March 6, 2020 Legislative Update

Today is the 54th day of the 60-day legislative session. The Legislature is scheduled to adjourn next Thursday by midnight. Today is another “cutoff” day, where non-budget bills from the House or Senate must pass the opposite chamber to remain alive. This is an update on the three remaining issues we have been tracking.


There have been significant developments on House Bill 2409 over the last 24 hours. The bill as passed the Senate Labor & Commerce Committee, about which we reported last week and which was the subject of numerous action alerts to self-insurers, was rejected. Instead, a more moderate version was adopted that (a) increases, but not as steeply, statutory penalty amounts, (b) creates a severity determination on whether to award self-insurance benefit delay penalties in the aggregate or per occurrence, and increases the potential amount up to $1,000 or 25% of benefits, (c) allows for inflationary increases in penalties, but on a slower index and every three years versus annually, (d) removes the whole good faith/fair dealing or fair conduct responsibility, and (e) requires the licensing of self-insured TPAs per rules to be adopted, and certification of self-insured claims handlers, incorporating the new rules of 07/01/19 and likely to be further refined in rules.

These are not ideal changes in the law. But it took a significant and frenetic lobbying effort to get the bill moderated down to this, particularly the removal of the nebulous fair conduct provisions and the decrease in penalty exposures. I have attached a comparison table that shows how the bill changed through the process. It must still go back to the House for concurrence by next Friday. It’s possible but unlikely the House could reject the Senate amendment. The likely consequence of that action would be to take the bill down this year.


Nothing substantive has changed in the form of Senate Bill 6440, the IME bill, since last week’s report. It passed the House Wednesday on a 97-0 vote. Because it was lightly amended by the House, it has to go back to the Senate for concurrence. The Senate is likely to accept the House amendments. As a reminder, the bill in its current form sets forth some criteria for IMEs, does some work around no-show fees, the reasonably convenient location of IMEs, and telemedicine, and sets up a working group this summer to delve into the deeper issues of regulation the claimants’ bar sought in the original bill.    


Senate Bill 6331 appears to be the vehicle for any further activity on captive insurance regulation/taxation this session. The bill was voted out of the Senate Ways & Means Committee on Monday with an amendment that broadens the power of the Office of Insurance Commissioner to tax and regulate out of state (“foreign”) captives that insure Washington risk. That provision does not, however, appear to impact the employer community’s primary goals in the bill which is to obtain legal recognition of captive use by Washington-based companies, and pay a premium tax related only to Washington risk. The employer community is asking that the bill be passed out of the Senate as soon as possible to keep the discussion moving, and it has been placed on the Senate floor calendar. As the bill is considered budget-related, it has until the adjournment of session next Thursday to pass but it has considerable process left in front of it for that to happen.

An updated bill tracking sheet is attached, summarizing the foregoing in the context of the other bills we’ve seen this session and their outcome to date.