Legislature(2023 - 2024)BELTZ 105 (TSBldg)
02/27/2023 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB60 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 60 | TELECONFERENCED | |
SB 60-REPEAL WORKERS' COMP APPEALS COMMISSION
1:32:34 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO. 60
"An Act repealing the Workers' Compensation Appeals Commission;
relating to decisions and orders of the Workers' Compensation
Appeals Commission; relating to superior court jurisdiction over
appeals from Alaska Workers' Compensation Board decisions;
repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of
Appellate Procedure, and amending Rules 202(a), 204(a) - (c),
210(e), 601(b), 602(c) and (h), and 603(a), Alaska Rules of
Appellate Procedure; and providing for an effective date."
CHAIR BJORKMAN recognized Senator Wielechowski and invited him
to introduce the bill.
[This is the first hearing of SB 60.]
1:32:55 PM
SENATOR BILL WIELECHOWSKI, District K, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 60. He said this bill would repeal
the Alaska Workers' Compensation Appeals Commission (AWCAC) and
return the cases to the Superior Court. The Superior Court
handled these cases for decades. In 2005 the legislature created
the Alaska Workers' Compensation Appeals Commission with two
specific goals:
1. To have a specialized agency to reduce Supreme Court appeals
by creating precedent.
2. To save time.
SENATOR WIELECHOWSKI said neither of the goals has happened.
Roughly 50 percent of the cases take far longer than they did,
and the Supreme Court ruled that the commission cannot set
precedent. So, the commission has not met either of the goals.
SENATOR WIELECHOWSKI said the commission handled 14 cases and
published five decisions in 2022. Repealing the commission and
returning workers' compensation (WC) appeals cases to the
Superior Court will:
- save money by eliminating this agency,
- help fill the Alaska workers' compensation budget deficit,
- preserve a worker's right to have their appeals heard in
court, and
- save at least $433,000 per year.
1:34:34 PM
SENATOR WIELECHOWSKI reviewed the staffing numbers of the
Workers' Compensation Appeals Commission. He said it has two
full-time staff, an attorney chair, and an administrative
support position. The commissioners are entitled to travel and
per diem compensation. The court confirmed it would submit a
zero fiscal note for SB 70. He said that this year the governor
is proposing to increase the commission funding to $479,000 to
pay for the attorney chair and statutory pay raise, so the
amount this bill saves would increase.
SENATOR WIELECHOWSKI said the Workers' Compensation Appeals
Commission no longer has the workload to justify its existence.
The commission received 49 filed cases in the first full year of
its existence and issued 42 published decisions in 2006. It
received 14 new cases and published five decisions in 2022. A
Legislative Research table titled "Cases Before the Alaska
Workers' Compensation Appeals Commission (AWCAC), 2005 - 2025"
shows this was not the result of COVID but a long-term trend of
falling case numbers. The commission's workload is so small that
the Office of Administrative Hearings recommended the chair be
assigned non-workers' compensation cases. Workers' compensation
claims have fallen consistently over the last decade, and it is
reasonable to expect that the number of appeals will continue to
fall.
1:35:50 PM
SENATOR WIELECHOWSKI said returning these cases to the Superior
Court would reduce the number of appeals to the Supreme Court,
leading to a faster, final resolution. When the Superior Court
heard appeals in 2005, 25 percent of the decisions were appealed
to the Supreme Court. That number has doubled to 50 percent
since 2011 under the Workers' Compensation Appeals Commission.
Supreme Court appeals can and often do delay final resolution up
to five years.
SENATOR WIELECHOWSKI said the Alaska Workers' Compensation
Program has a growing budget deficit; SB 60 will reduce that.
Workers' compensation insurance taxes are supposed to fund the
Alaska Workers' Safety and Compensation Program, but these taxes
are no longer enough to support that program. The program costs
$9.1 million but only raised $6.1 million in taxes in FY2022 and
is expected to decrease to $5.5 million this year. Unrestricted
general funds (UGF) fill the deficit, but a tax increase will
likely be necessary if the deficit continues to grow.
1:36:58 PM
SENATOR WIELECHOWSKI explained the Superior Court is better
equipped to handle these cases. The commission primarily handles
matters of law; however, the chair is the only staff person
required to be an attorney. None of the current commissioners
list any legal training in their biographies. The courts have
more resources for pro se or low-income parties than the
commission. For example, the courts provide translation services
for people who speak other languages, and the commission does
not.
SENATOR WIELECHOWSKI noted this bill has been around for several
years. Previously, it passed the other body unanimously. He
brought the bill forward again to save money, help close the
state's budget deficit, and eliminate an agency that outlived
its efficiency.
1:38:13 PM
DAVID DUNSMORE, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, gave a presentation on SB 60. He
spoke to four major points of the bill on slide 2:
Senate Bill 60
Repeals the Alaska Workers' Compensation Appeals
Commission
Returns jurisdiction over Workers' Compensation
appeals to the Superior Court
Saves $433,000 per year
Helps fill the Workers' Compensation budget deficit
and make Alaska's Workers' Compensation system more
solvent
1:38:59 PM
MR. DUNSMORE reviewed the flowchart on slide 3. The chart
illustrates the current flow of a contested workers'
compensation claim versus the bill's proposed flow. The flow is
the same until a board decision is appealed. Then, it goes
either to a commission under the current process or the Superior
Court under SB 60. In either case, the Alaska Supreme Court
hears final appeals. The flowchart on slide 3 reads:
Worker Files Workers'
Compensation Claim
Workers' Compensation Board
(Hearing Panel of Labor member, Management member and
Hearing Officer)
If a Party Appeals the Board Decision
CURRENT SYSTEM SENATE BILL 60
Workers' Compensation Superior Court
Appeals Commission
(Hearing Panel of Labor member,
Management member, and Full-Time
Attorney Chair)
ALASKA SUPREME COURT ALASKA SUPREME COURT
MR. DUNSMORE noted the Workers' Compensation Board hearing panel
consists of a hearing officer who chairs the panel, one labor
member, and one management member. The Workers' Compensation
Appeals Commission hearing panel consists of an attorney who
chairs the panel, one labor member, and one management member.
MR. DUNSMORE explained this bill returns the appeals process to
the pre-2005 system where the Superior Court heard workers'
compensation appeals. He noted the Alaska Supreme Court hears
all final appeals, whether under the current system or SB 60.
1:39:56 PM
MR. DUNSMORE compared the cost of doing business under the
current system versus SB 60 on slide 4:
SB 60 Will Save $433,000 Per Year
Currently the Commission has 2 full-time employees and
pays for commissioners' travel and per diem
Previously, the Court System has testified that they
can absorb these cases with a zero fiscal note
1:40:39 PM
MR. DUNSMORE summarized a graph on slide 5 titled "WCAC Workload
has Fallen Dramatically," extracted from Legislative Research
Services Report 23-057. The graph shows that cases and decisions
have fallen dramatically between 2007 and 2022. Forty-nine cases
were filed in 2007 with 42 published decisions, whereas ten were
filed in 2022 with five published decisions.
1:40:50 PM
MR. DUNSMORE reviewed a quote on slide 6 from the 29th
Legislature, House Department of Labor and Workforce Development
Finance Subcommittee, FY2016 Narrative Report dated February 25,
2015. It identified AWCAC as an ineffective division and
recommended its elimination. He pointed out the AWCAC workload
was significantly higher at that time than it is today. The
quote reads:
"The Worker's Compensation Appeals Commission is an
ineffective division? The Commission during the
calendar year of 2013 closed 30 cases for a closure
rate of 67 percent with an average time from filing to
closure of seven months. This closure rate and average
time for closure is not demonstrably better than the
process was before the establishment of the
commission."
1:41:27 PM
MR. DUNSMORE reviewed facts on slide 7, substantiating the
commission had not achieved its goal of providing final
resolutions faster than the courts:
The Workers' Compensation Appeals Commission Has Not
Closed Cases Faster than the Courts
• The Superior Court took "8 to 18 months" to decide
Workers' Compensation Appeals.
• When it was created, it was estimated that the
Commission could decide cases in 6 months.
• Instead, in 2018 it averaged 371 days (12.2 months)
to decide cases.
• Even as their workload decreased, in 2021 they still
averaged 282 days (9.3 months) to decide cases.
• More Commission decisions are appealed to the
Supreme Court, adding months to years before final
resolution.
Sources: Testimony of Paul Lisankie, Director,
Division of Workers' Compensation, Senate Labor and
Commerce Committee, March 10, 2005.
Alaska Workers' Compensation Appeals Commission Annual
Report for Calendar Year 2021.
1:42:16 PM
MR. DUNSMORE compared the number of Superior Court and
commission decisions appealed to the Supreme Court on slide 8:
SB 60 Will Reduce Appeals to the Supreme Court
When the Superior Court handled appeals approximately
25% of their decisions were appealed to the Supreme
Court.
Since the Commission was created in 2005, 36% of its
decisions have been appealed to the Supreme Court.
Since 2011, 50% of Commission decisions have been
appealed.
Sources: Testimony of Doug Wooliver, administrative
attorney, Alaska Court System, Senate Labor and
Commerce Committee, March 10, 2005.
Legislative Research Services Report 19-175.
MR. DUNSMORE said that an increasing number of commission
decisions are appealed to the Supreme Court.
1:42:43 PM
MR. DUNSMORE reviewed the bar graph on slide 9, which shows a
growing budget deficit for the Alaska Workers' Compensation and
Safety Program. The graph shows program costs remaining constant
at $9.1 million. However, the tax income that funds the program
declined from $8 million in FY2019 to $5.5 million in FY2023. He
said tax income is projected to continue to decline. So, it is
anticipated that UGF will backfill about a $4 million budget
deficit this fiscal year. He said the legislature should address
this long-term structural deficit to avoid the risk of higher
taxes and higher workers' compensation costs for employers.
Slide 9 reads:
Alaska's Workers' Compensation and Safety Program
Faces a Growing Budget Deficit-SB 60 Will Help Fill It
• Workers' Compensation and Safety are funded by a tax
on Workers' Compensation payments.
• These programs cost $9.1 million annually and are
projected to remain flat.
• Saving $433,000 will help close the growing budget
gap.
Sources: Legislative Finance Division
Department of Revenue, Revenue Sources Book, Fall 2019
1:43:41 PM
MR. DUNSMORE summarized the bottom line on slide 10:
Bottom Line
SB 60 saves $433,000 annually
Preserves parties' right to have their cases heard in
timely manner
Will reduce appeals to the Supreme Court
Makes Alaska's Workers' Compensation system more
solvent
1:44:08 PM
SENATOR DUNBAR expressed confidence that the two full-time
employees whose jobs would be eliminated if SB 60 were to pass
would be picked up by another state agency.
He drew attention to the bar graph on slide 9 and asked why the
tax revenue is declining so precipitously.
MR. DUNSMORE replied he would do a little research and respond
to the committee in writing. He expressed his understanding that
there is a fixed percentage rate based on premiums. As the
premiums decline, the percentage declines.
1:45:21 PM
SENATOR BISHOP chimed in that the slide shows the department's
safety and health programs have been proactive since about 2006
[see slide 6]. Accident rates are trending downward. He
explained that a safer workforce positively affects the state's
experience ratings and lowers premiums. Lowered premiums
generate less tax revenue. He said that he interprets the trend
on slide 6 as a good thing.
1:46:21 PM
CHAIR BJORKMAN asked what percentage of AWCAC appeals are upheld
by the [Alaska Supreme Court].
MR. DUNSMORE referenced a Legislative Research chart titled
"Cases Before the Alaska Workers' Compensation Appeals
Commission (AWCAC), 2005-2022," an excerpt from Report 23-057,
dated January 2023. He cited the chart's outcomes of appeals to
the Alaska Supreme Court:
48.4 percent dismissed/remanded/vacated/denied
these can also be out-of-court settlements
25.2 percent affirmed
16.1 percent reversed
6.5 percent split decision - affirmed/reversed in part
3.9 percent of cases are still pending
1:47:55 PM
At ease.
1:49:25 PM
CHAIR BJORKMAN reconvened the meeting and invited Mr. Collins to
answer questions on SB 60.
1:49:45 PM
CHARLES COLLINS, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development, Juneau, Alaska,
introduced himself.
1:49:55 PM
SENATOR DUNBAR said slide 9 shows a decline in tax revenue. He
wondered what caused the drop to occur.
MR. COLLINS answered the question in two parts. He said that the
first part has to do with the workers' compensation safety
account. It is filled by a 2.9 percent fee on top of all self-
insured [employers] workers' compensation insurance premiums.
The money goes into the Workers' Safety and Compensation
Administration Account (WSCAA) fund. The Workers' Compensation
and Alaska Occupational Safety and Health (AKOSH) Programs use
these funds.
MR. COLLINS gave a history lesson to explain why tax revenue
drops sometimes. He explained that Alaska had the highest
workers' compensation premiums in the nation in 2012. In
conjunction with the Alaska Workers' Compensation Board, the
Division of Workers' Compensation director made a radical move
to adjust Alaska's fee schedule from usual and customary charges
to Centers for Medicare and Medicaid Services (CMS)-based fees
in 2012. They knew this would affect businesses that made money
providing medical services to injured people and did not want to
lose providers, especially in less urban locations. So, self-
regulated doctors, insurance adjusters, and the Division of
Workers' Compensation director carefully worked on setting up a
Medical Services Review Committee. Every year they monitor and
adjust the cost tied to the CMS model. This brought Alaska down
from the highest workers' compensation premiums in the nation in
2012 to number 21 in 2022. These medical costs improved more
than any other state in the country ever has by self-regulation.
He noted that no providers were lost in the process, and the
change made it somewhat less expensive for workers and
employers. He said the Division of Insurance sets premiums based
on recommendations from the National Council of Comprehensive
Insurance, an actuary that works with 40 jurisdictions in the
country. The Division of Insurance and its group may accept the
recommendation as is or adjust them. He emphasized the division
lowered the workers' compensation insurance premiums for the
tenth year.
1:54:19 PM
MR. COLLINS said that the second part of the answer concerns
labor standards and industry. Labor standards and industry are
more aware of the cost of on-the-job injuries and have taken
drastic steps to ensure safer workplaces. Raising safety
awareness has become ubiquitous, like signs that tout a
company's safety record and safety meetings. He gave the example
of Kensington Mine, which has a daily safety briefing and weekly
safety meetings before every shift. Kensington Mine requires all
supervisors to have an additional weekly supervisor safety
meeting. He said increased awareness across Alaska and the
nation has made workplaces safer.
SENATOR DUNBAR expressed appreciation for the thorough and
informative answer.
1:55:40 PM
SENATOR GRAY-JACKSON said the Municipality of Anchorage swapped-
out solid waste garbage trucks that required workers to get out
of the truck to empty trash cans. She said the municipality now
has new mechanized vehicles. She expressed curiosity to know if
the municipality statistics for WC claims have declined since
the city launched the new vehicles.
MR. COLLINS replied that he could not speak directly to the
municipality's WC claim statistics. He spoke to two garbage-
pickup providers last week about slip and fall events associated
with three-yard dumpsters. The two garbage-pickup providers
indicated they have better protocols and use personal protective
equipment (PPE), such as ice cleats and better gloves. They
increased the number of workers for commercial pickups in winter
to cut down on slip-and-fall accidents. This is another case
where employers conscientiously took preventative measures to
avoid injuries. He said he would collect statistics if needed.
SENATOR GRAY-JACKSON said she would follow up with the
Municipality of Anchorage for those numbers.
1:58:25 PM
CHAIR BJORKMAN opened public testimony on SB 60.
1:58:48 PM
DON ETHERIDGE, Lobbyist, Alaska - American Federation of Labor
and Congress of Industrial Organizations (AFL-CIO), Juneau,
Alaska, testified in support of SB 60. He said the Workers'
Compensation Appeals Commission was a failed experiment. The
commission was supposed to increase the appeals processing speed
but slowed it down. He added there have been more appeals in the
long run. He indicated that his numbers match the numbers
Senator Wielechowski cited.
2:00:07 PM
CHAIR BJORKMAN kept public testimony open and held SB 60 in
committee.