Legislature(1997 - 1998)
01/22/1997 03:12 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 January 22, 1997 3:12 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Jerry Sanders Representative Joe Ryan MEMBERS ABSENT Representative Eric Croft Representative Gene Kubina OTHER HOUSE MEMBERS PRESENT Representative Tom Brice COMMITTEE CALENDAR OVERVIEW: DEPARTMENT OF LABOR *HOUSE BILL NO. 41 "An Act relating to impairment rating guides used in evaluation of certain workers' compensation claims." - MOVED HB 41(L&C) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 41 SHORT TITLE: IMPAIRMENT RATING GUIDES FOR WORKERS COMP SPONSOR(S): REPRESENTATIVE(S) ROKEBERG JRN-DATE JRN-PG ACTION 01/13/97 38 (H) PREFILE RELEASED 1/3/97 01/13/97 38 (H) READ THE FIRST TIME - REFERRAL(S) 01/13/97 38 (H) LABOR & COMMERCE 01/22/97 (H) L&C AT 3:00 PM CAPITOL 17 WITNESS REGISTER TOM CASHEN, Commissioner Department of Labor P.O. Box 21149 Juneau, Alaska 99802 Telephone: (907) 465-2784 POSITION STATEMENT: Overview on the Department of Labor REBECCA NANCE, Director Division of Employment Security Department of Labor P.O. Box 25509 Juneau, Alaska 99802 Telephone: (907) 465-4537 POSITION STATEMENT: Explained Unemployment Insurance Program ED FLANAGAN, Deputy Commissioner Office of the Commissioner Department of Labor P.O. Box 21149 Juneau, Alaska 99802 Telephone: (907) 465-2784 POSITION STATEMENT: Answered questions on the Department of Labor ARBE WILLIAMS, Director Division of Administrative Services Department of Labor P.O. Box 21149 Juneau, Alaska 99802 Telephone: (907) 465-2720 POSITION STATEMENT: Centralizing services in the Department of Labor PAUL GROSSI, Director Division of Workers' Compensation Department of Labor P.O. Box 25512 Juneau, Alaska 99802 Telephone: (907) 465-2790 POSITION STATEMENT: Testified on HB 41 CRYSTAL SMITH, Legal Administrator Office of the Attorney General Department of Law P.O. Box 110300 Juneau, Alaska 99811 Telephone: (907) 465-3600 POSITION STATEMENT: Testified on HB 41 DEBORAH BEHR, Assistant Attorney General Legislation and Regulations Section Civil Division Department of Law P.O. Box 110300 Juneau, Alaska 99811 Telephone: (907) 465-3600 POSITION STATEMENT: Testified on HB 41 MIKE FORD, Attorney Legislative Legal and Research Services Legislative Affairs Agency 130 Seward Street, Suite 409 Juneau, Alaska 99081 Telephone: (907) 465-2450 POSITION STATEMENT: Testified on HB 41 ACTION NARRATIVE TAPE 97-1, SIDE A Number 001 The House Labor and Commerce Standing Committee was called to order by Chairman Rokeberg at 3:12 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson, Ryan and Sanders. He also noted Representative Brice was in attendance. CHAIRMAN NORMAN ROKEBERG welcomed everybody to the meeting and indicated a quorum was present. He introduced Committee Secretary/Supervisor of House Records Cathy Wood, Chief of Staff/Committee Aid, Shirley Armstrong, and Staff Member Janet Seitz. CHAIRMAN ROKEBERG stated that there were two items on the agenda for the Department of Labor; the back issues of Alaska's Economic Trends and Title 23. He announced there would also be a public hearing on HB 41. Number 193 CHAIRMAN ROKEBERG announced a brief at ease at 3:15 p.m., to wait for the arrival of Tom Cashen, Commissioner of the Department of Labor, (DOL). CHAIRMAN ROKEBERG called the meeting back to order at 3:19 p.m. He asked Commissioner Cashen what was on the DOL's agenda this year. Number 280 COMMISSIONER TOM CASHEN, Commissioner, Department of Labor, referred to a pie chart giving the DOL five-tenths of 1 percent of the state budget. He stated that the DOL has taken $276,000 in general fund budget cuts and a $1.2 million cut in the federal side of the budget. The DOL has had to delete 18 full-time positions and laid off nine people. The Governor has given the DOL a $100,000 cut for 1997. The DOL will continue to operate as before, with less funds. In the case of heavier cuts, in the million dollar range, the DOL will have to start to cut programs. Commissioner Cashen stated that the DOL is trying to implement efficiencies in each department due to the budget cuts and increased work load. He asked if the committee had any questions regarding the DOL. Number 526 CHAIRMAN ROKEBERG asked if the DOL was doing anything to streamline or consolidate the organization. For example, Colorado is consolidating all of its employment security operations into a single location. Number 578 REBECCA NANCE, Director, Division Employment Security, Department of Labor, stated she has been working on the inefficiencies in the Unemployment Insurance Program. Colorado has one unemployment insurance call center which handles all of the unemployment insurance claims by phone or mail and will be handling claims strictly telephonically. The DOL will always offer the option of mail claims due to the rural nature of the state of Alaska. Ms. Nance indicated the DOL has three toll-free call centers. The call center has cut overtime by 95 percent; last year the cost of overtime was $5,000 verses the previous year of $90,000. In addition, the service is more convenient for the claimants by eliminating office visits. Number 696 CHAIRMAN ROKEBERG asked if the federal government has increased the minimum wage law, indicating that Alaska has an automatic step above the federal minimum wage. Number 719 COMMISSIONER CASHEN answered that in October of 1996, the federal minimum wage increased 50 cents to $4.75. In October of 1997, the federal minimum wage will increase 40 cents to $5.15. Alaska law states that the State's minimum wage will be 50 cents higher than the federal minimum wage. The State's minimum wage is $5.25 and will increase to $5.65 in October 1997. Commissioner Cashen stated that he would like to see Alaska's state minimum wage $1.00 higher that the federal minimum wage. Number 831 REPRESENTATIVE JOHN COWDERY referred to the Labor Relations Agency's classified employees who are partially exempt because they became political appointees. ED FLANAGAN, Deputy Commissioner, Office of the Commissioner, Department of Labor, indicated Representative Cowdery might be referring to the Labor Negotiator positions in the Department of Administration, (DOA). The DOL's Labor Relations Agency is for employees who administer the labor relations functions but do not negotiate contracts. It is the state equivalent of the National Labors Relations Bureau (NLRB) which is not classified as a union position because it oversees union processes. REPRESENTATIVE COWDERY asked if it was classified as a union position in the past. MR. FLANAGAN replied it was not. Number 955 REPRESENTATIVE BILL HUDSON inquired if the federal government, possibly in connection with the block grants is proposing anything that might diminish or increase the budget, especially since the largest share of the DOL's money, $60 million, is federal monies. Number 979 COMMISSIONER CASHEN replied that it is one of the reasons the DOL has started the Unemployment Insurance (UI) reorganization. He spoke with Senator Stevens, who advised that the DOL is fine for now but plans should be made in the future because of anticipated reductions. Number 1017 REPRESENTATIVE JOE RYAN indicated that the various departments have their own data processing sections and inquired if there were any plans for a central data processing system that all departments could access. Number 1040 ARBE WILLIAMS, Director, Division of Administrative Services, Department of Labor, stated that a couple of years ago the DOL was installing a new application to run the UI called DB2. Texas Instruments had the original contract with the DOL, which has since doubled running into the four million dollar range. The division, as a result, has been discussing how they would be able to control its costs internally with a good data processing operation. Ms. Williams noted that this operation would have to support services and not supplant services due to cost. MS. WILLIAMS indicated that four years ago the DOL consolidated its main frame applications with the DOA. For past three years the division's costs of data processing were capped due to the division's development mode, in effect the division was paying $1.2 million when the usage was $4.2 million. The DOL could not afford to increase its usage at this cost rate. A systems programmer was able to cut usage to $1.6 million by centralizing services in data processing. Ms. Williams stated, "But if you get those services too far out beyond the programs, then they become efficient services that are not necessarily providing good support to the programs." She does not feel centralizing the DOL's data processing operation with the DOA would be effective. Number 1280 REPRESENTATIVE HUDSON asked how the DOA absorbs the DOL's loss. Number 1288 MS. WILLIAMS replied that the DOL's cap was to end July 1, 1997. The DOA accommodated their overhead to the $1.6 million. She stated that the DOL does not plan to go over the $1.6 million because that would result in program cuts. REPRESENTATIVE HUDSON stated that the legislature needs to review what's going to happen in 1997. Number 1306 MS. WILLIAMS replied the DOA understands that the DOL is not going to pay them more that $1.6 million because the DOL's usage will not surpass that. She believes the DOA has accommodated the $1.6 million internally into its 1998 plans. She also stated that there is one-half to one million dollars leeway in the anticipated usage of resources. REPRESENTATIVE HUDSON asked if the changes that positively affect the DOL will negatively affect the state through the DOA and thought this needed to be examined. He asked if the DOL had their own mainframe. MS. WILLIAMS replied that the DOL does not have their own mainframe, they are with the DOA. She indicated the steps the DOL has taken to come within the Department's budgeted allocation will not adversely affect the DOA. REPRESENTATIVE HUDSON asked if the DOL will continue to use the DOA's mainframe capacity. MS. WILLIAMS replied yes for now. She indicated that because the technology is changing they did not want too far ahead. The DOL and the DOA are meeting every three months, to assess what the usage and program needs are. They are constantly looking at options as to whether they will change to a mainframe environment or a distributed network environment or something in between the two. Number 1414 REPRESENTATIVE HUDSON asked if the DOL finalized its 1998 budget. MS. WILLIAMS replied they had finalized it and expect that through 1998 they will not be moving off the mainframe since the DOL has been so successful in coming within the budget. Number 1432 REPRESENTATIVE HUDSON asked for the location of the 50 cent increase. Number 1447 MR. FLANAGAN stated it was located in AS 23.10. CHAIRMAN ROKEBERG asked Commissioner Cashen to introduce his staff. Number 1465 COMMISSIONER CASHEN introduced his staff at the Department of Labor: Paul Grossi, Director of Worker's Compensation; Al Dwyer, Director of Labor Standards and Safety; Dwight Perkins, Special Assistant; Steve Schlaffman, Deputy Director of Employment Security; Dan Knouse, Budget Director of Employment Security; and Mike Helms, Budget Analyst. HB 41 - IMPAIRMENT RATING GUIDES FOR WORKERS COMP Number 1568 CHAIRMAN ROKEBERG announced House Bill 41 was next on the agenda, "An Act relating to impairment rating AMA Guides used in evaluation of certain workers' compensation claims." Chairman Rokeberg indicated he was the sponsor of the bill and stated, "This seemingly is a very simple bill. It was introduced two years ago in the first session of the Nineteenth Legislature by Representative Bettye Davis and I signed on immediately as a cosponsor of the bill. The -- and one reason I was aware of that the people and the underwriters in the workers' comp insurance business were desirous of having legislation to make immediate adoption of the American Medical Association Impairment Guide. And the bill it did -- it took two years to wind its way through the legislature and during which time, and if I - perhaps Mr. Grossi later can explain the exact time frame -- and one of the most urgent portions of the former bill was the adoption of the guide, but it did go through the regulatory process that took almost two years to get it adopted. So the urgency of the bill is not with us now because the latest edition has been adopted by regulation, but the purpose and intention of the bill is to make - which is part of the older bill - is to make this an automatic procedure in the future, thereby, also saving the state the expense of going through the Administrative Procedures Act and adopting the whole enchilada in terms of regulation." Number 1921 CHAIRMAN ROKEBERG stated, "One issue that came up was the original bill had a 60-day window and after testimony in the HESS (Health, Education and Social Services) Committee last year, we did adopt the 90-day time frame. So at the last hour, it was brought to our attention that there may be some corrective things done to it. Before I go any further, we'll ask for some testimony from the folks that have signed in and I would ask the Mr. Paul Grossi lead off the testimony." PAUL GROSSI, Director, Division of Workers' Compensation, Department of Labor, explained permanent partial impairment and how it fits into HB 41. He gave the example of a injured worker, deemed disabled/medically unstable, and receiving temporary total disability benefits. The employee will receive those benefits until he or she becomes medically stable, at which time the employee has a permanent physical impairment. The employee is then rated and either released to go back to work receiving a lump sum based on the permanent partial impairment rating or they may have to go back to training. The DOL is required by Section 1, AS 23.30.190 as it currently exists to use the AMA Guides. The problem the DOL encounters is the AMA Guides are published as changes occur in the science. The way HB 41 exists now requires the DOL to pass a regulation before they can use the next edition. The intent of this amendment is to allow the DOL to use the newly published AMA Guides without promulgation of a regulation. The Department of Law has informed the DOL that there are problems with the way the amendment is written. Mr. Grossi stated that the DOL, and the Workers' Compensation Board, support the amendment to HB 41 because promulgation of a regulation can prevent the most current science from being implemented in the rating of the impairments, negatively affecting both the employee and the involved insurance companies. Mr. Grossi added this amendment would eliminate the expense of having to issue a regulation every time the new AMA Guide is issued. Number 1921 CHAIRMAN ROKEBERG asked what was the time frame for adoption the regulation. MR. GROSSI stated a year and a half. CHAIRMAN ROKEBERG indicated the latest AMA Guide was published January of 1995 and the regulation was adopted in April of 1996. The time delay of the regulatory process caused many physicians and other users of the AMA Guides to not have access to the AMA Guides. MR. GROSSI stated that when the AMA issues a new edition they stop publishing the previous edition. There was a period of time because of the delay in regulation when users did not have access to the AMA Guides. Number 1993 REPRESENTATIVE COWDERY asked if there had been any objections to HB 41. MR. GROSSI replied that there was testimony by Alaska Public Interest Group (AKPIRG) but it was not against the automatic adoption, it was over the use of the permanent partial impairment as a system. Number 2046 REPRESENTATIVE TOM BRICE asked if there were any changes to the AMA Guide by the State in regards to permanent partial impairment. MR. GROSSI replied that there are no additional changes, besides the change to use the most recent edition of the AMA Guide. REPRESENTATIVE BRICE asked if within the contents of the most recent edition has there ever been a need to issue changes. MR. GROSSI replied no and added that it is the opinion of everyone he has talked to doctors, insurance agencies, workers' compensation attorneys and the Workers' Compensation Board that the sooner the use of the most recent AMA Guide can be implemented the better off everyone will be. The DOL supports the legislation that will bring about that change. Number 2107 REPRESENTATIVE HUDSON asked if the Department of Law had a problem with the regulation. MR. GROSSI answered the Department of Law has a technical problem with determining the exact date the publication would be in effect. Number 2176 CHAIRMAN ROKEBERG indicated it was the intention of the chair to move HB 41 today and asked Crystal Smith, Legal Administrator, to talk about the Department of Law's technical problem with the amendment. CRYSTAL SMITH, Legal Administrator, Office of the Attorney General, Department of Law, stated the Department did not notice the problem when HB 41 was reviewed last session. She feels there needs to be a process to establish the date that the new AMA Guides would be adopted. House Bill 41 currently states that they need to be in effect within 90 days. This gives the interpretation that the DOL still needs to go through the regulation process to establish the effective date. The Department of Law is suggesting a process of setting a date, that would eliminate the regulatory process. Such as, issuing a specific time for a board meeting after the new AMA Guides were published to determine when they would adopt the new rating standards. Number 2272 DEBRA BEHR, Assistant Attorney General, Legislation and Regulation Section, Civil Division, Department of Law, stated HB 41 does not accomplish the full goal of the committee to have the AMA Guides come in effect without having to go through the regulation process. House Bill 41 currently states that the board is to begin using the new AMA Guides within a 90-day period, which could be any day within those 90 days. Ms. Behr believes the public has a right to know what the date is and should be involved in the process of when to start applying the new AMA Guide. She stated the AMA Guide effects the public's rights and responsibilities, for example an employee may receive a better outcome under the old or new AMA Guide. The amendment would require the board to hold a meeting declaring the new AMA Guide's effective date. The Department would issue a press release to notify the public and also include the date in the Department's bulletin to notify the employees involved in the Workers' Compensation System that the new AMA Guide is in effect. The last sentence of the amendment states that there does not have to have a regulation to issue and effective date. Ms. Behr anticipated the board could issue the date at a regularly scheduled meeting, a telephonic meeting, or hold a special meeting. She addressed the option of issuing a firm date, for example 90 days from X, except that the AMA does not have a firm date from which to count those 90 days. This can cause debate on when those 90 days start. The amendment the Department of Law is suggesting will accomplish the goal with minimum cost. Number 2378 REPRESENTATIVE BRICE stated that he thought the AMA would have a specific publishing date. MS. BEHR responded that most publications give a month and a year but not a specific date with the month. REPRESENTATIVE BRICE asked if the publishing company would a have a more specific date. MS. BEHR said then there is ambiguity as to whether published means published in the state of Alaska, or when the printer received the document, creating further problems. The most direct way would be to allow the board to meet, taking in the concerns of the public and setting a date that takes in the concerns of the State of Alaska. Number 2441 CHAIRMAN ROKEBERG stated that there was some concern that the board could set a date that was after the 90-day period. He questioned if the language in AS 23.10.190 (b) was strong enough to prevent that situation. Number 2454 MS. BEHR felt that in the circumstance of litigation, a court would have to conclude that the board would have to set the date within 90 days. However, she does not have an objection if the committee would like to do a technical amendment to include the 90 days in both places of the amendment. TAPE 97-1, SIDE B Number 001 CHAIRMAN ROKEBERG suggested language stating the new AMA Guide is to be adopted precisely 90 days after publication. He asked Mike Ford, Attorney for Legislative Legal Affairs and drafter of HB 41, to give his opinion on the statutory draftsmanship of the amendment to this issue. MIKE FORD, Attorney, Legislative and Research Services, Legislative Affairs Agency, believes there are two options: either craft a mechanism in statute to fix a set day as to when the new edition would take effect or allow the board to set a day by giving the board parameters. He stated the problem with fixing a date is, as the legal department discussed, identifying the date of publication. However, the option of giving the board parameters would still require a guideline to set those parameters. CHAIRMAN ROKEBERG believed AS 23.30.190 (d) set the parameters for the board. He asked Mr. Ford if he had any suggestions that would further clarify (d) but leaving the language alone in AS 23.30.190 (b). Chairman Rokeberg felt that the language in AS 23.30.190 (b) gives the board the flexibility to meet within the 90 days and presumably the board would meet and set the date inside those 90 days. Number 100 MR. FORD felt in order to be absolutely certain, the 90-day requirement should be crafted on to AS 23.30.190 (d) making it clear that the board has to act within a certain period. However, in doing this, the problem still exists in how that period would be measured. He feels the board needs a more precise parameter of when to act. CHAIRMAN ROKEBERG asked Mr. Ford to suggest parameters for the setting of a date. MR. FORD asked if there was a month of publication. Number 157 MR. GROSSI passed around the AMA Guide which contained a month but not an exact date of publication. REPRESENTATIVE BRICE asked if the DOL acknowledges a specific date when they receive the AMA Guide, as most official agencies stamp the date of receipt on all in-coming mail. MR. GROSSI stated that the DOL receives advance notice from the AMA of the new edition for ordering purposes. REPRESENTATIVE RYAN stated that publishers may vary in their particular time of publication and they do not usually do not usually distribute the publications. A distribution company will list a date that the publication will be available for distribution or sale. Representative Ryan felt the distribution date could be used as a benchmark. Number 240 REPRESENTATIVE JERRY SANDERS asked if the 90 days could be started from the last day of the month of publication. MR. FORD suggested that the board could set the day that the new AMA Guide becomes effective, and require the board to act within a certain period. If the month is ascertainable it could read "not later than 90 days after the last day of the month of publication." That would allow the board to take public testimony in case they had a conflict with a particular day. Mr. Ford stated he could prepare the wording. CHAIRMAN ROKEBERG stated he would like to adopt it as a conceptual amendment and then provide for a committee substitute. Number 295 REPRESENTATIVE HUDSON made a motion adopt the amendment. CHAIRMAN ROKEBERG upon hearing no objection, it was so ordered. He stated it would be called Amendment 1. MR. FORD suggested that Section 1, AS 23.30.190, be dropped and the amended version of Section 2, AS 23.30.190, including Amendment 1, be used as the only section of HB 41. Mr. Ford stated that without doing this, HB 41 would require all determinations to be made under the most recent published edition, creating a period the most recently published edition would not be in effect because the board still has to act. The replacement HB 41 with the amended language from the Department of Law, with Amendment 1 would accomplish the committee's goal. Number 363 CHAIRMEN ROKEBERG asked Mr. Ford to draft an amendment to the amendment with the 90-day language in front of the committee in order to move HB 41. MR. FORD stated on page 1, lines 4 through 13 be deleted and insert the amendment, to now be Section 1, AS 23.30.190 with the new (d), after edition in the first sentence, "the meeting required under the subsection shall be held not later than 90 days after the last day of the month of publication. Number 455 MS. SMITH stated that it was not that the board meeting had to be within 90 days, but the effective date was to be within 90 days. The board meeting could actually be held prior to the last day of the month of publication. MR. GROSSI stated that it depended on when the DOL received notice from the AMA, it may be that a meeting could be held prior to the effective date. MR. FORD stated that there are two time frames: when the board meets and the period within which the board has to select an effective date. MS. SMITH suggested to tighten up the 90-day language for the time frame of the board meeting. Number 510 CHAIRMAN ROKEBERG stated it to be the intention of the Chair that both the meeting and the selection of the date occur within 90 days. He said, "With the indulgence of the committee and with the great faith in our legal counsel's ability to wordsmith it and if the Department of Law and the DOL agree to this conceptual amendment (shaking heads yes) with these additions we move the amendment to the amendment." Number 572 REPRESENTATIVE COWDERY made a motion to adopt the amendment to Amendment 1. CHAIRMAN ROKEBERG there being no objection, it was so ordered. REPRESENTATIVE HUDSON stated the committee has HB 41, as amended, before them with some conceptual words missing as authorized by Mr. Ford and the Department of Law. He made a motion to move HB 41, as amended, out of committee with individual recommendations. Number 593 CHAIRMAN ROKEBERG there being no objection, CSHB 41(L&C) moved out of the House Labor and Commerce Committee. ADJOURNMENT Number 642 CHAIRMEN ROKEBERG adjourned the House Labor and Commerce Committee meeting at 4:20 p.m.