Legislature(2009 - 2010)HOUSE FINANCE 519

03/22/2010 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 314 WORKERS' COMPENSATION TELECONFERENCED
Moved CSHB 314(FIN) Out of Committee
+ HB 346 WORKERS' COMPENSATION ADVISORY BOARD TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 369 IN-STATE PIPELINE MANAGER/TEAM/COMMITTEE TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 22, 2010                                                                                            
                         1:36 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:36:05 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:36 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Representative Mike Kelly                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
Konrad Jackson,  Staff, Representative Kurt  Olson, Sponsor;                                                                    
Linda Hall,  Director, Division of Insurance,  Department of                                                                    
Commerce, Community and  Economic Development; Trena Heikes,                                                                    
Director, Division  of Workers' Compensation,  Department of                                                                    
Labor and  Workforce Development; Anne  Carpeneti, Assistant                                                                    
Attorney  General, Legal  Services Section-Juneau,  Criminal                                                                    
Division,   Department  of   Law;  Michael   Ford,  Liaison,                                                                    
Department  of Law;  Representative Mike  Chenault, Sponsor;                                                                    
Tom  Wright,  Staff,  Representative  Mike  Chenault;  Frank                                                                    
Richards,   Deputy    Commissioner,   Highways    &   Public                                                                    
Facilities,   Department   of  Transportation   and   Public                                                                    
Facilities; Bob Swenson,  Manager, In-State Gasline Project,                                                                    
Office   of    the   Governor;   Konrad    Jackson,   Staff,                                                                    
Representative Kurt Olson,  Sponsor; Trena Heikes, Director,                                                                    
Division of  Workers' Compensation, Department of  Labor and                                                                    
Workforce Development.                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                      
                                                                                                                                
Erin A.  Pohland, Assistant Attorney General,  Department of                                                                    
Law.                                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 314 WORKERS' COMPENSATION                                                                                                    
                                                                                                                                
CSHB  314(FIN) was  REPORTED  out of  Committee  with a  "do                                                                    
pass"  recommendation  and  with  two  previously  published                                                                    
fiscal notes: FN1 (LAW); FN2 (LWF).                                                                                             
                                                                                                                                
HB 346 WORKERS' COMPENSATION ADVISORY BOARD                                                                                     
                                                                                                                                
HB  346  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB 369 IN-STATE PIPELINE MANAGER/TEAM/COMMITTEE                                                                                 
                                                                                                                                
HB  346  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 314                                                                                                              
                                                                                                                                
"An Act relating  to fees and charges  for medical treatment                                                                    
or   services,   the   crime   of   unsworn   falsification,                                                                    
investigations,  and penalties  as they  relate to  workers'                                                                    
compensation; and providing for an effective date."                                                                             
                                                                                                                                
1:37:05 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON,  STAFF, REPRESENTATIVE KURT  OLSON, SPONSOR,                                                                    
reported that  HB 314  addresses medical  treatment, service                                                                    
fees,  and penalties  related to  worker's compensation.  He                                                                    
informed  the committee  that  the  Medical Services  Review                                                                    
Committee  met  a  number  of times  the  previous  year  to                                                                    
address   the  issues   and  generated   a  report   with  a                                                                    
recommendation to  set up a  medical services  fee schedule.                                                                    
House  Bill 314  sets up  the schedule  and addresses  civil                                                                    
penalties. The current  fee schedule cap expires  at the end                                                                    
of the year.                                                                                                                    
                                                                                                                                
LINDA HALL,  DIRECTOR, DIVISION OF INSURANCE,  DEPARTMENT OF                                                                    
COMMERCE,  COMMUNITY AND  ECONOMIC DEVELOPMENT,  provided an                                                                    
overview  of the  background  and contents  of  HB 314.  She                                                                    
noted  that   when  changes  were   made  to   the  workers'                                                                    
compensation law in 2005, there  was an inadvertent deletion                                                                    
of the basis  of the Worker's Compensation Board  to adopt a                                                                    
fee  schedule.   An  expectation  that   stakeholders  would                                                                    
convene and  propose legislation  before August 1,  2007 was                                                                    
not met;  subsequently, the  department has  twice requested                                                                    
increases to the old 2004  fee schedule. She called the 2006                                                                    
and 2008 increases  "artificial, across-the-board." The most                                                                    
recent fee  schedule will expire  December 31, 2010.   After                                                                    
expiration, there will not be  a cap on charges by providers                                                                    
for services given to injured workers.                                                                                          
                                                                                                                                
Ms.  Hall   referred  to  handouts  before   the  committee,                                                                    
beginning  with  "Workers  Compensation Medical  Losses  Are                                                                    
More  Than Half  of  Total Losses;  All Claims-NCCI  States"                                                                    
(copy  on file).  She explained  that NCCI  is the  National                                                                    
Council  on Compensation  Insurance,  the statistical  agent                                                                    
for Alaska  and 35 other  states. Data collected by  NCCI in                                                                    
the  36  states  show  medical expenses  in  2008  being  58                                                                    
percent  of  the  total system  cost  with  indemnity  (lost                                                                    
wages) at 42 percent.                                                                                                           
                                                                                                                                
Ms. Hall  directed attention to  the second  chart, "Workers                                                                    
Compensation  Benefit Split  in Alaska;  All Claims--Alaska"                                                                    
(copy on  file), with pie  charts focusing on  statistics in                                                                    
Alaska only. She  noted that Alaska's medical cost  is at 72                                                                    
percent; the  equivalent of $0.72  of every dollar  spent on                                                                    
workers'   compensation  benefits   is   spent  on   medical                                                                    
services. She emphasized that  this was significantly higher                                                                    
than the national average.                                                                                                      
                                                                                                                                
Ms. Hall turned to the  third chart, "Alaska Medical Average                                                                    
Cost per Case  vs. Countrywide" (copy on  file). She pointed                                                                    
out  that in  2008, Alaska  spent approximately  $40,000 per                                                                    
case; the national average is $26,000.                                                                                          
                                                                                                                                
Ms.  Hall  referred to  the  final  chart, "Oregon  Worker's                                                                    
Compensation  Premium  Rates  Ranking, Calendar  Year  2008"                                                                    
(copy on file)  and emphasized that Alaska  ranks number one                                                                    
in  both 2006  and  2008 for  workers' compensation  premium                                                                    
rates. She believed that much  of the high premium costs are                                                                    
driven by medical costs.                                                                                                        
                                                                                                                                
Ms. Hall acknowledged that the  proposed new fee schedule in                                                                    
HB 314  was not a "fix"  that would lower the  premiums, but                                                                    
she  asserted  it would  replace  the  consumer price  index                                                                    
(CPI) increases that  have created a static  schedule with a                                                                    
sustainable  schedule adding  back missing  procedure codes,                                                                    
language  for medical  supplies,  and transportation  costs,                                                                    
which have  seen dramatic increases. Ms.  Hall asserted that                                                                    
the  fee  schedule  in  the   bill  would  be  complete.  In                                                                    
addition,  a  vendor would  supply  the  information to  the                                                                    
Division  of Workers'  Compensation.  She  pointed out  that                                                                    
there would not be changes in the process.                                                                                      
                                                                                                                                
1:43:32 PM                                                                                                                    
                                                                                                                                
Ms. Hall  remarked that  the second part  of the  bill would                                                                    
update fraud  prosecution language.  She noted  that current                                                                    
language is insufficient to prosecute in cases of fraud.                                                                        
                                                                                                                                
Ms. Hall  provided a sectional analysis,  beginning with the                                                                    
first section addressing the fee schedule:                                                                                      
                                                                                                                                
     Section  1.  Amends  AS 23.30.097(a)  to  provide  that                                                                  
     after December  31, 2010,  the fee  may not  exceed the                                                                    
     usual,  customary  and  reasonable  charges  in  a  fee                                                                    
     schedule adopted  by the board  which must  include the                                                                    
     most  recent   Current  Procedural   Terminology  codes                                                                    
     maintained  by  the  American Medical  Association  for                                                                    
     category I, II and III  medical services and the Health                                                                    
     Care  Procedure  Coding  System for  medical  supplies,                                                                    
     injections,   emergency   transportations   and   other                                                                    
     medically  related  services.  The  fee  schedule  must                                                                    
     reflect  the  cost  in   the  geographical  area  where                                                                    
     services  are   provided  and  is   set  at   the  90th                                                                    
     percentile.                                                                                                                
                                                                                                                                
Ms.  Hall detailed  that  fees  in Alaska  are  based on  90                                                                    
percent   of  the   predominant   charges   in  an   Alaskan                                                                    
geographical area.                                                                                                              
                                                                                                                                
Ms.  Hall  turned to  the  next  section providing  language                                                                    
regarding fraud:                                                                                                                
                                                                                                                                
     Section 2.  Amends AS 23.30.250(a) to  clarify that the                                                                  
     behaviors  outlined  are  workers'  compensation  fraud                                                                    
     which may  be punished  under AS 11.46.120  - 11.46.150                                                                    
     (criminal law).                                                                                                            
                                                                                                                                
Ms.   Hall  detailed   that   crimes   committed  in   false                                                                    
representation is considered  to be a felony  and subject to                                                                    
criminal prosecution.                                                                                                           
                                                                                                                                
Ms.  Hall noted  that  the next  section separates  criminal                                                                    
penalties in Section 2 from civil penalties:                                                                                    
                                                                                                                                
     Section 3.  Amends AS 23.30.250  (c) clarifies  that in                                                                  
     addition  to criminal  penalties, a  violation of  this                                                                    
     chapter may result in civil  liability with an award of                                                                    
     three times the amount of compensatory damages.                                                                            
                                                                                                                                
1:46:47 PM                                                                                                                    
                                                                                                                                
Ms. Hall detailed  that Section 3 enables a  civil action in                                                                    
addition to  criminal penalties,  noting that  attorney fees                                                                    
are on  top of  the three times  the amount  of compensatory                                                                    
damages.                                                                                                                        
                                                                                                                                
Ms. Hall referred to the next sections:                                                                                         
                                                                                                                                
     Section  4.  Amends  AS   23.30.280(a)  to  change  the                                                                  
     specific  statute citation  of  AS  23.30.250 to  "this                                                                    
     chapter" to broaden the  investigative authority to the                                                                    
     entire chapter.                                                                                                            
     Section 5.  Amends AS 23.30.280(b) to  delete reference                                                                  
     to  AS   23.30.250(a)  to  broaden  the   reporting  of                                                                    
     fraudulent acts to the employer.                                                                                           
     Section  6. Provides  for an  immediate effective  date                                                                  
     under   AS   01.10.070(c)    Section   1.   Amends   AS                                                                    
     23.30.097(a) to  provide that after December  31, 2010,                                                                    
     the  fee  may  not  exceed  the  usual,  customary  and                                                                    
     reasonable  charges in  a fee  schedule adopted  by the                                                                    
     board  which  must  include  the  most  recent  Current                                                                    
     Procedural Terminology.                                                                                                    
                                                                                                                                
Representative Austerman asked  for clarification related to                                                                    
Page  2,  line  9  and  the  new  fee  structure.  Ms.  Hall                                                                    
responded that the fee schedule  is based on procedure codes                                                                    
done by  the American  Medical Association and  are standard                                                                    
throughout the  industry. She explained that  GENEX Services                                                                    
takes all the Alaska charges  in geographical areas and sets                                                                    
                      th                                                                                                        
the schedule at the 90   percentile and replaces the current                                                                    
schedule only  in that it  updates and adds codes  and makes                                                                    
the charges in line with what is actually being billed.                                                                         
                                                                                                                                
Representative  Austerman queried  the meaning  of the  90th                                                                    
percentile.  Ms. Hall  provided the  example of  putting ten                                                                    
charges for  knee surgery in  a line; 90 percent  would fall                                                                    
             th                                                                                                                 
not a  percentage but becomes  a maximum amount.  She agreed                                                                    
the number was basically 90 percent.                                                                                            
                                                                                                                                
Ms.  Hall added  that the  current fee  schedule is  missing                                                                    
approximately 2,000 procedure codes  that have been added to                                                                    
practice since the last update.                                                                                                 
                                                                                                                                
1:50:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  had questions  about the  measure related                                                                    
to  seasonal  workers.  He  asked  whether  damages  can  be                                                                    
recovered  if   a  seasonal  worker   intentionally  injures                                                                    
himself, makes a claim, and  then leaves the state. Ms. Hall                                                                    
replied that there are more  workers' compensation claims at                                                                    
the end of  the season and in difficult  economic times. She                                                                    
explained  that  an  employer can  go  before  the  Workers'                                                                    
Compensation Board to  challenge a claim. The  board is able                                                                    
to go out of state  and investigate. She thought the ability                                                                    
to  extradite  would  depend  on   the  amount  of  benefits                                                                    
collected. The  claim can be  challenged even if  the person                                                                    
has moved  within the  states; she was  not sure  about what                                                                    
would happen to a person who has left the country.                                                                              
                                                                                                                                
Vice-Chair Thomas relayed  personal experience and expressed                                                                    
concerns.                                                                                                                       
                                                                                                                                
1:53:30 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  queried costs on the  current fee                                                                    
structure. Ms. Hall answered that  the structure had been in                                                                    
place since  2004. She estimated  that it did not  cost much                                                                    
to update the schedule, although it has been ineffective.                                                                       
                                                                                                                                
Representative Fairclough asked  about letters of opposition                                                                    
the committee  had received related to  payment methodology.                                                                    
Ms. Hall  replied that she  had worked with two  groups with                                                                    
concerns.  Revisions were  made in  response to  concerns by                                                                    
the   state  medical   association.  She   noted  additional                                                                    
opposition from  those who felt the  original language about                                                                    
fraud prosecution  was too narrow.  The department  had made                                                                    
changes in the language that were satisfactory.                                                                                 
                                                                                                                                
Representative  Fairclough quoted  from a  February 2,  2010                                                                    
letter  from the  Alaska Spine  Institute dated  in February                                                                    
2010   related  to   the  language   currently  before   the                                                                    
committee:                                                                                                                      
                                                                                                                                
This  revised   language  provides   "the  board"   with  an                                                                    
undefined and  unlimited scope of authority  to make changes                                                                    
and  establish  policy  with  respect  to  the  medical  fee                                                                    
schedule.                                                                                                                       
                                                                                                                                
Representative   Fairclough  pointed   out  that   the  only                                                                    
difference she  could see is  an "and" provision on  line 14                                                                    
[page  2]  regarding  the   coding  system.  She  questioned                                                                    
whether the issues raised had been addressed.                                                                                   
                                                                                                                                
Representative Gara  directed attention  to Section  3 (Page                                                                    
3, line  10) and  language regarding  liability of  a person                                                                    
guilty of fraud. He noted that  current law says a person is                                                                    
"entitled  to compensatory  damages  and an  award of  three                                                                    
times  the  amount  of  those   damages."  He  compared  the                                                                    
proposed  language: "economic  damages  as a  result of  the                                                                    
award  and  three  times  the  amount  of  the  compensatory                                                                    
damages." He questioned the reason for the language change.                                                                     
                                                                                                                                
1:58:12 PM                                                                                                                    
                                                                                                                                
ERIN A.  POHLAND, ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF                                                                    
LAW (via teleconference), explained  that the change was for                                                                    
clarification.  The change  is that  the person  who suffers                                                                    
from  economic harm  as a  result  of workers'  compensation                                                                    
fraud would be  entitled to three times  economic damages as                                                                    
compared   to  essentially   four  times   the  compensatory                                                                    
damages.                                                                                                                        
                                                                                                                                
Representative Gara  pointed out that original  statute does                                                                    
not  have  the  word  "economic." He  noted  that  generally                                                                    
statutes talk in  terms of compensatory damages  a person is                                                                    
entitled.  He suggested  reverting  to compensatory  damages                                                                    
plus  an award  of three  times the  amount of  compensatory                                                                    
damages. He  asked the policy  reason for the  new language.                                                                    
Ms. Hall  did not know any  reason not to have  the original                                                                    
language in the bill.                                                                                                           
                                                                                                                                
Representative  Gara understood  the intent  was to  make it                                                                    
clear  that the  amount of  compensatory language  was three                                                                    
times and not four. Ms.  Hall believed old language had been                                                                    
interpreted as  four times the damages.  Representative Gara                                                                    
pointed out  that a  person usually does  not get  the three                                                                    
times unless  they got the  compensatory damages;  he wanted                                                                    
to  know  if  the  goal  was  to  take  away  the  right  to                                                                    
compensatory damages.  Ms. Hall  responded that  taking away                                                                    
compensatory damages was not the goal.                                                                                          
                                                                                                                                
2:02:18 PM                                                                                                                    
                                                                                                                                
Representative Austerman  asked whether  eliminating Section                                                                    
3 would make the old language law.                                                                                              
                                                                                                                                
Representative Gara  commented that  the bill says  a person                                                                    
would  be given  criminal penalties.  In addition,  a person                                                                    
would   get  compensatory   damages  plus   a  three   times                                                                    
multiplier.  To  be  consistent  with  current  statute,  he                                                                    
proposed starting with the word  "person" on line 9 to read:                                                                    
"person  for  compensatory  damages   as  a  result  of  the                                                                    
violation and  an award of three  times compensatory damages                                                                    
resulting from the violation".                                                                                                  
                                                                                                                                
Co-Chair Stoltze requested an  explanation of the difference                                                                    
between   economic  and   compensatory  damages.   Ms.  Hall                                                                    
explained  that   compensatory  damages  are   broader  than                                                                    
economic damages and potentially more subjective.                                                                               
                                                                                                                                
Representative  Gara  described  "compensatory  damages"  as                                                                    
resulting when  someone hits a  person in a car;  the person                                                                    
hit is entitled to compensation  for losses such as physical                                                                    
damages  and lost  wages,  although lost  wages  tend to  be                                                                    
called economic damages. He was  concerned that the bill was                                                                    
written just in terms of  economic damages. He asked whether                                                                    
the attorney  had problems with  going back  to compensatory                                                                    
damages plus  three times the  amount of  those compensatory                                                                    
damages. Ms.  Pohland believed there should  be a discussion                                                                    
with the  Department of Labor  and Workforce  Development in                                                                    
terms of  the policy  change. She  opined that  damages that                                                                    
would be  considered in a  workers' compensation  fraud case                                                                    
would be economic damages.                                                                                                      
                                                                                                                                
Representative  Gara described  a hypothetical  situation in                                                                    
which there could be medical  damages as opposed to economic                                                                    
damages. Ms. Pohland  agreed and pointed out  that there are                                                                    
provisions  already  in  place   addressing  an  insurer  or                                                                    
employer's   failure  to   insure  (AS   23.30.155  and   AS                                                                    
23.30.255). Penalties and damages  are already in place; for                                                                    
example, there  is usually a penalty  provision (essentially                                                                    
an extra interest) that is tacked  on when an employer or an                                                                    
insurer have unfairly controverted  a claim. The legislation                                                                    
was  intended  to  address other  situations,  such  as  the                                                                    
intentional misclassification  of employees to  avoid paying                                                                    
workers' compensation premiums, or lying in a case.                                                                             
                                                                                                                                
2:08:25 PM                                                                                                                    
                                                                                                                                
Ms. Hall added  that one of the reasons for  the section was                                                                    
a "co-mingling"  of civil and  criminal language,  which had                                                                    
presented difficulty in  attempted prosecution. The language                                                                    
attempted  to clear  up the  confusion between  criminal and                                                                    
civil penalties.                                                                                                                
                                                                                                                                
Representative  Austerman wanted  to ask  the Department  of                                                                    
Labor and Workforce Development about the change in policy.                                                                     
                                                                                                                                
TRENA HEIKES,  DIRECTOR, DIVISION OF  WORKERS' COMPENSATION,                                                                    
DEPARTMENT OF LABOR AND WORKFORCE  DEVELOPMENT, did not know                                                                    
why  the  changes  were  made in  subsection  (c).  She  had                                                                    
recommended  a   change  in   the  attorney   fee  language.                                                                    
Currently, attorney's  fees allow  prevailing party  by law,                                                                    
but that is  a small percent of costs.  She requested adding                                                                    
an award of reasonable attorney's  fees, or recovery of full                                                                    
reasonable attorney's fees.  Regarding Representative Gara's                                                                    
question,  she did  not know  why the  change was  made. She                                                                    
recommended   deleting    the   language    "economic"   and                                                                    
"compensatory" so that damages are not delineated.                                                                              
                                                                                                                                
Representative Gara  summarized that no one  had intended to                                                                    
change the damages a person is  entitled to. He asked for an                                                                    
evaluation by DLWD  of proposed changes: line 9  to 10 (page                                                                    
3)  cross  out  "who   suffers  economic"  and  insert  "for                                                                    
compensatory" after  "person" on  line 9;  on line  10 after                                                                    
"violation"  put "and"  instead of  "for". The  result would                                                                    
be: "a  person for compensatory  damages as a result  of the                                                                    
violation and an  award of three times".  Ms. Heikes replied                                                                    
that her first reaction was that  she did not have a problem                                                                    
with the proposal.                                                                                                              
                                                                                                                                
Ms. Hall  felt the  proposed change  left the  intent intact                                                                    
and  clarified  the  issue  in  a  way  that  would  resolve                                                                    
concerns.                                                                                                                       
                                                                                                                                
2:14:06 PM                                                                                                                    
                                                                                                                                
Ms.  Pohland  concurred  that  the  proposal  clarified  the                                                                    
language and makes  clear what damages a  person is entitled                                                                    
to without changing the original intent.                                                                                        
                                                                                                                                
Representative Doogan understood  that the legislation would                                                                    
get  rid of  the application  of theft  by deception  in the                                                                    
statute and  replaces it  with being  guilty of  perjury and                                                                    
related offenses. He asked why  the change was being made in                                                                    
terms of the criminal code.                                                                                                     
                                                                                                                                
Ms.  Hall  noted that  another  amendment  was pending  that                                                                    
would provide further clarity. She  stated that the goal was                                                                    
to make  workers' compensation fraud  more than  a paperwork                                                                    
problem or  theft by deception  but closer to  real workers'                                                                    
compensation fraud on the part  of an employee, provider, or                                                                    
employer.  In making  the change,  DCCED  was attempting  to                                                                    
clarify that it  was talking about other  specific things in                                                                    
Section 2.                                                                                                                      
                                                                                                                                
Ms.  Heikes explained  that the  need for  the change  in AS                                                                    
23.30.250 arose  out of  a problem  DLWD had  in prosecuting                                                                    
for  fraud.  The  statute currently  says  that  the  intent                                                                    
element  of  the  crime  is  to  "knowingly"  make  a  false                                                                    
statement,  etc., that  the  person is  guilty  of theft  by                                                                    
deception. However,  theft by deception is  a higher intent.                                                                    
The law  appears to establish  two different  intents, which                                                                    
makes  prosecution difficult,  if not  impossible. For  that                                                                    
reason, DLWD  wanted just  one intent.  In the  re-write, AS                                                                    
23.30.250(a) provisions were gutted.                                                                                            
                                                                                                                                
Representative  Doogan queried  whether  the proposal  would                                                                    
make  a  misdemeanor  a  felony  or  affect  other  "penalty                                                                    
creep." Ms. Heikes answered that  under the new statute, the                                                                    
felony  or  misdemeanor status  would  depend  on amount  of                                                                    
damage or the amount taken.                                                                                                     
                                                                                                                                
2:19:12 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze MOVED to  ADOPT Amendment 1 (26-LS1354\R.1,                                                                    
Bailey, 3/9/10):                                                                                                                
                                                                                                                                
     Page 1, line 2:                                                                                                            
     Delete "investigations,"                                                                                                   
     Page 2, line 24, through page 3, line 6:                                                                                   
                 Delete all material and insert:                                                                                
     "*Sec. 2. AS 23.30.250(a) is amended to read:                                                                              
    (a)     A person who (1) knowingly makes a false or                                                                         
         misleading statement, representation, or                                                                               
          submission related to a benefit under this                                                                            
          chapter; (2) knowingly assists, abets, solicits,                                                                      
          or conspires in making a false or misleading                                                                          
          submission affecting the payment, coverage, or                                                                        
          other benefit under this chapter; (3) knowingly                                                                       
          misclassifies employees or engages in deceptive                                                                       
          leasing practices for the purpose of evading full                                                                     
          payment of workers' compensation insurance                                                                            
          premiums; or (4) employs or contracts with a                                                                          
         person or firm to coerce or encourage an                                                                               
          individual to file a fraudulent compensation                                                                          
          claim [IS CIVILLY LIABLE TO A PERSON ADVERSELY                                                                        
          AFFECTED BY THE CONDUCT, IS GUILTY OF THEFT BY                                                                        
          DECEPTION AS DEFINED IN AS 11.46.180, AND] may be                                                                     
          prosecuted under AS 11 [PUNISHED AS PROVIDED BY                                                                     
          AS 11.46.120 - 11.46.150}.                                                                                            
                                                                                                                                
Vice-Chair Thomas OBJECTED                                                                                                      
                                                                                                                                
Co-Chair Stoltze  remarked that he offered  the amendment by                                                                    
request of the Department of Law.                                                                                               
                                                                                                                                
Ms.  Hall  explained  that  the  amendment  further  refines                                                                    
language   to  clarify   and  separate   potential  criminal                                                                    
behavior   vs.   civil   behavior.  She   noted   the   word                                                                    
"investigations"  would  be  removed  from  the  title.  The                                                                    
deletion  of  Section 2  would  remove  references to  civil                                                                    
liability in  order to streamline the  legislation. Adoption                                                                    
of the changes would make Section  4 and Section 5 on page 3                                                                    
unnecessary.                                                                                                                    
                                                                                                                                
Representative  Doogan  wondered  if the  changes  mean  the                                                                    
entire criminal code would apply.                                                                                               
                                                                                                                                
2:22:36 PM                                                                                                                    
                                                                                                                                
ANNE CARPENETI,  ASSISTANT ATTORNEY GENERAL,  LEGAL SERVICES                                                                    
SECTION-JUNEAU,  CRIMINAL   DIVISION,  DEPARTMENT   OF  LAW,                                                                    
explained  that  a person  who  commits  a crime  under  any                                                                    
pretext  is  subject  to prosecution  under  Title  11.  She                                                                    
reported that the department thought  it would be clearer to                                                                    
simply state  a person  who commits a  crime in  relation to                                                                    
this type of activity is  prosecutable under Title 11, since                                                                    
theft by  deception under Title  11 has  particular elements                                                                    
that need to be proven.                                                                                                         
                                                                                                                                
Representative Doogan  reiterated his concern  regarding the                                                                    
amendment and  asked if  a more  discrete definition  of the                                                                    
offences  was  warranted.  Ms. Carpeneti  related  that  the                                                                    
Department of  Law's view  of violations  that occur  in the                                                                    
context of the worker's  compensation law is already subject                                                                    
to prosecution  under Title  11. It  is unnecessary  to list                                                                    
the specific  offences in the legislation.  The Department's                                                                    
intent in recommending that Title  11 be cross referenced in                                                                    
relation  to these  types of  crimes  was to  keep the  bill                                                                    
clear  , inclusive,  and expand  their ability  to prosecute                                                                    
fraud.  Representative Doogan  appreciated the  Department's                                                                    
approach.                                                                                                                       
                                                                                                                                
2:28:56 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  why  Sections 4  and  5 must  be                                                                    
deleted if Amendment  1 is adopted. He  assumed the sections                                                                    
broadened the  Department's investigative  and prosecutorial                                                                    
authority.                                                                                                                      
                                                                                                                                
2:30:01 PM               RECESS                                                                                               
2:30:57 PM                                                                                                                    
                                                                                                                                
MICHAEL  FORD, LIAISON,  DEPARTMENT OF  LAW, explained  that                                                                    
sections  4 and  5 were  in the  bill accidentally.  Changes                                                                    
were  made  in  the  Judiciary Committee  that  removed  the                                                                    
reference  to those  sections, therefore  Sections  4 and  5                                                                    
should  have been  removed  in  the CS.  He  added that  the                                                                    
sections could remain as a  matter of policy. Representative                                                                    
Gara  implied that  he did  not  want Worker's  Compensation                                                                    
investigators  feeling constrained.  Mr. Ford  believed that                                                                    
removal  of  Sections  4  and  5  simply  reflect  technical                                                                    
changes to correct an oversight.                                                                                                
                                                                                                                                
Representative Gara requested  assurance from the Department                                                                    
of Labor and Workforce  Development. Ms. Heikes replied that                                                                    
the  DLWD  supports  removal  of   Sections  4  and  5.  She                                                                    
confirmed that  previously the  investigators could  not get                                                                    
prosecutions because  of confusion regarding intent  and the                                                                    
bill clarifies that.                                                                                                            
                                                                                                                                
Vice-Chair  Thomas WITHDREW  his OBJECTION.  There being  NO                                                                    
OBJECTION, Amendment 1 was adopted.                                                                                             
                                                                                                                                
Representative Gara MOVED to ADOPT Conceptual Amendment 2:                                                                      
                                                                                                                                
     Page 3, lines 9-10:                                                                                                        
     Delete "who suffers economic" and replace with "for                                                                        
     compensatory"                                                                                                              
                                                                                                                                
     Page 3, line 10:                                                                                                           
     Replace "for" with "and"                                                                                                   
                                                                                                                                
Co-Chair Stoltze OBJECTED                                                                                                       
                                                                                                                                
Representative Gara read the changes, "on behalf of a                                                                           
person for compensatory damages as a result of the                                                                              
violation and an award of three times the amount of                                                                             
compensatory damages…"                                                                                                          
                                                                                                                                
Ms. Hall agreed with the amendment.                                                                                             
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, Amendment 2 adopted.                                                                                                 
                                                                                                                                
Co-Chair Stoltze requested discussion of the fiscal notes.                                                                      
                                                                                                                                
Ms. Heikes  explained FN 2  (LWF) that the $75  thousand was                                                                    
for development of the new medical fee schedule.                                                                                
                                                                                                                                
Vice-Chair  Thomas  MOVED to  report  CSHB  314(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
CSHB  314(FIN) was  REPORTED  out of  Committee  with a  "do                                                                    
pass"  recommendation  and  with  two  previously  published                                                                    
fiscal notes: FN1 (LAW); FN2 (LWF).                                                                                             
                                                                                                                                
2:37:31 PM               RECESS                                                                                               
2:51:26 PM               RECONVENED                                                                                           
                                                                                                                                
HOUSE BILL NO. 369                                                                                                              
                                                                                                                                
"An Act  relating to an  in-state natural gas  pipeline, the                                                                    
office of in-state gasline project manager, the Joint In-                                                                       
State  Gasline Development  Team, and  the In-State  Gasline                                                                    
Steering Committee; and providing for an effective date."                                                                       
                                                                                                                                
2:51:47 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
Vice-Chair Thomas  MOVED to ADOPT  CS for HB 369  (FIN), 26-                                                                    
LS1527\C, Cook, 3/18/10, as a working draft.                                                                                    
                                                                                                                                
Co-Chair Stoltze OBJECTED                                                                                                       
                                                                                                                                
TOM   WRIGHT,    STAFF,   REPRESENTATIVE    MIKE   CHENAULT,                                                                    
highlighted  the  changes in  the  CS  described in  the  CS                                                                    
Sectional Analysis (copy on file).                                                                                              
      "An Act relating to an  in-state natural gas pipeline,                                                                    
     the office  of in-state  gas line project  manager, the                                                                    
     Joint In-State Gasline  Development Team; requiring the                                                                    
     development of  an in-state natural gas  pipeline plan,                                                                    
     to be  delivered to  the legislature  by July  1, 2011,                                                                    
     that provides  for a  gas line  that is  operational by                                                                    
     December  31,   2015;  directing  the   Joint  In-State                                                                    
     Gasline  Development  Team to  assume  responsibilities                                                                    
     under sec.  19, ch.  14, SLA 2009;  requiring expedited                                                                    
     review  and  action  by   state  agencies  or  entities                                                                    
     relating to the in-state  natural gas pipeline project;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
Mr. Wright  noted the change to  the title of the  bill. The                                                                    
title  was tightened  up  to  differentiate the  legislation                                                                    
from other  bills dealing with  natural gas  development. He                                                                    
continued with the sectional.                                                                                                   
                                                                                                                                
      Section 1:   Adds a new chapter,  Chapter 34: In-State                                                                    
     natural Gas Pipeline, to AS 38, Public Land.                                                                               
                                                                                                                                
     Sec.  38.34.010.  In-state  gas line  project  manager.                                                                    
     (a) Creates  the position of in-state  gas line project                                                                    
     manager within  the governor's  Office.   This position                                                                    
     will   continue  until   one   year  after   commercial                                                                    
     operation of the in-state  natural gas pipeline begins.                                                                    
     (b)  The   Governor  appoints  an  individual   to  the                                                                    
     position of  an in-state  gas line  manager and  may be                                                                    
     removed  at the  Governor's  discretion. (c)  Describes                                                                    
     the duties of the in-state gas line project manager.                                                                       
                                                                                                                                
      Sec. 38.34.020.  Expedited review and action  by state                                                                    
     agencies or entities. (a) States  that any state agency                                                                    
     or entity conducting and taking  action relating to the                                                                    
     in-state  gas line  shall be  expedited.   (b) A  state                                                                    
     agency  or  entity  may  not  include  in  any  project                                                                    
     certificate,   right   of    way,   permit   or   other                                                                    
     authorization issued to a licensee  a term or condition                                                                    
     that is  not required  by law  if the  in-state project                                                                    
     manager determines the term  or condition would prevent                                                                    
     or  impair the  expeditious construction  and operation                                                                    
     or expansion  of the  in-state gas line.   (c)  A state                                                                    
     agency  or  entity may  not,  unless  required by  law,                                                                    
     amend  or  abrogate  any  certificate,  right  of  way,                                                                    
     permit or  other authorization issued to  a licensee if                                                                    
     the  project   manager  determines  the   action  would                                                                    
     prevent  or  impair  the expeditious  construction  and                                                                    
     operation or expansion of the in-state gas line.                                                                           
     In Section 1 Sec.38.34.020.,  The word entity was added                                                                    
     to  "review   and  action   by  state   agencies".  The                                                                    
     inclusion allows  for involvement  of entities  such as                                                                    
     ANGDA (Alaska Natural Gas Development Authority).                                                                          
                                                                                                                                
     Sec.  38.34.030.  Joint  In-state  Gasline  Development                                                                    
     Team.    (a)  Establishes the  Joint  In-State  Gasline                                                                    
     Development Team  in the Governor's  Office.   The team                                                                    
     consists  of  the  commissioner of  the  Department  of                                                                    
     Transportation and  Public Facilities or  designee, the                                                                    
     chief   executive  officer   of  the   Alaska  Railroad                                                                    
     Corporation  or designee,  the chief  executive officer                                                                    
     of the  Alaska Natural  Gas Development  Authority, the                                                                    
     in-state  gas  line  project   manager  and  the  chief                                                                    
     executive  officer   of  the  Alaska   Housing  Finance                                                                    
     Corporation.   (b)  Names  the  Alaska Housing  Finance                                                                    
     Corporation's chief  executive officer  as chair.   (c)                                                                    
     Allows the  development team to hire  staff, enter into                                                                    
     contracts and  exercise other powers  to carry  out its                                                                    
     functions.                                                                                                                 
     The  chief  executive  Officer of  the  Alaska  Housing                                                                    
     Finance  Corporation was  added as  a fifth  member and                                                                    
     chair to  the Joint  In-state Gasline  Development Team                                                                    
     in Sec.38.34.030.                                                                                                          
                                                                                                                                
Mr. Wright explained that Dan Fauske, (CEO/Executive                                                                            
Director, Alaska Housing Finance Corporation, Department of                                                                     
Revenue) would bring his finance and leadership experience                                                                      
to the team.                                                                                                                    
                                                                                                                                
2:55:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze interjected that he believed in the value                                                                      
of having a Development Team member who is familiar with                                                                        
the legislative and budget process.                                                                                             
                                                                                                                                
Mr. Wright elaborated further.                                                                                                  
                                                                                                                                
     Sec. 38.34.040.   Duties of the Development  Team.  (a)                                                                    
     Ensure a  project plan  for the  development of  an in-                                                                    
     state  gas  line  is completed  and  delivered  to  the                                                                    
     legislature by  July 1,  2011.   The project  plan must                                                                    
     specify and  document how an  in-state gas line  can be                                                                    
     designed,  financed, constructed  and made  operational                                                                    
     by December 31, 2015.    (b) The Joint In-State Gasline                                                                    
     Development Team  is to assume all  executive authority                                                                    
     over and  managerial responsibility for  all activities                                                                    
     enumerated under  sec. 19, ch. 14,  SLA 2009, including                                                                    
     work previously  completed, work  in process,  and work                                                                    
     for which  money has  been encumbered  but that  is not                                                                    
     completed  on the  effective date  of this  subsection.                                                                    
     (c) Describes  specific plans that  are to  be included                                                                    
     within the project  plan for an in-state  gas line that                                                                    
     will serve  Fairbanks, the south central  region of the                                                                    
     state,  and  other  communities  whenever  practicable,                                                                    
     connecting with or enhancing  the existing gas pipeline                                                                    
     system,   and  reaching   to   tidewater.     (d)   The                                                                    
     development  team's  work  product  is  to  include  an                                                                    
     analysis of  alternative possible  routes and  select a                                                                    
     route   that   is   consistent   with   the   following                                                                    
     requirements:  (1) is  the  most  economical, (2)  will                                                                    
     provide  gas to  residents  at a  reasonable cost,  (3)                                                                    
     allows  for  connecting   lines  to  serve  industrial,                                                                    
     residential  and  utility  customers along  the  entire                                                                    
     route and  in other  regions of the  state that  can be                                                                    
     served at  commercially feasible rates, (4)  uses state                                                                    
     land and existing state highway  and railroad rights of                                                                    
     way to  the maximum extent feasible,  (5) uses existing                                                                    
     highway  and railroad  bridges,  gravel pits  equipment                                                                    
     yards  and maintenance  facilities  and other  existing                                                                    
     facilities   and  resources   to  the   maximum  extent                                                                    
     feasible. (e) With the  intent that any project-related                                                                    
     assets acquired or developed  be available for transfer                                                                    
     or  sale  to  the  entity best  able  to  complete  the                                                                    
     project,  the  development team  is  to:  (1)   prepare                                                                    
     plans  and designs  necessary for  the construction  of                                                                    
     the  in-state gas  line; (2)  coordinate with  entities                                                                    
     qualified to build,  own and operate the  gas line; (3)                                                                    
     identify, apply for and  obtain rights-of-way and other                                                                    
     permits  for the  project route;  (4)  work with  other                                                                    
     entities to  promote gas supply and  purchase contracts                                                                    
     required  for the  project to  be commercially  viable;                                                                    
     (5)   prepare  cost   estimates  for   project  design,                                                                    
     construction and  operation to determine  the project's                                                                    
     feasibility and  the projected cost  of natural  gas to                                                                    
     consumers; (6) coordinate with and  use, to the fullest                                                                    
     extent, possible existing work  by other state agencies                                                                    
     and  entities before  contracting for  new reports  and                                                                    
     research   and  analysis;   (7)  determine   regulatory                                                                    
     authority  over the  pipeline project  and perform  any                                                                    
     necessary  compliance  requirements; (8)  identify  and                                                                    
     apply for,  or support  extension of,  existing permits                                                                    
     for  export  of  Alaska  natural  gas  if  that  export                                                                    
     improves project  economics and  will reduce  the price                                                                    
     of natural gas  to in-state consumers.   (f) Any rights                                                                    
     to  a gas  line  corridor obtained  by  a state  agency                                                                    
     under eminent  domain may be  transferred to  a private                                                                    
     entity.  (g)  Describes the various aspects  of the in-                                                                    
     state  gas  line  project   the  development  team  may                                                                    
     consider.                                                                                                                  
                                                                                                                                
     Sec.38.34.040, changes  the July 1, 2011  deadline from                                                                    
     construction   ready  to   a  completed   project  plan                                                                    
     delivered to the legislature. He  added that the change                                                                    
     accommodated   concerns   raised   by   the   impending                                                                    
     deadline.                                                                                                                  
                                                                                                                                
Mr.  Wright  also pointed  out  that  in subsection(c)  "the                                                                    
south  central region"  includes Valdez.  He read  the final                                                                    
change  in  Sec.38.34.060.  Subsection  b  that  dealt  with                                                                    
conflicts of interest.                                                                                                          
                                                                                                                                
3:00:22 PM                                                                                                                    
                                                                                                                                
     Sec.  38.34.060.  Conflicts  of  interest.   (a)  If  a                                                                    
     member  of  the  Development  Team  acquires,  owns  or                                                                    
     controls a direct or indirect  interest in property, an                                                                    
     organization or business that might  be affected by the                                                                    
     in-state  gas  line  project  or  other  matters  under                                                                    
     consideration   by    the   Development    Team   shall                                                                    
     immediately  disclose the  interest to  the Development                                                                    
     Team.   This disclosure  is part  of the  public record                                                                    
     and  shall be  included  in the  minutes  of the  first                                                                    
     meeting  of   the  Development  Team  held   after  the                                                                    
     disclosure.  (b) Members  of the  development team  are                                                                    
     subject to  AS 39.50  (Public Official  Disclosure) and                                                                    
     AS 39.52 (Alaska Executive Branch Ethics Act).                                                                             
                                                                                                                                
Representative Gara  referred to  page 4, line  8 of  the CS                                                                    
that calls  for analysis  of "alternative  possible routes".                                                                    
He  explained that  alternatives  might not  be routes.  The                                                                    
alternatives could include  importation of liquefied natural                                                                    
gas or Cook Inlet gas subsidies.  He asked the sponsor if he                                                                    
would change  the language  to reflect  other possibilities.                                                                    
Representative   Chenault  wanted   time  to   consider  the                                                                    
request.                                                                                                                        
                                                                                                                                
Representative Gara understood the goal  to be ready to move                                                                    
forward but wanted to avoid spending money unnecessarily.                                                                       
He  did  not want  to  see  gas pipeline  engineering  plans                                                                    
discarded. On  page 4  line, 23 he  requested to  insert the                                                                    
word "preliminary", that  would read, "prepare [preliminary]                                                                    
plans and  designs for construction of  the in-state natural                                                                    
gas line project." Representative  Chenault argued that even                                                                    
though he  dislikes wasting money  the state should  pay for                                                                    
whatever plans are necessary to determine costs.                                                                                
                                                                                                                                
3:04:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara  referred  to   line  27,  of  the  CS,                                                                    
regarding obtaining  right-of-ways. He wondered if  it was a                                                                    
waste of  money to  obtain right-of-ways  that might  not be                                                                    
used.  Representative Chenault  believed that  in order  for                                                                    
the project  to move  forward the state  will need  to spend                                                                    
money up  front to develop right-of-ways.  He felt resolving                                                                    
right-of-way issues  was essential to promoting  the project                                                                    
to a private entity.                                                                                                            
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was  so ordered. The CS for HB  369 (FIN), 26-                                                                    
LS1527\C, Cook, 3/18/10CS was adopted.                                                                                          
                                                                                                                                
3:06:29 PM          RECESS                                                                                                    
3:07:45 PM          RECONVENED                                                                                                
                                                                                                                                
Representative   Chenault  recalled   Representative  Gara's                                                                    
request to change  the language in the CS on  page 4, line 8                                                                    
to delete the word "routes". He  stated that he did not want                                                                    
to  change the  language.  He felt  that although  liquefied                                                                    
natural gas imports might become  a stop gap measure, HB 369                                                                    
was written  specifically, to develop an  in-state gas line.                                                                    
Representative Gara  announced that he supported  leaving HB
369 as a pipeline bill but  pointed out that on Page 4, line                                                                    
8 of the CS the  language called for analyzing alternatives.                                                                    
He felt  that leaving the  word routes narrowed  analysis of                                                                    
all options. He  wanted the state to be free  to analyze any                                                                    
cheaper alternatives.  Representative Chenault  offered that                                                                    
there  are a  number  of options  being  evaluated by  other                                                                    
sources.  His specific  bill dealt  with the  development of                                                                    
in-state  gas pipeline  routes not  alternative options.  He                                                                    
felt that all  of the options will be evaluated  once all of                                                                    
the information and cost analysis is gathered.                                                                                  
                                                                                                                                
Co-Chair   Hawker  interjected   that  Speaker   Chennault's                                                                    
intention was to present legislation  to promote an in-state                                                                    
gas  line not  liquefied  natural  gas importation.  Speaker                                                                    
Chenault affirmed.                                                                                                              
                                                                                                                                
3:11:44 PM                                                                                                                    
                                                                                                                                
Representative Doogan asked if  the pipeline project will be                                                                    
limited  in size  by  AGIA.  Representative Chenault  stated                                                                    
that  the  project would  not  be  limited  to the  500  bcf                                                                    
(billion  cubic feet)  specified  by AGIA  depending on  the                                                                    
state's involvement.                                                                                                            
                                                                                                                                
Representative Gara referred  to page 4, lines 23  and 27 of                                                                    
the CS.  He asked  the sponsor to  consider adding  the word                                                                    
"preliminary"  before  plans on  line  23.  On line  27,  he                                                                    
requested  adding  "applying"  for   and  omit  "and  obtain                                                                    
rights-of-way  and".   He  stated  that  he   offered  these                                                                    
conceptual  amendments  as  cost saving  measures  to  limit                                                                    
ineffectual   effort   by   the  state.   Speaker   Chenault                                                                    
reiterated that it is imperative  to have the rights-of-ways                                                                    
in  place in  order to  transfer or  sell the  project to  a                                                                    
private entity. He read the following:                                                                                          
                                                                                                                                
     Page  4,  lines  20-21,  "With   the  intent  that  any                                                                    
     project-related   assets  acquired   or  developed   be                                                                    
     available for transfer or sale  to the entity best able                                                                    
     to complete the project…"                                                                                                  
                                                                                                                                
Speaker  Chenault stressed  that if  the state  must own  or                                                                    
control right-of-ways  to support project completion  it was                                                                    
a valuable use of state funds.                                                                                                  
                                                                                                                                
Co-Chair Hawker  interjected that there are  not mandates in                                                                    
HB 369. He emphasized that  the bill only requires a project                                                                    
plan be  delivered to the legislature  by July 1, 2011.   He                                                                    
cautioned  that  prescribing  limits to  a  dynamic  process                                                                    
could hurt the outcome of the project.                                                                                          
                                                                                                                                
3:16:49 PM                                                                                                                    
                                                                                                                                
Mr. Wright  explained that any private  entity interested in                                                                    
the feasibility of the project will do its own analysis.                                                                        
                                                                                                                                
Representative Austerman asked if  the bill allows the state                                                                    
to  build  and  own  the  pipeline  and  lease  it  out  for                                                                    
operation.                                                                                                                      
                                                                                                                                
Representative Chenault asserted that  he would not want the                                                                    
state  to   build  the  in-state   gas  line.   However  the                                                                    
legislation does  not preclude the state  from participating                                                                    
in any form.                                                                                                                    
                                                                                                                                
Representative Fairclough  referred to page 5,  lines 12-13,                                                                    
that allows for a state  agency to transfer any acquired gas                                                                    
line corridor  rights to a  private entity. She  wondered if                                                                    
that  was   a  normal  process  for   state.  Representative                                                                    
Chenault stated he did not know the answer.                                                                                     
                                                                                                                                
Co-Chair Hawker  added that  the language  was added  at the                                                                    
request  of  the  Department of  Transportation  and  Public                                                                    
Facilities to clarify the department's ability to do so.                                                                        
                                                                                                                                
3:20:51 PM                                                                                                                    
                                                                                                                                
FRANK  RICHARDS,  DEPUTY  COMMISSIONER,  HIGHWAYS  &  PUBLIC                                                                    
FACILITIES,   DEPARTMENT   OF  TRANSPORTATION   AND   PUBLIC                                                                    
FACILITIES,   explained   that   the  state   is   currently                                                                    
prohibited  to  transfer land  obtained  by  a state  agency                                                                    
through eminent domain to a private entity.                                                                                     
                                                                                                                                
Representative  Fairclough  referred to  Sec.38.34.050  that                                                                    
dealt   with   confidentiality.   She  observed   that   the                                                                    
development   team   will   have  access   to   confidential                                                                    
information and  pointed out that  the bill would add  a new                                                                    
layer  of  access  by   someone  other  than  commissioners.                                                                    
Representative Chenault read lines 30-31 of Sec.38.34.050.                                                                      
                                                                                                                                
     "Confidential information received by the development                                                                      
     team shall be kept confidential."                                                                                          
                                                                                                                                
Co-Chair  Hawker  closed  public testimony.  He  called  for                                                                    
discussion of  the fiscal  notes. He  referenced the  new FN                                                                    
(OOG)  dated  3/12/2010 (copy  on  file)  and noted  it  was                                                                    
indeterminate.                                                                                                                  
                                                                                                                                
Bob Swenson,  Manager, In-State  Gasline Project,  Office of                                                                    
the Governor; relayed that the  fiscal note was outdated and                                                                    
no longer applied to the CS version of the legislation.                                                                         
Co-Chair   Hawker  asked   if   the   updated  fiscal   note                                                                    
information was available. Mr. Swenson stated it was.                                                                           
                                                                                                                                
Representative  Kelly  pointed   out  that  the  legislature                                                                    
previously  approved the  Governor's  requests for  in-state                                                                    
pipeline  development   funds.  He  requested   Mr.  Swenson                                                                    
delineate the expenditure of the  funds as it relates to the                                                                    
current project.                                                                                                                
                                                                                                                                
Co-Chair Hawker  elaborated that  the Governor  requested an                                                                    
additional  $6.5 million  dollars in  this year's  operating                                                                    
budget for  in-state gas line  development. He  informed the                                                                    
committee  that  a fiscal  note  for  the legislation  would                                                                    
incorporate  the  appropriation  request. He  requested  Mr.                                                                    
Swenson provide  a recap of the  overall fiscal requirements                                                                    
to move the project forward under the authority of HB 369.                                                                      
                                                                                                                                
Mr.   Swenson   summarized   the   projected   fiscal   note                                                                    
expenditures.  He stated  that the  fiscal note  total is  $                                                                    
8,000,053.  Incorporated in  that total  is $  1,000,095 for                                                                    
personal  services.  He  highlighted  the  positions  deemed                                                                    
necessary due to the accelerated  timeline for completion of                                                                    
the  project  plan.  He  listed  them  as  follows:  project                                                                    
manager,    engineering    manager,   commercial    manager,                                                                    
legislative  liaison/public  outreach officer,  finance  and                                                                    
budget   analyst,  schedule   coordinator,  and   finally  a                                                                    
technical writer.  He added that $6.8  million was requested                                                                    
for contractual services. He  noted the contractual services                                                                    
request was  similar to the entire  operating budget request                                                                    
of  6.5  million with  the  additional  amount intended  for                                                                    
market analysis. He expounded  that the contractual services                                                                    
request  was   divided  into  four  components.   The  first                                                                    
component  was completion  of  environmental and  permitting                                                                    
activities  and state  and  federal right-of-way  approvals.                                                                    
That includes  all of the  different issues involved  in the                                                                    
permitting process. The second  component of the request was                                                                    
project  management  and  engineering  data  acquisition  to                                                                    
further refine the engineering design.                                                                                          
                                                                                                                                
3:31:24 PM                                                                                                                    
                                                                                                                                
The  third  component  was refinement  of  cost  of  service                                                                    
estimates and  tariff modeling.  The component  was expanded                                                                    
to incorporate  both possible  routes. The  fourth component                                                                    
consisted  of a  complete documentation  of pipeline  assets                                                                    
for commercial offering.                                                                                                        
                                                                                                                                
Co-Chair Hawker wondered if the  mandates could be completed                                                                    
in one  year for  the additional approximately  $1.2 million                                                                    
over the  Governor's original  operating budget  request. He                                                                    
noted  the additional  funds were  for personal  services to                                                                    
get the work  done. Mr. Swenson stated that  was correct. He                                                                    
offered that in  reference to the fiscal note  the years out                                                                    
from FY  2011 remain  indeterminate dependent  upon outcomes                                                                    
of the plan. Co-Chair Hawker robustly concurred.                                                                                
                                                                                                                                
Representative  Austerman  asked  if   it  was  possible  to                                                                    
project  the expenditures  for the  out  years. Mr.  Swenson                                                                    
voiced that the  "what if" scenario is  incredibly broad and                                                                    
depends on what part of the  project the state is willing to                                                                    
undertake. He believed it would be impossible at this time.                                                                     
                                                                                                                                
3:35:25 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked  that  in reference  to  the  fiscal                                                                    
notes, if  the mission of  the bill is essentially  the same                                                                    
as the intent directive from  the legislature except for the                                                                    
accelerated  timeline  and   creation  of  clear  management                                                                    
hierarchy  and authority.  Mr. Swenson  affirmed. He  stated                                                                    
the accelerated  timeline was  worrying. The  assurance that                                                                    
an in-state  gas pipeline operational  by December  31, 2015                                                                    
was of  particular concern. The  permitting process  was out                                                                    
of  the  state's  control  and difficult  to  submit  to  an                                                                    
aggressive timeline.                                                                                                            
                                                                                                                                
Mr. Swenson  shared that another  issue is  optimization. He                                                                    
explained that  the earliest phase  of a massive  project is                                                                    
the  most important  and affects  the costs  of the  project                                                                    
over  time. Significant  optimization effort  must be  taken                                                                    
early  on in  a  project to  save money  in  the long  term.                                                                    
Optimization  is  not  always conducive  to  an  accelerated                                                                    
timeline. He  stated that these  issues should  be addressed                                                                    
before moving forward.                                                                                                          
                                                                                                                                
Co-Chair Hawker  agreed. He commented  that in terms  of the                                                                    
fiscal  note it  was  basically the  same  project that  the                                                                    
administration   had  all   ready   been   working  on.   He                                                                    
ascertained  that  there  was coordination  of  fiscal  note                                                                    
preparation  with  the  other departments  involved  in  the                                                                    
project.                                                                                                                        
                                                                                                                                
Representative Kelly  asked how the role  of project manager                                                                    
would interact  with the Development  Team. Mr.  Swenson was                                                                    
not certain  how the  management structure  was going  to be                                                                    
set up.                                                                                                                         
                                                                                                                                
3:44:53 PM          RECESS                                                                                                    
3:51:39 PM          RECONVENED                                                                                                
                                                                                                                                
Representative Fairclough  referenced page  5, lines  12 and                                                                    
13 of the CS regarding eminent domain.                                                                                          
                                                                                                                                
Representative  Fairclough  wondered what  transferring  gas                                                                    
line  corridor  rights to  a  private  entity means  to  the                                                                    
state. She asked if the  state could recover those rights if                                                                    
necessary. Mr.  Richards understood  that the  contract with                                                                    
the private  entity developer  would provide  a construction                                                                    
right-of-way  and contain  a  reverter  clause. He  revealed                                                                    
that  when  construction  is  completed  the  property  will                                                                    
revert  back to  state ownership.  Representative Fairclough                                                                    
asked  if  the  contract language  adequately  protects  the                                                                    
states  interest. Mr.  Richards answered  that the  contract                                                                    
reverts  the property  rights back  to the  state even  in a                                                                    
scenario that  the project is not  completed. Representative                                                                    
Fairclough wondered if the state's  interest is protected if                                                                    
the private entity sells their  assets to another party. Mr.                                                                    
Richards did not know the answer.                                                                                               
                                                                                                                                
HB  369  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 346                                                                                                              
                                                                                                                                
"An  Act  establishing  the Workers'  Compensation  Advisory                                                                    
Board; and providing for an effective date."                                                                                    
                                                                                                                                
3:57:30 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON,  STAFF, REPRESENTATIVE KURT  OLSON, SPONSOR,                                                                    
reported   that  the   Medical  Services   Review  Committee                                                                    
recommended  that  the   Legislature  establish  a  Worker's                                                                    
Compensation  Advisory Council.  The  council would  replace                                                                    
the  Medical Services  Review Committee.  He noted  the word                                                                    
"Board" was changed  to "Council" in the  Labor and Commerce                                                                    
Committee.                                                                                                                      
                                                                                                                                
TRENA HEIKES,  DIRECTOR, DIVISION OF  WORKERS' COMPENSATION,                                                                    
DEPARTMENT OF  LABOR AND  WORKFORCE DEVELOPMENT,  noted that                                                                    
the  council consists  of four  members  each who  represent                                                                    
organized  labor   and  employers  and  three   members  who                                                                    
represent medical  care providers. She remarked  that Alaska                                                                    
is the only state that  allows the medical providers to vote                                                                    
on such matters.                                                                                                                
                                                                                                                                
Representative Austerman  referred to the fiscal  note, FN 1                                                                    
(LWF)  and  asked  if   Medical  Services  Review  Committee                                                                    
members needed to  travel. Ms. Heikes responded  that two of                                                                    
the  members were  from  Ketchikan.  The Department  brought                                                                    
them  up for  monthly and  bi-monthly meetings  from May  to                                                                    
November of last year.                                                                                                          
                                                                                                                                
Representative Austerman  queried Ms.  Heikes about  the $40                                                                    
thousand  expenditure for  travel  in the  fiscal note.  Ms.                                                                    
Heikes explained  that it was for  the Worker's Compensation                                                                    
Advisory Council  members travel  to meetings twice  a year.                                                                    
She  explained that  currently the  Medical Services  Review                                                                    
Committee  travel budget  is  approximately $10-12  thousand                                                                    
and part  of the overall  travel budget for the  Division of                                                                    
Worker's Compensation.                                                                                                          
                                                                                                                                
Representative  Doogan asked  if  the $40  thousand was  the                                                                    
total expenditure for the new  Council. Ms. Heikes affirmed.                                                                    
She added  that the  Medical Services Review  Committee will                                                                    
be abolished and their  approximately $10-12 thousand travel                                                                    
budget will be rolled into the $40 thousand.                                                                                    
                                                                                                                                
Representative  Austerman determined  that the  $40 thousand                                                                    
is an increase in expenditures. Ms. Heikes affirmed.                                                                            
                                                                                                                                
Vice-Chair  Thomas  opined  that  the  fishing  and  tourism                                                                    
industries were not specifically  represented on the Council                                                                    
in the  bill. He also  felt the bill could  allow duplicated                                                                    
union membership in the employer representation language.                                                                       
                                                                                                                                
4:05:08 PM                                                                                                                    
                                                                                                                                
Representative  Kelly  asked  why  there is  more  than  one                                                                    
member from  organized labor since  the majority  of Alaskan                                                                    
workers are  non-union. Ms. Heikes responded  that organized                                                                    
labor had  the most  experience with  worker's compensation.                                                                    
She   believed  that   the  experienced   members  with   an                                                                    
established base  of knowledge  would help the  Council work                                                                    
efficiently.                                                                                                                    
                                                                                                                                
Representative  Kelly   maintained  his  concern   that  the                                                                    
council did not adequately represent the work force.                                                                            
                                                                                                                                
Representative  Fairclough noted  that  only voting  members                                                                    
counted in the quorum. She  wondered why the two members who                                                                    
represent  insurers  were  not voting  members.  Ms.  Heikes                                                                    
pointed  out  that although  insurers  have  an interest  in                                                                    
worker's compensation  they are not typically  given a vote.                                                                    
Worker's  Compensation  issues  are  between  employers  and                                                                    
employees. The medical providers complete the process.                                                                          
                                                                                                                                
Representative Gara asked how  the ad hoc committee compares                                                                    
to the  Worker's Compensation  Advisory Council.  Ms. Heikes                                                                    
explained that  the ad hoc committee  is an ad hoc  group of                                                                    
members from  organized labor and the  Worker's Compensation                                                                    
Committee of Alaska, an  employer industry organization. The                                                                    
ad  hoc   Committee  did  not  operate   under  an  official                                                                    
statutory  mandate  and  met behind  closed  doors.  Council                                                                    
meetings   will  be   on  the   record  and   invite  public                                                                    
involvement.                                                                                                                    
                                                                                                                                
Representative Gara expressed  concern with allowing medical                                                                    
providers to vote on all  matters brought to the Council. He                                                                    
felt   they  should   vote  exclusively   on  medical   care                                                                    
reimbursement  rates,  medical  care provisions,  and  other                                                                    
applicable  Medical  Services  Review Committee  issues.  He                                                                    
believed other  council members could leverage  their votes.                                                                    
Ms. Hiekes agreed  that was a concern of  industry and union                                                                    
members  on  the  Medical  Services  Review  Committee.  The                                                                    
medical providers felt they were  a major participant in the                                                                    
system.  The treatment  of  work  related injuries,  workers                                                                    
recovery   time,  degree   of   permanent  impairment,   and                                                                    
vocational  re-training involve  medical opinion.  They were                                                                    
given a voice by a  bare majority. A vote provides incentive                                                                    
for the medical  providers to come to  the Council meetings.                                                                    
Representative  Gara maintained  his concern  making medical                                                                    
providers  voting members  for  issues that  do not  concern                                                                    
them.                                                                                                                           
                                                                                                                                
4:13:49 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  felt  that  Council  members  should  be                                                                    
Alaska residents.                                                                                                               
                                                                                                                                
HB  346  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting was adjourned at 4:15 PM.                                                                                           

Document Name Date/Time Subjects
07 HB314 Letter AK Spine Institute 2-2-10[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
08 HB314 Letter NFIB 1-31-10[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
09 HB314 NCCI AK Medical Cost Comparison[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
10 HB314 NCCI AK vs Countrywide Medical Cost per Case[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
11 HB314 NCCI All States Medical Cost Comparison[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
12 HB314 Letter ASMA 1-1-10[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
13 HB314 Suggested changes ASMA 1-1-10[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
14 HB314 Workers' Compensation Premium Rate Ranking cy 2008[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
14 HB314 Workers' Compensation Premium Rate Ranking cy 2008[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
15 HB314 8 AAC 45 082 Medical Treatment[1].pdf HFIN 3/22/2010 1:30:00 PM
HB 314
CSHB314 Amendment R.1.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
HB314 Letter Accident-Injury Center 2-4-10.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
HB314 Letter McNamara 2-3-10.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
HB314 Sectional Analysis ver R.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
HB314 Sponsor Statement ver R.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
HB314 Summary of Changes ver A to ver R.pdf HFIN 3/22/2010 1:30:00 PM
HB 314
CSHB346 Sponsor Statement ver E.pdf HFIN 3/22/2010 1:30:00 PM
HB 346
HB346 LETTERS.pdf HFIN 3/22/2010 1:30:00 PM
HB 346
HB346 Sectional Analysis ver E.pdf HFIN 3/22/2010 1:30:00 PM
HB 346
HB346 summary of changes ver R to ver E.pdf HFIN 3/22/2010 1:30:00 PM
HB 346
HNBL HawkerStoltze HB346 3-19-10.pdf HFIN 3/22/2010 1:30:00 PM
HB 346
CS WORK DRAFT HB 369 26-LSI527 C version.pdf HFIN 3/22/2010 1:30:00 PM
HB 369
Sectional Analysis_FIN, version C HB 369.pdf HFIN 3/22/2010 1:30:00 PM
HB369CS(RES)-DEC-CO-3-16-10NEW.pdf HFIN 3/22/2010 1:30:00 PM
HB 369
HB369(RES)-DNR-SPCO-03-16-10NEW.pdf HFIN 3/22/2010 1:30:00 PM
HB 369
CSHB369(RES)-DNR-MLW-03-16-10NEW.pdf HFIN 3/22/2010 1:30:00 PM
HB 369