Legislature(2017 - 2018)GRUENBERG 120

03/10/2017 01:30 PM House JUDICIARY

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01:37:00 PM Start
01:37:34 PM HB69
03:04:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 69 REPEAL WORKERS' COMP APPEALS COMMISSION TELECONFERENCED
Heard & Held
         HB 69-REPEAL WORKERS' COMP APPEALS COMMISSION                                                                      
                                                                                                                                
1:37:34 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN announced  that the only order of  business would be                                                               
HOUSE BILL  NO. 69, "An  Act repealing the  Workers' Compensation                                                               
Appeals  Commission;  relating to  decisions  and  orders of  the                                                               
Workers'  Compensation Appeals  Commission; relating  to superior                                                               
court   jurisdiction   over    appeals   from   Alaska   Workers'                                                               
Compensation Board  decisions; repealing Rules 201.1,  401.1, and                                                               
501.1, Alaska  Rules of Appellate  Procedure, and  amending Rules                                                               
202(a), 204(a)  - (c), 210(e),  601(b), and 603(a),  Alaska Rules                                                               
of Appellate Procedure; and providing for an effective date."                                                                   
                                                                                                                                
CHAIR CLAMAN reopened the public testimony of HB 69.                                                                            
                                                                                                                                
1:38:15 PM                                                                                                                    
                                                                                                                                
ERIC CROFT, Attorney, advised that  he represents injured workers                                                               
and offered testimony as follows:                                                                                               
                                                                                                                                
     I want  to make three  points about the commission.   I                                                                    
     do now practice law  in -- representing injured workers                                                                    
     so I've appeared before the  board, and the commission,                                                                    
     and the Alaska  Supreme Court on those issues.   And so                                                                    
     I speak  from experience.  I  still occasionally dabble                                                                    
     in politics, as well.                                                                                                      
                                                                                                                                
     The three  points I'd like  to make today.   First, the                                                                    
     commission's decisions  over the  last 11 years  show a                                                                    
     distinct and  a clear bias against  injured workers and                                                                    
     in favor of insurance companies.   In my opinion, it is                                                                    
     not a fair tribunal if you don't get a fair shot.                                                                          
                                                                                                                                
     Second,  the  commission does  not  do  very much  work                                                                    
     compared to  other appeals courts, you  get very little                                                                    
     bang for your half a million bucks.                                                                                        
                                                                                                                                
     And  third,   the  commission   has  not   brought  the                                                                    
     uniformity  and clarity  to  workers' compensation  law                                                                    
     that  was promised.   In  fact, often  the commission's                                                                    
     decisions create more confusion than they resolve.                                                                         
                                                                                                                                
     On   the  key   point,  the   first  point,   that  the                                                                    
     commission's decisions  are overwhelmingly in  favor of                                                                    
     insurance  companies,  I  took  the work  that  Mr.  --                                                                    
     Commissioner  Hemenway  did,  Andy Hemenway,  where  he                                                                    
     looked  at all  the  opinions  that had  --  of the  --                                                                    
     published opinions of the commission,  there are 229 of                                                                    
     them.   One hundred made it  all the way to  the Alaska                                                                    
     Supreme  Court,   and  by  his  count,   39  reached  a                                                                    
     substantive result as opposed  to (indisc.) for want of                                                                    
     prosecution,  those  sorts  of  things.    So,  he  had                                                                    
     counted 39 of those.   I was able to find  36.  I think                                                                    
     those  other   3  are  unpublished  older   cases,  I'm                                                                    
     speculating there.   But, it basically  -- Commissioner                                                                    
     Hemenway and  I agree on  that there's a --  about that                                                                    
     number out  there.  Um,  and I understand  he testified                                                                    
     before  you  and  presented some  --  information  that                                                                    
     there was a 50 percent affirmation of reversal rate.                                                                       
                                                                                                                                
     ... So, continuing ... um, I  -- I have no reason to --                                                                    
     to doubt that,  that appears to fit what I  found.  Um,                                                                    
     but I asked a slightly  different question, that is how                                                                    
     often does  the commission rule for  or against injured                                                                    
     workers and  how often do they  get it right?   Um, out                                                                    
     of those  36 decisions,  I --  I took  out some  of the                                                                    
     decisions  that weren't  directly  on workers'  rights,                                                                    
     that  is  -- there  was  a  sheriffs  case that  I  was                                                                    
     actually involve  with about whether there  were gay --                                                                    
     whether a gay couple had  rights under the Act.  That's                                                                    
     something  the  commission  has no  jurisdiction  over.                                                                    
     And,  a Titan  case where  the employer  was fined  for                                                                    
     failing  to get  compensation insurance.   So,  ticking                                                                    
     off  those  that  aren't on  insurance  company  versus                                                                    
     employee  benefits, there's  ...  um,  31 decisions  in                                                                    
     this universe  left.   And, I've  attached, as  I said,                                                                    
     the  attachment  characterizes   them  by  whether  the                                                                    
     employee or  the insurance company  was suc --  ah, was                                                                    
     successful.   In  these cases  the commission  ruled in                                                                    
     favor  of insurance  companies over  85 percent  of the                                                                    
     time.   I think, more like  87 percent.  But,  the real                                                                    
     number is  how often  were they were  right.   That is,                                                                    
     were the insurance  companies in -- in --  in the right                                                                    
     place 87  percent of the time?   In the 13  cases where                                                                    
     the insurance  company's position were  confirmed later                                                                    
     by  the Alaska  Supreme Court,  the commission  got all                                                                    
     those right,  that is, they  are very good  at spotting                                                                    
     when the insurance company should win.                                                                                     
                                                                                                                                
1:42:38 PM                                                                                                                    
                                                                                                                                
     But,  in  the  18  cases  where  the  employee's  legal                                                                    
     position  was correct,  was later  found by  the Alaska                                                                    
     Supreme Court,  the commission still ruled  in favor of                                                                    
     the  insurance company  over 80  percent  of the  time.                                                                    
     That is,  even when the  Supreme Court later  says that                                                                    
     the  employee   position  was  correct.     It's  still                                                                    
     overwhelming  that the  commission rules  against them.                                                                    
     The board and the Supreme  Court are much more balanced                                                                    
     in terms of their results,  the commission is not.  And                                                                    
     just  to reconcile  that with  --  with Mr.  Hemenway's                                                                    
     finding that  there was about a  50 percent affirmation                                                                    
     of reversal rate,  I just suggest that when  you have a                                                                    
     commission  that so  consistently  rules  on one  side,                                                                    
     they can  be right at  50 percent  of the time  if they                                                                    
     always say --  or almost always say  basically the same                                                                    
     position.  It's  like if somebody flipped a  coin and I                                                                    
     just yelled  "heads" every time,  I would end  up being                                                                    
     right  -- being  right about  half  the time.   But,  I                                                                    
     wouldn't be exercising much discretion.                                                                                    
                                                                                                                                
MR. CROFT, in response to Chair Claman, advised he was                                                                          
testifying on his own behalf.                                                                                                   
                                                                                                                                
1:44:23 PM                                                                                                                    
                                                                                                                                
MR. CROFT continued his testimony as follows:                                                                                   
                                                                                                                                
     I'll  just summarize  the  other two  points  then.   I                                                                    
     listed that the commission doesn't  do much work.  That                                                                    
     is, in  the last  eight months,  I counted  up, they've                                                                    
     only done seven opinions, and  over the last five years                                                                    
     their average  is just over  one a month.   That's much                                                                    
     less  than the  criminal court  of appeals,  which does                                                                    
     have three attorneys as opposed  to one attorney on the                                                                    
     commission.   But, even there,  they're turning  out 14                                                                    
     to  15 opinions  a  month,  or four  to  five for  each                                                                    
     attorney who  can write those  opinions, as  opposed to                                                                    
     less  than one.    So, you're  getting  five times  the                                                                    
     production  out  of  the attorneys  who  work  for  the                                                                    
     criminal  court   of  appeals  than  you   are  from  a                                                                    
     commissioner.                                                                                                              
                                                                                                                                
     And, finally.   I listed  the fact that  the commission                                                                    
     decisions  often   create  more  confusion   than  they                                                                    
     resolve.    I listed  the  Hudak  [v. Pirate  Airworks,                                                                  
     Inc.] and  Thurston v.  Guys with  Tools, a  great case                                                                
     name  if nothing  else.    And, particularly  emphasize                                                                    
     that  the Adamson  [v. MOA]  case that  I was  involved                                                                  
     with where  the commission,  within a week,  issued two                                                                    
     contradictory  legal  standards  for stays  on  appeal.                                                                    
     And, the  Alaska Supreme Court  had to bring  them both                                                                    
     together, consolidate them, and establish the law.                                                                         
                                                                                                                                
     So  with that  I just  say  that the  commission has  a                                                                    
     decided  bias  against  injured  workers  in  favor  of                                                                    
     insurance companies.   There's not  -- they don't  do a                                                                    
     lot of work for the money  you spend, and they have not                                                                    
     provided the clarity that we had hoped.                                                                                    
                                                                                                                                
1:45:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN noted  that  he  appreciated Mr.  Croft's                                                               
research and  said that  he suspected  the research  had probably                                                               
gone back  prior to the  start of the  commission.  He  asked the                                                               
results,  as  far  as  a   weight  toward  or  against  insurance                                                               
companies  prior   to  these  types   of  cases  coming   to  the                                                               
commission.                                                                                                                     
                                                                                                                                
MR. CROFT responded that his research  did not extend to when the                                                               
superior court had  jurisdiction because he ran out  of time just                                                               
doing this.   He related that he was a  member of the legislature                                                               
when  this  commission  was  established  and  one  of  the  main                                                               
arguments was that  it would bring uniformity and  clarity.  That                                                               
argument  had not  been accomplished,  although, he  related that                                                               
there was a  manner in which to  craft a way to "get  that out of                                                               
the current court,"  he said.  To  directly answer Representative                                                               
Eastman's question, he  related that he was unsure  of bias prior                                                               
to the creation of the commission.                                                                                              
                                                                                                                                
1:47:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN  referred to Mr. Croft's  experience as an                                                               
attorney working  in this area of  law, and asked whether  he had                                                               
any  experience  that would  inform  what  he would  expect  that                                                               
number to be.                                                                                                                   
                                                                                                                                
MR. CROFT  answered that a mix  would be anticipated, and  in the                                                               
18 decisions where the Alaska  Supreme Court eventually ruled for                                                               
the employee,  it was  roughly equal that  the board  decided one                                                               
way or  the other.   Therefore, he  noted, the board  was getting                                                               
some of  those that  should have  gone the  way of  the employees                                                               
wrong, even at  the board level.  He referred  to the category of                                                               
pro  se  individuals,  unrepresented by  counsel,  who  represent                                                               
themselves because they  believe they have a case,  but they just                                                               
don't  and are  just  wrong about  their  case.   On  the pro  se                                                               
employee  side, they  have to  wait a  long time  to receive  any                                                               
relief and  if they take  a case that  is not meritorious  to the                                                               
board,  they often  will not  take it  any further.   Unless,  he                                                               
commented, it  is one of  those difficult pro se  individuals who                                                               
believe they have a case, but they don't.                                                                                       
                                                                                                                                
1:49:52 PM                                                                                                                    
                                                                                                                                
STEVE CONSTANTINO, Attorney, said he  is an attorney in Anchorage                                                               
and  was speaking  on his  own behalf.   He  advised that  he has                                                               
practiced law  in Alaska since  1981, and was later  appointed as                                                               
the  commissioner's designee  and  chaired workers'  compensation                                                               
hearings.   During the  course of  his practice,  he said  he saw                                                               
many meritorious  cases where employees couldn't  get an attorney                                                               
so he left  the board and opened a  private practice representing                                                               
injured workers.   At the time the  Workers' Compensation Appeals                                                               
Commission  was created,  he testified  before committees  at the                                                               
behest of Governor Walter Murkowski,  and opposed the creation of                                                               
the  commission  and continues  to  oppose  it  for many  of  the                                                               
reasons Mr.  Croft outlined  within his  extensive research.   He                                                               
referred to his personal practice,  and anecdotal experience, and                                                               
related  that some  of  the  problems with  the  creation of  the                                                               
commission was that it was  created to streamline the process and                                                               
the commission's decisions were binding  legal precedent.  In his                                                               
experience,  he   pointed  out,  when  the   defense  receives  a                                                               
favorable decision from  the commission and changes the  law in a                                                               
way that  favors insurance companies,  the insurer  will approach                                                               
him  with a  settlement offer  the injured  worker, who  has been                                                               
denied benefits for years, just  can't refuse.  As a consequence,                                                               
insurance  companies are  buying favorable  binding precedent  on                                                               
the  Workers'  Compensation  Board.    Subsequently,  when  those                                                               
decisions, in  another case, finally  get in front of  the Alaska                                                               
Supreme Court they are often  overruled and reversed, and the law                                                               
is  then clear.   He  pointed out  that this  system was  created                                                               
wherein  insurers have  an  incentive to  buy  the precedent  the                                                               
appeals commission creates.   For the record,  he stressed, these                                                               
are  majority decisions  between one  attorney -  a commissioner,                                                               
and two lay members; therefore,  effectively, lay individuals are                                                               
creating legal  precedent.  He  expressed that he was  unaware of                                                               
another  situation in  Alaska's  jurisprudence  where that  takes                                                               
place.                                                                                                                          
                                                                                                                                
1:53:54 PM                                                                                                                    
                                                                                                                                
MR. CONSTANTINO pointed  out that no fiscal note  was attached to                                                               
this  bill, except  to reduce  the cost  of the  commission.   He                                                               
further pointed out that at  the time the commission was created,                                                               
the  Alaska Supreme  Court expected  a flood  of appeals  and the                                                               
legislature funded a separate position  for a clerk of the Alaska                                                               
Supreme Court  to focus their attention  on workers' compensation                                                               
appeals.   He  offered  that that  flood  never appeared  because                                                               
injured workers  could not get through  the system to get  to the                                                               
Alaska Supreme  Court.  He  then remarked that his  preference is                                                               
for  the  superior court  to  hear  these  matters, and  that  he                                                               
understands the separation of powers issues.                                                                                    
                                                                                                                                
1:55:18 PM                                                                                                                    
                                                                                                                                
ANDREW  HEMENWAY,  Retired  Chair, Workers  Compensation  Appeals                                                               
Commission, said  he is  the [most recent]  retired chair  of the                                                               
Workers'  Compensation  Appeals  Commission  and  was  chair  for                                                               
approximately 18  months, and that  he was testifying on  his own                                                               
behalf.   Prior  to  being chair,  he explained  that  he was  in                                                               
private  practice,  and was  an  administrative  law judge  (ALJ)                                                               
within the Office of Administrative  Hearings.  He stated that he                                                               
would  not be  speaking to  the financial  aspect of  the appeals                                                               
commission, or to  the pros and cons in terms  of whether workers                                                               
or  insurance  companies are  more  or  less likely  to  succeed.                                                               
Frankly, he  said, in his view  that was primarily a  function of                                                               
who the chair was, and that  anyone in that position would have a                                                               
mind set  and that mind  set would carry  over into the  kinds of                                                               
decisions  issued.    He  agreed  that  many  of  the  cases  the                                                               
commissions  hears  are  from  injured  pro  se  individuals  who                                                               
believe  they have  a good  case, but  the reality  is that  they                                                               
don't, and  they bring it up  on appeal.  Which,  he pointed out,                                                               
does contribute to the high rate of reversal for the employee.                                                                  
                                                                                                                                
MR. HEMENWAY referred to precedent,  and said that he appreciates                                                               
there  is a  downside to  that, but  there is  also an  upside of                                                               
predictability.  Mr. Croft indicated  that the commission was not                                                               
(indisc.) in  that regard and,  Mr. Hemenway pointed out  that no                                                               
other   court  is   either,  as   occasionally   there  will   be                                                               
inconsistent  decisions.   The  case  Mr.  Croft mentioned  where                                                               
there were inconsistent  decisions in a short  time, he explained                                                               
that there were  two different chairs of the  commission, and one                                                               
ruling was  issued by a  pro tem chair  and the other  ruling was                                                               
issued by the  chair, and they were somewhat different.   He said                                                               
he  agreed  that  is  a   problem  because  different  commission                                                               
decisions  shouldn't  be  issued  and they  are  supposed  to  be                                                               
binding on the commission.                                                                                                      
                                                                                                                                
1:58:02 PM                                                                                                                    
                                                                                                                                
MR.  HEMENWAY   noted  two  beneficial  points   to  the  current                                                               
structure, and  referred to  the longer amount  of time  it would                                                               
take  to receive  a final  decision  from the  superior court  as                                                               
opposed to the appeals commission.   He explained that within the                                                               
rules set  up in the  superior court and the  appeals commission,                                                               
it takes about the same amount of  time in either body to get the                                                               
paperwork completed.  He pointed  out that the difference is that                                                               
the superior court calendaring depends  on priority cases and the                                                               
workers' compensation  cases will not  be a priority.   Also, the                                                               
superior court judge has six months  to render a decision and the                                                               
appeals commission has thirty days.                                                                                             
                                                                                                                                
1:58:58 PM                                                                                                                    
                                                                                                                                
MR. HEMENWAY  related that the  second benefit would be  how much                                                               
handholding  pro se  individuals would  receive from  the appeals                                                               
commission versus  the superior  court.   He offered  his opinion                                                               
that  the appeals  commission does  a much  better job  of making                                                               
sure pro se individuals understand what  they need to do in order                                                               
to complete their  appeal, and that they have the  ability to get                                                               
the necessary paperwork in.                                                                                                     
                                                                                                                                
MR. HEMENWAY  remarked that there are  two alternatives available                                                               
rather  than simply  sending it  back to  the superior  court and                                                               
changing back to  its previous structure.   The first alternative                                                               
would be  to use  the Office of  Administrative Hearings  in some                                                               
capacity  as  the  decision  body  as there  are  any  number  of                                                               
different structural  ways the Office of  Administrative Hearings                                                               
could take  it up.   He suggested  possibly moving  this position                                                               
into the Office of Administrative  Hearings, changing the way the                                                               
chair was appointed, or something similar.                                                                                      
                                                                                                                                
MR. HEMENWAY said  the second alternative would be,  in the event                                                               
the  process went  back to  the superior  court, the  legislature                                                               
could have the  superior court decisions have the  same effect as                                                               
appeals commission  decisions, and  make them  binding precedent.                                                               
He commented  that the  Alaska Court System  did indicate  it was                                                               
open to  the idea  of trying  to develop  some type  of expertise                                                               
within the  court system  by working  with the  presiding judges.                                                               
He suggested  that the legislature  could have an impact  on that                                                               
thought and  direct that the  cases be  heard in the  same venue,                                                               
which would limit the number of  judges hearing them.  He further                                                               
suggested  a letter  of intent  indicating  that the  legislature                                                               
hopes for that  type of approach or something that  would lead to                                                               
expertise  at the  superior  court level.    Lastly, he  related,                                                               
money  was put  into the  court system's  budget to  provide that                                                               
expertise in this  area, and he was unaware  whether that funding                                                               
was still available.                                                                                                            
                                                                                                                                
2:01:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked the advantages and  disadvantages of                                                               
utilizing the Office of Administrative Hearings.                                                                                
                                                                                                                                
MR. HEMENWAY  advised that the Office  of Administrative Hearings                                                               
currently  has approximately  10 administrative  law judges,  and                                                               
the  judges  are similar  to  the  court system's  trial  judges.                                                               
Administrative  law judges  provide  due process  hearings for  a                                                               
wide variety of  agencies, "they don't right now have  any -- any                                                               
role  as an  appellate body,"  where  the fact  finding had  been                                                               
accomplished  and  all it  would  do  was  appellate work.    The                                                               
advantage, from his perspective having  worked in both areas, was                                                               
that the Office of Administrative  Hearings has a good reputation                                                               
across the  board as being impartial.   He explained that  it has                                                               
many  different  types  of  hearings, and  that  office  was  not                                                               
perceived  as being  particularly favorable  to one  side or  the                                                               
other.  He suggested the  possibility of the appeals commission's                                                               
chair being appointed  by the chief administrative  law judge, of                                                               
which might  take the  potential for  political influence  out of                                                               
it,  if  that  was  a  concern.    The  advantage  would  be  the                                                               
impartiality, and  also there would  be a fiscal  savings because                                                               
there  would  be economies  of  scale.    He explained  that  the                                                               
appeals  commission was  not always  a fulltime  position because                                                               
the cases ebbed  and flowed.  In  the event it was  in the Office                                                               
of Administrative  Hearings and there  was a period of  time with                                                               
less  than fulltime  work, the  chair of  the appeals  commission                                                               
could work on other  matters, as well.  Lastly, if  it was in the                                                               
Office of Administrative  Hearings, it could roll  in the appeals                                                               
commission's fulltime  staff person  because it  probably doesn't                                                               
really require  more than  a halftime person  if a  structure was                                                               
set up with  other staff available to work on  it.  The advantage                                                               
would  be money  and impartiality.    The downside  was that  the                                                               
Office of Administrative Hearings  does not currently have anyone                                                               
with  workers'  compensation  appeals [expertise]  but  it  could                                                               
develop  expertise over  time.   Although,  he  pointed out,  the                                                               
superior court doesn't have that expertise either.                                                                              
                                                                                                                                
2:04:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked,  based  upon his  experience as  an                                                               
administrative law  judge, whether  the Office  of Administrative                                                               
Hearings would be  able to do this job  without hiring additional                                                               
administrative law judges, and staff.                                                                                           
                                                                                                                                
MR. HEMENWAY  responded that Representative LeDoux  would have to                                                               
speak with the chief administrative  law judge because it depends                                                               
upon their  case load.   He said he  would guess that  they would                                                               
need a position to do this work,  and it may not necessarily be a                                                               
fulltime staff position.                                                                                                        
                                                                                                                                
2:06:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EASTMAN  inquired as  to the  number of  years Mr.                                                               
Hemenway looked at workers' compensation issues.                                                                                
                                                                                                                                
MR.  HEMENWAY answered  that he  does not  have a  great deal  of                                                               
workers' compensation  experience, and related that  he worked in                                                               
the Alaska Supreme  Court for five years at the  beginning of his                                                               
career.   One of his responsibilities  was administrative appeals                                                               
and  working on  all of  the workers'  compensation appeals  that                                                               
came  through the  Alaska  Supreme  Court.   He  related that  in                                                               
private  practice he  worked with  several  attorneys who  worked                                                               
primarily  in  workers'  compensation  law  and  he  was  exposed                                                               
through that.   He specified that  he does not have  a real depth                                                               
of experience  in that area  and that his primary  experience was                                                               
administrative law  in general, and working  as an administrative                                                               
law judge.                                                                                                                      
                                                                                                                                
2:07:29 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN presented  a situation  wherein someone  was before                                                               
the Office  of Administrative Hearings  and they didn't  like the                                                               
result, he asked  whether they would then directly  appeal to the                                                               
Alaska  Supreme Court,  or stop  at the  superior court  and then                                                               
appeal to the Alaska Supreme Court.                                                                                             
                                                                                                                                
MR. HEMENWAY explained that the  appeals go to the superior court                                                               
from the  Office of  Administrative Hearings.   In the  event the                                                               
decision was to send these  cases to the Office of Administrative                                                               
Hearings,  he  said  he  assumed  the  committee  would  want  to                                                               
eliminate  the  superior court  and  go  straight to  the  Alaska                                                               
Supreme  Court as  they do  now.   In the  event cases  were sent                                                               
straight to  the Office of  Administrative Hearings  without some                                                               
sort of special provision to  bypass the superior court, then the                                                               
committee would  be adding  another layer  of process,  which was                                                               
probably not in anyone's best interest.                                                                                         
                                                                                                                                
2:08:35 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN  asked  how  long   he  worked  in  the  Office  of                                                               
Administrative Hearings.                                                                                                        
                                                                                                                                
MR.  HEMENWAY  responded that  he  started  when the  office  was                                                               
established in 2005, so ten years.                                                                                              
                                                                                                                                
CHAIR  CLAMAN  then asked  how  long  he [chaired]  the  workers'                                                               
compensation appeals commission.                                                                                                
                                                                                                                                
MR. HEMENWAY answered, 18 months.                                                                                               
                                                                                                                                
2:09:39 PM                                                                                                                    
                                                                                                                                
NANCY  MEADE, General  Counsel, Administrative  Staff, Office  of                                                               
the Administrative  Director, Alaska  Court System, said  she was                                                               
available for questions.                                                                                                        
                                                                                                                                
REPRESENTATIVE  EASTMAN quiered  as to  whether the  court system                                                               
could   handle  these   types   of  cases   in   the  Office   of                                                               
Administrative Hearings  (OAH) without or with  minimal increases                                                               
to staffing and resources.                                                                                                      
                                                                                                                                
MS.  MEADE  answered that  the  court  system would  not  require                                                               
additional  staff  to handle  these  cases  and, accordingly,  it                                                               
submitted a zero  fiscal note.  She said she  could not speak for                                                               
the Office of Administrative Hearings  about the fiscal impact of                                                               
handling  these   cases.     Although,  the   previous  testifier                                                               
testified  that the  Office of  Administrative Hearings  would be                                                               
able  to  handle  appeals,  and that  his  supposition  was  with                                                               
additional staff.   Her understanding, she offered,  was if these                                                               
cases went  to the Office  of Administrative Hearings  they would                                                               
not go to  the superior court and would go  to the Alaska Supreme                                                               
Court;  therefore,  the court  system  would  not have  a  fiscal                                                               
impact from that decision either.                                                                                               
                                                                                                                                
2:11:23 PM                                                                                                                    
                                                                                                                                
MARIE   MARX,  Director,   Division  of   Workers'  Compensation,                                                               
Department of Labor & Workforce  Development (DLWD), said she was                                                               
available for questions.                                                                                                        
                                                                                                                                
CHAIR CLAMAN,  in response  to Representative  Eastman's question                                                               
whether the  current chair of  the Workers'  Compensation Appeals                                                               
Board would  be testifying, pointed  out that it would  be better                                                               
to ask  the prior  chair to testify  because with  the discussion                                                               
being about taking  the current chair's job away  it was probably                                                               
not the best idea, and that he only recently became chair.                                                                      
                                                                                                                                
2:12:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN  noted  that the  discussion  was  around                                                               
whether it  would be beneficial  to move  some of these  cases to                                                               
the Office of Administrative Hearings, and asked her thoughts.                                                                  
                                                                                                                                
MS. MARX opined  that the administration's position  is that this                                                               
was  a  policy call.    She  opined  that sending  only  workers'                                                               
compensation cases  with a full  due process  evidentiary hearing                                                               
at  the administrative  level, appeal  to another  administrative                                                               
function, didn't make sense, and  no other administrative type of                                                               
proceedings do  that.   She explained  that, except  for workers'                                                               
compensation  cases,  administrative  appeals move  from  a  full                                                               
evidentiary  due process  hearing to  the superior  court to  the                                                               
Alaska Supreme Court.                                                                                                           
                                                                                                                                
2:14:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN  asked  her   thoughts  about  having  an                                                               
administrative law judge look at  the case, and from there bypass                                                               
the superior court.                                                                                                             
                                                                                                                                
CHAIR CLAMAN  pointed out  that the  committee had  not suggested                                                               
that as  the alternative, and  rather that  it was an  idea being                                                               
discussed.                                                                                                                      
                                                                                                                                
MS. MARX explained  the system set up  for administrative appeals                                                               
as follows:  a due process  hearing at the  administrative level,                                                               
appeal  to [the  superior] court,  appeal to  the Alaska  Supreme                                                               
Court.     She  opined   that  that  is   how  things   flow  for                                                               
administrative appeals  and she  did not understand  why workers'                                                               
compensation would be treated differently.                                                                                      
                                                                                                                                
MS. MARX  agreed that workers' compensation  was complicated, but                                                               
so are family legal issues,  mental health courts, and many other                                                               
complicated areas of  law, and that she could  not understand why                                                               
workers' compensation  would have  a special  rule.   She further                                                               
reiterated  her understanding  that  workers' compensation  cases                                                               
would move  from the Workers'  Compensation Board, appeal  to the                                                               
Office of  Administrative Hearings, skip the  superior court, and                                                               
appeal to  the Alaska Supreme Court,  of which would be  the only                                                               
type of administrative appeal that would do that.                                                                               
                                                                                                                                
2:16:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX said  that, theoretically, if it  was to be                                                               
treated  like  everything else,  wouldn't  it  start out  in  the                                                               
superior court and then to the Alaska Supreme Court.                                                                            
                                                                                                                                
MS. MARX  responded that that was  a policy call, and  she unsure                                                               
whether  it was  her  place to  make comments  on  behalf of  the                                                               
administration  since  it hadn't  been  raised  as an  issue  and                                                               
hadn't  been discussed.   She  related that  having the  workers'                                                               
compensation board perform full  due process evidentiary hearings                                                               
had  been in  place probably  since statehood  and changing  that                                                               
process  would probably  need  a lot  of input  from  all of  the                                                               
stakeholder groups.   She continued that it  was established that                                                               
there would be  one member of labor, one member  of industry, and                                                               
a fulltime hearing staff member that  chairs, and it works on the                                                               
board level.                                                                                                                    
                                                                                                                                
2:17:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  clarified   that  she  wasn't  suggesting                                                               
actually starting at  the superior court level, in  that Ms. Marx                                                               
had  explained why  the legislature  might  now want  to use  the                                                               
Office of Administrative Hearings.   She related that she thought                                                               
Ms.  Marx  commented that  workers'  compensation  should not  be                                                               
treated differently from  anything else.  She  clarified that she                                                               
was just  commenting that if  it wasn't treated  differently than                                                               
anything else, why not just start at the superior court level.                                                                  
                                                                                                                                
MS. MARX  clarified that she  meant, once  there had been  a full                                                               
due  process evidentiary  hearing  at  the administrative  level,                                                               
possibly  the Office  of Administrative  Hearings,  is where  she                                                               
said  the administrative  process should  be the  same for  those                                                               
agencies.   Although, she explained the  Office of Administrative                                                               
Hearings is not  the only panel that takes fact  finding full due                                                               
process hearings, and that the board does also.                                                                                 
                                                                                                                                
2:19:35 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN,  after  ascertaining  no one  wished  to  testify,                                                               
closed public testimony on HB 69.                                                                                               
                                                                                                                                
2:19:44 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN  agreed with  Representative LeDoux's  suggestion of                                                               
hearing from someone from the Office of Administrative Hearings.                                                                
                                                                                                                                
2:20:31 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:20 p.m. to 2:50 p.m.                                                                       
                                                                                                                                
2:50:10 PM                                                                                                                    
                                                                                                                                
CHAIR CLAMAN advised that the  committee had been joined by Chief                                                               
Administrative Law Judge, Kathleen Frederick.                                                                                   
                                                                                                                                
2:50:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked Ms.  Frederick,  in  the event  the                                                               
workers' compensation  appeals commission was transferred  to the                                                               
Office  of   Administrative  Hearings,  whether  this   would  be                                                               
something it would have the  ability and expertise to do, whether                                                               
that  would  be  within  the purview  of  its  jurisdiction,  and                                                               
whether she would require additional  staff and additional judges                                                               
to do this sort of thing.                                                                                                       
                                                                                                                                
2:51:23 PM                                                                                                                    
                                                                                                                                
KATHLEEN  FREDERICK, Chief  Administrative Law  Judge, Office  of                                                               
Administrative   Hearings,   explained   that   the   Office   of                                                               
Administrative  Hearings (OAH)  is  an  independent (indisc.)  to                                                               
agency called  the central  panel, with  approximately 26  in the                                                               
country.  She said she was  aware of approximately seven who work                                                               
on  workers'  compensation appeals.    While  OAH primarily  does                                                               
hearings  de novo,  it  also occasionally  does  appeals, and  in                                                               
fact, last  night it  sent out  a decision in  an appeal  from an                                                               
entity  that was  a board.   Therefore,  she related  that it  is                                                               
something OAH  could do, and in  fact it is done  in other states                                                               
as  well.     Historically,  in  2014  under  the   part  of  the                                                               
administration,  there   was  a  move  to   handle  the  workers'                                                               
compensation appeals in that manner, she offered.                                                                               
                                                                                                                                
2:52:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked what happened with that move.                                                                       
                                                                                                                                
MS.  FREDERICK advised  that the  administration changed,  and at                                                               
the  time  a white  paper  was  procured  in conjunction  with  a                                                               
retiring  chair, pre-dating  Mr.  Hemenway.   The retiring  chair                                                               
thought there would be a cost  savings to roll this into OAH when                                                               
"he was out  of there."  The administration then  changed and the                                                               
Department of Labor & Workforce  Development preferred to go in a                                                               
different direction.                                                                                                            
                                                                                                                                
2:53:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX noted that  presumably either the Office of                                                               
Administrative Hearings  or the  Department of Labor  & Workforce                                                               
Development has that white paper.                                                                                               
                                                                                                                                
MS.  FREDERICK advised  that Ms.  Marx  and she  have that  white                                                               
paper.  At  the time there was an enormous  amount of money going                                                               
to the facility of the  workers' compensation appeals commission.                                                               
At that  time, a  view of  the chair  was that  there would  be a                                                               
substantial  space savings  because  it was  occupying over  1800                                                               
feet in  the building at  6th and K,  and their lease  costs were                                                               
approximately $50,000  a year.   Also, it wouldn't need  the same                                                               
number  of staff  because  a  judge could  pick  up the  workers'                                                               
compensation appeals work  in addition to working  on other cases                                                               
if it was less than fulltime.                                                                                                   
                                                                                                                                
2:54:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LEDOUX   surmised   that  if   the   Office   of                                                               
Administrative  Hearings was  to take  over and  do this  type of                                                               
work, whether additional judges  and/or additional staffing would                                                               
be necessary.                                                                                                                   
                                                                                                                                
MS.  FREDERICK  opined  that  there  would  not  be  a  need  for                                                               
additional staffing because OAH would  have ample staff to handle                                                               
it.  She  said she needs to look further  because her information                                                               
was about three  years old, and look at  the commission's current                                                               
caseload, the  hours involved,  things of  that nature,  and then                                                               
look at the  statistics here to see whether it  could be done in-                                                               
house.    Sometimes  OAH  has   had  judges  with  some  workers'                                                               
compensation experience such as  administrative law judges Andrew                                                               
Hemenway  and Rebecca  Pauli.   Currently, she  said she  did not                                                               
believe  there   was  anyone  with   that  kind   of  background.                                                               
Although, she  pointed out that  the office handles  66 different                                                               
types of  case areas and  they all have had  to come to  speed in                                                               
various areas, and it is something they do pretty well.                                                                         
                                                                                                                                
2:55:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LEDOUX  surmised   that   her  office   wouldn't                                                               
necessarily have to hire someone  for their workers' compensation                                                               
expertise.   When comparing the  two entities, she  remarked that                                                               
it wasn't  thought there was  a judge with  workers' compensation                                                               
background  at  the  superior  court,   and  that  Ms.  Frederick                                                               
wouldn't necessarily  have to  hire someone  just because  no one                                                               
currently had background in workers' compensation.                                                                              
                                                                                                                                
MS.  FREDERICK  explained  that  in the  event  an  agency  asked                                                               
whether they  could handle a  certain type  of case, they  sent a                                                               
person  to  a training  program  to  come  up  to speed  in  that                                                               
particular area of  law.  She noted that,  currently, the statute                                                               
requires  someone to  be employed  by the  commission and  have a                                                               
fulltime job.   In the  event a  person was brought  in, trained,                                                               
and skilled  in workers' compensation,  that part of  the statute                                                               
would  require revising.   Her  understanding was  that the  case                                                               
load of workers'  compensation ebbs and flows  and it, currently,                                                               
is  not a  fulltime position.   There  are savings  for positions                                                               
worked under 29 hours per week,  such as not paying benefits, she                                                               
said.                                                                                                                           
                                                                                                                                
2:57:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX requested a copy of the white paper.                                                                      
                                                                                                                                
MS. FREDERICK said she would have  to check with (indisc.) to see                                                               
whether it  was for public  dissemination because it was  under a                                                               
prior administration and  she was unsure of the  rules.  Assuming                                                               
she can turn it over, she said she would be happy to do so.                                                                     
                                                                                                                                
MS. MARX opined that it  was an administrative policy type paper,                                                               
Ms. Frederick  forwarded it to her,  and she forwarded it  to the                                                               
commissioner.   She  said  barring  any unforeseen  circumstances                                                               
about  not  being able  to  distribute  the  white paper  to  the                                                               
public, she would be happy to provide it to the committee.                                                                      
                                                                                                                                
MS.  FREDERICK noted  that she  was  unsure whether  it could  be                                                               
distributed  because  it   was  a  thinking  paper   in  a  prior                                                               
administration, and  she wanted  the committee  to be  aware that                                                               
the facts at that time may have changed.                                                                                        
                                                                                                                                
2:59:30 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN asked  for  clarification that  in  the event  this                                                               
function for  appeals from the  workers' compensation  board were                                                               
to  be assigned  to the  Office of  Administrative Hearings,  Ms.                                                               
Frederick  wouldn't  need  to hire  any  additional  judges,  but                                                               
whether  she thought  she may  need  to hire  support staff  that                                                               
would develop expertise.                                                                                                        
                                                                                                                                
MS. FREDERICK  articulated that  she would  not need  more staff,                                                               
but  she wanted  to  take a  closer  look at  the  amount of  the                                                               
workload the  commission currently has  to make sure it  could be                                                               
absorbed without any  additional staff.  The  other function that                                                               
came up back then, was that  originally the chair was a range 27,                                                               
and they have a specialty judge category  that is a range 25.  At                                                               
the time  the talk was  to revise  the range 27  position because                                                               
that is  a director's position down  to a range 25.   She related                                                               
that numerous  issues would go  into this  pot and on  such short                                                               
notice she  had to think through  all of them and  be prepared to                                                               
answer a bit better.                                                                                                            
                                                                                                                                
3:01:29 PM                                                                                                                    
                                                                                                                                
CHAIR  CLAMAN said  the committee  would hold  the bill,  get the                                                               
white paper from the administration,  and Ms. Frederick could get                                                               
the information  she needs  to provide  answers to  the questions                                                               
the committee posed.                                                                                                            
                                                                                                                                
CHAIR  CLAMAN  asked  Ms. Frederick  whether  she  could  provide                                                               
written answers to the questions  posed to her today, rather than                                                               
at a hearing.                                                                                                                   
                                                                                                                                
3:02:26 PM                                                                                                                    
                                                                                                                                
MS. FREDERICK asked for clarification  that the question would be                                                               
whether they would need additional  staff, and whether they would                                                               
need an additional ALJ.                                                                                                         
                                                                                                                                
CHAIR CLAMAN  agreed, and  he noted that  Ms. Marx  would provide                                                               
access  to  the caseload  of  the  workers' compensation  appeals                                                               
commission over the last few years.                                                                                             
                                                                                                                                
CHAIR  CLAMAN  advised  that  the committee  would  wait  on  the                                                               
written answer from  Ms. Frederick and then schedule  the bill in                                                               
due course.   He noted that if,  as a result of that,  there is a                                                               
kind of interest in exploring more  of this alternative to try to                                                               
figure that out before the hearing and have an amendment offered                                                                
if that is the direction the committee wants to go.                                                                             
                                                                                                                                
3:03:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EASTMAN  commented  that  he  was  interested  in                                                               
reading the  white paper, and  hoped that  if it was  prepared at                                                               
the taxpayer's  expense, that the  committee could get a  copy of                                                               
it.                                                                                                                             
                                                                                                                                
[HB 69 was held over.]                                                                                                          

Document Name Date/Time Subjects
HB069 ver O 2.18.17.pdf HJUD 2/22/2017 1:30:00 PM
HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Sponsor Statement 2.16.17.pdf HJUD 2/22/2017 1:30:00 PM
HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Summary of Changes ver O 2.24.17.pdf HJUD 2/22/2017 1:30:00 PM
HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 ver A 2.16.17.pdf HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Sectional Analysis ver A 1.30.2017.pdf HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HL&C 2/6/2017 3:15:00 PM
HL&C 2/10/2017 3:15:00 PM
HB 69
HB069 Supporting Document-WCAC cases 1.30.2017.pdf HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HL&C 2/6/2017 3:15:00 PM
HL&C 2/10/2017 3:15:00 PM
HB 69
HB069 Supporting Document-Croft Attachment 3.10.17.pdf HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Supporting Document-Letter Eric Croft 3.10.17.pdf HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Opposing Document-Letter David D. Floerchinger 2.28.17.pdf HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Opposing Document-Letter Workers' Compensation Committee of Alaska 3.7.17.pdf HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM
HB 69
HB069 Fiscal Note DOLWD-WCAC 2.16.17.pdf HJUD 2/22/2017 1:30:00 PM
HJUD 3/10/2017 1:30:00 PM
HB 69
HB069 Fiscal Note JUD-ACS 2.16.17.pdf HJUD 2/27/2017 1:00:00 PM
HJUD 3/10/2017 1:30:00 PM
HJUD 3/20/2017 1:00:00 PM