Legislature(2005 - 2006)BELTZ 211
03/10/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 15 | TELECONFERENCED | |
| += | HB 90 | TELECONFERENCED | |
| += | SB 130 | TELECONFERENCED | |
SB 130-WORKERS' COMPENSATION
CHAIR CON BUNDE announced SB 130 to be up for consideration.
The following is a verbatim transcript of testimony on SB 130.
PAUL LISANKIE, Director of the Division of Workers'
Compensation, Department of Labor and Workforce Development
(DOLWD): I have been asked to continue our presentation of our
bill to the committee and pick up where Commissioner O' Cleary
left of in his overview the other day.
CHAIR BUNDE: That would be fine.
MR. LISANKIE: What I would like to do Mr. Chairman is to work
through some of the major sections of the bill not necessarily
in numerical order but in substantive order and I can cross
reference them to sectional cites so that you can read along if
you wish. I know that here have been some questions about some
of the sections that we have discussed in the first hearing.
CHAIR BUNDE yes, do the referencing, please, and we can follow.
MR. LISANKIE: There are a number of major areas that are
addressed by this bill and the motivations are as explained to
you by Commissioner O'Claray. The first section that I would
like to address to the committee is one that that I have put
under the heading "Protecting Workers and their Jobs from
Uninsured Employers." Now this is a subject that will sound
familiar to members of the committee because we did discuss it
somewhat last session, we continued to be concerned by employers
who do not follow the letter of the law and continue to operate
not withstanding their failure to insure their liabilities for
workers' compensation benefits. Of course, we worry about that
because it jeopardizes the economic and physical health of the
injured worker and it jeopardizes the economic health of the
law-abiding employers who are trying to do business with
substantially increasing overhead costs and who are undercut by
people who are breaking the law who hurt them directly as well.
1:41:16 PM
MR. LISANKIE: In section 21 of this bill, there is a proposal to
allow the division director to immediately shut down an employer
upon completion of an investigation confirming that there is a
lack of the required insurance. This is something that we think
is important because, you might have heard me testify last
section, one of the problems that we run up against is that it
is difficult to detect uninsured employers to begin with, its
takes allot of effort. All too often when our investigator
finds one, before the current law, all we can really do is bring
them before the workers compensation board for a hearing to
attempt to shut them down with a stop work order. And while that
usually works fine, if they continue to abuse their right to
work under the law, what also happens is they run out and get
insurance as they get caught - sometimes up to and including
almost the day of the hearing. So, then we don't have any tool
in our arsenal to assert against them and they may have been
operating risking their employers and unfairly competing for a
significant period of time, although we do try and have the
hearings as soon as we possibly can.
So, this first provision would require us to get an investigator
on sight and complete an investigation. If they are convinced
that there is reason to believe that there is no insurance, then
they will be able to call me and we can have a very quick
telephonic hearing and, if I conclude that their investigation
is correct, we will close them down, that it.
CHAIR BUNDE: Let me ask about that investigation, you said 'on
site.' Wouldn't it be pretty straight-forward to electronically
check? We only have two insurance companies - to see that they
are indeed covered.
1:44:05 PM
MR. LISANKIE: Mr. Chairman, its relatively straight forward but
even with the electronic system that we recently installed,
there are gaps, for legitimate reasons when coverage is bound
and when it actually shows up in our system. So, we certainly
try to do that first. And there is in the law a presumption that
not having the proof of coverage on file raises a rebuttable
presumption of failure to cover. We do occasionally run into
situations where, when we get the person's input, they point
out, or their insurance broker points out, that they are within
the law and we track it back and it turns out that its
paperwork.
SENATOR SEEKINS: Without having to look at the statute, what is
the evidence of compliance that is required by AS.43.31.085.
MR. LISANKIE: Evidence of compliance used to be a piece of paper
that indicated that you where insured. Now, it's an electronic
document that is filed by your insurer that is sent to us and
gets entered into our computer system that indicates that your
company is properly covered for a period of time for workers'
compensation liability in the State of Alaska by X-company.
SENATOR SEEKINS: If I could Mr. Chairman, then you could foresee
here a glitch somewhere in the system shutting the person down
and then the burden of proof is on them. Are you proposing any
other process to be able to show that they do have insurance?
MR. LISANKIE: The process is designed so that they would have an
opportunity to be heard because we are reluctant to take that
rebuttable presumption and shut somebody down based up it. So,
to answer your question directly, that is why we would have a
follow up investigation - get in contact with the people who are
under suspicion, give them an opportunity to give us any proof
that they have to direct us to an insurance agent that they
believe that they talked to, or a business manager, or anything.
We are not looking to jeopardize people's rights to make a
living on something that could be just a paperwork glitch.
SENATOR SEEKINS: The bill that we passed last year on workers'
comp said that a subcontractor, if they don't have insurance,
the contractor is required to carry that coverage. Or if the
contractor doesn't have insurance, then the owner would be
required to carry that coverage. How would you anticipate
looking at a subcontractor violation? Would you go right on
upstream and ask for coverage from the other people.
MR. LISANKIE: I don't think that we have actually done that yet,
but since you have asked me to envision it, I think that we
would. It would just be prudent to check up and see that the
next level did have the insurance, which the bill requires. But
I think that we would be inclined to still go after the
subcontractor. Last year's bill was meant to be a safety net. I
don't think that it's meant to be a substitute for people doing
their legal requirements.
SENATOR SEEKINS: I understand that, too, but I guess I am
wondering in that scenario if I said, 'Well, under the law, if I
don't carry it, the contractor is required to carry it and
that's my substantial proof of coverage.'
MR. LISANKIE: I would construe it a little differently. I would
consider that that would not prove that the subcontractor had
the required coverage. It would prove that their employees are
not in extreme danger of not having their benefits paid. I
would agree with that. I could see that offered as a reason if
the - I mean we would talk to the contractor and see if they
wanted to keep working and we would probably take that into
account. I certainly would.
1:47:55 PM
SENATOR SEEKINS: I am not trying to impose a new form, I am just
trying to see if one exists.
MR. LISANKIE: There is also a provision in section 21 that
addresses the lack of a hammer that I mentioned and the hammer
now is actually a bigger hammer than we talked about last
session. For a failure, for a proved failure, to insure, we can
go to the workers' compensation board with a full hearing
because we don't feel that there is this - you know, once we
have taken care of the absence of insurance quickly. We don't
think its as important to move quickly on the fine part, so we
would like to have that continue to go through the board. And
for demonstrated failure to have the required insurance an
employer would have to be subject to a fine of up to $1000 a day
per employee that was not covered and you can do the math. That
would be a very substantial sum. It is an up to amount and it
would be in the province of the board to take into consideration
things that were mitigating factors and things that where
aggravating factors. But it could be a very high penalty. Last
year, the last numbers that I have seen, our single
investigator, even with some of the problems that you have heard
about with our computer system, was able to detect and stop 158
employers that were uninsured and then at least went and got
insurance after they were caught. Those employers had
approximately 2,300 workers. So, if we had a fine in place like
we were talking about here, that would be a lot of potential
liability to be assessed - and convince them that they should
never do that again.
There is also a section in the bill that I will address in a
moment that actually establishes a fund to receive those fines
and uses those fines to pay for the benefits of injured workers
who were working for an uninsured employer at the time that they
were injured and weren't able to get their benefits directly
from them.
CHAIR BUNDE: Of that 158 employers last year, were there
penalties that were imposed or were these cured by simply going
and getting insurance and so they could? Did the vast majority
get to go bare and keep the money?
1:50:57 PM
MR. LISANKIE: Correct, there are some states that address the
problem by saying that the fine would be assessed in light of
what their premium might have been and then the fine is some
multiple of their basic premium, but this is a little more broad
application.
CHAIR BUNDE: To clarify that, it says that employer X has been
working for a month, he's got ten people employed, and you find
that they don't have insurance, he would be liable for up to
$1000 per day for that 30 day times each employee. That might
be a disincentive.
MR. LISANKIE: It would be a considerable disincentive to any
business I am aware of.
1:52:03 PM
MR. LISANKIE: The second area of the bill that I would like to
talk about is one that characterizes quicker and more efficient
resolution disputed benefit claims. You heard the Commissioner
talk about some of our problems in that regard, Senator Seekins,
you raised some questions from people that you have heard about
stipulations on the process. One of the areas that will
actually make legal something that has happening right now under
our regulations, but some people think that the regulation may
not be sufficient. Attorney's fees in Workers' Compensation,
even though they are usually paid by an insurer in additional to
benefits, they are not taken out of benefits. They have to be
approved by the Workers' Compensation Board before they can be
legally seen. It's actually a criminal offence to do otherwise.
We have a regulation that is based on some concerns over the
years that there was a need to have a way to get an attorney to
give you a consultation, even if they didn't take on your case,
just give you some advice, even if the advice was, 'I can't take
your case,' or 'I don't think that you have such a good case.'
So, we have a regulation that allows a one-time consultation fee
of up to $300 to be paid by an injured worker and received by
the attorney.
MR. LISANKIE: There are some attorneys that thanked us for the
regulation, but looked at the statute and said they don't want
to put themselves in that kind of jeopardy with a potential
criminal act. So, in section 42 of the bill, it would
specifically legalize the receipt of a one-time consultation fee
of up to $300. The hope is that it will make it just a little
bit easier for people to at least get an initial complication
and guidance even if they continue to have problems getting
someone that will actually take on their case.
MR. LISANKIE: Another significant change is that section 9 will
provide that the Department of Labor and Workforce Development
may contract with a non-profit organization or organizations to
provide some information and legal assistance to injured workers
that are unable to obtain private counsel. One of the things
that we continue to hear is that there is a limited number of
private counsel that are willing and able to represent people in
workers' compensation matters. We have heard this for a
considerable period of time long before I ever came to the
division. People have been talking about it during the 20 years
that I have been working in the field. This is kind of an
offer; it's kind of an approach to attempt to get a non-profit
organization that has some understanding of say, disability law
but, perhaps hasn't focused on workers' compensation at this
point, to get them into a contractual relationship with the
department for a period of time and see if we can kind of prime
them and get in this area of assistance. And then they would be
eligible to get attorneys fee awards if they were successful in
helping people before the board in the same way that a private
attorney would and, hopefully, the attorneys fees would take the
place of further funding as it went forward.
This is, I know, kind of a stretch beyond what we have done over
the many years of workers' compensation. We have always left it
to the private sector to represent people, but we continue to
hear that a significant number of people feel, and commonly
testify before a committee such as this, that they are unable to
get an attorney that is willing to take on their case. And while
the division gives them as much advice and assistance as we can,
obviously we can't represent them. This is an attempt to try to
encroach on that divide, to try and narrow the problems that
they have as far as not being able to get help with what their
claims should be understood by an attorney.
CHAIR BUNDE: And then these organizations would then provide
legal representation?
MR. LISANKIE: That is the hope.
CHAIR BUNDE: Obviously they would be legally able to provide
that, I mean, they would be members of the bar.
MR. LISANKIE: Yes, the contract would have to delineate the
requirements and that would certainly be one of them, if they
are going to represent someone they are going to have to be
admitted to the bar.
CHAIR BUNDE: If they can't find an attorney, if there is a non-
profit group that is perhaps able to employ an attorney on a
broader scope then we could bring them in.
1:56:58 PM
SENATOR SEEKINS: Mr. Lisankie, let me go back just for a moment
to section 42 if I can and ask a question here. This one time
fee of $300, is that one time per insured or one time per
attorney?
MR. LISANKIE: I believe it would be one time per attorney. It's
your money; as the injured worker, it would be coming out of
your pocket if you had enough money to pursue a number of
consultations. My interpretation of this is yes, you could do
that and the attorney would not have to keep track of whether
someone has already utilized this safety valve.
SENATOR SEEKINS: So, each attorney could take at least $300 from
the insured for any attorney that they choose to talk to - one
time.
MR. LISANKIE: Any injured worker could go to any attorney, and
if the attorney wanted to charge a consultation fee up to $300,
they could do so.
SENATOR SEEKINS: Is there any mechanism for the insured to
recover that $300?
MR. LISANKIE: Yes, if it develops into a disputed claim and
there is some success, I would say yes, that an employee, even
if they did it on their own they could ultimately seek recovery
of that as a cost of their claim, and I would anticipate that
the board would recognize that as a cost of pursuing their claim
and reimburse them for it - order reimbursement for it.
Obviously, the board doesn't pay for anything.
1:58:58 PM
MR. LISANKIE: There is also a section, section 11, which I put
an asterix next to because I think it goes to part of the
question about what Senator Seekins asked the other day about
his concerns about the ability of injured workers and their
employers and insurers to decide that they no longer want to
dispute something and they want to stipulate their way out of
it.
What section 11 talks about is that it would allow an injured
worker who is represented by an attorney who is licensed in
Alaska to settle their claims, and that would be either a
partial or complete settlement of the disputed claim, without
review of the Workers' Compensation Board.
That would do two things, one it would marginally speed up the
process in that there is a certain degree of delay associated
with having people who have already resolved their disputes have
to wait until the workers board can actually review the terms of
their proposed resolution. It would also allow us to focus the
resources that we have in the division to either do additional
hearings to get other disputes heard quicker and to focus their
continuing review responsibility on proposed settlements from
injured workers who have some additional need for the board to
review their situation such as they are a minor or they are
mentally incompetent, or they are unrepresented by counsel. So
it would be an opportunity for the board to focus on folks who
don't have an attorney by freeing folks who do have an attorney
to resolve their disputes without further review by the board.
That's also going some degree towards addressing the concerns
that were expressed by Senator Seekins because if you can settle
a full claim, you can certainly file, what it would otherwise be
referred to as, a partial settlement, but a stipulation, a
stipulation of somebody's entitlement to something, you could
agree to it. You could file it with the board and it would not
have to be further reviewed.
2:02:12 PM
That would apply across the spectrum of any dispute. It wouldn't
be limited to the one section that I specifically mentioned to
the committee last time, which was a specific section that
allows stipulation to entitlement to reemployment benefits.
That is something that has been developed due to specific
complaints that we have received from parties saying that if
they want to stipulate, an injured worker needs reemployment,
why do we not accept that stipulation and just get on with the
process and our response in this bill is 'why indeed.' So we do
have a specific section that talks about reemployment benefits
and that is in section 14, but this section 11 could arguable
apply to any other type of stipulation or dispute.
SENATOR SEEKINS: I guess I have had a hard time reading into the
fact, in mid-section 11, that says that, 'If you and I want to
stipulate to the extent of my injury or the type of my injury
rather than going through the medical examination process and
confirmation of that et cetera,' that we are allowed to do that.
I am just thinking about certain steps in the process where you
may not want to stipulate to complete dismissal but to elements
of the process. It's my understanding, and maybe I am wrong,
that right now, at least it's viewed that that's a prohibited
activity. Maybe I'm wrong.
MR. LISANKIE: If I understand your question correctly, I don't
think that you are wrong. The division and the board takes the
view that anything that can be read as a partial settlement of
any dispute does have to be reviewed and many things can be
viewed as a partial settlement that the parties might look at as
just stipulation of status. If it can be viewed as affecting
somebody's right to benefit, and arguably anything can, the
current language is broad enough that I think that the board is
within its rights to look at it the way they do under the
current law, even though it slows things down.
SENATOR SEEKINS: I have no doubt that they are within their
right. I am just wondering if - there comes a point where we are
trying to do two things and one of them is reach a final
determination as quickly as possible to keep uncertainty in the
process even from developing. And I'm just thinking that there
may be intermediate steps in the process that we go to a lot of
trouble to verify even though both parties should have the
right, as they do in any other legal activity, to stipulate the
certain portions of that activity. But it seems like it is
precluded here and that seems like it protracts the timeframe
and maybe even unnecessarily. I don't know if these are subject
to some kind of review, but even most stipulations are at least
reviewed - even in a court of law - to a certain degree. 'Did
you agree to that, Mr. Steng? Did you agree to that Mr. Segan?
Yes, we both did.' and 'Did you do it willingly? Yes, no
problem. Okay, we stipulate to that.'
But, it seems to me that if the process is inherently clumsy and
unnecessarily clumsy, then we should try and accommodate a
streamlining of it as long as we aren't sacrificing anybody's
rights against their will. Maybe I am shooting in the dark, but
it's just my opinion.
2:05:11 PM
MR. LISANKIE: The final point that I would like to make under
this heading is that, while it is common practice already, the
division uses Workers' Compensation hearing officers to chair
hearings of disputed claims. We don't actually have that in the
statute. It's simply the commissioner of the department or their
representative and so it's just the kind of adjustment for what
is actually being done and to give us the authority to do it in
case anybody actually complains about it.
Section seven does require the use of hearing officers and it's
anticipated, I think everyone knows, that since passage of some
legislation last session having to do with a central panel
hearing process, all hearing offices will be required to adhere
to certain ethical standards that are being reviewed and
produced as we speak by the administrative law judge. This would
add to the board an obligation to develop its own internal
regulation for any conflict of interest of the board members.
And that would be something that would be developed internally
by the department and approved by the board members themselves
as required the current statutes.
MR. LISANKIE: The third heading that I have generated is "Fair
Benefits at Reasonable Employer Cost."
2:06:34 PM
The first is section 32, and this will sound kind of reminiscent
for people who have been following this process for the last
year - since last session, anyway. It's a reprise of the cap on
non-resident compensation rates. Currently there is a cost of
living adjustment in the Workers' Compensation Act and it only
applies outside the state. So, people who are injured within the
State of Alaska get a unified rate. It's based on a blended
assessment of the cost of living in Anchorage, Fairbanks, and
Juneau - Juneau being the highest and Fairbanks and Anchorage
being fairly close together now. So there is a unified Alaskan
rate. So, no matter where you reside in Alaska, no matter how
expensive or inexpensive, you get the same rate. However, if
you are a non-resident worker at the time of your injury working
in Alaska or if you move out after you get injured and you go to
someplace that has a arguable higher cost of living, my division
is tasked by the current statute to do a cost of living analysis
and allow you to receive a higher compensation than you could
have anywhere in state. I don't really think that it's
appropriate to pay people who are non-injured workers more than
we pay our own injured workers. So, section 32 would preclude
that and cap the rate that can be paid to a non-resident at the
rate that would be paid someone who was residing in Alaska.
There is a provision in section 36 that talks about coordinating
private disability and Workers' Compensation benefits so that
the combined benefits do not exceed workers' take home pay. If
you have any specific questions about this proposal, I have
someone sitting with me who has helped me develop that,
Assistant Attorney General Kraly helped draft that, but it is
essentially what it says, that there are under limited
circumstances, some employees who get a private disability
payment which is not being considered when we do our workers
compensation payout. For some limited number of people, they do
sometimes get more than they would have if they had been working
which is kind of viewed as not such a good ideas for a number of
obvious and not so obvious reasons when the whole intent of
Workers' Compensation is that you get a significant portion, but
not all of your take home pay - so that you don't have a
disincentive to return to work. And so that's the motivation for
this provision.
2:09:22 PM
MR. LISANKIE: We have also heard some concerns about potential
fraud in our system by any number of people. People talk about
fraud from a variety of perspectives and some people envision it
as someone making a claim that they don't deserve; other people
envision it as an employer lying about the classification of
their worker so they get a lower premium; a provider that may or
may not really be giving health care treatments that they are
getting money for. So, there is a provision in section 40 that
talks about broadening and strengthening anti-fraud provisions
under the workers' compensation provision under the Workers'
Compensation Act. It's quite extensive and goes through great
detail to show that there isn't anybody who can derive a benefit
or a payment in the name of Workers' Compensation and not be
violating the fraud provisions so that we do have a right to
enforce that right in the Workers' Compensation Act.
MR. LISANKIE: I was asked by someone whether or not we were
going to run out and hire a whole bunch of investigators and the
answer is no, not at this time. I have talked to Director Hall
at the Division of Insurance and she has a number of
investigators on her staff and we are going to try and
coordinate with the limited resources that we have right now and
her resources - with not having a specific authority to go after
fraudulent situations and see if that doesn't fix it. If it
turns out that we feel that we are missing a lot of fraud
because we don't have sufficient investigation staff then, I
suppose that I would probably be back in front of the committee
trying to explain why it wasn't there. But, we just kind of
concerned about the overall cost of the proposal and we would
like to try and make it work within the resources that we
currently have - with closer coordination between my division
and the insurance division. Most of the situations that can
develop in the name of fraud, because they are trying to take
advantage of an insurance company, they also represent an
insurance fraud that is investigatable by the Division of
Insurance.
2:11:38 PM
Similarly, there are improvements in section 41 to the criminal
anti-fraud provisions under the Workers Compensation Act. We
have been asked over the years why we don't have a very long
track record of successful prosecutions and people have offered
a variety of reasons. A lot of time, what it boils down to is
that the higher standards that are applicable to criminal
activity as they are viewed by the district attorneys who know
what it is that they address or not address come down to that
the criminal provisions in our act are inadequate.
So in section 41 we propose to change some of that language to
meet some of the concerns that have been stressed by the law
enforcement community so that if we feel that we do an
investigation of someone that they are likely to agree that this
is something that can be prosecuted as opposed to just being
concerned that we have done good work but we haven't given them
the tools that they need to get a jury to convict someone.
2:12:45 PM
SENATOR SEEKINS: On the first part on page 30 you are looking at
the hearing, that hearing you would have to find by a
preponderance of evidence if I take a look at page 32, there is
a reference to credible evidence. What standard of proof are we
looking at?
MR. LISANKIE: I am sorry, Senator, are you looking at the second
one?
SENATOR SEEKINS: Page 30 line 3, 'The director determines this
is credible evidence.' Are we saying here that credible evidence
is for notification?
MR. LISANKIE: Yes.
SENATOR SEEKINS: There is a higher standard of proof to be
determined whether or not the act actually took place?
MR. LISANKIE: That is correct.
SENATOR SEEKINS: I just wanted to make sure.
2:14:09 PM
MR. LISANKIE: There is one provision in the legislation that I
would like to highlight and this is something that's been kind
of a grey area for us - that we would like to address, and
that's why its in section 38. As the committee members are
probably aware, there are certain people that run a business
that don't have to cover themselves and they can opt to cover
themselves if they wish to, partners for example, sole
proprietors. We have seen in the last few years, since Alaska
has changed its laws to have more limited liability, we have
seen questions raised about where does a member of a limited
liability company stand in relation to their legal obligations
and whether they can or must get workers' compensation coverage.
There has been a bit of a divide on that question and there
wasn't any clear guidance.
So what the bill proposes to do in section 38 is to confirm that
a member of the limited liability company need not have workers
compensation coverage to start with, but if the limited
liability company has an insurance policy for its employees and
they wish to add the company members to the covered people under
that insurance policy, they may certainly do so. So, it gives
the limited liability company a clear statement of where its
members stand initially and gives them the clear option that
they can insure those members, if they so choose, and properly
inform an insurance company that binds their coverage. That is
just something, as I said, that was a grey area that was kind of
perplexing to people about what their liabilities and
responsibilities were. So, that is what we would help resolve
that system.
MR. LISANKIE: Finally under this heading, we had recommendations
from a variety of attorneys representing people in the workers'
compensation system, again, looking at ways that we can speed up
the system. And they wondered why we didn't have a release of
medical records of some sort that would be signed with the
initial injury report, because there are sometimes delays
associated with getting proof of medical treatment; and until
you get that proof, then the insurer has no obligation or any
knowledge that they need to make a payment. So what this would
do is require the division to redo our injury report so that
there is a limited release of medical records right from the get
go - that applies to treatment for the injuries that just
happened.
2:16:54 PM
It's not a broad release because we recognize that there are
some people that, due to confidentiality concerns, are concerned
about not signing a release for everything. That raises some
other problems that we can discuss at a different point, but at
least at this point we would have a requirement that, from the
beginning, bills and records for medical treatment that happened
with the particular injury would be immediately available to the
insurer and their adjuster. And if they weren't submitted by the
injured worker, they could be obtained by the adjuster and will
get things flowing faster.
MR. LISANKIE: You can understand why attorneys on both sides of
the bar raised that particular issue - something that could be
an unnecessary delay and we are not interested in doing that. We
are really trying to focus on things that can speed things up,
even if it's just incrementally - because they all add up as you
go through this whole process. We would maintain, in section
27, the confidentiality of medical and rehabilitation records
that are held by the division or the new appeals commission.
And, in section 28, it would ban the division from assembling or
providing individual records for commercial purposes. We've got
a number of folks that ask us to give them information. We are
getting more and more information into our system that we
request because we are trying to get electronically filed and
now we are getting this intercession where people recognize that
there is more and more information about employers, employees
anybody you can think of. They asked us to stratify this data
and give them some kind of report that they can use for a
commercial purpose.
MR. LISANKIE: We want to still be able to give information to
people that need it so they can get good health care, so that
they can get paid for providing that health care, so that an
insurance company or an employer or an employee can get
information they need to settle, or resolve, or if necessary,
have a hearing on a disputed claim. We're trying to restrict
the scope of information that we give out for purely commercial
purposes.
This is another section I would like to address - is improving
return-to-work benefits while reducing the cost of doing that.
In section 35 we are proposing to gradually phase out the second
injury fund. The second injury fund is perceived as archaic in
the modern employment system by many observes. The last time I
looked, there were 17 states that had revoked their second
injury funds in the '90 and 2000 era. The way that the second
injury fund is filled is through a six percent contribution rate
currently based on all time loss benefits that are paid by an
insurer. So, it's an additional six percent on top of what they
pay in benefits.
To try and get more bang for that buck and reduce the cost, what
we propose to do now is phase it out incrementally. The people
that already established the insurance companies, that already
have a right to get the reimbursement under that fund, would
continue to get those amounts reimbursed, but they would not be
able to make new claims going forward. As the old claims are
gradually paid off, the contribution rate would ramp down. There
is in our statutes a ramp that says that if the balance in the
fund is a certain amount at 6%, if it goes up, its 5%. We would
hope that it would go down to 5%, then 4%, then down to zero and
eventually when the commissioner of labor officially notifies
the Lieutenant Governor that all of the obligations were the
fees, then the fund would be no longer in existence.
We are interested in reducing delays in determining reemployment
eligibility. In Section 14, it specifically allows injured
workers and their employers and insurers to stipulate to the
injured workers eligibility for reemployment benefits. That will
simplify the determination of eligibility for those benefits and
we think it will have a significant monetary effect on the
overall cost of the system, although it is difficult to
quantify.
I will give you a snap-shot of what we did in 2003. There were
just over 1,000 requests for eligibility evaluations that were
filed with the division in 2003. As of the end of January of
2005, about 50 percent of those requests had been finally ruled
upon. By my math, on average, if it was in the middle of 2003
and it went to January, it would have been about 18 months. So
some would have been a shorter period, some would have been a
little longer, but we are taking a long time to get eligibility
evaluation done in the first place. On average, it's 160 days.
So, our hope is that if some proportion of these become
stipulations, then that will be 160 days on average for each of
them, and that will save the need to pay 401K benefits, which is
a time-loss benefit that is paid for people who are waiting for
that evaluation concluded.
2:22:37 PM
The next section is Section 16 and it talks about redefining the
trigger for when you are eligible for reemployment benefits.
Part of that process right now is to establish that you have
physical capacities that are less than the demands of certain
jobs. A big part of the delay that we are seeing is trying to
get someone, typically a doctor, to opine as to whether someone
is going to have his physical capacities diminished to the point
where they can't meet the requirements of certain jobs. There
is an awful lot of people who don't request the benefit within
the anticipated 90-day period, because they have not had the
opportunity to have a doctor opine about whether they really
need it. That adds a lot of delays, because among other things,
after they finally find out that they think that they may have
triggered their entitlement, then they have to ask to be excused
for not asking on time. So, the trigger has been redefined in
terms of how long somebody has been taking off work. If they are
off work for 45 days, it triggers a requirement for our
reemployment benefits administrator to give these people
information about their potential entitlement to reemployment
benefits. But, the direct response that we hear is that people
don't have adequate knowledge of what their entitlements are.
After 60 days, either the injured worker or the insurer could
ask for an evaluation of their entitlement and then after 90
days off work, our reemployment benefits administrator would be
required to send it out for an evaluation and nothing further is
said. We are just trying to get something that is just an
easily defined trigger and I can understand that some folks
would prefer that we continue to use the current system. And my
response to their concerns is that it is just slowing things
down so much that it is really inconsistent with our goals of
getting people all of their benefits - but particularly their
reemployment benefits, vocational rehabilitation.
The 1988 Act was predicated on the understanding that of all the
benefits, retraining benefits were most critical to get going
quickly. Because studies have shown that that particular type of
benefit was unlikely to yield a good result unless it got there
quickly. So you see in section 41 of our current act, all of
these short time frames - 90 days to ask, 14 days to make an
assignment, 30 days to get the evaluation completed - and I am
talking about 160 days to get the average report back. What we
are trying to do is make this system a system that is
understandable, that people understand when their rights are
triggered and they can ask for the right if they want it, which
is a big point. The legislature has gone out of its collective
way to listen and respond to people who said that reemployment
benefits, vocation rehabilitation, should be elective, a
voluntary system in which am employee doesn't have to do
retraining benefits unless he or she wants to do it.
2:26:30 PM
CHAIR BUNDE: On that point, I have received an inquiry from a
Robert Sullivan. I have given you the letter and you get an
opportunity to respond to that if you would. Give me a response
please. There are some concerns on this issue.
MR. LISANKIE: I know Mr. Sullivan, Mr. Chairman, that he
provides services under the Workers' Compensation Act, I would
be glad to do that. What we have seen happen and you have heard
other people talk about this as well - right now there is a
certain way of determining entitlements to these reemployment
benefits that I just discussed. Currently, you can choose to
take that benefit and embark on it. It's typically some type of
retraining and for a period of years, oftentimes, you are
entitled to get some cash benefits to tide you over while you
are doing a retraining. There are many people that choose not
to take that retraining, but based on the possibility that they
could be found qualified for whatever they had been found
qualified, and they could actually go through it if they wanted
to even though they don't want to. They will enter into a
settlement that could be a considerable amount of money.
What we are trying to do in section 16 is to have people still
have their right to this benefit, but to try and save some money
by saying, all right, now you have been found eligible for this
benefit, it is a voluntary benefit, you have two choices, but
the choices are slightly different. The first choice continues
to be take advantage of these benefits and we hope that we will
do everything that we can to help you. The second choice is, if
you do not want for any reason to take these benefits, you are
qualified, but you may have other things to do, you may want to
retire, there may be another job that doesn't rule you out from
this benefit that you are intending to go back to. There is any
number of things. You can no longer hold out the possibility of
getting that benefit as a reason to get a large settlement. You
either take the benefits or you elect to take a smaller case
payment which is being described as a job dislocation benefit,
which can be used for any purpose and that is tied to the
impartment rating that you get from your injury to your person.
That ranges from $5,000 to $13,500. There will be no strings
attached to that, so the injured worker can use it for whatever
they want to do. But within 15 days of having been found
eligible, they will either be getting into the program and using
the benefits that we will still extend to them - they will not
be diminished in any way - or they will take this lesser amount,
which is much less than what the typical settlement is. We
think that that is a fair way of moving the system along and
reducing costs without cutting the actual benefit. The benefit
would be unchanged if you choose to take advantage of it.
2:29:58 PM
I just want to touch very briefly - there are several provisions
in the beginning of the act that have to do with changing the
way that insurance is done for workers' compensation in the
state. Director Hall has already testified about it some. If you
have any specific questions, there are people here from the
Division of Insurance that could address them. The point that I
would like to make is that the further improvement - last
session we were here trying to bail out the GuarantyAssociation
as you recall Mr. Chairman and members of the committee, and we
were successful in doing that. But there are people in the
industry that said that we would have been even better off if
there were bonds in place to collateralize some of the
liabilities of the insurance companies so that if one of them
went out of business, these bonds could be picked up and then
the cash represented by those securities could be sent by the
Division of Insurance to the Guaranty Fund to actually pay some
of the benefits rather than shifting all the costs to the
companies that didn't go under. So there is a specific
provision that I like from my perspective, because it is one
more way of getting additional funds to the Guaranty Association
to pay the benefits to the injured workers on behalf of the
employers that legitimately insure themselves, but have the
misfortunate to have their insurance company go under and so I
certainly support that. I am not at all an expert in insurance
and I cannot tell you the fine points about how that operates,
but we do have experts if the committee has any questions. That
leaves two sections.
2:31:22 PM
MR. LISANKIE: There are two sections that have some degree of
commentary. The first one I'd like to address is increasing the
speed, efficiency and predictability in Workers' Compensation
appeals and what would be done is to replace an appeal from the
superior court with an appeal to an appeals commission, which is
within the Department of Labor. This provision is designed to
bypass the superior court for a number of reasons and is not an
add-on to the additional system. It would actually take the
first level of appeal, which right now is the superior court and
replace it with the appeals commission. It would maintain the
next step of appeal, which is guaranteed to everyone as an
Alaskan citizen, which is to have recourse to the Alaska Supreme
Court. And it's always the Alaska Supreme Court that tells all
of us whether we've done the right thing or the wrong thing. The
motivation behind this is that the superior court is made up of
numerous individual judges. They are not necessarily experienced
in any particular matter of the law, including Workers'
Compensation. Their decisions do not establish binding legal
precedent. The appeals commission would be offered to have a
single site as where you would go to have your appeals heard by
people who have experience in workers' compensation. It would
establish legal precedence that could be overturned by the
Supreme Court, but otherwise would be in place and could be
relied upon by people who are in a similar situation in other
claims. Right now there is no way of establishing a definitive
legal interpretation short of going to the Supreme Court and it
takes a good number of years.
This is a way of getting the Workers' Compensation Board, which
will continue to be made up of numerous panels doing hearings.
That is not being changed, unlike some of the suggestions last
session. But you will be able to go to the appeals commission
and ask them on the executive branch side to give you a final
definitive statement of what the Workers' Compensation Board
thinks about what the workers' compensation law may need, for
example.
2:34:25 PM
MR. LISANKIE: Other people can rely on that in doing their
business and paying benefits and knowing what they're entitled
to receive. And that will remain in place during those years
where there is not a Supreme Court decision. If someone does go
to the Supreme Court and the Supreme Court confirms it, then
fine, if they overturn it then that's fine, too. At least, in
the interim everybody is operating under the same rule for a
period of years that they can't do right now.
Section 31 would allow me, the division director, to file an
appeal with the commission if there was an unsettled question of
law and if a party was not represented by legal counsel. So,
this is also another way to try and address the concerns we have
about the difficulty of someone who's unrepresented making a
legal case. The court system is well aware that it is very
difficult for the average person to make a legal case. This
would give the director an opportunity to try and weigh in. If
there was [indisc.]question of law because we simply don't have
the resources to do that in every instance.
The appeals process would be somewhat speeded up in that the
commissioner will be required to issue his decision within 90
days of record closure, which is on average - we think it would
take probably six months to complete this kind of process as
opposed to 8 to 18 months in the superior court system. There
are two specific concerns that you heard testimony about last
session and I'm sure that some of those people still have the
same concerns and so they've been specifically addressed. First
is that board level determination hearing panels would continue,
as they are now, to take testimony and their determinations
about the credibility of the witness that testified to them,
their testimony credibility, would be binding on the commission.
And to reflect that there are people who are concerned that you
can't really judge credibility of somebody's testimony unless
you look them in the eye. And also concerns about possible
constitutional issues that could be raised based on certain
Alaska Supreme Court decisions that find people have a right, if
there's credibility involved, to have an in-person hearing.
The second is by constructing the commission out of one person
with legal background and then commission members who are
volunteers who are paid a sum for each day that they
participate. That is to address two concerns. One is the
expense. There are concerns about if there are three attorneys
or some odd number of attorneys, that the expense would really
ramp up. This is an attempt to address those concerns and also
there was a concern that if appeals were heard solely by people
who were lawyers, that you would lose some degree of the human
element or empathy or something that is over my head, since I'm
an attorney.
2:36:55 PM
SENATOR SEEKINS: In the four members - two for employees, two
for employers - is there anything in the statute that would
preclude those public members from being attorneys?
MR. LISANKIE: Not that I know of. I would suspect from the
amount of money that they wouldn't be paid that they would
probably have to be retired attorneys.
SENATOR SEEKINS: I could see where some employers would continue
to pay their employees. Some person being a member of the
administration or a labor union may be paid to be there by the
union at the same time. It wouldn't necessarily mean that $200
dollars a day is their entire compensation because I wouldn't
anticipate that they'd be that busy to be paid that as a salary.
2:38:25 PM - 2:44:15 PM - Recess
MR. LISANKIE: What I would like to do is offer a clarification;
I think I made a misstatement in regard to Section 36
coordination of benefits. It was pointed out to me by the
drafter that I said private disability insurance would be
weighed against workers' compensation benefits, and it's
actually benefits that are received through the PERS system or
from another employer-funded disability system that does not
take an offset on its own. So the disability that's paid by an
employer if they take the offset, then there is no double
offsets. An employee gets the net. But I said private and it's
not correct. The last section I'd like to address is maintaining
medical benefits while reducing costs. One of the elements of
that is to have a rollback of the allowable maximum amounts
under the board's medical fee schedule to a fee schedule that
th
was approved initially December 15, 1999, and applied to bills
that were rendered in the year 2000. Those rates would remain in
place while the committee that the commissioner discussed the
other day would be making its study of the Workers' Compensation
health care delivery system and the way the bills and costs
would be reimbursed, which would have to be completed no later
than March 1, 2007.
I would continue protection for injured workers that exist
within the statute now and would not be taken away, which is
specifically injured workers may not be required to pay any fee
or charge for healthcare services that is provided under the
Workers' Compensation Act. And that is a question I've heard
from some people already - if there is a difference between
what's billed and what's payable, would the employee be required
to pay and the answer is they are not allowed to be made to pay
now and that will be continued.
2:47:16 PM
CHAIR BUNDE: If I wanted to be treated under Medicare, I could
not pay the doctor more, even if I chose to. They can't accept
it. Is that the same case here? That if there was a cap and I
had the means that I could pay above that cap to pay the
doctor's normal rate, would I be allowed to do that?
MR. LISANKIE: That's a good question. I believe the actual
verbiage may not be required. There was a proposal in Section 24
to have the board apply the Occupation medicine practice
guidelines of the American College of Occupational Environmental
Medicine (ACOEM) to determine reasonable and necessary medical
care under the act. ACOEM for sure is the non-profit
organization that has put these guidelines together and they
have a mission statement that I know we don't have enough time
to get into all the specifics but, they propose the purpose of
the guidelines are to optimize the livelihood that injured
workers are able to return to health and function as rapidly and
safely as possible. That is their mission statement. Those
guidelines would be presumed to be reasonable treatment, but you
could depart from those guidelines based upon a preponderance of
the scientific evidence.
2:49:05 PM
SENATOR SEEKINS: Describe to me how a person would rebut by a
preponderance of scientific evidence. How would that be done?
MR. LISANKIE: I guess it would typically be done either
informally or formally, with someone proposing studies or
someone making the point that the individual situation that's
encountered by that injured worker falls outside the expected
range of the guidelines.
SENATOR SEEKINS: How would that rebuttal be mounted? Would it be
mounted by the injured workers' attorney or by the injured
worker or by him retaining expert medical opinion to rebut the
guidelines that are provided?
MR. LISANKIE: I think it would be like the other types of
potential disputes that the Workers' Compensation Board
sometimes hears now. Therefore, it could be something that would
begin informally and might end informally with a practitioner or
the representative and talking through what the situation is.
But it could, under certain circumstances, end up all the way in
a hearing with lawyers and advocates putting on additional
information based on scientific studies. It could be the full
range, some of them would be easy and some of them would not.
2:50:44 PM
SENATOR SEEKINS: The last sentence of that section says we could
be looking at standards based on other scientific evidence based
medical treatment guidelines generally recognized by the
national medical community adopted by the board by regulation.
Are there other generally recognized medical community
guidelines other than this one from the American College of
Occupational Environmental Medicine?
MR. LISANKIE: There is at least a couple. I know there is at
least one that I have a copy of in my office that I was sent. So
there is at least one fairly comprehensive one and I believe,
based on what I've heard from the drafter the ACOEM guidelines
that there is at least one other one. And then I heard from Mr.
Jordan in his testimony - he said that there are a variety of
guidelines that have been published by a member of the specialty
fields and I'm not as aware of those.
2:52:07 PM
MR. LISANKIE: There is a provision of Section 24 that tried to
take advantage of any savings that would be available through
the utilization of generic drugs in place of name brands by
requiring that generics be used unless a name brand is medically
necessary. Also Section 24 tried to take advantage of any
potential cost reductions by requiring the Department of Labor
and Workforce Development to adopt a preferred drug list or
something like that, which was recently developed by the
Department of Health and Social Services. The Department of
Labor and Workforce Development would also be called upon to set
procedures for establishing the need to depart from that
formulary list. And then a final provision I'd like to address
today is under Section 25.
2:52:47 PM
MR. LISANKIE: We propose to remove roadblocks to potential cost
savings by allowing employers to develop preferred provider
lists and to negotiate fee rates with preferred providers.
Currently, there are statutory prohibitions against interference
with anything that can be described as interference with the
choice of physician. So this would be a specific authorization
for an employer or an insurer to try to develop a preferred
provider list and try to negotiate lower rates. However, the
injured worker would not be required to use or restricted
exclusively to the use of people on that list. So, the employer
and insurer could try to develop such a list and they could give
it to the injured worker. But they would also have to tell the
injured worker and specifically inform them that they do not
have to utilize any healthcare provider on the preferred list,
and that they can continue to choose a provider who is not on
that list. Which may or may not make it easy to get a preferred
provider list done up if you can't guarantee that anybody will
use it. So I thank the committee very much for their attention
and if there are questions that I can try and address I'd be
glad to, and if not I will certainly pursue them and give you
answers in writing.
2:54:27 PM
SENATOR SEEKINS: Looking at page 20, line 3, paragraph 1, we're
scheduling, we're specifying a schedule there from a public
bulletin dated December 15, 1999. Just for information purposes,
do you have any idea of what the difference between that and the
schedule is and what that schedule would be today, in terms of
percentage difference?
MR. LISANKIE: I believe that we have a chart that was included
in your packets and I may not be able to lay my hands on it
right away, but the point I'd like to make is, there were
certain services under the codes that were analyzed for what
percentage difference between the 2000 rate, or the rate that
was effective December 15, 1999, and the highest allowable
currently under the fee schedule from December of 2004. I'm sure
that the Senator appreciates, but I just want to make clear,
that the way the board sets those rates is to have a company do
a statistical analysis of all the bills that are rendered for a
certain procedure. So, all it does is say the highest that could
be paid in full as of 1999 would be a certain amount. And that
presupposes based on statistics that eight out of ten providers
charge less, because it's defined in terms of the 90th
percentile. So, if there is a change for 2004, presuming it is
higher, it's still possible for someone that is charging less
than the highest amount in the beginning of 2000 may or may not
be above that now. But the simple answer to your simple question
is that each one of those codes potentially could be a different
percentage simply because it's based on bills.
2:56:46 PM
CHAIR BUNDE: I believe Jane forwarded a question about the codes
in trying to get some more information and when we get that,
I'll share it with the committee and it would be interesting to
note in dollar amounts compared to other states what this cap
creates. If it's limited to December 1999 rates in Alaska, how
does that compare with Washington state rates today? Something
like that.
2:57:40 PM
NORM WOOTON, Executive Director, Kodiak Chamber of Commerce:
Workman's comp is an issue that, according to my members, it's
close to putting many of them out of business. The rates
continue to rise and I'm not sure how much longer they can
afford to do it. Just an anecdotal comment, we run a litter
patrol here in Kodiak through the auspices of the Chamber of
Commerce. We hire four teenagers and have an adult supervisor
and next year my workman's comp bill is going to be $2,100 for
that three months to keep those four teenagers working and so
anything that you can do to alleviate that and to provide some
relief to employers, strictly small businessmen, would be much
appreciated and good for the economy of Kodiak as well as the
rest of Alaska.
2:58:43 PM
MIKE MARTIN, President, Brechan Enterprises Construction
Company, (Kodiak, Alaska since 1954): We have currently about 95
employees signed through the operators, laborers, teamsters, and
carpenters unions. From 2004 to 2005 we've had an increase of
$277,000 or a 63 percent increase from 2004 just on workman's
comp. How it works in the construction business, we have
approximately $20 million dollars worth for work this year that
didn't take into consideration that type of increase. So, I have
no way to recoup or to bid that type of increase into the work.
Secondly, an issue in workman's comp, we had an employee,
actually one of my favorite employees, 40 years old had a heart
attack on the job, had nothing to do with work-related. He
showed up in the morning and about 15 minutes later, not because
of any incident, had a heart attack, had everything to do with
the fact he was a heavy smoker, overweight. Yet, that cost me
$250,000 through insurance, which was a part of the increase.
The last issue I want to talk about is frivolous actions and
injuries that take place. It is very prevalent unfortunately
with some of the new people coming into this industry. They know
they are going to be laid off and next thing you know they have
a back injury. Very difficult to prove contrary to that and
there are many things that are taking place in this industry
right now along with the fact we have only one carrier, which is
Alaska National and no other opportunity to have anybody else to
carry this type of insurance. I've been listening to your
discussion for the last hour and a half and you're talking about
the employees and I'm very glad the fact you are very interested
in helping those folks out, but I can tell you right now if you
don't do some help for the employers, those employees aren't
going to have jobs from companies like us that have been around
a long time. There are going to be companies that are billion-
dollar companies that are self-insured and who can afford this
type of insurance and the small business people and companies
are no longer going to be around here if you folks don't figure
out some way to help us out with these burdens we're facing
here.
3:01:32 PM
WAYNE STEVENS, President, Alaska State Chamber of Commerce:
Certain workers' compensation structures and current escalating
rates are an ever-increasing burden on Alaska's businesses.
State Chamber strongly urges the Legislature and administration
to provide the environment for stable, fair, and competitive
market place for both the insurer and the insured. The State
Chamber encourages the Legislature to diligently work towards a
solution for the workers' compensation insurance crisis and make
meaningful insurance and regulatory reform during the first
th
session of the 24 Legislature. State Chambers workers'
compensation premium in 2003 for four employees was $1,554. For
this year it's $2,774, which is an increase of roughly 78
percent, and that's with no claims history. We support efforts
to make substantive reform to workers' compensation. We
recognize that there is no single answer to solve the problem.
We encourage all parties involved to make concessions to make
this work. That includes the medical profession, the legal
profession, the insurance industry, workers, and businesses. We
need to provide an adequate safety net for workers hurt while on
the job, but as Mr. Martin pointed out, let's not put the
healthy worker out of work when the businesses they are employed
by can no longer afford the premiums for workers' compensation
insurance. Thank you.
DOUG WOLLIVER, administrative attorney for the Alaska Court
System: As you know the court's decades old practice is not to
take a position on legislation, we don't take a position on the
merits of this one either. In fact, having listened to this now
for the second year, I'm glad we don't have to. It seems like
it's a nearly impossible problem to solve. My only purpose in
testifying is to discuss that one section of the bill, which is
Section 31 that would bypass the superior court and send appeals
from the agency directly to the Supreme Court. For the past
several years, I think my testimony last year was we averaged 36
cases a year to the superior court. Taking into account 2004
numbers it's now 34 cases a year. 75 percent of those cases
don't go on to the Supreme Court. We average now an average of
about 8.3 cases a year actually get appealed to the Supreme
Court. The court doesn't believe that the passage of this bill
is going to dramatically change the number of cases that come to
the court system, and there are a variety of reasons for that.
One, we already only receive a fairly small percentage of the
decisions and orders issued by the workers' comp board. We don't
think that small percentage is likely to drop, one because out
of all of the workers' comp claims that are filed every year,
out of the tens of thousands, there are always going to be some
that even after the thorough process of review, there are going
to be cases that are close calls where either side can disagree,
where reasonable minds might disagree, where one side or the
other is going to want to appeal the agency decision. We have
appeals from our very best superior court judges; we'll have
appeals from even a very competent workers' comp commission.
Second reason is, every year or so there are at least a couple
of novel legal issues, those will always go to the court system
for final resolution. Additionally there are some people who
simply don't trust the administrative agency process. We see
this in all different types of administrative agencies in all
different types of cases. In order to get to the court you have
to exhaust your administrative remedies, in this case it would
be through an appeal through the commission but those folks want
their day in court and the only way to get your day in court is
to appeal to the court system. Finally, there are always a
handful of people every year that are simply tenacious litigants
who are going to keep fighting until they win, even if their
claim isn't particularly reasonable. We expect roughly the same
number of cases that we have always seen. The only difference
will be that they will come to the Supreme Court directly as
opposed to coming to the superior court first. As I mentioned
right now, the superior court takes off about 75 percent of
those cases. One of the stated goals of many provisions in this
bill including this one, is to help streamline the process and
to get a final resolution of these cases as quickly as possible.
One of the courts' concerns about this particular provision is
that it will be working against that goal. We've heard
testimony, and I've done some checking too on our own
statistics, that most of the superior court cases take somewhere
between 8 and 18 months to resolve. Our total taking into
account all of our administrative appeals, which come to the
superior court, we get about three hundred a year, I'd like to
say only about 34 are workers' comp, but we get a lot of
administrative appeals a year and they average about nine months
to be resolved by superior court. I just went back through the
cases that went to the Supreme Court last year, the workers'
comp appeals that went to the Supreme Court in 2004.
3:07:18 PM
They took an average of 20 months to be resolved. So what you're
going to be doing in many of these cases is moving from a forum
that takes 8-18 months to a forum that takes 20 months. You'll
save time on some of those cases, any case that would have been
appealed to the Supreme Court anyway, that 25 percent of the
cases, you will save time on by simply cutting out the middle
step, which is the superior court. But you will add time to the
vast majority of those cases. So I'm not sure that we're meeting
that particular aspect of the goal of the bill, which is to
speed things up. That's the basis for our fiscal note. Our
fiscal note is an attempt to add staff to Supreme Court that can
specifically focus on these cases and these cases only as a way
to not only offset the amount of time typical cases take in the
Supreme Court but also to make sure that these cases don't have
a significant impact on the amount of time it takes for the
court to resolve all of the other cases that it has before it
each year. And there are several reasons why the Supreme Court
takes longer, very legitimate reasons.
3:08:29 PM
The superior court judge is, as I like to say, is a committee of
one. You could probably move bills pretty quickly, Mr. Chairman,
if you were the only one that had to decide them. But the
Supreme Court is a deliberative body. There are five members. It
takes longer by design. And so the point of the fiscal note is
to try to reduce that amount of time to meet the goal of the
bill, which is to move these cases as quickly as possible,
although I don't know if we could ever, if the Supreme Court is
ever going to move as fast as the superior court. They can at
least work in that direction. That's my testimony, I'd be happy
to take any questions.
3:09:01 PM
CHAIR BUNDE: Doug, one of the problems is that the superior
court isn't precedent setting. Is there any way without setting
the entire American system and jurisprudence on it's head to
make that precedence setting, would that solve that, is there
some way you could solve that problem?
DOUG WOLLIVER: Mr. Chairman, I don't know the answer to that. I
don't think that you could, and I'm not sure that you would want
to. One of the concerns that the sponsors have is that there is
a whole variety of different judges involved in these cases. You
could have one - generally a precedent setting body is a single
group of judges and there's consistency the same group is
setting what the court of appeals or the Supreme Court. It's
hard to have 34 different independent judges each setting
precedent, which may consist of each other. Additionally, with
respect to the precedent setting, if the commission is setting
precedent, the problem of a lack of a court of appeals setting
precedent is probably significantly less than it is now.
3:10:06 PM
SENATOR SEEKINS: Without speaking for the courts, do you think
we are approaching a time where we need a civil court of
appeals?
DOUG WOLLIVER: We are. In fact, it probably won't be too many
years before the Supreme Court is asking for an intermediate
civil court of appeals, although I can tell you the impetus for
that is not likely to be the small number of workers' comp
cases, it would be the family law cases that are currently an
ever increasing percentage of the Supreme Court's case load.
SENATOR SEEKINS: In my overview of the courts and of the
Judiciary Committee, it appears that is fast approaching in the
analysis that I've gotten from the court systems and from
members of the court that we may be very close to the point
where we need to establish a civil court of appeals, which could
be a precedent setting court.
3:11:00 PM
MR. WOLLIVER: In many states where the workers' comp does bypass
their trial court, it's because they have an intermediate court
of appeals that, or civil appeals, that does set precedent.
SENATOR SEEKINS: Mr. Wolliver, if I'm not mistaken, the criminal
appeals court is three members?
MR. WOLLIVER: Yes it is.
SENATOR SEEKINS: But by adding three members to the court, on
civil court of appeals, they could handle a broader spectrum of
cases. If you had to say that compared to members that were paid
fulltime as hearing officers in the system now, any idea where
that would flush out in terms of expense?
MR. WOLLIVER: In a word, no.
3:12:18 PM
DR. JOHN DUDDY, orthopedic surgeon, president of Alaska
Physicians and Surgeons, member, Board of Counselors for the
American Academy of Orthopedic Surgeons: I implore you not to
support SB 130. As an orthopedic surgeon, and a business owner,
I understand that the workman's comp system is in need of
repair, but the current bill before you is not the solution.
This current bill is taking a sledge hammer when a surgical
scalpel was needed. As you may already be aware, the physician
community participated in the ad hoc committee appointed by the
Governor. We agreed with their recommendations. As you
previously heard on Tuesday, those recommendations have been
totally disregarded. The bill in its current form will throw the
baby out with the bathwater. The three components to this bill
have already been previously discussed. The first component,
which would be new to the workers' comp system, is the generic
drug list. I suspect the adoption of a Medicaid-like generic
drug list would be supported by the medical community. The next
two aspects of SB 130, a rollback to the fee schedules of
December 1999 and implementation of practice guidelines, I fear
may have serious ramifications for the access of care for Alaska
injured workers. The physician community in conjunction with the
ad hoc committee, requested a list of procedural codes in
November 2004 to help the committee's identification of over
used services. We were never able to obtain this data. This data
would have helped identify potential abuses in the system and
would have been able to be helped curb specific excesses. Since
the ad hoc committee's recommendations were never brought forth,
specific recommendations couldn't be made. Instead the
Governor's office has recommended implementing broad based
guidelines utilizing the American College of Occupational and
Environmental Medicine practice guidelines. My colleagues in
orthopedic surgery across the nation tell me that these
guidelines simply don't work. They don't take into account
patient code morbidities, such as their overall state of health
or other factors. When these cookie cutter approaches to
medicine are implemented such as in California, they hurt the
injured worker. In summary, I'm very concerned that the end
result if this bill is passed will result in diminished access
of care for the injured Alaskan worker. Thank you.
3:15:16 PM
CHAIR BUNDE: It's very clear we understand the opposition to the
limit on payment and the guidelines escalating medical costs and
I'm interested in those codes as well, but other than that,
would you have - your organization have - other suggestions
about how we might deal with these escalating medical costs?
DR. DUDDY: Has anyone considered a price freeze?
CHAIR BUNDE: I'm sorry?
DR. DUDDY: Has anyone considered just a price freeze?
CHAIR BUNDE: A price freeze at current levels?
DR. DUDDY: Yes.
CHAIR BUNDE: I think it's been discussed among some committee
members, yes.
DR. DUDDY: I mean that would be the simplest approach. The
bigger issue is not the change in fee schedules. That's the
issue for a lot of physicians, but the biggest concern are the
guidelines. The guidelines is going to make it so difficult to
practice medicine. They don't take into consideration, and I've
read the American College of Occupational Health guidelines.
They just don't take into account every aspect that I see as an
orthopedic surgeon. The perfect example of it is a colleague of
mine in California had a patient with an ankle fracture. This
guy weighed 400 pounds. The guidelines say they specify the
amount of time necessary or expected for recovery and they
specify the weight bearing status. In other words, the patient
can't be weight bearing and it says that you can only have
crutches. So when this injured worker applied for a wheelchair,
it was turned down. A 400-pound guy couldn't wear crutches and
he ended up falling and breaking his wrist. Cookie cutter
approaches to medicine don't work.
CHAIR BUNDE: Thank you. We appreciate the additional
information.
3:17:21 PM
ALAYNE LARSON: I've been in Kodiak for 25 years. I have a
construction company. I build apartment buildings for my own
personal use and I keep them for my own personal inventory. I'm
not like Mike Brechan that builds for profit and has a much
bigger business than me. But on a smaller scale, I'm here to
tell you that workman's comp is such an issue for me every year
when I go for my insurance renewals, if I'm not doing a big
enough payroll, I can't get insurance. If I'm not doing $200.000
worth of payroll, which is small in comparison to what Brechan's
got to pay, and I'm not near in the same boat, but it's still
affects me in the same sort of way. I can't even get workman's
comp and I get thrown into pool, which then I have to pay 33
percent premium for being a special high-risk person. I've been
in business 25 years and every year when insurance time rolls
around, it's just an absolute horror show. If I'm not doing a
big enough payroll, again, I get thrown into pool and every year
I wonder if I'm even going to be insured with my liability and
my workman's comp. I've never had claims, my risk ratios are
great, so I know you have, I've sat here for an hour and a half
along with Mr. Martin listening to your issues, but I'm here to
tell you the sun is gone out of being in business 25 years, I'm
a pretty good member of the community and we just did a project,
$1,400,000, the little town of Kodiak last year, which is a
sizeable project. But it gets every year, you get to wonder if
it's your last year being in business with the workman's comp
skyrocketing. So thank you for hearing me, Juneau, Elaine
Larson, Kodiak, Alaska.
CHAIR BUNDE: Ok, and thank you and trust me that we share your
concerns that the problem will have fallouts for everyone if
it's not solved.
3:19:31 PM
JOEL SIGMAN: I'm an injured worker. I'd like to know who does
workman's comp actually work for because in my book, it's not
the injured worker, it's the insurance companies and the
doctors. And whoever else, I don't know, you guys tell me, but
I've been living a nightmare. The insurance companies, I don't
think there should be a workman's comp board, I think the
insurance companies should have to cover their responsibilities.
People shouldn't have to sell everything they've worked for all
their life to be able to get help, and have to go on welfare
because they cannot take and get anywhere. I've been struggling
for eight years now and I've lost dang near everything I've
owned, I had to get rid of it to get any help. I've been denied.
I got dyslexia that I asked them to take and read me the things
in the workman's comp board and they got all their attorneys
there and everything, well, they refused to read them to me.
They just tell me well either you sign it or you're cut off and
you lose all your benefits and they would not read me anything.
I asked them well, who do I go to see to get help so you can
guide me in the right direction? And well we can't give you any
advice. I mean, what is the point of having a workman's comp
board if they ain't there for the people that's been hurt? These
businesses and the insurance companies are making a killing and
the injured worker is a dead man walking. He's no longer, my
life is no longer my life, everybody else runs my life anymore.
I can't do what I used to do. My family has done without. It's
the workman's comp thing is a nightmare and I've gone to
attorneys and when I tell them well who the insurance companies
are well, oh no we won't have nothing to do with that. We won't
take it. So where do I go? I can't read and write. I don't know
how to go about it and I've really been discriminated against
all the way through this. I'm kind of against this thing you
guys got going here because there's a lot of contradictions and
stuff that ain't right to me and it looks like what it's
basically for is to protect the employer and the insurance
company and as far as the injured person, he's totally
handicapped for life. He ain't worth nothing. My whole life's
been shot down the drain. My family has gone through a
nightmare. And there are a lot of other people out there, there
are people out there, I've been denied, denied, denied and so
have they. There are people who lost their houses, they've lost
everything they've ever worked for. They've lost their families
and then they take their lives because they ain't got nothing
else left. There is a whole bunch of stuff that needs to be
figured out to where the worker gets compensated instead of
feeling like a number like you're in prison because when you get
hurt, you're no longer a person, you're a number as far as the
workman's comp board goes. So I always thought of myself more
than a number. I've had a lot of people thought I've been a hard
worker that would always hire me back and now I can't go to
work. So what am I supposed to do? Everything they got going,
social security, welfare and all this, they're trying to cut
that out. I get $17 a month for food for three people. Well,
that's going to get me a long ways. I mean, nobody knows what
workman's comp is all about until they wind up getting hurt and
losing everything they got and see just how corrupt the system
actually is. There's a whole lot more I got to say but you
probably ain't got all day to listen to it but I really feel
like I've been discriminated against, and my family has been
having to suffer for the workman's comp and the insurance
companies and the employers mistakes. I guess that's all I can
say right now because I know you guys kind of on a time schedule
but I'm really disappointed in the system and the way it works.
CHAIR BUNDE: Thank you Mr. Sigman for sharing your experience
with us. We are certainly trying to make it better for everyone
and you sharing your experience will help.
MR. SIGMAN: If the insurance company would pay for what they're
supposed to, everybody wouldn't have to go on welfare, which
would save the state a lot more money too. I don't see what,
like I said, I'd like to know who the workman's comp board does
work for.
3:25:04 PM
DR. BILL PFIEFER, Vice President, Alaska Chiropractic Society,
and the American Chiropractic Association of Alaska delegate: SB
130 and the Governor's transmittal letter indicate that the
ACOEM guidelines are to be used as a benchmark for medical
treatment. You should have in front of you two studies that I
forwarded to Senator Bunde's office. They are both analysis of
those ACOEM guidelines that conclude and advise against using
these guidelines without any substantial change. The mandated
use of these guidelines is not based on solid scientific
investigation or a consensus of those likely to be affected by
its implementation. They point out that these guidelines do not
currently represent an unbiased and comprehensive means of
evaluating care rendered to injured workers and should be
substantially modified or rejected. So given that I've got one
minute, that concludes that, and I've asked you to review those
documents and the Alaskan Chiropractic Society and the American
Chiropractic Association stand ready to help you in any way that
we can. I also have testimony that we submitted to the ad hoc
committee that I'd be glad to make available to your committee
or any other Senators or legislators.
CHAIR BUNDE: If you'd forward that to the committee, I'll see
the committee members get a copy.
3:26:42 PM
MICHAEL CUNNINGHAM, chief financial officer, Chugach Electric
Association: We have two primary workers comp classifications,
clerical and electric light or power company. In both of these
classifications over the last three years, we've seen rate
increases between 78 and 86 percent in computing our manual
rates. Obviously we've had to quit our workman's comp coverage,
such as increasing our self-insured retention, things of that
nature, to make the premiums more palatable. At this point,
we're still evaluating the bill, and we do thank you for the
opportunity to enter this testimony. Thank you.
3:27:48 PM
CHAIR BUNDE: That brings us to the allotted time and apologies
to anyone who didn't get a chance to testify. This bill is still
a work in progress. Obviously we're still just getting started
in mark up. We will address the bill next Tuesday at 1:30 and
that will be the sole focus of our attention at this point.
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