Legislature(2019 - 2020)ADAMS ROOM 519
04/24/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB30 | |
| SB61 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 30 | TELECONFERENCED | |
| + | SB 61 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 24, 2019
1:30 p.m.
1:30:12 PM
CALL TO ORDER
Co-Chair Wilson called the House Finance Committee meeting
to order at 1:30 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
None
ALSO PRESENT
Elise Sorum-Birk, Staff, Representative Andy Josephson;
Scott Jordan, Director, Division of Risk Management,
Department of Administration; Grey Mitchell, Director,
Division of Workers' Compensation, Department of Labor and
Workforce Development; Senator Gary Stevens, Bill Sponsor;
Tim Lamkin, aide, Senator Stevens; Velma Thomas, Program
Coordinator, Fishermen's Fund, Department of Labor and
Workforce Development.
PRESENT VIA TELECONFERENCE
Marianne Burke, Mother of Abigail Caudle; Kevin Dougherty,
Attorney, Alaska District Council of Laborers; Charles
McKee, Self, Anchorage; Laura Bonner, Self, Anchorage; Mark
Butler, Self, Anchorage; Bob Kehoe, Executive Director,
Purse Seine Vessel Owners Association (PSVOA); Clay
Bezenek, Member, Fishermen's Fund Advisory and Appeals
Council.
SUMMARY
HB 30 WORKERS' COMP: DEATH; PERM PARTIAL IMPAIR
HB 30 was HEARD and HELD in committee for
further consideration.
SB 61 COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS
SB 61 was HEARD and HELD in committee for
further consideration.
Co-Chair Wilson reviewed the agenda for the meeting.
HOUSE BILL NO. 30
"An Act relating to the exclusiveness of liability of
an employer in the case of death; relating to the
payment of workers' compensation benefits in the case
of permanent partial impairment; relating to notice of
workers' compensation death benefits; relating to the
payment of workers' compensation death benefits
payable to a child of an employee where there is no
surviving spouse; relating to the payment of workers'
compensation death benefits for an employee without a
surviving spouse or child; and providing for an
effective date."
1:30:46 PM
REPRESENTATIVE ANDY JOSEPHSON, BILL SPONSOR, introduced
himself. He relayed that 90 percent of the contents of the
bill had been circulating through the building since 2014.
The bill made it through the House in the previous year,
reached the Senate Finance Committee, and died there.
Representative Josephson turned to slide 2 of his
PowerPoint Presentation: "HB 30 - The Abigail Caudle Act"
(copy on file). He explained that the bill was named after
Abigail Caudle who died in an electrical accident in 2011.
He attended an event at the location where she passed away.
There were members of the public and the media there. Her
mother, Marianne Burke, spoke as well.
Representative Josephson continued to slide 3: "Reviewing
Workers' Compensation Statutes." He reported that the bill
did three principle things. First, it updated permanent
partial impairment (PPI). Currently, there was a PPI of
$177,000 for the entire body. When a person survived an
accident a doctor could declare they had a percentage of
disability. The bill updated the amount to about $254,000
to $255,000. Second, the bill updated a benefit that the
legislature created in 1968 originally in the amount of
$20,000. The amount would be increased to $150.000 for a
death benefit for non-nuclear family dependents. He
provided an example of a 25-year-old slope worker who died
and had a disabled parent that lived with that person.
Representative Josephson continued that the bill would also
create a new benefit that applied to persons that were
single and childless. Under current law if a person was
single, childless, and died at work, their estate would
receive no benefit. Essentially, a person could not sue in
personal injury or tort if they were injured on the job. A
person's remedy existed only in the Title 23 silo. The
theory of the law was that for a person that was single and
childless there was no dependent to pay. The only thing the
law did was pay for funeral expenses. It left other family
members with no way to express their grief through the law.
He noted a case brought to the Alaska Supreme Court. The
bill would create a $120,000 benefit to parents of a
deceased individual. If the person's parents were no longer
alive, the estate would receive $120,000. The funds could
be used to help pay for any existing debt of the deceased.
He commented that on the fiscal note, because very few
people died at work (a handful per year in Alaska of which
only one single childless person died), the expense
associated with the bill did not really have to do with the
new benefit. The expense was connected to the updated PPI.
Representative Josephson noted there was a snafu in the
prior committee where they adopted a committee substitute
(Version U) which updated the 1968 from $20,000 to
$150,000. He continued that when the bill moved out of
committee, they selected a different version (Version S)
that neglected to reflect their previous work. There was a
technical error that could not be addressed until it
reached the House Finance Committee. He thanked members.
1:38:32 PM
ELISE SORUM-BIRK, STAFF, REPRESENTATIVE ANDY JOSEPHSON,
continued to explain slide 4. The bill also allowed a
dependent child left without a parent to continue to
receive benefits for five years after they reached the
definition of "adulthood" under the workers' compensation
Act.
Ms. Sorum-Birk explained that the bill dealt with the
single worker with no dependents who died on the job. There
was no remedy under current law. The parents could not
collect workers' compensation, and they could not file
suit. The original version of the bill provided the ability
for the family to file suit but was removed from the Labor
and Commerce committee substitute. House Bill 30 amended AS
23.30.055 to allow the parent or questioned state of the
deceased to receive compensation through workers'
compensation. It also added a new subsection under AS
23.30.215 (a) to provide the death benefit Representative
Josephson spoke to previously. She reiterated that the
death benefit was $120,000 payable to the parents or estate
of the deceased. If there were two parents that were
separated, the amount would be divided equally. Each parent
would receive $60,000. If there were no parents, the entire
amount would be awarded to the estate of the deceased. She
highlighted that the benefit would be slightly different
from other death benefits currently under workers'
compensation in that it would be paid out in a lump sum
rather than being paid over time.
Ms. Sorum-Birk continued to slide 5 and slide 6 to discuss
the PPI. The rates had not been adjusted since 2000. In
1988 the amounts were updated to $135,000. In 2000 they
were updated to $177,000. House Bill 30 adjusted the amount
to $255,854 to account for inflation. She pointed to a
handout in members' packets about PPI by state. Alaska was
very close to the bottom of the list for all of the listed
benefits. If the state were to adjust the amount to
$255,854, Alaska would move to the national average.
Ms. Sorum-Birk moved to the next item that dealt with the
death benefit paid to a non-child dependent which had not
changed in 53 years. Under AS.23.30.215(a)(4) the death
benefit could be paid to a dependent father, mother,
grandchild, brother, or sister. The amount needed to be
brought up to date.
Ms. Sorum-Birk moved to slide 7: "Once dependent children
become legal adults all benefits cease." She explained that
HB 30 created a new subsection to extend the payment for
dependent children 5 years. She noted that dependent
children became legal adults, after the age of 19.
Ms. Sorum-Birk turned to slide 8 which showed the
definition of a child. She read the definition in the
Workers Compensation Act directly from the slide:
Definition of "child"
From AS 23.30.395 (8) includes
• "persons who are under 19"
• "persons who, though 19 years of age or over, are
wholly dependent upon the deceased employees and
incapable of self- support by reason of mental or
physical disability"
• "persons of any age while they are attending the
first four years of vocational school, trade
school, or college"
• "persons of any age while attending high school"
Ms. Sorum-Birk provided additional information on the third
bullet point regarding a person attending the first 4 years
of vocational school, trade school, or college. as the bill
was currently written, if she were to start collage at the
age of 19, pursue a 4-year degree, and graduate in 4 years
at age 22, she could continue to receive benefits until age
27. The bill could be amended if the committee was not
comfortable with the provision.
1:43:34 PM
Representative Josephson noted that essentially the way the
item ended up in the bill and stayed in the bill all the
way until reaching the Senate Finance Committee was by
considering circumstances that might leave a child without
either parent and with a very limited benefit. It turned
out that the definition of a child was under the age of 19.
Under current law children were paid a maintenance amount
for 4 years as long as they were enrolled in school. The
bill would add an additional 5 years to the 4 years
bringing someone into their late twenties as long as they
were a student in their early twenties. The committee might
want to scale the amount back to a total of 5 years. He
reminded members that they were not dealing with a large
number of people.
1:45:58 PM
Representative Josephson spoke to slide 9. The example he
used was an elevator accident where a customer and an
employee rode to their deaths when a cable broke. The
estate of the customer riding in the elevator could recover
money for damages under Title 9. The estate could sue for a
number of things which he read from the slide. However, the
estate of the single, childless worker would only receive
funeral expenses. He highlighted the incredible disparity.
He noted that 12 other states did what his bill would do.
The figure of $120,000 was chosen based on the figure used
by the state of Louisiana.
Representative LeBon asked about Representative Josephson's
early reference regarding the case of an employee without
children or a spouse dying in a work related accident. He
asked if the bill prescribed the benefit going upstream to
the parents. Representative Josephson responded
affirmatively.
Representative LeBon suggested that Johnny take out an
insurance police with his parents as beneficiaries. As he
understood insurance, the parents could take out a policy
on Johnny if they felt they needed the benefit. He asked if
what he was saying was true. Representative Josephson
though Representative LeBon's statement was true. He was
unclear about the last part.
Representative LeBon guessed that the parents would have a
vested stake in protecting the life of their child and they
could insure it. Representative Josephson had never heard
of someone taking insurance out on their children. An
injury could be based on gross negligence on the part of
the employer. However, there were not currently
consequences for the employer. There was a theory that the
employer would not improve their safety record without some
sort of incentive. There was also the argument that the
employee would have to pay out of pocket for the insurance
premium.
1:50:10 PM
Representative LeBon returned to Representative Josephson's
example of the elevator incident. He wondered if it
possible for a company to take out a life insurance policy
on its employees as part of their benefits package.
Representative Josephson responded that the legislature had
some sort of death disability payment in place. He supposed
it was possible. Ms. Sorum-Birk also noted that life-
insurance was voluntary, unlike employers being required to
have Worker's Compensation benefits.
Representative LeBon mentioned spending time in the banking
industry. His employer had always insured his life. It was
an employee benefit and a standard practice for the bank.
He thought if an employer cared enough about their
employees, they would have life insurance as part of the
benefits package available. Representative Josephson
responded that he was unsure that it was available. Some of
the jobs were hazardous. In other words, they came with
more risk.
Co-Chair Wilson concluded that in a riskier profession a
person might want to make sure they had an insurance
policy.
Representative Josephson responded that it would make
sense. However, he reminded members that the cost in the
bill was related to the PPI. If there was a horrible
accident in which a worker in Alaska lost their leg at the
hip, it would be equal to 40 percent impairment. Under the
state's workers' compensation law, Alaska would pay $71,000
for the loss of a leg. He was certain that a person would
not voluntarily give up their leg for $71,000.
Pennsylvania, for the same lost leg, would pay $389,000. He
explained that although there was a new benefit used
infrequently, the $120,000 risk was being spread all over
the state. He reiterated that most of the benefit was in
the PPI update.
Representative Knopp noted that Representative Josephson
would advise a young woman, 18.5 years of age whose father
had died, to enroll in school. He supposed that there was
no prior obligation to have been enrolled in school at the
time of her father's death. He asked if he was accurate.
Ms. Sorum-Birk thought his interpretation was correct.
Representative Knopp thought the bill would limit someone
receiving benefits for 5 years. Representative Josephson
corrected himself that it was a period of 4 years. He
suggested that as long as they were under the age of 19,
even if they were not enrolled in a school program, they
would get a spendable weekly allowance. However, if they
were not enrolled in school, he would advise them to do so
prior to their 19th birthday so that benefits would
continue for the 4 years.
1:55:13 PM
Co-Chair Wilson OPENED Public Testimony.
MARIANNE BURKE, MOTHER OF ABIGAIL CAUDLE (via
teleconference), indicated that it was her daughter that
was killed in 2011 by gross negligence. She was given
nothing for her daughter's life with the exception of
$10,000 for funeral expenses. Her daughter, a new
apprentice, was working without supervision on a live wire
with a cheaper "non-contact" tester and was electrocuted.
After the accident, the funeral, and many emotions, she
tried to seek a legal remedy. However, no lawyer would
represent her because they relayed that Abagail's death was
a workers compensation death. She explained that because
the accident occurred in the work place she had to go
through workers' compensation layers who stated that there
was no remedy. There was nothing given for a single person
killed in the workplace because her daughter did not have
any dependents. The purpose of the bill was to remedy a
single person killed in the workplace as well as increasing
the PPI of those employees that were injured. It also
allowed the right for a person to go through a civil suit.
She was unable to pursue a civil suit.
Ms. Burke continued that she filed a workers' compensation
claim working up through the Alaska Supreme Court. The U.S.
Supreme Court currently had her case and a docket number.
She reported that, early on when she filed the workers'
compensation case, the Workers' Compensation Board was
trying to dismiss her case. The board claimed that she did
not have dependents and requested to see her taxes. She
found out that the board wanted her taxes in order to prove
that Abigail did not have any dependents. Ms. Burke did not
provide copies of her taxes, as she appealed the request.
Carol Sloan who worked for workers' compensation reported
that she was the first to get through, otherwise the case
would have been dismissed.
Ms. Burke elaborated that the employer's side was trying to
get her case dismissed because she filed within 2 years of
her daughter's death rather than 1 year. The court ruled in
her favor. The employer was also trying to hold her liable
for attorney's fees. The Alaska Supreme Court again ruled
in Ms. Burkes' favor, and she did not have to pay
attorney's fees.
Ms. Burke reiterated her disgust in the justice system.
There was no liability on the part of the grossly negligent
employer. Nothing happened to Raven Electric. Their
insurer, Liberty Mutual, paid the funeral costs and the
Occupational Safety and Health Administration (OSHA) fines
of about $11,000. She claimed that OSHA was not a good
check and balance for negligent employers. Nothing happened
to the employer. She believed some sort of payout was
necessary to keep the employers accountable. Ms. Burke
emphasized that there was nothing given for a human life
who was single with no dependents. She urged members to
make some applicable changes. She stressed to the
legislature that it needed to address the situation by
taking action on the bill. She noted there was a statute on
the books - employer's liability for negligence -
AS.23.25.010. The statute outlined that the employer was
liable for inadequate machinery and for the employer's
mistakes. She mentioned being on a number of rabbit trails.
Employers were supposed to be liable. There were no
repercussions for employers to practice appropriate safety
measures.
2:02:31 PM
KEVIN DOUGHERTY, ATTORNEY, ALASKA DISTRICT COUNCIL OF
LABORERS (via teleconference), relayed that HB 30 was vital
to families of Alaskans whose family members died on the
job or were injured significantly. He had the opportunity
to work with Ms. Burke. He met people over the years and
throughout Alaska whose family members were killed on the
job and were told they would not be provided any
compensation for the loss of life. He wanted to walk
through the practical impact of not getting the bill
passed.
Mr. Dougherty explained that currently, about 20 Alaskans
had lost their lives in the workplace. He reported that,
fortunately, the number was declining. Most of the people
who were killed in the workplace had family or spouses, and
the current law worked for them. However, the young single
person remained uncovered. Alaska's Worker's Compensation
law had a loophole for employers. There were no
consequences for employers who were grossly negligent. He
pointed out that life insurance was voluntary, whereas,
Worker's Compensation was not. He suggested that it was the
employer's responsibility to have proper Worker's
Compensation Insurance. The Workers' Compensation Appeals
Commission pointed out they would have liked to have done
something for Abigail Caudle's family but indicated the
issue had to be addressed by the legislature. It was the
legislature's responsibility to correct the problem.
Mr. Dougherty spoke about a decrease in voluntary loss
costs and the assigned risk pool. As a matter of public
policy he hoped the legislature would pass the bill out of
respect for human life.
2:08:11 PM
CHARLES MCKEE, SELF, ANCHORAGE (via teleconference), spoke
about his own Worker's Compensation Claim. [His testimony
was unrelated to the bill].
2:13:53 PM
LAURA BONNER, SELF, ANCHORAGE (via teleconference), spoke
in support of HB 30 and the increase to the PPI. She
reminded members that Alaska's rates had not been adjusted
for almost 20 years. She also supported the changes
regarding unmarried workers with no known dependents who
lost their lives on the job. She talked about her own
Worker's Compensation claim and the effects on her family.
She thought it was right to value a life lost in the
workplace. She reiterated her support for the bill.
2:15:43 PM
MARK BUTLER, SELF, ANCHORAGE (via teleconference), spoke in
support of HB 30. He knew Abigail Caudle. He thought the
changes outlined in the bill encouraged young people to
work through the ranks. He urged support of the bill.
2:17:32 PM
Co-Chair Wilson CLOSED Public Testimony.
Co-Chair Wilson indicated there were 2 fiscal notes
associated with the bill. Fiscal note 1 had an OMB
component number 71. She invited Mr. Jordon to review
fiscal note 1 and Mr. Mitchell to review fiscal note 2.
2:17:45 PM
SCOTT JORDAN, DIRECTOR, DIVISION OF RISK MANAGEMENT,
DEPARTMENT OF ADMINISTRATION, reported that the total on
the fiscal note was strictly for the PPI increase. It was
about a 44 percent increase. The division had done a
10-year look back at the average the state paid out every
year. The 10-year average was approximately $979,000 and 44
percent equaled about $434,000. The additional amount was
$26,059 for the payment of benefits to the second injury
fund with the workers' compensation division. The total
amount per year was estimated at about $460,400. In the
first year, because of the effective date of the bill on
January 1, 2020, the amount reflected only 6 months.
Representative Sullivan-Leonard asked about the 44 percent
increase. She wondered if the employer would feel an
increase in premiums. Mr. Jordan responded that the state
was self-insured, and the premiums would get transferred to
the agencies but not dollar-for-dollar.
2:20:07 PM
Representative LeBon asked if employers would feel a
financial impact. Mr. Jordan responded in the affirmative.
Representative LeBon asked if the administration had looked
at the impact to the private sector employer. Mr. Jordan
thought the reference to not having much financial impact
had to do with the payout to dependents. He explained that
there were not many workers' compensation death cases where
there were no dependents. In the last 45 years the state
had only one case in which a worker died and had no
dependents.
Representative LeBon suggested, since the risk of payout
was extremely small, there would not be a material change
in the premiums paid by the employers to have the added
coverage. Mr. Jordan responded that he could not make such
a calculation for the fiscal note. He furthered that the
fiscal note by the Department of Administration was limited
to the increase in the PPI payout. He noted that the change
would be reflected in the premiums back to agencies.
Co-Chair Wilson suggested that the fiscal note reflected a
change in interagency receipts. The interagency receipts
were general fund dollars received from other agencies. She
asked if she was accurate. Mr. Jordan responded
affirmatively.
Co-Chair Wilson clarified that employees from the
Department of Transportation and Public Facilities (DOT)
would be paying a certain amount per person to cover the
costs of the bill. The money would be given to Risk
Management as their portion if the bill were to be passed.
Mr. Jordan responded, "Madam Chair, that is correct." He
did not have the calculation. Co-Chair Wilson asked for a
dollar amount increase per employee. Mr. Jordan would get
the information to the committee.
Co-Chair Wilson asked for the number of active state
employees. Mr. Jordan did not know the figure but would
find out and provide it to the committee. Co-Chair Wilson
thought the information would help. She also asked about
the calculation and what it was based on. Mr. Jordan
indicated the calculation was based on payroll. He noted
the calculation was based on full time employees (FTEs). He
clarified that 3 part-time positions were equal to 1
full-time position.
2:23:41 PM
Representative Carpenter asked if the fiscal note applied
to both public sector and private sector employees. Mr.
Jordan responded that the fiscal note only applied to the
State of Alaska.
Representative Carpenter asked about a fiscal impact to the
private sector. Co-Chair Wilson commented that the
legislature did not make fiscal notes for anyone but the
state. Representative Carpenter thought some employers
would have a problem.
Co-Chair Wilson informed members that the bill would not be
moving in the current hearing.
Representative LeBon reported having checked with a private
sector employer about the bill. The employer was concerned
about the material increase in workers' compensation
premiums for the private sector.
Co-Chair Wilson asked for a review of fiscal note 2 with an
OMB component number of 344 dated April 23, 2019.
2:25:15 PM
AT EASE
2:29:27 PM
RECONVENED
GREY MITCHELL, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, directed
members' attention to the fiscal note. He pointed out that
the department anticipated zero costs associated with the
legislation. However, the department anticipated additional
revenue. He reported the revenue for FY 20 was estimated at
$246,000 which increased from FY 21 and on to $492,000 in
revenue. He spoke to the reason for the increase. He
explained that the Division of Workers' Compensation
collected funds based on the amount of workers'
compensation premiums that were paid by private employers.
Mr. Mitchell explained that the Division of Workers'
Compensation was funded through a portion of the premium
tax that was collected by the Division of Insurance where
the workers compensation division received 2.5 percent of
the overall premiums paid in the private sector for
workers' compensation. In addition, the division collected
a 2.9 percent fee for all self-insured employers like the
State of Alaska. He continued that the National Council of
Compensation of Insurers was the rating agency that
provided workers' compensation information for Alaska and
monitored compliance with workers' compensation rules for
insurers in Alaska. The division asked them for an impact
assessment of HB 30 including the increase to the PPI and
death benefits. They estimated that the total market impact
could be between $9 million and $10 million per year for
both private sector and public sector self-insured
employers. The increase equated to about 3.5 percent in
overall workers' compensation costs.
Mr. Mitchell reported that the fiscal note was based on a
breakdown of 2 amounts. There was an increase of $6 million
in the private sector market at 2.5 percent and an increase
of $3 million in the self-insured market at 2.9 percent.
The total that the division arrived at was $237,000.
Mr. Mitchell pointed to another line in the fiscal note
labeled "Second Injury" which related to the second injury
fund. He explained that the Division of Workers'
Compensation collected a fee from insurers and self-insured
employers - the smaller amount referenced by the Department
of Administration in its fiscal note. The second injury
fund contribution was 5 percent of the indemnity benefits
that were paid out by an insurer for workers' compensation
or by a self-insured employer for workers' compensation
purposes. Mr. Mitchell relayed that to arrive at the fiscal
note amount, the division calculated that $5.1 million
would be paid out in additional PPI benefits based on the
proposed legislation. At 5 percent of the amount, the
division calculated $255,000 in additional second injury
fund contributions that would be due from self-insured
employers and insurers for workers' compensation costs.
Mr. Mitchell mentioned that there was one other provision
in the bill that required the division to develop a form
that would be used by an employer following a workplace
fatality to notify the next of kin or the estate of the
statute of limitations for obtaining a workers'
compensation benefit claim and providing a list of legal
counselors and grief counselors. The division expected
there would be an associated regulation which would provide
a definition for grief counselor. He thought that it would
get rolled into an existing regulation package and did not
anticipate a cost.
Mr. Mitchell reported that the division had a couple of
concerns with the bill. The first concern had to do with
the cost to the market. The division had experienced some
significant reductions for FY 19. He reported a
14.8 percent reduction in the voluntary market, the market
that most employers got their insurance from. Many small
employers could not obtain their insurance through the
traditional market and had to go to the assigned risk pool,
a group that saw an even larger reduction of 17.5 percent
in 2019. He suggested that it was the first year the
division had seen double-digit reductions in workers'
compensation costs. The costs had been going down slowly
over the last few years. The division recommended caution
related to the reduction. In the 2018 study put out by the
State of Oregon, Alaska was still the 4th highest in the
nation for workers' compensation costs. In 2016, Alaska
ranked 5th in the nation. Alaska had moved in the wrong
direction even though the state had been reducing costs.
The state needed to be careful about increasing costs. One
of the statutory missions under AS 23.30.001 was to make
sure the costs remained affordable for employers.
Mr. Mitchell reported another concern having to do with the
5-year extension for a child. The definition of a child
under the workers' compensation law included children up to
the age of 19. Children would be covered through their 18th
year through the spendable weekly wage benefits that were a
percentage of the earnings of their deceased parent. It
also covered a separate benefit for the first 4 years of
college or trade school. He argued that the periods did not
have to be successive. A person could receive the weekly
benefits up until they reached the age of 19, take a few
years off, then go to school. They could reapply and be
instated while in their first 4 years of college regardless
of their age. He thought there was a potential problem
which was not clarified in the bill which might result in
litigation. There could be 5-year periods added on to both
of the periods: 5 years beyond the initial period when they
reached the age of 19 and another 5 years past the first
4-year period of college or trade school. He thought the
division's concern deserved some clarification. The sponsor
had mentioned changing the benefit to a 5-year extension
rather than covering something special in the first 4 years
of schooling. He was available for questions.
Co-Chair Wilson indicated the bill would be set aside.
Amendments were due Friday, April 29, 2019 by 5:00pm.
HB 30 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 61
"An Act relating to claims against protection and
indemnity insurance policies of vessel owners."
2:39:27 PM
SENATOR GARY STEVENS, BILL SPONSOR, thanked the committee
for hearing the bill and gave credit to Vice-Chair Ortiz
who had helped significantly with the legislation. He
reported that the bill affected commercial fishermen and
people who worked on fishing vessels. He relayed that the
Commercial Fisherman's Fund served as a fall back for
insurance for commercial fishermen who were hurt on the
job. The fund had existed since statehood and was self-
funded. Fishermen paid into the fund with a portion of
their licensing fees. The bill also addressed protection
and indemnity (P and I) insurance, liability insurance. He
expounded that it was a policy held by the vessel owner and
covered their assets and crew.
Senator Stevens continued that the incentive of the bill
was to take the pressure off the Commercial Fisherman's
Fund. More claims would be filed against the owner's P and
I insurance and less on the fund. It was capped at $5,000.
He believed the legislation was a win for all stake
holders. He deferred to his staff to answer any questions.
2:42:08 PM
Co-Chair Wilson OPENED Public Testimony.
TIM LAMKIN, AIDE, SENATOR STEVENS, indicated Ms. Leach had
another hearing to attend and could not make it to the
meeting. He reported that she submitted written testimony
on the bill on behalf of United Fishermen of Alaska.
Co-Chair Wilson commented that people could listen to the
previous hearing to listen to her testimony in favor of the
bill.
2:42:40 PM
BOB KEHOE, EXECUTIVE DIRECTOR, PURSE SEINE VESSEL OWNERS
ASSOCIATION (PSVOA) (via teleconference), testified in
strong support for SB 61. The Purse Seine Vessel Owners
Association was a commercial fishing trade association
representing the small boat fleet operating throughout
Alaska and the West Coast. Among other things PSVOA managed
three fisherman-owned marine insurance pools which included
approximately 900 member vessels. All profits generated by
the marine insurance pools were distributed back to
membership which helped to keep down the cost of hull and
liability insurance for the small boats and business
owners.
Mr. Kehoe explained that SB 61 expanded upon the
legislature's efforts in 2010 to provide a financial
incentive to vessel owners to obtain insurance to fully
cover their crew members in case of an injury. Maritime
seamen were not covered by state workers' compensation
laws. Vessel owners were not required by law to carry
insurance for their crew members. It was different for
shoreside employers who were required by law to insure
their employees under the state workers' compensation
system.
Mr. Kehoe relayed that the cost of vessel insurance was
relatively high compared to the rates paid by shoreside
employers. For example, a purse seine operation typically
had 4 crew members and the cost of insuring the crew could
be as high as $400 per man per month. As small independent
business owners, the cost of liability insurance was a
major fixed cost. The bill would ease the financial burden
on vessel owners in paying the cost of insurance. For
instance, when a claim was submitted, they would be able to
recover up to $5,000 of their deductible. He believed the
bill would promote the goal of insuring all of the medical
needs of an injured crew member were satisfied. On behalf
of PSVOA he respectfully asked the committee to support the
bill by moving it forward. He was available for questions.
2:45:43 PM
CLAY BEZENEK, MEMBER, FISHERMEN'S FUND ADVISORY AND APPEALS
COUNCIL (via teleconference), mentioned that he wore many
hats. He spoke of passing legislation in 2007 or 2009 to
raise limits of $10,000 for insurance claims to modernize
the fund. There were several stop-gaps incorporated to
protect the fund. He realized that the large boat operators
and some of the small boat operators were being penalized
for having insurance coverage because they had to pay the
full deductible for their P and I coverage. Whereas, if a
person did not carry insurance, the State of Alaska
automatically paid the first $10,000 from the Commercial
Fisherman's Fund. He supported the actions of all involved.
He thanked Representative Ortiz and Senator Stevens and
their staff. He reiterated his support for SB 61.
2:47:21 PM
Co-Chair Wilson CLOSED Public Testimony.
2:47:34 PM
AT EASE
2:50:41 PM
RECONVENED
Co-Chair Wilson indicated the fiscal note that would be
reviewed was dated March 6, 2019 and had the OMB component
number 343. She directed Mr. Mitchell to review the fiscal
note.
GREY MITCHELL, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, reported
that the fiscal note had a small impact in the amount of
$16,100 per year. The amount was based on the history from
FY 14 through FY 17 of 7 claims per year from the vessel
owners who had P and I policies who were requesting
reimbursement of their deductible cost. He reported that
the average deductible cost for the historical period was
$4,600. He explained that by taking half of the $4,600 and
multiplying the number by 7 equaled the $16,100 amount.
There was sufficient revenue in the fund to cover the
costs. There was a fund balance of between $11 million and
$12 million. Even if there was a spike in claims, the
department expected there would be sufficient revenues to
pay the costs.
Representative LeBon asked if the public was in support of
the bill. Mr. Mitchell had only heard support for the bill.
Co-Chair Wilson asked if the department supported the bill.
Mr. Mitchell reported that the administration was neutral
on the bill.
Co-Chair Wilson asked why the administration was only
neutral. Mr. Mitchell replied that there were some good
things about the bill. The bill encouraged vessel owners to
purchase P and I insurance which provided a better
insurance coverage for crew members. He conveyed that the
P and I policies could exceed far more than the $10,000 in
the benefits they provided per incident. The state and its
Commercial Fisherman's Fund program limited benefits to
$10,000 per incident and were also limited to just medical
costs. Some P and I policies also provided for lost wages
in addition to medical costs. It was more of a workers'
compensation program than the Commercial Fisherman's Fund
program.
Co-Chair Wilson explained the acronym, P and I.
Representative Carpenter asked about the total fund
revenues. He wondered if the revenues came from earnings.
Mr. Mitchell responded in the negative. He clarified that
the revenues came from a fee from all of the people who
purchased fishing licenses and all of the permit fees
collected by the Commercial Fishing Entry Commission. He
conveyed that 39 percent of the value of the fees went into
the Commercial Fishermen's Fund to pay the benefits.
Representative Carpenter asked about the investment of the
$11 million fund. He asked if the fund was gaining
interest. Mr. Mitchell answered that there was some
investment. He deferred to Ms. Thomas.
2:55:16 PM
VELMA THOMAS, PROGRAM COORDINATOR, FISHERMEN'S FUND,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, responded
that it was part of the General Fund and Other Non-
Segregated Investments Fund. There were earnings that
collected interest and were distributed based on a formula.
There were earnings as well as losses depending on the
market.
Co-Chair Wilson asked if the $11 million could be used for
anything else. Mr. Mitchell responded that the fund was
established before statehood and the constitution. It was
grandfathered in as a dedicated fund and had not been used
for anything other than paying benefits to fishing claims.
Co-Chair Wilson relayed that amendments were due Thursday,
April 25, 2019 by 5:00 p.m. She reviewed the agenda for the
following meeting.
SB 61 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
2:56:58 PM
The meeting was adjourned at 2:57 p.m.