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State Policy News
House Bill to Eliminate Punitive Damages from Controversial 2013 Discrimination-Remedies Law Dies in Committee
CACI Labor and Employment Council Chair Stacey Campbell
Yesterday afternoon, CACI Board Member Susan Cirocki and CACI Labor and Employment Council Chair Stacey Campbell testified in support of HB-1172, the bill sponsored by House Minority Leader Brian DelGrosso (R-Loveland) that would have stripped the punitive-damages provision from state law that was put in place two years ago when the Democratically controlled legislature passed HB-1136.
In 2013, HB-1136 was signed into law by Democratic Governor John Hickenlooper. The measure allows a plaintiff suing his or her employer—no matter the size of the employer–in state court in an employment discrimination case to seek awards of both compensatory and punitive damages and recover attorneys’ fees, among other remedies. Sponsors of HB-1136 labeled it the “Job Protection and Civil Rights Enforcement Act of 2013.”
CACI, in opposing HB-1136, worked with the bill’s sponsors to lessen its potential harm to employers, especially small ones with less than 15 workers. Governor Hickenlooper signed the bill.
Yesterday, the House Judiciary Committee on a partisan 7-6 vote killed HB-1172 after lengthy testimony and discussion.
Susan is President & Owner, Arrow Sheet Metal Products Company. Stacey recently left CACI–member Littler to recently start his own firm, Campbell Litigation, P.C., which has become a CACI member.
Stacey told the Committee that existing law, CRS 13-21-102 already provides plaintiffs with the opportunity to pursue punitive damages. Here is the statute:
C.R.S. 13-21-102 (2014)
13-21-102. Exemplary damages
(1) (a) In all civil actions in which damages are assessed by a jury for a wrong done to the person or to personal or real property, and the injury complained of is attended by circumstances of fraud, malice, or willful and wanton conduct, the jury, in addition to the actual damages sustained by such party, may award him reasonable exemplary damages. The amount of such reasonable exemplary damages shall not exceed an amount which is equal to the amount of the actual damages awarded to the injured party.
(b) As used in this section, “willful and wanton conduct” means conduct purposefully committed which the actor must have realized as dangerous, done heedlessly and recklessly, without regard to consequences, or of the rights and safety of others, particularly the plaintiff.
(1.5) (a) A claim for exemplary damages in an action governed by this section may not be included in any initial claim for relief. A claim for exemplary damages in an action governed by this section may be allowed by amendment to the pleadings only after the exchange of initial disclosures pursuant to rule 26 of the Colorado rules of civil procedure and the plaintiff establishes prima facie proof of a triable issue. After the plaintiff establishes the existence of a triable issue of exemplary damages, the court may, in its discretion, allow additional discovery on the issue of exemplary damages as the court deems appropriate.
(b) The provisions of paragraph (a) of this subsection (1.5) shall not apply to any civil action or arbitration proceeding described in section 13-21-203 (3) (c) or 13-64-302.5 (3).
(2) Notwithstanding the provisions of subsection (1) of this section, the court may reduce or disallow the award of exemplary damages to the extent that:
(a) The deterrent effect of the damages has been accomplished; or
(b) The conduct which resulted in the award has ceased; or
(c) The purpose of such damages has otherwise been served.
(3) Notwithstanding the provisions of subsection (1) of this section, the court may increase any award of exemplary damages, to a sum not to exceed three times the amount of actual damages, if it is shown that:
(a) The defendant has continued the behavior or repeated the action which is the subject of the claim against the defendant in a willful and wanton manner, either against the plaintiff or another person or persons, during the pendency of the case; or
(b) The defendant has acted in a willful and wanton manner during the pendency of the action in a manner which has further aggravated the damages of the plaintiff when the defendant knew or should have known such action would produce aggravation.
(4) Repealed.
(5) Unless otherwise provided by law, exemplary damages shall not be awarded in administrative or arbitration proceedings, even if the award or decision is enforced or approved in an action commenced in a court.
(6) In any civil action in which exemplary damages may be awarded, evidence of the income or net worth of a party shall not be considered in determining the appropriateness or amount of such damages.
“It is unfortunate that the bill died. It truly makes no sense to have punitive damages in the employment discrimination context when Plaintiffs were already provided that remedy through Colorado statute,” Stacey told CACI in an email after the hearing. He also said that through the statute currently, exemplary damages are not automatic but require the plaintiff to first obtain information during the discovery process in a lawsuit and establish “prima facie proof” of a “triable” issue for exemplary damages before the Court will allow such damages.
CACI Board Member Susan Cirocki
Susan told the Committee that, she, as a small business owner, finds the risk of any lawsuit terrifying. Although profits may be small,the risk every day of staying in business is high, she said. Although the damages stipulated in HB-1136 are concerning, she said, the cost of just talking with her firm’s attorney can escalate quickly.
The fact that the legislature two years ago exempted state and local governments from the punitive damages provision but subjected small businesses to the provision is shocking, Susan said. One bad year or one unfortunate event can devastate a small family owned business, she said. The punitive damages provision of HB-1136 will make her cautious in hiring and promoting workers, she said.
HB-1172’s fiscal note described the bill:
Summary of Legislation
Under current law, an employee may file an employment discrimination claim and seek compensatory and punitive damages in state court after pursuing administrative relief through the Colorado Civil Rights Division (CCRD). This bill eliminates punitive damages as a remedy for these state law employment discrimination cases.
Background
In 2013, preexisting state employment law covered employers of all sizes, and prohibited employment discrimination on the basis of sexual orientation. House Bill 13-1136 amended Colorado employment discrimination law to provide the same forms of relief available under federal law, specifically compensatory and punitive damages. However, employees of small organizations (under 15 employees), as well as employees aggrieved on the basis of sexual orientation, are not covered by federal employment law. Under HB 13-1136, these employees may pursue employment discrimination claims under state law that are unrecognized by federal law, though employees of state and local government in Colorado are precluded from seeking punitive damages.
SB-69 awaits Senate Appropriations Committee hearing
Meanwhile, the Senate bill to repeal HB-1136 awaits action in the Senate Appropriations Committee. SB-69 is sponsored by Senator Laura Woods (R-Arvada).
The Senate Business, Labor and Technology Committee approved a bill to repeal HB-1136 on a 6-3 vote with Senator Cheri Jahn (D-Wheat Ridge), a small businesswoman, breaking ranks with her fellow Democrats to support the measure.
Loren Furman, CACI Senior Vice President, State and Federal Relations, testified in support of the bill before the Committee.
The SB-69’s fiscal note summarizes the proposal:
This bill modifies provisions of Colorado statute related to legal recourse for employment discrimination. The bill also repeals a requirement that the Colorado Civil Rights Division (CCRD) form a volunteer working group of employer and employee representatives.
Recourse for employment discrimination. The bill reverses certain changes to state employment law enacted by House Bill 13-1136, which took effect January 1, 2015. Specifically, the bill repeals and reenacts provisions of state statute related to remedies for employment discrimination.
Under current law (HB 13-1136), any employee who proves to the CCRD or, as applicable, the State Personnel Board (personnel board) workplace discrimination on the basis of disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry may seek equitable relief (e.g., reinstatement) or an award of back pay and prospective earnings. In cases of intentional discrimination, and subject to certain limits, HB 13-1136 permits an employee who has prevailed at the CCRD or personnel board to pursue compensatory and punitive damages in state court. The present bill eliminates the option to pursue damages in court and limits remedies awarded by the CCRD to certain equitable remedies, removing prospective earnings from CCRD remedies.
A conforming amendment repeals the authority for the Risk Management Fund in the Department of Personnel and Administration (DPA) to be used for payment of compensatory damages to state employees.
Volunteer working group. Under current law, the volunteer working group organized by CCRD in the Department of Regulatory Agencies (DORA) is to develop education and outreach resources for employers to prevent discriminatory employment practices. An education and outreach plan was to be produced in FY 2013-14, and the group was also to compile educational resources for dissemination on the CCRD website. The bill repeals all statutory requirements for the working group.
Although the Republican-controlled Senate will likely send SB-69 to the Democratic-controlled House, its life there will probably be very short. For news media coverage of this issue, read:
“House panel kills attempt to lighten lawsuits against Colorado small businesses,” by Ed Sealover, The Denver Business Journal, February 19th,
“Repeal of Colorado anti-discrimination lawsuit bill receives first approval,” by Ed Sealover, The Denver Business Journal, February 9th
“Colorado lawmakers attempt to undo 2013 discrimination law,” by Ed Sealover, The Denver Business Journal, February 6th.
For more information on this matter, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.
CACI and Business Interests Unite to Defeat SB-123
Today, CACI and other business interests united to oppose and defeat SB-123, which, if enacted into law, would have infringed upon health insurers’ freedom to contract with specialty pharmacies to dispense specialty prescription drugs that are increasingly used to treat complex health conditions.
The bill was sponsored by Senator Larry Crowder (R-Alamosa).
Under SB-123, any willing pharmacy could merely submit a written attestation to be recognized as a specialty pharmacy. Health insurance networks would thus be forced to reimburse for the specialty drugs dispensed by any pharmacy, regardless of their ability to meet the detailed terms and conditions, prices and reimbursement rates, heightened standards of care, and broader range of services generally included in contractual agreements between health insurers and specialty pharmacies.
Specialty pharmacies have become a proven cost- and quality-control asset for Colorado’s health insurance industry, helping health-insurance networks contain costs and protect patient safety. Forcing health-insurance networks to contract with and reimburse any pharmacy, regardless of its ability to control costs and guarantee patient safety when specialty drugs are prescribed would have resulted in significantly increased health-insurance costs across Colorado, which would have been passed on to businesses and their employees.
Here’s how the bill’s fiscal note summarized the proposal:
Under current law, an insurance carrier or pharmacy benefit manager (PBM) may require a person to fill a prescription for a prescription drug through either a mail-order pharmacy or another pharmacy designed by the insurance carrier or PBM. The bill allows an individual covered by a health insurance plan to fill a prescription for a specialty drug or biological product at a network pharmacy of his or her choice if proper noticed is filed with the insurance carrier or the PBM. The bill creates a process for local pharmacies to attest that they are able to fill the prescription in compliance with state and federal law and other requirements, and accepts the payment terms for specialty drugs and biological products provided by the health plan for existing network pharmacies.
The bill imposes other requirements on PBMs and insurance carriers in covering specialty drugs and biological products dispensed by local pharmacies, including:
- requiring that claims for these products be paid in a timely manner as for other prescriptions;
- prohibiting different payment terms when filled by a local pharmacy compared with a mail-order pharmacy or other designated pharmacy; and
- prohibiting incentives for a covered individual to fill a prescription through a mail-order pharmacy or other designated pharmacy.
Any violation of the bill constitutes an unfair or deceptive act or practice for the business of Insurance.
SB-123, which initially passed Second Reading on the Senate floor, ultimately died after the Senate adopted an amendment to the “Committee of the Whole” (COW) Report to reverse the prior vote to advance the legislation. This procedural maneuver killed the legislation.
For more information on this bill, contact Dan O’Connell, CACI State Government Affairs Representative, at 303.866.9622.
Federal Policy News
CACI Expresses Strong Concerns about Proposed Ozone Regs to EPA Administrator, Urges Congressional Delegation Members to Weigh in with EPA
CACI President Chuck Berry has sent a letter to Gina McCarthy, Administrator of the U.S. Environmental Agency (EPA), to express CACI’s strong opposition to the EPA’s proposed, restrictive ozone regulations that threaten to severely damage the Colorado and U.S. economies if implemented.
In addition, Chuck conveyed letters to six members of the Colorado Congressional Delegation, asking them to contact Administrator McCarthy and tell her “to keep the ozone standards at their current level . . . “
Meanwhile, Chuck has sent a letter to Governor John Hickenlooper (D), requesting that he also contact Administrator McCarthy to urge her to pull back the proposed ozone rules.
Here is Chuck’s letter to Senator Cory Gardner (R); the letters to the following members of the Delegation are similar:
- Senator Michael Bennet (D)
- Representative Scott Tipton (R)
- Representative Ken Buck (R)
- Representative Doug Lamborn (R)
- Representative Mike Coffman (R)
Here is the text of the letter to Administrator McCarthy:
On behalf of the Colorado Association of Commerce and Industry (CACI), I am writing today concerning the new ozone regulations proposed by the Environmental Protection Agency (EPA). The regulations being proposed by the EPA threaten regulatory consistency and the economic well-being of both workers and employers, housing providers and businesses. A one-size-fits-all approach of the EPA on this matter is not appropriate for application in Colorado.
The ozone rules imposed in 2008 are still being implemented today, and Colorado has seen a 30% drop in ozone levels since 1980. However, in 2010 when these same rules were proposed by EPA, the President stepped in with a two-year break from implementation of the rules – noting the new regulations would add uncertainty to the economy and we needed to, “minimize regulatory costs and burdens, particularly in this economically challenging time.”
Complying with Federal regulation is one of the heaviest burdens on business today. By the EPA’s own estimates, the proposed ozone bill will cost upwards of $50 billion from our nation’s GDP; National Association of Manufacturing (NAM) numbers show $11 billion just from Colorado. Additionally, the EPA rules could mean losses of up to 220,000 jobs nationally with almost 25,000 coming from our state. The U.S. Chamber of Commerce even found disposable income losses could be as high as $550 billion. Numerous studies have shown the newly proposed ozone regulations of 60ppb to 70ppb will do incredible damage to our economy.
Additionally, this proposal does not take into consideration Colorado’s industries or unique topography. Specifically, this blanket rule does not account for the vegetation, winds, wildfires or the animals so unique and intrinsic to Colorado and our neighboring states. In fact, the proposal goes so far and is so stringent that the Grand Canyon would fail the proposed 70 ppb standard, and Yellowstone National Park would fail the proposed 65 ppb standard. In non-attainment areas like Colorado’s Front Range, companies building or expanding would be required to reduce ozone-forming emissions regardless of cost, and economic development could not move forward unless emissions were reduced from other sources.
Colorado businesses have been working hard to comply with existing EPA rules and we are already on the forefront of environmental standards in America. Colorado businesses were at the table for statewide air quality standards, minimum setbacks, water conservation and energy efficiency standards – all to ensure we worked with our communities and State Government as a team. However, the EPA did not ask for input from Colorado businesses on these proposed standards and to-date has been uninterested in hearing business and consumer voices.
Colorado citizens work hard to not only be good corporate citizens, but we also work to be responsible stewards of the land. Colorado’s continued economic promise is a bright spot in the nation’s economy, in addition to being a good example of existing environmental standards. Thus CACI joins with many other voices in asking the EPA to keep ozone standards at their current level (75ppb). We want Colorado to be the best state in the nation in which to do business, but the EPA’s onerous regulations will take us in the opposite direction. Thank you for your consideration.
For information about the proposed ozone regulations, contact Leah Curtsinger, CACI Federal and State Governmental Relations Representative, at 303.866.9641. For more information on this issue, read:
“What Could New Ozone Regs Cost Colorado?” CACI Colorado Capitol Report, January 23rd.
“CACI Creates Reference List for EPA Timeline, Asks for Ozone Rule Comments,” CACI Colorado Capitol Report, February 6th.
“EPA to propose tougher rules on smog-causing ozone, setting up clash with GOP,” by Joby Warrick, The Washington Post, November 26th.
“EPA Sends Proposed Ozone Rules to White House,” CACI Colorado Capitol Report, October 17th.