Category(s): Arizona - 03/17/2020

The Arizona Director of Insurance, Keith Schraad, has resigned effective February 13, 2020 and will be pursuing a position in the private sector.   He will be replaced by Christina Corieri, the Governor’s Senior Policy Advisor who will serve as Interim Director of the Department.   The Governor’s Office has indicated that it will be undertaking a national search for Director Schraad’s replacement.

S. David Childers, Esq.

Category(s): Florida - 03/17/2020

In December 2019, the Florida Department of Health took a significant step forward in the regulation of Medical Marijuana Treatment Centers (MMTCs) by issuing notices of proposed rules and rule development for a variety of long-awaited regulations. Emergency rules were also noticed for MMTC Renewal Applications and Background Screening. Emergency rules may be adopted if an agency finds there is an immediate danger to the public health, safety, or welfare, and are effective for 90 days while an agency undertakes the rulemaking process. The full GT alert can be found here.

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

Category(s): Florida - 03/17/2020

On February 4, 2020, the Florida Hurricane Catastrophe Fund issued their 2020 Annual Report of Aggregate Net Probable Maximum Losses, Financing Options, and Potential Assessments. Section 627.35191, Florida Statues, enacted in 2013, requires the Florida Hurricane Catastrophe Fund to provide a report for the upcoming contract year to the Legislature and the Financial Services Commission regarding the aggregate net probable maximum losses, financing options, and potential assessments of the FHCF. Please click here to view the report.

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

Category(s): Florida - 03/17/2020

On January 23, 2020, the Florida Office of Insurance Regulation issued a bulletin regarding an Order issued on January 22, 2020 stating that, as of April 1, 2020, surplus lines policies issued or renewed prior to July 1, 2015 and all related transactions reported to FSLSO will not have the CPIC assessment charged or credited. The last day to report surplus lines policy data through the FSLSO system where the CPIC assessment will be charged or credited is March 31, 2020.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530

Category(s): Georgia - 03/19/2020

On January 9, 2020, Georgia Insurance Commissioner John F. King (the “Commissioner”) issued Directive 20-EX-1 (the “Directive”) summarizing O.C.G.A. §33-64-11(a) which imposes certain restrictions upon Pharmacy Benefit Managers.  Specifically, as set forth in the Directive, Pharmacy Benefit Managers are proscribed from certain practices, including but not limited to:
Prohibiting a pharmacist, pharmacy or other dispenser from providing information to an insured individual cost share of an individual drug and the effectiveness of a more affordable alternative drug;
Prohibiting a pharmacy or pharmacist or other dispenser from offering and providing direct store delivery;
Charging or collecting from an insured a copayment that exceeds the total submitted charges by the network pharmacy;
Charging or holding a pharmacist; pharmacy or other dispenser responsible for a fee or penalty relating to the adjudication of a claim or audit under O.C.G.A. 26-4-118 (the “Pharmacy Audit Bill of Rights”) or penalizing a pharmacist or pharmacy for exercising its rights under the provisions of the Pharmacy Audit Bill of Rights).
Ordering and insured for the filling of a prescription to an affiliated pharmacy or offering or implementing prescription benefit plan designs that require patients to utilize an affiliated pharmacy.
Transferring or sharing records relative to prescription information containing patient identifiable and prescriber identifiable data to an affiliated pharmacy for any commercial purpose.
The Directive reminds pharmacy benefit managers that violations of O.C.G.A. §33-64-11(a) may result in the Commissioner placing any pharmacy benefit manager on probation for a period of time not to exceed one (1) year and a fine of up to $1,000 for each and every violation of  O.C.G.A. §33-64-11(a)?; provided that the Commissioner may impose a fine of up to $5,000 for each and every violation of O.C.G.A.§33-64-11(a) that the pharmacy benefit manager knew or should have known was a violation.

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

Category(s): Georgia - 03/17/2020

On January 17, 2020 the Georgia Court of Appeals ruled that a request to increase standard automobile liability insurance coverage limits did not constitute the issuance of a new insurance policy and that the insurer was not required to obtain a new rejection of uninsured motorist coverage at the time of the insured’s request for increased standard automobile liability insurance limits. 
The insureds under a Progressive Mountain Insurance Company (“Progressive”) had purchased automobile insurance from Progressive beginning in 2010.  The automobile insurance policy had renewed every six months through 2015.  In 2012, the insured had increased its automobile liability insurance coverage, but Progressive did not obtain a new rejection of the statutory minimum UM Insurance Coverage.  The insured was involved in an automobile accident in 2015 and claimed that Progressive should have offered the insured the statutory minimum UM limits at the time of the insured’s 2012 increase to the automobile liability insurance policy standard limits which would have resulted in additional UM insurance coverage available to the insured at the time of the 2015 accident.  
The Georgia Court of Appeals ruled that Progressive did not have a statutory duty to obtain a new rejection of the statutory minimum UM coverage based on the September 2012 change in standard automotive coverage, and that Progressive also did not have a statutory duty to reoffer the Hunters the statutory minimum UM coverage at that time.  The Court reasoned that a change in the existing policy during the course of one of the policy’s periods had no impact on the insureds’ UM coverage and was not sufficient to trigger the duty to offer the statutory minimum coverage in OCGA § 33-7-11 (a) (1) or to reobtain a rejection of that coverage under OCGA § 33-7-11 (a) (3).

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

Category(s): Minnesota - 03/17/2020

The Minnesota Department of Revenue recently published Revenue Notice 20-01 to clarify how surplus lines brokers can calculate the fee revenue to be included as taxable gross premium, addressing a statutory ambiguity that has existed since 2010. 
In 2010, Minnesota law was amended to include broker fee revenue within the definition of surplus lines gross premium for purposes of calculating surplus lines tax. See, Minn. Stat. 297I.05. The amendment was Revenue's attempt to capture broker fee revenue earned for placing surplus lines business placed net of commission. Determining what portion of a broker placement fee was compensation for surplus lines policies sold net versus compensation for unrelated activities tends to be highly subjective and has resulted in protracted and difficult audits.
Revenue Notice 20-01 sets forth three ways that a broker can report the portion of its fee as "gross premium": A broker that uses one of these methods will comply with Minnesota's surplus lines tax law, thereby providing a measure of certainty in how to report fee income as taxable gross premium in a manner that should be consistent among brokers. 
https://www.stinson.com/newsroom-publications-Minnesota-Revenue-Department-Issues-Notice-on-Surplus-Lines-Insurance-Taxation

Peter H. Thrane, Esq. - Stinson LLP, (612) 335-1779 , pete.thrane@stinson.com

Category(s): New York - 03/17/2020

Governor Andrew M. Cuomo announced legislation in the FY 2021 Executive Budget to protect elder New Yorkers from financial exploitation. This proposal will strengthen banks' ability to place a hold on the bank account of a vulnerable adult if there is sufficient reason to believe that the adult is a victim of actual or attempted financial exploitation by creating parameters for the holds, providing financial institutions and employees with immunity from civil liability for holding transactions, and requiring reporting of the hold to the Office of Children and Family Services. DFS will also create a new certification program for banking institutions to bolster training and education in financial exploitation.

While current law permits a financial institution to place a hold on a bank account for suspected financial exploitation of a vulnerable person, banks, fearing potential civil liability if they institute such a hold, have hesitated to act on such a suspicion. This proposal would create parameters for the holds and provide financial institutions and employees with immunity from civil liability for holding transactions and reporting when there is a reasonable suspicion of elder financial abuse. Banks will be able to more effectively deploy a transaction hold on the account of an elder adult when there is sufficient reason to suspect financial exploitation and a transaction hold appears necessary for asset protection. During the course of the transaction hold, the account holder will have access to account funds to meet ongoing housing, living, and emergency expenses.

Governor Cuomo has made it a top priority to deter unlawful actions against New Yorkers and put an end to senior financial abuse.

Frederick J. Pomerantz, Esq. - INSURANCE LEGAL & REGULATORY CONSULTING, PLLC, (516) 297-3101 , PomerantzF35@gmail.com

Category(s): New York - 03/19/2020

DFS Superintendent Linda A. Lacewell announced on December 23, 2019 that the New York State Department of Financial Services (DFS) is directing New York-regulated depository and non-depository institutions, insurers and pension funds to submit their plans for managing the risks relating to the likely discontinuation of the London Interbank Offered Rate (LIBOR) at the end of 2021.

LIBOR is widely used to price a vast number of loans, derivatives and securities transactions.  According to estimates, the value of all financial products linked to U.S. dollar LIBOR is approximately $200 trillion, including $3.4 trillion of business loans, $1.3 trillion of consumer loans (held by about four million retail consumers) and $1.2 trillion of residential mortgage loans. The remaining 95% of exposures are in derivative contracts, notably interest rate swaps.

With this letter, the Department is taking action to ensure that regulated institutions’ boards of directors, or the equivalent governing authorities, and senior management fully understand and have assessed the risks associated with the potential cessation of LIBOR, have developed an appropriate plan to manage them, and have initiated actions to facilitate transition to alternative reference rates.

DFS is requiring its regulated depository and non-depository institutions, insurers, and pension funds to submit to the Department their plans to address their LIBOR transition risk management plan by February 7, 2020.

Frederick J. Pomerantz, Esq. - INSURANCE LEGAL & REGULATORY CONSULTING, PLLC, (516) 297-3101 , PomerantzF35@gmail.com

Category(s): Wisconsin - 03/17/2020

As described in our article, the Wisconsin corporate governance annual disclosure (CGAD) regulations should be in place so that the first CGAD report is due June 1, 2020. And as noted in our report, the chief legal counsel at the Wisconsin Office of the Commissioner of Insurance (OCI) said that the Commissioner sees corporate governance as important to sound operation, so he hopes the disclosure is taken seriously, and the first disclosure should be done right, as only updates are required after that. The disclosures are given OCI's highest level of confidentiality.

William J. Toman, Esq. - QUARLES & BRADY LLP, (608) 283-2434 , william.toman@quarles.com