Legislature(2001 - 2002)

02/02/2001 09:00 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                         February 02, 2001                                                                                    
                              9:00 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-01 # 7, SIDE A                                                                                                            
                                                                                                                                
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete Kelly convened  the meeting at approximately 9:00 a.m.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Loren Leman                                                                                                             
                                                                                                                                
Also Attending:   SENATOR GENE THERRIAULT; HEATHER  BRAKES, staff to                                                          
Senator Gene  Therriault; CATHERINE  REARDON, Director, Division  of                                                            
Occupational  Licensing,   Department  of  Community   and  Economic                                                            
Development                                                                                                                     
                                                                                                                                
Attending  via  Teleconference:    From Anchorage:    DWAYNE  ADAMS,                                                          
American  Society of Landscape  Architects  (ASLA); From  Fairbanks:                                                            
PAT KALEN                                                                                                                       
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 9-BD OF ARCHITECTS, ENGINEERS, LAND SURV. ETC                                                                                
                                                                                                                                
The Committee  heard from the sponsor,  the Department of  Community                                                            
and Economic  Development and members  of the public.  The  bill was                                                            
reported from Committee.                                                                                                        
                                                                                                                                
SB 21-FINES BY THE STATE MEDICAL BOARD                                                                                          
                                                                                                                                
The Committee heard from  the sponsor and the Department of Economic                                                            
Development.  The bill was held in Committee.                                                                                   
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 9                                                                                                               
"An  Act extending  the  termination  date  of  the State  Board  of                                                            
Registration for Architects, Engineers, and Land Surveyors."                                                                    
                                                                                                                                
                                                                                                                                
HEATHER BRAKES,  staff to Senator Gene Therriault,  stated that SB 9                                                            
proposes  the extenuation  of the  State Board  of Registration  for                                                            
Architects, Engineers and  Land Surveyors for additional 4 years out                                                            
to  June 30,2005.   She  informed  the Committee  that  there was  a                                                            
committee substitute  (CS) adopted in the Senate Labor  and Commerce                                                            
Committee.   She explained  that the CS also  extends the  temporary                                                            
board  member seat  or landscape  architect  seat, which  is a  non-                                                            
voting seat on the board  and was established by section 31, chapter                                                            
47, of SLA 1998.  She noted  that the temporary board member seat is                                                            
also  set  to  expire  on  June 30,  2001  and  SB  9  proposes  the                                                            
extenuation  of that with  the board.  She  pointed out that  in the                                                            
packet  there  are  several  letters  of  support,  as  well  as,  a                                                            
legislative audit that was released in December of 2000.                                                                        
                                                                                                                                
Mrs. Brakes  further stated  that the legislative  audit found  that                                                            
the board  was operating  in an efficient  and effective manner  and                                                            
that it  should continue  to  regulate architects,  engineers,  land                                                            
surveyors and landscape  architects.  Further, it was found that the                                                            
board  is   safeguarding  the  public   interest  by  insuring   the                                                            
competence and  integrity of those who hold themselves  out as such.                                                            
She indicated that it was  also found that the board serves a public                                                            
purpose and has  demonstrated an ability to conduct  its business in                                                            
a satisfactory  manner.  The board  continues to propose  changes to                                                            
regulations   to  improve  the  effectiveness   of  the   regulatory                                                            
oversight provided by these  professions.  She pointed out that most                                                            
importantly it states that  the existence of the board provides more                                                            
assurance that  the various professionals it oversees  are competent                                                            
and  promote  maintenance  of  the  integrity   of  the professions                                                             
involved.                                                                                                                       
                                                                                                                                
Mrs.  Brakes referred  to  the  three recommendations   made in  the                                                            
audit;   first,  bringing   the  board   into   parody  with   other                                                            
professional  boards  by  requiring  continuing  education  for  the                                                            
professionals.   She indicated that  they spoke with several  of the                                                            
professionals  that are overseen by the board and  as they all agree                                                            
that  those  requirements  are  coming  there  is  still  a  lot  of                                                            
controversy  as to what  those requirements  should  be.  She  added                                                            
that there  was no support to attach  that.  The focus is  simply to                                                            
extend  the board  at  this  point.   Second,  with regards  to  the                                                            
recommendations,  it talks about replacing the mining  engineer seat                                                            
with a  landscape architect  seat.   She noted that  again it  was a                                                            
controversial  issue  that   the professions   felt  should  not  be                                                            
attached  to the  bill.   In  fact, she  added, that  the  landscape                                                            
architects are  not recommending it either.  She noted  that it is a                                                            
fairly  new  profession  and they  are  hoping  to simply  have  the                                                            
temporary board seat extended  out for the additional four years and                                                            
at that  point if a need  is felt to make  it a permanent  seat they                                                            
might do  it at that  time.  She  continued,  saying that the  third                                                            
recommendation  spoke  to statutory  clarity  for the  licensing  of                                                            
architects and the board has dealt with that through regulation.                                                                
                                                                                                                                
Co-Chair Kelly asked about the fiscal note.                                                                                     
                                                                                                                                
CATHERINE  REARDON, Director,  Division of  Occupational  Licensing,                                                            
Department  of Community  and Economic Development,  indicated  that                                                            
the  division   provides  the  staff   support  for  the   Board  of                                                            
Architects,  Engineers and Land Surveyors.   She explained  that the                                                            
fiscal  note is a  $3,000 fiscal  note in terms  of new expenditure                                                             
authority;  however, for the purposes  of full disclosure  they also                                                            
attached an  explanation of what they  actually spent on  regulation                                                            
of the professions  for the last two fiscal years.   She pointed out                                                            
that if  they decided to  stop having the  board and regulating  the                                                            
professions  that amount  of  the money  could be  removed from  the                                                            
state  budget.   She noted  that  the reason  for  the 3,000  dollar                                                            
increase in their expenditure  authority was the fact that under the                                                            
current  law the non-voting  landscape architect  could not  receive                                                            
money from the division  for their travel to the board meetings; the                                                            
existing  law  states   that  all  costs,  with  regards   to  their                                                            
participation  in  board  meetings,  has to  be  born by  the  board                                                            
member.    She said  that  it  did  not seem  like  a  fair  system;                                                            
therefore,  in  addition  to  extending  the  non-voting   landscape                                                            
architect member  SB 9 allows that person to receive  the normal per                                                            
diem for food and travel.   She pointed out that the $3,000 would be                                                            
generated   through  license  fees;   therefore,  it  will   not  be                                                            
increasing any budget gap problems.                                                                                             
                                                                                                                                
Senator Wilken referred  to the second page of the fiscal note where                                                            
it  states  that  in  1999  they spent  $522,038.55   and  collected                                                            
$131,325.92 and  then in 2000 they proposed to spend  551,370.90 and                                                            
collect 1,095,757.18.  He requested clarification.                                                                              
                                                                                                                                
Mrs. Reardon  clarified that by law  each profession must  cover its                                                            
own costs  through the  fees generated  by those  professions.   She                                                            
noted  that  since all  of  the licenses  are  issued  for  two-year                                                            
periods there is always  a high revenue year and a low revenue year.                                                            
She explained  that the high  revenue year  is when everyone  renews                                                            
their  licenses and  the low  year is  when just  new licensees  are                                                            
coming in and  exams are being conducted;  therefore, the  fact that                                                            
there is  a high and a  low is totally appropriate.   She  indicated                                                            
that they try  to have the revenue from the two-year  license period                                                            
and the expenses  for the two-year license period  equal.  She noted                                                            
that  another reason  they may  not be  equal is  that deficits  and                                                            
surpluses from prior years roll forward.                                                                                        
                                                                                                                                
PAT KALEN testified via  teleconference from Fairbanks.  He referred                                                            
to the recommendations  for continuing education and  indicated that                                                            
the board would be taking  that issue up at the meeting in Juneau on                                                            
February 15 and 16.  He  noted that at the previous meeting they had                                                            
taken  a stand  in favor  of having  authority given  to the  board,                                                            
although  he  believes  they  will  be  discussing   the  continuing                                                            
education  requirement a bit  more.  He referred  to the budget  and                                                            
audit review  and advised the Committee  that they may want  to wait                                                            
until after the meeting in Juneau to move forward with SB 9.                                                                    
                                                                                                                                
DWAYNE  ADAMS,  American Society  of  Landscape  Architects  (ASLA),                                                            
testified  via  teleconference  from Anchorage,  indicated  that  he                                                            
could touch on  specifics with regards to the Alaska  Special Design                                                            
Council.   He  indicated  that  the ASLA,  as  well as,  the  Alaska                                                            
Special Design Council, support the bill as worded.                                                                             
                                                                                                                                
Senator Wilken wondered how many people this would cover.                                                                       
                                                                                                                                
Mrs. Reardon  explained that  there are  approximately 5,000  people                                                            
regulated by the board.                                                                                                         
                                                                                                                                
Senator Leman  informed the Committee  that the board regulates  him                                                            
and passage of  the bill would cost him money; having  said that, he                                                            
offered a motion to report from Committee, CS SB 9(L&C),                                                                        
22-LS0242/F,  with  individual  recommendations   and  the  attached                                                            
fiscal  note   from  the  Department   of  Community  and   Economic                                                            
Development.                                                                                                                    
                                                                                                                                
Senator  Green wondered  if  the considerations  brought  up by  the                                                            
board at the meeting in  February would be talked about and possibly                                                            
offered as amendments to the bill before it goes through.                                                                       
                                                                                                                                
Senator  Therriault  responded   that  with  regards  to  continuing                                                            
education the regulated  community is split on that issue.  He noted                                                            
that he had considered  putting in permissible language allowing the                                                            
board,  through  a  regulatory  process,  to  bring  that  on.    He                                                            
indicated that he heard  quite a bit of testimony that they were not                                                            
quite ready to take that  on yet; however, if the legislature wanted                                                            
to add  that it has been  dealt with through  regulations that  were                                                            
the findings  of the auditors.   He added  that with regards  to the                                                            
mining engineer seat they  have been through that battle in the past                                                            
and would  like to keep it  the way it is.   He commented  that they                                                            
have not had a real problem finding someone to fill that seat.                                                                  
                                                                                                                                
Senator Green removed her objection.                                                                                            
                                                                                                                                
Senator Therriault  noted  that the title  is worded broadly  enough                                                            
that those things can be considered anywhere along the process.                                                                 
                                                                                                                                
Senator Olson  wondered what  the consequences  are if someone  does                                                            
not keep up with their continuing education.                                                                                    
                                                                                                                                
Senator  Therriault   pointed  out   that  currently  there   is  no                                                            
requirement, but if there  were a requirement their license could be                                                            
suspended.                                                                                                                      
                                                                                                                                
Senator Olson wondered if they could be fined as well.                                                                          
                                                                                                                                
Mrs. Reardon reiterated  that there is currently no  requirement for                                                            
continuing  education.   She  said that  she would  imagine if  they                                                            
create  the requirement  for  continuing education  at  the time  of                                                            
renewal they would  be asking people to certify that  they have done                                                            
their continuing  education.  If they certified that  they had and a                                                            
random audit  indicated that they  had not told the truth  then they                                                            
would be subject to the  usual array of disciplinary action.  On the                                                            
hand, she  noted, that  if they  told the truth  and indicated  that                                                            
they did  not do  their continuing  education then  they would  most                                                            
likely delay their renewal  of their license until they came up with                                                            
the hours.   She pointed  out that  they have not  had to face  that                                                            
situation,  because members  of the  industry are  not at the  point                                                            
where they  have unanimously agreed  to have a continuing  education                                                            
requirement.                                                                                                                    
                                                                                                                                
Senator Olsen  wondered how available continuing education  programs                                                            
are and if  it would be difficult  to travel during the wintertime.                                                             
                                                                                                                                
Mrs. Reardon suspected  that some of those concerns  might be behind                                                            
members  of the industry  being  reluctant to  support a  continuing                                                            
education  requirement.    She  noted  that  since there  is  not  a                                                            
continuing  education   requirement  there  might  not  be  as  much                                                            
systematic continuing education offered.                                                                                        
                                                                                                                                
Senator Therriault  that is the type of thing, he  said, that if the                                                            
legislature  decided to  go to that  level they  could either  spell                                                            
that out  in statute or  through the regulatory  process by  getting                                                            
input by the regulated  community on what classes,  how often and if                                                            
they would have to travel out-of-state to attend.                                                                               
                                                                                                                                
Senator  Olson  urged that  when  they start  taking  away  people's                                                            
licenses it is a pretty  serious infraction on someone's livelihood.                                                            
He also noted  that when they start  implementing more requirements                                                             
they are going  to need more people  to oversee those requirements,                                                             
which will  entail more expenses.   He said that he was hesitant  to                                                            
apply the requirement  until there  was something more established.                                                             
                                                                                                                                
Co-Chair Kelly  pointed out that the objection was  removed and that                                                            
there was  still a  motion before  the Committee.   Without  further                                                            
objection CS SB 9 MOVED FROM COMMITTEE.                                                                                         
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 21                                                                                                              
"An Act  increasing the maximum  civil fine  that may be imposed  by                                                            
the State Medical Board as a disciplinary sanction."                                                                            
                                                                                                                                
                                                                                                                                
SENATOR DONALD  OLSON, sponsor of  SB 21, stated that he  introduced                                                            
SB 21  to increase  the  monetary sanction  that  the State  Medical                                                            
Board may  impose on a  licensee upon a  finding of professional  or                                                            
ethical  misconduct.   He  explained  that  the bill  increases  the                                                            
maximum penalty from the  $10,000 limit that is currently in statute                                                            
to $25,000.  He  feels that the justification for  SB 21 is twofold.                                                            
First, he  believes that  the maximum sanction  of $10,000  does not                                                            
provide a sufficient  monetary deterrent, given the  economic status                                                            
of many licensees.  Most  often the severity of the penalty is in no                                                            
manner  equivalent  to  the  damage   caused  in  extreme  cases  of                                                            
misconduct.   Furthermore,  the $10,000 limit  has not been  changed                                                            
since it was first enacted 14 years ago.                                                                                        
                                                                                                                                
Senator Olson  further explained that  a second reason for  SB 21 is                                                            
the increasing costs that  the board is experiencing in its caseload                                                            
management  of misconduct allegations.   It  is not unusual  for the                                                            
costs of a  misconduct determination  to exceed the $10,000  penalty                                                            
limit.  He  indicated that since licensure  fees wholly support  the                                                            
activities  of the  board  and fines  increased costs  of  operation                                                            
usually translate  into license fee increases.  He  pointed out that                                                            
SB 21 offers  a second way  to meet increasing  caseload costs.   It                                                            
expands the board's  cost recovery ability through  increased fines.                                                            
In  practice  then,   he  noted,  the  financial  burden   for  this                                                            
regulatory activity may  be shifted more from the general membership                                                            
to the wrongdoers themselves.                                                                                                   
                                                                                                                                
Senator  Olson further  stated that,  currently,  the board has  188                                                            
cases that are open for  potential investigation and adjudication by                                                            
the Division of Occupational  Licensing.  During calendar year 2000,                                                            
130 new cases  were opened and 133 closed.  This effort  resulted in                                                            
35  disciplinary  actions  against  medical  board  licensees.    He                                                            
pointed  out  that  in fiscal  year  2000,  the  costs  of  pursuing                                                            
misconduct charges exceeded $160,000.                                                                                           
                                                                                                                                
Co-Chair  Kelly wondered  if there  were enough  cases currently  to                                                            
cause fees for non-violating license holders to go up.                                                                          
                                                                                                                                
Senator Olson  responded that he did  not have the specific  number.                                                            
                                                                                                                                
Co-Chair  Kelly  clarified  the  question,  saying  that it  is  not                                                            
potential, but is actually happening.                                                                                           
                                                                                                                                
Senator Olson  indicated that it has happened that  the fees for the                                                            
licensure   between  1998   and  the   year   2000  have   increased                                                            
significantly.                                                                                                                  
                                                                                                                                
Senator Green said that  it sounds like a really good idea and think                                                            
they should broaden the  concept out in those areas of high dispute.                                                            
She wondered if the funds  go directly into the medical board credit                                                            
account.                                                                                                                        
                                                                                                                                
Senator  Olson agreed  that  the burden  should  be  shifted to  the                                                            
wrongdoer regardless.                                                                                                           
                                                                                                                                
CATHERINE  REARDON, Director,  Division of  Occupational  Licensing,                                                            
Department  of Community  and Economic Development,  said that  they                                                            
consider fines  received from a specific profession  in the receipts                                                            
supported  services category  and  technically part  of the  general                                                            
fund, but  they are credited  to the specific  profession that  they                                                            
come  from.     She  affirmed   that  the   amount  they  spend   on                                                            
investigation  and  discipline  of wrongdoers  greatly  exceeds  the                                                            
amount  of money  they bring  in, in fines,  in any  one-year.   She                                                            
reported that they spent  $160,000 last year just on legal bills and                                                            
expert witnesses for the  medical board.  She pointed out that there                                                            
is no  way they  took in  anywhere close  to $160,000  in fines  for                                                            
medical professionals;  therefore, she declared that  this is a real                                                            
situation.                                                                                                                      
                                                                                                                                
Senator Green wondered if it could be brought to a net zero.                                                                    
                                                                                                                                
Mrs. Reardon  answered no,  but it could  improve the situation  and                                                            
slightly improve  licensees feeling  of fairness that those  who are                                                            
found to have  done wrong would pay  more.  She also thinks,  as the                                                            
sponsor mentioned,  the fact that  the maximum fine has not  gone up                                                            
means  inflation  has also  kept  up with  salary  and  the cost  of                                                            
living.                                                                                                                         
                                                                                                                                
Senator Green  wondered if there was  any assessment of legal  costs                                                            
of the wrongdoer.                                                                                                               
                                                                                                                                
Senator Olson  clarified that the  question is whether the  licensee                                                            
who has  allegedly done  wrong would  bear some of  the cost  by the                                                            
state.    He  responded  that  it  is  his  understanding  that  the                                                            
wrongdoer would bear no cost.                                                                                                   
                                                                                                                                
Senator Green wondered if it is appealable.                                                                                     
                                                                                                                                
Mrs.  Reardon  responded  yes.    She explained   that disciplinary                                                             
actions by  the licensing  board could be  appealed directly  to the                                                            
superior court and then on to the Supreme Court.                                                                                
                                                                                                                                
Senator Green said that she did not think it was enough.                                                                        
                                                                                                                                
Co-Chair  Kelly  asked Senator  Green  if  she was  entertaining  an                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Green  indicated that  she would  not burden the  Committee,                                                            
but feels  that  it is certainly  something  to think  about in  the                                                            
future.  She pointed out  that about two weeks prior the real-estate                                                            
licensees underwent  a cataclysmic  event when they had a  series of                                                            
high cost  things and then  they are suddenly  paying three  or four                                                            
times what they had paid  the year before.  She noted that it seemed                                                            
punitive to the  non-wrongdoers.  She suggested that  there might be                                                            
something in the  bill that states that wrongdoers  do bear a bigger                                                            
share of the  burden.  She referred  to last year's legislation,  SB                                                            
34, on the board of barbers  and hairdressers regarding the addition                                                            
of the  tattooing and body  piercing occupations  and declared  that                                                            
eventually that is going  to cost the barbers and hairdressers a lot                                                            
of  money when  there  is  litigation  over the  wrongdoing  of  the                                                            
license holder.   She urged  that they really  should be looking  at                                                            
all the boards  to be sure that the  wrongdoer bears a bigger  share                                                            
of the cost.                                                                                                                    
                                                                                                                                
Co-Chair Kelly referred  to the 188 cases and wondered if those were                                                            
just general ethical complaints  or complaints that were potentially                                                            
finable up to maximum.                                                                                                          
                                                                                                                                
Mrs. Reardon responded  that all violations are potentially finable,                                                            
in that,  the statute states  that for a  violation of the  statutes                                                            
and regulations  governing the profession the fine  could be as high                                                            
as $10,000 and with this  bill, $25,000.  She noted that the way the                                                            
process  works  is  that  if  the  division's  investigation   finds                                                            
sufficient  evidence  in  violation  of the  law  then they  file  a                                                            
charging document and the  person has the right to an administrative                                                            
hearing  in front  of a hearing  officer  who is an  attorney.   She                                                            
pointed out that  the hearing officer acts as an administrative  law                                                            
judge and would  view the maximum  penalty as the worse offence  and                                                            
medium  offences go in  the middle  and smaller  ones go toward  the                                                            
bottom;  therefore, there  is some  protection  there from  everyone                                                            
being charged $25,000.                                                                                                          
                                                                                                                                
Co-Chair Kelly  expressed concern  that if they are not setting  the                                                            
fines high enough  for the most egregious offenses  there might be a                                                            
danger  that the people  who commit  the more  minor offenses  would                                                            
have higher fines to cover  the administrative costs of the program.                                                            
                                                                                                                                
Mrs.  Reardon   indicated  that  the   fines  are  intended   to  be                                                            
disciplinary  actions not  cost-recovery  actions.   She noted  that                                                            
they do  have the effect  of helping to offset  costs, but  they are                                                            
suppose to  be like a reprimand or  a suspension; something  that is                                                            
matched to the grievousness  of the offence not how much it costs to                                                            
catch  the wrongdoer.    She explained  that  there would  not be  a                                                            
process through  which the  division said,  "Hey, we've got  so much                                                            
disciplinary money to cover;  therefore, we think this person with a                                                            
minor offense should have  to pay $25,000," rather they have to come                                                            
in and argue that  a bad act merits a certain amount  of money.  She                                                            
clarified  that it  is intended  to  be a  sanction and  not a  cost                                                            
recovery.                                                                                                                       
                                                                                                                                
Mrs.  Reardon further  stated  that  she looked  at  fines from  the                                                            
medical programs  for the last couple calendar years:   in 2001 they                                                            
had four fines;  worst case was a sexual misconduct  case, which was                                                            
a $10,000 fine  suspended down to $5,000 and the smaller  fines were                                                            
for continuing  education and tended to be at about  $1,000; in 2000                                                            
there were fifteen fines  and six of them were for $5,000, which was                                                            
half of the  maximum; in 1999 there  were four fines; in  1998 there                                                            
were fourteen.   She explained that  $1,000 is sort-of the  baseline                                                            
for  offenses  such as  lying  on an  application  about  continuing                                                            
education  or something  like  that and  then $10,000  would be  for                                                            
pretty grievous offenses.                                                                                                       
                                                                                                                                
Co-Chair Kelly indicated  that Senator Green brings up a good point,                                                            
"Is this enough?"  He wondered  if there was a problem with boosting                                                            
the $25,000  amount or if  that number was  chosen for a  particular                                                            
reason.                                                                                                                         
                                                                                                                                
Senator  Olson  indicated  that a  licensee  would probably  want  a                                                            
system that is  somewhat incremental and less than  extreme, because                                                            
they are starting to deal  with some large amounts of money.  It was                                                            
his understanding  that  other states  did not have  a fine  maximum                                                            
much higher than Alaska.                                                                                                        
                                                                                                                                
Co-Chair Kelly wondered  if this was a number that the state medical                                                            
board recommended.                                                                                                              
                                                                                                                                
Mrs. Reardon responded  that the state medical board does support it                                                            
and  she suspected  that  the  state medical  board  would  probably                                                            
approve  a higher  number.   She noted  that  if they  get into  the                                                            
$100,000 range they might  be bringing in legal issues about whether                                                            
the size  of the  fine makes  them no  longer eligible  for a  civil                                                            
situation.   She was not  sure at what dollar  amount that  actually                                                            
happens, but they do have to watch for that.                                                                                    
                                                                                                                                
Senator Wilken wondered  what the state spends to process the cases.                                                            
                                                                                                                                
Mrs. Reardon  said that out  of the division's  budget, between  the                                                            
investigator's  salary, the money they pay to the  Department of Law                                                            
and  the money  they  pay to  the  expert  witnesses that  they  are                                                            
probably  talking  about  $2  million  per  year for  all  of  their                                                            
professions.  She knows  that they pay $600,000 to the Department of                                                            
Law every year.                                                                                                                 
                                                                                                                                
Senator Wilken wondered if that was just for these violations.                                                                  
                                                                                                                                
Mrs. Reardon clarified that it was for all of their professions.                                                                
                                                                                                                                
Senator Wilken  wondered if  they were to  move the $25,000  to some                                                            
other number  what would the number  be to recoup the average  costs                                                            
spent over the last five years.                                                                                                 
                                                                                                                                
Mrs.  Reardon responded  that  the  amount of  money  they spend  in                                                            
investigating  a  particular  case  that  results   in disciplinary                                                             
action-                                                                                                                         
                                                                                                                                
Senator Wilken  interjected and asked how much have  they collected,                                                            
using the $10,000 limit, back from the violator.                                                                                
                                                                                                                                
Mrs. Reardon  estimated that in a  high year they might get  $50,000                                                            
and in low year they might get $5,000.                                                                                          
                                                                                                                                
Senator  Wilken  clarified  that  they  are  collecting  $25,000  to                                                            
$30,000 per  year and asked how much  it is costing them  to process                                                            
that money.                                                                                                                     
                                                                                                                                
Mrs. Reardon responded  that they have investigated  a lot of people                                                            
that do not  end up being disciplined;  therefore, they do  not want                                                            
to  count  their  costs.   She  noted  that  the  $160,000  was  not                                                            
including investigator  time or hearing officer time.  That was just                                                            
the cost  of paying  for an attorney  and expert  witnesses,  so the                                                            
number  would actually  be substantially  higher.   She pointed  out                                                            
that a good  portion of the  $160,000 for  last year went to  a case                                                            
that has not resulted in a final action.                                                                                        
                                                                                                                                
Senator Wilken  wondered if  it would be proper  to suggest  that in                                                            
rough numbers  it costs  them a  half-million dollars  a year  to do                                                            
these  things  and  they  have  recouped,  under  a  $10,000  limit,                                                            
somewhere around $25,000;  therefore if they multiple the $10,000 by                                                            
20 they would approach, perhaps, what it would take.                                                                            
                                                                                                                                
Mrs. Reardon  said that she feels  that she should go back  and look                                                            
at her numbers,  but she  indicated that they  would have to  have a                                                            
very  large maximum  fine to  have it  pay for  itself; larger  than                                                            
people would probably be comfortable with.                                                                                      
                                                                                                                                
Co-Chair Kelly  noted that they have  the added problem of  crossing                                                            
from administrative to court actions.                                                                                           
                                                                                                                                
Mrs. Reardon responded yes.                                                                                                     
                                                                                                                                
Senator Wilken  requested that Mrs. Reardon go back  and look at her                                                            
numbers, because it is  important that they understand what is being                                                            
done.                                                                                                                           
                                                                                                                                
Co-Chair Kelly agreed.                                                                                                          
                                                                                                                                
Senator  Wilken wondered  if the  physicians are  covered under  the                                                            
Equal  Employment Opportunity  (EEO)  policies when  they are  found                                                            
guilty of a wrongdoing and are fined.                                                                                           
                                                                                                                                
Mrs. Reardon said that  she did not know.  She thinks that it varies                                                            
a lot.  She explained that  there is no state requirement that their                                                            
licensees have  any malpractice or  liability insurance;  therefore,                                                            
she believes  that a fair number do  not.  She said that  they could                                                            
only  guess by  the  amount  of money  being  spent on  the  defense                                                            
whether or not  licensee has some other source of  money.  She noted                                                            
that sometimes  it appears that they  do have some backup  and other                                                            
times it does not.                                                                                                              
                                                                                                                                
Senator Olson commented  that the main point of sponsoring SB 21 was                                                            
to provide  the flavor of what goes  on.  He indicated that  as long                                                            
as he remains a senator  they could almost guarantee that there will                                                            
be this kind of  incremental increase in some of the  fines.  As far                                                            
as  the second  question  by Senator  Wilken,  he said  that is  his                                                            
understanding  that most  physicians pay  it out  of their own  bank                                                            
accounts.   He  added that  as far  as he  knows there  is no  third                                                            
party.                                                                                                                          
                                                                                                                                
Senator  Wilken  wondered  if  it  was  just a  hand  slap,  such  a                                                            
continuing education $1,000 fine, if it would be under EEO.                                                                     
                                                                                                                                
Senator Olson responded that he did not think so.                                                                               
                                                                                                                                
Co-Chair Donley indicated  that he had the same question and thought                                                            
that some sort  of admissions and  errors insurance would  cover the                                                            
professional  mistakes  versus the  more intentional  mistakes.   He                                                            
thought it would be good  to find out.  He pointed out that any time                                                            
they are dealing with a  range of fines and set the higher fines the                                                            
question is whether  they are pulling up the lower  level fines that                                                            
are generally  set by  the board.   He indicated  that if it  is not                                                            
their intent there  is a pretty simple way of dealing  with that and                                                            
that  is by  inserting  a paragraph  of  legislative  intent,  which                                                            
states, "by raising  the fine maximum the intent of  the legislature                                                            
is to address  the most  grievous types of  situations going  on and                                                            
not necessarily  to raise the fines for people who  are doing simple                                                            
professional  mistakes  where there  is not  intent  involved."   He                                                            
added that he  thought something like that would be  well suited for                                                            
this situation  if that is the sponsor's  intent.  He believes  that                                                            
when  they  do get  the  more  serious  offenses  that it  would  be                                                            
appropriate to add language  saying, "for those people receiving the                                                            
maximum civil fine the  board could also assess them for the cost to                                                            
the state  of administrating  them for the  prosecution that  led to                                                            
that fine."                                                                                                                     
                                                                                                                                
Co-Chair  Kelly wondered  if  they do something  like  that if  they                                                            
would then  take all  the cases out  of the realm  of the board  and                                                            
everyone  would begin to  appeal to the court  system, because  they                                                            
have so much at stake.                                                                                                          
                                                                                                                                
Co-Chair Donley responded  that they are certainly not going to take                                                            
on all of the cases, for  instance, all the small cases would not be                                                            
affected  by the changes,  rather they would  be protected  by those                                                            
changes.  He  indicated that the only  cases that somebody  might be                                                            
inclined to appeal are ones with a maximum fine.                                                                                
                                                                                                                                
Co-Chair  Kelly pointed  out  that they  would probably  go  through                                                            
court system.                                                                                                                   
                                                                                                                                
Co-Chair Donley agreed.                                                                                                         
                                                                                                                                
Senator Olson said that  Senator Donley brought up a good point.  He                                                            
added that  it is his intention to  do things in a step-wise  manner                                                            
and this  is the  first  step.  He  said that  it is  his intent  to                                                            
proceed cautiously.                                                                                                             
                                                                                                                                
Co-Chair Kelly requested  that Senator Olson get together with other                                                            
members  of the  Committee,  rewrite the  bill  and come  up with  a                                                            
Committee Substitute.                                                                                                           
                                                                                                                                
Senator Green  wondered if there is a wall between  what the medical                                                            
board does and the court.                                                                                                       
                                                                                                                                
Mrs. Reardon explained  that they are unrelated, but information may                                                            
go back and forth.   For example, when the division  has the medical                                                            
board investigate  a complaint and there is a malpractice  judgement                                                            
and a case out there that has come to completion-                                                                               
                                                                                                                                
SFC - #7, SIDE B                                                                                                                
                                                                                                                                
Mrs. Reardon  continued that  they certainly  would try and  get the                                                            
evidence that has already  been considered and use it in their case.                                                            
She  noted  that  there  is  a  requirement  under  state  law  that                                                            
physicians  who make payments in malpractice  cases, either  through                                                            
settlements or being found  in the wrong, have to report that to the                                                            
medical   board.     She  explained   that  there   is  information                                                             
transferred,  but the  two  processes and  the two  punishments  are                                                            
separate.                                                                                                                       
                                                                                                                                
Senator Green  wondered if  her constituents  then go to the  Alaska                                                            
Medical Board and say,  "I want to know what happened in the life of                                                            
Doctor  'so-and-so'."   She  wondered  if there  would  be free  and                                                            
unfettered information provided to that person.                                                                                 
                                                                                                                                
Mrs. Reardon  responded  that it is  not free  and unfettered.   She                                                            
explained that the malpractice  cases that have been reported to the                                                            
division  are public information.   She added  that the accusations                                                             
that  are filed  and the  disciplinary  decisions  that the  medical                                                            
board  has  reached is  also  public  information.   She  said  that                                                            
ongoing  open  investigations  are considered  to  be confidential.                                                             
Once an investigation is  closed, either through disciplinary action                                                            
or  through  deciding  that  there is  not  sufficient  evidence  to                                                            
proceed,  then the Public  Records Act dominates  the answer  to the                                                            
question;  when someone asks  the division  for information  about a                                                            
license  holder they  go through a  process of  looking through  the                                                            
files,  categorizing  all  of  the  documents  and  talking  to  the                                                            
Department  of  Law.   She  explained that  a  person  might get  99                                                            
percent of the  information or much less, because  it depends on the                                                            
legal analysis  of the Public Records  Act.  She noted that  medical                                                            
records are an exception  to the Public Records Act, so the division                                                            
does  not  give  out records  that  they  have  obtained  during  an                                                            
investigation.  There is  a balance between the constitutional right                                                            
to  privacy  and  the  Public  Records  Act.    She  indicated  that                                                            
sometimes it depends on who is asking.                                                                                          
                                                                                                                                
Senator Green wondered Mrs. Reardon meant by that.                                                                              
                                                                                                                                
Mrs. Reardon  said that the easy example  would be medical  records,                                                            
which are  clearly excluded  by the  Public Records  Act.  She  also                                                            
noted  that if  someone  is engaged  in  litigation  with the  state                                                            
rather  than requesting  information  from the  division they  would                                                            
request information through the discovery process.                                                                              
                                                                                                                                
Senator Green wondered  what she means by litigation with the state.                                                            
                                                                                                                                
Mrs. Reardon  said that  it could  be the physician  or the  unhappy                                                            
consumer.                                                                                                                       
                                                                                                                                
Senator  Green  clarified  that if  a  person  goes to  the  various                                                            
information  agencies  about  the records  of  a physician  and  the                                                            
decisions  were decided  on or  agreed  to before  they reached  the                                                            
final stage  of a  court settlement  then none  of that information                                                             
would be  public.  If a  physician before  court settlement  none of                                                            
that information  is available.   She  said that  she finds  it very                                                            
difficult  to explain  to someone that  they do  not have access  to                                                            
                                                      th                                                                        
that  information,  because  they settled  at  the  11   hour.   She                                                            
suggested that  they need to have  free exchange and people  need to                                                            
be able  to find out about  their physician.   She said that  she is                                                            
not sure whom  they are protecting,  but it does not seem  to be the                                                            
consumer.                                                                                                                       
                                                                                                                                
Co-Chair  Kelly asked  Senator Olson  to possibly  come up with  new                                                            
language  and Mrs. Reardon  if she would  supply the Committee  with                                                            
information regarding  civil actions and court actions.   He ordered                                                            
the bill HELD in Committee.                                                                                                     
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Co-Chair  Kelly adjourned  the Senate Finance  Committee meeting  at                                                            
9:56 a.m.                                                                                                                       
                                                                                                                              

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