Alert Edition January 2020

Welcome to the January 2020 edition of the FORC Alert. If you have any colleagues that may be interested in this publication, please forward it on. There is a link on the Alerts main page where they can subscribe to receive FORC Alerts automatically.

Regards,
Ryan Smart, Esq., FORC Alert Editor

Blurb

Category(s): Florida - 01/13/2020

CFO Announces New Chief of Staff

On November 25, the Office of Jimmy Patronis, Chief Financial Officer (CFO) announced that Peter Penrod will be the new Chief of Staff. Peter Penrod recently served as General Counsel for the Department of Financial Services where he provided both legal counsel and representation for the CFO. Penrod has also served as General Counsel for the Department of Economic Opportunity. The full Press Release from the Office of the CFO can be found here.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Florida - 01/13/2020

Commissioner David Altmaier Announces Office of Insurance Regulation Government Affairs Director

On December 2, Commissioner Altmaier announced the appointment of Allison Hess Sitte to Government Affairs Director. Hess Sitte previously worked as the Director of Legislative and Cabinet Affairs at the Florida Department of Veterans Affairs and with the Florida Senate.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Florida - 01/13/2020

Florida Insurance Commissioner Voted in as NAIC President-Elect

On December 10, Florida Insurance Commissioner David Altmaier was voted President-Elect of the National Association of Insurance Commissioner (NAIC), effective January 1, 2020. Commissioner Altmaier served as Vice President of the NAIC during 2019. The full press release can be found here.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 01/13/2020

Hemp Rules in Florida Stall Awaiting Approval from Feds

With an eye on January 1, 2020, the Division of Cannabis was poised to finalize the rules relating to hemp and allow farmers get seeds in the ground. After reports in committee hearings, State Cannabis Director Holly Bell told legislators that they can expect a delay of a few weeks before cultivation can begin. The full proposed rules can be found here.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 01/13/2020

OIR Approves a 7.5% Decrease to Workers’ Compensation Insurance Rates

On November 19, the Commissioner of the Office of Insurance Regulation (OIR), David Altmaier, announced he issued a Final Order granting approval to the National Council on Compensation Insurance (NCCI) for a statewide overall decrease of 7.5% for Florida workers’ compensation insurance rates.  This decrease applies to new and renewal workers' compensation insurance policies effective in Florida as of January 1, 2020.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Georgia - 01/22/2020

Class Action Seeking Reinstatement of Life Insurance Policies Properly Removed to Federal Court

On November 22, 2019, the Eleventh Circuit Court of Appeals issued and opinion ruling that a class action seeking reinstatement of life insurance policies was properly removed to federal court under the Class Action Fairness Act (“CAFA”), because the aggregate amount of the face amount of death benefits of the life insurance policies far exceeded $5 million.  In Anderson v. Wilco Life Insurance Co., 2019 WL 6242199 (11th Cir. Nov. 22, 2019), the Eleventh Circuit Court of Appeals addressed the proper measure of amount in controversy requirements in a class action seeking reinstatement of life insurance policies.  The Court determined that the aggregate face amount of death benefits payable under the life insurance policies represented and sought to be reinstated by the class was the proper measure of determining the amount in controversy far exceeded $5 million; and thus, the class action case was properly removed to federal court under CAFA.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Georgia - 01/17/2020

Georgia Commissioner of Insurance Proposes Changes to Regulations

On November 25, 2019, Georgia Insurance Commissioner John King held a public hearing to consider proposed changes to Georgia’s insurance regulations with respect to reporting extraordinary dividend, corporate governance annual disclosures, administrative hearings, and procedures for registering staff adjusters.  

With respect to reporting extraordinary dividends, Commissioner King proposes to amend §120-223.19(2) of the Rules and Regulations of the Georgia Insurance Department (the “Department”) to provide the Department with ten (10) days from the date the Department receives notice from an insurer of the extraordinary dividend in order to review the declared dividend and determine whether or not the dividend is extraordinary.  If the dividend is determined by the Department to be an extraordinary dividend, then the additional time will also allow the Department to approve or disapprove the proposed dividend.

Commissioner King also proposes to promulgate §120-2-105 et seq. of the Rules and Regulations of the Georgia Department of Insurance which sets forth the regulatory framework for Georgia’s Corporate Governance Annual Disclosures requiring all insurers to file a Corporate Governance Annual Disclosure describing such insurer’s corporate governance practices.  Such filings will be annually due no later than June 1.

The Department also propose to amend §120-2-2 of the Rules and Regulations of the Georgia Insurance Department to modernize the administrative hearing rules in keeping with best practices of the Georgia Administrative Procedure Act and provide members of the public with clear processes and procedures to be followed.  Changes include standards for the Commissioner appointing an adjudicator to preside over administrative hearings.

Finally, Commissioner King proposes to repeal §120-2-3-.24 of the Rules and Regulations of the Georgia Insurance Department and replace it with a new regulation.  Currently, the regulation requires each insurer having salaried employees who adjust claims in Georgia to annually provide a list of such employees to the Commissioner. The proposed regulation would create an exemption from this requirement for employees of a property and casualty insurer licensed to do business in Georgia, if the employees handle only claims for residential property insurance in which the amount of coverage for the loss is limited by contract to $500 or less.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Georgia - 01/13/2020

Georgia Governor Kemp Releases Proposal for Medicaid Waiver

On November 4, 2019, Georgia Governor Brian Kemp released a new proposal for a Medicaid waiver.  Under Governor Kemp’s proposal, uninsured adults in Georgia who earn no more than the federal poverty level would qualify for Medicaid assistance subject to certain conditions, including if they spent at least 80 hours a month working, volunteering, training or studying. Participants would also have to pay monthly premiums. Under the Affordable Care Act, states gained the option of expanding the program to low-income adults who earn up to 138 percent of the federal poverty level, with the federal government picking up 90 percent of the cost.  Georgia’s proposal does not fully expanded Medicaid under the ACA.  Written comments on the Medicaid waiver were due to the state in December 2019 with further action on the proposal to follow.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Georgia - 01/17/2020

Governor Kemp Unveils Broad ACA Section 1332 Waiver Proposal

On November 4, 2019, Georgia Governor Brian Kemp released a new draft waiver application under Section 1332 of the Affordable Care Act (ACA) that, if approved, would reshape the state’s health insurance market. The application reflects a two-phase approach: a state-based reinsurance program to begin in plan year 2021, followed by a transition to the “Georgia Access” model beginning in plan year 2022. Both components of the waiver application would extend through plan year 2025.

The first phase of the waiver application is a state-based reinsurance program using an attachment point model. The reinsurance program would be administered by the Georgia Office of Health Strategy and Coordination (a new state agency created by the Georgia Legislature in 2019), in collaboration with the Georgia Office of Insurance and Safety Fire Commissioner and would reimburse insurers at an average of 27 percent of an enrollee’s claims between $20,000 and $500,000. The reimbursement percentage would vary in different parts of the state using a three-tier structure. In the five areas of the state with the lowest health care costs, insurers would have 15 percent of their claim’s costs reimbursed when the claim is between $20,000 and $500,000 (i.e., the insurer would pay 85 percent of costs). In contrast, in the six areas of the state with the highest health care costs, insurers would have 80 percent of these claims reimbursed (i.e., the insurer would pay 20 percent of costs).

The Georgia Access model, proposed to begin in plan year 2022, would eliminate the use of HealthCare.gov, transitioning consumers to decentralized enrollment through private web-brokers and insurers. The state would establish its own subsidy structure to allow for 1) the subsidization of individual health plans that do not comply with all the ACA’s requirements; and 2) enrollment caps if subsidy costs exceed federal and state funds.

Georgia’s new state-specific subsidies would be sourced through federal pass-through funding provided under Section 1332, state general revenue, and insurers user fees. However, Georgia would cap its contribution towards the Section 1332 waiver on an annual basis.  Subsidies would be granted on a first-come, first-served basis until the state’s funding cap is reached. If there are a larger number of subsidy-eligible residents than expected, those individuals could still enroll in coverage but would be placed on a waiting list for subsidies (meaning they would pay full premiums even though their income would qualify them for subsidies under the ACA).

Public comments on the Section 1332 waiver application were due to the state on December 3, 2019, with further action on the proposal to follow.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Georgia - 01/22/2020

Phishing Email Funds Transfer Fraud Covered Under Commercial Crime Insurance Policy

In Principle Solutions Group v. Ironshore Indemnity, Case No. 17-11703 (U.S. Court of Appeals, Eleventh Circuit), the Eleventh Circuit Court of Appeals held that a commercial crime insurance policy issued by Ironshore Indemnity Company covered a funds transfer fraud resulting from a phishing email scheme. The case arose from an email-based theft scheme in which an employee of Principal Solutions Group LLC was duped into wiring $1.7 million dollars into an overseas bank.  The scheme originated with a fraudulent email from a person posing as the president of the Company and instructing the employee to wire the funds for a Company acquisition.  Subsequent emails confirmed the wiring instructions.  Upon discovery of the fraud, Principal sought recovery of the wired funds under the Ironshore commercial crime insurance policy which provided insurance coverage for losses resulting directly from a “fraudulent instruction”.   Ironshore argued that there was no coverage under the insurance policy because policy language was ambiguous and that intervening causes after the initial email caused the loss.  The Eleventh Circuit Court of Appeals ruled that the initial email was clearly a fraudulent instruction and the loss arising from such fraudulent instruction was covered under the commercial crime insurance policy.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Idaho - 01/13/2020

Navigating Idaho’s Interstate Insurance Sale Law

In 2018, a new Idaho law created an expedited path for out-of-state insurers to be authorized to issue health insurance in Idaho.  Dubbed “Interstate Insurance Sale,” the law is codified as Idaho Code Section 41 306A and represents a step towards a model in which an insurer in one state could sell insurance to consumers in another state with little or no regulation by the consumer’s home state.

This law significantly relaxes the burden on an insurer to obtain and retain a certificate of authority in Idaho. Under this law, the insurer must:

•	Be licensed in good standing in another state to sell individual or group accident and sickness insurance.
•	Remain licensed in the other state.
•	Appoint the director of the Department of Insurance as agent for service of process for disputes related 
to polices sold to Idaho residents.
•	Comply with the requirements summarized below with respect to all policies issued to Idaho residents.

All policies issued to Idaho residents under this new law must comply with the following requirements:

•	Any dispute regarding the policy is governed by Idaho law and resolved in Idaho.
•	The foreign insurer submits to the jurisdiction of the Idaho Department of Insurance.
•	The foreign insurer is subject to all provisions of Idaho law applicable to insurers transacting accident and sickness insurance in Idaho.
•	The foreign insurer pays all fees and assessments provided by law under this title. This includes premium tax and participating in the Idaho high risk reinsurance pool.
•	The Department of Insurance may ensure that policy forms are appropriate and not misleading.
•	Producers (i.e. agents) are required to be licensed in Idaho.

Finally, the new law authorizes the director of the Idaho Department of Insurance to promulgate administrative rules and to enter compacts to carry out the purposes of the law.

Gabriel Hamilton, Esq. - Holland & Hart LLP, (208) 383-3952 , gahamilton@hollandhart.com

Category(s): Nebraska - 01/13/2020

Nebraska Department of Insurance

Matt Holman, General Counsel Nebraska Department of Insurance, has been named Deputy Director and General Counsel.

Lawrence F. Harr, Esq. - LAMSON, DUGAN & MURRAY, LLP, (402) 397-7300 , lharr@ldmlaw.com

Category(s): New York - 01/13/2020

New York State Department Announces New Executive Deputy Superintendent of the Insurance Division

In November 2019, the New York State Department of Financial Services (“NYDFS”) announced the appointment of My Chi To as Executive Deputy Superintendent of the Insurance Division at the NYDFS.  Ms. To will take the position previously occupied by Laura Evangelista who recently left the NYDFS to go into private practice.  We understand that Ms. To will join the NYDFS in early 2020 from Debevoise & Plimpton LLP, where she has been partner in the Restructuring Group and global insurance practice.

Allison J. Tam, Esq. - Willkie Farr & Gallagher LLP, (212) 728-8282 , atam@willkie.com

Category(s): Tennessee - 01/13/2020

Commissioner Mainda Names Michael Corbett as TDCI Director of Business Development

Michael Corbett has been named by Tennessee Commissioner of Commerce and Insurance Hodgen Mainda to the newly created position of Director of Business Development for TDCI’s Insurance Division.  In this role, Director Corbett will be responsible for recruiting both traditional insurance companies and captives to become Tennessee domestic insurers either de novo or via redomestication.  The creation of this new Director position is a component of Commissioner Mainda’s economic development agenda to continue to grow the domestic insurance industry in Tennessee.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

Category(s): Tennessee - 01/13/2020

Jennifer Stalvey Promoted to Director of TDCI’s Captive Insurance Section

Jennifer Stalvey has been elevated to Director of the Tennessee Department of Commerce and Insurance Captive Insurance Section.  Stalvey, who has served as Assistant Director since 2015, has assumed the Director role as a result of Michael Corbett moving into TDCI’s Director of Business Development position.  Stalvey will oversee the state’s rapidly growing captive sector, with Tennessee now the seventh-largest domicile in the United States.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

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