SENATE COMMITTEE ON GENERAL GOVERNMENT

 

 

April 26, 2005                                                                                                         Hearing Room B

3:10 P.M.                                                                                                                      Tapes 65 - 67

 

 

MEMBERS PRESENT:         Sen. Frank Shields, Chair

Sen. Gary George, Vice-Chair

Sen. Bruce Starr

Sen. Joanne Verger

Sen. Vicki Walker

 

STAFF PRESENT:                 Judith Callens, Committee Administrator

Linda K. Gatto, Committee Assistant

 

MEASURES/ISSUES HEARD:        

                                                SB 310 – Work Session

                                               

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 65, A

004

Chair Shields

Calls the meeting to order at 3:17 p.m. and opens the work session on SB 310.  Refers to the document titled Disputed Issue Decision Chart and invites Mr. DiLorenzo to comment.

SB 310 - WORK SESSION

022

John DiLorenzo, Jr.

Oregonians for Sound Economic Policy (OSEP). Submits rebuttal testimony which includes correspondences (EXHIBIT A). Refers to the   Disputed Issue Decision Chart (EXHIBIT A, Tab 11) and summarizes OSEP’s opposition to SAIF reconnecting with the Public Records Law and SAIF’s conceptual change to Section 6. Summarizes OSEP’s support for the -10, -4 and -11 amendments.

066

Sen. Walker

Notes that the -11 amendments supersede the -5 amendments.

068

DiLorenzo, Jr.

Continues to summarize support for the -7, -8 and -9 amendments to SB 310 and the -1 amendments to SB 984. Adds that the conceptual change regarding the assigned risk pool study would not be necessary if SB 984 -1 amendments were adopted.

100

John DiLorenzo Jr.

Refers to (EXHIBIT A) and explains OSEP’s intent in regard to the rebuttal testimony from SAIF, AOI and AGC.

127

DiLorenzo, Jr.

Refers to the Statesman Journal article quoting Mr. Thurber and the minutes of SAIF Board of Directors meeting on January 24, 2005.

160

DiLorenzo, Jr.

Discusses questionable uses of money and concurs with Sen. George that the legislature should prescribe statutes specifying what the rules should be rather than rely on good will.

164

DiLorenzo, Jr.

Reiterates opposition to SAIF reconnecting to the Public Records Law. Refers to examples (EXHIBIT A, Tab 2) and states that there should be a law regarding disclosure and advocates the -4 amendments (EXHIBIT B).

189

DiLorenzo, Jr.

Discusses the SAIF contempt of court ruling and SAIF’s position regarding sovereign immunity. Concludes with discussing the -8 amendments and loss provision contracts.

273

Christopher Davie

Representing SAIF Corporation.  Refers to the summary of proposals to SB 310 (EXHIBIT C) and the explanation of proposed amendments to SB 310 (EXHIBIT D). Reviews and explains the proposals section by section.

290

Sen. Walker

Notes that all the sections associated with her name were incorporated into the -11 amendments.

302

Brenda Rocklin

Interim President and CEO, SAIF Corporation. Commenting on the public records issue, suggests that the committee needs to determine if SAIF should be treated differently than every other state agency and public entity. Refers to the definitions of “employer account records” and “claimant files” as advised by the Department of Justice (EXHIBIT C, Page 7).

339

Chair Shields

Comments on the inconsistency in writing style.

347

Rocklin

Begins a discussion on the -1 amendments and -4 amendments regarding “sovereign immunity”.

386

Sen. Walker

Confirms there were two versions and the -4 amendments are the most recent.

400

DiLorenzo, Jr.

Explains the -1 amendments prohibit asserting the defense of sovereign immunity. Explains that the -4 amendments say that SAIF is subject to the inherent contempt power of the court and prohibits asserting the defense of sovereign immunity.

409

Rocklin

Responds that the -4 amendments are unnecessary. Explains that the legal issue is whether the legislature had authorized the court to impose monetary sanctions against the corporation itself; not against particular managers that may have engaged in contemptuous conduct.

TAPE 66, A

010

Rocklin

Speculates on the relationship between attorney fees the -4 amendments.

020

Chair Shields

Refers to sovereign immunity as related to all state agencies in SB 989 and asks why not broaden this to all state agencies.

031

DiLorenzo, Jr.

Explains that the Chair of the Judiciary Committee will not hear the bill. States that SAIF is the only state agency to be found in contempt of court.

040

Rocklin

Refers to Section 9 of the -4 amendments states that this is not talking about future conduct; the amendments are addressing January 2004.

059

DiLorenzo, Jr.

Responds that the court originally fined SAIF over $2 million but then reduced the fine to $700,000.

064

Sen. Walker

Responds it is not uncommon for people to come with legislation to head off court decisions.

071

Chris Davie

Refers to the Disputed Issue Decision Chart (EXHIBIT A, Tab 11) and reviews SAIF’s position on the different proposals.

102

Davie

Refers to the document that outlines the types of records that are subject or not subject disclosure under the Public Records Law (EXHIBIT E). Summarizes SAIF’s opposition to the -10 and -4 amendments, support for the -11 amendments, and opposition to the -7, -8 and -9 amendments.

141

Davie

Discusses the suggested amendments to SB 984 submitted by the Department of Consumer and Business Services regarding the assigned risk pool (EXHIBIT F).

189

Sen. Verger

States that this is a unique and separate issue pertaining to SAIF and not other state agencies. Asks why the contract was broken with regard to the magazine.

193

Rocklin

Answers that the contract was not really broken. Explains that last year the board of directors for SAIF Corporation had concerns about political viewpoints in addition to safety information in the magazine called Business Viewpoint. The SAIF board wanted to renegotiate the contract, while not paying for the magazine.

242

Chair Shields

Asks if this is still an unanswered question.

243

Rocklin

Answers that the negotiations are ongoing.

250

Sen. Verger

Acknowledges the concern. Asks have all the contracts been reviewed to determine if the elimination of some might be beneficial to SAIF.

264

Rocklin

Answers if there is a legitimate contract it either needs to be honored or pay a penalty and walk away. When contracts come due they are evaluated.

287

Sen. Verger

Suggests that as SAIF goes forward, that they become non-political.

299

Rocklin

Responds this is what they are trying to do in SB 310.

304

Chair Shields

Refers to (EXHIBIT C) and (EXHIBIT A, Tab 11) and directs the committee to address issues that they feel strongly about and discuss them.

356

Sen. Walker

States there appears to be consensus on the -11 amendments entitled “new section” (EXHIBIT G).

443

Sen. B. Starr

Refers to Section 1 and suggests changing “may” to “shall”.

484

Judith Callens

Committee Administrator. Clarifies that the change from "may" to "shall" means require instead of allow.

TAPE 65, B

030

Rocklin

Refers to the section just above where the board is required to review and approve all contracts (EXHIBIT C, Page 1). States the intent of Section 3 is the board may approve particular contracts under certain provisions.

047

Sen. George

Asks if the language in the original bill is not amended would it be okay.

059

Sen. Walker

Inquires if the -7 amendments regarding group plans are in Section 1.

063

DiLorenzo, Jr.

States that SAIF’s handout (EXHIBIT C) includes only the amendments that SAIF is supportive of not any of OSEP’s suggested amendments.

091

Chair Shields

Asks what the -7 amendments add to SB 310 (EXHIBIT A, Page 57).

103

Sen. George

States dislike for a government entity to show preference. Supports the -7 amendments.

111

Sen. Walker

Concurs with Sen. George. Comments that SAIF determines who participates as a group employer.

120

Chair Shields

Wonders if Section 1(3) already accomplishes criteria like sound business practices, insurance principals for specified services. Asks if the committee wants to go with the -7 amendments.

124

Sen. Verger

Asks are these employers being rewarded.

137

Cory Streisinger

Director, Department of Consumer and Business Service (DCBS). Informs that there is currently statutory guidance on when groups can and cannot be formed. States the criteria is stipulated in ORS 737.316. DCBS would be uncomfortable with the removal of the regulatory guidance as implied in the -7’s amendments.

158

DiLorenzo, Jr.

Explains that the -7 amendments are not designed to remove the statutory criteria. States the question is whether or not SAIF has to provide group status; currently SAIF can pick and choose.

179

Chair Shields

Comments that other insurers pick and choose. Asks how is this different from other insurance groups.

182

DiLorenzo, Jr.

Responds that SAIF is the government, other insurers are not.

186

Sen. B. Starr

Inquires about groups that SAIF has denied.

188

DiLorenzo, Jr.

Recalls that National Federation of Independent Businesses (NFIB) was not permitted a group. States there are number of others and he will follow up.

199

Sen. Walker

States that the -7 amendments should make it clear that the group must meet the criteria of ORS 737.316

220

Streisinger

States that from an insurance regulatory standpoint it would treat SAIF differently from other participants in the market. Refers to the inter-relationship between the -7 amendments and -9 amendments and expresses concern that the safety achievements of groups could be at risk. 

230

Sen. George

Asks if the “may” in line four of the -9 amendments solves this (EXHIBIT C, Page 59).

248

Streisinger

Notes that line six says “may” and explains that she reads this as having loss prevention services being put out to bid.

264

DiLorenzo, Jr.

Affirms, the purpose of the amendment is to address favoritism.

298

Chair Shields

States he does not understand what criteria would be added that is not already there.

329

DiLorenzo, Jr.

States that the intention of the amendment is to remove SAIF’s discretion to pick and choose.

343

Chair Shields

Ask what does this do to the insurance market environment.

350

Streisinger

States the issue is subjectivity versus objectivity.

387

Sen. B. Starr

Asks does this allow for the differences in groups of employers.

361

Rocklin

Responds there does not appear to be information that this is not working for SAIF under the current rules and statutes.

411

Sen. Walker

Asks why someone cannot form their own group without being a member of another group in order to get a special discount.

427

Rocklin

Responds the advantage of being part of the group is to have loss control and safety work effectively.

444

Chair Shields

Refers to the mobile loss control units.

464

Streisinger

Notes that groups are experience rated.

TAPE 66, B

011

Sen. George

Comments on having fair criteria for every group. Explains SAIF’s organizational purpose of being a safe harbor for those who are having difficulty in the open market.

025

Streisinger

Agrees conceptually. Asks how to come up with criteria that allows groups to be creative.

038

Chair Shields

Comments on subjective criteria.

047

Rocklin

States that she is not aware of the insurance division or workers compensation divisions getting complaints of unfair treatment from unsuccessful groups.

056

Sen. Verger

Expresses concern regarding the audit piece, public records, and sovereign immunity.

089

Chair Shields

Comments that people have a sense of what sound business and insurance principals are.

091

Sen. Walker

Supports the -7 amendments with the change of meeting the criteria under ORS 737.316. Asks what does “supported by sound business and insurance principals” mean.

099

Streisinger

Explains that depending on the circumstance it will exclude entering into contracts for political purposes, exclude favoritism, and business board must have business reasons for entering into contracts.

130

Sen. Walker

Supports the -7 with the changes and does not support the -9 amendments. Comments that safety programs lower workers compensation rates.

150

Sen. Verger

Comments on the -11 amendments because it does say operations.

147

Chair Shields

Requests a discussion on the audit piece. (-8 amendments)

153

Rocklin

Refers to page one of SB 310 regarding board accountability where an audit committee composed of board members would approve a plan for internal and external audits. Discusses how the -8 amendments would affect the Secretary of State Audits Division.

203

Sen. B. Starr

Agrees that someone other than the Secretary of State should do this.

211

Chair Shields

Refers to correspondence from the Secretary of State expressing concerns with the -8 amendments (EXHIBIT H).

225

Sen. B. Starr

Comments that the audit provisions in SB 310 and the -8 amendments are separate and distinct.

231

DiLorenzo, Jr.

States the -8 amendments are a perfect example of the philosophical differences in approach. The statute should provide that audits be done every other year.

252

Sen. Verger

States a preference for an external auditor; SAIF needs to dispel any wrongdoing.

261

Rocklin

Responds this is the reason why SAIF has pursued an external auditor for contract review.

282

Sen. B. Starr

Asks why not audit after the first two years and then upon renewal. Agrees with Mr. DiLorenzo that some of the things that Ms. Rocklin is bringing to the agency should be institutionalized.

296

Rocklin

Responds that the intent is hold the board of directors accountable.

324

Sen. B. Starr

Suggests more specificity in the language.

328

Sen. Verger

Comments on the behavior of the past board. Acknowledges that it is unfair but the board will need to rebuild trust and an outside auditor will provide assurance that it will be done.

353

Rocklin

Opines that the -8 amendments do not provide the business flexibility needed in the future.

363

Sen. B. Starr

Asks Mr. DiLorenzo if he is willing to alter the -8 amendments to provide more specificity.

368

DiLorenzo, Jr.

Responds affirmatively to a willingness to work on this.

370

Sen. B. Starr

Agrees to referee the work group.

379

Sen. George

Recommends that some of the language in the -8 amendments be incorporated for accountability criteria and a significant independence of the auditor.

401

Chair Shields

Recaps that Sen. B. Starr will work on the -8 amendments with input from Mr. DiLorenzo and Ms. Rocklin.  Returns to the may/shall question in Section 1(3) (EXHIBIT C).

430

Callens

Informs that according to Legislative Counsel “may” is discretionary and “shall” is mandatory.  Reviews what is included as discretionary or mandatory provisions.

432

Chair Shields

Comments on subjective language.

470

Sen. Verger

Suggests “shall only” approve contracts…

TAPE 67, A

020

Chair Shields

Confirms there is consensus to change “may” to “shall only”.

055

Chair Shields

Recaps next steps, possibly carrying some over to Thursday.

058

Sen. Verger

States that she wants to be satisfied about the public records law.

070

Chair Shields

Agrees that the public records law and sovereign immunity issue are big issues and will come back on Thursday. Adjourns the meeting at 5:15 p.m.

 

 

 

EXHIBIT SUMMARY

 

  1. SB 310, rebuttal testimony and correspondences, John DiLorenzo Jr., 63 pp
  2. SB 310, -4 amendments, staff, 1 p
  3. SB 310, summary of proposals, Christopher Davie, 10 pp
  4. SB 310, explanation of proposals, Christopher Davie, 16 pp
  5. SB 310, public records law, Christopher Davie, 1 p
  6. SB 310, suggested amendments to SB 984, Cory Streisinger, 2 pp           
  7. SB 310, -11 amendments, staff, 4 pp                       
  8. SB 310, letter from Secretary of State, Sen. Frank Shields, 1 p