Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/02/2018 09:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time & Date --
Moved CSSSSB 112(L&C) Out of Committee
Moved CSSB 38(L&C) Out of Committee
Scheduled but Not Heard
Heard & Held
Moved CSHB 79(FIN) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 2, 2018                                                                                          
                           9:09 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Mia Costello, Chair                                                                                                     
Senator Kevin Meyer, Vice Chair                                                                                                 
Senator Berta Gardner                                                                                                           
Senator Peter Micciche                                                                                                          
MEMBERS ABSENT                                                                                                                
Senator Gary Stevens                                                                                                            
COMMITTEE CALENDAR                                                                                                            
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 112                                                                                      
"An  Act  relating  to   the  controlled  substance  prescription                                                               
database;   relating   to   disability;   excluding   independent                                                               
contractors  from   workers'  compensation   coverage;  employer-                                                               
required drug  testing; relating to the  office of administrative                                                               
hearings; and providing  for an effective date."  relating to the                                                               
Alaska Workers'  Compensation Board;  relating to the  payment of                                                               
workers'  compensation  or   benefits;  relating  to  compensable                                                               
injuries; relating to rehabilitation  and reemployment of injured                                                               
workers;  relating  to  reemployment vouchers;  relating  to  the                                                               
treatment  or care  of employees;  relating to  use of  evidence-                                                               
based   treatment   guidelines;   relating  to   prescribing   or                                                               
dispensing  a   controlled  substance   to  an  employee   for  a                                                               
compensable   injury;    relating   to    workers'   compensation                                                               
prehearings;  relating  to  the  filing of  claims  for  workers'                                                               
compensation benefits or petitions  for other relief; relating to                                                               
the  burden of  proof and  credibility of  witnesses in  workers'                                                               
compensation matters; relating to  attorney fees; relating to the                                                               
filing of a  verified annual report; relating  to permanent total                                                               
disability; relating to temporary total                                                                                         
     - MOVED CSSSSB 112(L&C) OUT OF COMMITTEE                                                                                   
SENATE BILL NO. 38                                                                                                              
"An  Act relating  to  the registration  and  duties of  pharmacy                                                               
benefits  managers;  relating   to  procedures,  guidelines,  and                                                               
enforcement mechanisms for pharmacy  audits; relating to the cost                                                               
of  multi-source   generic  drugs  and   insurance  reimbursement                                                               
procedures;  relating  to  the  duties of  the  director  of  the                                                               
division of insurance; and providing for an effective date."                                                                    
     - MOVED CSSB 38(L&C) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 205                                                                                                             
"An  Act relating  to the  Regulatory Commission  of Alaska;  and                                                               
relating to telecommunications  regulations, exemptions, charges,                                                               
and rates."                                                                                                                     
     - HEARD & HELD                                                                                                             
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 79(FIN)                                                                                 
"An  Act  relating  to workers'  compensation;  relating  to  the                                                               
second  injury  fund;  relating  companies  may  obtain  workers'                                                               
compensation  coverage;  relating to  the  duties  of injured  to                                                               
service  fees  and  civil  penalties   for  the  workers'  safety                                                               
programs and  the workers'  employees to  report income  or work;                                                               
relating  to  misclassification  of  employees  and  compensation                                                               
program;  relating  to the  liability  of  business entities  and                                                               
certain persons deceptive  leasing; defining 'employee'; relating                                                               
to  the  Alaska Workers'  Compensation  for  payment of  workers'                                                               
compensation  benefits and  civil  penalties;  relating to  civil                                                               
Board's approval of attorney fees  in a settlement agreement; and                                                               
providing  for  an  penalties for  underinsuring  or  failing  to                                                               
insure  or   provide  security  for  workers'   effective  date."                                                               
compensation liability;  relating to preauthorization  and timely                                                               
payment for  medical treatment and  services provided  to injured                                                               
employees; relating  to incorporation  of reference  materials in                                                               
workers'  compensation   regulations;  relating   to  proceedings                                                               
before the  Alaska Workers' Compensation  Board; relating  to the                                                               
authorization  of  the  workers' compensation  benefits  guaranty                                                               
fund  to claim  a  lien; excluding  independent contractors  from                                                               
workers'  compensation coverage;  establishing the  circumstances                                                               
under which certain nonemployee  executive corporate officers and                                                               
members of limited liability                                                                                                    
     - MOVED CSHB 79(FIN) OUT OF COMMITTEE                                                                                      
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 170(JUD)                                                                                
"An Act relating to  securities, registration, exempt securities,                                                               
exempt transactions,  broker-dealers, agents,  investment advice,                                                               
investment advisers, investment  adviser representatives, federal                                                               
covered   securities,   federal  covered   investment   advisers,                                                               
viatical   settlement   interests,  small   intrastate   security                                                               
offerings,   Canadian   broker-dealers,  and   Canadian   agents;                                                               
relating  to   protecting  older   and  vulnerable   adults  from                                                               
financial  exploitation; relating  to administrative,  civil, and                                                               
criminal enforcement provisions,  including restitution and civil                                                               
penalties for violations; relating  to an investor training fund;                                                               
establishing increased civil penalties  for harming older persons                                                               
and vulnerable  adults; relating to corporations  organized under                                                               
the Alaska  Native Claims  Settlement Act;  amending Rules  4, 5,                                                               
54, 65,  and 90, Alaska Rules  of Civil Procedure, and  Rule 602,                                                               
Alaska  Rules  of  Appellate  Procedure;  and  providing  for  an                                                               
effective date."                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 112                                                                                                                  
SHORT TITLE: WORKERS COMPENSATION;DRUG DATABASE & TEST                                                                          
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
04/12/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/17       (S)       L&C, FIN                                                                                               
01/22/18       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
01/22/18       (S)       L&C, FIN                                                                                               
02/01/18       (S)       L&C AT 1:00 PM BUTROVICH 205                                                                           
02/01/18       (S)       Heard & Held                                                                                           
02/01/18       (S)       MINUTE(L&C)                                                                                            
03/08/18       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/08/18       (S)       Heard & Held                                                                                           
03/08/18       (S)       MINUTE(L&C)                                                                                            
04/02/18       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
BILL: SB  38                                                                                                                  
SHORT TITLE: PHARMACY BENEFITS MANAGERS                                                                                         
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST                                                                                       
01/25/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (S)       L&C, FIN                                                                                               
03/28/17       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/28/17       (S)       Heard & Held                                                                                           
03/28/17       (S)       MINUTE(L&C)                                                                                            
03/19/18       (S)       L&C AT 6:00 PM BELTZ 105 (TSBldg)                                                                      
03/19/18       (S)       Heard & Held                                                                                           
03/19/18       (S)       MINUTE(L&C)                                                                                            
04/02/18       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
BILL: SB 205                                                                                                                  
SHORT TITLE: TELECOMMUNICATIONS REGULATION/EXEMPTIONS                                                                           
SPONSOR(s): MEYER                                                                                                               
02/19/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/18       (S)       L&C                                                                                                    
02/27/18       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/27/18       (S)       Heard & Held                                                                                           
02/27/18       (S)       MINUTE(L&C)                                                                                            
03/08/18       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/08/18       (S)       Heard & Held                                                                                           
03/08/18       (S)       MINUTE(L&C)                                                                                            
04/02/18       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
BILL: HB  79                                                                                                                  
SHORT TITLE: OMNIBUS WORKERS' COMPENSATION                                                                                      
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
01/25/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (H)       L&C, JUD, FIN                                                                                          
02/20/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/20/17       (H)       Heard & Held                                                                                           
02/20/17       (H)       MINUTE(L&C)                                                                                            
03/01/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/01/17       (H)       <Bill Hearing Canceled>                                                                                
03/06/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/06/17       (H)       Heard & Held                                                                                           
03/06/17       (H)       MINUTE(L&C)                                                                                            
03/08/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/08/17       (H)       <Bill Hearing Canceled>                                                                                
03/15/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/15/17       (H)       -- MEETING CANCELED --                                                                                 
03/17/17       (H)       L&C AT 3:15 PM CAPITOL 106                                                                             
03/17/17       (H)       <Bill Hearing Canceled>                                                                                
03/20/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/20/17       (H)       Heard & Held                                                                                           
03/20/17       (H)       MINUTE(L&C)                                                                                            
03/22/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/22/17       (H)       Moved  CSHB 79(L&C) Out of Committee                                                                   
03/22/17       (H)       MINUTE(L&C)                                                                                            
03/24/17       (H)       L&C RPT CS(L&C) NT 3DP 1DNP 1NR 2AM                                                                    
03/24/17       (H)       DP: JOSEPHSON, STUTES, KITO                                                                            
03/24/17       (H)       DNP: KNOPP                                                                                             
03/24/17       (H)       NR: WOOL                                                                                               
03/24/17       (H)       AM: SULLIVAN-LEONARD, BIRCH                                                                            
03/31/17       (H)       JUD AT 1:00 PM GRUENBERG 120                                                                           
03/31/17       (H)       Heard & Held                                                                                           
03/31/17       (H)       MINUTE(JUD)                                                                                            
04/05/17       (H)       JUD AT 1:00 PM GRUENBERG 120                                                                           
04/05/17       (H)       Heard & Held                                                                                           
04/05/17       (H)       MINUTE(JUD)                                                                                            
04/13/17       (H)       JUD AT 5:30 PM GRUENBERG 120                                                                           
04/13/17       (H)       Moved CSHB 79(JUD) Out of Committee                                                                    
04/13/17       (H)       MINUTE(JUD)                                                                                            
04/14/17       (H)       JUD RPT CS(JUD) NT 2DP 5NR                                                                             
04/14/17       (H)       DP: LEDOUX, CLAMAN                                                                                     
04/14/17       (H)       NR:   EASTMAN,   KOPP,   KREISS-TOMKINS,                                                               
                         FANSLER, REINBOLD                                                                                      
02/05/18       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/05/18       (H)       Heard & Held                                                                                           
02/05/18       (H)       MINUTE(FIN)                                                                                            
02/15/18       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/15/18       (H)       Heard & Held                                                                                           
02/15/18       (H)       MINUTE(FIN)                                                                                            
02/19/18       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/19/18       (H)       Moved CSHB 79(FIN) Out of Committee                                                                    
02/19/18       (H)       MINUTE(FIN)                                                                                            
02/21/18       (H)       FIN RPT CS(FIN) NT 3DP 2DNP 3NR 2AM                                                                    
02/21/18       (H)       DP: GUTTENBERG, SEATON, FOSTER                                                                         
02/21/18       (H)       DNP: WILSON, TILTON                                                                                    
02/21/18       (H)       NR: ORTIZ, THOMPSON, GRENN                                                                             
02/21/18       (H)       AM: KAWASAKI, PRUITT                                                                                   
03/12/18       (H)       TRANSMITTED TO (S)                                                                                     
03/12/18       (H)       VERSION: CSHB 79(FIN)                                                                                  
03/14/18       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/18       (S)       L&C, FIN                                                                                               
04/02/18       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
NATASHA MCCLENAHAN, Staff                                                                                                       
Senator Mia Costello                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented the committee substitute for SB                                                                 
112 and the committee substitute SB 38.                                                                                         
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 112                                                                                         
RICHARD HOLT, Chair                                                                                                             
Board of Pharmacy                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 38.                                                                            
EDRA MORLEDGE, Staff                                                                                                            
Senator Kevin Meyer                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented the committee substitute for SB                                                                 
CHRISTINE O'CONNOR, Executive Director                                                                                          
Alaska Telecom Association                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided information on SB 205.                                                                           
EMILY NAUMAN, Deputy Director                                                                                                   
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided information on SB 205.                                                                           
DAVID PARISH, Common Carrier Specialist IV                                                                                      
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided information on SB 205.                                                                           
STEPHEN MCALPINE, Chair                                                                                                         
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided information on SB 205.                                                                           
KRISTIN SCHUBERT, Manager                                                                                                       
Commission Section                                                                                                              
Regulatory Commission of Alaska                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided information on SB 205.                                                                           
JAMES JACKSON, Legal Counsel                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided information on SB 205.                                                                           
HEIDI DRYGAS, Commissioner                                                                                                      
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided introductory comments on HB 79.                                                                  
MARIE MARX, Director                                                                                                            
Division of Workers' Compensation                                                                                               
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented HB 79.                                                                                          
BRONSON FRYE, Painters Union Local 1959                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 79.                                                                            
LAURA BONNER, representing self                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 79.                                                                            
DON ETHERIDGE, Lobbyist                                                                                                         
Alaska AFL-CIO                                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HB 79.                                                                            
CHRIS DIMOND, Organizer                                                                                                         
Pacific Northwest Regional Council of Carpenters                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support HB 79.                                                                               
ACTION NARRATIVE                                                                                                              
9:09:21 AM                                                                                                                    
CHAIR MIA COSTELLO called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 9:09  a.m. Present at the  call to                                                               
order  were   Senators  Gardner,   Meyer,  Micciche,   and  Chair                                                               
        SB 112-WORKERS COMPENSATION;DRUG DATABASE & TEST                                                                    
9:10:30 AM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 112 and noted                                                                  
the proposed committee substitute (CS).                                                                                         
9:10:54 AM                                                                                                                    
NATASHA MCCLENAHAN, Staff, Senator Mia Costello, Alaska State                                                                   
Legislature, Juneau, Alaska, reviewed the following changes from                                                                
version L to S of SB 112:                                                                                                       
        • Retains language that repeals and reenacts AS                                                                         
          23.30.145  governing  the  award  and  payment  of                                                                    
          attorney fees.                                                                                                        
        • Retains language amending AS 23.30.230(a) to                                                                          
          provide a definition of "independent contractor."                                                                     
        • Retains an applicability provision that states                                                                        
          secs. 1-2 of the Act  apply to claims for injuries                                                                    
          filed  on or  after the  effective dates  of those                                                                    
        • Establishes the Workers' Compensation Working                                                                         
          Group in the Department  of Commerce Community and                                                                    
          Economic  Development, division  of insurance,  to                                                                    
          review  the State's  Worker's compensation  system                                                                    
          and  provide  recommendations to  the  Legislature                                                                    
          for  reforming  the  system. The  workgroup  shall                                                                    
          provide a  report to  the Legislature  by December                                                                    
          1, 2018.                                                                                                              
        • Removes all other sections in Version L                                                                               
9:12:22 AM                                                                                                                    
SENATOR MEYER moved to adopt the  work draft CS for SSSB 112, 30-                                                               
LS0318\S, as the working document.                                                                                              
CHAIR COSTELLO found no objection  and version S was adopted. She                                                               
said  the bill  retains  two of  the elements  that  came in  the                                                               
second  version as  introduced by  the sponsor.  She worked  with                                                               
parties  involved in  this issue  and realized  that it  would be                                                               
best  to create  a working  group, so  the parties  can work  out                                                               
differences. The report to the  legislature would be due December                                                               
1, 2018 and then the working  group would disband on the last day                                                               
of January 2019.                                                                                                                
9:13:41 AM                                                                                                                    
SENATOR  GARDNER  said  she  believes   that  attorneys  for  the                                                               
employers or insurance companies are  often on retainer. The cost                                                               
or  time to  pursue a  case is  of no  direct consequence  to the                                                               
employer's attorney,  but the injured  worker's attorney  is very                                                               
much impacted  by the provision  that limits what they  can earn.                                                               
Section 1  would make  it more difficult  for injured  workers to                                                               
get representation.                                                                                                             
CHAIR COSTELLO said the next  committee of referral can work with                                                               
the working group  to resolve any issues it sees.  She noted that                                                               
the bill goes to Senate Finance next.                                                                                           
9:15:00 AM                                                                                                                    
SENATOR  GARDNER said  she  sees  this as  a  Labor and  Commerce                                                               
9:15:12 AM                                                                                                                    
SENATOR MEYER said his question  is more finance related, but the                                                               
fiscal note  adds 24  full-time employees  for the  Department of                                                               
Administration   that  come   from   the  Workers'   Compensation                                                               
Division.  He asked  if there  will be  a corresponding  decrease                                                               
from the Workers' Compensation Division.                                                                                        
MS. MCCLENAHAN  said that section  that spurred that  fiscal note                                                               
was removed from the current version of the bill.                                                                               
SENATOR MEYER said  then this is not the correct  fiscal note for                                                               
the committee substitute.                                                                                                       
MCCLENAHAN agreed.                                                                                                              
SENATOR MEYER asked the sponsor of SB 112 to comment.                                                                           
9:16:35 AM                                                                                                                    
SENATOR CATHY GIESSEL, Alaska  State Legislature, Juneau, Alaska,                                                               
sponsor  of SB  112, said  she has  no comment  on the  committee                                                               
substitute. She defers to the will of the committee.                                                                            
SENATOR MEYER said this appears to be a compromise.                                                                             
9:17:11 AM                                                                                                                    
SENATOR MEYER moved  to report [the CS for SSSB  112], version S,                                                               
from  committee with  individual recommendations  and forthcoming                                                               
fiscal note(s).                                                                                                                 
9:17:32 AM                                                                                                                    
SENATOR GARDNER objected.                                                                                                       
CHAIR COSTELLO asked for a roll call vote.                                                                                      
9:17:59 AM                                                                                                                    
A roll  call vote was  taken. Senators Micciche,  Meyer, Costello                                                               
voted in  favor of the  motion and Senator Gardner  voted against                                                               
it.  Therefore,  the  motion  to   report  CSSSSB  112(L&C)  from                                                               
committee passed with a 3:1 vote.                                                                                               
                SB  38-PHARMACY BENEFITS MANAGERS                                                                           
9:18:15 AM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 38 and noted                                                                   
the proposed committee substitute (CS).                                                                                         
9:18:29 AM                                                                                                                    
SENATOR MEYER moved to adopt the work draft CS for SB 38, 30-                                                                   
LS0190\D, as the working document.                                                                                              
CHAIR COSTELLO objected for an explanation.                                                                                     
9:18:49 AM                                                                                                                    
NATASHA MCCLENAHAN, Staff, Senator Mia Costello, Alaska State                                                                   
Legislature, Juneau, Alaska, presented the following changes                                                                    
from version A to version D for SB 38.                                                                                          
        • Page 6, Lines 22-25: Changes language in relation                                                                     
          to  pharmacies'   appeals  of   pharmacy  benefits                                                                    
          manager's reimbursements  for multi-source generic                                                                    
          drugs below  pharmacy acquisition cost in  which a                                                                    
          pharmacy  benefits  manager  may grant  a  network                                                                    
          pharmacy's appeal.                                                                                                    
        • Removes unrequired language that referenced a                                                                         
          definition for the board of pharmacy.                                                                                 
        • Page 9, Line 6 updates language to correctly                                                                          
          reference AS 21.97.900(27).                                                                                           
        • Updates the effective date provision to reflect                                                                       
          July 1, 2019.                                                                                                         
9:19:33 AM                                                                                                                    
CHAIR COSTELLO removed her objection and version D was adopted.                                                                 
SENATOR MICCICHE asked Mr. Holt to speak to the changes.                                                                        
9:20:33 AM                                                                                                                    
RICHARD HOLT, Chair, Board of Pharmacy, Anchorage, Alaska,                                                                      
stated support for SB 38 on behalf of the Board of Pharmacy.                                                                    
SENATOR MICCICHE asked if the board specifically supports the                                                                   
committee substitute, version D.                                                                                                
MR. HOLT confirmed the board approves of the changes in version                                                                 
9:21:18 AM                                                                                                                    
At ease                                                                                                                         
9:21:54 AM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
9:22:04 AM                                                                                                                    
SENATOR MEYER moved  to report the CS for SB  38, version D, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
9:22:19 AM                                                                                                                    
CHAIR  COSTELLO announced  that without  objection, CSSB  38(L&C)                                                               
moves from the Senate Labor and Commerce Standing Committee                                                                     
9:22:33 AM                                                                                                                    
At ease                                                                                                                         
        SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS                                                                     
9:28:21 AM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  SB  205.  She  noted  the  proposed  committee                                                               
substitute (CS).                                                                                                                
9:28:56 AM                                                                                                                    
SENATOR MEYER  moved to adopt the  work draft CS for  SB 205, 30-                                                               
LS1431\U, as the working document.                                                                                              
CHAIR COSTELLO objected for an explanation.                                                                                     
9:29:20 AM                                                                                                                    
EDRA  MORLEDGE,   Staff,  Senator   Kevin  Meyer,   Alaska  State                                                               
Legislature,  Juneau,   Alaska,  said  there  are   four  primary                                                               
        • Requires telecommunications utilities to continue                                                                     
          to pay an annual Regulatory Cost Charge to the                                                                        
          Regulatory Commission of Alaska.                                                                                      
        • Requires the Regulatory Commission of Alaska to                                                                       
          provide in their annual  report to the Legislature                                                                    
          details pertaining  to how much activity  is spent                                                                    
          on  each  area   of  telecommunication  regulatory                                                                    
        • Removes exemption for AS 42.05.145.                                                                                   
        • Removes transition language that is no longer                                                                         
9:30:20 AM                                                                                                                    
CHAIR COSTELLO removed her objection and version U was adopted.                                                                 
SENATOR GARDNER asked Ms. Morledge to repeat the third change.                                                                  
MS. MORLEDGE said it removes the exemption for AS 42.05.145, the                                                                
exemption   for   telecommunications    regulation   policy   and                                                               
restrictions on regulation of telephone directories.                                                                            
SENATOR MICCICHE asked what the new report might be because that                                                                
cost will be passed on to rate payers.                                                                                          
CHAIR COSTELLO said she'd like to defer the question until after                                                                
the sectional.                                                                                                                  
9:31:46 AM                                                                                                                    
MS. MORLEDGE read the following sectional analysis for SB 205,                                                                  
version U.                                                                                                                      
     Section 1    Municipal powers and  duties. AS 29.35.070                                                                  
     Public  Utilities.  Section  7  repeals  AS  42.05.810,                                                                    
     therefore it is removed  from reference in this section                                                                    
     of the statute.                                                                                                            
     Section 2   Alaska  Public Utilities Regulatory Act. AS                                                                  
     42.05.141 Adds two  new subsections (e) and  (f) to the                                                                    
     general   powers  and   duties   of   the  RCA.   These                                                                    
     subsections   state  that   the   Commission  may   not                                                                    
     designate a local exchange  carrier or an interexchange                                                                    
     carrier as  the carrier  of last  resort, and  that the                                                                    
     Commission      may      designate     an      eligible                                                                    
     telecommunications carrier consistent  with the federal                                                                    
     code  that  allows  for  federal  subsidies  under  the                                                                    
     Universal Service Fund.                                                                                                    
     A  carrier  of  last  resort  is  a  telecommunications                                                                  
     company  that  commits  (or  is  required  by  law)  to                                                                    
     provide service to any customer  in a service area that                                                                    
     requests it,  even if serving  that customer  would not                                                                    
     be economically viable at prevailing rates.                                                                                
     The   Universal   Service   Fund   is   a   system   of                                                                  
     telecommunications  subsidies and  fees managed  by the                                                                    
     U.S.  Federal  Communications  Commission  intended  to                                                                    
     promote   universal    access   to   telecommunications                                                                    
     services  at reasonable  and affordable  rates for  all                                                                    
     Section 3    Annual Report   This  section requires the                                                                
     RCA  to  submit an  annual  report  to the  Legislature                                                                    
     detailing the activity and  costs related to regulating                                                                    
     each type of telecommunications carrier.                                                                                   
     Section 4    Amends  AS 42.05.254(a) from  the previous                                                                  
     Committee  Substitute  that eliminated  the  Regulatory                                                                    
     Cost  Charge. This  section maintains  the current  RCC                                                                    
     funding  mechanism  of  calculating and  assessing  the                                                                    
     charge  and   applies  it  to   all  telecommunications                                                                    
     Sections  5  &  6   both  relate  to  implementing  the                                                                  
     Regulatory  Cost  Charge   for  all  telecommunications                                                                    
     Section 7 - Alaska  Public Utilities Regulatory Act. AS                                                                  
     42.05.711    Exemptions.     This    section    exempts                                                                    
     telecommunications  carriers from  the  Act except  for                                                                    
     the following provisions:                                                                                                  
          • AS 42.05.141(f)    New  section  in  the  bill                                                                      
             (Section 2 above)                                                                                                  
          • AS 42.05.221     Requiring  a  Certificate  of                                                                      
             Public Convenience and Necessity ? AS 42.05.231                                                                    
               Provision for applying for the certificate                                                                       
          • AS 42.05.241  Conditions  of issuing/denial of                                                                      
             a certificate  ? AS  42.05.251    Allow  public                                                                    
             utilities to  obtain a  permit for  the use  of                                                                    
             streets in municipalities                                                                                          
          • AS 42.05.254  Regulatory cost charge                                                                                
          • AS 42.05.261  Prohibits a  public utility from                                                                      
             discontinuing or abandoning service for which a                                                                    
             certificate has been issued                                                                                        
          • AS 42.05.271  Allows the RCA to amend, modify,                                                                      
             suspend or revoke a certificate                                                                                    
          • AS 42.05.281     Prohibiting  a  sale,  lease,                                                                      
             transfer or inheritance of  certificate without                                                                    
             RCA permission                                                                                                     
          • AS 42.05296      Requirements   for  providing                                                                      
             telephone   services   for   certain   impaired                                                                    
          • AS 42.05.306    Allows  discounted  rates  for                                                                      
             customers  receiving  benefits  from  a  social                                                                    
             services assistance program administered by the                                                                    
             state or federal government                                                                                        
          • AS 42.05.631    Allows  a  public  utility  to                                                                      
             exercise the power of eminent domain                                                                               
          • AS 42.05.641   Extends  RCA's jurisdiction  to                                                                      
             public utilities operating in a municipality                                                                       
          • AS 42.05.830   Requires  the RCA  to establish                                                                      
             exchange access  charges  to  be paid  by  long                                                                    
             distance carriers to compensate  local exchange                                                                    
             carriers  for  the  cost   of  originating  and                                                                    
             terminating long distance services                                                                                 
          • AS 42.05.850   Relating to  the administration                                                                      
             of access charges by an exchange carrier                                                                           
          • AS 42.05.840   Allows the  RCA to  establish a                                                                      
             universal service fund                                                                                             
          • AS 42.05.860      Prohibits  a   carrier  from                                                                      
             restricting the resale of telecommunications                                                                       
     Section 8    AS  42.05.820 No Municipal  Regulation. In                                                                  
     addition  to a  long distance  telephone company,  this                                                                    
     section  amends AS  42.05.820  to  add 'local  exchange                                                                    
     carrier'  that is  exempted in  whole or  in part  from                                                                    
     this chapter from being regulated by a municipality.                                                                       
     Section  9    AS  42.05.890  Definitions. This  section                                                                  
     defines  "local   exchange  carrier,"   "long  distance                                                                    
     telephone  company,"   and  "long   distance  telephone                                                                    
     Section  10    Related to  implementing Section  4, the                                                                  
     Regulatory Cost Charge.                                                                                                    
     Section  11     Repealers.  This  section  repeals  the                                                                  
     following  provisions, as  the changing  nature of  the                                                                    
     industry  and  market  conditions  have  rendered  them                                                                    
          • AS 42.05.325   Registration and  regulation of                                                                      
             alternate operator services  also unnecessary                                                                      
             at this point                                                                                                      
          • AS 42.05.800  Findings                                                                                              
          • AS 42.05.810    Competition    unnecessary  in                                                                      
             today's market, which experts can speak on.                                                                        
MS. MORLEDGE noted that Ms. O'Connor could answer detailed                                                                      
9:37:50 AM                                                                                                                    
CHAIR  COSTELLO  listed  the   individuals  available  to  answer                                                               
SENATOR GARDNER asked what kind of change Section 4 describes.                                                                  
9:39:05 AM                                                                                                                    
CHRISTINE   O'CONNOR,   Executive    Director,   Alaska   Telecom                                                               
Association,  Anchorage, Alaska,  said that  change is  spreading                                                               
the cost across a broader section.  About half of the telecoms in                                                               
Alaska don't  pay the RCC  [Regulatory Cost Charge]  because they                                                               
have  become exempt.  The committee  substitute  would cause  all                                                               
telecoms  to  resume  paying the  regulatory  cost  charge.  That                                                               
provides a broader  base to support the  Regulatory Commission of                                                               
Alaska (RCA).                                                                                                                   
SENATOR GARDNER  said she didn't  know if  that was good  or bad.                                                               
Noting  that Section  7 has  a  description of  the services  for                                                               
which the  utility that  provides telecommunications  services is                                                               
not exempt,  she asked what is  being exempted. She asked  for an                                                               
answer in  common language, not  numbers. All the  sections apply                                                               
to  telecommunications  services  and   now  a  bunch  are  being                                                               
exempted. She asked what they are.                                                                                              
CHAIR COSTELLO  asked the  drafter to  comment on  which sections                                                               
the exemptions are for.                                                                                                         
9:41:09 AM                                                                                                                    
EMILY  NAUMAN,  Deputy   Director,  Legislative  Legal  Services,                                                               
Legislative  Affairs  Agency,  Juneau,  Alaska,  said  she  would                                                               
submit  her  answer  in  writing  because  the  answer  isn't  as                                                               
straightforward  as it  might  seem. The  challenge  is that  she                                                               
wouldn't want to  misstate what statutes apply.  All the statutes                                                               
other than  the ones listed in  the RCA statutes will  apply with                                                               
the  exception  that  some  of those  statutes  are  specific  to                                                               
certain types  of utilities or  certain types of behavior  that a                                                               
telecommunications company might never engage in.                                                                               
SENATOR GARDNER  rephrased the  question. She  asked if  there is                                                               
any impact on  consumers in exempting any of  those provisions or                                                               
are they no longer relevant to the industry.                                                                                    
MS. NAUMAN suggested the RCA would  be better able to answer that                                                               
9:42:32 AM                                                                                                                    
DAVID   PARISH,   Common   Carrier  Specialist   IV,   Regulatory                                                               
Commission of  Alaska, Anchorage, Alaska,  said the RCA  would no                                                               
longer  be able  to assign  COLRs [Carrier  of Last  Resort]. The                                                               
primary  impacts  for  consumers  would be  the  RCA  would  lose                                                               
current   jurisdiction   over  interconnection   agreements,   so                                                               
disputes between carriers would no  longer come to the RCA. Also,                                                               
the  RCA would  have no  exercise of  economic jurisdiction  over                                                               
rate  making for  the  carriers  across the  state  that have  no                                                               
competition.  That  is for  both  left  market and  interexchange                                                               
markets.  He did  not know  if  there would  be negative  effects                                                               
immediately,  but should  a  carrier  want to  raise  rates in  a                                                               
monopoly market,  there would be  no obligation for  the increase                                                               
to be vetted and approved by the commission.                                                                                    
9:44:27 AM                                                                                                                    
SENATOR  MEYER   commented  that  this  bill   pertains  only  to                                                               
MR. PARISH agreed.                                                                                                              
SENATOR MEYER asked the percent of people who have landlines.                                                                   
MR. PARISH  estimated that it  was below  50 percent. There  is a                                                               
steady  decline with  residential  use. Businesses  tend to  keep                                                               
their landlines longer, but the erosion is steady.                                                                              
9:46:06 AM                                                                                                                    
STEPHEN  MCALPINE,   Chair,  Regulatory  Commission   of  Alaska,                                                               
Anchorage, Alaska,  said when  the power goes  down and  the cell                                                               
towers are  no longer  operable, someone  without a  landline can                                                               
come to his house and make a call. He has two landlines.                                                                        
SENATOR  MEYER  asked  if  the  CS  addresses  the  concerns  Mr.                                                               
McAlpine raised at a previous meeting.                                                                                          
MR.  MCALPINE  said,  as  Mr. Parish  indicated,  there  are  two                                                               
overriding issues.  The bill is  getting better, but this  is the                                                               
type of  bill that ought to  be developed over time.  The RCA has                                                               
had to deal  with carriers that decide to stop  service. He asked                                                               
where  customers go  to  complain  about that.  That  is what  is                                                               
happening in the  MatSu. Some of the customers have  been cut off                                                               
because  they  have  been  losing  the  better  system  that  MTA                                                               
[Matanuska  Telephone Association]  has decided  not to  provide.                                                               
Because MTA is deregulated, consumers  do not have the ability to                                                               
come to the RCA's consumer protection  arm. They are going to the                                                               
FCC [Federal  Communications Commission]. He cannot  say anything                                                               
further  because it  is on  the  RCA's public  meeting agenda  on                                                               
Wednesday.  Carriers  of  last   resort  are  receiving  tens  of                                                               
millions in subsidies in competitive  markets. He would like that                                                               
to go  to high-cost  areas or  to development  of other  kinds of                                                               
telecommunications  that could  better serve  the rural  areas of                                                               
Alaska.  The   second  concern  is   the  failure  to   agree  on                                                               
interconnection.  In  case of  a  dispute  between two  carriers,                                                               
current  statute provides  that the  utility would  apply to  the                                                               
commission to arbitrate.                                                                                                        
MR.  MCALPINE  said  he  didnt   know  when  those  changes  were                                                               
developed. This  bill appeared  without any  prior notice  and as                                                               
they work through  it, there are multiple  concerns and problems.                                                               
Many have  been addressed, but he  would like to see  a good bill                                                               
come out  at the end  of the pipe  rather than the  one currently                                                               
before the committee.                                                                                                           
SENATOR MEYER  asked if the  added year-end report was  a concern                                                               
for the RCA.                                                                                                                    
MR.  MCALPINE  said the  RCA  does  calculate time  dedicated  to                                                               
different  activities. He  isn't  sure what  "should provide  the                                                               
legislature  with  detailed  activity" means  exactly.  It  could                                                               
require more staff time, but they could do it.                                                                                  
SENATOR GARDNER  asked the impact  of the provision in  Section 8                                                               
that  adds  a  local  exchange  carrier  to  the  exemption  from                                                               
municipal regulation.                                                                                                           
MR. PARISH said  this already exists for  long distance carriers.                                                               
His understanding is that it  means a municipality cannot step in                                                               
and start  regulating since the  RCA, under this bill,  would not                                                               
have jurisdiction.                                                                                                              
9:53:49 AM                                                                                                                    
MS.  O'CONNOR agreed  with Mr.  Parrish. She  went on  to address                                                               
issues raised earlier. The latest  national figures indicate just                                                               
42  percent of  households have  landlines, but  those are  still                                                               
important  and they  are not  in any  way proposing  to eliminate                                                               
landlines  or to  degrade that  service. Local  rates are  capped                                                               
federally. If  they wish to  raise rates, which is  not happening                                                               
today,  they  would  be  limited by  the  federal  rate  ceiling.                                                               
Regarding  Chair McAlpines   comments  about the  COLR, she  said                                                               
that obligation  continues under  the certificate process.  It is                                                               
one  of  the  listings  not being  exempted.  The  commission  is                                                               
currently looking  into one situation.  This bill  doesn't change                                                               
that.  Regarding the  funds companies  are  receiving to  provide                                                               
service, there is a docket in  which the RCA is actively pursuing                                                               
how  to change  that.  The chair  and  commissioners have  stated                                                               
their  goal   is  to  reform   that  and  industry   is  actively                                                               
participating and has submitted  draft regulations, comments, and                                                               
proposals to implement those changes.                                                                                           
MS. O'CONNOR  clarified that  the bill  requires that  the annual                                                               
report  be   formatted  to  show   the  detail  of   the  telecom                                                               
activities. It  is intended  to use  the data  already collected.                                                               
The  RCA  annual report  format  changes  and  some years  it  is                                                               
difficult to see how much activity  is attributed to each form of                                                               
telecommunications. They were not  suggesting any additional data                                                               
be  collected,  just  that the  presentation  provide  a  similar                                                               
detail as was provided in the FY2017 report.                                                                                    
9:59:05 AM                                                                                                                    
SENATOR MICCICHE said  the fiscal note still  says the regulatory                                                               
cost  charge  (RCC)  would   be  removed  for  telecommunications                                                               
services, so  that needs  updating. Looking at  the last  line of                                                               
the fiscal note,  he asked that if in the  future the RCC funding                                                               
mechanism  is  removed  from telecommunications,  if  that  would                                                               
reduce the workload  of the RCA. He asked what  is the likelihood                                                               
that  the RCC  would  be  passed on  to  other regulated  utility                                                               
MR. PARRISH said  he assumed that the question  is referencing if                                                               
RCCs are eliminated for telecommunication  companies. He asked if                                                               
that was correct.                                                                                                               
SENATOR MICCICHE  said they haven't  had an updated  fiscal note.                                                               
Before  the  bill   was  amended,  it  eliminated   the  RCC  for                                                               
telecommunications services and the fiscal  note said it could be                                                               
shifted  to  the other  regulated  utilities,  which has  been  a                                                               
concern  of   his.  He   asked  if   the  RCA   doesn't  regulate                                                               
telecommunications, wouldn't  that reduce the  RCA work  load and                                                               
avoid a cost shift to the other regulated utilities.                                                                            
10:01:10 AM                                                                                                                   
KRISTIN   SCHUBERT,  Manager,   Commission  Section,   Regulatory                                                               
Commission  of  Alaska,  Anchorage,  Alaska, said  in  regard  to                                                               
shifting RCCs to other regulated  utilities, they are still going                                                               
to be doing work  on telecoms, and so that burden  is going to be                                                               
shifted to  the other utilities  because the RCCs  are calculated                                                               
using labor ratios. Since they  cannot charge telecoms RCCs, that                                                               
burden gets  put on  the other utilities,  so their  charges will                                                               
SENATOR MICCICHE  said since that  has been removed in  Section 4                                                               
now,  it maintains  the current  RCC  funding mechanism.  Nothing                                                               
will change, but he should be on  the lookout for a change in the                                                               
future  that  could  unfairly  distribute   that  cost  to  other                                                               
MS. SCHUBERT answered yes.                                                                                                      
MR. PARRISH said  this was something the  commission addressed at                                                               
the  public meeting.  The current  draft  is fairer.  One of  the                                                               
interesting  things is  that when  other  utility sectors  become                                                               
deregulated,  the commission  generally  does no  work for  them.                                                               
With telecommunications  it's a  strange beast because  they have                                                               
lots  of delegated  authority  from the  FCC  to provide  ongoing                                                               
regulation  even   of  deregulated  carriers.  Bringing   back  a                                                               
requirement for otherwise  economically deregulated entities that                                                               
they do  perform regulatory work for  to pay some of  those costs                                                               
would be an improvement over the current landscape.                                                                             
MS. O'CONNOR  said their legal  expert can speak to  the concerns                                                               
about interconnection disputes.                                                                                                 
10:04:21 AM                                                                                                                   
JAMES JACKSON, Legal Counsel, GCI,  Anchorage, Alaska, said he is                                                               
not  sure  what raised  the  concern  from  Mr. Parrish  and  Mr.                                                               
McAlpine regarding joint use and  interconnection. The statute is                                                               
confusing  on  this   issue.  The  sections  on   joint  use  and                                                               
interconnection  are AS  42.05.311 and  AS 42.05.321.  "It's true                                                               
that those are  not listed as sections which will  still apply to                                                               
us," he  said. That is  because the statute is  somewhat strange.                                                               
It  is stated  within those  sections  that they  still apply  to                                                               
utilities that  are exempt under  AS 42.05.711.  Specifically, AS                                                               
42.05.321 which  is entitled Failure  to Agree upon Joint  Use or                                                               
Interconnection, gives  the commission  the authority  to resolve                                                               
those disputes. Subsection (d) of  AS 42.05.321 says this section                                                               
and AS 42.05.311 apply to all  utilities, whether or not they are                                                               
exempt  from  other  regulation under  AS  42.05.711.  Since  the                                                               
exemption this bill grants is  under AS 42.05.711, the section on                                                               
joint use will still apply.                                                                                                     
10:07:01 AM                                                                                                                   
CHAIR COSTELLO  stated her intention  to hold SB 205  for further                                                               
10:07:16 AM                                                                                                                   
At ease                                                                                                                         
              HB  79-OMNIBUS WORKERS' COMPENSATION                                                                          
10:07:22 AM                                                                                                                   
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of  HB 79. [CSHB  79(FIN) was before  the committee                                                               
and this is the first hearing.]                                                                                                 
10:10:40 AM                                                                                                                   
HEIDI  DRYGAS, Commissioner,  Department of  Labor and  Workforce                                                               
Development  (DOLWD), Juneau,  Alaska,  said HB  79 improves  the                                                               
department's  ability  to  administer the  Workers'  Compensation                                                               
Division. Last  year they presented  companion bill SB 40  to the                                                               
committee. Since  then HB 79 made  its way through the  House and                                                               
has seen  changes and improvements.  It is an  efficiencies bill.                                                               
It  modernizes  the  system, which  has  not  been  significantly                                                               
reformed in  more than 10 years.  It speeds up the  resolution of                                                               
disputes,   improves  the   delivery  of   benefits  to   injured                                                               
employees,   deters   workers'    compensation   fraud,   reduces                                                               
administrative  costs,  and  provides adequate  funding  for  the                                                               
administration  of the  workers' compensation  system. HB  79 was                                                               
well  vetted  and passed  in  the  House  with support  from  the                                                               
minority and majority.                                                                                                          
10:11:55 AM                                                                                                                   
MARIE   MARX,  Director,   Division  of   Workers'  Compensation,                                                               
Department of  Labor and  Workforce Development  (DOLWD), Juneau,                                                               
Alaska,  said she  always starts  with  the department's  mission                                                               
when she presents  on workers' compensation. It is  to ensure the                                                               
quick, efficient,  fair, and predictable delivery  of benefits to                                                               
injured workers at  a reasonable cost to  employers. She directed                                                               
attention to the  slide showing the other pillars  that guide the                                                               
division's administration of  Alaska's Workers' Compensation Act.                                                               
The  governor's  bill focuses  on  the  fairness, quickness,  and                                                               
efficiency of the workers' compensation process.                                                                                
MS. MARX  said she  would present  the bill  by topic  instead of                                                               
numerical order.  Each section is  listed by topic and  she would                                                               
refer to page numbers as they work through HB 79, version N.                                                                    
MS.  MARX  first  addressed  the topic  of  speeding  up  dispute                                                               
resolution. She  said HB 79  simplifies and quickens  the hearing                                                               
process by letting  the board schedule a hearing  shortly after a                                                               
claim  is filed  instead  of  waiting until  one  of the  parties                                                               
requests a hearing, which can be many years down the road.                                                                      
MS.  MARX said  it  changes who  may represent  a  claimant in  a                                                               
workers' compensation  hearing. Now a non-attorney  may represent                                                               
parties. The  bill proposes that anyone  authorized by regulation                                                               
of  the board  may  represent parties.  They  have had  instances                                                               
where   non-attorneys  who   were  not   bound  by   ethical  and                                                               
professional  rules represented  someone,  such as  a brother  or                                                               
spouse, before the board. Often,  that person's assistance is not                                                               
helpful but  delays outcomes  for injured  workers. At  first the                                                               
bill said  non-attorneys may not  represent parties,  but through                                                               
the hearing process, this was changed.                                                                                          
She said  HB 79 streamlines settlement  agreements by eliminating                                                               
a requirement  that the board  approve attorney fees if  fees are                                                               
the only issue that requires  board approval. It also streamlines                                                               
the  process of  imposing  civil penalties  against an  uninsured                                                               
employer by allowing the division  to assess the penalty directly                                                               
rather  than  petitioning  the  board  to  set  the  penalty.  An                                                               
employer may appeal the penalty before the board.                                                                               
MS. MARX addressed the second  topic of improving the delivery of                                                               
medical care.  She said  currently no  language addresses  if and                                                               
when a provider's  written request for medical  care, usually for                                                               
surgery, must  be preauthorized.  The bill requires  an insurance                                                               
company or self-insured employer  to preauthorize or deny medical                                                               
treatment  within  60  days  of   a  medical  provider's  written                                                               
request. This gap has led to  a lot of litigation and delayed the                                                               
delivery of  care to  injured workers. The  bill does  not change                                                               
the requirement that  medical bills must still be  paid within 30                                                               
10:16:21 AM                                                                                                                   
SENATOR GARDNER said  60 days seems like a long  time to wait for                                                               
surgery. She asked why 60 days was selected.                                                                                    
MS. MARX  said the  only duty the  employer has now  is to  pay a                                                               
medical bill  within 30  days of  receiving it.  By the  time the                                                               
medical  bill  is  received  by   the  self-insured  employer  or                                                               
insurance  company,  the care  has  already  happened. They  have                                                               
already had the opportunity for  one of their doctors to evaluate                                                               
the  injured  worker. It  is  different  for preauthorization  of                                                               
surgery, which  is generally very  expensive surgery.  Sixty days                                                               
would give time  the employer or insurance company  time to refer                                                               
to the worker to a physician  of their choice and get the medical                                                               
records from the doctors. At  times it's difficult to get medical                                                               
records within 45 days. Now  the injured worker needs surgery and                                                               
the  doctor won't  move forward  without the  certainty of  being                                                               
paid. The  worker doesn't want  to be  on the hook  either. Sixty                                                               
days was  a compromise to  balance the injured worker's  need for                                                               
care and efficiency and reasonable cost for the employer.                                                                       
10:18:24 AM                                                                                                                   
MS. MARX  addressed the issue of  misclassification before moving                                                               
on.  She   said  not  tackling   misclassification  is   a  great                                                               
disservice to  workers and  law-abiding businesses.  When workers                                                               
are  fraudulently  misclassified,  workers die  or  are  severely                                                               
injured  and huge  uninsured  losses  can put  a  company out  of                                                               
business. They  must keep workers safe  and law-abiding employers                                                               
should not have to pay the price for misclassification.                                                                         
She then  took up the  third topic, strengthen  fraud provisions.                                                               
She  said   HB  79  strengthens  fraud   provisions  by  defining                                                               
misclassification and when it amounts to fraud.                                                                                 
She said  there is no  affirmative duty  to report work  or wage-                                                               
loss benefits.  If asked, workers  cannot misrepresent  that, but                                                               
there is not an affirmative duty  to tell an insurance company or                                                               
self-insured  company that  they  are receiving  benefits. HB  79                                                               
does impose an  affirmative duty on the injured  worker to report                                                               
their injury.                                                                                                                   
MS. MARX  said currently  a loophole  exists where  LLCs [limited                                                               
liability companies]  escape liabilities  for benefits  and civil                                                               
penalties because the  act was created when  corporations were in                                                               
existence.  The   bill  will  make  LLCs   that  operate  without                                                               
insurance  just as  liable as  corporate  officers for  uninsured                                                               
injuries and penalties.                                                                                                         
She said  the bill defines  independent contractor, which  is the                                                               
biggest change since  the committee heard SB  40. This definition                                                               
is  the  result  of  working with  many  stakeholder  groups  who                                                               
initially  vehemently  opposed   the  original  definition.  This                                                               
definition is a result of  collaboration between stakeholders and                                                               
the  department. The  definition will  accomplish the  mission of                                                               
preventing fraud  and misclassification while also  ensuring that                                                               
bona  fide  independent  contractors   continue  to  operate  and                                                               
She said  HB 79 allows the  Benefits Guaranty Fund, which  is the                                                               
injured workers fund,  to file a lien for  compensation and civil                                                               
penalties.  The  Benefits Guaranty  Fund  pays  a claim  when  an                                                               
employer  does not  carry  insurance.  Then the  fund  has to  be                                                               
reimbursed by the  uninsured employer. By the  time that happens,                                                               
the assets are  gone. An injured worker already has  the right to                                                               
file a lien.                                                                                                                    
10:22:07 AM                                                                                                                   
MS. MARX  said HB 79  expands the  division's ability to  asses a                                                               
civil penalty  to include employers who  are underinsured because                                                               
they have  misclassified workers  in a variety  of ways.  Now the                                                               
division only has the ability to  assess a penalty for failing to                                                               
carry any  insurance. The  bill changes  the calculation  and the                                                               
maximum  civil penalty.  The maximum  penalty now  is $1,000  for                                                               
each   uninsured  employee   workday,  which   has  resulted   in                                                               
astronomically  high penalties  that  employers  cannot pay.  The                                                               
calculation  of these  penalties doesn't  survive appeal  and has                                                               
led  to a  lot  of  litigation. The  employers  who  do not  keep                                                               
records on the number of employers they have are rewarded.                                                                      
She said the maximum penalty in  HB 79 is three times the premium                                                               
an  employer  should  have  paid. HB  79  a  simpler  calculation                                                               
because  it only  requires the  employer's overall  payroll data.                                                               
The new penalty will result  in a reasonable deterrent that takes                                                               
into account  the employer's  size, the  nature of  the business,                                                               
and the  financial gain the  employer realized by not  paying the                                                               
full workers'  compensation insurance.  She provided  an example.                                                               
Their hope  is that if penalties  are more in line  with reality,                                                               
the division will be able  to collect more. These penalty amounts                                                               
go to the  injured worker fund. With HB 79,  penalties may not be                                                               
suspended in full or in part.  Right now, the board has suspended                                                               
penalties, which  is arbitrary.  The board  can always  reduce or                                                               
reverse a penalty. HB 79  allows employers to establish a payment                                                               
plan, so they won't go out of business.                                                                                         
10:25:27 AM                                                                                                                   
MS.  MARX addressed  the  fourth  topic, reducing  administrative                                                               
costs. She said current law says  the employer must pay by check.                                                               
Times have  changed, so  the bill does  not prescribe  a specific                                                               
method  of  payment.  Currently,  the division  may  not  require                                                               
electronic filing. The  bill says the division  may prescribe the                                                               
filing  format.  The  division has  moved  almost  completely  to                                                               
electronic filing  except for a few  things that must be  done by                                                               
paper. The bill will modernize that.                                                                                            
She  said  there  is  a   corporate  executive  officer  workers'                                                               
compensation coverage opt out, which  involves a lot of paperwork                                                               
that must  be submitted.  The bill  streamlines that.  If someone                                                               
has at  least 10 percent  ownership, that  is enough to  say that                                                               
person  is   not  an   employee  and   does  not   need  workers'                                                               
compensation insurance.  The division  has a great  database that                                                               
makes verifying that easy.                                                                                                      
10:26:58 AM                                                                                                                   
SENATOR  MICCICHE  asked if  simplifying  the  corporate opt  out                                                               
would result  in a significant  change in the numbers  opting out                                                               
or would it be close to what it is now.                                                                                         
MS.  MARX said  its  difficult  to tell  how many  officers would                                                               
then be  considered non-employees.  Now there are  many corporate                                                               
officers who  have no  ownership in the  business and  are added.                                                               
Corporations  change  that makeup  of  their  officers every  few                                                               
months.  She guessed  the bill  would  make sure  that those  who                                                               
legitimately have an interest in the company would be exempted.                                                                 
SENATOR  MICCICHE said  it's more  black and  white criteria.  He                                                               
asked if  there was  another reason  a corporate  executive could                                                               
opt out.                                                                                                                        
MS. MARX  agreed that it is  very black and white,  which was the                                                               
intent. She  answered no to  the second question. She  added that                                                               
HB 79 is  not a bill that deals with  substantive benefits. It is                                                               
an efficiencies  bill that seeks  to make things clearer  for the                                                               
10:29:02 AM                                                                                                                   
MS.  MARX continued  to review  administrative efficiencies.  She                                                               
said  the Medical  Services Review  Committee looks  at different                                                               
publications  to  come  up  with a  medical  fee  schedule.  More                                                               
publications are added to that list.                                                                                            
MS. MARX  said there is  currently no consequence if  insurers do                                                               
not meet the deadline to tell  them when an employer has coverage                                                               
or not.  By granting a  30-day deadline  (instead of ten)  with a                                                               
penalty,   they  hope   that  will   reduce  wasted   effort  for                                                               
investigating failure-to-insure  cases. The bill also  phases out                                                               
the Second  Injury Fund, which  reduces costs for  the department                                                               
and employers.  The fund's purpose  is to encourage  employers to                                                               
hire  or retain  disabled individuals,  but the  purpose is  moot                                                               
with the Americans with Disabilities  Act and other laws that bar                                                               
employment   discrimination.  As   claims  are   paid  out,   the                                                               
employers' contribution will  drop to zero. These  claims are for                                                               
permanent disability.  The fiscal note estimates  the average age                                                               
of claimants will be 80 and two  to three will be phased out each                                                               
10:32:10 AM                                                                                                                   
MS. MARX addressed  the final topic, ensure  adequate funding for                                                               
the  Workers'  Safety  and  Compensation  Administration  Account                                                               
(WSCAA)  in Section  1. She  said  the WSCAA  balance is  rapidly                                                               
declining. In 2005, the Alaska  Legislature added programs funded                                                               
by WSCAA, but no increase in  the WSCAA service fee rate was made                                                               
for the increased costs to  operate these programs. The bill does                                                               
not increase the service fees companies  pay, but more of the fee                                                               
will  be allocated  to the  department. That  is a  difference of                                                               
$1.8 million. If  the change is not implemented,  WSCAA will have                                                               
a shortfall in 2020.                                                                                                            
10:33:49 AM                                                                                                                   
CHAIR COSTELLO opened public testimony on HB 79.                                                                                
10:34:13 AM                                                                                                                   
BRONSON  FRYE,  Painters  Union Local  1959,  Anchorage,  Alaska,                                                               
testified in support  of HB 79. He said he  was just appointed to                                                               
the  Workers' Compensation  Board.  Unscrupulous contractors  are                                                               
requiring as  a condition  of employment  that their  workers get                                                               
business licenses  and work as independent  subcontractors. These                                                               
are not legitimate independent subcontractors.  An entire crew of                                                               
workers working on  a singular job on a singular  project are all                                                               
classified as independent subcontractors.  He gave the example of                                                               
the  drywall workers  for the  Dena'ina Center.  Because workers'                                                               
compensation  premiums are  so high  in the  inherently dangerous                                                               
construction industry, they  can account for up to  30 percent of                                                               
labor cost.  If an employer  misclassifies workers, he  can lower                                                               
labor  costs and  have  a competitive  advantage  in the  bidding                                                               
process  against   honest,  law-abiding  employers.  This   is  a                                                               
fairness-in-contracting  issue.  Also,  liability for  injury  at                                                               
work  is  shifted  to  the  worker  with  independent  contractor                                                               
misuse. Workers'  compensation exists for  a reason. HB 79  has a                                                               
multifactor test  to determine a true  independent contractor. It                                                               
will  reduce  workers'  compensation fraud,  create  fairness  in                                                               
contracting in the construction industry, and protect workers.                                                                  
10:37:58 AM                                                                                                                   
LAURA BONNER, representing self,  Anchorage, Alaska, testified in                                                               
support of  HB 79. She  said her husband suffered  a debilitating                                                               
injury  years ago.  HB 79  allows  better and  quicker access  to                                                               
medical  care  and  quicker  resolution   of  disputes.  This  is                                                               
important  to  the injured  worker  and  their families  who  are                                                               
dealing with  the stress  of the  injury. She  expressed pleasure                                                               
with  the   language  defining  an  independent   contractor  and                                                               
strengthening  the  fraud  provisions.  She  has  served  on  the                                                               
Workers'  Safety  Advisory  Council because  safety  and  injured                                                               
workers have been  a concern of hers. She urged  the committee to                                                               
pass HB  79 from  committee. It  is better  than the  bill passed                                                               
earlier today.                                                                                                                  
10:40:25 AM                                                                                                                   
DON   ETHERIDGE,  Lobbyist,   Alaska  AFL-CIO,   Juneau,  Alaska,                                                               
testified in  support of HB  79. He said any  efficiencies should                                                               
be  made. Alaska  AFL-CIO was  involved in  the working  group to                                                               
define independent contractors  and is happy with  the result. He                                                               
related how  difficult it can  be for injured workers  to receive                                                               
their compensation checks by mail. The bill makes improvements.                                                                 
10:42:33 AM                                                                                                                   
CHRIS DIMOND,  Organizer, Pacific  Northwest Regional  Council of                                                               
Carpenters, Juneau, Alaska,  testified in support HB  79. He said                                                               
making government  more efficient is  always a move in  the right                                                               
direction.  The definition  of independent  contractor is  a long                                                               
overdue  reform. He  related  cases  in Juneau  of  fraud. HB  79                                                               
protects  workers' rights  and safety.  It will  keep contractors                                                               
working more fairly.                                                                                                            
10:44:39 AM                                                                                                                   
CHAIR COSTELLO closed public testimony on HB 79.                                                                                
SENATOR  MEYER  asked  about  the   change  on  slide  4  of  the                                                               
presentation that states  HB 79 will allow  persons authorized by                                                               
regulation of  the board  to represent parties.  He asked  if the                                                               
bill  would  prevent  an  injured  person  using  his  cousin  to                                                               
represent him.                                                                                                                  
MS. MARX said the bill would  allow the board to develop, through                                                               
the regulatory process,  a list of the parties  who can represent                                                               
parties  before the  board. The  board serves  two functions,  to                                                               
make regulation and  to hear claims. The hearing panel  is in the                                                               
best  position to  know the  type of  individual who  is able  to                                                               
represent  injured workers.  Through  the  public process,  there                                                               
will be  a list created. She  noted that she served  as a hearing                                                               
officer  for   six  years.  She  gave   anecdotal  experience  to                                                               
illustrate problems that can arise.                                                                                             
SENATOR MEYER asked  if the names on the list  would be primarily                                                               
MS.  MARX said  the 18-member  Workers' Compensation  Board would                                                               
come  up  with  the  list.  She  envisions  that  besides  Alaska                                                               
attorneys,  the  list  could  contain  perhaps  outside  counsel,                                                               
retired attorneys,  paralegals, medical billing  specialists, and                                                               
others.  The   list  would  be  appropriate   to  create  through                                                               
regulation rather than statute.                                                                                                 
SENATOR MEYER asked if she anticipated a long list.                                                                             
MS.  MARX said  yes and  very  specific and  detailed to  provide                                                               
CHAIR COSTELLO  said that Senator  Meyer made a good  point. They                                                               
are hoping for common sense and flexibility with this list.                                                                     
COMMISSIONER DRYGAS said the initial  draft said no non-attorneys                                                               
for a  lot of reasons. This  is a compromise where  it would make                                                               
sense for non-attorneys to represent.                                                                                           
SENATOR MEYER  said he wanted  to ensure that the  injured worker                                                               
has choices.                                                                                                                    
10:51:47 AM                                                                                                                   
SENATOR  GARDNER asked  if the  department has  the resources  to                                                               
look into  possible cases  of fraud when  they hear  stories like                                                               
the ones Mr. Dimond referenced.                                                                                                 
COMMISSIONER  DRYGAS  said  yes  and  no.  The  fraud  unit  will                                                               
investigate if they hear something.  Right now, the test of being                                                               
an  independent  contractor  versus an  employee  is  cumbersome,                                                               
which  is why  they are  changing it  in law.  The department  is                                                               
cash-strapped currently.  Next year,  FY2020, WISCA  funding will                                                               
be depleted.                                                                                                                    
10:53:26 AM                                                                                                                   
SENATOR MICCICHE said  he had the same concern  as Senator Meyer.                                                               
Another  concern  is  with  Section  7  that  redefines  LLC.  He                                                               
questioned  whether a  Workers' Compensation  bill was  the right                                                               
place to do that.                                                                                                               
MS. MARX clarified it does not  redefine an LLC. Right now, there                                                               
is  a  loophole. Under  the  current  Workers' Compensation  Act,                                                               
employers must have workers' compensation  for employees. If they                                                               
don't,  the employer  and those  in  charge of  the business  are                                                               
responsible  for uninsured  claims.  LLCs do  not  have the  same                                                               
liability. Those LLC members who  run the corporation, even if it                                                               
is one member, completely escape  the liability that corporations                                                               
have for  uninsured injuries. This  levels the playing  field for                                                               
all members. There  is a need to close the  loophole of companies                                                               
to escape liability.                                                                                                            
SENATOR MICCICHE said he understands  the intent but would rather                                                               
it be  dealt with in  a section of law  that defines what  an LLC                                                               
can do with  that limit of liability rather  than eliminating the                                                               
loophole in  this bill. He  said it needs  to be dealt  with more                                                               
COMMISSIONER DRYGAS  said it's there  to maintain  consistency in                                                               
the statute.  The corporate  section is  already in  the statute,                                                               
which is why they addressed  the LLC there. She acknowledged that                                                               
one could argue both sides.                                                                                                     
10:58:23 AM                                                                                                                   
SENATOR MEYER  moved to report  HB 79, version N,  from committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
10:58:45 AM                                                                                                                   
CHAIR  COSTELLO announced  that without  objection, CSHB  79(FIN)                                                               
moved from the Senate Labor and Commerce Standing Committee.                                                                    
10:59:01 AM                                                                                                                   
There being  no further  business to  come before  the committee,                                                               
Chair Costello  adjourned the Senate Labor  and Commerce Standing                                                               
Committee meeting at 10:59 a.m.                                                                                                 

Document Name Date/Time Subjects
CS SSSB112 (L&C) Ver. S.pdf SL&C 4/2/2018 9:00:00 AM
SB 112
CS SSSB112 (L&C) Explanation of Changes Ver. L to S.pdf SL&C 4/2/2018 9:00:00 AM
SB 112
CS SB38 (L&C) Ver. D.pdf SL&C 4/2/2018 9:00:00 AM
SB 38
CS SB38 (L&C) Explanation of Changes Ver. A to D.pdf SL&C 4/2/2018 9:00:00 AM
SB 38
CS SB205(L&C) Ver. U.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS SB205(L&C) Sectional Analysis 4.2.18.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS SB205(L&C) Explanation of Changes Ver. D to U.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
ACS Support Letter for SB 205.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
SB 205 RCA letter to Senator Kelly.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
SB 205 RCA Staff Analysis Public Meeting Memorandum and exhibits.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS HB79(FIN) Ver. N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Summary of Changes ver A to ver N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Sectional Analysis ver N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
HB79CS(JUD)-DOLWD-SIF-02-14-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB79-OOG-OMB-02-13-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB079CS(FIN)-DOLWD-WC-02-16-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB079CS(JUD)-DOA-DRM-02-09-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Ver. N DOLWD Presentation 3.29.18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79