WA Legislative Report
Saturday, February 15, 2020
Posted by: Administration
February 15, 2020
House and Senate Focus on Floor Action as Fiscal Committees Complete Work on Policy Bills
House and Senate Fiscal Committees completed their review of policy bills on Tuesday, February 11. With the Fiscal Committee Cut-off behind them, legislators have been working on the House and Senate floors to consider bills passed by committees in the House of origin. Floor action will dominate activity in Olympia until the deadline for the House and Senate to act on their own bills. The cut-off resolution calls for bills in the House of origin to be approved by Wednesday, February 19 at 5:00 p.m. With rare exception, bills failing to be approved by the cut-off dates will not be considered further this session.
Senate Approves Revised Consumer Data Bill
On Friday, February 14, the Senate approved a revised version of 2SSB 6281—a measure on consumer data privacy that was previously considered and approved by the Senate Environment, Energy & Technology Committee on January 23, and by the Senate Ways and Means Committee on February 6. The bill was approved on a final vote of 46-1 with 2 members excused. The bill has been referred to the House for consideration.
The bill is intended to establish consumer protections with respect to the handling of personal data and information. The measure was introduced following the failure of SB 5376 during the 2019 Legislative session. The new measure is Senator Carlyle’s most recent effort to enact privacy standards for consumer data that are similar to protections that have been enacted in California and Europe.
At the hearings for the bill, Microsoft and other business stakeholders testified in support of the measure. They have consistently supported legislation on the issue, so long as it does not restrict facial recognition technology. At the hearings, insurance industry stakeholders indicated opposition to the bill, and previously submitted a letter to Senator Carlyle and key members who have been working on the issue, expressing concern about imposing new requirements on insurers when they are already subject to direct regulatory supervision, and are subject to existing federal and state privacy laws. Other business groups also expressed concern or opposition to the measure. The ACLU and immigration rights groups testified in opposition to the measure. Plaintiff lawyers also expressed concern that the bill does not provide a private right of action for consumers that believe that the privacy of their personal information has been compromised.
On Tuesday, February 11, the House Appropriations Committee killed the House version of the bill—SHB 2742. The bill was killed when it was not considered and approved before the deadline for passage on Tuesday, February 11. It appears that key House members are not in agreement with the Senate with respect to key sticking points, including facial recognition technology. Plaintiff lawyers are also pushing House leaders to include a private right of action in the bill. With the demise of SHB 2742, if a data privacy bill is going to be approved this year, agreement will have to be reached on 2SSB 6281.
House Committee Approves Amended Version of Bill on Auto Insurance Coverage and Claims
On Friday, February 7, the House Consumer Protection & Business Committee approved a heavily-revised version of SHB 2782—a measure that has been introduced by Rep. Steve Kirby (D, 29th District, and the Chair of the Committee). The original version of the bill appears intended to rewrite loss settlement language in auto insurance policies, and impose new requirements regarding the use of OEM parts, and adhering to auto manufacturer recommendations and specifications. The original bill also includes new and controversial requirements regarding damage appraisals and disputes between insurers and auto repair facilities. The revised version of the bill removes provisions regarding uninsured motorist coverage as well as provisions related to the appraisal process included in the original bill.
At the hearing for the bill on Tuesday, February 4, insurance industry stakeholders testified in opposition to the measure. The auto repair industry and a plaintiff lawyer testified in support of the bill. Following the hearing, Rep. Kirby circulated the amendment that substantially alters the underlying bill—removing large portions of the original measure. What remains continues to be controversial.
The bill has been referred to the House Rules Committee, but it is unclear whether the measure will be pulled to the House floor for further consideration. Insurance industry stakeholders have advised Chairman Kirby of the industry’s availability to work with him over the summer and fall to better understand and address his various concerns.
Senate Approves OIC Request Bill to Adopt NAIC Revisions to the Model Holding Company Act
On Wednesday, February 12, the Senate approved SSB 6048—a measure that was introduced at the request of the OIC to enact the NAIC revisions to the Model Holding Company Act. The measure passed the Senate on a final vote of 46-0 with three members excused. The bill would amend the Holding Company Act to include group-wide supervision of internationally active insurance groups. The revisions are a standard for maintaining NAIC accreditation. As a result, passage of the proposal is a top priority for the OIC and for the insurance industry. The bill has been referred to the House Consumer Protection & Business Committee for consideration.
The House version of the bill—HB 2207—was considered and approved by the House Consumer Protection and Business Committee on January 15. The bill was referred to the House Rules Committee, but it appears that further action on the issue will be focused on SSB 6048, now that it has passed the Senate. The OIC and insurance industry stakeholders testified in support of both bills at hearings in the Senate and House.
House Committee Considers Controversial Local Option Excise Tax Plan—Insurers Included
On Tuesday, February 4, the House Finance Committee held a hearing to consider HB 2907—a controversial local option excise tax proposal that is intended to provide funding for low-income housing. The bill would authorize a county with at least 2 million residents to impose an excise payroll tax on businesses, including insurers.
Insurance industry trade associations testified in opposition to provisions in the bill that would impose the tax on insurers, arguing that insurers pay a 2% premium tax in lieu of all other taxes, and that insurers domiciled in Washington could face retaliatory tax issues in other states in which they do business. Other business and local government stakeholders also expressed concern about various aspects of the bill. The measure is supported by labor and social service groups, and by some large business stakeholders.
On Friday, February 7, the House Finance Committee approved an amendment adding city representatives to the advisory committee contained in the bill. The amended measure was approved and referred the measure to the House Rules Committee, where it is being held while negotiations take place in an effort to resolve concerns that have been identified.
Public Lands Commissioner Requests the Introduction of House Bill Establishing New Surcharge on Property and Casualty Insurance Policies to Provide Dedicated Funding for Forest Health and Wildfire Suppression
Public Lands Commissioner Hilary Franz has requested the introduction of HB 2413—measure that would impose a new annual $5 per policy surcharge imposed on property and casualty insurers. The surcharge would provide funding for a new dedicated account to address forest health and wildfire suppression. Medical malpractice insurance policies would be exempt from the surcharge. The bill has been referred to the House Appropriations Committee for consideration. The bill has not been scheduled for a hearing, and informal indications suggest that that key legislators have expressed concern or opposition to the measure.
The new proposal follows a controversial measure (SB 5996) that was considered, but not passed, during the 2019 legislative session that would have imposed a 25% increase in premium taxes imposed on property and casualty insurers to provide dedicated funding for wildfire prevention and suppression. Insurance industry stakeholders successfully mounted a strong line of defense against the measure, arguing that insurers and the insurance-buying public should not be the target for funding wildfire-related services.
Insurers are actively opposing HB 2413, and have been meeting with key members of the House and Senate to encourage opposition to the measure.
Senate Committee Approves OIC Proposal to Create a Dedicated Account to Fund the OIC’s Criminal Investigation Unit
On Thursday, January 23, the Senate Ways and Means Committee approved SB 6049—a bill that was introduced at the request of the OIC that would establish a new dedicated account to provide funding for the OIC’s Criminal Investigation Unit. The account would be funded with new assessments imposed on insurers. The assessments would be limited to no more than .01% of premium on each insurer, with the minimum assessment set at $100. Despite support indicated from insurance stakeholders, the bill was approved on a divided vote, with five Republican members of the committee voting against the measure. The bill has been referred to the Senate Rules Committee.
House Approves Bill Restricting Auto Manufacturers from Prohibiting Auto Dealers from Selling Secondary Market Service Contracts, Maintenance Agreements, Extended Warranties, Protection Product Guarantees, Guaranteed Asset Protection Waivers, Insurance, Replacement Parts, Accessories, Oil, or Supplies
On Wednesday, February 12, the House approved an amended version of SHB 2374— a measure that was introduced at the request of the Washington State Auto Dealers Association. The measure would prohibit auto manufacturer franchise agreements from restricting auto dealers from offering secondary market service contracts, maintenance agreements, extended warranties, protection product guarantees, guaranteed asset protection waivers, insurance, replacement parts, accessories, oil, or supplies. The bill is supported by the Washington State Auto Dealers Association. The bill passed the House on a final vote of 96-0 with two members excused.
On Thursday, February 6, the Senate Labor and Commerce Committee approved an amended version of the Senate counterpart—SSB 6340. SSB 6340 has been referred to the Senate Rules Committee, but it appears likely that work on this issue will be focused on the House version of the bill—SHB 2374.
House and Senate Committees Consider Controversial Rental Car Tax Bill Targeting Car Sharing Operators
On Tuesday, January 21, the Senate Ways and Means Committee and House Finance Committees held hearings to consider companion bills (HB 2071/SB 5927) that would impose new sales tax impacts on car sharing operators. The bills were introduced at the request of Enterprise Rent-A-Car. The bills are of significant concern to car sharing operators and insurers because they appear intended to create a competitive tax advantage for rental car companies, and are inconsistent with the NCOIL Model “Peer-to-Peer (P2P) Car Sharing Program Act”. Insurance industry stakeholders testified in opposition to the measure, arguing that the bill includes new definitions that appear to alter Washington’s current insurance requirements on car-sharing companies, and that the bill is inconsistent with the NCOIL model bill. Neither HB 2071 nor SB 5927 have been brought to a committee vote following the hearings.
Three other bills dealing with Peer-to-Peer car sharing have also been introduced—SB 5893 (died in committee at the February 7 cut-off) and HB 2773. SHB 2773 was approved by the House Consumer Protection & Business Committee after being amended to be consistent with the NCOIL Model. HB 2918, was introduced at the request of Turo, and appears to be consistent with the NCOIL Model “Peer-to-Peer” Car Sharing Program Act. HB 2918 died at the February 7 cut-off, and was not considered.
Senate Committee Approves Bill on Noneconomic Damage Waivers
On Monday, January 27, the Senate Law and Justice Committee held a hearing to consider SB 6236—a measure that has been introduced by Senator Patty Kuderer (D, 48th District) that appears to conjoin exceptions that may result in a waiver of a health care privilege in discrimination claims for noneconomic damages. The bill follows legislation that Senator Kuderer successfully advanced during the 2018 Legislative session that limits access to medical records in claims under the law against discrimination (see SB 6027 in the 2018 Legislative Session). At Monday’s hearing, the Washington Defense Trial Lawyers, insurance industry representatives, and the Washington Liability Reform Coalition testified against the bill. Plaintiff lawyers testified in support of the bill.
On Thursday, January 30 the Senate Law and Justice Committee approved the bill on a divided vote of 5-2. The bill has been referred to the Senate Rules Committee.
Business and Professional Groups Concerned About Controversial “Qui Tam” Bill
On Tuesday, February 4, 2SHB 1965 was pulled from the House Rules Committee and placed on the House Floor Calendar. Business, professional, and insurance stakeholders have identified the bill as a top defensive priority for the 2020 Legislative session.
The bill was introduced in the 2019 Legislative session by Rep. Drew Hansen (D, 23rd District). During the 2019 Legislative session, the measure was considered and approved by the House Labor & Workplace Standards Committee, and by the House Appropriations Committee, but the bill was never brought to a vote on the House floor. Now on the House floor, the bill could be brought to a vote at any time.
HB 1965 would establish “Qui Tam” authority for violations of various employment and workplace safety laws. The bill would specifically authorize Qui Tam authority for violations of minimum wage requirements, prevailing wage, health care facility overtime standards, WISHA and workplace safety laws, family and medical leave requirements, gender equal pay, agricultural industry labor requirements, and meal and rest break requirements set by the Dept. of Labor and Industries. Qui Tam authority would also extend to the Washington Law Against Discrimination and whistleblower anti-retaliation standards enforced by the Human Rights Commission.
The Qui Tam authority would authorize a private action to be maintained on behalf of a private “Relator” who seeks remedies for violations of the various employment laws referenced in the bill. If the public entity with jurisdiction for enforcing compliance with the requirements intervenes in the action, the relator would receive 20% of any penalty determined, with the remainder going to the agency or public entity. If the public entity does not intervene, the relator would receive 40% of any penalty determined, with the remainder going to the agency. The relator would be entitled to recover all fees and costs.
OIC Prepares Legislative Proposals
Insurance Commissioner Mike Kreidler has prepared a package of legislative proposals that he intends to submit to the 2020 Legislature. A link to the OIC’s legislative priorities can be found at https://www.insurance.wa.gov/legislative-priorities .
The OIC’s request bills include:
-A proposal to establish a dedicated account with new regulatory assessments to fund the OIC’s Criminal Investigations Unit (CIU). The separate account would have its own surcharge cap of 1/100th of a percent of premium. See SB 6049;
-A measure to adopt amendments to the NAIC Holding Company Model Act. These standards would be applied for risk retention groups (RRG’s) in a holding company that meets the definition of “Internationally Active Insurance Groups (IAIG’s). These amendments are necessary to maintain NAIC accreditation. See SB 6048 and HB 2207;
-A measure to reform Washington’s Life & Disability Insurance Guaranty Assocition by adding HMO’s and Health Care Service Contractors to the membership of the WLDGA to provide for larger assessment capacity. See SB 6050 and HB 2209;
-A measure to amend legislation that was enacted last year relating to implementation credits. The measure would provide more explicit criteria for the use of implementation credits, and provide the legal framework for the use of performance standards in insurance contracts. Implementation credits are a payment by an insurer to offset document expenses incurred by a group policyholder in changing coverage from one insurer to another. See SB 6144 and HB 2208; and
-A measure to regulate “captive insurers”. The measure would create a statutory framework for how captive insurance companies can be formed by Washington state companies, who can form them, and what taxes will be paid by them to Washington state. A “captive insurer” is defined as an insurance company that is wholly owned and controlled by its insureds. See SB 6241 and HB 2291.
Legislature Approves Cut-Off Resolution for the Consideration of Bills
The Senate and House have approved SCR 8411—a cut-off resolution establishing dates for the consideration of bills. The cut-off dates that are established in the resolution are as follows:
February 7—the last day for committees in the House of origin to take action on bills;
February 11—the last day for Fiscal committees in the House of origin to take action on bills;
February 19—the last day for the House of origin to take action on bills;
February 28—the last day for committees in the opposite House to take action on bills;
March 2—the last day for Fiscal committees in the opposite House to take action on bills;
March 6—the last day for the opposite House to take action on bills (except exempt bills and bills passed by both Houses in different forms);
March 12—the last day of the 2020 Regular Legislative Session