Certified Final Objection No. 134 of the

 

Joint Legislative Committee on Administrative Rules

 

            At its meeting on March 18, 2005, the Joint Legislative Committee on Administrative Rules (Committee) voted, pursuant to RSA 541-A:13, IV, to enter a preliminary objection to Final Proposal 2004-212 containing rules Ins 1905 of the Insurance Department (Department) relative to minimum standards for Medicare supplement policies.  The Department responded pursuant to RSA 541-A:13, V(c) with an amended proposal and with a cover letter from the Commissioner dated March 24, 2005. 

 

At its meeting on May 20, 2005, the Committee voted, pursuant to RSA 541-A:13, V(f), to enter a final objection to Final Proposal 2004-212.   The final objection has been filed with the Director of the Office of Legislative Services for publication in the New Hampshire Rulemaking Register.  The effect of a final objection is stated in RSA 541-A:13, VI:

 

     After a final objection by the committee to a provision of a rule is filed with the director under subparagraph V(f), the burden of proof thereafter shall be on the agency in any action for judicial review or for enforcement of the provision to establish that the part objected to is within the authority delegated to the agency, is consistent with the intent of the legislature, is in the public interest, or does not have a substantial economic impact not recognized in the fiscal impact statement.  If the agency fails to meet its burden of proof, the court shall declare the whole or portion of the rule objected to invalid.  The failure of the committee to object to a rule shall not be an implied legislative authorization of its substantive or procedural lawfulness.

 

            The following summarizes the bases for the Committee’s final objection:

 

Lack of Criteria and Procedure

 

            The Committee objected that the following rules are, pursuant to Committee Rules 402.02(a) and 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3, RSA 541-A:16, I, and RSA 541-A:22, I:

 

·         Ins 1905.08(f)

·         Ins 1905.09(d), (f)(7), (g) and (m)(6)

·         Ins 1905.13(c)(1), (c)(2)c. and (d)

·         Ins 1905.14(a), (c), (d)(1), (e)(2), and (g)

·         Ins 1905.18

 

The rules listed above relate to discretionary decisions of the Commissioner concerning Medicare supplement policies.  They use language such as “with the prior approval of the commissioner,” “prescribed by the commissioner,” “acceptable to the commissioner,” and “the commissioner may approve.”  In the view of the Committee, agencies are required to specify in their rules how they will handle discretionary decision-making, by setting forth the criteria and procedures to be followed.
 

Certified Final Objection No. 134 of the

 

Joint Legislative Committee on Administrative Rules

 

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As noted by the Committee in Certified Final Objection No. 96, published in the November 26, 1997 New Hampshire Rulemaking Register, “The goals for such specificity are twofold: to ensure that agencies set requirements only through the process mandated by RSA 541-A:3; and to ensure that the criteria will be applied in a uniform, consistent manner.  The criteria are not required to be exhaustive, but must be enough to put the regulated community on notice generally as to how the rule will be applied.”

 

            The Committee determined that in the rules in Ins 1905 listed above, the Commissioner has not stated the procedures or criteria he will use to make the specified determinations.  The Committee concluded that, by not including such procedures and criteria in the proposed rules, the Commissioner would be enforcing unstated provisions that fall under the definition of “rule” in RSA 541-A:1, XV, but have not been adopted under the RSA 541-A rulemaking process.

 

            The Committee took notice of the fact that, since the proposed rules are based on a National Association of Insurance Commissioners (NAIC) model rule, the rules are exempt, under RSA 541-A:21, VI, from compliance with the numbering and drafting requirements for rules in the New Hampshire Drafting and Procedure Manual for Administrative Rules required by RSA 541-A:8.  The rules are also presumed to be “clear and coherent” for the purposes of RSA 541-A:7 if their wording is consistent with the NAIC model.  However, the Committee also noted that the rules are not exempt from the remainder of RSA 541-A.  RSA 541-A:16, I requires agencies to adopt rules specifying all formal and informal procedures.  Pursuant to RSA 541-A:22, I, “no agency rule is valid or effective against any person or party, nor may it be enforced by the state for any purpose, until it has been filed” pursuant to RSA 541-A.  Therefore, the Committee concluded that the specified rules conflict with RSA 541-A:3, RSA 541-A:16, I and RSA 541-A:22, I.  

 

Lack of Authority; Delegation of Rulemaking Power

 

            The Committee objected that the following rules are, pursuant to Committee Rule 401.01(c), beyond the authority of the Department, and pursuant to Committee Rules 402.02(a) and 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3, RSA 541-A:22, I and RSA 541-A:22, III(e):

 

·         Ins 1905.07(e)(1)j.

·         Ins 1905.08(e)(7)d. and (e)(12)d.

·         Ins 1905.10(c)

·         Ins 1905.13(b)(4)

 


 

Certified Final Objection No. 134 of the

 

Joint Legislative Committee on Administrative Rules

 

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The rules listed above relate to requirements on, and determinations of, the Secretary of the U.S. Department of Health and Human Services (Secretary) concerning Medicare supplement policies.  The Committee noted that, as drafted, the cited rules impose requirements on the Secretary by using language such as “[i]t shall be adjusted…by the secretary” and “[t]he

Secretary shall specify….”  The Committee determined that the Commissioner does not have statutory authority to impose requirements on the Secretary. 

 

The Committee also noted that under the cited rules the Secretary will be establishing requirements that fall within the definition of “rule” in RSA 541-A:1, XV.  RSA 541-A:22, III(e) prohibits agencies from using rules to delegate their rulemaking authority.  In the Committee’s view, the cited rules delegate rulemaking authority to the Secretary in violation of RSA 541-A:22, III(e).  The Committee also determined that, because any requirements established by the Secretary will be adopted outside the RSA 541-A rulemaking process, the requirements will, like the unwritten criteria noted above, conflict with RSA 541-A:3 and RSA 541-A:22, I.

 

Authority for Ins 1905.18

 

            The Committee objected that Ins 1905.18 is, pursuant to Committee Rule 401.01(c), beyond the authority of the Department.  The Committee noted that this rule paraphrases RSA 415-F:7, by requiring insurers to submit copies of advertising “for approval by the Commissioner to the extent it may be required under state law.”  The Committee determined that state law does not require submission of advertising for approval.

 

Fiscal Impact

 

            Pursuant to Committee Rule 404.01(a), the Committee objected that Final Proposal 2004-212 contains a substantial economic impact not recognized in the fiscal impact statement. 

 

The fiscal impact statement indicated there is no change in cost when the proposed rule is compared to the existing rule, and there is no fiscal impact.  However, the Committee noted that there are numerous provisions within the proposal with dollar amounts that have changed from the existing rule.  Therefore, the Committee determined that the fiscal impact statement is inaccurate and incomplete.