You are on page 1of 8

Legislative Report

February 6, 2015

In This Issue

General Assembly Overview
Sales Tax on Services
Various Tax Matters
Unclaimed Life Insurance Benefits
Privacy: Breach of Security
HERO Plans
Dental and Optometry Service
Use of Investigational Drugs
Coverage of Prescription Eye Drops
Inmates and Medicaid
Medical Malpractice
No Pay, No Play

Contact Us
111 Monument Circle
Suite 2700
Indianapolis, IN 46204
Follow Bose Public Affairs Group on
Get timely updates on the legislative
session by following the Bose Public
Affairs Group on Twitter @BosePAG or


As the legislature began the second quarter of session this week,
many bills were moving through committees and on the House and
Senate floor. The week wrapped up on Thursday with a controversial
bill in the House, HB 1609. HB 1609 provides that the members of the
State Board of Education shall annually elect their own chairperson
from the members of the state board. Current law provides that the
Superintendent of Public Instruction serves as chair of the board.
Democrats offered several amendments to HB 1609 on second
reading, all of which were defeated. Since Superintendent Glenda
Ritz (D) was elected in 2012, the State Board of Education has
become politically-charged.
Following the second reading of HB 1609 in the House, Governor
Pence released the following statement: “For the sake of our kids,
education in Indiana must function at the highest levels. Our
administration took the first step to restore harmony in education
governance by dissolving the Center for Education and Career
Innovation, and we called on the General Assembly to give
members of the State Board of Education the opportunity to choose
their own Chair. By advancing HB 1609 on the House floor today,
members of the General Assembly took an important step toward
achieving this reform. I applaud Representative Jud McMillin for his
efforts in moving this important legislation and urge members to
support HB 1609 when it comes to the floor next week.” HB 1609 will
be up for a third reading vote in the House next week.
The House Ways & Means Committee has been meeting almost daily
and will continue to do so up to the House committee report
deadline on February 20. The Governor’s tax bill was up for a hearing
this week, HB 1349. HB 1349 is an effort to address an administration
goal of tax simplification. Although the author, Rep. Todd Huston (RFishers), presented the bill as revenue-neutral, there are tax shifts
among various sectors of the economy. One area of focus addresses
the elimination of the double direct test for the gross retail tax
exemption. The bill specifies that the exemption applies if the
tangible personal property is acquired for direct use or consumption
in the production of tangible personal property when the person
acquiring the property is occupationally engaged in the business of
producing tangible personal property. The bill also eliminates the
taxation of income that is attributed to a state that does not have an
income tax, known as the "throwback rule".
Although HB 1349 exhibits tax savings among some sectors of the

economy, there remained opposition to some of the proposals. One
such proposal adopts the sourcing of income using market based
sourcing. The bill changes the apportionment of sales of services or
intangibles from a cost of production method to a market-based
sourcing method. Since corporate income is apportioned to Indiana
based solely on a corporate taxpayer’s sales, the difference in the
method of sourcing the sales could have a significant impact on
corporate taxpayers, specifically the telecommunications and cable
industry. The bill will generally increase the tax liabilities of corporate
taxpayers that are out-of-state service providers and generally
decrease the tax liabilities for corporate taxpayers that are engaged
in service producing business in Indiana.
HB 1349 is a work in progress and will be up for committee
amendments next week in Ways & Means.
Two full weeks of committee hearings remain in the House and
Senate before committee reports must be adopted, February 20 in
the House and February 19 in the Senate. The state budget bill, HB
1001, will be heard soon in the House Ways & Means Committee.
Another bill drawing major attention, HB 1624 which deals with
Sunday sales of alcohol, will be heard on Wednesday, February 11 in
the House Public Policy Committee.
The House and Senate first-half of session deadlines are as follows:

Second reading deadline: February 24
Third reading deadline: February 25
Halftime break: February 26-27
Session reconvenes: March 2

Concluding the week in Indiana politics, President Barack Obama
made a trip to Indianapolis on Friday to participate in a town hall
discussion to highlight the benefits of Indiana’s statewide community
college system. The President’s town hall is part of a national tour to
advocate free community college for many students.

Sen. Michael Young (R-Indianapolis) has filed SB 560, which allows for
sales tax to be imposed on all transactions except for legal services,
health or mental health services. The bill also eliminates property
taxes on primary residences (homesteads) and business personal
property. The bill has been assigned to the Senate Tax & Fiscal
Committee but has yet to be scheduled for a hearing.

HB 1349, authored by Rep. Todd Huston (R-Fishers), eliminates
numerous tax credits and deductions. In particular, it eliminates
several deductions available to the insurance industry relative to
patent exemptions, disaster area expenditures, certain stock losses,
qualified refinery property, qualified film or television production and
the E-Verify program.

The bill will likely be heard again next week in House Ways and

HB 1298, authored by Rep. Jerry Torr (R-Carmel), permits the Indiana
Public Employer’s Plan (a nonprofit, self-funded Workers’
Compensation program for Indiana public entity employers) to
convert to a mutual insurance company, subject to approval by the
Indiana Department of Insurance. The bill was heard in the House
Insurance Committee on Wednesday. Some technical issues arose
during committee regarding the process for conversion.
Accordingly, the Chairman held the bill until next week.

SB 425 will require only those companies who engaged in
asymmetrical DMF searches prior to July 1, 2015, to perform DMF
searches on all in-force policies, annuity contracts and retained asset
accounts. However, if a company did not engage in asymmetrical
searches, then they only have to conduct DMF searches on policies,
annuity contracts and retained asset accounts entered into after July
1, 2015. It also removes the fuzzy match requirement.
SB 425 could be problematic because it treats companies differently
with respect to when DMF searches need to be conducted based
upon prior conduct.
The bill is scheduled to be heard on Thursday, February 19th at
9:00am, in the Senate Insurance and Financial Institutions Committee
(Room 130).

HB 1341, authored by House Insurance Chairman Matt Lehman (R),
does the following: Corrects a conflict concerning payment of
expenses of the department of insurance (department) from the
general fund. Amends the law concerning internal audits of domestic
insurer and insurer group financial statements. Requires an insurer or
insurance group to file with the commissioner of insurance an annual
corporate governance disclosure. Specifies requirements concerning
use and disclosure of information related to the annual corporate
governance disclosure.
Removes a requirement for placement of the insurance
commissioner's (commissioner) signature on approval of a proposed
insurer. Defines "designated home state license" and provides for the

licensure for certain out of state insurance producers. Specifies a
designated home state license fee. Adds certain: (1) guarantees
made by an insurer; and (2) acquisitions or investments; to the list of
transactions between a domestic insurer and another person in an
insurance holding company system that require prior notice to the
Further, it repeals and replaces a section of the public adjuster law
concerning public adjuster violations and penalties. Excludes
information related to title insurance from the law concerning
electronic posting or delivery of insurance notices and documents.
Removes a requirement that a policy insure more than four
automobiles for purposes of application of the law concerning
cancellation of automobile insurance policies. Provides for issuance
of group casualty and liability insurance in certain circumstances.
Amends the definition of "small employer" to conform to federal law.
Provides for registration renewal annually on the last day of the
month of issuance, rather than on June 30 of each year, for claim
review agents and utilization review agents. Removes an annual
reporting requirement by the police benefit fund to the department
of insurance.
The bill was heard on second reading in the House on Tuesday. An
amendment was adopted on second affecting the long term care
partnership law to provide that when an asset disregard adjustment is
being made for purposes of Medicaid eligibility, if the assets owned
by the individual's spouse are included in the individual's eligibility
determination, then the assets of the individual’s spouse need to be
included in the asset disregard determination.
As amended, the bill passed out of the House unanimously. The bill
will likely be assigned to the Senate Insurance & Financial Institutions
committee with an expected hearing date during the first or second
week of March.

Sen. Jim Merritt (R-Indianapolis) has introduced SB 413, which amends
IC 24-4.9 concerning the breach of the security of data that includes
the personal information of Indiana residents and that is collected
and maintained by a person other than a state agency or the
judicial or legislative department of state government.
In pertinent part, the bill specifies that the statute is not limited to
breaches of computerized data; requires a data user to post certain
information concerning the data user's privacy practices on the data
user's Internet web site; increases the amount of the civil penalty that
a court may impose in an action by the attorney general; sets forth
certain information that a data owner must include in a disclosure of
a security breach; and specifies the applicability of different
enforcement procedures available to the attorney general under the

From an insurance perspective, the bill does not appear to apply to
those companies already complying with numerous federal laws
governing data security. However, the proposed language has
raised a lot of questions regarding compliance. The bill is scheduled
to be heard in Senate Homeland Security and Transportation
Committee on Tuesday, February 10th at 9am.

HB 1279, authored by Rep. Matt Lehman (R-Berne), establishes a
state-assisted retirement plan for private employers and employees.
Provides that a newly created state board will oversee the plan and
the manager of the plan will be contracted out to a third party.
Employers can participate in the plan only if the employer does not
offer its employees a pension or retirement system of any kind. Sen.
Greg Walker has filed SB 555, a companion to HB 1279.
Interested parties are still continuing to work with Rep. Lehman and
Sen. Walker on creating a retirement planning portal to serve as a
connector for providers and consumers which could be hosted on
the State Treasurer’s website.

HB 1063, authored by Rep. Ron Bacon (R-Chandler), prohibits dental
and vision insurers and health maintenance organizations from
requiring dentists and optometrists to accept certain payments unless
the health care services are covered services. The bill also prohibits
dentists and optometrists from charging for noncovered services an
amount that exceeds the usual and customary charges for the
services. HB 1063 still has not received a hearing.

HB 1065, authored by Rep. Wes Culver (R-Goshen), received an initial
hearing this week in the House Public Health Committee. HB 1065
provides that a manufacturer of an investigational drug, biological
product, or device may make the drug, biological product, or
device available to a patient who meets certain requirements. The
bill also adds to the requirements concerning experimental or
nonconventional medical treatment the authority to allow a patient
to receive an experimental or nonconventional medical treatment if
a physician determines that the patient: (1) has been diagnosed with
a terminal disease or condition; and (2) does not have comparable
or satisfactory treatment options.

HB 1065 was heard again on Wednesday in the House Public Health
Committee. The bill passed unanimously out of the committee and
included an amendment which indicates that the proposed law
does not create a cause of action against a physician, pharmacist,
or hospital for the use of an investigational drug, biological product,
or device by a patient for any harm to the patient from the drug,
product or device.

HB 1451, authored by Rep. Steve Davisson (R-Salem), includes
telemedicine services within the health care consent law. The bill
provides for coverage of telemedicine services under a policy of
accident and sickness insurance and a health maintenance
organization contract. HB 1451 was heard this week in House Public
Health. After extensive testimony, the bill was held in committee last
week and has yet to surface again.

SB 26, authored by Sen. Pat Mille r (R-Indianapolis), was heard in the
Senate Health & Provider Services Committee this week where the bill
was amended and approved by the committee by a vote of 8-0. The
bill now requires that beginning January 1, 2016, certain state
employee health plans, policies of accident and sickness insurance,
and health maintenance organization contracts must cover refills
and additional units of prescription eye drops under specified
conditions. This bill came as a result of the interim committee on
public health, behavioral health, and human services.
SB 26 is estimated to increase state expenditures between $51,000
and $131,000 during CY 2016. This increase is attributable to (1)
additional expenditures between $50,000 and $80,000 for changes to
the state employee health plan and (2) additional expenditures of
$51,000 to financing state-mandated coverage for prescription eye
drops under the federal Affordable Care Act (ACA).
SB 26 passed the full Senate on third reading last week by a vote of
50-0. House Public Health Committee Chairman Rep. Ed Clere will
sponsor SB 26 in the House.

In an effort to address the cost of inmate healthcare, Sen. Pat Miller
(R-Indianapolis) has introduced SB 212. SB 212 was approved by the
Senate Corrections & Criminal Law Committee this week by a vote of
8-0. This bill makes the Department of Correction (DOC) an inmate's
authorized representative for applying for Medicaid for inmates who
are potentially eligible for Medicaid and who incur medical care
expenses that are not otherwise reimbursable. The bill requires the

DOC and the Office of the Secretary of Family and Social Services
(FSSA) to enter into an agreement in which the DOC pays the state
share of the Medicaid costs incurred for the inmate.
The bill also allows a sheriff to apply on behalf of a lawfully detained
individual for Medicaid and act as the person's Medicaid
representative if the sheriff enters into an agreement with the FSSA to
pay the state share of the Medicaid costs incurred for the person.
SB 212 remains on third reading in the Senate.

Two bills dealing with medical malpractice have been filed this year:
SB 55, authored by Sen. Brent Steele (R-Bedford), and HB 1043,
authored by Rep. Jerry Torr (R-Carmel). As introduced, each bill varies
in detail.
SB 55, as amended on second reading in the Senate on Monday,
permits a patient to bring an action against a health care provider
without submitting the complaint to the medical review board if the
amount of the claim is not more than $45,000 for claims filed before
July 1, 2020. (Under current law, a patient may bring a direct action
only if the amount is not more than $15,000). The IDOI is charged
with determining the threshold amount beginning 7/1/20 and every
five years thereafter.
HB 1043 increases the medical malpractice cap from $1,250,000 to
$1,650,000 for claims arising after June 30, 2015 and increases the
maximum amount of liability for a health care provider or a health
care provider's insurer from $250,000 to $300,000. This bill has yet to
be scheduled for a hearing.

HB 1192, authored by Rep. Kevin Mahan (R-Hartford City), provides
that an uninsured motorist is not entitled to collect non-economic
damages when involved in a motor vehicle accident. The bill was
heard again on Wednesday in the House Insurance Committee. The
Chairman decided to hold the bill again since the author was
unavailable to attend the hearing.

Sen. Carlin Yoder has filed SB 347, which requires TNC’s (e.g., Uber) to
obtain a permit issued by INDOT in order to operate in Indiana. The
bill establishes numerous requirements necessary for a TNC to obtain
a permit, including insurance requirements. The bill passed out of
committee this week and is scheduled for third reading in the Senate
on Monday.
Rep. Matt Lehman’s competing bill, HB 1278, limits its application to
specific insurance requirements for TNC’s and TNC drivers. The bill
passed the House floor unanimously on Tuesday.

Legislators, TNC’s and the insurance industry continue to work toward
a compromise on the phase 1 coverage issues.

For more information
Trent Hahn
Telephone: 317/684-5400
Fax: 317/684-5432