Legislature(1999 - 2000)
03/20/2000 03:50 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 20, 2000
3:50 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative John Harris
Representative Jerry Sanders
MEMBERS ABSENT
Representative Lisa Murkowski
Representative Tom Brice
Representative Sharon Cissna
COMMITTEE CALENDAR
HOUSE BILL NO. 326
"An Act relating to the inspection of boilers and pressure vessels
and to fees for services under the boilers and pressure vessels
program; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 303
"An Act relating to the method of payment of fees and adoption of
regulations under AS 21; relating to orders under AS 21 regarding
risk based capital instructions; relating to accounting standards
for insurance companies; amending the definitions of 'creditable
coverage' and 'late enrollees' in AS 21.54; relating to
requirements for small employer insurers; relating to requirements
for issuance of new voting securities by an insurance company;
requiring health care insurance coverage for reconstructive surgery
following mastectomy; requiring guaranteed renewability of and
certification of coverage regarding certain individual health
insurance policies; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 419
"An Act relating to the weekly rate of compensation and minimum and
maximum compensation rates for workers' compensation; specifying
components of a workers' compensation reemployment plan; adjusting
workers' compensation benefits for permanent partial impairment,
for reemployment plans, for rehabilitation benefits, for widows,
widowers, and orphans, and for funerals; relating to permanent
total disability of an employee receiving rehabilitation benefits;
relating to calculation of gross weekly earnings for workers'
compensation benefits for seasonal and temporary workers and for
workers with overtime or premium pay; setting time limits for
requesting a hearing on claims for workers' compensation, for
selecting a rehabilitation specialist, and for payment of medical
bills; relating to termination and to waiver of rehabilitation
benefits, obtaining medical releases, and resolving discovery
disputes relating to workers' compensation; setting an interest
rate for late payments of workers' compensation; providing for
updating the workers' compensation medical fee schedule; and
providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 326
SHORT TITLE: INSPECTION OF BOILERS & PRESSURE VESS.
Jrn-Date Jrn-Page Action
2/02/00 2062 (H) READ THE FIRST TIME - REFERRALS
2/02/00 2063 (H) L&C, FIN
2/02/00 2063 (H) FISCAL NOTE (LABOR)
2/02/00 2063 (H) GOVERNOR'S TRANSMITTAL LETTER
2/02/00 2063 (H) REFERRED TO LABOR & COMMERCE
3/20/00 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 303
SHORT TITLE: MISC. INSURANCE PROVISIONS
Jrn-Date Jrn-Page Action
1/21/00 1967 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1967 (H) L&C, HES
1/21/00 1967 (H) ZERO FISCAL NOTE (DCED)
1/21/00 1967 (H) GOVERNOR'S TRANSMITTAL LETTER
3/20/00 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 419
SHORT TITLE: WORKERS' COMPENSATION
Jrn-Date Jrn-Page Action
2/23/00 2279 (H) READ THE FIRST TIME - REFERRALS
2/23/00 2279 (H) L&C, JUD, FIN
2/23/00 2279 (H) REFERRED TO LABOR & COMMERCE
3/08/00 (H) L&C AT 3:15 PM CAPITOL 17
3/08/00 (H) Heard & Held
3/08/00 (H) MINUTE(L&C)
3/17/00 (H) L&C AT 3:15 PM CAPITOL 17
3/17/00 (H) Heard & Held
3/17/00 (H) MINUTE(L&C)
3/20/00 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
DWIGHT PERKINS, Deputy Commissioner
Office of the Commissioner
Department of Labor & Workforce Development
P.O. Box 21149
Juneau, Alaska 99802-1149
POSITION STATEMENT: Presented HB 326.
ERNEST DUMMANN, Secretary
Alaska State Association
of Boiler and Pressure Vessel Inspectors
(Address not provided)
POSITION STATEMENT: Testified on HB 326 expressing concern.
J.R. "RANDY" CARR, Chief/Labor Standards & Safety
Mechanical Inspection
Division of Labor Standards & Safety
Department of Labor & Workforce Development
P.O. Box 107021
Anchorage, Alaska 99510-7021
POSITION STATEMENT: Testified in support of HB 326.
REMOND HENDERSON, Director
Central Office
Division of Administrative Services
Department of Labor & Workforce Development
P.O. Box 21149
Juneau, Alaska 99801-1149
POSITION STATEMENT: Testified on HB 326.
BOB LOHR, Director
Division of Insurance
Department of Community & Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
POSITION STATEMENT: Testified on HB 303.
KATY CAMPBELL
Life/Health Actuary
Division of Insurance
Department of Community & Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
POSITION STATEMENT: Testified on HB 303.
BARBARA WILLIAMS
Alaska Injured Workers Alliance
P.O. Box 771754
Eagle River, Alaska 99577-1784
POSITION STATEMENT: Testified on HB 419, Version G.
LAURA WALDON
Alaska Injured Workers Alliance
4120 Resurrection Drive
Anchorage, Alaska 99504
POSITION STATEMENT: Testified on HB 419, Version G.
JERRY FLOCK
705 Muldoon Road, Space 114
Anchorage, Alaska 99504
POSITION STATEMENT: Testified on HB 419, Version G.
DEBORAH BUSH
P.O. Box 876975
Wasilla, Alaska 99687-6975
POSITION STATEMENT: Testified on HB 419, Version G.
JOEL SIGMOND
P.O. Box 872071
Wasilla, Alaska 99687-2071
POSITION STATEMENT: Testified on HB 419, Version G.
GERALDINE BODEMAN
P.O. Box 672006
Chugiak, Alaska 99567-2006
POSITION STATEMENT: Testified on HB 419, Version G.
MARJORIE LINDER
P.O. Box 230029
Anchorage, Alaska 99523-0029
POSITION STATEMENT: Testified on HB 419, Version G.
MURIEL BOWLES
P.O. Box 200713
Anchorage, Alaska 99520-0713
POSITION STATEMENT: Testified on HB 419, Version G.
HARRY BLANAL
5616 South Tahiti Loop
Anchorage, Alaska 99507
POSITION STATEMENT: Testified on HB 419, Version G.
BARBARA SUE ROTH
313 B Coleman Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 419, Version G.
THOMAS SMITH
8320 Sue Street
Anchorage, Alaska 99502
POSITION STATEMENT: Testified on HB 419, Version G.
ROBERT SULLIVAN
6635 Desiree Loop
Anchorage, Alaska 99507
POSITION STATEMENT: Testified on HB 419, Version G.
MIKE JENSEN
Workers' Compensation Attorney
12350 Industry Way
Anchorage, Alaska 99507
POSITION STATEMENT: Testified on HB 419, Version G.
K. SCOTT MCENTIRE, President
Alaska Injured Workers Alliance
6530 East 16th Avenue
Anchorage, Alaska 99504
POSITION STATEMENT: Testified on HB 419, Version G.
ACTION NARRATIVE
TAPE 00-31, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:50 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro,
Murkowski, Harris, Brice, Cissna and Sanders.
HB 326-INSPECTION OF BOILERS & PRESSURE VESS.
CHAIRMAN ROKEBERG announced the first order of business is HOUSE
BILL NO. 326, "An Act relating to the inspection of boilers and
pressure vessels and to fees for services under the boilers and
pressure vessels program; and providing for an effective date."
Number 0116
DWIGHT PERKINS, Deputy Commissioner, Office of the Commissioner,
Department of Labor & Workforce Development, came before the
committee to testify. He read the following statement into the
record:
Current Situation:
There are a total of 24,500 active boiler and pressure
vessels subject to the department's jurisdiction.
Currently, the Mechanical Inspection Section [Division of
Labor Standards & Safety, Department of Labor & Workforce
Development] inspects approximately 3,300 vessels per
year. We charge for those inspections and for a
certificate of operation that is issued as a result of
that inspection. Inspection fees are set by regulation
and vary from a total of $60 every two years to a high of
$125 every year. The number of boiler inspectors has
been reduced from five to three and one-half, and we are
still facing a substantial backlog of overdue
inspections. The number of revenue producing inspections
shrinks annually and the revenue varies unpredictably.
The Proposal:
Adopted from the state of Oregon, the proposed plan would
issue a certificate of operation to every active boiler
and pressure vessel every year and charge a certificate
fee. Boiler inspections would be done free of charge.
This has two major advantages:
- Income would be leveled to a highly predictable
rate every year. The number of active vessels does
not fluctuate that greatly, and the changes that
occur tend to be increases in the total number of
vessels. The consumer would pay no more for the
aggregate annual certificate fee than they do now
for the periodic inspection and certificate fee and
in many cases could pay less.
- The inspection staff could schedule inspections
on a needs basis, using factors such as volatility
of the unit (i.e. high pressure fired versus
unfired), last inspection date and so forth. In
this manner the small cadre of inspectors could be
used in the most effective manner.
This plan simplifies the administrative support and
allows management to prioritize inspections to better
address the needs of the public.
Number 0338
REPRESENTATIVE ANDREW HALCRO asked Mr. Perkins whether the figure
3,300 was based on the three and one-half inspectors or five
inspectors.
MR. PERKINS replied the figure was based on the three and one-half
inspectors.
Number 0390
ERNEST DUMMANN, Secretary, Alaska State Association of Boiler and
Pressure Vessel Inspectors, testified via teleconference from an
off-net site in Seattle, Washington. The association has some
concerns about HB 326. The association would not be in favor of
legislation that would reduce the need or number of inspections.
The association would not be in favor of legislation that would
reduce qualifications of boiler and pressure vessel inspectors.
After hearing testimony from the department, he said, it sounds
like the fee would be levied but the inspection would not be levied
until inspectors are available. The association may have a problem
with that.
CHAIRMAN ROKEBERG inquired about the membership of the Alaska State
Association of Boiler and Pressure Vessel Inspectors.
MR. DUMMANN replied the association is comprised of private
inspectors, and from time to time state inspectors are members as
well. The association primarily mimics the National Board of
Boiler and Pressure Vessel Inspectors, as inspectors must be
certified by the national board. The Alaska State Association of
Boiler and Pressure Vessel Inspectors is interested in educating
the public in how to prevent pressure vessel explosions and
mishaps.
CHAIRMAN ROKEBERG asked Mr. Dummann whether the members of the
Alaska State Association of Boiler and Pressure Vessel Inspectors
would be available to contract with the state for inspections.
MR. DUMMANN replied he's not sure. He would look into it. Some
members, he noted, are private contractors who work for boiler
manufacturers, for example. He's not aware, however, of a member
who performs a service for the state under contract.
Number 0614
REPRESENTATIVE HALCRO asked Mr. Dummann how many members are part
of the Alaska State Association of Boiler and Pressure Vessel
Inspectors.
MR. DUMMANN replied, at last count, membership is in the sixties.
CHAIRMAN ROKEBERG asked Mr. Perkins to comment on the concern that
HB 326 is a fee-only bill in that inspections would occur only when
inspectors are available.
MR. PERKINS replied the department sees HB 326 as a potential to
predict a certain amount of revenue for the state for the operation
of the certification program. The department knows, however, that
they would not charge for the periodic inspection. There are a
couple of factors involved. One, it gives the department the
ability to catalogue every boiler that goes into service throughout
the state. Two, it gives the department the ability to know when
a boiler comes on-line and when it needs to be inspected. In
response to Mr. Dummann's concerns, HB 326 in no way reduces or
weakens the inspections or allows for a less qualified individual
to perform an inspection.
MR. PERKINS updated the committee on a bill that passed last year
in relation to plumbers conducting inspections on low pressure
boilers. [Senate Bill 50]. The inspectors, he explained, have had
their training and have sat for their examination. The program is
up and running and will help reduce some of the backlog.
Number 0864
J.R. "RANDY" CARR, Chief/Labor Standards & Safety, Mechanical
Inspection, Division of Labor Standards & Safety, Department of
Labor & Workforce Development, testified via teleconference from
Anchorage. House Bill 326 was modeled after the state of Oregon
that experienced the same decline in inspectors as the state of
Alaska is experiencing now. The department has gone from five
full-time inspectors to the equivalent of three full-time
inspectors. The plumbing inspectors equate to about one-quarter of
an inspector. The department has streamlined how they conduct
inspections, the way they schedule their travel, and have increased
inspection goals for each inspector in order to hold even with the
backlog. The department is still looking at approximately 6,000
vessels that are overdue for inspection. The good news is, the
department has been focusing on the older vessels so that the ones
that are overdue are not nearly as overdue as they were a year ago,
for example. However, until the department can find a means of
insuring a level amount of program receipts that can be budgeted
and through good management find room for another full-time
inspector there will not be an "inroad" into the backlog,
especially when the trend is for more vessels each year. The only
way to meet the burden is to increase the number of inspectors in
the field, and HB 326 would help the department do that.
CHAIRMAN ROKEBERG asked Mr. Carr whether he thinks that if the
legislature authorized the department to hire another boiler
inspector he would pay for himself.
Number 1006
MR. CARR replied the department is hoping that the legislature will
authorize a position if it can pay for itself. The department and
the industry can show that vessels are a very volatile area and if
they aren't inspected in a timely manner by qualified inspectors
they present a tremendous hazard in places such as schools,
hospitals and apartment complexes.
Number 1048
CHAIRMAN ROKEBERG asked Mr. Perkins whether a new inspector
authorized by the legislature would make money for the department
and pay for himself.
MR. PERKINS replied it depends on the type of boiler being
inspected. A high pressure boiler, for example, takes a greater
amount of knowledge to inspect.
CHAIRMAN ROKEBERG asked Mr. Perkins whether a new inspector would
pay for himself by generating new revenue.
MR. PERKINS deferred the question to Mr. Remond Henderson of the
Department of Labor & Workforce Development.
Number 1141
REMOND HENDERSON, Director, Central Office, Division of
Administrative Services, Department of Labor & Workforce
Development, came before the committee to testify. The answer to
Chairman Rokeberg's question is, yes. But the department, he
noted, does not have authority to spend general fund receipts
generated from the program. The bill therefore would replace
general funds with program receipts thereby allowing the department
to use all the fees generated to actually operate the program. The
bill would not change the quality of the inspectors or the time
frames involved. In fact, if the department is allowed to use
program receipts to get another boiler inspector or two, the
department would be able to address the backlog at no additional
cost to the general fund.
Number 1188
REPRESENTATIVE HALCRO asked Mr. Perkins, if he had a boiler, would
he receive a certificate of operation along with a bill under the
current operation.
MR. PERKINS deferred the question to Mr. Carr. He believes that a
person does not receive a bill unless an inspection actually takes
place.
MR. CARR confirmed that is the current operation. He said, "If we
don't come out and inspect you, you do not get a certificate of
operation and no fee is rendered either for the inspection or [the]
certificate."
Number 1224
REPRESENTATIVE HALCRO stated, to Mr. Carr, judging from the figures
presented earlier it would take seven years to inspect all of the
boilers.
MR. CARR replied that's correct. The numbers, however, are a bit
misleading because boilers have different inspection schedules
depending on the type of vessel. A high pressure steam vessel, for
example, has to be inspected every year, while a propane or high
volume air tank has to be inspected once every five years.
CHAIRMAN ROKEBERG stated he thought that the figure was closer to
eight years, and including the pressure vessels he thought that the
figure was even worse than that.
MR. PERKINS noted that the plumbers who are conducting inspections
as well are helping in that regard.
CHAIRMAN ROKEBERG remarked that the service needs to be privatized.
This [legislation] is outlandish. The public safety of the state
is in jeopardy. He realizes that there are fiscal problems, but HB
326 is not the answer. He said:
All you're doing here is saying I'm gonna charge you a
fee and if I can get around to inspecting it, I'll get
around to inspecting it. That's ridiculous. Unless you
think that you're going to have leverage with the finance
committees because you're getting revenue coming in that
you're gonna be able to put more personnel on. Either
you need to put more people on and generate more revenue
or you need to come up with a further contracting type
mechanism where you can put some more people out there.
I mean we have a public safety problem in this state over
this issue. I compliment the department [in] trying to
make some inroads here without costing money, this
actually generates money, but to me it's almost [like]
this is the end of it. In my entire career, this takes
the cake. You're gonna to charge people for something
you don't do. Now, this is what you're doing with this
bill. Now, you have to convince me I'm wrong.
Number 1356
MR. HENDERSON asked Mr. Carr whether individuals would pay less in
the long run than what they pay now under the proposed legislation.
MR. CARR replied that is correct. Individuals would pay the same
amount or less spread out over the time frame of the number of
years that they would normally be inspected. The smaller vessels
in particular would pay less.
Number 1384
MR. PERKINS stated:
Well, Mr. Chairman, we may respectively agree to disagree
on this one. I understand what you're saying, but you're
right, Mr. Chairman, we do have a public safety problem
out there. And I appreciate you recognizing the fact
that the department is trying to address these.
Obviously, our ways of doing this aren't acceptable to
you, and it certainly is no disrespect to you on how
we're going about this. But this is our best shot at it,
and I think in the long run it'll give us an opportunity
and, as I said, another tool in our box to do the
people's work out there. And without this and
continually every time we're going in for, as you
mentioned the finance committees, we keep going in and
we're taking our share of the budget reductions and we're
bringing in more money than we're authorized to use
already, you know, it's hard on us too. We keep reducing
personnel because the department, as you know, that we
have labor standards and workers' comp[ensation] are
about the only general fund programs we have. It's,
which one of you guys in the hopper this year for the
cut? So, we're just asking for a little help here.
Number 1443
CHAIRMAN ROKEBERG suggested setting HB 326 aside in order to look
at hiring about a half a dozen inspectors with the money that the
department would receive.
MR. PERKINS indicated that the department would be willing to work
with the chairman in that regard.
CHAIRMAN ROKEBERG stated he doesn't want to send legislation out of
the committee that charges people for not doing anything.
MR. PERKINS remarked that the rationale for the legislation has
been stated.
Number 1480
REPRESENTATIVE HALCRO asked Mr. Perkins how the state of Oregon
responded to the concerns voiced today.
MR. PERKINS deferred the question to Mr. Carr.
Number 1511
MR. CARR said:
As I understand it, the primary concern in Oregon is one
that we share. You can only do so many inspections with
a given number of inspectors. There's no way you can
make the math work that you're gonna be able to inspect
every single vessel when it's due. But by changing the
methodology of collecting the funds so that everyone
shares in a certificate-of-operation fee instead of
paying only when they get inspected. They have the
ability to get inspected; they can request an inspection
and an inspector would come out if they thought there was
a problem. But it allows the managers to focus their
staff on those areas that are the most volatile. To be
able to go out and do the inspections on boilers that are
presenting the greatest hazard and prioritize their
inspections in that manner rather than going by an
inspection schedule on just when a particular boiler is
due for inspection. Because that's how the fees are
generated, so if you don't go out and inspect it because
it's due then you aren't gonna get your fees.
Number 1564
REPRESENTATIVE HALCRO asked Mr. Carr, if he pays the fee and gets
the certificate of operation in the mail but nobody actually
inspected his boiler and something tragic happens, from a liability
standpoint who stands to lose the most.
MR. CARR replied he can't answer the question. He noted that some
have an insurance company conduct the inspection, while some prefer
no inspection at all; the only reason that a vessel is inspected,
in those cases, is because of the authority given to the department
in statute.
CHAIRMAN ROKEBERG indicated that HB 326 would be held in committee
for further consideration. He also noted that there wasn't a
quorum to conduct any official business.
HB 303-MISC. INSURANCE PROVISIONS
CHAIRMAN ROKEBERG announced the next order of business is HOUSE
BILL NO. 303, "An Act relating to the method of payment of fees and
adoption of regulations under AS 21; relating to orders under AS 21
regarding risk based capital instructions; relating to accounting
standards for insurance companies; amending the definitions of
'creditable coverage' and 'late enrollees' in AS 21.54; relating to
requirements for small employer insurers; relating to requirements
for issuance of new voting securities by an insurance company;
requiring health care insurance coverage for reconstructive surgery
following mastectomy; requiring guaranteed renewability of and
certification of coverage regarding certain individual health
insurance policies; and providing for an effective date."
Number 1645
BOB LOHR, Director, Division of Insurance, Department of Community
& Economic Development, came forward to testify on HB 303. He
indicated HB 303 is the insurance clean-up bill which addresses two
primary areas. The first is accounting practices and attempts to
conform current statutory provisions to the National Association of
Insurance Commissioners [NAIC]. These have provisions have been
adopted and will take effect on January 1, 2001. However, there
are certain provisions of statute and regulations which would
conflict with the uniform provisions. The second major area of the
bill attempts to conform with the federal Health Improvement
Portability and Accountability Act of 1996 [HIPAA]. There were
numerous amendments to state law adopted in 1997 in an effort to
conform state law with the federal requirements thereby avoiding
federal preemption by the Health Care Financing Administration
[HCFA]. A few provisions were not directly addressed by that
legislation. The federal government has indicated that conformance
of state law is required for those provisions in addition to
enforcement of those provisions by the Division of Insurance. The
Division has been enforcing those provisions, but the State has
received a letter from HCFA indicating that absent legislation
similar to HB 303 would undertake a review to determine whether
federal preemption is required of the State in this area. He said
the Division believes the adoption of HB 303 would forestall the
threat of federal preemption by HCFA. There is a provision in the
bill which allows the director of the Division of Insurance to
acquire payment electronically. This would simplify the process of
making timely payments of fees and charges to the State. He said
the Division was unable to unearth any opposition to the provisions
of the bill despite a diligent search.
REPRESENTATIVE HALCRO asked if electronic payment assists with cash
flow and ensuring that payments are in on more timely basis.
MR. LOHR stated that is correct. He said:
Depending on whether this is addressing premium taxes,
which go into the general fund (GF), it would improve
cash flow there and we've already tried to adopt those
provisions. For fees, it would increase the speed of
delivery of the fees to the Department of Revenue.
CHAIRMAN ROKEBERG asked Katy Campbell to explain section 10 in HB
303 which refers to coverage for reconstructive surgery following
a mastectomy.
Number 1871
KATY CAMPBELL, Life/Health Actuary, Division of Insurance,
Department of Community & Economic Development, came forward to
testify on HB 303. She explained this provision was a health
insurance mandate which went in after the original HIPAA
legislation in 1996. Federal law was amended the next year to
require coverage of reconstructive surgery following a mastectomy.
Section 10 would bring Alaska State Statute into compliance with
the federal provision.
CHAIRMAN ROKEBERG asked, "So, they just amended the HIPAA statute
rather than enact a new law?"
MS. CAMPBELL stated that is correct.
CHAIRMAN ROKEBERG wondered, "So, there's really no connection per
se except there is a connection regarding compliance, though, is
there not?"
MS. CAMPBELL replied yes. She said, "They added into this section
so that, basically, it has the enforcement provision of HIPAA apply
to that amended piece that went in in 1997 or 1998, I think it
might have been."
CHAIRMAN ROKEBERG wondered if failure to adopt this provision could
jeopardize the ability to regulate health insurance in Alaska.
MS. CAMPBELL clarified it would jeopardize the ability to regulate
this particular provision. She commented:
Right now we go back to the insurance companies and say,
"Look, you have to have this mandate in your health
plans." If this didn't pass, actually the Health Care
Financing Administration would come in and review the
policy forms and kind of take a more active role in
ensuring that insurance companies are in compliance with
that provision.
CHAIRMAN ROKEBERG asked if the penalty provisions of HIPAA have
some impact on the ability to regulate.
MR. LOHR said that he believes the provisions would. He said:
What we've done basically is, in response to the "show
cause", if you will, letter from the administrator of
HCFA. We've suggested that, because the Division is
actively enforcing these provisions for the duration,
that they should allow that as constructive compliance
until the legislation could be considered. So, in the
short run, I think we've got an argument. However, if we
tried to extend that argument over a period of years, I
think the lack of...state provisions that conform to
HIPAA would be a, potentially, very serious and could
lead to actual federal preemption.
Number 1990
CHAIRMAN ROKEBERG asked what the position of enrolled insurers in
Alaska is on this particular provision. He also wondered if the
leading insurance carriers provide this mandate.
MS. CAMPBELL replied that is correct. She indicated that they are
required to under the federal law that passed.
CHAIRMAN ROKEBERG inquired if the State enforces that.
MS. CAMPBELL responded, "We are right now, but that's because we're
going back to them and pointing out if they don't have the
provision. We're saying, 'Look, it's a federal law. You have to
have it.' Once we have it in our state law, we have a basis for
enforcing it. By putting it in state law, we're saying that we can
enforce the provision."
CHAIRMAN ROKEBERG said it is a chicken and egg thing. He said,
"The enforcement of it doesn't rest with the federal government.
It rests with the Division of Insurance. Is that not correct?"
Number 2060
MS. CAMPBELL answered, "With this amendment, that's true.
Otherwise, it would be federally enforced."
MR. LOHR pointed out there is a good deal of rhetoric supporting
states' rights at the federal level. They look at particular
issues and there is federal preemption all over the place. It is
either veiled, indirect or, in some cases, very direct preemption
by the federal government. He said, "We're facing suspended
sentence on that with respect to...agent and broker licensing."
CHAIRMAN ROKEBERG referred to section 17 and asked, "Alaska, we
have our own small employer statute. Does that speak to that?"
MS. CAMPBELL explained it is an amendment to the existing small
employer statute. Section 17 clarifies that employers continue to
have the choice on how to define their own group for purposes of
insurance.
CHAIRMAN ROKEBERG asked if the amendment allows for the exclusion
of an employee for underwriting purposes.
MS. CAMPBELL said it does not apply to underwriting. She stated:
In most cases, how this works, is that the employer may
have several employees that are in their management level
and they want to cover them because they're the stable
employees, and then they have other employees who are in
and out, and they don't want to have to provide coverage
to every individual in their group because it's just not
cost effective for them to do that. This allows them to
make that, and actually, it's more of a clarification
that the employer can make that decision.
CHAIRMAN ROKEBERG said, "So, the answer to my question is yes."
MS. CAMPBELL said that is correct. She noted it is a federal law
that the insurance company cannot exclude anyone, but the employer
can make a decision to define their own group.
CHAIRMAN ROKEBERG indicated HB 303 would be held in committee.
HB 419-WORKERS' COMPENSATION
CHAIRMAN ROKEBERG announced the next order of business is HOUSE
BILL NO. 419, "An Act relating to the weekly rate of compensation
and minimum and maximum compensation rates for workers'
compensation; specifying components of a workers' compensation
reemployment plan; adjusting workers' compensation benefits for
permanent partial impairment, for reemployment plans, for
rehabilitation benefits, for widows, widowers, and orphans, and for
funerals; relating to permanent total disability of an employee
receiving rehabilitation benefits; relating to calculation of gross
weekly earnings for workers' compensation benefits for seasonal and
temporary workers and for workers with overtime or premium pay;
setting time limits for requesting a hearing on claims for workers'
compensation, for selecting a rehabilitation specialist, and for
payment of medical bills; relating to termination and to waiver of
rehabilitation benefits, obtaining medical releases, and resolving
discovery disputes relating to workers' compensation; setting an
interest rate for late payments of workers' compensation; providing
for updating the workers' compensation medical fee schedule; and
providing for an effective date."
Number 2284
BARBARA WILLIAMS, Alaska Injured Workers Alliance, testified via
teleconference from Anchorage. She stated:
I would like to speak to you today about HB 419. We
don't feel that this bill is in the best interest of
workers. It is done by the same committee that has
formulated 1988 changes that have devastated workers and
their families. We now know conclusively by the
Legislative Budget and Audit Report [October 31, 1999,
included in the bill packet] that just came out.
Intentionally or not, have been and are being
disadvantaged by the workers' compensation system. Many
workers have waited for medical care and been denied
benefits while knowing that fee caps on workers'
attorneys did little or nothing to help them secure
information regarding their rights and benefits. The
worker has little or no help provided by the Division of
Workers' Compensation. We are now asking for your
assistance to make this a more fair and just system.
We know that recent budget cuts have not helped this
situation but complicated it yet even more. I hope that
you will carefully review the Legislative Budget and
Audit Report and see that changes can be implemented on
the recommendation of the Audit team. We need to improve
service, better enforcement of the current law, and
straighten out our penalty issues. If insurance
companies are regularly under reporting on verified
annual data that the division is not enforcing the
penalties, we could have more revenue to assist in
securing better services. Defense attorney are given
more preferential treatment than injured workers and
their attorneys and the audit confirms this. We need to
make this system fairer for all parties.
The average worker earning $155 per week makes below
poverty wages, with no inflationary increase. With the
rate proposals in HB 419, it is not even keeping pace
with today's inflation in real money terms. None of the
increases are based on today's real money terms and do
not account for any inflation. Why would we further
complicate an already complicated matter? Why not use
the Legislative Budget and Audit recommendations to first
make the process more fair for all parties, then make
constructive changes that reflect more real terms for
workers. We need to move them past social services and
delayed medical treatments and enforce even handed
fairness to all parties.
Lastly, we need better education programs geared for
workers. 28,000 claims per year and 10 workers'
compensation attorneys are not enough to cover the whole
state. Better wages for workers' attorneys would mean
more attorneys. Fee caps on defense attorneys' fees are
essential. Education programs and technical assistance
are only provided by the Alaska Injured Workers Alliance
at this time. Workers need better access to information
to make informed decisions about their rights and
benefits. The further away from Anchorage they are, the
less access to information they have. We are not against
anyone, but this system was designed for workers long ago
and needs input from the very disadvantaged workers, not
a bunch of people who are supposed to represent our
interest. With three-quarters of the majority working
against injured workers from the start, we are looking to
you to insure better benefits and safer working
conditions in which to work. We hope you will be
sensitive to our needs and not just the people that
control of our benefits. We hope that you guys will
consider the recommendation of the audit and consider
that in this house bill instead of just accepting HB 419
because we really feel like it's in the best interest of
workers.
Number 2427
LAURA WALDON, Alaska Injured Workers Alliance, testified via
teleconference from Anchorage. She agrees with what was stated by
the previous testifier because the injured worker ends up without
any type of medical coverage or treatment. She said:
So, there's no way that they can become better and with
what you have here, and from my understanding, your
mission as a workers' compensation board [is] to assure
that Alaskan workers who suffer work related injuries or
illness are provided adequate medical care...and this is
not happening and this is your mission statement. How
can you create new laws when you can't even enforce the
ones you already have on the book?...
TAPE 00-31, SIDE B
...and that is not what the Workers' Compensation Board
mission statement states. Even from 1998, you're
supposed to be here to help the workers, but instead
you're buying into the insurance company's monopoly, and
I repeat "monopoly" of insurance; how they railroad
people's lives...you say they can't do this, that and the
other, but they're doing it and walking away with it, and
you're letting it happen because we're depending on you
as the board to make things right for the injured
workers. You're not doing that. You're not living up to
your missions.
Number 0044
JERRY FLOCK testified via teleconference from Anchorage. He said:
I am an injured worker with an uninsured employer who you
may have heard of. My employer, General Roofing
Systems,...paid somebody $100 as a down payment and gave
them a 38-special to take me out and relieve them of
their responsibility and of their liability. Through the
whole process, Alaska Workers' Compensation Board has
done nothing to protect my rights or me. The only source
of information that I have had to help me in any of this
last three years is the Alaska Injured Workers Alliance.
By passing HB 419, you are enforcing the fact that the
division regularly works with employers and insurance
companies as the legislative audit confirms.
I have had surgery that Public Assistance had to pay for,
not my employer, and it was my employer's
responsibility...They have disposed of their
responsibilities regularly and, not only do I have to
fear for my own safety, but the safety of my family as
well. You cannot possibly tell me that the DWC [Division
of Workers' Compensation] is doing all that it can to
fairly access workers' rights to medical care and
benefits. I am a prime example of how this can all go
wrong. I urge you to follow the recommendations and
clean up the workers compensation act and make it fair
for all parties, not just employers and insurance
companies. My employers had let their policy lapse 16
times and one other employee broke his back while falling
off a roof since my employer knew no one would enforce
the laws to protect me those like me. Proper enforcement
is necessary to see that the workers are protected. Two
years ago when the Alaska Injured [Workers] Alliance
started inquiring, an alarming 60 percent, over half, of
the state employers were uninsured. This must change.
We also need better education programs and access to
legal assistance to process our claims.
I urge you to see fit to protect all workers in this
state and see that everyone is treated fairly and not
denied due process. Due process escapes me to this day
because no one will see that my employer pays for my
benefits and secures my medical care and provides
retraining. I hope that you will remember me and be an
effective part of proper enforcement of these laws.
CHAIRMAN ROKEBERG asked if Mr. Flock has filed charges with the
police or the Alaska State Troopers.
MR. FLOCK replied yes.
Number 0222
DEBORAH BUSH testified via teleconference from Mat-Su. She stated:
I was injured at work in June of 1995 and I have endured
unconscionable practices as the result of the vagueness
presented by the act. Insurance companies have been
empowered by the act and injured workers are left at a
disadvantage. Unfortunately, the more complex the injury
and medical issues and medical claims become, the more
difficult the injured workers have in receiving just
outcomes in dealing with workers' comp[ensation]
insurance companies. The increasing cost of workers'
compensation insurance premiums are becoming
unnecessarily inflated at the result of risk management
cost. The audit [Legislative Budget and Audit Report]
sites multiple causes for the increase of premiums
(indisc.) for employers. These increased medical costs,
extended disabilities, and retraining costs are bonafide.
The finding that extended the disability payments made to
workers thought to be capable of returning to work is a
blanket for the cost of litigation. Discovery,
investigation and other costly means of litigation is
overinflating the cost covering work-related injuries.
Most medical disputes involve one EME physician, that is
an Employer Medical Evaluation or the insurance doctor's
opinion. Their disputes generally contradict the
multiple opinions from the injured worker's treating
physician and other attending physicians. I've had three
EME evaluations and not one was performed by a local
doctor. One doctor was flown up from California and I
was flown to California for the second and third at a
cost of $1,200 just for lodging and the flights. I was
seen for a total of 15 minutes and both doctors produced
17- and 22-page opinions which were quite costly.
The cause of my continued disability is industrial in
basis. The insurance companies paid medical opinion
relates no industrial basis and that I could return. I
was in danger of becoming a quadriplegic due to
complications. I needed treatment. I didn't need to be
followed, filmed, photographed, watched at home by
investigators since 1996. This is costly. The
increasing costs to the State of Alaska Medical
Assistance Program is the result of the injured workers
losing benefits...Once an injured worker is controverted,
and a serious medical condition persists, there are not
many avenues the worker can take to adjudicate those
claims when savings and accrued (indisc.) dwindle away.
To cover medical costs, a complex claim poses difficulty
in securing representation from a lawyer or finding a
doctor that wants to get involved in possible depositions
and appearing in court...A large portion of injured
workers apply for or receive Alaska Temporary Assistance,
Alaska State Medical Program Benefits, which is Medicaid,
and federal food stamp funds.
Eligibility for an incapacitated person is determined by
a community [physician] and reported on a State form. To
receive Medicaid, an injured worker declares a third
party liability, which is the insurance company, and
agrees that the State can assess a lien. The lien is
placed upon any settlement monies the worker receives
unless a settlement, a compromise release, or a decision
and order is made that they collect reimbursement from
the assumed medical costs from the injured workers
compensation. This award is for lost earnings that pays
back medical costs to the State. The insurance company
is also hit up for medical costs. In my case, I refused
to settle past issues of compensation until the insurance
company agreed to repay medical. They did not feel they
had any liability for medical costs during the
controversion. The State of Alaska Medical Assistance
Program receives reimbursement by liens and awards. The
funding of ATAP [Alaska Temporary Assistance Program] or
welfare to eligible injured workers needs to be
reimbursed by the insurance carriers if, based on merits
of all medical evidence, (indisc.) evidence, or a
compromised release agreement, or whatever it takes,
which reopens weekly medical compensation.
It is foreseeable, if the insurance companies were held
accountable to the State for incurred related
expenditures resulting from an industrial injury, it
would generate revenue for reimbursement and it would
benefit the State of Alaska. There is a tremendous
amount of State welfare funds paid to injured workers
during the controversion of workers' comp[ensation]
benefits. In my case, the insurance company agreed to
repay the State of Alaska Medical Program or Medicaid.
What about the ATAP funds the State paid for the injured
worker? What about the federal food stamp benefits? In
my case, my family received Alaska Temporary Assistance
in the rough amount of $1,100 in allowances. This was
paid for 25 months while medical disputes were
determined. There's a multitude of revenue the State
truly has a right to reimbursement for. Had it not been
for the controversion, the basis of the worker going on
welfare, there would have been no cost to the State.
Once a claim is found to be bonafide, reimbursement
should be made. In my case alone, ATAP equaled almost
$27,000...The State should be reimbursed for supporting
an injured worker who is controverted if it is found that
the continued disability is a result of the work
injury...The practices the adjusters have implemented are
sometimes unfair. Under the terms of the act, an injured
worker can deteriorate and be one day from death and
still be considered or deemed medically stable. In my
case, after the second surgery, which, by the way, was a
revision of a cervical fusion that was performed after my
injury; the surgery was on the twenty-first of November
'98. I followed up with my neurosurgeon. I had to be
flown to Seattle and was treated at Harborview Medical
Center. And I followed up with my neurosurgeon the
fourteenth of February and again on the fifth of August
1999. I was seen twice a month here in recovery by my
attending and treating physician in Eagle River. Did the
adjuster seek my treating doctor's opinion of medical
stability? No. By her own account, she made almost ten
contacts to my surgeon who I hadn't been examined by in
over 90 days to get the medical stability to clear.
My condition continues to deteriorate. There is medical
evidence supporting this that isn't subjective, but
objective in nature. I suffer from extensive nerve
damage as a result of the severity of my injury,
complications from the surgery, and my belated treatment
due to the controversion. I cannot return to work. I
have been (indisc.) for rehab[ilitation] reemployment
benefits, but I cannot participate in a retraining
program due to my medical condition. Am I receiving
compensation from worker comp[ensation] insurance company
with all the causal connection to my work relatedness?
No. And I'm a pen stroke away from the welfare roll
again. Me and many other injured workers in Alaska need
legislative support in dealing with the worker
comp[ensation] carriers...There are a lot of unnecessary
harassments, comments that are made by adjusters towards
injured workers. That needs to be dealt with. Our
Alaskan representatives are in a position to attempt to
balance the (indisc.) shortcomings of the act currently
posed. This practice of unfair and frivolous
controversion needs to hold serious penalties for those
who engage in it. And the defining factor that
determines what is unfair and frivolous needs to be
addressed. I believe legislative intent was not to be
construed to allow injured workers to be dumped onto the
welfare roll. The State interest in the medical
assistance program should be protected and temporary
assistance reimbursement needs to be pursued. Insurance
companies should not be allowed to go doctor shopping.
(indisc.) and the opinion which results should be taken
into account, but they should never be the basis of
terminating any benefits when there is a medical
dispute...HB 419 falls short in protecting us as injured
workers of Alaska.
Number 0672
JOEL SIGMOND testified via teleconference from Anchorage. He
explained that he used to make between $4,000 and $5,000 per month.
He was cut down to $800 per month. He said he is unable to obtain
food stamps and cannot receive medical insurance for his family
because he owns too much. He said he thinks the insurance company
should also have to cover an employee's family expenses if they
become ill. He commented that he is about to lose his home. He
also stated that he lost $1,200 per month on unemployment that he
should be reimbursed since he was unable to receive due to a
work-related injury. He indicated that his insurance companies
refuses his doctors and he is unable to receive the medical
treatment and medication he needs.
Number 0858
GERALDINE BODEMAN testified via teleconference from Anchorage. She
is an injured worker who has not been able to resolve her claim
since 1996 because the system is complicated and hard to
understand. She said if it had not been for the pre-service she
received from the Alaska Injured Workers Alliance, she would not
have any meaningful way to proceed her claim. She asked the
committee to please review the recommendations made by Legislative
Budget and Audit in order to make the process more fair and better
for injured workers. She explained that better education programs
and information for workers is necessary. She said that legal
access and enforcement of laws is essential to make the process
fair and accessible to all parties. She said there are no worker
attorneys available. She urged the committee to help protect
workers' rights.
Number 0960
MARJORIE LINDER testified via teleconference from Anchorage. She
is a vocational rehabilitation counselor in the workers'
compensation system. She stated:
I served on the WCCA [Workers' Compensation Committee of
Alaska] in 1988 and I helped draft the section [AS
23.30.]041 that became part of the current law. Because
of this, I offer a unique perspective. I know that I
have good intentions with these law changes, but, like
Frankenstein, I helped to create a monster. In 1988,
there was a perception that the law was unbalanced in
favor of injured workers. Premiums went
undenied...employers have enjoyed a reduction in premiums
of 41.5 percent according to the recent legislative
audit. Unfortunately, injured workers have paid the
price. Today only 300, out of 28,000 workers injured
each year, qualify for the reemployment benefits. Both
a laborer and an office worker receive as little as
$9,450 for a herniated disk despite the disparate ways
their injury affects them. The reemployment benefits
attempt to assist the laborer to learn to earn a living
again because he, unlike the office worker, can't return
to his job. Workers with no ratable impairment are
ineligible for retraining. This affects office workers,
cannery workers and others with repetitive stress
injuries to their forearms, for instance. Instead of
curing such problems with the present act, section 7 (r)
of HB 419 seeks to further restrict access to retraining
for injured workers. It allows workers to forfeit their
reemployment benefits before, and if, they know whether
they will need them and before they know how much they
are worth to them. Once they have signed in the dotted
line, they cannot retract if they find they are unable to
return to work or continue to work because of their
injury. And with no legal advice or explanation from
anyone other than their claims adjuster, workers who
don't typically read what they sign, who can't speak
English, who are functionally illiterate, who are on pain
pills, will sign these affidavits as a matter of course,
that they're just papers sandwiched between the others.
Section 7(r)'s irrevocability will invite numerous legal
challenges to be sure. Like the Miranda warning has
done, this waiver will tie up the legal system for years
to come. This litigation will cost the State of Alaska
money. Workers with no way to earn a living will lose
their homes, their savings, and their buying power.
You've heard about that today. That will hurt, not help
Alaskan businesses. Section 7(r) of this law is a veiled
attempt by the insurance industries to get the State to
supplement the benefits for which they collect premiums.
Injured workers not adequately served by the
comp[ensation] system will be forced to obtain financial
support for themselves and retraining by the Division of
Public Assistance and DVR [Division of Vocational
Rehabilitation]. That will cost the State of Alaska
money. As time passes and their resources decrease,
injured workers who are able, will accept inappropriate
employment and put themselves, their co-workers, and
their new employer at risk. All of them and all of us
will suffer. Therefore, I urge you to remove section
7(r) from HB 419 to protect the people of Alaska and the
state budget. One life is a precious thing to waste.
Number 1198
MURIEL BOWLES testified via teleconference from Anchorage. She
stated:
In the short time that I have been in the workers'
compensation system, I have felt uninformed totally.
There are few educational programs for workers to help us
understand our rights and benefits. We need better
access to information and legal help. You need to make
sure that all persons have medical treatment and
benefits. Agencies such as [Division of] Workers'
Compensation and [the] Division of Insurance must protect
all workers, some self-insured as well as privately
insured. People with self-insured employers have no
consumer protection measured at all. It is even harder
for us to secure benefits and medical treatment because
no one sees that our employers act (indisc.). Without
such oversight, we have less of a chance to get those
benefits. We need strict enforcement that keeps pace
with inflation and other variables to ensure fairness to
everyone involved. We need to be able to support
ourselves and our families and return to work quickly...I
stress that we, the injured workers and families of such,
need to be given a fair chance here and I don't see this
bill helping us, yet, it will profit the employer and
their insurance company at our expense. I strongly
suggest that you will take the time and consider
incorporate the findings of the audit before moving any
further ahead with this bill. Also, my case was
controverted with a statement referring to a car accident
my son and I had been in after my employer had let me go.
I need to make a note here because they weren't even
taking care of my bills prior to the accident and no one
asked for any details about the accident either. They
just declined payment for my surgery. We were merely
bumped while sitting at a red light and I'd been
diagnosed with carpal tunnel, but they controverted my
case because I was in a car accident.
Number 1364
HARRY BLANAL testified via teleconference from Anchorage. He said
he objects to HB 419. He noted that HB 419 infringes on Article 7
of the Alaska State Constitution. He urged the committee to reject
HB 419.
Number 1810
BARBARA SUE ROTH came forward to testify on HB 419, Version. She
has been providing vocational rehabilitation services in Alaska
since 1983. She said she would like to speak specifically on the
waiving of reemployment. She is in favor of waiving reemployment.
She stated she has worked with too many injured workers that really
did not want reemployment benefits. They participated
half-heartedly in the process to perhaps increase the amount that
they would receive. She has worked in a voluntary system in six
other states and has found that people who want these services do
receive them. She said, "It makes people come up with a plan and
they participate and everyone is more happy."
CHAIRMAN ROKEBERG said he thinks she is referring to section 7(r).
MS. ROTH replied that is correct.
CHAIRMAN ROKEBERG asked if Ms. Roth to provide an example of why
the waiving of benefits is a positive thing.
MS. ROTH explained:
I had someone that I met with and they said they did not
want reemployment benefits. They were going to waive
them. This is something that happened in the past.
CHAIRMAN ROKEBERG interjected and asked, "Why would they do that?"
MS. ROTH replied:
He said that he could get his own job. That he was
perfectly capable of getting his own job, he was
relocating, his wife worked, that he was not concerned.
So, he waived his benefits and then he moved. Right
after he moved, he called me two weeks later and said
--oh, and they gave his permanent impairment money -- he
moved, he received that.
CHAIRMAN ROKEBERG asked if the permanent impairment payment is
received in a lump sum.
MS. ROTH said yes. She further stated:
He received that. Two weeks later he called and he
wanted to participate in reemployment benefits. So, I
called the insurer and they reinstated his right to
participate in this. The minute I started asking him to
participate in going for vocational testing, he didn't
show and things like. It turned out then they did settle
with the insurance company for an additional amount of
money and he did not participate in it. That's just what
has happened in the past. I have many people that they
would rather get their lump sum and use it as they want
in their family, maybe to pay bills and take care of
their own rehab[ilitation]. There's many, many injured
workers. I know there are some that can't and that's why
there's the service, but there's many that are able to
find their own jobs. All they may need is some job
development which is not a part of the act. If it was,
it'd be different...When you get reemployment benefits,
you get training, and a lot of people, they don't want
more training. A lot of them don't think they'll
benefit. A lot of them have many different reasons for
not wanting the training. All they need is help finding
a job, maybe a new resume, maybe some job-seeking skills.
And we have these wonderful one-stop centers that are
being implemented in the State of Alaska that provide
those services for free. I do not think providing them
to additional people, the job development and the job
placement and resume, those seminars are regular. The
size of the class does not increase the cost for the
State. So, many workers, that's all they need. They
don't really want or need training. But once you have
them, you have to provide some type of training, you
can't just offer that service.
Number 2066
CHAIRMAN ROKEBERG asked, "So, someone would go into business rather
than training if they thought they had the ability or talent...do
you have an example of that then?"
MS. ROTH answered that many do go into business. She said she has
written reemployment for self-employment, but has only done three
in 16 years.
CHAIRMAN ROKEBERG asked if a person could get some training.
MS. ROTH commented that a person could be sent to small business
classes. Many of these type of classes can taken through the Small
Business Association.
CHAIRMAN ROKEBERG wondered if a person could receive reimbursement
for doing that.
MS. ROTH indicated that is a possibility.
Number 2138
THOMAS SMITH testified via teleconference from Anchorage. He
stated:
I am injured worker. I currently have two injuries.
One's a back injury and one is a foot injury. I'm
currently collecting benefits from an insurance company
for worker's comp[ensation] benefits. I was injured over
a year and a half ago after working 10 years for the same
employer. It became apparent I was not going to be able
to work anymore doing the physical labor my back and foot
injuries precluded me from doing. I became more reliant
on the workers' comp[ensation] system to help me as the
statutes provide. I've also been a resident of Anchorage
since 1957, some 43 years. The reason I bring this up is
because most of the details about the unfairness of this
act are going to come out if they already haven't, but I
want to address maybe kind of like the feelings that
people have about this in general, if I may. Like I
said, I've been a resident of Anchorage since 1957.
That's some 43 years. My father and mother brought me up
here when I was just four years old from Seattle. I met
many of the characters that spice up the nature of this
state. My father was a friend to many of these men and
women, legislators, governors, senators. From these
historical figures, I apply many of my values. At one
point in my life, I actually sat down to lunch with
Senator Gruening and Senator Bartlett while I was a child
at a convention in Washington D.C. It was quite a
thrill. I say this because as I read HB 419 and I
understand it, I wonder what some of these great men
would say about HB 419 as its written today. I wonder
what they would say about Section 7, AS 23.30.041,
stating that "notwithstanding an employee may waive, at
any time, any benefits or rights under this section of
his rehabilitation benefits". Now, why is that
necessary? And why would anybody use this kind of
language for something that we have the right to already?
I wonder what these great men would say about a system so
lopsided in favor of insurance companies that the
distinguished bodies of the State of Alaska Legislature
would be reduced to writing words that can only be
considered unfriendly and difficult. I wonder what
happened to that sense of fairness and justice my father
encountered as a new resident to Alaska in 1957.
CHAIRMAN ROKEBERG interjected and said, "In regards to section 7 of
the bill it says 'may'." He said he is not sure he understands Mr.
Smith's point on that.
MR. SMITH apologized and said he is probably not speaking as
clearly as he would like to.
CHAIRMAN ROKEBERG commented that it could be the drafting manual.
He pointed out that the laws that are written in Alaska are not as
clear as they should be to the average person.
MR. SMITH referred to section 7 which states that an employee "may
waive" any benefits or rights. He said:
But that's always been our rights. Why would they
include something like that and make it sound like
they're doing us a big favor or something? Like, if we
don't waive these rights, something terrible is going to
happen. Like we're going to be forced to be retrained or
something. That is confusing to me and, although, I have
a pretty good education, reading these bills...I'm a
little bit challenged.
TAPE 00-32, SIDE A
Number 0038
ROBERT SULLIVAN testified via teleconference from Anchorage. He
stated:
I'm a vocational rehabilitation counselor. I've been in
the field of vocational rehabilitation counseling for 19
years. I've worked in two different states under about
four different laws. I've also worked some with the CHIA
(ph) program early on. I also do work for social
security administration as a vocational expert. I got
into the field when vocational rehabilitation laws had
just started. Prior to that, there wasn't anything in
the law for it and we still received referrals from
insurance companies because they wanted to get them back
to work because they were eating up their medical bill.
So, we don't need a law to get rehab[ilitation]...
...The two major problems I see with HB 419 are in
section 7(r). This section opens the door for insurance
companies and employers to apply pressure to the injured
workers and employees to waive their rehabilitation
benefits before they have a clear idea of whether or not
they will need it. It says "may" and they have the
choice, but I see it opens the door to pressure. The
waiver, once signed and transmitted, it's irrevocable.
That is, it can't be modified the way other things can be
modified which means that if they finally need it later,
they can't go to the Board and get it modified and get it
at a later date.
The way the statute works now, people aren't referred for
ineligibility evaluation until they get close to medical
stability, they're nearing the end of their treatment,
they have a little bit more knowledge of what their
vocational needs might be or whether they're going to
have any or not. This would eliminate that if it's
utilized early on in the claim. If it is utilized, then
this is going to lead to some problems. Injured workers
who cannot return to their usual employment will be
subject to returning to work in unskilled, low-paying
jobs, returning to their usual employment in a hurt
condition. And you have the rest of it, except for one
thing I added to this. Number 6, an injured who has
waived his benefits and discovered later that he cannot
return to his employment at the time of injury, may end
up being considered permanently and totally disabled
because he has no means to obtain the skills to return to
work through the statute.
Number 0337
CHAIRMAN ROKEBERG indicated he did not entirely understand Mr.
Sullivan's point with respect to number 6.
MR. SULLIVAN clarified:
You have the injured worker who waives his benefit early
before he knows he needs it. They don't think he's going
to need surgery, it comes up that he needs surgery, he
gets a poor result, he's gone on his medical now for four
or five years and he's finally got an attorney, and the
attorney's saying, "Okay, I think my guy is permanently
and totally disabled because he cannot return to work in
his usual and customary employment." If he has no access
to obtaining other skills that would make him employable
in the labor market because he's already waived them and
its irrevocable, then wouldn't he be declared permanently
and totally disabled? I'm sure that's going to come up.
Number 0437
MIKE JENSEN, Workers' Compensation Attorney, testified via
teleconference from Anchorage. He has been in practice for 15
years and exclusively represents injured workers in the State
Workers' Compensation system. He explained that numerous hearings
were held for the past two years with staff from the Governor's
Office and members of the Alaska Workers' Compensation Board. At
these hearings, many injured workers testified and related to the
Governor and the Board their personal stories of neglect,
nonpayment of benefits, invasion of privacy, loss of dignity and
other complaints. He stated:
I'd had hoped that after listening to these stories from
all these workers and their families, that legislation
would have been offered to address their concerns. These
workers did not come to the Governor or the Board with a
tin cup hoping for a handout. They simply wanted changes
to the act which would address their concerns.
Regrettably, this proposed legislation does not do this,
but it is a step in the right direction. I do not want
to condemn this effort. I simply wish to suggest ways to
improve it to meet just some of the concerns expressed by
these workers. In a most recent legislative audit [Page
19, Legislative Audit Report, October 1999] which found
that circumstances have developed...that limit the
protection the legislature meant to be in place and
strictly enforce to the benefit of workers. Such
circumstances, that we believe are an unintended
byproduct of the 1988 amendment, have resulted in a
situation where more consideration is provided to
employers and insurance companies than to the injured
workers...I want to personally thank the Ad Hoc Committee
and the Division of Workers' Compensation for their
efforts on behalf of workers who have not seen an
increase in benefits for almost 12 years. The labor
members of the committee were able to take a step in the
direction as far as increasing temporary, permanent and
death benefits. Regrettably, what insurers are asking
workers to give up in exchange for these amendments needs
to be addressed.
I want to address only several sections which this
proposed legislation seeks to amend, namely [AS
23.30.]041(c) and section [AS 23.30.]107. Although the
legislative audit found that page 35 from our review it
appears the statute has succeeded in limiting access to
reemployment benefits. This proposed legislation would
find another way of totally removing access to
reemployment benefits. The proposed amendment to [AS
23.30.]041(c) proposes another way for workers to lose
access. They will be asked to do this without any
guarantee that that such waiver is: 1. informed and 2.
made only with an appreciation of the seriousness of the
disability. Workers need to have an appreciation of the
seriousness of their injury before any waiver should be
allowed. The Board currently approves waivers if in the
best interest of the worker. This should remain
unchanged. In addition, I have concerns about section
[AS 23.30.] 107. This act is very complicated as you've
heard today. The workers are frustrated with the
complexity of the system, regulations and associated time
line which the audit noted at page 23. This act,
instead, would propose to add additional timeliness,
making the system even more complex.
Number 0717
K. SCOTT MCENTIRE, President, Alaska Injured Workers Alliance,
testified via teleconference from Anchorage. He commented:
I myself am an injured worker since 1992. I'm a
life-long Alaskan. I was born in Fairbanks. The
Workers' Compensation Act is an act that I had to educate
myself about and, in turn, am educating other injured
workers. The Workers' Compensation Division has had its
budget cut, its staff reduced, they've lost most of their
experienced hearing officers, and it is virtually
impossible to get accurate information from the Division.
When an injured worker goes in there, they are disabled,
they are on medications, they're totally confused, and
this system just eats them up. The Alaska Injured
Workers Alliance has spoken to the Governor about having
representation on new legislation. We asked to be put on
the ad hoc committee and we were not.
The Workers' Compensation Act is supposed to be a
prescriptive remedy to promote the promptness and the
efficiency of it. However, the act itself, has more
procedural bars to disadvantage injured workers so that
they are denied benefits under the act. This
legislation, in conjunction with other legislation right
now, is a further extension of that. The ERISA Act, the
Employee Retirement Income and Security Act exempts
workers' compensation...insurance that employers have
when they self-insure, if it's solely for workers'
compensation. California recently passed legislation to
make sure that the employers were self-insuring solely
for workers' compensation so that they could remain
governed by the state agencies such as the Division of
Insurance.
We now have legislation promoting group self-insurance
that the director of the Division of Insurance, using the
existing regulations, has virtually no power to enforce,
they do not enforce any insurance regulations right now
against self-insured employers, this is just further
extending it to smaller group insurance plans. The wage
rates are still an argument as to what constitutes a
wage, what should be counted for compensation, whether
health and welfare, pension plans, what vesting means,
whether accrued leave, overtime at premium pay, or shift
differential should be included. This legislation
doesn't address any of those. The notion of going to a
fee-funded service and then basing it on a percentage of
the annual reports filed under AS 23.30.155(m)or (n) do
not reflect that the Division gets, (indisc.) at its
annual meeting last year, passed a regulation granting
greater leniency in the accuracy of those because the
Division itself creates more errors internally than the
insurance companies filing those reports. So, those
reports are not accurate and should not be used a basis
for any percentage of payment of fees.
CHAIRMAN ROKEBERG suggested that Mr. McEntire peruse Version G of
HB 419. He said Version G does provide for the counting of
overtime and premium wages.
MR. MCENTIRE replied that it does not include accrued leave. He
commented, "If you're working for an employer who you accrue leave
time based on, for instance, 3.2 hours per pay period, that is a
benefit. That is another reason why you're working for that
employer and those are not included."
CHAIRMAN ROKEBERG answered, "Well, that's right because we don't
want the premiums go to Mars."
MR. MCENTIRE said he does not think it has been demonstrated that
they would go to Mars.
CHAIRMAN ROKEBERG indicated that HB 419 would be held in committee.
ADJOURNMENT
Number 1099
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee at 5:41 p.m.
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