Legislative oversight committees voted on reports this week in Raleigh, giving a glimpse into some legislation we will see coming before the legislature during the upcoming short session.

---

Health and Human Services

The Joint Legislative Oversight Committee on Health and Human Services voted Tuesday to approve their legislative report which included four pieces of draft legislation:

1. An act to study medical education and medical residency programs.
2. An act establishing a telemedicine policy for the state of NC and directing DHHS to study and report recommendations for various telemedicine standards.
3. An act establishing a psychology inter-jurisdictional compact (PSYPACT).
4. An act to address health issues in local confinement facilities and to ensure that state prisons are full participants in the NC Health Information Exchange (HIE) known as NC HealthConnex.

All four proposals were accepted as presented to the committee. The committee also recommended that co-chairs of the Joint Legislative Oversight Committee on Health and Human Services allow the Subcommittee on Aging to continue its study of the state’s delivery of services for older adults during the interim period following the 2018 regular legislative session.

Remarks from the Secretary

In addition to the legislative report, the committee also heard a few updates from Dr. Mandy Cohen, Secretary of the Department of Health and Human Services (DHHS). According to Cohen, the flu had a higher peak this season than in recent seasons. However, she told the committee the season seems to be drawing to a close, with the exception of a few cases of Flu B still making their way around the state. Total flu deaths in the state reached 342 this season, with most deaths occurring in persons 65 years or older. She also let the committee know that DHHS is in the process of reviewing oversight procedures for birthing centers in the state following an issue in Wake County with a birthing center that experienced an inordinately high amount of infant deaths this year. Sec. Cohen remarked that DHHS has little regulatory oversight over these centers, but they are hoping the center in question will submit to a voluntary investigation by the agency.

Anything Else?

Sec. Cohen also provided the committee with an update on Cherokee County’s Department of Social Services (DSS). DHHS learned that Cherokee DSS was using Custody and Visitation Agreements (CVAs) that circumvented the required court involvement. On March 14, 2018, a judge determined this violated parents’ rights of custody and control of their children. Over the course of investigating Cherokee DSS’s use of the CVAs, DHHS determined that child welfare services were not being provided in accordance with law, rule, and policy, posing a substantial threat to the safety and wellbeing of children. DHHS assumed temporary control of Cherokee DSS child welfare services in March and they are continuing to work to find placement for impacted children.

---

Medicaid and Health Choice

The healthcare discussions continued Tuesday with a number of presentations but no additional legislative recommendations from the Joint Legislative Oversight Committee on Medicaid and NC Health Choice.

Medicare Payment Audit

Sec. Cohen spoke again on Tuesday, this time to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice. She provided the committee with background on Medicare cost-sharing payments and an explanation of an audit by the Office of the Inspector General (OIG) on cost-sharing payments. According to Cohen, OIG began an audit of the payment process in 2016. Last year, OIG concluded that any claim not paid based on the full Medicare claim was paid incorrectly, resulting in OIG finding an overpayment of $41 million. She notified the committee that DHHS disputes OIG’s claim of the overpayments. The dispute is ongoing and still under review.

---

Revenue Laws

The Revenue Laws Study Committee held their first meeting of 2018 Wednesday. The meeting kicked off with an overview from staff on 2017 NC tax law changes. Those changes came in the form of three main bills:

1. House Bill 59, S.L. 2017-39 – Revenue Laws Technical Changes. This bill includes the Internal Revenue Code (IRC) update from 2016-2017, which was covered later in the meeting.
2. Senate Bill 257, S.L. 2017-57 – Individual Income Tax Changes. This bill included corporate income tax and franchise tax changes, as well as sales tax changes involving machinery and equipment.
3. Senate Bill 628, S.L. 2017-204 – Various Revenue Law Changes. This bill contained changes and new exemptions to sales tax including repair, maintenance, and installation services for certain aircraft; wastewater dispersal products; and certain sales tax exemptions for farmers.

Fraud Detection

The committee heard a presentation from Alan Woodard of the Department of Revenue (DOR) on the DOR Report on Tax Compliance. Woodard informed the committee that across the state, DOR is seeing increased fraud and non-compliance. This includes:

• Refund Fraud
• Identity Theft Refund Fraud
• Cash Intensive Businesses
• Collection of Trust Taxes with no remittance

DOR feels that complete and timely information reporting with enhanced data analytics are the critical building blocks to effectively and efficiently identify those taxpayers not in tax compliance. The department works hand in hand with SAS and the Government Data Analytics Center (GDAC) to leverage their statistical expertise and technology along with DOR’s Business Intelligence Group. They have implemented specialized audit programs within their overall Audit Program to work towards cutting down on fraudulent payments. DOR was directed to work with committee staff to determine legislative solutions that can further reduce fraud in the state.

Internal Revenue Code

Staff updated the committee on the impact NC will feel from the recently enacted federal tax changes taking effect in 2018. The committee also heard about how the 2017 changes to the IRC will impact state revenue. According to committee staff, impact is expected to be minimal, but the changes could matter a great deal to some taxpayers.

Worker Classification Issues with Independent Contractors

Worker classification was discussed by staff and by a visiting vendor, Handy Technologies, Inc. Committee staff explained to the membership how the 2015 legislation changed legal standing for classification of employees for certain companies in an industry in which there is a presumption that their employees are independent contractors. There was concern of possibility of injury and an ensuing debate about responsibility. The legislative response was to force network transportation companies to have a large amount of insurance. 

As more companies are formed with this type of structure, worker classification issues may become more complicated. Gina Fornario from Handy Technologies, Inc. spoke to the committee about how worker classification matters to companies like Handy. Ms. Fornario described Handy as the modern, more sophisticated version of the 20th century yellow pages for finding marketplace contractors to help with jobs around the home or office, like furniture installation, home improvements, and the like. She explained that as the economy changes, the way people find service providers is also changing. She brought to the committee proposed legislation that would help Handy and other similar companies with worker classification in NC.

What Else?

The committee discussed a piece of proposed legislation, entitled Various Changes To The Revenue Laws. The committee did not vote on the proposed legislation. They will continue to tweak the bill and take suggestions before submitting it for consideration.

---

Emergency Management Proposals

The Joint Legislative Emergency Management Oversight Committee voted Thursday to approve their committee report, which contains four legislative proposals. Sen. Ron Rabin explained the four pieces of proposed legislation:

1. An act to require training and certification of police telecommunications.
2. An act to require charter schools, regional schools, UNC Laboratory schools, and nonpublic schools accepting students receiving opportunity scholarship grants and to encourage other nonpublic schools to develop a school risk management plan, hold school safety exercises, and provide school safety information to local law enforcement and the Division of Emergency Management.
3. An act to encourage local law enforcement agencies to operate programs that education citizens regarding law enforcement operations, to recognize the danger signs of potentially violent activities, and to provide training to citizens who want to provide volunteer services to local law enforcement agencies.
4. An act to amend the NC Emergency Management Act to clarify that prevention is within the scope of the Act.

---

Ag Committee Visits NC Zoo

Thursday, members and guests of the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources visited the NC Zoo in Asheboro, NC. Committee members heard about the economic benefit the zoo brings to the state as well as challenges facing the zoo. Attendees viewed numerous zoo exhibits during their visit as well.

---

Justice and Public Safety

The Joint Legislative Oversight Committee on Justice and Public Safety met Thursday to discuss prison safety, sexual assault evidence kits, and the report from the ABC Subcommittee. The committee voted on and approved their legislative report, which included a proposed bill for ABC Regulation and Reform. The bill would strengthen permitting enforcement authority of the ABC Commission and make other changes to ABC laws.

Sexual Assault Evidence Collection Kit Law Enforcement Inventory Report

Bradford Sneeden, Legislative Counsel to AG Josh Stein at the NC Department of Justice and John Byrd, Director of the NC State Crime Lab (SCL), spoke to the committee about Sexual Assault Evidence Collection Kits (SAECKs) and the Law Enforcement Inventory Report. Session Law 2017-57 (Appropriations Act of 2017) required each law enforcement agency (LEA) in the state to conduct an inventory of SAECKs in its custody and report that number to the SCL. In its report to the SCL, each LEA was required to note how many of the kits they reported were untested. The NCGA directed the SCL to compile this information and report its findings to the Joint Legislative Oversight Committee on Justice and Public Safety by March 1, 2018. The resulting recommendations were as follows:

1. Create select committee
2. Institute a statewide SAECK tracking system
3. Develop a protocol to test all kits reported to law enforcement going forward

The state is now working on developing the SAECK Tracking & Inventory Management System (STIMS). Idaho gave NC the use of their web-based tracking system which would need to be customized for NC. The cost to test all kits is high, but the lab is looking at outsourcing and grants to get the job done. A draft bill was presented to the committee entitled the Rape Evidence Collection Kit Tracking Act. This bill, if passed, would create a statewide SAECK system and require testing of previously untested SAECKs. The draft bill was included in the committee report.

Prison Safety

There were a number of speakers at the beginning of the committee meeting for a period of public comment on prison safety. Speakers included former police officers, correctional officers, and prison directors. Committee members heard from these members of the public about funding deficits, policy issues, and other things that they say lead to decreased safety for inmates and prison staff alike. A draft bill was proposed with the intent to enhance prison security and modify the administrative remedy procedure. The draft bill was included in the committee report which was approved by the committee.

---

A Look Ahead to Next Week

Monday, April 16, 2018

1:00 PM Committee on Intellectual and Developmental Disabilities

2:00 PM Select Committee on Disaster Relief

Tuesday, April 17, 2018

9:00 AM Select Committee on School Safety

1:00 PM Agriculture and Forestry Awareness Study Commission

---