Legislature(2007 - 2008)BELTZ 211

01/25/2008 03:00 PM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Rescheduled from 01/24/08 --
+= SB 101 GUARDIANSHIP AND CONSERVATORS TELECONFERENCED
Moved CSSB 101(L&C) Out of Committee
Bills Previously Heard/Scheduled
= SB 147 WORKERS' COMP EMPLOYER LIABILITY
Heard & Held
= SB 107 NATUROPATHS
Moved CSSB 107(L&C) Out of Committee
                                                                                                                                
            SB 147-WORKERS' COMP EMPLOYER LIABILITY                                                                         
                                                                                                                                
CHAIR ELLIS announced SB 147 to be up for consideration.                                                                        
                                                                                                                                
SENATOR HOLLIS  FRENCH, sponsor of  SB 147, said this  bill tries                                                               
to fix  a severe inequity  that the  addition of three  words "or                                                               
potentially liable"  for securing payment or  compensation to the                                                               
workers' compensation statutes created  when it last went through                                                               
the  legislature.  This means  that    employers who  are  merely                                                               
"potentially liable"  for buying a workers'  compensation policy,                                                               
but who  do not  actually purchase  a policy,  can still  get the                                                               
benefit  of the  exclusiveness of  remedy provisions  in workers'                                                               
compensation statutes.                                                                                                          
                                                                                                                                
3:24:37 PM                                                                                                                    
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Community,  Commerce  and  Economic  Development,  said  she  has                                                               
talked  with  four  attorneys  and  she is  not  quite  sure  she                                                               
understands it.                                                                                                                 
                                                                                                                                
3:25:58 PM                                                                                                                    
SENATOR BUNDE  asked if Tesoro didn't  have workers' compensation                                                               
and hired a sub who did  have workers' compensation and the sub's                                                               
employee  got  hurt,  was his  compensation  limited  to  workers                                                               
compensation. But  if Tesoro purchased workers'  compensation and                                                               
the person gets hurt, is Tesoro immune from tort suits.                                                                         
                                                                                                                                
3:27:46 PM                                                                                                                    
MS. HALL said she couldn't answer the question.                                                                                 
                                                                                                                                
PAUL  LISANKIE,  Director,  Division  of  Worker's  Compensation,                                                               
Alaska Department of Labor and  Workforce Development, said he is                                                               
not an  expert in  tort legislation either,  but he  attempted to                                                               
explain:                                                                                                                        
                                                                                                                                
     Under  the   2004  law  the  project   owner  would  be                                                                    
     potentially  liable  for   everybody  below  for  their                                                                    
     workers' compensation  only if the people  that had the                                                                    
     primary   responsibility    failed   to    cover   that                                                                    
     responsibility. So  they would only be  responsible for                                                                    
     that  injured subcontractor  if both  the subcontractor                                                                    
     employer and the  intermediary general contractor, both                                                                    
     of  them, failed  to  cover  the workers'  compensation                                                                    
     coverage. Then  the project owner would  be responsible                                                                    
     for paying those workers'  compensation benefits and in                                                                    
     exchange,  in a  sense, they  would not  be liable  for                                                                    
     being sued  for the damages.  That was under  '04. They                                                                    
     weren't   very  likely   to   have   to  pay   workers'                                                                    
     compensation.  I   would  certainly  agree   with  that                                                                    
     characterization,  that the  primary responsibility  is                                                                    
     with  the subcontractor  employer. And  presumably most                                                                    
     of them  follow the  law. If they  fail, then  it would                                                                    
     move up  one step  to the  general contractor  for whom                                                                    
     they are  working and most  of them follow the  law and                                                                    
     have workers' compensation liability coverage.                                                                             
                                                                                                                                
     But  in the  event that  both  of those  fail, then  it                                                                    
     would flow up  to the project owner and  under the laws                                                                    
     that  were  changed  in  2004,   they  would  now  have                                                                    
     responsibility for workers'  compensation payments that                                                                    
     they didn't use to have.                                                                                                   
                                                                                                                                
     But the  change in '04 was  they were added to  the mix                                                                    
     of  people  that  had  this  very  somewhat  attenuated                                                                    
     liability  for the  workers'  compensation benefits  to                                                                    
     the lower employees.  They didn't use to  have that. It                                                                    
     used to stop  at the general contractor.  They were the                                                                    
     only intermediary  other than the actual  employer that                                                                    
     was required to pay  workers' compensation benefits. In                                                                    
     '04  the  project  owners  were added  to  be  kind  of                                                                    
     suspenders on  top of the belt  on top of the  belt. So                                                                    
     it was  like primary responsibility with  the employer,                                                                    
     secondary responsibility  with the  general contractor,                                                                    
     and tertiary responsibility with the project owner.                                                                        
                                                                                                                                
     In  exchange,  for  that,  if   you  think  it's  worth                                                                    
     anything, you  know, then they  were exempt  from being                                                                    
     sued  for  that  same  injury   -  even  if  they  were                                                                    
     negligent.                                                                                                                 
                                                                                                                                
     So now  what this bill  before you is talking  about is                                                                    
     taking it back  in the other direction  and saying that                                                                    
     that  is a  too  attenuated  liability. It's  extremely                                                                    
     unlikely....that  they  will  end  up  paying  workers'                                                                    
     compensation even if they have coverage.                                                                                   
                                                                                                                                
     So, as I  understand it, it will be changed  so that if                                                                    
     for some  reason they actually  pay the  benefits, that                                                                    
     they will not  be sued or they cannot be  sued. But the                                                                    
     mere   fact  that   they  might   under  some   set  of                                                                    
     circumstances  be liable  will not  longer shield  them                                                                    
     from a tort suit for their own negligence.                                                                                 
                                                                                                                                
3:32:03 PM                                                                                                                    
SENATOR BUNDE asked  if under current law the  owner that doesn't                                                               
have to buy workers' comp, and if  it went to trial the most they                                                               
would be liable for would be the workers' compensation benefits.                                                                
                                                                                                                                
MR.  LISANKIE replied  with what  he understood  from discussions                                                               
with Ms.  Hall and  others that  a project  owner is  typically a                                                               
company,  and  it  has  the   responsibility  to  cover  workers'                                                               
compensation benefits for its employees;  this would be an add on                                                               
to  that. The  question is  how  much credit  should be  extended                                                               
potentially to  an employee - not  their own - but  of this other                                                               
company that is working for them.                                                                                               
                                                                                                                                
3:33:38 PM                                                                                                                    
SUSAN ORLANSKY, Attorney, Feldman  Orlansky & Sanders, Anchorage,                                                               
said Mr.  Lisankie's understanding of  the law comports  with her                                                               
understanding  both of  how it  is working  currently and  how it                                                               
would be changed under this bill.                                                                                               
                                                                                                                                
SENATOR BUNDE  asked if  this bill passes,  then the  owner would                                                               
not  be forced  to  buy  workers' compensation,  but  even if  he                                                               
bought it, an employee of a  subcontractor who got hurt could sue                                                               
the owner.                                                                                                                      
                                                                                                                                
MS. ORLANSKY said she understands the  way the bill would work is                                                               
if   an  employee   of  a   subcontractor  were   hurt  and   the                                                               
subcontractor  didn't carry  workers' compensation  insurance and                                                               
the general  contractor didn't either,  if the project  owner had                                                               
workers' compensation  or stepped  up to  the plate  and provided                                                               
the equivalent  of workers' compensation benefits,  then he would                                                               
be exempt from a tort suit. If  the cause of the accident was due                                                               
to the  project owner's  negligence and  he didn't  have workers'                                                               
compensation coverage, he could be subject to a tort lawsuit.                                                                   
                                                                                                                                
3:36:03 PM                                                                                                                    
SENATOR BUNDE said he agreed  with Senator French about fairness.                                                               
If this  passes it would be  unfair for owners of  companies that                                                               
would  buy the  insurance  but  still be  subject  to a  personal                                                               
injury suit.  However, it may  not be any  fairer to leave  it in                                                               
place.                                                                                                                          
                                                                                                                                
3:38:41 PM                                                                                                                    
SENATOR HOFFMAN said  he still doesn't feel  comfortable with the                                                               
issue.                                                                                                                          
                                                                                                                                
CHAIR ELLIS said he would like  to expand the discussion to allow                                                               
more members of the Senate to express themselves.                                                                               
                                                                                                                                
3:39:28 PM                                                                                                                    
SENATOR FRENCH added  that there is a policy decision  to be made                                                               
here and  he agreed  with expanding the  discussion. There  is no                                                               
perfect solution to  every legal issue. However,  he thought this                                                               
bill restores a fundamental balance  in the workers' compensation                                                               
law.                                                                                                                            
                                                                                                                                
CHAIR   ELLIS  said   he  would   hold  the   bill  for   further                                                               
consideration.                                                                                                                  

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