All bills passed by the Legislature and sent to the Governor for her signature during the 2018 session.
SF 2169 – Alcoholic beverages licensee liability
SF 2177 – CRA security freezes
SF 2257 – Marketplace contractors
SF 2262 – Final-stage motor vehicle manufacturers
SF 2311 – Public utilities regulation
SF 2316 – Domestic stock insurers; insurance transactions VETOED
SF 2349 – MEWAs; Health benefit plans
HF 2171 – Electronic ‘stop payment’ option
HF 2175 – Mezzanine loans in life insurance legal reserve
HF 2234 – Foreclosure timeline; judgment on rent claims
HF 2236 – Insurance Division ‘service of process’ clean-up
HF 2237 – Insurance Division Code clean-up
HF 2238 – Insurers as victims of fraud
HF 2239 – Insurance Division regulated industries clean-up
HF 2286 – ‘Time of Sale’ real estate ordinances
HF 2305 – Telemedicine health insurance coverage
HF 2307 – Process for certain utility sales
HF 2382 – Engineering, Land Surveying Examination Board
HF 2446 – IUB omnibus
HF 2458 – Future Ready Iowa
SF 2169 limits the liability of an alcoholic beverage license or permit holder for certain alcohol-related injuries, commonly known as Dram Shop. Currently, the holder, regardless of whether the license or permit was issued by the Iowa Alcoholic Beverages Division (ABD) or by the licensing authority of any other state, is liable for all damages caused by an intoxicated person if the holder served alcohol to them when the holder knew or should have known the person was intoxicated, or who sold to and served the person to a point where the holder knew or should have known the person would become intoxicated. Under the bill, damages are available to an innocent third party, and a license or permit holder is liable only if the establishment sold and served beer, wine or intoxicating liquor directly to the intoxicated person, provided the person was visibly intoxicated at the time of sale or service.
As passed by the Legislature, the bill also:
- Adds a cap of $250,000 in a civil action for each plaintiff, unless a jury determines that there is a substantial or permanent loss or impairment of a bodily function, substantial disfigurement or death, and such limitation would deprive the plaintiff of just compensation for injuries sustained.
- Directs *ABD to conduct a study every two years on minimum coverage requirements, including a comparison of Dram Shop requirements in other states, other relevant issues, and ABD findings and recommendations. The first report to the Legislature is due January 31, 2019.
NOTE: HF 2502 – Standings, Division VIII – Dram Shop: Implements changes requested by LSA on ambiguity of the cap on non-economic damages, so as not to be perceived to be the cap on all recoverable damages. It also states that the liability insurance evaluation will be done by the Insurance Division, not by ABD.
SF 2177 eliminates fees to place, temporarily lift or remove a credit freeze, and creates communication methods other than certified mail that credit reporting agencies (CRAs) must accept, including first-class mail, telephone and secure electronic methods. The legislation also shortens the time from five to three days for the CRA to put the freeze in place, and requires the CRA to provide the customer with contact information for the other CRAs (e.g., Equifax, Experian and TransUnion). The Iowa Attorney General strongly supports the proposal, which is similar to legislation in many other states. Provisions to expedite and process security freeze requests must be in place by January 1, 2019. Other provisions would take effect July 1.
SF 2257 defines a marketplace contractor as an independent contractor who enters into a written agreement with a marketplace platform (e.g., online booking) to use its digital network to connect with those who want to hire a contractor for services, such as home repairs. The most notable is Handy Technologies, a company that offers a variety of services, including residential cleaning, handyman repair, furniture assembly, and plumbing and electrical work. It exempts real estate brokers and real estate agents, as well as delivery service providers (e.g., UPS, FedEx) who only transport sealed boxes, parcels, freight and envelopes for a fee. When providing services that require an Iowa license, the marketplace contractor must obtain the license and make it available to customers.
SF 2262 allows a final-stage motor vehicle manufacturer to be licensed as a motor vehicle dealer of incomplete motor vehicles only, if it manufactures multi-stage manufactured vehicles. This streamlines the sales process for dealers of special manufactured equipment, such as service trucks, cranes, concrete pumpers, garbage trucks, and other construction and municipal vehicles.
SF 2311 significantly deregulates gas and electric public utilities in Iowa. It removes or restricts oversight by the Iowa Utilities Board (IUB) on a wide range of issues, including energy efficiency, rate increases, coal plant emissions controls and consumer protections. It requires the IUB to review energy efficiency plan modification requests within 60 days of filing; issue orders approving or rejecting regulated emissions management projects within 90 days of filing; review any tariffs or rates imposed by rate-regulated public utilities within 30 days of filing; and specify in advance the ratemaking principles that will apply whenever a rate-regulated public utility requests advanced ratemaking for construction, investment or implementation of an emerging energy technology. It also authorizes the IUB to initiate a formal proceeding if reasonable grounds exist for investigating a public utility’s request to modify an energy efficiency plan to achieve projected annual costs below a two-percent threshold. To perform the duties associated with the legislation, including the shorter time frame for existing duties under current law, the IUB would need to hire two additional technical staff, at a cost of $228,924 annually.
The bill exempts electric cooperative corporations and electric public utilities with fewer than 10,000 customers from regulated rates. It also prohibits the IUB from requiring gas and electric public utilities to adopt energy efficiency plans that result in projected annual costs in excess of two percent of the utility’s annual rate revenue.
The energy efficiency caps will result in fewer programs offered, such as popular rebate programs to install efficient commercial lighting or replace inefficient commercial heating and cooling systems, fewer measures in programs, or fewer incentives available for measures and programs, or a combination of all of these. Caps could also result in cancellation of incentives or programs mid-year and create significant uncertainty about the availability of rebates for efficient equipment, such as a new HVAC system (residential or commercial). Making efficiency programs lower quality and less workable will mean lower participation and higher energy costs for consumers and businesses.
The bill takes solar price discrimination oversight of municipal utilities away from the IUB and makes other kinds of discrimination legal. While there is a section in the code that prohibits municipal utilities from discriminating against solar by charging higher rates, there are no parameters defined or bases to challenge a municipal utility for discriminating against a person who wants to install solar as it relates to time to respond or inter-connection fees for solar customers to connect with the utility. The only recourse for the solar customer is to challenge the action of the municipal utility in court.
Iowa has some of the lowest energy rates in the Midwest and the country, while developing one of the strongest clean energy economies. Energy efficiency and rebate programs have saved Iowa consumers billions of dollars, avoided the need to build costly new power plants, attracted businesses looking for low electric rates and created thousands of Iowa jobs. This bill undermines many of the policies that have led to Iowa’s cost-effective clean energy leadership. For example, it separates energy efficiency and demand-response programs. The Iowa Consumer Advocate (Utilities) has expressed concerns about many facets of the proposal, and Iowa families and businesses will likely see substantial utility rate increases.
SF 2316 applies to transactions by domestic stock insurers, small employer group health insurers, and universal life insurance. The bill allows them to divide into two or more insurers, and provides a process for regulatory approval for such actions. The insurer must file its plan with the Iowa Insurance Division and meet various requirements. The Division will determine whether to approve the plan. The proposal is modeled after Connecticut law, and does not apply to mutual insurance companies.
As passed by the Legislature, the bill:
Prohibits requiring a W-2 and tax statement for employee eligibility, and sole proprietors, partnerships and independent contractors are not required to have a W-2 to receive a medical plan as a small employer.Requires a written notice to a policyholder at least 30 calendar days prior to termination of a universal life insurance policy, in an envelope that indicates it contains important information.VETOED
SF 2349 relates to association health plans, a type of multiple employer welfare arrangement (MEWA). The arrangement is established by a trade, industry or professional association of employers that has a constitution or by-laws, is organized and maintained in good faith with membership stability. In the 1980s, there were significant problems with MEWAs across the country. Many were not properly capitalized and failed, leaving people with millions of dollars in unpaid health care claims. As a result, Congress gave states authority to regulate MEWAs. Under current Iowa law, no new MEWAs can be created. The only ones that exist are run by the Iowa Bankers Association and the Iowa Petroleum Marketers. The U.S. Department of Labor is in a lengthy rule-making and public-comment period on a proposal to modify MEWAs. The bill loosens Iowa law and directs the Iowa Insurance Commissioner to promulgate rules for association health plans consistent with U.S. Department of Labor regulations. Some believe that, while MEWA options are promising for Iowa, it would be prudent to wait until federal rules and guidelines are complete.
NOTE: HF 2502 – Standings, Division XII – Multiple Employer Welfare Arrangements: Requires those forming a MEWA to be a non-profit entity; repeals the emergency rulemaking authority; exempts MEWAs in Iowa from having to comply with Department of Labor changes; and states that a MEWA registered before January 1, 2018, (applicable to the Iowa Bankers Association and the Iowa Petroleum Marketers) is not considered a MEWA unless all members elect to be treated as such (May 5, 2018). – ITEM VETO
The House passed the bill 69-30 with an amendment that incorporates SF 2329, relating to health benefit plans, which passed the Senate 40-9 and was on the House Unfinished Business Calendar. The amendment allows certain agricultural organizations to offer their members “health benefit plans” and requires any plan be provided through a self-funded arrangement and administered by a domestic third-party administrator that holds a certificate of registration from the Iowa Insurance Commissioner. This allows those who do not qualify for a health insurance subsidy to join the Iowa Farm Bureau and, as a benefit of membership, buy health coverage plans that are not ACA-compliant. The third-party administrator must have provided more than 10 consecutive years of previous health care administrative services for the agricultural organization, which limits this to health plans provided through Wellmark Blue Cross and Blue Shield. The plans “shall be deemed to not be insurance” and so are not subject to state and federal insurance regulations. One concern is that Farm Bureau and Wellmark could cherry-pick younger, healthier customers, leaving less healthy and older Iowans in the individual market, where Medica is the only provider in Iowa. This could further increase Medica premiums and further destabilize Iowa’s individual health insurance market.
HF 2171 allows a person to electronically stop payment on a check. In Iowa, a customer’s “stop payment” order is effective for six months, but lapses if the original order is verbal and not confirmed in writing within 14 days. The stop payment can also be renewed for another six months if the bank receives written notice that the order is effective. Email is a dorm of written notice. The bill was supported by the Iowa Bankers Association, Iowa Credit Union League and Community Bankers of Iowa.
HF 2175 modifies the maximum value of a life insurance company’s or life insurance association’s investments in CM3 classified mezzanine loans as a percentage of its legal reserve. Iowa law allows companies to invest up to 3 percent of their legal reserve in mezzanine loans. Currently, no more than 2 percent can be invested in CM3 loans, requiring companies to invest in riskier CM4 mezzanine loans. The bill increases the cap on CM3 loans from 2 percent to 3 percent.
HF 2234 shortens the timeframe for residential foreclosures. The federal Dodd-Frank Act added a 120-day waiting period before a financial institution can start a foreclosure proceeding. Taking that into account, this proposal shortens Iowa’s foreclosure waiting periods (12 months to six months, and six months to three months.) The three-month waiting period applies to foreclosures in which the financial institution agrees to forgive the debt, which is the situation in most Iowa foreclosures. The six-month waiting period applies to the few foreclosure cases in which the financial institution does not waive the debt. The three-month and six-month wait times do not begin until the 120-day Dodd-Frank waiting period has expired. Even with this legislation, Iowa will continue to have one of the longer foreclosure timeframes in the country.
As passed by the Legislature, the bill removes the five-year limit on claims for executing judgments for rent, leaving the limit on judgements of record at 20 years. If the judgement comes from a court not of record, the statute of limitations is 10 years. A landlord could bring a claim for rent within five years and would have 20 years to collect the judgment if the court that decided the case was a district court. A landlord could bring a claim for rent within five years and would have 10 years to collect the judgement if the court was a small-claims court. The statutory limit of two years for claims transferred to a third party remains.
HF 2236 provides greater clarity and consistency in the “service of process” provisions under the Iowa Insurance Division’s regulatory authority. The changes were made following the Division’s five-year review of its administrative rules. Supporters include the Iowa State Bar Association, the Federation of Iowa Insurers and the Independent Insurance Agents of Iowa.
HF 2237 is a recommendation by the Iowa Insurance Division that eliminates the words “or long-term care” from Iowa code section 507B.4 to be consistent with Iowa code section 514G.102, and repeals an outdated requirement in 505.32 to establish a clearinghouse. The healthcare.gov website fulfills this function and is linked to as needed throughout the Insurance Division website.
HF 2238 specifies that an insurer can be a victim for purposes of restitution if insurance fraud has been committed against the insurer. It clarifies that when an insurer pays a victim’s insurance claim, the insurer is not the victim and has no right of subrogation.
HF 2239 updates the Securities and Regulated Industries Bureau at the Iowa Insurance Division. It removes an unnecessary Iowa Code reference to NASDAQ; aligns Iowa’s crowdfunding portal law to reflect rule changes at the federal level; and updates references to the Financial Industry Regulatory Authority in Iowa Code covering viatical settlements.
The bill also amends Iowa Code (523A.207) that covers pre-need funeral arrangements. Changes will provide consumer protections and simplify the reporting process to make it more workable for businesses. Previously, a CPA report was required for the sale of a business or the assets of a business involving pre-need funeral arrangements. Now, the Insurance Division can waive the report for good cause, and an agreed-upon procedures methodology may satisfy the requirement instead.
HF 2286 deals with “time of sale” mandates that local municipalities may impose on home sales. Some local governments in Iowa have passed ordinances that create mandates for homeowners and/or buyers during a real estate transaction. Examples include sump pump hook-up inspections, utility inspections, energy efficiency audits and home inspections. This bill prohibits time-of-sale mandates for real property transactions. The legislation does not completely restrict a city’s ability to require certain inspections, but it specifies that these inspections cannot hinge on the point of sale.
HF 2305 relates to insurance coverage for health care services delivered by telehealth, health care services delivered through interactive audio and video. Telehealth does not include services delivered through an audio-only telephone call, e-mail or fax. A health insurer must provide the same coverage for services, including for mental health conditions, illnesses, injuries and diseases, whether in person or by telehealth. The Insurance Commissioner may adopt rules to administer the Code section. The new law applies to third-party payment provider policies, contracts or plans delivered, issued for delivery, continued or renewed in Iowa on or after January 1, 2019.
HF 2307 establishes a process for selling a city utility to another party, and requires the Iowa Utilities Board (IUB) to approve the acquisition of a water utility by an investor-owned utility already regulated by the IUB. Iowa American Water Company is the only investor-owned, rate-regulated water utility currently in the state. It provides water in most of Scott County, including Davenport and Bettendorf, as well as in the city of Clinton.
The Utilities Board must approve any acquisition in the interest of existing and new ratepayers. A community can receive fair market value for those acquisitions. Previously, the Utilities Board only reimbursed for book value (depreciated value of the assets), which is often much less than current debt. A sale of a municipal utility requires voter approval. The process ensures transparency so that the community has the information necessary for a thorough review prior to any action.
Key stakeholders, including the Iowa Association of Municipal Utilities, Iowa Rural Water Association, the IUB and the Iowa American Water Company helped craft the proposal. The Office of Consumer Advocate (Utilities) sees no problem with the legislation.
HF 2382 allows for three licensed professional engineers and two licensed professional land surveyors on the Engineers and Land Surveyors Board. The board includes seven members, two of whom are lay people. An individual licensed as both a professional engineer and a professional land surveyor can only satisfy the requirements for one seat on the board. The Iowa Banking Division’s Professional Licensing Bureau includes the Engineers and Land Surveyors Board.
HF 2446 clarifies and updates Iowa Code by deleting references in Utilities Board regulatory sections that are obsolete and repeals requirements for studies that have been completed and the reports properly filed with the Legislature.
HF 2458 is an initiative known as “Future Ready Iowa,” which aims to build the state’s “talent pipeline.” It was created after Iowa received a National Governor’s Association grant, and a “Future Ready Iowa Alliance” developed and recommended a plan to ensure 70 percent of Iowa’s workforce has education or training beyond high school by 2025. Currently, 55 percent of jobs available in Iowa are “middle-skill” jobs that require more than a high school diploma but not a four-year degree: an associate’s degree, a training certificate or an apprenticeship. Only 32 percent of Iowa workers meet this skill level.
The legislation creates a new program under the Economic Development Authority to encourage more small- and medium-sized apprenticeship programs. It also creates a volunteer mentor program; a summer youth intern pilot program for at-risk youth; an Iowa Employer Innovation Program focused on training for high-demand jobs; and a Skilled Workforce Grant Program for state universities or accredited private colleges. The Department of Workforce Development and community colleges will identify and create a list of high-demand jobs for these programs.
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NOTE: health care coverage for peace officers’ surviving families
HF 2351 addressed health care coverage for peace officers’ surviving families. It was funneled on March 15 in Senate Commerce, when Sen. Chapman cancelled the committee meeting.
HF 2502 – Standings, Division XVII – Health Care Coverage for Surviving Spouse & Children: Requires the continuation of existing health care coverage or reenrollment for surviving spouse and surviving children of an eligible peace officer or fire fighter. The city or county may pay the cost of the coverage. Otherwise, the surviving spouse may the cost.