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SPONSOR: |
HBIC |
DATE TYPED: |
|
HB |
CS/281/aHJC/aSJC |
||
|
SHORT TITLE: |
Regulation of Controlled Insurance Plans |
SB |
|
||||
|
|
ANALYST: |
Collard |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
|
$195.0 |
Recurring |
OSF |
(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
Workers’
Compensation Administration
SUMMARY
Synopsis
of SJC Amendments
The Senate Judiciary Committee amendment to the
House Business and Industry Committee substitute to House Bill 281 makes a
technical adjustment by striking HJC amendment number two. The amendment also deprives the Insurance Department
of jurisdiction to discipline insurers that may violate provisions of the bill
and leaves the Workers’ Compensation Administration sole jurisdiction for
enforcement of the bill.
Synopsis
of HJC Amendments
The House Judiciary Committee amends the bill to
make the Workers’ Compensation Administration (WCA) responsible for approving
the health and safety programs of the owner or principal contractor. It also requires the owner or principal
contractor to submit evidence of compliance with WCA and the superintendent of
insurance, and puts the WCA director in an advisory role to participate in the
rulemaking process to provide for participation of the stakeholders.
FISCAL
IMPLICATIONS
WCA still indicates the need for $195.0 and
three additional FTEs to properly implement the provisions of this bill and
carry out the additional regulatory work, especially since the FY04 budget
recommendation currently deletes four FTE and reduces the agency budget by
$184.1.
OTHER
SUBSTANTIVE ISSUES
The Workers’ Compensation Administration
Advisory Council, after consideration of this bill at a public meeting, urges
enactment of this legislation.
Synopsis
of Substitute Bill
The House Business and
Industry Committee Substitute for House Bill 281 includes:
· A
definition of “controlled insurance plans” and limits the use of controlled
insurance plans to projects over $150 million spent within five years;
· Prohibiting
“rolling wrap-ups,” meaning coverage for an ongoing project or series of projects
where the common insurance program remains in place indefinitely and contracted
work is added as it occurs under the control of an owner or principal contractor;
· Requiring
requests for proposals or bids for projects where controlled insurance plans
are contemplated;
· Requiring
the administration to resolve disputes, however initial benefits shall be provided
by the controlled insurance plan until the dispute is resolved;
· Requiring
all owner or principal contractors using a controlled insurance plan to show
the contract and evidence of compliance with the requirements in the bill to
the superintendent of insurance 30 days prior to receiving bids or requests for
proposals on the project;
· Requiring
the owner or principal contractor to distribute a project performance-based refunded
premium or dividend to each participating contractor and subcontractor on a
proportional basis, if provided in the construction contract;
· Requiring
the owner or principal contractor to develop and carry out a health safety
program approved by the superintendent of insurance, including protocol that
encourages return to work pursuant to the Workers’ Compensation Act;
· Requiring
an owner or principal contractor using a controlled insurance plan to establish
a method for timely reporting of job-related injuries, provide modifier
experienced units statistical rating information and other information required
by the superintendent of insurance, provide contractors or subcontractors with
actual and specific payroll audit data from the controlled insurance plan, and
provide information on injured employees as would be available to the employer
from a non-controlled insurance plan; and
· Establishing
penalties as provided in Section 59A-1-18 NMSA 1978.
Finally, the substitute
bill gives authority to adopt rules, regulations and fee schedules to the director
of the Workers’ Compensation Administration (WCA).
FISCAL IMPLICATIONS
There is no appropriation associated with this
bill. However, WCA notes this bill creates an entirely new regulatory function unlike
anything it currently oversees.
Department analysis indicates that an appropriation of approximately
$195.0 should accompany this bill. That
will pay for a field investigator, a financial analyst and a support person of
appropriate experience together with benefits and infrastructure support. Below is the department’s breakdown of the expected
cost. It should be noted that the FTE
costs shown are at mid-point salaries in each position pay range and include
employee benefits. It should also be
noted that operational expenses include new furniture, new computer equipment,
travel, training, car leases, and telecommunications expenses.
|
Expenses |
Dollar Amount |
|
Accountant and
Auditor permanent FTE |
$57.8 |
|
Support Staff
permanent FTE |
$38.5 |
|
Compliance
Officer permanent FTE |
$47.8 |
|
Operational
expenses |
$50.9 |
|
Total |
$195.0 |
ADMINISTRATIVE
IMPLICATIONS
WCA notes the department has neither the
appropriate personnel on staff, nor the unused FTE capacity to handle a major new
regulatory function without additional personnel. The addition of three FTEs, one advanced
financial analyst, one field investigator and one support person, is strongly
recommended. Additionally, WCA indicates
it will be nearly impossible for WCA to absorb a significant regulatory program
without additional resources. The
ability of WCA to fulfill its other duties will be compromised by the bill in
its present form.
The
table of organizational listing for January 2003 indicates one compliance
officer vacant since January 2003 and one office clerk position vacant since
September 2002. It is possible for these
two vacant positions to fill the need for a support person and a field
investigator.
TECHNICAL ISSUES
WCA
indicates the specification of the role or terms of the stakeholder group
created in Section 3 of the bill is entirely absent. Unlike other sections of the Act, where the
role of advisory groups is specified, the bill leaves the role
unspecified. As a result, the regulatory
actions taken after the group’s input will be subject to legal challenge on the
grounds that the role of the group was not properly observed, regardless of the
role actually undertaken.
OTHER SUBSTANTIVE ISSUES
WCA is concerned because there are several areas where
the Superintendent of Insurance is the recipient of critical information
(filing of contract under Section 2 Subsection E), the approver of processes
(approval of a health and safety plan under Section 2, Subsection G), or the
enforcer of regulations (ability to impose penalties under Section 2, Subsection
I) that are inconsistent with the regulatory authority being vested in
WCA. WCA is concerned this will lead to
issues of inter-agency coordination and conflict.