Okay, good morning.

Um, I'd like, or actually, no, very afternoon.

Good afternoon.

Um, I'd like to call this public hearing for the committee on health to order.

Today is Monday, June 15, 2026.

The time is 1 uh p.m.

I'm at large council member Christina Henderson, chair of the committee on health.

We're in room 500 of the John A.

Wilson building, and this is a hybrid hearing uh with public witnesses testifying both virtually and in person, and our government witnesses testifying in person.

We've got a lot on the agenda today.

Uh, we're gonna consider three nominees, two for the board of pharmacy, one for the health benefit exchange authority board, and then we'll turn to three bills uh before the committee today.

Uh I'm gonna give a brief description um of each of the uh nomination resolutions, and then we'll do that and then we'll get to the legislation thereafter.

So for the Board of Pharmacy, PR26-689 nominates Dr.

Jewel Redick to the Board of Pharmacy as a pharmacist licensed in the district, filling a vacant seat for a remainder of an expired term to end on March 12, 2028.

The honorable doctor uh Jewel Um Redick is an administrative law judge in the civil remedies division of the Department of Appeals Board at the U.S.

Department of Health and Human Services, as well as a CBS health pharmacist.

Um he earned his doctor of pharmacy from Florida Agricultural Mechanical University, go Raddlers.

Uh, and his jurisdictor from the University of Miami.

Uh, he is a Ward 7 resident.

PR26-690 nominates uh Dr.

Stephanie Johnnikan uh to the Board of Pharmacy as a pharmacist licensed in the district for a term to end March 12, 2029.

Dr.

Johnikan currently serves as a primary care uh clinical pharmacist at uh Washington DC veteran affairs medical center.

Previously she served as a clinical pharmacist at the Oakland VA outpatient clinic.

Uh she completed her residency uh with the Federal Bureau of Prisons and is licensed to practice pharmacy in Kentucky, California, Maryland, Virginia, and the District of Columbia.

Dr.

Johniken uh holds a doctor of pharmacy degree from Turo University California and is award six resident.

Our one nominee for the Health Ex Benefit Exchange Board, um, PR26-691 nominates uh John R.

Back to the board for a term to end July 6, 2030.

Uh Mr.

Auraback uh currently serves as the Senior Vice President of Health at ICH, excuse me, ICF, uh International Inc.

as the lead federal health expert.

He's a rich career with over 30 years of experience in public health, where he held senior roles at the federal, state, and local levels, including as the public health commissioner for the Massachusetts Department of Public Health, President and CEO of Trust for America's Health, and in several doctorate, excuse me, director level roles at the centers uh for disease control and prevention, serving most recently as the director of intergovernmental and strategic affairs.

He was a master's of business administration with a concentration and health care administration from Boston University and is a war three resident.

Um I would like to invite all three of the nominees up now.

Um I don't know.

It's a quiet day in the Wilson building, but should any of my colleagues join us, we'll certainly turn to them.

So if you all can come on up, we'll swear you in, and then we'll get to it.

Great.

All right.

Um, so if you all can raise your right hand before you begin, do you swear or affirm under penalty of law that the testimony you're about to provide to the council of the District of Columbia and this committee is the truth, the whole truth, and nothing but the truth?

Great.

All right.

Dr.

Reddick, why don't you go first?

Good afternoon, Chairperson Henderson, members of the committee, and staff.

My name is Dr.

Jewel Reddick.

Thank you for the opportunity to testify before you today, and thank you to Mayor Muriel Bowser for nominating me for this appointment to the Board of Pharmacy.

I am grateful for the opportunity to share my testimony.

When I received the call to interview for this nomination to the Board of Pharmacy, I paused and the world around me grew quiet for a moment.

I paused because the call was a real life manifestation of a dream that formed around 2005.

In my third year pharmacy school at Florida AM University, my pharmacy law professor.

Recording in progress.

A former board of pharmacy member took our class to observe a Florida Board of Pharmacy meeting.

Hearing his stories was one thing, but watching the board operate made it all real.

I did not know it at the moment, but a seed had been planted.

Today I stand before you grateful that it has grown into this opportunity.

I was born in Tallahassee, Florida and raised in a small community in Wasissa, Florida.

In my community, most of the students did not attend college after finishing high school.

Even as a child, I promised myself that I would do more with my life.

In my early years, I knew that I wanted to be a judge, even though I did not know that judges were attorneys at the time.

On one middle school afternoon, I overheard one of my cousins mention that she wanted to be a pharmacist.

I went to the library after school and researched what a pharmacist did.

After my research, I was sold based on the science background and the ability to help people in need.

I earned my doctor of pharmacy degree from Florida AM University College of Pharmacy and Pharmaceutical Sciences in 2007.

As I practiced as a pharmacist, my desire to become a judge did not fade.

So I made the decision to attend law school.

I earned my jurisdictor degree from the University of Miami School of Law in 2014.

I have been a licensed pharmacist in the District of Columbia for 18 years and a licensed attorney for 12 years.

Over the course of my career, I have practiced in numerous community pharmacy settings, ensuring regulatory compliance and maintaining the highest standards of patient safety.

In addition to my pharmacy practice, I have served public through roles within the U.S.

Department of Health and Human Services.

I currently serve as an administrative law judge where I preside over cases related to tobacco control and health care matters.

I applied to serve on this board because I believe in science and because I believe that the skills that I have developed at the intersection of pharmacy and law are precisely what this board needs.

My desire to serve as evidence by my current service as the vice chair of the District of Columbia Opioid Fatality Review Board, OFRB, where I contribute to efforts to address the opioid crisis by reviewing fatal overdose cases to develop evidence-based policy recommendations to the mayor.

My service on the OFRB is often frustrating as we look back at a decedent's life to determine if there were actions that could have been taken to save their life, but it is important and necessary work.

I am also a dedicated member of the apothecary board of visitors for Florida AM University's College of Pharmacy and Pharmaceutical Sciences, where I support the advancement of pharmacy education and the development of the next generation of pharmacists.

The Board of Pharmacies' mission to protect and improve public health is one that I have devoted my career to in different forms.

I bring to this role an interdisciplinary perspective, the clinical judgment of a practicing pharmacist, the analytical rigor of an administrative law judge, and the public health commitment of someone who has worked on one of the district's most pressing challenges, the opioid crisis.

I am passionate about health equity and legal integrity, and I understand that the board's decisions have real world consequences consequences for patients, practitioners, and communities across the district.

I am ready to bring that awareness and that sense of responsibility to every matter that comes before the board.

If confirmed, I would like to continue the board's work on improving workplace conditions and protections for pharmacists and pharmacy staff.

As a practicing pharmacist, I am keenly aware of the demands placed on pharmacists and how these demands and workplace conditions can affect patient safety.

It is important to me to find a balance between business needs, staffing, and pharmacist protections that do not negatively impact patient safety.

As most of my legal practice has centered on administrative law, I would also work to assist the board with proposed rulemaking as the scope of practice for pharmacists expands and provider status is on the horizon.

The District of Columbia has given me the opportunity to build a rewarding career to serve on the opioid fatality review board and now potentially to serve on the board of pharmacy.

I do not take any of it lightly.

If confirmed, I will bring the full weight of my training, my experience, and my commitment to this role, and I will work each day to ensure that the board's decisions reflect the dignity and safety that every patient pharmacist and community member in this district deserves.

Thank you.

Thank you.

Dr.

Jonikan.

Dr.

Redek, if you could just turn off your mic so she can turn on hers.

Sit the button in front of you.

There you go.

Okay.

Good morning, Chairperson Henderson and members of the Committee on Health.

I am Stephanie Johnikan, and it's my pleasure to receive your consideration for nomination to serve on the DC Board of Pharmacy.

I'm grateful to Mayor Mary O'Bowser for nominating me and honored to have this opportunity to serve the residents of our district.

Thank you so much for holding this hearing so I may voice my testimony.

I am a graduate of Kentucky State University with a major in biology and a double minor in chemistry and theater arts.

I received my doctor of pharmacy at Toro University California and completed a postgraduate year one residency at the Federal Bureau of Prisons Medical Facility in Butner, North Carolina.

I pride myself in holding, as you said, five active registered pharmacist licenses in Virginia, Maryland, District of Columbia, California, and Kentucky.

I also have an advanced practicing pharmacist license in the state of California, where I have authorization to prescribe non-control substances for chronic illnesses.

Though I have spent time in inpatient and in community pharmacy, my passion is in ambulatory care.

That's why I'm currently a primary care pharmacist at the Washington DC VA Medical Center, and I have been recognized by my peers and patients for my contributions to patient care.

As a registered pharmacist, I do have experience on the application process, the renewal process, as well as the maintenance process to be a registered pharmacist in District of Columbia.

I can aid with upholding the laws, regulations, license, and license preservation.

I can assist with investigations, hearings, and administering oaths.

I have a passion for seeing the progression of pharmacy practice and would love to volunteer my time to see where and how the most accessible health care provider can provide services to the community.

There's no other candidate more zealous and determined to make a change for the better than I am.

With the help of annual reports, polls, population health data, we can find ways to strengthen our community and its partnerships.

My vision for the board is to help increase support of the Committee on Health as well as the executive office of the mayor's commitment to increase access to health care and improve DC's Healthy People 2020 objectives.

I love that the Healthy DC People 2020 leading health indicator dashboard is an amazing tool that allows constituents to see reports on community health data and government goals.

It would be great to see an update on those statistics for 2026.

There were a few indicators on the dashboard where pharmacists, especially pharmacist practitioners, can contribute to improving.

For example, Code D4 identifies an increase in diabetes type 2 patients with A1C over 9%.

Pharmacists have the knowledge to provide preventative health care like diabetes education, glucose monitoring, lab ordering, and medication adjustments.

They can also educate patients on blood pressure, cholesterol, immunizations, and lifestyle modifications, which can also impact code NWP 4.1 to lower obesity and code 081 to improve overall health.

I want to assist the board, pharmacy in getting pharmacists recognized as providers so that the most accessible health care provider can have a more hands-on approach.

It will be a team effort to ensure the Board of Pharmacy, the Committee on Health, and the executive Office of the Mayor creates avenues for pharmacy regulations and reimbursements.

With my enthusiasm to problem solving and teamwork, I firmly believe we can make the District of Columbia a healthier place.

Thank you so much, Chair Person Henderson, for the opportunity to testify before this committee, and I'd be happy to respond to any questions.

Thank you.

Mr.

Arbach.

Thank you, Chairperson Henderson and members of the committee and staff.

Good afternoon.

Thanks for the opportunity to testify before you today, and I'm honored to appear before you as Mayor Muriel Bowser's nominee to serve on the DC Health Benefit Exchange Authority Executive Board, or if you will, the HBX Executive Board.

I also want to thank the mayor for her confidence in me and for her commitment to improving the health and well-being of the district's residents.

My name is John Auerbach, and I've spent more than three decades working in public health and health policy at the local, state, federal, academic, and nonprofit levels.

I currently serve as the senior vice president for public health at ICF International, where I advise federal agencies and national partners on health systems, public health policy, and health equity issues.

Previously, I served in senior leadership roles at the Centers for Disease Control and Prevention, including as the director of policy and later as the director of intergovernmental and strategic affairs.

My interest in health access issues is also deeply personal.

I grew up in Tennessee and was raised by a single mother who often struggled financially, and we didn't have health insurance or regular source of health care for much of my childhood.

And I saw firsthand how difficult it would be for low-income families like ours to obtain consistent medical care and preventive services, and those experiences help shape my lifelong interest in public health, health equity, and improving access to care.

Before joining CDC, I worked for nine years as the City of Boston's health commissioner, and later I served as the Commissioner of Public Health for the Commonwealth of Massachusetts during the period of time that the Commonwealth was enacting and implementing the state's landmark universal health insurance law.

In that role, I worked with governmental agencies, insurers, providers, and community organizations to help understand the implications of expanded coverage and to support effective participation by both the public and private sector partners.

Later, when I was at the Centers for Disease Control, I was there during the implementation of the Affordable Care Act.

And again, I work closely with federal and state partners on health system transformation efforts and the relationship between coverage, prevention, and population health.

Those experiences are among the reasons I'm interested in serving on the DC HBX Executive Board.

The authority has played an important role in helping district residents and small businesses obtain affordable health coverage.

If confirmed, my initial goal would be to listen carefully, to learn about the board's current priorities and challenges, and to be a constructive and collaborative contributor.

I recognize that the board is already engaged in important and complex work, and I would approach this opportunity with both humility and a respect for the staff and the current members.

If there is an opportunity, I'd also welcome supporting efforts related to affordability, equity, prevention, and coordination between the health care and the public health systems, areas that have been central throughout my career.

In particular, I hope I could contribute perspectives on how coverage and access to care has an impact on health outcomes, especially for populations that have been historically underserved.

I also believe my experience working with both governmental and commercial health sector partners could be useful as the board considers evolving health policy and operational issues for the future.

I'd be honored to contribute my experience in service to the district, and I want to thank both Mayor Bowser for this nomination and the committee and Chairperson Henderson for the opportunity to testify today and to be considered for this role.

Thank you so much.

Thank you.

Thank you to the nominees, and I want to say up front, thank you for your willingness to serve.

These none of these positions are paid.

And frankly, looking at the CVs of each of you, you're busy.

So the idea that you want to volunteer of your time to serve both the district but also your fellow professionals, we thank you in advance.

All right, have some follow-up questions, and then we'll kind of go from there.

Okay.

So Dr.

Jonathan, I'll start with you.

You mentioned how you currently hold licenses in a variety of direct different jurisdictions.

Is there anything about from the application experience with those jurisdictions in comparison to the district that you would look to either modify or change or emulate?

Recording in progress.

As far as the application process, there are a lot of similarities in terms of what the basic requirements are.

Must have gone and received a pharmacy degree, as well as excuse me, not have any discrepancies in background, but in terms of the actual paperwork, it is pretty much the same.

So there hasn't been any thing that stands out in terms of uh differences.

Okay.

We often hear from folks who say that somehow, like DC, it takes like twice as long as anywhere else to like get your license.

And I mean, you've applied to multiple places, so I'm wondering if you saw anything kind of stand out as a difference.

No.

Okay, that's that's a good thing.

That's what we uh that's what we want.

Um, you know, you spoke about a couple of um different ways that pharmacists um improve folks' lives.

We've done legislation around um, you know, immunizations and other things.

Um, what are some of the goals that you hope for uh with the board in terms of maybe expanding scope of practice, it sounded like, or is it just um raising awareness that your pharmacists can help you with these types of needs?

I'd actually like to do both.

Okay.

One, expand the knowledge.

Some people don't know that your pharmacist has a lot of background and can educate patients, help um what's really new is the glucose monitoring programs, the DEXCOM, Libre, uh, everyone's wearing them now.

Everyone has their phones to be able to monitor their blood sugars.

Uh pharmacists can help assist uh with monitoring that as well.

Uh so I would like to get more information out there and let people know hey, utilize your pharmacists or actually increase the awareness of pharmacists wanting to be practitioners and helpfully push that through so that when patients do come around and are asking for that patient education, that there is some reimbursement as well.

As we've noted before, pharmacists in community care are somewhat overworked, if not overworked completely, so adding that to uh the bucket would be a little much.

So having that provider that pharmacist that can tailor uh lab monitoring and patient monitoring would be really great.

I'd love to see that pushed forward.

Okay.

All right.

Dr.

Reddick, uh, I guess there is a little bit of overlap in terms of some of the work that you and Dr.

Donakin have done.

She talked a little bit about nalaxone training and some medication therapy management, um, and working with complex populations, and you've done a lot of work around um opioids, even serving on the opioid fatality review board.

Are there areas where you believe that pharmacists can play a bigger role in our opioid epidemic that we're we're still, I'm gonna say quietly, but it definitely is still very prevalent here in the district.

Yes, um, there's a lot of work still to be done.

Um numbers are down, but um even one death I think is probably too much.

Um I think pharmacists are underutilized when it comes to Narcan distribution or even training on how Narcan can be used.

Um I think pharmacists are underutilized when it comes to uh patients that may not be, I mean, we see all of the medications that that come in, and so you know, some providers are great at making sure that they're educating the patients on what to do if there's an overdose.

Um, but we sort of like lag in how we educate families and those of those that may be higher risk, and I think that pharmacies are in most communities, and I think that pharmacists could be utilized for for that education purpose, and and also maybe able to if someone is struggling to just come in and and just sort of talk to someone about um about what the struggle is.

A lot of times the overdoses that we see in the district are people who are using at home or are alone, um, and so as pharmacies are usually open during the daytime or other times, I think pharmacists could certainly be utilized for for that purpose.

Yeah.

Um, you know, to your point, um, our our fatal overdose numbers are down, our overall overdose numbers are not, which means that um in some ways maybe we're doing a better job in terms of Narcan distribution.

But um having it at pharmacies, I hadn't thought about that.

I mean, we have we're we have been pumping it out as much as we possibly can, um, but also wanting people to know one, how to actually use it appropriately, um, and two, to have it available.

Um, you know, not there are physicians I know who carry Narcan like in their bag.

That is not something that people do on sort of a normal everyday basis, but even having it close by um in shops and other things where um incidents may occur, I think is always um super helpful.

Um you talked a little bit in your testimony, Dr.

Redick, about the intersection of science and law, and then I was sort of putting two and two together.

You got your doctor of pharmacy at the same time that you got your JD.

Uh a few years apart.

Okay, but same difference in terms of you like degrees.

School is easier than work.

School is easier than work, okay.

Um talk to me a little bit about how your experience or not serving as an administrative law judge, how's that uh influence your perspective as a pharmacist?

Um ironically, that because I practice them, well, let me just back up.

So when I went to law school, I was sort of burnt out as a pharmacist, and so I I went there thinking I wanted nothing of pharmacy to touch law, and so as I went through law school, I deliberately kept them separate.

And so I practiced them separately now.

It was a little short-sighted, but it works out because uh the part of my brain that I use when I'm in the pharmacy and I'm thinking of science or or patients is totally different than what I do in my day-to-day when I'm a judge, but they sort of strengthen each other, and so when I'm thinking about legal matters or if I have a case that's really difficult, I often find that sort of the science side of me is able to kind of help pull me into the right direction.

Um, and so they although they are different, and most people are don't really understand.

I do think that they support each other when I'm in the pharmacy.

A lot of times pharmacists uh there's not a lot of legal training in your pharmacy school, but you're expected to know.

Really?

Given you're dealing with narcotics.

I mean, not all of them, but maybe a year or class or two, um, and you you take an exam to become licensed as a pharmacist.

But there's not a lot of legal training, and so you're expected as a pharmacist to interpret what the regulations are or what the laws are, and and many times it's it's a great area, but for me, it's a little easier because I'm like, no, it doesn't say that, and so I think it's helpful to me.

And and I do have other pharmacists that come in and ask me questions based on what my interpretation of the law would be.

So they they sort of mirror each other, and they definitely help uh help me balance, okay.

Um given your experience working as a staff pharmacist at a um a place here in the district.

I don't know, that's you know, but your employer on blast there, but like um, what do you see as some of the biggest barriers in terms of pharmacies today?

Um a lot of our independent pharmacies, and Dr.

Johnikan, please feel free to um jump in on this.

Uh, we've had a struggle with our independent pharmacists um staying open, or even in some cases, some of our older pharmacies like Grubs uh on Capitol Hill, which is I think the oldest pharmacist pharmacy in the district no longer accepts Medicaid.

So what are some ways in which we can work to reduce some of these barriers?

I'm glad you asked me that.

Um so one of the things that I I think has sort of been amazing, well not amazing, but interesting to me, a lot of pharmacy consolidation has happened in the district.

So uh whereas there might have been a CVS, and I'll just say CVS, but there may have been a CVS on every corner or every few blocks, a lot of that is uh changed, and a bunch of the stores have closed, which um especially east of the river where most of the time I'm practicing, their challenges to get the first off the patients are able to get if they're able to get to the pharmacy.

Um if they're uh able to even afford their medications, but what happens is the pharmacy is often super busy, even if it looks like nothing's going on.

Most of the time we are doing something.

Um, but what happens is the stores that are already stressed, low staff or just pharmacists is really stressed and overworked.

When those stores close and consolidate, those patients have to go somewhere.

So they typically are sort of shepherded to that store that's already overstaffed.

Um, and when one of my sort of wonders is I haven't heard a lot from and if I'm wrong, correct me.

I haven't heard a lot from the council or the board of pharmacy or anyone about these areas of concern.

Um we without access to a health care professional or a pharmacy to pick up your meds, a lot of the patients will just go without.

And independent pharmacies, unfortunately, are not usually able to absorb the amount of patients once a store closes.

I mean, you talk maybe a thousand patients or or something absorbed into an independent pharmacy that probably is already struggling, it's just not tenable.

So one of the things that I I'd like to explore at the board is how do we ensure that stores maintain a presence in neighborhoods that they're in?

Um whether that's you know, a commitment that if you're already in that area that you need to stay, or you need to provide, you know, delivery services or something to make sure that these patients still have access because what happens, pharmacists are already overworked.

We're doing, you know, on a normal shift.

I could have whatever the prescriptions are, and I can have to give 20 vaccines on top of everything that I'm doing, and then when another store closes and I absorb all of those patients, then that's more work.

And so I I wonder if there's an area or a way that the district can make sure that pharmacy pharmacies actually stay in the neighborhoods, especially those neighborhoods where historically they don't have access to transportation.

So coming from a uh socialized medicine standpoint, uh that is what the military is, yes, yes, it is.

So receiving prescriptions from community care, uh there is a software program, which the Board of Pharmacy, I believe, already discussed uh separate, but they use there is one called Sure Scripts that the DC Board of Pharmacy already discussed, but in social in the VA, the community care, there's a software program where they send their outside prescriptions to the VA.

Then pharmacists will process that prescription and then funnel it to the VA.

So there's a whole separate area where we can utilize just pharmacists for verification of the prescription, dosing strengths, things like that, and then feed it to whatever pharmacy it needs to go to.

Then once it's at the pharmacy, we can either ship it to our central male order pharmacy, which maybe we can find in some form or fashion AI data center, something to where robots are filling our medications, like our central mail order pharmacy, and then have that delivered to the patient's address on file for Medicaid.

So then it can reach the patient, and then depending on what medication it is, if it's an antibiotic, they're too far out, maybe we can expedite those, but then just maintenance prescriptions, those can take seven to ten days.

Also, utilizing virtual appointments would also telehealth would really be great.

And for instance, when patients that are on Medicaid or don't have any insurance, they end up in the emergency room for elevated blood pressure or elevated uh blood sugars, the prescription drug monitoring program, maybe there's an extra button or an extra uh website that they can go to to where the patients are placed in so that uh a pharmacist practitioner can dial in to that particular patient.

Okay, we see that you've um been to the emergency room in the past 48 hours.

We'd like to schedule uh an appointment with you virtual since you've already seen your provider.

Let's make sure that you have medication education, uh diabetes education, blood pressure education, and then we'll make sure that you get your subsequent follow-up prescriptions via mail.

What address would be really great to send it to and kind of go from there.

Yeah.

You named uh a couple of uh really good suggestions on some of this, and you know, Dr.

Edict, to your point, um I've been talking about the closure of our independent pharmacies, because in many of their testimonies, a lot of it is around provider payments.

So this is a lot of questions that we've been having around with the Department of Health Care Finance, and in the past, I've sort of asked all of our boards who've come before us of like what is your relationship and the conversation that the board is having with the department of health care finance, because even though a lot of the work that you're doing is around um renewal of applications and bringing people into the profession, it is also you have this opportunity to liaise, if you will, around some of the bigger issues that are facing the profession and why people don't stay in the profession or or stay in the district for that matter.

But um, you know, to your point around how do we get people or how do we help folks stay in the communities of which they are in?

Um I focus more on the independent folks because they just seem to be more mom and pop.

Um, some of the larger networks, it's just a little bit difficult.

Um, I don't know the specific reason why you're consolidating.

Um sometimes they share it with the government, sometimes they don't, and sometimes we don't even get the notice.

Like we find out about it when they put the sign up, and the neighborhood is finding out about it as well.

Um because it's a little it's a pharmacy is different than a doctor's office in terms of notifications on with SHIPTA around some of these different things, but it's something I think we need to continue to work on, especially for our communities where we have lots of people with chronic illnesses and diseases that require uh medication management.

I want to make sure that you're able to get said medication.

Um while I could have it delivered to your house or do all these various things.

There's something to be said for a touch point of when you go into a pharmacy um someone laying eyes on you one.

One.

And also, if you have any questions, I feel like people are more likely to ask them in person or ask them in that touch point as opposed to coming back for a follow-up.

Um, Mr.

Arbach, I haven't forgotten about you.

And the health benefit exchange board.

I want to first say that the HBX board has been so great and adapting to sort of the changes that have occurred ever since you know the Affordable Care Act was approved.

Because I feel like every couple of years something new is being thrown into the mix, and they've been consistent in that we want folks to have health care, we want folks to have access, and how trying to be creative and sort of approaching how to provide it in that way.

I'm curious if you could tell me a little bit more.

So I mean, not only were you worked for the city of Boston, but also served as you know the Commissioner of Public Health for the entire state of Massachusetts at a very interesting time.

And our HBX has a um relationship with Massachusetts in terms of um software for the insurance companies and and um for the insurance company for the marketplace, if you will.

Are there any lessons that you've learned from your time in Massachusetts that you feel like could be um applied here in the district?

Um thank you for that.

First of all, I would say in Massachusetts, it was an experiment.

And so we we were just learning as we were going, and and frankly, the ACA was an experiment too, and you know, learning as we're going.

So I think over time there there are certain lessons.

I think that one of those key lessons is uh in the implementation of expanded insurance coverage, it's really important that there's clarity about what this means for people because people are confused about it, and and um where do I where do I fit in terms of this and uh and what percentage of the poverty level is my income?

It can be very confusing.

Um so one of the lessons I think is the importance of working really closely with community-based organizations, working, making sure people have the accurate information.

They have a way of getting their questions answered, and the simplification of the processes also helps, so that people don't have to, you know, scratch their head as they're figuring out well, do I do I want the silver or a bronze, and what is that copay or mean versus a um uh the higher cost.

Um so I'd say clarity and community connections is one thing.

The other thing that I think um is key that we've learned is affordability matched with stability is really important.

It's um people will um if they're if their money's tight, affordability is just key.

And so it's really important to have health care become affordable, or else people will just drop their coverage.

And right now we're seeing that we're seeing across the country as those um tax subsidies disappear, that the price uh is going up for many people, and millions of people I think will will lose their coverage and then decide um that they're just going to hope they don't need health care, hope there won't be an emergency, and that's not a prescription for good health.

Um so I'd say really paying attention to that affordability and in a period of transition, maybe the third thing I would say is helping people as they transition.

Um for instance, if if people that were on Medicaid are no longer eligible, a smooth transition onto the health link is important, and there are ways to do that, I think, in terms of um doing more than simply saying you have to figure it out for yourself.

This you're just not eligible for this anymore.

I think helping people stay insured and figure out where's the best coverage for them and their family is something that I think is part of the the um obligation of uh working on on um the implementation of the ACA.

Yeah, I um was meeting with CEO of an insurance company a couple weeks ago who's coming to the new to the area, and we were talking about healthy DC and the work that HBX did to do this very smooth transition that you talked about, which he said he was super impressed by it, and that other jurisdictions had thought about it, but they couldn't figure out how to do it in the way that we did it, um, which I don't know if it was because of our size, where we were able to make that transition, or just the will of the HBX staff and the Department of Healthcare Finance, and that like we're we're gonna make this work.

Um, and so far it has gone um very very smooth.

Um, in your current role, you're a senior member of a health-oriented marketing team.

Um, one challenge that we have um experienced in the district, particularly around health insurance is like ensuring that well, getting people to open up our messages, just read it, you know.

Uh read our emails, reading like we get return mail, you know, all of these different things.

Um are there lessons that you want to bring to HBX and sort of that conversation?

Because this is a new one for them in terms of uh speaking of healthy DC, where um you know we needed folks to provide some documentation for um enrollment, and it's a struggle getting folks to um just open up our message.

And what we know is that then they'll go to the pharmacy, and that'll be the first time that they realize that they no longer have coverage when they're trying to pick up their prescription because they didn't respond to the messages.

I think part of the challenge is that um the way information is shared now is completely different than what it was, say when I started and working in public health.

When I started working public health, there was like if we paid attention to two newspapers and a radio station, and you know, you could kind of assume most people would get the information.

That's not the way people get information now.

It's really diversified, you know.

Young people are getting uh our social media becomes the way they get information, and sometimes it's not from the official um government or healthcare provider.

Sometimes it's from an influencer or someone that they uh think that they trust.

Um, so I and we're in a 24-7 system too.

So we're competing with a whole lot of information that people are getting constantly.

So I think that the challenge is understanding how people get their information, and and that difference it occurs by subpopulation.

Sometimes it's making sure we've got information in multiple languages, sometimes it's uh tailoring the message to literacy levels that people have, and then sometimes it's really understanding that they don't trust authorities.

They may trust their friend, they may trust the church, they may trust um someone whose podcast they listens to.

I think really thinking about all of those and coming up with multiple solutions for information is necessary, and I think it's easier now as we're getting a clearer understanding about how to do that.

I I spend a fair amount of my time now on what it means with artificial intelligence in terms of our being able to channel information in different ways than we could before.

So I think it's challenging, but I also think there's some new tools.

Hey, well, I think you have some um expertise that could be offered as we're sort of transitioning, not just around like insurance, but just in general combating disinformation and misinformation from these so-called influencers about things with regard to health.

There's like a recent survey that saw that something like 53% of Americans are getting their health information from social media.

Like, okay if you're on like Johns Hopkins' Bloomberg School of Public Health, right?

But I doubt that's where the vast majority of folks are going.

Um okay, well, I have uh one more question I have to ask all three of you.

I ask all of our nominees this because I think it's appreciate your opportunity and your volunteering of your time, but also um these boards require quorum.

They require folks showing up, and so I'm gonna hope and assume that at least for Dr.

Reddick and Dr.

Donakin, you've had a conversation with the department um of health around the time commitment required to serve on the Board of Pharmacy, and I'm sure you've had a similar conversation with HBX.

And so having understood the time commitments for serving on this board, or as it has been explained to me, explained to you, excuse me.

Do you believe you're able to fulfill these commitments?

And I need to hear some response from all three of you, whichever way you desire to go.

Yes, I'm fine with the time commitment.

Okay, yes, I can commit to the time.

Okay.

Yes, I can as well.

Great.

All right.

Um, so this concludes the nominees portion of this um round table.

And so I want to thank you all again for your willingness to serve.

For those who are watching at home, I give my PSA.

Serving on a mayoral board or commission is an excellent way to give back to the district and inform program and policy decision making, particularly for some of our health professional boards.

So if you're interested in serving, you can go to the mayor's office of talent and appointments and see what's available there.

Um, but thank you all for being here today.

Thank you.

Okay, so we're gonna turn to the three permanent bills.

I'm gonna describe each of the bills, and then we'll hear from our public witnesses.

Um, I think for most uh in the public, but maybe not.

Um so in January, we uh we acquired, not acquired, we welcomed into the Committee on Health Family, the Department of Insurance Securities and Banking.

Um, and so the bills today are relevant um to their work.

Uh so bill 26-427, the Cybersecurity and Accountability Act of 2025.

Um, this uh was introduced by Chairman Middleton um at the request of the mayor, which would establish standards for data security um uh for invest data security and standards for investigating and notifying the commissioner of the Department of Insurance Securities and Banking of cybersecurity events that might um impact insurance licensees.

Bill 26-588, the Captive Insurance Company Amendment Act of 2026.

That was also introduced by Chairman Mendelssohn at the request of the mayor, would update uh protected cell captive insurers requirements uh related to formation, capital, application, transaction business, taxes on premiums collected, and annual reports.

Um it would also establish requirements for inactive captive insurance companies for the public.

You might be asking, what is a captive insurer?

Um it is an insurance company that is wholly dedicated or excuse me, wholly owned and controlled by its insureds.

Um its purpose is to ensure the risk of its owners and its insurance benefits from the captive insurers under writing profits.

And then our last bill is Bill 26-18, the short-term disability insurance benefit protection clarification amendment act of 2025.

Um this was introduced by council members Lewis George, Parker Allen, Robert White, and Nadeau, and it would prohibit private disability insurance providers from reducing short-term disability benefits based on actual and estimated pay leave benefits, an eligible individual may be entitled to from the district regardless of what jurisdiction their insurance policy was issued.

Uh this bill uh passed the council on an emergency and temporary measure.

Wow.

Uh, we've been passing this on emergency and temporary since 2021.

So it is about time that we take it up in a permanent fashion.

Um we're gonna go to our public witnesses and um we'll start with our folks in person, and I think we have two virtual.

Uh so Thomas Glassick from the DC Insurance Federation, uh, Jason Schupp.

I hope I'm saying that right.

Shoop.

Okay.

Uh Joseph Hollihan from the Captive Insurance Council of the District of Columbia and Fritz Mulhauser from uh DC Open Government Coalition.

Uh Mr.

Glassick, how many of these bills are you testifying on?

All three.

Okay.

I mean, we'll give you some extra time if you need it.

I want to hear you, so I don't want you to like speed.

That's okay.

Okay, great.

All right, when you're ready.

Okay.

Um Madam Chair, my name's Tom Glassick, I'm the executive director of the DC Insurance Federation.

Um, I do have something to say about all three bills, but I'm not sure I can get all three in three minutes, but I talk quick, you know that.

Um, so I am pleased.

This is our first hearing for insurance bills that we were that were re-referred to your committee in the in the earlier this year.

Um so I was very happy to see that you had an all insurance hearing for us and very appreciative that some of these things need to get moving.

Um I will go, if you don't mind, I just have them in numerical order.

Okay.

Um I agree with you that the short-term disability um insurance benefit protection clarification amendment has been out there for a long time.

It actually predates me, and I've been in this job for almost four years now.

Um, so it definitely needs taking up.

Um, when DCIF last testified in December of 2022, one of the things that we pointed out is the extraterritoriality.

Gosh, that's hard to say.

Extraterritoriality is unique to DC.

Um, and you know, I that this is not a I'm no constitutional lawyer, but um writing things into contracts that happen in other states is something that I do not know that is even enforceable.

So I just want to flag that.

Um, what is nice to hear, I hope we will hear from um the remote witnesses.

I am not aware of anyone who has been negatively impacted by the structure that existed before the emergency and temporaries, and it seems to be smoothing out.

Another thing is now that Maryland and Virginia have paid family leave programs.

I'm wondering if this legislation might not even become becoming moot over time.

Um, again, no necessary opposition.

I just the constitutional issue, and I don't know that TCB has the tools to enforce this if they needed to.

Um move on to the micro.

Um move on to the cybersecurity and accountability act.

This is a modification of a model created by the National Insurance of National Association of Insurance Commissioners.

So all the state insurance commissioners, all 56 get together and do model laws.

Um that was that is that is where this came from.

There are some deviations in this text.

Um, but I also note that Disby wants to do some of the things that are in the model regulatorily, and we just look forward to working with Disby and get this done.

What I really think is cool is DC is sometimes on the later end of adopting things that come out in that space.

Um there are already 25 states that have adopted, so we're like at the halfway point.

So if we can actually get this over, I can show off to all my other state friends.

Okay, I I leave a boring life, but okay.

Um and then the last bill is the Captive Insurance Company Amendment Act.

Um, the founding executive director of the DCIF, Larry Morrell, was actively involved in getting the captive program set up in the District of Columbia.

I've always been kind of proud as our small jurisdiction is one of the leaders in that space.

Um, it is a very complicated space.

Um so I have a funny feeling that you and your team are gonna have questions about it, and I have known Jason my almost my entire professional career.

So I will sit between the two sides and just say they're all my friends.

Um with that, madam chair, I will yield and I'll stay here for questions.

All right, thank you.

Uh Jason.

Madam Chair, my name is Jason Shub.

I have worked in the insurance industry for 30 years.

Ultimately serving as a chief compliance officer for one of the world's largest insurance companies.

Over the last five years, I've dedicated my time, expertise, and resources to pushing an industry that has been very good to me to be better for all of its stakeholders.

One of the areas that has troubled me for years is captive insurance.

In broad terms, captive insurance is where a non-insurance company gets a hold of an insurance license.

With that license, these companies can access the tax, accounting, and program eligibility rules only available to insurance companies.

By abusing these privileges, captive insurance companies have made multiple appearances on the IRS's dirty dozen list of tax scams.

They've gotten kicked out of the federal home loan bank program and have been caught in numerous state tax schemes.

While no doubt there is some societal good occurring in the captive insurance market, as a seasoned compliance officer, I have focused on where that market and its regulators have gone off the rails.

DC is a top 10 licensor of captive insurance companies, joining Bermuda, the Cayman Islands, Barbados, as well as Vermont, Utah, and Delaware.

As a researcher, I can attest that each of these other jurisdictions is more transparent about who they are selling captive insurance licenses to than the District of Columbia.

Yet, through this bill, the Department of Insurance, Securities, and Banking is asking for the Council to bury its regulatory decision making under an even deeper layer of security.

I implore this committee to number one reject the secrecy provisions contained in the Captive Insurance Company amendment of 2026.

Repeal the department's current authority to sell secret corporate charters.

And third, request a review of the funding of the department's risk finance bureau to determine whether funding that Bureau solely from the proceeds of captive insurance licenses itself creates an unacceptable conflict of interest.

Thank you, and I look forward to answering your questions.

Thank you.

Mr.

Hollihan.

Thank you, Madam Chair.

We just got to hit the button.

There you go.

Okay.

Can you hear me now?

Yes.

Thanks, madam chair.

Thank you for the opportunity to appear before you today.

I'm Joe Hollihan.

I'm an attorney in private practice here in the DC, and I'm president of the Captive Insurance Council of DC.

CIC DC, my organization was formed in 2001, shortly after the council enacted capital legislation for the first time, and we represent captive owners, captives, and service providers who serve that industry here in DC.

Captive insurance is an important mechanism for private companies and in some cases public entities to insure and manage their risks, especially those risks that are hard to place in traditional markets.

Through the leadership of Commissioner Woods and her predecessors and the very talented and dedicated professionals at Disby, the district is now one of the top 10 captive insurance domiciles in the US.

The CICDC fully supports the enactment of the bill you have before you today.

The DC's existing statute governing captive insurance provides a strong and effective framework for regulating captive insurers.

The Act enhances this framework by clarifying certain regulatory requirements and allowing Dispie to regulate in a more efficient manner.

I won't go into the specifics of the act unless you'd like me to, but I'm glad to answer any questions you might have.

Before I conclude, I'd like to say a few words about what a valuable resource DC has in Disby and the Risk Finance Bureau.

The Risk Finance Bureau is the division that's responsible for regulating captives.

One of the most wording aspects of my practice is having the privilege of working with professionals at Disby.

I work with captives and other insurers, you know, before state regulators throughout the U.S., and I can tell you with from experience that Disby staff is among the very best of them.

The council really should be proud of what Disby has built with the Risk Finance Bureau.

It's really an excellent example of a productive and mutually beneficial partnership between the public and the private sectors.

Captives insure, captive insurers, they rely on a strong and independent and effective regulator to establish their credibility with counterparties in private markets.

You know, so for example, captives, often many captives purchase reinsurance on domestic and international markets.

They have access to those markets because of the credibility that's built by the strong and effective regulation that they enjoy here in the district.

DC captives, they've been successful because the council has been forward-looking.

You've enacted strong and effective regulation and legislation to enable the regulation of captives.

And that legislation has been very well implemented by DSP.

The act you have in front of you is really would build upon that, and I would urge you to adopt it.

Thank you.

Thank you.

Mr.

Mulhauser.

Thanks very much, Madam Chair.

I'm Fritz Mulhauser.

I'm co-chair of the legal committee of the board of the DC Open Government Coalition.

We've been advocating for transparency and accountability across DC government, especially public records access for going on two decades.

Our concern today is with a small part of the bill on captive insurance.

The captive insurance program, as you understand, licenses more than 200 companies.

A bill before you today raises questions about public access to records about the licensed firms.

That's a key, that records access is a key to knowing whether government oversight of the firms is working, as well as the colleagues cheerfully claim it is.

DC FOIA, the Freedom of Information Act, establishes a presumption that government records are open.

Exemptions are exceptions requiring justification, done case by case, and where questionable could be challenged in court.

A requester, Mr.

Schubb, seeking some captive records, captive insurance records, is doing exactly that.

He was denied, he's gone to court, it's in superior court right now.

This bill is profoundly premature.

Section eight would take away from the court the chance to look at whether the current regime is working.

The bill would replace a case-by-case process of applying exemption, particularly the exemption in commercial records for harm their release might cause to their competitive position.

The bill would replace that with a permanent categorical, unchallengeable exemption by statute for an entire class of records held by a regulatory agency that makes money from just those people.

Guess who wants secrecy?

The mayor's transmitted letter in January justified the bill on tidying up things that haven't uh have evolved since 2015.

It offers no findings, not any evidence, no explanation for why a blanket FOIA exemption is warranted permanently obliterate the current FOIA process that's apparently working well.

It's taken a plaintiff several years of litigation to make the case that the denial was incorrect.

And the plaintiff, Mr.

Schubb puts in his testimony today, a written testimony, a revealing quote.

Counsel for the agency was not able to answer the court's questions of why annual reports for 900 insurance companies that are regulated are available.

Traditional insurers and risk retention groups, which are a certain kind of captive, but the agency withholds, denies requests for records of captives.

What's going on here?

It wasn't explained to the judge in court, and even if they've got a considered legal position on that, I think it just highlights what we're trying to raise for you today, Madam Chair.

The council is being asked to codify into permanent statute a withholding practice that the agency itself can't publicly explain or justify.

Do three things, please, before you move on.

First, ask the agency questions for the record.

QFR, what is the evidence you need Section H in this bill?

There's nothing in the mayor's letter or in the testimony submitted in advance today.

Second, preserve the public access to some captive records that's currently allowed.

It's technical, so I won't try to explain it, but there is some accessibility to captive records currently allowed because a few captives are licensed under federal rules which require that.

So let's preserve that if you're going to change the law at all.

Third, given that corporate financial records and insurance are historically treated with great tenderness as confidential.

Please add to the legislation a requirement that the agency provide every year an aggregate report of the financial soundness of these captive firms.

The presenty in getting those annual reports prevents anyone from knowing how well these firms are doing with the resources entrusted to them.

Vermont, the nation's preeminent captive licensor over 600, does this.

They have an annual aggregate report on captive insurance financial soundness without apparently hurting their attractiveness as the global US dominant licensor.

We've submitted more detailed argument in our testimony.

We look forward to talking more with you about it.

Thank you.

Give you a little bit more time there.

Okay, just some follow-up questions.

Heather, if you could put me on 10 minutes as well.

Yeah, 10.

Thank you.

Okay.

Mr.

Hollihan, I'll start with you.

What's in the annual reports that captives are submitting?

Those are annual financial statements.

So there are balance sheet and income statement and cash flow statements.

So they're they're annual financial reports.

The regulators use them to evaluate the strength and solvency of the captive.

But they are private, these are private companies, and this is private information.

I can tell you that the confidentiality provision in the bill is it's it's appropriate and it's consistent with what you find, what I found in my own practice in other other domiciles that license captives.

If you were to force the private companies to come here to form a captive insurance company, and these are not, these are captives don't make, they're not marketing insurance to the general public, they're self-insuring their own risks.

If you were to uh force them to disclose those financial reports, you very soon you would not have any captives uh formed here in DC.

They would go somewhere else where the confidentiality provisions are more appropriate.

Okay.

Um, Mr.

Shoop, um, you gave testimony similar to Mr.

Mulhauser around needing transparency.

Um sometimes I think about this from like the average public perspective.

Um to be clear, right?

Uh I it never ceases to amaze me that there is always some resident out there who wants to submit a FOIA on something.

Fill in the blank, any topic whatsoever.

But um, what's the value to the public in this information, right?

I I think there's a value in uh overall analysis around is the company financially sound or not, but I don't actually need to know their accounting information.

If you want to, you gotta turn on your mic.

Yeah.

Yes, um, certainly, madam chair.

So let's just focus on one piece of information that uh Disby absolutely refuses to provide, and that is the name of the owner of the captive insurance company.

Now, when you create a corporation in the District of Columbia that's not a captive insurance company, and there are tens of thousands of them, you must file an annual report every year, every other year, which discloses the ultimate beneficial owner of that corporation.

Any business.

Very could be in uh technology, they could be in pharmaceuticals, very sensitive business, right?

The 200 that uh Disby issues uh corporate charters for that information about who just owns them, not their financials.

Just who did Disby decide to bless with a financial services license?

They're claiming that information is confidential.

Why is it?

And remember, FOIO, we believe government's supposed to be open.

This isn't about me getting into the financials of these captive insurance companies, although I can get into the financials through Disby of Geico, of State Farm, of just about anybody, right?

Other than the 200, you know, there are another 860 that I can get a hold of from Disby, but they've cherry picked 200 and said, nope, you're not allowed to get these.

That'd be wonderful to know what their explanation for that is, other than we're selling secrecy and we can't sell these licenses unless we make them secret.

That's that's what I'm hearing, right?

What do I use that information for?

I am a whistleblower.

I have I work with states uh throughout the country on covering tax schemes that captives are involved in.

I've helped them to recover over 50 million dollars in evaded taxes through captive schemes.

DC is a facilitator through these licenses of captive schemes.

I have uncovered a DC licensed captive that has not paid, I hesitate to do the word evade, but has declined to pay its independent procurement tax to the state of Maryland to the tune of about 1.3 million dollars.

They've recently, through the information I've provided, made a collection in that.

I've also uncovered, for example, what do we want to know?

Elon Musk has one of these licenses.

Now I can't figure out which of his companies has it, but I can tell you that Disby sold one to them.

I think that's something the people of the district should know.

Not about these companies, but about Disby.

This is our government who's choosing to make available licenses to sell insurance to who?

That's all I'm asking.

Well, to who?

Now, my understanding of captives is right, it's it's not like we're selling health insurance, right?

They're not selling insurance to individual consumers.

Is that accurate?

My understanding, it's for that's that's correct.

This these are not this is not geico, it's not, you know, Aetna.

These are private, privately held companies that that self-insure that are used to finance self-insured risk.

Right.

So when I from the perspective of the way that you're kind of speaking about it from a tone a little bit of consumer protection, would suggest that there's harm to residents because someone is being sold a product, but that's not what this is.

So there is certainly harm to the other states where these licenses are being used to evade taxes.

There are harms to the federal taxpayer.

Uh the IRS has over 1,000 open micro captive cases where they're uh investigating uh abuse by captives, including undoubtedly some that are licensed here in our nation's capital.

More importantly, and to your point, these captives issue certificates of insurance, proof of liability insurance, right?

So when you go in and um uh are dealing with, let's say uh an Amazon, right, and you're a contractor that is dealing with them, and you say to them, okay, I'm gonna have a deal with you, but I need you to prove that you have insurance.

Amazon will hand you a certificate that says uh we are our general liabilities insured by day one insurance company.

Day one insurance company is a captive, right?

An invisible ghost captive that the holder of that certificate cannot figure out.

Number one, in DC, you can't even figure out whether that corporation exists because you go into the you go into the district's um uh corporation website, none of this appears.

It's a ghost.

None of it's in there.

Every other corporation, so it's it's interesting that the query is why why, Jason, should government be open?

No, the query should be.

What justifies government to be closed?

That wasn't my question.

I think that there are times with, even on annual reports.

Like I I heard your suggestion, Mr.

Mulhauser, of like at least have an annual report and sort of the aggregate, which I'm not necessarily opposed to, but I feel like oftentimes people ask us to ask agencies or people in government to do reports that then nobody reads, but a lot of time is spent on it.

And then we have to come back and ask ourselves the question: what was the purpose of the report?

Is the report still serving its duty, or is it just existing to exist and it's essentially paperwork for someone?

That's the reason I'm as you're asking kind of the question here is what is the information that folks are trying to glean that you're not able to, that doesn't delve into deeply the individual finances of these private businesses.

So I have testified before the US Congress on how captive insurance companies have completely taken over the terrorism risk insurance program.

Today, the federal terrorism risk insurance program, five percent by premium is the participation of captives.

They take up to 95% of any payout under the program.

This is the sort of research, and I have an entire website where I spend my time exposing the um activities of captive insurance companies.

So my role, and I spend my own money, my own time, my own expertise on this, is to help government understand how uh licensing authorities such as the DIS DISB are secretly enabling companies through captive insurance licenses to evade taxes, to rip off federal programs, and to also evade detection through anti-money laundering schemes.

This is my question here to ask you, which was around are there any jurisdictions that are doing this better?

But it sounds like you're just anti-p.

Not at all.

I'm sure that there are wonderful reasons to have them.

It's curious that they don't want to explain them.

No, no, no.

So then I'll go back to my original question then, which is I'm sorry?

New York is the state where I'm I just make a FOIA request, I get the annual statement, the balance sheet, um, I get I get the income statement.

I even get their financial exams, which I've never asked for here.

I can get the financial exam reports in New York.

New York has uh by volume by premium uh is about the same size as DC.

They seem to be doing just fine.

So this idea that if you if you guarantee 100% secrecy, that's the key to a successful captive market candidly, madam chair.

If that's what you need to do to be in this market, is sell secrecy, uh query whether whether the district really should be in this market at all.

Mr.

Holman, well, excuse me.

I mean, this is a gross mischaracterization of the industry.

It's not about secrecy, this is about uh private companies um with confidential proprietary information and preserving the confidentiality of it.

Um Mr.

Shoop, you know, has yet to articulate any uh reasonable basis for for why this information, why this proprietary information should be disclosed.

There's no there's no there's no public interest in doing that, and it would only hurt the uh the private actors that that um domicile their captives in the in the DC.

But let's go back to a fundamental about existing law.

The Freedom of Information Act, which makes records generally as a DC policy accessible to the public, uh, includes an exemption, uh a ground for denial if an agency proves that it would hurt, uh as my colleague just suggested, sometimes could happen, if it could hurt the competitive position of the company.

That's the ground for protecting commercial information that comes into the government, and that's in current law.

What is wrong with that?

The department is busy for the last year and a half defending a denial to Mr.

Schupp on a ground of competitive harm.

That is the protection the colleagues are asking for from the industry side.

Oh, protect our customers, our our captive customers' uh business position, the law does that, but not the proposed bill, which would decide once and for all that the captive's annual reports and other information can never be open, not upon any showing of need or justification, permanently closed, unappealable in court.

That is to establish a record secrecy regime for which there's not one shred of important evidence to support.

Okay.

But just one final question for you.

What type of industries have been getting captives in the districts?

Well, really, it uh all types.

I mean, it ranges from, you know, many of my clients are nonprofit associations.

Okay.

They form captives for the to uh self-insure their own risks, and in some cases, cases with risk retention groups, they um they they back insurance programs for their members.

Um uh large corporations, you know, uh Fortune 100 companies to self-insure risks.

Um, you know, there it runs the gamut, uh, really.

Yeah, it's another another aspect is uh uh brokers who who place you place insurance with licensed carriers.

They sometimes take they use a captive to reinsure that risk so they can capture underwriting profit on that.

Um they're they're used for in many different capacities and by um, you know, uh owners of captive can really run the gamut.

Uh as I mentioned, uh, some public entities also own captives.

Okay.

Um you would think from this, we only have one bill, but there are three.

Um, Mr.

Glassick, let me just ask really quickly.

So the short-term disability, um I remember when we first were dealing with this in 2021, um, I was on then Councilmember Silverman's committee when this came up as an issue.

There were actually the issue came from constituents um who were having um their benefits reduced because they were like, oh, well, you have an opportunity for paid family leave, therefore we're not gonna do short-term disability.

And not everybody wore um residents in the district, some of them were outside, but you're suggesting that there might be some constitutional concerns about us doing that.

Well, obviously check with our lawyers.

We know we try not to pass uh laws that are unconstitutional around here.

Um but are you opposed to the legislation going forward if that stays in?

Yeah, turn turn your mic on.

Sorry.

Um in the December 22 hearing about this, there were two witnesses.

I believe one of those witnesses joining us, and they testified that they had not had any negative impacts.

They had they had been concerned about it.

I believe one had a maternity situation where they were concerned that this was gonna happen.

And during her testimony, she said that that had not come to pass.

So, what's great?

I'm not aware of anyone who's been harmed by us not having this as permanent legislation.

I as a native Washingtonian, I would think that the council district of Columbia would be kind of up in arms if another state did this to us, just in any context, tried to write something into our contracts.

Um they do it to us all the time.

It's called Congress.

Um, but like I said I said another state, another sister state.

The people down the street I can't solve for you.

But um, but that's that is death's definitely an intellectual.

I mean, it's I just don't think we need to get into other states' contracting spaces.

Yeah, and um, if the department thinks it can enforce this, that's a different animal, but I don't I just don't think it's I mean, if someone actually tried to enforce this, I think it'd be really hard.

Okay.

Um, on the cybersecurity bill, um, you know, it is partly informed from a model law.

I think it's fairly straightforward, but you mentioned in your testimony that there are some things that other jurisdictions have put into their law that Disney wants to do on a regulatory basis.

Are you comfortable with that?

I haven't seen the draft regulations, but I'm I've been working with Disney for a long time.

I think it's fine.

Okay, all right.

Um, well, thank you guys so much uh for your testimony.

If you haven't provided your written testimony for the record, please make sure you upload that for us.

Um we're gonna go to our virtual witnesses.

We have two.

Um, if you're joining us virtually and you haven't done so before, you'll need to affirmatively accept our invitation to become a panelist.

Um, Alex Samuels and uh Laura Brown from the first shift justice project.

Um, there should be again a little box that pops up.

Oh, great.

You're both here.

Wonderful.

Um, so Alex, uh, when you're ready.

Hello, council member.

Um, I'm giving a testimony written by my boss, Elizabeth Falcon.

Okay.

Um that is substantially similar to one she's given multiple times before, as um you noted probably in this uh.

Um we I would love to see this actually pass into permanent um legislation so we don't have to keep coming back and doing this over and over again.

Um, thank you for the opportunity to testify today.

Um, my name is Alex Samuels.

I work at DC Jobs with Justice.

Uh, we have supported the creation and effective implementation of the DC paid family medical leave program throughout the advocacy and rollout of the program.

And here to testify in support of the short-term disability insurance benefit protection clarification amendment act of 2025.

Um my boss was the first member of the DC Jobs with Justice staff to utilize DC's paid family leave program.

Um, when we emailed our short-term disability company while she was pregnant in the spring of 2021 to inform them of her pending leave, they told us that they were not sure if they would provide her with short-term disability coverage due to DC's paid family leave program.

Um that included a copy of what she received from the company.

I'm just gonna read the last line, which is so if the member receives the max from DC, then there could potentially be no benefit payable from Guardian or short-term disability insurance company.

As an employer, DCJWJ pays into both programs.

We pay the payroll tax dedicated to the DC paid family leave program, and we pay our short-term disability premium.

We happily do those things because we recognize that everyone on our team may have a medical need or want to go to their family and will need time to care.

We were stunned, however, to hear that our private insurance might refuse to cover us because of a public program funded in a completely different way and to serve a completely different purpose.

The company was clearly trying to avoid doing what it was designed to do, which is pay for the coverage that we had purchased.

My boss had her child shortly after the emergency legislation clarifying the directive to insurance providers went into effect the first time.

So she was able to utilize both programs.

Um, and we we appreciate the leadership of the DC Council to address this issue.

However, no one should end up in that bind, and I support this legislation further ensuring all workers can access both types of leave if eligible.

The council must act to ensure that it does not matter where your short-term disability insurance originates.

You can still access the medical leave coverage that has been paid for.

Thank you again for the opportunity to testify.

Thank you.

Laura.

Good afternoon.

Thank you for the opportunity to testify in support of the short-term disability insurance benefit protection clarification amendment act of 2025.

My name is Laura Brown, and I'm the executive director of First Shift Justice Project.

One of the services that First Shift provides is assisting DC workers in applying for DC paid leave benefits.

We previously provided testimony in support of this bill in December 2022 and June 2023.

I'll be honest, I only became aware of this legislation in this hearing late last week, and I thought the legislation had already passed.

And in fact, the provision is codified in DC Code 32-54107 J 1.

So I'm not sure why the instant bill needed to be introduced, but I assume it was procedural.

First If continues to support it because of the impact it will have on workers we serve who are also covered under an employer's short-term disability insurance plan.

The legislation at issue today has been introduced to close an unintended loophole in the 2021 law.

B26-0181 amends the law so that it applies to all short-term disability insurance policies which cover DC workers.

The DC paid family leave program was designed to serve as wage replacement for DC workers who need to take leave for work from work to care for themselves or a loved one.

While offsetting insurance payments by other income received during the applicable time period is generally permissible, to do so with paid family leave benefits would eviscerate the value of the benefits for many workers and undermine the intent of the paid family leave program.

Permitting this offset transforms a government benefits program intended to financially support working families through medical crises and family transitions into government subsidies for insurance companies at the expense of employers and employees who pay the premiums.

For new mothers, paid family leave only pays up to 90% wage replacement for 12 weeks, even though the Family Medical Leave Act allows for up to 16 weeks of leave.

Short-term disability benefits, which replace wages at 60% for six to eight weeks, can cover the gaps to make a mother whole while she is on leave.

If offsets are permitted, workers may receive little or nothing from their insurance company to cover gaps in wage replacement, which may make the difference for covering costs like rent or food, especially as we now face cuts to paid family leave benefits in this budget.

The fact that the 2021 law did not extend to short-term disability insurance programs outset established outside the district is an arbitrary and inequitable application of the law that undermines the intent of the anti-offsetting provision.

Employers of DC workers, including national organizations or those based in other states like Maryland or Virginia, sometimes purchase insurance policies that originate outside the district.

The law under consideration today fulfills the intent of the 2021 law by making the anti-offsetting provision applicable to all DC workers, no matter where their short-term disability insurance was written.

Thank you again for the opportunity to testify.

Hopefully, the third time's the charm, and this legislation secures this provision's place in our labor code permanently.

Thank you.

Thank you.

Uh to both Alex and Laura for your testimony on this.

As I said before, Disby is a new agency of ours.

We're gonna definitely try to get this done this time around.

And uh yeah, I don't have any further questions for you all, but thank you for your testimony.

If you haven't provided your written testimony for the record, if you can go online and upload that, that would be great.

Um we're gonna transition to our government witnesses.

Um we're gonna take like a like a three-minute stretch break as they come to the table, and then I'll swear them in and we'll get started.

So uh Philip Barlow, Sharon Ship, and uh Sean O'Donnell from all from Disney.

Okay, hello.

All right.

Um I'm gonna swear you guys all in at the same time, just to keep it simple.

Um, so if you can all raise your right hands, um, do you swear or affirm under penalty of law that the testimony you're about to provide to the council of the District of Columbia and this committee is the truth, the whole truth and nothing but the truth?

Great.

All right.

Uh let's start with our least controversial piece of legislation, shall we?

Uh, which would be the Cybersecurity and Accountability Act, I hope.

Um, I hope.

Uh so um uh Sharon, when you are ready.

Yep, your honor.

Okay.

Good afternoon, Chairperson Henderson, committee members, staff, and district residents.

I am Sharon Chip, Deputy Commissioner for the Department of Insurance Securities and Banking, also known as Disby.

I appreciate the opportunity to testify today on B-26427, the Cybersecurity and Accountability Act of 2025.

B-26427 establishes a uniform standard to require insurance licensees to enact comprehensive cybersecurity and data protection measures, investigate cyber events promptly, and report significant incidents to the commissioner.

The bill applies to all entities licensed or registered under district insurance laws, excluding captive insurance companies, out-of-state purchasing groups, risk retention groups, and foreign assuming insurers.

Licensees must develop and maintain a written information security program tailored to their size, complexity, use of third party vendors, and sensitivity of non-public information.

This program must include risk assessments, administrative, technical, and physical safeguards, access controls, including multi-factor authentication for certain users, encryption, secure system development and disposal, auditing, environmental protection, personnel training, and board oversight with annual reporting.

The bill also mandates a written incident response plan, specifying roles, communication protocols, remediation steps, reporting, and recovery processes.

If a cybersecurity event defined as unauthorized access, misuse or disruption occurs or is suspected, licensees must launch a prompt investigation, document impacted data, and restore system integrity.

Notable events must be reported to the commissioner within 72 hours if they affect the district or involve data on 250 or more district residents, or otherwise pose significant consumer or operational harm.

Licensees must provide detailed updates, including event timing, discovery method, data types involved, and remediation actions.

Enacting B-26 427 would empower the department with explicit authority, statutory authority, to examine, investigate, and remedy cybersecurity and data security deficiencies among licensees, creating a clear enforcement mechanism.

Additionally, it encourages insurers and producers to implement comprehensive risk-based cybersecurity programs, lowering the likelihood of data breaches and systemic incidents that may impact district consumers.

Currently, district law requires reporting of cyber events by insurance licensees to the Office of the Attorney General.

This creates confusion among insurers about whether additional reporting to Disby is necessary, which is addressed by this bill.

The bill also explicitly identifies that it does not preempt existing reporting requirements.

Finally, although the bill does not impact district government systems, Disby did seek subject matter input from Octo on the bill during its development.

B26 427 is based on a National Association of Insurance Commissioners model that has been enacted by 25 jurisdictions to date.

In drafting the bill, the department proposes to remove some of the details from the model and include them in a rulemaking.

A copy of the proposed rulemaking has been provided to the committee for completeness with the intention to publish once the bill becomes effective.

Thank you again, Chairperson Henderson, for the opportunity to testify.

Disby supports B 26427 and its goals of strengthening data and cyber security protections for district consumers.

We urge the council to take favorable action on this bill, and I'm happy to answer your questions.

Great.

Thank you, Deputy Commissioner.

While it's fresh, I'm just going to ask you a few follow-up questions.

So as you said in your testimony, and as is my understanding, right now, when there are cybersecurity breaches, that information is reported to the Office of the Attorney General.

How does the OAG requirement differ at all from the requirements of this bill?

So the attorney general's bill does not specifically include insurance companies.

The reason why this bill is critical is because insurers, number one, collect a lot of personal private insurance.

And in the district, we uh license 1,300 insurance companies, and we know that they have been a subject of cyber attacks and ransomware.

And over the past 10 years, there's been a significant number of companies that have seen cyber attacks.

By this particular bill, it does require them to report directly to us so that we can have proper oversight, because it poses a risk for solvency, particularly companies that have to pay ransomware.

So that is the way that it's different because it insurance different companies we believe are different from just your ordinary corporate companies.

Okay.

Was there an issue though in terms of let's say an insurance company did report to OAG?

Was OAG not sharing information with you guys?

I do not recall specifically that OAG has shared information with us.

Some companies will voluntarily report, and others.

Yeah, I mean, we had a situation about what, two years ago, there was a major insurer who is operating both in DC and Maryland.

They experienced a data breach, and my understanding is that the department was alerted by the state of Maryland as a courtesy because the company did not alert the district themselves.

And so we want to make sure that that doesn't happen.

We appreciate our neighbors and the regionalism of them sharing that information, but they had no obligation to do so.

So that definitely provides some safety there.

And I'm asking because, you know, rulemaking is an additional 30 days at least in terms of the public comment period, the feedback, et cetera.

Uh, why not go ahead and include that in the bill?

So I think we wanna we really want to um you know focus on uh, you know, how this all of this is going to unfold for all the the the companies um they are of various size.

So the the bill is kind of tailored to the size and complexity, and so we I think we want to have some more additional time to kind of hone down into how it will impact the companies based on again on their size, their complexity, um, and if we we just need some more time to uh to focus on that.

Okay.

Um under the legislation, insurers would be required to submit risk assessment data to the department, including documents related to areas of improvement.

Um, I mean, I don't have any insurance companies obviously testifying today, but are they gonna come back to us in the next three weeks and tell us that this is somehow a burden?

I don't think so.

Um we certainly have not heard um any opposition from the insurance company as we previously mentioned.

Okay.

Um this has been adopted in 25 jurisdictions, um, and I do recall that at the time when you know the um the the regulators were deliberating on the bill that there was a lot of input um from all of the companies, um and you know, from the the industry in general.

Okay.

Um in terms of how it's gone in the other jurisdictions that have implemented this already.

Is it um what's the transition like, right?

So in those first uh couple of years where folks are having to submit the risk assessment data and these other sort of data points, um, is it a grandfathering or is it uh by this date everybody must get into compliance?

I'm not really clear um what the the cadence is okay, um, but um you know we could I could get back to you on that, okay.

Or Mr.

Barlow, if they may know.

Uh you know, again, many of the companies that operate here operate other places as well, and they're already providing you know some of this information, you know, this so um, but I think we would I I'd have to go back and look at the legislation, see if it gave them time.

I again this is this is one of these bills that's been in process for maybe longer than the short-term disability one.

So okay.

But it's be great for our legislative process, but we're trying over here.

Um the bill exempts licensees with fewer than 10 employees from some of the uh information security provisions.

Uh, what's the rationale for that exemption?

I'm sorry, the rationale for that exemption.

So we exempt companies that have uh fewer than 10 employees uh from some of the um security provisions, and then I think you also mentioned in your testimony, and that would be the case is that um if the company has a security breach but it's less than 250.

Um what do we call it?

Less than 250 uh people from DC residents, I think.

Yeah.

Um if they if it involves data on 250 or more residents or otherwise poses significant consumer operational harm.

I'm curious just in terms of how we got to the 250 or more.

Well, I think what we're looking at is um impact.

Um, so if you have, you know, 250 or more people that are impacted, obviously, the consequences could be could be tremendous because that is a significant amount of um data and individuals whose private information um you know could be out there uh in on the internet or being sold.

Uh and so um I think we're just looking at what the impact could be, and it seems as if 200 more than 250 people would be significant, particularly in in our jurisdiction.

Uh the other side of that is that insurance companies are subject to attempted cyber intrusions almost constantly.

So we don't want, we don't want something every time there's an attempt to uh to access information, or else we'd you know they'd be overwhelmed in reporting and we'd be overwhelmed in trying to evaluate the reporting.

So, you know, this I think that's really part of that is to get at things where where there's an attempt but it's unsuccessful, you know.

If it would have to at least impact some policy holders in order to uh to trigger the trigger the reporting.

Okay.

Um the bill would establish a monetary penalties for up to $25,000 for noncompliance.

Are there any other accountability mechanisms beyond the penalty?

The fine.

No.

Um we well the the I think the penalty um is um of course sufficient, um, of course, if uh the we find that the company um you know continues as a practice uh to be non-compliant, then of course we have other tools and there are other steps that we could take to escalate.

Yeah.

Okay.

Uh I'm gonna ask this now for the record, just in case they come back to us, the office of the chief financial officer later, but uh what's the estimated additional?

Well, is any additional staff required for the implementation of this bill?

No, I I believe that we can do this within uh the the staffing and the regulatory regulatory authority that we have.

Love that.

Hope you heard that.

Our good friends at ORA.

They said that funds are sufficient.

No additional people necessary.

Um the government people laughed at that, but everybody else is like, what are you guys talking about?

Nonetheless, um, okay.

Uh I don't have any, well, for now, I don't have any further questions on this bill, so let's go to our um next uh least controversial, which would be the short-term disability bill, which we have been running in part since 2021.

Um so uh Commissioner Barlow, when you're ready.

Thank you.

Good afternoon, Chairperson Henderson, committee staff and district residents.

I am Philip Barlow, the Associate Commissioner for Insurance for the Department of Insurance Securities and Banking.

I appreciate the opportunity to testify today on Bill 26181, the short-term disability insurance benefit protection clarification amendment act of 2025.

Bill 26181 would prohibit private disability insurance providers from reducing short-term disability benefits based on actual or estimated paid leave benefits, and eligible individual may be entitled to from the district, regardless of the jurisdiction in which the insurance policy was issued.

Many district employers offer private short-term disability insurance as part of their employment compensation packages.

These plans typically replace 40 to 60 percent of an employee's salary for three to six months when the employee is recovering from injury or illness, including postpartum recovery.

Some employers pay the premiums while others require employees to contribute.

The district's universal paid leave program began in July 2020.

It provides partial wage replacement for parental leave, medical leave, and family leave.

Employers pay quarterly contributions into a social insurance fund, and eligible workers may receive up to 12 weeks of benefit.

Many workers rely on both private short-term disability and universal paid leave to achieve more complete wage replacement and to cover longer recover recovery periods.

However, DISB identified a significant enforcement challenge.

The department's authority generally applies only to insurance policies written or issued in the district.

Many employers, including national employers, purchase policies written or delivered outside the district.

As a result, the district's anti-offsetting protections do not apply to their short-term disability products.

The primary reason insurers provide offsets is to avoid situations where an employee might be eligible for more in benefits than the income it is intended to replace for an extended period.

The universal paid leave program would be less susceptible to that concern.

Additionally, the enforcement of the extraterrestrial provision may prevent some, may present some issues for DISB, particularly if the underwriting carrier is not licensed in the district.

Another potential issue that we have heard could be that short-term disability plans issued outside the district could exclude district residents from coverage.

Thank you again, Chairperson Henderson, for the opportunity to testify.

DISB supports Bill 26-0181 and its goal of protecting district residents' short-term disability benefits from being reduced based on paid family leave benefits that residents may also be entitled to.

I'm happy to answer any questions at this time.

Thank you.

All right.

So the emergency and temporary have been in place for a little bit of time now.

Does currently, does Disby currently work with Department of Employment Services to enforce the legislation?

Well, we would we would enforce the legislation.

Generally speaking, I think if we got a complaint, through on it and, you know, I think we got, you know, when when it first passed, we got some complaints about it.

Uh I'm not aware of any reason complaints.

Okay.

So that was going to be my next question, which was around in those first couple of years.

Well, isn't it?

It wasn't even a year.

So when uh universal paid family leave came online in 2020, and then this issue sort of coming to everyone's attention.

Um, how many complaints did you all receive at Disby?

Uh I'd have to go back and look.

That's okay.

But we can we can get you that information.

Um have you received any complaints in the last year or so about this issue?

I'm not aware of any, but I can double check with our complaint staff.

I'm it's sometimes it's hard to just look for these particular types of complaints, you know, because they can get lumped in with other complaints in terms of the way they're categorized.

All right.

Um is there anything that Disby feels like needs to be changed on a permanent basis that was not included in the temporary legislation?

Uh no.

All righty.

Look at that.

Simple.

Now to our problem, child.

I'm kidding.

I'm kidding, Mr.

O'Donnell.

Um, all right, let's let's talk about the captive insurance bill.

Um, so when you're ready.

Okay.

Good afternoon, Chairperson Henderson, committee members, staff, and district residents.

I am Sean O'Donnell, Associate Commissioner of the Risk Finance Bureau within the Department of Insurance Securities and Banking.

I appreciate the opportunity to testify today on Bill 26058, the Captive Insurance Company Amendment Act of 2026.

Disby has a three-part mission.

First, to cultivate a regulatory environment that protects consumers and attracts and retains financial services firms to the district.

Second, to empower and educate residents on financial matters, and third, to provide financing for district small businesses.

The bill would update the district's captive insurance law to reflect current practices in the captive industry, clarify provisions of current law, and make technical edits before addressing specific provisions in the bill.

Please allow me to take a minute to provide background information about captive insurance.

A captive insurance company is a licensed insurance entity created and owned by a business or nonprofit organization to insure some or all of its own risks, giving the business or nonprofit organization more control over its insurance costs, the coverage terms and its insurance program, and its risk management.

Companies establish captives to stabilize insurance expenses, tailor coverage to their unique risks, and potentially capture underwriting profits that would otherwise go to commercial insurers.

Captive insurers do not provide insurance to the general public.

In the same way, you and I can reduce our automobile or homeowners' insurance cost by increasing our deductibles.

Large and medium-sized organizations use captive insurers to increase and self-insure their deductibles and their retentions, thereby retaining more of their insurance risk and reducing the amount of insurance purchased from commercial insurers.

Disby licenses and regulates captive insurers in many of the same ways we license and regulate commercial insurers who operate in the district.

Captives must be capitalized and funded.

They issue policies, they collect and invest premiums, and they pay claims to their owners.

The district enacted its first captive insurance law in October of 2000 and has licensed over 400 captive insurance companies since then.

Captive insurers contribute approximately $4 million annually in premium taxes and fees to the district's general fund and they contribute to the local economy.

The captive insurance industry and the regulation of captives is constantly evolving and requires jurisdictions that license and regulate captives to continually review, fine-tune, update, and enhance their captive insurance laws to keep up with changes to retain current captives and to attract new ones.

The district last updated its laws related to captives in 2015.

The legislation would update the captive insurance law as follows.

The organizational requirements section is updated to add articles of organization, which are the formation documents used by limited liability companies.

Captives may be formed as corporations, which is already in the law, but they're also formed and their corporations are formed using articles of incorporation.

And LLCs use articles of organization.

Similarly, the bill adds units and interest, which are issued by LLCs, in addition to shares which are issued by corporations and which are already in the law.

The capital requirements are expanded to include cash equivalents such as certificates of deposit and money market accounts, and to add an option for captives to use credit unions in addition to regular banks.

A certain type of captive called a protected cell will be eligible for an expedited licensing process, and certain types of captives will be permitted to make changes to their business plan without prior approval if they do not increase insolvency risk.

But the companies must notify the commissioner of the change within 30 days.

The bill creates a new section that would allow captive insurers who decide to temporarily stop writing insurance to become inactive.

Captive owners occasionally find it necessary to stop writing business and change their plans for a variety of reasons.

Under current law, captive owners that stop writing business must continue to comply with all the requirements in the law that apply to active captives, even though the captive insurer is temporarily not being used.

Often owners will opt to close the captive rather than be subject to the same requirements as an active captive.

If they decide to relicense it later, the relicensing process can be expensive, or they may choose to go to another captive jurisdiction when doing so.

A definition of net direct premiums was added to clarify that premiums include all fees, levies, or assessments, even if they're billed separately.

A new subsection is added to Section 14 that clarifies that all information that is filed with the department related to a captive insurer's annual financial report shall be confidential and shall be exempt from the Freedom of Information Act of 1976 and shall not be subject to subpoena or discovery or admissible in evidence in a private civil action and shall not be divulged to any person without the written consent of the captive insurer.

Section 23 is amended to add back a provision that was mistakenly deleted in a prior law change.

Finally, the bill adds rulemaking authority to Chapter 41 of Title 31.

Chapter 41 governs the licensing and regulation of risk retention groups, which are formed and regulated under the captive insurance law in the district.

I will also point out one minor error on line 81 of the bill and Disby request that this error be corrected.

Line 81 currently reads to violate any applicable law or regulation and does increase the risk of insolvency.

Line 81 should read to violate any applicable law or regulation and does not increase the risk of insolvency.

I want to conclude by thanking the committee for holding a hearing on this important legislation and allowing me the opportunity to testify on Bill 260588.

Disby believes passing this bill supports Mayor Bowser's goals of attracting business to the district and reducing red tape and streamlining processes for businesses operating in the district.

I am happy to answer any questions you may have.

Thank you.

Thank you.

You know, Commissioner, I think the comments that you kind of made at the top of your testimony around, you know, industries evolve and our laws also need to evolve to address new arising, both challenges and developments.

I think makes sense.

We first did captive or we lasted the captive law in what 2015.

So we're at about the 10-year mark.

So I think this is probably the appropriate time for us to, is it working?

Is it not working?

And let's make some changes.

Okay, there was a 2022 um insurance National Association of Insurance Commissioners report that estimated about 148 captive insurance companies were registered here in DC.

You mentioned in your testimony that uh since October of 2020, we've licensed over 400.

How many do we currently have active?

There are 234 active captives as of today.

Okay.

Um 435 have been formed since the inception of the program.

Okay.

Um can you talk about some of the reasons captives might leave the district?

We've had captives leave because they didn't like the way we regulated them.

Oh okay.

They thought we were too tough on them.

Um we've had captives leave because two parent corporations merged and both had captive entities and they didn't need both of them, so they merged the captive.

Um, the the biggest reason for a captive dissolving or leaving DC is is just dissolution.

The the reason for the captive has run its course.

Um, some captives are set up for kind of a one-time event where maybe a defined um block of of business is put into the captive to run it off or to transfer it off the parents' books, again onto the captive that's owned by the parent, so it's still under the parent.

Yeah.

Um so there's a number of reasons why captives not only leave DC but just um dissolve.

Okay.

So this legislation would deal with inactive captives.

Correct.

Um, do we know how many inactive captives we currently have?

Um I think there's two or three.

Okay, so it's it's not a significant number.

Correct.

Um, and we've had our thinking, and we've been told this if we had legislation that addressed um inactive captives and kind of let them remain dormant, then perhaps the captive captives we've had in the past that that were inactive, then those captives ended up closing up, but we were told by the owners, well, if you had a dormancy statute or an inactive statute, we probably would have left it on the books because we might use it in a couple years.

So again, that's another reason.

Okay, so is that one of the reasons for creating this newly inactive captive status?

Yes.

All right.

Um the bill provides limited details on the timing and process for a company to be deemed as an active.

What is the amount of time that a um insurer or a captive insurer would need to have, I guess, ceased uh transactions or activity to be considered inactive?

The minimum amount of time would essentially be um, well, it it there's really no minimum time.

I was gonna say a calendar year, because at any point during a calendar year when a captive is active, it's still subject to premium tax.

Right and perhaps a financial filing.

But a captive theoretically could deem itself inactive at the end of a year.

Um the key is that it no longer has any insurance risk.

The captive that insurance risk has to be gone.

There can't be any insurance risk.

So that's really the key.

It's really not a timing issue.

It's it's whether or not it still retains and is responsible for for um any coverage under any policies.

Okay, so as long so long as you maintain risk, you can't necessarily be considered as inactive.

Correct.

Okay, all right.

That that's okay, that's good in terms of clarifying.

All right, um, another portion of the bill is around uh financial requirements.

Um the bill clarifies that net direct premiums includes all fees, levies, and assessments, even if billed separately.

Has Disney encountered some situations where captives were billing um were billing separately and not reporting them?

Not frequently, but we've seen it.

So captives are are taxed on the amount of premium that they write.

And we found that a few captives, and really none recently, again, since 2015, we've been uh accumulating a list of law changes we wanted to make, and this was always on the list.

Okay, um, captives would bill what they call risk management fees and other fees separate from the the billing for the premium.

So say um uh a captive um wrote a policy, and and most of um where we've seen this practice is with risk retention groups.

Um they would bill um for the premiums um say ten thousand dollars, but then they would send a separate invoice for risk management fees and some other fees.

And and those fees are really part of premium.

You can't really break those out.

Um so they were paying less tax than they should have.

They need to pay tax on all these fees.

That's why we're we're um um adding this provision just to clarify the definition of premium.

Got it, okay.

Um formation and application requirements.

So the bill expands the definition of what qualifies as a cash equivalent to include certificate of deposits and money market accounts and allows captives to use credit unions.

Um what type of cash equivalents qualify under this definition?

Um it's essentially certain instruments that have um maturity date of one year or less.

Um so it would be certificates of deposit, certain um US treasuries that would be six months or um one year or less.

Um there's certain um money market accounts that qualify.

So we have a defined list of six or seven instruments that that qualify as cash equivalents.

Okay.

Umitalization as we mentioned and have discussed is critical to insurance solvency.

Um I'm assuming that we have uh a varying capital requirement based on size.

It's based on type of captive and size.

Okay, okay.

Um can you um follow up with the committee to provide a breakdown of what's currently there?

As far as capital requirements, yes.

Yeah, so there the uh I will follow up, but there's defined dollar amounts in the law.

So some are 250,000, some are 500,000, that's minimum capital just to start up.

Right, but the the required capital is really based on the volume of business the company writes, okay, maybe the type of business, um, and we use ratios, so just to give you an example again, we'll follow up.

But if a captive uh we use a ratio called premium to surplus.

So if a captive has a million dollars in surplus, um a three to one premium to surplus ratio, maybe up to five to one is what we use, which means a captive with a million dollars in surplus, if we use three to one premium to surplus, they could write three million dollars in premium on a million dollars in capital.

Um we can go up to five of certain types of captives go up to five to one, so captive with a million in surplus, million in capital could write up to five million dollars.

Um so it varies depending on the type of captive and and the business, the writing and the premium volume.

Okay.

How many?

Just curious, in terms of your team over at Disby who deal in sort of the captive insurance regulatory and oversight.

How many staff?

We have 11 positions.

Um one of those is currently vacant.

We're recruiting for that now.

Okay.

And we have a 12th position in the budget.

It's made it through the budget so far as my understanding for um fiscal 27.

We didn't take it.

What's that?

I said we didn't take it, so it's still there.

Thanks.

Um, but that's really because of growth.

And and the volume of work is kind of exponential.

The more captives you license, when a captive is licensed, that's kind of the beginning of the regulation process.

We have the financial filings, and we have when they make changes to um their business plan, um, they submit those changes to us.

That's one of the reasons for the provision to expedite uh to allow captives to do certain changes without our prior approval.

But but it just adds all just having a sheer number of more captives just adds to the volume of of um the work we have.

And and we want to make sure we're we're helping those captives, we're serving them by um, you know, timely reviewing business plan changes and timely acting on their requests.

So I was gonna ask you about that.

So section 10 would allow for the commissioner to issue expedited licenses or certificates of authority for protected cells within two business days of receipt.

How long typically is that process?

For for an expedited license for protected cell?

Yeah.

It can be as little as a day.

Um, and and we've um we we are developing um a process where there's there's a defined um it's kind of an uh it's kind of um an expedited application, if you will, where if they provide certain information to us, um, and and it's all complete and accurate.

Um and if it's not expedited, how long would it normally take?

Oh, um 30 days.

30 days.

Um we we um we commit to licensing any captive, um whatever the size, whatever the type, in 30 days or less.

Okay.

All right.

Um so LLC formation has become increasingly common across both businesses and in the financial services industry.

The bill adds articles of organization um units and interests uh to the existing framework to accommodate this shift in the industry.

Um how prevalent is LLC formation among captive insurers nationally, and does this give the agency any pause in terms of the overall conversation around transparency when it comes to these companies?

I would say maybe 30% of our captives are formed as LLCs, and that's increasing maybe 20 to 30 percent.

Um, but it's just a different form of corporate organization, it doesn't give us uh any concerns.

Okay, um let's uh talk a little bit about the transparency piece, and I'm gonna try to be uh cautious with my words because I know that there's open litigation with regard to FOIA pieces, but um, as it stands, uh there's limited data and reporting on captives here in the district that is publicly available.

Obviously, they're reporting to the agency some information.

Other jurisdictions vary in terms of what they require or not require or allow for being public.

Um does the department plan on updating its website or processes to make this information more readily available to district residents.

There was a suggestion from a public witness that maybe even just a report in the aggregate, right?

How many captives do we have?

What type of industries are they from?

That kind of thing.

I don't know as if that's something that the agency would be okay with.

Yes.

And we in the midst of trying to keep up with our workload, we try to address other things that aren't directly related to licensing the licensing, regulating the captives.

So I think Vermont was mentioned.

If you go on the Vermont captive website, they have a dashboard and it's it's a nice dashboard.

It has aggregate information, so it doesn't give you information on individual captives, but the things you're mentioning, the types of industries, premium volume, things like that.

We already we calculate certain measures already, annual premium volume, the capital, collective capital of all the captives, which is well over $10 billion, annual premiums, I think are in that range as well.

And some of that information we do have on our website now, but it's not as comprehensive as we would like it.

So we have no issues with with putting out um some kind of aggregate information really on any measure that um folks want to want to see on there.

Okay, all right.

We could talk more about that.

I I wonder though, around the concern, with annual reports being subject to FOIA requests, which is something that you all had included in the legislation.

Yes.

And I could talk for a long time on it, so I'll try to keep it short.

Um, so number one, we started drafting this change in mid uh 2024, and that was well before a FOIA request from Mr.

Shoot, as well before any any um litigation.

So we're not trying to slip this in.

This was again, we had a laundry list of what um changes we wanted to make, and this was this has been on the list for a long time.

Um the annual report.

Well, um, captive applications are specifically exempt from FOIA in the captive law.

And it's my understanding.

I wasn't here, I I started in the captive unit in 2007, and captive legislation was passed in the late 90s, early 2000s.

It was my understanding the intent was to make the annual reports also confidential and not subject to FOIA specifically in the captive law, and that did not happen back then.

Um but there's two other provisions in DC law that do protect um those reports.

Um one is the FOIA law itself, and there was a lot of discussion on the FOIA law um here by the public witnesses, and um I will let me see.

I will quote from it.

So um information that contains trade secrets and commercial or financial information obtained from outside the government to the extent that disclosure would result in substantial harm to the competitive position of the person from whom the information was obtained.

So that um the that type of information is exempt from FOIA.

Um so in this current um FOIA request, which is under litigation, it was appealed initially.

Uh that we denied it um based on DC law.

There's another provision, DC DC law that we rely on as well.

I'll explain that.

Um the request was denied, an appeal was made to the mayor's office, which is part of the process, that's how it works.

Then appeal goes to the mayor's office, and the mayor's office of legal counsel um upheld our position, denied um the um appeal, and uh if if you haven't seen the denial, I'll provide that to you.

Um the mayor's office of legal counsel, um, if bear with me, um, this is uh they give a lot of background and they actually cite um some um some case law.

Uh, and this is a quote from from their um from mayor's office of legal counsel denial.

Annual reports filed by captive insurance companies contain sensitive information received from outside the government, the disclosure of which would result in substantial harm to the competitive position of the person from whom the information was obtained here Disby has demonstrated the sensitivity of the requested information and how its release would cause substantial competitive harm that's from the mayor's office of legal counsel okay I I and I I'm not anticipating you to sort of defend this here like I said I know that there's ongoing litigation that's happening on this particular front but I think overall this question around how much information about captives can actually be shared by Disby and what is in the public interest of categories of information that should be known I think one of the things that was discussed earlier was like who owns the business that was correct who owns the business now with an LLC hard to say I mean that could be said for anything right we got LLCs as uh builders developers who are flipping houses and which sometimes causes some issues um in the future um you know overall uh amount of money types of industries those kinds of things I think if we could talk more with the agency around what that annual report might look like from an information standpoint um I think that would be helpful I don't know if I am going to have Disby in the future so I don't want to say like oh we could just get this information through performance oversight because it could be a question that could be asked next year and then never asked for 10 years right so um I think getting that um right might be helpful um and we would love some feedback um from you all around that as well and happy to talk to um uh Mr.

Hollowhan's uh group as well to kind of see where the nexus of information um kind of would be um on that front um all right is there anything um well let me ask this when you said you guys were having essentially a running list of things at any point did you all uh conduct some analysis comparing our captive laws to other jurisdictions throughout the country yes we do that all the time that our captive law was was copied from Vermont's law uh 20 25 26 years ago okay so so all captive jurisdictions do that yeah okay um and you feel like what we have before us is a fair representation of where we need to be today and I'm asking this because you're talking about some things where like I know you all well in terms of the process right this bill might have been in existence and percolating for the last two years or so is there something new that wasn't in there besides what you mentioned in your testimony that you want us to address.

I think I I've made some notes uh to myself in the office about maybe some minor technical things that I've noticed in and formulating this law and and towards the end of the process I thought oh we we could have added this or that and and um so there are a few minor things but not nothing major at this point okay so like nothing material addition but more technical edits okay we're happy to work with you guys on that we just want to make sure that we get it right um so I um let me just talk a minute about timing ish about our three different um bills and can I say real quick where where I was going talking about how the FOIA law um these reports are already exempt and there's another provision that exemps exempts them too um the the information is already confidential and we're uh I mentioned the captive applications themselves which are um a lot of the same information that's in the annual report is in the application that that is confidential specifically under the captive law.

But we've we're we've added this to the captive law just to make it very clear.

So we don't have to rely on other parts of the insurance code to make it very clear that these reports are confidential, and that's the reason for adding this provision in the law.

And there was discussion of differences.

Why are 900 commercial insurance companies?

Why are their reports publicly available and the captive reports aren't?

Well, there's two main reasons.

Captives don't sell to the public, where you know we talked about Aetna, whatever state farm, they sell to the public.

So in a in a state farm annual statement or an Aetna annual statement, you're not going to find information on Aetna's Enterprise Insurance Program in that report.

You find information about the policies they write to the public.

So these captive annual reports, again, it's the insurance program of private companies.

And there's that information is proprietary.

It's can represent trade secrets and it could bring harm to the to those to the parent companies if that information was released.

Okay.

So I'm trying to make it my business to wrap these bills up this year, this calendar year, this council period, if you will.

Um we will likely um move the short-term disability.

Um first, as well as the cybersecurity, because those are fairly straightforward.

Um I'm not gonna make any promises on behalf of my staff, but like we're gonna do our best to prepare pre-recess.

So that's July 15th.

Um, and then uh Commissioner O'Donnell, um, this one will just from a timing purposes, we'll likely move uh post-recess, uh, when the council comes back after recess um this summer.

And yeah, okay.

That concludes today's hearing.

Um, oh, wait, wait, wait.

I'm gonna ask on the record.

I didn't ask you this, but Commissioner Barlow, do you need some additional funding to implement a bill that you've been implementing since 2021?

No, we do not.

Okay, great.

All right.

Um, and we've already given you guys an additional FTE, but the way that captive, at least I'm my understanding, you're funded from SPR, correct?

Do you need an additional FTE?

Well, we have one in the butt in the coming budget.

Right.

Not specifically ready to dispel, but just our overall workload.

Right.

Um but no, we um if we can get that FTE, then um we don't we don't need any additional funding or positions.

Great.

That's what we like to hear.

Bills that don't cost money move faster.

It's great.

Um, anyway, all right.

So I want to thank all of the witnesses who spoke today.

Um the record is gonna remain open until 5 o'clock on Monday, June 29, 2026, for the public to submit any testimony.

You may submit written statements online via the council's hearing management site um on the DC Council.gov backslash hearings.

This does conclude today's hearing.

Um, the next meeting of the committee on health will hopefully knock on wood, be on Wednesday, June 17th, where we're gonna mark up some board nominations, knock on wood, if I can get one of my colleagues who happens to be on the ballot on Tuesday to wake up on Wednesday and come vote.

So um we'll also include some of the nominations that we heard from today.

So I'm gonna do my best to get a colleague for 15 minutes.

Um there being no further business before the committee, uh, the time is 323 p.m.

and this hearing is adjourned.

Thank you, everyone.

Thank you.

Mais Oh, Oh, Oh, Oh Oh