Legislature(2015 - 2016)BARNES 124

02/27/2015 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 32 WORKERS COMP: CONTROLLED SUBSTANCES TESTS TELECONFERENCED
Heard & Held
*+ HB 116 EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Moved HB 116 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                       February 27, 2015                                                                                        
                           3:17 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Gabrielle LeDoux                                                                                                 
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 32                                                                                                               
"An  Act relating  to employer-required  drug testing;  requiring                                                               
the  Alaska  Workers'  Compensation Board  to  adopt  regulations                                                               
relating  to   the  prescription  of  controlled   substances  to                                                               
employees;  and  relating  to   the  prescription  of  controlled                                                               
substances to employees."                                                                                                       
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 116                                                                                                              
"An Act extending the termination date of the Alcoholic Beverage                                                                
Control Board; and providing for an effective date."                                                                            
                                                                                                                                
     - MOVED HB 116 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 32                                                                                                                   
SHORT TITLE: WORKERS COMP: CONTROLLED SUBSTANCES TESTS                                                                          
SPONSOR(s): REPRESENTATIVE(s) OLSON                                                                                             
                                                                                                                                
01/21/15       (H)       PREFILE RELEASED 1/9/15                                                                                
01/21/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (H)       L&C, JUD                                                                                               
02/27/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 116                                                                                                                  
SHORT TITLE: EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD                                                                            
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/18/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/15       (H)       L&C, FIN                                                                                               
02/27/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KONRAD JACKSON, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 32 on behalf of the prime                                                                   
sponsor, Representative Kurt Olson.                                                                                             
                                                                                                                                
MICHAEL MONAGLE, Director                                                                                                       
Central Office                                                                                                                  
Division of Workers' Compensation                                                                                               
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 32.                                                                                                            
                                                                                                                                
AESHA PALLESEN, Assistant Attorney General                                                                                      
Labor & State Affairs Section                                                                                                   
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 32.                                                                                                            
                                                                                                                                
SCOTT JORDAN, Director                                                                                                          
Division of Risk Management                                                                                                     
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 32.                                                                                                                          
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance (DOI)                                                                                                     
Anchorage Office                                                                                                                
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 32.                                                                                                            
                                                                                                                                
LAURA STIDOLPH, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Presented HB  116 on  behalf of  the House                                                             
Labor &  Commerce Standing Committee, Representative  Kurt Olson,                                                               
Chair.                                                                                                                          
                                                                                                                                
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:       Presented   auditor    findings   and                                                             
recommendations and  answered questions during the  discussion of                                                               
HB 116.                                                                                                                         
                                                                                                                                
CYNTHIA FRANKLIN, Executive Director                                                                                            
Alcoholic Beverage Control Board ("ABC Board")                                                                                  
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During discussion  of  HB  116,  answered                                                             
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:17:34 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to order at  3:17 p.m.  Representatives Colver,                                                               
Tilton, Josephson,  Kito, Hughes, and  Olson were present  at the                                                               
call to order.                                                                                                                  
                                                                                                                                
        HB 32-WORKERS COMP: CONTROLLED SUBSTANCES TESTS                                                                     
                                                                                                                                
3:18:32 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 32,  "An Act  relating to  employer-required drug                                                               
testing;  requiring the  Alaska  Workers'  Compensation Board  to                                                               
adopt  regulations relating  to  the  prescription of  controlled                                                               
substances  to employees;  and relating  to  the prescription  of                                                               
controlled substances to employees."                                                                                            
                                                                                                                                
3:19:03 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON,  Staff, Representative  Kurt Olson,  Alaska State                                                               
Legislature, on behalf of the  prime sponsor, Representative Kurt                                                               
Olson,  stated that  HB 32  is  intended to  address opioid  use,                                                               
which is one of the factors  leading to the high cost of workers'                                                               
compensation  insurance  in Alaska.    The  sponsor introduced  a                                                               
similar  bill last  legislature on  the  same topic.   This  bill                                                               
would allow  for drug testing  for workers'  compensation patient                                                               
opioid  use   under  very  specific  circumstances   by  limiting                                                               
prescriptions  for opioids  to  a  30-day supply.    He said  the                                                               
bill's focus  is aimed to help  reduce the high cost  of workers'                                                               
compensation in Alaska  by addressing the epidemic  use of opioid                                                               
use  and abuse  of  prescription drugs  by workers'  compensation                                                               
patients.                                                                                                                       
                                                                                                                                
MR. JACKSON  gave a brief  section-by-section analysis of  HB 32,                                                               
relating that Section  1 would authorize drug  testing of injured                                                               
workers  if  the  employees have  been  prescribed  a  controlled                                                               
substance  for over  90  days.   He said  a  negative test  could                                                               
result in denial of future  payments for the controlled substance                                                               
by the employer,  although negative or positive  test results may                                                               
not  result  in  any  adverse employment  action.    He  directed                                                               
attention to  the "may"  language, which  is permissive  since it                                                               
does not mandate a test after 90 days.                                                                                          
                                                                                                                                
MR.  JACKSON   stated  that  Section  2   requires  the  Workers'                                                               
Compensation  Board  to  adopt   regulations  pertaining  to  the                                                               
provisions in Section 3 of HB 32.                                                                                               
                                                                                                                                
3:20:53 PM                                                                                                                    
                                                                                                                                
MR.  JACKSON  stated  Section  3   will  limit  prescriptions  of                                                               
controlled substances  listed in schedule  IA, IIIA, or VA  in AS                                                               
11.71 to  a 30-day  supply; however, an  employer or  insurer may                                                               
use an  employee's negative test  result under AS 23.10  to claim                                                               
that the  employee may  not be eligible  for future  payments for                                                               
schedule IA controlled substance  prescription.  Again, this bill                                                               
is designed to  limit and discourage use of  long-term opioids by                                                               
restricting prescriptions  to controlled  substances to  30 days,                                                               
he  said.    He  reported   statistics  that  show  one  in  four                                                               
prescriptions  is  being  used  by   someone  who  has  not  been                                                               
prescribed the  medication that employers are  paying for, either                                                               
directly or through insurer premiums.                                                                                           
                                                                                                                                
3:22:06 PM                                                                                                                    
                                                                                                                                
MR. JACKSON  emphasized that the  drugs in question are  not mild                                                               
drugs, but are  opioids, which are a synthetic  version of opium-                                                               
derived drugs  as defined in AS  11.  Higher usage  and dosage of                                                               
opioids  over  long  periods  of  time  can  lead  to  addiction,                                                               
increased disability  or work loss,  and potentially  even death.                                                               
He reported  that deaths from  overdoses have  grown dramatically                                                               
and  in many  states  have now  exceeded  deaths from  automobile                                                               
crashes.   He concluded by  stating that prescription  drug abuse                                                               
has been declared an epidemic  by the Centers for Disease Control                                                               
(CDC).                                                                                                                          
                                                                                                                                
3:23:45 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether patients  can obtain a new prescription                                                               
so long as they see their doctor.                                                                                               
                                                                                                                                
MR. JACKSON  answered yes.   The bill proposes reducing  a 90-day                                                               
prescription of controlled  substances to 30 days.   Patients can                                                               
obtain refills  by visiting their  physicians, who  can prescribe                                                               
an additional  30-day refill, if  deemed necessary.   The overall                                                               
goal is  to reduce workers'  compensation costs, but also  to get                                                               
workers  healthy and  back to  work as  quickly as  possible, and                                                               
proper pain management is a key component.                                                                                      
                                                                                                                                
3:24:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES asked  for  further  clarification if  the                                                               
drug test  is negative and the  opioids are not in  the patient's                                                               
system,  whether  it  is  possible  that  these  drugs  might  be                                                               
diverted  and  are  being  illegally sold.    She  further  asked                                                               
whether  the  statistics for  overdoses  are  for patients  being                                                               
prescribed  the  drugs or  by  people  illegally buying  diverted                                                               
prescription drugs.                                                                                                             
                                                                                                                                
MR. JACKSON replied that a negative  test may result in denial of                                                               
a  prescription refill  for controlled  substances, noting  these                                                               
costs are being  passed on to the insurer or  the employer.  Thus                                                               
if the patients do not  need the medication, their employers need                                                               
to stop  paying for  it.   He clarified that  this bill  does not                                                               
accuse   workers'   compensation   patients  of   selling   their                                                               
prescription  drugs,  in fact,  patients  may  simply be  putting                                                               
their prescriptions  in the medicine  cabinet.  This  bill allows                                                               
the  drug testing  to occur  to ensure  that patients  are taking                                                               
their medications.  If patients  have been consciously attempting                                                               
to wean themselves off their  pain medication, and some have done                                                               
so,  they must  do  so in  conjunction with  their  doctors.   He                                                               
reiterated that  this bill  does not intend  to harm  the injured                                                               
worker.    He  directed  attention  to some  of  the  reports  in                                                               
members'  packets that  provide  information  on drug  overdoses,                                                               
although he did not specifically recall the figures.                                                                            
                                                                                                                                
3:27:48 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON said  that he  has heard  that one-third  of Alaskan                                                               
workers  are subject  to random  UAs (urine  analysis) with  more                                                               
stringent  actions  allowed for  positive  tests.   For  example,                                                               
North Slope workers will lose their  jobs if they have a negative                                                               
test.   Employees of many  industries, including ones  related to                                                               
transportation, maritime,  and the military currently  subject to                                                               
drug testing, he reported.                                                                                                      
                                                                                                                                
3:28:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  said it  is a good  bill and  she supports                                                               
it.     She  emphasized  the  importance   of  reducing  workers'                                                               
compensation costs  in Alaska.   She asked whether  any employers                                                               
are  subject to  rules  regarding administering  random UAs,  for                                                               
example, whether employees are forewarned.                                                                                      
                                                                                                                                
MR. JACKSON answered that this  bill specifically addresses Title                                                               
23, which relates to workers'  compensation and does not apply to                                                               
other workers.   He clarified  that this bill applies  to injured                                                               
workers who have been taking  prescriptions opioids for more than                                                               
90 days.   However, this bill would not apply  to patients taking                                                               
prescription drugs  for opioids for  less than 90  days; instead,                                                               
the trigger  for drug testing  of workers'  compensation patients                                                               
is  for patients  have been  taking prescription  opioids for  90                                                               
days or longer.   He stated that the details  for testing will be                                                               
laid out in regulation upon passage of HB 32.                                                                                   
                                                                                                                                
3:30:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER asked  who can order the  tests, whether it                                                               
is the employer or the workers' compensation carrier.                                                                           
                                                                                                                                
MR. JACKSON answered that it is  not spelled out in the bill, but                                                               
it will be  established in regulation.  He  directed attention to                                                               
Section 1, which  allows the employer, or  essentially the claims                                                               
manager to  order the  testing.   He deferred  to Mr.  Monagle to                                                               
further address this during his testimony.                                                                                      
                                                                                                                                
3:31:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO said  this is the first time he  has seen the                                                               
bill.    He expressed  concern  that  the state  would  establish                                                               
different classes  of care for people.   He offered if  the state                                                               
believes  that it  needs  to  assure that  there  isn't abuse  of                                                               
scheduled drugs, the statutes should  apply to everyone, not just                                                               
those  receiving workers'  compensation.   However,  if there  is                                                               
further  concern   about  keep  people  from   illegally  selling                                                               
narcotics, it  is already illegal  to do  so.  He  suggested that                                                               
there  should  be  other  ways   to  investigating  whether  that                                                               
activity is  taking place.  He  did not think that  doctors could                                                               
provide evidence  to an investigator  as to whether a  patient is                                                               
potentially selling narcotics.                                                                                                  
                                                                                                                                
3:33:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO asked  how  long it  takes for  prescription                                                               
drugs listed  in schedule  IA to  clear a  patient's bloodstream.                                                               
He wondered  when workers' compensation patients  will have clear                                                               
urine analysis  tests.   He further asked  for the  percentage of                                                               
cases that  this would apply  to in  Alaska, for example,  if the                                                               
state has 100  workers' compensation cases, how  many cases would                                                               
involve prescriptions  for narcotics  beyond 30  days.   He asked                                                               
whether the  doctor will need  to refill the  prescriptions after                                                               
30 days for patients who have prescriptions for narcotics.                                                                      
                                                                                                                                
MR. JACKSON answered he is  absolutely correct that it is illegal                                                               
for anyone  to resell  prescriptions that  are not  prescribed to                                                               
them.   Thus  only pharmacies  can sell  prescription drugs.   In                                                               
terms  of the  length of  time for  opioids to  leave a  person's                                                               
system, he  surmised that it  would depend  on the body  mass and                                                               
the  drug; however,  he  was not  certain.   He  deferred to  Mr.                                                               
Monagle, but also offered to research the matter.                                                                               
                                                                                                                                
3:35:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO felt  it was important to  know what workers'                                                               
compensation   patients  were   being  testing   for  and   if  a                                                               
prescription  drug clears  in one  day or  seven days  would mean                                                               
different things.                                                                                                               
                                                                                                                                
MR. JACKSON provided  some statistics for Alaska,  noting that in                                                               
2011,  prescription  drugs comprised  almost  20  percent of  the                                                               
medical costs of  workers' compensation claims.   Over 90 percent                                                               
of  the time,  injured  workers  missing one  or  more weeks  had                                                               
prescriptions covered  by workers' compensation, of  which, 60 to                                                               
90 percent received opioids or narcotics.                                                                                       
                                                                                                                                
3:36:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO asked  for further  clarification if  he was                                                               
indicating 60 percent of 90 percent  of the 20 percent of medical                                                               
costs were for workers' compensation claims.                                                                                    
                                                                                                                                
MR. JACKSON answered yes.                                                                                                       
                                                                                                                                
3:37:09 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether that  amounted to 11 percent of injured                                                               
workers.                                                                                                                        
                                                                                                                                
MR. JACKSON deferred to Chair Olson on the math.                                                                                
                                                                                                                                
3:37:20 PM                                                                                                                    
                                                                                                                                
MR. JACKSON,  referring to  the 30-day  renewal, stated  that the                                                               
sponsor's  hope  was to  encourage  a  stronger and  more  robust                                                               
communication  between doctors  and injured  workers, which  will                                                               
allow  for 30-day  refills of  prescriptions  for opioids,  which                                                               
could encourage a conversation between  doctors and patients that                                                               
could  mean  patients  don't need  prescriptions  for  additional                                                               
drugs.                                                                                                                          
                                                                                                                                
3:38:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  asked   for   clarification  on   the                                                               
statistics.                                                                                                                     
                                                                                                                                
MR. JACKSON  responded that  20 percent of  the medical  costs in                                                               
workers'  compensation  claims  were for  prescription  drugs  in                                                               
2011.   Ninety percent of the  injured workers who missed  a week                                                               
or more received workers'  compensation prescriptions, with 60-90                                                               
percent of them receiving opioids.                                                                                              
                                                                                                                                
3:39:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said that the statistics  tell him that                                                               
injured workers  are prescribed lots  of drugs.   He contemplated                                                               
how  best  to   use  that  information  and   whether  this  bill                                                               
represents the right means to reduce costs.                                                                                     
                                                                                                                                
CHAIR OLSON  added that  HB 32  will provide one  tool to  do so.                                                               
Ultimately, he hoped that the  best practices for pain management                                                               
will be completed in the next year  or two.  Although he is not a                                                               
doctor,  it  seemed to  him  that  prescribing drugs  to  injured                                                               
workers  that were  intended  as  end of  life  drugs for  cancer                                                               
patients  without  first trying  other  options  can create  some                                                               
problems.    For  example,  after  several  months  of  being  on                                                               
opioids, injured workers are much  less likely to return to their                                                               
jobs.  He offered to  provide statistics, but reiterated that the                                                               
longer  injured workers  are on  drugs like  oxycodone, the  less                                                               
likely they are to return to work.                                                                                              
                                                                                                                                
3:41:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   asked  whether  any  study   or  data                                                               
supported  that legislation  of  this type  in  other states  has                                                               
achieved  results, in  other  words if  premium  costs were  then                                                               
reduced.                                                                                                                        
                                                                                                                                
MR. JACKSON related that Florida,  Washington, Colorado and Texas                                                               
have initiated  reforms and Texas  and Washington have  also seen                                                               
significant reductions in deaths from  opioid use.  Other states,                                                               
including Florida have restricted  physicians from dispensing and                                                               
all of those  measures have contributed to a  reduction in deaths                                                               
and  abuse  of  prescription  opioids.    He  did  not  have  the                                                               
statistics on hand, he said.                                                                                                    
                                                                                                                                
3:42:42 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON recalled  that the committee has  a relatively recent                                                               
national study from the  Workers' Compensation Research Institute                                                               
it can distribute to members.                                                                                                   
                                                                                                                                
3:43:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON related  her understanding  that long-term                                                               
use leads to addiction.   She asked whether workers' compensation                                                               
covers rehabilitation.                                                                                                          
                                                                                                                                
MR. JACKSON deferred  to Mr. Monagle to respond.   He referred to                                                               
a study  in members' packets  by the Lockton  Companies entitled,                                                               
"Opioids  Wreak  Havoc  on   Workers'  Compensation  Costs"  that                                                               
highlighted the addiction and  other problems observed throughout                                                               
the country.   He added  that members' packets also  include some                                                               
charts that show the number of deaths attributed to overdoses.                                                                  
                                                                                                                                
3:45:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TILTON asked whether  any information is available                                                               
on   prescription   paid   medicines   prescribed   in   workers'                                                               
compensation claims that have been seized in investigations.                                                                    
                                                                                                                                
MR. JACKSON  answered that he  was unsure whether  the Department                                                               
of  Public Safety  (DPS) tracks  the  source, but  he offered  to                                                               
check.    He stated  the  DPS  provided information  in  members'                                                               
packets on hydrocodone seized in 2011-2013.                                                                                     
                                                                                                                                
REPRESENTATIVE  TILTON suggested  it  may be  difficult to  track                                                               
that type of information, but it could be useful information.                                                                   
                                                                                                                                
CHAIR OLSON offered to request  any information that is available                                                               
from the department.                                                                                                            
                                                                                                                                
3:46:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO pointed  to the earlier statistics.   He said                                                               
he was surprised only 20  percent of workers' compensation claims                                                               
involve prescriptions,  but it  seemed as though  about 1  or 1.2                                                               
people  per hundred  were using  opioids.   He asked  for further                                                               
clarification on  whether there are any  anticipated cost savings                                                               
by implementing this bill.                                                                                                      
                                                                                                                                
MR.  JACKSON  answered that  not  have  the figures,  which  were                                                               
calculated  by the  National  Council  on Compensation  Insurance                                                               
(NCCI).  He  anticipated that it may take time  to quantify costs                                                               
and  savings that  may be  realized from  passage of  HB 32.   He                                                               
offered to try to obtain the information.                                                                                       
                                                                                                                                
3:48:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  asked for  further clarification  on whether                                                               
the information would be nationwide or applicable to Alaska.                                                                    
                                                                                                                                
MR.  JACKSON  answered  that  the   estimated  savings  would  be                                                               
specific to Alaska, assuming that this bill passes.                                                                             
                                                                                                                                
3:48:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  expressed  an  interest  in  identifying  a                                                               
ballpark figure of  cost savings.  He reiterated  his interest in                                                               
how  much  money  Alaska  insurers  stand  to  save  on  workers'                                                               
compensation  costs.   He suggested  that if  the state  hopes to                                                               
save money it would be good to identify any savings.                                                                            
                                                                                                                                
MR.  JACKSON  emphasized  that  he  agreed  it  is  important  to                                                               
determine  savings, plus,  another  benefit in  passing the  bill                                                               
could be the  number of people that may never  abuse narcotics or                                                               
have prescription drugs diverted and found by children.                                                                         
                                                                                                                                
3:50:17 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  stated  that approximately  half  the  states  have                                                               
enacted  similar   legislation.     He  offered  to   obtain  the                                                               
information  on  the  number  of  states  that  have  implemented                                                               
measures of this  type.  He offered his belief  that other states                                                               
have seen significant savings.                                                                                                  
                                                                                                                                
3:50:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES offered her belief  that it is important to                                                               
have  a  foundation  on  this  issue.    She  asked  for  further                                                               
clarification,  in  terms  of  protection   of  privacy,  of  how                                                               
employers  become  aware of  their  employees  being on  workers'                                                               
compensation.                                                                                                                   
                                                                                                                                
MR. JACKSON deferred to Mr. Monagle to respond.                                                                                 
                                                                                                                                
REPRESENTATIVE  HUGHES asked  for  further  clarification on  the                                                               
information that employers are provided.                                                                                        
                                                                                                                                
3:52:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON agreed  this could  be in  the workers'                                                               
best interests;  however, he imagined  that injured  workers will                                                               
be taking painkillers  and not be getting a flu  shot.  He looked                                                               
forward to a discussion on the  nature of employer being privy to                                                               
this type of medical information.                                                                                               
                                                                                                                                
3:53:51 PM                                                                                                                    
                                                                                                                                
MICHAEL MONAGLE,  Director, Central Office, Division  of Workers'                                                               
Compensation,  Department   of  Labor  &   Workforce  Development                                                               
(DLWD), said as he  consider the bill, he does not  look at it in                                                               
terms of  cost savings  to employers, but  in terms  of returning                                                               
someone back to work and  preventing people from destroying their                                                               
lives by long-term opioid use.   He recalled an instance in which                                                               
an injured  worker reached a  point of medical recovery,  but due                                                               
to extensive  use of  opioids for several  years, the  worker had                                                               
developed such  cognitive and other  impairments that  the doctor                                                               
classified the worker  as permanently disabled.  He  said that it                                                               
was those types  of concerns that this  legislation will address.                                                               
The 90  days is  identified by medical  studies as  the threshold                                                               
when the  physical problems begin to  develop.  He said  that the                                                               
curve for  employees who return  to work drops off  sharply after                                                               
90 days  on prescription pain  killers.  He explained  that under                                                               
the bill,  injured employees  under workers'  compensation claims                                                               
would  obtain  a  30-day  supply of  medication,  followed  by  a                                                               
consultation  with   their  physician   who  can   determine  the                                                               
effectiveness and necessity of  prescribing an additional 30-days                                                               
prescription  for  opioids.    In  many  cases  there  isn't  any                                                               
functional  improvement  and  the  patients  become  addicted  to                                                               
opioids and  continue to use  them.  Nationwide, the  emphasis is                                                               
to work to  wean patients off opioids after 90  days in the hopes                                                               
that patients can  discontinue these drugs and learn  how to deal                                                               
with their pain management in more constructive ways.                                                                           
                                                                                                                                
3:56:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked for further clarification  on how                                                               
employee privacy and the employer's right to know would work.                                                                   
                                                                                                                                
MR. MONAGLE  said that typically  what was meant in  referring to                                                               
the  term  "employer" in  workers'  compensation  matters is  the                                                               
employer,  the insurance  company, or  the claims  administrator.                                                               
Unless  the  entities are  self-insured,  most  employers do  not                                                               
interact with an injured worker;  instead that contact is done by                                                               
the  insurance company  or the  contracted claims  administrator.                                                               
The  claims administrator  or  claims  adjustor provides  regular                                                               
contact with the  injured worker, who reviews  the medical bills,                                                               
authorizes  payment  of  medical  bills,  and  issues  disability                                                               
checks to the  injured worker.  He reiterated  that the employer,                                                               
the insurance company,  or the claims administrator  are the ones                                                               
who  will have  access  to the  information  on the  prescription                                                               
drugs since  they are the ones  who have access to  the frequency                                                               
that  the  injured  worker  is  using  prescription  drugs.    He                                                               
suggested the  claims administrator  would initiate any  check on                                                               
the prescription, not the employer.                                                                                             
                                                                                                                                
3:58:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  the  claims  adjustors                                                               
confer to  inquiries by  small employers  and if  these adjustors                                                               
use some discretion.                                                                                                            
                                                                                                                                
MR.  MONAGLE answered  that  workers'  compensation was  excluded                                                               
from HIPAA  [Health Insurance Portability and  Accountability Act                                                               
of 1996] law  so the health care concerns between  a provider and                                                               
the  patient  does  not apply  in  workers'  compensation  cases.                                                               
Second, the provision of the  Workers' Compensation Act says that                                                               
parties to  workers' compensation  cases are  entitled to  any of                                                               
the  information about  that case,  which includes  the employer,                                                               
the injured worker and their  representatives, such as the claims                                                               
administrator or  legal counsel.   Thus any of the  parties would                                                               
have access to the information, he said.                                                                                        
                                                                                                                                
3:59:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  any  current  statutes                                                               
requires drug  testing other than  for those  employees operating                                                               
heavy equipment or for commercial carriers.                                                                                     
                                                                                                                                
MR.  MONAGLE answered  that  AS  23.10.600-699 outlines  employer                                                               
drug testing.   First, drug testing  is a voluntary system  so it                                                               
is not mandatory  for any employer to test.   Drug testing is not                                                               
administered by  the state, but  is left open to  private action.                                                               
He  suggested  that if  employees  feel  their rights  have  been                                                               
violated, their  recourse is civil.   It goes  on to say  that an                                                               
employer  must meet  certain requirements  in order  to put  in a                                                               
policy for drug  testing, for example, providing  employees a 30-                                                               
day  notice prior  to implementing  a plan,  as well  as advising                                                               
them of the conditions of  testing, including the substances that                                                               
will be tested.   These statutes also provide  remedies for those                                                               
whose confidentiality  has been  violated or  who suffer  a false                                                               
positive test  that occurred  through negligence  on the  part of                                                               
the employer or the person doing the testing for the employer.                                                                  
                                                                                                                                
4:01:41 PM                                                                                                                    
                                                                                                                                
AESHA  PALLESEN,  Assistant  Attorney   General,  Labor  &  State                                                               
Affairs Section,  Civil Division  (Anchorage), Department  of Law                                                               
(DOL), agreed that  provisions are generally set out  in AS 23.10                                                               
for drug  testing and  that Section  1 of this  bill would  add a                                                               
section to that  drug testing regime for a  negative drug testing                                                               
in workers' compensation cases.                                                                                                 
                                                                                                                                
4:02:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO recalled Mr.  Monagle mentioned a patient who                                                               
was on  opioids for a  long period  of time; however,  he offered                                                               
his belief  that this bill would  not do anything about  that and                                                               
would only  allow an action to  be taken if someone  had not been                                                               
taking prescribed opioids.                                                                                                      
                                                                                                                                
REPRESENTATIVE  KITO  expressed  concern   about  what  would  be                                                               
accomplished by  the bill  if the  only denial  is in  regards to                                                               
those who are not taking their prescribed medication.                                                                           
                                                                                                                                
CHAIR OLSON  stated that  part of  the bill  was aimed  at having                                                               
workers' compensation injured employees  see their doctor monthly                                                               
and not  refilling potent drugs via  the pharmacy.  He  said that                                                               
this  action may  result in  additional  costs, but  it may  also                                                               
result  in ultimate  savings; however,  the ultimate  goal is  to                                                               
assist in getting injured workers back to work.                                                                                 
                                                                                                                                
4:05:06 PM                                                                                                                    
                                                                                                                                
SCOTT JORDAN,  Director, Division of Risk  Management, Department                                                               
of Administration  (DOA), in  response to  a question  on privacy                                                               
issues,   stated   that    Health   Insurance   Portability   and                                                               
Accountability   Act  (HIPAA)   does   not   apply  to   workers'                                                               
compensation  cases  so the  state,  which  is self-insured,  can                                                               
share these  records.   He reported that  he obtains  a quarterly                                                               
report of the workers' compensation individuals on opioid drugs.                                                                
                                                                                                                                
4:06:05 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked  for further clarification on  how many injured                                                               
employees are taking scheduled drugs.                                                                                           
                                                                                                                                
MR.  JORDAN answered  that 67  employees of  900 open  claims, or                                                               
less than 1 percent are  prescribed opioids.  He characterized it                                                               
as a low amount.                                                                                                                
                                                                                                                                
4:06:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for  further clarification  that                                                               
these are injured Alaska state employees.                                                                                       
                                                                                                                                
MR. JORDAN answered yes.                                                                                                        
                                                                                                                                
4:07:09 PM                                                                                                                    
                                                                                                                                
LORI   WING-HEIER,  Director,   Division   of  Insurance   (DOI),                                                               
Anchorage Office,  Department of  Commerce, Community  & Economic                                                               
Development  (DCCED), stated  that  from  the DOI's  perspective,                                                               
after all  is said and done,  the data comes to  the division and                                                               
the DOI  sets the  rates for employers,  including rates  for the                                                               
State of Alaska.   These rates have gone up,  and while they have                                                               
stabilized somewhat  in the past  year, the rates are  still very                                                               
high.  The division was proud  that the state fell off the number                                                               
one spot  in the nation;  however, these rates still  represent a                                                               
very high  cost to  employers across  the state.   Any  impact to                                                               
bring down the cost of  workers' compensation will be considered,                                                               
and this  is one approach  to do so.   As a former  risk manager,                                                               
she can attest to the fact  that the cost of rehabilitation is an                                                               
expensive  part  of most  workers'  compensation  claims when  it                                                               
involves pulling someone back from being  on an opioid for a long                                                               
period time.   She  reported that  it increases  the cost  of the                                                               
claim, which  goes back into  the workers' compensation  rate and                                                               
is shared by all employers.                                                                                                     
                                                                                                                                
4:08:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON related  his  understanding that  there                                                               
would normally  be some type of  tracking by the prescriber.   He                                                               
asked whether that  information would be shared to  ensure that a                                                               
drug contract  was followed.   He asked whether  that information                                                               
would make its way back to the adjuster.                                                                                        
                                                                                                                                
MS. WING-HEIER answered  that the adjuster will have  a record of                                                               
prescriptions   being  prescribed   to   the  injured   employee.                                                               
However,  this bill  would require  the employees  to touch  base                                                               
with the  physician every 30  days.  In  fact, it isn't  meant to                                                               
try to  take the painkiller  or narcotic away, but  just requires                                                               
patients to  touch bases  with their  physicians to  help prevent                                                               
overprescribing.                                                                                                                
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  referred  to  Section 1  of  the  bill                                                               
related to  testing.  He  asked whether there is  some redundancy                                                               
if the prescriber  already doing some testing.   He recalled that                                                               
in his  experience as  an attorney, that  evidence he  saw during                                                               
trial  and  drug  contracts.    He  asked  whether  an  insurance                                                               
adjuster will know those facts.                                                                                                 
                                                                                                                                
MS.  WING-HEIER   answered  that  the  adjuster   will  know  the                                                               
prescriptions  were  issued,  but  she  was  unsure  whether  the                                                               
adjuster will know  if any prescriptions were not  being used and                                                               
of the patient might be stockpiling the medication.                                                                             
                                                                                                                                
4:10:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked whether  costs can be reported for                                                               
the 67 of 900 injured employees.   He recalled that 20 percent of                                                               
the cost is for prescription drugs  so he wondered how much money                                                               
is being spent.                                                                                                                 
                                                                                                                                
MS. WING-HEIER  said she has  cumulative data for the  state, but                                                               
not the State of  Alaska data.  She deferred to  Mr. Jordan.  She                                                               
did  not  have  the  itemized  costs for  the  67  injured  state                                                               
workers.                                                                                                                        
                                                                                                                                
4:12:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  offered  that  not  all  of  the  67  total                                                               
scheduled drug  use cases will have  prescriptions for controlled                                                               
scheduled  drugs  over 90  days  or  that  all  of them  will  be                                                               
violation cases.   Thus  it seemed  as though out  of 67,  a very                                                               
small number might be subject to  this law.  He asked whether she                                                               
had any idea of the number of cases this would affect.                                                                          
                                                                                                                                
MS.  WING-HEIER answered  that  she does  not  have the  specific                                                               
information related to the state's  plan; however, she agreed not                                                               
every case  would be for  injured workers with  prescriptions for                                                               
controlled  substances for  over  30  days.   She  was unsure  of                                                               
whether the 67  of 900 were for prescriptions of  over 90 days or                                                               
if that was the current total  for the state's claim record.  She                                                               
offered  to   provide  some  state   statistical  data   for  all                                                               
employers.                                                                                                                      
                                                                                                                                
4:13:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  asked for  further clarification  on whether                                                               
this  applies  to all  employers.  He  expressed an  interest  in                                                               
seeing the data for all employers.                                                                                              
                                                                                                                                
MS. WING-HEIER offered to provide it.                                                                                           
                                                                                                                                
4:14:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  related  his  understanding  that  the                                                               
state  does not  write workers'  compensation checks  to insurers                                                               
since the state is self-insured.                                                                                                
                                                                                                                                
MR.  JORDAN agreed  that  is  correct.   In  further response  to                                                               
Representative  Josephson, he  clarified that  the division  does                                                               
not pay a premium  and he was unsure of the  source of the $1,400                                                               
premium since the state is self-insured.                                                                                        
                                                                                                                                
CHAIR OLSON answered that the  $1,400 refers to the monthly major                                                               
medical health  insurance cost  for state  employees.   This bill                                                               
would  not  affect  those  premiums since  it  isn't  related  to                                                               
workers' compensation.                                                                                                          
                                                                                                                                
4:15:25 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON opened  public testimony  on HB  32 and  held public                                                               
testimony open.                                                                                                                 
                                                                                                                                
[HB 32 was held over.]                                                                                                          
                                                                                                                                
         HB 116-EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD                                                                     
                                                                                                                                
4:16:37 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON announced  that  final order  of  business would  be                                                               
HOUSE BILL  NO. 116,  "An Act extending  the termination  date of                                                               
the  Alcoholic  Beverage  Control  Board; and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
4:17:00 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH,  Staff, Representative  Kurt Olson,  Alaska State                                                               
Legislature, on  behalf of  the House  Labor &  Commerce Standing                                                               
Committee, Representative  Kurt Olson,  Chair, presented  HB 116.                                                               
This  bill  would  extend  the  sunset  date  for  the  Alcoholic                                                               
Beverage Control  (ABC Board) to  June 30,  2018.  Each  year the                                                               
Division   of  Legislative   Audit  reviews   state  boards   and                                                               
commissions  to determine  whether they  should be  reestablished                                                               
per AS  24.44.   The Division of  Legislative Audit  reviewed the                                                               
activities  of   the  Alcoholic  Beverage  Control   Board  ("ABC                                                               
Board").  The  purpose of the legislative audit  was to determine                                                               
whether there is  a demonstrated public need for  the ABC Board's                                                               
continued existence and whether it  has been serving the public's                                                               
interest effectively.                                                                                                           
                                                                                                                                
MS.  STIDOLPH reported  that the  board has  resolved all  issues                                                               
found  in prior  audits with  two  being resolved  and one  being                                                               
partially resolved.  She directed  attention to the five findings                                                               
and  recommendations  in  the  most recent  audit.    First,  the                                                               
legislative  auditors recommended  including  having the  board's                                                               
director ensure  that all board  meetings are  properly published                                                               
on  the  state's  online  public  notice  system.    Second,  the                                                               
legislative  auditors recommended  that the  board should  notify                                                               
local  governing  bodies of  applications  for  new and  transfer                                                               
licenses  within 10  days  of receipt.    Third, the  legislative                                                               
auditors  recommended  that  the   board  should  issue  catering                                                               
permits in  accordance with statutory requirements.   Fourth, the                                                               
legislative  auditors recommended  that  the  board should  issue                                                               
recreational  site  licenses  in accordance  with  statutes;  and                                                               
finally,  the legislative  auditors  recommended  that the  board                                                               
should implement  a process to  monitor and track  all complaints                                                               
to ensure they are resolved in a timely manner.                                                                                 
                                                                                                                                
MS.  STIDOLPH reported  that the  Division  of Legislative  Audit                                                               
recommended that  the ABC Board  be extended three years  to June                                                               
30, 2018.   The legislative  auditors serve public's  interest by                                                               
effectively  licensing and  regulating  the manufacture,  barter,                                                               
possession  and  sale  of  alcoholic beverages  in  Alaska.    In                                                               
closing,  she  related the  auditors  found  that the  ABC  Board                                                               
serves an  important role  in guarding the  health and  safety of                                                               
Alaskans by  protecting the general public  through the issuance,                                                               
renewal,  revocation,   and  suspension  of   alcoholic  beverage                                                               
licenses.  The continuation of  this board is very important, she                                                               
relayed.                                                                                                                        
                                                                                                                                
4:19:54 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative  Agencies and  Offices,  reported  that the  division                                                               
conducted a sunset  review of the ABC Board and  concluded it was                                                               
serving  the  public  interests;   however,  the  division  noted                                                               
several  operational improvements  were needed  in the  licensing                                                               
and  general administration  of the  board.   She  said that  the                                                               
board is  set to sunset  in June  2015 and the  legislative audit                                                               
recommended a conditional  five-year extension.  At  the time the                                                               
audit was  completed in  May 2014, the  outcome of  the marijuana                                                               
initiative was  not yet  known, so the  audit suggested  a three-                                                               
year  extension, just  in case  the marijuana  initiative passed,                                                               
since  the  initiative  will  significantly  expand  the  board's                                                               
duties.                                                                                                                         
                                                                                                                                
4:20:45 PM                                                                                                                    
                                                                                                                                
MS.  CURTIS  referring  to  page  9  of  the  legislative  audit,                                                               
reviewed  the   recommendations.    She  directed   attention  to                                                               
Recommendation  1, which  recommended that  the board's  director                                                               
ensure  that all  board meetings  are properly  published on  the                                                               
state's online  public notice system.   Three of the  25 meetings                                                               
held were  not publically noticed,  she said.   Second, referring                                                               
to page  10 of the audit,  she said that the  division's auditors                                                               
recommended [Recommendation  2] that the board  should notify any                                                               
local  governing  bodies of  applications  for  new and  transfer                                                               
licenses within 10 days of receipt  as required by statutes.  The                                                               
auditors found  the board did  not notify local  governing bodies                                                               
within  the  required  timeframe  for two  of  the  ten  licenses                                                               
tested.   She  advised that  these  errors were  caused by  board                                                               
staff not adhering to their policies and procedures.                                                                            
                                                                                                                                
4:21:21 PM                                                                                                                    
                                                                                                                                
MS.  CURTIS directed  attention to  audit Recommendation  3, that                                                               
the  board  should  issue catering  permits  in  accordance  with                                                               
statutory  requirements.   The auditors  reviewed four  licensees                                                               
who had received more than  six consecutive catering permits.  Of                                                               
those,  three   of  the  four  were   non-compliant,  which  each                                                               
represent  a statutory  violation since  the permits  were issued                                                               
with  the intention  of serving  alcohol on  a licensed  premises                                                               
during the  regular operation of  the business rather than  for a                                                               
short-term social gathering  or similar event.   The board issued                                                               
the  permits to  ensure  that the  businesses  could continue  to                                                               
operate.                                                                                                                        
                                                                                                                                
4:21:56 PM                                                                                                                    
                                                                                                                                
MS. CURTIS referred  to page 11 to audit  Recommendation 4, which                                                               
recommended that  the board issue  recreational site  licenses in                                                               
accordance with statutory requirements.   She reported that 15 of                                                               
32 recreational site licenses active  during the audit period, or                                                               
40 percent  of the businesses,  did not  meet the criteria  for a                                                               
recreational  site license.  She  explained  that the  ineligible                                                               
businesses included  a sports  center and  pub, an  exercise gym,                                                               
gift  shop, bowling  alleys,  theatres, and  pool  halls.   These                                                               
business  types did  not meet  the definition  of a  recreational                                                               
site nor were  the operations limited to a season.   The issuance                                                               
of these licenses expanded the  number of establishments licensed                                                               
to sell  alcohol over  the number  allowed for  in statute.   She                                                               
stated that  inquiries with board members  revealed that improper                                                               
issuance of  these recreational  site licenses  was caused  by an                                                               
historic  misunderstanding of  what qualifies  as a  recreational                                                               
event.                                                                                                                          
                                                                                                                                
4:22:55 PM                                                                                                                    
                                                                                                                                
MS.   CURTIS   referred  to   page   12   to  the   final   audit                                                               
recommendation,  Recommendation 5,  that  the  board implement  a                                                               
process to  monitor and track  all complaints and to  ensure that                                                               
they are resolved  in a timely manner.  Although  the board had a                                                               
process  in place3  to receive  complaints, complaints  were only                                                               
tracked if they  resulted in an inspection or  investigation.  If                                                               
the  complaint  was  deemed  invalid,   it  was  not  documented;                                                               
furthermore, the basis for a  decision not to investigate was not                                                               
documented or  maintained.   She stated  that the  board director                                                               
did  not  consider tracking  all  complaints  as necessary  since                                                               
there was  not any  statutory mandate  to do  so.   She concluded                                                               
that the  department and the board  agreed with all of  the audit                                                               
recommendations and submitted a corrective action plan.                                                                         
                                                                                                                                
4:23:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON, in  terms of  the misunderstanding  on                                                               
Recommendation  4, asked  whether the  board currently  agrees on                                                               
the foregoing interpretation of the statute.                                                                                    
                                                                                                                                
MS. CURTIS  answered that  the division believes  so.   The board                                                               
and department's response  to the audit indicated  that the board                                                               
had operated under guidance from  the assistant attorney general,                                                               
but  the  board has  since  reconsidered  its process,  including                                                               
taking  public  testimony, and  the  board  has  gone back  to  a                                                               
stricter interpretation of statute.                                                                                             
                                                                                                                                
4:24:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON referred to  a proposed rewrite of Title                                                               
[4] and  to the  stakeholders who  are working on  it.   He asked                                                               
whether this should give the committee  some pause and if it will                                                               
lead to  a shorter extension  given the ABC Board's  shared staff                                                               
with the proposed marijuana board.                                                                                              
                                                                                                                                
MS. CURTIS  answered that the  recommendation for  extension took                                                               
into  consideration  the  results  of the  audit,  including  the                                                               
findings  and  recommendations.    When   the  sunset  audit  was                                                               
completed for the  ABC Board, the division did not  have any idea                                                               
if the  marijuana initiative would  pass.  She  acknowledged that                                                               
the proposed  marijuana board envisioned  sharing staff  with the                                                               
ABC  Board; however,  she  did  not see  a  sunset provision  for                                                               
proposed  marijuana  board.    She  suggested  that  if  the  two                                                               
separate  boards  plan  on  sharing staff,  it  is  possible  the                                                               
extension date  could put the sunset  dates of each board  out of                                                               
synch with one another, which  could result in inefficient use of                                                               
audit resources.                                                                                                                
                                                                                                                                
CHAIR OLSON commented  that as the bill  establishing a marijuana                                                               
board continues to move forward  through the legislative process,                                                               
that he will  work to ensure that it shares  the same sunset date                                                               
as the ABC Board.   He also noted that some  of the Department of                                                               
Commerce,   Community  &   Economic  Development's   occupational                                                               
licensing staff was often shared by boards.                                                                                     
                                                                                                                                
MS. CURTIS agreed.                                                                                                              
                                                                                                                                
4:26:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  had questions  on  some  of the  proposed                                                               
changes  to the  Title  4 [alcoholic  beverage]  revisions.   She                                                               
suggested that  three years  still works  for a  proposed sunset.                                                               
She asked whether Ms. Curtis had any comments.                                                                                  
                                                                                                                                
MS. CURTIS  answered that at  the time  the field work  was done,                                                               
which  was  in  late  spring,  the  division  was  aware  of  the                                                               
stakeholders group,  but could  not predict  any outcome  at that                                                               
point.                                                                                                                          
                                                                                                                                
4:27:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO referred to  audit Recommendation 2, in which                                                               
two  meetings did  not have  the  appropriate notice.   He  asked                                                               
whether  there  is  any  cause  for the  state  to  find  out  if                                                               
decisions were made without adequate local involvement.                                                                         
                                                                                                                                
MS.  CURTIS  answered   that  the  division  did   not  find  any                                                               
complaints  made  by the  local  governing  body or  any  outcome                                                               
resulting from the lack of timely noticing.                                                                                     
                                                                                                                                
4:28:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  related her  understanding that  the several                                                               
violations  occurred with  Recommendations  3 and  4.   He  asked                                                               
whether the  violations were  corrected and  if the  permits been                                                               
removed, where appropriate.                                                                                                     
                                                                                                                                
MS.  CURTIS answered  that the  audit  team does  not know  that;                                                               
however, it will be a good question for the department.                                                                         
                                                                                                                                
4:29:00 PM                                                                                                                    
                                                                                                                                
CYNTHIA FRANKLIN, Executive  Director, Alcoholic Beverage Control                                                               
Board  ("ABC   Board"),  Department  of  Commerce,   Community  &                                                               
Economic Development (DCCED) introduced herself.                                                                                
                                                                                                                                
4:29:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  asked  for  further  clarification  on  the                                                               
sunset audit  Recommendations 3  and 4, and  if the  changes have                                                               
been implemented and improper permits have been withdrawn.                                                                      
                                                                                                                                
MS. FRANKLIN answered that with  respect to Recommendation 3, the                                                               
catering permits  were for individual  events that had  been held                                                               
prior to  the audit, that  catering events are held  for specific                                                               
events,  and represent  short-term  permission  in which  sellers                                                               
serve  alcohol.   She  elaborated  that  what happened  with  the                                                               
catering permits  predated her tenure  with the board as  of last                                                               
September.    She related  her  understanding  that there  was  a                                                               
practice during  the liquor license  transfers such that  the new                                                               
licensees  had   the  expectation  of  approval.     During  this                                                               
timeframe  catering   permits  were   issued  that   allowed  the                                                               
establishment  to   continue  to   sell  or  serve   alcohol.  In                                                               
particular,  this occurred  with respect  to stock  transfers, in                                                               
which ownership  of the organization  changed but  the day-to-day                                                               
operations were  not changing.   She said the agency  was issuing                                                               
catering  permit to  allow for  "non-interruption" of  service in                                                               
the license;  however, it  was determined  to violate  the permit                                                               
statute.    She  reported  that the  practice  had  already  been                                                               
discontinued  by September  2014,  and the  ABC  Board does  have                                                               
safeguards in place to check  all catering permits to ensure that                                                               
the  activity is  not happening.    She said  that involves  some                                                               
coordination  between  the  licensing and  enforcement  sections,                                                               
which  was  not  previously  occurring.   She  stated  that  this                                                               
practice has ceased.                                                                                                            
                                                                                                                                
4:31:43 PM                                                                                                                    
                                                                                                                                
MS. FRANKLIN  said it is  a little  more complicated in  terms of                                                               
the  recreational  site  licenses.   She  explained  that  liquor                                                               
licenses  were  issued to  businesses  that  did not  technically                                                               
qualify  for   recreational  site  licenses.     For  example,  a                                                               
recreational site  license was  issued to  the Alaska  Club South                                                               
location.   However, the  facility is a  gym that  operates every                                                               
day and does not qualify for an  event.  Since they have a liquor                                                               
license, the  ABC Board will  not be  able to review  the license                                                               
until renewal.   However, the board is very  aware it overstepped                                                               
its bounds  in issuing that  and several other  recreational site                                                               
licenses.  She anticipated that  the issue will be addressed when                                                               
these licenses come up for renewal.                                                                                             
                                                                                                                                
4:32:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KITO   asked   whether  provisions   allow   for                                                               
transition  of facilities.   He  related  his understanding  that                                                               
gaps could exist when transferring  ownership and there is a gap;                                                               
however,   he   asked   whether  another   method   for   issuing                                                               
transitional licenses exists.                                                                                                   
                                                                                                                                
MS.  FRANKLIN answered  not really.   She  characterized this  as                                                               
being  "chicken and  egg" problem  in terms  of stock  transfers,                                                               
depending  on   the  individual   transfer.    For   example,  in                                                               
Anchorage, a beverage license dispensary  license was sold by the                                                               
Sourdough  Mining  Company  to   the  Texas  Roadhouse  with  the                                                               
intention  that  Sourdough  Mining  Company  would  come  in  and                                                               
acquire a restaurant eating place  license that would allow it to                                                               
continue selling beer and wine  with meals.  However, this effort                                                               
requires engaging in  careful planning, and had  he applied ahead                                                               
of  time,  nothing would  have  prevented  approval or  a  smooth                                                               
transition when he sold his  beverage dispensary license.  Due to                                                               
the   way  the   business  transition   occurred,  the   beverage                                                               
dispensary  license was  sold, followed  by an  application being                                                               
submitted for  a restaurant eating place  license.  It led  to an                                                               
interruption in alcohol service  at Sourdough Mining Company, she                                                               
said;  however,  if  the  person  seeking  transfers  could  have                                                               
planned better.                                                                                                                 
                                                                                                                                
4:35:02 PM                                                                                                                    
                                                                                                                                
MS. FRANKLIN stated  that the ABC Board works  to accommodate its                                                               
licensees.  In  this instance the statutes did  not authorize the                                                               
board to  issue catering permits  to Sourdough Mining  Company so                                                               
it could  continue to  serve alcohol to  its customers  while the                                                               
business obtained  its other license.   Although the  board works                                                               
to  assist its  licensees, in  some instances  it is  out of  the                                                               
board's control if licensees wait too long to apply.                                                                            
                                                                                                                                
4:35:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KITO,   referencing  audit   Recommendation   4,                                                               
expressed  concern   that  some   facilities  may   be  operating                                                               
illegally if they received their  permits in error.  He expressed                                                               
further  concern  that  some  operators  should  have  sought  an                                                               
alcoholic  beverage  license,  but  now  have  recreational  site                                                               
licenses,  especially since  these  establishments  may not  have                                                               
been granted a license.                                                                                                         
                                                                                                                                
MS. FRANKLIN responded that she  did not believe these facilities                                                               
are  operating  in  violation  of the  law  since  the  operators                                                               
legally obtained their  licenses from the ABC Board.   She agreed                                                               
with the audit  finding that the definition  of recreational site                                                               
license had been stretched beyond  its original intent.  However,                                                               
those  decisions  were  apparently  made  upon  advice  of  legal                                                               
counsel.    She did  not  think  anyone  could argue  that  those                                                               
licensed establishments were operating  in violation of the state                                                               
law, in  particular, since they obtained  their licenses lawfully                                                               
with local  approval and  other approval  that must  occur before                                                               
the  licenses  are issued.    Further,  after the  licenses  were                                                               
issued,  the ABC  Board  received an  opinion  from the  auditing                                                               
agency  that  the  licenses "stretched  the  boundaries"  of  the                                                               
statutory definition  of what  would have  been allowed,  but she                                                               
did not believe that statement would invalidate the licenses.                                                                   
                                                                                                                                
4:37:52 PM                                                                                                                    
                                                                                                                                
MS. FRANKLIN understood his concern  and said the board will take                                                               
up those individually as they come  up for renewal.  In addition,                                                               
this agency also changed departments  during the audit period and                                                               
the assistant attorney  general changed, as well.   Thus, the ABC                                                               
Board has  a fresh  outlook on  this statute.   She said  she has                                                               
faith that the  licenses in question will  ultimately be strictly                                                               
reviewed  during the  renewal process,  which occurs  every other                                                               
year.                                                                                                                           
                                                                                                                                
4:38:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER directed attention to  the fiscal note.  He                                                               
said that the  FY 16 budget is $3.35 million,  with a fund source                                                               
of $1.575 million  in general fund monies  and approximately $1.8                                                               
million in  program receipts.  He  said he was interested  in the                                                               
program  receipts from  the industry  and  how much  goes to  the                                                               
general  treasury.   He  acknowledged that  a  number of  alcohol                                                               
taxes also  generate revenue  and he was  also interested  in the                                                               
tax collections.                                                                                                                
                                                                                                                                
MS. FRANKLIN answered  that she doesn't have the  tax receipts on                                                               
hand.    She  agreed  that  the receipts  for  fees  for  alcohol                                                               
licensing are reflected in the  fiscal note, which includes money                                                               
for  agency as  expanded.   In November,  with passage  of ballot                                                               
measure 2,  the agency scope  has expanded to  include marijuana.                                                               
What is  not reflected in the  fiscal note would be  the receipts                                                               
from the proposed  licensees since the ABC Board is  not sure how                                                               
many  licenses will  be issued  or  the amount  of the  potential                                                               
receipts.   Thus more funds are  reflected in the budget  for the                                                               
first  year of  marijuana  licensing, but  it  isn't possible  to                                                               
project  receipts until  the licenses  issued, which  is a  first                                                               
year problem for the agency.                                                                                                    
                                                                                                                                
4:41:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER said he did  not have access to last year's                                                               
information  so  he  cannot  compare  the  board's  budget.    He                                                               
surmised  that the  $1.575 million  is being  charged off  to new                                                               
regulations.   He asked  whether Ms.  Franklin could  provide the                                                               
committee with  how much of  the funding  is to regulate  the new                                                               
industry and the agency budget.                                                                                                 
                                                                                                                                
MS. FRANKLIN answered  that the ABC Board FY 15  budget was $1.75                                                               
million and  the FY  16 budget for  regulating the  new substance                                                               
includes  a  large  one-time  appropriation  for  a  database  to                                                               
replace  the  current  paper-based  agency.   Thus  far  she  has                                                               
received a substantial  number of questions and  demand for data.                                                               
The fiscal note includes $500,000  for a database.  She explained                                                               
that  the budget  doesn't double  since  it does  not double  the                                                               
agency,  but proposes  to  add  six employees  through  an FY  15                                                               
supplemental budget  and FY  16 budget  request. She  stated that                                                               
the agency budget would expand  from 10 to 16 statewide positions                                                               
to regulate  the substances.   She clarified  that it  appears to                                                               
mirror  the  budget since  it  has  a  one-time expense  for  the                                                               
database.                                                                                                                       
                                                                                                                                
4:44:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  referred to the  fiscal note for  FY 17-FY                                                               
19  seems to  show the  same increment,  which doesn't  reflect a                                                               
one-time  database upgrade.   He  suggested that  he may  wish to                                                               
tweak the out years.                                                                                                            
                                                                                                                                
MS. FRANKLIN agreed.                                                                                                            
                                                                                                                                
4:44:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES referred to  the proposed Title 4 revisions                                                               
and  asked  for  further  clarification  on  how  the  three-year                                                               
extensions might impact the ABC Board.                                                                                          
                                                                                                                                
4:45:21 PM                                                                                                                    
                                                                                                                                
MS. FRANKLIN offered her belief  that the three-year extension is                                                               
a good  plan.  She explained  that the Title 4  revisions will be                                                               
introduced by  Senator Micciche [by the  Senate Rules Committee].                                                               
She reported that  the group has finished its work.   In response                                                               
to earlier  questions, she  stated that no  work went  beyond the                                                               
auditor's   findings   regarding   these  specific   issues,   in                                                               
particular,  the permit  issues.   She suggested  that the  board                                                               
needs  to stick  to the  strict statutory  interpretations.   She                                                               
emphasized the  stakeholders' intention  that the  board strictly                                                               
follow the statutes  when issuing the two types of  permits.  She                                                               
stated  that the  revisions to  Title  4 are  very expensive  but                                                               
since the two-board one agency set  up is reflected in SB 60 [and                                                               
HB 123], she thought a three-year timeline will be appropriate.                                                                 
                                                                                                                                
4:47:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  for  further  clarification  on                                                               
whether the stakeholders group was  a balanced membership and for                                                               
the groups that were represented.                                                                                               
                                                                                                                                
MS.  FRANKLIN answered  that the  Title 4  stakeholder group  was                                                               
balanced  with   multiple  representatives  from   public  health                                                               
sector, including that many of  the subcommittee chairs were from                                                               
the  health   sector.    She   reported  that  L.   Diane  Casto,                                                               
[Behavioral  Health],  Department  of Health  &  Social  Services                                                               
chaired  the  underage  drinking subcommittee  and  Jess  Jessee,                                                               
Executive  Director,  Alaska  Mental Health  Trust,  chaired  the                                                               
licensing  subcommittee.    Bob   Klein,  Chair,  ABC  Boar,  and                                                               
[Aleesha  Towns-Bain] of  the Rasmuson  Foundation served  on the                                                               
steering committee.  She said  that the stakeholders consisted of                                                               
representatives from  every sector of liquor  industry, including                                                               
manufacturers,   breweries,  retail   package  stores,   bar  and                                                               
restaurant eating  places.  In  addition, the group  consisted of                                                               
numerous   municipal    members   providing    local   government                                                               
representation.    She stated  that  the  group issued  a  report                                                               
["entitled  Alaska  Title  4  Review  for  the  Alaska  Alcoholic                                                               
Beverage  Control Board  dated November  2014].   She offered  to                                                               
share the  report with the  committee, which also lists  the [70]                                                               
participants, as well as a  PowerPoint that shows the composition                                                               
of each  subcommittee.   She stated  that the  Title 4  group has                                                               
done  substantial  work  since  May 2012,  noting  that  as  some                                                               
members  dropped  off,  others  joined.   She  characterized  the                                                               
entire process as being a fairly incredible process.                                                                            
                                                                                                                                
4:49:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first determining  no one wished  to testify,                                                               
closed public testimony on HB 116.                                                                                              
                                                                                                                                
4:49:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON remarked  that it  is evident  that the                                                               
Alcoholic  Beverage Control  Board (ABC  Board) will  exist.   He                                                               
said he  has heard that  Ms. Franklin is doing  a great job.   He                                                               
recommended the committee move the bill out of committee.                                                                       
                                                                                                                                
4:50:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  moved to  report HB  116 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 116 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
4:50:38 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:50 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB32 verA .pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Sponsor Statement.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Sectional Analysis.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Fiscal Note-DOLWD-WC-02-21-15.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Fiscal Note-DOA-DRM-02-20-15.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-2013 DPS Prescription Drug Statistics.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-AKDrug Overdose Deaths 2008-12.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Health Partners Opiate Drug Screens.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Letter NFIB 02-13-2015.PDF HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Letter PCI 02-3-2015.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Report Lockton & Associates 08-2012.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Report Workers Compensation 2012 Issues Report by Joseph Paduda.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB32 Supporting Documents-Letter AK State Chamber 02-26-2015.pdf HL&C 2/27/2015 3:15:00 PM
HB 32
HB116 ver A.PDF HL&C 2/27/2015 3:15:00 PM
HB 116
HB116 Sponsor Statement.pdf HL&C 2/27/2015 3:15:00 PM
HB 116
HB116 Fiscal Note-DCCED-ABC-02-20-15.pdf HL&C 2/27/2015 3:15:00 PM
HB 116
HB116 Supporting Documents-Legislative Audit 05-30-14.pdf HL&C 2/27/2015 3:15:00 PM
HB 116