Business

By:

John Rappa, Principal Analyst

2004-R-0442

June 4, 2004

During the 2004 regular and special sessions, the legislature enacted laws that affect the business community. Some have a broad effect while others affect only specific types of businesses, such as manufacturing. This report summarizes those laws in lay terms without interpreting them. For this reason, we encourage you to read the laws that interest you. You can obtain them from the Connecticut State Library or the House Clerk’s Office. A detailed OLR analyses of all the 2004 laws will be available in the early fall when OLR publishes its Public Act Summary book. In the meantime, you can view completed analyses by visiting our web page (www. cga. state. ct. us/olr).

BANKS, FINANCE, AND INSURANCE

Life and Health Insurance Guaranty Association Act Coverage

The coverage maximum under the Connecticut Life and Health Insurance Guaranty Association Act is now $ 500,000 for both life insurance death benefits and life insurance and annuities net cash surrender and net cash withdrawal values. The Class A $ 150-per-calendar-year “member insurer” cap on non-pro-rata assessments is eliminated. (PA 04-17, effective October 1, 2004)

Corporate-Owned Life Insurance

An employer or a trustee of a trust, other than a voluntary employees’ beneficiary association, can now purchase life insurance on employees or retirees for whom it provides life, health, disability, retirement, or similar benefits. These entities must first obtain the employee’s or retiree’s consent. (PA 04-24, effective October 1, 2004)

Wigs for Cancer Patients

A new law requires specified types of health insurance policies to provide at least $ 350 of coverage per year for wigs licensed oncologists prescribe for patients who lose hair because of chemotherapy. (PA 04-34, effective October 1, 2004)

Connecticut Uniform Securities Act

The legislature’s changes to the Connecticut Uniform Securities Act include:

1. removing provisions allowing investment advisers registered with the Securities and Exchange Commission to avoid certain application, notification, and fee requirements applicable to Connecticut investment advisers;

2. setting a $ 50 per agent fee for transferring broker-dealer or investment adviser agents from one broker-dealer or investment adviser to another;

3. making several fees nonrefundable; and

4. extending the statute of limitations for certain actions related to misrepresentation and fraud in investment advisory services.

(PA 04-45, effective October 1, 2004).

Stop-Loss Policies

Stop-loss policies can no longer be issued or delivered in Connecticut unless a copy of the policy is first submitted to the Insurance Department for review and approval. (PA 04-49, effective October 1, 2004)

Off-Label Cancer Drugs

A new law requires HMO plans delivered, issued for delivery, or renewed in Connecticut covering FDA-approved cancer prescription drugs to also cover “off-label use” of those drugs (i. e. , drugs used to treat a type of cancer not included in the medication’s labeling). (PA 04-49, effective October 1, 2004)

Waiving Pre-Licensing Examination Requirements

The insurance commissioner can now waive pre-licensing examination requirements for (1) property and casualty insurance and life and accident insurance producers who meet specified criteria. (PA 04-77, effective October 1, 2004)

Property Casualty Insurance Loss Containment

People who do repair or remediation work under a personal or commercial risk insurance policy claim must now give the insured written notice of the work to be completed and the estimated total price before beginning any work. But they do not have to do so for repairs made to cars covered by an automobile liability policy or done according to applicable law by registered home improvement contractors. (PA 04-108, effective October 1, 2004)

Disclosing Dental Reimbursement Information

Insurance companies must now disclose the estimated policy reimbursement for specific dental procedure codes ordered or recommended by a dentist. They must do so when an insured or a licensed dentist acting on an insured’s behalf requests it. This requirement applies to policies delivered, issued for delivery, renewed, amended, or continued on or after October 1, 2004 that cover inpatient or outpatient dental services only. (PA 04-125, effective October 1, 2004)

Terrorism Coverage

A new law allows commercial risk insurers to exclude coverage for terrorism, which the insurance commissioner must define, from standard fire insurance policies delivered, issued for delivery, or renewed in Connecticut beginning July 1, 2004. They can do this for direct or indirect loss from terrorism only (1) if the premiums charged for the policy reflect projected savings from the exclusion and (2) until the federal terrorism insurance program expires (PA 04-140, effective July 1, 2004)

Managed care organizations (MCOs) must now, among other things, include professional counselors in provider lists issued to enrollees, give them 60 days prior notice of contract termination, and permit counselors to tell enrollees how the MCO compensates them. (PA 04-125, effective October 1, 2004)

Small Employer Health Plans

A new law sets conditions under which the administrative savings resulting from administering an association group plan or a health plan arranged by the state comptroller may be considered when determining small employer premium rates. (PA 04-163, effective July 1, 2004)

Medically Necessary Formulas

Specified types of health insurance policies must now cover amino acid modified preparations and low protein modified food products prescribed for cystic fibrosis; medically necessary specialized formula for children up to age eight; and preparations, food products, and specialized formulas on the same basis as other outpatient prescription drugs. (PA 04-173, effective October 1, 2004)

Miscellaneous Changes

A new law:

1. permits the sale of federally qualified health savings accounts (HSAs) in Connecticut by exempting specified individual and group high-deductible health plans used to establish them from the $ 50 deductible limit on home health care coverage;

2. extends the Connecticut Insurance Guaranty Association Act for property and casualty insurance to the legal successor of the insolvent insurer following a merger; and

3. revises the definition of "control" under the acquisition of controlling interest provisions. (PA 04-174, effective October 1, 2004, except for the sections concerning HSAs, which take effect upon passage)

BUSINESS LAW

Documents of Title

The legislature changed the Uniform Commercial Code’s Article 7 provisions governing warehouse receipts, bills of lading, and other documents of title. The changes including allowing electronic documents of title and subjecting them to the

Gasoline Prices

A new law prohibits gasoline and motor fuel refiners and distributors from requiring or coercing franchisees (which can be either distributors or retailers) to sell gasoline at a specific price or in a specific price range. (PA 04-70, effective October 1, 2004)

Mergers and Dissolutions

Domestic corporations can now merge with more than one corporation or other entity and limited partnerships can merge with foreign as well as domestic limited partnerships and limited liability companies. Nonstock corporations dissolved by their boards without member approval must now reflect that fact in the certificate of dissolution filed with the state. (PA 04-99, effective upon passage)

Limited Liability Companies

A new law allows groups comprising licensed doctors and surgeons, occupational therapists, social workers, and alcohol and drug counselors to form LLCs and requires the members to meet specified requirements. LLCs formed by alcohol and drug counselors must be a mixed type. (PA 04-175, effective October 1, 2004)

Construction Contracts

The legislature:

1. extended the construction contract law that previously applied only to work done on commercial and industrial buildings to all types of private sector construction work and to nonprofit corporations,

2. mandated the use of statutory default payment schedule provisions,

3. gave subcontractors the right to sue owners for payment, and

4. specified that the exemption from the law for United States government contracts includes contracts funded or insured by the Department of Housing and Urban Development.

(PA 04-202, effective October 1, 2004)

Treasurer’s Sale of Unclaimed Property

The treasurer can now liquidate all types of unclaimed property as soon as she receives it and immediately liquidate unclaimed securities she currently holds. A person who claims an abandoned business ownership share before the end of the three-year waiting period can no longer receive the greater of the sales proceeds or the securities’ market value when he made the claim. (PA 04-216, effective upon passage).

Filing Names of Business Entities

A new law requires that domestic corporations, limited partnerships, LLCs, and domestic and foreign limited liability partnership (LLP) to distinguish themselves in the secretary of the state’s records from other recorded entities doing business in the state. (PA 04-240, effective October 1, 2004)

Agents to Receive Process

More types of entities can now act as agents to receive process for domestic and foreign stock and nonstock corporations, limited partnerships, LLCs, LLPs, and statutory trusts. (PA 04-240, effective October 1, 2004)

Limited Liability Company Interim Change Notices

LLCs must now file an interim notice when they replace a manager or member who was named in their most recent annual report. They must do this if the replacement occurred no later than 30 days preceding the month during which the company’s next annual report is due. (PA 04-240, effective October 1, 2004)

CONSUMERS

Income Tax Refunds

A new law requires refund anticipation loan facilitators to disclose certain facts when a borrower applies for the loan and subjects violators to a criminal penalty and civil liability. (PA 04-170, effective October 1, 2004)

Appealing Health Care Determinations

Enrollees can now appeal claim denials based on medial necessity to the insurance commissioner for up to 30 days after the denial. They can do so only if they exhausted the MCO’s or the utilization review company’s internal mechanisms (PA 04-157, effective October 1, 2004)

ECONOMIC DEVELOPMENT

Manufacturing Machinery and Equipment Property Tax Exemption

Businesses applying for the five-year, 100% property tax exemption for new and newly acquired manufacturing machinery and equipment must now show that they listed this property on their federal tax return as five- or seven-year property. (PA 04-72, effective upon passage)

Connecticut Development Authority (CDA)

A new law allows CDA to issue bonds on behalf of towns for cleaning up contaminated properties and restoring them to productive uses and makes it easier for CDA to finance projects that redeveloped deteriorated, tax delinquent properties (PA 04-106, effective upon passage) Another new law lets CDA to invest the proceeds from its bonds and use them fund more types of projects. (PA 04-193, effective upon passage)

Research and Development Tax Credit Refunds

The legislature made companies paying the alternative capital base corporation tax permanently eligible for the 65% refund of R&D tax credits the companies could not use. (PA 04-235, effective upon passage and applicable to income years starting on or after January 1, 2002)

Industry Clusters

The legislature authorized the use of Manufacturing Assistance Act funds to support industry clusters and up to $ 5 million in bonds for a manufacturing competitiveness grant program. (PA 04-1, May Special Session, effective July 1, 2004)

ENERGY

Call Before You Dig

A new law increases, from $ 10,000 to $ 40,000, the maximum civil penalty for violating the call before you dig laws, which govern excavations near utility lines. It also imposes a $ 1,000 maximum penalty on utilities for failing to mark properly the location of underground facilities or meeting the regulatory deadlines for doing so unless they can show that the failure was not due to gross negligence and caused no property damage or personal injury. (PA 04-43, effective October 1, 2004)

Direct Billing and Collection Services

The Department of Public Utility Control (DPUC) must adopt regulations by January 1, 2005 that allow competitive electric suppliers to provide direct billing and collection services for commercial and industrial customers who (1) choose this option and (2) have a demand meter or whose peak demand is at least 500 kilowatts. Suppliers cannot disconnect or otherwise terminate the physical delivery of electricity to these customers. (PA 04-86, effective October 1, 2004)

Energy Efficiency Standards for Certain Products

The Department of Public Utility Control must adopt regulations setting energy efficiency standards for a variety of products that provide heat, cooling, and lighting. (PA 04-85, effective July 1, 2004)

Telecommunications Antennas

Starting April 1, 2005, each telecommunications services provider must tell the Siting Council the location of antenna arrays that are not on towers but are used to provide cellular and personal communication services in Connecticut. The council may use this information only to prepare a statewide coverage plan. (PA 04-226, effective upon passage)

HEALTH CARE

Connecticut Health and Educational Facilities Authority Bonds

A new law expands the Connecticut Health and Educational Facilities Authority’s (CHEFA) ability to (1) refinance or restructure existing nursing home project bonds and (2) refinance or restructure, or retire bonds issued on a pool or group obligation basis for projects with several participating nursing homes. (PA 04-167, effective upon passage)

Pharmacies

2004 changes to the ConnPACE program include:

1. limiting pharmacies’ participation to those that accept all Medicare-approved discount cards designated for use in conjunction with the program,

2. allowing the DSS commissioner to require a participating pharmacy to accept a Medicare-endorsed discount card if that is required under federal law, and

3. requiring pharmacies to make reasonable efforts to determine if a client is entitled to the $ 600 subsidy under the discount card, as it must for other types of insurance

(PA 04-6, effective upon passage).

A new law reduces the pharmacy dispensing fee for medical assistance programs from $ 3. 30 to $ 3. 15 per prescription (PA 04-258, effective July 1, 2004). Another new law exempts prescription drugs

Outpatient Surgical Facilities

The legislature changed the definition of outpatient surgical facility, required the Public Health Department to license certain facilities, and set conditions under which they must obtain a certificate of need. (PA 04-249, July 1, 2004)

Hospitals, Nursing Homes, and Residential Care Homes

The legislature changed the law governing the sale of nonprofit hospitals to for profit entities by modifying the conditions under which the attorney general and the Office of Health Care Access must disapprove a proposed sale. It also changed the penalty for nursing homes that fail to return unused drugs under the drug return program. (PA 04-258, effective July 1, 2004)

The legislature authorized CHEFA Facilities Authority to:

1. finance health care institution equipment purchases;

2. establish a three-year demonstration program to help nonprofit hospitals provide medical malpractice insurance coverage to their physicians and surgeons through captive insurers; and

3. provide hospitals with access to leases for equipment needed to digitize patient records. (PA 04-1, May Special Session, effective upon passage)

Hospital Inpatient Rates

The legislature extended the freeze on inflationary adjustments for inpatient hospital rates through March 31, 2008. (PA 04-2, May Special Session, effective July 1, 2004)

LABOR

Workers’ Compensation Payments

A new law gives employers up to 20 days instead of 10 to compensate workers for injuries under a compensation commissioner award or voluntary agreement or from the Second Injury Fund. (PA 04-47, effective upon passage)

Unemployment Compensation

The Labor Department can now charge 1% interest per month on fraudulent unemployment compensation overpayments, and employers must pay a $ 25 fee if they miss the deadline for filing their quarterly wage report. The minimum forfeiture penalty in fraudulent claim cases is reduced to one week of unemployment benefits instead of two. (PA 04-60, effective July 1, 2004, except that the interest can be charged only for fraudulent overpayments made on or after July 1, 2005)

Hotel and Restaurant Gratuities

The legislature made permanent the hotel and restaurant tip credit, which allows employers to pay employees and bartenders less than the minimum wage as long as tips they receive make up the difference. (PA 04-68, effective January 1, 2005)

Family And Medical Leave For Organ Donation

Employees can now take family and medical leave to donate organs or bone marrow. (PA 04-95, effective October 1, 2004)

Debarment Reform

General contractors working on municipal or state public works projects are now barred from awarding work on these projects to subcontractors who violated the prevailing wage law. (PA 04-102, effective October 1, 2004)

Personnel Files Act Enforcement

The labor commissioner can now subpoena people and records to investigate complaints about employee personnel and medical records under the Personnel Files Act. He cannot disclose the records under the Freedom of Information Act. (PA 04-178, effective October 1, 2004)

Compromise Offers for Unemployment Compensation Overpayments

A new law sets conditions under which the labor commissioner can make or consider a compromise offer for overpayment of unemployment compensation taxes. (PA 04-179, effective July 1, 2004)

Unemployment Benefits for Social Security Pensioners

A new law eliminates the unemployment compensation benefit reduction for Social Security pensioners, thus allowing them to receive full all unemployment benefits and Social Security pensions. It also changes the conditions under which an employee can be disqualified from receiving unemployment compensation benefits. Lastly, the law allows lump sum worker compensation settlements if the parties agree and the Workers’ Compensation commissioner approves. (PA 04-214, effective October 1, 2004, except the workers’ compensation provision takes effect upon passage)

The legislature allowed certain employer mutual associations to make payments owed to the Second Injury Fund for five years without any penalties or interest. It also changed, starting January 1, 2005, the way these associations are assessed for fund payments. (PA 04-229, effective October 1, 2004)

Hospital Overtime Limits

A new law limits the circumstances under which hospitals can require registered and licensed practical nurses and nurses’ aides to work overtime. (PA 04-242, effective October 1, 2005)

LAND USE AND ENVIRONMENT

Commercial Fishing

Commercial fishing reporting requirements now extend to anyone, other than the final consumer, who (1) purchases, ships, consigns, transfers, transports, barters, accepts, or packs certain species directly from a commercial fisherman for resale or (2) any commercial fisherman who sells, ships, consigns, transfers, or barters his catch of certain species to anyone other than a seafood dealer. Commercial fishermen must also report on more species they land. (PA 04-97, effective upon passage)

Posting Land Contamination Notices

A new law requires people and businesses who own contaminated parcels to post a notice to that effect on the parcel and at their business locations no later than five days after an event that increases the likelihood that people will be exposed to known contaminants. Owners that fail to do so must pay a $ 100 civil penalty for each day they fail to comply. (PA 04-134, effective October 1, 2004)

Farm Preservation

The agriculture commissioner must establish and administer programs that allow grocery stores, schools, and restaurants to qualify for economic development funds if they use certain percentages of Connecticut grown or produced farm products. The administrative services commissioner must now give preference to certain Connecticut farm products if they compare favorably with those from other states. (PA 04-222, effective July 1, 2004, except for the Connecticut Farm Fresh programs, which are effective upon passage)

Transmission Lines

Applications for electric or gas transmission lines and electric substations must now address how the electromagnetic fields they produce affect the environment, and the Siting Council must make findings about these effects when it acts on an application. Transmission lines with a minimum 345 kilovolts capacity located near homes and apartments should be buried unless the applicant can show that doing so would not be technologically feasible. (PA 04-246, effective upon passage)

Climate Change

A new law requires the state to reduce greenhouse gas emissions and the Governor’s Steering Committee on Climate Change to develop plans to help achieve the goal. (PA 04-252, effective October 1, 2004)

MOTOR VEHICLES AND TRANSPORTATION

Transportation Laws

The legislature:

1. expanded the transportation commissioner's authority to make agreements with public utilities governing the longitudinal use of highway rights-of-way to include all state highways, not just state limited-access highways (effective upon passage) and

2. allowed him to issue overlength permits to vehicles carrying divisible loads that, in the aggregate, do not exceed 53 feet in length (effective October 1, 2004). (PA 04-143)

Motor Vehicle Law Revisions

A new law:

1. increases the registration period for taxicabs, livery service vehicles, and service buses from one to two years;

2. requires the motor vehicles commissioner to allow marine dealers to submit applications and documents for vessel registrations to DMV electronically;

3. exempts certain businesses that auction construction equipment from motor vehicle dealer licensure and auction permit requirements;

4. reduces the license period for commercial drivers' licenses from six to four years and makes related fee changes including an increase in the fee for original licenses;

5. defines a major loss of utility service for purposes of the exemption from state and federal maximum hours of driving and on-duty time for drivers of utility company vehicles providing emergency relief; and

6. establishes requirements for new and used car dealers who offer optional component-part-marking services to vehicle purchasers with respect to specifying the charges on the sales order, filing charges for such services with the commissioner, charging only the filed rates, and related procedures. (PA 04-199, effective July 1, 2004)

Commercial Driver’s License

The legislature made many changes to the laws governing issuing, qualifying for, and holding a commercial driver's license to conform them to the federal Motor Carrier Safety Improvement Act of 1999. It also made many changes that conformed the state law regarding drivers of vehicles transporting hazardous materials to the federal USA Patriot Act. (PA 04-217, effective January 1, 2005 for most changes)

TAXES AND FEES

Pass-Through Entity Income Tax Filings

A new law tightens the filing requirements for people who pay taxes on income they derive from S corporations and other entities that pass their tax liabilities on to their shareholders, partners, and beneficiaries. It also standardizes the filing and tax payment requirements for these different “pass-through entities. ” (PA 04-216, effective upon passage and applicable to tax years starting on or after January 1, 2004)

Property Taxes

The legislature allowed towns required to revalue real estate in 2003, 2004, or 2005 to wait until 2006, if their legislative bodies’ approve. Subsequent revaluations must be made every five years thereafter. The legislature extended the revaluation cycle from every four years to every five years (PA 04-2, May Special Session, effective upon passage and applicable to assessment years starting on or after October 1, 2003). It also required towns to conducted physical revaluations every 10, rather than every 12, years (PA 04-2, May Special Session, effective October 1, 2003 and applicable to assessment years starting on or after that date).

A new law establishes rules for determining the town where a motor vehicle or snowmobile’s owner must pay property taxes. The rule, which applies to registered and unregistered vehicles, requires the owner to pay taxes in the town where the vehicle most frequently leaves from and returns to or remains during the normal course of its operation. Additional rules apply to vehicles that do not meet this frequency test. (PA 04-228, effective upon passage and applicable to any assessment year)

Sales Tax

Beginning July 1, 2004, retailers with sales in two or more towns must report on their quarterly sales tax return (1) the town where each taxable sale occurred and (2) the amount of sales tax it collected in each town. (PA 04-2, May Special Session, effective upon passage)

The legislature restored the annual exemption for clothing and footwear costing less than $ 300 sold during the fourth week of August. (PA 04-218, effective July 1, 2004 and applicable to sales on or after that date)

Gasohol Tax Increase

As of July 1, 2004, the motor fuel tax on gasohol goes up from 24 to 25 cents per gallon. (PA 04-2 May Special Session, effective upon passage)

Real Estate Conveyance Tax

A new law sets conditions exempting employers and relocation companies from paying the real estate conveyance tax when they resell residential property acquired through employee relocations. (PA 04-154, effective July 1, 2004 and applicable to conveyances on or after that date)

Utility Company Tax Exemption

Under a new law, gas companies now pay no gross earnings taxes on the gas they sell to existing combined cycle generating plants meeting specified criteria. Gas sales to cogeneration plants providing electricity or steam for manufacturing are also exempted if they are located on the manufacturer’s premises. The exemption applies even if the manufacturer does not own the plant. (PA 04-180, effective upon passage)

Motor Vehicle Fee Increases

The legislature increased the fees for:

1. temporary registration for vehicles used to transport passengers for hire, from $ 6 per day to $ 25 for vehicles under 6,000 pounds and $ 46 for vehicles over that weight;

2. duplicate of a license to operate a commercial driving school, from $ 7 to $ 20;

3. commercial driving instructor’s license, from $ 10. 75 to $ 50; and

4. special use registration, from $ 10 to $ 20. (PA 04-182, effective July 1, 2004)

The legislature:

1. expanded the revenue services commissioner’s power to investigate cases involving motor vehicle fuel and motor carrier road taxes (effective upon passage);

2. established a Connecticut income tax withholding payment schedule that is different from the federal schedule (effective January 1, 2005 and applicable to wages and nonpayroll amounts paid on or after that date);

3. eliminated the commissioner’s authority to require cigarette dealers and distributors to file customer information and the penalty for noncompliance (effective upon passage);

4. eliminated a maximum penalty imposed on these dealers and distributors for failing to file certain reports (effective upon passage); and

5. eliminated the license required for harvesting oysters and the quarterly assessment on harvested oysters (effective upon passage and applicable to calendar quarters starting on or after July 1, 2004). (PA 04-201)

Health Care Premium Tax

Health care centers must now pay the 1. 75% premiums tax only on the next direct subscriber charge they receive on policies or contracts the insurance commissioner approves. (PA 04-218, effective upon passage and applicable to income years starting on or after January 1, 2005)

REAL ESTATE

Disclosing Nonmaterial Facts

A new law prohibits lawsuits against a real estate owner, his agent, or any agent of the transferee for failing to disclose certain specified “nonmaterial facts” about a property to the transferee. It also eliminates the ban against suits brought for failing to disclose that a property was psychologically impacted. (PA 04-39, effective October 1, 2004)

Commercial Brokerage Agreements

A new law sets conditions and requirements under which real estate brokers and salespeople licensed by other states, but not Connecticut can handle commercial real estate transactions here. It prohibits the out-of-state broker or salesperson from touring

Real Estate Broker Liens

A real estate broker or his authorized agent can now sign a claim for lien, and a broker can also claim a lien if he is unable to give the notice to the prospective buyer or tenant because, after due diligence and reasonable effort, he cannot learn his identity. (PA 04-131, effective October 1, 2004)

WORKFORCE DEVELOPMENT

Office of Workforce Competitiveness (OWC)

A new law requires the OWC to offer grants to colleges and universities and technology-based industries that collaborate on developing educational programs in emerging interdisciplinary technology fields and related issues. (PA 04-212, effective July 1, 2005 for the grant program and July 1, 2004 for the coordination requirement)

Allied Health Workforce

The legislature established a 17-member board to identify and assess allied health workforce needs and required it annually to report its findings and recommendations to several legislative committees beginning January 1, 2006. (PA 04-220, effective October 1, 2004)

The legislature appropriated funds to increase the number of regional community-technical college faculty qualified to teach or train students to become registered nurses. The colleges must do this in collaboration with hospitals and other health care institutions and secure private funding. (PA 04-253, effective July 1, 2004) The legislature also authorized grants to colleges and universities that work with hospitals on establishing or expanding nursing education programs. (PA 04-196, effective upon passage)

JR: ro