Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 2nd Meeting

of the 2011 Interim


<MeetMDY1> November 22, 2011


Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Tuesday,<MeetMDY2> November 22, 2011, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Tom Buford, Co-Chair; Representative Jeff Greer, Co-Chair; Senators Julie Denton, Dennis Parrett, Dorsey Ridley, John Schickel, Dan "Malano" Seum, and Brandon Smith; Representatives Dwight D. Butler, James R. Comer Jr., Will Coursey, Ron Crimm, Robert R. Damron, Joseph M. Fischer, Danny Ford, Jim Gooch Jr., Sara Beth Gregory, Mike Harmon, Dennis Horlander, Brent Housman, Dennis Keene, Adam Koenig, Michael Meredith, Brad Montell, Sannie Overly, Ryan Quarles, Jody Richards, Steve Riggs, Arnold Simpson, Kevin Sinnette, Wilson Stone, Tommy Thompson, and John Tilley.


Guests: Debra Stamper, General Counsel, John Cooper, Governmental Affairs, Kentucky Bankers Association; Sharon Clark, Commissioner, D J Wasson, Legislative Liaison, Department of Insurance; Thad Connally, President, First Choice Medical Equipment and Teresa Camfield, Executive Director, Medical Equipment Suppliers Association.


LRC Staff: Rhonda Franklin, Sean Donaldson, Jens Fugal and Jamie Griffin.


Dodd-Frank Wall Street Reform Act

Debra Stamper, General Counsel, Kentucky Bankers Association addressed the committee regarding the potential impact of the Dodd-Frank Wall Street Reform Act on state banks, including: burdensome regulation that was intended for the banks that were “too big to fail”, which should not include the smaller state banks; the need to regulate providers of non-traditional financial services with the same level of scrutiny as banks; and the need to ensure that consumers have the information needed to make informed financial decisions.


She stated that the areas being reviewed by the state bankers for amendment include: changes to the Uniform Commercial Code statutes that would maintain the ability of Kentucky businesses to enter into transactions consistently; changes necessary under the Dodd-Frank Wall Street Reform Act; changes to statutes to conform to actual current business practices; and changes that would require additional notices and reasonable restrictions on third party tax purchasers to protect communities, citizens, and banks.


In response to a question from Representative Montell asking if Congress should rework the Dodd-Frank Act. Ms. Stamper stated there are some parts that work, but there is an error in application. Mr. Cooper stated that Congress realizes that the Dodd-Frank Act overreaches and has hurt community banks. He stated that there would be amendments to the Act in 2012.


In response to a question from Representative Simpson asking if Dodd-Frank targets investment banks, Ms. Stamper replied yes.


Sharon Clark, Commissioner, Department of Insurance, addressed the committee regarding potential legislation for the 2012 session, stating that the department’s legislation would focus on consumer protection and departmental administration. Consumer protection legislation would redefine “dependent for life” for life insurance purposes. Other consumer protections would include property insurance protections to:  prohibiting or limiting cancellations and nonrenewal of property insurance due to a lack of or minimal credit history or cancellation of a policy based on the volume of inquiries regarding credit history; establishing responsibility of an insurance agency for an agent’s action; and prohibiting previous year’s audit as the basis for cancellation. Health insurance legislation would incorporate the Affordable Care (Act) provisions already in effect. The commissioner stated that without specific legislation addressing the provisions of the Act, as well as clarification of the Commissioner’s enforcement authority, Kentucky’s regulatory power over domestic insurance companies may be in jeopardy.


In response to a question from Representative Thompson regarding an update on the development of a health benefit exchange, Commissioner Clark stated that the representatives of the Department of Insurance have been working with Janie Miller, Commissioner for the Cabinet for Health and Family Services, and her staff to have a proposal ready for the 2012 Regular Session, and would defer questions to Commissioner Miller regarding health benefit exchange legislation. Representative Thompson asked that Commissioner Miller be invited to the first committee meeting of the upcoming 2012 Regular Session to update the committee.


Cancellation of Existing Home Medical Equipment Provider Contracts

Thad Connally, President & Owner, First Choice Home Medical Equipment, and Teresa Camfield, Executive Director, Medical Equipment Suppliers Association, addressed the cancellation of existing home medical equipment provider contracts with one of the state’s largest health insurers. The cancellation of the provider contracts was due to a provider contract entered into between the health insurer and Apria, a national home medical equipment provider located in another state. Mr. Connally stated home medical equipment medical equipment providers would seek licensure of members of their industry and their inclusion in the definition of “any willing provider” to ensure participation of Kentucky’s home medical equipment providers in contracts with health insurers for home medical equipment. Bill Spear, Humana, stated that the contract with the national medical equipment provider was not exclusive, but clinical management of over 2,000 home medical equipment providers nationwide was too difficult and the contract with a national provider was more manageable.


In response to a question from Representative Riggs regarding why exclude a home medical providers were excluded and why they are not considered “any willing provider”, Mr. Spear stated that they are not excluded, but Humana will evaluate the need and make the decision whether to do business with the local home medical equipment provider or APRIA. Senator Buford noted that the language in the Kentucky Revised Statute is not specific to home medical providers as any willing providers. Representative Riggs stated that he feels Humana is taking advantage of a loophole. Representative Richards stated that he fears this could harm small businesses and he will be requesting legislation to help the home medical equipment providers.


With no further business, the meeting adjourned.