Legislature(2017 - 2018)GRUENBERG 120
04/13/2017 05:30 PM JUDICIARY
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HB 79-OMNIBUS WORKERS' COMPENSATION 5:58:41 PM CHAIR CLAMAN announced that the next order of business would be HOUSE BILL NO. 79, "An Act relating to workers' compensation; repealing the second injury fund upon satisfaction of claims; relating to service fees and civil penalties for the workers' safety programs and the workers' compensation program; relating to the liability of specified officers and members of specified business entities for payment of workers' compensation benefits and civil penalties; relating to civil penalties for underinsuring or failing to insure or provide security for workers' compensation liability; relating to preauthorization and timely payment for medical treatment and services provided to injured employees; relating to incorporation of reference materials in workers' compensation regulations; relating to proceedings before the Workers' Compensation Board; providing for methods of payment for workers' compensation benefits; relating to the workers' compensation benefits guaranty fund authority to claim a lien; excluding independent contractors from workers' compensation coverage; establishing the circumstances under which certain nonemployee executive corporate officers and members of limited liability companies may obtain workers' compensation coverage; relating to the duties of injured employees to report income or work; relating to misclassification of employees and deceptive leasing; defining 'employee'; relating to the Workers' Compensation Board's approval of attorney fees in a settlement agreement; and providing for an effective date." [Before the committee was CSHB 79(L&C), Version 30-GH1789\O.] CHAIR CLAMAN advised he would move Amendment 5 to the bottom of the stack of amendments, pending the committee's discussion on Amendment 8. [CHAIR CLAMAN passed the gavel to Vice Chair Fansler.] 5:59:41 PM CHAIR CLAMAN moved to adopt Amendment 6, Version 30-GH1789\O.5, Wallace, 4/4/17, which read as follows: Page 18, line 11: Delete "or knowingly fails to report a material fact" Page 18, line 23, through page 19, line 5: Delete all material. Renumber the following bill sections accordingly. Page 19, lines 11 - 15: Delete "An employee knowingly fails to report a material fact under (a) and (b) of this section if the employee does not disclose the receipt of unemployment or other disability benefits or other employment, and the employee knowingly receives compensation under this chapter to which the employee is not entitled because of the receipt of the other benefits or other employment." Page 21, line 20: Delete "sec. 38" Insert "sec. 37" Page 21, line 22: Delete "38" Insert "37" Page 21, line 24: Delete "38" Insert "37" Page 21, line 27: Delete "sec. 38" Insert "sec. 37" Page 21, line 28: Delete "38" in both places Insert "37" in both places Page 21, line 30: Delete "38" Insert "37" Page 22, line 18: Delete "Section 41" Insert "Section 40" REPRESENTATIVE LEDOUX objected for discussion. 6:00:08 PM CHAIR CLAMAN explained that Amendment 6 responds to written concerns his office received from two or three lawyers involved in Workers' Compensation matters as to "knowingly fails to report a material fact." The lawyers noted that it could actually put providers, and others, in a position of trying to determine what is, or is not, a material fact. Chair Claman noted that this particular language was a response to an Alaska Supreme Court case, Shehata v. Salvation Army, [225 P. 3d 1106 (2010)] wherein the court found ambiguity as to whether a worker had a duty to report whether they were trying to work and whether it was paid or unpaid work. Amendment 6 creates the duty to accurately disclose the work status of the worker, and it does not create undesired duties for medical providers and others, which was the prime objection of the lawyers writing to the committee, he explained. After consultation with the department, he advised that it has no objection to Amendment 6. REPRESENTATIVE LEDOUX withdrew her objection. There being no objection, Amendment 6 was adopted. 6:03:53 PM CHAIR CLAMAN moved to adopt Amendment 7, written by Chair Claman, which read as follows: Page 4, line 7, following "partnership,": Delete "or" Page 9, line 27, following "self-represented,": Insert "or" Page 9, line 28: Delete "or by a parent of" Insert "a parent if the party is" Page 11, lines 26 - 27: Delete "if an employer controverts the employee's right to compensation" Insert "of the controversion" Page 14, following line 23: Insert a new bill section to read: "* Sec. 27. AS 23.30.205(e) is amended to read: (e) An employer or the employer's carrier shall notify the commissioner of labor and workforce development of any possible claim against the second injury fund as soon as practicable, but in no event later than 100 weeks after the employer or the employer's carrier has knowledge of the injury or death or after the deadline for submitting a claim for reimbursement in (g) of this section." Renumber the following bill sections accordingly. Page 14, lines 25 - 28: Delete all material and insert: "(g) An employer or the employer's carrier must establish all requirements for reimbursement in this section, including notice of any possible claim and the payment of compensation in excess of 104 weeks, before submitting a claim for reimbursement to the second injury fund. Notwithstanding (a) and (b) of this section, a claim for reimbursement may not be submitted for an injury or death that occurs after August 31, 2017, and must be submitted before October 1, 2019. An employer that qualifies for reimbursement under this section will continue to receive reimbursement payments on claims accepted by the fund, or ordered by the board, until the fund's liabilities for the claim are extinguished." Page 21, line 20: Delete "38" Insert "39" Page 21, line 22: Delete "38" Insert "39" Page 21, line 24: Delete "38" Insert "39" Page 21, line 27: Delete "38" Insert "39" Page 21, line 28: Delete both occurrences of "38" Insert "39" in both places Page 21, line 30: Delete "38" Insert "39" Page 21, line 31: Delete "29" Insert "30" Page 22, line 1: Delete "29" Insert "30" Page 22, line 3: Delete both occurrences of "29" Insert "30" in both places Page 22, line 5: Delete "29" Insert "30" Page 22, following line 5: Insert a new subsection to read: "(d) The amendments to AS 23.30.205, added by secs. 27 and 28 of this Act, apply to notice of any possible claim and a claim for reimbursement submitted on or after the effective date of secs. 27 and 28 of this Act." Page 22, line 18: Delete "Section 41 of this Act takes" Insert "Sections 27, 28, and 42 of this Act take" Page 22, line 19: Delete all material and insert: "* Sec. 44. Section 31 of this Act takes effect September 1, 2017." Page 22, line 20: Delete "29" Insert "30" REPRESENTATIVE REINBOLD objected. CHAIR CLAMAN related that Amendment 7 was requested by the Department of Labor & Workforce Development (DLWD), and Ms. Marx would present the amendment. 6:04:26 PM MARI MARX, Director, Division of Workers' Compensation, Department of Labor & Workforce Development (DLWD), advised that the Department of Law (DOL) brought this issue to the attention of DLWD, and Kimber Rodger would explain the basis of its concern. 6:04:50 PM KIMBER RODGERS, Assistant Attorney General, Labor and State Affairs Section, Department of Law, referred to Amendment 7, page 1, lines 1-13, and explained that they are technical changes to correct language issues. The real substance involves the second injury fund within Amendment 7, page 1, lines 11-22, and page 2, lines 4-14, and she advised that the idea was that they clarify some procedures and extend deadlines for phasing out the second injury fund. The new section, Section 27, ends the requirement that employers provide notice of any possible second injury fund claims because their claims could no longer be submitted to the fund. She referred to Amendment 7, [page 2, lines 4-14], and the new subsection (g), and advised that it explains what is required to submit a claim for reimbursement to the second injury fund, such that it does not permit claims to be based on a subsequent injury or death that occurs after August 31, 2017; and requires that employers file their claims for reimbursement before October 1, 2019, and she noted that the new addition of the section required some renumbering of sections. MS. RODGERS referred to Amendment 7, page 3, lines 25-29, and explained that it adds a new subsection to the applicability section, and clarifies that the second injury fund amendments apply to notices of any possible claim and claim to reimbursement submitted after the effective date of Sections 27 and 28, with the effective date of those sections being an immediate effective date. She advised that this is provided in Amendment 7, [page 3, line 31, and page 4, lines 1-2], where an immediate effective date is necessary so that these sections will take effect before the injury or death deadline date after August 31, 2017. MS. RODGERS remarked that Amendment 7 [page 4, lines 4-6], provides for a new effective date of September 1, 2017 for renumbered Section 31. She explained that Section 31 amends AS 23.30.247(c) to remove a provision allowing employers to ask about a person's prior health or disability history in order to document that employer's knowledge of a pre-existing condition for a possible second injury fund reimbursement if the person was later injured at work, she explained. As of September 1, 2017, this provision will no longer be needed because "a subsequent injury or death had occurred at that time" will not qualify for a second injury fund reimbursement. Therefore, she noted, those questionnaires will no longer be necessary. 6:08:38 PM REPRESENTATIVE REINBOLD withdrew her objection on Amendment 7. There being no objection, Amendment 7 was adopted. [VICE CHAIR FANSLER passed the gavel back to Chair Claman.] 6:09:02 PM REPRESENTATIVE REINBOLD moved to adopt Amendment 8, Version 30- GH1789\O.10, Wallace, 4/13/17, which read as follows: Page 16, line 28: Delete "three" Insert "two" Page 16, line 29, following "person": Insert "is responsible for the satisfactory completion of services that the person has contracted to perform and is subject to liability for a failure to complete the contracted work, or" Page 17, line 1, following "location": Insert "or a business mailing address" Page 17, line 4: Following "person": Insert "provides contracted services for two or more different customers within a 12-month period or" Following "in": Insert "any kind of" Page 17, line 6: Delete ";" Insert "." Page 17, lines 7 - 13: Delete all material. REPRESENTATIVE FANSLER objected. 6:09:12 PM REPRESENTATIVE REINBOLD stressed that her name should have been printed on Amendment 8 and asked that everyone write her name on the document "because that's a big deal to me." REPRESENTATIVE REINBOLD explained that Amendment 8 revises [Sec. 28, AS 23.30.230(a)(11)(H), page 16, line 28], and adds provisions that an independent contractor "meet at least two of the three listed criteria" to satisfy the definition of an independent contractor. She explained that this amendment loosens the language to ensure that independent contractors are not held to strict eligibility standards that may be difficult to overcome depending on the business size, operation, and services offered. She advised that this amendment provides flexibility in determining what constitutes an independent contractor. It is important to foster small business opportunities including those offered by independent contractors in the time of Alaska's financial uncertainty. She related that Independent contracting opportunities keep Alaskan businesses in the business of providing services and professional services to Alaskan and non-Alaskan businesses. She described Amendment 8 as a "win-win for everybody," and urged the committee's support. She then thanked Chair Claman, committee members, the National Federation of Independent Business (NFIB), and others opposing parts of a "soon to be withdrawn" amendment, and the committee staff in working closely with her office to make this a win-win for everyone. 6:11:02 PM CHAIR CLAMAN related that the committee received letters of support from three different groups, and also support from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). REPRESENTATIVE KOPP remarked that he fully supports the amendment. 6:11:32 PM REPRESENTATIVE FANSLER withdrew his objection. There being no objection, Amendment 8 was adopted. 6:11:47 PM REPRESENTATIVE LEDOUX moved to adopt Amendment 9, Version 30- GH1789\O.9, Wallace, 4/11/17, which read as follows: Page 10, line 14: Delete "21st [14TH]" Insert "14th" Page 10, line 17: Delete "21  days" Insert "14 days or twice a month" Page 10, line 18, following "period.": Insert "If the first installment of compensation due under this subsection is not paid within 14 days or a subsequent installment due under this subsection is not paid every 14 days or twice a month, a grace period will not be allowed and an additional amount will become due under (e) of this section." REPRESENTATIVE FANSLER objected for purposes of discussion. 6:12:02 PM REPRESENTATIVE LEDOUX explained that when she introduced the now adopted Amendment 2 [on 4/5/17], it provided that if [an employer or insurer] had not paid workers' compensation benefit to a worker within 14 days, no grace period would be allowed and the late benefit would be penalized under this section. Since the adoption of Amendment 2, she remarked, a representative from the National Federation of Independent Business (NFIB) pointed out that some businesses, including the State of Alaska, pay their employees twice per month and it would be difficult to change the benefits to a 14 day period within the computer systems of people paying on a bi-monthly pay period. Amendment 9 changes it to every 14 days, or twice per month, she explained. REPRESENTATIVE REINBOLD commented that she likes the 7-day grace period aspect and she would like feedback from those being impacted. REPRESENTATIVE LEDOUX pointed out that the 7 day grace period was already eliminated [within the adoption of Amendment 2], and Amendment 9 simply moves the time period from every 14 days to twice per month. She reiterated to Representative Reinbold that the discussion was not about the previously deleted 7 day grace period. REPRESENTATIVE REINBOLD argued that the amendment went from 14 days to 21 days. 6:14:01 PM CHAIR CLAMAN disagreed and advised that the amendment changes the 21 days to 14 days, [or twice per month]. REPRESENTATIVE REINBOLD after re-reading the amendment agreed that Chair Claman and Representative LeDoux were correct. She commented that she did not know whether anyone would like to testify, but she would not fight it because Representative LeDoux had the votes. REPRESENTATIVE EASTMAN commented that he likes the idea of Amendment 9, and suggested that under its current construction, an employer could probably do what was unintended by this amendment due to the word "or," and pay the money twice on day 30 and would be in compliance. REPRESENTATIVE LEDOUX answered that she supposed it could be read in that manner, although, that certainly wasn't the purpose of the amendment, but Representative Eastman may have a point. CHAIR CLAMAN referred to Representative Eastman's suggestion and said that because the employer was not paying for past time and was paying for the time going forward, that if the employee received a full month at one time the employee probably would have no objection. Although, he commented, the odds that an employer would actually choose to pay in one lump sum is pretty unlikely. 6:17:23 PM MS. MARX answered that the language is "very broad" and is open to multiple interpretations, and the division would probably have difficulties in calculating penalties. Whereas, the division could easily calculate when penalties may be due with a set date, and every employer having the same due date. The language "twice per month," she related, could be read to be two days in one month period, a 30 day or a 31 day period. 6:18:11 PM REPRESENTATIVE LEDOUX, noting that the division knows where the committee wants to go with this language and is aware of the problem, asked the language the division would suggest. MS. MARX related that originally the compensation was paid within 14 days with a grace period of 7 days, meaning an employer actually had 21 days in which to pay. She opined, that the administration changed it, and the feeling is to back to the way it was before, "but changing it here." She explained. "So here, I think the intent is to pay 14 days, and 'this right here' adding twice per month, I'm not sure that that would meet that intent to pay that 14 days." CHAIR CLAMAN pointed out that it is not an attempt to make it 14 days, it's an attempt to recognize that many employers pay twice per month. He commented that while technically a possibility, in the real world no employer would pay the entire payment for one month on the last two days of the month. MS. MARX related that in her experience as a hearing officer, 9 out of 10 employers would follow the intent, and 1 out of 10 would construe the language against the intent, and it would happen often enough that it would be a concern. She remarked that in a perfect world, the fraud unit would not be in existence. 6:20:49 PM COMMISSIONER HEIDI DRYGAS, Department of Labor & Workforce Development, clarified that there are different systems when paying workers' compensation benefits. Typically, it is not the employer paying the benefits - it's the insurer, and to have an insurer pay every 14 days or every 21 days is a reasonable part of its responsibilities. She commented that there are some self-insured employers in this state. The workers' compensation benefits system versus regular wages and benefits paid to working employees are completely different and, she opined, the attempt to try to fit it into an employer's version of how employees are paid may not be necessary. 6:21:41 PM REPRESENTATIVE LEDOUX asked Mr. DeWitt's perspective on the amendment. 6:22:05 PM DANNY DeWITT, State Director, National Federation of Independent Business (NFIB), related that he is not an expert in workers' compensation and advised that 14 days plus 14 days equals 28 days and most months have 31 days which causes math difficulties. He related that he does not have a solution but offered concern that without the grace period, it could create a significant problem for folks paying on the 1st and 15th of the month. 6:23:10 PM REPRESENTATIVE LEDOUX remarked that as Commissioner Drygas pointed out, everyone is covered through workers' compensation insurance, or through those who might be self-insured. She commented that she did not know whether anyone was available from the workers' compensation carriers to testify, but it wouldn't appear to actually impact Mr. DeWitt's clients, and it might impact the workers' compensation insurance carrier. MR. DeWITT explained that everything an insurance company has to do is charged in premiums which directly affects his clients. He offered concern that if a payment was made on the 14th, the next payment would be on the 28th, which means three days into the next month which puts everyone on a 54 year payment cycle, rather than a 52 year cycle. CHAIR CLAMAN commented that Mr. DeWitt may be getting his math wrong but he wasn't going to quarrel with the math. MR. DeWITT advised that he appreciates Representative LeDoux's intent, but it begs the question of whether the math works, which is why a grace period is necessary. 6:25:19 PM CHAIR CLAMAN clarified that the issue Commissioner Drygas raised was that it gets referred to the workers' compensation carrier. The workers' compensation carrier is accustomed to the 14 days rule, might prefer the 14 days rule, and might prefer not to get confused by the twice per month rule, he said. REPRESENTATIVE LEDOUX commented that at this point she was not particularly interested in Amendment 9. REPRESENTATIVE EASTMAN noted that if 14 days poses a math problem, whether 16 days or 17 days would solve the problem. MR. DeWITT stated that he was hesitant to respond and underlined that "I really don't know enough of the technical issues," but if forced to respond, would think that 16 days would work because it would cover one month. REPRESENTATIVE REINBOLD reiterated that a grace period is important and then read to the committee [Amendment 9, page 1, lines 10-13]. 6:27:28 PM REPRESENTATIVE LEDOUX, in reference to Mr. DeWitt's comments and the 16 days, commented that she was unsure it was mathematically better. In response to Representative Reinbold's comments, she pointed out there is not a grace period when paying someone's salary and she could not see why there should be a grace period with workers' compensation benefits. Representative LeDoux then remarked that if she had her druthers, she would like to withdraw the amendment and as the bill progresses, that an insurance carrier advise as to whether adopting this amendment would become a data nightmare and how to solve the data nightmare. 6:29:05 PM REPRESENTATIVE LEDOUX withdrew Amendment 9. 6:29:14 PM CHAIR CLAMAN asked Representative Reinbold, in light of the committee action on Amendment 8, whether she preferred to not offer Amendment 5. REPRESENTATIVE REINBOLD related her appreciation with the AFL- CIO, NFIB, Chair Claman's office, and the passage of Amendment 8, and opined that the parties came to a "great compromise," and said she would not to make a motion to adopt Amendment 5. 6:29:52 PM REPRESENTATIVE LEDOUX noted that the department did not weigh in on Amendment 8, and asked whether the department accepted the committee's action. CHAIR CLAMAN advised that Commissioner Drygas gave him a "thumbs up" to indicate that the department was good with Amendment 8. REPRESENTATIVE LEDOUX stated that she was both impressed and amazed that this was accomplished and thanked everyone who worked on this bill to come up with a "win-win for everybody." REPRESENTATIVE KOPP commented that this is a "great example" of the public and private sector working together toward the common goal of taking care of employees. 6:30:56 PM REPRESENTATIVE FANSLER moved to report CSHB 79, Version 30- GH1789\O, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 79(JUD) passed out of the House Judiciary Standing Committee.