Legislature(2015 - 2016)BARNES 124

04/04/2016 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 125 LEGISLATIVE MEMBERS OF AGDC BOARD TELECONFERENCED
Moved HCS CSSB 125(RES) Out of Committee
-- Public Testimony <Time Limit May Be Set> --
+= HB 372 OMNIBUS INSURANCE TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ HB 299 PERS PARTICIPATION: CONTRACTORS TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 4, 2016                                                                                          
                           3:22 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 125(RES)                                                                                                 
"An  Act adding  legislative nonvoting  members to  the board  of                                                               
directors of the Alaska Gasline Development Corporation."                                                                       
                                                                                                                                
     - MOVED HCS CSSB 125(RES) OUT OF COMMITTEE                                                                                 
                                                                                                                                
HOUSE BILL NO. 372                                                                                                              
"An  Act   relating  to  insurance;  relating   to  expenses  for                                                               
insurance  examinations; relating  to  regulations for  insurance                                                               
utilization   review,   benefits   determination,   health   care                                                               
insurance grievance resolution  procedures, independent review of                                                               
adverse   determinations   or   final   adverse   determinations,                                                               
independent  review   organizations,  and   continuing  education                                                               
providers;  relating  to  required  provisions  for  health  care                                                               
insurance contracts and policies,  including health care provider                                                               
choice; establishing civil penalties  for insurers for failure to                                                               
provide  requested  records;  amending  the  definition  of  'wet                                                               
marine  and  transportation'  insurance; amending  provisions  on                                                               
limited licenses  to include crop  insurance; relating  to third-                                                               
party  administrator   notification  requirements;   relating  to                                                               
certification   filing  by   reinsurance  intermediary   brokers;                                                               
relating  to  rate filings,  delivery  of  insurance policies  or                                                               
endorsements;  relating to  refunds  of  variable life  insurance                                                               
policies  and  variable  annuities; establishing  limitations  on                                                               
issuance of  long- term care insurance;  relating to requirements                                                               
for group  health insurance policies; amending  the definition of                                                               
'group  health  insurance';  relating to  motor  vehicle  service                                                               
contracts;  relating  to  notice  requirements  for  meetings  of                                                               
stockholders  or members  of a  domestic insurer;  establishing a                                                               
definition of  'bona fide association'; relating  to requirements                                                               
and penalties  for committing a fraudulent  or criminal insurance                                                               
act; updating criteria for examinations;  relating to rate filing                                                               
deviations;  establishing  civil  penalties  for  certain  wilful                                                               
violations; and providing for an effective date."                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 299                                                                                                              
"An  Act  excluding certain  persons  from  participating in  the                                                               
Public Employees' Retirement System of Alaska."                                                                                 
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 125                                                                                                                  
SHORT TITLE: LEGISLATIVE MEMBERS OF AGDC BOARD                                                                                  
SPONSOR(s): SENATOR(s) COSTELLO                                                                                                 
                                                                                                                                
01/19/16       (S)       PREFILE RELEASED 1/15/16                                                                               
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (S)       L&C, RES                                                                                               
02/02/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/02/16       (S)       Heard & Held                                                                                           
02/02/16       (S)       MINUTE(L&C)                                                                                            
02/04/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/04/16       (S)       Moved  CSSB 125(L&C) Out of Committee                                                                  
02/04/16       (S)       MINUTE(L&C)                                                                                            
02/08/16       (S)       L&C RPT CS  4DP  SAME TITLE                                                                            
02/08/16       (S)       DP: COSTELLO, GIESSEL, MEYER, STEVENS                                                                  
03/02/16       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/02/16       (S)       Moved  CSSB 125(RES) Out of Committee                                                                  
03/02/16       (S)       MINUTE(RES)                                                                                            
03/04/16       (S)       RES RPT CS  4DP 1DNP 1NR  SAME TITLE                                                                   
03/04/16       (S)       DP:    GIESSEL,    COGHILL,    MICCICHE,                                                               
                         COSTELLO                                                                                               
03/04/16       (S)       DNP: WIELECHOWSKI                                                                                      
03/04/16       (S)       NR: STOLTZE                                                                                            
03/23/16       (S)       TRANSMITTED TO (H)                                                                                     
03/23/16       (S)       VERSION: CSSB 125(RES)                                                                                 
03/25/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/25/16       (H)       RES, L&C                                                                                               
03/30/16       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/30/16       (H)       Heard & Held                                                                                           
03/30/16       (H)       MINUTE(RES)                                                                                            
04/01/16       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/01/16       (H)       Moved   HCS   CSSB   125(RES)   Out   of                                                               
                         Committee                                                                                              
04/01/16       (H)       MINUTE(RES)                                                                                            
04/04/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 372                                                                                                                  
SHORT TITLE: OMNIBUS INSURANCE                                                                                                  
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/21/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/16       (H)       L&C                                                                                                    
03/28/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/28/16       (H)       Heard & Held                                                                                           
03/28/16       (H)       MINUTE(L&C)                                                                                            
03/30/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/30/16       (H)       Heard & Held                                                                                           
03/30/16       (H)       MINUTE(L&C)                                                                                            
04/04/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 299                                                                                                                  
SHORT TITLE: PERS PARTICIPATION: CONTRACTORS                                                                                    
SPONSOR(s): WILSON                                                                                                              
                                                                                                                                
02/05/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/05/16       (H)       STA, L&C                                                                                               
03/22/16       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/22/16       (H)       Moved HB 299 Out of Committee                                                                          
03/22/16       (H)       MINUTE(STA)                                                                                            
03/23/16       (H)       STA RPT 5DP                                                                                            
03/23/16       (H)       DP: SPOHNHOLZ, STUTES, KELLER, VAZQUEZ,                                                                
                         LYNN                                                                                                   
04/04/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR MIA COSTELLO                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Speaking as the sponsor of SB 125,                                                                       
introduced the bill.                                                                                                            
                                                                                                                                
WESTON EILER, Staff                                                                                                             
Senator Mia Costello                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of Senator Costello, sponsor of                                                                
SB 125, presented the sectional analysis of CSSB 125(RES).                                                                      
                                                                                                                                
EMILY NAUMAN, Legislative Legal Counsel                                                                                         
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on                                                                 
HCS CSSB 125(RES).                                                                                                              
                                                                                                                                
REPRESENTATIVE LIZ VAZQUEZ                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HCS CSSB                                                                 
125(RES).                                                                                                                       
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Anchorage Office                                                                                                                
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented the committee substitute for HB                                                                
372, and answered questions.                                                                                                    
                                                                                                                                
JEANNIE MONK, Senior Program Officer                                                                                            
Alaska State Hospital and Nursing Home Association                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HB 372.                                                                  
                                                                                                                                
JON ZASADA, Policy Integration Director                                                                                         
Alaska Primary Care Association                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on HB 372.                                                                  
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Speaking as the sponsor, introduced HB 299.                                                               
                                                                                                                                
MITCH FLYNN, Fire Chief                                                                                                         
Steese Volunteer Fire Department                                                                                                
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in favor of HB 299.                                                                            
                                                                                                                                
KATHY LEA, Chief Pension Officer                                                                                                
Division of Retirement and Benefits                                                                                             
Central Office                                                                                                                  
Department of Administration                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the hearing on HB                                                             
299.                                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:22:43 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:22 p.m.   Representatives Olson,                                                               
Tilton, Kito, Josephson,  Hughes, and LeDoux were  present at the                                                               
call to order.  Representative  Colver arrived as the meeting was                                                               
in progress.                                                                                                                    
                                                                                                                                
3:23:13 PM                                                                                                                    
                                                                                                                                
            SB 125-LEGISLATIVE MEMBERS OF AGDC BOARD                                                                        
                                                                                                                                
3:23:01 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
CS  FOR SENATE  BILL  NO. 125(RES),  "An  Act adding  legislative                                                               
nonvoting  members  to  the  board of  directors  of  the  Alaska                                                               
Gasline Development Corporation."                                                                                               
                                                                                                                                
3:23:31 PM                                                                                                                    
                                                                                                                                
SENATOR MIA  COSTELLO, Alaska State Legislature,  speaking as the                                                               
sponsor, informed  the committee  [HCS CSSB  125(RES)] is  a bill                                                               
that strengthens  and diversifies the board  of directors (board)                                                               
for the  Alaska Gasline Development Corporation  (AGDC), which is                                                               
the  state's primary  representative in  the Alaska  LNG project,                                                               
and will  be the focal point  for policy decisions in  the coming                                                               
years.   She said the  bill would facilitate communication  and a                                                               
teamwork  approach  between  the  board and  the  legislature  by                                                               
adding three legislators  as nonvoting members to  the board, one                                                               
from  the  Senate,  one  from  the House,  and  one  from  either                                                               
minority caucus.   The bill  also ensures the original  intent of                                                               
the legislature  by reserving four  out of the five  public seats                                                               
on  the  board for  appointees  with  expertise in  natural  gas,                                                               
pipeline  construction,  finance,  project management,  or  other                                                               
relevant  experience.    Senator   Costello  stated  that  having                                                               
legislators  on  a  board  as important  as  AGDC  would  provide                                                               
perspective, institutional  knowledge, and continuity.   She read                                                               
from  a   memorandum  provided  in  the   committee  packet  from                                                               
Legislative  Legal Services,  Legislative  Affairs Agency,  dated                                                               
3/30/16, and signed by Emily Nauman, as follows [in part]:                                                                      
                                                                                                                                
     Given  the split  in how  other states  treat nonvoting                                                                    
     legislative  members,  perhaps  nothing can  be  relied                                                                    
     upon to divine the outcome in this state.                                                                                  
                                                                                                                                
SENATOR COSTELLO then  referred to a ruling in  South Carolina in                                                               
2013 that upheld  legislators having an ex-officio  role on state                                                               
boards and commissions [document not  provided].  She opined that                                                               
legislators   serving    in   nonvoting    positions   alleviates                                                               
constitutional concerns, and pointed  out that precedent has been                                                               
established  by  the fact  that  legislators  currently serve  on                                                               
state boards  and commissions, including state  corporations such                                                               
as the Knik  Arm Bridge and Toll Authority,  the Alaska Aerospace                                                               
Corporation, the  Alaska Seafood Marketing Institute,  the Alaska                                                               
Commission  on Postsecondary  Education, the  Alaska Health  Care                                                               
Commission,  the  Alaska  Criminal Justice  Commission,  and  the                                                               
Alaska Tourism  Marketing Board.   She urged for  the committee's                                                               
support.                                                                                                                        
                                                                                                                                
3:27:07 PM                                                                                                                    
                                                                                                                                
WESTON  EILER,  staff  to  Senator  Mia  Costello,  Alaska  State                                                               
Legislature,  on  behalf  of Senator  Costello,  paraphrased  the                                                               
sectional analysis for  SB 125, Version S,  as follows: [original                                                               
punctuation provided]                                                                                                           
                                                                                                                                
     Section  1:  Amends  AS 31.25.020(a),  (Alaska  Gasline                                                                    
     Development  Corporation),   Governing  body.   Adds  a                                                                    
     member  of  the  House,  appointed by  the  Speaker,  a                                                                    
     member  of   the  Senate,   appointed  by   the  Senate                                                                    
     President and a member  of the minority caucus jointly-                                                                    
     appointed  by  the  presiding  officers,  as  nonvoting                                                                    
     members to the AGDC Board.                                                                                                 
                                                                                                                                
     Section  2:  Amends  AS 31.25.020(b),  (Alaska  Gasline                                                                    
     Development  Corporation),   Governing  body.  Requires                                                                    
     four  of   the  five  public  board   members  to  have                                                                    
     qualifications  in natural  gas pipeline  construction,                                                                    
     operation   and  marketing;   finance;  large   project                                                                    
     management; or other  expertise and experience relevant                                                                    
     to the corporation.                                                                                                        
                                                                                                                                
     Section  3:  Amends  AS 31.25.020(d),  (Alaska  Gasline                                                                    
     Development   Corporation),   Governing  body.   States                                                                    
     legislative members of the board  may not be reimbursed                                                                    
     or compensated by  AGDC for their service  on the board                                                                    
     and related costs.                                                                                                         
                                                                                                                                
     Section  4:   Adds  new  subsection   AS  31.25.020(e),                                                                    
     (Alaska Gasline  Development Corporation),  Meetings of                                                                    
     the board.  Specifies legislative members of  the board                                                                    
     may participate in all  board activities except voting.                                                                    
     Legislative members may not  be excluded from executive                                                                    
     sessions, and  may not be  appointed for a  term longer                                                                    
     than two years.                                                                                                            
                                                                                                                                
     Section  5:  Amends  AS 31.25.030(a),  (Alaska  Gasline                                                                    
     Development  Corporation),   Meetings  of   the  board.                                                                    
     Conforming language outlining  that only voting members                                                                    
     of the  AGDC Board may  be selected to serve  as chair,                                                                    
     secretary  or treasurer.  Also defines  a  quorum as  a                                                                    
     majority of voting members of the board.                                                                                   
                                                                                                                                
     Section  6:  Amends  AS 31.25.040(a),  (Alaska  Gasline                                                                    
     Development  Corporation),  Administration of  affairs;                                                                    
     program directors.  Conforming language  that Sectional                                                                    
     Analysis - SB  125 2 allows only voting  members of the                                                                    
     board  to  manage  the  assets   and  business  of  the                                                                    
     corporation  and  that  voting  members  will  delegate                                                                    
     supervision  of the  administration of  the corporation                                                                    
     to the executive director.                                                                                                 
                                                                                                                                
MR.  EIHER  noted  that  conforming changes  are  also  found  in                                                               
Sections  7, 8,  and  9,  and Section  11  provides an  immediate                                                               
effective date.                                                                                                                 
                                                                                                                                
3:29:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  directed  attention  to  a  memorandum                                                               
provided  in the  committee  packet from  the  Department of  Law                                                               
(DOL)  dated  3/20/16, that  referred  to  AGDC as  an  executive                                                               
branch entity.    He then directed attention to  a table provided                                                               
in   the  committee   packet   by   Senator  Costello   entitled,                                                               
"Legislative   Membership  on   State   of   Alaska  Boards   and                                                               
Commissions" and  asked whether the entities  listed thereon were                                                               
executive branch agencies.                                                                                                      
                                                                                                                                
MR. EILER deferred to Legislative  Legal and Research Services on                                                               
the definition, and opined the  entities complied on the list are                                                               
a  variety  of  capacities  in which  legislators,  as  nonvoting                                                               
members,  advise  the  functions of  the  administration  through                                                               
commissions,  independent  state   corporations,  divisions,  and                                                               
departments  of state  government, "by  which the  legislature is                                                               
advising  the administration,  and the  overall process  of state                                                               
government."                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  inquired as to any  boards and commissions                                                               
on which legislators serve that are  identical - legally - to the                                                               
corporate structure of AGDC.                                                                                                    
                                                                                                                                
MR.  EILER offered  to provide  additional information  comparing                                                               
state  corporations; he  added that  there are  many similarities                                                               
between  state  corporations  involved  in  large  projects,  and                                                               
legislators  are serving  in a  nonvoting,  ex-officio manner  on                                                               
boards of directors that make business decisions.                                                                               
                                                                                                                                
REPRESENTATIVE  JOSEPHSON referred  to another  memorandum (memo)                                                               
[document not provided]  dated 12/7/15 in which  Emily Nauman, an                                                               
attorney for  Legislative Legal and Research  Services, concluded                                                               
that  the   proposal  related   to  the   bill  was   likely  not                                                               
constitutional; however, in the 3/30/16  memo she said it may not                                                               
be  constitutional when  " ...  speaking to  nonvoting membership                                                               
...."  He asked for the basis for her change in position.                                                                       
                                                                                                                                
3:34:51 PM                                                                                                                    
                                                                                                                                
MR.  EILER  recalled  that  the   issue  of  "voting  legislative                                                               
members"  was the  subject of  an earlier  Legislative Legal  and                                                               
Research Services memo.                                                                                                         
                                                                                                                                
REPRESENTATIVE JOSEPHSON remarked:                                                                                              
                                                                                                                                
     ...  legislative lawyers  on  the  seventh of  December                                                                    
     were   inclined  to   say,   "This  proposal,   broadly                                                                    
     speaking,   doesn't,  is   not   consistent  with   the                                                                    
     constitution."   Last  week,  the  same attorney  said,                                                                    
     "Well,  it  may  very  well   be  consistent  with  the                                                                    
     constitution."   And I'm asking,  whether you  know ...                                                                    
     what the difference is.                                                                                                    
                                                                                                                                
MR.  EILER offered  to research  previous  Legislative Legal  and                                                               
Research Services opinions on this  matter.  He acknowledged that                                                               
voting  legislative  members  "would   run  into  conflict,  with                                                               
regards to the constitutional issues."   He directed attention to                                                               
page 4 of the memo dated 3/30/16, which read [in part]:                                                                         
                                                                                                                                
     What  is   clear  is  that   the  issue   of  nonvoting                                                                    
     legislative  members  on  executive  branch  boards  is                                                                    
       unsettled.  ... I do not believe the risk is great                                                                       
      enough that I would advise removing the legislative                                                                       
     board members from the bill.                                                                                               
                                                                                                                                
REPRESENTATIVE LEDOUX  suggested the committee  address questions                                                               
directly to Ms. Nauman in this regard.                                                                                          
                                                                                                                                
3:37:12 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 3:37 p.m. to 3:39 p.m.                                                                       
                                                                                                                                
3:40:00 PM                                                                                                                    
                                                                                                                                
EMILY  NAUMAN, Attorney,  Legislative Legal  Counsel, Legislative                                                               
Legal   and  Research   Services,  Legislative   Affairs  Agency,                                                               
directed attention  to page 3  of a memo dated  12/7/15 [document                                                               
not provided], and pointed out  that she noted ex-officio members                                                               
may possibly reduce the infringement  on executive branch powers,                                                               
thereby lessening the  constitutional issues.  The  main point of                                                               
the  12/7/15 memo  addressed legislative  members serving  on the                                                               
AGDC  board that  would be  voting and  participating in  officer                                                               
selection  and  other  duties.    The  3/30/16  memo  deals  with                                                               
legislative  members who  are ex-officio  and nonvoting  members.                                                               
Ms. Nauman  opined that  a court opinion  is needed  to determine                                                               
whether nonvoting legislative members are unconstitutional.                                                                     
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  said   the  aforementioned   attorney                                                               
general's  opinion relies  upon  1968 and  1976  State of  Alaska                                                               
decisions,  and on  several attorney's  general opinions  (AGOs).                                                               
He said AGO's are presumptively  law and asked whether Ms. Nauman                                                               
does  not  rely  on  state   opinions  "as  sort  of  an  overall                                                               
jurisprudential analysis."                                                                                                      
                                                                                                                                
MS. NAUMAN  said correct.   She added that  there is no  AGO that                                                               
addresses  nonvoting legislative  members  seated  on boards  and                                                               
commissions.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KITO  questioned   the   need  for   legislative                                                               
representation on  the AGDC board because  legislators can attend                                                               
any AGDC  meeting, and request  and receive information  from the                                                               
corporation.   Furthermore,  if legislative  members do  not have                                                               
the ability  to vote, he inquired  as to the role  of legislative                                                               
board members.                                                                                                                  
                                                                                                                                
SENATOR COSTELLO reminded the committee  of the importance of the                                                               
gasline project to  Alaska's future.  Recently, there  has been a                                                               
high  turnover  of  AGDC  board   members,  and  members  of  the                                                               
legislature  have  held  a  long interest  in  the  project,  and                                                               
developed  the project's  guiding  documents.   She  acknowledged                                                               
that legislative  members can attend  meetings, except  the board                                                               
meetings often  go into executive  sessions that  exclude members                                                               
of the legislature.   She opined service on the  AGDC board is no                                                               
different than that on the  Alaska Seafood Marketing Institute or                                                               
the Alaska Travel Industry Association  boards.  Senator Costello                                                               
restated  the intent  of  the bill  is  to foster  communication,                                                               
cooperation,  and trust,  and legislative  members are  needed on                                                               
the  board to  represent  the  people of  Alaska  and advise  the                                                               
corporation.                                                                                                                    
                                                                                                                                
3:45:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KITO   turned   to   the   following   concerns:                                                               
legislative members in attendance  during executive sessions; the                                                               
continuity  of  the  board;  the   qualifications  of  the  board                                                               
members.   He pointed  out that legislators  are lay  leaders and                                                               
although his personal  expertise is in engineering,  he would not                                                               
presume to understand  the technicalities of, for  example, a gas                                                               
liquefaction  plant, and  cautioned  that "we're  relying on  lay                                                               
legislators  like   ourselves  that  might  not   have  technical                                                               
expertise in  natural gas pipelines  to be that continuity."   In                                                               
addition,  legislators  could  be  called  on  by  the  board  to                                                               
participate  in decisions  whenever  necessary.   He pointed  out                                                               
that   although  a   legislative  member   of  the   board  could                                                               
participate in  an executive session,  he/she would be  unable to                                                               
share  information with  the full  legislature, which  calls into                                                               
question the benefits thereof.   Representative Kito restated his                                                               
question as to the role of the legislative board member.                                                                        
                                                                                                                                
SENATOR  COSTELLO  said legislators  have  to  decide whether  to                                                               
"agree ...  with the premise  of the  bill which is  the people's                                                               
branch  has a  seat at  the  table, no  matter if  that table  is                                                               
inside a locked  door or outside in the public  view."  Regarding                                                               
the value, she recalled that  the legislature passed [Senate Bill                                                               
138, passed in the Twenty-Eighth  Alaska State Legislature] - the                                                               
guiding  structure   for  the  project  -   and  legislators  are                                                               
interested in further participation in the project.                                                                             
                                                                                                                                
CHAIR  OLSON  stated his  and  other  members' concern  with  the                                                               
current  structure of  the board,  which has  board members  with                                                               
experience  limited  to  serving   on  the  Alaska  Gasline  Port                                                               
Authority.    He  reviewed  the  qualities  of  two  unsuccessful                                                               
appointees to  the AGDC board,  and said legislators want  to see                                                               
legislative  members on  the board  because "  ... the  direction                                                               
that  it  may  be  going  may  not  be  the  direction  that  was                                                               
envisioned by the bulk of the people that got the ball rolling."                                                                
                                                                                                                                
REPRESENTATIVE HUGHES expressed strong  support for the provision                                                               
of  the  bill  that  requires  expertise  and  experience.    She                                                               
inquired as  to the nature  of executive sessions, and  asked for                                                               
the reasons the AGDC board would go into executive session.                                                                     
                                                                                                                                
MR. EILER  advised that  AGDC is  exempt from  many parts  of the                                                               
Administrative Procedure  Act, except for the  open meetings law.                                                               
He deferred to AGDC.                                                                                                            
                                                                                                                                
3:51:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  asked whether the bill  sponsor can assure                                                               
the committee that if there  are nonvoting legislative members on                                                               
the board, the board would remain apolitical.                                                                                   
                                                                                                                                
SENATOR COSTELLO  pointed out that  the legislature votes  on the                                                               
appointments   of  members   of   the  board,   except  for   the                                                               
commissioners.  She remarked:                                                                                                   
                                                                                                                                
     I would like to see  the people's branch be represented                                                                    
     there.  Whether you see that  as political ... I see it                                                                    
     as only adding value to,  to the board, and adding some                                                                    
     depth in terms  of the history of  the legislation, the                                                                    
     history of the project.                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES   then  asked   whether  the   sponsor  is                                                               
confident  that if  during  executive  sessions with  legislative                                                               
board  members present,  the other  AGDB board  members would  be                                                               
free to "lay things out on the table."                                                                                          
                                                                                                                                
SENATOR  COSTELLO  opined that  all  board  members would  follow                                                               
guidelines and procedures.                                                                                                      
                                                                                                                                
REPRESENTATIVE JOSEPHSON inquired as to  the laws related to when                                                               
executive branch  officials can  listen to  legislative executive                                                               
sessions;  for  example, whether  they  can  attend an  executive                                                               
session  of  a  Legislative  Budget and  Audit  (JBUD)  committee                                                               
meeting.                                                                                                                        
                                                                                                                                
SENATOR COSTELLO declined to answer.                                                                                            
                                                                                                                                
MS.  NAUMAN said  she was  not  aware of  any law  that allows  a                                                               
member  of  the executive  branch  to  sit  in on  a  legislative                                                               
committee   executive   session.     In   further   response   to                                                               
Representative Josephson, she restated her answer.                                                                              
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  questioned whether  other  commissions                                                               
and boards  such as the Alaska  Aerospace Corporation, Department                                                               
of  Military &  Veterans' Affairs,  and the  Knik Arm  Bridge and                                                               
Toll   Authority,   Department   of   Transportation   &   Public                                                               
Facilities,  have been  challenged  by a  claim that  legislators                                                               
should not serve.                                                                                                               
                                                                                                                                
SENATOR COSTELLO said, "Not that I am aware."                                                                                   
                                                                                                                                
3:57:16 PM                                                                                                                    
                                                                                                                                
CHAIR   OLSON  was   told  that   Commissioner  Sheldon   Fisher,                                                               
Department   of  Administration,   was   invited   to  the   last                                                               
Legislative  Council meeting  executive session  but declined  to                                                               
attend at the direction of the governor.                                                                                        
                                                                                                                                
REPRESENTATIVE   KITO  advised   that  Legislative   Council  and                                                               
Legislative  Budget  and Audit  committees  have  the ability  to                                                               
invite  any individual,  but  an individual  must  be invited  to                                                               
participate in executive sessions.                                                                                              
                                                                                                                                
CHAIR OLSON  understood that any  member of the House  and Senate                                                               
can attend, but not participate in, an executive session.                                                                       
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether  the  committee would  hear                                                               
testimony  from the  administration  in opposition  to the  bill.                                                               
She  gave her  history of  serving on  the Aerospace  Corporation                                                               
board of directors.                                                                                                             
                                                                                                                                
3:59:56 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON opened public testimony.                                                                                            
                                                                                                                                
4:00:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LIZ VAZQUEZ,  Alaska State  Legislature, reminded                                                               
the  committee that  the  board is  not  set up  as  part of  the                                                               
executive branch  - reporting directly  to the governor -  but is                                                               
set  up  as  an  independent   corporation  and  is  exempt  from                                                               
personnel and procurement regulations,  and statutes that pertain                                                               
to the rest  of the state.   She opined AGDC is  only required to                                                               
comply with the  open meetings law; in fact, if  a legal decision                                                               
rendered in  the state were found,  it would relate to  an entity                                                               
closer to  or within  the executive branch,  as opposed  to AGDC,                                                               
which is "totally distinct."                                                                                                    
                                                                                                                                
4:01:53 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after ascertaining  that no  one further  wished to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
REPRESENTATIVE  COLVER   expressed  his   concern  that   with  a                                                               
constitutional  issue  outstanding,  AGDC board  actions  may  be                                                               
subject to  litigation, and "cloud  business that we  expect AGDC                                                               
to do."   He read from  the Constitution of the  State of Alaska,                                                               
Article II, Section 5, as follows [in part]:                                                                                    
                                                                                                                                
     No legislator may hold any other office or position of                                                                     
     profit under the United States or the state.                                                                               
                                                                                                                                
REPRESENTATIVE COLVER continued, noting  that AGDC is supposed to                                                               
look and act  like a business, and should not  be encumbered with                                                               
politics.                                                                                                                       
                                                                                                                                
CHAIR  OLSON advised  that  there  are "at  least  a dozen  other                                                               
boards, similar  boards, and to  the best of my  knowledge, we've                                                               
never had that issue arise ...."                                                                                                
                                                                                                                                
REPRESENTATIVE KITO  questioned the benefit of  adding members to                                                               
a  board that  is operating.   Adding  three additional  members,                                                               
especially  legislative members  whose  appointments will  change                                                               
every two years,  does not provide continuity.  He  said the bill                                                               
is not necessary.                                                                                                               
                                                                                                                                
REPRESENTATIVE  JOSEPHSON stated  the  following  concerns:   1.)                                                               
memos written by  Legislative Legal Services that  cite two other                                                               
states  are persuasive  authority, however,  the memo  written by                                                               
the  Department  of Law  cites  actual  state authority  on  dual                                                               
office  holding and  separation of  powers, and  is supported  by                                                               
three  AGO statements;  2.) turnover  on the  board due  to legal                                                               
requirements of  residency; 3.) politicizing  of the  agency; 4.)                                                               
the  inability of  legislative board  members to  share executive                                                               
session   comments;    5.)   constitutionality;    6.)   possible                                                               
litigation.  He said he was a "no vote."                                                                                        
                                                                                                                                
REPRESENTATIVE HUGHES  gave her  experience serving on  the board                                                               
of directors of the Alaska  Travel Industry Association, and said                                                               
the  addition of  legislative  members to  the  AGDC board  could                                                               
improve communications.                                                                                                         
                                                                                                                                
4:09:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  moved  to   report  [HCS  CSSB  125(RES],                                                               
Version   29-LS1250\S,   out   of   committee   with   individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
4:09:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON objected.                                                                                              
                                                                                                                                
4:10:26 PM                                                                                                                    
                                                                                                                                
A  roll call  vote was  taken.   Representatives Tilton,  Hughes,                                                               
LeDoux, Colver,  and Olson voted  in favor of HCS  CSSB 125(RES).                                                               
Representatives Kito and Josephson  voted against it.  Therefore,                                                               
HCS  CSSB  125(RES) was  reported  out  of  the House  Labor  and                                                               
Commerce Standing Committee by a vote of 5-2.                                                                                   
                                                                                                                                
4:10:47 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 4:10 p.m. to 4:14 p.m.                                                                       
                                                                                                                                
                    HB 372-OMNIBUS INSURANCE                                                                                
                                                                                                                                
4:14:57 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE BILL  NO. 372, "An  Act relating to insurance;  relating to                                                               
expenses for insurance examinations;  relating to regulations for                                                               
insurance  utilization  review,  benefits  determination,  health                                                               
care  insurance  grievance   resolution  procedures,  independent                                                               
review    of   adverse    determinations    or   final    adverse                                                               
determinations, independent review  organizations, and continuing                                                               
education providers;  relating to required provisions  for health                                                               
care  insurance contracts  and  policies,  including health  care                                                               
provider choice;  establishing civil  penalties for  insurers for                                                               
failure to provide requested records;  amending the definition of                                                               
'wet  marine and  transportation' insurance;  amending provisions                                                               
on  limited  licenses  to include  crop  insurance;  relating  to                                                               
third-party administrator notification  requirements; relating to                                                               
certification   filing  by   reinsurance  intermediary   brokers;                                                               
relating  to  rate filings,  delivery  of  insurance policies  or                                                               
endorsements;  relating to  refunds  of  variable life  insurance                                                               
policies  and  variable  annuities; establishing  limitations  on                                                               
issuance of  long- term care insurance;  relating to requirements                                                               
for group  health insurance policies; amending  the definition of                                                               
'group  health  insurance';  relating to  motor  vehicle  service                                                               
contracts;  relating  to  notice  requirements  for  meetings  of                                                               
stockholders  or members  of a  domestic insurer;  establishing a                                                               
definition of  'bona fide association'; relating  to requirements                                                               
and penalties  for committing a fraudulent  or criminal insurance                                                               
act; updating criteria for examinations;  relating to rate filing                                                               
deviations;  establishing  civil  penalties  for  certain  wilful                                                               
violations; and providing for an effective date."                                                                               
                                                                                                                                
4:15:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES moved  to adopt  the committee  substitute                                                               
(CS) for  HB 372, Version  29-LS1379\H, Wallace, 3/30/16,  as the                                                               
working document.                                                                                                               
                                                                                                                                
CHAIR OLSON objected for discussion purposes.                                                                                   
                                                                                                                                
4:15:27 PM                                                                                                                    
                                                                                                                                
LORI  WING-HEIER,  Director,  Division  of  Insurance,  Anchorage                                                               
Office,   Department   of    Commerce,   Community   &   Economic                                                               
Development,  presented  changes  made  by the  CS  for  HB  372,                                                               
Version H, as follows:                                                                                                          
   · Beginning on page 3, Section 4 is amended by adding to the                                                                 
     title "relating to health care  insurance policies" in order                                                               
     to  clarify that  workers' compensation  is not  included in                                                               
     the definition of health care insurance policies.                                                                          
   · Section 5 is deleted, affecting subsequent section numbers.                                                                
   · Beginning on page 19, Section 31 is changed by adding the                                                                  
     words,  "the   specific"  and  "the  exact   change  in"  in                                                               
     subsection (b).   Sections 46  and 50 were deleted,  and the                                                               
     foregoing added to clarify that  insurers give notice to the                                                               
     consumer of  45 days after  changes in the premium  and form                                                               
     filings are known.                                                                                                         
   · Beginning on page 7, Section 8 was Section 5, and now                                                                      
     applies to obstetrics/gynecology (OB/GYN)  in order to avoid                                                               
     federal  preemption, and  adds  the  words "a  participating                                                               
     health care  professional who  specializes in  obstetrics or                                                               
     gynecology  shall  agree  to   adhere  to  the  health  care                                                               
     insurer's  policies  and  procedures,  including  procedures                                                               
     regarding  referrals,  obtaining   prior  authorization  and                                                               
     providing services under a treatment  plan, if any, approved                                                               
     by the health care insurer."                                                                                               
                                                                                                                                
MS. WING-HEIER said the above are  all the changes made by the CS                                                               
except for renumbering.                                                                                                         
                                                                                                                                
4:20:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked for  the reason to  avoid federal                                                               
preemption.                                                                                                                     
                                                                                                                                
MS.  WING-HEIER  explained   that  federal  preemption  threatens                                                               
state-based   insurance   regulations.     In   addition,   state                                                               
compliance with  the [Patient Protection and  Affordable Care Act                                                               
of 2010 (PPACA)]  aids in health care reforms,  a possible waiver                                                               
or  other provisions,  in providing  better  and more  affordable                                                               
insurance  products for  consumers, and  in interaction  with the                                                               
Centers for Medicare and Medicaid Services (CMS).                                                                               
                                                                                                                                
REPRESENTATIVE  HUGHES  asked  whether the  statement  needed  to                                                               
comply with federal law is specific to OB/GYN providers.                                                                        
                                                                                                                                
MS. WING-HEIER  said yes.   Previous iterations of the  bill used                                                               
substantially similar language.                                                                                                 
                                                                                                                                
REPRESENTATIVE  HUGHES  questioned  whether   there  has  been  a                                                               
reaction from OB/GYN providers in Alaska.                                                                                       
                                                                                                                                
MS.  WING-HEIER  said  providers  were previously  aware  of  the                                                               
provision.   In  further response  to Representative  Hughes, she                                                               
offered  that the  purpose of  the provision  directed at  OB/GYN                                                               
providers was to provide  transparency and avoid miscommunication                                                               
between the provider, consumer, and the insurer.                                                                                
                                                                                                                                
REPRESENTATIVE  HUGHES restated  her  previous  concern that  the                                                               
insurer must not dictate a  patient's care; she posed a situation                                                               
in which  an insurer approved  a treatment plan and  the provider                                                               
deviated from the  plan, and asked whether the  insurer would pay                                                               
for the approved parts of the plan without penalty.                                                                             
                                                                                                                                
MS. WING-HEIER said  the consumer always has the right  to go out                                                               
of network for  a different procedure, and  the insurance company                                                               
retains the  right to  pay from the  benefit plan;  the provision                                                               
clarifies for the  consumer what to expect "so there  will not be                                                               
a surprise billing."                                                                                                            
                                                                                                                                
4:25:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  restated her  concern that  this provision                                                               
is a federal requirement.                                                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX confirmed that  original Section 5 had been                                                               
deleted.                                                                                                                        
                                                                                                                                
MS. WING-HEIER said correct.                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON surmised that  subsection (h) is part of                                                               
the  policy and  values of  PPACA to  ensure that  women's health                                                               
care  is  fundamental, and  is  "part  and  parcel of  a  general                                                               
package of, of primary care."                                                                                                   
                                                                                                                                
MS.  WING-HEIER said  she did  not disagree  in this  regard, but                                                               
declined to explain the intent of PPACA.                                                                                        
                                                                                                                                
4:27:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON opened public testimony on HB 372.                                                                                  
                                                                                                                                
4:27:44 PM                                                                                                                    
                                                                                                                                
JEANNIE MONK,  Senior Program Officer, Alaska  State Hospital and                                                               
Nursing Home  Association (ASHNHA),  informed the  committee that                                                               
HB 372 is a complex bill,  of which ASHNHA has not had sufficient                                                               
time to fully  understand or vet.  The stated  intent of the bill                                                               
is to conform Alaska Statutes to  federal law and to the National                                                               
Association   of   Insurance  Commissioners   (NAIC)   standards;                                                               
however, which  portions of the bill  are based on what  model is                                                               
unknown to ASHNHA.  Ms.  Monk expressed appreciation that Section                                                               
5 had been  deleted.  However, two areas of  concern remain:  1.)                                                               
on page 8,  lines 15-22, Section 11, the  definition of emergency                                                               
medical  condition   does  not  include  the   prudent  layperson                                                               
standard which  is a standard  in federal law that  addresses the                                                               
need for  insurance to cover a  visit to an emergency  room based                                                               
not on diagnosis, but on  the possibility of serious illness, and                                                               
ASHNHA  urged for  the bill  to  confirm with  the definition  in                                                               
PPACA; 2.) on page 20, lines 15  and 20, Section 32, add the term                                                               
"or  omits  information"  to  the   definition  of  a  fraudulent                                                               
insurance act,  and ASHNHA  is concerned  that adding  this could                                                               
turn "any average  bill submission into a  fraudulent claim," and                                                               
seeks the deletion of "or  omits information," or the addition of                                                               
"intentionally."                                                                                                                
                                                                                                                                
REPRESENTATIVE JOSEPHSON  returned attention  to Section  11, and                                                               
asked  whether  the  present  proposed  definition  of  emergency                                                               
medical  condition  is  too  restrictive, and  sets  too  high  a                                                               
standard for a visit to the emergency room.                                                                                     
                                                                                                                                
MS. MONK  said yes.   The prudent  layperson standard is  a lower                                                               
standard.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   surmised  ASHNHA  seeks   to  protect                                                               
patient rights in Section 11.                                                                                                   
                                                                                                                                
MS.  MONK said  that's exactly  right.   In  further response  to                                                               
Representative  Josephson,  she  said  in  Section  32,  ASHNHA's                                                               
interest is to protect the  person who submits an insurance bill,                                                               
which could be a patient or a provider.                                                                                         
                                                                                                                                
REPRESENTATIVE HUGHES  pointed out  on page  20, line  8, Section                                                               
32, read:                                                                                                                       
                                                                                                                                
        (b) A fraudulent insurance act is committed by a                                                                        
     person who, with intent to injure, defraud, or deceive                                                                     
                                                                                                                                
REPRESENTATIVE  HUGHES  asked  if  ASHNHA  considered  that  this                                                               
language addresses the concern of intent.                                                                                       
                                                                                                                                
4:34:26 PM                                                                                                                    
                                                                                                                                
MS.  MONK offered  to  consult  with others  on  this matter  and                                                               
respond.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  LEDOUX opined  that the  new language,  "or omits                                                               
information" would lead  to litigation on whether  a claim should                                                               
be accepted.                                                                                                                    
                                                                                                                                
MS. MONK agreed.                                                                                                                
                                                                                                                                
MS.  WING-HEIER  advised that  part  of  addressing the  cost  of                                                               
health care is addressing fraud;  in fact, any fraudulent act has                                                               
to  have  intent  and  cannot  be  a  simple  clerical  error,  a                                                               
misstatement, or  a one-time  occurrence.  She  said this  is not                                                               
about  insurance  companies  failing  to pay  claims,  but  about                                                               
someone who is committing fraud.                                                                                                
                                                                                                                                
REPRESENTATIVE KITO  asked how the division  determines intent if                                                               
an insurance company makes an accusation of fraud.                                                                              
                                                                                                                                
MS.  WING-HEIER explained  the  division would  not  look at  one                                                               
claim or claimant,  but the provider would have  to file multiple                                                               
claims against an insurer and establish a pattern of fraud.                                                                     
                                                                                                                                
REPRESENTATIVE HUGHES suggested that  the word "incomplete" found                                                               
on page 20, line 15, equates to "or omits information."                                                                         
                                                                                                                                
MS.  WING-HEIER  said  no,   incomplete  information  is  missing                                                               
information.   In further response to  Representative Hughes, she                                                               
added  that "incomplete  information" could  be a  form that  was                                                               
half   completed,   but   "omits  information"   is   withholding                                                               
information that has been requested.                                                                                            
                                                                                                                                
4:40:00 PM                                                                                                                    
                                                                                                                                
JON  ZASADA, Policy  Integration  Director,  Alaska Primary  Care                                                               
Association (APCA), informed the  committee APCA is the statewide                                                               
membership  organization of  Alaska's  community health  centers.                                                               
Because  APCA  members  are   safety-net  health  providers,  his                                                               
organization's comments  are focused  on the potential  impact of                                                               
the  bill  on  its  members.     Mr.  Zasada  said  APCA  members                                                               
appreciate the  deletion of  Section 5.   Returning  attention to                                                               
page 20, Section  32, subsection (b), paragraphs (2)  and (3), he                                                               
said APCA suggested  adding the word "intentionally"  in front of                                                               
"or  omits information"  after consulting  with community  health                                                               
associations in other states.                                                                                                   
                                                                                                                                
REPRESENTATIVE HUGHES questioned  whether page 20, lines  8 and 9                                                               
take care of APCA's concern related to fraudulent intent.                                                                       
                                                                                                                                
MR. ZASADA said APCA seeks to  add the word intentionally to make                                                               
the paragraphs "crystal clear."                                                                                                 
                                                                                                                                
REPRESENTATIVE JOSEPHSON  returned attention  to page  8, Section                                                               
11, and asked whether APCA  agrees with ASHNHA's inclusion of the                                                               
prudent layperson standard in Section 11.                                                                                       
                                                                                                                                
MR.  ZASADA  disclosed  that  APCA  does  not  provide  emergency                                                               
services, but does agree with ASHNHA.                                                                                           
                                                                                                                                
4:43:56 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after ascertaining  that no  one further  wished to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
[HB 372 was held over.]                                                                                                         
                                                                                                                                
4:44:41 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 4:44 p.m. to 4:46 p.m.                                                                       
                                                                                                                                
             HB 299-PERS PARTICIPATION: CONTRACTORS                                                                         
                                                                                                                                
4:46:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE  BILL  NO. 299,  "An  Act  excluding certain  persons  from                                                               
participating  in  the  Public Employees'  Retirement  System  of                                                               
Alaska."                                                                                                                        
                                                                                                                                
4:46:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, speaking                                                                
as the sponsor of HB 299, paraphrased the sponsor statement, as                                                                 
follows: [original punctuation provided]                                                                                        
                                                                                                                                
     HB  299, is  being  brought forward  on  behalf of  the                                                                    
     501(C)3,    nonprofit   corporation    volunteer   fire                                                                    
     departments  within the  Fairbanks North  Star Borough,                                                                    
     operating  as   "independent  contractors".   They  are                                                                    
     currently under  contract with  the borough  to provide                                                                    
     emergency  response   services.  Each   nonprofit  fire                                                                    
     department  has  both  full  time  paid  employees  and                                                                    
     trained  volunteers as  emergency  responders. Each  of                                                                    
     these  organizations  provides  benefit plans  for  all                                                                    
     members.  Dolan vs  King County  was a  lawsuit between                                                                    
     the  County  and independent  non-profit  organizations                                                                    
     which provided  indigent legal services to  the county.                                                                    
     Over  a period  of thirty  years, King  County asserted                                                                    
     increasing budgetary and day  to day authority over the                                                                    
     formerly   independent  non-profit   organizations.  In                                                                    
     doing  so, it  asserted  more control  over the  groups                                                                    
     that   provided   the   services.  Employees   of   the                                                                    
     organizations sued  the County  for the  state employee                                                                    
     benefits.  They argued  that the  County's funding  and                                                                    
     control   over    their   "independent"   organizations                                                                    
     essentially made them state  employees for the purposes                                                                    
     of  participating in  the  Public Employees  Retirement                                                                    
     System (PERS)  and under pertinent statutes  and common                                                                    
     law   principles,  the   Supreme   Court  agreed   that                                                                    
     employees of  the organizations were  "employees" under                                                                    
     state law, and,  as such, were entitled  to be enrolled                                                                    
     in  the  PERS.  HB  299 would  clearly  define  who  is                                                                    
     eligible  for the  Public Employees'  Retirement System                                                                    
     of Alaska  and give added protection  to municipalities                                                                    
     against such liability. In times  of such fiscal strife                                                                    
     this  legislation would  encourage the  exploration and                                                                    
     utilization  of cost  effective  measures for  services                                                                    
     and  promote  independent organizations  and  business.                                                                    
     This  bill emphasizes  the need,  however, to  maintain                                                                    
     the  proprieties of  the independent  relationship when                                                                    
     contracting  for  the  provision  of  essential  public                                                                    
     service. I would appreciate your support of HB 299.                                                                        
                                                                                                                                
REPRESENTATIVE WILSON added that  Washington passed a similar law                                                               
to prevent further litigation.                                                                                                  
                                                                                                                                
4:49:05 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked how many fire service areas would be affected.                                                                
                                                                                                                                
REPRESENTATIVE  WILSON  responded  that Fairbanks  has  five  and                                                               
Ketchikan has the same issue.                                                                                                   
                                                                                                                                
CHAIR OLSON indicated that the  Matanuska-Susitna region may have                                                               
as well.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  WILSON, as  an  aside  to Representative  Colver,                                                               
said  Fairbanks North  Star Borough  has  approximately 109  road                                                               
service areas.   Representative  Wilson pointed  out [Identifier:                                                               
DOA-DRB-HB299-03-18-16] is a zero fiscal  note.   She paraphrased                                                               
the sectional analysis, as follows:                                                                                             
                                                                                                                                
   · Section 1  Contractors and employees of contractors are                                                                    
     excluded from this plan                                                                                                    
   · Section 2  "same thing"                                                                                                    
   · Section 3  adds "a person who is compensated on a                                                                          
     contractual or fee basis"                                                                                                  
                                                                                                                                
REPRESENTATIVE  WILSON advised  that Section  3 would  not impact                                                               
the "university fire service area"  employees, who are members of                                                               
the  Public  Employees'  Retirement System  (PERS),  because  the                                                               
contract with FNSB is with the University of Alaska.                                                                            
                                                                                                                                
REPRESENTATIVE  KITO  inquired  as  to  whether  individuals  are                                                               
covered under another retirement plan.                                                                                          
                                                                                                                                
REPRESENTATIVE WILSON  said yes.   She added that  those affected                                                               
by  the  bill  have  their  own  medical  and  retirement  plans;                                                               
however, they  are not  employees of FNSB  and would  not qualify                                                               
for  PERS.   In  further  response  to Representative  Kito,  she                                                               
explained  that in  Washington,  a nonprofit  that was  providing                                                               
services  sued   for  coverage  under   the  county   system  and                                                               
prevailed.   Subsequently, Washington clarified its  laws related                                                               
to who is a contractor and who  is an employee; the purpose of HB                                                               
299   is  to   clarify   that  contractors   who  contract   with                                                               
municipalities  are  separate  entities, and  therefore  are  not                                                               
eligible for membership in PERS.                                                                                                
                                                                                                                                
4:52:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  directed   attention  to  the  sponsor                                                               
statement and read [in part]:                                                                                                   
                                                                                                                                
     In times  of such fiscal strife  this legislation would                                                                    
     encourage  the  exploration  and  utilization  of  cost                                                                    
     effective   measures    for   services    and   promote                                                                    
     independent organizations and business.                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether HB  299 was  designed to                                                               
help privatize employees who are now public employees.                                                                          
                                                                                                                                
REPRESENTATIVE WILSON said absolutely not.                                                                                      
                                                                                                                                
REPRESENTATIVE  HUGHES asked  whether a  problem related  to this                                                               
issue has arisen.                                                                                                               
                                                                                                                                
REPRESENTATIVE  WILSON answered  that  "being  proactive is  much                                                               
better and much more affordable."                                                                                               
                                                                                                                                
REPRESENTATIVE COLVER questioned  how contracts with firefighters                                                               
are established.                                                                                                                
                                                                                                                                
REPRESENTATIVE WILSON  explained that  there is  a mill  rate for                                                               
each  fire  service  area,  which is  separate  of  the  contract                                                               
between FNSB for  emergency medical services (EMS)  that are paid                                                               
by the number of ambulance calls made.                                                                                          
                                                                                                                                
REPRESENTATIVE  COLVER surmised  EMS is  provided by  the private                                                               
sector or  a 501(c) 3  nonprofit entity that  is not housed  in a                                                               
FNSB fire department facility.                                                                                                  
                                                                                                                                
REPRESENTATIVE  WILSON clarified  that EMS  is part  of the  fire                                                               
department; the fire  service protection is based on  a mill rate                                                               
and EMS is  a different area paid  by a contract with  FNSB.  The                                                               
ambulances, and volunteer and paid  responders, are housed in the                                                               
fire station.                                                                                                                   
                                                                                                                                
4:55:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  concluded that  EMS coverage  is not  by a                                                               
service area,  but is  area-wide.   He asked  about the  chain of                                                               
command.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  WILSON said  the staff  is directed  by the  fire                                                               
chief   and  an   EMS  (indisc.).     In   further  response   to                                                               
Representative   Colver,  she   affirmed  that   the  contractual                                                               
relationship is just between FNSB and the fire service area.                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  questioned   whether  previous  part-time                                                               
employees have asked to be covered by PERS.                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON said  no.   The employees  are covered  by                                                               
their  own plans  and work  fulltime  or part-time  for the  fire                                                               
service area.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  COLVER  recalled  that in  the  Matanuska-Susitna                                                               
(Mat-Su) Borough, EMS staff is  hired by the borough; however, in                                                               
order  to avoid  paying benefits  and retirement,  employees were                                                               
kept on part-time status, and this  led to a legal action against                                                               
the Mat-Su Borough  over employees' right to PERS.   He cautioned                                                               
that "this  area of this  PERS with  the fire department  and the                                                               
EMS  employees   is  a  very   expensive  proposition   for,  for                                                               
government."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  restated  that the  proposed  legislation                                                               
addresses independent contractors, and  none of these [employees]                                                               
are employees  of FNSB.   The  Mat-Su Borough  hired people  on a                                                               
part-time status, but  these [individuals] are hired  by the fire                                                               
service areas as independent contractors.                                                                                       
                                                                                                                                
4:58:48 PM                                                                                                                    
                                                                                                                                
MITCH  FLYNN,  Fire  Chief,   Steese  Volunteer  Fire  Department                                                               
(SVFD),  informed  the  committee  SVFD is  a  501(c)3  nonprofit                                                               
organization  in Fairbanks,  and an  independent contractor  with                                                               
the Fairbanks  North Star Borough  (FNSB) that provides  fire and                                                               
EMS  services  within   a  service  area  on   an  annual  basis.                                                               
Recently, FNSB  revealed problems with SVFD's  contracts that may                                                               
pose a financial  liability risk to fire service  and EMS service                                                               
area  taxpayers.   Although improvements  to  its contracts  have                                                               
been made, SVFR  remains concerned about a possible  claim from a                                                               
current  or past  employee who  may  sue for  PERS benefits.  The                                                               
purpose of  HB 299 is  to eliminate the aforementioned  threat to                                                               
PERS,  and  is   not  to  prevent  the   fulfillment  of  current                                                               
contracts,  or  to  remove  employees  currently  receiving  PERS                                                               
benefits  from  the  system.    Mr.  Flynn  said  there  are  six                                                               
nonprofit   fire  departments   statewide  which   contract  with                                                               
municipal  governments to  provide fire  and EMS  services.   The                                                               
Steese  Volunteer  Fire  Department   has  its  own  medical  and                                                               
retirement benefits programs and members  do not intend or expect                                                               
to participate  in PERS.   He asked  the committee to  support HB                                                               
299  in  order  to  protect  PERS and  those  employees  who  are                                                               
rightfully entitled to PERS membership.                                                                                         
                                                                                                                                
REPRESENTATIVE  COLVER  asked  whether   it  is  problematic  for                                                               
municipalities to  contract with  nonprofits or others,  and seek                                                               
an exclusion from PERS.                                                                                                         
                                                                                                                                
5:02:37 PM                                                                                                                    
                                                                                                                                
KATHY  LEA, Chief  Pension Officer,  Division  of Retirement  and                                                               
Benefits,  Department of  Administration, said  it is  common for                                                               
municipalities  to  contract-out  for certain  aspects  of  their                                                               
work; however, from the perspective  of PERS, it is important for                                                               
independent contractors  to remain  independent from  the control                                                               
of the  municipality related to  finances, behavior,  or physical                                                               
arrangement.   If not,  the independent  contractor is  no longer                                                               
independent, and can be considered an employee.                                                                                 
                                                                                                                                
REPRESENTATIVE COLVER  inquired as  to the  hours an  employee is                                                               
required to work to be entitled to PERS.                                                                                        
                                                                                                                                
5:03:49 PM                                                                                                                    
                                                                                                                                
MS. LEA said the threshold for  part-time service is a minimum of                                                               
15  hours regularly  scheduled every  week, and  fulltime service                                                               
requires  at least  30 hours  of work  regularly scheduled  every                                                               
week.                                                                                                                           
                                                                                                                                
5:04:21 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that public testimony would remain open.                                                                  
                                                                                                                                
[HB 299 was held over.]                                                                                                         
                                                                                                                                
5:04:35 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:04 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB372 Draft Proposed CS ver H.pdf HL&C 4/4/2016 3:15:00 PM
HB 372
SB125 ver S.PDF HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Fiscal Note-(L&C)-DCCED-AGDC-02-29-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Sponsor Statement.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Legal Memo CS ver G 3-31-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
HB299 ver A.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Sponsor Statement.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Fiscal Note DOA-DRB-HB299-03-18-16.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Steven Crouch 3-16-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Resolution AK Municipal League 11-20-15.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Resolution K. Gateway Borough 10-5-15.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Case Summary Dolan vs King County.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Dolan VS King County 8-18-11.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Arthur Hansen 2-27-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Dave Nebert 2-27-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Mitch Flynn 2-22-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
SB125 Sponsor Statement ver S.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Sectional Analysis ver S.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB 125 Supporting Document Legislative Membership State Boards and Commissions.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Dept. Law Memo to Leg. Office 03-20-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125