Update to Bills Signed June 30: Governor Vetoes HB 679 Referencing Self-Insurance

Update:  On June 30, 2008, Governor Crist vetoed HB 679, which referenced commercial residential property insurance contracts and authorized associations or groups of associations to form a self-insurance fund. The bill also required homeowners’ associations to maintain adequate insurance and changed association governance statutes, which would have impacted the process used by those associations to obtain insurance.

Although the Governor emphasized that HB 679 provided many clarifying changes for condominium association and homeowners’ activities, he vetoed this bill based on his concerns that an enacted exemption from the current supervision and inspection requirements by the Florida Department of Health for pools, which approximate 7,300 throughout the State, would endanger the health and safety of those swimmers who frequent them. 

Governor Crist’s veto message is attached for your review. 

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Today, June 30, 2008, Florida Governor Charlie Crist signed 32 bills into law and vetoed two bills that passed during the 2008 Florida Legislative Session.

Several insurance and health-care related bills were among those signed today.

Summaries of SB 2082 and HB 7103  are provided below.

 

SB 2082 Relating to Insurance By Senator Mike Bennett 

Requires that an applicant for licensure as an insurance agent, customer representative, adjuster, service representative, managing general agent, or reinsurance intermediary provide to the Florida Department of Financial Services (“DFS”) his or her home and office telephone numbers and e-mail address. Revises the elements of the offense known as “churning” to include direct or indirect purchases made for the purpose of earning fees or commissions, etc.  Effective date: 1/1/2009.

 

HB 7103 Relating to the My Safe Florida Home Program by the House Jobs & Entrepreneurship Council 

Requires that wind certification entities meet certain minimum criteria to qualify for selection by DFS; deletes provision requiring hurricane mitigation inspectors participating in program to meet requirements for criminal record check by specified date; requires insurers to accept as valid uniform mitigation verification forms certified by DFS or signed by certain professionals, etc. Effective Date: July 1, 2008

 

HB 7075 Relating to Developmental Disabilities by the House Healthcare Council 

Revises exemption from certain requirements for refingerprinting and rescreening; provides circumstances under which the Agency for Persons With Disabilities may deny, revoke, or suspend license or impose a fine; authorizes direct service providers to administer certain prescription medications to clients with developmental disabilities. Effective Date: July 1, 2008

 

HB 7083 Relating to Health Care Fraud and Abuse by the House Healthcare Council 

Authorizes home infusion therapy provider to be licensed as nurse registry; requires applicant for home health agency license to submit to the Agency for Health Care Administration a business plan and evidence of contingency funding, and disclose other controlling ownership interests in health care entities; provides for fine to be imposed against home health agency that provides complimentary staffing to assisted care community in exchange for patient referrals, etc. Effective Date: July 1, 2008

 

HB 1429 Relating to Mental Health and Substance Abuse Services by State Representative Andy Gardiner 

Provides legislative findings & intent; establishes goals; specifies roles and responsibilities of the Department of Children and Family Services (“DCFS”); creates community-based systems of care; authorizes implementation of managing entities by DCFS; establishes process for contracting with managing entities; specifies qualifying criteria for and responsibilities of managing entities; specifies responsibilities of department; provides for evaluations and reports; provides for monitoring process.  Effective Date: July 1, 2008.

 

Summaries of SB 2082 and HB 7103

 

CS/CS/SB 2082 Insurance/Seible Act

SB 2082 was passed by the Senate on May 2, 2008, by a vote of 40 Yeas, 0 Nays. In the House, the billed passed on May 2, 2008, 118 Yeas, 0 Nays.  This bill revises the Florida Statutes, relating to the following:
• Provides that an applicant for licensure as an insurance agent, customer service representative, managing general agent or reinsurance intermediary shall provide to the DFS his or her home and office telephone numbers and e-mail address and requires a licensee to notify DFS within sixty days of a change of home or business telephone numbers or e-mail address;
• Provides that persons licensed to solicit or sell life insurance shall complete continuing education on the subject of suitability  in annuity and life insurance transactions;
• Provides revisions to the elements of the offense known as “churning” to include direct or indirect purchases made for the purpose of earning fees or commissions;
• Provides enhanced penalties for certain misrepresentations and that said misrepresentations constitute an unfair method of competition and an unfair or deceptive trade practice;
• Provides an increase in the amount of time for an unconditional refund for life insurance or annuity policies and provision of a buyer’s guide;
• Provides regulations relating to recommendations for sales of life and annuity products to seniors and requires an agent to obtain financial and other information regarding seniors before executing an annuity or life insurance contract;
• Redefines  “ annuity” and defines “life insurance contract;”
• Provides that an agent shall provide a suitability analysis in writing;
• Provides that an agent shall provide a comparison between current and recommended products if there is an in-force policy or annuity as well as any surrender charges and tax consequences;
• Provides for regulation of the sale and issuance of variable and indeterminate value contracts by DFS; and
• Provides rulemaking authority.

Section 1 
• This bill may be cited as the “John and Patricia Seible Act.” 

Section 2 
• Amends Section 626.171(a)(2), Florida Statutes (“F.S.”), to require an applicant for licensure as an insurance agent, customer service representative, managing general agent or reinsurance intermediary provide to the DFS his or her home and office telephone numbers and e-mail address.

Section 3 
• Amends Section 626.2815 F.S. by adding paragraph 3(k) stating that effective from January 01, 2009, through January 01, 2010, there will be a minimum of 3 hours of continuing education regarding the suitability in annuity and life insurance transactions, for any person holding a license to solicit or sell life insurance in this state.  The hours obtained may be used to satisfy the requirement for continuing education in ethics.

Section 4 
• Amends 626.551 F.S. to require every licensee to notify the department in writing within 60 days after a change in home telephone number, business telephone number, or e-mail address, and that a failure to notify shall result in a fine of at least $500.

Section 5
• Section 5 amends Section 626.9521 F.S. as follows:
   o  Provides that paragraph 3(a) shall categorize the offenses of “twisting” and “churning” as felonies of the third degree, punishable as provided in s. 775.083, and a fine not greater than $5,000 for each nonwillful violation, and a fine not greater than $30,000 for each willful violation.  If the victim is 65 years of age or older, or the agent knew or should have known the victim was mentally disabled, the offenses become felonies of the second degree, punishable as provided in Section 775.082 F.S., and a fine not greater than $5,000 for each nonwillful violation, or a fine not greater than $30,000 for each willful violation.  To impose these penalties, the “churning” or “twisting” must involve fraudulent conduct;
   o Provides that Paragraph 3(b) shall characterize the submission of fraudulent signatures on an application or policy-related document as a felony of the third degree, punishable as provided in Section 775.082 F.S., and a fine not greater than $5,000 for each nonwillful violation or not greater than $30,000 for each willful violation; and
   o Provides that Paragraph 3(c) shall limit the aggregate amounts of fines that may be imposed for violations arising out of the same action:  $20,000 for all nonwillful violations, and $150,000 for all willful violations.

Section 6 
• Section 6 adds that if, at any time during the 2008 legislative session, there is an increase in fines imposed under Section 626.9521 F.S. which exceeds the increases provided for by this act, such increase will supersede the current act, if it is enacted and passed into law.

Section 7 
• Amends Section 626.9541(1) F.S. relating to unfair method of competition and unfair or deceptive acts or practices, to add Paragraphs (ee) and (ff) as follows:
paragraphs (ee) and (ff) provide that a licensee may not use a designation or title in a way that falsely implies that the licensee possesses special financial knowledge or specialized financial training, is certified or qualified to provide specialized financial advice to seniors, and may not use terms such as “financial advisor” in a way that falsely implies the licensee is licensed or qualified to discuss, sell, or recommend financial or investment products other than insurance products.
• However, a licensee who holds an additional license or designation such as CFP, CLU may advise customers and make recommendations in accordance with those licenses or designations, without violating this paragraph.

Section 8 
• Amends Section 626.99 (4)(a) F.S. as follows;
   o Provides that insurers are required to provide to a purchaser, a buyer’s guide and policy summary prior to accepting an initial premium or deposit, unless the policy provides an unconditional refund for a period of at least 14 days. 

   o Provides that for annuities, the insurer shall provide a buyer’s guide to annuities and a contract summary as provided in the NAIC Model Annuity and Deposit Fund Regulation, and must provide an unconditional refund for a period of at least 14 days.

Section 9 
• Amends Section 627.4554 F.S. to include “life insurance” along with the provisions for Annuities.
• Provides that a violation of this section does not create or imply a private cause of action.
• Provides definitions of annuity contract and life insurance contracts.
• Provides that when recommending to a senior consumer the purchase or exchange of an annuity or life insurance contract that results in another transaction or series of insurance transactions, an insurance agent or insurer must take reasonable efforts to determine the suitability of such product, and must have an objectively reasonable basis for such determination, requiring specific information to be collected.
• Provides that all information must be collected on a form – paragraph contains signature and font requirements for legibility, and provides the form be provider to the insurer and the consumer within specified times.
• Provides that if the consumer refuse to provide certain information, a signed verification must be obtained.
• Provides that the agent shall provide written differences between the current policy and the recommended policy to the consumer and that the exchange or purchase may have tax consequences, prior to signing the new application.
• Provides that DFS may order corrective action, including ordering an insurer to rescind the policy and pay a full refund of premiums or accumulation value the consumer, whichever is greater.
• Changes compliance standards from the National Association of Securities Dealers to Financial Industry Regulatory Authority.

Section 10 
• Confers regulatory authority upon the Office of Insurance Regulation and rulemaking authority upon DFS.

Section 11 
• Provides that DFS may adopt rules to implement the law.
• Provides that rules may not become effective until 60 days after the date the final rule is adopted or January 1, 2009, which ever is later.

Section 12   
• Effective Date is July 1, 2008.

 

HB 7103 Mitigation Enhancement

HB 7103 was passed by the House on April 29, 2008, by a vote of 117 Yeas, 0 Nays.  In the Senate, this bill was substituted for SB 644 on April 30, 2008.

The bill makes several changes to the My Safe Florida Home (“MSFH”) program administered by the Department of Financial Services (“DFS”) that provides hurricane mitigation inspections and grants for specified improvements as follows:

• requires that to qualify for selection by the DFS as a wind certification entity, which provides hurricane mitigation inspections, an entity must use mitigation inspectors who are certified or licensed in certain professions;
• requires DFS to adopt a quality assurance program that includes a statistically valid number of reinspections;
• allows DFS to contract with third parties for the provision of services for low-income homeowners;
• provides that DFS must develop the No-Interest Loan Program in the MSFH program  bill;
• mandates that insurers accept as valid a uniform mitigation verification form certified by DFS  or signed by an approved MSFH inspector who is certified or licensed in certain professions;
• provides that residential property insurers must take into account in their rate making county ordinances and local amendments to the Florida Building Code that effectuate mitigation measures for the reduction or elimination of geologic hazards such as sinkholes.

Section 1

• Section 1 revises Section 215.5586, Florida Statutes (“F.S.”), addressing who may qualify as hurricane mitigation inspectors for wind certification entities that provide wind certification inspections. The bill clarifies who may qualify as hurricane mitigation inspectors as follows:
   o a certified building code inspector under Section 468.607 F.S.;
   o a licensed general contractor or residential contractor under Section 489.11 F.S.;
   o a licensed professional engineer under Section 471.015 F.S. who has passed the appropriate equivalency test of the building code training program under Section 553.841 F.S.;
   o a licensed professional architect under Section 481.213 F.S.

• Requires DFS to implement a quality insurance program that includes a statistically valid number of reinspections.
• Provides that DFS, as a condition of “reimbursing a homeowner,” may require that improvements be made to all openings, including exterior doors and garage doors.
• Removes the departmental transfer of funds appropriated to the program provision, as well as the provision making the Volunteer Florida Foundation responsible for the inspections and grant management for low income homeowners.
• Makes the DFS directly responsible for implementing the low interest loan program by October 1, 2008, requiring the department to pair with the private sector.

Section 2

• Section 2 amends Section 627.711 F.S. to require that an insurer accept a valid uniform mitigation verification form certified either by the DFS or signed by one of the following:
   o a hurricane mitigation inspector employed by a My Safe Florida wind certification entity;
   o a certified building code inspector under Section 468.607 F.S.;
   o a licensed general contractor or residential contractor under Section 489.11 F.S.;
   o a licensed professional engineer under Section 471.015 F.S. who has passed the appropriate equivalency test of the building code training program under Section 553.841 F.S.; or
   o a licensed professional architect under Section 481.213 F.S.

Section 3

• This section sets an Effective Date of July 1, 2008.

 

Should you have any questions or comments please contact Colodny Fass

 

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