REPRESENTATIVE JOE STRAUS: House will come to order. Members, please register. Have all registered? The quorum is present. The House and gallery, please rise for the invocation. The Chair recognizes Representative Dutton for our invocation.
REPRESENTATIVE HAROLD DUTTON: Thank you, Mr. Speaker. Would you join me in prayer? Dear God, we begin this prayer by thanking you, as your people, for listening to us. We end this prayer in the fervent hope that we continue to listen to you. As Christians, we pray this prayer in Jesus' name. Amen.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative McClendon to lead us in the pledge. [PLEDGE]
REPRESENTATIVE JOE STRAUS: Excuse Representative Van Taylor because of important business in the district, on the motion of Representative Lewis. Excuse Representative Frullo because of family business, on the motion of Representative Shelton. Excuse Representative Marcus because of important business, on the motion of Representative Dutton. Excuse Representative Miles because of important business in the district, on the motion of Representative Kuempel. Excuse Representative Vo because of important business in the district, on the motion of Representative Dutton. Is there objection? Chair hears none. So ordered. Representative McClendon moves to move the reading and referral of bills until the end of today's calendar. Is there objection? Chair hears none. So ordered. Madam Doorkeeper?
DOORKEEPER: Mr. Speaker, I have a messenger from the Senate at the door of the House.
REPRESENTATIVE JOE STRAUS: Admit the messenger.
MESSENGER: Thank you, Mr. Speaker. I'm directed by the Senate to inform the House that the Senate has taken the following actions. The Senate has passed the following measures: SB 9 by William, relating to the enforcement of state --
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Farias for a recognition.
REPRESENTATIVE JOE FARIAS: Mr. Speaker, members, I'd like to have your attention for just a minute. I do have some friends here from San Antonio and some folks from Newport News, Virginia, that are here visiting our Capitol. We have Ruth Asher, her son Peter, his fiancee, Rachel and her son. Welcome to the State Capitol. And, members, would you help me welcome them to Texas?
REPRESENTATIVE JOE STRAUS: Chair lays out on third reading SB 4. The clerk will read the bill.
THE CLERK: SB 4 by Seliger. Reeling to the composition of the Congressional Districts for the State of Texas.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Hunter for a motion.
REPRESENTATIVE TODD HUNTER: Mr. Speaker, members, I request permission for the Committee on Calendars to meet while the House is in session at 10:30 a.m. today, June the 5th, room 3W15; to consider a calendar.
REPRESENTATIVE JOE STRAUS: Members, you've heard the motion. Is there objection? Chair hears none. So ordered. Following announcement, the clerk will read the announcement.
THE CLERK: The Committee on Calendars will meet at 10:30 a.m. on June 15th, 2011, in 3W.15. This will be a formal meeting to consider a calendar.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Solomons.
REPRESENTATIVE BURT SOLOMONS: Thank you, Mr. Speaker. Members, this is the redistricting bill we passed yesterday. I do have a lege counsel technical corrections on some existing precinct lines, just a zero out -- the zero deviation, the zero population changes. And, with that, I'll move passage.
REPRESENTATIVE JOE STRAUS: The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Solomons.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Solomons.
REPRESENTATIVE BURT SOLOMONS: Thank you, Mr. Speaker and members. I want to tell you that I appreciate everybody's help in this. This amendment is a technical correction from lege counsel to conform the amount of (inaudible) existing precinct lines. Tosca, Bexar, Comal, El Paso Hays, Hidalgo, La selle, Maverick and Travis counties. There are zero population changes in the amendment. In other words, it doesn't move a single person from one district to another, it just straightens some lines out on the map. And it will make it easier on county officials when they draw their precinct lines. It's acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Solomons sends up an amendment. It's acceptable to the author. Is there objection? Mr. Walle, for what purpose?
REPRESENTATIVE ARMANDO WALLE: What does the amendment actually do? I'm sorry.
REPRESENTATIVE BURT SOLOMONS: The actual amendment helps your counties out, and all the counties out that I mentioned. It's zero population changes. It straightens out some of the lines so that the county officials don't have to go back in and change their precinct lines to match ours. They apparently, when they do their redistricting, match it up to what we have.
REPRESENTATIVE ARMANDO WALLE: As far as the local counties and --
REPRESENTATIVE BURT SOLOMONS: Right. Right. It does absolutely nothing except helps county officials in those counties just straighten their lines out to make them conform, and they don't have to go back to another the process for themselves.
REPRESENTATIVE ARMANDO WALLE: Okay. This is just for the local (inaudible).
REPRESENTATIVE BURT SOLOMONS: Yeah, zero population, persons involved.
REPRESENTATIVE ARMANDO WALLE: Okay.
REPRESENTATIVE BURT SOLOMONS: Thank you.
REPRESENTATIVE JOE STRAUS: Representative some Solomons sends up an amendment. It is acceptable to the author. Is there objection? Chair hears none. Amendment's adopted.
REPRESENTATIVE BURT SOLOMONS: Thank you, Mr. Speaker. Again, members, I appreciate everybody's courtesies and I move passage.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Hunter.
REPRESENTATIVE TODD HUNTER: Mr. Speaker, members, just so you heard the date, I request permission for the Committee on Calendars to meet today, June 15th, at 10:30 a.m. in 3W15 to consider a calendar.
REPRESENTATIVE JOE STRAUS: Members, you've heard the motion. Is there objection? Chair hears none. So ordered. Following announcement, the clerk will read the announcement.
THE CLERK: The Committee on Calendars will meet at 10:30 a.m. on June the 15th, 2011, in room 3W.15. This will be formal meeting to consider a calendar.
REPRESENTATIVE JOE STRAUS: The House will stand at ease until 10:40.
(The House stands at ease.)
REPRESENTATIVE JOE STRAUS: The House will come to order. The following amendment, the clerk will read the amendment:
THE CLERK: Amendment by Zedler.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Zedler.
REPRESENTATIVE BILL ZEDLER: Mr. Speaker, members, what this does is makes the changes only within three congressional districts: 6, 33 and 24. And 33 is an open seat, 6 is Joe Barton. What it does, is it takes him -- He used to have almost all of Arlington. Current map gives him none, or very little. And this one gives him a portion of Arlington, including his district office as well as his home. In the current map, his home and his district office were taken out and I think this is -- it's a good, fair way to get the solution solved.
REPRESENTATIVE LON BURNAM: Mr. Speaker, would the gentleman yield?
REPRESENTATIVE BILL ZEDLER: I do.
REPRESENTATIVE LON BURNAM: So does this proposed amendment in any way address the issue that continues to be a problem in Tarrant County, Representative Zedler; of cracking and packing the minority populations? You know, eastern Arlington has a large minority population. In fact, we were able to draw a majority/minority legislative district. And it's my understanding that those minority populations, and the minority populations in Fort Worth are ripped asunder. Does this amendment do anything to address those very legitimate and legal concerns about this illegal map?
REPRESENTATIVE BILL ZEDLER: Okay. As you know, the 33 is an open seat right now. And so that's -- And that map, or 33, was going to be a pretty solid republican district anyhow. I don't think it has any effect on that.
REPRESENTATIVE LON BURNAM: Mr. Zedler, that was not clear to me that you have answered my questions. Shall we make a another try at it?
REPRESENTATIVE BILL ZEDLER: Sure.
REPRESENTATIVE LON BURNAM: Where are the majority/minority precincts in Arlington, Texas? Which congressional district are they currently in?
REPRESENTATIVE BILL ZEDLER: Under the current map?
REPRESENTATIVE LON BURNAM: Under the proposed plan that we're dealing with on this House floor today.
REPRESENTATIVE BILL ZEDLER: I think they would be in 6. But, you know, in all honesty, I just got this so I -- I was looking at a different issue, and that was that under the current map he is not -- it took out his home and his district office. So this is an attempt to correct that as well as (inaudible).
REPRESENTATIVE LON BURNAM: Would you just clarify for me what you mean when you say and on -- in all honesty, you just got this? Were you assigned to carry this amendment by somebody?
REPRESENTATIVE BILL ZEDLER: No. Basically, what happened was, what I looked in it was -- what we tried, to make a minor correction to, trying to get his home and his district office back in the district. We also included UTA because Joe Barton had some significant help in the School of Nursing with UTA.
REPRESENTATIVE LON BURNAM: So all this amendment is going to do or is designed to do -- It is not designed to correct any of the illegal iniquities imposed on the people of Tarrant County by the current proposed lines. All it --
REPRESENTATIVE BILL ZEDLER: I'm not going to go along and say that there are any at all now. I'm saying this will simply not address the difference in that (inaudible).
REPRESENTATIVE LON BURNAM: So this amendment is not designed to address any of the civil rights, voting rights, legal rights? It is simply designed to do incumbent protection, to make sure the current congressman's personal residence is in this district, his personal district office is in this district; which I found unavailable on numerous indications, it's designed so a part of UTA, all though he consistently votes against higher funding issues; and it's designed to put the General Motors plant in the district, as well as the Cowboy Stadium; is that correct? Or do I need to repeat my question since you were distracted?
REPRESENTATIVE BILL ZEDLER: Yeah, I think you're correct.
REPRESENTATIVE LON BURNAM: Thank you.
REPRESENTATIVE PHIL KING: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. King, for what purpose?
REPRESENTATIVE PHIL KING: Can I ask Mr. Zedler just one more question? I'm sorry, Mr. Solomons. And I'm sorry, Representative; I was in the back. What -- What does this do? How much population is taken out of the Arlington area in the new district and putting in to 6? Is it just moving a
(inaudible).
REPRESENTATIVE BILL ZEDLER: It's basically moving the population between 24 -- primarily between 33 and 6. And, to some degree, 24.
REPRESENTATIVE PHIL KING: How much population are you shifting? Or tell me the rough area of Arlington you are carving out.
REPRESENTATIVE BILL ZEDLER: Well, the current map has almost none. He used to have all of it. And now what it does is it puts more of Arlington back in his district.
REPRESENTATIVE PHIL KING: Where do you pick up for that new district, 33 -- what is it, Number 33, the new district? Where do you pick up the population that you're taking out of it to do this? Because that district had all of Arlington. So where do you go to pick up that population? I am not saying it's a bad amendment, I just want to make sure (inaudible) see what it does.
REPRESENTATIVE BILL ZEDLER: I think it took it out of 33, which had a great deal of Arlington.
REPRESENTATIVE PHIL KING: Right. So where did you put the population back in into 33 from? Where did that population come from?
REPRESENTATIVE BILL ZEDLER: I think all it did was shift between 33 and 24. And it gave 33 less of Arlington, gave 6 more of Arlington.
REPRESENTATIVE PHIL KING: I'm not -- Forgive me, I'm not communicating very clearly. I apologize. Since you took population out of 33 --
REPRESENTATIVE BILL ZEDLER: Right.
REPRESENTATIVE PHIL KING: -- you had to put population back in 33 from somewhere else.
REPRESENTATIVE BILL ZEDLER: And I think -- I think basically what it boiled down to was it took it out of -- it simply moved areas around in 33 and 24. I mean 33 and 6. And it gave 33 perhaps more of Fort Worth and less of Arlington.
REPRESENTATIVE PHIL KING: Thank you. Maybe I can look at the map, I can understand it better. Thank you.
REPRESENTATIVE BILL ZEDLER: Move passage.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Martinez Fischer to speak in opposition.
REPRESENTATIVE FISCHER MARTINEZ: Thank you, Mr. Speaker. Members, I'm just going to oppose this amendment on third reading for a couple of reasons. Number one, we all had a prefiling deadline yesterday for second reading for maps like this. It gives us an opportunity to study them and know what the impact is. And while I understand Representative Zedler's only using this for Arlington and other places, both the Texas Legislative Black Caucus and the Mexican American Legislative caucus both have maps that do different things in the Dallas-Fort Worth metroplex. So I would urge you, unless you know exactly what it does; and I can tell you I don't. I've talked to Representative Veasey and he doesn't know what it does. And so I would urge you to vote against this amendment. One, on principal; everybody else had to prefile this yesterday, on Monday, so everybody knew what everybody was doing. And secondly, I think it could conflict or send a conflicting message that we may support something like this where, in fact, we have alternative maps for the Dallas-Fort Worth metroplex area. So, with that, I ask that those who are concerned about voting rights please vote no on this amendment --
REPRESENTATIVE LON BURNAM: Mr. Speaker, would the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Martinez Fischer, do you yield?
REPRESENTATIVE FISCHER MARTINEZ: I yield.
REPRESENTATIVE LON BURNAM: Thank you Chairman Martinez Fischer. I've heard, although I haven't seen it, that this proposed amendment is designed to put the General Motors plant, which is surrounded by minority communities, into Smokey Joe Barton's district, the current congressman. Do you see any irony in making sure that Smokey Joe Barton has the General Motors plant, in light of his clean air voting record in the National Congress?
REPRESENTATIVE FISCHER MARTINEZ: Only if he drives a Ford. I'm not sure.
REPRESENTATIVE LON BURNAM: I don't know if he drives a Ford or not. I agree with you, we should oppose this amendment.
REPRESENTATIVE FISCHER MARTINEZ: Thanks.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Solomons.
REPRESENTATIVE BURT SOLOMONS: Thank you, Mr. Speaker and members. Let me just point out a few things about this amendment, and I would have to echo -- I know it's amazing for many of you, but Mr. Martinez Fischer and I are on the same page on this. It's a last minute amendment. We're not exactly sure of all it ramifications, but what we can tell at this point; it could have been filed yesterday. We would have had time to analyze it --
REPRESENTATIVE ROBERTO ALONZO: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Alonzo, for what purpose?
REPRESENTATIVE BURT SOLOMONS: Just a second, let me lay out a couple of things. This amendment, basically, as far as we can tell right now, splits Arlington. It takes about 50,000 people out of Arlington. We made a concerted effort to try to keep Arlington whole, and to keep the cities whole when possible. It does more than just the district office and an alleged house. Right now, our records show that Mr. Barton -- this is all about Mr. Barton. To the detriment of Kenny Marchent in CD24, it literally takes her staff out of CD24 from Representative -- Congressman Marchent, who was a former member here. He wanted to put in Ranger Stadium. He already has Texas Stadium, apparently he needs Texas Stadium -- the ballpark stadium as well. And, quite frankly, he moves Hearst out of CD24 to get his population as well. So it seems to me that if Mr. Barton had wanted to do this earlier and worked with us through the second reading amendments, or even before; it would have more appropriate. I think this amendment has some other -- I do think, and I do think it has some other ramifications. I would ask you to table this amendment and we'll send it -- we'll send this bill over to the Senate and see what else we need to do with the map, if necessary. But I do drastically think that this is the epitome of Joe Barton, Congressman Barton, wanting to have just exactly what he wants without really going through the process, as all the other congressman and everyone else in this process really did. This last minute amendment really does dramatically effect some other districts. And, with that, I'll be happy to yield.
REPRESENTATIVE ROBERTO ALONZO: Thank you. Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Alonzo, for what purpose?
REPRESENTATIVE ROBERTO ALONZO: Gentleman yield?
REPRESENTATIVE BURT SOLOMONS: I yield.
REPRESENTATIVE JOE STRAUS: Gentleman yields.
REPRESENTATIVE ROBERTO ALONZO: Mr. Solomo ns, just a few questions, and --
REPRESENTATIVE JOE STRAUS: Members, can we have order please?
REPRESENTATIVE ROBERTO ALONZO: In the process of getting here today, we had hearings, we had -- throughout the state, we had hearings here at the Capitol. We had dates. In that process, we had different individuals participating in proposing maps to the body; is that correct?
REPRESENTATIVE BURT SOLOMONS: Yes, sir.
REPRESENTATIVE ROBERTO ALONZO: In that process we had House members, we had Senate members and we had committee folks, were on the state and we also had congressman; is that correct?
REPRESENTATIVE BURT SOLOMONS: What?
REPRESENTATIVE ROBERTO ALONZO: We also had congress --
REPRESENTATIVE BURT SOLOMONS: We had -- we had -- We had a variety of input from a variety of sources.
REPRESENTATIVE ROBERTO ALONZO: Okay --
REPRESENTATIVE SENFRONIA THOMPSON: Includ ing congressman, members of the House, members of the Senate, the voting public, the citizenry. We can all agree and disagree on certain aspects of all of this redistricting, but we did have this entire process that he went we went through for several months. And in this latest -- in special, too, as well for this congressional redistricting, yes sir.
REPRESENTATIVE ROBERTO ALONZO: If I may focus from all those different entities on the congress for a minute. Did you have input from different congress people from around the state?
REPRESENTATIVE BURT SOLOMONS: We had input from various congressman, both republican and democrat.
REPRESENTATIVE ROBERTO ALONZO: And when these congress individuals made proposals to you, the ones that, in my opinion, seem to have the most impact on the map were mainly republican congressman; would you not say so?
REPRESENTATIVE BURT SOLOMONS: I'm sorry, it's really hard to hear. There's a lot of conversation. Can you repeat that?
REPRESENTATIVE ROBERTO ALONZO: Okay. Would you not say that in -- in the way this map was shaped, that the ones that had the most impact on the decision of how the map came out were republican congressman; is that right?
REPRESENTATIVE BURT SOLOMONS: Not entirely. But they did -- We have a number of republican congressman, of course they did have input like any other congressman. It was available to all congressman.
REPRESENTATIVE ROBERTO ALONZO: Not entirely but almost entirely?
REPRESENTATIVE BURT SOLOMONS: No, there was just a lot. Because there's just a lot of republican congressman. There's a lot democratic congressman who had input through their own members as well.
REPRESENTATIVE ROBERTO ALONZO: In -- On the four additional new districts, would you say that the democrat was a Hispanic opportunity district, and the republicans were not?
REPRESENTATIVE BURT SOLOMONS: No, I wouldn't say that.
REPRESENTATIVE ROBERTO ALONZO: In the end, are the four new districts, how many were Hispanic opportunity districts?
REPRESENTATIVE BURT SOLOMONS: We created -- Well, there's eight Hispanic --
REPRESENTATIVE ROBERTO ALONZO: (Inaudible ) repeat the question -- Well, the question is four not eight, four -- of the four new ones.
REPRESENTATIVE BURT SOLOMONS: Oh, the four new ones?
REPRESENTATIVE ROBERTO ALONZO: Yes, sir.
REPRESENTATIVE BURT SOLOMONS: Well, it's -- sort of interesting. It -- it there are two and probably two. Now, depending on really it's about two and two, actually. But when you look at one of the districts it could go either way. So --
REPRESENTATIVE ROBERTO ALONZO: But in north Texas you didn't create one?
REPRESENTATIVE BURT SOLOMONS: Yes. And I know your concern in north Texas (inaudible) We did not create one in north Texas. I understand that that would be your -- you've advocated for that, and I'm sure. And the lawsuit that we'll hear there'll be an argument on that basis. And I understand that you have a difficulty in voting for the map because of that.
REPRESENTATIVE ROBERTO ALONZO: And you accept the concept that we have an argument that we should have a district in north Texas?
REPRESENTATIVE BURT SOLOMONS: I think there's a difference of opinion of where those districts should be. And I think that, as I explained to you, a lot of had to do with the assimilation of Hispanic and black throughout the community in north Texas, and the Hispanic citizens of voting age population issues. So when you start looking at those numbers they become kind of important, so there's a difference of opinion of whether you think we (inaudible).
REPRESENTATIVE ROBERTO ALONZO: (Inaudible) .
REPRESENTATIVE BURT SOLOMONS: You and Mr. Veasey, in particular, and some others really felt like there ought to be something up there. And we looked at that. We also looked at other parts of the state and that's why the map looks like it does.
REPRESENTATIVE ROBERTO ALONZO: A couple of more questions: There's a difference of opinion, but we have a good argument; is that correct?
REPRESENTATIVE BURT SOLOMONS: I think our argument is better, but I think we have a difference of opinion.
REPRESENTATIVE ROBERTO ALONZO: But we have a great argument?
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, the gentleman's time is expired. The point of order is well taken and sustained.
REPRESENTATIVE BURT SOLOMONS: I will move to table.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Zedler to close.
REPRESENTATIVE BILL ZEDLER: Mr. Speaker, members, basically what this does is give Joe Barton back part of Arlington. He used to have all of it. And it includes his district office and his home, and it effects six -- Which was his current district, 33, which is an open one. And some of 24, which is currently Kenny Martin's district.
REPRESENTATIVE MARC VEASEY: Mr. Speaker? Gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Veasey?
REPRESENTATIVE MARC VEASEY: Mr. Zedler, are you aware that in the current redistricting plan, without your amendment that there were members' district offices that were -- minority members' offices that they lost their district offices under the plan that's about to pass out. And you're going to make this change just for this one congressman, that they were minority members, African American members of the congress and our delegation that also lost their district offices due to reapportionment. Are you aware of that?
REPRESENTATIVE BILL ZEDLER: Well, I think what it boils down to is he's been a longstanding, good congressman. And I think he ought to -- keep his current (inaudible).
REPRESENTATIVE MARC VEASEY: So are the other members of congress. So are the other members of congress. Did you know that the plan that you're doing actually lowers the black and Hispanic voting age of the district?
REPRESENTATIVE BILL ZEDLER: Well, as you know, the state has become more and more republican and so, you know, sometimes that happens --
REPRESENTATIVE MARC VEASEY: (Inaudible)
(inaudible).
REPRESENTATIVE BILL ZEDLER: (Inaudible).
REPRESENTATIVE MARC VEASEY: That's not correct. The state has become more and more Hispanic and African American.
REPRESENTATIVE BILL ZEDLER: Right.
REPRESENTATIVE MARC VEASEY: So that would be effectually incorrect.
REPRESENTATIVE BILL ZEDLER: Okay.
REPRESENTATIVE MARC VEASEY: And, you know, the congressman (inaudible) (inaudible).
REPRESENTATIVE BILL ZEDLER: And I think -- I know that Joe Barton has tried numerous times to talk with Mr. Solomons, and to know avail. So I move passage.
REPRESENTATIVE MARC VEASEY: You know that the congressman has a house in (inaudible) too, don't you?
REPRESENTATIVE BILL ZEDLER: Thank you.
REPRESENTATIVE JOE STRAUS: Representative Zedler sends up an amendment. Representative Solomons moves to table. It's on the motion to table. The clerk will ring the bell. Have all voted? Being 115 ayes and 21 nays, motion to table prevails. Chair recognizes Representative Solomons.
REPRESENTATIVE BURT SOLOMONS: Thank you, Mr. Speaker. Thank you, members, for that. And I now move passage of the bill. Thank you.
REPRESENTATIVE JOE STRAUS: Anyone wishing to speak on, for, or against Senate Bill 4? If not, the question occurs on final passage of Senate Bill 4. It's a record vote. The clerk will ring the bell. Show Representative Lucio voting no. Have all members voted? There being 93 ayes and 47 nays, Senate Bill 4 is finally passed. Representative Zerwas? Chair recognizes Representative Taylor for a motion.
REPRESENTATIVE LARRY TAYLOR: Thank you, Mr. Speaker. I move to suspend the following rules: The 24 hour posting rule and all necessary rules to allow the Committee on Elections to consider HJR 13 tomorrow morning at 9:00 a.m. That's June 16th, in E2028.
REPRESENTATIVE JOE STRAUS: Members, you've heard the motion. Is there objection? Chair hears none. So ordered. Following announcement, the clerk will read the announcement.
THE CLERK: The Committee on Elections will meet at 9:00 a.m. on a June the 16th, 2011. Room E2.028. This will be public hearing to consider HJR 13.
REPRESENTATIVE JOE STRAUS: Members, we're moving to items eligible to the calendar. Senate's request for an appointment of conference committee on Senate Bill 7. Chair recognizes Representative Zerwas.
REPRESENTATIVE JOHN ZERWAS: Thank you, Mr. Speaker and members, I move to concur with the Senate's request to -- have a conference committee, and appoint the conference committee.
REPRESENTATIVE JOE STRAUS: Representative Zerwas moves that we grant the Senate's request for the appointment of conference committee on SB 7. Is there objection? Chair hears none. Is there objection to granting the Senate's request? Chair hears none --
REPRESENTATIVE RANDY WEBER: Mr. Speaker, I'm sorry I --
REPRESENTATIVE JOE STRAUS: Representative Weber?
REPRESENTATIVE RANDY WEBER: Thank you. I missed that request, again, please?
REPRESENTATIVE JOE STRAUS: To grant the Senate's request to grant a conference committee on Senate Bill 7.
REPRESENTATIVE RANDY WEBER: Okay. Thank you.
REPRESENTATIVE JOE STRAUS: No objection? So ordered. Following motions to instruct the conferees. Chair recognizes Representative Miller.
REPRESENTATIVE SID MILLER: Mr. Speaker and members, if I could have your attention. Many times during the regular session, we have put good pro-life amendments on bills, only to see them stripped off. You know, and frankly we've -- we've passed these pro-life amendments with other -- over a hundred pro-life legislators voting in favor of them and, I for one, am tired of them being stripped off. Representative Weber has a letter going around that many of you signed, several dozen of you have signed. I don't know how many. And in a minute I'm going to instruct the conferees to hold to those amendments. And I believe Representative Weber's letter says if they are stripped off we intend to vote against Senate Bill 7. So we're serious about this. Forty-four signatures so far. Mr. Speaker, I move to instruct the House conferees on Senate Bill 7 to include in the conference committee report the following amendments adopted by the House on June 8th: Amendment 7 by Hughes. The Hughes amendment matches a priority language in Senate Bill 7 to the Williams right of pass in House Bill 1. Also. Amendment 8 by Zedler, and that amendment required confidential data collection of all abortions in Texas, plus the reporting of abortion complications. Amendment 27 by Christian. And this was the amendment that prohibited hospital district from using tax revenues to fund abortions.
REPRESENTATIVE JOE STRAUS: Members, Representative Miller sends up the following instructions. Is there objection? There is objection? It's a record vote. The clerk will ring the bell. Have all voted? Representative Allen voting no. Have all voted? Being 101 ayes and 37 nays, the motion to instruct passes. Chair recognizes Representative Brown.
REPRESENTATIVE FRED BROWN: Thank you, Mr. Speaker. Members, I'd like to once again instruct the conferees to maintain the anti fraud amendment that we, as a body, overwhelmingly approved. I'd also like to point out that in the proposed language that I have here there's a glaring loophole, which seems like another attempt to leave the taxpayers and to be taken advantage of once again. The Senate, members, having to do with HMO's, NCO's and PBM's. They changed the language, they said if they're convicted and found liable and pay the penalty or fine, then they could do business with the State of Texas. We want the original language back in there that says if convicted or found liable or paid a penalty or fine in the amount of five hundred thousand, that they can't do business with the State of Texas for three years. And I would move passage.
REPRESENTATIVE JOE STRAUS: Is there objection on Mr. Brown's motion to instruct? Chair hears none. The motion is adopted. Are there any further motions to instruct the conferees? If not, the Chair announces the following conferees:
THE CLERK: House conferees for conference committee on SB 7. Zerwas, chair. Pitts, John Davis of Harris, Kolkhorst, Gonzales of Hidalgo.
REPRESENTATIVE JOE STRAUS: Excuse Representative Alaska because of business in the district, on the motion of Representative Howard. Is there objection? Chair hears none. So ordered. Chair lays out on second reading House Bill 3. The clerk will read the bill.
THE CLERK: HB 3 by Smithee. Relating to the operation and name of the Texas Windstorm Insurance Association and to the resolution of certain disputes concerning claims
(inaudible) that association; providing penalties.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker and members, this is the TWIA bill. The bill that's before you as the committee report is the identical bill that passed out of the House during the regular session. There will be a couple of amendments that are largely technical type of amendments, clean up amendments. One thing that I would like to say before I get started, there was an implication yesterday in the Senate committee that I had some personal interest in the outcome of this. I think that I'm entitled to tell you all that I don't. The implication was that I'm involved in representing the insurance industry. I haven't represented any insurance companies, anybody in the insurance industry since 1993 when I became chairman of the insurance committee. And so I'm standing here today telling you I have no financial interest in this, I have never made a penny off of TWIA, I don't intend to make a penny, don't expect to; and I have no personal investment or incentive in this. There's no motivation like that here. Now, having said that, I'll just tell you that we're getting very -- we're in storm season, we're getting very close to the hottest part of the storm season, and we really need to act to reform TWIA, because it affects all of us, it affects us in a very real way. As we sit here today, TWIA has about a hundred million dollars in the bank. Any additional money that they're required to pay above that is money they're going to have to go out and borrow, most of which they can't pay back. So they'll assess other policy holders on the coast and around the state to pay that money back. And that's what's at stake here. So we have several amendments. If Mr. Hunter wishes, I'll be glad to yield.
REPRESENTATIVE TODD HUNTER: Mr. Speaker, will the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Smithee?
REPRESENTATIVE JOHN SMITHEE: I yield.
REPRESENTATIVE TODD HUNTER: John, so just so we're clear again; the bill does not deal with rates, it's not a rate hike, it's not an access charge, it's not a fee. We're dealing with a liability issue, correct?
REPRESENTATIVE JOHN SMITHEE: That's correct. And, you know, I've been very careful and I've pretty much run every idea by you during this process to make sure that we're not indirectly hitting rates. I don't know of anything in there that even indirectly could -- and certainly there is no direct language that deals with that. This wasn't a rate bill and so that's -- That's where we end up.
REPRESENTATIVE TODD HUNTER: Thank you, John.
REPRESENTATIVE SYLVESTER TURNER: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Turner, for what purpose?
REPRESENTATIVE SYLVESTER TURNER: Would the gentleman yield?
REPRESENTATIVE JOHN SMITHEE: Yes, I will.
REPRESENTATIVE SYLVESTER TURNER: Chairman , you indicated that it has about a hundred million dollars presently. How would it generate sufficient dollars to cover any sort of claims that may arise?
REPRESENTATIVE JOHN SMITHEE: Well, two years ago, Sylvester -- And first of all, you got to realize they have about $70 billion worth of properties covered. $70 billion. One of the largest insurance companies in Texas, it's become. They've got a hundred million dollars in the bank. By any actuarial standard, that is insufficient. Once they spend the hundred million dollars, the next layer, which we passed two years ago, is that they issued -- they can issue a billion dollars worth of bonds, for which the policy holders are obligated. The comptroller's office and the bonding authority here in Texas tell us, and the bond buyer, the bond market tells us that they probably can't sell all or part of those bonds, because of the reputation that TWIA has acquired over the last year and a half. If they can't, one of two things happens: You either leave a hole there, and I don't know how we deal with that. Or else the commissioner may -- may order that the other bonds drop down, in which case coastal policy holders, who are non TWIA policy holders, will be assessed on their auto-liability coverage, all the other (inaudible) basically all their other PMC policy holders. But it will be on the coastal policy holders, up to another billion dollars. Beyond that then we go a half billion dollars -- Well, somewhere in there we have $600 million of reinsurance, but it doesn't kick in until after we pay all those losses up front. At some point, the policy holders around the state, in your district, including auto-liability policy holders, home owner policy holders; are going to be assessed to pay back the borrowed money. It will be borrowed money.
REPRESENTATIVE SYLVESTER TURNER: And that's the question that I'm going to raise. To the extent -- to the extent that HB 3 is not generating additional funds for potential claims that could result -- that could ensue, then the effect of HB 3 as it presently stands, becomes an impact -- I mean becomes -- everybody else's insurance premiums are subject to being raised?
REPRESENTATIVE JOHN SMITHEE: Well, it's like that, even if House Bill 3 doesn't pass.
REPRESENTATIVE SYLVESTER TURNER: Okay.
REPRESENTATIVE JOHN SMITHEE: What I'm trying to do -- I mean this is a financial bill with me. I'm making -- I'm not trying to pick winners and losers, not trying to hurt anybody. I'm just saying these are the finances we have, and so I'm trying to fit the maximum system for benefit into that available asset that we have. And, to do that, we are going to have to change our tort system. Because our -- We cannot -- Our present rate structure can't support the same tort system we just had. Because we essentially turned a 1.5 billion storm into more than -- Probably what's going to be certainly more than a 2 billion-dollar storm because of Hurricane Ike, because of the tort system.
REPRESENTATIVE SYLVESTER TURNER: Okay. Well, I would really confess this is not my area. I don't handle any of these claims, I never handled any of these claims. But I'm certainly interested on how these claims will be paid.
REPRESENTATIVE JOHN SMITHEE: Well, Sylvester, this is something that you need to know, and the other House members need to know; is our GR has already been assessed several hundred million dollars. The commissioner of insurance has indicated that when we're gone, in a couple of weeks, hopefully we're gonna in a couple of weeks; that he may well authorize an additional assessment that would be a hit on GR over the next five years of up to almost a half billion dollars.
REPRESENTATIVE SYLVESTER TURNER: Now, when you say a hit on GR, what does that mean?
REPRESENTATIVE JOHN SMITHEE: Well, the way the program was structured up until two years ago, and the way it was structured when Ike hit, so it's still part of what we live with, is that to pay these claims when TWIA didn't have the money, they would assess insurance carriers to provide insurance in Texas. Those carriers would then be entitled to a tax credit against a premium tax which would reduce the amount of money that the state would pay. Ultimately the treasury would pay those claims through those tax credits. We will have already issued tax credits of several hundred million dollars. Very likely we could have up to another half billion dollars of credit. That is the direct impact on GR. It reduces the money available for all the things that we appropriate for.
REPRESENTATIVE SYLVESTER TURNER: Okay. Will that be a draw on GR in the current biennium or in 2012-2013.
REPRESENTATIVE JOHN SMITHEE: Well, it -- I think there may be some impact on tax credits this year, in this past biennium. I do know that there will be some impact -- The comptroller is taking it into account in the next biennium as well. Even where we are right now without any more storms.
REPRESENTATIVE SYLVESTER TURNER: Okay. So as it relates to HB 3, HB 3 is dealing with the liability portion, it has -- it's not dealing with anything in terms of generating additional revenue in order to fund potential claims in the future.
REPRESENTATIVE JOHN SMITHEE: The only thing we've done, we have made some tweaks to the bonding lawyers and the bond buyers have indicated to us may be able to help us sell those bonds. And when I say us, I mean TWIA. They gave us some ideas that they said might make those bonds more marketable. And certainly the consensus was that if we couldn't show a significant improvement in the tort system in Texas, we could use that as a way to try to buy more bonds. Say that it's not the same old TWIA, we had changed the way we resolved these claims.
REPRESENTATIVE SYLVESTER TURNER: Okay. But are the changes in the tort system intended to place a cap or a significantly reduce the payout on claims that may be made on TWIA? Is that the intent?
REPRESENTATIVE JOHN SMITHEE: I think that's fair. I think what we're trying to do is to say everybody -- we are going to try to get into everybody's hands some money that pays for their losses, their shingles, their windows, whatever was damaged by the wind. We are going to -- if they have to go to court -- if they get to go too court if they don't get it resolved earlier, they can get their attorney's fees. They get prejudgment interest. But, beyond that, we just don't have enough money to go around.
REPRESENTATIVE SYLVESTER TURNER: Okay. I look forward to the debate.
REPRESENTATIVE JOHN SMITHEE: Okay. Thank you.
REPRESENTATIVE JOE STRAUS: Excuse Representative Villarreal because of important business in the district, on the motion of the Representative Madden. Is there objection? Chair hears none. So ordered. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Smithee.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Members, this is a fairly lengthy amendment which we prefiled and basically it's, more than anything, cleanup. But I think the most significant things that this amendment does, or seeks to do, is simplify the claims process. We eliminated the review panel and basically now the claimant has a direct line to go to court if there's a coverage dispute. We take cost of repair issues to an appraisal process, and most of the rest of this is primarily just clean up language that deals with some issues that have come up since the House passed its version. I'll be glad to address Mr. Eiland's question.
REPRESENTATIVE CRAIG EILAND: Mr. Speaker, does the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Smithee, do you yield?
REPRESENTATIVE JOHN SMITHEE: I yield, yes.
REPRESENTATIVE CRAIG EILAND: Okay, Mr. Smithee. A couple of questions as we go through this lengthy, 18 page amendment. Over on page 3 it says the association shall develop the simplified process that shall allow for the acceptance of an application for initial or renewal coverage from, and payment of premiums by a property casualty agent, a person insured under this chapter or an applicant. So, as I read that language, it means that a business owner or a person from the coast can -- you know, if they go into Farmers or All State or an independent agent and buy their homeowner's insurance, and they get a policy that excludes the wind coverage; that that individual business owner or individual homeowner can pick up the phone or go to a website and purchase coverage directly from TWIA without an insurance agent involved?
REPRESENTATIVE JOHN SMITHEE: Well, I think most of the coverage now is written through agents. But this was language that we had visited with the agents about. And, certainly, on renewals those -- those renewals shouldn't necessarily -- necessarily have to go through the agent. And so, you know, I don't want to create people having to go through an agent if they don't want to go through an agent. I mean there's no reason to do that if an individual can -- can handle the policy himself, he ought to be able to do that.
REPRESENTATIVE CRAIG EILAND: Okay. So in those situations, if I go to an insurance agent the first time and they place my coverage, and then the second time when it comes up for renewal I just pick up the phone to TWIA and say hey, I want to renew, I'm sending my check. Do we save the commissions and no commission is paid to the originating agent, or does that commission still flow to the agent?
REPRESENTATIVE JOHN SMITHEE: Well, I think it depends on the circumstances. If that agent is still representing that policyholder then I think there should be a commission paid. I think, frankly, that's one of those things we really can't address with statutes, it's very likely the commissioner will need to address with the making authority which he has to do that.
REPRESENTATIVE CRAIG EILAND: Okay. Well, every person that has a TWIA policy also would have a homeowner policy, and so they're going to have an agent on the homeowner's policy. And so I'm just trying to figure out how that's going to work if I call up TWIA and renew my policy directly.
REPRESENTATIVE JOHN SMITHEE: Well, I think that's going to have to be handled by rule making, because I'm not sure that we can write a statute with that many words in it to deal with all of those issues. I think it's a rule making process.
REPRESENTATIVE CRAIG EILAND: Okay. And then, over on the appraisal portion of your amendment, which is over on page 5, 6, 7, 8, I think; if you're going to -- if you're going -- number one is if an item can be appraised, does your bill, as amended, require mandate appraisal?
REPRESENTATIVE JOHN SMITHEE: Yeah. If -- What triggers appraisal is if TWIA says okay, you're covered for the loss. We don't contest coverage. In that situation, the claim would then go to appraisal, if there's a disagreement as to the cost of repair.
REPRESENTATIVE CRAIG EILAND: Okay. So in your bill as amended, will -- it will have mandatory appraisal?
REPRESENTATIVE JOHN SMITHEE: Yes.
REPRESENTATIVE CRAIG EILAND: And then how -- We've talked about a supplemental claim, because what happens --
REPRESENTATIVE JOHN SMITHEE: I'm not saying mandatory appraisal, if the claimant and TWIA agree, which hopefully they will, there's no appraisal.
REPRESENTATIVE CRAIG EILAND: Right.
REPRESENTATIVE JOHN SMITHEE: And if they can't agree then there's appraisal, is how you resolve the dispute.
REPRESENTATIVE CRAIG EILAND: That's the only option on the disputes with regard to cost or price?
REPRESENTATIVE JOHN SMITHEE: Yeah.
REPRESENTATIVE CRAIG EILAND: The only remedy is to go to appraisal?
REPRESENTATIVE JOHN SMITHEE: Yes. And appraisal is binding, just like it is in my insurance policy and most everybody in here.
REPRESENTATIVE CRAIG EILAND: Right. But the difference is in your policy and the TWIA policy currently going to appraisal is optional.
REPRESENTATIVE JOHN SMITHEE: Either party can demand it.
REPRESENTATIVE CRAIG EILAND: Right.
REPRESENTATIVE JOHN SMITHEE: And if one party demands it and the other doesn't you can still appraisal.
REPRESENTATIVE CRAIG EILAND: Right.
REPRESENTATIVE JOHN SMITHEE: It's required.
REPRESENTATIVE CRAIG EILAND: But in your policy right now, appraisal is optional for either side. But under the new TWIA policy it will be mandatory for either side?
REPRESENTATIVE JOHN SMITHEE: Well, like I say, if either party, under my policy, requested -- if the insurance company requested I've got to go. I don't have any choice because I've agreed to do it. But under the TWIA policy it will be a matter of choice, but only in those circumstances where the sole issue is cost of repair.
REPRESENTATIVE CRAIG EILAND: Okay. And then we go over -- And on issues where -- You now have a remedy to go to court, if you just disagree, and you first have a mandatory pre-suit mediation. And if that doesn't work, and you go to court, as you have the bill now there will be a judge that's appointed by the MDL panel; and that judge is not necessarily going to be from your county.
REPRESENTATIVE JOHN SMITHEE: He's going to be from a tier one coastal county, and it may not be your county because, you know, if you have a large volume of litigation you may need more than one judge. And you may need more judges in that county. So it give the flexibility to appoint the judge. And, as I told you, during the regular session one of the issues that we have faced with reinsures is they feel like it's very difficult for TWIA to win a case in a home county of a claimant. And so this is an effort to try to build some confidence in our judicial system.
REPRESENTATIVE CRAIG EILAND: It actually says a tier one or tier two.
REPRESENTATIVE JOHN SMITHEE: Or tier two. So it wouldn't be somebody from Dallas.
REPRESENTATIVE CRAIG EILAND: But it could be something somebody from -- people in Beaumont could have someone from Houston or Corpus come to Beaumont to handle their claim?
REPRESENTATIVE JOHN SMITHEE: Theoretically , my experience has been when hay try to appoint as geographically as similar as possible. And certainly there is nothing prohibiting them from appointing a judge in that county.
REPRESENTATIVE CRAIG EILAND: And --
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, the gentleman's time is expired. Point of order is well taken and sustained. Following amendment -- Following amendment to the amendment, the clerk will read the amendment.
THE CLERK: Amendment to the amendment by Smithee.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker and members, this is a amendment to the amendment. After we pre-filed this a last night there were several just directions that needed to be made. So these are just corrections, and I don't believe anything substantive to the amendment to the amendment. And it is acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Smithee sends up an amendment to the amendment. It's acceptable to the author. Is there objection? Chair hears none. The amendment to the amendment is adopted. Back on the Smithee amendment as amended.
REPRESENTATIVE JOHN SMITHEE: I would move adoption of the amendment as amended. It's acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Smithee sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. The amendment's adopted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Taylor of Galveston.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Taylor.
REPRESENTATIVE LARRY TAYLOR: Thank you, Mr. Speaker. Members, this amendment does three things: It authorizes the department to develop an incentive program for private carriers to write health coverage along the coast, is one of the things we've been trying to work on. It also clarifies that certain reports that are required in the bill that there are there for informational purposes, that they are not binding. Also it encourages mitigation for those folks in the wind pool by having substantial constructions, they can have some discounts figured in there if they're in the provision, they are under the waiver provision; if they have excessive (inaudible)
(inaudible) discounts. And I believe it's acceptable to the author.
REPRESENTATIVE YVONNE DAVIS: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Ms. Davis, for what purpose?
REPRESENTATIVE YVONNE DAVIS: Would the gentleman yield for questions?
REPRESENTATIVE LARRY TAYLOR: I yield.
REPRESENTATIVE YVONNE DAVIS: Thank you. Because this is apparently a big issue for folks, and so few of us know all of the details, I'd like to ask you what is the incentive program we're talking about? This is an incentive program we are supposed to be giving to all the insurance carriers; is that right?
REPRESENTATIVE LARRY TAYLOR: Yes, ma'am. And what this is something we worked on with Representative Eiland during the regular session. And it's a -- if a carrier will agree to write windstorm coverage in the (inaudible) counties, eliminating some of the exposure for the wind pool; that they will be able to use the -- what I call the one, two, three provision. They had -- An insured has one year from the date of loss to file a claim. And from the -- And then they have two years from the date that the company has made a decision to either appeal that or, you know, take to it court; whatever they want to do. So it's one year, two year and then three year max total. So if somebody waits for a full year to file their claim, within two years that claim should be litigated or whatever. They have to file, that notice of suit. So it just puts it a little bit -- it's a fairly generous time line, but it does slim it down somewhat. We're having the issue right now with TWIA policies that there's a four-year time line for people to file suit. So these are property claims. And on a property claim, you know, you should know if you have damages within a year. And I believe we have some extenuating circumstances, you know, for some reason that
(inaudible) you are not there to see that, that you have some extenuating circumstances, or you find it is within a wall that you couldn't see. But generally this is something that you should have known about, and you're required to notify the insurance company you have a claim. And then you have -- once the insurance company has made a decision, then you have two years to file suit.
REPRESENTATIVE YVONNE DAVIS: And the third one?
REPRESENTATIVE LARRY TAYLOR: Third is just a three-year max, the whole timeframe.
REPRESENTATIVE YVONNE DAVIS: For the whole timeframe?
REPRESENTATIVE LARRY TAYLOR: So one, two, three.
REPRESENTATIVE YVONNE DAVIS: So that's the incentive for companies --
REPRESENTATIVE LARRY TAYLOR: (Inaudible) in the first year then they can use those provisions, not only in the first tier county but across the state. And it's a fairly generous provision but it's an incentive to get companies to write in first tier counties.
REPRESENTATIVE YVONNE DAVIS: Thank you.
REPRESENTATIVE LARRY TAYLOR: Thank you. I believe it is acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Taylor sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. Amendment's adopted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Smithee.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker, members, this is a clarifying amendment. During the House debate during the regular session there was an amendment put on the bill that authorized -- didn't require, but authorized pre-event bonding. At the request of the some of the coastal members, we're just making clear that this does not constitute another layer of bonding, it's part of the same layer that's been authorize. And it's acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Smithee sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. Amendment's adopted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Walle.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Walle.
REPRESENTATIVE ARMANDO WALLE: Thank you, Mr. Speaker. Members, this is a simple amendment that would make the TWIA policy automatically renew on a
(inaudible) basis so it's not as burdensome for the policy holder. And, in addition to the actual agent that is going to be working the application to renew those policies, and that's the -- it's a simple amendment. And I'm not sure it's if acceptable to the author but, okay. Thank you.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker, members, I'm going to have to oppose Mr. Walle's amendment. This is something we've worked on in the bill, and the bill actually addresses. These policies are very difficult to renew right now, they're too difficult. So we put in the bill a streamlined renewal process, and having a commissioner basically adopt rules and a commission structure to reflect those new rules. The problem with an automatic renewal -- Basically what this does is once you have a TWIA policy it stays into effect forever until you cancel it. The the problem is that when a policy's renewed if the claimant or the policy holder hasn't paid the premium, or doesn't pay it; you could have theoretically have coverage for no payment. So we've got a provision in the bill now that says you've got to provide notice to TWIA that you want to renew, and that you're going to pay for the policy, and that you have to show that you're okay on the declinations of coverage, which are required for all policy holders. So I think the current bill accomplishes really what Mr. Walle's getting at, but where he's trying to go with this is really too far, and it will put TWIA in the position of probably insuring a lot of people who are never going pay for their insurance. And so I would move to table.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Walle to close.
REPRESENTATIVE ARMANDO WALLE: Thank you, Mr. Speaker. Again, this is -- makes it more efficient and effective for the policy holder, so that when you actually have a claim or -- not necessarily a claim, but when you -- let's say you don't have a claim and you are on the coast and it makes it a little bit burdensome for the policy holder to have to continue to reapply every year and send in that application. And we're just trying to make sure that policy holders are made whole. And I move against the motion to table.
REPRESENTATIVE JOE STRAUS: Representative Walle sends up an amendment. Representative Smithee moves to table. This is on the motion to table. Vote aye, vote nay. Show Representative Smithee voting aye. Representative Walle voting no. Show Representative Callegari voting aye. Show Representative Miller voting aye. Have all voted? There being 99 ayes and 39 nays, the motion is table prevails. Chair recognizes Representative Eiland for a recognition.
REPRESENTATIVE CRAIG EILAND: Mr. Speaker, members, before you all run over me on this bill, I want to introduce my nephew who's here from Afghanistan and Iraq. And I know Mr. Fletcher, with his son, every time he would come home he would be very relieved. And the same with me and my nephew. He's back, he's here. He'll get out of the Army in about a month or two and will be moving probably to Lubbock to work. So my nephew, Clay Eiland, up here in the gallery. And along with him is his wife, Heather, and his daughter, Sofia. Hi. He came back, he had ten days. He came back last December for the birth and went back for his final six months. So we're glad he's back to be a normal citizen and father. So thank you, Clay, for your service.
REPRESENTATIVE JOE STRAUS: The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Smith of Harris.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smith.
REPRESENTATIVE WAYNE SMITH: Thank you, members, this is agreed to language between the Texas Department of Insurance and the Texas Board of Special Engineers regarding the qualifications and requirements for engineers. And I think it's acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Smith sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. Amendment's adopted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Gallego.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Gallego.
REPRESENTATIVE PETE GALLEGO: Thank you, Mr. Speaker. Members, if you all -- As I look out at the 150 of us, think about how many of you are parents. Because I can count among us a significant number of us who are parents. Is there a difference -- As you're trying to teach your child, is there a difference between doing something -- If your child throws a rock through a window by accident, or if he throws a rock through window on purpose. Is there a difference? Or, for those of you who've had a bill in criminal jurisprudence, is there a difference between someone who runs over somebody on purpose, or somebody who does it by accident? Should they be treated the same? Well, this amendment essentially has that same argument at its core. But because what this amendment has to do is with is the deceptive trade practices, and whether you do it on purpose or whether you do it by accident. Because, truthfully, the way that this bill has been prepared, and the way the current language reads, then you're currently prepared to treat the windstorm that -- TWIA, same way whether it does something on purpose or by accident. And, to me, that's fundamentally flawed. Because if you make an error on -- for a person who you are insuring, and your make that error in good faith then that's one thing. But if you make an error it's not really an error, because you did it on purpose; that's something else. And so what this amendment simply does is it preserves the protections to those coastal home and business owners who are essentially going to get the same treatment, the same rights that are afforded all other private property owners in Texas. Because, right now, the way the bill is written, it jeopardizes the security of owning a building or a home on the coast by eliminating those -- those deceptive trade protections, those protections from a deceptive trade practice that everybody else across the state would have. So if your home is destroyed, for example, as a property owner you took the steps that were necessary to insure that your home as best you could, but the windstorm insurance association or an agent or Representative of TWIA knowingly or intentionally deceived you; knowingly or intentionally deceived you in violation of state law, what would happen? Well, under the current bill, the argument essentially would be too bad, so sad. Because you'd be treated whether they did it on purpose or whether they did it by accident, the result would be the same. So --
REPRESENTATIVE ARMANDO WALLE: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Walle, for what purpose?
REPRESENTATIVE ARMANDO WALLE: Would Chairman Gallego yield for just a few questions?
REPRESENTATIVE PETE GALLEGO: I'm happy to yield.
REPRESENTATIVE ARMANDO WALLE: Chairman Gallego, what you are saying is that policy holders -- well, better than policy holders would -- it would give free range for an industry, you know, treat their policy holders in a negative way.
REPRESENTATIVE PETE GALLEGO: I'm under
(inaudible) basic stuff. I mean, essentially, you know, you have -- you're a new dad and you want to teach your son, and all our sons and daughters we want to teach them the difference between right and wrong. If they do something as they learn by accident, then that's one thing. But why should we allow people who are doing something on purpose? And that's what you see here. I want to concentrate on that phrase, knowingly and intentionally. If they knowingly and intentionally do something wrong they shouldn't be treated the same way as if they did it by accident and in good faith.
REPRESENTATIVE ARMANDO WALLE: Right.
REPRESENTATIVE PETE GALLEGO: And that's what this amendment does.
REPRESENTATIVE ARMANDO WALLE: Under the Texas Trade Practices Act, I mean you -- that's the reason why it's there, is because -- to try to get rid of these bad actors.
REPRESENTATIVE PETE GALLEGO: You know, you've got to figure out a way to incentivize good behavior and to penalize bad behavior. And this is one of the best incentives for good behavior. You've got to treat people differently, depending on the circumstances.
REPRESENTATIVE VERONICA GONZALES: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Ms. Gonzales, for what purpose?
REPRESENTATIVE VERONICA GONZALES: Would the gentleman yield for a question?
REPRESENTATIVE PETE GALLEGO: I'm happy to yield.
REPRESENTATIVE JOE STRAUS: Gentleman yields.
REPRESENTATIVE VERONICA GONZALES: Represe ntative Gallego, in fact, doesn't the insurance code have protections in there if insurance companies, for instance, did summarily deny claims and you were later to find out through litigation that there were acts being down to deny the claim without -- without a good reason?
REPRESENTATIVE PETE GALLEGO: Absolutely.
REPRESENTATIVE VERONICA GONZALES: Okay. So what you are saying is we don't want people just for instance, we don't wouldn't want the windstorm insurance agency to say we're just going to summarily deny all claims. And if you find out years later because you've had to go through the expense of litigation to say well, too bad. Too bad. Because it didn't matter whether you did it intentionally, it doesn't matter whether you did it knowingly, it doesn't matter whether you did it fraudulently; you did it, and we helped protect it?
REPRESENTATIVE PETE GALLEGO: That's exactly right. This absolutely hammers at every policy owner. It absolutely hammers -- it treats them differently from everybody else in Texas, from every other private property owner. Every policy owner, every home owner, every business owner who is insured by TWIA is treated differently than you are anywhere else.
REPRESENTATIVE VERONICA GONZALES: And, in fact, we want people -- we want the insurance company to act fairly from the get go, and to say, you know, there -- if I don't, I risk the potential of having to pay extra contractual damages.
REPRESENTATIVE PETE GALLEGO: You know, TWIA risks nothing by dealing in bad faith. TWIA is risking nothing by engaging in fraudulent behaviors. TWIA risks nothing by knowingly and intentionally deceiving their policy holders, because they're not held accountable. And again, that -- It seems to me it's so fundamental, it's so basic. Every aspect of our system is built on a difference between good faith and bad faith.
REPRESENTATIVE VERONICA GONZALES: Correct.
REPRESENTATIVE PETE GALLEGO: Between doing something by accident, and doing something on purpose. Between doing something knowingly and intentionally, or thoroughly in good faith.
REPRESENTATIVE VERONICA GONZALES: And so your amendment would simply be saying to people if you want to avoid insurance companies or anyone, really, in general, from acting that way, that goes against good faith; then you'll vote for your amendment?
REPRESENTATIVE PETE GALLEGO: Absolutely, Chairman. And I want to thank you for bringing up a -- Again, the issue a very basic. Whether you're a -- whether you're talking about any aspect, whether you're talking about being a parent or running a business or insurance; the issue is should you be treated the same way if you do something wrong, and you do it by accident as if you're doing something and you're running a business and you do something wrong and you go it on purpose? If you do it with malice, if you do it -- in Spanish we would say (inaudible) (inaudible) if you do it on purpose, you shouldn't get the benefit of the deal, the benefit of that bargain. Those are, according to the Supreme Court, that's the fruit of the poisonous tree. You shouldn't be entitled to that benefit, and you shouldn't be entitled to that reward, so to speak.
REPRESENTATIVE VERONICA GONZALES: Absolut ely. I think you have a great amendment and I think that we would like to think that people are always going to do the right thing, but that's why we incentivize them, by putting in some type of teeth into the law in the event that they do not. So thank you for bringing the amendment.
REPRESENTATIVE PETE GALLEGO: This amendment incentivizes good behavior. I want to make this clear, as it's currently written this section excludes the Windstorm Insurance Association and it excludes TWIA from any protections or penalties that are awarded to private property owners if they knowingly or intentionally engage in deceptive trade practices.
REPRESENTATIVE JIM JACKSON: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Jackson, for what purpose?
REPRESENTATIVE JIM JACKSON: Gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Gallego, do you yield?
REPRESENTATIVE PETE GALLEGO: I'm happy to yield.
REPRESENTATIVE JIM JACKSON: Chairman Gallego, I'm not a lawyer so I just kind of get lost then. Because I (inaudible) triple damage is what it's about isn't it? It's not about being able to collect, it's about not being able to collect triple damages?
REPRESENTATIVE PETE GALLEGO: I beg your pardon?
REPRESENTATIVE JIM JACKSON: It's not being able to collect triple damages?
REPRESENTATIVE PETE GALLEGO: Triple damages are part of the normal DTPA or have been historically part of the normal (inaudible).
REPRESENTATIVE JIM JACKSON: The association has to pay triple damages to -- who has to pay that, where's the money come from?
REPRESENTATIVE PETE GALLEGO: Where does the money come from?
REPRESENTATIVE JIM JACKSON: Where's the money come from?
REPRESENTATIVE PETE GALLEGO: Well, I would assume that if the association didn't want to pay triple damages then they would engage in acts of good behavior and good faith.
REPRESENTATIVE JIM JACKSON: But where's the money come from?
REPRESENTATIVE PETE GALLEGO: Well, the money could come from TWIA in terms of triple damages.
REPRESENTATIVE JIM JACKSON: Where does TWIA's money come from?
REPRESENTATIVE PETE GALLEGO: Well, if you're trying to get me to say that the money comes from the policy holders, I understand that, Chairman Jackson but (inaudible) (inaudible). No, let's talk about this. Because that is very serious -- this is a very serious --
REPRESENTATIVE JIM JACKSON: It sure is.
REPRESENTATIVE PETE GALLEGO: -- this is a very serious difference. And it's not just about triple damages. This question is about whether you're going to treat a policy holder with respect or disrespect. It's about whether that policy holder is going to get his money's worth or not. It's about whether that organization that we know of as TWIA is going to charge people and then try to get out of paying them, or treat them wrongfully and totally, thoroughly and completely get away from this idea that they would be able to do anything.
REPRESENTATIVE JIM JACKSON: I understand that that's the lawyer's speak, but let me just --
REPRESENTATIVE PETE GALLEGO: (Inaudible)
(inaudible).
REPRESENTATIVE JIM JACKSON: I'm not a lawyer, but this is about triple damages that the policy holders would have to pay in addition to their --
REPRESENTATIVE PETE GALLEGO: Chairman Jackson, whether -- You know, I guess you can look at it that way. But whether the glass is half full or half empty depends upon on whether you are drinking or pouring.
REPRESENTATIVE JIM JACKSON: (Inaudible) lawyer.
REPRESENTATIVE PETE GALLEGO: And so from my perspective, because I don't do this kind of work either, but from my perspective, when I'm talking about that person who has just lost their house, that's the person I am worried about. And the person who just lost their house, and they are worried about representation and now (inaudible).
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, that the gentleman's time has expired. The point of order is well taken and sustained. Chair recognizes Representative Smithee to speak in opposition.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker and members, I'm going to move to table. And this is probably the most important concept in the bill. And I certainly agree with Mr. Gallego that if his child does something wrong he should do something about it, but you don't go around slapping every other kid in the neighborhood because your child did something wrong. And that's what this is all about. In TWIA we know who the bad actors were, we know their names, we know what they look like. Do you know what happened to they want after we paid all the initial damages? They got bonuses, they got new trucks. They got severance packages. That's how they were punished. The people that did the bad act never got punished at all. But, you know who get punished? And it's still going on right now. The out policy holders on the Texas coast are going to pay for this for a long time to come. They didn't do anything. They didn't even know it was going on, but they're the ones who are going to have to dig deeper in pack their pockets to pay triple damages for -- And let me be clear, we have not had a case where triple damages have been awarded, because none of these cases go to trial. But I tell you what has happened, we're seeing settlements, and Mr. Taylor's got a list of them and he can verify them; we're seeing settlement after settlement where TWIA is paying somewhere around 85 to 90 percent of the value of the house for a wind damage claim. Now, I don't want to belittle Hurricane Ike because it was a very serious storm, it resulted in death. But Hurricane Ike on its route, as a windstorm, was about a Category 2, I think, Mr. Taylor. It had as very much more serious surge that would be indicated in a Category 3 or 4 storm. But we just got cover wind in TWIA. We shouldn't be having these kind of claims in TWIA being paid. But they are being paid. And a big part of that is the threat of treble damages, because of the a lot of damaging emails that came out of TWIA; they were stupid, damaging emails, that even though it didn't have anything to do with this claimant's claim, they're still going to get admitted into evidence; TWIA's scared to death so they are really more than these claims are worth and it's going to impact every member in this room and all the people we represent at some point. So that's why I'm going to move to table the amendment. It is not logical to punish someone who didn't commit the bad act. Also, if we had -- if -- We had this law in effect in this last storm, and you can see how well it worked. It just wasn't a deterrent to bad conduct. I'll be happy to yield.
REPRESENTATIVE LARRY TAYLOR: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Taylor, for what purpose?
REPRESENTATIVE LARRY TAYLOR: For a question of the gentleman.
REPRESENTATIVE JOHN SMITHEE: I yield.
REPRESENTATIVE LARRY TAYLOR: Mr. Smithee, is TWIA -- First of all, what does TWIA stand for? We say TWIA all the time.
REPRESENTATIVE JOHN SMITHEE: Texas Windstorm Insurance Association. It's an association. It is nonprofit. There are no profits. Most companies, when they get struck with treble damages or punitive damages, they pay them out of profits. That gets the attention of the shareholders and the board of directors. Here there are no profits, so it's immediately passed directly to the policyholders.
REPRESENTATIVE LARRY TAYLOR: So what we're trying to do -- This is a quasi state agency, it's not an insurance company; is that correct?
REPRESENTATIVE JOHN SMITHEE: It's not an insurance company -- so -- so --
REPRESENTATIVE LARRY TAYLOR: If we want -- If we want to punish the bad actors, I think you said it very well, do we punish the policyholders, co-op members of TWIA by making them pay higher rates? Or do we fire the bad actors?
REPRESENTATIVE JOHN SMITHEE: We need to get rid of the people that are making these decisions. And like you've said many times, there's no incentive for them to make these decisions. They don't make more money. There's no incentive. They're a lot like ERS in a way, that they're just taking claims in and just trying to pay them out fairly. You can't sue Social Security for treble damages, you can't sue ERS, you can't sue the federal flood program, which is very analogous to what we have with windstorm.
REPRESENTATIVE LARRY TAYLOR: Well, any of those state agencies that we have in the State of Texas, if they're not acting well, if they're not doing their jobs properly; would it be fitting for us to penalize that agency and increase the rates of people that are related by that agency pay, or increase the taxes that people pay, or would it not be more beneficial just to fire the people who are not acting well?
REPRESENTATIVE JOHN SMITHEE: You've got to get it under control and there's some things in this bill that do that. One thing, TDI, as you know now, practically -- TWIA is under the supervision of TDI. And they're watching these. And if we have a storm this year they will be still be watching this very closely. They're under a supervision, and this bill gives them authority to do even more. We will also have realtime files to make sure that these abuses are during on a systematic basis. Now yes, you may have an isolated instance here or there where you the system doesn't work as well as it should, but we're just trying to do the best that we can for as many people as we.
REPRESENTATIVE LARRY TAYLOR: Would you agree with me that the main purpose of TWIA is to issue policies, and then pay claims as they're presented?
REPRESENTATIVE JOHN SMITHEE: That's really all they do.
REPRESENTATIVE LARRY TAYLOR: And they should pay those claims quickly, fairly; and they shouldn't may more than what they're supposed to be paid and they shouldn't be paid less, they should pay the reasonable, fair amount isn't that --
REPRESENTATIVE JOHN SMITHEE: And I would add consistently. Because one of things we saw is that some claimants got more money than they were entitled to, or appeared to be entitled to; some they couldn't even get them to call them back. That's not the way the railroad should run.
REPRESENTATIVE LARRY TAYLOR: Well, through this bill, from what I understand, from what I'm seeing, is you're trying to establish a process where these people's claims will be taken care on a quicker -- that what happened in the past. We've all seen what's happened from Hurricane Ike, nothing good came from Hurricane Ike. Would you agree with that? And the further we've gotten into it the worse it's gotten, the more information we found out, the worse it's been, from how much we paid the defense lawyers, to how much we paid the plaintiff lawyers, we're trying to make a process from this bill to make a process where folks will only be treated fairly at rates that will stay within reason. Are you aware that we stand -- Right now, you talk about earlier, we have we've got a hundred million dollars from in a trust fund. That's on reserves. Are you aware that we've spent over a hundred million dollars in litigation costs so far on Hurricane Ike? (Inaudible).
REPRESENTATIVE JOHN SMITHEE: Just on our lawyers. Just on our lawyers. And they haven't tried one case -- At least one that I know of, yet. And they know -- I don't know where how we've spent that money. I don't know what they've done. You and I met with them, but I still don't know how we've spent that -- I don't know how we spent that much money on lawyers.
REPRESENTATIVE LARRY TAYLOR: It's a 130 some odd million dollars that have been spent, just on litigation costs, on things that have never gone to court. It's unbelievable. So what you are trying to do is make a process where people can be treated fairly, they get their claim treated fairly. (Inaudible) we've got to have things that are made so they act right. Well, what happened with Hurricane Ike? Did they not wait two years, two and a half years to finally get paid what they should have been paid in the first place?
REPRESENTATIVE JOHN SMITHEE: And the statute, as you say, was in place; and it didn't work.
REPRESENTATIVE LARRY TAYLOR: And who benefited from that? Now, certainly not the claimant. The only people that's benefited were the people trying to fight for treble damages, incentives to come back and do this again on whatever storm comes in the future.
REPRESENTATIVE JOHN SMITHEE: I don't want any of your constituents to have to wait two years to get paid on a claim that should have been closed within just a few weeks.
REPRESENTATIVE LARRY TAYLOR: You know, you and I have disagreed a lot on TWIA over the years. We've been on the insurance committee for a number of years. But I think in this deal, I've enjoyed working with you. I think you've done a good jot to try to come up with a fair process that allows the courts to still be available to the people along the coast, but at the same time keeping a system where they can get their claims paid quickly and fairly, and feel like they've been treated fairly by the association. And you put things in place to make sure that that happens, and I appreciate your work.
REPRESENTATIVE JOHN SMITHEE: Well, I appreciate all you have done. And, you know, we may not know how well this works until we have another storm, and I hope that's not until you and I are both out of here. But once we have another storm we'll know how well this works, and we can move forward. So, thank you.
REPRESENTATIVE LARRY TAYLOR: Thank you, Mr. Chairman.
REPRESENTATIVE JOE STRAUS: Mr. Gallego, for what purpose?
REPRESENTATIVE PETE GALLEGO: Mr. Speaker, will the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Smithee, do you yield?
REPRESENTATIVE PETE GALLEGO: Mr. Speaker, since this is our first opportunity at I'd like, in advance, to ask for an extension time because I'm sure the time is running short.
REPRESENTATIVE JOE STRAUS: You have about three minutes, Mr. Gallego.
REPRESENTATIVE JOHN SMITHEE: You talk fast and I'll talk fast.
REPRESENTATIVE PETE GALLEGO: Mr. Smithee, Commissioner or Representative Jackson, Chairman Jackson asked about where the money was going and whether this was about treble damages. You have indicated that no treble damages have ever been paid under a claim; is that correct?
REPRESENTATIVE JOHN SMITHEE: We haven't tried any cases. So you haven't had an award of treble, but treble has influence the amount that TWIA has paid out.
REPRESENTATIVE PETE GALLEGO: But it's never been paid out?
REPRESENTATIVE JOHN SMITHEE: Not with Ike.
REPRESENTATIVE PETE GALLEGO: It's never been paid out. And the truth is that there was issues that, with respect to wrongful denial of claims, and emails and some issues that came out that made it pretty difficult to defend TWIA; is that correct?
REPRESENTATIVE JOHN SMITHEE: I would say that's accurate, yes.
REPRESENTATIVE PETE GALLEGO: And as that happens -- Now, one of the fallacies that seems to me that in order to buy insurance from TWIA do you have to go TWIA agent or can you go to another insurance agent?
REPRESENTATIVE JOHN SMITHEE: No, you go to any agent, almost any agent.
REPRESENTATIVE PETE GALLEGO: And so you go to any insurance agent, any insurance agent who makes a misrepresentation doesn't necessarily work for TWIA. But that insurance agent is also going to get the benefit of the protection of this bill; is that correct?
REPRESENTATIVE JOHN SMITHEE: I don't think so, because he's not an agent of TWIA.
REPRESENTATIVE PETE GALLEGO: Well, if you are -- If you're -- If somebody makes a misrepresentation to you, and he's the person who sold you your TWIA policy, he may be an agent of TWIA, but --
REPRESENTATIVE JOHN SMITHEE: No, he's not an agent of TWIA.
REPRESENTATIVE PETE GALLEGO: Okay. What is he to TWIA?
REPRESENTATIVE JOHN SMITHEE: He's nothing. He's the agent of the policy holder who buys the policy. We haven't changed that at all.
REPRESENTATIVE PETE GALLEGO: And so it's your understanding, then, that these limitations that you're extending are not going to be extended to independent agents who contract with the associations, who contract with TWIA?
REPRESENTATIVE JOHN SMITHEE: I don't think -- I don't think there's anything in here that would do that, Pete. And, Pete, I will say people don't buy these policies because they're misrepresented, they buy these policies because it's the only thing they can get.
REPRESENTATIVE PETE GALLEGO: I understand that. But the challenge of buying these policies is when you buy them you expect them to be there for you, and you don't expect to have an issue with someone who refuses to settle your claim, or -- It seems to me that if you're paying out as an insurance company 85 to 90 percent of the value of the house, it's because someone has valued your damage claim at 85 or 90 percent of the house.
REPRESENTATIVE JOHN SMITHEE: That's not true. We're seeing that right now. And these claims that are probably 15,000-dollar claims, they're paying out multiples of that. And their position is we're paying them out because of the threat of what the plaintiff might recover if a suit went to trial. So we have turned, you know --
REPRESENTATIVE PETE GALLEGO: So they might have to cover at maximum, on a 15,000-dollar claim, they might recover a maximum of $45,000?
REPRESENTATIVE JOHN SMITHEE: Or more. I mean, most of them haven't gone above the insured amount of the dwelling.
REPRESENTATIVE PETE GALLEGO: As I read the copy of the statute, that consumer may recover -- the tryer of fact may award not more -- not more than the three times the amount of damages. Not more than three times. So it wouldn't be any more than forty-five thousand dollars on a 15,000-dollar claim.
REPRESENTATIVE JOHN SMITHEE: Under Article 21 -- well, the old 2121. Now it's been codified, but that's what the statute reads. But we're reading -- we're seeing even higher multiples than that. And I don't, I don't get into these claim files to really know what is happening but we're seeing certainly suggestions of things that's going on, and we've been told that.
REPRESENTATIVE PETE GALLEGO: If you violate Chapter 541 of the insurance code, the deceptive trade practice act kicks in, and it kicks in for everybody exempt TWIA; is that correct?
REPRESENTATIVE JOHN SMITHEE: Well, under the current law TWIA is included. We're taking them out of TWIA because TWIA is not an insurance company.
REPRESENTATIVE PETE GALLEGO: So under your proposed legislation, 541 of the insurance code would apply to everybody except TWIA?
REPRESENTATIVE JOHN SMITHEE: That's correct.
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, the gentleman's time is expired. Chair recognizes Representative Gallego to close.
REPRESENTATIVE PETE GALLEGO: Thank you, Mr. Speaker. Members, let's talk about this amendment very quickly, because I'm sure that there are other amendments up there and I hate to take up so much time. But here is the issue for me, and it's very simple: If you take the steps that are necessary to insure your home or your business, and whoever you're dealing, with respect to purchasing a policy from the Texas Wind Insurance Association; somehow there's a knowing -- there is -- your claim is handled and it's handle badly. What do you do? Keeping in mind that when you use the windstorm insurance policy, that's a pretty bad time in your life, because you've either been hit by a flood or a hurricane; it's going to be some catastrophic event. So you're at a moment where your business or your home, or whatever, you're at a really weak moment in your life. And there's going to be, as a result of this legislation, very, very, very limited options for you. And your options are going to be limited because regardless of whether your policy was knowingly or intentionally mishandled, if there was a knowing or intentional misrepresentation; no matter how bad, how bad faith, how malicious, how whatever the issue is; you may have had a prior relationship with someone at TWIA who is mad at you and doesn't like you anymore, because your son dated their daughter. And the truth is that even if whatever extraneous even influences that decision on your policy they're protected. They're protected even from their own decisions.
REPRESENTATIVE JOE STRAUS: Mr. Miller, for what purpose?
REPRESENTATIVE PETE GALLEGO: (Inaudible) fundamentally unfair.
REPRESENTATIVE JOE STRAUS: Mr. Gallego, do you yield?
REPRESENTATIVE PETE GALLEGO: I'm happy to yield, Mr. Speaker.
REPRESENTATIVE DOUG MILLER: Thank you, Pete. And I appreciate your concern. And I heard the dialogue between you and Chairman Smithee. And I just want to be sure, because there are literally hundreds, hundreds, if not thousands of agents that are out there --
REPRESENTATIVE PETE GALLEGO: Selling TWIA policies.
REPRESENTATIVE DOUG MILLER: Selling TWIA policies, trying to take care of their customers --
REPRESENTATIVE PETE GALLEGO: Absolutely.
REPRESENTATIVE DOUG MILLER: And, you know, they read the rules just like we read the rules. But they're there because the insurance companies they represent will not insure those homes or those structures for wind, because they're just not going to do it. So, the only way they can help get the coverage for their customers is to provide coverage or try to apply the TWIA. You would agree with that, correct? That they're trying to help their customers?
REPRESENTATIVE PETE GALLEGO: Absolutely.
REPRESENTATIVE DOUG MILLER: And so -- But what you're going to is the claim aspect here; is that correct?
REPRESENTATIVE PETE GALLEGO: Yes.
REPRESENTATIVE DOUG MILLER: Isn't it a fact that those agents, whether they work for a company or they're independent agents or whatever they are, that their input as far as --
REPRESENTATIVE PETE GALLEGO: Let me put it -- Let me rephrase it, Mr. Miller, because there's two aspects of this. And the first is if you sell a policy and you sell a policy in good faith, and you understand the policies, because you've had your conversation with TWIA and TWIA has hold you x and Y and Z, and you turn around to the person, to your customer, who you have built a relationship with, and you say look, my credibility is at stake here. Here is X and Y and Z. And if, in the meantime, TWIA decides through whatever mechanism, and it could be totally -- it can be very arbitrary and very capricious, quite frankly, under this; the provision that Mr. Smithee and his -- has brought forth. But they decide it's not going to be X and Y and Z. You need a claim and you need them, and all of a sudden it's A and D and C. And so that customer is now mad at you, all right.? Because you -- And you and your customer both are mad at TWIA, all right? Because TWIA has changed their story, all right? TWIA, in that circumstance, is totally, thoroughly and completely protected under this legislation.
REPRESENTATIVE DOUG MILLER: Right. But now let me say that you understand that the contract, the insurance contract, is a contract between -- it is a two party contract, right? It's not a three party contract. The agents' not a party to it.
REPRESENTATIVE PETE GALLEGO: Correct.
REPRESENTATIVE DOUG MILLER: So, the contract is between the ensurer, TWIA in this case, and the insured, the person that's buying the policy. So, the agent is just the facilitator, and the fact that they're doing this, I mean the fact is, like you say, they may be mad at the agent --
REPRESENTATIVE PETE GALLEGO: Mr. Miller.
REPRESENTATIVE DOUG MILLER: But the agent doesn't have any control over the contract.
REPRESENTATIVE PETE GALLEGO: But here's what the agent -- It's worse than that, because the agent now no longer has any control over his own reputation or his own credibility. That agent puts his name, his credibility, his future opportunity to do business in that community on the line for someone who can arbitrarily and capriciously change their mind. And I don't really know very many situations where that can happen with impunity, with protection, and with complicit acceptance by the law in Texas. Because that is essentially what incentive are you going to have? What credibility are you going to have when you sell all of the those policies and all of a sudden those policies don't mean what you've told your customer what they mean. And you've told them because that's the information that you were provided by TWIA.
REPRESENTATIVE DOUG MILLER: Here's the question I have though, is to you and Mr. Smithee, is the fact that there's not saying -- he's not saying, and I don't think I heard him saying, maybe you can tell me different, that still TWIA can be forced to pay. But what I think you're looking for, correct me if I am wrong, that if they don't pay the claim you're looking for three times; isn't that what your -- you want to punish them?
REPRESENTATIVE PETE GALLEGO: That's not -- the law says you're not entitled -- there's no entitlement to three times. It says the tryer of fact may award not more than three times the amount of the damages, may award; all right? But here's what I'm looking for. I'm looking to incentivize good behavior, and I'm looking to punish bad behavior. And by incentivizing good behavior, here's my -- here's my issue: We have a history, you have a track record at a company that now has a track record of dealing in bad faith. And you can ignore that track record and say no, we're going go ahead and go on about our business. And we can say well, we've made changes, and it's new management, and this is the new TWIA. We're now, we're all smiles and we're all nice and we all --
REPRESENTATIVE DOUG MILLER: But doesn't the new TWIA (inaudible) have a double oversight? You keep talking about it, and what I'm hearing Mr. Smithee saying is a double oversight. One, you've got TDI, you've got the Department of Insurance that's going to be there in the event that there's a problem with the claim. And then in the second standpoint we've got us, right here at the legislature, doing just what we're doing today to rein in TWIA, or PCIP or a whatever it's going to be called in the future.
REPRESENTATIVE PETE GALLEGO: This is a question again, you know, is the (inaudible) glass half empty or full, depends on whether you are drinking or pouring. Because from my perspective, what we're doing on this particular issues is not very good oversight. And, in fact, I would argue that you are giving them license. You're, in essence, rather than making them atone for their sins, you are essentially giving them the blessing to continue doing what they were they were doing, albeit in a very subtle way. We can rant and rail about how bad they were, but when you take the teeth out and so the bite is only gums, it's not a very solid bite.
REPRESENTATIVE DOUG MILLER: Well, and I guess that's a degree of bite, maybe. That's a degree of punishment. That's might be what we're talking about. Let me come back to the question I did want to ask you about, and that is that the fact that you agree that this is a two party contract between the insured and the insurer. And the agent, unless they commit some act which damages or causes further damage to the -- to the claimant --
REPRESENTATIVE PETE GALLEGO: I think you have to be --
REPRESENTATIVE DOUG MILLER: -- really separated here, wouldn't you agree?
REPRESENTATIVE PETE GALLEGO: -- be able to show that your claimant that your agent also act in bad faith, and -- And so --
REPRESENTATIVE DOUG MILLER: And that's the current law, isn't it?
REPRESENTATIVE PETE GALLEGO: And it seems to me, and certainly in the agents that I've dealt with, I've never found that at home, with the folks that I deal with because, quite frankly, I wouldn't deal with them anymore if that was the case.
REPRESENTATIVE DOUG MILLER: There's another incentive they have there, isn't there?
REPRESENTATIVE PETE GALLEGO: But again, it also all depends on the company that you deal with. You know, there's a difference. As you know, there's an argument between people who are insurance agents who want to be independent insurance agents, versus those who want to work for a company; and that's a whole turf battle. But it gets to the same kind of issue of what kind of ability do I have? And that is why I say, and that's why I think this is so tremendously --
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, the gentleman's time is expired. Representative Gallego sends up an amendment. Representative Smithee moves to table. This is on the motion to table. The clerk will ring the bell. Vote aye, vote nay. Show Representative Smithee voting aye. Show Representative Gallego voting no. Have all voted? There being 103 ayes, 36 nays, motion to table prevails. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Eiland.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Eiland.
REPRESENTATIVE CRAIG EILAND: Mr. Speaker, members, this isn't there's an adjustor advisory board in the bill, and there is a prohibition from being a lobbyist. And one of the people that's either on the adjustor advisory board or wants to be on it is a lobbyist for like wildlife and game management and deer. And so what this amendment does is simply say you can't be a lobbyist for any insurance related issues, but you could be a lobbyist for some non-related issue. I believe it's acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Eiland sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. Amendment's adopted. Following amendment to the amendment, the clerk will read the amendment.
THE CLERK: Amendment by Walle.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Walle.
REPRESENTATIVE ARMANDO WALLE: Thank you, Mr. Speaker. Members, this amendment, the way it reads on your screens is a little difficult to understand. But basically what the amendment would do is set the sunset at 2015. And it is acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Walle sends up an amendment. It's acceptable to the author. Is there objection? Chair hears none. The amendment's adopted. Following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Hernandez Luna.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Hernandez Luna.
REPRESENTATIVE ANA HERNANDEZ LUNA: Thank you, Mr. Speaker. Members, this is a simple amendment that just requires an insured with the member of the association offer windstorm and hail insurance in all geographic areas where the members are insured offered the insurance on September 1, 2011.
REPRESENTATIVE ALLAN RITTER: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Ritter, for what purpose?
REPRESENTATIVE ALLAN RITTER: Will the gentle lady yield for a question?
REPRESENTATIVE JOE STRAUS: Ms. Luna, do you yield?
REPRESENTATIVE ANA HERNANDEZ LUNA: I yield.
REPRESENTATIVE ALLAN RITTER: Can you tell me in English what that amendment says?
REPRESENTATIVE ANA HERNANDEZ LUNA: I think that's the language I used to explain it.
REPRESENTATIVE ALLAN RITTER: Yeah. And in southeast Texas English, does that mean any insurance company that is a private insurance company that's in association with Windstorm now will a have to write?
REPRESENTATIVE ANA HERNANDEZ LUNA: They have to continue providing policies in the areas in which they do on September 1, 2011. Move passage.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Here's what I'm afraid of: First of all, if this bill doesn't get immediate effect, it's -- it's not going to be effective until after September 1. But here's the problem: We're basically, the amendment is going to tell the companies if you are writing in these areas on September 1 of 2011, you've got to stay there forever. I'm concerned that you're going to be companies leaving these coastal areas because it's a now or never deal. It's like okay, the door's open, but once the door's shut you can't get out. Well, most people walk out the door at that point. That's my big concern with this amendment. I think Mr. Taylor probably shares that as well.
REPRESENTATIVE DOUG MILLER: Mr. Speaker?
REPRESENTATIVE JOHN SMITHEE: Yes.
REPRESENTATIVE DOUG MILLER: Will the gentleman yield for a question?
REPRESENTATIVE JOE STRAUS: Mr. Smithee, do you yield?
REPRESENTATIVE JOHN SMITHEE: Yes, I yield.
REPRESENTATIVE DOUG MILLER: John, isn't that the same situation with states down in Florida, when all the insurance companies were forced to continue writing coverage throughout the state, along the coastline, which 80 percent of the coastline; and they just chose to just withdraw from the state?
REPRESENTATIVE JOHN SMITHEE: Yeah, I mean they'll just pull out of the state. Now this amendment probably wouldn't force like All State or State Farm to leave, but there are some smaller companies who would just say look, it's not worth it to be put in this position. And we very well could lose some of our smaller companies, which are a very important part of our market. We've wrestled with this, how do we force insurers to write in these areas? The problem is that these are private companies. It's difficult to force them to do anything. Because they have constitutional rights, just like any business does. And when you start forcing them to do that first of all, it impacts the cost and availability all over the state. And so --
REPRESENTATIVE DOUG MILLER: So this what you said is if they're forced to do this, they're going to have to raise premiums for everybody in Texas to compensate for the risk that they're taking, you know, without -- and because of this government mandate.
REPRESENTATIVE JOHN SMITHEE: Yeah. I think, you know, we've studied this for years, and I think we have been trying to focus on incentives to get companies to write in these areas, instead of trying to force them to. Because it really is isn't good for the coast and it's certainly not good for the rest of the state.
REPRESENTATIVE DOUG MILLER: Isn't is the incentive that we've offered them is to lower the tax and, if that's an incentive is that you pay less insurance premium tax if you will write in particular areas?
REPRESENTATIVE JOHN SMITHEE: Not exactly. Because what we require them to do is take a piece of the coast, but if they will write those policies they can get out of the -- out of TWIA and --
REPRESENTATIVE DOUG MILLER: Okay.
REPRESENTATIVE JOHN SMITHEE: -- so we provide that incentive.
REPRESENTATIVE DOUG MILLER: So there is an incentive for them, but as opposed to this is going to say you have got to write in the panhandle -- Or even if you don't write there today, you are mandated to do that if you are part of (inaudible).
REPRESENTATIVE JOHN SMITHEE: You can
(inaudible) tell them the door's open until September of -- September 1st, they're going to leave while the door's open. And it's going to have that unintended consequence of forcing carriers out of the market this year, during Hurricane season. Right in the middle of Hurricane season. And it would be a real problem, because it will put more people into TWIA; which we don't need right now.
REPRESENTATIVE DOUG MILLER: So, the two problems are people leaving the marketplace, not being there for us, and higher costs?
REPRESENTATIVE JOHN SMITHEE: That's right. I'd move to table.
REPRESENTATIVE ANA HERNANDEZ LUNA: Thank you Mr. Speaker. Members, as Mr. Smithee just mentioned, we are concerned about more policy holders being included in TWIA. But that's exactly what will happen if we allow these private insurance companies to pull out of the coastal communities, TWIA will be the insurance provider, or we will have more policyholders, if we have a hurricane there will be more claims that are mishandled, there will be more lawsuits. So I urge you to vote against the motion to table.
REPRESENTATIVE JOE STRAUS: Representative Hernandez Luna sends up an amendment. Representative Smithee moves to table. This is on the motion to table. The clerk will ring the bell. Show Representative Smithee voting aye. Representative Hernandez Luna voting no. Show representative Torres voting aye. Have all voted? Being 98 ayes and 43 nays, the motion to table prevails. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Sheets.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Sheets.
REPRESENTATIVE KENNETH SHEETS: Thank you Mr. Speaker, this amendment just places a 1.5 million dollar cap on the coverage of dwellings.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: I'm just going to leave this to the will of the House. And I think some of the members wanted to have a vote on this. What this amendment does is it limits a residence to 1.5 million dollars in TWIA. What would happen to the practical matter, it only affects I think like 20 houses down there, I think it's 28 or something, 18. I think 10 of those are primary residences, 8 are second homes. What it would do is the person that owns that house could buy up to 1.5 million with TWIA, and if they wanted any more than that they would have to go to an excess policy with a domestic or surplus line of carriers.
REPRESENTATIVE ALLAN RITTER: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Ritter, for what purpose?
REPRESENTATIVE ALLAN RITTER: Would the gentleman yield?
REPRESENTATIVE JOHN SMITHEE: I yield.
REPRESENTATIVE ALLAN RITTER: Mr. Smithee, this amendment is strictly for residential?
REPRESENTATIVE JOHN SMITHEE: It's residential.
REPRESENTATIVE ALLAN RITTER: Okay.
REPRESENTATIVE JOHN SMITHEE: He's not impacting commercial.
REPRESENTATIVE ALLAN RITTER: Okay. It has nothing to do with secondary homes or homestead homes? Nothing to do with commercial?
REPRESENTATIVE JOHN SMITHEE: No, it does have something to do with homes. There are only ten homes that I -- that we know of that would fall under this category that are insured by TWIA right now.
REPRESENTATIVE ALLAN RITTER: But it doesn't speak to been specifically a second home or homes --
REPRESENTATIVE JOHN SMITHEE: No, any homes -- (inaudible).
REPRESENTATIVE ALLAN RITTER: And it doesn't speak to commercial at all?
REPRESENTATIVE JOHN SMITHEE: No. That's my understanding.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Sheets to close. Mr. Legler, for what purpose?
REPRESENTATIVE KEN LEGLER: May I ask the gentleman a question?
REPRESENTATIVE JOE STRAUS: Mr. Sheets, do you yield?
REPRESENTATIVE KENNETH SHEETS: I do.
REPRESENTATIVE KEN LEGLER: What you are saying, any home -- any house that is valued over 1.5 million. And have you been down to Clear-lake area?
REPRESENTATIVE KENNETH SHEETS: I have not.
REPRESENTATIVE KEN LEGLER: And there's homes, maybe they're not on TWIA now, this would deny them ever to getting any more, and if they're homestead
(inaudible).
REPRESENTATIVE KENNETH SHEETS: This would not deny them from getting coverage, they would get coverage up to 1.5 million, and then beyond, maybe they would get excess coverage through the private market.
REPRESENTATIVE KEN LEGLER: What if the private market doesn't cover it?
REPRESENTATIVE KENNETH SHEETS: I'm sorry?
REPRESENTATIVE KEN LEGLER: What if the private market won't cover it?
REPRESENTATIVE KENNETH SHEETS: They will cover it. These are homes that are multi million dollar homes.
REPRESENTATIVE KEN LEGLER: I know
(inaudible) if there's any land or like Clear-lake area and areas like that in John Davis' district? If you're on the water front, you know, in the Houston area the prime property is hard to get. And a 1.5 million dollar home on that water is not a 1.5 million dollar home in Amarillo.
REPRESENTATIVE KENNETH SHEETS: Right. We're talking about the dwelling.
REPRESENTATIVE KEN LEGLER: And I mean a home, and so what we're doing is we're actually punishing people because the prior -- the property is higher priced in certain areas than before. It'd be like saying all insurance, just because you live in a tornado area you are going to only have a house valued at 1.5 and you can't have it any more.
REPRESENTATIVE KENNETH SHEETS: This covers the structure, not the land.
REPRESENTATIVE KEN LEGLER: Well
(inaudible) in a home. The same thing.
REPRESENTATIVE KENNETH SHEETS: So you can move that home, it's the value of the dwelling. It's not the value of the land.
REPRESENTATIVE KEN LEGLER: Well, the value of the dwelling. Right. But it's the same, if the the dwelling is valued in areas of higher priced because the (inaudible).
REPRESENTATIVE KENNETH SHEETS: Right. And they're still going to be able to get coverage, they're going to get coverage (inaudible).
REPRESENTATIVE KEN LEGLER: So we should do the same with TWIA in Tornado Alley?
REPRESENTATIVE KENNETH SHEETS: Well, we don't have TWIA in Tornado Alley. This is a state insurance agency.
REPRESENTATIVE KEN LEGLER: So what you are saying then is you want to punish anybody on the coastline?
REPRESENTATIVE KENNETH SHEETS: No. This isn't punishing them. They're still going to be able to get coverage.
REPRESENTATIVE KEN LEGLER: It sounds like you are trying to punish anybody on the coastline from getting -- because they live on coastline and have a house down on Clear-lake, and I think that's wrong. I can't go for this amendment.
REPRESENTATIVE KENNETH SHEETS: No, we're not doing that. We're just making sure we are not subsidizing multi million dollar homes with state insurance policies.
REPRESENTATIVE JOHN DAVIS: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Davis, for what purpose?
REPRESENTATIVE JOHN DAVIS: Will the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Sheets, do you yield?
REPRESENTATIVE KENNETH SHEETS: I will.
REPRESENTATIVE JOHN DAVIS: I'm just trying to make sure I understand. If they can -- they -- You are saying they already can get insurance, so why would they need to go to TWIA first?
REPRESENTATIVE KENNETH SHEETS: Well, they're going to get TWIA for their primary insurance coverage, up to 1.5. We already have a cap of 1.7 under the current law, so we're lowering the cap to 1.5. And they'll get coverage for up to 1.5, and if they need additional coverage beyond that they'll get through their excess lines.
REPRESENTATIVE JOHN DAVIS: Okay. So I guess the price differential on the excess lines versus what they're paying with TWIA, what are we looking at?
REPRESENTATIVE KENNETH SHEETS: I'm not advised.
REPRESENTATIVE JOHN DAVIS: More than what they're paying for TWIA?
REPRESENTATIVE KENNETH SHEETS: I -- I would not. I -- I don't know. But I know when they get to the excess lines the amounts come down. Because you're talking about an umbrella coverage policy that only applies once you have the primary policy reach their limit.
REPRESENTATIVE JOHN DAVIS: I just had some concerns with your amendment, so --
REPRESENTATIVE KENNETH SHEETS: Thank you.
REPRESENTATIVE CRAIG EILAND: Mr. Speaker, does the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Sheets, do you yield?
REPRESENTATIVE KENNETH SHEETS: I do.
REPRESENTATIVE CRAIG EILAND: Mr. Sheets, do you know what the current cap is?
REPRESENTATIVE KENNETH SHEETS: 1.7 million .
REPRESENTATIVE CRAIG EILAND: And do you know where that comes from?
REPRESENTATIVE KENNETH SHEETS: No.
REPRESENTATIVE CRAIG EILAND: It comes from 1971 value, which has been brought forward with the back insurance index, and it just adjusts automatically every year. So that when the TWIA was begun like in 1971 it's the same value of a house today, as was originally put in back in those days. So it just allows people's house to grow with the insurance, as it grows with value. So, why do you why not choose a 1.3, 1.2, 1.1?
REPRESENTATIVE KENNETH SHEETS: We're going with 1.5 because it's a subtle change, and it allows to bring the free market in to cover the excess lines, and at the same time not exposing the state to the liability of the -- above the 1.5.
REPRESENTATIVE CRAIG EILAND: So you're going to bring the free market in to TWIA to cover those holes?
REPRESENTATIVE KENNETH SHEETS: I do. And I think this is a good first steppingstone.
REPRESENTATIVE CRAIG EILAND: So how did you vote on the last amendment?
REPRESENTATIVE KENNETH SHEETS: I'm sorry?
REPRESENTATIVE CRAIG EILAND: How did you vote on the last amendment? Because that one required the free market to come in to the coastal counties.
REPRESENTATIVE KENNETH SHEETS: That's not the free market, when you're requiring them to come in.
REPRESENTATIVE CRAIG EILAND: Are you going to require them to cover these homes?
REPRESENTATIVE KENNETH SHEETS: Well, if your forcing an agency to cover homes, that's not the free market. The free market is free will.
REPRESENTATIVE CRAIG EILAND: Are you going to require anybody to cover the homes in Mr. Taylor's district and Mr. Davis' district, that are valued in access of 1.5?
REPRESENTATIVE KENNETH SHEETS: No. But they won't have problems receiving excess coverage lines?
REPRESENTATIVE CRAIG EILAND: How do you know?
REPRESENTATIVE KENNETH SHEETS: Because when we're talking about structures, they're multi million dollar structures, it's going to be possible for the companies to come in and provide coverage, excess coverage for these properties.
REPRESENTATIVE CRAIG EILAND: Do you think there's a whole of thousand dollar excess policies out there that you can buy?
REPRESENTATIVE KENNETH SHEETS: I don't know. Move passage.
REPRESENTATIVE JOE STRAUS: The question occurs on the adoption of the Sheets amendment. Vote aye, vote nay. The clerk will ring the bell. Have all voted? Being 77 ayes and 61 nays, amendment is adopted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Castro.
REPRESENTATIVE JOAQUIN CASTRO: Thank you, Mr. Speaker. Members, this amendment is single adjustor amendment. Right now, insurance adjustors for TWIA are responsible for inspecting damage to property and setting the expected repair cost. Part of the problem is that TWIA doesn't have enough adjustors after massive storms to handle all the claims in a timely fashion. What this amendment would allow is for wind damage to be done by -- whoever is providing the adjustment -- providing the homeowner's insurance policy. So, as we know, homeowners insurance policies are underwritten by major insurance carriers, whether it is All State, Farmers Nationwide, whoever does homeowners insurance, rather than having the TWIA folks do it, we would have the adjustors from the insurance companies doing it, because they're already involved with the homeowners' policies. And, of course, they're the ones who are also hooking up homes with the TWIA policies. And so this would be a way to streamline the process and do a few things. First, it would free things up for the homeowner, for the claimant. It would also help alleviate a lot of the corruption and unprofessionalism among some of the adjustment practices that occurred and have occurred after massive storms. TWIA has this challenge where they don't -- it's not like they have a million adjustors on staff all the time. They're constantly, after big storms, having to -- to scale up the number of adjustors they have. And so they are scrounging to find people, you know, unfortunately often folks who have not -- who, you know, have left, sometimes on bad terms with the insurance companies; or who have not been up to snuff with the insurance companies. So what we would get with this amendment is a group of adjustors who are on staff, who are professionals, who hopefully adhere to the highest practices. And it would be a way to alleviate some of the works also from TWIA itself. With that, I would ask that for your favorable consideration. I know that Representative Smithee or Chairman Smithee, I think, is going to speak against. And it I've asked him to go easy on me.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Well, this actually is not a bad idea. But the problem -- the reason I'm going to move to table the amendment, this came up in the regular session when we debated this bill is that we're not there where we can do this yet. Basically, if this amendment were to pass, we would be forcing our private carriers to adjust the TWIA claims. They don't want to do that. And, you know, I'm not saying just because they don't want to do that it is a good reason not to do it, but they've almost got to buy into this, be willing to buy into it for to it work. It just won't work if they're not on board with this. We've got a lot of open issues, too, about how they're compensated. And there's always that issue of when you have adjustors who don't really -- are not answerable to TWIA, but they have access to TWIA's purse strings, which means they have access to your purse strings. Because of that, we're going to study this over the interim. And I would recommend study. Because we're not ready to go there yet, because if we tried to do this in the next two years it would be an absolute disaster for the policy holders on the coast to have to deal with this. Like I say, it just would not work yet. Like I say, we can't even get the federal flood program to work with us on unified adjustors right now. So we're we just can't do this as a practical matter. So, with that, I would say it's a good idea, but I'm going to move to table because we just can't get there.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Castro to close.
REPRESENTATIVE JOAQUIN CASTRO: Members, I would ask you to take a moment and consider this amendment and that all that it encompasses. We've heard many arguments during this session, and in previous sessions since I've been here, about taxing on a responsibilities to the private market. The fact is, these insurance companies are already in the market selling the TWIA policies. They are the first conduit for getting these policies out. The challenge right now is that TWIA, this government body, essentially, is trying to do too much work, and they're trying to do it with people that are unfamiliar with all of the processes. What we're asking in this amendment is to allow the insurance companies who have professional adjustors, who are always there, to do the adjustments. So I know it may be a little bit of a surprise to see me standing here asking for that kind of transfer, but I think that it's important that we allow for that kind of professional liberalism to root out some of the most systematic problems of corruption, and other things, that have plague this system; and also have punished homeowners unnecessarily. And I would remind you guys of one last thing: I think when all of us campaigned for office, one of the biggest gripes that we get from -- from our constituents, is the challenge, the problems with insurance. And we know that over the last two years for those folks along the coast, TWIA has been a big nail in their side. And this part, in particular, the part about adjustment; this process has been one that probably needs the most fixing of all the parts. So, with that, I would ask that you vote against tabling the amendment.
REPRESENTATIVE JOE STRAUS: Representative Castro sends up an amendment. Representative Smithee moves to table. This is on the motion to table. Show Representative Smithee voting aye. Show Representative Castro voting no. Have all voted? There being 99 ayes and 40 nays, the motion to table prevails. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Taylor of Galveston.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Taylor.
REPRESENTATIVE TAYLOR: Thank you, Mr. Speaker. Members, this is the last amendment. And all this amendment does is we allowed for bonds last session, House Bill 449, in this session we're allowing for pre-event bonds. And this just says you cannot use the proceeds from a pre-event bond to pay for reinsurance, because you wouldn't want to be financing obviously your insurance premiums for ten year. And it is acceptable to the author.
REPRESENTATIVE JOE STRAUS: Representative Taylor sends up an amendment, the amendment's acceptable to the author. Is there objection? Chair hears none. The amendment's adopted. Anyone wishing to speak on, for, or against House Bill 3? Chair recognizes Representative Eiland.
REPRESENTATIVE CRAIG EILAND: Mr. Speaker, members, I'll speak quickly because this is deja vu all over again from the regular session. But number one, this bill creates an unfunded mandate for counties because it requires -- it does not allow and ensure that the local judges are going to hear the cases if they are brought. Hopefully, we won't have any lawsuits. But if we do, this bill says that the judicial panel for multi district litigation will pick a judge from one of the 14 coastal counties, or one of the 16 or 17 second tier coastal counties. And I've talked to Judge Lewis about this. I would be offended, if I was an elected district judge in my -- in Brazoria County, and if a hurricane happens in Brazoria County and a Brazoria County resident brings a lawsuit, it lands in my court, and then the judicial panel in multi district litigation is going to grab that case from me and have somebody from Brownsville or Harris County or Orange come here, in my court, and send the bill to the commissioner's court in my county. I think that's offensive and I think it should not be in here. We have local judges. They can handle these cases. They can handle a death case, they can decide which parent should have child custody after a divorce, they can sure as heck decide whether or not, and preside over a case regarding damage to a business of damage to a roof of a house. That's number one. Number two, I simply want for all of my constituents to be able to recover all of their damages after a storm. That is not too much to ask. This bill does not ensure that. This bill does not allow consequential damages. What that means is -- It may not allow for consequential damages, depending upon how the policy is written. What means is if I buy what's called alternative living expenses, and that what covers is -- and I also buy for my business something called business interruption. Alternative living expenses says look, if the storm hits and I'm going to be out of my house, if everything going perfectly, for six months, because my house is damaged, TWIA adjusts the claim, they are giving a check, I've got to get the house fixed and move back in; I'm going to be out of the house. So I got to go live in a hotel or rent an apartment. I buy extra coverage for that, that's called alternative living expenses. That's fine. The problem is, if the insurance company breeches the contract and doesn't pay you timely and doesn't pay you enough, that's not what alternative living expenses is for. (Inaudible). They are causing you additional extra damage, and it happens time and time again in my district. That's after this storm, where people actually lost their house, because they had to pay the mortgage on the damaged house, and then you had to pay the rent on the rented house that they had to live in because TWIA refused to fix their house. And the time that they got all the money together, they couldn't make both payments. So they lost the house. That actually happened. That is not covered under this bill. And finally, every policy in this state has an appraisal clause. 80 percent of the time neither the insurance company nor the homeowner or the business owner in appraisal clause, because it's not appropriate to use, because maybe they're going to go to court on other issues, you just lump it in there. This bill requires mandatory appraisal, whether you want it or whether TWIA wants it or whether neither of you want it; it requires to go through appraisal. And it mandates it. So for those three reasons alone, I would urge you to please vote no on this bill.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Smithee.
REPRESENTATIVE JOHN SMITHEE: Mr. Speaker and members, I think this is a good bill and a fair bill. And I will give you this commitment. I hope the only time you see this bill again is on a motion to concur with the Senate. I'm working with Senator Carona to hopefully get a bill passed that we can give little bit here and there, and we can both get the same bill out so that we don't have to come back here any longer than we have to. So I will give you that commitment. But, with that, I would move passage.
REPRESENTATIVE JOE STRAUS: Question occurs on passage to third reading of House Bill 3. It's a record -- The clerk will ring the bell. Have all members voted? There being 99 ayes and 41 nays, House Bill 3 is passed to third reading. Chair lays out on second reading House Bill 5. The clerk will read the bill.
THE CLERK: HB 5 by Kolkhorst. Relating to the interstate health care compact.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Kolkhorst.
REPRESENTATIVE LOIS KOLKHORST: Thank you, Mr. Speaker and members. This is the health care compact. We have heard it -- this, I think is our fourth time to lay it out on the House floor. I'm happy to talk about it as much as you like. This is allowed through Article 1, Section 10 of the United States Constitution. It would be the first time that we did do it for health care. There are 24 compacts that our state has in the past been a part of. I think we even saw low level waste compact come through this session and we had (inaudible). This is a new concept, to allow us, the state, to have more flexibility. It would be a consolidated funding stream for the federal government based on the 2010 year, with growth factors included for population and inflation. And, of course, I yield to my colleague.
REPRESENTATIVE GARNET COLEMAN: Thank you very much. Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Coleman for what purpose?
REPRESENTATIVE GARNET COLEMAN: Will Chairwoman Kolkhorst yield for a couple of questions?
REPRESENTATIVE LOIS KOLKHORST: Surely.
REPRESENTATIVE GARNET COLEMAN: You know, we've talked about this a lot of times and we all understand; and you tell me if this is right, that under this compact you are creating a block grant stream of funding, through an -- through a coalition of states, we'll call it. And we know that part of that is medicaid, because that's what we talk about, that's what we deal with here; is that correct?
REPRESENTATIVE LOIS KOLKHORST: Correct.
REPRESENTATIVE GARNET COLEMAN: Do you also anticipate that medicare dollars would be put into this stream under House Bill -- under this House Bill?
REPRESENTATIVE LOIS KOLKHORST: Yes, sir. The request is for medicaid and medicare, in that it would be a consolidated funding stream that would be based off of a 2010 settle-up year; which is not quite determined yet, Garnet. And then we, as a state, would -- You could opt in or out of medicare
(inaudible).
REPRESENTATIVE GARNET COLEMAN: I got you, so -- But could the entitlement for medicare, meaning the fact that people over 65 in Texas get medicare regardless of whatever they do, as long as they are citizens. Could that be ended under this bill? In other words, if we chose not to do the entitlement, is that -- could just be waived under this bill?
REPRESENTATIVE LOIS KOLKHORST: No. No. Let me tell you that the compact -- and it's estimated it's between $60 and $62 billion annually.
REPRESENTATIVE GARNET COLEMAN: But you would block grant it, right?
REPRESENTATIVE LOIS KOLKHORST: Right. But you have to use the dollars for -- Hold on one second, if you would. You would have to use the dollars on health care, or it would revert back to the federal government. It cannot supplant other (inaudible) --
REPRESENTATIVE GARNET COLEMAN: But if you could supplant money from medicare and use it under medicaid under this particular bill, couldn't you?
REPRESENTATIVE LOIS KOLKHORST: (Inaudible) .
REPRESENTATIVE GARNET COLEMAN: You could take money from our seniors in Medicaid, and that a combined stream, give that -- put that money into the medicaid budget; is that correct?
REPRESENTATIVE LOIS KOLKHORST: I guess. Because you could say (inaudible) you could, I never heard of that happening --
REPRESENTATIVE GARNET COLEMAN: So why did Leo Linbeck tell me that's what he intended on doing with the compact stuff that he put together around the country?
REPRESENTATIVE LOIS KOLKHORST: I have no intention of taking money and putting more into medicaid and looking at -- We actually served more people on medicaid --
REPRESENTATIVE GARNET COLEMAN: Mrs. Kolkhorst, if you take the stream and you block grant them and put them into one fund, wouldn't that shift the use of those dollars to other individuals and take the entitlement away from medicare?
REPRESENTATIVE LOIS KOLKHORST: I think what it would do is this: Is that you would say you had a medicaid where we serviced about 1.4 million people, and that includes dual eligible --
REPRESENTATIVE GARNET COLEMAN: But I'm not talking about that. I'm not talking about all that. I'm talking about the seniors who have a -- a commitment from this country, and under all of these bills the waiver purpose is to one, take away the entitlement, two, is to be able to use those funds flexibly. And you could also change, could you not, the benefits package from medicare under these proposed compacts; is that correct?
REPRESENTATIVE LOIS KOLKHORST: If what you are saying is -- Let me clarify. Can I answer your question? I will. Here's what it would do: It would move the structure of medicare and medicaid to the State of Texas. And yes, we would decide how those dollars would be spent. Instead of the federal government, which Senator Leverman proposed, I believe, it was this week or late last week, moved the age to 67; we would be making those decisions here between these two chambers and the middle office.
REPRESENTATIVE GARNET COLEMAN: Do you think, based on the decisions that have been made in -- in nursing homes, for example. 37 percent cut. Some people argue that it's 3 percent. But that this state would not try to create more copays, coinsurance and affect the entitlement under medicare? Is it your intention to affect the entitlement to our seniors through this?
REPRESENTATIVE LOIS KOLKHORST: It is not -- Here's the biggest (inaudible) that I have.
REPRESENTATIVE GARNET COLEMAN: (Inaudible) .
REPRESENTATIVE LOIS KOLKHORST: If you would let me answer that real quickly, because I know you and I are after the same thing and in different ways. And here's what I'm going to say: Is that when you look at the flexibility -- I'm going to talk about medicaid and then I'm going to go to medicare. Medicaid, our only real flexibility right now is on reimbursement rates. Just like you said on long term care. And what you saw is the reactionary was we cut 37 percent. Now, we've gotten it back up. And you're right, we are going to have to come back with a supplement bill --
REPRESENTATIVE GARNET COLEMAN: (Inaudible) .
REPRESENTATIVE LOIS KOLKHORST: But one more thing that I have to say. On medicare what I see is that in the affordable care act and other things, I know that a half a trillion has been cut. I know there are other cuts that are proposed because they're trying to balance it out. President Obama even proposed another half a trillion, and I've we (inaudible) and he's right. Innovation can lower our cost. I believe that bringing that structure back to Texas is a better way to do that.
REPRESENTATIVE GARNET COLEMAN: Let me ask you one more question.
REPRESENTATIVE LOIS KOLKHORST: (Inaudible) .
REPRESENTATIVE GARNET COLEMAN: Is this part of the bill that have been passed -- or attempted to be passed in other states, where you're passing it in the same form to come together to build a compact with those other states?
REPRESENTATIVE LOIS KOLKHORST: Yes, that's how compacts work.
REPRESENTATIVE GARNET COLEMAN: That's how that works, right? And so what you're also doing is trying to use that as a way of saying that compact can actually trump federal law; is that correct?
REPRESENTATIVE LOIS KOLKHORST: The compact -- it would first --
REPRESENTATIVE GARNET COLEMAN: If --
REPRESENTATIVE LOIS KOLKHORST: If we pass it, if it's signed by the governor, and there are two other states that have passed it. Just recently, South Carolina, Louisiana and Michigan. And actually Louisiana, it was introduced by a democrat there. We have Georgia, Michigan, Missouri, Montana, North Dakota, Oklahoma, Tennessee and others. But here's the thing: Eventually the states, like in all compact requested from congress, it would have to pass congress and allow (inaudible).
REPRESENTATIVE GARNET COLEMAN: In all of that, if you claim you can trump federal law then you can take the entitlement from our seniors in medicare; is that correct?
REPRESENTATIVE LOIS KOLKHORST: I have no incentive if the money --
REPRESENTATIVE GARNET COLEMAN: (Inaudible) .
REPRESENTATIVE LOIS KOLKHORST: -- have to use the money for health care.
REPRESENTATIVE GARNET COLEMAN: You said for health care. You didn't say for those seniors in medicare. And I'm asking you, because that's
(inaudible) (inaudible).
REPRESENTATIVE LOIS KOLKHORST: (Inaudible ) one member out here would vote against the seniors.
REPRESENTATIVE GARNET COLEMAN: Well, what if the other states in the compact decide that that's what they want the compact to do?
REPRESENTATIVE LOIS KOLKHORST: They can't. That's the beauty of the compact. Each state gets to decide how they get to do their block grants. It is not -- It is not --
REPRESENTATIVE GARNET COLEMAN: (Inaudible) .
REPRESENTATIVE LOIS KOLKHORST: Oklahoma could do something where they decide they're going to cover everybody from 60, the age of 60 and above. And we could say -- (inaudible) (inaudible).
REPRESENTATIVE GARNET COLEMAN: I just want you to answer this question.
REPRESENTATIVE LOIS KOLKHORST: Sure.
REPRESENTATIVE GARNET COLEMAN: Could it, under this compact, and under the language in your bill, could the entitlement for people in medicare be taken away from them in that block grant, and in the combined streams; could that also move that money around so that it doesn't serve those seniors? And I use the word could.
REPRESENTATIVE LOIS KOLKHORST: I do not believe so. I'm going to answer that as a no, because you have to use it on health care and here is the thing too (inaudible).
REPRESENTATIVE GARNET COLEMAN: But on seniors --
REPRESENTATIVE LOIS KOLKHORST: (Inaudible) .
REPRESENTATIVE GARNET COLEMAN: You say on seniors, does that mean people who are medicare eligible?
REPRESENTATIVE LOIS KOLKHORST: I would assume so. That's what we have (inaudible).
REPRESENTATIVE GARNET COLEMAN: Then what the problem is --
REPRESENTATIVE LOIS KOLKHORST: -- medicare --
REPRESENTATIVE GARNET COLEMAN: (Inaudible ) just answered my question. When you say you use the health care, you didn't say it has to be used for those seniors in medicare. And that's the reason why taking away the entitlement is a part of this bill. And it's clearly a part of this bill, because it could that. And I've read the language very carefully, and I have read the fifth amendment stuff and I've read the other things. Yes, it could. It certainly could and that's what Leo Linbeck argued with me that, he said would you support this and he said that look, the medicare entitlement would end. You're right, Garnett, it does end. And so that's not -- may not be your intention, but that is the intention for rolling it out across the country.
REPRESENTATIVE LOIS KOLKHORST: Each state gets to decide how these dollars -- Where is Leo Linbeck from?
REPRESENTATIVE GARNET COLEMAN: Houston, Texas.
REPRESENTATIVE LOIS KOLKHORST: Houston, Texas?
REPRESENTATIVE GARNET COLEMAN: Yeah. I went to grade school with him.
REPRESENTATIVE LOIS KOLKHORST: But did he vote on this floor?
REPRESENTATIVE GARNET COLEMAN: No. But it's his intent in the terms of --
REPRESENTATIVE LOIS KOLKHORST: Did Dr. Henderson vote to take away medicare as far as if we have the structure here --
REPRESENTATIVE GARNET COLEMAN: No. I asked you tenant (inaudible) and can this take away the entitlement. And clearly, by the language in the bill, it can.
REPRESENTATIVE LOIS KOLKHORST: No. And, in fact, the feds any day could take away the entitlement. The Social Security act in --
REPRESENTATIVE GARNET COLEMAN: Well, but you never answered the question. The the fact is we don't have to do medicaid, do we?
REPRESENTATIVE LOIS KOLKHORST: The state could opt out. And that's a great point. Thank you for making our point. We could vote today to opt out, but we don't. Why would we let our infrastructure crumble and not do anything, and send people to the hospital with no insurance? We have an incentive to provide for that, and I believe that you're smart enough --
REPRESENTATIVE GARNET COLEMAN: But why won't you answer my question about whether this could take away the entitlement --
REPRESENTATIVE LOIS KOLKHORST: I don't believe it does. I don't believe it does, so --
REPRESENTATIVE GARNET COLEMAN: Would you accept an amendment that says that this particular bill will not take away the -- in Texas, we will not take away the entitlement from medicare?
REPRESENTATIVE LOIS KOLKHORST: I will not accept an amendment, because it has to pass very similar to other states for us to be able to enter into the compact. So, I deny the fact that these members out here today could file a bill during this -- You can do it in the call right now and say we're not going to do medicaid, and that bill has never been filed. And they have never voted it out. So there is an assurance for Texas voters that we are going to provide for those -- in medicaid. And, I believe, in medicare. And, in fact, when the money comes to us we can say to CMS, we don't want to do medicare right now. We contract that with you to do medicare.
REPRESENTATIVE GARNET COLEMAN: (Inaudible ) then. I just asked you could (inaudible) I just asked could it.
REPRESENTATIVE LOIS KOLKHORST: I don't know what congress is going to do tomorrow. (inaudible)
(inaudible).
REPRESENTATIVE GARNET COLEMAN: This is not about congress, it's about Texas.
REPRESENTATIVE LOIS KOLKHORST: Medicare is set to cut a half a trillion dollars (inaudible)
(inaudible) own president offered another half a trillion. So it's a trillion dollars from medicare and --
REPRESENTATIVE GARNET COLEMAN: It's not about congress, it's about Texas (inaudible) (inaudible)
(inaudible).
REPRESENTATIVE LOIS KOLKHORST: I am trying to ensure to seniors that we do cover them.
REPRESENTATIVE GARNET COLEMAN: No, you don't.
REPRESENTATIVE LOIS KOLKHORST: -- by a block grant.
REPRESENTATIVE GARNET COLEMAN: (Inaudible) ensure that by the block grant. In fact, what you do do is reduce the amount of dollars to seniors by freezing the amount as a 2010 level (inaudible) (inaudible).
REPRESENTATIVE LOIS KOLKHORST: It's going to be cut anyway, Garnet. It's going to be cut.
REPRESENTATIVE GARNET COLEMAN: So you want to cut it (inaudible).
REPRESENTATIVE LOIS KOLKHORST: No. I want to ensure that we get the 2010 rate.
REPRESENTATIVE GARNET COLEMAN: So, you're saying that the 2010 rate is going to be higher than the future without medical inflation?
REPRESENTATIVE LOIS KOLKHORST: Absolutely . And I'm going to tell you why (inaudible)
(inaudible). Medicaid inflation is (inaudible) is already set to.
REPRESENTATIVE JOE STRAUS: (inaudible) raises a point of order. (Inaudible).
REPRESENTATIVE LOIS KOLKHORST: Medicare is set to be cut as it stands today, in the patient section of the affordable care act, and the reconciliation act that was passed shortly thereafter.
REPRESENTATIVE GARNET COLEMAN: Mr. Speaker, I raise a point of order against further consideration of House Bill 5 under Rule 4, Section 32C 1 of the House rules, on the grounds that the bill analysis is substantially and materially misleading.
REPRESENTATIVE JOE STRAUS: Bring your point of order down front. Point of order is respectfully overruled. Chair recognizes Representative Coleman to speak in opposition.
REPRESENTATIVE SYLVESTER TURNER: Oh, Mr. Speaker, I'm sorry. I was going to ask for the lady's time to be extended.
REPRESENTATIVE GARNET COLEMAN: Go ahead.
REPRESENTATIVE JOE STRAUS: Members, Representative Turner has asked if the lady's time be extended. Is there objection? Chair hears none. Chair recognizes Representative Kolkhorst.
REPRESENTATIVE SYLVESTER TURNER: Thank you, Mr. Speaker. And you look real good up there, Mr. Speaker. I appreciate you extending my time. Representative Kolkhorst, I want to follow up on that last point. You will agree that medicare is an entitlement, correct?
REPRESENTATIVE LOIS KOLKHORST: (Inaudible ) Social Security Act of 1965.
REPRESENTATIVE SYLVESTER TURNER: Makes it an entitlement?
REPRESENTATIVE LOIS KOLKHORST: Sure.
REPRESENTATIVE SYLVESTER TURNER: And this creates a compact. And I know in response to Representative Coleman you indicated it was not your intent to reduce the entitlement of medicare for our seniors, is that what I heard?
REPRESENTATIVE LOIS KOLKHORST: Correct.
REPRESENTATIVE SYLVESTER TURNER: Okay. And -- but you -- but you also acknowledge that if Texas should join these other states in this compact, that other states could certainly reduce the entitlement to seniors offered by medicare?
REPRESENTATIVE LOIS KOLKHORST: So each state, Sylvester, is allowed to determine the rules by which they operate the compact. The compact is together to request for the funding stream to be consolidated. Each state determines, by their legislatures, how the money will be spent. It is a consolidated funding stream, but it must be spent on health care.
REPRESENTATIVE SYLVESTER TURNER: Right. But I want to make sure that I understand, though, regardless of what the end result may be.
REPRESENTATIVE LOIS KOLKHORST: Right. So Oklahoma and Georgia have passed it.
REPRESENTATIVE SYLVESTER TURNER: Right.
REPRESENTATIVE LOIS KOLKHORST: They will come together, because the compact constitutes two or more states. They will request a consolidated funding stream.
REPRESENTATIVE SYLVESTER TURNER: Okay.
REPRESENTATIVE LOIS KOLKHORST: That funding stream would, if granted by congress --
REPRESENTATIVE SYLVESTER TURNER: Okay.
REPRESENTATIVE LOIS KOLKHORST: Would then flow to those two states, and then each of those two states; separate and apart from the other, decide how those dollars are being spent.
REPRESENTATIVE SYLVESTER TURNER: And could, for example, those two states; either or both, decide to reduce the entitlement to seniors then offered by medicare as it exists today?
REPRESENTATIVE LOIS KOLKHORST: What they would do as a legislature, just like we do and you have been very adept at in Article, 2 is decide the policies by which the monies are spent to provide health care for seniors and medicaid recipients.
REPRESENTATIVE SYLVESTER TURNER: Right.
REPRESENTATIVE LOIS KOLKHORST: They cannot use that money for anything else if it -- If the money is unspent, the idea of the compact is first dollar in is said dollar -- last dollar in is state dollar.
REPRESENTATIVE SYLVESTER TURNER: Right. Under this compact, can you bundle the dollars of medicare and medicaid? Can those dollars be --
REPRESENTATIVE LOIS KOLKHORST: As I understand it, it would flow and we would have the ability to see this is how much we got on medicaid --
REPRESENTATIVE SYLVESTER TURNER: Right.
REPRESENTATIVE LOIS KOLKHORST: -- and, as you know, 2010 was an enhanced (inaudible) of 2 percent, which we're dealing with right now at 58 --
REPRESENTATIVE SYLVESTER TURNER: I got that.
REPRESENTATIVE LOIS KOLKHORST: Okay. And then the other part would flow as medicare. So we would have two different funding streams, although they would flow to the state. We would, and I envision this, if by chance this passed and it was signed by the governor, and it went to congress and congress passed it --
REPRESENTATIVE SYLVESTER TURNER: Right.
REPRESENTATIVE LOIS KOLKHORST: And they said okay, we're going to allow the State of Texas to do this, and Georgia and Oklahoma and maybe Louisiana, and it's almost (inaudible) Missouri is this: I would envision that we would work first on medicaid, because that's what we have our infrastructure set up.
REPRESENTATIVE SYLVESTER TURNER: Right. But I want to --
REPRESENTATIVE LOIS KOLKHORST: We have the ability to say back to the feds we don't want to do medicare, although Oklahoma may or Georgia may --
REPRESENTATIVE SYLVESTER TURNER: I got you.
REPRESENTATIVE LOIS KOLKHORST: We want to keep going with medicare.
REPRESENTATIVE SYLVESTER TURNER: I understand that. But I understand. But the point that I'm making, separate and apart from what you may want or what some other individual legislator may want --
REPRESENTATIVE LOIS KOLKHORST: Of this body --
REPRESENTATIVE SYLVESTER TURNER: Of this body. Under the compact, under this concept that we are debating today, Georgia, Oklahoma, for example -- let's not even talk about Texas. Do they have -- Would they have the ability, under the compact, to bundle the dollars of medicare and medicaid and spend it -- Have the flexibility in spending those dollars as they deem appropriate, based on whatever policy they may implement?
REPRESENTATIVE LOIS KOLKHORST: You would say, for example, dual eligible. Would we be able to look at dual eligibles that qualify for both medicare and medicaid, which would be some folks in the nursing home; so that we would look at policies that would incentivize us --
REPRESENTATIVE SYLVESTER TURNER: Could they bundle? Could they bundle?
REPRESENTATIVE LOIS KOLKHORST: They could utilize those dollars maybe in a more efficient manner.
REPRESENTATIVE SYLVESTER TURNER: Can they bundle?
REPRESENTATIVE LOIS KOLKHORST: I don't know the answer to that.
REPRESENTATIVE SYLVESTER TURNER: I'm sorry?
REPRESENTATIVE LOIS KOLKHORST: I don't know what bundle means, and I don't want to hypothetically say can they utilize those dollars better?
REPRESENTATIVE SYLVESTER TURNER: I think the only -- I think the question that I'm interested in is whether or not, whether it can -- would happen -- whether it would happen is not the question. The question is whether or not, under this compact notion, can the dollars being expended under medicare, for our seniors, can they be reduced, diverted, sent to medicare, medicaid for health care purposes and be reduced from medicare --
REPRESENTATIVE LOIS KOLKHORST: I don't believe that. I believe that medicare money is going to flow to us and we say wow, that's how much we get from medicare? And I'm trying to do that number. And it's significantly more than medicaid, because we have a match with med --
REPRESENTATIVE SYLVESTER TURNER: I got you. But I'm looking for a definitive answer. And to the extent you do not believe that it can happen, and would not happen --
REPRESENTATIVE LOIS KOLKHORST: Right.
REPRESENTATIVE SYLVESTER TURNER: -- then tell me what is the problem with putting an amendment on HB 5 that simply says that the dollars for medicare -- the dollars for medicare for our seniors, as of entitlement, under no set of circumstances are we going to reduce any dollars to our seniors under the medicare program under this compact envisioned in HB 5. What's wrong with an amendment saying that?
REPRESENTATIVE LOIS KOLKHORST: Let me clarify this, okay. Because the wording has -- If we were the first state to do that that would be fine. We're not. So we're going to enter in, and our -- and our language needs to be very similar to introduce, and this is how the juvenile -- the juvenile compact that we are a part of in all 50 states for runaways; they all have to be similar, because we're making a request, so it's already passed in Oklahoma and it's already passed in Georgia. So I would only reject that on the notion that it would not be a very good offer right now by saying that we did one thing that kept us and --
REPRESENTATIVE SYLVESTER TURNER: Why would I want to yield? Why would Texas want to yield to Georgia or Oklahoma --
REPRESENTATIVE LOIS KOLKHORST: We're not ever going to yield to them.
REPRESENTATIVE SYLVESTER TURNER: I understand that. Then why not -- why not -- why not establish a clear understanding? Because otherwise we could --
REPRESENTATIVE LOIS KOLKHORST: (Inaudible) .
REPRESENTATIVE SYLVESTER TURNER: Let me finish. Because otherwise we could leave here today after voting on HB 5 --
REPRESENTATIVE LOIS KOLKHORST: Uh-huh.
REPRESENTATIVE SYLVESTER TURNER: -- not being able to say that we are not reducing the entitlement to our seniors under medicare. And I think, as you very well know, seniors are concerned about the -- about the feds; and I think seniors will be concerned that we are reducing their entitlement under medicare by voting for HB 5. Why not establish that clearly, and put it in the form of an amendment?
REPRESENTATIVE LOIS KOLKHORST: This gives us -- this gives us -- it turns the power structure, if you will, from the feds; which we know -- and let me finish for a second, because I can get my best Sylvester voice and I am positioning the microphone to do it. I can get my best Sylvester voice to tell you we know they are reducing the entitlement to medicare.
REPRESENTATIVE SYLVESTER TURNER: But why are we --
REPRESENTATIVE LOIS KOLKHORST: Hold on. Let me finish. And just a second. Okay. So here's the deal: Changes in payments to physicians, I had this June the 15th; we know that it's going to be cut by 29.4 percent in 2012. We know that we have these cuts coming our way of over a half a trillion for medicare. My goal is to say look, federal government, we know that you have a -- When I went to bed last night it was a 14.4 trillion-dollar deficit. We have not secured the votes to raise our debt ceiling. And let me say this, and let me finish for just a second; when I woke up this morning it was $14.35 trillion.
REPRESENTATIVE SYLVESTER TURNER: I'm only asking for an amendment.
REPRESENTATIVE LOIS KOLKHORST: So here's the thing: Our insurance to the seniors is to pass HB 5 to say that we have ensured -- we have locked in the money to --
REPRESENTATIVE SYLVESTER TURNER: Represen tative Kolkhorst, you know I have a great deal of respect for you.
REPRESENTATIVE LOIS KOLKHORST: Right.
REPRESENTATIVE SYLVESTER TURNER: But under HB 5, unless you can say without question that the entitlement to our seniors under medicare will not be negatively affected by us voting on HB 5, then I think people need to clearly understand that by voting for HB 5 we are opening the door to reduce the entitlement to our seniors by voting for this. I know you don't want to hear it, but we are not --
REPRESENTATIVE LOIS KOLKHORST: If you do nothing, you are voting to reduce your entitlement to the seniors. And that's the way it is. That's the -- If you read anything -- if you read anything you know that things are going to change. And I want to tell you this: I trust Sylvester Turner more than I do a congressman from New York, a congressman from California, a congressman from Florida. I trust you. I believe that you will get up here and represent the seniors just as I do.
REPRESENTATIVE SYLVESTER TURNER: And, Representative Kolkhorst, I trust you. But I'm not so sure that I'm going to trust the next legislator that
(inaudible).
REPRESENTATIVE LOIS KOLKHORST: They will be thrown out, because you will vote against them and you will see that they are left.
REPRESENTATIVE SYLVESTER TURNER: Represen tative Kolkhorst, look, I've been a lawyer for 31 years: If what you say is true, why not accept an amendment that says we're not going to reduce the entitlement for our seniors?
REPRESENTATIVE LOIS KOLKHORST: Because we have to pass the compact similar to what the other states do for us, to be able to enter into the compact.
REPRESENTATIVE SYLVESTER TURNER: Why should we yield to Georgia or Oklahoma?
REPRESENTATIVE LOIS KOLKHORST: It's the rules of the --
REPRESENTATIVE JOE STRAUS: Representative saved raises a point of order, the lady's time is expired.
REPRESENTATIVE SYLVESTER TURNER: I think you're asking for a bit much in HB 5.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Giddings to speak in opposition.
REPRESENTATIVE HELEN GIDDINGS: Thank you, Mr. Speaker and members. Our F map rate is about 60 percent today in Texas. And what that means is for every one hundred dollars the state spends we are reimbursed about $60 by the federal goverment for medicaid in the State of Texas. In a block grant we move away from a percentage, okay, and go to a fixed amount. Now, some states might be better off. Texas is not. Texas is growing. We have a high uninsured rate, our costs have increased, and with a block grant we would be locked in. There would be a cap for an amount and that would probably not be increased for inflation. This compact could put our seniors and their access to medicare at risk. There were similar calls for measures such as this in the 50's after the Brown versus Board of education decision. And I know the author of this bill is not that camp with those who follow that kind of reasoning and that kind of logic. Don't think that kind of reason is her intent. However -- But I believe that would be the effect. We cannot measure intent, but we can certainly measure affect. And the effect is fewer people will receive care. Legislators in Georgia and Oklahoma are not smarter than Texas legislators, and we are buying their language hook, line and sinker. This may be good for Georgia and Oklahoma. It is not good for Texas, and especially our seniors. The only flexibility we will have is to decrease access to care. And I urge you to vote no on this bill.
REPRESENTATIVE JOE STRAUS: Members, there's an amendment being drafted. The following amendment, the clerk will read the amendment.
THE CLERK: Amendment by Turner.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Turner.
REPRESENTATIVE SYLVESTER TURNER: Mr. Speaker, members, there has been a lot of discussion initially between Representative Kolkhorst and Representative Coleman in reference to the impact on this bill on our seniors, as it relates to the medicare program; which we all know is an entitlement program. And seniors across the country are very much concerned about anything that's going to negatively reduce or cut away their benefits. And I respect Representative Kolkhorst wholeheartedly, a great deal of respect for her, for the work that she's done as chairman -- chairperson of the public health committee. I do not at all question her commitment, her commitment to our seniors or the health care at all. But if we are going to be joining other states like Georgia, like Oklahoma and others, I do not think that Texas should be placed in a position of following what they do. I think Texas needs to make sure that we are the leaders and the not the followers. And so what this amendment does is that it places in writing what Representative Kolkhorst has stated is her intent. And what this does -- this bill is not intended to do. And simply it says with regards to implementing this -- this measure and this compact, the legislature may not implement the interstate health care compact in any manner that negatively affects or impacts any entitlement to medicare benefits to seniors, adults in this state. It makes it very, very clear that if it is our intent not to reduce the benefits to our seniors under medicare, it would not take place with this compact. And your vote today says to our seniors across the state that we do not at all intend to reduce the benefits to them under the medicare entitlement program. And that's the intent of this amendment. And if we're going to join a compact with Oklahoma or Georgia, then we should not allow Oklahoma and Georgia legislators to decide to reduce the benefit to our seniors.
REPRESENTATIVE ELLIOT NAISHTAT: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Naishtat, for what purpose?
REPRESENTATIVE ELLIOT NAISHTAT: Would the the gentleman yield?
REPRESENTATIVE JOE STRAUS: Mr. Turner, do you yield?
REPRESENTATIVE SYLVESTER TURNER: I'd be more than happy to yield.
REPRESENTATIVE ELLIOT NAISHTAT: Sylvester , do you understand that the bill, as filed, includes no requirement -- no requirement that the state continue to serve the same population, or provide the same health care benefits currently provided under medicare? You're aware of that?
REPRESENTATIVE SYLVESTER TURNER: I'm aware of that. And that, in part, is what's driving my concern and prompted of this amendment.
REPRESENTATIVE ELLIOT NAISHTAT: Well, this amendment would begin to address that problem. Thank you for it.
REPRESENTATIVE SYLVESTER TURNER: Thank you, Representative Naishtat.
REPRESENTATIVE JOE STRAUS: Ms. Harper-Bro wn, for what purpose? REPRESENTATIVE LINDA HARPER-BROWN: Mr. Speaker, would the gentleman yield?
REPRESENTATIVE SYLVESTER TURNER: I'd be more than happy to yield. REPRESENTATIVE LINDA HARPER-BROWN: Thank you. Thank you, Mr. Speaker. Mr. Turner, I just want to be sure because I understand your concern, I understand the questions that you have; but I want to be sure that the members, and especially, more importantly, that the seniors who might be viewing this, or might read in the paper about this compact understand some of the provisions in the compact. Because I don't want to scare them, and I'm sure you don't want to frighten them either, unnecessarily.
REPRESENTATIVE SYLVESTER TURNER: And that's the reason, Representative Harper-Brown, for the amendment. Because if this amendment should go on, it makes it very clear to our seniors that we do not intend to reduce their benefits by joining this -- REPRESENTATIVE LINDA HARPER-BROWN: All right, Mr. Turner. But I want to be sure that we get this on record. You understand that in this bill and within this compact, that the compact itself can study the issue and make recommendations to a state, but they are nonbinding recommendations. It clearly states nonbinding. That the state cannot take action as a compact and force Texans to then do something under that compact. That each state gets to decide individually what it wants to do with that funding.
REPRESENTATIVE SYLVESTER TURNER: Well, I'm a little bit confused. Because if we are joining the compact and if we are making the representation that the compact has some meaning, some value, then it is implicit within that is that this compact can do something that we cannot do presently. REPRESENTATIVE LINDA HARPER-BROWN: But it clearly says it is nonbinding. It also says, it backs it up even, to say that they cannot take any action with any member state that contravenes any state law of that member state. So if we joined and we become a part of this, then we can pass a law that says -- I mean the law then can be in place we would have to make those representations and those votes. We would have to approve what we do as a member of that compact.
REPRESENTATIVE SYLVESTER TURNER: And I think, and I think Representative Linda Harper-Brown, I think it's important for those other states then to make sure then that they follow the Texas lead. That being a part of this compact the legislature may not implement -- or the compact may not implement, the state health care compact, in any manner that negatively affects or impacts any entitlement to medicare benefits to senior adults in this state. Texas is always been a leader. And if we are going to join a compact, let's not be the tail on the dog, let's be the head of this dog; and let's lead us in the right direction. And if you want me to be a part of the pack, then let's be at the front of the pack or let's not be at all. REPRESENTATIVE LINDA HARPER-BROWN: Thank you, Mr. Turner. I just want to be sure that we get this on record, that this is not a decision that the compact will make, that it is a decision that we, as a legislature, make.
REPRESENTATIVE SYLVESTER TURNER: And I hope you will join me many adopting and accepting this amendment.
REPRESENTATIVE CHARLES PERRY: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Mr. Perry, for what purpose?
REPRESENTATIVE CHARLES PERRY: Ask a couple questions.
REPRESENTATIVE JOE STRAUS: Mr. Turner, do you yield?
REPRESENTATIVE SYLVESTER TURNER: I'd be more than happy to yield.
REPRESENTATIVE CHARLES PERRY: Representat ive Turner, when you talked a little bit at the back mic and you kind of (inaudible) me there on getting to the front of the mic, time extension. But I learned a lesson there. Real quickly, do you not agree that with the five hundred billion dollars in cuts coming out of the fed that we have a responsibility of the state -- as a state, to get ahead of curve or what's coming through our health care, we all acknowledge it could potentially bankrupt. But this is a way to start that process of discussion, not to take money out of our senior's coffers, if you will, through medicare, but provide discussion, debate and options going forth; because I think you'd have to be completely deaf and blind to be able to not understand what the environment is that we're operating in. And so I applaud the committee and the efforts of going through with this compact concept. I applaud the initiative that is taking to band together with other states (inaudible). I also, so what you just said in your amendment that would negatively impact medicare. I think if you really analyze what we're fixing to do with these compacts is going forth the Supreme Court's debate that efficiencies, cost savings and some flexibilities and some things that we can gain through that, that we can actually secure senior's benefits going forward. And I would hope that you can at least acknowledge that it is a positive thing that we're moving forward in an area where the state could literally be bankrupt, on a medicaid level alone, much less medicare; but it's the feds that are impacting the medicare dollars and not the state. Once we can get some control and some debate over those processes, we would actually bring forth a product that works better for our seniors, and works better for our medicare recipients, that we have more ability to manage the individual's needs, rather than the one stop shop that's all that could bankrupt the state. I hope that you could at least acknowledge that in dialogue, because I do not want seniors to hear this discussion that we're going to be tinkering and messing around with their medicare dollars. That's not at all the intent. And I think the federal government has already started that process. And we're just trying to be better.
REPRESENTATIVE SYLVESTER TURNER: But let me just say, I certainly have been supportive of cost savings. I understand that the people are saying that's not the intent, but I would never advise my client to enter into a contract with someone just saying it's not my intent. Let's write it down and you'll -- and your written word becomes the intent. And I'm in favor of cost savings, I hear the people saying we don't want to hurt our seniors, that we don't want to cut benefits to our seniors. Well, if that, in fact, is the case; as we enter this compact, and we're moving in unknown waters, because I don't know where we're headed; I want to have the assurance, and I believe seniors in the State of Texas want to have the insurance that nothing in this compact will serve to reduce their benefits that they're entitled to, as they exist today. And if that is the intent then I would think that 150 people, or 149 will join with us in voting for this amendment.
REPRESENTATIVE CHARLES PERRY: I appreciate your amendment there. I just want to make sure that people understand it wasn't us that created this, it was the federal government that pushed down, that's kind of created some of this. I think we're wise to get ahead of that. I think we have done a good job with that. I think that Chairman Kolkhorst and her group and the research that's
(inaudible). And over the interim this will continue to be a study (inaudible).
REPRESENTATIVE SYLVESTER TURNER: And no one -- Again, no one questions, and I certainly do not question Representative Kolkhorst's heart, her motivation, her desire, her commitment, her objectives in terms of public health. That speaks for itself and I believe she knows that. But when it comes to making policy, and when we are talking about joining other states, and then running the risk of other states leading Texas; that, to me, raises a red flag. And I do not want to be a Texan following the states of Georgia and Oklahoma. If we are going to become a part of the compact I think Texas should stand up front and be a leader in this compact, and not be the tail on the end of this dog.
REPRESENTATIVE CHARLES PERRY: I agree. I agree with you. I just don't want to be a Texan following the lead of the federal government. I appreciate your amendment, I just want to make it clear that we're not tinkering with people's medicare dollars in a sense that what was purported earlier, I think in the discussion. But we're here to make medicaid, medicare work. I'd rather be a Texan not following the feds or other states. And I think this gives us the avenue for it --
REPRESENTATIVE SYLVESTER TURNER: And I thank you.
REPRESENTATIVE CHARLES PERRY: I appreciate your amendment.
REPRESENTATIVE SYLVESTER TURNER: But I think at the end of the day, seniors are not concerned whether the damage is done by the feds or whether the damage is done by the states. If -- If the states are reducing their benefits for them it doesn't make any difference whether it's the feds or the states. At the end of the day, when they are looking to into their pockets, their benefits have been reduced. This amendment simply assures us, as best as we can today, that regardless on how we vote on HB 5, and if HB 5 moves forward, at least the benefits that they are entitled to receive today, will not be adversely effected.
REPRESENTATIVE CHARLES PERRY: Thanks.
REPRESENTATIVE SYLVESTER TURNER: You are more than welcome.
REPRESENTATIVE HELEN GIDDINGS: Mr. -- Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Ms. Giddings, for what purpose?
REPRESENTATIVE HELEN GIDDINGS: Would the gentleman yield for a question?
REPRESENTATIVE SYLVESTER TURNER: I'd be more than happy to yield.
REPRESENTATIVE HELEN GIDDINGS: Representa tive Turner, without your amendment, do senior citizens have any guarantee that this compact will not affect them and their entitlement in this --
REPRESENTATIVE SYLVESTER TURNER: In my -- In my opinion, based on what -- how I read it, they do not have any guarantee. It is an uncertainty.
REPRESENTATIVE HELEN GIDDINGS: And so if it is not our intention to affect senior citizens and their medicare, why would we not support the amendment that you're putting forth?
REPRESENTATIVE SYLVESTER TURNER: I see no reason why we shouldn't support it.
REPRESENTATIVE HELEN GIDDINGS: Your amendment only goes to guarantee senior citizens to the best of our ability that we do not plan to affect them with this compact?
REPRESENTATIVE SYLVESTER TURNER: That is correct.
REPRESENTATIVE JOE STRAUS: Representative Sheffield raises a point of order, the gentleman's time is expired. Chair recognizes Representative Kolkhorst.
REPRESENTATIVE LOIS KOLKHORST: Thank you, Mr. Speaker and members. Before we vote on this I want to tell you what is guaranteed to the seniors. Richard Foster, medicare's chief actuary noted that medicaid rates for doctors and hospitals serving seniors will be cut by 30 percent over the next three years. Under the policy of the patient protection of affordable act, by 2019 payment rates will be lower than under medicaid. Mr. Foster notes that by the end of the 75 year projection period in the annual medicare trustee's report, medicare payments will be one-third of what will be paid by private insurance, and only half of what is paid by medicaid. Altogether, the patient protection affordable act will cut $818 billion from medicare Part A, which is hospital insurance; from 2014 to 2023. The first ten years of its implementation in $3.2 trillion over the next 20 years, from 2014 to 2033. Adding in these cuts for Medicare Part B, physicians and other services, brings the total cut to 1.05 trillion over the next ten years, and 4.95 trillion over the next 20 years. Members, a vote for this amendment -- A vote for HB 5 is exactly what I am trying to do is protect our seniors. Show me voting aye on this amendment
(inaudible).
REPRESENTATIVE GARNET COLEMAN: Mr. Speaker?
REPRESENTATIVE JOE STRAUS: Ms. Kolkhorst, do you yield for a question?
REPRESENTATIVE GARNET COLEMAN: Based on the information she just gave. Chairwoman Kolkhorst, you know under the affordable care act it does not include a repeal of the reduction in medicare payments to providers, that that is being done on a yearly budget -- by year basis, and has been done for the last eight years.
REPRESENTATIVE LOIS KOLKHORST: We have to -- We have to depend on congress --
REPRESENTATIVE GARNET COLEMAN: But I just asked you a question. You understand that, right?
REPRESENTATIVE LOIS KOLKHORST: I understand that very well. I know.
REPRESENTATIVE GARNET COLEMAN: So you under-- understand the automatic cuts to medicaid reimbursement rates must be put back in the budget every year, or else those cuts will continue?
REPRESENTATIVE LOIS KOLKHORST: I understand that medicare Part B. But I was also focusing on medicare Part A.
REPRESENTATIVE GARNET COLEMAN: I am talking about medicaid Part A. I'm talking about all of medicare. Excuse me. That under medicare --
REPRESENTATIVE LOIS KOLKHORST: Physicians is Part B of the medicare.
REPRESENTATIVE GARNET COLEMAN: But I'm saying doctors in hospitals.
REPRESENTATIVE LOIS KOLKHORST: I understand that --
REPRESENTATIVE GARNET COLEMAN: That the reimbursement rate right now is on an automatic cut that is in every budget, so more money is added so those cut don't occur; is that correct?
REPRESENTATIVE LOIS KOLKHORST: I know what I'm reading, and I understand that --
REPRESENTATIVE GARNET COLEMAN: I know. But I'm just asking you --
REPRESENTATIVE LOIS KOLKHORST: Yes, I understand congress has to act every year and I know that they (inaudible).
REPRESENTATIVE GARNET COLEMAN: That's right. And those were put in place and those changed when republicans were in control, nothing happened --
REPRESENTATIVE LOIS KOLKHORST: I know that republicans actually furthered and added Part D to medicare, so that our seniors could be --
REPRESENTATIVE GARNET COLEMAN: So --
REPRESENTATIVE JOE FARIAS: -- could be covered.
REPRESENTATIVE GARNET COLEMAN: So the only thing I'm asking you here is is it clear that those cuts come from cost savings, just like you made cuts, and others made cuts in bills that they did here and called them cost savings. Those cuts are based on a lowered need for care because of restructuring of the system. You understand that, don't you?
REPRESENTATIVE LOIS KOLKHORST: I just -- I just know that medicare is -- part of our savings that we're looking for --
REPRESENTATIVE GARNET COLEMAN: So Texas is going to tax to increase the cost?
REPRESENTATIVE LOIS KOLKHORST: No. What we're going to do is we're going to protect our seniors. And please, Mr. Speaker, show me voting aye on this amendment.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Turner to close. Question occurs on the adoption of the Turner amendment. A record vote's been requested, a record vote's is granted. The clerk will ring the bell. Show Representative Kolkhorst voting aye. Have all voted? There being 132 ayes and 8 nays, the amendment is adopted. Members, that complete the amendments. Chair recognizes Representative Coleman to speak in opposition.
REPRESENTATIVE GARNET COLEMAN: Members, one of the reasons -- and I appreciate the work that Ms. Giddings and Mr. Turner have done, and I appreciate the understanding that this particular legislation ties to a nationwide roll out of health care compacts put together by my good friend, Leo Limbeck, III. We went from fourth and through eighth grade together. I met with Leo about this and he asked would I support it earlier before this session. And I said, Leo, you know, let me look at because I want to make sure that it doesn't do certain things. So I went back and I looked at the information that he gave and then we had another lunch. That was a nice lunch, we drank iced tea. The thing he stressed the most, and the reason that he had gotten into this movement was medicare, not medicaid. The whole idea that people whose income -- whose income is more than -- he wanted to means test medicare and he thought the best way to do that was to put the states in charge using these compacts. Now, I'm going to give you a quote. And this is what he says. Says these noble reasons and concerns for the poor who currently subsidize health care for wealthy seniors, he says I saw that there was an unsustainable path on medicare and the federal government was making promises to senior citizens that it could not fulfill. Now, I understand that discussion, but fundamentally this is about medicare and medicaid, and combining those streams. And I asked him point-blank, I said Leo, wouldn't this take away the entitlement to medicare? And he said yes, it would. Yes, this language would take away the entitlement to medicare for our seniors. Now, I've been here since 2003 watching cuts to health care. And you have seen more cuts to our health care safety net when this state is in control of spending the money now. You've seen cuts to seniors, you've seen cuts in prenatal care, you've seen cuts to children. And remember, this includes CHIP, it includes our CBA waivers, it includes every federal stream of health care. And when left to the state to make the decisions those programs are cut. And if you look at this current budget, those programs are cut. And so I don't want to be a part of a state that thinks caring for its people means cutting health care. And that's what we've seen, particularly in the last seven or eight years. And, believe me, there is not a restoration of the cuts that were done in 2003. Medically needy's totally gone. You know what that does? That program makes it possible for people who become broke, because they can't pay the copay on their insurance, and we allow them in medicaid because of a catastrophic illness. That's gone. We don't have that anymore. And that was for insured people, folks. Now, as I said before, I trust Lois, and Lois does a good job. But she's not governor, Rick Perry is. And we may have governors who have made it clear that they don't have an intent of doing anything -- anything that makes it better for the worst state in the nation when it comes to having people insured. The worst. The worst. And in my book, every time I've seen someone say it flexibility that means cut funding, cut benefits package. We do not want our seniors' benefits package cut, we don't want our disabled benefits package cut under our health care program. And I'm glad Sylvester put the amendment on, but it doesn't change the fact that this bill and the bills like it around the country are designed to wire around the affordable care act. It's designed, as an offense, to get rid of the guarantee to health coverage. Let me be clear, the guarantee. Entitlement's a bad word around here. But you know what? The whole constitution in that regard in terms of our rights is an entitlement. You're not saying the Constitution is bad, are you? I think children ought to be entitled to a public education. I also think they should be entitled to health care. I think they should say something. But what this does is untie that whole ball that says any state can do what they want to do that adopts that compact. I don't think these things will ever get adopted, but I don't want to send a message and I don't think we should send a message here today to anyone that we're going to mess with some of the most successful policy that this country has ever passed, and make it subject to the will of people who do not believe -- do not believe that people ought to get health care if it's paid for by the government. So I ask you, if you want to secure that, if you want make sure that your grandmama, that your disabled cousin, that your aunt or your sister who was on methamphetamine that couldn't take care of the kids and the grandma's taking care of them, you want to make sure that they have access over time to a full benefit, and that the people in this state have access under the affordable care act, then vote no on this bill. Vote no, because the principle of this bill is not to improve health care, it is to unwind the government health care system. Thank you.
REPRESENTATIVE JOE STRAUS: Chair recognizes Representative Kolkhorst to close.
REPRESENTATIVE LOIS KOLKHORST: Thank you, Mr. Speaker and members. I always enjoy my colleague, Representative Coleman, Chairman Coleman. We're both working very hard to work for health care and the future of our country and our state. I move passage.
REPRESENTATIVE JOE STRAUS: Question occurs on the passage to third reading of House Bill 5. The clerk will ring the bell. Members, strict enforcement's been requested. Strict enforcement's been granted. Please vote from your desk. Have all voted? Being 97 ayes and 43 nays, House Bill 5 is passed to third reading. Chair recognizes Representative Dutton for an announcement.
REPRESENTATIVE HAROLD DUTTON: Mr. Speaker and members, I'm joined by Brian Hughes because we wanted to announce that the Capitol Commission Bible Study with Don Garner will meet (inaudible) at the Roaring Fork, which is in the Steven F. Austin Hotel, and lunch is provided.
REPRESENTATIVE JOE STRAUS: Are there announcements? If not, Representative Bonnen moves that the House stand adjourned pending the reading and referral of bills and resolutions until 10:00 a.m. tomorrow in memory of Stanley Joseph La Chance of Lake Jackson who passed away Friday, June 10th, 2011. House stands adjourned. Following bills on first reading and referral.
THE CLERK: HR 76 (By Quintanilla), In memory of U.S. Army Corporal Eduardo Pedregon of El Paso, who gave his life while fighting in the Korean War. To Rules and Resolutions. HR 77 (By Craddick), Congratulating Billie Ann and Kenneth Baker of Midland on their 65th wedding anniversary. To Rules and Resolutions. HR 78 (By Workman), Congratulating Neal White on earning first place in extemporaneous informative speaking at the 2011 UIL Conference 4A State Academics Spring Meet. To Rules and Resolutions. HR 79 (By Workman), Congratulating James Bounds on earning the top score on the physics portion of the science contest at the 2011 UIL Conference 4A State Academics Spring Meet. To Rules and Resolutions. HR 80 (By Larson), In memory of Steven F. Gehrlein of San Antonio. To Rules and Resolutions. HR 81 (By Guillen), Honoring the life and work of Dr. Mamiliano Juan Rodriguez. To Rules and Resolutions. HR 82 (By Guillen), Congratulating Cruz Garza, Jr., on his retirement from Rio Grande City High School. To Rules and Resolutions. HR 83 (By Guillen), Honoring Gilberto Amado Hinojosa, Sr., of Benavides, for his service to Duval County. To Rules and Resolutions. HR 84 (By Guillen), In memory of Lino Perez, Jr., of Rio Grande City. To Rules and Resolutions. HR 85 (By Craddick), Congratulating Jack and Barbara Pallick of Midland on their 50th wedding anniversary. To Rules and Resolutions. HR 86 (By Craddick), Congratulating L. G. and Willie Atchley on their 70th wedding anniversary. To Rules and Resolutions. HR 87 (By Burkett), Congratulating Scott Coulson on his retirement as band director of Poteet High School in Mesquite. To Rules and Resolutions. HR 88 (By Rodriguez), Commending Alda Santana for her service as senior legislative assistant in the office of State Representative Eddie Rodriguez. To Rules and Resolutions. HR 89 (By Guillen), Honoring Jovita Rebecca Guevara of Jovita's Beauty Salon in Benavides. To Rules and Resolutions. HR 90 (By Gooden), Congratulating Hunter Pritchett of Quinlan on attaining the rank of Eagle Scout. To Rules and Resolutions. HR 91 (By Y. Davis), Congratulating Patricia Barton of Dallas and LaJuana Barton of DeSoto on the publication of Faithful Remembrances Volume I. To Rules and Resolutions. HR 92 (By Hughes), In memory of the Honorable Ed Hunt of Mineola. To Rules and Resolutions. HR 93 (By Hughes), In memory of U.S. Army Chief Warrant Officer 2 Bradley Justin Gaudet of Gladewater. To Rules and Resolutions. HR 94 (By Craddick), Congratulating Floretta and Wilbern Peden of Midland on their 60th wedding anniversary. To Rules and Resolutions. HR 95 (By Craddick), Congratulating Jim and Marilyn Clanahan of Midland on their 60th wedding anniversary. To Rules and Resolutions. HR 96 (By Truitt), Congratulating Chief Robert Finn on his retirement from the police services division of the Southlake Department of Public Safety. To Rules and Resolutions. HR 97 (By Larson), In memory of George Vernon Wright, Jr., of San Antonio. To Rules and Resolutions. HR 98 (By Guillen), Paying tribute to the lives of Ramiro and Hortencia "Nena" Hinojosa of Starr County. To Rules and Resolutions. HR 99 (By Guillen), Honoring the life and legacy of former Starr County sheriff Reymundo Alvarez. To Rules and Resolutions. HR 100 (By Guillen), Commending the Honorable Jose Benito Canales for more than 30 years of service as justice of the peace of Precinct 4 of Duval County. To Rules and Resolutions. HR 101 (By Alonzo), Paying tribute to Rodolfo, Marcos, Alejandro, Vicente, Jose, and Arturo Torres for their service in the armed forces of the United States of America. To Rules and Resolutions. HR 103 (By Aliseda), Congratulating Tina Marie Garza on her graduation from The University of Texas at Austin. To Rules and Resolutions. HR 107 (By McClendon), In memory of the Reverend R. A. Callies of San Antonio. To Rules and Resolutions. HR 108 (By Madden), Commending Harry LaRosiliere for his service as a member of the Plano City Council. To Rules and Resolutions. HR 109 (By Madden), Commending Jean Callison for her service on the Plano City Council. To Rules and Resolutions. HR 110 (By Button), Congratulating the Methodist Richardson Foundation on the success of its 2011 WildRide! WildRun! Against Cancer. To Rules and Resolutions. HR 111 (By Button), Honoring Richland College on its designation as a two-year National Center of Academic Excellence in Information Assurance Education. To Rules and Resolutions. HR 112 (By Guillen), Honoring Elida "Lela" Gutierrez Garcia of Benavides for her longtime service to area residents as the owner of Lela's Beauty Shop. To Rules and Resolutions. HR 113 (By Guillen), In memory of Manuel P. Guillen of Rio Grande City. To Rules and Resolutions. HR 114 (By Guillen), Recognizing Dr. Roberto S. Margo of Rio Grande City for his service as a veterinarian. To Rules and Resolutions. HR 116 (By Guillen), In memory of Javier "J. V." Villanueva of Duval County. To Rules and Resolutions. HR 117 (By Guillen), In memory of former Starr County judge Blas Chapa of Mission. To Rules and Resolutions. HR 118 (By Guillen), Paying tribute to the life and legacy of Dr. Ramiro Narro of Weslaco. To Rules and Resolutions. HR 119 (By Guillen), Commemorating the 30th anniversary of the Liberty Cafe in Freer. To Rules and Resolutions. HR 120 (By Guillen), Commending Edna and Arnoldo Cantu of Freer for their contributions to their community. To Rules and Resolutions. HR 121 (By Guillen), Honoring Francisco Guerra, Jr., of Starr County for his achievements in business. To Rules and Resolutions. HR 122 (By Margo), Honoring Sun Metro on its receipt of a 2011 Outstanding Public Transportation System award by the American Public Transportation Association. To Rules and Resolutions. HR 123 (By Margo), Congratulating retired Brigadier General Richard A. Behrenhausen and Elizabeth Behrenhausen of El Paso on their 50th wedding anniversary. To Rules and Resolutions. HR 124 (By Burkett), Congratulating the baseball team of Eastfield College in Mesquite on winning the NJCAA Division III World Series. To Rules and Resolutions. HR 125 (By Naishtat), Honoring the Center for Public Policy Priorities on its 25th anniversary. To Rules and Resolutions. HR 126 (By Gooden), Congratulating William Noah Bankston on attaining the rank of Eagle Scout. To Rules and Resolutions.
THE CHAIR: Members, the House stands adjourned until 10:00 a.m. Thursday. Thank you.
(The House stands adjourned.)
