NASBP Focal Point - March 19, 2020

Legislative News at a Glance

Currently, thirty-five state legislatures are scheduled to be in session; only eighteen remain in session: Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Federal, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, and Wisconsin.

Territories: Guam, Puerto Rico, and Virgin Islands

For the states in bold, their legislatures are either adjourned or suspended due to COVID-19.

*Click here for a complete 2020 calendar of the state’s legislative session dates.

In This Issue

Federal Report
COVID-19; Congressman Hanna
State Report
Bid Bonds
Bad Faith Legislation
Bond Threshold Increase
Bonding/Lien Laws

Federal Report:

COVID-19;

Congressman Hanna

On Wednesday, the Senate approved the bill passed by the House last week addressing the coronavirus. H.R. 6021 provides tax credits to employers to offset the costs of providing emergency paid leave and also requires insurers, Medicare, Medicaid, and other federal health programs to fully cover testing and related services for the virus. H.R. 6021 provides emergency funding for several nutrition programs, including the Special Supplemental Nutrition Program for Woman and Infants and Children (WIC) as well as various federal health programs. Further proposals for the next round of economic aid is expected to include an economic stimulus package to addresses loan payment forbearance for federal loans, help families pay for childcare, provide food and medicine assistance for seniors, deliver checks of $1,000 to every adult American, and put the Defense Department to work aiding the crisis response.

Former Congressman Richard Hanna (R-NY-22 ^nd ), a very good friend to NASBP, passed away on Sunday at the age of 69. Prior to winning election to Congress in 2010, Congressman Hanna owned and operated Hanna Construction, doing business across the empire state. Because of his construction background, Congressman Hanna was tapped to serve on key House policy committees such as Transportation and Infrastructure and was named chair of the Small Business Subcommittee on Contracting and Infrastructure. It was during his tenure while serving on the Small Business Committee that NASBP started a relationship with the Congressman who eventually agreed to sponsor legislation to increase the contract size of the SBA Surety Bond Guarantee Program and to protect construction businesses by requiring individual sureties to pledge specific federal government assets to support their bond obligations on federal contracts. Independent-minded and well-known as someone who was willing to buck members of his own party, Richard Hanna was a rare breed in the current age of partisan politics. Past NASBP Government Relations Chair, Kevin Garrity, who served as Richard Hanna’s bond producer early in his career, noted that NASBP “as an organization was very fortunate to have him serve as we promoted our good government legislation.” Kevin, added that “the industry and the users of our product are better for his efforts.”

Congressman Richard Hanna accepts an award from NASBP Government Relations Chairman, Kevin Garrity, for contributions as a legislator in protecting small business construction contractors.

State Report

Bid Bonds

Wyoming House Bill 50

UPDATE (in bold)
WY H.50 (House Appropriations Committee)Amends the current bid bond requirement for Administration Services. Instead of requiring a bid bond amount equal to 10% of the aggregate amount of the bid or contract when a contract is expected to exceed $1,500, this bill would have the requirement kick in when the contract is expected to exceed $150,000. This bill passed the House andthe Senate (with amendments with which the House concurred). On March 10, the governor signed the bill into law.

See Wyoming HB 52 (below) for additional information applicable to this legislation.

Bad Faith Legislation

Colorado House Bill 1290

UPDATE (in bold) CO H 1290 (Garnett)Amends Colorado Revised Statutes, by adding 10-3-1118–“Failure to Cooperate,” which bars an insurer the right from using a failure-to-cooperate defense in an action unless: the insurer has submitted a request to the insured or the insured’s representative for information the insurer deems necessary for litigation; the information necessary for litigation is not available to the insurer without the assistance of the insured; the request provides the insured 60 days to respond; the request is for information the insurer would be entitled to in litigation; the request cites the specific policy language that entitles the insurer to the information necessary to any lawsuit; the insured’s failure to cooperate has rendered performance by the insurer under the policy impossible; and the insurer gives the insured an opportunity to cure within 60 days and provides notice to the insured within 30 days, describing, with particularity, the alleged failure to cooperate.

H 1290 was referred to the House Committee on Judiciary on February and passed out of that committee with amendment on March 10. It is expected those who support expanding the bad faith law to apply to sureties will seek to advance this legislation or another bad faith bill this session.

Maryland Senate Bill 801

UPDATE (in bold) MD S.801 (Reilly) Amends the Courts and Judicial Proceedings and Insurance Articles to allow obligees to recover against the surety for failing to act in good faith to pay and/or settle valid claims. Should the fact finder discover that the surety failed to act in good faith, the obligee may recover additional expenses, such as interest on actual damages and reasonable attorneys’ fees. SB 801 broadly defines the word “obligee” as “a person who is the recipient of an obligation under a surety insurance policy.”

S.801 was heard in the Senate Committee on Finance on March 4, 2020, and the Committee did not take further action because the legislative session has been suspended due to conronavirus concerns. While the Maryland General Assembly may reconvene later this year, legislators are expected to only take action on issues that were left unresolved, which does not include this bill.

Bond Threshold Increase

Oklahoma House Bill 3879

UPDATE (in bold) OK H.3879 (Wallace)Amends the current law (Title 61 §§1-113) by increasing the bond threshold for all public construction contracts from $50,000 to $100,000.
This bill has passed the House.

Wyoming House Bill 52

UPDATE (in bold) WY H.52 (Committee on Appropriations)
Amends 16-6-112–Contractor’s performance and payment bond by increasing the bond threshold from $50,000 to $150,000 for a WY “public entity,” which was amended to be defined as the state of Wyoming, any state office, board, council, commission, separate operating agency, department, institution, or other instrumentality or operating unit of the state. If the contract price is $150,000 or less, the public entity may require the contractor to furnish any other forms of guarantee approved by the state or the political subdivision. This legislation passed the House and the Senate (with amendments with which the House concurred). On March 10, the governor signed the bill into law.

Bonding/Lien Laws

Florida Senate Bill 1422

UPDATE (in bold) FL S.1422 (Flores)/H.897 (Rodriguez)
Amends FL Statute 713.02(6) by removing the option that a private owner and a contractor may agree that the contractor furnish a payment bond in lieu of filling a mechanics lien claim. Several bills have been introduced this session addressing the FL Mechanics Lien Law. The Florida Surety Association is attempting to assess the recent surge of legislative activity. S. 1422 was referred to Senate Committee on Innovation, Industry and Technology and the Senate Judiciary. H. 897 was referred to the House Civil Justice Subcommittee and the House Committee on Commerce.
Last week, both the Senate and House versions were withdrawn from consideration.

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Focal Point is an e-bulletin sent to members and friends of the
National Association of Surety Bond Producers
when most state legislatures are in session and as needed thereafter. To obtain copies of Bills or other materials discussed above, contact
advocacy@nasbp.org
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