Legislature(2005 - 2006)CAPITOL 120
05/05/2005 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB193 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 193 | TELECONFERENCED | |
| + | SB 137 | TELECONFERENCED | |
| + | SB 135 | TELECONFERENCED | |
| + | SB 20 | TELECONFERENCED | |
| + | SB 132 | TELECONFERENCED | |
| + | SB 130 | TELECONFERENCED | |
| *+ | HB 232 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 130 - WORKERS' COMPENSATION/ INSURANCE 2:25:54 PM CHAIR McGUIRE announced that the next order of business would be CS FOR SENATE BILL NO. 130(FIN) am, "An Act relating to a special deposit for workers' compensation and employers' liability insurers; relating to assigned risk pools; relating to workers' compensation insurers; stating the intent of the legislature, and setting out limitations, concerning the interpretation, construction, and implementation of workers' compensation laws; relating to the Alaska Workers' Compensation Board; assigning certain Alaska Workers' Compensation Board functions to the division of workers' compensation in the Department of Labor and Workforce Development and to that department, and authorizing the board to delegate administrative and enforcement duties to the division; providing for workers' compensation hearing officers in workers' compensation proceedings; establishing a Workers' Compensation Appeals Commission; relating to workers' compensation medical benefits and to charges for and payment of fees for the medical benefits; relating to agreements that discharge workers' compensation liability; relating to workers' compensation awards; relating to reemployment benefits and job dislocation benefits; relating to coordination of workers' compensation and certain disability benefits; relating to division of workers' compensation records; relating to release of treatment records; relating to an employer's failure to insure and keep insured or provide security; providing for appeals from compensation orders; relating to workers' compensation proceedings; providing for supreme court jurisdiction of appeals from the Workers' Compensation Appeals Commission; providing for a maximum amount for the cost-of-living adjustment for workers' compensation benefits; relating to attorney fees with respect to workers' compensation; providing for the department to enter into contracts with nonprofit organizations to provide information services and legal representation to injured employees; providing for administrative penalties for employers uninsured or without adequate security for workers' compensation; relating to fraudulent acts or false or misleading statements in workers' compensation and penalties for the acts or statements; providing for members of a limited liability company to be included as an employee for purposes of workers' compensation; establishing a workers' compensation benefits guaranty fund; making conforming amendments; providing for a study and report by the medical services review committee; establishing the Task Force on Workers' Compensation; and providing for an effective date." [Before the committee was HCS CSSB 130(L&C).] The committee took an at-ease from 2:26 p.m. to 2:27 p.m. CHAIR McGUIRE relayed that HCS CSSB 130(L&C) no longer proposes to change certain "structures in the court regarding appeals," and voiced her understanding that Representative Dahlstrom would be offering a conceptual amendment to reinstate the "second injury fund." GREG O'CLARAY, Commissioner, Department of Labor & Workforce Development (DLWD), relayed simply that the DLWD supports the aforementioned conceptual amendment. 2:29:16 PM JOEL SIGMAN, referring to the [second injury fund], said he didn't think it's right to have the financial burden of a second injury placed on the employee, particularly since, in his opinion, "they" aren't taking care of the employee for the first injury. He indicated that he has been dealing with this issue for eight years and has been misrepresented throughout, and gave details regarding the information that he has been told, the information that has been kept from him, and what he's had to go through. Even though he has had a doctor acknowledge that he needs surgery, he relayed, [workers' compensation] refuses to do anything. He opined that if an insurance company does not do what it is supposed to do, then the employee ought to be able to sue the employer. He mentioned that before he was injured he was able to earn $4,000 to $5,000 per month, but since his injury his life has been destroyed and he is not getting any assistance from the government. 2:32:49 PM MICHAEL BLODGETT relayed that his wife was injured seven months ago, and that after her injury workers' compensation paperwork was filed with her employer but her employer refused to turn the paperwork over to the insurance company. It has taken seven months for his wife to "get through the system," he recounted, adding that his wife describes her pain as being like having an ice pick shoved into her shoulder and then periodically moved around. He relayed that they'd recently been offered a deal with the insurance company and the employer but would have had to give up all fines, penalties, and fees. Turning attention to provisions of the bill, he suggested that the $10,000 fine [established in AS 23.30.175(b)] be increased to $100,000 at 21 percent interest, be made nonnegotiable, and be split equally between the State and the injured party. He opined that medical costs should not be the responsibility of the employee but rather the responsibility of the insurance company and employer. MR. BLODGETT acknowledged that when most people consider the issue of workers' compensation fraud, they think of someone who claims to have been injured but then goes back to work while also collecting workers' compensation. However, there are also situations in which it is the employer committing the fraud. He suggested that [the legislature] quit following other states and start being leaders with regard to workers' compensation issues - impose fines on employers and insurance companies that allow the kind of situation his wife is experiencing to occur and/or continue. Mr. Blodgett referred to Mr. Sigman and offered his belief that Mr. Sigman has spent the last eight years in pain simply because the system currently in place is flawed. In conclusion, Mr. Blodgett said: I applaud our legislators for taking thus under their wing. I realize this is a very hot topic, I realize that it applies to a tremendous number of people. Insurance companies want to continue making money. People would like to get fixed. If we take and say, "Look, you're going to be putting out $100,000 for not taking care of these people, per person," then maybe you will be able to get this to a stop and the [Workers' Compensation Board] slimmed down and their cases thinned out. 2:37:24 PM ERROL CHAMPION, Director, Alaska Timber Exchange Management Corporation, said simply that he supports the aforementioned proposed conceptual amendment regarding the "second injury fund" and hopes that it will be adopted. Second injury funds are extremely important for the reemployment of Alaskans, particularly in the timber industry, he concluded. 2:38:08 PM RICHARD CATTANACH, Executive Director, Associated General Contractors (AGC) of Alaska, after relaying that he is also the "Management" co-chair of the Labor-Management ad hoc committee, opined that SB 130 reflects about six months of hard work on the part of both employers and employees, and represents the first step in what he characterized as a major overhaul of Alaska's workers' compensation statutes; a needed first step, he remarked, though it is far from perfect. He also opined that the second injury fund is "a system that isn't working," that it hasn't worked for a long time, and that it is an expensive system. He elaborated: If you are a good employer and you hire somebody, you can't ask them the questions that's essential to get into the second injury fund, and that is, "Does he have a preexisting injury?" because ... it's illegal to ask that question under federal law. And if you don't ask that question, you're not entitled to use the second injury fund. So we don't have many people getting into the second injury fund at all, and it's just a system not working. CHAIR McGUIRE surmised, then, that during an interview an employer isn't able to ask about physical injuries. MR. CATTANACH concurred. CHAIR McGUIRE asked what triggers entry into the second injury fund. MR. CATTANACH reiterated his belief that the employer has to have knowledge of a preexisting injury before he/she hires the employee and that under federal law an employer is precluded from having such knowledge. He said that he is not sure how anyone is getting into the second injury fund now, but pointed out that some people have been in that system for over 20 years. He offered his understanding that there are only between five and ten new cases a year qualifying for the second injury fund. MR. CATTANACH, in response to questions, offered his understanding that between $3 million and $4 million is currently in the second injury fund, and that insurance companies are assessed 6 percent of the indemnity payments that they make and this essentially amounts to a "tax" on employers of about 2.5 to 3 percent on their premiums. 2:42:53 PM MR. CHAMPION, in contrast to Mr. Cattanach's comments, offered his understanding that nothing prevents an employer from asking a potential employee to get a pre-employment physical exam, and that the employer simply can't discriminate on the basis of a preexisting injury. Thus preexisting conditions can be identified before a person is hired and even after a person is hired; it is not factual that an employer can't ask about a preexisting condition, he assured the committee. 2:44:16 PM PAUL F. LISANKIE, Director, Division of Workers' Compensation, Department of Labor & Workforce Development (DLWD), in response to a question, acknowledged that perhaps some employers have a fear of running afoul of the Americans with Disabilities Act (ADA) and so avoid asking about preexisting injuries before hiring someone. Now, in order to still qualify for the second injury fund, an employer can simply "prove it up" after the hire. In other words, if an employer can prove that an employee is being retained even though he/she has a preexisting condition, then the employer can still qualify for second injury fund protection. CHAIR McGUIRE asked what a worker's remedy would be if there were no second injury fund. MR. LISANKIE clarified that the second injury fund isn't really a remedy for employees; rather, it is a remedy for the employer or insurer. The second injury fund reimburses the insurance company after it pays a certain amount of benefits "and then the fund picks up the rest." If there was no second injury fund, the burden would remain on the shoulders of insurance company for the entire life of the claim. CHAIR McGUIRE questioned, then, whether the proposed conceptual amendment is intended to help insurance companies. REPRESENTATIVE DAHLSTROM said no. 2:47:18 PM REPRESENTATIVE DAHLSTROM offered her understanding that under the current workers' compensation law, there is a provision known as the "last injurious exposure rule," which would hold a former employer liable should a second injury with a new employer render the employee disabled. MR. LISANKIE concurred, and explained that when the Alaska Supreme Court was addressing the issue of whether to adopt that rule, it recognized that it might not be equitable in every situation to place all of the responsibility for the [disability] on the final employer. The Alaska Supreme Court decided that [this rule] was less inequitable because of the existence of the second injury fund, since "that last employer will only pay for a limited period of time and then the second injury fund will kick in"; so [the rule] really won't be that harsh [for the employer]. 2:48:42 PM REPRESENTATIVE DAHLSTROM pointed out, though, that at one job she'd had in the past, at the time she was hired she was required to sign a letter stating that she would undergo a physical exam and that her continued employment was contingent upon the results of the exam. REPRESENTATIVE ANDERSON offered a hypothetical example involving an employee who is injured while on the job and subsequently receives workers' compensation benefits. If that person goes on to work for someone else and is injured again, who would be liable? MR. LISANKIE explained that the apportionment of who would pay is based on a legal test and the existence of the second injury fund doesn't factor into the question of who would be liable. In most instances, though, the second employer would be liable unless the injury that occurred while under the employment of that second employer was found to not be a substantial factor in bringing about the disability. MR. LISANKIE, in response to a further question, said that as long as a second injury fund exists, if the second employer has correctly followed the procedures necessary to qualify an employee for the second injury fund, and if the employee then becomes injured in a second injury to the point where he/she is disabled and off work for more than two years, then the employer - or their insurer - would be reimbursed by the second injury fund for the "time lost benefits." He elaborated: So you pay a lot of benefits before you get anything, and you do have to pay for medical benefits notwithstanding the existence of the second injury fund. But it is true that the cases that you see being paid from the second injury fund are people who - due to the second injury, no matter how small or large the injury is - are getting paid benefits, usually for life. They're usually permanent total disability benefits, so they can be very expensive cases, which is why it's entirely true that there's only about 130 of them, but ... it's a "grants" (ph) line item out of our vision, and it's about $3 million a year right now that's being paid out, so it's substantial. CHAIR McGUIRE asked what other states do as an alternative to [the second injury fund]. 2:53:05 PM MR. LISANKIE offered that when a state stops having a second injury fund, it attempts to redirect those dollars to some other program that is orientated towards trying to get people back to work after being injured. The second injury fund merely provides a fall back position for employers contemplating hiring a previously injured person, and thus they may be more likely to hire that person. An alternative would be to establish laws that not only require employers to hire people notwithstanding any previous injury but that also try to get those individuals back to work somehow should they get injured again. MR. CATTANACH, in response to a question, offered his belief that the second injury fund results in an increase to workers' compensation insurance rates of about 1 to 2 percent. MR. LISANKIE explained that for [the second injury fund], everyone who pays workers' compensation benefits during a particular period of time is assessed at a certain percentage - between 0 and 6 percent. 2:55:52 PM REPRESENTATIVE KOTT asked Mr. Lisankie to comment on Mr. Cattanach's statement that the second injury fund system doesn't work. MR. LISANKIE said: It's a system that has a lot of hoops that you have to go through to qualify, to get anything out of it, and it can be very difficult to get all of the things in line to qualify an employee. ... So if the statement is, "Does this affect a lot people, does this really help a lot of people year in and year out?" [then] I guess the answer would be, "Probably not." But ... the idea is that some of those people wouldn't have gotten a job unless their employer had the security of knowing that if they were really going to incur this big liability, that they'd get bailed out of it. ... That's the focus of the second injury fund, and it has been for the many years that it's been in ... [existence]. You can certainly make an argument that you can try and do something else that might have broader application, but the theory behind the second injury fund has been pretty much that: ... in every state, for many years, ... you just try and soften the blow to employers of people who come to the workplace with a serious injury and then get seriously injured [again]. 2:57:37 PM REPRESENTATIVE KOTT asked whether, from the division's perspective, there is anything in SB 130 that is onerous, impractical, or unworkable. MR. LISANKIE indicated that he wouldn't characterize any of the bill's provisions as either onerous, impractical, or unworkable. REPRESENTATIVE KOTT asked whether the division has taken a position on SB 130. MR. LISANKIE indicated that if the division has taken a position on the bill, he is unaware of what it is. [HCS CSSB 130(L&C) was set aside until later in the meeting]. SB 130 - WORKERS' COMPENSATION/ INSURANCE 3:08:42 PM CHAIR McGUIRE announced that as a final order of business the committee would return to the hearing on CS FOR SENATE BILL NO. 130(FIN) am, "An Act relating to a special deposit for workers' compensation and employers' liability insurers; relating to assigned risk pools; relating to workers' compensation insurers; stating the intent of the legislature, and setting out limitations, concerning the interpretation, construction, and implementation of workers' compensation laws; relating to the Alaska Workers' Compensation Board; assigning certain Alaska Workers' Compensation Board functions to the division of workers' compensation in the Department of Labor and Workforce Development and to that department, and authorizing the board to delegate administrative and enforcement duties to the division; providing for workers' compensation hearing officers in workers' compensation proceedings; establishing a Workers' Compensation Appeals Commission; relating to workers' compensation medical benefits and to charges for and payment of fees for the medical benefits; relating to agreements that discharge workers' compensation liability; relating to workers' compensation awards; relating to reemployment benefits and job dislocation benefits; relating to coordination of workers' compensation and certain disability benefits; relating to division of workers' compensation records; relating to release of treatment records; relating to an employer's failure to insure and keep insured or provide security; providing for appeals from compensation orders; relating to workers' compensation proceedings; providing for supreme court jurisdiction of appeals from the Workers' Compensation Appeals Commission; providing for a maximum amount for the cost-of-living adjustment for workers' compensation benefits; relating to attorney fees with respect to workers' compensation; providing for the department to enter into contracts with nonprofit organizations to provide information services and legal representation to injured employees; providing for administrative penalties for employers uninsured or without adequate security for workers' compensation; relating to fraudulent acts or false or misleading statements in workers' compensation and penalties for the acts or statements; providing for members of a limited liability company to be included as an employee for purposes of workers' compensation; establishing a workers' compensation benefits guaranty fund; making conforming amendments; providing for a study and report by the medical services review committee; establishing the Task Force on Workers' Compensation; and providing for an effective date." [Before the committee was HCS CSSB 130(L&C).] CHAIR McGUIRE, after ascertaining that no one else wished to testify, closed public testimony on SB 130. She noted that the committee will be considering whether to adopt a conceptual amendment to SB 130. REPRESENTATIVE KOTT asked Mr. Wooliver from the Alaska Court System to comment. DOUG WOOLIVER, Administrative Attorney, Administrative Staff, Office of the Administrative Director, Alaska Court System (ACS), noted that many earlier iterations of this bill and many similar pieces of legislation have contained a provision that would bypass the Alaska Superior Court and send all appeals from the agency directly to the Alaska Supreme Court, one of the rationales for such a change being that it would speed up the process. He opined however that such an action wouldn't speed up the process, particularly since most cases that are appealed stop at the superior-court level, with only about eight cases per year going on to the supreme-court level. If cases bypass the Alaska Superior Court, in essence this results in the faster court being bypassed in favor of the slower court. MR. WOOLIVER relayed that from the time one files a case until the time the court issues an opinion, the Alaska Supreme Court takes an average of 20 months. This is a lot longer than if cases are left to go through the process at the superior-court level, at which a case can be completed in as little as a year [or less]. He acknowledged, however, that bypassing the Alaska Superior Court will save time for those cases that ultimately do get appealed to the Alaska Supreme Court, but that is not what happens with most cases. Furthermore, anytime the Alaska Supreme Court's caseload is increased, the rest of the work that's before the court is necessarily slowed down. 3:12:05 PM REPRESENTATIVE GRUENBERG noted that there has been some concern with regard to whether the Alaska Superior Court has as much expertise as administrative law judges would have. MR. WOOLIVER pointed out that superior court judges are judges of general jurisdiction and so hear every kind of case. One could always have some kind of specialty court with unique experience in a particular area that could develop greater expertise than a superior court judge. However, this same argument could be applied to every single case that comes before the [Alaska Superior] court. In conclusion, he opined that since the Alaska Superior Court is capable of understanding all of the details involved in the incredibly complicated issue of an oil company's duty to develop, for example, it can certainly understand a workers' compensation appeal. 3:13:30 PM REPRESENTATIVE DAHLSTROM made a motion to adopt Conceptual Amendment 1, to "add the second injury fund and insert it in the appropriate places of the bill." CHAIR McGUIRE objected for the purpose of discussion. REPRESENTATIVE DAHLSTROM opined that Conceptual Amendment 1 will provide a needed leveling mechanism for business. REPRESENTATIVE ANDERSON indicated that he agrees with Mr. Cattanach's comments regarding the second injury fund, and therefore he objects to Conceptual Amendment 1. REPRESENTATIVE GARA said he supports Conceptual Amendment 1 and is wondering whether eliminating the second injury fund will have a lingering affect on insurance premiums for some employers. CHAIR McGUIRE said she supports Conceptual Amendment 1 and anticipates further discussion on the issue as the bill continues through the process. REPRESENTATIVE COGHILL referred to the aforementioned recognition by the Alaska Supreme Court that if there is no second injury fund, then the last employer could end up bearing great responsibility because of the existence of the last injurious exposure rule, adding that this causes him concern. He said he would be supporting Conceptual Amendment 1. 3:17:25 PM A roll call vote was taken. Representatives McGuire, Coghill, Dahlstrom, Gruenberg, and Gara voted in favor of Conceptual Amendment 1. Representatives Anderson and Kott voted against it. Therefore, Conceptual Amendment 1 was adopted by a vote of 5-2. 3:17:49 PM REPRESENTATIVE ANDERSON moved to report HCS CSSB 130(L&C), as amended, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE KOTT objected, and said that he is not prepared to move the bill from committee today because he wants to be very sure Conceptual Amendment 1 will have the desired effect. 3:19:01 PM CHAIR McGUIRE expressed a preference for moving the bill from committee today, and suggested that further concerns could be addressed as the bill continues through the process. REPRESENTATIVE ANDERSON concurred. 3:20:28 PM A roll call vote was taken. Representatives McGuire, Anderson, and Coghill voted in favor of reporting HCS CSSB 130(L&C), as amended, from committee. Representatives Kott, Dahlstrom, Gruenberg, and Gara voted against it. Therefore, the motion to report HCS CSSB 130(L&C), as amended, from committee failed by a vote of 3-4.
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