Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:04/14/2009
ATTENDANCE
Time:09:29 AM to 10:39 PM
Balmer
X
Bradford
X
Place:HCR 0112
Gagliardi
X
Liston
*
This Meeting was called to order by
Priola
*
Representative Rice
Ryden
X
Scanlan
X
This Report was prepared by
Soper
X
Christie Lee
Stephens
X
Casso
X
Rice
X
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
SB09-037
SB09-243
HB09-1338
Amended, Referred to Appropriations
Witness Testimony and/or Committee Discussion Only
Referred to the Committee of the Whole


09:30 AM -- Senate Bill 09-037

Representative McNulty, prime sponsor, presented Senate Bill 09-037 concerning funding for certain workers' compensation funds. This bill changes the method for funding the Major Medical Insurance Fund (MMIF) and the Subsequent Injury Fund (SIF) in the Department of Labor and Employment, Division of Workers' Compensation. Under current law, a portion of the workers' compensation insurance premium surcharge is to be deposited into both funds until the funds are deemed actuarially sufficient to pay all present and future claims for medical benefits to persons injured or disabled on the job in specific situations and prior to specific dates. Under SB09-037 as amended, both funds would only be required to have balances that exceed the anticipated amount of claim payments for the following fiscal year.


Background

Workers' Compensation Premium Surcharge—is paid by insurance companies based on the amount of workers' compensation premiums received in the state. The surcharge rate is set by rule annually in May to take effect in July, and has been 3.818 percent of premiums since FY 2000-01. The funds collected are used for workers' compensation cost containment, the Workers' Compensation Division, and the MMIF and SIF. The director determines how the surcharge is distributed amongst the 4 benefitting areas. SB09-037 only affects the amount of surcharge revenue directed to the MMIF and SIF.









Major Medical Insurance Fund—was established in 1965 to defray employer costs for medically catastrophic injuries. The fund covers all employer costs for medical care resulting from work-related injuries once the total cost has reached $20,000. The injury must have occurred prior to July 1, 1981. Once admitted to the fund, the employer's insurance carrier is no longer responsible for medical costs, but the carrier remains responsible for any disability benefits or lost wages.

Subsequent Injury Fund—was established in 1945 to encourage employers to hire persons with preexisting work-related disabilities, especially veterans who had been seriously injured during World War II. The SIF accomplished this by eliminating the liability of a current employer for the continuing effects of an employee's preexisting work-related injury. Benefits are not available to claimants whose injuries occurred after July 1, 1993, and for occupational diseases diagnosed after April 1, 1994.

TABOR Emergency Reserve—$94 million in the MMIF is designated as the liquid portion of the TABOR emergency reserve. TABOR requires that at least 3 percent of state fiscal year spending, excluding bonded debt service, be kept in a reserve to be used only in the event of a state emergency. Each year, the General Assembly designates and prioritizes moneys in a set of cash funds to constitute the reserve. These fund balances cannot be used to pay benefits for major medical claims.


09:33 AM

Representative McNulty responded to questions from the committee regarding the impact the bill has on workers' compensation funds and what would happen if the fund does not have enough money to cover claims. He was asked to explain what the bill would be doing differently from current practice.

09:35 AM --
John Berry, representing the Workers' Compensation Coalition, testified in support of the bill. He explained that the bill would create a pay-as-you-go system.

09:37 AM --
Travis Berry, representing the Colorado Competitive Council, testified in support of the bill and responded to the earlier question regarding how the bill changes current practice.

09:40 AM --
Bob Summers, Director of the Division of Workers' Compensation, testified neutrally on the bill. He talked about some concerns that will be addressed in an amendment. Mr. Summers gave some background on the workers' compensation funds and the surcharge. He responded to questions from the committee. Representative McNulty distributed amendments L.004 (Attachment A) and L.005 (Attachment B). Mr. Summers addressed a question about the average cost of premiums, but noted that premiums are the jurisdiction of the Division of Insurance. He explained that the type of work impacts the cost of premiums more than the size of the company.

















09:57 AM

Representative McNulty explained the amendments and Mr. Summers commented on them as well.
BILL:SB09-037
TIME: 10:01:25 AM
MOVED:Priola
MOTION:Moved amendment L.004 (Attachment A). The motion passed without objection.

09HouseBus0414AttachA.pdf
SECONDED:Liston
VOTE
Balmer
Bradford
Gagliardi
Liston
Priola
Ryden
Scanlan
Soper
Stephens
Casso
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection























BILL:SB09-037
TIME: 10:02:06 AM
MOVED:Balmer
MOTION:Moved amendment L.005 (Attachment B). The motion passed without objection.

09HouseBus0414AttachB.pdf
SECONDED:Stephens
VOTE
Balmer
Bradford
Gagliardi
Liston
Priola
Ryden
Scanlan
Soper
Stephens
Casso
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


The following motion was ruled out of order:
BILL:SB09-037
TIME: 10:04:06 AM
MOVED:Rice
MOTION:Moved to refer Senate Bill 09-37, as amended, to the Committee on Finance. The motion was ruled out of order.
SECONDED:Balmer
VOTE
Balmer
Yes
Bradford
Yes
Gagliardi
Yes
Liston
Yes
Priola
Yes
Ryden
No
Scanlan
Yes
Soper
Yes
Stephens
Yes
Casso
Yes
Rice
Not Final YES: 9 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: RULED OUT OF ORDER

BILL:SB09-037
TIME: 10:04:43 AM
MOVED:Casso
MOTION:Moved to refer Senate Bill 09-37, as amended, to the Committee on Appropriations. The motion passed 10-1.
SECONDED:Balmer
VOTE
Balmer
Yes
Bradford
Yes
Gagliardi
Yes
Liston
Yes
Priola
Yes
Ryden
No
Scanlan
Yes
Soper
Yes
Stephens
Yes
Casso
Yes
Rice
Yes
Final YES: 10 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS


10:05 AM -- Senate Bill 09-243

Representative Rice said he would take witness testimony on Senate Bill 09-243, concerning payments for workers' compensation benefits. He said the bill would be rescheduled for action at a later date. The bill makes changes to workers' compensation insurance benefit procedures. The fee schedule for payment of benefits is extended to services delivered after any final order, final admission, or full or partial settlement of a claim. When determining the maximum amount of temporary and permanent partial disability payments a claimant is eligible to receive, the claimant's mental impairment rating must be combined with the physical impairment rating. Finally, payment for health care services is authorized for claims that are found to be compensable after initially being denied.

10:07 AM --
James Buck, a private attorney, representing the Workers' Compensation Coalition, testified against the bill. He talked about the concern he has with combining the mental impairment rating and the physical impairment rating. He said currently the two ratings are separate and are paid out separately and the bill would combine the two. Mr. Buck explained that there are caps on the amount of benefits a claimant can receive based on the impairment rating. He stated that currently, the impairment rating of the whole person (head through spine) are combined with the extremity rating (legs and hands) and this is the physical impairment rating. If the claimant is found to have a 25 percent or less physical impairment rating, the cap on indemnity benefits is $75,000, if the claimant is found to have 26 percent or greater impairment rating , benefits are capped at $150,000, unless the claimant is found to have a permanent total disability. Mr. Buck said the bill will encourage everyone to try to obtain a mental impairment in addition to the physical impairment in an attempt to exceed the 25 percent impairment rating in order to fall under the higher benefit cap. Mr. Buck responded to questions from the committee.








10:24 AM --
John Berry, representing the Workers' Compensation Coalition, testified against the bill and responded to questions.


10:25 AM -- House Bill 09-1338

Representative Casso, prime sponsor, presented House Bill 09-1338 concerning modifications to state insurance laws to comply with recently enacted federal laws. The applicable laws are:

10:29 AM --
Peg Brown, representing the Colorado Division of Insurance, testified on the bill and explained the following federal laws the bill is complying with and their effective dates: Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008; Genetic Information Non-discrimination Act; Michelle’s Law; and Children's Health Insurance Program Reauthorization Act of 2009. Ms. Brown responded to questions from the committee.
























BILL:HB09-1338
TIME: 10:38:49 AM
MOVED:Casso
MOTION:Moved to refer House Bill 09-1338 to the Committee of the Whole. The motion passed 11-0.
SECONDED:Soper
VOTE
Balmer
Yes
Bradford
Yes
Gagliardi
Yes
Liston
Yes
Priola
Yes
Ryden
Yes
Scanlan
Yes
Soper
Yes
Stephens
Yes
Casso
Yes
Rice
Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS


10:39 PM

The committee adjourned.