N.D. Attorney General Backs NAIC Locked-Door Sessions

Mr. Stenehjem ruled that Jim Poolman, the state's insurance commissioner, had not violated state open meeting laws by participating in closed sessions conducted by the National Association of Insurance Commissioners, Kansas City, Mo.

The NAIC meeting earlier this month was attended by Rhode Island State Rep. Brian Kennedy, D-Hopkinton, who is vice president and president-elect of the National Conference of Insurance Legislators, and Kentucky State Rep. Robert Damron, D-Jessamine, NCOIL treasurer.

Both legislators criticized the locked-door executive sessions, and Mr. Damron found his way in barred by a security guard.

Mr. Keiser and Mr. Wald had asked for an opinion on whether Mr. Poolman and his staff had violated state open records law by participating in NAIC executive sessions; whether North Dakota could pay dues to the NAIC to participate in policy and regulatory discussions and decisions if they occurred in nonpublic meetings; and whether it was acceptable to pay dues to the organization if state representatives only participate in NAIC sessions that are open to the public.

Mr. Stenehjem wrote in his decision that Mr. Poolman and his staff are not in violation of the open meetings law if they participate in public and nonpublic NAIC sessions.

According to his ruling, a state agency may pay membership dues to a national association such as the NAIC. North Dakota pays $7,725 in dues to the NAIC, according to the Keiser/Wald letter.

Mr. Stenehjem reasoned that:

o Although the insurance department is a public entity, the commissioner is a single elected official, not a governing body. Thus, the commissioner's participation in the session does not make the session a meeting under North Dakota law.

o There is nothing in North Dakota law that makes an elected official's participation in a national association's executive session a violation of the state's law.

o The definition of "meeting" in North Dakota law "does not include the attendance of members of a governing body at meetings of any national, regional or state association to which the public entity, the governing body, or individual members belong."

o "Since the commissioner or his staff participate in executive sessions, they may also participate in the public portions of NAIC meetings."

The opinion also determined that a state agency may pay membership dues to an organization as long as expenditures comply with state law, and in this case there were no violations.

Mr. Poolman announced that "now that the sideshow is over," the focus can return "to protecting consumers, creating a better insurance market, and turning the attention to things that should be focused on like saving state-based regulation and working with state legislators."

NAIC government affairs committee meetings, he said, are open meetings and "there is no grand conspiracy" in closing some meetings or portions of meetings. The Commissioners' Roundtable, Mr. Poolman noted, was attended by Mr. Kennedy.

In a recent interview with National Underwriter, Rep. Kennedy said that he walked into the session with a commissioner and was allowed to stay. He had previously written protesting the closed sessions.

Mr. Poolman said the exclusion of Rep. Damron was an administrative error and "clearly was not an intentional act."

He noted the need for regulators and legislators to work together, saying "the industry licks its chops whenever they divide and conquer us."

Catherine Weatherford, NAIC executive vice-president and CEO, wrote that the NAIC conducts its meetings in open sessions and invites "all interested parties to attend and participate."

She said that "a few regulator-to-regulator meetings are held, including those which involve discussions of ongoing investigations, litigation, or financial solvency concerns related to specific companies. We welcome state legislator and other appropriate government representative participation in many of these regulator-to-regulator sessions."

On Mr. Damron's exclusion from the meeting, Ms. Weatherford said that access to meetings is governed by badge color and monitored by temporary staff, and sometimes badge color alone is not enough to identify staff. She said a document "intended to allow greater legislator access to meetings was misinterpreted by a temporary door monitor."

Contacted by National Underwriter, Mr. Keiser responded that he was not surprised because the state's open meeting law, with the exception of a few "tweakings" 10 years ago, was created "some time ago."

The attorney general's response involved technical responses in two areas of the law, he said, and now that those sections of the law have been identified, he will draft new legislation to update these provisions.

Mr. Keiser said that when he introduces proposed changes, there will be public hearings held as the legislature examines the issue. North Dakota's legislature is in session again a year from this coming January, but within a few weeks he said he will make a filing to raise the issue.

When asked whether state legislators and state regulators should be working together given Washington's focus on issues such as changing the McCarran-Ferguson Act and creating an optional federal charter, Mr. Keiser responded, "You would think so," but also noted that regulators have been establishing legislative policy.

He said "there is a great irony here" because they are making policy decisions and yet do not have the same transparency that they often want from the insurance industry, choosing instead to operate in "a cloak of secrecy."