Small Business Chamber negotiates a 75.6 percent lower Duke rate hike for small businesses

The South Carolina Small Business Chamber of Commerce (SCSBCC) for the seventh time has chalked up another big win onproposed energy rate increases by power companies. 

Yesterday a settlement in the Duke Energy rate filing was submitted to the S.C. Public Service Commission (PSC).  All parties intervening in the case, including SCSBCC, joined Duke and the S.C. Office of Regulatory Staff (ORS) in signing the settlement.

In March Duke asked the PSC for an overall 15.1 percent electric rate hike for its South Carolina customers—16.3 percent for residential, 14 percent for small businesses and 14.4 percent for industrial.

SCSBCC officially intervened in the case saying that the proposed hike was unjustified in general and was specifically unfair to small businesses.   In my role as SCSBCC president and CEO I gave pre-filed direct testimony outlining our argument that Duke did not deserve the excessive rate hike.

As a result of SCSBCC’s negotiations with Duke, providing that the PSC agrees to the settlement, small businesses will see only a 3.42 percent rate hike spread out over two years—2.29 percent the first year and 1.13 percent the second year.  This is a 75.6 percent decrease from the original small business rate hike filed by Duke.

The overall rate increase called for in the settlement is 8.16 percent.  Residential customers would see a 9.49 percent hike and industrial 7.73 percent increase.

SCSBCC thanks ORS for its hard work in analyzing the Duke filing, a laborious and intricate accounting task, and for its commitment during the negotiations to have a fair outcome for small businesses.  While many like to disparage state workers, small businesses could not have gotten a better return on our tax dollars paying the salaries of the ORS employees.

You’re Invited

South Carolina Small Business Chamber of Commerce

 ANNUAL POLICY SUMMIT

WHEN:  Monday, January 14 from 6 to 8 pm.

WHERE:  South Carolina Press Association

                 106 Outlet Pointe Boulevard, Columbia, SC
                
KEYNOTE:  State Senator Vincent Sheheen

TICKETS:  Free for all members (and a guest) who have paid dues in 2012.  Only $20 for non-dues paying members.

Join SCSBCC President Frank Knapp, Jr., the Board of Directors, BuySC Advisory Committee Members and Chamber Ambassadors for a fun social evening, networking and discussion of small business issues and the SCSBCC's advocacy efforts in 2012 and 2013. 

Enjoy gourmet food provided by the Spotted Salamander Catering and wine from the Hampton Street Vineyard.  Beer and non-alcoholic beverages will also be available.

RSVP to sheila@scsbc.org or 803-252-5733.  You must have a ticket to attend.  Space is limited so get your tickets now.

All Memberships Now Include Accidental Death Insurance Policies

A membership in the South Carolina Small Business Chamber just got more rewarding thanks to a partnership with Liberty National Life.

All memberships—even the basic membership which is free—now include $3000 accidental death insurance policies for the small-business owner, employees and spouses.  Plus, every child of the owner and employee is covered with a $1000 accidental death insurance policy. 

This no-premium, one-year policy can be renewed for just $10 a year per family policy.  However there is no obligation to continue the policies after the first year.

Liberty National Life Insurance Company has been in the insurance business since 1900. They offer affordable life and supplemental health insurance through in-home and workplace sales. Providing local, one-on-one service to their customers is something they’ve done from the beginning. While automation is the way of today's world, it won't replace their individual attention to Liberty National policyholders.

If you are currently a member of the Small Business Chamber and would like more information on the no-premium accidental death policy, click here.

If you are not a member of the Small Business Chamber and want to have access to the no-premium accidental death policy and our other great benefits, click here.

South Carolina: Proposed workers’ comp hike cut by 58%

Yesterday the S.C. Consumer Advocate, the South Carolina Small Business Chamber of Commerce and the National Council of Compensation Insurance (NCCI) reached a settlement on a proposed 7.3% average increase sought by the workers’ compensation insurance industry.

The settlement reduces the NCCI proposed hike by 58%.  Starting in September 1, workers’ compensation carriers will be able to adjust their premiums using only a 3% average increase in loss costs.  (See WorkCompCentral.com story below.)

“Yesterday was a great day for the small businesses of South Carolina,” said Frank Knapp, Jr., president and CEO of the South Carolina Small Business Chamber of Commerce (SCSBCC).  Since 2005 the SCSBCC had intervened in workers’ compensation cases numerous times always with great success.  This 58% decrease in a proposed hike matches a similar result in May of 2008. 

The settlement also included an agreement by NCCI to withdraw an appeal of a Court of Appeal ruling earlier this year that required all NCCI proposed workers’ comp adjustments to be subject to a hearing before the Administrative Law Court.  Until that ruling, the law was being interpreted as not allowing the Consumer Advocate to contest an average decrease in loss cost even if the data would have called for more of a drop.

“Small businesses now can be assured that any overall changes in workers’ compensation rates will be based on an objective vetting of premiums paid and carrier payments made to workers and healthcare providers,” said Knapp.  “We will no longer have to trust the industry’s math because we were locked out of the filing process.”

Knapp gave credit to the partnership between the SCSBCC and the State Consumer Advocate, Elliott Elam, for the continued success in protecting small businesses from unwarranted workers’ comp rate increases.  “Thanks to the Injured Workers Advocates for providing the legal services that enables the Small Business Chamber to intervene in these cases.  Bill Smith (Chappell, Smith & Arden) and Kevin Holmes (Steinberg Law Firm) have worked very hard without compensation on these cases over the years on behalf of the state’s small businesses and we are very appreciative.”

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WorkCompCentral.com
August 29, 2012

NCCI Reaches Settlement in Latest Court Fight over Loss Costs

By Michael Whiteley, Eastern Bureau Chief

South Carolina Consumer Advocate Elliott Elam Jr. and a group of small businesses reached a settlement in the latest in a series of administrative court battles with the National Council on Compensation Insurance (NCCI) on Monday and agreed to a 3% increase in loss costs, effective Sept. 1.

Elam and the South Carolina Small Business Chamber of Commerce said the agreement, approved by Chief Administrative Law Judge Ralph K. Anderson III on Monday, resolves a three-year legal challenge over loss-cost notice requirements.

The agreement cuts NCCI's pending loss-cost request by more than half. Last February, NCCI had filed for a 7.3% loss-cost increase to take effect on July 1.

Elam said Acting State Insurance Director Gwendolyn Fuller McGriff also approved the settlement. The South Carolina Insurance Department did not return telephone calls on Tuesday.

As part of the settlement, NCCI also agreed to drop its appeal of a Feb. 22, 2012, ruling by the South Carolina Court of Appeals that required the Insurance Department to post notice of all loss-cost changes, regardless of whether overall averages increase or decrease.

Both NCCI and McGriff argued state law requires notice only when the average for loss costs covering the state's 700 job classification codes goes up.

Elam argued that, without official notice, he had no standing to challenge loss-cost changes and ask the state's Administrative Law Court to force NCCI to divulge the details of its filings.

"This brings certain stability back to the market, and now we can start moving forward," Elam said on Tuesday. "With every loss-cost filing, regardless of whether the overall average increased, somebody was getting a rate increase."

Small Business Chamber President and Chief Executive Officer Frank Knapp Jr. said the settlement makes it clear that Elam and his successors can challenge loss-cost filings even when overall averages decline.

"These filings are a little bit math and a little bit art," Knapp said. "We're quite pleased that the proposed rate increase has dropped by more than 50%."

The South Carolina Consumer Advocate's Office has filed a series of challenges to NCCI's filings dating back to 2001. Elam said South Carolina law does not provide for rate hearings within the Insurance Department.

NCCI's call to boost loss costs by 32.9% in 2005 led to more than a year of legal wrangling in the state administrative law court. Former Chief Judge Marvin Kittrell reduced the increase to 18.4%, effective Dec. 1, 2006.

NCCI filed for another 23.7% increase in April 2007, but reached a settlement with Elam and the Small Business Chamber in May 2008 that limited the overall increase to 9.8%.

The double-digit increases prompted a series of workers' compensation reforms approved by the South Carolina Legislature in June 2007.

Following the reforms, NCCI obtained Insurance Department approval to cut loss costs by 0.3% in 2009 and by another 9.8% in 2010.

But Elam contested both filings, arguing that the South Carolina Insurance Department provided no notice of the filings and did not make the data available. Elam lost the challenge to the notice requirement in state administrative court and took the case to the state Court of Appeals.

The appeals court ruled on Feb. 22, 2012, that South Carolina employers have a right to know when loss costs change, because it can affect their individual premiums.

"Under the DOI's interpretation, an insured might get notice of the filing one year and might not get notice the following year, even though that insurer's loss costs increased in both years," the appellate court ruled. "Such an arbitrary result cannot have been intended."

Both McGriff and NCCI filed writs of certiorari asking the South Carolina Supreme Court to intervene. The petitions were pending when the parties reached the settlement on Tuesday.

The settlement calls for:

The state to approve an increase in loss costs averaging 3% in the voluntary market and to reduce loss costs by an average of 3.1% for "F" classifications – which apply to workers covered by the U.S. Longshore and Harbor Workers Act.
The Insurance Department and NCCI to withdraw their petitions for certiorari within 10 days of the settlement's approval.
Elam to withdraw pending challenges of previous loss-cost changes.
The parties to agree that NCCI's filings for 2009, 2010 and 2011 were not "excessive, inadequate or unfairly discriminatory."


NCCI State Relations Executive Amy Quinn could not be reached for comment on Tuesday.

In its annual state advisory forums, NCCI reported that, prior to the settlement, South Carolina would have experienced the third largest loss-cost increase in the Southeastern region. Mississippi regulators approved a 9.9% loss-cost increase that took effect on March 1.

Florida Insurance Commissioner Kevin McCarty approved an 8.9% rate increase, effective Jan. 1, 2012, and is considering NCCI's call to increase rates by another 6.1% next January.

NCCI reported that 2012 loss costs or rates increased in seven states in the region and declined in five others. Alabama regulators approved a decrease of 9.3%, the steepest cut in the region, effective March 1.

Knapp said the settlement will streamline future loss-cost challenges.

"Small businesses now can be assured that any overall changes in workers' compensation rates will be based on an objective vetting of premiums paid and carrier payments made to workers and health care providers," Knapp said.

Opposing workers’ comp and SCE&G rate hikes

The workers’ compensation insurance industry and SCE&G both have hearings in the coming months regarding their requests for more revenue.  The South Carolina Small Business Chamber of Commerce (SCSBCC) and its president and CEO, Frank Knapp Jr., will intervene to oppose both rate hikes.

The SCSBCC is joining the S.C. Consumer Advocate’s Office in pushing back on a 7.3% average increase filed by the National Council on Compensation Insurance.  The Administrative Law Court is scheduled to hear the case starting October 8, 2012.  Representing SCSBCC from the Injured Workers Advocates will be Bill Smith of Chappell, Smith & Arden and Kevin Holmes of the Steinberg Law Firm.

“Since 2005 Bill Smith and Kevin Holmes have formed an effective team with Elliott Elam, the state Consumer Advocate, to successfully fight against proposed increases in workers’ compensation insurance costs to businesses,” said Mr. Knapp.  “Because of our efforts, Administrative Law Judges have ordered up to 44% decreases from the insurance industry’s requests.”

On November 27 the S.C. Public Service Commission will begin hearing a 6.61% overall electricity rate hike being sought by SCE&G, which serves 668,000 residential and commercial customers in South Carolina.

Mr. Knapp will officially intervene in the hearing to oppose the hike as he has done effectively since 2004.  He has worked closely with the S.C. Office of Regulatory Staff in these rate cases resulting in proposed hikes being reduced by up to 50%.  Mr. Knapp does not need legal representation in these hearings because he is intervening personally as a residential and commercial customer of SCE&G. 

“SCE&G’s parent company, SCANA, saw its earnings increase by 29% in the second quarter of this year,” said Mr. Knapp.  “In addition the company is justifying its request by saying it needs a return on equity almost 0.5% higher than the current rate for Duke Energy.  Small businesses simply want to tell SCE&G “NO”.  Fortunately I will have that opportunity.”

My adventure with Mick and little Billy

A “cancerous worm”?  That is what an infamous blogger called me back on June 27th, the day I testified before the U.S. House Small Business Committee.

Will Folks, or little "Billy" as they called him in the many high schools he attended, has the most well-read blog in South Carolina, FitsNews.com.  But the former spokesman for the disgraced South Carolina "hiking the Appalachian Trail" Mark Sanford achieves his acclaim not because of persuasive public policy commentary or insightful political analysis but rather due to his eagerness to wittily degrade others often based on half-truths or no truth at all.

Get on little Billy's bad side and he's relentless.  But FitsNews is not just about personal vendettas.  It is well-understood that little Billy is a paid hit man for his clients. But his skewering of his targets with embarrassing interpretations of current events or the occasional scoops always makes for good political entertainment.

So why the "cancerous worm" characterization?

A little history might be helpful.  The South Carolina Small Business Chamber of Commerce and Governor Sanford rather quickly became adversaries on numerous issues in his first term.  Mr. Sanford talked a good small-business game but his administration, including little Billy (whose prior work experience was playing in a local band), was really only interested in talk.

When little Billy left the Sanford administration he, of course, parlayed his insider status into a public relations career and the launching of FitsNews.com.  But the notoriously personality-challenged entrepreneur raised his misogynous profile by pleading guilty to physically abusing his then lobbyist girlfriend.  Needless to say that when I subsequently contracted with his ex for lobbying services and little Billy was court-ordered to refrain from writing about her or the Small Business Chamber as her employer, his resentment of me and my organization was forever set in stone.

But "cancerous worm"? 

In the analogy he applauds Representative Mick Mulvaney for "pinning" me to the table and "dissecting" me following my testimony (I guess to expose my cancerous innards).  A little history here is relevant. 

I was good friends with Congressman John Spratt, one of South Carolina’s most respected, dedicated and effective public servant the state has produced but who was defeated by Mr. Mulvaney in 2010.  I had been honored to have Mr. Spratt on my radio show as a regular guest up until that time.  But even before that, Mr. Mulvaney and the Small Business Chamber had locked horns on a state procurement code bill that was intended to help our small businesses receive more of our taxpayer contract dollars.  Mr. Mulvaney singlehandedly stopped the legislation in 2008 but failed to do so in 2009—a fact that I informed his would-be constituents of before the 2010 election in an opinion editorial.

So it is understandable that little Billy and Mr. Mulvaney would look for every opportunity to attack me and the Small Business Chamber.  However, this time in his enthusiasm to ridicule, little Billy exposed more than his paid-for man-crush on Mr. Mulvaney (he calls him a "rock star").  Very quickly after the completion of the hearing in which Mr. Mulvaney read from prepared questions (not about the issue but about my and the Small Business Chamber’s small business integrity), FitsNews had the blog posted along with a YouTube link to just the 9-minute "testy exchange" between Mr. Mulvaney and me--something only a well scripted plan between FitsNews and Mr. Mulvaney's office could have achieved.  

And characteristically little Billy spins the event misleadingly so he can score his points.  He alleges that I was invited to testify by the minority for the purpose of encouraging more funding for the Environmental Protection Agency (EPA).   He then goes on to repeat anti-regulation talking points about the agency.

The truth is that I only knew that I would be testifying two days earlier and had not been directly contacted by Democrats on the Committee or the EPA and certainly was not told what to say.  The hearing was on the EPA’s compliance with the Regulatory Flexibility Act (RFA) in regard to small businesses.  The RFA requires federal agencies to review proposed regulations to determine if they will be unnecessarily harmful to small businesses.  I qualified to discuss the issue both because of the Small Business Chamber and our experience with a RFA in South Carolina which we helped to pass.   

No one, including me, knew what my testimony would be until the day before the hearing.  But after reading the testimony of the other presenters, it was clear to me that the problems described in their prepared testimony were most likely due to the lack of resources of the EPA to carry out the RFA mandate properly.  Even the U.S. Chamber presenter expressed a need for more resources for the EPA’s efforts to comply with the RFA’s rulemaking process.

Had little Billy read my entire testimony and how I reached my conclusions….oh but that would mean that he actually cared about facts and finding solutions to problems. 

You can read here my written testimony that due to a five minute time limit I was unable to fully give orally to the Committee.

You can also watch my testimony and all the questions asked of me by every Committee member including Mr. Mulvaney.  Let me know if I look like a “cancerous worm.”

Blue Cross giving rebates for failing to meet requirement

The State
July 24, 2012

Insurer violated new health care law in spending on claims

BY STEPHEN LARGEN The (Charleston) Post and Courier

South Carolina’s largest health insurer has begun sending out rebate checks to some policyholders because it failed to meet a requirement of the federal health care overhaul.

Blue Cross Blue Shield of South Carolina said Monday that checks – most for less than $200 – will be sent to individual and small group policy holders during the next two weeks. A company spokeswoman declined to say how much it will be paying out in rebates.

The provider, like some others, didn’t spend enough on customers’ medical claims in 2011, according to the terms of the Affordable Care Act.

Blue Cross Blue Shield said it is complying with the law, even though the insurer views the requirement as bad policy. 

The spending stipulation doesn’t address the root causes of rising health care expenses, such as waste and fraud and lifestyle choices, a company spokeswoman said.

And Jim Deyling, Blue Cross Blue Shield’s president of private business, said in a statement that “our concern remains that a rebate such as this not only creates a false impression of overpricing, but also reveals the fundamental flaw of the legislation, which is that it does nothing to reduce health care expense for members.”

The director of Gov. Nikki Haley’s Department of Health and Human Services agreed.

“In a health care system where it has been estimated up to 30 percent of health care spending is excess cost, these small rebates may be momentary relief for those who receive them, but they clearly don’t target the underlying reasons for out of control health care costs,” Tony Keck said in a statement.

Haley, like most Republicans, opposes the Affordable Care Act.

Conversely, the president of South Carolina’s Small Business Chamber of Commerce hailed the requirement that forced Blue Cross Blue Shield to issue rebates.

“This demonstrates that the Affordable Care Act, ‘Obamacare,’ health care reform or whatever you call it is doing what it said it would do: help make health insurance more affordable,” said Frank Knapp, a longtime supporter of the law.

Blue Cross Blue Shield held at least 60 percent of the market share in eight of the state’s largest metro areas in 2008, according to a study by the American Medical Association. 

MONEY BACK

BlueCross BlueShield of South Carolina will issue checks to some policyholders because it didn’t meet a requirement of the Affordable Care Act. Questions and answers:

Who will get rebates? Individual customers will receive checks directly from the company, while owners of businesses with between two and 50 full- and part-time employees, including seasonal help, will get one check for the company’s policy.

What can the rebates be spent on? No restrictions for individual customers. Small business owners can return money to employees, reinvest it to offset future health care costs or use it in another way that benefits employees.

Why are the rebates coming? The company did not meet the medical loss ratio for spending on customers’ medical claims in 2011. It was required to spend 80 percent of premiums for customers’ medical claims. It spent 74.8 percent in the individual market, and 79.9 percent in the small group market. The company won’t issue checks for large group plans as it exceeded the 85 percent target.

http://www.postandcourier.com/article/20120724/PC16/120729651/1177/south-carolina-s-largest-health-insurer-issuing-rebates

Crocodile tears of insurance industry

The crocodile tears were flowing at yesterday’s South Carolina Senate Banking and Insurance Subcommittee that was hearing two bills supported by the South Carolina Small Business Chamber of Commerce (SCSBCC). 

One bill, S.31, would simply require all proposed workers’ compensation loss cost rate adjustments (increases and decreases) to be subject to a hearing before a judge if the States’ Consumer Advocate and organizations like the SCSBCC want to challenge the proposals.  The current law appears to deny such transparency if an aggregate rate decrease is requested.  But a recent Court of Appeals ruling shot that SC Department of Insurance (DOI) interpretation down.  S.31 would codify the Court of Appeals ruling.

The other bill, H.3111, would simply require all workers’ compensation insurance companies selling policies in the state to put the latest loss cost and loss cost multiplier rates approved by the state into effect within 120 days.  Presently there is no requirement to do so.

As logical as these bills are, the lobbyists for the insurance companies were there to tell the Senators and a crowded room how over-regulated workers’ compensation had become.  We were told that it is such a difficult and time consuming process for the companies to defend the rate adjustment proposals compiled by their rating organization, the National Council on Compensation Insurance (NCCI). 

The best regulation for this insurance to guarantee the lowest premiums for businesses, they said, was for competition to run free.  And, they suggested, if we have to have any regulation of the insurance industry, it should be after a rate adjustment has been put in place—a system called file and use.  Only then could the Consumer Advocate challenge the new rates in court.

Oh, and one insurance lobbyist expressed concern for the DOI saying that the department couldn’t possibly respond quickly enough to individual company rate changes and meet the 120 day implementation schedule in H.3111.

This last objection died quickly when the DOI testified that they saw no problem meeting the required deadlines.  DOI was obviously not going to be a part of that insurance industry charade.

When I testified in support of S.31, I addressed the insurance lobbyists’ objections and suggestions.

Here are the facts.  Around 2002 the South Carolina General Assembly deregulated the loss cost multiplier, the part of the premium calculation consisting of profit and all other insurance company expenses except for the actual claim payments (loss cost).  The Legislature was told at that time that this deregulation would keep premiums down because of free market competition.  Sound familiar?

But of course, that didn’t happen.  The loss cost multiplier for all companies grew dramatically after that adding over $200 million in excess premiums to the system according to estimates of one influential state Senator, Glenn McConnell, after the SCSBCC brought the problem to his attention.  In 2007, the law was changed to re-regulate the loss cost multiplier, which then started coming down for all companies along with premiums.  Pretending that competition resulting from deregulation of the workers’ compensation insurance industry, or of any insurance for that matter, doesn’t protect the consumers from winking and nodding greed.  Case closed.

But as for the industry’s complaint that defending proposed rate adjustments in court is too hard and time-consuming for them, I have a suggestion—only ask for rate adjustments you can justify with the data and it will be less likely to end up in a court fight.

In 2005, the NNCCI proposed an average 32.9% increase in workers’ compensation insurance loss cost rates. The SCSBCC went to Court with the state’s Consumer Advocate to fight this increase and propose only a 12.7% increase. The SCSBCC was the only business organization to fight the big increase in court. On Oct. 3, 2006, the Court issued an order supporting much of the position of the SCSBCC and Consumer Advocate.  The Court ordered only an 18.4% increase, a 44% reduction from the industry proposed hike.

In December 2007, NCCI once again requested an increase in workers’ compensation loss costs of an average of 23.7%. And once again, the SCSBCC was the only business organization to intervene to oppose the increase. In May 2008, NCCI, the Consumer Advocate and the SCSBCC reached an agreement with NCCI and DOI for a 9.8% increase thus saving at least $130 million in premiums for small businesses.

The workers’ compensation insurance industry has an atrocious track record on rate increase requests. A file and use system the industry also proposes would simply let companies lock in excessive rates and force the Consumer Advocate to claw them back ­– a process that would take months. It is a terrible idea for small businesses.

But surely there is no need for the Consumer Advocate and organizations like the SCSBCC to intervene in a proposed rate reduction.  Oh, yes there is.

After the colossal failure of the 2005 and 2007 giant rate hike requests, NCCI proposed an average rate decrease of 0.3 percent in 2009.  But an average means that some individual classes went own and other went up—in this case almost half of the individual rates went up.  SCSBCC and the Consumer Advocate should have had the right to intervene in this proposed average decrease not only to challenge the individual rate increases within the filing but also the proposed decreases.  Based on our 2005 and 2007 experiences, we fully expect that the decreases should have been greater—we just didn’t have the opportunity to demonstrate this in the court.  S.31 corrects this problem.

The Senators on the subcommittee gave S.31 and H.3111 favorable reports and sent them to the full committee where the fight against the insurance industry and their tears will resume.