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Under the Dome

Capitol Update, July 1 thru August 7, 2009

Cynthia Ann Paul

Campaign Finance Legislation- The House Ethics and Elections Committee Took Testimony on  HB 4284 (which amends the Michigan Campaign Finance Act to allow public employees to voluntarily do payroll deductions for donations to their Union PACs)  and  HB 4245 (which eliminates the annual authorization requirement for a political action committee check-off for payroll deductions).  HB 4997 also permits the payroll deductions for union PACs and the annual authorization requirement, but also encompasses the following common sense changes to Michigan’s Campaign Finance Act:
• Requiring any campaign finance violation involving the attorney general, or a committee with which the attorney general is connected with, to be referred to the Ingham County prosecuting attorney by the state director of elections.
• Requiring names and addresses of people to be recorded by campaigns only for contributions of $20 or more.
• Bundling reporting of contributions into cumulative categories of those contributing $20 or more and those contributing $20 or less.
• Eliminating odd-year filings of independent and political committees and eliminating the annual filing for caucus committees, instead putting them on an even-year schedule as well.
• Prohibiting a candidate committee from paying a candidate’s wages or salary.
• Changing the disclosure of radio or television advertisement from “authorized by (name of candidate or committee of candidate)” to “I am (candidate) and I approve this message.”
• Regulating rob calls.

Dillon’s Healthcare Plan- Speaker Dillon proposed a plan to lump all public sector workers into a health care plan.  This proposal is disastrous and could take away the collective bargaining rights with respect to health care for public sector employees.  The rough components include:
1. The governor would appoint a director that would design and implement a plan for the uniform public sector health care program. 
2. The benefits would be similar to those available to private sector workers and consistent with what other public sector employees in other states receive, subject to a means testing on income.
3. An estimated $100-$200 million would be saved by using economies of scale, but the plan also envisions leveraging the size of the worker pool to explore ways to provide holistic treatment with the medical community instead of the current fee-for-service system.
4. Other savings would be found by eliminating the need for all levels of government to individually negotiate and administer a health care program.
5. The plan would also include some way of ensuring the health care received conforms to best medical practices.

Please let me know if you want a copy of the more detailed memo on his plan.

Granholm Orders Contractor Cuts- In another budget cutting move yet this year, Governor Jennifer Granholm  issued an executive directive (2009-3) to reduce state contract spending by 5 percent to 10 percent.  Executive Directive 2009-3 also establishes a moratorium on new or expanded personal services contracts and limits the use of temporary employees.  It also orders the Office of State Employer and Department of Management and Budget to regularly monitor hiring practices.

State Deficit Growing- A new memo from the Senate Fiscal Agency shows budget deficits continuing to grow, with a total current year general fund and School Aid Fund deficit of $1.41 billion, and a total 2009-10 general fund and School Aid Fund deficit of $2.71 billion.

Committee on Govt. Efficiency Sets Hearings- The Legislative Commission on Government Efficiency is seeking public comment at a series of hearings across the state-  Marquette on Monday (8/3), Thursday (8/6) in Grand Rapids and Friday (8/7) in Detroit. The panel also will hold a hearing in Lansing on Wednesday 8/ 12.

CA Prisoners and Gitmo Prisoners May Come Here- California officials are reportedly getting close to a deal that could house some of that state’s inmates there, and now the Obama administration is reportedly looking at the site to hold prisoners from the soon-to-close naval prison at Guantanamo Bay, Cuba. Various sources indicated Monday that the Standish facility was on a short list with the military prison at Fort Leavenworth, Kansas, to hold those being detained as possible terror suspects.  Hearings on this issue are happening before the Corrections Subcommittee of the House Judiciary Committee.

Department of Corrections Releases 45 Sex Offenders- The Department of Corrections accidentally released some 45 sex offenders who should not have been designated as ready for parole. The inmates were apparently free for as long as four days before the error was discovered and they were returned to prison.  All had apparently been miscoded after interviews with psychologists.

State Settlement on Sex Abuse Case- The state has agreed to a settlement of $100 million to settle and close a lawsuit brought by 500 female prisoners alleging sexual abuse by correction officers. The settlement was reached in Washtenaw Circuit Court and came after the state has lost several cases where female prisoners accused male correction officers of sexual abuse. According to reports, the settlement will be paid to the 500 women over five years in six settlement payments.  The settlement was reached rather than try all 500 cases. The state has already been ordered to pay some $24 million to 18 women prisoners as the result of two separate cases.

Granholm Signs Mortgage Protection Package- Four bills stepping up protections for those with home mortgages by changing regulations for loan officers were signed by the Governor.  The bills signed bring the state standards in line with federal guidelines, contributing to the creation of a national registration system for officers. The new laws (SB 462, PA 75; SB 463, PA 76; SB 464, PA 77; and SB 465, PA 78) add the federal requirements, such as background checks and pre-licensing tests, to the existing Michigan law for individuals who offer or negotiate terms for mortgages, and make similar changes to laws on mortgage and financial services.

Wrongful Denial Legislation Taken up in House Insurance Committee- House Democrats are moving a package of bills penalizing insurance companies for wrongfully denying consumer claims while at the same time providing whistleblower protection for those industry employees who come forward with information.  The legislation also requires insurance companies to deal fairly when it comes to auto, property and casualty insurance claims, the bills also mandate companies help repair a customer’s credit rating if it was lowered because of insurance-related claims. Citizens would also be allowed to bring civil lawsuits against an insurer under the package.   The bills provide as follows:
1. HB 4244- Requires an insurance company to pay reasonable attorney fees in successful first-party actions. If the insurer failed to pay benefits in bad faith then the consumer could receive $10,000 or three times the amount of benefits owed.
2. HB 5150- Allows a consumer to bring a private cause of action against an insurer if they violate the law.
3. HB 5156- Says that in those cases, if an insurer is found to have failed to pay benefits in a timely manner or conducted business in a prohibited way then there is an assumption the insurer was acting in bad faith and would have to therefore disprove they were acting in bad faith.
4. HB 4846- Doubles the penalties for engaging in unfair or deceptive acts.
5. HB 5145- Would impose a $1 million administrative fine on second or subsequent violations by insurance companies for not dealing in good faith or fairly.
6. HB 4844 and HB 5020- Require auto insurance and property and casualty companies to deal fairly and in good faith to settle claims.
7. HB 5144- Opens up the Whistleblowers’ Protection Act to insurance company employees to report unfair or deceptive practices.
8. HB 5149- Creates a Whistleblower Protection Fund for the Office of Financial and Insurance Regulation that would reward insurance company employees who come forward with information. The fund would be financed through the $1 million administrative fine on violations of the law.
9. HB 5147 and HB 5148- Make it a felony for an insurance company chief executive officer to create and foster a business environment that leads to the wrongful denial of claims in a systematic way. The felony would be punishable by four years in jail, a fine of $50,000, or both.
10. HB 5151- Requires an insurance company found to be acting in bad faith to send information to the three major credit reporting agencies in order to restore a customer’s credit report.

House Judiciary Passes Identity Theft Package- A series of bills that would increase protections against identify theft and add stricter punishments for those convicted of perpetrating the crime.  (HB 4730, HB 4731, HB 4732, HB 4733, HB 4734, HB 4735, HB 4736, HB 4737, HB 4738, HB 4325 and HB 4326) .

Senate Panel Approves Pregnancy Discrimination Bill (HB 4327)- Employers could not consider pregnancy, or any related medical treatments, in making hiring or advancement decisions under legislation approved Wednesday by the Senate Commerce and Tourism Committee. It essentially adds pregnancy to one of the protected conditions under the Elliott-Larsen Civil Rights Act.  Employers could compare only non-pregnancy-related abilities and disabilities when comparing employees. But the bill as reported expressly excludes elective abortion as a condition related to pregnancy. 

Senate Education Moves Algebra II Bill (SB 698)-Under the bill, if a high school student completes an approved career and technical course with embedded mathematics skills then that will meet the algebra II requirements the state now has for a student to graduate high school.

Unemployment Rate Jumps to 15.2-Michigan’s unemployment rate spiked in June to a 26-year high to the seasonally adjusted rate for the month hit 15.2 percent.  A year ago, in June 2008, the state’s unemployment rate stood at 8.1 percent.  The rate was up 1.1 percentage points from May’s rate of 14.1 percent.  The seasonally adjusted national unemployment rate for June stood at 9.5 percent.

Unemployment Lines Running 24-Hours, Six Days Per Week- Unemployed workers can now apply for benefits essentially 24 hours a day under the state’s automated telephone system. The Unemployment Insurance Agency system will run 24 hours a day, six days a week, from Monday through Saturday. Currently, the phone system runs from 7 a.m. to 7 p.m., Monday through Saturday. While the automated system will run for 24 hours, individuals needing assistance from Unemployment Insurance Agency representatives will find them available only from 8 a.m. to 6 p.m., Monday through Friday, and must still follow the filing schedule based on the last two digits of the caller’s Social Security number.

Minimum Wage Increase for Youth-Michigan’s sub-minimum wage, now at $6.55 per hour, increased to $7.25 on July 24 because it is linked to the federal Minimum Wage.  The wage applies to persons under age 18 and must be at least as high as the federal minimum wage. Michigan’s minimum wage, which was increased last year, is $7.40.

Granholm Issues Directive to Cut Greenhouse Gases (2009-4)-Governor Jennifer Granholm issued a directive implementing a series of recommendations to reduce overall greenhouse gas emissions in the state by 20 percent by 2020 and by 80 percent by 2050.  This directive implements the recommendations of the Michigan Climate Action Council. 

E.O. Moving Disability Council- Ms. Granholm issued EO 2009-40 moving Michigan’s Disability Concerns Commission to the Department of Energy, Labor and Economic Development.  Under the order, the commission, which was created by a 1978 statute, is moved from the Department of Human Services to DELEG. The order also changes its name from the Commission on Disability Concerns to the DCC and creates a 13-member board for the group.

Michigan Democratic Party Chair Announces Potential Ballot Proposals-  That include more income, health care coverage, more unemployment benefits, lower utility bills, a respite from foreclosure, or some or all of those, under potential ballot proposals announced  by Michigan Democratic Party Chair Mark Brewer.

House GOP Budget Proposal- House Republicans outlined their proposal to balance the 2009-10 budget that would result in some $1.4 billion in cuts and savings.  In sum, the proposal calls for $878 million in general fund cuts, $180 million in reduced earned income tax credits, and another $302 million through annualizing the savings implemented in May with the executive order cuts on the 2008-09 fiscal year.  The proposal would delay expanded tax credits to the low-income under the earned income tax credit.  It would allow the state to institute reforms that could help generate business development as well as use some $700 million in federal stimulus money to help generate economic growth. Most of that money would go for state and local road projects.  Some $200 million that would be used for state highway projects would be able to leverage as much $1 billion in federal money for highway and bridge projects.  Another $200 million would go to local governments for their road projects.  Among the largest individual cuts the Republicans call for in their proposal is $150 million in reductions to non-Medicaid mental health services and substance abuse services.   The proposal also calls for $90 million in Medicaid savings by implementing Attorney General Mike Cox’s plan for a Medicaid fraud inspector general. By setting a limit of four years on welfare for able-bodied and work-ready adults, and making that provision retroactive, the state could save $51 million. The proposal also calls for freezing the number of state workers and instituting a strict ban on out-of-state travel by state workers. The proposal also calls adjustments to the statute that requires binding arbitration between local governments and police officers and fire fighters.  It also calls for eliminating requirements that school districts pay prevailing wage on construction projects.  The proposal also calls for the state to have one standard on inspections, which should help businesses minimize costs on state inspections.

DEQ Director Chester May Go to the EPA- DEQ Director Steven Chester is on a short list of candidates to head the U.S. Environmental Protection Agency’s Region V office in Chicago.

Important Court Cases-

Worker’s Comp. Attorney Fees, Good Decision- In a 4-3 decision, the Supreme Court ruled employers and their insurance companies, but not the injured employee, are liable for any attorney fees awarded in a worker’s compensation case.  The case, (Petersen v. Magna Corporation, SC Docket Nos. 136542 and 136543), encompassed the question of what parties had to pay attorney fees equal to 30 percent of the $153,448 in unpaid medical bills by the injured worker, Rick Petersen. The narrow majority affirmed the Court of Appeals and the Worker's Compensation Appellate Commission. Chief Justice Marilyn Kelly, joined by Justice Michael Cavanagh, found that regarding proration of attorney fees, the term in the Worker's Compensation law only applies to employers and their insurance companies.  “As applied to ‘prorate,’ ‘may’ indicates that magistrates have discretion in determining whether to award attorney fees. Hence, magistrates are allowed to award attorney fees, but they are not required to do so,” she wrote. “If employers and their insurance carriers are not held accountable for a prorated share of attorney fees, they will have an incentive to deny medical benefits. Likewise, if injured workers were forced to pay a prorated portion of their own attorney fees, their ultimate recovery could be reduced below their actual costs of securing medical treatment. Such a result would violate the remedial goal of the WDCA.” Justice Diane Hathaway concurred, but wrote separately, saying, she did not find the section of the law to be ambiguous but that it just applies to employers and their insurance companies.  Justice Elizabeth Weaver signed Ms. Hathaway's opinion.  But Justice Maura Corrigan, Justice Stephen Markman and Justice Robert Young Jr. all dissented.

Temporary Prisoners Owed Civil Rights- While some prisoners are not permitted to sue under the Civil Rights Act, because they are not receiving a public service while incarcerated, the law allows exceptions for people in jail to sue, for example, for pre-trial detainees, the Court of Appeals said in a published opinion. In Hamed v. Wayne County, (COA, docket No. 278017). Tara Hamed sued the county and one of its guards for sexual harassment she experienced while in jail awaiting transfer to a drug program. The county and lower court contended that Ms. Hamed was unable to sue under the Civil Rights Act because she was an “individual serving a sentence of imprisonment,” but appellate judges overturned the ruling, saying that Ms. Hamed fell within an exception and in fact was deprived of a public service by the sexual harassment. Judges said that Ms. Hamed’s failure to pay child support was a contempt charge, which even if the punishment for which could be construed as a sentence of imprisonment, wasn’t set to start until seven days after the sexual assault took place.