Legislature(1995 - 1996)
03/15/1995 03:06 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 15, 1995 3:06 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Norman Rokeberg, Vice Chairman Representative Brian Porter Representative Jerry Sanders Representative Kim Elton Representative Beverly Masek Representative Gene Kubina MEMBERS ABSENT All members present COMMITTEE CALENDAR HB 17: "An Act relating to the titles that describe the two principal executive officers of electric and telephone cooperatives." PASSED CSHB 17(L&C) OUT OF COMMITTEE HB 46: "An Act relating to the practice of architecture, engineering, and land surveying." PASSED OUT OF COMMITTEE HB 180: "An Act relating to liquor licenses issued to a hotel, motel, resort, or similar establishment; and providing for an effective date." PASSED OUT OF COMMITTEE *HB 237: "An Act relating to workers' compensation insurance rate filings; to second independent medical evaluations for workers' compensation claims; to immunity for third-party design professionals from civil actions by recipients of workers' compensation benefits; to workers' compensation death benefits; to computation of workers' compensation benefits; to penalties for fraudulent acts related to workers' compensation; to immunity for employer workplace safety inspections related to workers' compensation insurance; and providing for an effective date." PASSED OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 17 SHORT TITLE: OFFICERS OF UTILITY COOPERATIVES SPONSOR(S): REPRESENTATIVE(S) GREEN JRN-DATE JRN-PG ACTION 01/06/95 25 (H) PREFILE RELEASED 01/16/95 25 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 25 (H) STATE AFFAIRS, LABOR & COMMERCE 02/07/95 (H) STA AT 08:00 AM CAPITOL 102 02/07/95 (H) MINUTE(STA) 02/10/95 293 (H) STA RPT CS(STA) NEW TITLE 6DP 1NR 02/10/95 294 (H) DP: JAMES, PORTER, GREEN, ROBINSON 02/10/95 294 (H) DP: WILLIS, OGAN 02/10/95 294 (H) NR: IVAN 02/10/95 294 (H) ZERO FISCAL NOTE (DCED) 03/01/95 (H) L&C AT 03:00 PM CAPITOL 17 03/01/95 (H) MINUTE(L&C) 03/06/95 (H) MINUTE(L&C) 03/15/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 46 SHORT TITLE: ARCHITECT, ENGINEER & SURVEYOR REGULATION SPONSOR(S): REPRESENTATIVE(S) GREEN JRN-DATE JRN-PG ACTION 01/06/95 32 (H) PREFILE RELEASED 01/16/95 32 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 33 (H) LABOR AND COMMERCE, STATE AFFAIRS 03/08/95 (H) L&C AT 03:00 PM CAPITOL 17 03/08/95 (H) MINUTE(L&C) 03/15/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 180 SHORT TITLE: LIQUOR LICENSES FOR RESORT/LODGES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 02/15/95 369 (H) READ THE FIRST TIME - REFERRAL(S) 02/15/95 369 (H) ITT, CRA, L&C 02/21/95 (H) ITT AT 02:30 PM CAPITOL 408 02/21/95 (H) MINUTE(ITT) 02/22/95 446 (H) ITT RPT 2DP 5NR 02/22/95 446 (H) DP: JAMES, MASEK 02/22/95 446 (H) NR: KOTT, PORTER, ROBINSON, NICHOLIA 02/22/95 446 (H) NR: AUSTERMAN 02/22/95 446 (H) ZERO FISCAL NOTE (REV) 03/07/95 (H) CRA AT 01:00 PM CAPITOL 124 03/07/95 (H) MINUTE(CRA) 03/08/95 636 (H) CRA RPT 2DP 3NR 03/08/95 636 (H) DP: VEZEY, KOTT 03/08/95 636 (H) NR: ELTON, AUSTERMAN, IVAN 03/08/95 636 (H) ZERO FISCAL NOTE (REV) 2/22/95 03/15/95 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 237 SHORT TITLE: WORKERS' COMPENSATION AMENDMENTS SPONSOR(S): REPRESENTATIVE(S) MULDER BY REQUEST, Porter JRN-DATE JRN-PG ACTION 03/06/95 597 (H) READ THE FIRST TIME - REFERRAL(S) 03/06/95 598 (H) LABOR & COMMERCE, JUDICIARY 03/08/95 630 (H) JOURNAL CORRECTION 03/15/95 (H) L&C AT 03:00 PM CAPITOL 17 WITNESS REGISTER GEORGE DOZIER, Legislative Aide to Representative Pete Kott Alaska State Legislature State Capitol, Room 432 Juneau, AK 99811 Telephone: (907) 465-3777 POSITION STATEMENT: Explained changes to HB 17 REPRESENTATIVE JOE GREEN Alaska State Legislature State Capitol Room 24 Juneau, AK 99801-1182 Telephone: (907) 465-4931 POSITION STATEMENT: Prime sponsor HB 17 and HB 46 WILLIS KIRKPATRICK, Director Division Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, AK 99811-0807 Telephone: (907) 465-2549 POSITION STATEMENT: Provided information on HB 17 DAVE HUTCHENS, Executive Director Alaska Rural Electric Cooperative Assoc. 703 W. Tudor Suite 202 Anchorage, AK 99503 Telephone: (907) 561-6103 POSITION STATEMENT: Testified on HB 17 MIKE TAURIANINEN P.O. Box 937 Soldotna, AK 99669 Telephone: (907) 262-4624 POSITION STATEMENT: Testified against HB 17 SHARON MACKLIN, Lobbyist Alaska Design Professionals 315 5th Street, No. 8 Juneau, AK 99801 Telephone: (907) 586-9518 POSITION STATEMENT: Testified in favor of HB 46 JIM ROWE, Executive Director Alaska Telephone Association 4341 B Street. No, 304 Anchorage, AK 99503 Telephone: (907) 563-4000 POSITION STATEMENT: Testified in favor of CSHB 46(L&C) BARBARA KOTTING Legislative Assistant to Representative Jeanette James Alaska State Legislature State Capitol, Room 102 Juneau, AK 99801-1182 Telephone: (907) 465-3743 POSITION STATEMENT: Provided sponsor statement HB 180 PAT SHARROCK, Director Alaska Alcoholic Beverage Control Board 550 W. 7th Avenue Anchorage, AK 9950 Telephone: (907) 277-8638 POSITION STATEMENT: Provide information on HB 180 REPRESENTATIVE ELDON MULDER State Capitol Room 411 Juneau, AK 99811-1182 Telephone: (907) 465-2647 POSITION STATEMENT: Prime sponsor HB 237 DARIO NOTTI, Student Intern to Senator Jim Duncan Alaska State Legislature State Capitol Room 119 Juneau, AK 99801-1182 Telephone: (907) 465-4766 POSITION STATEMENT: Testified on HB 237 MARIANNE BURKE, Director Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0808 Telephone: (907) 465-2515 POSITION STATEMENT: Provided information on HB 237 WILLY VAN HEMERT, Civil Engineer Member, Ad Hoc Labor Management Committee on Workers' Compensation Reform 3900 Arctic Blvd. No. 304 Anchorage, AK 99503 Telephone: (907) 562-3252 POSITION STATEMENT: Testified in favor of 237 KEVIN DOUGHERTY, General Council Alaska Laborers Co-Chair, Ad Hoc Labor Management Committee on Workers' Compensation Reform 2501 Commercial Dr. Anchorage, AK 99577 Telephone: (907) 276-1640 POSITION STATEMENT: Testified in favor of *HB 237 ACTION NARRATIVE TAPE 95-17, SIDE A Number 000 The House Labor & Commerce Standing Committee was called to order by Chairman Pete Kott at 3:06 p.m. Members present at the call to order were Representatives Kott, Sanders, Elton, Kubina, and Porter. Members absent were Masek and Rokeberg. CHAIRMAN PETE KOTT stated that there was a quorum present. He stated that the order of business would be HB 17, HB 46, HB 180 and HB 237. HL&C - 03/15/95 HB 17 - OFFICERS OF UTILITY COOPERATIVES CHAIRMAN KOTT explained that HB 17 was back before the committee because the drafting attorney had some concerns with the committee substitute (CS) version G. He said that they now had a new CS version K, dated March 6, 1995 before them. Number 058 CHAIRMAN KOTT stated, for the record, Representative Masek joined the meeting at 3:10 p.m. Number 067 GEORGE DOZIER, LEGISLATIVE AIDE TO REPRESENTATIVE PETE KOTT, gave the following explanation of the new CS for HB 17 version K. He explained that the CS version G did not amend the title to reflect the biannual report. The other concerns deal with amendment two, which was proposed by the Division of Banking, Securities and Corporations, Department of Commerce and Economic Development. The draft, as passed out by committee, required that biannual reports be due before July 2, of the reporting year; however, the information contained in the reports was due by June 30. The division felt this was not enough time for the information to be gathered and the reports to be sent in. In the new CS version K, this date was amended to July 15. Mr. Dozier continued that the third concern addresses dissolution, this on page 8, states, "the provisions of Alaska Statute 10.06 (Alaska Corporations Code) relating to involuntary dissolution of business corporations applied to telephone and electric cooperatives." He said that the drafting attorney was concerned that too much generality had been included since a number of provision governing both voluntary and involuntary dissolution's of corporations were affected. He explained that this focuses upon when a biannual report is delinquent. This provision allows the commissioner to involuntarily dissolve a corporation if it hasn't filed its biannual reports. The language in the new CS, version K, makes this clearer. The fourth concern was with subsection (b), biannual reports, addresses when reports are do but is not clear that it applies to cooperatives that already exist. He stated that no changes were made to this language. Therefore, it is his understanding that it will apply to existing cooperatives, as well as new ones. Mr. Dozier stated that finally, the drafting attorney's last concern was that the draft provided and adopted by the committee (CS version G), (indisc.--interrupted) Number 202 REPRESENTATIVE GENE KUBINA asked if a motion to delete sections 17 and 18 would be a good way to deal with this. He stated that the reason the Department of Commerce and Economic Development wasn't receiving these reports was because they were already going to the Alaska Public Utilities Commission (APUC). He pointed out this would just be adding more bureaucracy. CHAIRMAN KOTT said he would entertain that motion, once they had adopted the new CS. REPRESENTATIVE KUBINA asked Chairman Kott exactly where they were at this point. CHAIRMAN KOTT stated that they had passed out version G, but they had not yet adopted version K. Number 231 REPRESENTATIVE JERRY SANDERS made a motion to adopt version K of the CS for HB 17. CHAIRMAN KOTT asked if there were objections. Hearing none, the CS was adopted. REPRESENTATIVE KUBINA made a motion to delete sections 17 and 18, and possibly make a title change. He said, "line 4 starting with, `relating' through line 7 ending with `cooperatives'". CHAIRMAN KOTT stated, "The title would be lines 1, 2 and 3, and then providing for an effective date." REPRESENTATIVE KUBINA interjected, "The first half of line 4, `according to officers' and then `providing for an effective date'." REPRESENTATIVE ELTON stated that they may need to start on line 5, because Section 4 of the bill amends the articles of incorporation. That may need to be noted in the title `relating to the articles of incorporation' beginning after cooperatives; deleting down `to effective date'." REPRESENTATIVE KUBINA indicated the last two words on line five is where it would start. CHAIRMAN KOTT repeated `relating to' line 5 through `electric cooperatives' on line 7. Number 279 CHAIRMAN KOTT stated that the conceptual amendment is to delete sections 17 and 18, and with that there will be a noted title change. He asked Representative Green if he had a problem with this amendment. Number 288 REPRESENTATIVE JOE GREEN stated that he did not have a problem with this. Number 291 CHAIRMAN KOTT stated that they did have Amendment 1, the conceptual amendment, deleting sections 17 and 18 with a title change. He asked for any objections. Hearing none, Amendment 1 was adopted. He stated that the committee now had the CSHB 17(L&C) before them for debate. Number 305 WILLIS KIRKPATRICK, DIRECTOR, BANKING, SECURITIES AND CORPORATIONS, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, stated that every organization filing under Title 6, files a biannual report. This provides the public with information as to who the registered agents, officers and directors of corporations are. He stated that only these 37 organizations, under this chapter of Title 10, do not file biannual reports. He stated, as far as bureaucracy is concerned, they are only asking for the current names of the officers and directors of the corporations and a biannual filing fee of $100. He pointed out that when he was advised that this may be redundant filing with the Department of Commerce, he called APUC for a current list of officers and directors of Cook Inlet Rural Telephone Cooperative, Incorporated; Glacier Valley Electric; and Unalaska Electric Association, Incorporated. The APUC had no record of any of the three. He explained that this was important. If they were to have filed every other year as to their status of their corporation, with the names and addresses of the officers and directors, and if something had changed in that interim year, as was the case with Unalaska, they would have written back and said that they had been sold to the community. They would have told the Department of Commerce to cross them off their list, and they would have been out of their file. He reiterated that the department only wants them to file every other year, whether they are profit or non-profit, like every other corporation and association under Title 10. Mr. Kirkpatrick said that the APUC further stated that they did not know if they could supply him with lists of officers and directors of corporations. Number 416 REPRESENTATIVE ELTON asked why Glacier Valley was registered with his department, and were they required to be. MR. KIRKPATRICK stated that as an organization, they wanted to be protected from liability as individuals. They then incorporated under electrical cooperatives, which gives them liability from personal acts, and puts responsibility on the corporate structure. DAVE HUTCHENS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC COOPERATIVE ASSOCIATION, stated that he had testified previously on this legislation and his association does not have any strong objection to filing these biannual reports. However, they do feel that it would be far better if it were set aside and dealt with that separately the next time there is legislation dealing with the powers of the division. He stated that all of the operating entities organized as electric and telephone cooperatives do make annual reports to the APUC. He said the division should have a note in their file that says, "Requests for information should be forwarded to the APUC." Number 454 REPRESENTATIVE ELTON pointed out that in the previous meeting Mr. Hutchens had no objection to the legislation, the committee felt that this might be a good idea. He stated that he would be interested in hearing Mr. Hutchens reactions to the provision relating to involuntary dissolution of a cooperative. MR. HUTCHENS stated that this would be a very strong penalty for failing to file a biannual report. He commented that perhaps there could be an intermediate step, and if someone refused to file, dissolution could be the ultimate sanction. He stated the reason for that would be to have some systematic way of weeding out the entities no longer in business. Number 471 CHAIRMAN KOTT stated the committee members had the CSHB 17 before them. REPRESENTATIVE BRIAN PORTER asked if they had adopted the CS. CHAIRMAN KOTT stated yes. REPRESENTATIVE PORTER made a motion to move CSHB 17, as amended, out of committee with individual recommendations. REPRESENTATIVE ELTON commented that they wouldn't need the fiscal note as amended. CHAIRMAN KOTT concurred that there would be a zero fiscal note. He stated that there was a motion to move CSHB 17(L&C) from committee with individual recommendations. He asked if there was an objection. Hearing none, the CSHB 17(L&C) was passed from committee. Number 483 REPRESENTATIVE KUBINA asked if the bill goes to Rules next. CHAIRMAN KOTT stated that was correct. HL&C - 03/15/95 HB 46 - ARCHITECT, ENGINEER & SURVEYOR REGULATION The next order of business was HB 46 which the committee had heard the previous week. CHAIRMAN KOTT said there were concerns with the language being too liberal. He asked the prime sponsor of HB 46 to come forward. REPRESENTATIVE JOE GREEN, PRIME SPONSOR OF HB 46, stated that the dialogue was now being centered around the exemption portion, Section 3, of the bill. Under Article 10, the Architects, Engineers and Land Surveyors (AE&LS) had objection to the way it was written. They felt it was too broad and wouldn't adequately protect the public. He stated that currently members of the AE&LS and other factions would be governed by this legislation, and they were meeting to work out some compromised language and would have a resolution by March 20. He stated if a resolution was not worked out, there was backup language that would make Alaska like the 36 other states that have the same exemptions. Number 536 MIKE TAURIANINEN testified via teleconference that he was opposed to HB 46 as written, regarding Section 2, use of the term "engineer." He stated this was contrary to terminology in Section 3 referring to the practice of engineering. He stated that it was open for anyone to practice engineering. Mr. Taurianinen reiterated that compromise language needs to be worked out so that some engineering work done by oil companies, communications and utilities companies can be accomplished. Number 550 CHAIRMAN KOTT stated that they had the CS before them. REPRESENTATIVE GREEN commented that Mr. Taurianinen might not understand Section 2. He explained that the AE&LS had requested this language because they felt this tightens the language rather than loosens it. He explained that when leaving the word "registered" in, then a person could say, "I'm a professional engineer, hire me." He's not professing to be a registered engineer, he's just professing to being a professional engineer. By dropping the word "registered," he is illegal. REPRESENTATIVE ROKEBERG inquired if the AE&LS were meeting to compromise on a solution for this bill. REPRESENTATIVE GREEN responded that it was not a solution for the bill, but a solution for the differences of opinion of subsection 10 of Section 3. To find language that would satisfy the concerns of the AE&LS for public safety and still not burden companies that employ large numbers of engineers that are not subject to public domain was the problem. REPRESENTATIVE ROKEBERG asked if the board was working on the change or people from the various professions. REPRESENTATIVE GREEN stated that a representative from the AE&LS, Mr. Dave Adams, is working with a representative for the other entities. Number 619 REPRESENTATIVE ELTON wondered if he should be comfortable with an existing exemption that allows a four-plex to be inhabited by families that hasn't had a professional engineer or architect involved in it. REPRESENTATIVE GREEN concurred with Representative Elton. He stated that his home is one of those and the only thing he's relying on are building codes. Number 640 TAPE 95-17, SIDE B Number 000 SHARON MACKLIN, ALASKA PROFESSIONAL DESIGN COUNCIL (APDC), clarified that the meeting on March 20, would be attended by a representative from ARCO, the cable TV organization, two representatives from APDC, and one from the telecommunications industry. Number 021 REPRESENTATIVE ROKEBERG asked if that would include an architect and a land surveyor. MS. MACKLIN replied architects, engineers and land surveyors trust each other and they feel comfortable with the representation. Number 037 REPRESENTATIVE KUBINA asked what the Chairman's intention was. CHAIRMAN KOTT answered that if it was the will of the committee, they would move the bill to the House State Affairs Committee, with a letter of transmittal indicating that they would expect some movement in Section 3, subsection 10, that would take care of the language problem. REPRESENTATIVE KUBINA made the motion. CHAIRMAN KOTT stated that there was one more person on teleconference. JIM ROWE, EXECUTIVE DIRECTOR, ALASKA TELEPHONE ASSOCIATION (ATA), testified via teleconference in favor of CSHB 46. Number 083 REPRESENTATIVE KUBINA made a motion to move CSHB 46(L&C) out of committee with individual recommendations, and accompanying zero fiscal note. CHAIRMAN KOTT asked for any objections. Hearing none, CSHB 46(L&C) was passed out of committee. HL&C - 03/15/95 HB 180 - LIQUOR LICENSES FOR RESORT/LODGES CHAIRMAN KOTT stated that the next matter before committee is HB 180. Number 113 BARBARA KOTTING, LEGISLATIVE ASSISTANT TO REPRESENTATIVE JEANETTE JAMES, stated the sponsor, Representative James, had submitted this bill as a request to cover a loophole in existing liquor license laws. She explained that under current law, small lodges located in large boroughs or unified population areas cannot get liquor licenses because they do not have enough rooms. As an example, if a person wanted to develop a small lodge or tourist facility in a remote or inaccessible area of the Mat-su or Kenai Borough, the lodge would be required to have 40 rooms to obtain a full service liquor license. She stated that this was excessive and unfair, and that this is not a liquor issue, it is a business issue. She stated that Pat Sharrock was standing by to answer any questions. Number 145 REPRESENTATIVE PORTER stated that he supported the bill, but his concern was that this could be used as a way around a dry village or dry area. PAT SHARROCK, DIRECTOR, ALCOHOLIC BEVERAGE CONTROL (ABC) BOARD, responded that those dry villages probably reside in other incorporated boroughs of the state. In those areas, separate rules apply as to how or under what circumstances a liquor license could be issued, and is governed by a five mile radius rule. REPRESENTATIVE PORTER noted that the ABC Board would be looking at the proximity of the location for requests for these licenses in relation to the dry areas. MR. SHARROCK stated that the board looks closely at current licenses issued in communities on the grounds of encouraging tourism. If the board does not feel they're encouraging tourism, they suggest that the licensee comply with that or look to losing the license. REPRESENTATIVE KUBINA asked what the rational was for excluding road system places outside of towns. MR. SHARROCK asked what he meant by "excluding road systems." REPRESENTATIVE KUBINA asked what the rationale was for Glennallen or Gakona not being able to do the same thing. MR. SHARROCK stated that those communities exist in the unincorporated areas of the state. In those areas, it's not the aggregate population that determines the issuance of a license. Number 206 REPRESENTATIVE ROKEBERG asked if any resort in Southeast could apply for this if they had only ten rooms. MR. SHARROCK responded that they could if they reside within a unified municipality or borough, and were not accessible as defined by the highway definition. REPRESENTATIVE ROKEBERG asked if this included the ferry system. MR. SHARROCK said that in Title 28, it does say "including but not limited to every street, and the Alaska State Marine Highway System." REPRESENTATIVE ROKEBERG asked how many rental rooms you would have to have in the Municipality of Anchorage. MR. SHARROCK replied 50. CHAIRMAN KOTT asked Mr. Sharrock to explain the process on issuing the liquor licenses. MR. SHARROCK explained that the applicant would advertise publicly in the newspaper and post the copy at the proposed premises. The applicant, after a period of time, would then file the application with the ABC Board, who must forward a copy of the application to the local governing body. During this time it is assumed that if there is public objection, those people will appear at the assembly meeting, or before the board, when it takes up final review of the application. He concluded that if the board felt this bill would promote the proliferation of liquor licenses, they would withdraw their support immediately. Number 275 REPRESENTATIVE ROKEBERG referred to the first section, "encouraging tourist trade," and didn't feel this was a very high standard. He asked if there was any case law to back this up and how readily these licenses are granted. MR. SHARROCK stated that the board hasn't or doesn't grant any more than one or two per year. He stated that it's not that easy for an applicant to come forward and say, "I'm building a facility that has a dining room and I propose a bar." He explained that even with a minimum of ten rooms, it would be hard to find this economically viable if there is really no market for it. He pointed out the board, over the years, has not had, except in isolated cases, concern or objection about the way a facility has operated. REPRESENTATIVE ROKEBERG stated that in the first section, it states, "The board may approve issuance or transfer". He asked if this license, once it was issued and becomes personal property and has value, can be transferred to someone else subject to board approval. If this was the case, he asked if a prohibition of transfer would be a help to the board. MR. SHARROCK stated that the word "transfer" only applies as it extends to the premises for which the license was issued. He said that the license issued under this provision of the law is not relocatable. CHAIRMAN KOTT closed public testimony on HB 180. REPRESENTATIVE PORTER stated that with assurances of Mr. Sharrock and the additional coverage that these new licenses would only be in the first class cities that have the ability to protest in and among themselves, he made a motion to move HB 180 from committee, with individual recommendations, and accompanying zero fiscal notes. CHAIRMAN KOTT asked if there were any objections. REPRESENTATIVE ELTON interjected that this has a very narrow application. He said that it was going to be difficult for the legislature next year to say "no" to a resort or lodge in a non-organized borough. REPRESENTATIVE PORTER stated that the provisions under subsection (a), line 14, page 1, through line 6 of page 2, are qualifications that would apply in an unorganized borough. As mentioned, the organized boroughs and cities are having problem with the limitations on the numbers within those boundaries. He stated that they wouldn't be asked to pass legislation on outside areas because those would be dealt with by the ABC Board. CHAIRMAN KOTT stated that there was a motion to move the bill, he asked for objections. Hearing none, HB 180 was passed out of the House Labor and Commerce Committee. HL&C - 03/15/95 HB 237 - WORKERS' COMPENSATION AMENDMENTS Number 397 CHAIRMAN KOTT announced the next order of business was HB 237. REPRESENTATIVE ELDON MULDER, PRIME SPONSOR OF HB 237, stated that HB 237 was a consensus piece of legislation. He explained that for seven years they have been trying to come up with a consensus package. This agreement was reached by members from the Ad Hoc Labor Management Committee on Workers' Compensation Reform. He stated Alaska was one of the few states, west of the Mississippi, that has been able to realize a reduction in Workers' Compensation Premiums. He said that there were six provisions contained within the bill. Section 2 is the contracted premium rate adjustment, which stipulates that workers' compensation premium rates cannot be determined by the amount of money you pay your employees. It's by the amount of risk. He said that Section 3 pertains to design professional construction site liability limits. This protects professional designers, engineers and architects who may map out a plan, but through the courts have been held liable through no fault of their own. Section 4, he stated, contains an element pertaining to determination of spendable weekly wages. This is in response to the Gilmore decision which the Supreme Court threw out this summer. He stated that the death benefit section is contained in Section 6. Currently in Alaska statute, for an individual killed on the job, their surviving spouse receives their benefits up to ten years. However, after five years that benefit is diminished by one-third. From five to eight years, it is diminished by half. This legislation suggests that a more appropriate course would be to extend the benefit through ten years. Number 469 CHAIRMAN KOTT asked what the rationale was behind that. REPRESENTATIVE MULDER stated that about the time the surviving spouse is about to get on their feet, presumably by going back to school to make up for the lost income, is about the time you're going to cut back on their benefits and essentially hampering their efforts. Number 480 CHAIRMAN KOTT added that the cost would be spread out so the cost to employers would be very small. REPRESENTATIVE MULDER stated that the net increase to employers would be .006 premium rate adjustment increase. He also added that there was a very small section of the employee community that is affected. REPRESENTATIVE ROKEBERG asked why they were revising the law. REPRESENTATIVE MULDER responded that when you do a workers' compensation reform package, you seek a balance between the benefits gained by management versus the benefits gained by labor, seeking to provide a level playing field so that the net impact to the rate payer will either be neutral or negative. REPRESENTATIVE MULDER continued that there were two more provisions. The Van Bene provision which provides immunity for insurance companies that provide workplace safety inspection programs. He said that the final element, contained in Section 8, is fraud. Currently, if an employer believes an employee is guilty of fraud, their only recourse is to take it to court. This would allow the employer to go before the board, which is far simpler and less expensive. Number 531 REPRESENTATIVE KUBINA asked if the department endorses the bill. CHAIRMAN KOTT stated that the department did endorse the bill as written. Number 538 DARIO NOTTI, LEGISLATIVE INTERN TO SENATOR DUNCAN, explained he was testifying on his own behalf, and asked if the employee had the right to appeal to the courts in a fraud case. REPRESENTATIVE MULDER responded they did. Number 554 MARIANNE BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified that the Division supports the legislation. However, Section 2 has potential impact on overall premiums. Any additional administrative costs that might be incurred would have to be shared by all of the insured. She continued that if credits were received by a portion of the group, based on an average salary and credit scale, the difference in premiums will have to be made up by the remaining group members. Number 567 REPRESENTATIVE PORTER asked for a factual example of this. MS. BURKE stated, that workers' compensation premiums start out with a manual rate. Depending on different factors, you may pay more than or less than that rate based on a percentage. If you had a good record with very few claims, you would pay a smaller percentage of the manual rates. If you had many claims, you would pay a higher percentage of manual rates. She stated the method currently structured is an open ended payroll base. The starting point for developing this premium is your total payroll. If an employer has a $10 million payroll, but you limit that payroll to the average weekly salary, the total amount of money needed to pay all claims remains the same so you must collect premiums from the remaining participants. Number 598 WILLY VAN HEMERT, CIVIL ENGINEER, MEMBER, AD HOC LABOR MANAGEMENT COMMITTEE ON WORKERS' COMPENSATION REFORM, testified via teleconference that the Ad Hoc Committee was a voluntary consensus group of both labor and management. He stated that they had attempted to eliminate third party providers, such as insurance and medical providers. He pointed out that the committee is structured through organized labor and the management side is composed of members of Workers' Compensation Committee of Alaska (WCCA). He concluded by saying that this was a consensus bill that comes as a package. TAPE 95-18, SIDE A Number 000 MR. VAN HEMERT stated that not all costs related to workers' compensation benefits are directly proportionate to wages, namely medical benefits. He said that if someone breaks their arm, the benefit cost for that arm is the same. It doesn't matter if they are making $10 an hour or $25 an hour. In some cases, there is a limit on the salary cap on benefits. He said as far as rate making is concerned, the state of Alaska uses NCCI as their rate maker. Number 027 CHAIRMAN KOTT asked what Mr. Van Hemert's role was in putting the package together. MR. VAN HEMERT responded that he was a representative for WCCA, and the co-chairperson to the Ad Hoc Committee. Number 042 CHAIRMAN KOTT stated that this proposal seemed more expansive than the original proposal that the Ad Hoc Committee had been working on. MR. VAN HEMERT responded that there were a couple of things the drafters of the bill changed. Number 068 KEVIN DOUGHERTY, General Council for Alaska Laborers, Co-Chair, Ad Hoc Labor Management Committee on Workers' Compensation Reform, testified via teleconference in support of HB 237. Number 109 CHAIRMAN KOTT closed public testimony. REPRESENTATIVE PORTER made a motion to move HB 237 from committee with individual recommendations, and zero fiscal notes. CHAIRMAN KOTT asked if there was an objection. Hearing none, HB 237 was moved out of the House Labor and Commerce Committee. ADJOURNMENT There being no further business to come before the House Labor and Commerce Standing Committee, Chairman Kott adjourned the meeting at 4:40 p.m.