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2014 SESSION

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Senate Committee on Commerce and Labor

Chairman: Richard L. Saslaw

Clerk: Maribeth Turner
Staff: Frank Munyan
Date of Meeting: February 17, 2014
Time and Place: Monday, 1/2 hour after adjournment, Senate Room B
CORRECTION: MEETING WILL BE IN SENATE ROOM B

H.B. 22 Unemployment compensation; calculating an employer's benefit ratio.

Patron: Kory

Unemployment compensation; benefit ratio. Provides that an employer's payroll, for purposes of calculating its benefit ratio and state unemployment tax rate, shall be deemed to be $1 when the employer's taxable payroll for the applicable 12-month period is not more than $1. The measure eliminates the necessity of dividing the employer's benefit charges by a payroll amount of $0, which produces an infinite benefit ratio and results in an assessment of state unemployment taxes at the highest rate.

H.B. 25 Public service companies; updates citation to federal Public Utility Holding Company Act, etc.

Patron: Habeeb

Obsolete provisions; regulation of public service companies. Updates a citation to the federal Public Utility Holding Company Act. The bill also removes an obsolete reference to repealed sections of the Code of Virginia that pertained to express companies. The bill is a recommendation of the Virginia Code Commission.

H.B. 33 Pediatric oral health; essential health benefits.

Patron: Habeeb

Pediatric oral health benefits; reasonable assurance of provision. Declares that a health carrier that makes available in the small group market or individual market outside an exchange a health benefit plan issued on or after January 1, 2015, that does not include the required minimum essential pediatric oral health benefits shall be deemed to satisfy the requirement that the plan provide such coverage if the health carrier has obtained reasonable assurance that such pediatric oral health benefits are provided to the purchaser of the plan. The health carrier shall be deemed to have obtained such reasonable assurance that such benefits are provided to the purchaser if (i) at least one qualified dental plan offers the required benefits and is available for purchase by the small group or individual purchaser; and (ii) the health carrier prominently discloses that the plan does not provide the required benefits.

H.B. 69 Service contracts; expands types of services that may be provided under extended contract.

Patron: Marshall, D.W.

Extended service contracts. Expands the types of services that may be provided under an extended service contract to include certain types of damage to a motor vehicle, the replacement of motor vehicle keys, and the installation or application of certain materials on a motor vehicle that includes an agreement that to the purchaser of incidental costs if the material fails to prevent loss or damage as specified. The measure also authorizes the Board of Agriculture and Consumer Services to designate additional services that may be provided under an extended service contract.

H.B. 109 Insurance holding companies; revises requirements applicable to companies.

Patron: Ware


Insurance holding companies. Revises the requirements applicable to insurance holding companies to conform to the National Association of Insurance Commissioners' Insurance Holding Company System Regulatory Act and Insurance Holding Company System Model Regulation. The measure expands insurance regulators' examination authority to ascertain the financial condition of the insurer. The bill (i) requires the ultimate controlling person of an insurance holding company system to submit a confidential Enterprise Risk filing; (ii) requires the parent company seeking to divest its interest in an insurance company subsidiary to provide notice to the domestic regulator prior to the divestiture; (iii) requires the insurer's board of directors to make statements regarding the corporate governance and internal control responsibilities within the registration statement; (iv) subjects the cost-sharing services and management agreements among affiliated entities to minimum reporting requirements; and (v) adds confidentiality protections for information shared. The State Corporation Commission will be authorized to participate in supervisory colleges, which will be used by regulators to coordinate supervision of an insurance holding company system that has national and international operations. The measure also makes dental and optometric services plans subject to the insurance holding company provisions, and dental plan organizations subject to requirements regarding risk-based capital. The holding companies requirements in effect on June 30, 2014, will continue to apply to any insurance holding company transaction commenced prior to January 1, 2015, unless otherwise provided.

H.B. 180 Invention development services; required disclosure, civil penalty.

Patron: Farrell

Invention development services; disclosure and civil penalty. Requires each contract for invention development services to include on its cover sheet a disclosure that the contract is a fee-for-service contract with no guarantees as to success of the invention and information on how to file a consumer complaint regarding invention development services with the Office of the Attorney General. The measure increases the maximum civil penalty that the Attorney General may recover in an enforcement action from $3,000 to $10,000 for each violation. As introduced, this bill was a recommendation of the Joint Commission on Technology and Science.

H.B. 308 Health insurance; prescription drug formularies, notices.

Patron: Dance

Health insurance; prescription drugs; formularies. Requires any health insurer, corporation providing individual or group accident and sickness subscription contracts, or health maintenance organization that applies a formulary to prescription drug benefits provided under its policy, contract, or plan to provide to each affected group health benefit plan policyholder or contract holder or each affected individual health benefit plan policyholder or contract holder not less than 30 days' prior written notice of a modification to a formulary that results in the movement of a prescription drug to a tier with higher cost-sharing requirements. This requirement does not apply to modifications that occur at the time of coverage renewal.

H.B. 313 Clerk of the State Corporation Commission; unauthorized filings.

Patron: Marshall, D.W.

Clerk of the State Corporation Commission; unauthorized filings. Authorizes the clerk of the State Corporation Commission, upon determining that a person who executed or delivered a business entity document to the clerk's office lacked the authority to act on behalf of the business entity, to refuse to accept the document for filing. The clerk is further authorized under such circumstances to summarily remove a filed document, correct the records, and notify the affected business entity. The measure also includes stylistic and technical changes.

H.B. 336 Insurance joint underwriting associations; board of directors.

Patron: Bell, Robert B.

Commercial liability insurance and medical malpractice joint underwriting associations. Updates the insurance company trade associations that are authorized appoint directors to the Medical Malpractice Joint Underwriting Association and the Commercial Liability Joint Underwriting Association if there is a need for either of the associations to be activated. References to (i) Alliance of American Insurers are changed to Property Casualty Insurers Association of America and (ii) National Association of Independent Insurers are changed to National Association of Mutual Insurance Companies.

H.B. 358 Banks; interstate branching.

Patron: Chafin

Banks; interstate branching. Repeals a limitation on the establishment within the Commonwealth of branches of out-of-state banks. The limitation provides that such a branch may not be established unless the laws of the home state of the out-of-state bank permit Virginia banks to establish and maintain de novo in that state under substantially the same terms as provided under Virginia law. The measure also repeals (i) a requirement that the State Corporation Commission, when acting on an application by a Virginia bank to establish a branch in another state, consider the views of the state bank supervisor of the state where a branch is proposed to be located and (ii) a nonseverability provision that states that if any provision of Virginia's 1995 law regulating interstate branching is held to be invalid, the entire article law is invalid.

H.B. 389 Unemployment compensation; voluntary separation presumed.

Patron: Minchew

Unemployment compensation; voluntary separation presumed. Establishes a rebuttable presumption that an individual left work voluntarily if the individual was a graduate student whose employment commenced and ended between spring and fall semesters of his academic program and he returned to his academic program following his separation from employment.

H.B. 422 Local government; prohibit certain practices requiring contractors to provide certain benefits, etc.

Patron: Davis

Prohibiting certain local government practices that would require contractors to provide certain compensation or benefits. Prohibits local governing bodies from establishing provisions that would require a wage floor of any other employee benefit or compensation, above what is otherwise required by state or federal law, to be provided by a contractor to its employees as part of certain local government contracts. Contracts for landscaping or janitorial services are excluded from the prohibition. The bill provides that its provisions shall have no impact on service contracts executed prior to January 31, 2014 and shall not prohibit a locality from entering into contracts in which a company receiving economic development incentives is required to maintain a certain wage level.

H.B. 456 Workers' compensation; civil penalty for failure to make required reports, collection costs.

Patron: Kilgore

Workers' compensation; civil penalty for failure to make required reports; collection costs. Clarifies that the Virginia Workers' Compensation Commission is authorized to assess a civil penalty against an insurance carrier, self-insurer, group self-insurance association, or third party administrator that fails to make reports required by the Commission. The measure also provides that (i) civil penalties will be allocated equally between the administrative fund and the Uninsured Employer's Fund and (ii) the Commission may add the costs of collecting the civil penalty to the aggregate civil penalty, with the collected costs to be paid into the administrative fund.

H.B. 458 Workers' compensation; civil penalties, collection costs.

Patron: Kilgore

Workers' compensation; civil penalties; collection costs. Increases the maximum civil penalty that may be assessed against an employer for failure to obtain workers' compensation insurance or provide evidence of compliance with the Virginia Workers' Compensation Act to $50,000. Currently, noncompliant employers are subject to a civil penalty of not less than $500 nor more than $5,000. The measure provides that, subject to the maximum, the penalty for each day of noncompliance will be no more than $250. The measure also provides that (i) civil penalties will be allocated equally between the Workers' Compensation Commission's administrative fund and the Uninsured Employer's Fund and (ii) the Commission may add the costs of collecting the civil penalty to the aggregate civil penalty, with the collected costs to be paid into the administrative fund.

H.B. 459 Virginia Workers' Compensation Commission; vacancies.

Patron: Kilgore

Virginia Workers' Compensation Commission; vacancies. Authorizes the chairman of the Virginia Workers' Compensation Commission to recall retired members of the Commission to participate in a review of an award when vacancies exist on the Commission. The retired member or members recalled shall be the member or members who occupied the seat for which such member or members are being recalled, unless the parties otherwise consent. The measure also provides for the compensation of recalled retired members and clarifies that more than one deputy commissioner may be appointed to participate in a review.

H.B. 466 Insurance companies; permitted investments in foreign securities.

Patron: Massie

Insurance companies; permitted investments in foreign securities. Increases the portion of a domestic insurer's total admitted assets that may be invested in permitted securities of a foreign country from 10 to 15 percent. The measure also increases the aggregate amount of securities of a single foreign country in which a domestic insurer may invest from 3 percent to 5 percent of the insurer's admitted assets if the foreign jurisdiction has a sovereign debt rating of SVO 1. If the foreign jurisdiction's sovereign debt rating is not SVO 1, the maximum amount of its securities in which the insurer may invest remains 3 percent. Finally, the measure allows investments in securities of foreign jurisdictions to be payable in currencies of foreign countries if the investment is effectively hedged, substantially in its entirety, against U.S. currency.

H.B. 630 Virginia Workers' Compensation Commission; filing of documents or materials.

Patron: Kilgore

Virginia Workers' Compensation Commission; filings. Eliminates the ability of parties to a workers' compensation proceeding to file documents or materials with the Virginia Workers' Compensation Commission by telegraph. The measure also permits the filing of documents and materials only by means of electronic transmission approved by the Commission.

H.B. 848 Electric utility regulation; recovery of costs of new underground distribution facilities.

Patron: Loupassi

Electric utility regulation; recovery of costs of new underground distribution facilities. Authorizes investor-owned electric utilities to recover the costs of new underground distribution facilities through a rate adjustment clause. Eligible facilities will replace existing overhead distribution facilities of 69 kilovolts or less. Petitions seeking approval for recovery of such costs shall not be brought more frequently than annually. A utility shall not seek any annual incremental increase in the level of investments in such facilities that exceeds five percent of the utility's distribution rate base. In determining whether to approve a rate adjustment clause for such facilities, the State Corporation Commission is directed to liberally construe the provisions of Title 56 and to give due consideration to the public policy goals of increased electric service reliability and reduced outage times associated with the replacement of existing overhead distribution facilities with new underground facilities. None of the costs of such new facilities shall be allocated to customers in the large power service rate class for a Phase I utility or general service rate classes for a Phase II utility.

H.B. 1044 Banks, director; ownership of shares.

Patron: Comstock

Banks; director ownership of shares. Provides that a bank director shall be deemed to be the sole owner of, and have in his personal possession or control, shares of stock that are (i) held through a brokerage account or similar arrangement, provided that the director retains sole beneficial ownership and sole legal control over the shares; (ii) held jointly or as a tenant in common, but only to the extent of the book value of the shares divided by the number of joint or tenant in common holders; (iii) deposited by the director in a living trust, or inter vivos trust, as to which the director is the sole trustee and retains an absolute power of revocation; or (iv) held through a profit-sharing plan, individual retirement account, retirement plan, or similar arrangement, provided that the director retains sole beneficial ownership and sole legal control over the shares. Such shares of stock in the bank of which the individual is a director may be used to determine if the director meets the requirement that he own and have in his personal possession or control shares of such stock with a book value of not less than $5,000. The measure also corrects a reference to the par value, rather than the book value, of such stock.

H.B. 1057 Benefits consortium; exemption and exclusions.

Patron: Kilgore

Benefits consortium; exemption and exclusions. Exempts a benefits consortium and the benefits consortium's sponsoring association from the Commonwealth's insurance laws and regulations, including those otherwise applicable to multiple employer welfare arrangements, and from the premium tax levied on insurance companies. A benefits consortium will be permitted to provide medical, prescription drug, dental, and vision benefits to employees of the sponsoring association and its members and the dependents of those employees through benefits plans. A benefits consortium is a trust that satisfies certain conditions, including (i) being subject to federal regulations applicable to multiple employer welfare arrangements and the enforcement authority of the U.S. Department of Labor; (ii) filing forms for the applicable plan year with the U.S. Department of Labor identifying the arrangement among the trust, sponsoring association, and benefit plans offered through the trust as a multiple employer welfare arrangement; (iii) operating as a nonprofit voluntary employee beneficiary association within the meaning of § 501(c)(9) of the Internal Revenue Code; (iv) providing that the trust's funds are to be used for the benefit of the participating employees, and their dependents, through insurance, self-insurance, or a combination thereof; (v) establishing and maintaining reserves determined in accordance with sound actuarial principles; (vi) purchasing and maintaining policies of specific, aggregate, and terminal excess insurance with retention levels determined in accordance with sound actuarial principles; and (vii) securing guarantees or standby letters of credit guaranteeing the payment of claims. The bill has a delayed effective date of January 1, 2015.

H.B. 1059 Electric utility regulation; recovery of certain generation facility costs, etc.

Patron: Kilgore

Electric utilities; generation facility cost recovery. Requires an electric utility to establish a regulatory asset for regulatory accounting and ratemaking purposes under which it shall defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant and certain related work. These deferred O&M costs shall be amortized over the refueling cycle, but in no case for more than 18 months. The State Corporation Commission (SCC) is required to treat the deferred and amortized costs of such regulatory asset as part of the utility's costs for the purpose of certain proceedings. The measure also limits the portion of the costs incurred by an electric utility between July 1, 2007, and December 31, 2013, in developing a nuclear power facility or offshore wind facility that are recoverable through a rate adjustment clause to 30 percent of such amount. The remaining 70 percent of such costs may be recovered through existing base rates as determined by the SCC in the test periods under review in the utility's next biennial review filed after July 1, 2014. All of the costs incurred after December 31, 2013, may be deferred for recovery through a rate adjustment clause as may be approved by the SCC. The measure also states that the planning and development activities for new nuclear generation facilities and generation facilities utilizing energy derived from offshore wind are in the public interest. Finally, the measure also rewords a provision that currently states that nothing precludes the Commission from determining the reasonableness or prudence of any cost incurred or projected to be incurred by a utility.

H.B. 1062 Banks; minimum capital stock requirement.

Patron: Villanueva

Banks; minimum capital stock requirement. Provides that the directive that the State Corporation Commission not issue a certificate of authority to a bank unless it finds that individuals have subscribed for specific amounts of the bank's capital stock and surplus does not apply to the Commission's issuance of such a certificate to a bank holding company or to a resulting bank in connection with certain types of mergers involving the holding company and its subsidiary bank.

H.B. 1065 Virginia Petroleum Products Franchise Act; right of first refusal.

Patron: Hugo

Virginia Petroleum Products Franchise Act; right of first refusal. Grants franchise service station dealers the first right of refusal to purchase their business when the station's franchisor attempts to sell the business. A franchisor that owns or leases as lessee a leased marketing premises is prohibited from selling, transferring, or assigning the franchisor's interest in the premises unless the franchisor has first either (i) made a bona fide offer to sell, transfer, or assign to the dealer the franchisor's interest in the premises, with certain exceptions, or (ii) offered to the dealer a right of first refusal of any bona fide offer acceptable to the franchisor made by another person to acquire the franchisor's interest in the premises. The measure applies only to the sale, assignment, or transfer of a franchisor's interest in a leased marketing premises located only in Planning District 8, and does not apply to leased marketing premises owned or controlled by a jobber/distributor.