law claim doesn't have to be created by this statute every contract in this state has an implied covenant of good faith and fair dealing he's not creating anything new here he could bring the claim under the existing law and say these are the damages I sustained in addition to my contractual benefits of the policy there's a court you know like a car wreck in addition to the violation the contract there was bad faith and it caused additional damages okay yes Sir. You. Senate Murdoch. Thank. Any other questions Senator Johnson. Thank you Mr chairman Mr crass good to see thank you senator. You mentioned twelve percent penalty an attorney's fees is this a sanction when good faith is alleged or if there's in another department I'm sorry senator Pete is this statute as I recall reach that if there was an update the Nile of coverage. That was not based in fact or law then the court can award the twelve percent penalty plus attorney's fees I think one of the bills Senator has in it in the agenda would actually be increased at twelve percent to twenty percent but that is correct it is a sanction the court can impose well I'm I look at this and. It's like when interest rates are two percent and three percent and I might be pretty strong sanction but when we go back to early early eighties interest rates that's really not that much hardly even makes you whole based on that time thing And we we yeah I see this bill as a as an extra. I'm calling sanction is not really but it is a it's a it's a hammer that someone that's been wronged can use if they indeed have been and that this good faith thing and I'm trying to get definitions of but but I that. It doesn't have to be malicious to be good about the allow of good faith it could be just a will you know and I can almost see as a pattern and I mentioned that earlier in the example that I use of the the adjuster that okay we've assigned due to a new adjuster now you're if you know it's good go back to the ground zero and start again was sending us information and and almost the situation will gosh we don't have all that paperwork will it if it's sitting right in front of the eyeballs of the adjuster then that's bad faith how you would prove that I have no idea but in this day of everything being electronic and probably everything being scanned and if if if I have a file on my case and the gestures got it you know it's probably transferred electronically to this the new adjuster and all that I'm just. I feel like it's almost a cat and mouse game where we in the General Assembly are trying to go back and and address a problem that's a reason and and Senator Bryant brought it to our attention because of it and I I fear and you know I'm I guess I'm just getting old and cynical but that. We're. With interest rates because we just don't see more of this and I'm I'm not to have no every insurance company every gesture not not think like that but some of them probably are and it's all due to the fact that we make more money if we delay thank you but we make more money if we if we drag it out and I and I realize that that might be difficult to prove and so I'm I'm just I'm guess I'm not against putting a couple extra teeth in the statute this case to to augment that and I'm that's why was everyone know about this twelve percent in the encourage that that's you know if without inflation that that could be a sanction but in in some situations it could just be looked at as a cost and business I'll close the question there somewhere that I love your comments I respect your perspective center I I just don't think that I've seen it and I've been in this business long time that there are enough examples like you gave in Mr brown in the motel that would justify this bill this is more than just a little teeth all the this is blowing it up in a way that do you know mysteries the said if this passes it'll. Cut down on the number of cases he gets it'll actually increase the number of cases against the insurance companies because this this thing just opens up all kinds of questions the emphasize the one that says but you know what's expected in the relationship everybody's gonna have a different view that that's what the law has said things could should be in writing so that nobody can argue about what's expected but listen or they're bad facts like Mr brown's absolutely but I think you're selling the insurance department. Forty three short by saying it's at a level that it we need a bill like this I think I don't think either one of the examples that were here today mention anything about going to the insurance department and I can tell you I've had clients who are subject to regulation regulation investigation from his department there's to ease their trust me there's teeth and that's enough in my judgment with with all due respect to the proponents second one thank you Mr Chris thank you Mr. Thank you so. When you say there's teeth could they like suspend the license hold the license tell the insurer they can do business in the state of Arkansas those would be the ultimate teeth but yes Sir at. Can you answer I mean are you're not the insurance commissioner but he knows that actually ever happen in Arkansas have they ever revoke a license or I couldn't say that on my own knowledge. But the insurance companies know that they have that power. Any other questions. Mr Ramage like to answer questions. We have statutory authority to revoke the license to suspend the licence and to find them to make it very difficult for them to operate for sure but we can definitely suspend or fine for sure or revoke. And other questions Senator Johnson. Has it ever happened on your watch. On autos or property casually I'll have to go work I don't recall off the top in any company ever having a suspension or revocation of their license yes yes over the these these types also taught over the specific facts now over the appraisals over to the hotel issues not only know that just in general and again this goes back to the good faith questions right over the good faith thing And right been sanctioned or yeah I mean if if no one's ever been punished and maybe we need the bill have you all been we were maybe even over board thank you maybe we don't we we do revoked for claims practices violations and we have I just can't recall the top off the top of my head the last ones we've done we do quite offense as a parent thank you Sir thank you Mister. Any other questions. And this may be two of two you senator is there any retroactivity to so if this if this bill passes are we subject to. Retro activity on this type of these type of claims is type of. Someone could bring and would be subject to that I don't know about retro if there's something. Pending or in process I mean when this goes into effect there's a potential that they could do that I mean they could sue now but if there's just the areas to gray for the courts to decide it's just and to to Mr brown he did file a claim and there's just there's nothing that the insurance commission is able to do to get. To him or the attorneys any satisfaction has just collect the hotel is just she's perpetually goes on because there is no teeth in our laws to make them come to the table so with with this bill does is if you're acting in good faith insurance companies have no fear because the areas so wide so so the the insurance pay ID did get involved in that case with. Okay and moved you were not able to bring that. I've never heard. This. It in he can speak to it one exactly caused this and he's never heard of Blue. I. I have not what twenty mute movie you get most things that. I filed a claim with the insurance department. Of. Tim Cole was the representative to help me Very cordial very helpful young man but he made it clear that the chronology of things is almost about all he can do and he would send letters to Chubb and prod them along and he said I can request this I can request that I can put pressure on them but I don't really have the authority to do much more than that okay then of he did refer it to your. That skews me for the other Division for action of and of I spoke with her and she said that That I would not be in the loop any longer and if Chubb were fine because of their behavior that the that the finds would go to the state of Arkansas and I would I would never even know about it so to that effect regarding rule forty three specifically. So I apologize regarding rule forty three what I think I know about the chronology is that once they and this is why they hurry up and get someone out there and get an estimate and send you some some small sum of money is because that's what forty three addresses but after that I know of no. chief in in your division that would encourage Chubb to do anything other than what they did And so so that I mean the today to put some some time lines in there that they have to adhere to to put it I mean to where they might get fined by you all if if they didn't hear those would I think be a big help to the consent. So in I just so here's my concern I don't want your bad experience to negatively impact my rates right I'm now and I know that's not what the sponsor with either I mean. You know I and a large number properties commercial residential unfortunately that several claims have less civil years and I've never had a hitch I would never question anything that never question does it it's been a very very smooth process impact my rate soon enough but but I don't but it but it would an insurance company and I don't know much about insurance and you have to insure against the unknown and in some ways I mean if they have to insure against the possibility that there we now open it up to litigation then that's just going to be part of my rate at some point because I'm not gonna be able to excluded out of my policies being an issue. my my my request is is just. Is there some way and I think you and pointed one if there was a way that you could handle this rule forty three then that would be a big step in the right direction is so if there's some way and I also just commend the Senate for bringing issue and you know stand up for its constituent I do appreciate it but if there's someone maybe we can resolve this through some other method because again at a for where you're going I think you got it every ensure I want you to tell me they are so I don't ever have to worry about ensuring with them right but it should be I don't know if that was laying out of what it so all right. I'm not familiar but I'm not the but if we can well I didn't do a very good job speaking the first time no you did it I mean I was a little intimidated frankly but you know I'm sixty nine years old I've been paying premiums commercial buildings for fifty years and forty years and I've had very few experiences good or bad until this situation but and there is there are people that practice in this arena that have a list of cases with these exact same circumstances today I'm speaking to the realtor is in charge a realtor for percentage bank and he said we had a branch the hit by a tornado and they paid be roughly twenty percent on the first go then at which was a million of five and then it was two of five and it was four or five and we would do this long drawn out ordeal to finally get Pitsch in this image but it so I mean this is this is not just a it means significant little thing that happened just to meet my request is if there's any way that we can figure out what a resolution might should look like and I I would I mean I don't want to take up committees time. I would just I would say. I don't know what that be like rule forty three has all these provisions in it and it's still not. It's not there so I don't know like the the hotel if the claim was filed and it's forty five years later and it's still there's there's nothing that gets in the table or as like an actual like this. I mean they if they do it for supposed to do there's no claim. But if they don't do an insurance company doesn't want to cancel the policy because it's one team one to your point one issue out of maybe Hendren good ones. And they don't want to spend a hundred accounts to make everybody flee their insurance fraud or create that you know the havoc this would get them back to the table so we we've got to address this we're doing good faith there is no claim. Both center around I'm of an account coming along with the Senator Dismang on this what I'd like to see you do it but your choices I'd like to see you pull that pull this back get with with those that have concerning this issue over dating they've all publicly said that they would work with you and just try to get this straight words not just good for your of your constituent there was also good for the state of Arkansas and the the cut for the state of Arkansas along with I'd like to see ms Mr Mr rand jump on these two cases that you brought forward CP can't get those things settled I think that's kind of an embarrassment for us as far as an insurance department over there to have that hanging out there and then not not work on that so I'd like to public call them and say we need to look at this and say for more facts to them what's going on. I could do that I'm. I'm a try to be optimistic that reward rule forty three that's been around for forty plus years can get massage to get. To get resolution to these kind of issues well that are not used to get this bill passed. I do districts so with that with that committee at a hearing I will I will say if you you bring it back and they don't work with you I'll make a motion for you. Thank you enough thank you Mr yes. Thank you thank you so if you're bored your project will this bill down the move to three fifty three fifty is it non controversial as well it well it's it's we've already we've already talked about it I'll I'll let you let you the whole. Thank you for coming. You're free to present your bill yes it Senate bill three fifty goes on to through it that senator Johnson was talking about the twelve percent eight called the hammers as the hammer that we need to to drop this makes the hammer a mallet. Is what it does it moves us from from twelve percent recovered at as additions amount of loss to twenty five percent that way it it make sure that insured knows that state means business when it when it decides to not come to the table in good faith. You have any questions the. Yes. Since I ask questions momentarily on the other bills center Brian This is I did not know that Senate bill three fifty specifically address that but I'm. Hi everyone you're you're so wise and and we're so far ahead of me and thinking about I'm so glad that you brought it forward but as I've would you agree. I do agree I I think this was like the easiest step towards getting some sort of activity on the insurer sure and insurance agencies parts to come to the table the next one was the the even more drastic step will end and Senator Rapert aye my friend our chairman is a honest person that wants to get bring people together and make us all get along better and and make people do the right thing but as I leaned over to tell Senator Penzo is it you know we're not negotiators here we're law makers were trying to make a laws and laws are about incentives and disincentives for behavior and if you set the fine for speeding on six thirty at to twenty five dollars you'd get more speeders thank you Senate for twenty five hundred dollars and I'm I'm grateful that you're you're bringing this bill and and I guess we can come back on the other one after we passed a little bit more but I would to its proper time I have a motion on this Mister chairman. Thank you any other questions Senator Rapert. Saying no one signed up to speak for or against the bill. Senator All opposing signed. Seven. Faster bills are. Saturday's. Sent relief please RT for sale for the record you're free to present your bill thank you. Thank you Mr thank you members Senate bill three fifty seven. And I I'd like to invite up my friend miss miss Amanda here with the attorney with the insurance of of insurance and commerce department when in Richardson. Hi my name's Amanda resume turning with the legal division at the Arkansas insurance department. So today Senate bill three fifty seven is that an omnibus general clean up bill taken every few years to look back and make sure that we go through scrub the the policy to make sure that that we get a chance to clean up what's needed to be cleaned up in so there's a multiple sections throughout and I'd have been happy to assist with the insurance commission with the Commissioner of the team to review this and so I'm gonna ask that this man to go through some of the sections and highlight some of the changes being requested through this bill. Thank you very. Section one is an amendment to part of our examination code we do financial exams on our insurance companies and they have thirty days right now to review the examination report and give any revival or comments we'd like to reduce that to twenty days for the most part is done electronically now and I would say the vast majority of our company's request that we waive the additional thirty days so that they can get on with their life and and get the adoption order entered and there's a provision in here that if they have good calls need more than twenty days we will grant that. section two is simply remedying an inconsistency in the way that we reimburse our examiners for their travel expenses. And it really is just a correction. Section three regards the market conduct annual statement which is a relatively new annual statement required by our domestics but we don't have a penalty in the law yet for failure to comply with that as we do with our financial annual statement so this would be a thousand dollars a month for failure to file but not to exceed twelve thousand dollars a year. Which is actually a little more lenient than the annual financial statements. And is consistent with other state. Section four is very simply changing the language of the statute from reference to a security's valuation office to capital markets investment analysis office which is a change that the national association of insurance commissioners made such as updates to our law. Section five. At this is regarding captive insurance companies right now they're on a three year exam schedule while our traditional insurers are on a five year exam schedule so would like to change the captive scheduled to match the other schedules that would make both insured are the insurer and the the Department cycle easier as far as scheduling and is very consistent with what we do with our standard slash traditional insurers. And section six again a really easy one we've had a request for incorporated cells to be able to use the acronym icy in their name and that's also part of captives. But again really a simple thing but our statute says incorporated cell and so this would just say you can also use the acronym I see. section seven. This regards books and records and there's a grandfather clause in that section that allows companies who have their books and records in another state prior to nineteen sixty to continue to keep them in the other state and. At least in my experience we continually for good reason grant companies the option of holding their books and records in another state largely because at this point almost everything we reviews electronic but it also could be a barrier to entry if we. Insist that all books and records be held in Arkansas so we're just removing that grandfather clause and it will just be an option for the company to keep their books and records here. Or request that they can keep them out of state. section eight also again this one is for reciprocal insurers but the amendment is designed to again remove any barrier to entry right now it requires all twenty five persons who want to form a reciprocal insurer to be domiciled in Arkansas this would remove that requirement. Section nine. Health maintenance organizations back in twenty nineteen the General Assembly a lot is to ADD age of most to coverage under the life and health guarantee fund so in case of insolvency they are covered just like a regular health insurance company would be so section nine removes. This prior section that required a plan for insolvency and that was specific to HMOS because they weren't covered under the guarantee fund but now that they are they don't need that section so is repealed and we're just removing that language. Section ten also relates to the fact that. H. O. Moser now more like traditional insurers and puts them on a five year examination. schedule while they're at three years now just put them on par with other health insurers. Section eleven simply removes reference to what I was talking about earlier the plan for insolvency for H. and those was repealed so it removes that reference. Section twelve. At this is against the scheduling issue for motor class we get their financial information at a different time than we actually have to renew their license so this just pulls it all together so that we have the right information to make the right decisions. Section thirteen. This road this fall company exemption from standard valuation law for life and annuities in Arkansas this is a a national standard and we have that this with local industry to make sure there wouldn't be any objection and we've gotten basically sums up on that one as well. And I think that's all we have to. Thank you any questions the committee Senate Johnson. Thank you Mr chairman amendment section seven you're talking about the record keeping of. I think our Lou this earlier a lot of record keeping our electronic yes certain or are we taking that in consideration that I mean it's you can say here Katamon Arkansas or in the home office but you've really got on on a server somewhere is that. Are we. Either requiring that or maybe what I should say we're we're making it simpler for them to. Comply by using that too is that shall we say that it does make it simpler for the companies to comply I. I think honestly that this change doesn't change the way that we are already treating the separation for the most part are examiners are able to do a lot of that electronically but I think this law goes way back to a time when you had to travel cross country to go and look at books and records yes ma'am okay so this is improvement thing yes okay thank you thank you Mr Senate is mine. Questions for synergies. Did you take notes. Got some notes. At being no further questions no recall or against the bill senator dis like closed I would like to close thank you would by reviewing my notes first. My notes say this this is important bill. It's when I stand behind firmly the most important bills that we may see the session. And so I would ask for a good for you you're going down here you may want to stop sending. Will the committee. Motion to pass second by Senator up Boyd all in favor hi again same sign there to be these the bill is passed thank you thank you. Would you say the word of all of us for some more time. The senator Wallace. Please enter your cell Senator Wallace. Mr chairman center Dave Wallace District nineteen. Let me centers I'm sorry with. Amanda Gibbs managing attorney at the Arkansas insurance department I'm also the attorney for the board that regulates that funeral home industry. Senator Wallace you've been running quite a few these funeral bills lately you're starting to scare me when you get my age to try to get in good with the funeral directors. Please present your bill for. Sure this is the start out very simple bill. Inotersen words of wisdom from the Committee is got a lot simpler. There's two associations are two members of funeral directors the association of funeral directors or embalmers and the board and they were both agree. There's no known opposition to this. This bill revises in The due dates for renewals and all this bill does now is we have moved the renewal wait renewal date from annual to bi annual. With that I stand by for your questions. Any. The motion properties we have a second. Second although in favor say aye. Senator Johnson our centers. Senator Wallace your bill is passed thank you Sir. Good to know what. We do. If you've got one more. You get this I can do it. You're free to present your bill senator Wallace. In our lives my steam associate pyxis because I wasn't ready. Thank you. Senate bill ninety seven amends and for different statutes and the section of laws that regulate prepaid funeral benefits contract so these and are contracts that are administered by the insurance department not by the board so I'm gonna go through those I'm had the high points and then I'll be happy to answer questions. And Arkansas Code twenty three forty one eleven as amended and section to when a prepaid organization fails to renew its permit or when the permit is suspended or revoked it is required after the law to surrender its contract files to the Department the proposed language adds a thirty day time frame within which the surrender must occur and it adds monetary penalties if this render does not occur within the thirty daytime frame and the time frame and the penalties are needed in order to enforce the surrender of the files to prevent the prepaid organizations or funeral homes from administering these prepaid contracts without being properly licensed to do so. The next statute that is amended as twenty three forty one nineteen transaction for it removes the requirement for quarterly reports and instead requires that the information just has to be reported annually so it takes the required number of reports from five down to one it also will lessen the burden on those small businesses those funeral homes which will no longer have to submit the quarterly reports also would lessen the financial burden on those funeral homes who are chronically late in filing their quarterly reports so if those quarterly reports are not filed are not required rather than needs are the late fees. Also references and adds references to subsection F. one to those contracts which are funded by an insurance policy or annuity this language is needed but has about seventy five percent of prepaid contracts are funded by an insurance policy or annuity rather than cash. Section six amends twenty three forty one twenty two at clarifies the requirements and when the consumer wants to transfer the contract to another funeral home after the death of the decedent clarifies who has control over the prepaid contract and and ads preferences also to the final dispositions right final disposition Rights act which is codified elsewhere in the code and is used widely by the funeral home industry in order to determine next of kin and who can make decisions regarding arrangements the language and some for that statute as needed for clarification and consistency throughout the prepaid code. Section seven eleven twenty three forty one twenty five and it abolishes the prepaid funeral contracts for covering program board and that board is advisory in nature and it was created in two thousand and one it has only met twice once in two thousand one and once in twenty sixteen the insurance commissioner has discretion to oversee the find and in the rare instances many needs to be released from the fund at the process would be much more streamlined without having to convene for. And I'd be happy to answer questions any questions. Seeing none senator Wallace would you like to summarize everything she just told us I'm sure will Mr last time we do this the only question that really came up was Senator Hickey wanted us to. The clause in there that if the. the funeral home let your policy. Further payments lapse that we would notify them and I believe we put that in there. Okay. Any other questions. Seeing none center just close your bill goes away we have a Robert. From the insurance department. I cannot read Roberts last in writing acres area. sing NO one to speak for against it Senator pretty close yes Sir I'm prepared to close. But will the Committee do pass do pass percent Murdock second by Senator Boyd all in favor say aye opposed same sign Senator Wallace your pastor bill. The Hammer your last one. I was thinking about adjourning since I had a way to a meeting for you all morning then it got the head. They took a lunch break I think we're going to do that. I appreciate you Mr. could I have a. Can I have my guests come to the table Mr. Yes Sir. Okay yes. Sure there's a couple handouts if the chair would allow to be and I'll be very short my comments. Because. Go ahead Senator Hammer thank you Mr I will tell you right now you may not be a good time as the if you look at the clock. I'm going to be I will be very short on my part the. But this bill is one that you seen before it has been amended we work with the Blue Cross blue shield mark wife with the DHS is here to speak on the finances if you have questions on the DHS financial impact have a physician with me from UAMS and have Petty Gibson who's given a handout and Mr if you're okay I'd like to defer two of our physician from few a mess for her to make her comments. Four Senator Dismang had a question first. Yeah and so it we I think we had a good discussion about the bill the main thing that we have concerns about prior you know this meeting was just the financial aspect and I would love to just jump into comments from mark Y. insureds insurers and then I think that levy Eads concerns I don't think anyone really had an issue with what you're driving towards it okay is costs and state if I could let you talk if you'd like to I don't wanna do anything hurt bill just. The position is for you M. S. I will do what the will of committee that would be highly recommended. So if if you want to but missed wide to the counter right to the table. And I think I consecutive forty was coming this The Amendment actually put a cap. To put some caps on it to alleviate some of the concerns are the committee had work with Blue Cross blue shield and Mr chairman for you Neil to Mister white and you all can. Get to the questions for you. Thank you Sir Clark auditorium services so I have our our fiscal impact assessment this is a somewhat lower than what was shown on the website and so I just want to bring that to you are middle aged recommend Regis minute impact right now it's total computable cost thirty seven point five nine million in the state sure that would be ten point five nine million now will be very very clear that is our estimate of projected cost of the program I understand that there are some possibilities for savings as a result of this model we don't dispute that I think our issue is those savings are much more difficult to quantify our project and so we've not to try to put a number on with the savings are we can tell you what we think on the cost side of the question is and so with that said I mean just the one thing I was going to say is. No we would never bills or deal with in the session they're adding costs Medicaid R. one concern is just that as we add these bills that have these increased cost that does complicate our ability to do a comprehensive review of the Medicaid program in its current state which is what our new secretary our state Medicaid director or are undergoing right now. Senate my so it's ten point five nine million dollar cost to the state I think you just answered the question so is that. Factor will have a balanced budget signing to lean up against but I mean is that so this will be for passes out dated makes it through both sides of this we all increase your requests or something that can be absorbed what how do you. Can I see that playing out and also not should say the visit also include you need to cut increased cost for the are only second we separate apart. Our would be separate apart this is looking at the fee for the for service and pass out of the question as far as the budget request I would not I mean number one the the ultimate budget request that's going to be a determination made by the governor DFA's I don't want to presume to speak for them I would not expect this to change that I think I think that budget request for this year's will be determined by other factors going on in the session but certainly this is a cost that will add to that ongoing cost of Medicaid in future years. Okay thank you. Any other questions from committee. Centerman. So I I like this idea love I like the policy here I mean I'm a co sponsor of it but I think my biggest concern and I'm just going to be super clear is that the Medicaid the increase of Medicaid spends an expression with what we're facing right now in our budget and so not sure if there's a way that it can pass or to where there would be language I don't know to mitigate that to where it would absolutely be considered and then if upon review this creates a scenario that this is something that. Upon review of the whole Medicaid program we look at this we decide this is approach that we want to really take because we can look at some historic data that I think that Blue Cross blue shield actually has had provided which is so and they I mean I've had those discussions as well but the attacks with senator Hammer but if there's something that. That can mitigate that initial cost right now I know that we're working kind of similar scenarios we're trying to postpone some of these things for Medicaid but then kind of pitch it to the. Back to date just to see if there was a way it could be incorporated upon the review I'm I'm not sure if I'm making sense but. I think it's a great idea it's a great policy just has a price tag I don't know how you. Create the policy without the price tag. But I wanted to be considered. For the review. Go ahead Senator Dismang and so I think. BlueCross BlueShield whoever may have small added to discuss potential savings probably you senator different than we do and so that probably beneficial bring them up and let the thought how they see the impacting their population. Which sheriff I may I would like to yes Blue Cross issue we work with them on the amendment but I I really think perhaps the physician from you I am asking give some insight that may also give a comfort level if the chair would allow on Senator Dismang if we could include that in your quest to comment if you don't mind yeah yeah and that when we heard some of that I mean okay what I can understand that argument but there's also folks that have financial stake and I think they're going to okay I would love to hear what kind of Blue Cross blue shield's. How this is playing out. If you wanna hear BlueCross BlueShield first or second. First it's okay yes someone from Blue Cross to come forward. He looks prepared. Okay. In return for your. Re referred. Okay okay. Yeah and that's what our managing there already doing it which that means they have experience and they could say whether or not that's generated savings and all that sort of that's what I was kind of hoping to hear and then that lets us have a greater comfort level inning you know this ten million dollars been being neutral so I guess with you with them not being here maybe to talk about how great it's been for Blue Cross blue shield from the M. S. perfect. I'm one of the handouts there is a illustration from Blue Cross blue shield about the savings I think it was given to you last time maybe Dr Gibson can point to that specifically. Petty Gibson. Last time I was here I gave you a handout that had multiple pages on page six it has the aids slide that actually came from Blue Cross blue shield and what it showed was that over time that that what they saw was their total cost of care for patients went down once they got this kind of once a provided this kind of care so that's why most Blue Cross is across the country including Arkansas Blue Cross has been paying for this since twenty twenty and one thing to realize is this isn't going to go all of. Be implemented rapidly it will have to phase up And so Blue Cross we saw that in twenty twenty they only had two hundred and ninety claims in twenty twenty one they had four hundred and thirty two and twenty twenty two is twenty seven ten so it's a type of care that takes work for practices to put in motion and it'll phase up one of the things we've seen mercy in Arkansas gave us some records for their last six months and they have two hundred and nineteen physicians who are providing this care but in the in the past six months they only filed thirteen hundred and ninety eight claims which was two hundred seventy one thousand charges and so it's it's only an average of a hundred ninety four dollars per claim the money is already Medicaid and other pairs are already having to pay for the physical health of these patients and it's been shown if we will spend money on the mental health then the cost goes down in the physical health the other thing is I did give you a hand out today about North Carolina Medicaid division of health and this type of care is paid for by twenty to the medic State Medicaid's North Carolina Medicaid in two thousand eighteen launched paying these codes and what they found was that it was much benefit to the state and now they've raised today pay a hundred and twenty percent of Medicare rate because they're very invested in this type of care and see it as a benefit to their state Medicaid beneficiaries. Senator Dismang any other questions. Any other questions the committee. Share. Could I have like a minute let it too because the position is taken off from you AM EST just let her say something if you don't mind yes thank you you've got it will give you and I have thank you. I'll take less than that thank you very much I am today and I'm a psychologist not physician from UAMS and I just want to say that at UAMS were really trying to implement this and the importance of allowing this to happen now is that allows us to build the infrastructure so that we can provide this care to patients these patients are already getting mental health care you Medicaid is paying for this mental health care it's it's gonna shifted toward they can get in primary care more efficiently and they can get better faster which is going to save money and I really appreciate all of you staying today to listen thank you. Thank you for that new your fast precise. Centerman just a question of you talked about it being phase done so it's not so it would be a gradual implementation to job DHS to talk factor that in at all. We did not we're focused on what would be a typical annual cost for this program and that was just based on claims yes potentially okay. So how does that correlate the simple. So how does that correlate so you you. So the in cost me. What I'm asking you said you just factored in based on past claims of it based on the claims we claims initial costs we would anticipate with this change in a given year. Okay. Anything else you'd like to add Senator. Yes Sir and I'll I'll during closing if that's okay lesser of questions any other questions. You're free to close thank you. The way I look at it is we're spending this money already what we're going to do is look at spending this money and wiser fashion is going to produce better results it's like a business you can invest in order to get the return of Benchley and we've been doing things the same away for long periods of time and one of things was look for down here's how can we save money especially in the long run and the way I would view this based on what was just present way of evidence is that this may be an initial start up costs but is it gonna be phased in I think we've been given a worst case scenario based on current historical data I think the the which is a great way to go about doing business I think that what we'll find is the start up will eventually transition into savings that will will help levelized program we've had debates over last year and caucus meetings about mental health and and this is a reaction to a year's worth of looking at this and this is what the professional say we ought to go in the direction of doing in order to get people upstream quicker so we don't have CM admitted to psychiatric hospitals or other places that are going to cost the system more in the long run that's the intent and I genuinely feel otherwise I would be here before you asking that having spent time over last year said to those meetings so I would appreciate a good vote. That means that everyone has the cost in front of them what is the will of committee. I have a motion by Senator Johnson do pass. It's winter. I guess it. Not a question if you can let's get some kind of information Blue Cross someone else they were not able to testify today I think probably just because we. State a little late but I would just like to really hear this because their respective because not only could that impact Medicaid directly but there may be an impact on our own side and I'd just like to get a deal with it looks like they could just give everyone a comfort level if we could get a statement from them Mr may make a commitment what I will do is I will get with will revisit the numbers from Medicaid and I'll get with Blue Cross blue shield assn to produce a statement I won't run this bill on the floor until that statements able to be distributed to everybody's desk in the chamber and then that way hopefully a short my time on the floor but also everybody I have a comfort level if something goes awry orange you know doesn't present to be what's been presented day I'll have a problem hit the pause button on it and referred back to committee if need be but I'll do that before I run it on the floor service got that information. Centreboard. I think it's a good bill I think were it's in the right direction I think that we have to make an investment but I also think that we have got to have follow up somehow to see what's happening I mean that's so lot of money in it And so whether it six months twelve now twelve months but there has to be deliberate the back to make sure we're we know we're going down the right direction. Centerman. No I think that's a really good fair points and I also think that it's important to think through the current policy that we have in place the Special Olympics patient center medical home or or or what we already have in place of the or not duplicating anything that that we're actually looking at trying to move forward in more comprehensive way I don't just disagree at all with your comments in your statements I'm a co sponsor and support the policy one hundred percent I just wanna make sure that as we are kind of doing our review that we need to look at all these factors but with that said we also need to look at and partner with our insurance companies who are our partners in our home with the Q. Q. H. P.'s to see if there other policies that they have enacted. And the reason why is because they're saving money in the long run I mean if if what you're saying you know what you have provided here is beneficial then why should not be incorporated into the Medicaid program with that said I just wanna make sure at the end of the day were improving care not less and for patients not necessarily just or not looking just at bottom lines because you know we have to have that is that strong balance and then I'll just finally say really appreciate you all coming and your expertise and all the work you've done in this and this area with with folks thank you for being here and I appreciate the collaboration on the bill thank you Mr mayor respond yes Sir what all do also I agree with mark it with the Secretary and we'll see what we can do to see if there systems in place already that we contract this and if not we still have time this session to get something done to implement that center Rapert work with future public health and that might be that we go through public health and we still have time this session to put some systems in place of the dower or there and I'll try to get that and I'll put that on the desk in the chamber to for the centers and I'll carry it to the house and when we go that way okay so you want to continue on yes Sir and at a motion by Senator Johnson we have a second. Senate is mine the second all those in favor say aye. Opposed same sign centre your bill is passed thank you Mr chairman appreciate your caller states like members of the committee.