Insurance & Commerce- House

Certify yourself for the record and you are then welcome to present HB seventeen forty seven thank you Mr chair I'm Kendon Underwood stares into from district ninety. Chair you mind if I have a I guess you can help me because of this bill no please please bring them to the table in the fill identify themselves the record then you can begin okay thank you Sir. Yeah. Hi Mister I J. R. Backstrom attorney from but in Arkansas. House Bill house bill seventeen forty seven currently all of the all this bill does is simply exempt purchasers from of nonperforming commercial that from the licensing requirements under Arkansas law a passage of this bill will bring Arkansas law to be more in line with federal law currently collection agency located in Arkansas. must be licensed by the state board of collection agencies collection agencies are required to comply with the fair debt collection practices act however if you are if you purchase a commercial that you are not subject to FDCPA the Arkansas collection agency statutes do not differentiate between consumer and collection a consumer debt and commercial that and but there is a statute that exempts certain certain items from being considered collection agencies all this bill would do would exempt those who purchase commercial that from the collection agency statute Mr Baxter probably he handles this more in depth than I do so you might be able give a better explanation or answer any questions. You're recognized. I'll give a brief explanation of one of the biggest problems I think that personal debt your mortgage more freely transferable I mean there's an industry people transfer commercial that's on a regular basis I one of the reasons I felt like this needed to be changed up for the licensure requirements as a case us off in Northwest Arkansas where a. A company that sells tractors would front the No they had a written agreement where they would sell the note to a company that basically just did nothing but service the notes but when the notes everyone of default they would transfer back to the tractor company. When that kind of situation the tractor company that originated that everything would have to be a license that collection agency because they're actually purchasing a delinquent debt back. There's no real. There's no real consequence to it other than being fined by the debt collection agency board but it's something that I could be five hundred dollars a day for every day that they're trying to collect on the delinquent no that they buy back that even just originated with themselves at the end of the day commercial debts just. It's a business people by commercial that and it consumers are who are designed to be protected from I that regulatory statutes and I think this is just kind of a slight oversight when the licensure requirement came out as Arkansas spirited collection practices act. Does does actually still differentiate between commercial and consumer debts. Members you have any of representive Underwood you have any other preliminary comments. We're open for questions and I will start by asking the question at what point does personal debt. Intentionally become commercial debt for instance of a. To commercial or a debt collector collects or bundles personal debt. Fifty cents on the dollar and then they resell it to someone else does that then become that personal debt the genesis does that then become commercial debt that is not subject to Arkansas law or would not be subject with this law change thank you for that that's a great question so the nice thing about the federal act differentiating between commercial and consumer that is there's a it's pretty well settled white the odd with the aspect of commercial debt with the expected consumer debt is and it looks the how it the debt originated so it and the standard way a court analyzes it is whether or not the debt was primarily for household purposes so medical debt credit card debt but you're going to the grocery store and things like that is going to be considered a consumer debt whereas tax debt or you know that for a business is going to be a commercial that's how the underlying that. Came about is where how courts of. Considered it again they consider the idea of is it primarily for household purposes and they're certain that Senator sometimes blended like credit card debt for instance by using a credit card I go buy groceries it's been things for my house but then also go and puts a business that on a credit card we kind of just look at court to just look at primary transactions so if it's primarily consumer goods or considered primarily a consumer debt. Okay. Members that represented Ferguson. Yeah and I apologize not area know much about of what protections would we be giving up for for consumers if we do this I mean is there with the licensing is our bonding requirement I mean what what are we actually giving up if we pass this bill. Well thank you representative for the question the main. Fare is a slight bonding requirement to be licensed but the bond doesn't in your to the benefit of any consumer it because the way the statutes are written currently that there's no civil liability or any liability other than fine through the debt collection agency board for not being licensed again consumer debt is would still be fully protected you would still have to be a license that collection agency to collect on any consumer debt so I really. Really the only thing that's being given up is the threat of a five hundred dollar day fine for a violation. Okay follow. The. Anyone else representative Hodges you wanna jump right in I know you just sat down nada okay. Any anybody a CS rep representative Ferguson. Kenneth Ferguson. Thank you Mr Speaker I almost missed this this is the Of. Collection agency bill correct. Yes Sir Hey one question at. This bill says that. If it's a court. They get higher person to collect what a court fine or something similar to that. Imac read it's actually broader than that it's a currently it's any debt whatsoever any kind of I think the definition of a debt collection agency under the Arkansas under the current statute is any entity or person that buys delinquent debt or attempts to collect for another delinquent debt. One follow the procedure yes okay. I guess my question is in my other life when I worked for the city pine bluff I can recall one time we hired but this was a collection agency. To collect overdue court finds. And some of the people who they were collected from actually said that. They would makes the court had debts with other debts hospital bills and doctors Bills. If you didn't pay the court find dead of course they could turn that back over to the court and a warrant could be issued. But some of the people who were they were trying to collect a debt from said that they will use and that. As a leverage to make them pay. The date. So this person would have to be licensed. And could be hired. By a court or by. Some entity to collect those kinds of finance is that correct. Representative I don't believe it is because I believe that the court finds which would still not be considered a debt from a commercial transaction so I believe under Arkansas law if this bill were to pass under the situation you describe they would still have the the collection agency you're describing would still need to be a license collection agency. So a court could just hire a person or entity that didn't have to be licensed to collect their court finds well it. Right now courts are exempt from the statute so from the license of the court directly hires them themselves they already don't have to be licensed that's already one of the current carve outs but if. if for instance at the City of Pine block for to hire an agency like you described that agency would have to be licensed even if the statute were to pass because the underlying debt is not a commercial not a debt resulting from a commercial transaction. Is that answer your question. Okay. Okay. Thank you Mr absolutely representative Hodges. I guess I do have a question I I probably should read over this I'm sorry so what what is actually the are we are we exempting commercial. Businesses from having to pay to have a third party to the collecting is that what. This is that what this bill is due in a minute thank you. No representative at the bill the way it's worded would dish make it where a entity does not have to be a license collection agency of all they do is collect on commercial debts so the way the law is currently written so does not do with the underlying person hires it has to do with the agency so the way the law is currently written even if even my law firm would be hired by bank to collect on a delinquent promissory note for a commercial loan we need to be a license that collection agency before we can do that and that's what made this bill would make it where you only need to be a license that collection agency for non commercial transactions such as consumer debt like medical debt credit card debt and the like and the reason. When there's good reasons for having protections for consumers that's reason why Congress passed fair credit collection practices act but that rationale does not really apply to commercial transactions people are engaging commercial transactions more sophisticated and the like and again commercial debt is transferred on a more regular basis. Okay okay now for the collection agency collects consumer debt to they would still like to be licensed so if a collection agency does both under the current. Bills written they would still have to be licensed. Okay the I don't stand why why would you not want to license collection agency to collect on a debt that's the purpose of the person or the entity or the hiring them because they have the expertise to collect on that debt they know you know they have the ins and outs they know how to track down locate you know. the dead or things of that nature I'm just kind of curious as to why we not want. To add to have but someone with the background to to to to collect on the debt. May I respond yes absolutely the. So the people that the agencies like you're just the. The. Agency right now it's very broadly defined under Arkansas law so it's not like a if it is can be any person it can be any entity it's not just the normal debt collection agencies your you know that kind of come to calm the mind. The debt collection agencies that you're thinking of who they're sophisticated know what they're doing they would start to be licensed they collect consumer debt which they likely do but the problem is is for instance if I. I'm. I'm doing a state plan for somebody and they have a a promissory note that they did for a they loans there and fifty thousand dollars to start a business they will put the promissory note in their trust. I put in the trust also the trust has become a license that collection agency. And so that's the that's the reasoning and with consumers there's legal liability for not being licensed and things like that where is currently the way our laws written a commercial entity there's no really consequence for them not being license other than a potential fight so it's just sort of an over broad sense but I think what you're. The concerns you have are still addressed by the current licensure law because people would still have to be licensed click on consumer debt that makes sense for both of you reckon so how does that happen have you spoken with the Arkansas bank association had had a they feel about this particular piece of legislation. So it change your question I think I don't remember when I filed this bill it's been out there for a couple of weeks I think nobody's contact me or if they I mean I have one question from somebody I redirected them that's people who know more about it than I did they answer the questions and so as far as I'm aware nobody has had any concerns about it I wish I could give you as far as the bank association I'm I'm unfamiliar with them contact me about it. Okay and if I may follow up to Mister chair to that question sure banks are currently at the I. see institutions are currently exempt from the licensure law so I don't. I don't know if they have a lot of. It does that okay this curiouser thank you. Representative Alan. Thank you thank you Mr chairman. My biggest concern is and and you may be able to clear this up. If the collection agency is not license. where is the room may be a liability if if they if the home is done. So if they're not license that means they're not required to have any errors in admissions insurance. So. It's kind of like They can do pretty much what they want to do. If they're not licensed in the bottom of the guidelines and third I'm just asking for clarification. because a friend of mine owns a company so if he tells me that we have to remove his or errors in admissions insurance every year. In case he does something wrong so unlicensed copy will they be required to have errors in admissions thank you insurance of some type of liability insurance that's my question. Representative that's a great question I think that all people who engage in collections work is heavily regulated as it is should have errors in admissions insurance there's no current requirement for that anyway so currently even with the licensure law you don't have to be insured you just pay a small bond amount but also the biggest fact that the current licensure law has a civil exemption so currently if you violate the licensure requirements you there's no civil liability for doing so I think the statute says that a fine shall be the only remedy a consequence of violating the licensure law so. The civil liability aspect of it is not meet the licensure doesn't create civil liability now there is a potential civil liability from the Arkansas for debt collection practices act which again only applies to consumers so this is just kind of lining up the two statutes together for the two more than one statute but you acts together. Follow up I guess so so the person that you collected the money from. Does not have a recourse if something the rights or something that violated if they went to fall and trying to collected that am I correct in saying man currently they do not that it currently in a commercial debtor that the the data collected against the commercial better has no recourse against an entity that's not license that collects against them the only consequence of that entity not being licenses a fine to the debt collection agency board and a court mean their neck that board has the exclusive jurisdiction determine if there's even been a violation of. You could even use the fact that they were licensed in a court for instance to say. Sorry no you're fine you're fine you could even use that you can even use the fact that a license like latency in a court trying to avoid collection I mean all it does is create the fine and this is just. The goal this legislation is to make that risk of that fine. Not as present for people who transfer commercial that to you. Single asset entities and things of that nature one quick follow you're recognized so if a company comes in and they do some wrong thing that we can do is find them and they'll and they'll keep right on doing what they doing can you tell me what the amount of the fine is yes so for violation of the licensure law so if you click try to collect these people not with the wonder trying to license now won't have license number right they will have a license I think the majority of people that are licensed now still have licenses because I think if you I mean I research this most the people who are licensed or collecting consumer debt. there's not a whole lot of people who just I don't know of any entities focus on just collecting commercial debts I think all the people that are licensed out most all of them if not all of them are still going to be licensed so. They currently if you violate the licensure law the foxes I believe the finest five hundred dollars a day for the per violation and that that can be astronomical because if you buy a debt and continue to hold a technical European you could be fined five hundred dollars for each day you happen. Can. Thank you let me and we do have a couple in the queue let me follow up on the Question about the. Fines Under this legislation we would be releasing anyone who collects commercial debt from a any oversight that would pop possibly lead to a fine and I guess my concern is that that fine is possibly enough push back that they would not use of abusive collection practices is that not the purpose of the find on the as far as licensing so that consumers or anyone any person who is a debtor is not abuse by the collection process. Mr share that the at that's a great question and a great concern it yet again I I think there's a lot of great reasons to have laws to protect consumers but the fine is just for violation of licensure law has nothing to do to abusing the debtor so I mean eight ACT so I started an LC tomorrow when I went and bought a whole bunch of delinquent promissory notes and started to collect on and I just started harassing these people of phone calls and things of that nature there's no recourse for that. The only recourse would be if I didn't have the license and again the recourse is just fine so we have no protection for consent for consumers if they are harassed if they receive phone calls in the middle of the night. Mr we have we have a recourse for consumers but I couldn't the consumer is not someone in a commercial setting so there's no recourse currently for anyone in a commercial setting so the Arkansas it's fair to collection practices act prohibits harassing or any any kind of collection practices like that for consumers but it does not apply to a commercial setting but the collection agencies that currently collect consumer skews me commercial debt are licensed in the state of Arkansas right there would be a requirement yes their current okay there are currently in your trip and should trying to release them from that so currently there are guidelines are there are guardrails to make sure that that debt collector whether there could collecting consumer data commercial debt that they follow certain standards in their collection of debt correct unfortunately I don't believe that's the case I believe that currently there I mean once you're license there's really no oversight of your actual collection practices. I mean there's no there's no regulatory requirements on them all they have to do to be license once they're license there's no they can do anything they can pretty much do anything there's no regulation of the commercial debt collector. Okay a representative flowers. Thank you Mr chair and that that last question was sort of where my interest lies so if. If a commercial debtor coals The licensing entity of the licensing agency and says Hey you know this particular collector is abusive they've been doing a B. and C. and I understand that there are no state laws that allow for me to file it I mean there's not even a complaint process I guess there is a complaint process but unfortunately there's not a standard and you can complain about them but they have to be violating some kind of legal standard and there's not and there's technically not that standard currently for commercial for commercial better there probably should be there probably should be some kind of requirements but they're just they're just aren't so there is a complaint process there is a fine there is a license required and there is an entity that that overseas at least all of that. So would not the agency have the authority to say. You can't we've you can't be licensed in the state you done a B. C. D. E. F. G. you know you have been abusive we're not going to allow you to be a licensed. Collector of for commercial debts in the state of Arkansas. That's within their authority right and in theory I think that would be within their info and that meant that would make sense yes I don't I'm not I'm not seeing that play out in practice but in theory but may yeah maybe because people want to. Go ahead and have the license to do business. Okay thank you thank you representative Deborah Ferguson. Yeah I guess I'm I'm mad question kind of goes to the continuing it the Attorney General I mean does no one have authority to. Three what they're bad actors in the spaces there's no control mechanism at all to the Attorney General or through licensing or. I mean I understand it's just licensing but do not does no no one ever gets her license revoked I've I've never seen anyone have their license revoked I will say that the Attorney General would have jurisdiction to determine under the deceptive trade practices act so that but I do believe. I'm not positive but I do believe there's something in the deceptive trade practices act that would prohibit harassing the state or any general would have jurisdiction to that mechanism but I don't believe there's any mechanism currently otherwise. I guess I'm just wondering if maybe by the very process of requiring them to be licensed it doesn't at least identify who's working in the state so if the Attorney General wanted to step in at least they have that information is that would that not be accurate representative that is extremely accurate there that you do have to register the collector is for each agency so you would have names and contact information and things like that that would be one aspect of it. Representative Kenneth Ferguson. Thank you Mr chair I want to go back to chairman Lowry's questions about the fine. You just to clear up something now. If you are license. And you become sort of a bad actor you can be fined up to did you say five hundred dollars per day per day so if we remove the. Licensure requirement. It and someone higher as an entity to collect this commercial debt. Then they would be fine it could be fined and that license right. Am I saying that right correct they wouldn't that would be fine if so they couldn't be fine. Under this bill. If you remove that exemption. And if they became the bad actor they couldn't be five that's the only thing. Yes but I don't think the bad actors necessarily tied to the fine the fines just purely not being license yes no there's no tie in to being a bad actor to the fine. So they don't have a license in India collecting the commercial debt under this bill based steel could be fine is that what you're saying that they're going to if they only collect commercial debt I mean they could not collect a single consumer debt under this bill they couldn't be fine that's correct they couldn't be fine correct under the bill that's what I'm getting at okay thank you yes Sir yes my question okay. The five hundred dollar fine would only apply if they're collecting debt and they're not licensed there are there are no other instances where a fine would. Kickin there's no such statutory authorization for a fine otherwise there is a river I mean I like I said are there that there would be a review process for the licensure but there's no other statutory basis for based on practices okay representative brown. Thank you Mr chair and I apologize if you've probably answered this but if I'm understanding correctly from. The representative under woods explanation of the bill this legislation simply brings Arkansas in line with what other states are doing and or federal law could you clarify that for me and that's absolutely correct so. Most other states that require a license not all states require licensure but the states that do require licensure they usually restricted to just consumers and the Federal the fair debt collection practices act which is what was passed in designed to keep harassing communications from debtors and things of that nature again only complies to consumers or this would just be line this up exactly with what the federal protections are currently following. Right and and you stated that and commercial debtors are generally more sophisticated data workers and that a. Have ways to as being sophisticated they have ways to look out for themselves and handle these kinds of things if they I mean. Correct correct and that's that's the rationale why Congress when a password and collection act may act faster produce consumer debts instead of all that's in general thank you very much thank you. Members any additional questions. Seeing none we will turn to the audience is there anyone here signed up the or otherwise to speak against the bill. Now this is agencies okay of sorry we're trying to make out writing of we don't have anyone signed up to speak against it we do have one person's signed up to speak for the bill with the State Board of collection agencies. The correct okay if you will identify yourself for the record. Thank you Mr chair members my name's Boyd mayor on the director with the State Board of collection agencies in the department of labor licensing okay are board discussed this bill at its meeting last month and we don't object to it I can corroborate the previous testimony that business to business that is already exempted from the federal fair debt collection practices act. So I can grow again corroborate the testimony that the bill as it's been drafted would make us more consistent with the corresponding federal statute. Let me ask you about the federal law isn't it true that there are some states that are more safe havens so to speak for collection agencies that a lot of these companies do incorporate in those states but they have the ability to be able to collect that in other states and not have to be licensed in the state that they're collecting in. I couldn't speak to the safe haven part of the question but of our fourteen hundred plus licensees only about three percent or in Arkansas. Okay so we Lysons well over a thousand agencies that collect debts. Against Arkansas residents okay so even if they are non resident companies so to speak I'm just using the verbiage didn't as contain any insurance law for instance nonresident they still have to license in Arkansas if they're going to collect in Arkansas that yes so if Frank's collection agency in Memphis is collecting from Sally in West Memphis Frank has to get licensed by us okay other questions I guess I should have that it man. Representive Underwood you Committee cover this in your closing yeah we've heard about and you're making a distinction between consumer debt and commercial debt it It is if commercial automatically is supposed to conjure up a mega company but it could be a mom and pop right could be a mom and pop grocery and they they've taken out a second mortgage or a line of credit personally to help shore up their their business if we remove this exemption A collection agency would be able to go after them even though the primary purpose is for their business collection agency would be able to go after them for both for for. Okay yeah I lost myself in the bill my question so never mind when we say commercial it be my interpretation that that covers business to business that. The debt collection agencies that only collect business to business that are already exempted from the federal statute this bill would exempt them from ours as well okay right thank you I'd add that it's really unusual for a collection agency to only collect business to business that. Okay most of them have one maybe two such accounts and then overwhelmingly they collect on consumer debt. Okay and they would have to be licensed thank you that case is licensed okay right. Members any questions for this witness. Representative Ferguson how much is a license what's the cost and how complicated is it to get one it's a hundred twenty five dollars a year. And then. But for the collection agency and then it's twenty dollars a head for every employee working at that location. So Frank's collection agency is located in Memphis and Jonesborough and each of those has twenty and ploys Frank would pay a hundred twenty five dollars for a license at each location and then twenty Bucks ahead for each employee at each location. That renewed annually. And. The manager at each location has to pass a credit check the thinking being that you shouldn't be handling other people's money if you're in you're in dire straits yourself. In a other other requirements for bonding or insurance or any of those things where the other the other requirements you require assuredly bond payable to the state of Arkansas it's. It's not much it probably alone doesn't discourage bad behaviour but it's something. Those Shuri Bond amounts are set by statute and based on the number of collectors at each location. Well into my question why should we exclude this group which it leased the licensing we can identify who they are in case there's a problem in the Attorney General needs to find them. I don't have an opinion on that. Okay thank you representative Kenneth Ferguson. Thank you Mr. Clarification here if a collection agency is hired to collect. Consumer debt when I consumer debt but the business debt commercial debt. In the already exempted under the federal law and so if we pass this bill they would be exempted from the penalty under state law. Let us distinguish between the penalty for failing to get license and then the penalty for behaving badly okay let's go with behaving badly okay now if a business to business debt collector is behaving badly to my knowledge that that business being collected upon may still have some civil recourse. Maybe through the attorney general's office maybe through the courts I'll have to defer to an expert in that subject area that your previous witness may be able to answer that better okay but under this bill there would be no fine. By the state the collection board there would be no fine if they fail to get licensed. Okay well let me ask this question is wine if they behave badly yes no because they be exempted from our licensure and therefore outside of our jurisdiction. And. They would only be fine if the war. Acting badly and collected a consumer debt. Yes that's right your. You're free to abuse businesses okay okay ask for a minute okay thank you right after this bill under this bill you would be free to abuse businesses. Using your vote other certain things action saying me well I understand that but I prefer will but I I want to thank you for being direct with this because the previous witness told us that there is no fine for acting badly and in your testimony is that no that is not there's two different categories there's a fine for not license being licensed and there's a fine for bad practice correct yes and if we pass this law you can no longer find someone for bad practice if they're collecting commercial debt. Only if it takes exclusively dealing commercial debt. Okay so if they have fifty commercial debts and one consumer debt they'd still be subject to licensure is that the legislative intent. Yes that's correct okay sorry it's one of the. Okay and the and the penalties would kick in no matter I mean they don't have a defense of going home will and no we were jerks but we're only collecting commercial debt. That would be my interpretation is that as I read the statute but I'll I should let the sponsors because. I will say it and I don't know if it's a separate or not but I know there's at some additional questions and I don't know this is out of order since we're in the form against segment I'm happy if if my witnesses willing to and you in the committee's willing to I'm happy to have him come back up here and answer any additional questions if if that would be as a preferred that he's willing to do that but what's okay I think we've got the correct witness before just wanted this one the okay make sure you get questions answered thank you thank you of the I think it's on other hand over here question is represented board. Thank you Mr chair so I just two two questions of my throat you just real quick so first of all how many licensees do you think this might affect that only do the business to business business and secondly if you had any significant fines or interactions with people that would do just commercial a commercial collection that might be the reason for this. It is very on you all take the second one first it's very unusual for us to find somebody directly we usually can work things out with a nice talk. I've been with this agency just over a month my predecessor said that in her previous twenty years they find for maybe five agencies for bad activities because they couldn't work it out with a nice talk first. as for the number of currently licensed agencies that would become exempted where this provision passed. Very few one percent or less the industry overwhelmingly focuses on consumer debt. A collection agency that only collected business to business loans would really be a. Nish industry. Okay any additional questions members representative brown and then representative Alan. So it thank you Mr chair so if I find a collection agency and I'm collecting because somebody to pay for the refrigerator. I'm license I have to be licensed to do that and I can be fine if I used inappropriately aggressive method to collect this debt yes okay. But I also have this one consumer debt I mean a commercial debt the only reason I have to be licensed it's because I do. Consumer debt collections that's the only reason to be licensed as. Okay but I'd just consequently have this commercial debt if I ate if I talked me into this commercial customer and I threatened and I I just act all kinds of. Inappropriate to to try to collect this money there's nothing to find me because it is a commercial debt I'm still licensed but I'm only license because of the this big cluster of customers over here has no impact on my relationship or how I conduct business with this commercial customer correct. I mean it would I be blinded by talked ugly to the commercial debtor error or did something that's considered overly aggressive. In but not within the boundaries of a proper debt collection I mean just because I'm licensed does that still mean that I can be at a find for the way I deal with this commercial customer is that the way it is now I could be fine for dealing in appropriately with the commercial customers for customer We would probably investigate that and my board would probably take into account that it was that. Commercial account that that was being abused but accordingly yet with this law. That would change. With this change in the law that would change I I I might not be. Spoken to nicely for getting out of bounds with this commercial commercial that. Client a. I think that if they were license for collecting commercial debts. Excuse me if they were license to collect consumer debts in Arkansas and then proceeded to abuse a commercial death or. Goodness I don't know I just want to know what the before and after is I mean it is I want to know okay that we do it that this is a possibility today if we pass this legislation what actually changes. I would defer to the legislative intent on that thank you okay. And. Yes represent Alan. Thank you Mr chairman let's go back to the this year to vote. What is the amount of the sure to buy five thousand ten thousand or one of the top of my head they range from ten thousand to twenty five thousand depending on the number of employees. I have to get that statue right in front of me but it's it's not a big amount okay my my board chair says he pays about two hundred dollars a year for his okay thank you Sir. Okay. Representive wooden. The. Proceed with represent brands question. You said Legislative intent now when when you are you talking about representative on which bill right now or but what. I have the same question what what changes now. From what you're doing presently in the under this legislation others that. You couldn't you can answer that or. What would change now is that if the collection agency. Only collected consumer to consumer debt they would be exempted from licensure and therefore beyond our jurisdiction for any bad behavior. I want to ask you a commercial commercial thank you. The say that again because of if the collection agency only collected business to business commercial debt and nothing else that's all they did. Then there and they will be exempted for licensure consumer requirements yes and that is already provided for under the federal act business is business debt is already exempted from fair debt collection practices under the federal statute. So what it is. So what is the intent thing Legislative intent. So I think I mean I don't from answer questions that let's live intent is so the federal government's already made this difference in this difference between commercial to commercial that compared to can consumer that so if you for example if you are an entity well if you're only purchasing commercial date you'd be exempt from the licensure and I think as Mr Baxter mentioned it I think more than anything this is a more efficient and oversight issue than anything else the federal government's already made this made this distinction so if you're an entity or business that might be involved with the not set up several different LLCs to purchase these type of this happened that you're going to have to licensure every single one of those LLCs and so this would just make make this would be make this a little easier for those people without have and be in line with the federal government as artid chairman title five answer that question but. The representative when under would let me to jump in here and then that represent wouldn't if you want to piggy back on my question please do that so in other words you talk about forming several LLCs if we pass this legislation one of these the debt collectors collection agencies that has. Consumer debt and commercial debt. And they have to license with Arkansas because they do collect some consumer debt they could go ahead and spend Office separate LLC that only does the cook commercial debt and then they're free from any oversight. Correct. I don't answers incorrectly but I guess I would say if but if you're if you're only purchasing constructing Marshall that you would have to purchase a license but if you are still involved with consumer debt you would still have to purchase a license that would not be exempt which the point of the the the fair debt collection practices act is to protect consumers so it you know if you're just about with commercial that the person commercial that yes you would be exempt from the foster under this bill right. So but it we've heard that the vast majority of these collection agencies that are licensed with the state have consumer and commercial. And as such even if we release them from oversight on commercial the fact is the oversight exists because they also do consumer debt. They could release themselves from that oversight by spinning off another L. L. L. C. and when they get commercial debt they just move it over to that LLC and they're able to absolutely acts without any state oversight. I think but not in regards to any of the consumer that either I'm not talking about consumer debt I'm talking about the commercial debt right think if you're just purchasing again it's only kind commercial that yes thank you okay representative would. Thank you Mr. To I will give you a specific example tell me what a farmer would face and East Arkansas if he had a combine and tractor he got behind with it without any state regulations how are we strengthening the commercial collection agency I mean what are they will be we won't have any over over sign or say about how they treat at the former. If the collection agency in question. Was only collecting on that tractor debt against the farm business not the farmer personally. Under this bill that collection agency provided they only held that business to business that would. Would be exempt from licensure and therefore are jurisdiction regarding bad behavior who would have jurisdiction over. Nobody. They may have some civil recourse in the court or with the AG's office but it wouldn't be through us. Through the state board of collection agencies. So real this is here is is differentiation between well as consumer what is commercial yeah if he personally board that from the bank. To pay that off and he got behind with the bank. Then that's a consumer is that what you consider consumer. Yes like the previous witness said the the federal act gives us some definitions on that they say if it's for household use it's a consumer debt. Okay but if he if the board the there isn't corporation or is corporation or LLC there'd be no control over how they treated him or how they what they did that would be construed as a commercial that and if the debt collection agency only dealt with commercial debts in the federal government license or does not have any say so over that the federal fair debt collection practices act generally exempts and that kind of collection activity from its oversight. This is to say okay again. Generally yes they'd be exempted from oversight the. The state and federal fair debt collection practices act are primarily designed to protect consumers from bad actors okay. Let's say of members of the administration that we're being very very thorough but we are still seem to from re plow the same ground of representative brown do you have a new line of inquiry just a brief question this concern for no oversight. From your agency. may not to be an issue because. Somebody. Collecting a debt the commercial debt still has to obey the law. They still have to I mean that they can't just go road. They can't just go take the piece the farm equipment they can't they can't do those kinds of things that I'm sure there are laws that protect against that are there not Mr Underwood. I would say I guess you had I guess your general questions correct yeah I don't know what those I have anymore and and analysis on that I guess I think here that yes they would stop all the law thank you. Members let's try to limit or questions to the witness representive fielding. Thank you Mr represent on the wood to the witness please we I know we've been asking representive Underwood that actually his time to answer questions is over. Sorry I jump in something I don't know if I'm still permitted to to Arizona or not you're done you're not I I loud it but we're going to we're going to stop that in represent fielding you can put something out there and representive Underwood can relate to it in his closing but as far as direct questioning will have to stop that now minds in the request because I thought he was doing that's that's no problem on the okay. Any other questions for this witness. Thank you the representative Kenneth Ferguson. Thank you Mr Chairman asked the question to representative Underwood but I want to ask that question to the witness and the question of the chairman asked if a collection agency did a spin off LLC and decided just to collect just to collect commercial to commercial debt that they would not be under your jurisdiction correct that is correct and if the underlying question is does this incentivise collection agencies to do that yeah yeah it kind of appears that way. Okay thank you okay thank you Mr thank you any other questions members. Representative Deborah Ferguson. Yes sorry I was just kind of trying to read online it what what I'm reading is that commercial debt collectors don't have to abide by any of the rules that consumer collector state that they can call you at all hours of night say I have a car dealership and I. Have a I don't I don't read paid for the cars did these commercial debt collectors unfortunately the way I read it don't have to abide by any. Debt collecting rules like the consumer debt collection it's and I mean is the I don't know it seems like to me are only that Arkansas has a good law that we do have some recourse with these commercial lenders is is is it true that they don't have to abide by any of the debt collecting laws of a consumer. The debt collecting laws are primarily designed to protect consumers from bad behavior. What what are board do if so if the licensee was abusing a commercial debtor. I couldn't say that probably take that into account. Okay all right representative Hodges okay. You get you get you they you think sample of a tractor company earlier right and so I I I I on the tractor company I turn turn turn my collection to collection eight the and then they turned the year after you know they could collect whatever they turn it back over to me I did my own collecting. I'm I'm responsible I have to have a license. At the state currently the law currently is right now if I try to collect as the personal tractor the owner that that tractor company is that correct yes I think that was the example of the first witness gave because you you bought a delinquent debt but it began as a business to business transaction under current law you still need to get license under this provision you in that would be required to be licensed anymore okay okay. Okay thank you very much for your testimony thank you Mr chair members absolutely Sir anyone additional to speak for the bill. Or against the bill. If not represent under which you're free to of clothes for your bill. I I know you guys appreciate first all committees time on this issue I know it's taking a lot more time the maybe guys wanted to so I want to Senate on a closing you know blaming the point I'll just say that again this is only regarding commercial to could transactions were not in line with what the current federal government is the government the federal government had or has already made to distinguish has distinguished between consumer debt and commercial that which is why they've they determine that you know the fair debt collection practices act only applies to consumer debt so with that I appreciate you guys time and and you know whatever the committee decides to appreciate about thank you okay thank you of members is there a motion. Representive right. Mr I'm a do pass okay we have a motion of do pass on the floor is there any discussion by members. Seeing no discussion of move to a vote on the motion to pass all those in favor signify by saying aye. All those opposed say no. the nose haven't. Several requests for reserve roll call. Okay we have two hands three hands for roll call so we'll make a. Pardon. a joke okay. Just as well. What was said joke they remind okay roll call. The. Is the is the joke in the transcript I mean I I didn't hear it. Okay. The representative Murdock. Representative Murdock. Representative fielding. Now. Representative Deborah Ferguson No representative Hodges. Representative Hodges. Representative Lundstrum yes representative Kenneth Ferguson. Now representative Boyd yes yes. Representative flowers. Now representative brown. Yes representative Alan. Now representative Gazaway. Representative Gazaway. Representative Pilkington yes yes. Representative Penzo yes. Representative wooden. Yes represent Clowney. Now. Representative Richardson representive Richardson representative eleven. Yes. Representative ray yes yes. Representative Maddox representative Maddox. Representive Underwood I'm sorry your bill is fail. Thank you Mr chair thank you committee for your time appreciate it thank you. Members we're passing over H. B. seventeen fourteen a request of the sponsor of representive eleven House Bill sixteen forty seven. Yeah. Yes I do no the company insurance. Members there's a hand out of it being distributed this point. Representive eleven if you have any witness that you'd like to peer at the table with you You're welcome to do that the researcher I'd like to invite bread night and day McCord from the attorney general's office to join me at the table okay. If they will identify themselves the record then you can begin presenting. Good morning Mr. Good morning Mister chair members my name is Brad nine on the legislative director for the attorney general's office. Good morning my name's David McCoy I'm an assistant Attorney General in the consumer protection department. Thank you very much representive eleven you're recognized thank you Mr chair committee members this bill is called a our voices that's Arkansas voices because it is about your constituents. It's about the protection of their freedom of speech and they're right through us as their representatives to combat cancel culture. So where is the problem why is this bill needed. So essentially most everyone relies on social media like Facebook Twitter and Instagram. Keep up with friends and family to share their thoughts and feelings about social events things like where they're going to eat dinner self produced photos we call themselves these these days of being a children's ball games or dance recitals and about everything from current events and yes even to politics. Social media is a new town square it's the new corner cafe the new barbershop. Ladies notice I didn't say it's the beauty shop. It's a public forum where people share their ideas their thoughts and their stories about their lives. However because of the nature. The toxicity of our current culture and world. Toxicity of politics there been notable instances of voices bi partisan constituent voices. Being silenced and being censored online quite frankly someone doesn't like what you say they can Senator you. This is what has come to be known as cancel culture which simply means to cancel or remove any message that someone disagrees with or does not like. Under section two thirty social media providers are able to do this without liability or without consequences you may ask what is section two thirty. This refers to the code section two thirty regarding the communications decency act. This is federal law that prohibits offensive and illegal content from being posted online. Under section two thirty providers like Facebook and Twitter. Where users post their own content the providers make their own determination of what is offensive or what is illegal in the block delete or censor the content and or the use or. And they're allowed to do that under section two thirty. If there determinations are made in good faith. That is where the problem is because we don't have a clear legal definition in code of what good faith is. Arkansas voices will alleviate that problem it does that by for what he's number one it provides a good definition of good faith under Arkansas law for instances when a provider takes action under section two thirty. Secondly it required that the provider can only act under section two thirty if the determination was a violation of its terms of service at the time that the information was posted online. Number three it states that the provider cannot selectively apply its terms of service engaging content banning simply because the provider disagreed with the content or the use of the post. Finally if that happens then according to this bill the provider did not act in good faith and it is enforceable only by the Attorney General of the state of Arkansas under the deceptive trade practices act. We have been in continual active discussions since the bill was filed over a month ago with industry representatives from providers such as Facebook I want to thank them for their diligence and attention to this and coming to the table and working through the amendments it was a series of amendments that were filed those have been engrossed into the bill and mitigated their concerns to where they no longer actively oppose the bill. I'll be happy to try to answer any questions it is in the legal then I would deferred those to my colleagues at the table. Do your witnesses have any kind of an opening statement or they just here to help answer questions. Five sure I'm sure they have some statement I'd like to make okay well let's do that first and then we'll go to questions. Thank you for that leeway Mister chair I appreciated I think just touching on what representative eleven I just told the committee. Our office is in Arkansas. Yes just as a reminder to remind us of the identify who you are we know you're with the AG's office. Thank you Mr chair again my name is Brad nine I'm the legislative director for the attorney general's office and to my stage right is David McCoy who is an assistant Attorney General in our consumer protection department. And I would just like to initially start out by saying. Generally. We're not in favor of regulating business and how they conduct themselves but social media platforms as representative Evans alluded to our kind of a unique animal they they truly are the town square of the twenty first century for political discourse. These companies are unique in the sense that those of us that use the platforms. Are just consumers but we are also the product for these companies these companies use our data they use are posed for analytics for directing advertising revenue dollars to the company. So in light of that in light of the the importance of the political discourse that occurs online. We felt that this was an extremely valuable bill to bring before the committee. Leading up to. The committee meeting this morning I know I've had a few questions brought to me from members I think the the one that I would like to address initially is the question of constitutionality of H. B. sixteen forty seven. There is a concept in the law call federal preemption. What that generally means is that if the if the federal Congress has spoken in an area. They control over any state laws that are out there federal preemption concurred one of two ways Congress can establish very clearly in its intent as they would have done in the communications decency act to say that they are the arbitrator for this ball they did not do that. So the second way preemption can apply is if a state law is in clear conflict with the federal law. We feel that the way we've crafted this bill to address the definition of good faith it's not addressed by Congress that we are not passing a law that is inconsistent with the federal goals of this program. the communications decency act has been on the books now since nineteen ninety six. There have been several cases that have come through the court system. That have said exactly what I'm saying for example in Texas the communications decency act. On the grounds of preemption they they challenged a state defamation law in Texas and the courts held as long as the state law is consistent with the intent of Congress in the communications decency act it's not preempted so similarly here we feel that our statute being consistent with the intent of Congress would help it to withstand any constitutional challenges and I think with that I'd be open to any other questions you might have. Thank you very much. We do have a number of questions of start with representatives Boyd. Thank you Mr chair I just wanted to clarify a couple points is this bill does it enable market you know marketers to sue you know the big Facebook Instagram YouTube for blocking spam messages and then this related to that is this kind of a a back door way to allow the zero to sue social media platforms when they restrict poster celebrating terrorist acts thank you. No thank you for the question representative up so this bill is is. Limited to our authority under this subdivision separate trade practices act so to file a complaint an individual would need to be in Arkansas residents this doesn't open it to out of state marketing companies to companies in general it doesn't open it to that kind of private action for a lawsuit this is only a a state right of action through our office and date can speak more to this but just kind of to to give a little bit of a flavor of how this would work in our office under the deceptive trade practices act for our office to be aware a a citizen would file a complaint with our office. We would receive that complaint and we would immediately reach out to our industry partner to try to informally resolve the complaint nine times out of ten complaints can be resolved in that manner. If a. Company did not qualify right with this and we felt that it was a clear violation of the TCPA. We could then issue what we call a civil investigative demand letter which then invokes our offices powers to include subpoenas and other legal authority. once we gather information through that process if we are still unable to come to some resolution as to a violation of the TCPA then and only then would we potentially bring an action in a court of law for enforcement I hope that helps. Yes just very quick follow up sure but just like if I could jump a representative to your question one of the amendments that that that we included to and in consultation with industry was I'm trying to find it here was that the the yeah under Page five line thirty one and that this is solely punishable by the Attorney General so the Attorney General have schools there with there's not a private right of action. It would not open up to class action. Okay thank you representative would then representive Clowney. Thank you Mr chairman. Would would do is impact the comments that were made from Washington DC or the state of Florida if if if the Attorney General felt that it was and they had blocked him took him off hello what standing would we have and something like that or with the statement have to emulate from Arkansas. Well the the the Attorney General would only has exclusive authority under this state under this bill and that authority would be under the deceptive trade practices act which affects would have to there would have to be ineffective Arkansas consumer. Now that's a person within Arkansas who's a consumer or of a person outside of Arkansas that is consuming. From an Arkansas product or business so it we would have to have a nexus to that an affected Arkansas consumer before we would have standing up. If that makes sense you're recognized really it really is it really doesn't but. What what what I'm after is when comments are made. S. the borders of Arkansas. Statements speeches but funny do we have any state is this bill give any standing to be a part of of the indicating that if they cut him all for take amount. This this particular bill since it is couched. With that are deceptive trade practices act it would not that's not to say that our office may have another Avenue Perhaps with. Multi state type litigation but for this bills purposes No representative would it would not just here in the state yes one one more very quickly sure that's that's right up tick tock was not mentioned here is is in included. It we in in our in the definition we use the definition that's used and the consumer I mean the Communications decency act the federal law we refer to that definition as the definition of a internet service provider and of with some exceptions that we worked out with the with the some industry so it would cover the chairman if I may. Yes okay okay yes representive wouldn't Any. Social media type platform and in the way it's just loosely defined as if a realize has heavily on user generated content so it relies on Facebook messages being posted our our tweets being sent out by individuals or people uploading clips to tech talk or what have you that that would be included yes Sir. Thank you Mr chairman and with some of represent plan if you allow me I want to follow up on the line of questioning their We were protecting and any rep referenced in your opening cancel culture. We're talking about protecting citizens with that also include corporate citizens of Arkansas. for instance if someone were to I don't know choose Walmart to go in and say we. We think you should ban Walmart because they took XYZ stand. Would this legislation protect Walmart to be able to push back and say that whoever generated that messages committing an unfair trade practice. Right ninety two. A wrecker. So Mr chairman thank you for that question you had again this bill is. Really Calyxt in terms of our deceptive trade practices act so it's really geared towards. Your average our cans in your average consumer who may not have the where with all to protect themselves or to bring a lawsuit or quite frankly to know who to call that's local representation for these companies to get a deleted post fixed eighty eight a corporate entity like a Walmart in your example. Would not be necessarily covered under the deceptive trade practices act but of course they would have the where with all to bring action as they deem appropriate in a court of competent jurisdiction okay thank you representive clammy. Thank you Mr chairman can you hear me. So. I got a lot of questions and and many of them are due to the fact that we are couching this in very what's the word I want to the very sort of of the moment phrases like cancel culture and. You know my worry is I read the preamble to this it's all about you know these companies are impeding our freedom of expression but you and I are both lawyers we both know how the first amendment works and it's not about private companies speech or private companies you know allowing speech it's about the government restricting speech so I guess my concern is that you know in your opening Mr nine you said that this wasn't about the government trying to impede the way that businesses do business but that's exactly what it is I'm thinking about something like I don't know a restaurant where there are lots of children rate and somebody were to come in. And start screaming about something and maybe how good tide pods taste or something right we would want the business owner to be able to say this is speech that is probably not. You know not desirable in this setting and I want to get this person out I see that you've made some exam exemptions in here for speech that violent speech that's obscene that kind of thing but I think that there's a lot of speech a lot of speech that's really dangerous. That maybe is covered under the first amendment shouldn't be censored by the government but when we're talking about a private business makes a lot of sense for them to want to control what's being put out on their medium can you address why that doesn't cause you concern yeah sure. No it and representive I appreciate the question I think that's that's a great question Under this bill the companies would still be able to through their terms of service address issues like to the tide pod challenge you address issues as a public health and safety and as long as those terms of service are clearly articulated I mean it doesn't have to say ice water challenger tide pod but as long as it addresses public health and safety and those. Standards the term of service are applied equally across the board regardless of who the Speaker is then that would still be allowable under this bill yeah we we talk about terms of service it can be something that would be completely inequitable but if it's something in regard to public health and safety that's not going to be an issue and again we're not opening up. Via this piece of legislation you know a a private right of action or a plaintiff's attorney could sue or could seek certification for this type of action this is something before the Attorney General in her role as the consumer advocate for the state to step in and and be involved in through the. Through the layers of the process that I set out earlier and respond representative voice question something like the tide pod challenge would never go beyond a mediation between our office and we would hear back from the company they would tell us why opposed was removed that would be the end of the story this bill is really not geared towards that Representative that and I appreciate your question that's a great question that's that win in you know that question was a whole lot of the discussion that went into of this bill and that's why the you know. This bill would do nothing to prevent of these platforms from. Taking any of the actions that they already can under section two thirty all this bill does is define what good faith that because they if they wanted to stop someone from speaking. Under the federal law they have to act in good faith. And unfortunately that's not defined anywhere this bill defines good faith and also sets out what not good faith is and So stopping. Someone from sunny legal speech or the lewd lascivious obscene or the the the list that's that's made out in the in the in section two thirty they're still able to do that but it even under section two thirty they have to do that in good faith. And so all this law does for the state of Arkansas fund what good faith this. Thank you and I appreciate that I just think that when I'm looking at the definition here what good faith is it says anything that's not dubious obviously that's pretty broad and and hard to define hard to nail down so if you could just a little bit more to about Mr night particularly the terms of service that you're mentioning it's not an affirmative defense I'm looking at page five I think it was. Lines nine through fourteen it's not a defense to a violation of this chapter if the terms of service stated that a computer service may I act unilaterally to take any action so I guess I'm wondering how that doesn't sort of render almost all terms of service meaningless because I'm guessing that that's you know the terms of service or if you do acts we will respond why and if that's if that action is unilateral then it's automatically not a defense to this so can you just talk a little bit about that unilateral that for me thanks. It may need to. Deferred by consumer protection expert on this issue up but in our conversations with with folks in developing this bill a lot of the concern was that their content would be labeled it would be removed or it would be censored and they were not given any indication of a kind of a due process right of what they could do what steps they could take to challenge that let that labeling that removal of the content and so really what we're talking about that unilateral action we're talking about. Situations like that where a company might remove content that's not clearly in violation of some. Spelled out term of service and the individual within it usually ends up happening is they contact our office for help but they would know what how to go forward with the due process to make sure that their content was was properly placed back on the website that there that's good that's correct of I know consumer not recently I maybe currently trying to sell their vote on all these platforms and. For some reason was bought the. That was bought and they don't know why they couldn't get a hold of the the the company representatives and so and it's like well I'm just trying to sum up. And there is they just seem to be without recourse. Mr terrified if I made. At present. We we've and even as recently as last week a member of this body posted a video up to their Facebook page it was a video I think of a speech made in the well in support of action. The governor took in regard to a bill The algorithm for the social media platform that was placed on for whatever reason blocked the content of this message it was clearly political speech it was speech that was done in public this individual I I don't think would identify as being a conservative voice this was a a deathly bipartisan kind of an issue this is last week one of the. Things it's made the news that really help draw our attention to it was the Mississippi Attorney General Lynn Fisher on her official Twitter page tweeted out a PSA about how to identify believe with sex trafficking for children. Twitter took it down and that was a government official with a public service announcmenet. And there's no explanation given as to why it was taken down and it was down for quite a while before she being the Attorney General knew who to contact was able to get it back up so our concern is what about your average or cans and engaged in political discourse online who doesn't have the where with all or know who to call whose content is removed in this bill just gives them an Avenue through our office. To see help. Webserver a question. I'm gonna pass over my question Mister chair representative Clowney asked a similar question thank you resent fielding you're recognized for a question. Thank you Mr chairman The other is the with the AG's office okay is represented. Hand of should Arkansas. I'm trying to get should have. Should the AG's office. The in laws that are made. In Arkansas that conflicts with a constitutional law within the law. Right yes no answers yes or no will mean to me representive fielding any law that's passed by this body and B. R. any bill that's passed us by the becomes law we defended as constitutional that's our job until we're told otherwise by the courts. So yes is this. That we that we spend taxpayer's modified in laws that we know. Fund constitution. Yes. Representative fielding I'm I'm not sure how that's germane to the bill that's in front of us at the moment but my address that was my question that was my question I do I'm asking the question. So you asset to me is no. Representative fielding any bill that's passed by this body we defend as the state's attorney as being constitutional until a judge tells us differently. All right thank you thank you Mr. Thank you represent Ferguson recognized for a question. Yeah I had you the lady to. Senator Tucker supposed and it was but you didn't complete that it was corrected right I mean he posted an algorithm identified it and took it down and then he contacted Facebook and they put it back up I just want I just want you to complete what you said I don't want to leave the impression that it was come taken down permanently there was a corrective process. Yes representative and I did not mention his name in committee because I had not asked permission to use it but yes he I believe Facebook was able to get that post back up for Senator Tucker I believe at the end of the same day but again Senator Tucker knows local representation for Facebook and is able to reach out to get something fixed my concern is the the average or cans and that may not know how to do that. Well and just a follow up to sort of reiterate what Nicole Clowney reserve plan he said I hear all the time about free speech just to verify again the constitutional first and Fourteenth Amendment protections for government speech there there's no free speech rights required at Facebook in private companies. To for the first and Fourteenth Amendment is that right. That is correct historically that is accurate But I think to the the point that representative that is alluded to in his opening. These private companies in this example have gone beyond just a consumer transaction these are now the twenty first century's equivalent of the town square where the majority of political discourse in this country is taking place. But I mean they do have terms and the terms are apple bill to everyone who's on the platform. And they are a private company and they have the right to do that. Yes ma'am it is long as those terms of service are clearly articulated in our plight equally regardless of the source of the speech that I would agree and I guess my question is I keep hearing that they're not applied equally but that's that in reality is not true. What what what this bill does it just this bill does not know it I I don't know that that was really a question but if you want okay go okay go in response will. I'm just going off what of. Right to say this bill does not do anything more than section two thirty in the federal law already does it does not. Regulate free speech it. It defines good faith the company's already supposed to act in good faith. This bill defines what good faith this. You may have a different definition right may have a different definition of good faith we were setting up what we feel fits within the federal statute that would be constitutional as a definition of how the company would act in good faith under that law well I'm in to representative Alan's point nothing was worse than Allen said this that yes okay. Well it was I'm sorry elected to his. To the point that Texas already passed similar all that is being challenged constitutionally so I mean I guess my question is why do we need this if there's already federal regulation. It in thank you representative of eight U. eight again to David's point of there is federal regulation on the book Section two thirty. Has really served to be a broad. Granted immunity to social media platforms if they act you know quote unquote in good faith but again good faith you know reasonable minds can can differ as to the definition and so we felt by providing some clarity in Arkansas law again not inconsistent with the intent of the federal law that was important of it again. We wouldn't bring a bill forward from our office if we felt that it was unconstitutional we feel that being consistent with the federal law there is not a preemption issue here and we're ready to to defend the law that is challenged. Thank you represent Boyd recognized for a question. Thank you Mr chair so a recess a federal law that created challenges for RK and sins and the AG defended all the way to the Supreme Court if this bill were to pass and become law it with this same similar challenge that it's in response to a federal law with the AG's office defended just the same way. Yes representive. Thank you represent flowers I believe you're next in the queue for questions. Thank you Mr chair. So. As I've read even listen today I do have concerns about the constitutionality but I guess I'm wondering if there is A federal statute in process season we've seen over and over again the different social media companies come before Congress with the these such concerns. And then on the flip I'm kind of on the flipside we know that there's not a person sitting at a desk and phone and looking at every post these are based on algorithm algorithms. That I don't know you know it all of the mechanics in the science of it but. I suspect that the same way that there is one side of a political perspective or business perspective or whatever. That All. I hear my voice I really don't like to talk about that because. But So on on the flip side you have. these algorithms that are defining what happens and then there is a process as we just heard representative Ingram speak to that Ferguson I'm sorry thank you. Ferguson speak to regarding that process so if there is already a process. And you know this exists to address. Concerns like for example we never could have imagined that there would be a whole year we're we're dealing with you know covid. And there would actually be folks out there. Spreading misinformation about. COVID I'm prevention testing vaccines use of mass you know. I guess with the such important issues around health and safety and this and the structure is based upon the algorithms and the technology. There is a process in place I'm just wondering what are we doing more. That would change that and if someone is in violation under this law what would be the penalty. Thank you representive flowers at let me take your and your last first under the deceptive trade practices act there is a potential civil penalty of up to ten thousand dollars per violation that would be. Post litigation all we could do is request a a judge for that which we may not get that that would be the cap. Of the bill actually has a a bill to an affirmative defense on page six. Which says if for example if it's the algorithm that caught something that may maybe shouldn't have been blocked. If our office reaches out to a Twitter or Facebook or whomever and they are able to recognize this was the algorithms fault and get it fixed within ten business days that they have no liability and that's that's for a single currency if there's a trend or only a certain type of post keeps getting blocked that might be a different story but for instances where there's a an algorithm issue that would be affirmed affirmative defense for them that they caught and they fixed it we reached out. There you as to representative Ferguson's point there there is a process out there. But that process is not something that. I think your your average. User on social media platform would be able to utilize and so. This bill. Although we already mediate these issues on behalf of consumers of consumers reach out to us. We are able to get the result this does give us teeth. In the event we ever get to a point where a company will not work with us. so that's why we we think it is very important and then I think you also asked about like the the COVID nineteen labeling in the warning you again that's not something that our office would ever have a problem with anything dealing with public health and safety you know that's that's not what this bill is intended to address this really is just intended to address. Individuals expressing themselves by social media and having that content blocked hidden removed replicates maybe. Follow up Mr sure. Yes and I think on paper if that that makes sense on paper I support something like that but in the real world who would have ever thought that. You know. Public health. the guidelines and standards why are you know world renowned CDC. Would. B. clapback against with political perspectives who would ever thought that a mask during and that a global pandemic would become a political issue so I'm I feel like there is some overlap there in two what would be considered public health and safety versus political politics. And I guess I'm when I think about what we heard representative Boyd speak to which I think is a very valid issue because he and I probably both on the same side when we look at the preemption issue and what states should do to address. Issues on the state level through policy when I think of that bill if I'm not mistaken. PBMs were completely there was no regulation on the federal or state level for the most part and there was a push back that we took you know the the bull by the horns and said Hey we have to have something here. Verses for example I you know. Push the bill recently regarding transportation safety and. You know you guys had to come back and say Hey. There's some preemption issues here will I would look at this more along the lines with that what differentiates. Something like this S. as you know I mean like why would you promote a bill versus say Hey we shouldn't do anything on this. But on other issues say Hey there's some preemption issues can you speak to that. Sure thank you representive you again preemption is kind of a complicated area of the law even even for attorney's side I readily admit I'm not an expert but. There are some instances where when Congress passes laws it specifically sets out in its intent section that their intention is to wholly control legislation in that area to preempt it fully other bills Congress is silent as to that intent which is the case with the communications decency act. And in those cases where Congress is silent the courts have consistently held that if states enact legislation that is consistent with the aims of the federal legislation that it is not preempted and that is that is our contention here that simply by defining good faith which is not defined by the feds we are not preempted doing so. Thank you representative wouldn't. The definition of good faces if is our it's tough I mean the but back to representative fill these questions. The Attorney General has the responsibility to defend legislation is passed by this body becomes law in the state of Arkansas is that not correct that is correct. Well the. You're recognized. Is it is the intent here the intent is understand that more is to. Say the. These companies that provide the services. Facebook tictoc Twitter others. The is a they have taken upon themselves the responsibility of what is right and what is wrong is that is that true. The representative but I think that's a fair statement so what more so. Really and truly. They're trying to control my speech. If they could control my speech from the floor of the house several times this year they could have taken it off of surprise ahead and I don't I don't subscribe to any of them I couldn't tell you the two week for a month Facebook or whatever. The to me there's the there's the devil's workshop. But but is that no one this and know what we're after here. And and representative I think to be clear we have a good working relationship with most of our partners in this industry and. We are usually able to. Resolve these issues by reaching out. But that's on a case by case basis as people come to us. It's our hope by putting some teeth into a bill like this that were able to effectuate some system wide change within the policies of these companies. Thank you thank you Mr chairman thank you. Members we do have some witnesses lined up on this bill and we actually have one of the bill that we would really like to get to so if you will allow We're going to move to the for and against since we've had a considerable time for we're going to move to the first Speaker on the list against. The. We have we have. Two on this bill okay. The one against one four. So of against on the H. B. sixteen forty seven would be Chris marquise with net choice. If you identify yourself for the record please. Christopher Marquese. German Lowery vice chair Maddox and members of the committee thank you for the opportunity to testify today against H. B. sixteen forty seven my name is Maria microphone a little bit closer to use mine that work better that's great great so my name is Chris Marquese United service council for not choice we are a trade association whose members include everyone from Amazon Google Facebook and Twitter to you at the eBay and Pinterest as a lifelong Republican I understand the frustrations and concerns that many of you in this room have shared and as a lifelong supporter free speech I also understand the desire to expand free speech and protect free speech unfortunately this bill does not there and as such I ask that you please a vote against it first because it's unconstitutional under the first amendment and second because if it does pass it will introduce many unintended consequences into social media platforms including making ninety content cesspool so turning to the first point that the bill is unconstitutional under the first amendment I'd like to remind everyone that you know the first amendment protects what you say and what you don't say and so this bill would allow the government to. Compelled social media platforms to host certain kinds of speech even if they don't agree with the speech even if the speech you know conflicts with their personal values and even if the speech hurts their business model at the end of the day users don't want to see certain times types of offensive content and advertisers who are the ones you allow platforms to be free they don't want their ads running next to offensive content and even though the bill seems like it is a you know modest just defining what you know good faith means it's far broader than that first of all the definition for good faith is pretty expensive and that it doesn't exactly explain what it means to remove something you know dubiously or you know what happened how do you even measure whether you're removing content consistently you know is certain types of bike is black lives matter going to be categorized as democratic speech and you know neo Nazism going to be classified as Republican because that's exactly what partisans on both sides of the aisle will say and they will say that they're not removing this speech appropriately or consistently because at the end of day it's really hard to categorize certain types of content as falling along certain types of identities. But that's just one problem another problem is that it prevents the platforms from exercising their editorial judgment in the moment as was mentioned earlier the tide pod challenge was this bizarre thing that sprang up among teenagers in two thousand seventeen you know compared to generations past where they you know stole their parents alcohol instead they stole tide pods and decided to ingest them and then posted videos on the internet and it went viral and you know as common sense suggest evidence confirms it is not a good idea to ingest laundry detergent over eat over forty teenagers ended up in the hospital because they had chemical poisoning from the detergent and I know what was said by the attorney general's office that this bill would do they would not prevent the platforms from a responding to those types of weird that viral videos but I think it would I mean that way the bill is red and it says the platform can only enforce its moderation decisions if it is explicitly spelled out in the content guidelines to begin with and in this case and none of the platforms had specific policies about videos of teenagers you know ingesting household cleaners instead they had to respond in the moment take down the dangerous videos and then they rewrote their you know guidelines moving forward but under this bill they would not have been able to remove the old videos only the new videos moving forward and so at the very least a ton of people still would have seen the videos and got and potentially sick from it so at the end of the day this is unconstitutional under the first amendment because it compels private platforms and I understand that you know. Some people think that they are in a public squares and so forth but I agree with representative eleven thank you know they are similar to like a barber shop they are similar to other private businesses where they have control over who is able to enter their store and you know they're able to kick people out of their store if they don't follow the rules and another thing I recognize that these platforms are not perfect they make mistakes when they're applying their content guidelines I think earlier someone brought up the Facebook may have made a mistake in removing representatives video but it was reinstated and I think mistakes are inevitable and I think that as we move forward platforms are learning their algorithms are getting better and mistakes will become far lass but mistakes are inevitable and I think that kind of applies across the board to any industry not just social media so I'll keep this really short and just say I think the bill is unconstitutional and I think that even if it survives constitutional muster it will release a flood of unintended consequences and make the internet into a cesspool that is not safe for kids And isn't conducive to free speech for adults. Thank you thank you we have several members let me let me ask a question At I remember one time of when I was first running for office in two thousand twelve and I told the city attorney in Maumelle that was unconstitutional for them to infringe upon when you could put out campaign signs and she said well nothing's and Constitutional until it's challenged which is true and I've done so I didn't challenge it because I didn't think it be a good photo op to be next to the ACLU That is argument is used many times against well intended legislation it's unconstitutional. My concern about this constitutionality issue is that it we probably do need a new challenge going to through the courts I mean when when the the most famous ruling we look at is Oliver Wendell Holmes reference a pageant that you can't yell stand up in a theater and yell fire nineteen nineteen we're certainly not taking into account technological advances and I think you nineteen sixty nine was the most recent revisit of that so wouldn't would you agree that there are times when we have to test these boundaries that legislation like that this I mean I know you don't want to say yes I agree but are there times when we actually have to look it current technology and see how that fits in the lands or the prism of constitutional oversight. Thank you representive Lowery I do actually agree with you that I think you have to tasked where areas of the law are are ambiguous and I think we see that you know what technology in the fourth amendment have to bring cases to clarify the law here however I don't think that the laws in the US the Supreme Court said just last year that private social media platforms are not transformed into state actors simply because they're ubiquitous or widely used or even today's version of the public square they retain their first amendment right to make content moderation decisions and that is you know a policy that has been held by several circuit courts of appeal throughout the country including the ninth circuit so I don't think that this is a an area of a law that is over the and big US. Okay thank you for that representive board thank you Mr chair I just wanted to ask so when the federal government passes law that creates or exacerbates oligopoly city not think that the state has some kind of right to step in and hold them to a different standard than when the markets are truly free flowing and there's competition. Well all. Greater promise for the question but I think yeah states have leeway to regulate as they see fit and I think when it comes to competition policy especially federal law is clear that states are allowed to go beyond just what Congress does in this specific context I believe that section two thirty actually would preempt this bill but that's neither here nor there. Representive ray. actually Mister chairman after reflecting on my question is probably better for the discussion okay thank you representive wooden. The questions for the witness to do that are you are you telling us that Kids who would not experiment with the hail so to to cleaners if. If it wasn't posted if it was taken off. I think that. Others will yes or no is. I think that they would still experiment I don't think that it would be as widespread or and it obviously wouldn't go viral if others throughout the country couldn't see their videos. Follow up you're recognized so. Could the. Well first of all the follow the ninth circuit. Rule of the favor of the of. Google Amazon and YouTube and Twitter. I don't know if it's ruled in favor of all of those companies individually but it has ruled in favor of you to. and so I think the principle would apply across the board okay is is not the follow up is not the ninth circuit court of appeals the most liberal appeals court in the country actually representative I believe that the third circuit is now the clear winner for that reputation that the ninth circuit I believe president trump was able to prodded NO a direction that is being viewed as one of the most liberal I think historically that is very true okay so. If the if eighteen anti. Doesn't like what I'm saying my telephone or they have the right to cut off my telephone they do not. So tell me the difference. Sure so eighteen T. has held itself out to the public for a century saying we want every we want to partner with everyone we want you all to be our customers we will not discriminate based on your view is who you are where you come from Exeter II okay. If this if this situation. These companies have helped himself out and they have millions and millions of people who use them. Do you like to use do you think that that then it can be rule is a private platform with the constitutional it seems to be the pits today everything's unconstitutional if you're if you're against it if you're in favor of it everything it is because is is unconstitutional. So which which they go ahead of its its truck. Represent represent would not take your microphone turned off it. Is strange to me that the only time that they have interceded that I'm aware of is some this politically contrary to their policies and beliefs and I'll need somebody in Seattle or in silicone valley or will these other hot spots around the country tell me what I am saying Cannings a politically. This is true. It is so I aid it is not true have they know the inner city. No I they have removed speech that I think we would to characterize as progressive or left leaning okay we'll need to move on thank you Mr members any of other questions. we are at eleven thirty and as a members pointed out to me we have a very long agenda this afternoon so we're going to cut off today at twelve o'clock it would be great if we could get this bill finished and maybe even the next one but we'll see if there are no further questions thank you very much Mr Marquese speaking for the bill is Paul Calvert. If you will try to be as concise as is possible I appreciate. Identify yourself for the record I'm Paul Calvert they committee As a radio personality this is kind of a the important issue to me I'm I'm on the radio once once a week for the devils lake so but I'm not speaking on their behalf I'm speaking about myself. So generally speaking I would be opposed to the idea of private. Companies private businesses being told. That they can't control who says what on their property or in their business however. Facebook Twitter. These other giant corporations are not people they're not private businesses there is essentially Clause I governmental organizations and so is corporations form when people. A formal relationship with government and their offspring is baseless corporation so they're they're not really people this is not a a first amendment issue because first amendment free speech rights apply to people and so otherwise if it was truly a private business if it was representative ray and representative brown got together to solve the gonna they're gonna open a newspaper with their own private funds it's gonna be a private newspaper they're going to they're going to allow they they could they could realistically I think legally and rightfully control who says what with their newspaper or whatever it might be maybe they start of a website. And and they can control maybe they maybe they only want to allow Baptists and Presbyterians to to write articles for their for their newspaper and it would be perfectly acceptable because it is perfectly in line with the idea of free speech however these giant corporations some of them are bigger than government bodies there some of them are literally bigger than governments and they are essentially a clause I governmental agencies and therefore I can get on board with the idea of of of limiting how much authority they have to to limit content in the public square and and so that's why I can get on board with this with this type of legislation because they're not people they are Clause I governmental organizations and I think we need to make a clear distinction between these corporations persons persons Methodist money thank you. Thank you members are there any questions if not thank you very much with skews me hang on just second representative for your for your fine okay section of eleven you are recognized to close. Thank you Mr chair just a few closing comments so that we can move on to the next bill and and thank yes Sir I so number one I and no this is very difficult I alluded to this in my opening comments. Unfortunately we live in a very toxic culture and time due to politics and. My goal of of working with this bill with the attorney general's office is that we could take the politics out of it. And and try to do that in the opening comments because to me this really is not about politics this is not about. Partisanship. This is a ballot and and I'm very confused by Mr Marquesas testimony. And I want to. Thank you for the one of the softball to me because this this really is about freedom of speech. At. Currently. By not having the definition of good faith. And by not having the tool in the toolbox for our attorney general's office to defend our constituents. The social media platforms are limiting our freedom of speech. I think about some some every week during the session on Wednesday mornings at seven o'clock I've attended per caucus and almost without exception representative Hodges is there. Representative Hodges is a man of high character in faith in his ministry that he strives very hearty and when he goes into our department of corrections and ministers to inmates and tries to help change their life. And. If representative Hodges chooses to take that out to the social media world to promote his claws. And to try to get others to assist and help him in these issues if one of the social media platforms does not like the idea of having a ministry inside the four walls of our department corrections that can silencing him. I I think about representative Penzo and I know how proud he is of his Italian heritage and how he has worked so hard for the Marshallese community in his district. He has done a phenomenal job in that and we have passed bipartisan legislation this session to help the Marshallese people. But if representive Penzo goes on to one of the social media platforms and promotes his calls to help benefit the Marshallese people. If one of the social media platforms does not like that they can silence him in yes. Representive Ferguson who and make sure we've got a couple of miss identities here this morning on election representative first you are correct Senator Tucker within a. A few short hours was able to pick up the phone. Call the liaison that he knew and get that put down but our local constituents can't do that social media has become the platform for promotion on a free speech platform of our calls is. And I believe that that has to be opened and operated in good faith. I believe that this bill still has all of the firewalls in place that if if something political goes awry it takes care of itself if something illegal goes awry it takes care of itself what this does is it identifies those terms of service cemex consistent with an Arkansas law with the definition of good faith is with federal law it puts that tool in the toolbox of the attorney general's office to defend the constitutional complaints of Arkansas situations when they step into this free public use of these platforms they're encouraged to do that it goes from from senior adults all the way down to kids are encouraged to use these platforms and I believe that our constituents should have the right to operate on those. In fall within those terms of good faith and when they are silenced or censored or blocked this provides a tool for the attorney general's office to step in and help us with that I'll close out or make a motion for do pass we appreciate a good vote. Thank representive we have a motion to pass members say any discussion. Representative for a. I'll be brief Committee I'm gonna vote for this bill. I do wanna take two quick things about at one when I. When this bill was announced. there was an article about it in the paper and John toll. I had some comments quoted in the paper about whether or not this bill would be constitutional and so I just wanna say that I do share some of those concerns and I wish there had been a little bit more testimony digging into the constitutionality of this but the second thing that I would say is you know the social media companies whether it's YouTube or Facebook or Twitter they need to understand why this effort is happening. It's because it's it's not because anyone is trying to restrict their ability to pull down videos of kids ingesting tide pods that's it that's it that's a canard and it's sort of a. Ridiculous excuse the reason that these types of efforts are taking place is because the. The overwhelming majority of instances where they curb people's speech politically. It's occurring in one direction. And you can say that. It's incurring in one direction politically you could say that it's not. But it is and it instance after instance after instance the curbing of people's opinions and thoughts that are posted on these platforms is occurring in one direction so I would just encourage that the representatives of of those companies to take that feedback back to those companies and I would encourage them to moderate their behavior and that's a bill extending my comments thank you representive Hodges and then Lundstrum. Thank you Mr chair and. The one of my favorite people Marcus all I don't what what is that I'm curious to know. would is reppin would know about tick tock. We anyway he a model looking to make sure you have a video at the written with but anyways in all seriousness read the one eleven one my favorite people and and all my packages regularly this morning that you bring some great legislation you brought great legislation but other than this one I. I'm not in favor of a I do have a little problem and I do believe it will have some unintended consequences I just have a problem with us so the meat social media platform not being able to take down something that may be offensive or abusive or all races and particularly when it when when children could be exposed to it I just have a little issue with that so you know if the piece of legislation that that just can't support as much as I love the the person this this draft and it that that meant that that proposed that. Representative Lundstrum. Yeah I am for this legislation we create the Townsquare and allow the town to participate and then when the town does participate suddenly we don't let some members participate so it's got to be an all skate even for the people we don't always agree with their freedom of speech we have to let everybody speak and so I think Facebook and a lot of these platforms have become extremely successful. That's to be commended but when you block certain members of society from having an ability to speak that's wrong so I'm I'm glad to see this at least gives an ability for people to complain and that's a good thing. Congratulations I hope this passes thank you for bringing this. At least at least now we have a discussion. Thank you representative Deborah Ferguson. Yeah and represent eleven I have a group Monte up I've I've not ever consider G. debate particularly partisan but when you bring a bill that in the title says cancel culture. How could you be more partisan than that we know that's a big Republican talking points and it's bills like the is in the trans gender and all these national bills that are coming to Arkansas that upset me the most because they're just out rage legislation to create this division among people I mean really when you when you bring a bill nine cancel culturing you expect us not to believe it's partisan. Thank you for finishing the representative within. Thank you Mr chairman. Well we we've danced around it all the way but these companies do not have a wry. When they're extending themselves to thirty five forty fifty six hundred million people and people all the way around the world. To strip all. I want to have the have you heard of any of them comments about stripping them of messages about human rights in China. I haven't. I haven't at all I think we have to look at counter culture and will whatever that is I'm telling you is it's time for us to stand up. And say Hey we are not going to do that. In a free nation. In society we have the right is a legislative body to protect our people and to affect what are they saying that if it's reprehensible if it's offensive and that type thing people can don't have to use that may be the it's just like things are off the radio or the like fox thing turn it to another channel. But here these people are injecting themselves in pulling down comments that are being made because it's against their political or their philosophy. It's just like they can pull them things that are anti abortion in just do away with the. They can pull them information about transgender. Let me use the correct term on that castration of children. So you know they they just don't have this right. And when they helped himself well I don't know will ask questions or make the come in here and I don't know for sure but I don't think anyone is warranted. Both of these companies before they make a post that it may be taken down. Thank you state that tells you right there is solely based on their opinion out west or up the east. That we had about all the influence we need as a nation from those folks we're intellectuals they think they know more than we do and they think so you can check this you can vote no thank you Mr. Here there is a dark period in American history. When certain individuals who had power could call whatever they wanted to they called on American. And everyone jumped on the bandwagon know what they're on American we're going to blacklist them. What's happening today is no less worse. With these media platforms are able to say that language is offensive that languages races that language is this or that language is that and no one granted them the right. To be the arbiters of good taste or be the arbiters of what is appropriate. In the public sphere other than the fact. That they on those air waves. And I understand the people bristle at hearing the terms cancel culture. But that is exactly what's happening is that the Americans voices are being silenced by people who were not elected they were elected by anybody to be the arbiter of facts or the arbiter of good taste and I think this bill is a good step in the right direction now I know we want to conduct business pretty quickly and if I fuel some more discussion so be it I think I saw a couple of other hands representative fielding did you want to speak. Thank you Mr represent eleven. This bill does not the U.. I really hate that you have to run such bill like this I have a standard that you all. Thank you. Representative flowers. Justin speaking to the the language of the bill there there is not a specifically enumerated exception for hate speech which is a huge concern I think that there are clearly constitutional issues as well as the conversations around federal preemption. And if I think that. All of that. Coupled with the fact that. Contrary to what we heard earlier you know these companies are companies that it's not the town square. In the town square it's public property in the town square we're still subject to laws that we must abide by whether it's getting a permit to protest whether it's you know not shrieking not using profane language we're still subject to behavior and rules in the public square in this a process to it and guess what if the government steps in and arrest you were two teens you for doing something that is perceived to go against those standards there's still a process in place so that if there's a mistake made. So I just think we have to be very careful. To not hold corporations and companies to such a a standard as government they are not government there are public shareholders or private shareholders. And I just think that we ought not get into a situation where we are over reaching to the extent that we are ultimately not protecting our people and for that reason I will be voting for the bill today thank you. Representative Pilkington. Because everyone said something so I'll say something to You know I. To me it's all discussion about private companies this and that. You know the Libertarian Party wants to say well you get kicked off Twitter go bills on Twitter and that's what they did the Bill parlor within part of the platform. So then you create your own company's been alternative then they D. platform those the next you know they cut off your access to your internet service so which now we all agree is a utility so to me I think you know it's interesting as these are public squares they are public forms you know these companies are very much how we we we campaign we advertise you know. And I think it's only fair that we get treated equally and and to my colleagues across the aisle and no cancel culture maybe a political buzz term but bill Maher has a lot of rants about how terrible cancer culture again I mean he's a liberal eighty S. I don't think we have anything in common but he sees how ridiculous it's gotten in this country recently I mean heck believer of the black lives matter movement is getting canceled right now because she bought a home in an upscale white neighborhood I mean what kind of ridiculousness is that but so when when Republicans talk about our fears a cancel culture we see this and that they are warranted it's not some you know well as Republicans try to knock liberals over the head we there's a legitimate concern I mean they're coming for you know right wingers right now but it'll be all pretty soon too I and and I just think he's taken what I think is a really small bill to I don't think it really does as much as that one makes it out to be it seems super super narrow I think ruling ourselves get caught up in our partisanship over this to realize what is a good bill and so with that I'm gonna vote yes I I think sometimes it's getting to be a long session and we just take a deep breath and realize you know not everything is as crazy as everyone on Twitter and social media making it out to be thank you thank you representative representative brown last word. Last word very for thank you Mr chair of all of us have made all of these platforms very successful all of us. We've all participated and then for any one of us to express an opinion that is the and locked It's just not it's just not fair it's just not fair and. And I think what we strive for in this country is to be fair we're not asking people to make it capable of publishing smart but I certainly get my share of this month on Facebook that I have to block so um. I just think this is a fairness issue and and these four platforms have been supported by all of us and they are the public square that's just the way it is and everybody has a right to share their opinion thank you and I will be voting for it thank you. Members we have a do pass skews me representative for you have clothes she made a do pass motion of we have do pass motion on the on the floor all those in favor of this bill signify by saying aye. All those opposed say no. The eyes haven't see a roll call of course. Representative. We believe in free speech including roll call said this committee. The representative Murdock. The representative fielding. No representative Deborah Ferguson now representative Hodges now the representative Lundstrum yes. Representative Kenneth Ferguson. Representative Kenneth Ferguson. Representative Boyd. Yes representative flowers. Representative flowers. Now. Representative brown yes yes. Representative Alan. Representative Alan. Representative Gazaway. Representative Gazaway. Representative Pilkington yeah yes. Representative Penzo yes yes representative wooden. Yes represent Clowney. Now representative Richardson representative Richardson representative eleven yes. Representative ray I guess representative Maddox yes. Yes but it's one vote short sorry representive eleven thank you Mister that you committee members for a hearing for the developers hang hang just for a second I had hoped that we be able to take up one more bill but I don't believe we're going to be able to do it give it adequate hearing let me just say you know we've had a good discussion about free speech I am the ultimate believer in free speech in this committee and I and I know it interferes with lunch plans and interferes with the of this things but I'm not going to shut down the ability for members and especially the public to be able to speak on these issues we it may mean that we end up having to have some afternoon sessions later but Police admonish. Your fellow house members that if they bring bills this committee and they asked me to put it on the agenda two not pull it fifteen minutes before the meeting representative board. This respectfully you that literally not witnesses brain surgery the. This state. I I'm fine I'm fine I just hope if if it's a close vote you just need to to know but that's fine we'll we'll go. Okay we'll run run the bill okay. Sure. Mister chair thank you very much for the opportunity to present this I I very much appreciate it members this is Senate bill six oh three and and and we do want to hear it I just didn't want to give the give you little time to be able to present it and I appreciate your witness being here yes with your permission I will very quickly begin. Thank you Mr certain invalid or surgeon surgery centers converted to temporary hospitals during the pandemic to assist with COVID patient overflow and for other reasons and so basically these invalid or surgery centers they stepped up to help during COVID and Medicare Medicaid recognize that in the change from ambulatory surgery center to a hospital but there been some challenges with in healthcare insurers recognizing that and so what this bill does it in in helps ensure fair treatment of those facilities by insurers and with that said doctor Scott Schlesinger K. if you identify yourself for the record and and then you can give your testimony. My name is Scott selection. Thank you my name is Scott Slesinger and I'm a nurse surgeon here in Little Rock for thirty years This Is he might exaggerate a little bit I don't have brain surgery this afternoon but we do have patients schedule to. The work is what I will be very it was a good hook yeah you know it it will be to the point so and in may CMS as stable Tory surgery centers in the United States to enroll as many as could possibly do so in their eleven thirty five waiver program to alter their license status as an amateur surgery center to that of a temporary hospital without getting into all the legal knowledge I don't really understand it basically allowed ASC's that didn't get shut down from the pandemic and still had staffing and manpower and and supplies and PHG RPP eccentric. To enroll in the program and try to help alleviate both capacity issue and mitigate the risk of knows a cold meal acquisition of COVID for patients getting care that were related to COVID to the CDC estimated that around fifteen percent risk if patients were getting treated in a facility treating COVID patients of acquiring covid and of course everyone here knows that the devastation of covert I have a and the terrible story of a brother who's been on the ventilator now for over seven months had been on ECMO for four months previously healthy no underlying condition and we couldn't be more thankful of the healthcare resources that he has had access to and I hope one way he got access was the good Samaritans at least in the front line workers and the good Samaritans in the amatory surgery center industry that agreed to enroll in the program. It'll basically allowed AS sees are normally required to keep patients a maximum of twenty three hours. Disallowed A. as cities that enrolled in the program to keep patients for longer than twenty three hours as long as necessary. So this is the basic licensing change of CMS stated in encouraging those of us who did enroll to enroll in that was but six around ten percent of Arkansas is a of season rolled in the program. They encouraged us by making it easy to get in and when they declared a pandemic easy to get out and they stated there would be no it's it's it's all in writing but it they stated that the autumn the license to be an agency would automatically revert. Immediately when they declared a PhD to be terminated the reason we're here today and taking up all of your lunchtimes in pushing back a few appointments is every insurance company that we are and I've been here thirty years every insurance companies that we've done business with except for two and I'm not gonna get into names. You're recognized the program did everything they could to help get their patients in and involved in able to get access to this care. And did everything they could to facilitate. Two insurance companies have not participated in the same manner and despite nine to ten months of negotiations with lawyers that we all hired to attempt to negotiate the terms of a fair contract and a fair exit that we as soon as the pandemic is declared over DO you are to do what exactly the the CMS is declared in that is allow us to immediately revert to a twenty three hour facility not have to renegotiate contracts could take months and months to negotiate. In long and short of it is one of the two companies not told us rule basically you participate in this program we're going to take your contract way as a as C. and we distract or feet did nothing there there other terms were unacceptable and they even told us more their representatives in the Senate Committee when we run a terror that this a private matter between agencies and insurance company and they would negotiate and work it out but none of that happened we even went back to them so. I'm glad we carried the legislation forward we have hundreds and hundreds of the even thousands of patients of this insurance company that received termination letters from the insurance company saying that are amatory surgery center which is really a temporary hospital is not in network anymore because we're not a a C. were hospital but then they refuse to recognize that we're hospitals were in a catch twenty two and I don't know and the reason that taking appeals time is I hope to see since we couldn't get any cooperation and negotiation with lawyers negotiating back and forth so we get legislative remedy not only for this pandemic. The fourth wave for fifth way this pandemic whatever may be hold to us in the future but if we have another pandemic or another pandemic or other health emergency that we don't go through this again that basically of CMS. Hartman of health the governor of Arkansas legislature say this is good for the people of Arkansas that the private insurance companies should follow suit and recognize the same terms thank you. Members are there any questions for this witness. Thank you very much speaking against the bill is Derek Smith. Please identify yourself for the record. Good afternoon Mister chair committee my name is Derek Smith I am a lawyer here in Little Rock Arkansas and I represent United health group. Okay in recognizing the hour I will be brief you are as I said I represent United health group it is one of the two carriers that has not been able to reach an agreement with doctor Slazenger and its principal because at this point Dr Slesinger's clinic to refuse to accept terms that are being offered there similar to similar size hospitals and state. in the Senate committee I think I testified that we were aware of only one hospital that's affected by this piece of legislation that's incorrect I think according to the department of health website there are three facilities with a total of three beds that are implicated by this legislation and again it really is a dispute on contracting terms doctor Slazenger has and his group of refused to give the go she ate or accept terms that are offered to comparable hospitals with regard to the notice that went out to policyholders that is correct under our reading of the C. CMS program. A hospital can either be well once you agree to go into the program then you are a temporary hospital you can no longer be an ASC you can't be both at the same time we attempted to negotiate for. The company's of attempted negotiate for months and it reached a point where they're still made still insist on being considered temporary hospital can no longer be an ASC and we felt obligated to tell our clients who are also his patients but our clients to pay premiums that that hospital is no longer an ASC and network I'd be happy to address any questions. Representive wooden. It didn't understand doctor solicitors say that there were nine other companies insurance companies that have approved. This the ambulatory being a temporary hospital or call along with it. I did not hear that I I heard him say that there to insurers that have not but I don't know how set might have thank you thank you said several of no exactly how many but what what what what of the resistance to this particularly. With the pandemic situation in the hospital situation what what are your resistant. Representative would we the company has absolutely no resistance to contracting with a doctor's lessons or any other A. S. the that wishes to become a temporary hospital as long as they will negotiate an agreed to terms that are similar to offer to other hospitals that are traditional hospital in the area okay use the words similar. What was the difference in being. What was the difference in the one being a permanent hospital one being a temporary if you say there's several or What were you doing to differentiate that between their temporary status in a permanent hospital that you lead run for your company again without getting into all the specifics of the contract negotiations and I was not involved in those negotiations I think here again the his from what I understand the hospitals were offered terms that are similar to similar size hospitals in the similar geographic region that offer similar services. Okay so representative would we need to move on and that's thank you Mr thank you representative Ferguson. Yeah I'm just so I thought I heard them say that. That that you weren't allowing them to be both the two pre hospital and outpatient surgery center is that correct that's the way I understand the thought CMS waiver program that allowed in a S. the to become a temporary hospital works while you are a temporary hospital you're no longer considered ASC. At twelve minutes to follow back I guess I'm trying to understand how Blue Cross and other insurers were able to come to terms with this but you are unable to come to the same terms. From what I. And again I only know the. What I've been told about the negotiations with one company I understand that because we know they're probably three major insurers that provide major medical in the state the he is set to companies have not been able to reach terms with so that's it just one pass. I mean but it would make sense that why you're saying covered patients as a temporary hospital you would also be a continual like to surgeries at some point like now at. No we we agree I think once the once the facility is considered an ASP of with be contracted with us and they actually don't for. Okay thank you. Thank you for your testimony saying no further questions thank you Mr thank you Committee. I'm sorry what would we be able to have the doctor respond to what he said so I'm just trying to clearly understand. Is it possible that really would would not be proper with hopefully he joined me in the closing just revealed that. Represent boy would just have to hope that you can pull it through. Okay so and we will recognize you now for closing. Thank you again Mister chair for allowing this to be heard I do appreciate it sure and Look it we had a pen we're in a pandemic still and the government worked to offer a solution it was a legitimate solution and it worked for the government and I did we want to make sure that other private facilities work with this in the future and this legislation is important component to help make sure that happens so with that said I appreciate a good vote thank you and you're making a motion motion do pass pastor K. all right members we have a do pass motion any discussion. If not all in favor of the motion do pass on Senate bill six oh three signify by saying aye. Any opposed say no and there's no opposition congratulations thank you members we're going to be changing the rules up of committees for for the duration. Anyone making a presentation will be presenting alone without witnesses at the table your witnesses will need to sign up for and against and will be subject to any limitation