Legislature(2005 - 2006)CAPITOL 17
04/04/2005 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB192 | |
| SB25 | |
| HB180 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 227 | TELECONFERENCED | |
| + | HB 192 | TELECONFERENCED | |
| *+ | HB 179 | TELECONFERENCED | |
| + | SB 25 | TELECONFERENCED | |
| = | HB 180 | ||
HB 180-WORKERS' COMPENSATION 4:14:37 PM 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." PAUL LISANKIE, Director, Division of Workers' Compensation, Department of Labor and Workforce Development, said Section 2 of the bill "is a change of the benefit payments from an insurers insolvency by requiring instate deposits to back the insurers' loss reserves." He said the section is designed "to have actual assets deposited instate so that if we have another untoward incident like we did with 'Freemont,' where we did have to come to the legislature last session and ask for a special fix to bail out the guarantee association, that there would, in any future insolvency, be these deposits instate that would be available and would be keyed to the next section, which is Section 3." He said Section 3 refers to the deposits, which would be releasable by the Director of the Division of Insurance to the Alaska Insurance Guarantee Association--the group that pays the benefits to injured workers whose employers insurance has "gone under." 4:16:30 PM REPRESENTATIVE LEDOUX asked to go back to Section 22 as it relates to Section 2. Section 22 sets up a different guarantee fund for uninsured employers, she noted, and she said it might make sense to put the money from the fines into the Alaska Insurance Guarantee Association. "Then you wouldn't have to set up another fund and you would avoid the question of what happens if there wasn't enough in the fund," she said. She asked the number of these instances and the amount of money. MR. LISANKIE said he doesn't have a firm number. He said he believes there were 25 injuries that involved companies that were not properly insured, but he said he didn't know the severity of the injuries and what a reasonable reserve might have been. LINDA HALL, Director, Division of Insurance, Department of Commerce, Community, & Economic Development, said the purpose of the guarantee fund is to protect claimants and policyholders from insolvency of an insurer. The cost is passed back to policyholders. There is a situation today "where workers' compensation policy holders are paying a four percent surcharge to make up for the insolvent insurers' claims, and to add a whole other burden to Alaska policy holders could create some inequities." REPRESENTATIVE ROKEBERG said if Representative LeDoux understood the guaranteed fund better, she would understand why it couldn't be combined with the other fund. It covers all property and casualty policies in the entire state, he said. "We made a significant policy change last year by using that fund to entirely finance the stop gap requirements for the insolvency of the Freemont situation," he added. MS. HALL said there were four insolvent workers' compensation insurers, and the largest was Freemont, who had about $60 million in outstanding claims reserves. She said the assessment is made annually to insurance companies to put funds into the guarantee association to ensure that claims are paid. 4:23:08 PM MS. HALL said the assessments can be passed back to policyholders. In extreme situations, "we could have a personal auto policy assessed for a workers' compensation claim, or whatever it might be." She said her concern is that it gives employers the idea that they don't need to buy coverage because their workers are going to be covered someplace else. REPRESENTATIVE ROKEBERG agreed that it would be a disincentive to insure, and "you would have socialized state insurance." REPRESENTATIVE LEDOUX thought there were criminal penalties for failing to have insurance. MR. LISANKIE said it can be a criminal offense. 4:25:21 PM REPRESENTATIVE ROKEBERG asked how the four percent assessment will work. MS. HALL said several states require additional deposits for workers' compensation. It is intended to protect against the insurers' piece of the assigned risk pool, as well, she said. She added that the bill has been through the Department of Law and she is unaware of any legal problems. 4:26:56 PM REPRESENTATIVE ROKEBERG asked Ms. Hall to explain the impact on the high-risk pool. MS. HALL said, "When the premiums collected for the assigned risk pool are less than the claims paid out, that difference is a direct assessment on insurance companies. That assessment is not given back to the policyholder, but is a direct offset to the profits of an insurance company. When Freemont, who had a large market share, became insolvent, their share of those losses was reallocated out among the insurance companies who were remaining in our marketplace. So in addition to having ... the highest assigned risk burden given back to insurers, that added even more to that burden, making our market even less attractive to insurance companies." MR. LISANKIE said Section 42 is designed to quickly resolve disputed benefits and allows a fee of up to $300 to be paid to an attorney. He noted that currently it is illegal for anyone to accept an attorney's fee for a workers' compensation matter unless the board approves the payment first. That stifled getting basic legal advice, he said. 4:30:16 PM MR. LISANKIE said Section 42 will allow in statute what is being done by many people now under the board's regulations. REPRESENTATIVE ROKEBERG asked if the source of funds is the actual claim that's paid. Is that where the $300 is coming from? he asked. 4:31:17 PM MR. LISANKIE said initially the source of funds is the pocket of the injured worker who is asking for legal advice. If the attorney takes the worker on as a client, he or she will be paid if the case is successful. 4:32:06 PM MR. LISANKIE said the statute now says no one can pay a fee unless it is approved by the board in advance, and this would cut that out, he said. MR. LISANKIE explained that Section 9 has two parts. "It allows the Department of Labor and Workforce Development to contract with a nonprofit organization in order to seek to provide information and legal assistance to injured workers who are unable to obtain private council." He said this is an attempt to address the disputed claims of people who are turned down by every attorney. He said it would give the department discretion to seek such a contract on a limited basis to see if it works. 4:35:38 PM CHAIR ANDERSON noted that Representatives Lynn, Kott, LeDoux, Rokeberg, and Anderson were present, and Representatives Crawford and Guttenberg left for a minority caucus. REPRESENTATIVE ROKEBERG asked about a fiscal note for Section 9. MR. LISANKIE said it is about $75,000 for the first partial year, and $50,000 for the fraction of the second year. The nonprofit would have to have an attorney to actually represent people, he added. It is designed to get an attorney if one is not available elsewhere. A worker can get other advice, to some degree, from the division, he said. 4:37:16 PM MR. LISANKIE said, "Section 11 would allow injured workers who are represented by attorneys who are licensed in Alaska to settle their claims without having review by the Workers' Compensation Board." The board would then continue to focus reviews on settlements of workers who are unrepresented by council, minors, incompetent, and others that need extra scrutiny to their settlements, he explained. 4:37:56 PM MR. LISANKIE said people who have licensed attorneys will "be able to just sign and resolve their disputes." 4:38:17 PM MR. LISANKIE said Section 7 allows the state to use hearing officers. Current statute requires that the commissioner is the chair of each hearing, but the volume of hearings requires the use of hearing officers, and this has been done for nearly 25 years, he said. Section 7 includes conflict of interest protections. 4:40:08 PM CHAIR ANDERSON said that labor interests feel that the hearing officer being designated by the commissioner lent a bias to the process. He asked how the panel will be comprised. MR. LISANKIE said the panels are still comprised of three people representing labor, management, and the hearing officer. The bill doesn't change that, he said. REPRESENTATIVE LEDOUX asked if there are any general regulations regarding ethics for board members. 4:41:18 PM MR. LISANKIE said yes but this would give the board the ability to set its own standards. REPRESENTATIVE LEDOUX asked if there have been problems. MR. LISANKIE said two claims, which involved ex-party contacts, ended up in the supreme court. 4:42:09 PM REPRESENTATIVE KOTT asked if the commissioner isn't part of the panel, why does the language say "commissioner". MR. LISANKIE said he didn't know but perhaps the commissioner would like to be able to join the panel in some instances. It hasn't happened in recent memory, he noted. 4:43:58 PM MR. LISANKIE said there are a number of fulltime hearing officers, and the department rarely uses contractors. 4:44:15 PM REPRESENTATIVE LEDOUX asked if the hearing officers are exempt. MR. LISANKIE said the current hearing officers are represented. 4:45:48 PM MR. LISANKIE said page 3, Section 2, proposes to cap non- resident compensation rates to the same rates as Alaska's. 4:48:46 PM MR. LISANKIE said Section 36 calls for the coordination of payments between workers' compensation benefits and disability benefits that are paid under a plan to which the employer has already contributed. The goal of this section is to make sure that the employee doesn't get more than regular take-home pay. He said he erroneously stated in another hearing that it would offset a private disability benefit, but this is tied only to the benefits that an employer contributes to, he clarified. 4:51:30 PM CHAIR ANDERSON said the committee is a third through HB 180. 4:52:08 PM REPRESENTATIVE ROKEBERG said there are modifications being made to HB 180, and he would like to see what those are. CHAIR ANDERSON asked Mr. Lisankie to keep the committee abreast. [HB 180 was held over.]
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