MINUTES OF THE meeting

of the

ASSEMBLY Committee on Commerce and Labor

 

Seventy-Second Session

April 4, 2003

 

 

The Committee on Commerce and Laborwas called to order at 12:21 p.m., on Friday, April 4, 2003.  Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr. David Goldwater, Chairman

Ms. Barbara Buckley, Vice Chairwoman

Mr. Morse Arberry Jr.

Mr. Bob Beers

Mr. David Brown

Mrs. Dawn Gibbons

Ms. Chris Giunchigliani

Mr. Josh Griffin

Mr. Lynn Hettrick

Mr. Ron Knecht

Ms. Sheila Leslie

Mr. John Oceguera

Mr. David Parks

Mr. Richard Perkins

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

None

STAFF MEMBERS PRESENT:

 

Vance Hughey, Principal Research Analyst

Wil Keane, Committee Counsel

Diane Thornton, Senior Research Analyst

Sharee Gebhardt, Committee Secretary

 

OTHERS PRESENT:

 

John Vergiels, Legislative Advocate, Nevada Financial Services Association; and Nevada Association of Mortgage Brokers

Jim Marchesi, President, Nevada Financial Services Association

Scott Walshaw, Commissioner, Financial Institutions, Department of Business and Industry, State of Nevada

Alice Molasky-Arman, Commissioner of Insurance, State of Nevada

Raymond Williams, past President, Nevada Association of Mortgage Brokers, Mortgage Advisory Council; President, Las Vegas Mortgage Comp

Charles Thompson, Legal Counsel, Desert Land, Las Vegas

Howard Bullock, Desert Land, Las Vegas

Cindy Stephens, MCS Mortgage Company

James Wadhams, Legislative Advocate, Mortgage Bankers Association of Nevada, Anthem Blue Cross & Blue Shield, Nevada Association of Health Underwriters, Nevada Association of Insurance & Financial Advisors, Nevada Hospital Association, National Council on Compensation Insurance, Nevada Surplus Lines Association, Nevada Independent Insurance Agents, and American Insurance Association

Sydney Wickliffe, Director, Department of Business and Industry, State of Nevada

Scott Walshaw, Commissioner, Financial Institutions Division, State of Nevada

James Kohl, Legal Counsel, Desert Land, Las Vegas

Dave Burton, Wholesale Representative, Las Vegas

Alfredo Alonso, Lionel, Sawyer & Collins, representing Money Tree, Inc.

Dennis Bassford, President, Money Tree, Inc., Seattle, Washington

Robert Vogel, Vice President of Operations, Pro Group Management

Daryl Capurro, Trustee, Nevada Transportation Network Self Insured Group

David Guinan, Legislative Advocate, Nevada Insurance Guaranty Association

Gary M.G. Deacon, Legislative Advocate, Nevada State Bail Agents Association

 

Chairman Goldwater called the meeting to order at 12:21 p.m. immediately after adjournment of the Floor session.  He noted that all members were present and a quorum was present.  He advised they had a long agenda.  He opened the hearing on A.B. 433.

 

Assembly Bill 433:  Makes various changes to provisions regulating persons providing check-cashing and deferred deposit services. (BDR 52-935)

 

John Vergiels, Legislative Advocate, representing the Nevada Financial Services Association, formerly the Check Cashing Association, introduced Jim Marchesi.

 

Jim Marchesi, President, Nevada Financial Services Association, testified in opposition to A.B. 433.  Reading from prepared testimony (Exhibit C), he explained that the Association represented Nevada deferred deposit companies, installment loan companies, and check cashers.  He said the Association provided a variety of services for Nevadans and estimated that 15 percent of Nevada residents used their services.  He said that, although he understood the proposed legislation attempted to clarify existing law, he feared significant economic damage would result to many financial organizations. 

 

Mr. Marchesi identified the concerns of members of his organization.  He said the most significant concern was the severe limitation of fees allowed upon loan default.  He explained that current law provided for a collection on a returned check, but no late fees.  He noted that all entities not governed by Chapter 604 of the Nevada Revised Statutes (NRS) were allowed some type of late fee for delinquent debtors.  Those entities included apartment complexes, banks, daycare centers, and libraries.  He said an incentive was needed to encourage the repayment of debt, but noted that current law and the suggested modifications provided no incentive.  He opined the current law actually encouraged nonpayment because there were no detrimental consequences.

 

Mr. Marchesi declared that members of his organization did not want to resort to litigation to collect on outstanding loans, citing the time and cost.  He advised if loan institutions were forced to seek legal remedies, costs of legal actions would need to be recoverable from the customer in default.  He said the “lost opportunity cost” of having delinquent accounts would also need to be recovered.  Mr. Marchesi said that collection costs, legal fees and court costs amounted to considerable financial burdens and noted that only the loan industry had been denied the right to implement late charges for nonpayment of debt. 

 

Mr. Marchesi continued that enactment of A.B. 433 would result in protracted collection actions and more court cases, resulting in additional costs to the business owner, the customer, and the local municipality.  He recommended the allowance of late fees with a cap at a level that approximately compensated for the lost opportunity.  He also recommended that the cost of pursuing legal action for nonpayment of debts be explicitly allowed. 

 

Another concern, Mr. Marchesi said, was the issue of right of rescission.  He said many of their members already offered a rescission and were concerned with both the costs associated with completing a loan transaction and with the increase in paperwork and record retention requirements. 

 

Mr. Marchesi explained the process for loan applications and the many steps involved to confirm and obtain approval.  He added the process was expensive and members of the Association believed that there should be recognition of those costs.  He said the proposed legislation would not allow recovery of costs if the transaction were rescinded within a 24-hour period.  Mr. Marchesi advised his association was concerned that A.B. 433 lacked a clear definition of what should be provided to the customer and what additional evidence was needed to document each transaction. 

 

Mr. Marchesi concluded that free markets worked to the consumer’s advantage and set the competitive framework within which all organizations must compete.  He said the small consumer finance business was very competitive and market forces had served to set how the business was conducted.  He said a basis of customer service expectations had been established.  He offered that the Nevada Financial Services Association would like to work closely with the Committee so that the law provided a framework that recognized the economic factors affecting the industry. 

 

Chairman Goldwater noted that Mr. Marchesi had signed in for A.B. 433 and said he had assumed Mr. Marchesi was speaking as a proponent.  He apologized to the sponsor of the bill, saying that normally the Committee heard the presentation of the proponent first.  He added that perhaps it would be an interesting twist to have the opponents of a bill speak first.

 

Mr. Vergiels advised that the Association recognized some problems with the bill, and he favored correcting the language and clarifying certain issues.  He said they believed they were supporting the bill with the suggestions they had introduced.  He reiterated their willingness to work with the Committee.

 

Assemblyman Brown introduced A.B. 433.  He recalled that five months previous he had received a telephone call from a friend who was a judge in Las Vegas.  The judge had noted a troubling trend.  The judge explained that he had concluded a case that involved a loan of $250 in which the plaintiffs had sought a $1,500 judgment.  He said the interest rate on the back of the loan document was 776 percent annually.  Mr. Brown admitted that these were short-term loans and the bill did not address the issue of interest.  He said the case, however, brought the general problem to his attention.  He acknowledged there were various complexities to the business, but that A.B. 433 addressed some of the needs of those citizens applying for small loans. 

 

Mr. Brown recalled a personal experience when, as a poor college student, he had experienced mechanical problems with his car and needed extra cash.  He said, because he could sympathize with someone who needed an emergency small loan, he was concerned with the harsh statutory remedies. 

 

Mr. Brown advised that A.B. 433 applied to deferred deposit transaction loans.  He explained that a person needing funds could write a post-dated check that would be cashed at a later time.  He said that in addition to the cash there were fees added to the amount.  He said a problem with the transaction was that there was no money in the bank account on which the check was written.  He said the person had to prove employment and be responsible in repaying the debt.  He said often the check, when cashed, would bounce.  The statutory result, he explained, could be treble damages with a type of “multiplier effect.”  He advised that the loan could be quite small, but when the claimant resorted to a court judgment, the debtor might be obligated to pay five or six times the amount of the initial loan. 

 

Assemblyman Brown explained that A.B. 433 provided a three-day right to rescind on a deferred deposit transaction.  He referenced the right to rescind on page 2, line 3, of the bill.  He said the person must return with a “sum of money equal to the face value of the check the person provided to the registrant, less any fee charged to the person for the provision of the deferred deposit.”  He said he recognized that, as Mr. Marchesi had testified, there was value in processing the loan.  He added that the fee could be removed.  He said a fee was not included in subsection (b), on page 2, line 6.  He said he believed the language could be amended to include a provision for a small fee to accommodate the activities of processing the loan. 

 

Assemblyman Brown advised that A.B. 433 also limited the number of times a $25 “NSF” fee (insufficient funds) could be added for processing the check.  He said a bank should not be able to process the check repeatedly in order to accrue multiple NSF fees.  He said the bill also limited the business entity to accept only one check from the borrower per deferred deposit transaction.  Mr. Brown explained this would prevent the potential for multiple bounced checks.  He said the bill also prohibited the lender from threatening criminal prosecution, except for instances of fraud.  He advised it also required that the lender disclose the rescission and redemption right; it prohibited deceptive trade practices and advertising; and lastly, it did not make these checks subject to the treble damages in the “bad check law.” 

 

Assemblyman Beers asked for clarification regarding the time period referenced on page 1, line 3.

 

Assemblyman Brown corrected his previous testimony.  He said the time period was 24 hours to rescind a transaction.

 

Assemblyman Brown advised there were others who had wished to testify, but he believed their travel had been impeded by inclement weather conditions. 

 

Chairman Goldwater advised that if those people wishing to testify arrived later, he would accommodate them.  He then closed the hearing on A.B. 433 and opened the hearing on A.B. 493. 

 

Assembly Bill 493:  Provides for money collected by Commissioner of Financial Institutions and Division of Financial Institutions of Department of Business and Industry to be deposited to and expended from the Fund for Financial Institutions. (BDR 55-463)

 

Scott Walshaw, Commissioner, Financial Institutions, Department of Business and Industry, State of Nevada, introduced A.B. 493.  He said the bill would codify a proposal that was placed in the budget to create a self-funded agency.  He said this would enable the depositing of all fees and charges, currently placed in the General Fund, to a specific account created to fund the Division. 

 

Chairman Goldwater asked why the Division could not continue to operate under the General Fund. 

 

Mr. Walshaw explained that an interim study in 2000 by the Legislative Counsel Bureau had advised the change. 

 

Assemblywoman Gibbons asked, in the event of excess funds at the end of the year, whether the money would go back to the General Fund. 

 

Mr. Walshaw responded that the current system was a “revenue-neutral” agency.  He explained they had a General Fund appropriation approved at the beginning of each fiscal year.  He said during the fiscal year, they were required by statute and regulation to raise an amount of money that repaid that General Fund appropriation.  He said that although the system had worked for the previous 15 years, they had recently been asked to convert to a “true self-funded status” whereby the funds raised would be deposited into an account for the sole benefit of the Division.  He explained it would alleviate some of the complicated accounting to ensure that the Division repaid the General Fund only the amount of funding that was used each year.  Mr. Walshaw acknowledged that it became more of a cash-flow issue as far as the impact on the General Fund.  He explained that at certain times in the fiscal year, the Division might be operating in the “red” as far as cash flow.  He said the Division would borrow money from the General Fund until the end of the year.  At that time the final assessment was conducted to settle the accounting.  He advised that his deputy, Larry Hickman, was available to provide a cash flow analysis if the Committee would like.  He stated that testimony regarding the analysis had been presented to the Ways and Means Committee.

 

Assemblywoman Gibbons advised that she just wanted to know what happened to any excess funds. 

 

Mr. Walshaw responded that currently there were no excess funds.  He said they were required to maintain a reserve because, in the event they became a self-funded agency, they could no longer rely on the General Fund.  He said they currently had to fund that reserve, and any excess funds each year would be credited to the reserve to reduce the amount of the current year’s assessment by that amount.  He said theoretically if they ever underspent their budget, the excess monies would go to the credit of the following year’s assessment.   

 

There were no further questions or additional testifiers.  Chairman Goldwater recessed the hearing on A.B. 493 and opened the hearing on A.B. 453. 

 

Assembly Bill 453:  Makes various changes to provisions relating to insurance. (BDR 57-546)

 

Alice Molasky-Arman, Commissioner of Insurance, State of Nevada, introduced A.B. 453.  Her Statement of Intent on Proposed Amendments (Exhibit D) was distributed to the Committee.  She explained the Insurance Code, Title 57 of NRS, consisted of 49 chapters, and she advised that the statutes currently “meandered” around various subjects.  She said other chapters of NRS also provided the Commissioner with authority, such as the Industrial Insurance Act and Chapters 287 and 288.  She said that in an effort to preserve continuity, she would discuss the nine subjects in the bill rather than reviewing it section by section.  She provided an extensive overview of her PowerPoint presentation (Exhibit E). 

 

Addressing the first subject, “Federal Oversight,” Ms. Molasky-Arman noted an increased federal presence on insurance issues.  She referenced numerous federal acts that affected state regulation.  She said that each act had imposed demands on the state’s regulatory process and required increased interaction between the state and federal authorities.  She explained that Section 1 of A.B. 453 clarified the Commissioner’s authority to enter into cooperation and coordination agreements with other governmental entities and to maintain the confidentiality and privileged nature of shared material.  Section 2 allowed the Commissioner to adopt reasonable regulations to comply with federal laws. 

 

Ms. Molasky-Arman said the second subject was the assessment of the National Association of Insurance Commissioners (NAIC).  She said Nevada’s participation and membership in the NAIC increased the resources available to the Division.  Last year, the value of the NAIC services received by Nevada was estimated to be $580,000.  She said NRS 680B.070 enacted an assessment in 1971 to finance the Commissioner’s membership and participation in the NAIC.  She said the assessment was to be paid by each insurer.  She noted that the law had not been changed since the time of its enactment.  She said the current statute provided for no more than $15 to be assessed against each insurer.  She advised that their costs had increased substantially.  She said that due to the increased volume of insurance, they could no longer pay the minimal membership fee.  She said their fees were estimated to be $13,300 for 2004 and $14,151 in 2005.  Until recently, the membership fees were stable at $7,000 per year.  She said the assessment was also intended to pay and offset some of the costs of travel associated with NAIC participation.  She said Section 8 of A.B. 453 proposed to raise the individual assessment on each insurer from a maximum of $15 to $30.  She said that proposal was supported by the insurance industry. 

 

Referencing the third subject, Medical Malpractice Closed Claim Reports, Ms. Molasky-Arman said that Sections 3, 4, 5, and 57 recognized the Division’s responsibility to collect, examine, and report claims and lost data on medical liability insurance policies issued in Nevada.  She cited several statutes that addressed the Division’s responsibility for the data.  She added that additional statutes required similar reports under cost stabilization.  She said the identical report was filed to comply with each of the statutes she referenced; A.B. 453 addressed the need to coordinate the statutes to prevent the necessity of duplicate filing. 

 

Additionally, she said the Division did not believe the statutes were adequate to enable the collection of lost data on claims against medical professionals.  She said they had submitted a proposed amendment (Exhibit D) that would include other kinds of medical professionals, dentists, hospitals, employees of hospitals, and related corporate entities.  She said that under A.B. 1 of the 18^th Special Session, the report due in 2005 would include dentists.  She said that currently they did not have that authority even under their cost stabilization statutes, and the amendment would cure that.  She explained that other proposed amendments regarding medical malpractice closed claim reports would combine similar reports required under other statutes.  It also would provide the flexibility to require additional information on the reports as needed.  She said this would enhance their efforts to collect meaningful data.  She said Sections 5 and 57 would clarify that the willful or repeated failure of an insurer to file the closed claim reports required under NRS 690B.050 would be identical with fines for similar violations under NRS 679.B.400-450. 

 

Ms. Molasky-Arman continued with the fourth subject of her presentation, Alternative Risk Mechanisms and Markets.  She said the heightened insurance scrutiny, due to the severely hard insurance markets over the past years with issues of availability and affordability, had drawn more attention to alternative risk mechanisms and markets.  She said this was permitted under the Nevada Insurance Code in the form of surplus lines insurers, essential insurance associations, captive insurers, and risk retention groups.  She advised there remained far too many unauthorized insurers.  She explained, regarding surplus lines insurers, that Section 38 amended NRS 685A.070 to raise the minimum surplus required of insurers from $5 million to $15 million.  She said this was consistent with other states’ laws.  She said that amendments regarding unauthorized insurers would also increase minimum surpluses. 

 

The amendment would also require a single alien insurer to maintain the U.S. Trust at $500,000 or 30 percent of the insurer’s gross U.S. liabilities, whichever amount was greater.  She added the amendment would require groups of incorporated insurers to maintain capital and surplus of not less than $25 million for each member insurer.  Ms. Molasky-Arman advised that each of the subsections was in accordance with the national standards.  She said A.B. 453 increased the trust fund for insurance exchanges from $50 million to $75 million and the capital and surplus required of each syndicate member would increase from $5 million to $15 million. 

 

The next subject Ms. Molasky-Arman addressed was that of unauthorized insurance.  She opined that in a hard market, despite public warnings, there was an increase in activity by an unauthorized insurer.  She said scam artists sought to fill the void left by a retreating authorized insurance market.  She said their offerings were attractive to purchasers who sensed urgency and sought to avoid the increasing costs of insurance.  She cited one of the worst cases of unauthorized insurance, Employers Mutual, L.L.C., which was incorporated in Nevada.  She said Employers Mutual had collected nearly $50 million in claims, which remained due and owing.  She said most shocking was that licensed insurance producers sold the insurance to unsuspecting employers.  She said after Employers Mutual was brought to justice, other states, such as Florida, enacted strong legislation to emphasize to their licensees their responsibility to ensure that customers only purchased from authorized insurers.  She said their proposal in Section 40 mirrored the Florida legislation.  She advised that other states were following the same course.  She explained how the section amended the penalties for transacting unauthorized insurance.

 

Ms. Molasky-Arman next discussed the Essential Insurance Act.  She explained that the Essential Insurance Association was a statutory insurer that could be formed, under NRS 686B, by the Commissioner to provide otherwise unavailable essential insurance coverage.  She said this was the mechanism used in the formation of the Medical Liability Association of Nevada (MLAN) in April 2002.  She said this addressed the unavailability of medical malpractice insurance.  She said the statute had not been applied since 1975, when the Nevada Medical Liability Insurance Association had been formed to address a similar availability crisis.  She said an Essential Insurance Association was intended as a temporary solution to an immediate crisis.  She advised that when a market stabilized, the statutes provided for the termination of the Essential Insurance Association, either through dissolution by the Commissioner or by converting the Association to a domestic stock insurer.  She said the conversion might also occur voluntarily by the Association upon approval of the Commissioner.  She said since 1975, the medical community favored mutual insurers as well as reciprocal insurers where ownership of the insurer truly lay with the policyholders. 

 

She said that Sections 41 through 46 would enable an Essential Insurance Association to privatize by conversion into a mutual insurer.  She referenced an amendment to this section in Exhibit D, which added the language “reciprocal” to the “mutual insurer” language.  She said all of the provisions mirrored the existing provisions for conversion to a stock insurer.  She then explained that Sections 49 through 52 amended existing language of the Essential Insurance Act.  Ms. Molasky-Arman said in these associations, if the premium was insufficient to fund the claims, the statute provided for an assessment of the participant in insurers, which included all insurers writing the same kind of insurance.  She said the amount of each insurer’s assessment would be based on the net direct written premiums during the preceding calendar year.  She said the formation of MLAN had raised the insurers’ concerns about their potential liability.  She continued that assessments prescribed in NRS 686B were dealt with dissimilarly to those required under guaranty associations.  She said the assessment provisions operated identically with those of the guaranty associations.  With a guaranty association, Ms. Molasky-Arman continued, the insurers could offset the assessments against premium taxes for a five-year period, beginning with the first year after the first year of assessment. 

 

Under the Essential Insurance Act, which established its own mechanisms to guarantee claims, the insurers might not immediately offset premium taxes by the amount of the assessment.  She added they would not do so until after the Essential Insurance Association had either been dissolved or converted.  She said this meant that if the insurers who were subject to the assessment did not receive immediate relief, they might be more likely to transfer those costs to policyholders.  She said it also meant that there might be insurers who would seriously consider whether they preferred to remain in the Nevada marketplace.  She said Section 49 of the bill would allow insurers to offset in the same manner as those paid under the guaranty association laws.  She explained that meant the offset was amortized for five years and could commence during the year immediately following a calendar year in which an assessment was paid.  She stated that this method was more equitable to both insurers and policyholders than the existing law.  She assured the Committee that the Essential Insurance Association had not experienced the need to trigger the provision.  She added that her worst nightmare would be if the provision needed to be triggered in the future, with respect to MLAN.  She explained that the Board of Examiners, with a loan of $250,000 for seed money, enabled the formation of MLAN.  She said they had transferred only $125,000 of those funds to MLAN.  She said MLAN repaid the remaining $125,000 together with statutory interest.  She continued that Section 50 clarified that any similar loans in the future for Essential Insurance Associations must be repaid to the state upon dissolution of the Association. 

 

Ms. Molasky-Arman’s presentation continued with the subject of captive insurers.  She recalled the 1999 enactment, which authorized the formation of captive insurers in Nevada.  She explained that captive insurers offered a key alternative market.  She noted that there was increasing interest in formation and “redomestication” of captive insurers who were authorized in other states.  She said that currently there were seven captives domiciled in the state.  She explained that Section 79 would clarify the definition of an association captive and its members.  She said that since the enactment of the Captive Insurance Act, there was reluctance by potential applicants to form a captive in Nevada rather than in a competing state.  She noted there were a number of competing states because of NRS 694C.450.  She said A.B. 453 would require a minimum annual premium tax of $5,000, regardless of the amount of premium in the state during that year.  She said Section 7 would impose a registration fee for reviewing purchasing groups to the Risk Retention Act.  

 

Regarding accreditation, Ms. Molasky-Arman explained the financial reports.  She said reinsurance brought the Division into line with the laws of other states.  She said there was a modification to NRS 681A, the chapter dealing with the reinsurance intermediary brokers and managers.  She said the amendment corrected the previous enactment that omitted the imposition of licensing of a domiciliary insurer.  She said there were also amendments to the valuations of bonds and securities, which were proposed to conform to the NAIC.  She said amendments to the Holding Company Act were mostly technical.  She said one new item was to provide the Commissioner with authority over the merger and acquisitions of foreign insurers, to mirror the authority over domestic insurers.  She said A.B. 453 would provide authority to review acquisitions and mergers of foreign insurance companies.  She said the remaining sections under the heading “Holding Companies,” were to conform to the language in other states’ statutory language.  She noted that the amendment to Section 76 was identical to the provisions of S.B. 11, and therefore she was suggesting its deletion from the bill. 

 

Ms. Molasky-Arman explained that the proposed amendments for licensees were mostly clarifying language, especially with respect to producers.  She said one additional amendment required third-party administrators to be financially solvent in order to be registered. 

 

Ms. Molasky-Arman said they had discovered in enacting the insurance consultant bill there were provisions requiring licensure, but there were no provisions to impose disciplinary action in the event that an insurance consultant was active in the state without a license.  She said the amendment created the same standards as those imposed upon producers. 

 

Referencing the surplus lines brokers, Ms. Molasky-Arman explained they had removed the one-year seasoning requirement to conform to the standards of uniformity set by the Graham-Leach-Bliley Act.  She said they also had conformed the penalty for delinquent requests for renewal with those imposed on other licensees. 

 

The amendments to bail agents, Ms. Molasky-Arman continued, made changes to the time for maintaining records from one year to three years, which was consistent with the record requirements of other licensees.  She said another provision the Division was proposing for NRS 697, Section 84(1) of the bill, prohibited an agent from transferring collateral to any person other than the bail agent or the surety insurer, and prohibited the transfer of collateral outside the state of Nevada. 

 

The next amendment Ms. Molasky-Arman discussed dealt with the insurance contract.  She said that Section 47 eliminated the requirement for sureties to file rates and forms.  She said that most commercial insurance was deregulated in the state, although surety insurance remained regulated.  She said that the American Surety Association set the rates; the policies or contracts were generally manuscripted; the premiums were very dependent upon the financial worth of the obligor or the principal; and there was also a shortage of surety insurance.  She said the Division believed it would enable purchasers who needed surety to obtain that coverage more quickly than if it were regulated.  She also indicated that most surety contracts, particularly those required by public entities, already had requirements imposed by those public entities, which could be different than the insurance code.  She said the amendment to the renewal with altered terms was one of two sections for which the Chairman had received opposition from the AAI.  She asked Chairman Goldwater whether he wished her to address the argument of the AAI.  Chairman Goldwater asked that she merely explain the need for the amendment. 

 

Ms. Molasky-Arman explained that Section 56 simply clarified that a failure by an insurer to provide notice of renewal with altered terms within 30 days before the policy expired, would require the insurer to renew the policy on the same terms as the expiring policy.  She said that reflected existing law. 

 

Regarding Section 48, Workers’ Compensation, Ms. Molasky-Arman referred to a rate review of dividends.  She said she wanted to remind the Committee that in establishing three-way worker’s compensation, Nevada carefully chose how the rating mechanism would transition to a voluntary market to avoid facing the insolvencies that so many other states had experienced.  She said the Division believed that the Nevada system was working.  She said the statutes, however, did not regulate the payment of dividends by worker’s compensation insurers to their policyholders.  She said, alternatively, the self insured associations had full regulation of their dividends and provided a dividend plan and could not pay a dividend unless the Commissioner approved it.  She said A.B. 453 required that if an insurer intended to pay a dividend, it must first file a plan for the payment of dividends for the Commissioner’s approval.  She said Section 48 arose from complaints by competing insurers that a competitor was going below the loss cost established by the Division’s mechanism by paying upfront dividends.  She explained that was the purpose of the amendment and the bill would ensure fair competition among the insurers.

 

Continuing with the presentation, Ms. Molasky-Arman noted that she had no problems with the amendments proposed by the self-insured employers and associations.  She referenced Section 86 and said there currently was a requirement that the Commissioner “decertify” any individual self-insured employer who had filed bankruptcy.  On that point, NRS conflicted with federal bankruptcy law, which precluded Nevada from taking any action.  She said Section 86 proposed to enable the Commissioner’s discretion to allow an employer to remain certified during the pendency of bankruptcy proceedings so long as the employer demonstrated that he would pay all claims for compensation.  She advised that the Division had been very successful in doing that, with the exception of one self-insured employer who decided that the other self-insured employers should be responsible for their claims, and despite the bankruptcy court, she had decertified that particular employer.  She said she had received no protest on her decision. 

 

Ms. Molasky-Arman discussed amendments regarding payment of claims upon liquidation of insurers.  She said that Sections 53 and 55 pertained to the current ability of the association to not pay a claim on behalf of an insured whose net worth was greater than $25 million, but she added that the association did not have the authority to recover that, which might have been wrongly paid.  She said that Section 54 removed the $100 deductible on claims for unearned premiums.  She referenced a survey from the NAIC that showed that it cost more than $83 per claim to determine how and which policies and premiums deserved the $100 deductible.  She opined that the amendment would be fairer to those people who had their insurance terminated because of an insolvent insurer and who then had to replace their insurance.

 

Ms. Molasky-Arman discussed the last page of her PowerPoint presentation, “The Commissioner as Receiver of Insolvent Insurers.”  She said the Division had learned through a recent insolvency that the guaranty associations’ requirement each insurer to file a claim for unearned premiums was contrary to what was done in many states, where the Commissioner, as receiver, could, on behalf of those insureds, file a claim with the guaranty associations for unearned premium.  She said Section 82 of A.B. 453 dealt with the distribution of assets so that it complied with federal law. 

 

Ms. Molasky-Arman concluded that a good portion of A.B. 453 dealt with accreditation standards, which were prone to periodic changes. 

 

Assemblyman Beers asked whether the financial statement preparation compliance referenced in Section 6 was something other states also required.  He asked if this was a standard other than generally accepted accounting principles (GAP).

 

Ms. Molasky-Arman responded that the insurers were required to use “statutory accounting principles” (SAP), rather than GAP.  She said the Division used a conventional statement form that was prescribed by the NAIC, which was adopted by all the states. 

 

Mr. Beers asked if people then were already in compliance with the form.

 

Ms. Molasky-Arman said they had it in regulation forms.  The NAIC, she said, was fairly insistent that the form should be included in statute. 

 

There were no other questions.  Chairman Goldwater recessed the hearing on A.B. 453 and opened the work session.

 

Assembly Bill 2:  Limits right of employer to own certain intellectual property developed by employee. (BDR 52-365)

 

Diane Thornton, Senior Research Analyst, Legislative Counsel Bureau, explained A.B. 2.  She cited Assemblyman Oceguera’s proposed amendment.  Referencing the mock-up in the “Work Session Document” (Exhibit F), she said the amendment deleted the requirement of an employer to give written notice to an employee; the original language of “during the course of employment” was kept.  Lastly, she said the type of employee was defined as one who “is expressly hired to invent; or the employee is expressly directed to invent and the invention or trade secret is developed pursuant to that direction.” 

 

Assemblyman Oceguera advised there was not a full consensus but expressed his satisfaction with the proposed amendment. 

 

ASSEMBLYMAN OCEGUERA MOVED TO AMEND AND DO PASS A.B. 2.

 

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. 

 

Assemblywoman Gibbons advised the Committee that she would, for the time, support the bill, but she wished to reserve the right to vote in opposition to it at the Floor session. 

 

Assemblyman Brown commented that he had reviewed Professor LaFrance’s document and believed that it made convincing arguments. 

 

THE MOTION CARRIED UNANIMOUSLY. 

Assembly Bill 184:  Creates state board to review certain increases in rent relating to manufactured home parks. (BDR 10-386)

 

Ms. Thornton explained that Sara Jones, State Librarian, had proposed amending page 2, lines 39-40 and lines 43-44, of A.B. 184, to refer to Mason’s Manual of Legislative Procedure.  She said Ms. Jones also proposed deleting Section 11 and advised that the State Library was mandated to loan such materials.  Ms. Thornton said that Assemblywoman Giunchigliani proposed that a sunset provision be added to the bill and that the provisions of the bill would expire by limitation on September 30, 2007.  Ms. Thornton advised that testimony by Renee Diamond, Administrator, Division of Manufactured Housing, indicated that the Division would have some funding issues with the bill.  

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS A.B. 184.

 

ASSEMBLYMAN PARKS SECONDED THE MOTION.

 

THE MOTION CARRIED.  MR. HETTRICK, MR. KNECHT, MRS. GIBBONS, MR. BEERS, MR. BROWN, AND MR. GRIFFIN VOTED NO.  (Mr. Arberry was absent for the vote.) 

 

Chairman Goldwater advised that the motion passed with a 7-6 vote. 

 

Assembly Bill 206:  Revises provisions relating to repayment of compensation received in lump sum for permanent partial disability. (BDR 53-1103)

 

Ms. Thornton explained that Exhibit F, with attached Exhibit “B,” provided the amendments to A.B. 206.  She said the intent of Assemblywoman Pierce’s amendments was for the injured employee to pay only the actual amount of the lump sum.  Additionally, she advised that page 3 of the mock-up had a new section that explained that any claim open between January 1, 2000, and July 1, 2003, must be recalculated by the insurer.  She explained that if an employee overpaid the lump sum, that amount must be reimbursed. 

 

Chairman Goldwater interrupted the work session on A.B. 206 to announce that he had breached the Committee Rules; eight votes were required for a bill to pass.  Consequently, he called for a new vote on A.B. 184.

 

THE MOTION CARRIED.  MR. GRIFFIN, MR. BROWN, MR. BEERS, MRS. GIBBONS, MR. KNECHT, AND MR. HETTRICK VOTED NO. 

 

For clarification, Chairman Goldwater called for a show of hands of those voting in favor of A.B. 206. 

 

MR. ARBERRY, MS. GIUNCHIGLIANI, MR. GOLDWATER, MS. BUCKLEY, MR. PARKS, MR. PERKINS, MR. OCEGUERA, AND MS. LESLIE VOTED YES.

 

Chairman Goldwater reopened the work session on A.B. 206 and asked if there was further discussion.  Ms. Thornton indicated that her presentation had been completed before the vote.

 

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 206.

 

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Assembly Bill 230:  Revises provisions regarding mobile home parks. (BDR 40‑202)

 

Ms. Thornton explained the amendments that were proposed during the hearing, referring to the Work Session Document (Exhibit F).  She said Ernest Nielsen, from the Senior Law Project for Washoe County, had proposed an amendment to address the concerns of corporate cooperative mobile home parks.  Mr. Nielsen requested cooperatives be exempt from the membership requirements pertaining to boards of directors because the tenants were the owners. 

 

Ms. Thornton continued that a second amendment proposed by the Las Vegas Valley Water District would reinstate the stricken language on page 2, lines 11 through 18, and amend that provision detailed on the Work Session Document.  She said that most importantly, it stated, “nothing in this section prohibits a mobile home park constructed on or before October 1, 1995, from expanding if the expansion can be accommodated under the capacity of the existing master meter.”

 

Assemblywoman Buckley discussed the second part of A.B. 230, which dealt with water meters.  She said she could vote either way.  She said the water district wanted to limit it to public housing authorities.  She advised if they wanted to limit the section to public housing authorities or to the non-profit sector, they should say “public housing authorities, non-profit corporations, or co-ops.”  She recalled that Assemblyman Beers had questioned why this section was needed.  She advised she also questioned its need, but that she wanted to solve the problem, recognizing Thelma Clark’s need.  She said if the Water Authority tried to restrict it in the Senate, she would like the low-income senior park to be able to move ahead. 

 

ASSEMBLYMAN BEERS MOVED TO AMEND AND DO PASS THE FIRST PART ONLY OF A.B. 230.

 

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.

 

Assemblyman Beers clarified that he was referencing the first amendment in the Work Session Document (Exhibit F), and that he was excluding the second.  He had additional information for the Committee.  He cited a study done on two parks that were converted to individual metering.  He said the results indicated individual metering was well under 20 percent.  He believed one was 7 percent and another was 12 percent savings in water consumption.  He noted there had been none implemented since the current law was enacted.  He said he believed the need for affordable housing was more important than watering lawns. 

 

Assemblyman Brown asked if in Section 2 on page 2 whether subsection 3 was entirely deleted, or just partially. 

 

Assemblyman Arberry said he needed further clarification.  He said he understood that the Las Vegas Housing Authority owned a park and they desired language that would not require them to maintain individual meters for everyone.  He asked whether that language was still included in the motion.  He received confirmation that the language would be included. 

 

Assemblyman Beers said his understanding of A.B. 230 was that the amendment would allow a nonprofit or a for-profit mobile home park to have master metering. 

 

THE MOTION CARRIED UNANIMOUSLY.

 

Chairman Goldwater conferred with Vance Hughey, Principal Research Analyst, regarding clarifications to A.B. 261. 

 

Assembly Bill 261:  Requires certain policies of health insurance and health care plans to provide coverage for continued medical treatment by provider of health care under certain circumstances. (BDR 57-814)

 

Not heard.

 

Assembly Bill 288:  Provides for judicial approval of certain contracts involving minors. (BDR 11-1116)

 

Ms. Thornton explained there were three proposed amendments to A.B. 288.  She said Mark Tratos, from the law firm Quirk & Tratos, proposed changing the word from “shall” to “may” on page 4, line 38.  She said Mr. Tratos had explained that “may” was optional language which would allow the guardian of a minor or producer to choose whether or not to seek judicial approval of a contract. 

 

Ms. Thornton advised that Assemblyman Hettrick had proposed that Section 15 of the bill be deleted to make the provisions of the bill resemble more closely California’s law governing contracts with minors.

 

Additionally, Ms. Thornton said Assemblyman Oceguera had proposed an amendment to Section 15 that he would explain.

 

Assemblyman Oceguera said he had consulted with the proponents and opponents of A.B. 288 and believed they could “tighten” the bill to alleviate Mr. Hettrick’s concern without deleting Section 15 in its entirety.  He said the court would still have the authority to review the contracts.  He thought that, on page 6, line 45, between the words “finding” and “that,” they could add the provision, “by clear and convincing evidence,” which would enforce the standard and require proof before obtaining judicial review of the standard. 

 

Assemblyman Hettrick said the problem with Section 15 was not what it did or tried to do.  He believed the problem was the competition between states, and increased legislation could make it more difficult to draw business to Nevada.  He said if the judge approved a contract, it was probably a moot point.  He said he did not want to insert language that made it more difficult for people to come to Nevada.  He said he wondered if they really needed the language.  He thought the Committee should consider being more competitive with California. 

 

Assemblyman Oceguera said he had reviewed the California law and reported their law had a provision for the court to set up a trust.  He said A.B. 288 did not allow for a trust but did allow for a special guardian.  He said this would be the only section that would be slightly different, and he was just trying to strengthen the law.  He said he still made the argument in Committee that he thought the provisions of mental, physical, and emotional health, were good provisions to stipulate to in a minor contract.  He said he did not believe the opponents to the bill would be overly concerned as long as A.B. 288 was similar to the California language, which lent itself to getting in on the periphery, not directly, like A.B. 288.

 

Assemblyman Brown said he wondered if the issue in the section was so much the degree of the finding as in “preponderance of evidence” versus “clear and convincing,” or if it was the degree of challenge to the mental, physical or emotional health and safety.  He wondered if they should insert language such as “substantial.”  He said he did not want to subject children to substantial emotional distress; he felt that was the issue.  He said they did not want to invite circumstances such as a child’s inability to go to a prom because of contractual obligations to become an issue.  He said he was not sure that those circumstances rose to the level of releasing them from a serious contract.  He said he was not proposing inserting “substantial” into the language of the bill, but he said that was one issue with that section. 

 

Assemblyman Hettrick agreed there was a dilemma with the bill.  He said he did not believe there was a judge who would not revisit a contract that he originally had approved, no matter how the law was worded, if he believed there was something that was truly detrimental to a child.  He said, consequently, he was not sure the language was necessary. 

 

Assemblywoman Buckley said that as a practical matter, a judge could not review his own approval of a contract unless the matter was brought before the judge.  She said if they did not have this language, she believed if there were a situation where a child was getting sick, they would breach the contract.  Then the film producers would sue the child through his guardian for failure to appear.  She said that would result in two court actions and she believed A.B. 288 would provide some sort of judicial economy.  She said she thought it would, ultimately, be up to the judge.  She noted that a child, as a minor, did not have the capacity to enter into a contract, and so they would be ruling the child’s life, and that would be up to a judge to decide on a case-by-case situation.  She said they would not allow the minor to abdicate if it were a trivial change of mind, yet they would still have continuing jurisdiction if there were a serious problem.  She said she believed it would be better to retain the language.  She said she was curious what California did under such circumstances.  She wondered whether they just filed another action.  She said some sort of review would be necessary.

 

ASSEMBLYMAN HETTRICK MOVED TO AMEND AND DO PASS ONLY THE FIRST AMENDMENT TO A.B. 288.

 

ASSEMBLYMAN OCEGUERA SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Assembly Bill 352:  Revises provisions relating to sale of older mobile home. (BDR 43-970)

 

Ms. Thornton explained that Assemblywoman Ohrenschall had proposed adding a provision to the bill to require that a landlord of a mobile home park prepare an annual earnings statement of the park and make copies of the statement available to the tenants.

 

Ms. Thornton said that Renee Diamond, Administrator, Manufactured Housing Division, had suggested that the date on page 1, line 14, be changed from 1975 to June 15, 1976.  She said Ms. Diamond also indicated that all manufactured homes built for sale in the United States after the new date must conform to the HUD (Housing and Urban Development) codes.

 

Chairman Goldwater said he had a question on A.B. 352, and was going to hold the vote on the bill. 

 

Assembly Bill 419:  Provides that landlord of dwelling units intended and operated for persons 55 years of age and older may not employ person to perform work on premises unless person has work card issued by sheriff. (BDR 10-833)

 

Vance Hughey, Principal Research Analyst, said Assemblywoman Pierce had introduced the bill and had proposed several amendments.  One was to change the frequency with which a work card was renewed from “each year” to “every five years.”  Another change was to add a new provision to provide that if an applicant for a work card changed employment to another property that was not within the same corporation, he must update his work card with the sheriff.  A third proposal was to add a new section to the bill to require a sheriff to issue a temporary work card pending the results of the Federal Bureau of Investigation criminal history.  Lastly, Mr. Hughey said that Assemblywoman Pierce had proposed that subsection 1 of Section 1 be amended so the bill applied only to dwelling units that limited occupancy to persons who were 55 years of age or older.  He advised that Assemblyman Hettrick had also made the same suggestion. 

 

Mr. Hughey said that David Howard, representing the Northern Nevada Apartment Association and the Southern Nevada Multiple Housing Association, had proposed that in Section 1, subsection 1, the phrase “any person” should be replaced with the phrase “a full-time person with universal access to dwelling units.” 

 

Assemblyman Hettrick indicated his satisfaction with A.B. 419.

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS A.B. 419. 

 

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Assembly Bill 433:  Makes various changes to provisions regulating persons providing check-cashing and deferred deposit services.  (BDR 52-935)

 

Not heard.

 

Assembly Bill 438:  Requires certain periodic increases in amount of compensation to which claimant or dependent of claimant is entitled to receive for permanent total disability under industrial insurance. (BDR 53‑1162)

 

Ms. Thornton explained that Rusty McAllister, representing the Professional Firefighters of Nevada, had proposed two amendments.  She referenced Exhibit “F” of the Work Session Document (Exhibit F).  She said the first amendment proposed a cost of living increase of 2.3 percent annually for any injury or disability that occurred on or after January 1, 2004.  She said his second amendment proposed that the effective date be January 1, 2004. 

 

ASSEMBLYMAN OCEGUERA MOVED TO AMEND AND DO PASS A.B. 438.

 

Chairman Goldwater clarified that the amendments were those proposed by Mr. McAllister.

 

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. 

 

THE MOTION CARRIED UNANIMOUSLY. 

 

Assembly Bill 497:  Exempts licensed child care facility from regulation as food establishment. (BDR 40-1199)

 

Mr. Hughey explained that Chairman Goldwater and Assemblywoman Buckley had suggested that there might be a way to exempt childcare facilities from regulations as food establishments because only limited food preparation occurred at those facilities.  He said he believed there had been further discussion and suggested that Wil Keane, Legal Counsel, further explain the bill.

 

Wil Keane, Legal Counsel, said he believed the exemption was for the preparation of non-hazardous foods or for potentially hazardous foods if those potentially hazardous foods were commercially prepared and precooked or were pasteurized.  He said the question arose as to whether or not there should be an exemption for those facilities that engaged in the limited food preparation, or whether it should simply be provided that facilities that engaged in that type of limited food preparation were exempt from any requirements regarding commercial facilities.

 

Assemblywoman Buckley said she would like to disclose that her child went to preschool and was being deprived of freshly cut apples and green eggs and ham once a year for Dr. Seuss Day.  But, she opined, her child was no more deprived than any other child in Clark County and she planned to vote on A.B. 497. 

 

Chairman Goldwater said he believed the intent of the bill was to relieve some of the daycare facilities from what was probably an unintentionally onerous statute.  He further surmised the law had been interpreted differently from county to county.  He said he certainly thought clarification in the law in the first option Mr. Keane described needed some regulation, but it should exempt a daycare facility from having to purchase large pieces of equipment. 

 

Assemblywoman Buckley said she believed it was appropriate to have some inspections but opined that if they created such sterile environments such that a refrigerator, hot water, and soap were not enough, they were really depriving their children.  She observed there were many quality facilities and the children would be hurt by such restrictive legislation.  She thought they could allow oversight to “crack down” on serious violations, but she did not think they should limit it to certain types of food. 

 

Chairman Goldwater concurred.  He said additionally he believed there was a natural check of health standards on the consumer’s ability to inspect a daycare facility.  He said he did not believe there was a disincentive for a daycare facility to violate certain sanitary standards.  He said he believed it was just the opposite. 

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS A.B. 497.

 

Assemblywoman Buckley clarified the amendment would remove the requirements as food establishments with the intent, either in drafting or through legislative intent, that they thought it was appropriate for inspections.

 

Chairman Goldwater asked Mr. Keane whether he understood the motion.

 

Mr. Keane clarified that the amendment would be an exemption from the NRS Chapter and that they would expressly provide that inspections could occur, but if a facility fell within the limited exemption, then the facility would be allowed to operate without interference. 

 

ASSEMBLYMAN KNECHT SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Assembly Bill 498:  Makes various changes to provisions governing manufactured home parks. (BDR 10-1296)

 

Ms. Thornton said there were several amendments to A.B. 498.  She advised that Assemblywoman Buckley had proposed to “revise provisions concerning habitual failure to pay rent” on pages 11 and 12.  She said Ms. Buckley would explain them further. 

 

Ms. Thornton said that Joe Guild, representing the Manufactured Home Community Owners, proposed deleting lines 19-24 on page 3 of the bill and adding the following sentence: 

 

The refund must include interest on the amount of the deposit for the period during which the deposit is retained by the landlord.  The interest must be calculated using a rate of interest equal to the average of the prevailing rates of interest for deposits, as determined by the Administrator.

 

Ms. Thornton also advised that Mr. Guild had proposed adding the following provisions to Sections 8 and 9:

 

If a tenant elects to move the manufactured home without the aid of the landlord, the landlord must reimburse the tenant the fair market value of the home as determined by a licensed manufactured home broker agreed upon by the landlord and the tenant.  If the landlord and the tenant cannot agree upon a broker, the Manufactured Housing Division shall choose the broker.

 

If the tenant elects to leave a manufactured home on site, which if moved would be structurally damaged, the landlord must reimburse the tenant the fair market value of the home, minus the cost of removal and disposal of the home.

 

Assemblywoman Buckley explained the change to the first provision addressed concern that A.B. 498 would apply to tenants who were late paying their rent and late fees a couple of times.  She said after a discussion with Mr. Guild, they agreed to limit the section to commercial owners of the homes.  She said Mr. Guild had indicated the biggest violators, who were the most often late, were the banks that ended up owning the homes.  She said she supported this compromise.

 

Assemblywoman Buckley said that the other amendments were acceptable, including the original intent.  She advised that the Legal Division would need to track the language regarding the mechanism of allowing a licensed broker, mutually agreed upon, to Section 8, lines 24 and 25.  She concluded there would be two sections for when a tenant wanted to move the home; one without the aid of the landlord, and the other would be for when there was no park within 50 miles, or the home would be structurally damaged.  She said the payment mechanism would be that which was set forth in the amendment.

 

Assemblyman Beers expressed concern regarding the second amendment that the language “annual compounding” was being retained.  He suggested they might want to add “compounding annually between deposits and as determined by the administrator.”

 

Assemblywoman Buckley said that was agreeable.

 

Assemblyman Hettrick said he had a question on Section 3.  He asked who was going to determine the cost of removal and disposal.  He said he believed they needed an independent party to ensure the fairness. 

 

Assemblywoman Buckley said they could insert “a mutually agreed party,” as they had set forth in the previous paragraph, and, she added, the Manufactured Housing Division could mediate any disputes.

 

Assemblyman Hettrick said he would agree to that. 

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS A.B. 498.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. 

 

Chairman Goldwater closed the work session, but advised they could be holding work sessions any time during their meeting.  He opened the hearing on A.B. 490. 

 

Assembly Bill 490:  Revises provisions governing mortgage brokers and mortgage agents. (BDR 54-998)

 

Assemblyman David Goldwater, Clark County, District No. 10, introduced A.B. 490.  He explained that he had been working in the area of mortgage regulations since the 1999 Legislative Session.  He referenced the Harley Harmon failure, for which an interim committee was formed.  He said recommendations were made; a statutory overhaul occurred; and the regulations, laws and statutes enacted had been very effective in preventing large-scale mortgage failure.  He noted that in those failures that had occurred, the victims had received restitution under the new laws and the perpetrators of fraud had received criminal penalties.  He reported that there had been a number of excellent developments in the area.  He said that in the 2001 Session, he had added provisions to statutes in mortgage regulation that he believed were important regarding who was conducting the business. 

 

He said A.B. 490 illustrated one weak point in the existing statutes and regulations.  Chairman Goldwater observed the Financial Institutions Division (F.I.D.) did an excellent job with financial institutions, but he believed they needed to be more responsive to the industry, recognizing it was very dynamic.  Therefore, he said, the bill would create a Board of Mortgage Broker Oversight.  He explained the Board would be comprised of five members, and he left to the Committee’s discretion whether the Governor should appoint the members and what the membership should be. 

 

Chairman Goldwater said Section 1 defined the Board, and Section 3 created joint and several liability for anyone who was a spokesman or advertiser for a mortgage company.  He said he believed A.B. 490 would inhibit someone who was doing a “soft sell.”  As an example, he cited Joe Namath encouraging people in Las Vegas to invest with Vestin Mortgage.  He said that was fine and he hoped the mortgage company was succeeding, but, he cautioned, that if fraud or embezzlement occurred, under this bill, Joe Namath would be held liable for encouraging people to invest in a fraudulent activity.  He said the bill would ensure that celebrity spokespersons were judicious in where they applied their support. 

 

Chairman Goldwater said that Section 4 explained how the agents were to be regulated and licensed and also provided for the fee.  He cautioned that agents were entrusted with a consumer’s most sensitive documents, including tax returns, income statements, and credit reports.  He said because of that, he thought it was prudent that they were licensed by the state.  He recalled, in a previous hearing, the Committee had discussed predatory lending, and he had observed that predatory lending was mostly a problem “out on the street” with the interaction of an agent and the borrower.  He said A.B. 490 would require those lenders to be licensed.  He remarked that other testimony would provide some anecdotal support for the bill. 

 

John Vergiels, Legislative Advocate, representing the Nevada Association of Mortgage Brokers, testified in support of A.B. 490.  He noted that there were a few points the Chairman had addressed that needed to be reconciled by the Committee.  He said the industry shared Chairman Goldwater’s concern for proper regulation.  

 

Raymond Williams, past President, Nevada Association of Mortgage Brokers; member, Mortgage Advisory Council; and President, Las Vegas Mortgage Company, said he supported the bill personally and on behalf of Nevada Association of Mortgage Brokers.  He noted one of the strengths of A.B. 490 was that it expanded A.B. 324 of the 71^st Session, which had instituted education and registration for loan officers.  He expressed his gratitude that the standard was being raised in their industry. 

 

Charles Thompson, Legal Counsel, Desert Land, testified via videoconference from Las Vegas and introduced Howard Bullock of Desert Land.  He said they supported A.B. 490 but believed the bill did not extend far enough.  He said he disagreed with Chairman Goldwater’s praise of the F.I.D.  He said he and Mr. Bullock had spent several years litigating two cases against the F.I.D. and they had prevailed in both actions.  In March 2001, he explained, Mr. Bullock had filed suit in federal court against Tom Procopio, one of the larger mortgage brokers in the state.  He advised that after a two-week trial, the federal court had ruled that the mortgage broker had acted unlawfully and had awarded Mr. Bullock a judgment of nearly $5 million. 

 

Simultaneously, Mr. Thompson explained, Mr. Bullock had filed a complaint with the F.I.D. charging the mortgage broker with an excess of 700 violations.  Mr. Thompson reported that for over a year, the F.I.D. ignored the complaint.  Finally, he said, Mr. Bullock complained to the Governor’s office.  He said the complaint then was brought forward, “lip service” was given to it, and the F.I.D.’s decision cleared the mortgage broker of all 700 counts.  He said that although the District Court allowed them to take depositions of several members of the F.I.D., including the chairman, they had to file a petition for writ of mandamus to force the F.I.D. to investigate Mr. Bullock’s complaint and provide them with documentation they had requested.  Mr. Thompson explained that the F.I.D.’s southern Nevada office gave a poor grade to the mortgage broker, but ultimately, at meetings held outside the southern Nevada office, the grade was changed; the findings were changed; and the mortgage broker was given a top grade. 

 

Mr. Thompson said the F.I.D.’s actions were corrupt.  He said although Mr. Bullock’s complaint had been ignored for over a year and it had taken almost 19 months to get any kind of decision, the mortgage broker himself had filed a complaint against another mortgage broker and had obtained a meeting with the F.I.D. on the same day.  He added that within a matter of days, several investigators initiated a five-month investigation.  He said ultimately the district court judge had concluded that the F.I.D.’s investigation was inadequate except for 3 or 4 of the 13 allegations.  He averred their complaint was not a weak effort; it was well extended, compelling documentation.  He reported the reinvestigation found 4 of the 13 counts to be in violation.  He said the first allegation charged that the mortgage broker had taken $3.8 million unlawfully.  He said that although the federal district court, in its trial, had ruled that the violation had occurred, the F.I.D. defended itself by claiming that the charge was really not a violation of the law; Mr. Bullock had agreed to it; therefore, the mortgage broker was not liable.  He said basically the F.I.D. ruled the federal district court was wrong.  He said the state should be concerned when a federal district court ruled that a mortgage broker was not adequately regulated. 

 

Mr. Thompson continued that their second allegation contained approximately 500 allegations of misbehavior and regulatory violations by the mortgage broker.  He said the final answer in both instances by the F.I.D. was essentially that neither had occurred.  He said it was physically and mathematically impossible that these violations had not occurred. 

 

Mr. Thompson advised that Mr. Bullock had ultimately been successful in both of his endeavors, but at a great cost to him.  He added that as a result of the litigation, Mr. Procopio, the mortgage broker, was finally investigated and subsequently had been removed from the account and from the F.I.D. 

 

Mr. Thompson said he believed attention needed to be focused on accountability and that discretion needed to be withdrawn from the Commissioner.  He said he believed the Commissioner hid behind discretion to protect those companies that were regulated.  He concluded that all the information he had detailed had been provided to Mr. Walshaw’s boss, Sydney Wickliffe.  He said he was embarrassed for the state of Nevada that it had an agency such as the F.I.D.  He said that agency was supposed to protect the citizens and referenced the many people hurt by the Harley Harmon matter.  He cautioned this could happen again and the Committee had been forewarned. 

 

Howard Bullock, Desert Land, Las Vegas, said that he applauded Chairman Goldwater for introducing A.B. 490.  He said the industry definitely needed some oversight.  He said in his experience, when he filed the complaint, there was only one person, the Commissioner, to whom he could express his concerns.  He confirmed that he had waited for well over a year with no response from the Commissioner.  He said if there had been a five-member Board, as currently proposed, there would have been at least other people he could have contacted for review and oversight of his complaint.  He thanked the Committee for their efforts towards creating some type of oversight in the industry.

 

Chairman Goldwater thanked Mr. Bullock and Mr. Thompson.  There were no questions.  He called for other people to testify on A.B. 490. 

 

Cindy Stephens, MCS Mortgage Company, testified in support of A.B. 490.  She asked for clarification regarding the education component of the bill.  She said that currently the National Association of Mortgage Brokers (NAMB) only certified education.  She said her concern was increasing the education requirements from five to ten hours.  She said the industry was still struggling to complete the five hours of education through the National Association.  She wondered if other associations could be involved in the education.

 

Chairman Goldwater said that was an excellent idea.

 

James Wadhams, Legislative Advocate, representing the Mortgage Bankers Association of Nevada, stated that he was neutral on A.B. 490.  He explained that mortgage bankers loaned their own money; they did not acquire funds from private persons.  He referenced page 13, line 43, and suggested, to avoid confusion, that section should properly read, “As used in this section, ‘mortgage broker’ includes a person who brokers loans to a person who holds a certificate of exemption.” 

 

Chairman Goldwater commented that was clarifying language.

 

Sydney Wickliffe, Director, Department of Business and Industry, State of Nevada, testified via videoconference from Las Vegas.  She explained the Department of Business and Industry was the parent agency of F.I.D.  She said the Department was neutral on the bill; however, she wanted to point out some inconsistencies before action was taken on A.B. 490.  She said she believed that Scott Walshaw, the Commissioner, was available in the Carson City audience and could further explain their concerns.  She said she could also provide the information in a memorandum if time precluded further testimony. 

 

Chairman Goldwater requested that Mr. Walshaw provide a brief explanation and then follow up with the memorandum.

 

Scott Walshaw, Commissioner, Financial Institutions Division, State of Nevada, said that both Mr. Wadhams and Ms. Stephens had briefly discussed some of the technical concerns referencing the continuing education and registration requirements.  He said he would review some of their concerns.  He advised that A.B. 490, as currently written, would require both the continuation of the registration requirements imposed on mortgage agents, as well as an annual licensing requirement.  He noted some duplication with that requirement.  He said the administrative cost would increase considerably, particularly if the state enforced the registration of 4,000 to 5,000 agents all to occur on one day of the year, as opposed to implementing an annual renewal date based on when the agents first applied, which was their current procedure.  He said that agent licenses were also proposed to be the same cost as a mortgage broker’s license, and he expressed concerns as to how that would be equitable.  He advised that enforcement problems on other financial institutions would be included in the registration process.  He said, for instance, they currently had supremacy issues with federally chartered banks and savings banks.  He said he believed there would be a legal problem trying to impose that requirement on them. 

 

Mr. Walshaw said Ms. Stephens had also pointed out the increase in the number of education hours.  He said that would pose some difficulties, particularly if the number of agents subjected to further education were to increase.  He questioned the availability of adequate providers of education who were certified, which was a current problem.  He noted that the individual agent would be subject to the same disciplinary action as a broker.  Under the current structure of the bill, the broker had some responsibility for adequately supervising the agents.  He said that would detract from the supervision if the broker thought the agents were going to be on their own, subject to some sort of similar discipline.  He added there were other points they would want to address, but he had mentioned the main ones. 

 

Chairman Goldwater thanked Mr. Walshaw and said his suggestions were helpful. 

 

Assemblyman Hettrick asked if A.B. 490 applied to individuals who were lending their own money.

 

Chairman Goldwater said that was not intended in the bill.

 

Assemblyman Hettrick asked if the bill would apply to someone who brokered a loan by referral; Chairman Goldwater said he did not think so.

 

Assemblyman Hettrick asked if the bill would apply to someone who brokered a loan by referral for a fee.  Chairman Goldwater responded that he thought the bill would apply under those circumstances.  Assemblyman Hettrick said he had a concern with that. 

 

Mr. Keane explained that the statutory definition of a mortgage broker was not changed in A.B. 490.  He advised if a person were currently a mortgage broker, then they would remain so under the bill, and the reverse applied. 

 

Assemblyman Hettrick, referencing page 1, Section 3, of the bill, said he was concerned with the amendment making the advertising spokesperson “jointly and severally liable.”  He said someone, such as Joe Namath, mentioned earlier, probably would have no way of knowing whether the companies he advertised for were doing anything inappropriate, and he thought it was unduly harsh to make a spokesperson jointly and severally liable.  He said it would effectively eliminate almost anyone from serving as a spokesperson for a mortgage broker. 

 

Assemblywoman Buckley asked whether any other states had movement in that area.  She noted that on one hand there was face recognition with some spokespersons, such as Ed McMahon.  She said it was a very interesting issue. 

 

Chairman Goldwater called Mr. Thompson back to testify regarding similar legislation in other states.

 

Charles Thompson reported there was case law in which celebrities had endorsed certain products.  He said the products did not necessarily deal with fraud, but there had been an instance with Pat Boone in which a product he had endorsed had scarred someone’s face, and Mr. Boone had been held personally liable.  He advised there were a number of cases nationwide and this was not a new issue; the public relied on someone’s integrity.  If the public were misled by a spokesperson, he said A.B. 490 would put a spokesperson on notice. 

 

Chairman Goldwater said they needed to further research that issue.

 

James Kohl, Legal Counsel, Desert Land, testified via videoconference from Las Vegas regarding the spokesperson liability.  He suggested the Committee study by analogy the recent legislation passed by the federal government, which affected CEOs of corporations who had to personally sign and vouch for the accuracy of the financial statements for their various corporations.  He opined it was not too great a leap for a spokesman to likewise be held accountable and to vouch for the correctness and/or integrity of the entity he was supporting.

 

Chairman Goldwater thanked Mr. Kohl for the good analogy.  He commented that in situations of fraud, embezzlement, and misappropriation of property, there was deceit, and the person who deceived was as guilty as the person who committed the criminal act. 

 

Dave Burton, Wholesale Representative, testified via videoconference from Las Vegas.  He said he had several concerns with A.B. 490.  First, the bill would set a fee of up to $1,500 for an initial application.  He said compared to the amount real estate agents were charged, this fee was out of line.  Second, he said it appeared the Committee was trying to establish standards that were higher than necessary.  He said, additionally, the standards did not define what was acceptable.  He referenced the top of page 3 of the bill, which required “written consent to an investigation of credit, criminal, background, etc.”  Mr. Burton asked whether an applicant who had a low credit score could be denied the privilege of being a loan officer.  Additionally, he queried how an applicant could prove that he was honest or had integrity, noting that the bill required such proof.  He referenced on page 3, that an applicant could not have been “convicted of, or entered a plea of nolo contendere to a felony or any crime involving fraud.”  He said he believed the language should state “to a felony involving fraud or misrepresentation.” 

 

Chairman Goldwater advised Mr. Burton that all his concerns were currently required for the registration of mortgage agents, that A.B. 490 added nothing new to the statutory language. 

 

Mr. Burton restated the problem previously addressed regarding the yearly registration requirement date of June 30.  He noted the processing difficulties of just the mortgage brokers’ registration forms.  He recommended, instead, using the last day of the month of the birth date of the agent.  He anticipated there would be more agents when they removed the exemption for mortgage bankers.  He said he had no problem with increasing the hour requirements for continuing education, but he said he would like to see some type of review to approve the courses offered, either by way of the Board or a separate educational committee.  He said he believed that the NAMB, since they offered courses, had a conflict of interest to also serve in the position of approving courses.  He suggested that a separate committee should meet quarterly to review the courses offered for continuing education.  He advised that he participated with several others at the local community college, which offered a series of mortgage courses.  He reported the community college had been very successful, although none were certified at the present time. 

 

Chairman Goldwater said they would work on that. 

 

Mr. Burton disagreed with the current proposed composition of the Board.  He suggested the Board should be comprised of one person from mortgage brokers, one from mortgage bankers, one from the APMW, a teacher, and one person with a legal background, and each member should have some defined duties.  The duties should include investigation, reviewing course offerings, handling payroll disputes with loan officers and their companies, handling ethics and legal complaints from borrowers and the public, and also reviewing disputes on examinations.  He offered to prepare a memorandum for the Committee. 

 

Chairman Goldwater thanked Mr. Burton and said he would appreciate a written memorandum, noting his concerns were those they were planning to review. 

 

There were no further questions or testimony.  Chairman Goldwater closed the hearing on A.B. 490 and said he would be working with the interested parties to hopefully bring the bill to work session for a vote.  Chairman Goldwater then reopened the hearing on A.B. 433, noting that the witness had arrived who was detained by weather. 

 

Assembly Bill 433:  Makes various changes to provisions regulating persons providing check-cashing and deferred deposit services. (BDR 52-935)

 

Alfredo Alonso, Lionel, Sawyer & Collins, representing Money Tree, Inc., introduced Dennis Bassford.  He advised that the issue was brought up last session with respect to some of the abuses in the industry.  He thanked Assemblyman Brown and Assemblywoman Buckley for their efforts introducing A.B. 433. 

 

Dennis Bassford, President, Money Tree, Inc., Seattle, Washington, explained that Money Tree offered retail financial services with 80 branches in 4 western states.  He said that in addition to being the president of Money Tree, he also sat on the boards of directors of two national associations, Financial Service Centers of America and Community Financial Services Association.  He said the two associations were the two trade groups that represented check cashing and payday loans.  Over the past few years, he advised, robust consumer demand had resulted in a tremendous growth in the payday loan industry.  There were currently over 10,000 locations that offered payday loans nationwide.  He said 34 states had enabling legislation, including the state of Nevada.  Over a year ago, he had learned that some judges and legislators in Carson City had some problems and were upset with some of the collection practices that were engaged in by a few operators in their industry.  Wanting to understand the issues, he said he had come to Carson City and had met with the judges and former Assemblywoman Bonnie Parnell.  He said that he found collection practices that were outside the bounds of reasonableness.  He said bets of $100 were having fees assessed to them upon default, which resulted in judgments of hundreds of dollars.  At that time, he said, they agreed to work on those practices and he had met with many of the members of the Committee in the past year to discuss the issue.  He said A.B. 433 would solve the problem of those excessive collection practices by restricting the default fee to $25. 

 

Additionally, he said, the bill also incorporated best practices that many in the industry already followed.  For example, he said, in the absence of fraud, it prohibited the threat of criminal prosecution on a defaulted loan.  He advised it mandated that the fees allowed to be collected in default follow the loan to third party collectors.  That meant a collection agency could not collect any more than the creditor could, prior to the assignment to the collection agency.  The bill limited the negotiation of just one check per loan as opposed to multiple checks per loan, thereby limiting the potential default fees assessed to the consumer.  He said it also incorporated the right of rescission, allowing the customer 24 hours to change his mind in the transaction and undo it for no fee.  Mr. Bassford advised that a payday loan was a very simple transaction, but occasionally a consumer would later find a friend or family member who would offer a loan to him for less.  He said his company already had a right of rescission.  He advised that the state of Idaho had recently passed a law with very similar provisions to those of A.B. 433.  He said he believed the bill was a good bill for the payday loan product, and because the bill fairly balanced the interests of the consumer with those of the industry, on behalf of Money Tree and the national associations, he urged passage of A.B. 433. 

 

Chairman Goldwater thanked the testifiers.  There were no questions and no further testimony.  Chairman Goldwater closed the hearing on A.B. 433. 

 

Chairman Goldwater reopened the hearing on A.B. 453.

 

Assembly Bill 453:  Makes various changes to provisions relating to insurance. (BDR 57-546)

 

Ms. Molasky-Arman agreed to answer any questions regarding the bill.  She said she neglected to say in her testimony that she referred to the self-insured associations as having shown her some proposed amendments with which she concurred.  She said she neglected to mention that James Wadhams had provided her with some other amendments proposed by the industry.  She said after their discussion, Mr. Wadhams had changed the amendments, and she was in agreement with the current amendments. 

 

James Wadhams, Legislative Advocate, spoke on behalf of Anthem Blue Cross & Blue Shield, Nevada Association of Health Underwriters, Nevada Association of Insurance & Financial Advisors, Nevada Hospital Association, National Council on Compensation Insurance, Nevada Surplus Lines Association, Nevada Independent Insurance Agents, and American Insurance Association.  He said that although the industry had not always agreed with the decisions that were made by the Insurance Commissioner, they recognized the need for modern, up-to-date regulations and they supported A.B. 453. 

 

Mr. Wadhams referenced the handout, “Amendments to A.B. 453” (Exhibit G), which, he said, although appearing lengthy, were actually corrections to edited language over the course of the last several years.  He said he had reviewed them with the Commissioner of Insurance, and he believed the amendments did not change the substance of the bill but merely corrected editing errors.  He identified briefly the general categories that were affected.  He said the first two pages dealt with surplus lines, which were insurance companies that were able to do business because they had adequate capital and surplus, but they were not directly licensed.  He said in representing that organization, he had inserted some technical cleanup provisions. 

 

Mr. Wadhams explained the next section had to do with the cancellation law, which clarified that worker’s compensation used a rating bureau, which helped the Commissioner set rates and also clarified that the rates were not always set at the same time a policy was renewed.  He explained at the bottom of page 3 was an amendment that clarified the application of the general law to health maintenance organizations  (HMOs).  The balance of the amendments, he advised, dealt with the area of bail bonds.  He explained that the problem in the bail bond area was unique because that activity took place within two regulatory agencies, the Insurance Commissioner and the judiciary. 

 

Assemblywoman Buckley asked Mr. Wadhams to discuss the bail changes.  She referenced the second to the last page of Exhibit G where it stated, “the court shall not set aside a forfeiture.”  She asked whether that did not “set the bail law right on its head.”

 

Mr. Wadhams noted that the language in that section provided that the surety submitted an application to set aside on the ground that the defendant had appeared, or that the surety did not enable the absence of the defendant.  He said he believed the intent was that the surety was not the one responsible for the absence of that.  He said he did not believe that eliminated the obligation of the defendant to appear.

 

Assemblywoman Buckley said it seemed to indicate that the surety would get his money back as long as he was not personally involved, but the surety guaranteed it and so it seemed to be a very large departure from existing concepts.

 

Mr. Wadhams said he understood the nature of the question and said he would appreciate an opportunity to review the issue.  He said that obviously was not the intent; the bond was presented for the guaranty or forfeiture on the appearance of the defendant.  He said he would review the language to ensure its accuracy. 

 

Robert Vogel, Vice President of Operations, Pro Group Management, explained they were the plan administrator for four self-insured groups in Nevada, Nevada Transportation Network, Nevada Auto Network, Nevada Retail Network, and the Builders Association of Western Nevada.  Mr. Vogel referenced a handout with his proposed changes to A.B. 453 (Exhibit H).  He advised that he had had an opportunity to speak with the Commissioner prior to the meeting.  He said the handout had four recommended changes.  He referenced Section 89.8 and said he proposed leaving the bill at the 120 days, advising that the original intent of the statute was to provide stability to the groups.  He said in the event of a smaller group, with a number of members leaving, this would provide the Division with enough time to evaluate the impact on the group and, more importantly, on any claims for which the group might be liable. 

 

Mr. Vogel said that Section 90.1 would make the language consistent with the proposal, which came out of Section 87 where the Division was requesting financial statements from single self-insured entities in 120 days.  He said the group’s current law was at 90 days, and he was suggesting that the time intervals for both be set at 120 days for the purpose of consistency. 

 

Section 92, subsection (2)(c), was a new requirement for a plan of additional assessment in the event of insolvency of a self-insured group.  Mr. Vogel advised this was redundant with that of NRS 616B.422.  He said the statute already provided the Commissioner with the authority to require the self-insured groups to devise a plan of assessment in the event of insolvency.  Consequently, he said he believed that subsection (2)(c) should be stricken. 

 

Lastly, referencing Section 94, Mr. Vogel said NRS 616B.368 required self-insured groups to keep their funds separate in an administrative and claims account.  He opined that if a self-insured group became insolvent, and they could not transfer from their administrative account to their claims account to pay claims, then they would have money sitting there that could not be used.  He said they really needed to retain subsection (1)(b) of NRS 616B422 so that the claimants received their payments first. 

 

Ms. Molasky-Arman said she approved of the suggestions.

 

Daryl Capurro, Trustee, Nevada Transportation Network Self Insured Group, advised that they were in the seventh year of operation and provided an excellent product and service for injured workers.  He said his group had reviewed the amendments very carefully and supported them. 

 

David Guinan, Legislative Advocate, representing Nevada Insurance Guaranty Association, said Sections 53, 54, and 55 of A.B. 453 would affect the Association.  He said he supported the bill as it pertained to those sections.  He explained that Section 53 related to the definition of covered claims that were handled by the Guaranty Association.  He recalled that several sessions ago that section had been amended to exclude from the definition of covered claims any claim asserted by an insured whose net worth had exceeded $25 million during the previous fiscal year.  He said that at the time that amendment was made there was no definition included for the term “affiliate,” and the purpose of the amendment was to clarify that affiliates would include subsidiaries and “upstream” affiliates, parent companies.  He said it was always the intent of the legislation to impose a net worth exclusion to include both upstream and downstream affiliates as part of the national records.  He said that should be considered when applying the exclusion.  He said he was aware of litigation where the contingency had been made that it only included subsidiaries, which was not the case. 

 

Mr. Guinan advised that the second change they offered was to eliminate a $100 deductible as it pertained to claims of unearned premium claims.  He said the $100 deductible served no effective purpose and it actually increased the administrative expenses. 

 

The third section, Mr. Guinan said, went back to the definition of affiliates and authorized the guaranty association to seek reimbursement from insureds who had a net worth in excess of $25 million.  The reason for the proposal was to enable timely attendance to claims, which was not possible when they tried to determine the amount of the net worth.  By including the ability to seek reimbursement later, they could go ahead and protect the insureds and, if later they learned that their net worth exceeded $25 million, they could ask for reimbursement. 

 

Gary M. G. Deacon, Legislative Advocate, representing the Nevada State Bail Agents Association, testified that he supported Sections 83 and 84 of A.B. 453.  Referencing record retention of one to three years, he said most of the bail agents retained the records so there was no problem.  He recommended, on lines 11, 23, and 36 of Section 84, after the word “immediate,” to add “without unreasonable delay and no longer than 30 days.”  He explained that bail agents were a 24/7 business and if a client were to come in on a Friday, no fiduciary was available, and if there were a Monday holiday, they would need time to make arrangements.  He said also there were other collateral accounts that they would be dealing with such as real estate, which required more time to process.  Mr. Deacon said he supported raising the industry’s standards. 

 

Mr. Wadhams said he wanted to readdress Ms. Buckley’s question.  He said he had reread the amendment and believed they had “bolded” language that should not have been bolded.  He said the purpose was that the court should not set aside forfeiture unless the surety had first submitted an application which allowed the court jurisdiction and control, and the defendant had appeared since the date of the forfeiture.  He explained once the defendant had appeared, the court would have jurisdiction over the person.  He said the existing language was, “and has presented a satisfactory excuse.”  He suggested that Ms. Buckley’s point was that if one were not going to produce the defendant, what was the point of the bond.  He said Ms. Buckley was correct and the language contemplated that the defendant had been produced, the court had the defendant in front of them, and then the question was whether the defendant had an excuse for his absence, which was independent of the production of the defendant, or had the surety participated in that initial absence.  He said the purpose of the amendment was to produce the defendant. 

 

Chairman Goldwater thanked Mr. Wadhams for the clarification.  There were no further questions or testimony.  He closed the hearing on A.B. 453 and advised the Committee they had big agendas until the Committee deadline. 

Chairman Goldwater adjourned the meeting at 3:05 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Sharee Gebhardt

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman David Goldwater, Chairman

 

 

DATE: