Legislature(1999 - 2000)
03/27/2000 03:30 PM House L&C
| Audio | Topic |
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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 27, 2000
3:30 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Lisa Murkowski
Representative John Harris
Representative Sharon Cissna
Representative Jerry Sanders
MEMBERS ABSENT
Representative Tom Brice
COMMITTEE CALENDAR
HOUSE BILL NO. 376
"An Act increasing the duration of a mechanic's or materialman's
lien to one year; 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."
- MOVED CSHB 419(L&C) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 376
SHORT TITLE: MECHANIC/MATERIALMEN LIENS
Jrn-Date Jrn-Page Action
2/16/00 2209 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2209 (H) L&C
2/16/00 2209 (H) REFERRED TO LABOR & COMMERCE
3/27/00 (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
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
3/20/00 (H) Heard & Held
3/20/00 (H) MINUTE(L&C)
3/27/00 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
BRYAN MERRELL, State Counsel and Underwriter
First American Title Insurance Company
3035 C Street
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 376.
PAUL GROSSI, Director
Division of Workers' Compensation
Department of Labor and Workforce Development
P.O. Box 22512
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 419.
BOB LOHR, Director
Division of Insurance
Department of Community and Economic Development
Post Office Box 110805
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 419.
MARY SHIELDS, Member
Workers' Compensation Committee of Alaska
3330 Arctic Boulevard, Suite 201
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 419.
JANET SEITZ, Staff
to Representative Norman Rokeberg,
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
POSITION STATEMENT: Provided information on HB 419.
ACTION NARRATIVE
TAPE 00-36, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:30 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro,
Murkowski and Harris. Representatives Cissna and Sanders arrived
as the meeting was in progress.
HB 376-MECHANIC/MATERIALMEN LIENS
CHAIRMAN ROKEBERG announced the first order of business would be
HOUSE BILL NO. 376, "An Act increasing the duration of a
mechanic's or materialman's lien to one year; and providing for
an effective date." He indicated no action would be taken on the
bill today.
Number 0118
BRYAN MERRELL, State Counsel and Underwriter, First American
Title Insurance Company, testified via teleconference from
Anchorage. He commented:
Our interest in this bill simply relates to the
interests of our primary customers: the real estate
agents and brokers, lenders and their clients;
borrowers, buyers and sellers of real estate. The
extension provisions set forth in the bill would
essentially double the time frame for which the
mechanic's liens duration would last, and I haven't
heard any of the rationale as yet for why that would be
a good idea.
I can certainly think of some reasons why it would not
be a good idea (indisc.--loud noises) ... the whole
idea behind having the mechanic's lien statute was to
give contractors, or those who improve real property,
the ability to lien the property without having to go
through a judicial process until after the lien is of
record. The process, as set up in Alaska, is meant to
be a relatively quick one. That is, you get your shot
at having a lien on the property, but then have to take
action in a fairly short period of time in order to
enforce your rights against the property.
I can't think of any really good reason to extend that.
It would potentially slow down real estate
transactions, particularly those relating to new
construction. It would affect the business of builders
and of lenders in that there would be an additional
period of time for which they would have to either bond
around those mechanic's liens or have their
transactions put on hold until those liens went away.
And so many times, it seems to me, in my experience of
working in the field, the liens, when they're recorded,
aren't particularly well thought out and very often
aren't valid necessarily, either because there really
wasn't any debt that was owing or because the party
that was attempting to use the mechanic's lien law
simply didn't have the right to do that.
So, at this time, First American, and I believe, the
majority of the members of the Alaska Land Title
Association - [of] which First American is a member,
I'm on the Board of Directors - don't feel like that
the bill is a good idea. And we're still sort of
waiting to hear from someone why it's a good idea to
try and extend these liens.
CHAIRMAN ROKEBERG said he believes that is why the sponsor,
Representative Joe Green, did not have the committee take action
on the bill today. He suggested that Mr. Merrell contact Kevin
Jardell, staff to Representative Green. [HB 376 was held over.]
CHAIRMAN ROKEBERG called an at-ease at 3:35 p.m. and returned at
3:38 p.m.
HB 419-WORKERS' COMPENSATION
CHAIRMAN ROKEBERG announced the next order of business would be
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."
[Before the committee was a proposed committee substitute (CS),
Version G (1-LS1418\G, Ford, 3/7/00), adopted as a work draft on
3/08/00.]
CHAIRMAN ROKEBERG noted that three people were available to
answer questions: Deputy Commissioner Dwight Perkins of the
Department of Labor and Workforce Development (DLWD) was in the
audience, and on the teleconference line were Bob Lohr, Director,
Division of Insurance, and Mary Shields, representing the Alaska
Labor-Management Ad Hoc Committee on Workers' Compensation.
CHAIRMAN ROKEBERG noted that previous discussion of HB 419
focused on the report issued by the Division of Legislative Audit
concerning the DLWD's Division of Workers' Compensation (DWC).
The committee had discussed Recommendation 1, which deals with a
strategic plan, and Recommendation 2, which proposes changes in
overtime and premium pay. He asked Mr. Grossi to speak to
Recommendation 2.
Number 0490
PAUL GROSSI, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development, testified by
teleconference. He clarified that Alaska law now allows for the
payment of temporary disability benefits if there is a dispute
between or among employers regarding who is liable for the
payment. However, there is no interim compensation when a claim
is controverted, and there may or may not be entitlement to the
benefits. The positive side is that benefits would be paid to
the employee all along. The downside is if the employer and
insurance company controvert the claim, and that controversion is
later found to be correct, there would be no way to reimburse the
employer or insurance company. This might increase the overall
cost of premiums.
Number 0764
MR. GROSSI explained controversion: If the employee is receiving
benefits and at some point it is determined that the employee is
not entitled to some or all of those benefits, the employer
and/or the insurance company can controvert. Evidence is needed
to do that. The evidence might come from an examination by a
doctor of their choice, in which case the employee's doctor may
be saying that the benefit is due and the employer's doctor
saying that it is not. In that case, the employer can
controvert, which would stop the benefits. The employee then has
the right to make a claim to the Workers' Compensation Board, and
the board would decide if there is an entitlement. During that
time, the employee would be without benefits.
CHAIRMAN ROKEBERG asked if the employee would be without benefits
between the time there is a controversion by the employer and the
time a determination is made by the board.
MR. GROSSI said that is correct.
CHAIRMAN ROKEBERG asked how long that time typically is.
Number 0849
MR. GROSSI said it is at least six months. He explained that
budget cuts in recent years have reduced the number of hearing
officers, who decide those cases, to five for the whole state.
CHAIRMAN ROKEBERG turned to Recommendation 3: The director of
workers' compensation "should increase outreach, education, and
technical assistance to injured workers with respect to their
rights and responsibilities under the workers compensation laws
when a disputed claim occurs."
MR. GROSSI mentioned the need for more information dissemination.
Currently, [the division] sends a workers' compensation brochure,
which outlines in simple language much of what is in the Workers'
Compensation Act. The statute and the regulations are available
for people to purchase. The audit seems to be saying that there
needs to be more. One of the suggestions made in the audit was
to have a video that people could watch to help them understand
how to proceed with their cases. The DWC is looking into
possible sources of funding. He cautioned that a video would
need to be updated regularly.
Number 1032
CHAIRMAN ROKEBERG observed that the recommendation says the
courts have stated that the board has a duty to instruct injured
workers on how to proceed in claiming injured workers' rights
under the law.
MR. GROSSI said that was correct, as determined by a state
supreme court case.
CHAIRMAN ROKEBERG asked Mr. Grossi if his testimony is that more
funding is needed to make a video.
MR. GROSSI said the best thing would be to have more staff so
that they would have the time to instruct individuals about their
rights and how to proceed. He said they do fairly well with the
limited staff they have, but it is a relatively small number of
people.
Number 1080
CHAIRMAN ROKEBERG observed that they have a brochure with step-
by-step instructions.
MR. GROSSI said the brochure basically outlines, in simple
language, what a worker needs to do.
Number 1117
REPRESENTATIVE CISSNA reiterated that the audit says there needs
to be better education. She has heard about successful efforts
in other departments that have had problems dealing with the
customers. Little educational efforts have been very effective,
she said. She mentioned a situation in which giving people good
information up-front actually reduced the time workers had to
spend. She said brochures alone are not sufficient because there
are people who have a serious problem reading and understanding
brochures. She would like to see something set up in the bill,
perhaps in Section 7(r) or before that, to address the whole
situation of better education. She hates to think about people
being "sat down and convinced that they ought to sign a waiver,"
which she fears may sometimes inadvertently be done.
Number 1224
MR. GROSSI asked if she could clarify the question. He
understood that she was talking about outreach, but he wasn't
sure if she was asking about rehabilitation, as proposed in the
bill.
REPRESENTATIVE CISSNA said her concern was not about outreach but
about when people who have been injured come in to the system.
At that point, they may not be thinking clearly. Helping them
seems like a good idea, and the audit even says that.
MR. GROSSI noted that the audit says they do not provide enough
information. They do have information officers at the three
workers' compensation offices, and one of their duties is to try
to answer questions for injured workers. He thought her question
was whether that is enough.
REPRESENTATIVE CISSNA affirmed that.
MR. GROSSI said obviously it would be better to have more of
that, and "the question again comes down to resources." He
agreed that it would be a good thing.
Number 1394
CHAIRMAN ROKEBERG noted that the auditor "suggests you go out and
the strong arm and a bite on the insurance industry" to help with
the video. He asked if the division had tried that.
MR. GROSSI said he has discussed it with some members of the
Workers' Compensation Committee of Alaska [WCCA], and they might
be willing to pay for at least the first video. He thought a
video could provide enough information to make it worthwhile.
Number 1441
CHAIRMAN ROKEBERG turned to Recommendation 4: "DWC's director
should take proactive measures to identify and monitor uninsured
employers." He cited the reference in subsection 1 that calls
for eliminating the backlog that contributes to significant
efficiencies, and asked Mr. Grossi about the backlog.
Number 1457
MR. GROSSI said the backlog has been eliminated. It had to do
primarily with the new computer system coming online and trying
to work the "bugs" out of it. Some of the other questions about
uninsured employers and providing a potential penalty for late
filing of data would need to be legislatively addressed.
Documenting "the entirety of employer enforcement correspondence"
is something they are trying to develop as part of the new
computer system.
MR. GROSSI said it is a very good suggestion to include in
business licensing procedures the notification of the need to
have workers' compensation insurance for any employees.
CHAIRMAN ROKEBERG asked if they had talked to the Department of
Community and Economic Development.
Number 1538
MR. GROSSI said not yet, but it is part of their plan for work
during the interim.
CHAIRMAN ROKEBERG asked how old the audit is.
MR. GROSSI said they had just received it a couple of weeks ago,
after work was underway on the bill.
CHAIRMAN ROKEBERG asked about the recommendation of going to the
legislature for some more severe penalties for [not] filing
insurance and adjuster notices in a timely manner.
MR. GROSSI said they tried to do that through regulation.
However, they were advised by the Department of Law that they did
not have the statutory authority to do so, and that it would have
to be done legislatively.
Number 1600
CHAIRMAN ROKEBERG turned to Recommendation 5: "The legislature
should consider amending AS 23.30.075 to empower the Alaska
Workers' Compensation Board (AWCB) to sanction uninsured
employers."
MR. GROSSI said he thought that was a good suggestion, and he
encouraged the legislature to look into it. He said he thought
members of Legislative Budget and Audit may be doing that because
one of them had contacted him with questions concerning it.
CHAIRMAN ROKEBERG noted that because of the lateness of the
audit, it would be necessary to make a recommendation to the ad
hoc committee to include any of these recommendations in HB 419.
MR. GROSSI said he couldn't remember if he had done so or not,
but he thinks the problem of uninsured employers is one of the
more serious problems that they have. He noted that it is really
unfair to the vast majority of employers who have coverage,
because those who do not have it are competing unfairly. It is
even more unfair to an employee who is injured. But, he said, it
is an overwhelming job to investigate and enforce, since there is
one person who investigates that for the entire state.
CHAIRMAN ROKEBERG asked, "So you are saying you are short of
funds?"
MR. GROSSI said yes. He thinks there should be more than one
person, and depending on how the budget goes, they may lose that
one person, too.
Number 1753
CHAIRMAN ROKEBERG asked what the sanction is now, under current
statute, for uninsured employers.
MR. GROSSI said it is a criminal [offense]; the uninsured
employer can be prosecuted and fined up to $10,000 and imprisoned
for a year. If the employee is injured, he thinks the fine can
go up to $50,000 a year. It is a pretty good sanction, but the
problem is actually the investigation, getting the information
for the prosecuting attorneys so that they are willing to take
the case. There are all sorts of criminal activities out there,
and they have to make decisions based on the constraints of their
budget regarding who to prosecute.
CHAIRMAN ROKEBERG said in his opinion, it sounds like the need is
for more manpower rather than for more criminal sanctions.
MR. GROSSI agreed that would help immensely.
Number 1824
CHAIRMAN ROKEBERG directed discussion to Recommendation 6: "The
Department of Community and Economic Development's director of
the Division of Insurance (DOI) should implement policies and
procedures that ensure timely enforcement of insurer-compliance
provisions of the Workers Compensation Act."
Number 1842
BOB LOHR, Director, Division of Insurance, Department of
Community and Economic Development, testified by teleconference.
He said the division basically agrees with Recommendation 6.
Current law, AS 23.30.155, says:
The board shall promptly notify the Division of
Insurance if the board determines that the employer's
insurer has frivolously or unfairly controverted
compensation due under this chapter. After receiving
notice from the board, the Division of Insurance shall
determine if the insurer has committed an unfair claim
settlement practice under AS 21.36.125.
MR. LOHR referred to the controversion process that Mr. Grossi
had described. He explained that after an employer has presented
its case, even if the injured worker puts on no case whatsoever
to challenge the controversion, the Workers Compensation Board
still could find that there was not enough evidence to support
the controversion and would make a finding that the insurer had
frivolously or unfairly controverted the claim, and they would
refer the matter to the Division of Insurance. If they do that,
the division reviews the case to determine whether there has been
a violation of the insurance code. "We in the division agree
that we need to do a better job of investigating those cases", he
said. Four have been referred to the division since 1997, and
those are all still pending.
MR. LOHR noted that a problem for the division is that, under the
statutes, "It takes at least 1 percent of the claims to be
improperly handled by the insurance company or multiple violation
of the same standard of unfair claims practice without a
reasonable explanation." A single unfair controversion does not
constitute a violation of AS 21.36.125. Mr. Lohr recommended
that the legislature consider amending that statute to provide
that a single act is a violation and, therefore, subject to
administrative action by the division. That would completely
solve the problem of being able to deal with a single act of
frivolous controversion. He noted that SB 177, which is broader
than that, has passed the Senate.
Number 1978
CHAIRMAN ROKEBERG said it seemed to him appropriate to sanction
an insurer if there was a pattern, but one incident did not
strike him as being sufficient grounds for action. He asked if
there was some discretion in the amount of fines that could be
levied.
MR. LOHR said there is discretion of fines up to a maximum of
$2,500 for a single act. However, the division cannot fine an
insurer for a single act of this type under the current statute -
unlike elsewhere in AS 21, where a single act is sufficient to
trigger the enforcement authority of the division. What the
division is seeking through administrative action is to get the
insurance company to acknowledge that there is a problem and to
propose a plan to address that problem. If the plan is adequate,
then there may be no fine at all.
CHAIRMAN ROKEBERG asked, "So, you think the discretionary
authority that would reside in your office would be enhanced by
legislative authority to do that?"
MR. LOHR said he believes it would, and there would be no
intention at all to use that authority to penalize a single,
innocent mistake.
Number 2078
CHAIRMAN ROKEBERG asked if there was a definition of "multiple
violation," either in the history of the division or from the
attorney general's office.
MR. LOHR said there is a letter from the division dated 02/25/00
at the back of the audit which describes the legal standards and
court case law, as well as the National Association of Insurance
Commissioner's model legislation, which was the source of the
standards.
CHAIRMAN ROKEBERG turned to Recommendation 7: "DWC's director
should improve controls over review of insurers' annual reports."
He asked Mr. Grossi what that concerns.
Number 2129
MR. GROSSI said Recommendations 7, 8 and 12 all have to do with
the insurance companies' filing of annual reports, which give the
division information on all the compensation paid in a single
year. There are penalties for late filing of these reports.
Those penalties go into the general fund and into the Second
Injury Fund. The recommendations involve much stricter
interpretation, increased penalties, and possibly increased
litigation. Mr. Grossi said they are planning to adopt
Recommendation 8 and to discuss Recommendations 7 and 12 with the
Attorney General, possibly seeking a legal opinion "to make sure
that we are on the right track before we start into this, because
it is a much stricter interpretation and could increase
litigation."
Number 2234
CHAIRMAN ROKEBERG observed that Recommendations 7, 8, 9 and 12
really do not relate to HB 419.
MR. GROSSI agreed, explaining that they deal strictly with
internal administrative matters.
Number 2264
CHAIRMAN ROKEBERG asked if Recommendation 10 also was unrelated
to HB 419.
MR. GROSSI affirmed that. He added that there is reason to think
the audit may not have been correct about Recommendation 10,
which relates to a mid-1970s adjustment of compensation rates in
relation to inflation.
Number 2332
CHAIRMAN ROKEBERG turned to Recommendation 11: "DWC's
reemployment benefits administrator should capture ineligibility
determination statistics for policy makers and stakeholders."
MR. GROSSI agreed that it, too, is unrelated to HB 419, but said
the division thinks it is an excellent idea and that it may help
the legislature with future legislation. It looks at retraining
benefits to see if people are being denied retraining for
statutory reasons yet still are unable to return to work.
CHAIRMAN ROKEBERG invited remaining questions regarding the
audit.
Number 2385
REPRESENTATIVE CISSNA asked about the new subsection in HB 419
that would add to AS 23.30.041, having to do with reemployment
benefits. The new language says an employee may waive at any
time the benefits under this section, including the eligibility
evaluation and benefits related to reemployment plans, and then
it sets up how this is done. In effect, it discharges the
liability of the employer for the benefits and rights contained
in the section. She asked what good it would do.
Number 2450
MR. GROSSI explained that it calls for a waiver on a board
prescribed form. That form will indicate exactly what the
employee is potentially waiving.
TAPE 00-36, SIDE B
MR. GROSSI said he thinks this simplifies the current process
whereby an employee has go through the initial stages of the
reemployment process before being eligible to go before the board
and request a waiver of benefits. "Whether you believe that the
employee should or should not choose that [to waive benefits], I
guess that's a policy call," he said. With reemployment
benefits, the employee is evaluated and then works with the
rehabilitation counselor to determine what would be the most
appropriate retraining plan. It may or may not be something the
employee is interested in doing, but it is something that can be
done with the $10,000 training benefit. The new board form
[spells this out] so that the employee will have full knowledge
of what he or she is potentially waiving, and could choose not to
waive it.
REPRESENTATIVE CISSNA noted that the committee had just been
discussing problems related to having fewer and fewer staff
people who are overwhelmed with too many people to help and not
enough time to do it. She said when she thinks about the waiver,
she remembers how she felt and how unclear her thinking was after
an auto accident. She recalled that she just wanted the problem
to go away, and wanted to move on to health and vitality. She is
afraid the waiver is being presented too early, at a time when
the client is not going to be wanting to think about
rehabilitation or going back to school. It is a time when the
client is potentially very vulnerable, especially if that person
was a really good carpenter or skilled at some other thing for
which one didn't have to be very good at reading, language skills
or assertiveness. It would be easy to get "talked along" and to
sign a waiver without really understanding what is being waived.
MR. GROSSI said Representative Cissna may be right. Under
current law, however, about 25 of 300 employees found eligible
for reemployment benefits complete a plan. The vast majority
settle their cases before that time. This [change] allows that
to happen in a simpler fashion. He thinks retraining would be
the best way to go, and they should probably choose retraining.
However, he said, "I don't think that we can force them to be
retrained."
Number 0241
REPRESENTATIVE CISSNA asked, "They can go through that before
they waive their rights; am I right?"
MR. GROSSI said under the proposed bill, they can still do that.
He suggested that the bill needs to be looked at in its entirety.
People can choose to waive their benefits. But for those who
choose not to waive them, the amount of the unemployment and
partial-impairment benefits are going to be increased. He added
that he did not know for sure, but he thought it was the employer
side of the ad hoc committee that wanted a simpler provision for
waiving benefits without the employee going through the whole
initial retraining process and a board review.
Number 0358
REPRESENTATIVE CISSNA asked what the difference would be if the
bill did not have Section 7(r) [the waiver]. She wondered if
everybody would be happy.
MR. GROSSI said he could not speak for everybody. He noted that
these bills [workers' compensation] reflect a balance in
legislation, and sometimes when something is changed, that will
take the labor or management support away from it. He thought
her question would be better addressed to a member of the ad hoc
committee.
CHAIRMAN ROKEBERG asked Ms. Shields if she would comment on the
entire bill and also speak to Representative Cissna's and the
committee's concern about Section 7(r).
Number 0428
MARY SHIELDS, Member, Workers' Compensation Committee of Alaska,
came forward to testify on HB 419. She said if that provision is
taken away, then management, the WCCA, will withdraw its support
of the bill. Ms. Shield said what the ad hoc committee has tried
to do with the bill is tighten up a lot of things that have been
rather loosely interpreted by the courts. That loose
interpretation leaves employers unable to complete their
obligations to employees "unable to finalize anything."
MS. SHIELDS said the provision for the waiver was intentionally
phrased as "may," not "shall," so that it gives the employee the
option. The employee is not required to sign off on the waiver,
but those who do sign off and take a payout cannot come back a
few months later determined that they do want to have
rehabilitation training after all. She explained that a recent
court decision has opened the way to "double dipping." In that
case, an employee who had already spent the payout was then
awarded rehabilitation for which the employer had to pay.
Employers want to put a stop to this new problem before it gets
worse. Another aspect of the issue is that some of the employees
who want vocational rehabilitation would prefer to have certain
kinds of training that now is not open to them under the law. In
some cases, they would be able to take a lump-sum payment to use
for the training they prefer. This provision, with the other
increases in benefits, has been "carefully sculptured between
labor and management," and is something about which the employers
feel very strongly.
Number 0560
REPRESENTATIVE CISSNA said her concern is with the danger that
people are going to be making a significant decision too soon
after the accident, and before they clearly understand [all the
implications and options].
MS. SHIELDS said everything is clearly explained to employees.
One of the things everyone - management, the department and
employee/clients - all want to see is some type of video or film
created to assist. Also, the board is not going to lightly
accept the waivers. She made it very clear that it is the board
that creates the waiver. It cannot be created by one of the
insurance carriers. It has to be accepted by the board. It is
not something that people are going to be pushed into signing,
but at some time, people have to be allowed to take
responsibility for their own lives and their own actions.
Number 0707
REPRESENTATIVE CISSNA said she certainly agrees with the last
point. However, there are times in every person's life at which
he or she will be vulnerable, and this is one of those times.
MS. SHIELDS said there has been an effort to allow for that and
to provide appropriate protection for that. That is why it is
not an open waiver, but must be drafted by the division.
Number 0728
CHAIRMAN ROKEBERG asked if he correctly recalls that a person can
now waive benefits after what is called "medical stability."
MS. SHIELDS said that is correct. Unfortunately, she added,
there have been a few cases in which clients have been given
their permanent partial disabilities and [the cash-out], and then
later have come back and said they had made a mistake and wanted
the vocational rehabilitation. The courts have very bluntly told
the insuring carriers and the employer who ultimately pays that
cost that it is too bad the employee made a mistake, but he/she
is not able to pay back the money and cannot support himself
while taking the training, so they are going to have to pay for
it. We are trying to block that loophole, she explained.
CHAIRMAN ROKEBERG asked if he understood correctly that an
employee can take a lump-sum settlement and agree to waive
further benefits.
MS. SHIELDS said that is "kind of what ends up happening."
Number 0800
MR. GROSSI explained that, currently under statute, when an
employee reaches medical stability, temporary total disability
benefits stop. If the employee has a permanent impairment,
he/she is entitled to whatever the percentage of impairment is
multiplied by $135,000. If the person is not in a reemployment
plan, that person is entitled to a lump-sum payment. If the
person is involved in the reemployment process, that benefit is
paid out in weekly increments at the temporary total disability
rate (80 percent of the spendable weekly wage). If the employee
waives the reemployment benefit, with a compromise in release
under the current law or the board-prescribed form under the
proposed law, then that person would not be entitled to
reemployment benefits.
CHAIRMAN ROKEBERG asked for clarification: "They're either
getting it over a period of time or they can elect to take the
same amount of money in a lump sum It's the same amount of
money is it not?"
MR. GROSSI said that is correct.
CHAIRMAN ROKEBERG summarized that the choice they are making is
whether to take the money up front or take it over time to get
reemployment [benefits], and the problem that is occurring is
that once a person has taken the lump sum and signed a waiver,
then that person goes to court saying he/she wants another
[chance at a] training program and the courts have said "we have
to [do that and] start them on the partial-impairment weekly
stipend again". He wondered if that correct.
Number 0938
MR. GROSSI said no. The permanent partial impairment [payout]
would be spent, gone. They would start immediately on "wages"
provided under AS 23.30.041(k).
Number 0972
CHAIRMAN ROKEBERG clarified that it was the "double dip" to which
Ms. Shields had referred.
MR. GROSSI explained that once the court returns that judgment,
the board has to abide by it. He added, however, that it is not
a common occurrence.
CHAIRMAN ROKEBERG observed that this particular provision has
created a great deal of controversy.
MR. GROSSI said it is fairly rare, "but it is still out there" in
about half of the country.
Number 1034
REPRESENTATIVE MURKOWSKI said she would like to pick up where
Representative Cissna left off. She summarized that
Representative Cissna's concern was that an employee who is in a
vulnerable situation is signing a waiver, and there is nothing in
HB 419 to indicate that if the employee does it under any kind of
duress or coercion, that the employee will have a way out after
that. "If you sign the waiver, it's a done deal," she said. The
employee's only protection is that the waiver is on a form
drafted by the board, and she is not certain that would really
help or protect the employee. She said there are no allowances
being made for the fact that the employee could be
mentally/unstable at that point -- not to the degree that any
court would find that person incompetent, but [enough so that]
the person probably should not be making this kind of decision.
She asked if any consideration had been given to a waiver that is
signed under duress, coercion, or mental instability.
MR. LOHR said he did not know if that had been discussed, but if
an employee could prove that he/she had been coerced into signing
a document waiver, that waiver probably would not stand up in
front of the board or in court. He suggested consulting the
Attorney General's office.
Number 1197
REPRESENTATIVE MURKOWSKI said she was looking at the language,
which states that the employee files a statement under oath, and
she assumed it would be within the terms of that oath that the
person is signing it of his/her own free will, et cetera.
CHAIRMAN ROKEBERG noted that "under oath" goes beyond a sworn
statement, [it is not] merely a notarized thing.
Number 1230
REPRESENTATIVE CISSNA said her biggest concern is about the way
in which this is done. If the person aggressively looks for the
opportunity for a waiver, that is one thing. If, in effect, "we
are encouraging or making it easy for a person to sign a waiver,"
then that is another thing, "and that is the part of this that
makes me really uncomfortable," she said. If someone has his act
together and knows what he wants to do, then that is one thing.
But the people who could really be hurt by this are those who are
balking at the [proposed] training right at this minute because
they are tired and they don't know whether or not they are going
to look like an idiot going to school, and they're getting used
to the idea, but then here is an easy way out. "I have talked to
lots of folks like this who are drifting around, basically
unemployable and sidelined permanently, "and I don't want to have
people sidelined permanently who were state employees and doing a
reasonable job."
CHAIRMAN ROKEBERG asked if she is contending that free will and
choice are not operative. If not, he wonders what she would
suggest to replace them.
REPRESENTATIVE CISSNA said the law nominally protects a person,
but these people are not going to go and hire attorneys.
"They're not going to have the money," she said.
CHAIRMAN ROKEBERG pointed out that law is still going to be
there, and that no one is changing that.
REPRESENTATIVE CISSNA said she knows that, "but we want to be
sensitive."
CHAIRMAN ROKEBERG observed that this is a question of choice on
the part of that worker. However, he said, he could be the first
to understand that they might feel some pressure on the part of
the employer or the insurance company to sign a waiver.
Number 1424
REPRESENTATIVE HALCRO asked if there was a provision making it
mandatory to disclose to the injured worker all of the choices
that are afforded.
Number 1442
MR. GROSSI said he thinks it is going to be necessary in the
waiver form to disclose to the employees everything that they are
potentially waiving. That would include the $13,300 in
retraining benefits, the 70 percent stipend available after the
permanent partial-impairment [benefit] runs out, the value of
rehabilitation services that could amount to thousands of
dollars. Those things would have to be fully outlined and
disclosed in that form. That would be the protection. The
question is, "Is that enough?" He thinks it is. He imagined
there could be some pressure somewhere [to sign the waiver],
although he suspects that would be rare.
MR. GROSSI said it seems to him that employees are basically
exercising the right [to choose] already. They are opting to go
into the retraining process and then, for the most part, they are
"penciling out" those [benefits] with a compromise and release."
One other thing worth noting is that there does not appear to be
anything that would preclude a client's asking for some of the
other benefits in addition to a lump-sum payment.
REPRESENTATIVE HALCRO said it was his understanding that before
employees decide to waive any benefits or future training, they
have to sign a document that clearly outlines what they are
giving up, and what their choices are.
MR. GROSSI confirmed that is correct.
REPRESENTATIVE HALCRO said that leads back to what Chairman
Rokeberg said about choice and free will. "We have waivers for
everything in life, liability and all kinds of things," he said
"There is a certain level of personal responsibility that I think
we're overlooking."
Number 1626
CHAIRMAN ROKEBERG asked if the point in time at which a waiver
would be offered to an employee is not usually after the whole
process of being certified as eligible. "Hasn't somebody
typically been in the program and receiving benefits for
literally months before they would reach this point?" he asked.
MR. GROSSI said that usually is the case. The employees have to
have reached medical stability. In other words, they have been
paid their temporary total disability for at least a month -- and
in some cases even for years, depending on the severity of the
injury. They have reached medical stability and the temporary
total disability payments stop, and then their rate of disability
(permanent partial impairment) is determined. That is when the
question of a waiver usually comes up, when they are considering
whether they are able to return to their usual work.
Number 1691
REPRESENTATIVE MURKOWSKI noted that Section 7(r) starts out
saying that any employee may waive at any time any benefits or
rights under this section. She said it appears that in practice
it does not happen until quite some time into the process,
although the language makes it clear a person can do it at any
time. She said she thinks perhaps the committee needs to look at
that language and give it more parameters.
REPRESENTATIVE CISSNA asked if there could be some counseling or
educational component included in the waiver process. It could
be the film or video -- just some way to make sure that they
understand the ramifications.
Number 1824
MR. GROSSI said one thing that definitely would be on the waiver
form would be the telephone numbers of the three division offices
so that if somebody has questions about signing the firm, there
will be someone there to answer those questions.
CHAIRMAN ROKEBERG asked if the form would have an attachment
clearly advising the person that his rights should be fully
investigated.
MR. GROSSI said they had not yet started work on the form, but
that it will have to fully inform the individual of all his/her
rights and if they have any questions who to call.
REPRESENTATIVE CISSNA volunteered to help the board design the
form.
MR. GROSSI assured her that the board was going through a public
process in designing the form.
Number 1910
REPRESENTATIVE HALCRO noted that there was language concerning
when the board shall serve the notice of the waiver. He asked,
"What about having something like a seven-day grace period so you
sign it on Monday and if you change your mind four or five days
later, then you can cancel it?"
CHAIRMAN ROKEBERG noted that a person has three days to back out
of buying a house.
Number 1960
REPRESENTATIVE CISSNA asked Ms. Shields what she would think of
something like that.
Number 1973
MS. SHIELDS said she would need to see the language. She then
expressed concern that some of the questions being asked suggest
that people are not reading the bill in its entirety, but looking
at one section in isolation from the rest. For example, she
said, someone had asked if a person signing the form might be in
the hospital at the time. She said the prospective signers are
a long way into the process before the issue of a waiver even
comes up. The people going into rehabilitation have to have been
found eligible and reached medical stability, the doctor needs to
have said that they cannot go back to the former occupation and
they have to have retraining, she explained.
CHAIRMAN ROKEBERG said it is very common to provide a "circuit
breaker" to permit people to change their minds on a very
important decision.
MS. SHIELDS said she couldn't speak for the entire ad hoc
committee, but thought if they could see the language being
proposed, they probably could come back with a very quick
decision on it.
CHAIRMAN ROKEBERG said he would like to see the bill get some
motion today. Both he and Representative Murkowski are on the
Judiciary Committee [the next committee to which HB 419 goes],
and could follow through with the issue, for which he, too,
expressed concern.
Number 2164
REPRESENTATIVE MURKOWSKI asked Ms. Shields if there was anything
in the audit the ad hoc committee feels would enhance or should
be incorporated into HB 419.
MS. SHIELDS explained that the ad hoc committee had completed its
work before the audit was released. The audit came out after all
of the ad hoc committee's recommendations had been made. For the
committee to go back into the audit would mean reconstituting the
committee and starting all over again.
REPRESENTATIVE MURKOWSKI then asked Ms. Shields as an individual
if there was anything in the audit that she would "put a star by"
and say was a good idea. She said she would like to incorporate
some of the more useful aspects of the audit at this time rather
than trying to run through HB 419 now and then taking up the
results of the audit next year.
MS. SHIELDS said when those on the committee had seen the audit,
they were amazed at how closely the committee had come to hitting
everything discussed in the audit except for those items the
committee considered to be in-house items for the Workers'
Compensation Commission and for the Department of Labor and
Workforce Development. She added, "To be blunt, I skimmed over
the audit and then tried to get back to my real work here, and
did not examine it closely." She asked what areas [of the audit]
Representative Murkowski was referring to or would like to see
added.
REPRESENTATIVE MURKOWSKI said she had gone through the
recommendations with the committee, and certainly does not come
at the issue from the same perspective as those in the ad hoc
committee, so she appreciated the feedback from them regarding
things from the audit they thought should be included in HB 419.
If there are some other things Ms. Shields and others out there
think should be included, she would like to know what they are so
they can be taken up either in this committee or in the next
committee of referral.
MS. SHIELDS said, "(Indisc.) hasn't even been discussed."
REPRESENTATIVE MURKOWSKI said if Ms. Shields had time to review
the audit recommendations, she would welcome [any thoughts].
TAPE 00-37, SIDE A
MS. SHIELDS said they would certainly take a look at it.
Number 0010
CHAIRMAN ROKEBERG said his analysis is that there are two
provisions that are not addressed in HB 419: those that spoke to
enhancing the department's sanctions of uninsured businesses and
to enforcement. The Injured Workers Alliance suggested the audit
says the department is "an administrative wreck" that needs to be
worked on, and we have discussed that briefly with Mr. Grossi,
who is claiming poverty [for the division], "and I can appreciate
that."
Number 0093
MS. SHIELDS told Chairman Rokeberg she agreed with his earlier
statement when talking with Mr. Grossi. She said she agrees with
Mr. Grossi. She doesn't like businesses that don't carry
workers' compensation unless they have already proved to be self-
insured because she cannot compete with them on a legitimate
basis. And she thought a previous bill covered that. All the
rules in the world won't help if they cannot be enforced.
CHAIRMAN ROKEBERG said, "That's exactly the point. We already
have criminal sanctions, so I don't think the legislature needs
to act, and I disagree with the audit in that regard."
Number 0150
MS. SHIELDS said, "I think we've tried to do that. We tried to
have criminal sanctions on fraud, and we've had a very difficult
time getting the enforcement we, and I know you feel is
necessary," including [action] against both fraudulent claims by
employees and fraudulent denials by employers. She doesn't think
any more language beyond the fraud bill is going to help.
CHAIRMAN ROKEBERG said he thinks HB 378, "which was to change the
entire fee structure and the premium tax of workers' compensation
insurance in the state of Alaska, which passed out of this
committee earlier this year," is intended to provide additional
funding for the Division of Workers' Compensation so that it can
take a more vigorous role in enforcing the law.
MS. SHIELDS emphasized that she is very much in favor of that.
CHAIRMAN ROKEBERG said he supports that, and he thinks this
committee and the legislature do, too. He hopes HB 419 will give
the division more firepower and make it possible to retain people
to enforce the law, "particularly as a it relates to the
uninsured employer, who is doing great damage to the workforce of
the state."
CHAIRMAN ROKEBERG called attention to a letter circulated to the
committee. Addressed to Mr. Grossi, and dated February 2,2000,
it came from the National Council on Compensation Insurance,
estimating the impact of the premium changes on businesses to be
between 7.7 and 8.9 percent of the premiums in Alaska.
CHAIRMAN ROKEBERG told listeners online that this was an
invitation-only hearing, and that HB 419 would be heard in the
House Judiciary and Finance Standing Committees. He advised
those who wished to testify to contact their legislators.
CHAIRMAN ROKEBERG noted that committee packets contained two
amendments he wished to consider. The first amendment, G.1 [1-
LS1418\G.1, Ford, 3/16/00], read:
Page 1, line 16, following "employee.":
Insert "This subsection may not be construed to
authorize an employer, carrier, rehabilitation
specialist, or reemployment benefits administrator to
request medical or other information that is not
applicable to the employee's injury."
Number 0430
JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska
State Legislature, explained that amendment G.1 says the only
information the adjuster can request when an employee first files
a request for benefits is information applicable to the
employee's injury. Currently, some adjusters send a form wanting
to know "everything" including the employee's educational
records, employee history, military service, and medical history.
This amendment would just put some sidebars on that. It does not
interfere with the ability to request additional information.
Number 0526
REPRESENTATIVE HALCRO made a motion to adopt amendment G.1 [text
provided above], to be marked Amendment 1. He objected for the
purpose of asking a question. Referring to the phrase, "that is
not applicable to the employee's injury," he asked about
investigative questions such as "Have you been drinking?" or
"Have you done drugs?"
MS. SEITZ said that probably would be applicable to the
employee's injury if the employer had reason to suspect that.
REPRESENTATIVE HALCRO withdrew his objection.
CHAIRMAN ROKEBERG said the intent was to prevent a "fishing
expedition" when an employee bumps a toe and has to give a whole
life history. He indicated that there being no further
objection, Amendment 1 was adopted.
CHAIRMAN ROKEBERG turned attention to amendment G.2, saying the
committee had heard from Mr. Dick Block regarding religious non-
medical treatment. He said the amendment "is primarily for
Christian Scientists." Amendment G.2 [1-LS1418\G.2, Ford,
3/20/00] read:
Page 2, line 2, following "schedule;":
Insert "relating to the effect of religious
nonmedical treatment on workers' compensation
coverage;"
Page 12, following line 31:
Insert a new bill section to read:
"* Sec. 20. AS 23.30 is amended by adding a new
section to read:
Sec. 23.30.280. Coverage for religious nonmedical
health care services. Nothing in this chapter shall be
construed to prevent an employee with an injury from
relying in good faith on religious nonmedical services
for healing through prayer alone or care through
religious nonmedical nursing services provided by an
individual, a nursing facility, or a visiting nurse
service without incurring a loss or reduction of
compensation or benefits due under this chapter. This
section does not exempt an employee from submitting to
an examination by a physician or surgeon as required
under AS 23.30.095(e)."
Renumber the following bill sections accordingly.
Page 13, line 6:
Delete "19"
Insert "20"
Page 13, line 7:
Delete "20"
Insert "21"
Page 13, line 8:
Delete "21"
Insert "22"
Number 1616
REPRESENTATIVE HALCRO made a motion to adopt amendment G.2 [text
provided above], to be marked Amendment 2. There being no
objection, Amendment 2 was adopted.
Number 0631
REPRESENTATIVE HALCRO made a motion to move HB 419 [Version G, 1-
LS1418\G, Ford, 3/7/00], as amended, out of committee with
individual recommendations and the three attached fiscal notes.
There being no objection, CSHB 419(L&C) moved out of the House
Labor and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:15 p.m.
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