Legislature(2005 - 2006)CAPITOL 17
03/09/2005 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB171 | |
| HB180 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 171 | TELECONFERENCED | |
| *+ | HB 180 | TELECONFERENCED | |
HB 180-WORKERS' COMPENSATION CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 180, "An Act relating to a special deposit for workers' compensation and employers' liability insurers; relating to assigned risk pools; relating to workers' compensation insurers; stating the intent of the legislature, and setting out limitations, concerning the interpretation, construction, and implementation of workers' compensation laws; relating to the Alaska Workers' Compensation Board; establishing a division of workers' compensation within the Department of Labor and Workforce Development, assigning certain Alaska Workers' Compensation Board functions to the division and the department, and authorizing the board to delegate administrative and enforcement duties to the division; establishing a Workers' Compensation Appeals Commission; providing for workers' compensation hearing officers in workers' compensation proceedings; relating to workers' compensation medical benefits and to charges for and payment of fees for the medical benefits; relating to agreements that discharge workers' compensation liability; relating to workers' compensation awards; relating to reemployment benefits and job dislocation benefits; relating to coordination of workers' compensation and certain disability benefits; relating to division of workers' compensation records; relating to release of treatment records; relating to an employer's failure to insure and keep insured or provide security; providing for appeals from compensation orders; relating to workers' compensation proceedings; providing for supreme court jurisdiction of appeals from the Workers' Compensation Appeals Commission; providing for a maximum amount for the cost-of-living adjustment for workers' compensation benefits; relating to attorney fees; providing for the department to enter into contracts with nonprofit organizations to provide information services and legal representation to injured employees; providing for administrative penalties for employers uninsured or without adequate security for workers' compensation; relating to fraudulent acts or false or misleading statements in workers' compensation and penalties for the acts or statements; providing for members of a limited liability company to be included as an employee for purposes of workers' compensation; establishing a workers' compensation benefits guaranty fund; relating to the second injury fund; making conforming amendments; providing for a study and report by the medical services review committee; and providing for an effective date." GREG O'CLARAY, Commissioner, Department of Labor and Workforce Development (DOL), said HB 180 is a composite of hard work by members of the ad hoc committee on workers compensation, DOL staff, and various other constituencies in the state. He said 2003 workers' compensation costs were $23 million. Legislation last year concentrated on readjustments to the adjudicatory system. "It really only dealt with about $11 million in costs, or what turned out to be about 4.9 percent of the pie." 4:32:24 PM COMMISSIONER O'CLARAY said testimony last year asked the department why it was not examining medical costs, which is 52 percent of the problem. In 2004, medical costs will be 61 percent, he noted. He said the governor chose to depart from the ad hoc two-year plan, and present his bill now. He noted that the ad hoc committee is a volunteer citizen's committee and has worked on workers' compensation issues for many years. 4:35:17 PM COMMISSIONER O'CLARAY said it is important for the administration to have a bill this year because "we're in a situation where if we are allowed to go beyond this legislative session, that the rate increases and premiums that employers will be looking at next year, will force more small businesses to close their doors and put more workers on the street." He said the administration feels that it is near crisis. Of the 16,000 active businesses that are reported by DOL, "I would venture to say, I don't know of one that wasn't impacted adversely by workers' comp rates." 4:36:42 PM REPRESENTATIVE LYNN asked about the ad hoc committee meetings, and why Commissioner O'Claray said the committee has not met lately except for this past interim. COMMISSIONER O'CLARAY asked, "Where have they been since 1995 when this problem was continuing to loom?" REPRESENTATIVE LYNN said, "But they did meet this time, is that correct?" 4:38:07 PM COMMISSIONER O'CLARAY said they did, and "frankly, I was pleased." They put a lot of time in examining issues that need to be dealt with. They wanted to meet because they recognized the problems with workers' compensation insurance rates. They worked very hard and Commissioner O'Claray said he was pleased with the progress they made, "to a point." 4:38:52 PM COMMISSIONER O'CLARAY said, "When we received the product [from the ad hoc committee], they had apparently made a decision fairly early in the process, that they would not deal with any issues that either the labor side or the management side raised or took issue with." The main issue they decided not to deal with was medical costs. He read the last paragraph of a letter from the ad hoc committee: We would also like to point out that there are more issues involving workers' compensation that we will be addressing in the future. These include group self- insurance, medical cost containment (the medical cost portion of workers' compensation payments in Alaska have more than doubled between 1988 and 1992, from approximately $20 million to in excess of $50 million), review of presumption of compensability, and review of benefits including health insurance. These issues will take further research and a great deal of discussion with various groups, but they must be dealt with to ensure that Alaska's workers' compensation system adequately protects injured workers while maintaining an equitable program for employers. 4:41:09 PM COMMISSIONER O'CLARAY said he is pleased the committee has reconvened, but the governor was not pleased with the result - "not because they didn't work hard, but because it didn't meet his goal of trying to arrest the escalating rates." He said he informed the committee of the decision the governor made and invited members to participate in the drafting process "over the weekend." COMMISSIONER O'CLARAY said when the ad hoc committee members began discussing strategy about their own bill, they asked the DOL person to leave the room. REPRESENTATIVE LYNN said the governor drafted his bill in February and asked how long it was worked on before it was introduced. COMMISSIONER O'CLARAY said "We started working on, I believe it was Sunday morning, and we worked through the night into the next day, which was a state holiday for everyone else. I believe we had an actual bill completed, that we actually presented, first to the advocates...on Wednesday. Then we had a press conference on February 21." REPRESENTATIVE LYNN asked how many working days it took the governor to prepare his bill. COMMISSIONER O'CLARAY said, "Well, state employee working days, at seven and a half hours a day, probably six, within a two and a half day period, because we worked around the clock." REPRESENTATIVE LYNN asked how many days the ad hoc committee worked on its bill. 4:45:18 PM COMMISSIONER O'CLARAY said he doesn't know, but he does know they spent a lot of time on it. "Remember, they had given us the results of their particular fruits of their labor...and we used a major portion of that information in our bill," he added. He said he got input from consultants and state underwriters as well. 4:46:00 PM COMMISSIONER O'CLARAY gave an example of a health facility that doubled its premium rate. "Obviously their charge-out rates had to go up as well. The statute requires that employers provide that particular insurance," he added. He then gave the example of a business of less than 25 people, where premium rates went from $5,900 to $10,232. A small general contractor business in Sitka had premiums in 2002 of $146,950, and in 2004 it jumped to $314,110. 4:47:07 PM COMMISSIONER O'CLARAY then gave an example of the Kodiak Island Borough where workers' compensation rates went from $24,000 in 2002 to $95,234 in 2005. 4:47:57 PM COMMISSIONER O'CLARAY said new hires in Kodiak have been placed on a maximum of a 30-hour week to save on costs, which denies workers access to benefits. 4:48:30 PM COMMISSIONER O'CLARAY referred to a newspaper article about the closure of an Anchorage restaurant, and the owner said that she could not afford workers' compensation insurance. LINDA HALL, Director, Division of Insurance, Department of Commerce, Community, and Economic Development, said last year, when workers' compensation rates increased by 21 percent, she got angry calls from employers. Later, she received calls from employers telling her they were at the verge of having to cut health insurance because they could not afford to provide both that and workers' compensation. Now calls are coming in about employers contemplating closure of their businesses. "These are wrenching calls for me to deal with," she said. She said she wants to be able to tell people that the state is trying stop the increase in insurance rates. REPRESENTATIVE LYNN said workers' compensation needs to be controlled, and the question is how. 4:52:47 PM COMMISSIONER O'CLARAY said the governor's bill deals with the rollback of the reimbursement rates for medical costs on page 18, line 30. 4:54:19 PM COMMISSIONER O'CLARAY said he wants to explain the rationale behind the fee reimbursement rollback to the December 1999 reimbursement rate. "The medical reimbursement schedule that the Division uses to pay claims for various procedures...whether it be surgical, whether it be pharmaceutical, whether it be hospital care, is published in a rather large...book, and it details the rate of reimbursement that is paid out." He then noted comparison to other northwestern states, and he said Oregon's reimbursement rate of $1,500 for arthroscopy is half as much Alaska's 1999 rate. Oregon uses a Medicare-plus multiplier, and Alaska considered doing that but decided against it. COMMISSIONER O'CLARAY said the 2004 rate for the same procedure in Alaska is $3,800, and the 2005 rate is $4,100. "This kind of gives you some idea of the increases in Alaska's workers' compensation charges and reimbursement rates between 2000 and 2005 - a 27-percent increase," he said. 4:56:55 PM COMMISSIONER O'CLARAY said there is lack of real data. There are unchallengeable conclusions, he said, but does not want to wait another year for more data. The bill suggests rolling the reimbursement rates back and requires a study to be completed by 2007. That will provide the data to determine the proper schedule of reimbursement, he said. 4:59:21 PM COMMISSIONER O'CLARAY said he hopes for assistance from the medical community. He said he is concerned about specialty surgeons deciding on their own to deny service. REPRESENTATIVE LYNN said he shares that concern. COMMISSIONER O'CLARAY said the workers' compensation system is a sole remedy system; an injured worker must go through this particular system, and workers cannot sue their employers. REPRESENTATIVE LYNN said workers' compensation came to his rescue when he was an injured police officer. 5:03:20 PM COMMISSIONER O'CLARAY said we cannot afford to let this system break down. We need to act on reforms this year, he said. The governor's bill creates an appeals panel consisting of one professional hearing officer, one layperson representing the employee, and one person representing the employer. 5:04:43 PM COMMISSIONER O'CLARAY said the issue of predictability is important. Certain types of injuries will be awarded at a certain level, he said. 5:05:18 PM COMMISSIONER O'CLARAY said without this, one side or other will try to push the decision to their benefit. The governor's bill uses an in-house "super panel," and from there the cases go to the supreme court. The appeals panel will be empowered to make legal precedent. 5:06:24 PM COMMISSIONER O'CLARAY said access to the superior court delays settlement of cases up to a year and a half. The two things that the bill concentrates on is making the system more efficient and more reactive to injured workers' concerns about early settlement, and making the system more affordable for the employer. 5:07:59 PM REPRESENTATIVE GUTTENBERG asked the administration to create an organizational chart of the new structure. REPRESENTATIVE LYNN asked for a side-by-side comparison of the governor's bill the ad hoc bill. COMMISSIONER O'CLARAY said yes to both. 5:08:49 PM REPRESENTATIVE CRAWFORD said he has worked under the Oregon system, and it is not very good. People do the dangerous work for us, putting their lives at risk, and we need a workers' compensation system that takes care of these people, he said. REPRESENTATIVE LYNN said he agrees. 5:11:08 PM REPRESENTATIVE GUTTENBERG brought up job safety, and wondered what the state was doing. COMMISSIONER O'CLARAY said the existing rate structure does not provide an incentive to employers to have good safety programs. He said a sawmill in Ketchikan paid well over $400,000 to workers' compensation and it had less than $50,000 in claims. Some businesses have zero claims, and he suggested having incentive for a great record. REPRESENTATIVE LYNN said everyone in the room agrees that there is a serious problem with the workers' compensation situation. He quoted the bible that says, "Come let us reason together." COMMISSIONER O'CLARAY said the governor is the kind of man that likes to come out with a solution. He said this bill is not the perfect solution; it is subject to the deliberative process. The administration is able to work on it this session. [HB 180 was held over.]
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