HEADLINES

CACI Revamps Governmental Affairs Council to Improve Business Lobbying Effort

Bill to Limit Surveillance of Injured Workers Reportedly Set for Senate Committee Hearing Wednesday

Roundup of the Other Pinnacol Bills

Summary of CACI Positions on Major Bills

Upcoming CACI Council Meetings

Dan Pilcher

CACI Senior Vice President

& Chief Operating Officer

Phone: 303.866.9600

E-Mail: dpilcher@cochamber.com

Friday, March 26, 2010

NOTE:  The late Tuesday snowstorm resulted in the closing of the CACI Office Wednesday and the cancellation of that day’s meeting of the CACI Labor and Employment Council.  The General Assembly was closed on Wednesday.

From left to right: Alan Poe of Holland & Hart, Al Timothy of MillerCoors, Chuck Berry of CACI, Tom Flanagan of Citywide Banks, A. Marvin Strait, CPA, Rob LeVine of Anters at Vail, Ann Brown of New Vista Image, Peter O'Connor of AngloGold Ashanti N.A. and Dan Pilcher of CACI at the Colorado State Capitol following a meeting with Senate President Brandon Shaffer.

CACI Revamps Governmental Affairs Council to Improve Business Lobbying Effort

On Tuesday, CACI Vice President of Governmental Affairs Loren Furman unveiled a new approach for the CACI Governmental Affairs Council that is designed to create a business coalition for specific bills to improve the lobbying effort on each bill.

The Governmental Affairs Council meets every other Tuesday during the legislative session.  It is comprised of the CACI lobbying team and CACI members who are registered lobbyists working for CACI member companies.  The Council also includes lobbyists for trade associations and local chambers of commerce, all of whom are CACI members.  It also includes contract lobbyists, who are CACI members but who represent business clients, some of whom are CACI members and some of whom are not.

Specifically, CACI’s lobbying team discussed the bills on which CACI’s policy Councils have taken positions.  These Councils are (1) Tax, (2) Energy and Environment, (3) Labor and Employment and (4) HealthCare.

The new initiative allows the Governmental Affairs Council to decide which bills from CACI’s policy Councils should be a priority for the Governmental Affairs Council.  Members of the Governmental Affairs Council then volunteer to be part of the lobbying coalition on a particular bill and are listed on the CACI fact sheet about the bill that is created and distributed to legislators.

At Tuesday’s meeting, the Governmental Affairs Council picked three bills as lobbying priorities:

·         SB-12 (Increased Penalties for Violations of the Workers’ Compensation Laws)

·         SB-76 (Unreasonable Insurance Claims Practices)

·         HB-1269 (Remedies in Employment Discrimination Cases)

SB-12 (Increased Penalties for Violations of the Workers’ Compensation Laws)

The bill is sponsored by Senator Lois Tochtrop (D-Thornton) and Representative Sal Pace (D-Pueblo).  The bill is one of seven bills approved by the legislature’s interim Pinnacol Assurance committee last summer and fall, which Senator Morgan Carroll (D-Aurora) chaired.

The bill reportedly is scheduled to be heard by the Senate Judiciary Committee, which is chaired by Senator Carroll, when it meets at  1:30 p.m. next Wednesday, March 31st, in Senate Committee Room 352.

SB-12 increases the penalty for violating the workers’ compensation laws from up to $500 per day to up to $1,000 per day.  The bill allows the Director of the Division of Workers’ Compensation in the Colorado Department of Labor and Employment or an administrative law judge (ALJ) to apportion the proceeds, in whole or in part, to the aggrieved party, a medical services provider and/or the Workers Compensation Cash Fund.  The bill also changes the mental state from “willfully” to “knowingly” for denying or delaying payment of benefits. 

Governmental Affairs Council’s Concerns with SB-12

By decreasing the standard from “willfully” to “knowingly” for denying/delaying payment of benefits, this change creates a lower standard that could adversely punish insurers for prudently slowing or stopping a claim in order to pursue proper proof or a fraud investigation.  This change will likely increase the number of penalties assessed.

Currently, if an adjuster “willfully” denies/delays payment, they are subject to penalties. If the “willfully” standard is changed to “knowingly,” it removes the adjuster’s intent in a situation.

For example, if an adjuster knows a check is going to be late because the mail won’t be delivered that day--and he or she obviously cannot control the U.S. Postal Service schedule—then the adjuster will be subject to penalties.

SB-12 allows for an apportionment of proceeds, which will increase costs for all parties, including employers and insurers, and further incentivize claimants to pursue penalties for the most minor of infractions, such as a late mail delivery.

This bill gives extraordinary powers to the Director of the Division of Workers’ Compensation or an ALJ for the assessment of increased penalties without allowing for a proper hearing.

Members of the Governmental Affairs Council who are actively working with CACI to defeat this bill include: Property and Casualty Insurers Association, Pinnacol Assurance, Tri-State Generation and Transmission Association, Colorado Civil Justice League, West Chamber Serving Jefferson County, Metro North Chamber of Commerce, Arvada Chamber of Commerce, Aurora Chamber of Commerce, Colorado Auto Dealers Association and Colorado Motor Carriers Association.

SB-76 (Unreasonable Insurance Claims Practices)

SB-76 will define as an unfair settlement practice and a deceptive practice of insurance to pay a salary or any kind of compensation to an insurance carrier employee whose work directly or indirectly results in the denial or delay of a claim, or cancellation or rescission of an insurance policy.

The bill is sponsored by Senator Morgan Carroll (D-Aurora) and Representative Dianne Primavera (D-Broomfield).  The Senate gave final approval to the bill on March 9^th.  It has been assigned to the House Judiciary Committee, but it has not yet been scheduled for a hearing.

Governmental Affairs Council’s Concerns with SB-76

A “solution in search of a problem,” SB-76 assumes that claimants are denied insurance benefits due to internal policies of insurers to provide incentives to their employees for denying or delaying claims.

This is neither a practice of insurers nor is there any reasonable proof that Colorado insurers have engaged in this practice.  Current Colorado law provides that a person who feels that his or her insurance carrier has engaged in an “unfair claim settlement practice” can file a complaint with the Colorado Division of Insurance or pursue civil action against the insurer.  In addition, the CACI Governmental Affairs Council opposes the bill for the following reasons because the bill will:

·         Prevent insurance companies from investigating potential fraudulent claims because that could be interpreted as delaying a claim;

·         Prevent insurance companies from paying salaries to workers who review claims;

·         Not distinguish between a justified or an unjustified claim, which may cause insurance carriers to pay for services not covered in an insurance contract; and

·         Increase the cost of purchasing insurance in Colorado by removing authority over insurance companies from the Division of Insurance and putting that authority within the courts, increasing unnecessary litigation and making insurance increasingly unaffordable to Coloradans.

Members of the Governmental Affairs Council who are actively working with CACI to defeat this bill include: Property and Casualty Insurers Association, Anthem Blue Cross Blue Shield, Colorado Association of Health Plans, Colorado State Association of Health Underwriters, State Farm Insurance Companies, Liberty Mutual, United Services Automobile Association (USAA), Rocky Mountain Health Plans, Cigna Health Plans, Hall and Evans, Professional Independent Insurance Agents of Colorado, Pinnacol Assurance and Aurora Chamber of Commerce.

For more information, contact Dan Anglin, CACI Governmental Affairs Representative, at 303.866.9641 or via e-mail at danglin@cCOchamber.com or Loren Furman, CACI Vice President of Governmental Affairs, at 303.866.8642 or via e-mail at lfurman@COchamber.com

HB-1269 (Remedies in Employment Discrimination Cases)

HB-1269 establishes the “Workplace Fairness and Civil Rights and Remedies Act of 2010” which would allow additional remedies of compensatory and punitive damages in employment discrimination cases brought under Colorado law.  Under current law, plaintiffs who win employment discrimination and other types of employment claims can recover actual economic damages, such as lost wages.

Governmental Affairs Council’s Concerns with HB-1269

·         This bill makes it more lucrative for both the plaintiff and his or her attorney to file lawsuits against Colorado employers, which will encourage more lawsuits against employers.

·         Small companies don’t have human resources departments to avoid the many litigation traps they face every time they make a decision to hire, promote or fire an employee. Additionally, small firms often do not have the resources to defend these cases--even meritless cases--and may thus be incentivized to settle early rather than defend themselves, thereby encouraging more claims.

·         Large companies with 15 or more employees already face most, but not all, of these expanded penalties under Federal law. HB-1269 will therefore lead to "forum shopping" in employment cases.

·         The new employment-related case load created by this bill would further slow state courts--where little employment litigation now takes place--and will cost taxpayers.

·         Although the General Assembly this session says it is encouraging new jobs creation, this bill encourages new lawsuits that will make it more costly for employers to hire new workers or re-hire laid-off workers.

Members of the Governmental Affairs Council who are actively working with CACI to defeat this bill include: Waste Management, Tri-State Generation and Transmission Association, Colorado Civil Justice League, Colorado Auto Dealers Association, Colorado Retail Council, Colorado Motor Carriers Association, West Chamber Serving Jefferson County, Metro North Chamber of Commerce and Arvada Chamber of Commerce.

For more information, contact Loren Furman, CACI Vice President of Governmental Affairs, at 303.866.8642 or via e-mail at lfurman@COchamber.com or Larry Hudson, CACI Contract Lobbyists, at 303.249.4234 or via e-mail at larry@hudsonga.com

Bill to Limit Surveillance of Injured Workers Reportedly Set for Senate Committee Hearing Wednesday

HB-1012 reportedly is scheduled to be heard by the Senate Judiciary Committee when it meets at 1:30 p.m. next Wednesday, March 31st, in Senate Committee Room 352.  CACI strongly opposes the bill. 

The bill’s Senate sponsor is Senator Morgan Carroll (D-Aurora), who also chairs the Judiciary Committee.  The House sponsor is Representative Sal Pace (D-Pueblo).  The bill is one of seven bills approved by the legislature’s interim Pinnacol Assurance committee last summer and fall, which Senator Carroll chaired.

HB-1012 limits the ability to use public surveillance to detect fraud in workers' compensation claims.  The bill as amended limits the introduction of evidence of the presence or absence of a medical condition at an administrative hearing if the following conditions have been met:

·         The evidence must be submitted to the treating physician prior to the hearing;

·         There was a reasonable basis to suspect fraud or misstatements prior to the surveillance;

·         The surveillance was not intrusive, intimidating or harassing; and

·         The person conducting the surveillance did not misrepresent the insurer or employer.

HB-1012 as amended also requires the destruction of all materials collected during surveillance no later than five years after resolution of the claim. 

The type of surveillance currently used is known as “legal observance” and uses photography/videography in public areas.  Surveillance is used in less than five percent of workers’ compensation claims and is only used when one or more “red flags” have been raised.  The expensive nature of conducting surveillance ensures that it is not overused.  

CACI’s concerns with HB-1012

·         HB-1012 is more restrictive on evidence than any criminal statute by requiring the destruction of potential evidence no later than five years after resolution of the claim.  For example, the criminal statute for theft allows for the statute of limitations to start on the “date of discovery” of the crime.  Additionally, the crime of forgery does not even have a statute of limitations.

·         Based on the specific conditions required for introducing evidence, HB-1012 creates a higher standard for admissibility of surveillance than that required for any other court proceeding.

·         Because surveillance is expensive to conduct, it is not overused by private or public entities.  In fact, the bill’s recent Fiscal Note quotes the Colorado Department of Personnel and Administration as saying that “based on the expensive nature of surveillance, the State would not pursue surveillance on anyone that is not already suspected of committing a crime.”  That same standard is currently upheld by insurers and employers.

·         The terms "reasonable basis", "intrusive", "intimidating" or "harassing" are undefined and subjective.

·         Surveillance is an important tool in determining fraudulent claims and containing costs for policyholders. If this bill is adopted, it will invite fraudulent claims and abuse by those individuals looking to take advantage of a necessary insurance coverage.

Other states do not limit admissibility in court, but do regulate and license private investigators.

For more information, contact Dan Anglin, CACI Governmental Affairs Representative, at 303.866.9641 or via e-mail at danglin@COchamber.com or Loren Furman, CACI Vice President of Governmental Affairs, at 303.866.8642 or via e-mail at lfurman@COchamber.com

Roundup of the Other Pinnacol Bills . . . .

As mentioned above, the legislature’s interim Pinnacol committee approved seven bills.  SB-12 and HB-1012 have been discussed above.  Three of the remaining Pinnacol bills—SB-11, SB13, and HB-1009—are also reportedly to be heard by the Senate Judiciary Committee next Wednesday afternoon.  One bill, HB-1356, is set to be heard in the House Business Affairs and Labor Committee on April 6^th.

SB-11 (Disclosure of Workers Compensation Conflicts of Interest)

This bill is sponsored by Senator Morgan Carroll (D-Aurora) and Representative Joe Miklosi (D-Denver).  CACI opposes this bill.  SB-11 would require a physician who performs an independent medical examination (IME) to disclose any business, employment, financial or advisory relationship with an insurer or self-insured employer if a party requests the information.

The bill prohibits payment of a financial incentive by an insurer, self-insured employer or health-care provider to deny or delay a workers' compensation claim or to deny or delay medical care or payment for medical treatment for any such claim.  The problem with this provision is that insurers pay bonuses for various achievements of efficiency or good medical outcomes.  It would be impossible to prove that a bonus or reimbursement was not based on a denial alone.

The bill subjects a person committing a violation to penalties of up to $3,000 per violation, not to exceed $30,000, or, in the case of knowing violations, up to $30,000 per violation, not to exceed $750,000 annually.

SB-13 (Workers' Compensation Accountability)

SB-13 is co-sponsored by Senator Mary Hodge (D-Brighton) and Senator Lois Tochtrop (D-Thornton).  CACI is neutral on the bill.  It requires all workers' compensation insurers to survey a number of injured workers at the close of each claim and report the results to the Division of Workers' Compensation in the Colorado Department of Labor and Employment.  It requires the Division to post the survey results on the Division's Web site.  It also prohibits an employer or insurer from taking disciplinary action or retaliating against an injured worker or his dependents for completing a survey.

HB-1009 (Pinnacol Assurance Board of Directors)

CACI opposes this bill.  Sponsored by Representative Joe Miklosi (D-Denver) and Senator Mary Hodge (D-Brighton), HB-1009 adds two seats-- one for an injured worker and one for a physician--to the Pinnacol Board of Directors.

Adding such individuals would conflict with the fiduciary duty of a Board member to oversee the operation of Pinnacol.  While there are several generally classified seats designated currently on the Board, none is so specific as that contained in the bill.

In addition, the governor of Colorado already has the power to appoint the Pinnacol Board with the discretion to ensure a balanced Board.  There are currently six vacant seats on the Board, however, which Governor Bill Ritter has failed to fill in the last two years.

HB-1356 (Rate Setting Bill)

CACI opposes this bill, which is sponsored by Senator Lois Tochtrop (D-Thornton) and Representative Su Ryden (D-Aurora).  The bill requires Pinnacol to return a dividend to policyholders if Pinnacol’s surplus exceeds 800 percent of risk-based capital. 

It requires the Colorado Insurance Commissioner to approve the lowest premium rate recommended by either a workers’ comp insurance rating agency or the independent actuary of the Colorado Division of Insurance. 

The problems with the bill include the following:

·         It inappropriately limits the authority of the Pinnacol Board of Directors;

·         There is no legitimate basis for the level of risk-based capital in the bill;

·         It is unnecessary because the Insurance Commissioner already explains the rationale for a selected rate in the final agency order; and

·         The change undermines the progress of Pinnacol’s efforts to restore surpluses to policyholders. 

For more information on the Pinnacol bills, contact Loren Furman, CACI Vice President of Governmental Affairs, at 303.866.8642 or via e-mail at lfurman@COchamber.com

Summary of CACI Positions on Major Bills

Upcoming CACI Council Meetings

Council meetings will be held at the CACI Office beginning at 12 Noon.  Council members who would like to sponsor lunches for Council meetings should contact Misty Fox, CACI Office Manager, at 303.866-9652 or via e-mail at mfox@COchamber.com

·         Governmental Affairs Council, Tuesday, April 6; lunch sponsored by Angie Binder, Encana, whose website is www.encana.com

·         Energy and Environment Council, Thursday, April 8; lunch sponsored by David Rivera, Climax Molybdenum, whose website is www.fmi.com

·         Tax Council, Friday, April 9: lunch sponsored by Judy Vorndran of EideBailly CPAs, whose website is www.eidebailly.com & Lance Williams of Deloitte Tax, whose website is www.deloitte.com

·         HealthCare Council, Thursday, April 15; lunch sponsored by Christine Shlagor, Quest Diagnostics, whose website is www.questdiagnostics.com

·         Governmental Affairs Council, Tuesday, April 20; lunch sponsored by Melissa Kuipers, Colorado Auto Dealers Association, whose website is www.coloradodealers.org

·         Labor and Employment Council, Wednesday, April 28; lunch sponsored by Mark  Moses, Outback Steakhouse, whose website is www.outback.com

For the complete meeting schedule of CACI Councils during the legislative session, visit the CACI Web site:

http://www.cochamber.com/newsandevents_calendar.asp