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Business, Free Enterprise and Constitutional Issues; Pro-Life and Pro Second Amendment. Susan Lynn is a member of the Tennessee General Assembly. She serves as Chairman of the Consumer and Human Resources subcommittee, a member of the Finance Ways and Means Committee and the Ethics Committee. She holds a BS in economics and a minor in history.

Sunday, February 09, 2014

Weekly Wrap - January 26, 2014

Email Replies
Last week after I sent my wrap I realized that replies were going to my former email address.  I have corrected the address.  Any replies you send now will go to the correct address so please feel free to resend any reply you may have sent last week or to reply this week.
Unemployment Insurance Presentation
The Consumer and Human Resources Committee heard a presentation on unemployment insurance (UEI).  I found information to be very helpful for my constituents.  I receive several phone calls about unemployment each week.  Largely, they are from people who are having difficulty using the system and I connect these individuals directly with someone in the department.  Some of the most important points in the presentation:
  1. The department understands that the computer system and the phone system have problems and they are working to fix them.
  2. The computer system often does not work because the main frame computer on which it operates is only in service daily between 7 AM to 6 PM and on Sunday from 8 AM to 4:30 PM.  The department is working to get the UEI system moved to another system so that operating hours can be 24 per day.  This is an open bid process and they hope to have a contract sometime in March for an updated system.  Implementation will take @24 months.
  3. The UEI system is not compatible with all web browsers – so anyone that is having difficulty during hours of operation should check that they are using one of the compatible browsers listed on the site.
  4. The phone UEI system is antiquated and inefficient – an improved system is in the works and should be implemented very soon (within two months).   This system too has time limitations and is only available between Monday-Friday 7 AM to midnight and Sunday 8 AM to midnight.  The highest number of call in any single month last year was 1.7 million calls a month but recent improvements have cut this down to 1 million.  They hope another improvement next month will further cut down calls by another huge percentage.  With 43,000 on UEI it is clear that may had to call multiple times in order to try to receive assistance with the system.
  5. The Department has made improvements to the email system for assistance requests and tracks the reasons for contact; 30% weekly verification ; 25.8% variable; 23% claim status; 12.5% missing payment; 7.5% pin issue; .4% address or phone change.
Many of the complaints about attempts to use the system are because the person was trying to use the system outside of these hours. 
About 43 thousand Tennesseans are currently drawing unemployment.  18,000 were removed from the system when the extended unemployment benefits were discontinued in December, 2013.
A Fight is Brewing over Litigation Funding Legislation
You may have never heard of litigation funding.  I had not until last year when a bill was filed to essentially ban the practice in Tennessee.
My first question whenever a bill seeks to regulate business or a contract or essentially seeks to put a business out of business is “Are there any consumer complaints?”
As Chairman of the subcommittee that hears this bill I checked with the state Division of Consumer Affairs and with the Department of Financial Institutions and after a thorough review no consumer complaints could be found.  So why regulate a business out of existence?
The litigation funding business is relatively new – perhaps 10 years old.   It is a practice where a funder gives money to a plaintiff to a lawsuit . Typically the money is wanted by the plaintiff in order to help sustain themselves until a settlement is reached.  If the plaintiff loses the lawsuit – they owe the funder nothing.  If they win the lawsuit – they pay the funder back the amount of money provided plus interest. 
Let’s say you were injured and couldn’t work so you sued seeking to be compensated for your situation.  Often, when a plaintiff cannot work they will fall behind on their bills and suffer financially waiting for the lawsuit to settle.  The defendant typically knows this (due to testimony given in depositions) so they make a low ball offer to the plaintiff.  Because the plaintiff is desperate and tired of fighting the offer is accepted.
Litigation funding developed to help such plaintiffs hold out for what they may feel is a fairer settlement.  The funder provides a requested sum which will typically help the plaintiff meet bills for the next two or three months – most often around $3000-$5000 dollars.  The plaintiff signs a contract stating that if the lawsuit provides a settlement the funder is paid back the $3000-$5000 with interest of @36%.  But if the plaintiff loses, the funder is not paid back – the plaintiff owes the funder absolutely nothing.
The funder is taking a huge risk and they lose a lot so the interest rate is high reflecting the risk.  Not all plaintiffs need such a product but it might be worth it for some to make this contract with the funder if he or she feels that their settlement might be higher should they be able to hold out a little longer. 
The legislation basically seeks to ban these contracts.  The side for this legislation states that the plaintiffs are being taken advantage of by the high rates charged by the funders.  The funders state that while they are getting 36% on perhaps $3000-$5000 dollars provided to the plaintiff – their losses are high and the rate reflects that.  Besides, they point out, the lawyers are often getting 1/3 of the proceeds of the entire lawsuit not just a small fraction and no one is banning that practice.
The legislation also considers the money a loan but the nature of a loan is that it must be paid back – remember – if you lose the lawsuit you owe the funder nothing.  The funders believe that they are making an investment and that it is not a loan.
Last year the legislation wanted the amount of funds provided to the plaintiff disclosed to the defendant – but this would have allowed the defendants to know exactly how long they needed to stall the court with procedural motions in order to let the plaintiffs money run out and they would become financially desperate again and settle for anything.
With no data on the losses incurred by the funders the legislation wants to set a cap on the amount of interest charged for providing the funding. But can the legislature justifiably cap an interest rate when we have no data?  And, should we cap a return on an investment it indeed this product is an investment?
I have a few rules of thumb when it comes to legislation;
  1. Are there warranted consumer complaints?  (People write me all the time telling me they want free healthcare but that is not in my opinion a warranted complaint).  I cannot find any consumer complaints on this issue, and since the bill has been here for two years no one has complained that they felt defrauded by the funders.
  2. Is the issue very prevalent?  From what I can tell, this is not a big industry in Tennessee. Most plaintiffs in lawsuits would never need to use this product because most do not sustain total loss of all income. And, most don’t have to use this product even if it might help them – they live with others who work or they can borrow money from relatives, credit cards etc.
  3. Is the issue extreme – does it involve grave damage, loss of life or fraud?  From what I can tell – no one has been defrauded or damaged.
However, I can tell that the insurance companies do not like this practice and that is why they brought the bill; because it does allow a plaintiff that might otherwise settle very quickly because they are in a financially desperate situation to hold out longer.  I can see that this type of funding would most definitely allow that to happen.  Imagine, if this bill passes, the “rich” people that sue for damages will still be able to hold out for what they consider a fair settlement but the “poor” people who perhaps would like to hold out will not be able to do so because this product will not be available or will be severely restricted.
I do not like lawsuits.  I do not want to encourage lawsuits.  But I am having a hard time finding a constitutional justification for essentially banning this practice.  Absent fraud – how could the industry not sue in court and have the law declared an unconstitutional restraint on trade or interference with a contract?
The Republicans in the Tennessee state Senate voted unanimously for the bill.  The Senate instituted a cap on interest that will surely put the industry out of business in Tennessee if passed by the House too.  And the Senate sponsor – he is an insurance agent.
I am still thinking this bill through so feel free to provide your comments and thoughts on this issue.

Please Watch the Mount Juliet News this Week for an Exciting News Article
I am sending a press release to the Mount Juliet News on the results of work on an issue that I have been working very hard to solve.

Wilson County Commission Calls for Private Acts to Build Expo Center.
Center would be funded by 1%-3% hotel tax and by ticket surcharge.

Last week I wrote about a request from the Wilson County Commission for two Private Acts to be sponsored by Senator Beavers and Representative Pody to enable the building an expo center at the Ward Agricultural Fair Grounds.  The Wilson County Commission approved two Private Acts for consideration by the General Assembly in order to fund the building of the facility. 

A Private Act is necessary when a local government wants to implement a policy that their state charter (their local Constitution) does not empower them to do.  The request in the Act is run as a bill in the General Assembly by the Senate and House representatives of the district.  The Act is not voted upon but rather adopted by the General Assembly.  This does not necessarily mean that the members support the measure but it authorizes the local government to commence a vote to change their state charter to do what the Act requests.  Most Acts are adopted by the General Assembly – unless the request in question is would be unconstitutional for the local government to enact.  For instance, a local government could not decided they wanted to vote to make their city their own country or to form a standing army.  In short, a Private Act asks the General Assembly for permission to allow the local officials to vote upon making a change to their state authorizing charter.
Private Acts are very common and typically ask the General Assembly to allow the locals to change their state charter to do a wide variety of different things – anything from changing the dates for elections to imposing a local tax.
 The intent of Acts passed by the Wilson County Commission is to use the funds to build an expo center at the Ward Agricultural Fairgrounds.
 Since the expo center is in Senator Beavers’ Senatorial district and Representative Pody’s House district it would be up to each of them to file the necessary bills and run them.  If done, this would allow the Wilson County Commission to vote and impose the change of policy asked for in the Acts.
The first Act requested by the county would help pay for the expo center by implementing anywhere from a 1%-3% hotel/motel tax upon local hotels.
 Wilson County already has a privilege tax on hotels set at 5%.  When combined with the city of Mount Juliet’s hotel tax rate of 5 %, the state sales tax of 7% and the county/city sales tax of 2.25 % – the tax rate for Mount Juliet hotels would be the highest in the nation at 22.25%.   
Naturally, this additional tax is strongly opposed by the hoteliers in Wilson County and Mount Juliet area elected officials, and many businesses and residents.  The hoteliers have expressed that they could live with an additional 1% tax but the county’s request, as drafted, calls for between 1%-3% additional tax.  It is not skeptical to imagine that if adopted, the tax would not stay at 1% because it would be allowed to grow to 3%.  The Mount Juliet City Commission passed a Resolution opposing the Act and asking Senator Beavers and Rep. Pody not to run the bill.
The second Private Act passed by the county would impose a surcharge on tickets of $1 for use of the expo center.  The Wilson County Fair Board, who would be the single largest collector of the surcharge, has voted in favor of the measure because they feel the facility would benefit the Wilson County Fair.
Both Acts received a 2/3rds vote of approval by the Wilson County Commission last fall.  Senator Beavers and Rep. Pody have had a standing policy that if a Private Act initially passes the County Commission by two/thirds vote they will each carry the measure through the General Assembly for adoption.  The 2/3rds vote requirement is because after adoption by the General Assembly the local government must then actually carry out the vote that will change their state charter.
Constitutionally, votes to change a charter require a 2/3rds vote of the local boy in order to effective – therefore, the legislators want to see that strong 2/3rds vote of support when the request is first voted upon and sent to the legislators.
Rep. Pody had stated that Senator Beavers had refused to file the bills unless the bills are each first adopted by the House.
House committees have a standing policy that no bill without a companion bill filed in the Senate will be considered by the committee.  This is because it is a terrible waste of the committee’s time when no Senate companion bill is filed.
However, Senator Beavers cleared this up when she stated very strongly on the Coleman Walker Radio Show on Friday that she will file the bills and run them in the state Senate.
 Stay tuned…
Major Business Expansions Announced In East And West Tennessee
The Tennessee Department of Economic and Community Development joined House Republicans this week to announce two major business expansions, one in east Tennessee and one in the west.

Colgate-Palmolive, one of the world’s leading consumer products companies, will invest $25 million in manufacturing and infrastructure improvements, and create 75 new jobs in Hamblen County. On the other side of the state, Conduit Global, one of the largest independent, fully-integrated business process outsourcing companies, will invest $8 million and create more than 1,000 new jobs in Memphis.

The two expansions come after Republicans worked diligently during the last legislative session to cut taxes, remove bureaucratic barriers to business, and create an overall friendlier, more business-oriented environment across the state to help spur job creation. The news also follows Business Facilities magazine, a national economic development publication, officially naming Tennessee as its ‘2013 State Of The Year’ for economic development, based on the state’s huge success over the last twelve months in recruiting new business and promoting economic development.

Cited in the magazine’s report were the state’s top five economic development projects of 2013, which created a total of 6,900 jobs, $3.2 billion in capital investment, and included seven expansions and three new recruitments.

House Republicans are optimistic that additional expansions will be announced in the coming days as even more pro-business polices are put into place by the state legislature.

Governor Haslam, House Lawmakers Announce Anti-Meth Legislative Packages
Earlier this week, Governor Bill Haslam announced new legislation aimed at reducing the growing problem of methamphetamine production in Tennessee. In addition, House lawmakers have also filed legislation aimed at curbing the abuse of methamphetamine across the state.
Over the last several years, meth production has become a widespread problem, affecting many aspects of Tennesseans’ lives. In 2013 alone, 266 children were removed by the Department of Children’s Services from homes due to meth-related incidents at an estimated cost of more than $7 million. In addition, the state spends approximately $2 million annually on meth lab clean-up, and in 2013, 1,691 labs were seized in Tennessee. These costs are in addition to the millions spent by local governments and law enforcement agencies to combat the state’s methamphetamine problem.
These new legislative initiatives build on the adoption of a 2011 law which set up the statewide electronic tracking system called nPLEX (the National Precursor Log Exchange), to monitor and stop illicit purchases of over-the-counter cold and allergy products containing pseudoephedrine, the most common ingredient used to illegally manufacture methamphetamine.
Though several more proposals are expected before the proposed February 5th legislative bill filing deadline, the proposals filed so far range from simply strengthening current state guidelines, to making products containing pseudoephedrine prescription only, attainable only through a prescription from a doctor. An additional proposal would create a mandatory minimum jail sentence for those convicted of meth offenses.
The bill proposed by Governor Haslam, referred to as the Tennessee Anti-Meth Production (TAMP) Act, seeks to limit access to products that contain pseudoephedrine while also ensuring law-abiding Tennesseans who need temporary cold and sinus relief are not affected.
In summary, the Governor’s bill includes three major provisions:
  • Individuals would be authorized to purchase up to 2.4g (the maximum recommended daily dose for 10 days) of products containing pseudoephedrine or ephedrine in a 30-day period by presenting a valid ID to a pharmacist, which is the way state law currently works.
  • If the consumer returns to purchase additional products, a pharmacist, at his or her discretion, may override the National Precursor Log Exchange (NPLEx) system to allow individuals to purchase up to 4.8g in that same 30-day period.
  • Anything above 4.8g in a 30-day period would require a prescription issued by a licensed physician, certified physician assistant, or authorized nurse.
According to data from the Tennessee Department of Mental Health and Substance Abuse Services, 97 percent of Tennesseans who bought cold medicine containing pseudoephedrine in 2012 bought less than 4.8g per month.
Without a doubt, the next several months will contain lively debate and discussion concerning the state’s ever-growing methamphetamine problem as lawmakers work with all sides to reach the most positive outcome for all Tennesseans.
Additional Background:

Tennessee is one of 17 states that currently use the NPLEx system, which works across state lines to track and stop illegal pseudoephedrine sales. As part of the same comprehensive anti-meth bill which implemented NPLEx, lawmakers have also passed legislation which:

  • Increases the penalty for making meth in the presence of children;

  • Makes it easier to prosecute those who purchase medicines containing pseudoephedrine at different times and places for the purpose of exceeding the allowable amount, or through use of false identification; and

  • Imposes minimum mandatory fines on those offenders.

House Republicans Kick Off Statewide Yellow DOT Safety Program
House Republicans have partnered with the Tennessee Department of Transportation to officially kick off the state’s new Yellow Dot Safety Program.

The new initiative, which was passed into law in 2012, is part of a nationwide program designed to provide crucial medical information to emergency responders in the event of a vehicle incident.

The program works by attaching a Yellow DOT sticker to a vehicle’s rear window. Once the sticker is attached, participants then fill out a series of medical information papers to store in the glove compartment of their automobile. If a serious accident takes place, first responders will see the Yellow DOT sticker and know to immediately look in the vehicle’s glove compartment for a photo and medical information on the vehicle’s driver.

Because many victims are often unable to communicate following a motor vehicle accident, the Yellow DOT sticker will assist first responders in their job of saving lives by providing access to important personal and medical information when they arrive on the scene of an incident, regardless of the individual’s condition. In addition, the program will provide better communication with hospital emergency staff concerning any injured parties.

“In that first hour after a serious injury, immediate medical care can dramatically increase a patient's chances for survival,” said Representative Curtis Halford, the primary House sponsor of the Yellow Dot legislation. “This program will help police and other first responders by giving them quick access to potentially life-saving medical information within minutes of a car crash or other accident.”

Individuals interested in participating in the new Yellow DOT program can visit their local driver services facility or by contacting the Tennessee Department of Safety at TennesseeYellowDOT@tn.gov. Participants will receive a Yellow DOT decal, a Yellow DOT folder, and a medical information sheet which consists of areas to fill in emergency contact information, medical information, recent surgeries, hospital preferences, current medications, and insurance and physician’s information.

The full text of the new law can be found by visiting:

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