STATE ISSUES
What’s happening in Montgomery? The Alabama Legislature adjourned Thursday marking the completion of nine, of thirty, legislative days. The House continues to work cooperatively passing a number of bills. Noteworthy this week was the passage of HB 541 by Rep. Tammy Irons (D-Florence) by the Education Policy Committee. This is the bill that would place two-year school system policies under the Administrative Procedures Act thereby giving the Legislative Council veto authority over those on which they did not agree (i.e.—ban on double-dipping by state legislators). Rep. Terry Spicer (D-Enterprise), who would be impacted by the policy because of his employment with Enterprise-Ozark Community College, serves as vice-chair of the Committee but held the gavel for this particular meeting. Apparently, there were sufficient votes to kill the bill, but member requests for a roll-call vote were not granted by Rep. Spicer who gaveled the bill through on a voice vote.

Tensions in Senate, though not as high as last year, remain and their progress is still somewhat limited. On Tuesday, they did pass a bill banning PAC to PAC transfers, though it did leave a giant loophole allowing campaign committees, parties and caucuses to serve this function. The House rejected the Senate changes on Thursday and the bill will go to conference. Neither the House or Senate version would allow membership organizations to transfer funds between PACs thereby prohibiting a bank’s PAC from contributing to ABA’s PAC.

Horrible Workers Comp Package Introduced— There were five bills introduced (SB 139 by Sen. Bedford (D-Russellville), SB 389 by Sen. Zeb Little (D-Cullman), SB 405 by Bedford, SB 403 by Sen. Smitherman (D-Birmingham), and HB 502 by James Gordon (D-Saraland)) amending various sections of the Alabama Workers’ Compensation Act that have produced some very notable quotes:

1. “This is the most egregious attack on the business community I have ever seen.”
2. “This reads like the trial lawyer’s Christmas list.”
3. “This is not reform, it is deform.”
4. “Be afraid...be very afraid.”

Clearly, they amount to the most significant changes in the Alabama workers’ compensation laws in history. Each change creates an additional cost to the employer. None will result in reduced workers’ compensation costs. A detailed analysis would be required to produce an accurate assessment of the total costs on Alabama’s Employers. The costs will be born proportionately not only by the large employers but by employers of as few as 6 employees.

Under current Alabama workers’ compensation law, if a 30 year old employee lost his big toe as the result of an on-the-job accident, the employer would be obligated to pay the employee benefits of $220 per week for a maximum of 300 weeks or a total payout of $66,000. Under these bills, a trial judge would be justified in awarding as much as $682 per week for 1924 weeks for a total payout of $1,312,168.

In addition, the new law could also allow the employee to file a tort claim against the employer and demand a jury trial seeking both compensatory and punitive damages by merely alleging that the employer acted recklessly to create a hazardous condition which led to the loss of his toe. The employer would face the costs of defending that suit over 2-3 years of litigation, the owner and other employees would face hours of depositions related to the accident, and a jury could impose additional damages on top of the workers’ compensation benefits previously awarded.

Another example of cost escalation relates to medical expenses. Amendments proposed in the current legislation would alter law that has existed since the creation of the Alabama Workers’ Compensation Act which gives the employer the right to select the employee’s treating physician following a workers’ compensation accident. The amendments would enable the employee to also select his own physician for treatment, which could mean that the employer pays not for one physician, but for two. In addition, the amendment allows the employee an opportunity to seek a 3rd physician by motion to the court and the court can then designate that third physician as the new treating physician for the employee.

There are a number of associations with work comp plans that have taken the lead in opposing these bills. ABA has offered to assist and will certainly be monitoring this issue.

Bank Department Bill Update— ABA attorney Hamp Boles has spent considerable time working with the Department to limit the application of this measure to banks during their drafting of the Alabama Mortgage Act. The bill is basically aimed at mortgage brokers and encompasses licensing, registration, liabilities and penalties. We anticipate it to be introduced soon.

ABA legislative package
The Alabama Bankers Association has submitted three bills for passage this session:

1. Bank Impersonation bill—HB 478 by Rep. Vance (D-Phenix City) and SB 149 by Sen. Bedford (D-Russellville) - This bill restricts the use of lender information that is publicly available including loan numbers, amounts and trade names in solicitations for services or products without the consent of the lender. The Senate bill has been approved by the Senate Banking and Insurance Committee and awaits floor action by the full Senate. Thanks to our bill sponsor Sen. Roger Bedford (D-Russellville) for his leadership.
2. Lost Note bill—HB 399 by Rep. Hill (R-Columbiana) and SB 273 by Sen. Griffith (D-Huntsville) - This bill codifies a Supreme Court decision that an assignee of a creditor may enforce a lost note just as the creditor could. This bill has received a favorable report from both Banking and Insurance Committees
3. Commercial Property Redemption bill—HB 272 by Rep. Hill (R-Columbiana) and SB 267 by Sen. Griffith (D-Huntsville) - Currently, all property is subject to a one-year right of redemption to the owner. This bill removes that the redemption period for commercial property. The Senate Banking and Insurance Committee substituted a version of HB 338 by Rep. Ford (D-Gadsden) for Sen. Griffith’s bill this week. SB 267 now reduces the right of redemption on commercial and residential property to six months. We will now push the Griffith and Ford bills.

Federal Issues
Attempt to Consider Senate Housing Bill Defeated—The Senate fell 12 votes short of the 60 needed to begin consideration of the Foreclosure Prevention Act of 2008 (S. 2636) that includes ABA-opposed Title IV provisions that would allow bankruptcy judges to modify first-mortgage terms in Chapter 13 proceedings. The battle, however, is not over as Senate Majority Leader Harry Reid (D-Nev.) is expected to bring the legislation back for a final push, perhaps late next week, when the leading Democratic presidential candidates return after Tuesday's primaries. Both Senator Shelby and Sessions are supportive of our position.

Hearing scheduled on Credit Union bill—A hearing focusing on H.R. 1537, the Credit Union Regulatory Improvements Act, has been set for March 6 by The House Financial Services Committee. This bill, among other things, would expand credit union’s commercial lending authority. Call Alabama’s Rep. Spencer Bachus, Minority Leader on this Committee, and voice your opposition to this bill. His office number is 202-225-4921.