New and improved business lobbying

CACI Vice President of Governmental Affairs Loren Furman has 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) Health Care.

 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.

{pagebreak:Page 1}

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 9th. 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. 

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.

{pagebreak:Page 2}