Legislature(2005 - 2006)BUTROVICH 205
04/05/2005 08:30 AM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB137 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 130 | TELECONFERENCED | |
| + | SB 137 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 130-WORKERS' COMPENSATION
8:49:15 AM
MR. PAUL LISANKI, director, Division of Worker's Compensation,
Department of Labor and Workforce Development (DOLWD), presented
a summary of the committee substitute (CS). The reforms
contained in SB 130 are aimed at lessening the threat to jobs
and workers benefits that are being caused by insurance premiums
increasing at intolerable rates. The reforms address five major
areas.
8:50:51 AM
Protecting Workers' Benefits and Jobs:
Section 21 would empower the division director to shut down an
employer upon completion of an investigation that confirms the
employer does not have the required worker's compensation
liability insurance. Section 21 would also empower the Board to
fine employers up to $1,000 per employee per day. The intent is
to take away the opportunity for employers to operate without
the required insurance.
8:52:44 AM
A brief inadvertent problem would be viewed as a lesser
infraction than an employer with repeated infractions.
CHAIR SEEKINS queried whether cancellation without notification
from an insurer would be vigorously pursued.
MR. LISANKI confirmed. Section 22 would establish a benefits
guarantee fund to receive the fines. The fund would use the
fines to pay benefits to the injured workers whose employers
were uninsured at the time of injury.
8:54:48 AM
Section 2 and Section 3 address the insurance provisions.
Section 2 would protect the benefits payments from an insurer's
insolvency by requiring in-state deposits to back the insurer's
loss reserves. Section 3 would release the deposits to the
Alaska Insurance Guaranty Association.
CHAIR SEEKINS asked Mr. Lisanki whether this would reduce the
number of insurers offering worker's compensation coverage.
MR. LISANKI answered he did not know. He would defer the
question to the Division of Insurance.
8:56:51 AM
Quicker and More Efficient Resolution of Disputed Benefits
Claims:
Section 41 would legalize a private attorneys' receipt of a
one-time consultation fee up to $300 to advise injured workers
on benefits matters. The Worker's Compensation Act makes it a
crime to receive an attorney's fee without a Board approval in
advance.
SENATOR GENE THERRIAULT asked whether this was for the payment
out of pocket.
MR. LISANKI said yes. If the attorney takes the case s/he will
attempt to seek reimbursement from the insurance company as a
litigation cost.
9:01:15 AM
Section 9 would allow the DOLWD to contract with non-profit
organizations to provide information and legal assistance to
inured workers unable to obtain private council. This would
permit the Workers' Compensation Board to delegate authority to
the division director. It allows the DOLWD to contract with a
non-profit organization to represent those who cannot obtain an
attorney.
CHAIR SEEKINS asked whether Alaska Legal Services Corporation
would be an example.
MR. LISANKI said he was not sure it would be asset based. This
would be to address the issue that there are a limited number of
private attorneys who are willing to provide the service.
9:05:15 AM
Section 10 would allow injured workers represented by Alaska
licensed attorneys to settle their claims without review by the
Worker's Compensation Board. It would allow the Board more time
to focus on people who are minors, incompetent, or not
represented by counsel and would speed the system up.
Section 7 requires the use of hearing officers and adoption of
conflict of interest regulations. A panel hears the dispute. For
over 20 years, the DOLWD and the Division of Worker's
Compensation have used hearing officers on the panel. This would
propose to legalize what is already happening.
9:07:54 AM
Fair Benefits at Reasonable Employer Cost:
Section 30 would cap non-resident compensation rates. Currently
non-resident injured workers who live in a higher cost of living
climate receive the higher compensation. Section 34 would
coordinate payments of the workers' compensation benefits, and
disability benefits under a plan to which an employer also
contributed. This would ensure the combined payments do not
exceed the injured worker's take home pay.
9:10:47 AM
SENATOR GRETCHEN GUESS asked how Section 34 is done currently.
MR. LISANKI answered it currently isn't done. The DOLWD has to
figure out the proper worker's compensation benefits. Section 34
would give the employer the opportunity to reveal other payments
that are paid to the worker.
CHAIR SEEKINS asked for an example.
MR. LISANKI preferred not to give an example. Section 34 would
not be aimed at a policy bought by an individual worker. A
private policy establishes what a person would get in the event
they receive worker's compensation benefits. Also they do not
pay more than 70 percent of the take home pay. Certain employers
are paying into other funds; PERS for example, and the worker
can get an occupational disability benefit. There is no offset
at this time.
9:13:29 AM
SENATOR THERRIAULT said under the PERS system a person can
select disability coverage, but the employee covers the cost.
MR. LISANKI said this addresses the employer-defined
occupational disability policy.
SENATOR GUESS asked the definition of "spendable weekly wage."
MR. LISANKI answered it was the net after withholding taxes. The
intent is to pay a fair and reasonable amount but less than what
they would receive if they were working.
9:16:00 AM
Section 38 and Section 39 are both designed to strengthen anti-
fraud provisions. There have been complaints that people are not
being prosecuted effectively. Section 40 also follows in the
anti-fraud provisions. It would adopt the Ad Hoc Committee
recommendations authorizing courts to award punitive damages,
compensatory damages, and attorney's fees for violations of
fraud provisions.
9:18:21 AM
SENATOR GUESS asked Mr. Lisanki to speak about the problem of
fraud.
MR. LISANKI responded the Workers Compensation Division does not
have the authority to investigate fraud. The Division of
Insurance performs fraud investigation.
9:20:07 AM
SENATOR GUESS referred to Page 24, line 8, and asked Mr. Lisanki
to comment on how the DOLWD decides whether to investigate
fraud.
MR. LISANKI said they would have to install regulations. A
discretionary call would have to be made regarding which cases
they would pursue depending on resources.
CHAIR SEEKINS commented among the business community worker's
compensation fraud is common. It is a two-fold problem.
Insurance companies do not aggressively pursue claims of fraud
they just increase rates. There aren't enough teeth in the
statutes to effectively prosecute people.
9:22:54 AM
MR. LISANKI said there should not be anybody getting away with
fraud.
9:24:39 AM
SENATOR GUESS commented fraud investigation should not be
limited to one type of business.
MR. LISANKI continued Section 36 clears up a gray area. Limited
Liability Company members need not have workers' compensation
coverage but would allow the Company to add them to its
insurance policy if desired.
9:26:25 AM
Section 26 would speed processing of medical bills by requiring
the injury report to include release of medical records for
treatment of injury. It would require the division to re-work
medical reports. Attorneys who represent both sides of the
dispute recommended this.
Section 27 would maintain confidentiality of worker's medical
and rehabilitation records held by the Board.
Section 28 is a new provision, which would ban the Division of
Worker's Compensation from assembling or providing individual
records for commercial purposes. The Division of Worker's
Compensation is asking people to file online so as to speed up
the process. However, they are getting requests from other
people to provide information that may be used for other
purposes. People have legitimate privacy concerns.
9:30:37 AM
Improving Return-to-Work Benefits While Reducing Costs:
Section 33 would provide for a phase-out of the limited, archaic
Second Injury Fund.
CHAIR SEEKINS asked Mr. Lisanki to describe the function of the
Second Injury Fund.
MR. LISANKI explained the Second Injury Fund was developed when
it was common and legal to discriminate against people. They are
mostly claims with people who are permanently disabled. If an
employer hires a person under one of the listed limitations and
the person receives another injury, after paying two years, the
Second Injury Fund kicks in. Currently there are about 130
claims.
9:34:11 AM
MR. LISANKI continued it is based on six percent of all the
dollars paid for time lost benefits. It ends up being about $4
million a year to keep the system going. The hope is by phasing
it out, they would continue paying the claims off but not have
any new ones. Gradually the balance of the fund will grow so the
savings will be passed to employers.
9:35:55 AM
SENATOR GUESS inquired the result for the employer when the
Second Injury Fund gets phased out.
MR. LISANKI answered the insurance company would continue to
have full liability.
9:37:17 AM
Section 13 is an improvement that came from the Senate Labor &
Commerce Standing Committee (L&C). It would require improved
reporting of reemployment benefits, including plan status and
tracking of injured workers' employment status at intervals
following retraining plan completion, in order to provide more
accurate and detailed information about the functioning and
effectiveness of the reemployment benefits system. The data
would be better and it would be easier to assess the
effectiveness of the system.
SENATOR GUESS referred to Page 8, line 22 and wondered why the
L&C committee singled out "successfully completed reemployment
plan." She commented it is sometimes just as interesting to look
at the unsuccessful plans.
MR. LISANKI said he felt there was enough breadth in the
previous sections and the Division of Worker's Compensation
would look at the entire picture.
9:39:47 AM
Section 14 would attempt to reduce delays in determining
reemployment benefits eligibility, and resulting costs, by
allowing workers and employers to stipulate to eligibility. This
would allow workers and employers to agree to disagree and move
forward.
9:41:29 AM
CHAIR SEEKINS commented he is not familiar with any other
dispute that says you can't stipulate.
MR. LISANKI agreed. He said there is certain stipulations that
the Board requires that it see and accept.
CHAIR SEEKINS expressed concern that employees would be forced
into stipulation.
MR. LISANKI responded he does not see that as a legitimate
concern.
9:43:59 AM
MR. LISANKI pointed out the reemployment benefits are entirely
voluntary at the option of the injured worker.
Senator French joined the committee at 9:44:43 AM.
CHAIR SEEKINS recalled there were rehabilitation specialists
that opposed the stipulation.
9:46:02 AM
Section 16 is designated to encourage utilization of
reemployment benefits, and reduce costs, by requiring the worker
to either choose to begin the current retraining process within
15 day of eligibility determination or choose to accept cash job
dislocation benefits.
9:47:46 AM
MR. LISANKI mentioned a possible amendment to Section 17, which
would keep the sequence of SB 130 the same. The amendment would
change the word "plan" in several places and replace it with the
words "reemployment process." This is designed to ratify what is
already being done.
9:52:58 AM
Since 1988 the worker's compensation system in Alaska has
switched from one that paid permanent partial disability
benefits to one that pays permanent partial impairment benefits.
CHAIR SEEKINS advised Mr. Lisanki the proposed amendment would
be considered later on in the bill hearing.
CHAIR SEEKINS announced a brief recess at 9:58:21 AM.
CHAIR SEEKINS reconvened the meeting at 10:07:39 AM.
Maintaining Medical Benefits While Reducing Costs:
Section 25 would reduce health care costs incrementally by
resetting the current maximum reimbursement rates for health
care services at the maximum level applied to bills for services
rendered in 2004.
10:09:43 AM
Section 23 would maintain maximum reimbursement rates until
completion of an appointed medical review committee's
comprehensive examination of the workers' compensation health
care delivery system.
10:10:29 AM
SENATOR GUESS clarified Section 23 in combination with Section
51 gives the comprehensive package.
CHAIR SEEKINS referred to line 6 and asked the reason for out of
state assistance.
MR. LISANKI answered that language has been in statute since
1988. Often consultants do not have an office in Alaska.
CHAIR SEEKINS expressed a preference to spend state money in
state.
10:13:01 AM
SENATOR GUESS suggested since the intent is to look at the
entire delivery system, the DOLWF may want to add the word
"delivery" to Section 51, line 12.
MR. LISANKI agreed that was a reasonable consideration.
SENATOR THERRIAULT referred to Section 25 and wondered whether
an employee has any sense of the cost of the medical care
received, and whether other states impose limits on the amount
of medical care offered to the employee.
MR. LISANKI said a variety of states have tried to put treatment
guidelines into place. Implementation varies. It is a topic of
worker's compensation reform.
10:16:19 AM
SENATOR GUESS asked the consequences if an employee doesn't
choose a physician on the preferred physician list.
MR. LISANKI responded there were no consequences.
10:17:17 AM
Section 24 seeks to promote injured workers' safe and efficient
return to health and function.
10:19:15 AM
SENATOR HOLLIS FRENCH asked whether a rebutted presumption was
challengeable.
MR. LISANKI responded there was no specific language to address
that. He would expect everything is challengeable.
10:20:30 AM
Section 24 would require the Board to adopt similar guidelines
for injuries not covered by ACOEM guidelines.
10:22:49 AM
MR. LISANKI continued some guidelines would be continually
updated. Section 24 would also take advantage of generic drug
cost savings and adopt a preferred drug list.
10:24:20 AM
Section 25 would allow employers to develop a preferred
providers list and negotiate fee rates.
CHAIR SEEKINS advised committee members of his intent to take
testimony from people who are working to improve SB 130.
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