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Archive for the ‘Government Relations’ Category

Who Can Lobby?

Posted on: January 8th, 2018

By: Allan J. Hayes

Most businesses are subject to federal, state and local laws and regulations. The business value at stake from legislative and government regulatory intervention is huge: about 30 percent of earnings for companies in most industries, according to a 2010 study by McKinsey & Company, and higher still in the banking sector, where the figure tops 50 percent. Participation in the political and public policy processes is vital to most businesses. This participation is generally referred to as lobbying.

Can anyone lobby? Well, yes. The Encyclopedia Britannica defines lobbying as “any attempt by individuals or private interest groups to influence the decisions of government.” The United States Constitution provides for lobbying in the First Amendment by protecting the right of individuals “to petition the government for the redress of grievances.”

If anyone can do it, why does FMG have professional registered lobbyists? Lobbying involves more than persuading legislators. Professional lobbyists research and analyze legislation or regulatory proposals, attend legislative hearings, and educate government officials and corporate officers on important issues. It is a full-time job that requires a specialist to properly execute. Our experienced professionals represent our client’s interests before government so our clients can concentrate on effectively running their business.

Also, the federal government and most states regulate lobbying. Lobbyists working to influence the federal government are regulated by the Lobbying Disclosure Act of 1995, as amended. According to the National Conference of State Legislatures, there are more than 50 versions of lobbying laws in states and territories. In Georgia for instance, Georgia Code §21-5-70 and §21-5-71 defines a lobbyist as one who receives more than $250.00 per year to “promote or oppose the passage of any legislation by the General Assembly, or any committee of either chamber or a joint committee thereof, or the approval or veto of legislation by the Governor.” The statutes further regulate expenditures by lobbyists for entertainment, meals and gifts as well as disclosure of and the amounts spent on such activities. These regulatory burdens can be significant for the part-time or occasional lobbyist.

When I did research on lobbying in Georgia in the early 1990s for the book Politics in Georgia by Dr. Arnold Fleischman and Dr. Carol Pierannunzi, of UGA and KSU respectively, there were 1059 lobbyists registered.  In 2016 there were 1085 registered lobbyists, even though the ethics laws had been strengthened three times, the number has not fluctuated much in 25 years. For good reason, businesses and associations have continued to trust professional lobbyists to represent their interests at the Capitol.

For more information, please contact Allan Hayes at [email protected].

 

A Look Ahead to 2018 Legislative Session

Posted on: December 20th, 2017

By: Allan J. Hayes

The Georgia General Assembly will convene on January 8, 2018 and adjourn after 40 legislative days (usually the end of March). With 2018 being an election year, there is likely to be as much politicking, positioning and posturing as there is legislating during the second half of the 2017-2018 cycle. All statewide elected officials and all seats in the state House and State Senate are up for election in 2018. This generally means that no sweeping new policies will be passed this year.

Governor Deal (R) is term-limited, so the race for the office is open. Lt. Governor Cagle (R) is running for governor, so that office will be open as well. Many current and former legislators are campaigning to replace the Governor and the Lt. Governor, so both chambers are expected to adjourn early so everyone can campaign for their respective office.

But, as Speaker Ralston recently told a group of us, “regardless of elections, the people’s work must get done. And we will stay until it is finished.” This governor and legislature have worked well together in the past, and will likely work together on legislation that include the following (not in order of importance).

Every session, the most scrutinized piece of legislation is the state budget. According to the Georgia Constitution, it is the only issue the General Assembly must address each year. An increase in state revenue means lawmakers will have additional money to use in the 2018 fiscal year. At least some of that new money will go into education, which represents about half of the state budget. The health program for state employees and Medicaid are also likely to receive additional funds. And Lieutenant Governor Cagle wants the state to invest $100 million into venture capital for tech companies, a program he calls “Invest Georgia.” The state will also do what is necessary to continue funding of the Savannah Harbor Deepening Project.

The legislature will also consider spending for new rural development ideas like relocation tax incentives, rural broadband and healthcare funds to fight the opioid epidemic. Other healthcare related priorities include addressing rising health insurance premiums, including exploring association health plans and promoting the selling of insurance across state lines. Out-of-Network “Surprise Billing” or Balance Billing prohibitions is another major issue that will be tackled this session. The department of insurance may pursue ACA 1332 State Innovation Waivers to cover more Georgians and health insurance issues like air ambulance payments, cost-sharing Limits for prescription drugs, health insurance network adequacy standards, and medical marijuana will also be discussed.

The very contentious Religious Freedom Restoration Act has come up in each of the last two sessions of the legislature. Even with legislative leaders declaring it a “non-starter,” it will likely receive attention in the halls, if not on the floor. Last year a bill to modernize Georgia’s adoption laws which included the religious liberty provision was stalled. Legislative leaders have vowed to pass a “clean” adoption bill this year and the Governor has said he will sign it.  Additionally, there will be a bill introduced that would restrict local governments ability to ban short term residential rentals like Airbnb.

Another holdover from the 2017 session is Marsy’s Law, a proposed Constitutional Amendment securing permanent, enforceable rights for victims of crime. It passed the Senate and will be addressed in the House in 2018. Georgia’s certificate of need law for healthcare provider facilities is also a likely topic for debate. The Cancer Treatment Center of America is limited to 50 beds and a cap on in-state patients of 35 percent at their Georgia hospital and they support legislation to raise the 35 percent cap.

Finally, lawmakers are expected to debate two separate proposals that would boost pay for police and legislators. The Georgia Sheriffs’ Association is backing a one-cent sales tax to help fund a new mandatory minimum salary for deputy sheriffs and jailers, and legislators would see a 72 percent increase to their salaries under a proposal by a committee created earlier this year to review compensation for elected officials.

If you have any questions or would like more information, please contact Allan J. Hayes at [email protected].

Private Passenger Auto Rates

Posted on: December 15th, 2017

By: Allan J. Hayes

A lobbyists job in never done. Like the tides of the ocean, politics has an ebb and flow. Issues go through a cycle effected not by the moon’s gravitational pull but by the nature of America’s form of governance. Government is influenced by public opinion, economic conditions, media scrutiny, bureaucrats, politicians and yes, by lobbyists. All of these influences change and evolve over time.

A good example of this cycle is rates for private passenger auto insurance in Georgia. After rates skyrocketed in the late 1980s, the Georgia legislature changed state law so that the Insurance Commissioner had to approve increases proposed by insurance companies. This system is referred to as “prior authorization.” The auto insurance industry instructed its lobbyists at the Capitol to try and change the law back to a “file and use” system.

In 2008 insurance company lobbyists managed to pass SB 276 which returned Georgia to a file and use rate system. Section 3 of the bill stated that “No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable; provided, however, with respect to rate filings involving an increase in rates, no rate for personal private passenger motor vehicle insurance shall be held to be excessive unless such rate is unreasonably high for the insurance provided and a reasonable degree of competition does not exist.” This language allows companies to implement new rates without prior review and the insurance commissioner cannot hold the rates excessive as long as there is competition. The industries argument was that if you let free-market principles take effect, competition will drive auto insurance rates down. At that time, in that political and economic environment, it was a winning argument.

But wait. When the Georgia House Insurance Committee held an early session hearing on January 11, 2017 regarding premiums of private passenger auto insurance it brought unwelcome scrutiny for the property and casualty industry. Dr. Robert P. Hartwig, Special Consultant to the Insurance Information Institute was brought in by industry lobbyists to speak to the committee regarding the rising frequency and severity of auto accident claims. It seems that competition was not able to keep auto insurance rates from rising due to these “environmental factors.”

The Atlanta Journal-Constitution has posted five stories on the issue since July. According to the AJC, Georgia has ranked either first or second nationally for auto insurance rate increases in the last four years. All while having over 200 insurance companies competing in Georgia. Steve Manders, Director of Insurance Product Review for the DOI, addressed the committee in January to highlight some issues the department wants to address with this current file and use system. The department would like to see the auto rate filing system conform to a 45 day waiting period on new rate implementation so the DOI can review the rates for compliance. It also would like to define the term “excessive” to give the department the authority to roll back rates. The hearing room was full of lobbyists representing the individual P&C insurance companies, insurance agents’ groups, the insurance companies’ associations, consumer groups, and the insurance department. Like I said, a lobbyists job is never done.

If you have any questions or would like more information, please contact Allan Hayes at [email protected].

Owen Rooney For Government Practice Group

Posted on: September 5th, 2017

By: Owen T. Rooney

In Ponte v. County of Calaveras, 2017 Cal. App. Lexis 710 the Court of Appeal held the plaintiff’s complaint for breach of a verbal contract was not brought in subjective and objective good faith under CCP sect. 1038.  After a land failure, plaintiff (an unlicensed contractor) alleged “it was agreed” with a County engineer that he could undertake the repairs since his equipment was already on site.  The trial court granted the County’s summary judgment and then awarded the County $65,000 in attorney’s fees under CCP sect. 1038.

First, the Court noted that the public bidding statutes are to eliminate oral contracts and are for the benefit of the public and not to enrich bidders.  Plaintiff tried to argue there was an “emergency” for him to undertake his work, but ultimately conceded that he could not cite a statute or ordinance covering emergency repair work.  Thus, the Court rejected plaintiff’s promissory estoppel argument.

CCP sect. 1038 allows the recovery of attorney’s fees if an action against a public entity is not brought “with reasonable care and in the good faith belief that there was a justifiable controversy.”  Thus, this section is akin to a statutory remedy for malicious prosecution.  Case law has extended the application of sect. 1038 to actions not only filed, but also maintained in bad faith.   Here, plaintiff simply argued that he wanted to “get paid.”  Such a subjective desire did not meet the objective standard of reasonableness. The alleged contract did not contain any fixed terms nor was it submitted for County approval.  Plaintiff could not cite any legal authority to support his claim of an emergency or that a member of the public can declare an emergency, which he argued would constitute an exception to the statutory bidding rules.   Thus, “no reasonable attorney would believe there was a tenable basis for this lawsuit.”  The Court affirmed and then awarded, as icing on the cake, the County’s fees on appeal.

For more information, please contact Owen Rooney at [email protected].

Georgia Modernizes Captive Insurer Law

Posted on: May 23rd, 2017

By: Allan J. Hayes

According to the National Association of Insurance Commissioners (NAIC) a Captive Insurer is an insurance company established by a parent firm for the purpose of insuring the parent’s exposures. Currently, 75 percent of the world’s Fortune 500 companies are parent owners of captive insurance companies and total captive premium income is exceeding $14 billion with more than 5,000 captives established worldwide. Twenty-four captives are domiciled in Georgia.

Benefits of a captive include greater business opportunities and more risk management options for the parent company which can result in lower premium payments and management costs. Also, a captive can be formed in a jurisdiction where taxes, solvency rules and reporting requirements are more advantageous.

The Georgia Department of Insurance and other state leaders are interested in attracting some of the growing captive insurance market. During the 2017 legislative session they supported passage of SB 173, a bill sponsored by Senate Insurance and Labor Committee Chairman Burt Jones and House Insurance Committee member Jason Shaw that extensively revises provisions relating to captive insurance companies and updates several definitions within the Insurance code. Governor Deal signed the bill on May 9, 2017 and the new provisions contained in it become effective July 1, 2017.

Briefly, the new law will:

  • Update definitions used throughout the captives chapter to make them more consistent with best practices in other states.
  • Update the rules for captive formation to make them more specific to the captive company. Currently captives are required to incorporate like any other general insurer.
  • Make captives subject to the provisions of the general corporations statute, while allowing the Commissioner rule-making authority where the provisions of the general corporations statute might not make sense for captives.
  • Allow captives to form as manager-managed LLCs rather than limiting formation to corporations.
  • Put an end to the differences in the code regarding taxation of risk retention group captives (RRG) and all other captives. RRG captives will only be subject to relevant taxes on direct premiums collected for coverage within the state of Georgia.

For any questions or for more information regarding forming a captive, please contact Allan Hayes at [email protected].