Legislative Report

May 2008

The political picture in state government during the month of April was an interesting one. Both the House and Senate took a two week break during the month. Nevertheless, there were many legislative committee meetings dealing with various legislative measures. Several of the more interesting committee meetings dealt with insurance related issues. Hearings and work groups continued on the so-called Blues bills which were discussed in last month’s report. These very controversial bills (HBs 5282-85) now have been replaced with substitute bills crafted by Senator Tom George. There is still no agreement on the substitute bills as various stakeholders continue to weigh in on their acceptability. The other insurance related bills pertain to automobile and home owners’ insurance costs. They are reported in more detail in this report.

The Democrats were consumed with inner-party concerns. According to Gongwer News Service, “The Team of 4” (Governor Granholm, U.S. Representative Carolyn Kilpatrick, U.S. Senator Carl Levin and National Committeewoman Debbie Dingell) were attempting to craft a solution to the very perplexing problem of recognizing and seating the Michigan delegation at the Democratic Convention in August. Michigan Democrats are being penalized for violation of national party rules by moving the state’s primary up to January 15th. The national party refuses to seat the delegation or recognize the results of a flawed election. As of this writing, Michigan Democrats are proposing as a compromise to give Senator Clinton 69 delegates and Senator Obama 59 delegates. This proposal will be presented to the national Democratic Party’s Rules and Bylaws Committee at the end of the month.

House Speaker Andy Dillon has been occupied with his own battle against a recall effort mounted against him in Redford Township for his support of last year’s tax increase votes. There have been charges and counter charges regarding the methods recall petition circulators are using in obtaining signatures. Court intervention has been obtained and future court action is almost a certainty. Such a situation is an obvious distraction for one in such an important leadership position as Representative Dillon.

Some of the legislative bills which saw action during April and which may be of interest to seniors and or retirees are reported below. Please note that at the suggestion of a SERA member who contacted me via e-mail, bills are initially identified by subject matter as opposed to bill number as has been my previous practice.

Assistance in fighting foreclosure — A series of bills know as “Save the Dream” bills which offer some assistance to those facing foreclosure have been enacted into law. HBs 5443, 5446, 5448, are now Public Acts 53, 56, and 57 respectively and SBs 950, 951 and 1133 are now Public Acts 55, 54 and 58, respectively. Generally, the bills allow the Michigan State Housing Development Authority (MSHDA) to make, purchase, or participate in loans made to individual purchasers for the purchase or refinancing of newly rehabilitated, newly constructed, or existing one-to-four unit housing units. The bills would also increase the bonding ability of MSHDA until November 1, 2011 giving the agency more funds to assist in foreclosure prevention efforts. The bills also create a fund to allow MSHDA to repay borrowers for certain recapture taxes. To qualify for the MSHDA assistance, a borrower’s family income may not exceed $74,750 for eligible distressed areas or $65,000 for any other area. A number of the public acts associated with this effort are technical in nature and enable MSHDA to accomplish what is stated above.

Additional principal residence exemption — Currently a homeowner may claim one principal residence exemption from local school operating taxes. Under HB 4215 which has been signed into law and is now Public Act 96, a homeowner may claim an additional principal residence exemption for a period up to three years on property previously exempt as the owner’s principal residence if that property is not occupied, is for sale, is not leased or available for lease, and is not used for any business or commercial purpose. This new act recognizes the slow real estate market in some areas of the state and attempts to offer some relief.

Return of insurance premiums if rates are excessive or unfairly discriminatory — HB 5558 would allow a person or organization who felt harmed by an insurance company rate filing with the commissioner of the Office of Financial and Insurance Regulation for automobile and homeowners insurance to challenge such a rate filing and ask the OFIR commissioner to hold a hearing. If the OFIR commissioner disapproves the rate filing by finding that it is excessive and unfairly discriminatory, he or she could order a refund of the premiums paid by affected policy holders if the amount of the refund is substantial and exceeds the cost of making the refund. This bill has passed the House and gone to the Senate Committee on Economic Development and Regulatory Reform for consideration.

Ban on credit scoring in establishing insurance rates — HB 4412 would prohibit the use of credit scoring by insurance companies as a factor in determining rates or as a basis in refusing to insure or limiting coverage for personal insurance (homeowners and automobile insurance primarily). The bill would require insurance companies to adjust their base rate using a formula contained in the bill excluding the credit score discounts and certify to the commissioner of the Office of Financial and Insurance Regulation that such adjustments have been made. The bill has passed the House and gone to the Senate Committee on Economic Development and Regulatory Reform for consideration.

Insurance company’s duty to deal fairly — HB 4998 would provide that an insurance company providing personal injury protection benefits under an automobile insurance policy “has a duty to deal fairly and in good faith with an injured person claiming benefits and that person’s treatment providers.” Under the bill, any insurer breaching this duty would be liable for compensatory, consequential, economic, non-economic, and exemplary damages proximately caused by the breach, and for cost of litigation, including actual attorney fees. The bill has been reported out of the House Committee on Insurance and will be considered by the full House.

Geographic distribution of referendum and initiative petition signatures — Under the Michigan Constitution the people may propose, enact and reject laws through the initiative petition process and through the referendum petition process approve or reject laws passed by the legislature. Currently, there is no requirement for geographical distribution of signatures on petitions. Thus, signatures can be collected in heavily populated areas of the state and make null and void the voices of residents in less populated areas of the state. Under Senate Joint Resolution K petitions for initiatives or referendums would have to be signed by at least 100 electors, unless the legislature requires a greater number of registered electors, in at least 42 counties of the state and by at least one registered elector in each county of the state. These representational requirements would not negate the total number of signatures needed currently under the Constitution. The Resolution has been reported out of the Committee on Campaign and Election Oversight. If the Resolution passes both chambers, the question would go no the November ballot as a proposed Constitutional amendment.

Responsibility for development, approval and administration of state retiree health care plans — The status of HB 5545 remains unchanged. SERA continues to oppose this legislation and encourages our membership to contact their representatives to let them know of your opposition to this bill which would transfer responsibility for state retiree health care plans from the Civil Service Commission to the State Employees Retirement Board. Please go to the SERA website (www.mi-sera.org) for a summary of the reasons for our opposition.

Establishment of trust accounts for retiree health care pre-funding. HB 5913 establishes five trust accounts to pre-fund retiree health care costs. One of the trust funds would be for state retirees health care pre-funding. SERA is still attempting to fully understand the impact of these trust accounts on current retirees. We will continue to attend the hearings and work group meetings on this bill which remains in committee at this time. A major issue is how the trust account(s) will be funded. The bill is a work in progress.


Cost of lawsuits and settlements — The state reported that it spent $31.8 million in lawsuit judgments and settlements in 2007. Historically, the major portion of funds paid for lawsuits and settlements are for the Departments of Transportation and Corrections. Last year, approximately half of the total amount was attributed to the Department of Management and Budget. Some $15 million had to be repaid to the federal government as the result of funds, put into a health care pre-funding account during the Engler administration, being withdrawn from that account to help balance the budget in the early nineties. As the result of an audit, it was determined that $15 of the $58.2 raided from the health care pre-funding account was attributable to the cost of health care for federally funded state employees. Because the money was subsequently used not for health care costs but to balance the budget, the federal government required that it be repaid.

People in the News

Governor Jennifer Granholm had emergency surgery in late April for an intestinal blockage and spent several days in Sparrow Hospital. She is scheduled to recuperate for two weeks at home.

Sharon Bommarito has been appointed as Director of the Office of the State Employer by Governor Granholm. She succeeds Scott Bowen who is now Lottery Commissioner. Ms. Bommarito most recently was Deputy Director of the Department of Labor and Economic Growth. She served as Personnel Director for the City of Lansing and was responsible for personnel activities within former Governor Blanchard’s office.

Beverly Nettles-Nickerson, an Ingham County Circuit Judge who has been suspended from the bench with pay for almost a year, has been recommended for removal from office by the Judicial Tenure Commission for improprieties both on and off the bench. It was also recommended that she pay $128,000 for the cost of the investigation of her misdeeds and be suspended for six years should she be reelected in November. The Supreme Court will make the final decision.

David Gorcyca, Oakland County Prosecutor, is being investigated by the Michigan Attorney Grievance Commission for statements he made regarding a defendant in a criminal sexual conduct case involving an elementary school teacher. Gorcyca allegedly publicly discussed evidence which had been excluded by the court during the trial and called the defendant a “freak.”

Editor’s note: Alvin Whitfield is former President of the Lansing SERA Chapter and former Chairperson of the Michigan SERA Council and current Legislative Representative for both the Council and the Lansing Chapter. He may be contacted at 1241 Runaway Bay Drive, C-3, Lansing, Michigan 48917; phone 517/703-9666; e-mail: alwhit@worldnet.att.net.

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