Dems: Commerce Committee Report – week 6, 2018

February 19, 2018

SF 2182 – Multiple Employer Welfare Arrangement proposals; 
SF 2243 – Consumer Fraud Caller ID; 
SF 2248 – Insurance Division service of process; 
SF 2249 – Insurance Division Code clean-up; 
SF 2257 – Marketplace contractors; 
SF 2262 – Final-stage motor vehicle manufacturers; 
SF 2275 – Insurance Division regulated industries; 
SF 2305 – Establish workers’ compensation fraud unit; 
SF 2311 – Public utilities regulation; 
SF 2316 – Domestic stock insurers; 
SF 2317 – Utilities Board omnibus; 
SF 2327 – Future Ready Iowa; 
SF 2328 – Process for certain utility sales; 
SF 2329 – Health benefit plans; 
SF 2330 – Sale, lease of water treatment systems; 
SF 2331 – Consumer finance companies. 

SF 2182 relates to association health plans, a type of multiple employer welfare arrangement (MEWA), established by bona fide associations of employers. The arrangement was established by a trade, industry or professional association of employers that has a constitution or by-laws, is organized and maintained in good faith with membership stability. An amendment recommended by the Iowa Insurance Division was approved. It allows the Commissioner to have rulemaking authority for creation of such association health plans consistent with U.S. Department of Labor regulations, rather than putting prospective language in Code based on proposed federal rules. The U.S. Department of Labor currently is in a lengthy rule-making and public comment period. Concerns were expressed by some members that while the MEWA options are promising for Iowa, it would be prudent to wait until federal rules and guidelines are complete. SF 2182 will be redrafted as a Committee bill.
[2/14: 9-6, party line]


SF 2243 (SF 2126) prohibits a person from knowingly using or providing false or misleading caller ID information to telephone customers in Iowa. The bill is an effort to strengthen laws on “spoofing,” where an individual or company sets up a fake name, area code and telephone number, frequently with the same area code and prefix as the customer, to encourage the customer to answer what looks like a local call. The “spoofer” may try to sell products, services or get additional personal information from the customer. A violation is an unlawful practice under Iowa’s Consumer Fraud laws.
[2/8: short form]


SF 2248 (SSB 3130) is an Iowa Insurance Division departmental bill to provide greater clarity and consistency in the “service of process” provisions. The recommendations were made following the Division’s five-year review of its administrative rules. Companion bill is HF 2236.
[2/8: short form]


SF 2249 (SSB 3131) is a recommendation by the Iowa Insurance Division that eliminates the words “or long-term care” from Iowa code section 507B.4 to be consistent with Iowa code section 514G.102, and repeals an outdated requirement in 505.32 to establish a clearinghouse. The website fulfills this function and is linked to as needed throughout the Insurance Division website. Companion bill is HF 2237.
[2/8: short form]


SF 2257 (SSB 3058) defines a marketplace contractor as an independent contractor. A marketplace contractor is a person who enters into a written agreement with a marketplace platform (online booking) to use its digital network to connect with individuals who want to hire a marketplace contractor for services, such as home repairs. The most notable is Handy Technologies, a company that offers a variety of services, including residential cleaning, handyman repair, furniture assembly, and plumbing and electrical work. The proposal was amended to exempt real estate brokers and real estate agents, as well as delivery service providers (e.g., UPS, FedEx) who only transport sealed boxes, parcels, freight and envelopes for a fee. Concerns were expressed regarding professions that require an Iowa license, particularly plumbers and electricians, and the contracted work booked online without verification of licensure.
[2/8: 9-5 (No: Boulton, Lykam, Mathis, McCoy, Petersen; Excused: Bertrand)]     


SF 2262 (SSB 3132) allows a final-stage motor vehicle manufacturer to be licensed as a motor vehicle dealer only of incomplete motor vehicles if it manufactures multi-stage manufactured vehicles. The original bill was amended after discussions with stakeholders, including the Iowa Automobile Dealers Association and Iowa Nebraska Farm Equipment Dealers Association. Companion bill is HF 2308.
[2/8: short form]


SF 2275 (SSB 3129) is a recommendation by the Iowa Insurance Division to update provisions of its securities and regulated industries bureau. It removes unnecessary and outdated references and aligns Iowa’s crowdfunding portal law to reflect rule changes implemented at the federal level. Companion bill is HF 2239.
[2/8: short form]


SF 2305 (SSB 3165) relates to workers’ compensation and insurance fraud. It creates a new Code chapter (507F) specifically for workers’ compensation fraud, codified following the existing insurance fraud Code chapter 507E. The bill establishes a workers’ compensation fraud unit in the Insurance Fraud Bureau of the Iowa Insurance Division to investigate and prosecute workers’ compensation fraud. Insurance Division investigators have the power and status of law enforcement officers. The bill requires the unit to employ at least one full-time prosecuting attorney to prosecute all criminal actions brought under this chapter. Opponents noted that the language stacks the system against the employee, who likely would be hesitant to report an injury, depending on the initial diagnosis by the employer’s physician, who may reject a good-faith claim by the employee and then face concerns of criminal action and a lengthy process time to resolve the issue before any compensation could be received.

If a person commits an offense under this Code chapter, the prosecuting attorney may elect to proceed under this Code chapter or any other Iowa law.  The prosecuting attorney may be the unit prosecuting attorney or a county attorney. The bill limits commencement of actions for violations to within five years of the commission of workers’ compensation fraud.

The bill amends Code chapter 85 to provide that the employer retains the right to choose the employee’s physician throughout the course of treatment, including the choice of specialists. The employer does not have to authorize a referral for care with a specific provider of services.

If a person is currently receiving or has a pending application for workers’ compensation benefits under chapter 85, 85A, or 85B and the workers’ compensation fraud unit decides to file charges in district court alleging a violation of the new Code chapter by a person receiving benefits under Code chapter 85, 85A, or 85B, the workers’ compensation fraud unit must notify the workers’ compensation commissioner, who must suspend benefits  or suspend any pending application.  A person convicted of workers’ compensation fraud is prohibited from receiving benefits under Code chapters 85, 85A, and 85B for the specific claim or injury giving rise to the criminal action. If the person is acquitted or the charges are dismissed, a person’s benefits or application will be resumed, and the individual has the option to receive a lump sum for back payment of benefits.

The bill sets criminal penalties for engaging in workers’ compensation fraud, including fraud committed by employers, workers, insurers, health service providers, employees of insurers, and attorneys. Specifically, it penalizes as a class “D” felony the following forms of workers’ compensation fraud: benefit fraud, insurance coverage fraud, employer fraud, health service provider fraud, insurance carrier fraud, and attorney fraud.  A class “D” felony is punishable by confinement of a maximum of five years and a fine of at least $750 but not more than $7,500.  In addition to any other applicable penalties, a court must order a person to pay restitution.  The bill requires 50 percent of any criminal penalty collected will deposited in a fund created in the bill. Moneys in the fund are appropriated to the Insurance Division for the benefit of the workers’ compensation fraud unit.

The legislation would take effect upon enactment.

[2/13: 9-6 party line]


SF 2311 (SSB 3093) significantly deregulates gas and electric public utilities in Iowa. It removes or restricts the Iowa Utilities Board’s oversight on a wide range of issues, including energy efficiency, rate increases, coal plant emissions controls and consumer protections. Iowa has some of the lowest energy rates in the Midwest and the country, while developing one of the strongest clean energy economies. This bill undermines many of the policies that have led to Iowa’s cost-effective clean energy leadership. An adopted amendment further erodes energy efficiency programs and savings. For example, it separates energy efficiency and demand response programs and makes both optional for customers. The Iowa Consumer Advocate (Utilities) has expressed concerns about many facets of the proposal. The committee amended the bill by removing a section on revenue-neutral tariffs. The legislation will continue to be discussed and more amendments offered.
[2/13: 8-7 (No: Bertrand, Democrats)]


SF 2316 (SSB 3160) allows Iowa domestic stock companies to divide into two or more insurers, and provides a process for regulatory approval for such actions. The insurer must file its plan with the Iowa Insurance Division and meet various requirements. The Insurance Division will determine whether to approve the plan. The proposal is modeled after Connecticut law, does not apply to mutual insurance companies.
[2/13: short form]


SF 2317 (SSB 3164) is a recommendation by the Iowa Utilities Board that includes clarifications and updates to Iowa Code. It also deletes references in Utilities Board regulatory sections that are obsolete and repeals requirements for studies that have been completed and the reports properly filed with the Legislature. The original bill included a provision that is now filed as a separate proposal, SF 2328.
[2/14: short form]


SF 2327 (SSB 3087) is an initiative by the Governor called “Future Ready Iowa” to build Iowa’s “talent pipeline.” It was created after Iowa received a National Governor’s Association grant. It establishes various job training and skills programs, including Registered Apprenticeship Development, Volunteer Mentorship, and a Summer Youth Intern pilot project administered by Iowa Workforce Development. Committee members were supportive of the overall goal but expressed concerns on funding and state-directed plans and goals, rather than local control by communities that better know the job and training needs in their areas. The proposal will be further discussed and amendments proposed as legislators continue to meet with stakeholders.
[2/14: short form]


SF 2328 (SSB 3057) gives the Iowa Utilities Board the authority to approve an acquisition by a rate-regulated water utility. Iowa American Water is the only rate-regulated water utility currently in the state. The bill requires the Utilities Board to approve any acquisition in the interest of existing and new ratepayers. It states that a community can receive fair market value for those acquisitions. Currently, the Utilities Board only reimburses for book value (depreciated value of the assets), which is often much less than current debt. It also sets up a process for a community to ensure transparency and a thorough review prior to any action.
[2/14: short form] 


SF 2329 (SSB 3173) relates to health benefit plans for members of certain agricultural organizations, and requires the plan be provided through a self-funded arrangement and administered by a domestic third-party administrator that holds a certificate of registration issued by the Iowa Insurance Commissioner. This would allow individuals to join the Iowa Farm Bureau and, as a benefit of membership, have an opportunity to buy various health insurance plans that are not ACA-compliant.
[2/14: 13-2 (No: McCoy, Petersen)]


SF 2330 (SSB 3159) updates current law regarding the unlawful practice of a person selling, leasing, renting or advertising a water treatment system for which claims or representations of removing health-related contaminants are made, unless the water treatment system is performance tested by an authorized third-party testing agency accredited by the American National Standards Institute or other certified specified in the bill.  Any fraudulent practice can be enforced under Chapter 714. The Department of Public Health and the Iowa Attorney General’s Consumer Protection Division support the legislation. [2/14: short form]


SF 2331 (SSB 3158) addresses consumer finance companies licensed under Chapter 536 Regulated Loans. These entities are non-depository lenders that acquire financing on the open market for their loans. Banks and credit unions are depository lenders. The proposal allows the Iowa Superintendent of Banking to set the maximum interest rates on a tiered basis for loans between $10,000 and $30,000, and allows consumer finance lenders to assess a service fee (or loan origination fee). The maximum interest rate is capped at 36 percent. It was noted that these companies fill a niche for small loans to consumers who are uncomfortable working with other financial institutions and may instead go to payday loan companies or unregulated lenders on the Internet.
[2/14: short form]



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