E-Alert Case Updates
Maryland General Assembly Wraps Up 2015 Legislative Session
by Christopher Boucher, Michael L. Dailey (Schmidt, Dailey & O'Neill, LLC),
K. Nichole Nesbitt (Goodell, DeVries, Leech & Dann, LLP) Colleen K. O'Brien
(Semmes, Bowen & Semmes), and John R. Stierhoff (Venable)
The following summarizes certain legislation passed or defeated in the Maryland General Assembly, which bear relevance to the practice of civil law in the State of Maryland.
Task Force to Study the Establishment of Health Courts (Failed)
Unsuccessful House Bill 402 (“HB 402”) and Senate Bill 188 (“SB 188”) proposed the establishment of a Task Force to Study the Establishment of Health Courts, and ultimately received an unfavorable report from the House Judiciary Committee on March 18, 2015 and from the Senate Judicial Proceedings Committee on March 20, 2015. HB 402/SB 188 sought to establish a task force that would investigate the adequacy and cost of state law and policies relating to the litigation of medical malpractice cases in the State of Maryland. In particular, the task force would examine the feasibility of assigning a medical malpractice case to a single judge throughout the litigation process. The task force would also evaluate whether specialized litigation tracks, similar to currently used in the Maryland Business and Technology Case Management Program, should be utilized to ensure that motions and other matters are ruled upon timely and consistently. The Maryland Defense Counsel (“MDC”) supported these bills with written and oral testimony. HB 402 was defeated with vote of 16 to 4 in the House Judiciary Committee and SB 188 was defeated with a vote of 10 to 0 in the Senate Judicial Proceedings Committee.
Civil Action — Wrongful Selling or Furnishing of Alcoholic Beverages (Failed)
Unsuccessful Senate Bill 93 (“SB 93”) and House Bill 102 (“HB 102”), sought to impose “Dram Shop Liability” in Maryland. This legislation was authored to permit civil actions against alcoholic beverage licensees for damages proximately caused by a customer who purchased an alcoholic beverage from the licensee. The bills imposed liability upon the licensee if (a) the licensee knew or reasonably knew that the customer “was visibly under the influence” of alcohol; (b) the licensee could have reasonably foreseen that the customer might attempt to drive a motor vehicle; and (c) the customer’s negligence while driving under the influence proximately caused the damages claimed by the plaintiff. The bills did not provide the customer with a private cause of action, only other persons that the customer injured while trying to drive under the influence. Under the current state of Maryland law, a beverage licensee can be subject to a misdemeanor conviction, imprisonment, and a fine for serving a customer who causes another injury; it does not, however, provide for a private cause of action.
The MDC submitted opposition testimony to the Senate Judicial Proceedings Committee regarding SB 93 and to the House Judiciary Committee regarding HB 102. The MDC took issue with various ambiguities in the text of the law, including the amorphous standard that the licensee know that the customer is/was “visibly under the influence” of alcohol. SB 93 received an unfavorable report from the Judicial Proceedings Committee on February 25, 2015 with a 10 to1 vote. The cross-filed bill, HB 102, was subsequently withdrawn.
Health Care Malpractice — Certificate and Report of Qualified Expert — Objection (Failed)
Unsuccessful Senate Bill 127 (“SB 127”) sought to allow a medical malpractice plaintiff to re-file a certificate of a qualified expert or report if the plaintiff’s previous certificate was held to be insufficient under the law. Under current Maryland law, a plaintiff seeking more than $30,000 in a medical malpractice action is required to file a certificate of qualified expert that attests that (1) the defendant health care provider breached the applicable standard of care and (2) the departure from the standard of care was the proximate cause of the alleged injury. A substantively inadequate certificate of a qualified expert is tantamount to not having filed a certificate at all. Pursuant to SB 127, any objection to the sufficiency of a certificate of a qualified expert or report must be filed within 14 days after the filing of the certificate or report. If a party’s certificate or report is legally insufficient, the party may file a legally sufficient certificate and report of an attesting expert within 30 days of the order’s entry.
A prior iteration of SB 127 was introduced in 2011 as House Bill 340 (“HB 340”) and Senate Bill (“SB 887”). HB 340 was heard and voted Unfavorable by the House Judiciary Committee, and SB 887 was withdrawn without a hearing in the Senate Judicial Proceedings Committee.
The MDC submitted testimony to the Judicial Proceedings Committee in opposition to SB 127 arguing that medical malpractice defense attorneys regularly have issues with plaintiffs filing generic, non-substantive certificates by unqualified experts that shed no light on the actual standard of care violations and causation issues that ultimately will be asserted. The MDC further argued that the current statutory framework already permits an automatic 90-day extension to file certificates if failure to file on time would result in a violation of the statute of limitations. In a 9 to 2 vote, SB 127 received an unfavorable report from the Senate Judicial Proceedings Committee on February 23, 2015.
Civil Jury Trials — Amount in Controversy (Failed)
Unsuccessful Senate Bill 474 (“SB 474”) proposed an amendment to Article 23 of the Maryland Constitution, which currently preserves the right to a jury trial in civil proceedings where the amount in controversy exceeds $15,000. SB 474 sought to increase the amount in controversy requirement to $30,000. SB 474 was accompanied by Senate Bill 475 (“SB 475”), which would amend the Courts and Judicial Proceedings Article of the Maryland Code to prohibit a party in a civil action from requesting a jury trial if the amount in controversy does not exceed $30,000. The MDC submitted opposition testimony.
Under current Maryland law, the District Court has exclusive jurisdiction for civil cases in which the amount in controversy does not exceed $5,000, and concurrent jurisdiction with the Circuit Court for any amount that does not exceed $30,000. The Circuit Court has exclusive jurisdiction over all jury trials and cases in which the amount in controversy is greater than $30,000. Because of the current structure of the law, if a plaintiff files a case in the District Court with an amount in controversy between $15,000 and $30,000, a defendant can demand a jury trial, which in turn requires that the case be transferred to the Circuit Court. If SB 474 and SB 475 had become law, cases with an amount in controversy between $15,000 and $30,000 could not have been tried by jury, and would have remained in the District Court.
District Court — Civil Jurisdiction — Amount in Controversy (Failed)
Unsuccessful House Bill 461 (“HB 461”) would have expanded the original jurisdiction of the District Court to include civil actions seeking up to $50,000 in damages. Currently, the District Court has exclusive jurisdiction over civil matters seeking damages less than $5,000; landlord-tenant disputes; and replevin actions. The District Court has concurrent jurisdiction with the circuit courts for civil actions claiming between $5,000 and $30,000. HB 461 sought to increase the original jurisdiction of the District Court from $30,000 to $50,000. The MDC submitted opposition testimony, and the bill was eventually withdrawn.
District Court Jurisdiction — Uninsured Motorist Claim (Failed)
Unsuccessful House Bill 719 (“HB 719”) would have placed uninsured motorist ("UM") claims within the exclusive original jurisdiction of the District Court if the amount of UM insurance is not higher than $30,000, and claimed damages did not exceed $50,000. Maryland law requires that drivers maintain minimum amounts of UM insurance in the amounts of $30,000 for bodily injury per person; $60,000 for bodily injury per accident; and $15,000 for property damage. The District Court has concurrent jurisdiction with the circuit courts for civil claims between $5,000 and $30,000. HB 719 would have expanded the original jurisdiction of the District Court to include claims up to $50,000 for first-party UM benefits. The MDC submitted opposition testimony, and the bill was eventually withdrawn.
Civil Actions — Noneconomic Damages — Catastrophic Injury (Failed)
Unsuccessful Senate Bill 479 (“SB 479”) sought to amend the Courts and Judicial Proceedings Article of the Maryland Code in order to increase the maximum amount of noneconomic damages that may be recovered in cases of “catastrophic injury.” Current Maryland law places certain caps on noneconomic damages based on the type of claim at issue.
In an action for damages for personal injury or death (excluding medical malpractice), the cap is $815,000 for causes of action arising between October 1, 2015 and October 1, 2016. In a wrongful death action, where there are two (2) or more claimants or beneficiaries, an award of noneconomic damages may not exceed 150% of the applicable cap, regardless of the number of claimants or beneficiaries.
Pursuant to SB 479, if a court in a post-trial motion in any civil action for personal injury or wrongful death, or a health claims arbitration panel in a medical malpractice claim, determined that the defendant’s negligence or other wrongful conduct caused at least one catastrophic injury, then the limitation on noneconomic damages would triple. The term “catastrophic injury” was defined as death or permanent impairment constituted by one of the listed symptoms: (1) spinal cord injury associated with severe paralysis of an appendage or the trunk or with incontinence; (2) amputation and loss of effective use of an appendage; (3) severe brain injury; (4) blindness; (5) loss of reproductive organs that leaves a person sterile; or (6) major burns. A previous iteration of SB 479 was introduced in 2014 as House Bill 1009 and Senate Bill 789. Bill hearings were conducted by both chambers, but no action was taken by either the House Judiciary Committee or the Senate Judicial Proceedings Committee.
Aggressive Drunk Driving — Punitive Damages (Failed)
Unsuccessful Senate Bill 605 (“SB 605”) would have permitted a finder of fact to award punitive damages against a personal injury defendant who had operated or attempted to operate a motor vehicle with a blood alcohol concentration of 0.15 or higher. Under current Maryland law, a trier of fact may not award punitive damages in a nonintentional tort action unless the plaintiff has established that the defendant’s conduct was characterize by “actual malice.” Under SB 605, certain offenses related to drunk driving could constitute “actual malice,” such that the plaintiff would be entitled to punitive damages. The bill required a plaintiff to prove by clear and convincing evidence that the defendant/driver had a blood alcohol concentration of 0.15 or higher. SB 605 further required that claims for punitive damages under the bill be pled with particularity, and that any award of punitive damages must be accompanied by compensatory damages. SB 605 passed the Senate amended, but ultimately received an unfavorable report from the House Judiciary Committee with a vote of 12 to 8, and was defeated.
The MDC opposed SB 605 because it would change the established law on punitive damages. Instead of requiring a plaintiff to meet the “actual malice” standard for awarding punitive damages by showing an “evil motive [or] intent to injure,” Owens-Illinois, Inc. v. Zenobia, 325 Md. 420 (1992), it would deem this particular activity to constitute an "intent to harm" or “actual malice,” as a matter of law. MDC posited that this would not be warranted or appropriate because the nature of compensation should be independent of the notion of punishment. Because administrative and criminal punishments are already in place, additional punishment for this activity should be handled administratively or criminally.
Civil Right to Counsel — Implementation (Failed)
Unsuccessful House Bill 348 (“HB 348”) and Senate Bill 468 (“SB 468”) would have required the Governor of Maryland to appropriate funds to provide legal representation to individuals with incomes below a certain threshold in contested custody and protective order proceedings. These appropriations would have begun in 2017, and provided counsel for those individuals meeting requirements established by the Maryland Legal Services Corporation (“MLSC”). A pilot program — the Judicare Pilot Program — would have been launched in Baltimore City, along with five (5) other select Maryland counties. The program would have been overseen by the Workgroup to Monitor Implementation of a Civil Right to Counsel, staffed by members of the Administrative Office of the Courts. HB 348 and SB 468 were ultimately defeated when SB 468 received an unfavorable report from the Senate Judicial Proceedings Committee with a vote of 6 to 4, and HB 348 was subsequently withdrawn.
Courts — Jury Service — Excusal (Failed)
Unsuccessful House Bill 260 (“HB 260”) would have permitted an individual to be excused from jury service if the individual was a breast-feeding mother with a child less than two (2) years of age. HB 260 was heard before the House Judiciary Committee but never voted upon, and therefore did not pass during the 2015 legislative session.
Award of Attorney's Fees and Expenses — Violation of Maryland Constitutional Right (Failed)
Unsuccessful House Bill 283 (“HB 283”) and Senate Bill 319 (“SB 319”) would have authorized a court to award reasonable attorney’s fees and expenses to a prevailing plaintiff for any claim for relief against the State, any political subdivision of the State, or any employee or agent of the State or any political subdivision of the State, if the claim for relief seeks to remedy a violation of a right that is secured by the Maryland Constitution or the Maryland Declaration of Rights. Under the bill, a court may award reasonable attorney’s fees and expenses to a prevailing defendant only on a finding that the relevant claim for relief brought by the plaintiff was maintained in bad faith or without substantial justification. A court must determine whether to award attorney’s fees and expenses by considering the factors listed in Maryland Rule 2-703(f)(3). The bills would have applied prospectively to cases filed on or after the bill’s October 1, 2015 effective dates. The Maryland Defense Counsel (“MDC”) submitted opposition testimony.
Civil Actions — Hydraulic Fracturing Liability Act (Failed)
Unsuccessful Senate Bill (“SB 458”) would have made the practice of hydraulic fracturing an ultrahazardous and abnormally dangerous activity, and thereby imposed strict liability upon a company engaged in hydraulic fracturing. SB 458 would have also made any chemicals used in the hydraulic fracturing process subject to discovery in a legal action, irrespective of any objections based upon trade secret law, and increased the amount of comprehensive general and environmental pollution liability insurance coverage that a permit holder must maintain and increased the duration of coverage for environmental pollution liability insurance. Finally, SB 458 would have voided specified contractual waiver provisions pertaining to hydraulic fracturing activities.
Increase in Liability Limits under Local Government Tort Claims Act and Maryland Tort Claims Act (Passed)
Successful House Bills 113 (“HB 113”) and 114 ( “HB 114”), both passed on the final day of the Session, increase the liability limits under the Maryland Tort Claims Act (“MTCA”) and the Local Government Torts Claims Act (“LGTCA”).
The MTCA permits an individual to maintain a civil action against the State of Maryland, but caps the State’s liability at $200,000. HB 114 increased the liability limit under MTCA from $200,000 to $400,000 to a single claimant for injuries arising from a single incident or occurrence. HB 114 also alters the notice requirements of MTCA by authorizing a court, upon a showing of good cause by a claimant who failed to submit a written claim within the one-year time period under MTCA, to entertain the claimant’s action unless the State can affirmatively show that its defense has been prejudiced by the claimant’s failure to submit the claim. The bill applies prospectively to a cause of action arising on or after October 1, 2015.
HB 113 similarly impacts the LGTCA, and also applies prospectively to a cause of action arising on or after October 1, 2015. The LGTCA is the local government counterpart to MTCA, and currently limits the liability of a local government to $200,000 per individual claim and $500,000 per total claims that arise from the same occurrence for damages from tortious acts or omissions (including intentional and constitutional torts). HB 113 increases the liability limits under the LGTCA to $400,000 per individual claim and $800,000 per total claims that arise from the same occurrence for damages from tortious acts or omissions. As originally introduced, HB 113 intended to limit liability under the LGTCA to $300,000, but that amount was ultimately increased to $400,000. The bill also extends the time period for giving notice of a claim to one year. The figure represents a compromise between House and Senate preferences for the liability limit, which were $300,000.00 and $500,000, respectfully. Of particular note, the liability limits of the LGTCA was made all the more important by the Maryland Court of Appeals’ recent decision in Espina v. Jackson, ___ Md. ___, No. 35 (March 30, 2015), in which the Court held that the liability limits of the LGTCA extended to constitutional violations.
Judgments — Appeals — Supersedeas Bond (Passed)
Successful House Bill 164 (“HB 164”) specifies that the amount of a supersedeas bond posted in a civil action may not exceed the lesser of one hundred million dollars, or the amount of the judgment for each appellant, irrespective of the amount of the judgment appealed. HB 164 passed the General Assembly enrolled on April 13, 2015. Under Maryland law, a party cannot stay the execution of adverse judgment simply by filing an appeal. Rather, to stay execution pending an appeal, Maryland courts generally require the appellant to file a supersedeas bond pursuant to Md. Rule 8-423. Pursuant to Rule 8-423, when the judgment is for the recovery of unsecured money, the amount of the bond must cover the whole amount of the judgment remaining unsatisfied plus interest and costs.
Under HB 164, a supersedeas bond may not exceed the lesser of one hundred million dollars or the amount of the judgment for each appellant, regardless of the amount of the judgment appealed. The bill amends the Courts and Judicial Proceedings Article, to include Section 12-301.1. The new Section 12-301.1 would provide a procedure by which an appellee could engage in discovery for the limited purpose of determining whether an appellant dissipated assets outside the course of ordinary business when the appellant posts a supersedeas bond less than the amount of unsecured money subject to execution under the appealed judgment. The new law also provides the circuit court with jurisdiction over the action for the limited purpose of ruling on any motions relating to the new form of limited discovery.
Real Property — Condominiums and Homeowners Associations — Disclosures to Purchasers on Resale of Unit or Lot — Limitation on Fees (Failed)
Unsuccessful House Bill 1007 (“HB 1007”) sought to limit the liability of homeowners associations and condominium councils for errors and omission in the content of a resale certification. HB 1007 intended to amend Section 11-1354 of the Real Property Article of the Maryland Code to cap fees charged by homeowners associations and condominium councils for providing resale certifications, and permit condominium councils to collect new fees for inspecting the resale unit. Most importantly, HB 1007 would have limited the liability of homeowners associations and condominium counsels for any error or omission in the certificate to the amount of the fees paid.
Judges — Mandatory Retirement Age (Failed)
Unsuccessful Senate Bill 847 (“SB 847”) would have increased, subject to voter approval, the mandatory retirement age of judges in Maryland from 70 to 73. Article IV, section 3 of the Maryland Constitution sets mandatory retirement limits for all circuit, district and appellate court judges in Maryland. The current mandatory retirement age is set at 70. SB 847 failed on the House floor after receiving a favorable with amendments report by the House Judiciary Committee. Because the measure is a constitutional amendment, it would have required approval by the voters in the 2016 election.
Workers’ Compensation — Benefits — Heart Disease and Hypertension Presumption - Anne Arundel County Detention Officers (Passed)
Successful Senate Bill 135 (“SB 135”) and House Bill 173 (“HB 173”) extend to Anne Arundel County detention officers an occupational disease presumption for heart disease or hypertension that results in partial or total disability or death. The presumption applies only to the extent that the individual suffers from heart disease or hypertension that is more severe than the individual’s condition prior to being employed as a detention officer.
Certain public safety employees — including specified volunteer and paid firefighters, paramedics, and law enforcement officers — are entitled to receive enhanced workers’ compensation benefits for permanent partial disabilities that are determined to be compensable for fewer than 75 weeks. Under current law, an employee who is not entitled to enhanced benefits is compensated at a rate that equals one-third of the employee’s average weekly wage, not to exceed 16.7% of the State average weekly wage. SB 135 and HB 173 alter the definition of “public safety employee” to include Anne Arundel County detention officers, making these officers eligible for enhanced workers’ compensation benefits for permanent partial disabilities that are determined to be compensable for fewer than 75 weeks.
Workers’ Compensation — Baltimore County Deputy Sheriff (Passed)
Successful Senate Bill 331 (“SB 331”) and House Bill 12 (“HB 12”) alter the definition of “public safety employee” to include a Baltimore County deputy sheriff who sustains an accidental personal injury that arises out of and in the course and scope of performing duties directly related to (1) courthouse security; (2) prisoner transportation; (3) service of warrants; (4) personnel management; or (5) other administrative duties. A public safety employee who is awarded compensation for a period of fewer than 75 weeks for a permanent partial disability is compensated by the employer or its insurer at an enhanced rate that is equal to the rate for claims that are determined to be compensable for 75 to 250 weeks (two-thirds of the employee’s average weekly wage, not to exceed one-third of the State average weekly wage). The bills apply only prospectively and do not have any effect on or application to claims arising before October 1, 2015.
Workers’ Compensation Commission — Regulation of Fees and Charges (Failed)
Unsuccessful House Bill 1092 (“HB 1092”) and Senate Bill 118 (“SB 118”) sought to authorize, but does not require, the Workers’ Compensation Commission (“WCC”) to regulate payment of fees and other charges for (1) the examination of a covered employee; and (2) the preparation of a report by a medical expert. The bill also specifies that fees charged for a medical service or treatment or the examination and preparation of a report by a medical expert may not vary based on the party responsible for the payment of the fee or charge.
The fiscal impact of HB 1092 on employers and insurers in Maryland (including the State, Chesapeake Employers’ Insurance Company, local governments, and small businesses) depends on if and how the WCC chooses to utilize its authority to regulate the fees specified by the bill.
Although the bill is only expected to have a minimal direct fiscal impact on employers and insurers in the State, Chesapeake advised the Committees that the bill may indirectly result in increased costs to employers and insurers. Due to the provision which specifies that fees may not vary based on the party responsible for payment of the fee or charge (and depending on how the WCC chooses to regulate these fees), employers and insurers may have difficulty obtaining independent medical examinations of injured workers. Examinations performed and reports prepared by a claimant’s treating physician are generally less expensive because the treating physician has had many visits with the claimant and does not need additional time to review and understand his or her medical history. Conversely, an independent medical examiner hired by an employer or its insurer may not be familiar with the patient and, therefore, needs additional time to review a patient’s medical records or prepare reports.
HB 1092 received a Unfavorable Report from the House Economic Matters Committee. SB 118 was never voted on by the Senate Finance Committee and failed at the conclusion of the Session.
Workers’ Compensation — Permanent Partial Disability Compensation — Reversal or Modification of Award (Failed)
Unsuccessful House Bill 262 (“SB 262”), specified that, if a workers’ compensation award of permanent partial disability is reversed or modified by the WCC or a court of appeal, the payment of any new compensation awarded must be subject to a monetary credit for compensation previously awarded and paid. As introduced, the bill must be construed to apply only prospectively and may not be applied or interpreted to have any effect or application to any compensation award made prior to the bill’s October 1, 2015 effective date.
Section 9-633 of the Labor and Employment Article specifies that, if a workers’ compensation award of permanent partial disability is reversed or modified by a court on appeal, the payment of any new compensation awarded must be subject to a credit for compensation previously awarded and paid. In July 2014, the Court of Appeals released a consolidated opinion for three recent cases related to this provision. In W. R. Grace & Co., et al. v. Andrew P. Swedo, Jr., No. 82, September Term 2013; Florida Rock Industries, Inc., et al. v. Jeffrey P. Owens, No. 91, September Term 2013; and Robert W. Coffee v. Rent-A-Center, Inc., et al., No. 92, September Term 2013 (Opinion filed July 22, 2014), awards of permanent partial disability were modified and extended by the court such that each employee was entitled to a higher weekly benefit amount.
The employers/insurers argued that these modifications should apply prospectively and that crediting should be done based on the total number of weeks that an employee has received compensation, citing Del Marr v. Montgomery County, No. 60, September Term 2006. In Del Marr, the court held that, in the event that a workers’ compensation case is reopened by WCC and benefits are modified due to worsening of condition (which is governed by Section 9-736 of the Labor and Employment Article), credits should be based on weeks paid.
The Court of Appeals distinguished Del Marr from the case at hand, stating that a reopened case due to worsening of condition and a modification on appeal are two different circumstances. The Court of Appeals held that crediting for payments made under an award amended on appeal should be the basis of the total dollars paid, resulting in back pay to the employees.
The bill applies to two distinct situations. The first is when an award is reversed or modified on appeal to the circuit court, and the second is when a case is reopened by the WCC due to worsening of condition. There is no fiscal impact in the first situation, as the bill simply codifies the judicial decision in the court’s consolidated opinion. However, there is a potentially significant fiscal impact in the second situation. Although the bill does not specify that its monetary credit provision must apply to cases that are modified due to worsening of condition, it clearly states, “[i]f an award of permanent partial disability compensation is reversed or modified by the commission or a court of appeal, the payment of any new compensation awarded shall be subject to a monetary credit for compensation previously awarded and paid.” The reopening of a permanent partial disability case due to worsening of condition is a modification made by the WCC; thus, the bill applies in that situation.
HB 262 received an Unfavorable Report by the House Economic Matters on March 20, 2015.
Chesapeake Employers’ Insurance Company (Passed)
Successful Senate Bill 465 (“SB 465”), among other things, subjects the Chesapeake Employers' Insurance Company to Title 11 of the Insurance Article. Chapter 570 of 2012 converted the Injured Workers’ Insurance Fund into a private, nonprofit, and nonstock workers’ compensation insurer as of October 1, 2013. This new organization is the Chesapeake Employers’ Insurance Company (“Chesapeake”).
In subjecting Chesapeake to Title 11 of the Insurance Article, SB 465 effectives requires Chesapeake to join a rating organization, beginning January 1, 2023. Additionally, the rating organization must (1) make annual reports beginning October 1, 2016, and ending October 1, 2022, to specified committees of the General Assembly concerning the status of Chesapeake joining the rating organization; and (2) create a classification code for governmental occupations that are not already included in police, firefighter, and clerical classifications. Although the provisions related to the classification code requirement for the rating organization take effect January 1, 2022, the Act states that it is the intent of the General Assembly that the selected rating organization create an exception in its classification system on or before January 1, 2022, to allow any authorized insurer in the State to use a single classification code for governmental occupations that are not included in police, firefighter, and clerical classifications.
In addition, SB 465 authorizes Chesapeake to establish, own, or control a subsidiary for any lawful purpose if the subsidiary (1) is, or after acquisition will be, wholly owned by Chesapeake; (2) engages in a business activity that is ancillary to the workers’ compensation insurance business; and (3) is operated for the purposes of benefiting Chesapeake. Furthermore, the Act alters the selection process for the Chesapeake board members. Under the Act, two of the board’s nine members must be appointed by the Governor; the remaining seven members must be appointed by policyholders under the procedures required by the board’s bylaws. The Act authorizes the removal of board members under certain circumstances and specifies, through a transition process, the appointment dates and term limits of board members through 2029. Specifically, the Governor shall appoint board members whose terms expire in 2015 through 2019.
As these new terms expire, the policyholders begin to appoint their seven members. Finally, the Act requires the Insurance Commissioner to review the State’s self-insured workers’ compensation program for State employees at least once every five years and submit a report of its findings to the State Treasurer. These provisions take effect October 1, 2015.