Legislature(2005 - 2006)HOUSE FINANCE 519
04/07/2006 01:30 PM FINANCE
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* first hearing in first committee of referral
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3:01:27 PM HOUSE BILL NO. 51 An Act relating to permitting employers in the same trade to form joint insurance arrangements for self- insured workers' compensation coverage. Co-Chair Meyer MOVED to ADOPT Amendment #1. Representative Kelly OBJECTED. MIKE PALOWSKI, STAFF, REPRESENTATIVE KEVIN MEYER, explained that Amendment #1 on Page 2, Line 11, clarifies the joint liability language. The amendment adds "and the solvency of the association of self-insured employers". The amendment clarifies the member's obligations and the solvency of the association. Representative Kelly WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. Co-Chair Meyer MOVED to ADOPT Amendment #2. Representative Kelly OBJECTED. Mr. Palowski explained that Amendment #2, Page 5, Line 27, addresses concerns with assessment. The amendment inserts "of not less than $300,000 in the aggregate and not less than $10,000", in order to qualify for a certificate of self-insurance. He acknowledged that it would push some smaller companies from being able to join some associations. The sponsoring groups testified in favor of the legislation including that language. 3:06:15 PM Representative Weyhrauch pointed out that addition of that language would drive him out of business. He questioned the deletion of all material on Page 5. He suggested alternative language to Line 28: "Or an amount necessary to maintain solvency with the association". That language could provide the Department the discretion to determine the appropriateness of the floor. He noted that he did support the first part of the amendment. Mr. Pawlowski agreed that the change could work well for the language of the bill and was consistent with the intent. Representative Weyhrauch MOVED to AMEND Amendment #2, deleting Lines 5 & 6 of the amendment and then on Page 5, Line 28, add "or" before "in". There being NO OBJECTION, Amendment #2 was amended. Representative Kelly WITHDREW his OBJECTION to Amendment #2. There being NO further OBJECTION, amended Amendment #2 was adopted. 3:09:11 PM Co-Chair Meyer MOVED to ADOPT Amendment #3. Vice Chair Stoltze OBJECTED. Mr. Pawlowski stated that Amendment #3 relates to single self-insurance. Page 2, Line 1, deletes $5 million dollars and inserts $10 million dollars; Page 6, Line 9, deletes $5 million dollars and inserts $10 million dollars; Page 6, Line 11, deletes $5 million dollars and inserts $10 million dollars. The changes reflect the testimony received from the Department of Labor & Workforce Development. Vice Chair Stoltze WITHDREW his OBJECTION. Representative Kelly asked the new number. Mr. Pawlowski did not know. There being NO further OBJECTION, Amendment #3 was adopted. 3:10:45 PM Co-Chair Meyer MOVED to ADOPT Amendment #4. Vice Chair Stoltze OBJECTED. Mr. Pawlowski explained the change to Page 6, Line 18, following "employers", inserting "shall be registered under AS 21.27.630-21.27.660 and". The change was recommended by Director Linda Hall, Department of Labor & Workforce Development, allowing the process of claims be addressed by rd a 3 party administrator. Vice Chair Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #4 was adopted. 3:11:46 PM Co-Chair Meyer MOVED to ADOPT Amendment #5. Representative Kelly OBJECTED. PAUL LISANKIE, DIRECTOR, DIVISION OF WORKERS' COMPENSATION, DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT, explained that Amendment #5 reflects that the association will be kept in the frame work of the Workers Compensation Act for purposes of determining entitlement. Mr. Lisankie continued, Part 2 of the Amendment, Page 16, following Line 7, the association will not have a premium but rather an assessment. Currently, the language requests consideration of insertion of "each association of self insured employers" base all contributions on either insurance premiums or payments. That language guarantees that the association, on behalf of the members, would make the contributions now. The tail end of the amendment provides provisions needed when an association is started & then during the transition period. 3:15:25 PM Representative Kerttula inquired where workers would be placed under the second portion of Amendment #5. Mr. Pawlowski explained that the provisions in Title 21, relates to the accounting portion. The places, where it would be applicable, such as on Page 7, Line 30, providing the investment of assets and the type of investment classes. There is a difference between accounting and gap accounting, and the internal procedures the insurance company is required to go through, and is not appropriate for self- insurance. 3:17:05 PM Mr. Lisankie agreed, stating that it would guarantee that they fit into the Worker's Compensation statute but not subject to all the Title 21 Insurance Act regulations. Representative Kelly WITHDREW his OBJECTION. There being NO further OBJECTIONS, Amendment #5 was adopted. 3:17:56 PM Representative Weyhrauch MOVED to ADOPT Conceptual Amendment #6 to Page 15, Line 26, describing a tangible net income. Co-Chair Meyer OBJECTED. Representative Weyhrauch addressed net worth protection by adding after "chapter", language: "including defining tangible net worth". Mr. Pawlowski thought that would be okay. Co-Chair Meyer agreed. Co-Chair Meyer WITHDREW his OBJECTION. There being NO further OBJECTION, conceptual Amendment #6 was adopted. 3:20:29 PM Representative Foster MOVED to REPORT CS SS HB 51 (FIN) out of Committee with individual recommendations and with the accompanying notes. There being NO OBJECTION, it was so ordered. CS HB 51 (FIN) was reported out of Committee with a "no" recommendation and with a new zero note by the Department of Labor & Workforce Development and indeterminate note #1 by the Department of Commerce, Community & Economic Development.