Legislature(1999 - 2000)
03/20/2000 03:50 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 20, 2000 3:50 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative Andrew Halcro, Vice Chairman Representative John Harris Representative Jerry Sanders MEMBERS ABSENT Representative Lisa Murkowski Representative Tom Brice Representative Sharon Cissna COMMITTEE CALENDAR HOUSE BILL NO. 326 "An Act relating to the inspection of boilers and pressure vessels and to fees for services under the boilers and pressure vessels program; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 303 "An Act relating to the method of payment of fees and adoption of regulations under AS 21; relating to orders under AS 21 regarding risk based capital instructions; relating to accounting standards for insurance companies; amending the definitions of 'creditable coverage' and 'late enrollees' in AS 21.54; relating to requirements for small employer insurers; relating to requirements for issuance of new voting securities by an insurance company; requiring health care insurance coverage for reconstructive surgery following mastectomy; requiring guaranteed renewability of and certification of coverage regarding certain individual health insurance policies; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 419 "An Act relating to the weekly rate of compensation and minimum and maximum compensation rates for workers' compensation; specifying components of a workers' compensation reemployment plan; adjusting workers' compensation benefits for permanent partial impairment, for reemployment plans, for rehabilitation benefits, for widows, widowers, and orphans, and for funerals; relating to permanent total disability of an employee receiving rehabilitation benefits; relating to calculation of gross weekly earnings for workers' compensation benefits for seasonal and temporary workers and for workers with overtime or premium pay; setting time limits for requesting a hearing on claims for workers' compensation, for selecting a rehabilitation specialist, and for payment of medical bills; relating to termination and to waiver of rehabilitation benefits, obtaining medical releases, and resolving discovery disputes relating to workers' compensation; setting an interest rate for late payments of workers' compensation; providing for updating the workers' compensation medical fee schedule; and providing for an effective date." - HEARD AND HELD PREVIOUS ACTION BILL: HB 326 SHORT TITLE: INSPECTION OF BOILERS & PRESSURE VESS. Jrn-Date Jrn-Page Action 2/02/00 2062 (H) READ THE FIRST TIME - REFERRALS 2/02/00 2063 (H) L&C, FIN 2/02/00 2063 (H) FISCAL NOTE (LABOR) 2/02/00 2063 (H) GOVERNOR'S TRANSMITTAL LETTER 2/02/00 2063 (H) REFERRED TO LABOR & COMMERCE 3/20/00 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 303 SHORT TITLE: MISC. INSURANCE PROVISIONS Jrn-Date Jrn-Page Action 1/21/00 1967 (H) READ THE FIRST TIME - REFERRALS 1/21/00 1967 (H) L&C, HES 1/21/00 1967 (H) ZERO FISCAL NOTE (DCED) 1/21/00 1967 (H) GOVERNOR'S TRANSMITTAL LETTER 3/20/00 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 419 SHORT TITLE: WORKERS' COMPENSATION Jrn-Date Jrn-Page Action 2/23/00 2279 (H) READ THE FIRST TIME - REFERRALS 2/23/00 2279 (H) L&C, JUD, FIN 2/23/00 2279 (H) REFERRED TO LABOR & COMMERCE 3/08/00 (H) L&C AT 3:15 PM CAPITOL 17 3/08/00 (H) Heard & Held 3/08/00 (H) MINUTE(L&C) 3/17/00 (H) L&C AT 3:15 PM CAPITOL 17 3/17/00 (H) Heard & Held 3/17/00 (H) MINUTE(L&C) 3/20/00 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER DWIGHT PERKINS, Deputy Commissioner Office of the Commissioner Department of Labor & Workforce Development P.O. Box 21149 Juneau, Alaska 99802-1149 POSITION STATEMENT: Presented HB 326. ERNEST DUMMANN, Secretary Alaska State Association of Boiler and Pressure Vessel Inspectors (Address not provided) POSITION STATEMENT: Testified on HB 326 expressing concern. J.R. "RANDY" CARR, Chief/Labor Standards & Safety Mechanical Inspection Division of Labor Standards & Safety Department of Labor & Workforce Development P.O. Box 107021 Anchorage, Alaska 99510-7021 POSITION STATEMENT: Testified in support of HB 326. REMOND HENDERSON, Director Central Office Division of Administrative Services Department of Labor & Workforce Development P.O. Box 21149 Juneau, Alaska 99801-1149 POSITION STATEMENT: Testified on HB 326. BOB LOHR, Director Division of Insurance Department of Community & Economic Development P.O. Box 110805 Juneau, Alaska 99811-0805 POSITION STATEMENT: Testified on HB 303. KATY CAMPBELL Life/Health Actuary Division of Insurance Department of Community & Economic Development P.O. Box 110805 Juneau, Alaska 99811-0805 POSITION STATEMENT: Testified on HB 303. BARBARA WILLIAMS Alaska Injured Workers Alliance P.O. Box 771754 Eagle River, Alaska 99577-1784 POSITION STATEMENT: Testified on HB 419, Version G. LAURA WALDON Alaska Injured Workers Alliance 4120 Resurrection Drive Anchorage, Alaska 99504 POSITION STATEMENT: Testified on HB 419, Version G. JERRY FLOCK 705 Muldoon Road, Space 114 Anchorage, Alaska 99504 POSITION STATEMENT: Testified on HB 419, Version G. DEBORAH BUSH P.O. Box 876975 Wasilla, Alaska 99687-6975 POSITION STATEMENT: Testified on HB 419, Version G. JOEL SIGMOND P.O. Box 872071 Wasilla, Alaska 99687-2071 POSITION STATEMENT: Testified on HB 419, Version G. GERALDINE BODEMAN P.O. Box 672006 Chugiak, Alaska 99567-2006 POSITION STATEMENT: Testified on HB 419, Version G. MARJORIE LINDER P.O. Box 230029 Anchorage, Alaska 99523-0029 POSITION STATEMENT: Testified on HB 419, Version G. MURIEL BOWLES P.O. Box 200713 Anchorage, Alaska 99520-0713 POSITION STATEMENT: Testified on HB 419, Version G. HARRY BLANAL 5616 South Tahiti Loop Anchorage, Alaska 99507 POSITION STATEMENT: Testified on HB 419, Version G. BARBARA SUE ROTH 313 B Coleman Street Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 419, Version G. THOMAS SMITH 8320 Sue Street Anchorage, Alaska 99502 POSITION STATEMENT: Testified on HB 419, Version G. ROBERT SULLIVAN 6635 Desiree Loop Anchorage, Alaska 99507 POSITION STATEMENT: Testified on HB 419, Version G. MIKE JENSEN Workers' Compensation Attorney 12350 Industry Way Anchorage, Alaska 99507 POSITION STATEMENT: Testified on HB 419, Version G. K. SCOTT MCENTIRE, President Alaska Injured Workers Alliance 6530 East 16th Avenue Anchorage, Alaska 99504 POSITION STATEMENT: Testified on HB 419, Version G. ACTION NARRATIVE TAPE 00-31, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:50 p.m. Members present at the call to order were Representatives Rokeberg, Halcro, Murkowski, Harris, Brice, Cissna and Sanders. HB 326-INSPECTION OF BOILERS & PRESSURE VESS. CHAIRMAN ROKEBERG announced the first order of business is HOUSE BILL NO. 326, "An Act relating to the inspection of boilers and pressure vessels and to fees for services under the boilers and pressure vessels program; and providing for an effective date." Number 0116 DWIGHT PERKINS, Deputy Commissioner, Office of the Commissioner, Department of Labor & Workforce Development, came before the committee to testify. He read the following statement into the record: Current Situation: There are a total of 24,500 active boiler and pressure vessels subject to the department's jurisdiction. Currently, the Mechanical Inspection Section [Division of Labor Standards & Safety, Department of Labor & Workforce Development] inspects approximately 3,300 vessels per year. We charge for those inspections and for a certificate of operation that is issued as a result of that inspection. Inspection fees are set by regulation and vary from a total of $60 every two years to a high of $125 every year. The number of boiler inspectors has been reduced from five to three and one-half, and we are still facing a substantial backlog of overdue inspections. The number of revenue producing inspections shrinks annually and the revenue varies unpredictably. The Proposal: Adopted from the state of Oregon, the proposed plan would issue a certificate of operation to every active boiler and pressure vessel every year and charge a certificate fee. Boiler inspections would be done free of charge. This has two major advantages: - Income would be leveled to a highly predictable rate every year. The number of active vessels does not fluctuate that greatly, and the changes that occur tend to be increases in the total number of vessels. The consumer would pay no more for the aggregate annual certificate fee than they do now for the periodic inspection and certificate fee and in many cases could pay less. - The inspection staff could schedule inspections on a needs basis, using factors such as volatility of the unit (i.e. high pressure fired versus unfired), last inspection date and so forth. In this manner the small cadre of inspectors could be used in the most effective manner. This plan simplifies the administrative support and allows management to prioritize inspections to better address the needs of the public. Number 0338 REPRESENTATIVE ANDREW HALCRO asked Mr. Perkins whether the figure 3,300 was based on the three and one-half inspectors or five inspectors. MR. PERKINS replied the figure was based on the three and one-half inspectors. Number 0390 ERNEST DUMMANN, Secretary, Alaska State Association of Boiler and Pressure Vessel Inspectors, testified via teleconference from an off-net site in Seattle, Washington. The association has some concerns about HB 326. The association would not be in favor of legislation that would reduce the need or number of inspections. The association would not be in favor of legislation that would reduce qualifications of boiler and pressure vessel inspectors. After hearing testimony from the department, he said, it sounds like the fee would be levied but the inspection would not be levied until inspectors are available. The association may have a problem with that. CHAIRMAN ROKEBERG inquired about the membership of the Alaska State Association of Boiler and Pressure Vessel Inspectors. MR. DUMMANN replied the association is comprised of private inspectors, and from time to time state inspectors are members as well. The association primarily mimics the National Board of Boiler and Pressure Vessel Inspectors, as inspectors must be certified by the national board. The Alaska State Association of Boiler and Pressure Vessel Inspectors is interested in educating the public in how to prevent pressure vessel explosions and mishaps. CHAIRMAN ROKEBERG asked Mr. Dummann whether the members of the Alaska State Association of Boiler and Pressure Vessel Inspectors would be available to contract with the state for inspections. MR. DUMMANN replied he's not sure. He would look into it. Some members, he noted, are private contractors who work for boiler manufacturers, for example. He's not aware, however, of a member who performs a service for the state under contract. Number 0614 REPRESENTATIVE HALCRO asked Mr. Dummann how many members are part of the Alaska State Association of Boiler and Pressure Vessel Inspectors. MR. DUMMANN replied, at last count, membership is in the sixties. CHAIRMAN ROKEBERG asked Mr. Perkins to comment on the concern that HB 326 is a fee-only bill in that inspections would occur only when inspectors are available. MR. PERKINS replied the department sees HB 326 as a potential to predict a certain amount of revenue for the state for the operation of the certification program. The department knows, however, that they would not charge for the periodic inspection. There are a couple of factors involved. One, it gives the department the ability to catalogue every boiler that goes into service throughout the state. Two, it gives the department the ability to know when a boiler comes on-line and when it needs to be inspected. In response to Mr. Dummann's concerns, HB 326 in no way reduces or weakens the inspections or allows for a less qualified individual to perform an inspection. MR. PERKINS updated the committee on a bill that passed last year in relation to plumbers conducting inspections on low pressure boilers. [Senate Bill 50]. The inspectors, he explained, have had their training and have sat for their examination. The program is up and running and will help reduce some of the backlog. Number 0864 J.R. "RANDY" CARR, Chief/Labor Standards & Safety, Mechanical Inspection, Division of Labor Standards & Safety, Department of Labor & Workforce Development, testified via teleconference from Anchorage. House Bill 326 was modeled after the state of Oregon that experienced the same decline in inspectors as the state of Alaska is experiencing now. The department has gone from five full-time inspectors to the equivalent of three full-time inspectors. The plumbing inspectors equate to about one-quarter of an inspector. The department has streamlined how they conduct inspections, the way they schedule their travel, and have increased inspection goals for each inspector in order to hold even with the backlog. The department is still looking at approximately 6,000 vessels that are overdue for inspection. The good news is, the department has been focusing on the older vessels so that the ones that are overdue are not nearly as overdue as they were a year ago, for example. However, until the department can find a means of insuring a level amount of program receipts that can be budgeted and through good management find room for another full-time inspector there will not be an "inroad" into the backlog, especially when the trend is for more vessels each year. The only way to meet the burden is to increase the number of inspectors in the field, and HB 326 would help the department do that. CHAIRMAN ROKEBERG asked Mr. Carr whether he thinks that if the legislature authorized the department to hire another boiler inspector he would pay for himself. Number 1006 MR. CARR replied the department is hoping that the legislature will authorize a position if it can pay for itself. The department and the industry can show that vessels are a very volatile area and if they aren't inspected in a timely manner by qualified inspectors they present a tremendous hazard in places such as schools, hospitals and apartment complexes. Number 1048 CHAIRMAN ROKEBERG asked Mr. Perkins whether a new inspector authorized by the legislature would make money for the department and pay for himself. MR. PERKINS replied it depends on the type of boiler being inspected. A high pressure boiler, for example, takes a greater amount of knowledge to inspect. CHAIRMAN ROKEBERG asked Mr. Perkins whether a new inspector would pay for himself by generating new revenue. MR. PERKINS deferred the question to Mr. Remond Henderson of the Department of Labor & Workforce Development. Number 1141 REMOND HENDERSON, Director, Central Office, Division of Administrative Services, Department of Labor & Workforce Development, came before the committee to testify. The answer to Chairman Rokeberg's question is, yes. But the department, he noted, does not have authority to spend general fund receipts generated from the program. The bill therefore would replace general funds with program receipts thereby allowing the department to use all the fees generated to actually operate the program. The bill would not change the quality of the inspectors or the time frames involved. In fact, if the department is allowed to use program receipts to get another boiler inspector or two, the department would be able to address the backlog at no additional cost to the general fund. Number 1188 REPRESENTATIVE HALCRO asked Mr. Perkins, if he had a boiler, would he receive a certificate of operation along with a bill under the current operation. MR. PERKINS deferred the question to Mr. Carr. He believes that a person does not receive a bill unless an inspection actually takes place. MR. CARR confirmed that is the current operation. He said, "If we don't come out and inspect you, you do not get a certificate of operation and no fee is rendered either for the inspection or [the] certificate." Number 1224 REPRESENTATIVE HALCRO stated, to Mr. Carr, judging from the figures presented earlier it would take seven years to inspect all of the boilers. MR. CARR replied that's correct. The numbers, however, are a bit misleading because boilers have different inspection schedules depending on the type of vessel. A high pressure steam vessel, for example, has to be inspected every year, while a propane or high volume air tank has to be inspected once every five years. CHAIRMAN ROKEBERG stated he thought that the figure was closer to eight years, and including the pressure vessels he thought that the figure was even worse than that. MR. PERKINS noted that the plumbers who are conducting inspections as well are helping in that regard. CHAIRMAN ROKEBERG remarked that the service needs to be privatized. This [legislation] is outlandish. The public safety of the state is in jeopardy. He realizes that there are fiscal problems, but HB 326 is not the answer. He said: All you're doing here is saying I'm gonna charge you a fee and if I can get around to inspecting it, I'll get around to inspecting it. That's ridiculous. Unless you think that you're going to have leverage with the finance committees because you're getting revenue coming in that you're gonna be able to put more personnel on. Either you need to put more people on and generate more revenue or you need to come up with a further contracting type mechanism where you can put some more people out there. I mean we have a public safety problem in this state over this issue. I compliment the department [in] trying to make some inroads here without costing money, this actually generates money, but to me it's almost [like] this is the end of it. In my entire career, this takes the cake. You're gonna to charge people for something you don't do. Now, this is what you're doing with this bill. Now, you have to convince me I'm wrong. Number 1356 MR. HENDERSON asked Mr. Carr whether individuals would pay less in the long run than what they pay now under the proposed legislation. MR. CARR replied that is correct. Individuals would pay the same amount or less spread out over the time frame of the number of years that they would normally be inspected. The smaller vessels in particular would pay less. Number 1384 MR. PERKINS stated: Well, Mr. Chairman, we may respectively agree to disagree on this one. I understand what you're saying, but you're right, Mr. Chairman, we do have a public safety problem out there. And I appreciate you recognizing the fact that the department is trying to address these. Obviously, our ways of doing this aren't acceptable to you, and it certainly is no disrespect to you on how we're going about this. But this is our best shot at it, and I think in the long run it'll give us an opportunity and, as I said, another tool in our box to do the people's work out there. And without this and continually every time we're going in for, as you mentioned the finance committees, we keep going in and we're taking our share of the budget reductions and we're bringing in more money than we're authorized to use already, you know, it's hard on us too. We keep reducing personnel because the department, as you know, that we have labor standards and workers' comp[ensation] are about the only general fund programs we have. It's, which one of you guys in the hopper this year for the cut? So, we're just asking for a little help here. Number 1443 CHAIRMAN ROKEBERG suggested setting HB 326 aside in order to look at hiring about a half a dozen inspectors with the money that the department would receive. MR. PERKINS indicated that the department would be willing to work with the chairman in that regard. CHAIRMAN ROKEBERG stated he doesn't want to send legislation out of the committee that charges people for not doing anything. MR. PERKINS remarked that the rationale for the legislation has been stated. Number 1480 REPRESENTATIVE HALCRO asked Mr. Perkins how the state of Oregon responded to the concerns voiced today. MR. PERKINS deferred the question to Mr. Carr. Number 1511 MR. CARR said: As I understand it, the primary concern in Oregon is one that we share. You can only do so many inspections with a given number of inspectors. There's no way you can make the math work that you're gonna be able to inspect every single vessel when it's due. But by changing the methodology of collecting the funds so that everyone shares in a certificate-of-operation fee instead of paying only when they get inspected. They have the ability to get inspected; they can request an inspection and an inspector would come out if they thought there was a problem. But it allows the managers to focus their staff on those areas that are the most volatile. To be able to go out and do the inspections on boilers that are presenting the greatest hazard and prioritize their inspections in that manner rather than going by an inspection schedule on just when a particular boiler is due for inspection. Because that's how the fees are generated, so if you don't go out and inspect it because it's due then you aren't gonna get your fees. Number 1564 REPRESENTATIVE HALCRO asked Mr. Carr, if he pays the fee and gets the certificate of operation in the mail but nobody actually inspected his boiler and something tragic happens, from a liability standpoint who stands to lose the most. MR. CARR replied he can't answer the question. He noted that some have an insurance company conduct the inspection, while some prefer no inspection at all; the only reason that a vessel is inspected, in those cases, is because of the authority given to the department in statute. CHAIRMAN ROKEBERG indicated that HB 326 would be held in committee for further consideration. He also noted that there wasn't a quorum to conduct any official business. HB 303-MISC. INSURANCE PROVISIONS CHAIRMAN ROKEBERG announced the next order of business is HOUSE BILL NO. 303, "An Act relating to the method of payment of fees and adoption of regulations under AS 21; relating to orders under AS 21 regarding risk based capital instructions; relating to accounting standards for insurance companies; amending the definitions of 'creditable coverage' and 'late enrollees' in AS 21.54; relating to requirements for small employer insurers; relating to requirements for issuance of new voting securities by an insurance company; requiring health care insurance coverage for reconstructive surgery following mastectomy; requiring guaranteed renewability of and certification of coverage regarding certain individual health insurance policies; and providing for an effective date." Number 1645 BOB LOHR, Director, Division of Insurance, Department of Community & Economic Development, came forward to testify on HB 303. He indicated HB 303 is the insurance clean-up bill which addresses two primary areas. The first is accounting practices and attempts to conform current statutory provisions to the National Association of Insurance Commissioners [NAIC]. These have provisions have been adopted and will take effect on January 1, 2001. However, there are certain provisions of statute and regulations which would conflict with the uniform provisions. The second major area of the bill attempts to conform with the federal Health Improvement Portability and Accountability Act of 1996 [HIPAA]. There were numerous amendments to state law adopted in 1997 in an effort to conform state law with the federal requirements thereby avoiding federal preemption by the Health Care Financing Administration [HCFA]. A few provisions were not directly addressed by that legislation. The federal government has indicated that conformance of state law is required for those provisions in addition to enforcement of those provisions by the Division of Insurance. The Division has been enforcing those provisions, but the State has received a letter from HCFA indicating that absent legislation similar to HB 303 would undertake a review to determine whether federal preemption is required of the State in this area. He said the Division believes the adoption of HB 303 would forestall the threat of federal preemption by HCFA. There is a provision in the bill which allows the director of the Division of Insurance to acquire payment electronically. This would simplify the process of making timely payments of fees and charges to the State. He said the Division was unable to unearth any opposition to the provisions of the bill despite a diligent search. REPRESENTATIVE HALCRO asked if electronic payment assists with cash flow and ensuring that payments are in on more timely basis. MR. LOHR stated that is correct. He said: Depending on whether this is addressing premium taxes, which go into the general fund (GF), it would improve cash flow there and we've already tried to adopt those provisions. For fees, it would increase the speed of delivery of the fees to the Department of Revenue. CHAIRMAN ROKEBERG asked Katy Campbell to explain section 10 in HB 303 which refers to coverage for reconstructive surgery following a mastectomy. Number 1871 KATY CAMPBELL, Life/Health Actuary, Division of Insurance, Department of Community & Economic Development, came forward to testify on HB 303. She explained this provision was a health insurance mandate which went in after the original HIPAA legislation in 1996. Federal law was amended the next year to require coverage of reconstructive surgery following a mastectomy. Section 10 would bring Alaska State Statute into compliance with the federal provision. CHAIRMAN ROKEBERG asked, "So, they just amended the HIPAA statute rather than enact a new law?" MS. CAMPBELL stated that is correct. CHAIRMAN ROKEBERG wondered, "So, there's really no connection per se except there is a connection regarding compliance, though, is there not?" MS. CAMPBELL replied yes. She said, "They added into this section so that, basically, it has the enforcement provision of HIPAA apply to that amended piece that went in in 1997 or 1998, I think it might have been." CHAIRMAN ROKEBERG wondered if failure to adopt this provision could jeopardize the ability to regulate health insurance in Alaska. MS. CAMPBELL clarified it would jeopardize the ability to regulate this particular provision. She commented: Right now we go back to the insurance companies and say, "Look, you have to have this mandate in your health plans." If this didn't pass, actually the Health Care Financing Administration would come in and review the policy forms and kind of take a more active role in ensuring that insurance companies are in compliance with that provision. CHAIRMAN ROKEBERG asked if the penalty provisions of HIPAA have some impact on the ability to regulate. MR. LOHR said that he believes the provisions would. He said: What we've done basically is, in response to the "show cause", if you will, letter from the administrator of HCFA. We've suggested that, because the Division is actively enforcing these provisions for the duration, that they should allow that as constructive compliance until the legislation could be considered. So, in the short run, I think we've got an argument. However, if we tried to extend that argument over a period of years, I think the lack of...state provisions that conform to HIPAA would be a, potentially, very serious and could lead to actual federal preemption. Number 1990 CHAIRMAN ROKEBERG asked what the position of enrolled insurers in Alaska is on this particular provision. He also wondered if the leading insurance carriers provide this mandate. MS. CAMPBELL replied that is correct. She indicated that they are required to under the federal law that passed. CHAIRMAN ROKEBERG inquired if the State enforces that. MS. CAMPBELL responded, "We are right now, but that's because we're going back to them and pointing out if they don't have the provision. We're saying, 'Look, it's a federal law. You have to have it.' Once we have it in our state law, we have a basis for enforcing it. By putting it in state law, we're saying that we can enforce the provision." CHAIRMAN ROKEBERG said it is a chicken and egg thing. He said, "The enforcement of it doesn't rest with the federal government. It rests with the Division of Insurance. Is that not correct?" Number 2060 MS. CAMPBELL answered, "With this amendment, that's true. Otherwise, it would be federally enforced." MR. LOHR pointed out there is a good deal of rhetoric supporting states' rights at the federal level. They look at particular issues and there is federal preemption all over the place. It is either veiled, indirect or, in some cases, very direct preemption by the federal government. He said, "We're facing suspended sentence on that with respect to...agent and broker licensing." CHAIRMAN ROKEBERG referred to section 17 and asked, "Alaska, we have our own small employer statute. Does that speak to that?" MS. CAMPBELL explained it is an amendment to the existing small employer statute. Section 17 clarifies that employers continue to have the choice on how to define their own group for purposes of insurance. CHAIRMAN ROKEBERG asked if the amendment allows for the exclusion of an employee for underwriting purposes. MS. CAMPBELL said it does not apply to underwriting. She stated: In most cases, how this works, is that the employer may have several employees that are in their management level and they want to cover them because they're the stable employees, and then they have other employees who are in and out, and they don't want to have to provide coverage to every individual in their group because it's just not cost effective for them to do that. This allows them to make that, and actually, it's more of a clarification that the employer can make that decision. CHAIRMAN ROKEBERG said, "So, the answer to my question is yes." MS. CAMPBELL said that is correct. She noted it is a federal law that the insurance company cannot exclude anyone, but the employer can make a decision to define their own group. CHAIRMAN ROKEBERG indicated HB 303 would be held in committee. HB 419-WORKERS' COMPENSATION CHAIRMAN ROKEBERG announced the next order of business is HOUSE BILL NO. 419, "An Act relating to the weekly rate of compensation and minimum and maximum compensation rates for workers' compensation; specifying components of a workers' compensation reemployment plan; adjusting workers' compensation benefits for permanent partial impairment, for reemployment plans, for rehabilitation benefits, for widows, widowers, and orphans, and for funerals; relating to permanent total disability of an employee receiving rehabilitation benefits; relating to calculation of gross weekly earnings for workers' compensation benefits for seasonal and temporary workers and for workers with overtime or premium pay; setting time limits for requesting a hearing on claims for workers' compensation, for selecting a rehabilitation specialist, and for payment of medical bills; relating to termination and to waiver of rehabilitation benefits, obtaining medical releases, and resolving discovery disputes relating to workers' compensation; setting an interest rate for late payments of workers' compensation; providing for updating the workers' compensation medical fee schedule; and providing for an effective date." Number 2284 BARBARA WILLIAMS, Alaska Injured Workers Alliance, testified via teleconference from Anchorage. She stated: I would like to speak to you today about HB 419. We don't feel that this bill is in the best interest of workers. It is done by the same committee that has formulated 1988 changes that have devastated workers and their families. We now know conclusively by the Legislative Budget and Audit Report [October 31, 1999, included in the bill packet] that just came out. Intentionally or not, have been and are being disadvantaged by the workers' compensation system. Many workers have waited for medical care and been denied benefits while knowing that fee caps on workers' attorneys did little or nothing to help them secure information regarding their rights and benefits. The worker has little or no help provided by the Division of Workers' Compensation. We are now asking for your assistance to make this a more fair and just system. We know that recent budget cuts have not helped this situation but complicated it yet even more. I hope that you will carefully review the Legislative Budget and Audit Report and see that changes can be implemented on the recommendation of the Audit team. We need to improve service, better enforcement of the current law, and straighten out our penalty issues. If insurance companies are regularly under reporting on verified annual data that the division is not enforcing the penalties, we could have more revenue to assist in securing better services. Defense attorney are given more preferential treatment than injured workers and their attorneys and the audit confirms this. We need to make this system fairer for all parties. The average worker earning $155 per week makes below poverty wages, with no inflationary increase. With the rate proposals in HB 419, it is not even keeping pace with today's inflation in real money terms. None of the increases are based on today's real money terms and do not account for any inflation. Why would we further complicate an already complicated matter? Why not use the Legislative Budget and Audit recommendations to first make the process more fair for all parties, then make constructive changes that reflect more real terms for workers. We need to move them past social services and delayed medical treatments and enforce even handed fairness to all parties. Lastly, we need better education programs geared for workers. 28,000 claims per year and 10 workers' compensation attorneys are not enough to cover the whole state. Better wages for workers' attorneys would mean more attorneys. Fee caps on defense attorneys' fees are essential. Education programs and technical assistance are only provided by the Alaska Injured Workers Alliance at this time. Workers need better access to information to make informed decisions about their rights and benefits. The further away from Anchorage they are, the less access to information they have. We are not against anyone, but this system was designed for workers long ago and needs input from the very disadvantaged workers, not a bunch of people who are supposed to represent our interest. With three-quarters of the majority working against injured workers from the start, we are looking to you to insure better benefits and safer working conditions in which to work. We hope you will be sensitive to our needs and not just the people that control of our benefits. We hope that you guys will consider the recommendation of the audit and consider that in this house bill instead of just accepting HB 419 because we really feel like it's in the best interest of workers. Number 2427 LAURA WALDON, Alaska Injured Workers Alliance, testified via teleconference from Anchorage. She agrees with what was stated by the previous testifier because the injured worker ends up without any type of medical coverage or treatment. She said: So, there's no way that they can become better and with what you have here, and from my understanding, your mission as a workers' compensation board [is] to assure that Alaskan workers who suffer work related injuries or illness are provided adequate medical care...and this is not happening and this is your mission statement. How can you create new laws when you can't even enforce the ones you already have on the book?... TAPE 00-31, SIDE B ...and that is not what the Workers' Compensation Board mission statement states. Even from 1998, you're supposed to be here to help the workers, but instead you're buying into the insurance company's monopoly, and I repeat "monopoly" of insurance; how they railroad people's lives...you say they can't do this, that and the other, but they're doing it and walking away with it, and you're letting it happen because we're depending on you as the board to make things right for the injured workers. You're not doing that. You're not living up to your missions. Number 0044 JERRY FLOCK testified via teleconference from Anchorage. He said: I am an injured worker with an uninsured employer who you may have heard of. My employer, General Roofing Systems,...paid somebody $100 as a down payment and gave them a 38-special to take me out and relieve them of their responsibility and of their liability. Through the whole process, Alaska Workers' Compensation Board has done nothing to protect my rights or me. The only source of information that I have had to help me in any of this last three years is the Alaska Injured Workers Alliance. By passing HB 419, you are enforcing the fact that the division regularly works with employers and insurance companies as the legislative audit confirms. I have had surgery that Public Assistance had to pay for, not my employer, and it was my employer's responsibility...They have disposed of their responsibilities regularly and, not only do I have to fear for my own safety, but the safety of my family as well. You cannot possibly tell me that the DWC [Division of Workers' Compensation] is doing all that it can to fairly access workers' rights to medical care and benefits. I am a prime example of how this can all go wrong. I urge you to follow the recommendations and clean up the workers compensation act and make it fair for all parties, not just employers and insurance companies. My employers had let their policy lapse 16 times and one other employee broke his back while falling off a roof since my employer knew no one would enforce the laws to protect me those like me. Proper enforcement is necessary to see that the workers are protected. Two years ago when the Alaska Injured [Workers] Alliance started inquiring, an alarming 60 percent, over half, of the state employers were uninsured. This must change. We also need better education programs and access to legal assistance to process our claims. I urge you to see fit to protect all workers in this state and see that everyone is treated fairly and not denied due process. Due process escapes me to this day because no one will see that my employer pays for my benefits and secures my medical care and provides retraining. I hope that you will remember me and be an effective part of proper enforcement of these laws. CHAIRMAN ROKEBERG asked if Mr. Flock has filed charges with the police or the Alaska State Troopers. MR. FLOCK replied yes. Number 0222 DEBORAH BUSH testified via teleconference from Mat-Su. She stated: I was injured at work in June of 1995 and I have endured unconscionable practices as the result of the vagueness presented by the act. Insurance companies have been empowered by the act and injured workers are left at a disadvantage. Unfortunately, the more complex the injury and medical issues and medical claims become, the more difficult the injured workers have in receiving just outcomes in dealing with workers' comp[ensation] insurance companies. The increasing cost of workers' compensation insurance premiums are becoming unnecessarily inflated at the result of risk management cost. The audit [Legislative Budget and Audit Report] sites multiple causes for the increase of premiums (indisc.) for employers. These increased medical costs, extended disabilities, and retraining costs are bonafide. The finding that extended the disability payments made to workers thought to be capable of returning to work is a blanket for the cost of litigation. Discovery, investigation and other costly means of litigation is overinflating the cost covering work-related injuries. Most medical disputes involve one EME physician, that is an Employer Medical Evaluation or the insurance doctor's opinion. Their disputes generally contradict the multiple opinions from the injured worker's treating physician and other attending physicians. I've had three EME evaluations and not one was performed by a local doctor. One doctor was flown up from California and I was flown to California for the second and third at a cost of $1,200 just for lodging and the flights. I was seen for a total of 15 minutes and both doctors produced 17- and 22-page opinions which were quite costly. The cause of my continued disability is industrial in basis. The insurance companies paid medical opinion relates no industrial basis and that I could return. I was in danger of becoming a quadriplegic due to complications. I needed treatment. I didn't need to be followed, filmed, photographed, watched at home by investigators since 1996. This is costly. The increasing costs to the State of Alaska Medical Assistance Program is the result of the injured workers losing benefits...Once an injured worker is controverted, and a serious medical condition persists, there are not many avenues the worker can take to adjudicate those claims when savings and accrued (indisc.) dwindle away. To cover medical costs, a complex claim poses difficulty in securing representation from a lawyer or finding a doctor that wants to get involved in possible depositions and appearing in court...A large portion of injured workers apply for or receive Alaska Temporary Assistance, Alaska State Medical Program Benefits, which is Medicaid, and federal food stamp funds. Eligibility for an incapacitated person is determined by a community [physician] and reported on a State form. To receive Medicaid, an injured worker declares a third party liability, which is the insurance company, and agrees that the State can assess a lien. The lien is placed upon any settlement monies the worker receives unless a settlement, a compromise release, or a decision and order is made that they collect reimbursement from the assumed medical costs from the injured workers compensation. This award is for lost earnings that pays back medical costs to the State. The insurance company is also hit up for medical costs. In my case, I refused to settle past issues of compensation until the insurance company agreed to repay medical. They did not feel they had any liability for medical costs during the controversion. The State of Alaska Medical Assistance Program receives reimbursement by liens and awards. The funding of ATAP [Alaska Temporary Assistance Program] or welfare to eligible injured workers needs to be reimbursed by the insurance carriers if, based on merits of all medical evidence, (indisc.) evidence, or a compromised release agreement, or whatever it takes, which reopens weekly medical compensation. It is foreseeable, if the insurance companies were held accountable to the State for incurred related expenditures resulting from an industrial injury, it would generate revenue for reimbursement and it would benefit the State of Alaska. There is a tremendous amount of State welfare funds paid to injured workers during the controversion of workers' comp[ensation] benefits. In my case, the insurance company agreed to repay the State of Alaska Medical Program or Medicaid. What about the ATAP funds the State paid for the injured worker? What about the federal food stamp benefits? In my case, my family received Alaska Temporary Assistance in the rough amount of $1,100 in allowances. This was paid for 25 months while medical disputes were determined. There's a multitude of revenue the State truly has a right to reimbursement for. Had it not been for the controversion, the basis of the worker going on welfare, there would have been no cost to the State. Once a claim is found to be bonafide, reimbursement should be made. In my case alone, ATAP equaled almost $27,000...The State should be reimbursed for supporting an injured worker who is controverted if it is found that the continued disability is a result of the work injury...The practices the adjusters have implemented are sometimes unfair. Under the terms of the act, an injured worker can deteriorate and be one day from death and still be considered or deemed medically stable. In my case, after the second surgery, which, by the way, was a revision of a cervical fusion that was performed after my injury; the surgery was on the twenty-first of November '98. I followed up with my neurosurgeon. I had to be flown to Seattle and was treated at Harborview Medical Center. And I followed up with my neurosurgeon the fourteenth of February and again on the fifth of August 1999. I was seen twice a month here in recovery by my attending and treating physician in Eagle River. Did the adjuster seek my treating doctor's opinion of medical stability? No. By her own account, she made almost ten contacts to my surgeon who I hadn't been examined by in over 90 days to get the medical stability to clear. My condition continues to deteriorate. There is medical evidence supporting this that isn't subjective, but objective in nature. I suffer from extensive nerve damage as a result of the severity of my injury, complications from the surgery, and my belated treatment due to the controversion. I cannot return to work. I have been (indisc.) for rehab[ilitation] reemployment benefits, but I cannot participate in a retraining program due to my medical condition. Am I receiving compensation from worker comp[ensation] insurance company with all the causal connection to my work relatedness? No. And I'm a pen stroke away from the welfare roll again. Me and many other injured workers in Alaska need legislative support in dealing with the worker comp[ensation] carriers...There are a lot of unnecessary harassments, comments that are made by adjusters towards injured workers. That needs to be dealt with. Our Alaskan representatives are in a position to attempt to balance the (indisc.) shortcomings of the act currently posed. This practice of unfair and frivolous controversion needs to hold serious penalties for those who engage in it. And the defining factor that determines what is unfair and frivolous needs to be addressed. I believe legislative intent was not to be construed to allow injured workers to be dumped onto the welfare roll. The State interest in the medical assistance program should be protected and temporary assistance reimbursement needs to be pursued. Insurance companies should not be allowed to go doctor shopping. (indisc.) and the opinion which results should be taken into account, but they should never be the basis of terminating any benefits when there is a medical dispute...HB 419 falls short in protecting us as injured workers of Alaska. Number 0672 JOEL SIGMOND testified via teleconference from Anchorage. He explained that he used to make between $4,000 and $5,000 per month. He was cut down to $800 per month. He said he is unable to obtain food stamps and cannot receive medical insurance for his family because he owns too much. He said he thinks the insurance company should also have to cover an employee's family expenses if they become ill. He commented that he is about to lose his home. He also stated that he lost $1,200 per month on unemployment that he should be reimbursed since he was unable to receive due to a work-related injury. He indicated that his insurance companies refuses his doctors and he is unable to receive the medical treatment and medication he needs. Number 0858 GERALDINE BODEMAN testified via teleconference from Anchorage. She is an injured worker who has not been able to resolve her claim since 1996 because the system is complicated and hard to understand. She said if it had not been for the pre-service she received from the Alaska Injured Workers Alliance, she would not have any meaningful way to proceed her claim. She asked the committee to please review the recommendations made by Legislative Budget and Audit in order to make the process more fair and better for injured workers. She explained that better education programs and information for workers is necessary. She said that legal access and enforcement of laws is essential to make the process fair and accessible to all parties. She said there are no worker attorneys available. She urged the committee to help protect workers' rights. Number 0960 MARJORIE LINDER testified via teleconference from Anchorage. She is a vocational rehabilitation counselor in the workers' compensation system. She stated: I served on the WCCA [Workers' Compensation Committee of Alaska] in 1988 and I helped draft the section [AS 23.30.]041 that became part of the current law. Because of this, I offer a unique perspective. I know that I have good intentions with these law changes, but, like Frankenstein, I helped to create a monster. In 1988, there was a perception that the law was unbalanced in favor of injured workers. Premiums went undenied...employers have enjoyed a reduction in premiums of 41.5 percent according to the recent legislative audit. Unfortunately, injured workers have paid the price. Today only 300, out of 28,000 workers injured each year, qualify for the reemployment benefits. Both a laborer and an office worker receive as little as $9,450 for a herniated disk despite the disparate ways their injury affects them. The reemployment benefits attempt to assist the laborer to learn to earn a living again because he, unlike the office worker, can't return to his job. Workers with no ratable impairment are ineligible for retraining. This affects office workers, cannery workers and others with repetitive stress injuries to their forearms, for instance. Instead of curing such problems with the present act, section 7 (r) of HB 419 seeks to further restrict access to retraining for injured workers. It allows workers to forfeit their reemployment benefits before, and if, they know whether they will need them and before they know how much they are worth to them. Once they have signed in the dotted line, they cannot retract if they find they are unable to return to work or continue to work because of their injury. And with no legal advice or explanation from anyone other than their claims adjuster, workers who don't typically read what they sign, who can't speak English, who are functionally illiterate, who are on pain pills, will sign these affidavits as a matter of course, that they're just papers sandwiched between the others. Section 7(r)'s irrevocability will invite numerous legal challenges to be sure. Like the Miranda warning has done, this waiver will tie up the legal system for years to come. This litigation will cost the State of Alaska money. Workers with no way to earn a living will lose their homes, their savings, and their buying power. You've heard about that today. That will hurt, not help Alaskan businesses. Section 7(r) of this law is a veiled attempt by the insurance industries to get the State to supplement the benefits for which they collect premiums. Injured workers not adequately served by the comp[ensation] system will be forced to obtain financial support for themselves and retraining by the Division of Public Assistance and DVR [Division of Vocational Rehabilitation]. That will cost the State of Alaska money. As time passes and their resources decrease, injured workers who are able, will accept inappropriate employment and put themselves, their co-workers, and their new employer at risk. All of them and all of us will suffer. Therefore, I urge you to remove section 7(r) from HB 419 to protect the people of Alaska and the state budget. One life is a precious thing to waste. Number 1198 MURIEL BOWLES testified via teleconference from Anchorage. She stated: In the short time that I have been in the workers' compensation system, I have felt uninformed totally. There are few educational programs for workers to help us understand our rights and benefits. We need better access to information and legal help. You need to make sure that all persons have medical treatment and benefits. Agencies such as [Division of] Workers' Compensation and [the] Division of Insurance must protect all workers, some self-insured as well as privately insured. People with self-insured employers have no consumer protection measured at all. It is even harder for us to secure benefits and medical treatment because no one sees that our employers act (indisc.). Without such oversight, we have less of a chance to get those benefits. We need strict enforcement that keeps pace with inflation and other variables to ensure fairness to everyone involved. We need to be able to support ourselves and our families and return to work quickly...I stress that we, the injured workers and families of such, need to be given a fair chance here and I don't see this bill helping us, yet, it will profit the employer and their insurance company at our expense. I strongly suggest that you will take the time and consider incorporate the findings of the audit before moving any further ahead with this bill. Also, my case was controverted with a statement referring to a car accident my son and I had been in after my employer had let me go. I need to make a note here because they weren't even taking care of my bills prior to the accident and no one asked for any details about the accident either. They just declined payment for my surgery. We were merely bumped while sitting at a red light and I'd been diagnosed with carpal tunnel, but they controverted my case because I was in a car accident. Number 1364 HARRY BLANAL testified via teleconference from Anchorage. He said he objects to HB 419. He noted that HB 419 infringes on Article 7 of the Alaska State Constitution. He urged the committee to reject HB 419. Number 1810 BARBARA SUE ROTH came forward to testify on HB 419, Version. She has been providing vocational rehabilitation services in Alaska since 1983. She said she would like to speak specifically on the waiving of reemployment. She is in favor of waiving reemployment. She stated she has worked with too many injured workers that really did not want reemployment benefits. They participated half-heartedly in the process to perhaps increase the amount that they would receive. She has worked in a voluntary system in six other states and has found that people who want these services do receive them. She said, "It makes people come up with a plan and they participate and everyone is more happy." CHAIRMAN ROKEBERG said he thinks she is referring to section 7(r). MS. ROTH replied that is correct. CHAIRMAN ROKEBERG asked if Ms. Roth to provide an example of why the waiving of benefits is a positive thing. MS. ROTH explained: I had someone that I met with and they said they did not want reemployment benefits. They were going to waive them. This is something that happened in the past. CHAIRMAN ROKEBERG interjected and asked, "Why would they do that?" MS. ROTH replied: He said that he could get his own job. That he was perfectly capable of getting his own job, he was relocating, his wife worked, that he was not concerned. So, he waived his benefits and then he moved. Right after he moved, he called me two weeks later and said --oh, and they gave his permanent impairment money -- he moved, he received that. CHAIRMAN ROKEBERG asked if the permanent impairment payment is received in a lump sum. MS. ROTH said yes. She further stated: He received that. Two weeks later he called and he wanted to participate in reemployment benefits. So, I called the insurer and they reinstated his right to participate in this. The minute I started asking him to participate in going for vocational testing, he didn't show and things like. It turned out then they did settle with the insurance company for an additional amount of money and he did not participate in it. That's just what has happened in the past. I have many people that they would rather get their lump sum and use it as they want in their family, maybe to pay bills and take care of their own rehab[ilitation]. There's many, many injured workers. I know there are some that can't and that's why there's the service, but there's many that are able to find their own jobs. All they may need is some job development which is not a part of the act. If it was, it'd be different...When you get reemployment benefits, you get training, and a lot of people, they don't want more training. A lot of them don't think they'll benefit. A lot of them have many different reasons for not wanting the training. All they need is help finding a job, maybe a new resume, maybe some job-seeking skills. And we have these wonderful one-stop centers that are being implemented in the State of Alaska that provide those services for free. I do not think providing them to additional people, the job development and the job placement and resume, those seminars are regular. The size of the class does not increase the cost for the State. So, many workers, that's all they need. They don't really want or need training. But once you have them, you have to provide some type of training, you can't just offer that service. Number 2066 CHAIRMAN ROKEBERG asked, "So, someone would go into business rather than training if they thought they had the ability or talent...do you have an example of that then?" MS. ROTH answered that many do go into business. She said she has written reemployment for self-employment, but has only done three in 16 years. CHAIRMAN ROKEBERG asked if a person could get some training. MS. ROTH commented that a person could be sent to small business classes. Many of these type of classes can taken through the Small Business Association. CHAIRMAN ROKEBERG wondered if a person could receive reimbursement for doing that. MS. ROTH indicated that is a possibility. Number 2138 THOMAS SMITH testified via teleconference from Anchorage. He stated: I am injured worker. I currently have two injuries. One's a back injury and one is a foot injury. I'm currently collecting benefits from an insurance company for worker's comp[ensation] benefits. I was injured over a year and a half ago after working 10 years for the same employer. It became apparent I was not going to be able to work anymore doing the physical labor my back and foot injuries precluded me from doing. I became more reliant on the workers' comp[ensation] system to help me as the statutes provide. I've also been a resident of Anchorage since 1957, some 43 years. The reason I bring this up is because most of the details about the unfairness of this act are going to come out if they already haven't, but I want to address maybe kind of like the feelings that people have about this in general, if I may. Like I said, I've been a resident of Anchorage since 1957. That's some 43 years. My father and mother brought me up here when I was just four years old from Seattle. I met many of the characters that spice up the nature of this state. My father was a friend to many of these men and women, legislators, governors, senators. From these historical figures, I apply many of my values. At one point in my life, I actually sat down to lunch with Senator Gruening and Senator Bartlett while I was a child at a convention in Washington D.C. It was quite a thrill. I say this because as I read HB 419 and I understand it, I wonder what some of these great men would say about HB 419 as its written today. I wonder what they would say about Section 7, AS 23.30.041, stating that "notwithstanding an employee may waive, at any time, any benefits or rights under this section of his rehabilitation benefits". Now, why is that necessary? And why would anybody use this kind of language for something that we have the right to already? I wonder what these great men would say about a system so lopsided in favor of insurance companies that the distinguished bodies of the State of Alaska Legislature would be reduced to writing words that can only be considered unfriendly and difficult. I wonder what happened to that sense of fairness and justice my father encountered as a new resident to Alaska in 1957. CHAIRMAN ROKEBERG interjected and said, "In regards to section 7 of the bill it says 'may'." He said he is not sure he understands Mr. Smith's point on that. MR. SMITH apologized and said he is probably not speaking as clearly as he would like to. CHAIRMAN ROKEBERG commented that it could be the drafting manual. He pointed out that the laws that are written in Alaska are not as clear as they should be to the average person. MR. SMITH referred to section 7 which states that an employee "may waive" any benefits or rights. He said: But that's always been our rights. Why would they include something like that and make it sound like they're doing us a big favor or something? Like, if we don't waive these rights, something terrible is going to happen. Like we're going to be forced to be retrained or something. That is confusing to me and, although, I have a pretty good education, reading these bills...I'm a little bit challenged. TAPE 00-32, SIDE A Number 0038 ROBERT SULLIVAN testified via teleconference from Anchorage. He stated: I'm a vocational rehabilitation counselor. I've been in the field of vocational rehabilitation counseling for 19 years. I've worked in two different states under about four different laws. I've also worked some with the CHIA (ph) program early on. I also do work for social security administration as a vocational expert. I got into the field when vocational rehabilitation laws had just started. Prior to that, there wasn't anything in the law for it and we still received referrals from insurance companies because they wanted to get them back to work because they were eating up their medical bill. So, we don't need a law to get rehab[ilitation]... ...The two major problems I see with HB 419 are in section 7(r). This section opens the door for insurance companies and employers to apply pressure to the injured workers and employees to waive their rehabilitation benefits before they have a clear idea of whether or not they will need it. It says "may" and they have the choice, but I see it opens the door to pressure. The waiver, once signed and transmitted, it's irrevocable. That is, it can't be modified the way other things can be modified which means that if they finally need it later, they can't go to the Board and get it modified and get it at a later date. The way the statute works now, people aren't referred for ineligibility evaluation until they get close to medical stability, they're nearing the end of their treatment, they have a little bit more knowledge of what their vocational needs might be or whether they're going to have any or not. This would eliminate that if it's utilized early on in the claim. If it is utilized, then this is going to lead to some problems. Injured workers who cannot return to their usual employment will be subject to returning to work in unskilled, low-paying jobs, returning to their usual employment in a hurt condition. And you have the rest of it, except for one thing I added to this. Number 6, an injured who has waived his benefits and discovered later that he cannot return to his employment at the time of injury, may end up being considered permanently and totally disabled because he has no means to obtain the skills to return to work through the statute. Number 0337 CHAIRMAN ROKEBERG indicated he did not entirely understand Mr. Sullivan's point with respect to number 6. MR. SULLIVAN clarified: You have the injured worker who waives his benefit early before he knows he needs it. They don't think he's going to need surgery, it comes up that he needs surgery, he gets a poor result, he's gone on his medical now for four or five years and he's finally got an attorney, and the attorney's saying, "Okay, I think my guy is permanently and totally disabled because he cannot return to work in his usual and customary employment." If he has no access to obtaining other skills that would make him employable in the labor market because he's already waived them and its irrevocable, then wouldn't he be declared permanently and totally disabled? I'm sure that's going to come up. Number 0437 MIKE JENSEN, Workers' Compensation Attorney, testified via teleconference from Anchorage. He has been in practice for 15 years and exclusively represents injured workers in the State Workers' Compensation system. He explained that numerous hearings were held for the past two years with staff from the Governor's Office and members of the Alaska Workers' Compensation Board. At these hearings, many injured workers testified and related to the Governor and the Board their personal stories of neglect, nonpayment of benefits, invasion of privacy, loss of dignity and other complaints. He stated: I'd had hoped that after listening to these stories from all these workers and their families, that legislation would have been offered to address their concerns. These workers did not come to the Governor or the Board with a tin cup hoping for a handout. They simply wanted changes to the act which would address their concerns. Regrettably, this proposed legislation does not do this, but it is a step in the right direction. I do not want to condemn this effort. I simply wish to suggest ways to improve it to meet just some of the concerns expressed by these workers. In a most recent legislative audit [Page 19, Legislative Audit Report, October 1999] which found that circumstances have developed...that limit the protection the legislature meant to be in place and strictly enforce to the benefit of workers. Such circumstances, that we believe are an unintended byproduct of the 1988 amendment, have resulted in a situation where more consideration is provided to employers and insurance companies than to the injured workers...I want to personally thank the Ad Hoc Committee and the Division of Workers' Compensation for their efforts on behalf of workers who have not seen an increase in benefits for almost 12 years. The labor members of the committee were able to take a step in the direction as far as increasing temporary, permanent and death benefits. Regrettably, what insurers are asking workers to give up in exchange for these amendments needs to be addressed. I want to address only several sections which this proposed legislation seeks to amend, namely [AS 23.30.]041(c) and section [AS 23.30.]107. Although the legislative audit found that page 35 from our review it appears the statute has succeeded in limiting access to reemployment benefits. This proposed legislation would find another way of totally removing access to reemployment benefits. The proposed amendment to [AS 23.30.]041(c) proposes another way for workers to lose access. They will be asked to do this without any guarantee that that such waiver is: 1. informed and 2. made only with an appreciation of the seriousness of the disability. Workers need to have an appreciation of the seriousness of their injury before any waiver should be allowed. The Board currently approves waivers if in the best interest of the worker. This should remain unchanged. In addition, I have concerns about section [AS 23.30.] 107. This act is very complicated as you've heard today. The workers are frustrated with the complexity of the system, regulations and associated time line which the audit noted at page 23. This act, instead, would propose to add additional timeliness, making the system even more complex. Number 0717 K. SCOTT MCENTIRE, President, Alaska Injured Workers Alliance, testified via teleconference from Anchorage. He commented: I myself am an injured worker since 1992. I'm a life-long Alaskan. I was born in Fairbanks. The Workers' Compensation Act is an act that I had to educate myself about and, in turn, am educating other injured workers. The Workers' Compensation Division has had its budget cut, its staff reduced, they've lost most of their experienced hearing officers, and it is virtually impossible to get accurate information from the Division. When an injured worker goes in there, they are disabled, they are on medications, they're totally confused, and this system just eats them up. The Alaska Injured Workers Alliance has spoken to the Governor about having representation on new legislation. We asked to be put on the ad hoc committee and we were not. The Workers' Compensation Act is supposed to be a prescriptive remedy to promote the promptness and the efficiency of it. However, the act itself, has more procedural bars to disadvantage injured workers so that they are denied benefits under the act. This legislation, in conjunction with other legislation right now, is a further extension of that. The ERISA Act, the Employee Retirement Income and Security Act exempts workers' compensation...insurance that employers have when they self-insure, if it's solely for workers' compensation. California recently passed legislation to make sure that the employers were self-insuring solely for workers' compensation so that they could remain governed by the state agencies such as the Division of Insurance. We now have legislation promoting group self-insurance that the director of the Division of Insurance, using the existing regulations, has virtually no power to enforce, they do not enforce any insurance regulations right now against self-insured employers, this is just further extending it to smaller group insurance plans. The wage rates are still an argument as to what constitutes a wage, what should be counted for compensation, whether health and welfare, pension plans, what vesting means, whether accrued leave, overtime at premium pay, or shift differential should be included. This legislation doesn't address any of those. The notion of going to a fee-funded service and then basing it on a percentage of the annual reports filed under AS 23.30.155(m)or (n) do not reflect that the Division gets, (indisc.) at its annual meeting last year, passed a regulation granting greater leniency in the accuracy of those because the Division itself creates more errors internally than the insurance companies filing those reports. So, those reports are not accurate and should not be used a basis for any percentage of payment of fees. CHAIRMAN ROKEBERG suggested that Mr. McEntire peruse Version G of HB 419. He said Version G does provide for the counting of overtime and premium wages. MR. MCENTIRE replied that it does not include accrued leave. He commented, "If you're working for an employer who you accrue leave time based on, for instance, 3.2 hours per pay period, that is a benefit. That is another reason why you're working for that employer and those are not included." CHAIRMAN ROKEBERG answered, "Well, that's right because we don't want the premiums go to Mars." MR. MCENTIRE said he does not think it has been demonstrated that they would go to Mars. CHAIRMAN ROKEBERG indicated that HB 419 would be held in committee. ADJOURNMENT Number 1099 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee at 5:41 p.m.
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