02/16/2004 03:20 PM House L&C
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 16, 2004
3:20 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Carl Gatto, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
Representative Norman Rokeberg
COMMITTEE CALENDAR
HOUSE BILL NO. 403
"An Act relating to the Alaska Insurance Guaranty Association;
relating to joint insurance arrangements and assessments to the
association; relating to the powers of the Alaska Industrial
Development and Export Authority concerning the association; and
providing for an effective date."
- MOVED CSHB 403(L&C) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 34
Requesting the United States Department of Agriculture and the
United States Department of Labor to extend Trade Adjustment
Assistance benefits to Alaska fishermen; requesting the United
States Congress and the United States Department of Agriculture
to extend additional disaster and price support benefits to
Alaska salmon fishermen; and requesting the United States
Department of Agriculture to establish terminal markets in
Alaska for all covered commodities including salmon.
- MOVED CSHJR 34(FSH) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 35
Relating to mad cow disease and country-of-origin labeling for
meat products.
- MOVED CSHJR 35(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 450
"An Act providing for a special deposit for workers'
compensation insurers; relating to the board of governors of the
Alaska Insurance Guaranty Association; relating to covered
workers' compensation claims paid by the Alaska Insurance
Guaranty Association; stating the intent of the legislature, and
setting out limitations, concerning the interpretation,
construction, and implementation of workers' compensation laws;
relating to restructuring the Alaska workers' compensation
system; eliminating the Alaska Workers' Compensation Board;
establishing a division of workers' compensation within the
Department of Labor and Workforce Development and assigning
certain Alaska Workers' Compensation Board functions to the
division and the Department of Labor and Workforce Development;
establishing a Workers' Compensation Appeals Commission;
assigning certain functions of the Alaska Workers' Compensation
Board to the Workers' Compensation Appeals Commission; relating
to agreements that discharge workers' compensation liability;
providing for hearing officers in workers' compensation
proceedings; relating to workers' compensation awards; relating
to an employer's failure to insure and keep insured or provide
security; providing for appeals from compensation orders;
relating to workers' compensation proceedings; providing for
supreme court jurisdiction of appeals from the Workers'
Compensation Appeals Commission; providing for a maximum amount
for the cost-of- living adjustment for workers' compensation
benefits; providing for administrative penalties for employers
uninsured or without adequate security for workers'
compensation; relating to assigned risk pools and insurers; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 418
"An Act extending the termination date of the Real Estate
Commission; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 403
SHORT TITLE: ALASKA INSURANCE GUARANTY ASSOCIATION
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
01/28/04 (H) READ THE FIRST TIME - REFERRALS
01/28/04 (H) L&C, JUD, FIN
02/09/04 (H) L&C AT 3:15 PM CAPITOL 17
02/09/04 (H) Heard & Held
02/09/04 (H) MINUTE(L&C)
02/11/04 (H) L&C AT 3:15 PM CAPITOL 17
02/11/04 (H) Heard & Held
02/11/04 (H) MINUTE(L&C)
02/16/04 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HJR 34
SHORT TITLE: FED TRAINING AND ASSISTANCE FOR FISHERMEN
SPONSOR(S): REPRESENTATIVE(S) OGG
01/28/04 (H) READ THE FIRST TIME - REFERRALS
01/28/04 (H) FSH, L&C
02/09/04 (H) FSH AT 9:00 AM CAPITOL 124
02/09/04 (H) Moved CSHJR 34(FSH) Out of Committee
02/09/04 (H) MINUTE(FSH)
02/12/04 (H) FSH RPT CS(FSH) NT 5DP
02/12/04 (H) DP: OGG, WILSON, SAMUELS, GUTTENBERG,
02/12/04 (H) SEATON
02/16/04 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HJR 35
SHORT TITLE: MAD COW DISEASE/COUNTRY OF ORIGIN LABELS
SPONSOR(S): REPRESENTATIVE(S) KERTTULA
02/05/04 (H) READ THE FIRST TIME - REFERRALS
02/05/04 (H) L&C, RES
02/16/04 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 450
SHORT TITLE: INSURANCE & WORKERS' COMPENSATION SYSTEM
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
02/09/04 (H) READ THE FIRST TIME - REFERRALS
02/09/04 (H) L&C, FIN
02/11/04 (H) L&C AT 3:15 PM CAPITOL 17
02/11/04 (H) Heard & Held
02/11/04 (H) MINUTE(L&C)
02/16/04 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
LINDA HALL, Director
Division of Insurance
Department of Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Explained the changes in the proposed
committee substitute to HB 403 and answered questions;
introduced HB 450 and answered questions.
REPRESENTATIVE DAN OGG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HJR 34.
MELISSA DOVER, Staff
to Representative Dan Ogg
Alaska State Legislature
POSITION STATEMENT: Explained changes to HJR 34 on behalf of
Representative Ogg, sponsor.
REPRESENTATIVE BETH KERTTULA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HJR 35 and answered
questions.
AURORA HAUKE, Staff
to Representative Beth Kerttula
Alaska State Legislature
POSITION STATEMENT: Presented HJR 35 on behalf of
Representative Kerttula, sponsor.
DOUG WOOLIVER, Administrative Attorney
Administrative Staff
Office of the Administrative Director
Alaska Court System (ACS)
Anchorage, Alaska
POSITION STATEMENT: Explained the perceived impacts of HB 450
on the Alaska Court System.
DON ETHERIDGE, Lobbyist
for Alaska State AFL-CIO [American Federation of Labor and
Congress of Industrial Organizations]
Anchorage, Alaska
POSITION STATEMENT: Requested that HB 450 be reviewed by an ad
hoc committee prior to passage.
PAMELA LaBOLLE, President
Alaska State Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 450.
ACTION NARRATIVE
TAPE 04-13, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:20 p.m. Representatives
Anderson, Gatto, Dahlstrom, and Guttenberg were present at the
call to order. Representatives Lynn and Crawford arrived as the
meeting was in progress.
HB 403-ALASKA INSURANCE GUARANTY ASSOCIATION
Number 0042
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 403, "An Act relating to the Alaska Insurance
Guaranty Association; relating to joint insurance arrangements
and assessments to the association; relating to the powers of
the Alaska Industrial Development and Export Authority
concerning the association; and providing for an effective
date."
Number 0097
LINDA HALL, Director, Division of Insurance, Department of
Community & Economic Development, noted that she had presented
HB 403 originally and would explain changes in the proposed
committee substitute (CS) [Version D, labeled 23-GH2105\D,
Bullock, 2/11/04, which there was a motion to adopt at the
February 11 hearing].
MS. HALL told members the most controversial part of the bill
had been removed, the assessments against entities not covered
by the Alaska Insurance Guaranty Association (AIGA). It removes
all references to assessments on self-insurers and joint
insurance arrangements (JIAs) because funds generated by those
assessments would be a minimal part of the funds generated by
other types of assessments.
Number 0186
CHAIR ANDERSON announced that Representative Lynn had joined the
meeting. Returning to the testimony, he asked who had wanted
those references removed.
MS. HALL replied that representatives from both the Alaska
Municipal League Joint Insurance Association and the Alaska
Public Entity Insurance (APEI), as well as at least two school
districts, had testified that additional assessments would be
injurious to their budgets.
Number 0230
REPRESENTATIVE GUTTENBERG asked for clarification of the whole
bill, with the changes.
MS. HALL explained that the bill proposes to generate a stream
of revenue to cure the deficit in the [AIGA] fund through,
first, an increase in the assessment on the line of business
where the insolvency occurs; second, assessing the other two
accounts in the fund, the auto and the "other"; and, third,
allowing AIDEA [Alaska Industrial Development and Export
Authority] to guarantee a loan on behalf of [AIGA] if there are
insufficient funds to pay claims through the assessment process.
Number 0310
REPRESENTATIVE GUTTENBERG asked if the self-insurers were taken
out statewide.
MS. HALL responded that it was all self-insurers.
CHAIR ANDERSON remarked that Ms. Hall in the past had said this
process wouldn't be very appealing because it would raise rates.
He said it was tough to do, but needed to be done.
MS. HALL agreed. She characterized the bill as painful and
unpopular, and said it does increase assessments on other
policies and policyholders. Saying the alternative of doing
nothing would be more painful, she continued:
It will give the injured workers who are currently
receiving benefits at least probably a period of
disruption of their benefits. In the long run, the
obligation for workers' compensation insurance is that
of the employer.
We have 380 employers with claims of their employees
in the [fund] today. These claims would revert back
to those employers who purchased a workers'
compensation policy to satisfy that obligation, and
now they would get that financial obligation back with
probably little awareness or financial planning for
that burden.
Number 0424
REPRESENTATIVE DAHLSTROM moved to report CSHB 403, Version 23-
GH2105\D, Bullock, 2/11/04, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 403(L&C) was reported from the House Labor
and Commerce Standing Committee.
HJR 34-FED TRAINING AND ASSISTANCE FOR FISHERMEN
Number 0446
CHAIR ANDERSON announced that the next order of business would
be HOUSE JOINT RESOLUTION NO. 34, Requesting the United States
Department of Agriculture and the United States Department of
Labor to extend Trade Adjustment Assistance benefits to Alaska
fishermen; requesting the United States Congress and the United
States Department of Agriculture to extend additional disaster
and price support benefits to Alaska salmon fishermen; and
requesting the United States Department of Agriculture to
establish terminal markets in Alaska for all covered commodities
including salmon. [Before the committee was CSHJR 34(FSH).]
Number 0462
REPRESENTATIVE DAN OGG, Alaska State Legislature, sponsor, noted
that he'd sponsored HJR 34 at the request of the Joint
Legislative Salmon Industry Talk Force. He introduced
Ms. Dover.
Number 0480
MELISSA DOVER, Staff to Representative Dan Ogg, Alaska State
Legislature, presented the resolution as follows:
HJR 34 seeks to ask Congress to make some changes to
the current Trade Adjustment Assistance programs to
make them a better fit for commercial fishermen. Both
the United States Department of Agriculture and the
United States Department of Labor have Trade
Adjustment Assistance programs that are designed to
help workers who have been hurt by imports. Those
programs were primarily designed for agricultural
workers.
Last year, with the recognition that imported salmon
has dramatically hurt wild salmon prices, [U.S.]
Senator Lisa Murkowski was able to get Alaska's
commercial salmon fishermen qualified for those
programs. We've been working with her office, and
with fishermen and other stakeholders, to look at some
of the issues hitting commercial fishermen.
MS. DOVER concluded that the resolution requests specific
changes to the existing programs to make them a better fit for
commercial fishermen, and, ultimately, asks that the U.S.
Secretary of Commerce create a program specific to commercial
fishermen.
Number 0616
REPRESENTATIVE DAHLSTROM moved to report CSHJR 34(FSH) out of
committee with individual recommendations and the zero fiscal
note. There being no objection, CSHJR 34(FSH) was reported from
the House Labor and Commerce Standing Committee.
HJR 35-MAD COW DISEASE/COUNTRY OF ORIGIN LABELS
Number 0664
CHAIR ANDERSON announced that the next order of business would
be HOUSE JOINT RESOLUTION NO. 35, Relating to mad cow disease
and country-of-origin labeling for meat products.
CHAIR ANDERSON noted that Representative Crawford had joined the
meeting.
Number 0672
REPRESENTATIVE BETH KERTTULA, Alaska State Legislature, sponsor
of HJR 35, introduced her staff, Aurora Hauke.
Number 0686
AURORA HAUKE, Staff to Representative Beth Kerttula, Alaska
State Legislature, introduced HJR 35 with the story of a girl
from the United Kingdom who moved to Florida and began
experiencing memory loss; she'd contracted a form of
Creutzfeldt-Jakob disease from eating beef contaminated with
bovine spongiform encephalopathy (BSE) or "mad cow disease."
Noting the 10-year incubation period in humans and that it
affects mostly young people, Ms. Hauke said the median age at
death is 29 years old. It was as recent as December 2003 that
the first instance of the disease appeared in the U.S., causing
the U.S. Department of Agriculture to try to control it; this
resolution supports those efforts.
MS. HAUKE pointed out that country-of-origin labeling
implementation has been delayed by Congress until September
2006, and the resolution suggests moving the date back to
September 2004. She said 43 countries currently have country-
of-origin labeling as a way to address the spread of mad cow
disease.
Number 0875
REPRESENTATIVE DAHLSTROM asked if other states have country-of-
origin labeling requirements.
REPRESENTATIVE KERTTULA noted that the information could be
obtained.
Number 0925
REPRESENTATIVE GATTO began discussion of what later became
Amendment 2. He asked if "bovine spongiform encephalopathy"
could be used throughout the bill, rather than "mad cow
disease", in order to address the issue legally and
scientifically. He suggested an amendment [on line 1] that says
the resolution addresses "bovine spongiform encephalopathy (mad
cow disease)".
MS. HAUKE observed that the resolution uses "bovine spongiform
encephalopathy" throughout the remainder.
Number 0990
CHAIR ANDERSON turned to a different issue. Referring to page
2, lines 11-13, he asked whether there was agreement with the
wording. He questioned the phrasing, though agreeing that
Americans need to know what is in their food.
Number 1005
REPRESENTATIVE DAHLSTROM responded that she, as a consumer and
parent, definitely wants to know where her food comes from. She
suggested changing the semantics and asked if the sponsor could
fix it.
REPRESENTATIVE GATTO said he had the same question, and offered:
"are better served by an awareness of".
REPRESENTATIVE KERTTULA suggested: "WHEREAS it's important for
Americans to know".
REPRESENTATIVE DAHLSTROM offered: "WHEREAS Americans want to
know" or "... Americans need to know".
Number 1103
REPRESENTATIVE CRAWFORD said he didn't want to weaken the
resolution in any way. He emphasized that Americans deserve to
know what is in their food, where it comes from, the fat
content, and country of origin. The wording [as it stands]
states his feelings very well, he added.
CHAIR ANDERSON responded that "deserve" is one issue and "need
to know" another. He pointed out that the FDA [U.S. Food and
Drug Administration] already has requirements in place.
Number 1155
REPRESENTATIVE DAHLSTROM remarked, "There are many people that
do need to know what's in their food for purposes of allergies
or things that would be life-threatening if they were to eat
something."
CHAIR ANDERSON said he didn't intend of offer an amendment and
opined that readers would understand the resolution's intent.
Number 1205
MS. HAUKE offered Amendment 1, which read [original punctuation
provided]:
Page 1 line 16 through page 2 line 2
Delete "identify and destroy cattle that are from the
same herd as the infected cow and other animals that
may have been exposed to that cow"
Insert "control bovine spongiform encephalopathy"
Number 1245
REPRESENTATIVE DAHLSTROM moved to adopt the foregoing as
Amendment 1. There being no objection, it was so ordered.
Number 1259
REPRESENTATIVE GATTO moved to adopt Amendment 2 as follows:
Page 1, line 1
After "Relating to"
Add "bovine spongiform encephalopathy (mad cow
disease)"
There being no objection, it was so ordered.
Number 1290
REPRESENTATIVE DAHLSTROM moved to report HJR 35, as amended, out
of committee with individual recommendations [and the
accompanying fiscal notes]. There being no objection,
CSHJR 35(L&C) was reported from the House Labor and Commerce
Standing Committee.
HB 450-INSURANCE & WORKERS' COMPENSATION SYSTEM
[Contains discussion of HB 403]
Number 1325
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 450, "An Act providing for a special deposit
for workers' compensation insurers; relating to the board of
governors of the Alaska Insurance Guaranty Association; relating
to covered workers' compensation claims paid by the Alaska
Insurance Guaranty Association; stating the intent of the
legislature, and setting out limitations, concerning the
interpretation, construction, and implementation of workers'
compensation laws; relating to restructuring the Alaska workers'
compensation system; eliminating the Alaska Workers'
Compensation Board; establishing a division of workers'
compensation within the Department of Labor and Workforce
Development and assigning certain Alaska Workers' Compensation
Board functions to the division and the Department of Labor and
Workforce Development; establishing a Workers' Compensation
Appeals Commission; assigning certain functions of the Alaska
Workers' Compensation Board to the Workers' Compensation Appeals
Commission; relating to agreements that discharge workers'
compensation liability; providing for hearing officers in
workers' compensation proceedings; relating to workers'
compensation awards; relating to an employer's failure to insure
and keep insured or provide security; providing for appeals from
compensation orders; relating to workers' compensation
proceedings; providing for supreme court jurisdiction of appeals
from the Workers' Compensation Appeals Commission; providing for
a maximum amount for the cost-of- living adjustment for workers'
compensation benefits; providing for administrative penalties
for employers uninsured or without adequate security for
workers' compensation; relating to assigned risk pools and
insurers; and providing for an effective date."
Number 1348
LINDA HALL, Director, Division of Insurance, Department of
Community & Economic Development, presented HB 450, noting that
she would provide introductory comments prior to addressing
specific provisions in the bill. She reminded members that
about three weeks ago she'd done a presentation with two of her
colleagues on the workers' compensation environment in Alaska.
One piece of that presentation was the deficit in the guaranty
fund, which relates to HB 403. She continued:
There is an additional area of concern of a lack of
healthy workers' compensation environment in Alaska.
To outline and briefly indicate the problems we are
encountering in that marketplace: one problem is lack
of profitability in the workers' compensation lines of
business in Alaska.
From 1997 to 2002, losses in workers' compensation for
carriers ranged from 99.9 percent to a high of 154
percent. At that high, insurance companies were
spending $1.54 for every $1 of [workers' compensation]
premium collected. Alaska in that time period
averaged 123.7 percent losses per dollar premium,
while the national average for that time period was
118.8 percent. What that translates to is that
carriers are losing 5 percent more money in Alaska
than the national average.
Number 1425
MS. HALL said a second factor in the workers' compensation
environment today is the cost of medical benefits, which - along
with prescription drug costs - have seen double-digit increases
in the past several years. She told members:
We tend to accept a correlation between the rising
cost of health insurance and increased cost of medical
care, but we generally don't make that same
association with the cost of workers' compensation
claims. A big portion right now, approximately 55
percent, of workers' compensation premium is due to
the increased cost of medical care.
Frequency of claims over the last several years has
declined. This is a good thing; it indicates we have
safer work environments, fewer injured workers. But
that decrease in the number of claims has begun to
level out, and it tended to mask the increase in the
costs of those individual claims. So, we have seen
for several years that we haven't seen the need for a
premium increase ....
The third area that's creating a difficult environment
for employers are the premium rate increases.
Effective January 1 [2004], the average rate increase
is 21.2 percent. As the historical loss cost of
claims has increased, actuarial analysis of historical
claims data and projection for the future costs of
claims indicate a need for substantial rate increase,
and that was approved. ...
This rate change ranged from a 15 percent reduction to
a 57 percent increase. Thirty classifications
received reductions in their rates, while 17 different
workers' comp classifications will see rate increases
in excess of 50 percent in 2004.
The current cash deficit in the guaranty association
has already resulted in a 2 percent assessment being
made on each workers' compensation policy. And the
legislation that we propose to fund that stream of
payments, to fund the guaranty fund, would increase
those assessments. Between the rate increases and the
assessments, we're seeing dramatic costs in increases
in the cost of workers' compensation for employers,
both large and small.
Number 1533
MS. HALL continued:
The fourth factor I'd like to discuss is the assigned
risk pool. This is another factor in the increasingly
unattractive environment in Alaska today. Due to the
mandatory nature of workers' compensation, when
employers are unable to obtain workers' compensation
insurance in the traditional voluntary marketplace, we
have an assigned risk pool where all employers can
obtain insurance.
Currently, 17 percent of the workers' compensation
premium in Alaska is in that pool. When the cost of
claims in that pool exceeds the premium dollar
collected, the difference is charged to all insurance
companies who write business in Alaska.
Currently, Alaska has the highest charge of any state
for losses in the assigned risk pool. That charge has
ranged from 4 to 6 percent over the past six years.
This additional cost to insurance companies comes from
their operating cost and makes doing business in
Alaska very expensive.
Overall, we have a workers' compensation environment
that's becoming very expensive for employers and very
unattractive [for] insurers. As these issues became
apparent, ... staff from the Division of Insurance,
from the Department of Labor [& Workforce
Development], the Department of Law, and the
administration met and struggled to try to find ways
to overcome these challenges.
We cannot continue to merely increase workers'
compensation payment for employers. We must look to
find ways to stem the increasing cost of providing
benefits. We've looked at many options, ranging from
the cost of medical befits and the provider fee
payments, to the definition of compensability, the
value of the whole man - that's a technical work comp
term - ... and the reemployment retraining program.
I would submit to you that House Bill 450 makes no
changes to benefit levels other than a small COLA
[cost of living allowance] adjustment, which I believe
Director Lisankie addressed last week. It proposes a
change in the workers' compensation system which we
feel will bring about efficiency, consistency, and
predictability.
Number 1622
MS. HALL continued:
We need a healthy workers' compensation marketplace.
We need a stable environment that is sustainable, that
will encourage current companies to continue to do
business in Alaska and to attract new markets. We
need worker's compensation insurance that is available
and affordable for employers to continue to develop
jobs and sustain economic development.
This environment depends on four factors: adequate
rates; a self-funding, assigned risk plan; a sound
regulatory environment; and a viable workers'
compensation system.
House Bill 450 is fairly unique, as it is cross-
departmental. It's an effort to find a solution to
the issues at hand. I will address for you today the
insurance pieces of House Bill 450. I believe
Director Lisankie, who is also here for questions,
addressed the workers' compensation pieces last
Wednesday [February 11] in hearing.
While we all recognize that a 55-page bill is not
attractive to anybody - I believe you called it "less
than riveting" last week - I would like to briefly go
through [it]. There are only ... five sections that
deal with insurance.
Section 3 adds a requirement for an increase in the
deposit required of insurance companies writing
workers' compensation in Alaska. This deposit would
be for the protection of Alaskans covered under
workers' compensation. Section 4 ties in with that,
and makes the deposit subject to the guaranty
association, and the first order of priority before
the courts in delinquency proceedings.
The second concept in this bill is to change the
composition of the board of governors of the guaranty
association. Insurance company representatives are
important members of the board. Today there are nine
seats on that board, seven or which are filled with
insurance company representatives. Two are set aside
for public members; there's only currently one public
member, who I appointed in November. This bill
proposes to change that composition to four insurance
company representatives, two representatives from
labor, two representatives from employers, and one
representative from the agent world.
I think that there are a lot of stakeholders in these
issues. [It] particularly became apparent this year
when we started to talk about prorating workers'
compensation claims and where those obligations would
go. I'd like those stakeholders to have a seat at the
table during those discussions.
Number 1739
MS. HALL continued:
Section 6 is a net-worth exclusion. This provision
excludes from coverage under the guaranty association
if the net worth of the insured exceeds $25 million.
Thirty-two other states have this provision today,
with exclusion amounts ranging from $10 million to $50
million, but $25 million is kind of an in-between
number. It is the one most typically found in other
states' legislation.
The purpose here is to ... provide some kind of cap on
the cost of claims in the guaranty fund. Other than
workers' compensation, claims in the guaranty fund are
capped at $500,000. Only one other state has it
capped that high. Many states cap claims at $300,000.
Alaska has seen fit to do a larger cap. Workers'
compensation claims are not capped, but this would cap
coverage for an employer. ... An employer whose net
worth exceeded $25 million would not receive benefits
of the guaranty fund for the claims of an insolvent
insurer.
Number 1787
MS. HALL continued:
The last section that deals with insurance is almost
at the end, ... Section 105, ... another important
piece of this bill concerned with insurance and
availability of insurance. This repeals the current
25 percent statutory cap on the surcharges of the
assigned risk pool and the exclusion for surcharges on
policies under $3,000.
As I've indicated before, the assigned risk pool needs
to be self-funding. Premiums have lagged well behind
the costs of claims. Today, nearly 6,000 policies of
the 8,800 policies in the assigned risk pool have
premiums under $3,000, and the average premium for
these policies is $864. Small employers are likely to
have claims, even if they don't have as many claims as
larger employers. But these claims can be as costly
as the claims of a large employer. At an average
premium of $864, a single claim can offset the premium
of several hundred policies, which is one of the basic
reasons the pool has become very unprofitable.
As I described in the introduction, the financial
burden on the insurance companies from the Alaska
assigned risk pool contributes to the overall
unattractiveness of Alaska to insurers. We face a
fragile insurance marketplace. We need to find
solutions that bring about change in the way we
currently operate. We need to have insurance
companies here so that employers have a sustainable
source of the mandatory coverage of workers'
compensation.
Number 1877
REPRESENTATIVE DAHLSTROM asked Ms. Hall if, indeed, Alaska had
the highest risk of loss in the U.S. from workers' compensation
claims. She also asked if studies had been done on why this is
so.
MS. HALL replied:
For the period from 1997 through 2002, the cost of
claims averaged 5 percent higher than the national
average. Generally, the increases are attributable to
higher costs of medical care in Alaska. We have
remote sites where you have to Medivac people, so
there's a higher cost of medical benefits.
Typically, many of the high-risk employments in Alaska
are not covered in the traditional marketplace.
Fishing fleets, for example, are covered under a
different system. Some of the larger contractors in
the oil field are self-insured, so I don't think the
high-risk occupations tends to skew those rates.
REPRESENTATIVE DAHLSTROM asked for more information about the
$864 average premium.
MS. HALL replied:
The $864 is the average premium for the 6,000 policies
that are under $3,000 in premium in the assigned risk
pool. A very large number of the policies in the
assigned risk pool are for small employers. And it's
not cost-effective, typically, for an $864 policy, for
a traditional insurer to write that, because even the
investigation at that point would put them at a loss.
Number 1976
REPRESENTATIVE CRAWFORD asked, "How does an insurance company
stay in business year after year when they have ... losses of
123 percent? What is it that I'm not understanding?"
MS. HALL replied:
Typically, an insurance company doing business in
Alaska - not all of them, but a large number - will
write other lines of business. They may be making a
profit in another state;, they may write other lines
of business; and in some periods in the economy they
certainly had investment income, which made up for the
underwriting loss. That's certainly not true today.
Right now, the workers' compensation line of business
is being judged on its own merits from an underwriting
standpoint, which means the losses are being evaluated
as the premiums [are] taken in.
REPRESENTATIVE CRAWFORD asked again:
Why would any insurance business get into the workers'
comp line across the nation if the nation averages 118
percent losses? Wouldn't they just say, "Let somebody
else do that, if we know that we're going to lose
money on it each and every year?" There must be some
profit in it, or people wouldn't get into the
business.
MS. HALL responded:
I think, as we look around the country, Alaska's
certainly not unique in having this [problem]. I read
headlines today: in California, the ... new governor
... has proposed sweeping reforms of their workers'
compensation system because they are in a comparable
problem. About 50 percent of the California workers'
compensation is written in a state plan. Some states
have formed plans because the ... voluntary insurers
are not willing to write those lines of business.
Utah is a state I've done a lot of discussion with.
Sixty-five percent of the Utah workers' compensation
premium is in their state fund. What that does is put
the state in competition with private enterprise. It
certainly takes out free-market competitive forces
that tend to do good things for insurance lines of
business. And this is not a unique Alaska problem.
... I think there are at least 10 states who have
major workers' compensation reform done, in one
fashion or another.
Number 2091
REPRESENTATIVE CRAWFORD noted that he was sure she was correct
or there wouldn't be an average 118 percent loss across the
nation. He continued:
I just don't understand why anybody would choose to
get into that business if they ... know that they're
going to lose money. I know I'm missing something,
somewhere. There has to be a profit motive for
private business to get into it, in some form or
fashion, I would think."
REPRESENTATIVE CRAWFORD also asked if any states made a profit
on workers' compensation.
MS. HALL responded:
That's one of the reasons I'm here: to make sure we
have available insurers that would do some things in
our environment to start to make it more attractive.
I'm very concerned that we will lose the markets that
we have currently writing business.
We are in the process of looking at states. There are
states that have, certainly, better losses than Alaska
has right now. And there are states that have done
reform in the past, and we are working with the
Division of Workers' Compensation to look at ways
workers' compensation has been changed and the effect
that that may have had on the premium, to find if
there are ways, in addition to what we are proposing
here, to make changes in the system.
Number 2152
DOUG WOOLIVER, Administrative Attorney, Administrative Staff,
Office of the Administrative Director, Alaska Court System
(ACS), testified:
As is our practice, the court does not take a stand on
the merits of this law. I'm sure that there are
problems with the workers' compensation system, but
we'll leave the resolution of those problems up to
you. My only purpose for testifying is to explain the
impact that we've seen one provision of the bill may
have on the court, in Section 65 of the bill, the
provision that says that appeals from the agency will
bypass the superior court and go directly to the
supreme court.
For the last several years, the court system has seen
about an average of 36 workers' comp cases a year.
Right now, they're filed in the superior court, as are
all other agency appeals, and about 75 percent of
those 36 are resolved at the superior court level.
About nine cases a year go ... under appeal again to
the supreme court.
Our concern is that even with passage of the bill, the
total number of cases that come into court are not
likely to change much. We will probably still see
about 36 cases a year. The difference will be, they
will all come to the supreme court, rather than having
75 percent of them, anyway, resolved by the superior
court.
There are several reasons we don't think we'll see a
decrease. The first is that you will always see a
certain number of appeals, regardless of what the
issue is. It doesn't matter whether it's a superior
court decision or a court of appeals decision. Every
year you always see a certain number of cases
appealed, simply because reasonable minds can differ
on the outcome of a case. ... Another group of cases
that we will see every year are [those where] novel
legal issues are raised, ... and those will continue
to come to the supreme court for final resolution.
Additionally, there's a certain number of people who
will never trust an agency decision. They don't like
administrative agencies; they don't think they're
fair. What they want is "their day in court." You
will continue to see a certain number of those every
year.
Finally, another group of litigants that we anticipate
are the tenacious, some people that simply never give
up. And we'll continue to see those. The only
difference will be that the number of cases now will
all come to the supreme court. ...
Remember, there are ... thousands of workers' comp
claims are filed every year, somewhere in the
neighborhood of 25,000 to 30,000. We only get 36 at
the superior court level. It is ... already whittled
down to a fraction of a percentage. We don't think
that fraction is likely to fall any further.
Number 2263
MR. WOOLIVER continued:
But there's also the potential, with the number of
appeals that we see, ... that there's likely to be an
increase, perhaps increase significantly. One of the
important features of the current board system is that
each of the panels is comprised of a labor
representative, a management representative, and a
hearing officer. That gives the perception of balance
and fairness to the system, to both employers and
employees. Neither side has reason to believe that
the other side has the advantage in that makeup.
There is no such requirement for balance in the
current appeals commission that's contemplated in this
bill. If either employers or employees feel that the
board of this new commission is stacked in favor of
the other guy, we're likely to see far more appeals,
... not fewer, and not the same as we see now.
However, we have a fiscal note with the bill; usually,
I will discuss this with the finance committee. Our
fiscal note doesn't assume an increase. We're
assuming that we'll see the same number ... of cases
that we've always seen in the past. The difference
will be that they'll all come to the supreme court.
Now, one of the reasons for bypassing the superior
court is that ... you save time. And while that's
true for a certain number of cases, for those nine
cases each year that typically go to the supreme
court, you will save time because you will have cut
out an intermediate opinion. You will save all the
time that the superior court would have spent on that
case.
Remember, those nine cases represent 25 percent of the
cases that go to the court. The other 75 percent are
resolved at the superior court level and are never
further appealed. Those cases are likely to take much
more time under this proposal because the supreme
court simply doesn't decide cases as quickly as does
the superior court.
A superior court judge is a committee of one. The
judge ... makes his or her decision on the case,
writes the opinion, and that's the end of it. The
supreme court, of course, is a committee of five.
Opinions are drafted, they are circulated for comment,
those comments lead to amendments, it's recirculated.
It's a ... slower, more deliberative process. So by
bypassing the superior court, you will save time on 25
percent of the cases that come to the court, but you
will add time to 75 percent of those cases.
Number 2350
MR. WOOLIVER continued:
Now, ... part of the reason for bypassing is this
concern with delay. So what our fiscal note does is
to assume to hire a central staff attorney with
expertise in this area to help prep all of these
cases, and some clerical staff to help move the
paperwork through. ... Hopefully, with that additional
staff, ... the provision that bypasses the superior
court won't be the clog that slows down the whole
process. This won't ... lead to as much delay in the
cases. And, of course, every time you increase the
supreme court's caseload, you still only have five
justices. If you increase the caseload, you will
inevitably have an impact on the other cases that are
before the court as well.
TAPE 04-13, SIDE B
Number 2366
REPRESENTATIVE GUTTENBERG asked Mr. Wooliver if the supreme
court, in general, reviews cases and decides which ones merit a
hearing.
MR. WOOLIVER responded:
Not in general, not in ... civil cases. Cases that go
to the court of appeals, criminal cases that go to our
criminal court of appeals, then they can; it's the
discretion of the court to hear those further. Your
... appellate right ends, though, at the court of
appeals. But for cases like this, the court must hear
all of those.
Number 2325
REPRESENTATIVE GUTTENBERG said in the restructuring of the
current board, he believes some of these cases require specific
knowledge about certain things such as workers' compensation or
OSHA [Occupational Safety and Health Administration], for
example. He asked, "Was that what you were referring to, ...
more appeals and novel legal cases where the hearing officers
weren't competent to hear an issue?"
MR. WOOLIVER replied:
No, as far as I know, there isn't ... a competency
question. It's just that, like in all other civil or
criminal cases, interesting legal issues arise every
year, in these cases and in any other. So those won't
stop simply because you have the expertise. Or the
legal issues always, inevitably, arise.
Number 2269
REPRESENTATIVE GUTTENBERG asked if a claimant could base an
appeal on a perceived imbalance in the board membership.
MR. WOOLIVER responded:
They'll still have to have reasons to appeal. The
only reason that the court envisions a greater number
of appeals from this is that people - either the
employers or the employees, depending on how the board
is constituted - will feel they haven't been treated
fairly. They'll think there's a bias in the system
itself. ... And even if that isn't the case, if that's
the perception, I think we'll see more appeals.
We're ... taking a conservative assumption that we
won't see any. We think it's a very real possibility.
But we try to write these [fiscal] notes
conservatively. At the very least, we're going to see
about the same number we have always seen. But there
is the risk that we will see considerably more. Our
note assumes the conservative assumption, which is,
we'll stay about the same.
Number 2229
REPRESENTATIVE CRAWFORD said he had lots of questions and didn't
understand the reasoning behind this. He continued:
It doesn't seem to me we are talking about a savings
here. ... Those 36 [cases] that are appealed to
superior court, what would the typical question be
there? ... Is it a constitutional question? What is
it that they can't work out in those 36 cases each
year?
MR. WOOLIVER responded:
The only cases that I've looked at, specifically, are
the supreme court cases, because they're the ones that
are public. In those cases, there are any number of
issues. ... Right now ... the standard of review that
the court applies to board decisions - how closely are
they going to look at what the board did - this is
called the "substantial evidence standard," which
means as long as there's substantial evidence in the
record, that the board made the right decision on the
issues of fact, then the court will defer to the
board.
An example might be - and these are the types of
cases we would see - one doctor testified that the
injury was permanent and another doctor testified that
the injury wasn't permanent. And then the board will
have made their decision, one way or the other.
Someone will appeal, and there was almost no evidence
that it wasn't permanent. All the evidence
[indicated] this one doctor testified for five minutes
and the other doctor testified for a day. ... The
evidence was not sufficient to support the board's
file. That would be one type of appeal.
Other types of appeals are over somewhat peripheral
issues, [for example], when the statute of limitations
began to run - a legal question. How the attorney's
fees should have been apportioned would be another
question. There ... are questions of law in some
cases, and questions of fact in others. A lot of
these questions are easily subject to appeal, simply
because you've got dueling doctrines in a lot of
cases. If you lose, it may be a significant issue to
you. So they'll appeal those cases, but 75 percent of
those are resolved by the superior court in trial
court, probably.
Number 2121
REPRESENTATIVE CRAWFORD asked if Mr. Wooliver could see a reason
for moving away from the present system.
MR. WOOLIVER replied:
I don't know whether it works or not, at the agency
level. I'm sure that the administration has a lot of
reasons for introducing this bill. It's not a problem
for us, but we're not operating ... in that area. We
... take appeals that come to us, but in terms of how
the boards are constituted, we don't really have a
view on that, other than if there's a perceived
balance, we're probably less likely to see appeals
than if there's a perceived bias.
CHAIR ANDERSON asked:
You talked about the difference between superior and
supreme court. And isn't it true, if you take away
from the superior court - which is far more compact
with cases ... compared to the supreme court - ...
won't it free up time in superior court? Is that one
benefit? You can argue both sides.
MR. WOOLIVER replied:
In our fiscal note, too, I mentioned the fact that it
will free up some time at the superior court level,
but we have 30 some superior court judges and we get
36 appeals. Each judge, right now, handles an average
caseload of five to six hundred cases a year.
Reducing that by one each will free up a little bit of
time, but it's out of a caseload of 36 cases statewide
- it's not a very significant change.
Number 2045
CHAIR ANDERSON asked Mr. Wooliver if there were not more staff
at the supreme court level, and if this bill wouldn't force them
to expedite their deliberations.
MR. WOOLIVER answered:
It still does take longer to get any type of case,
with the exception of perhaps of ... election cases,
which have to be decided in a matter of days. In
general, it just takes ... longer for five people to
decide than one.
REPRESENTATIVE GUTTENBERG asked if this bill would require a
court rule change in procedure, since the jurisdiction would
change.
MR. WOOLIVER said he didn't believe so; rather, he believed the
bill drafters did a competent job in drafting this bill and that
there were no indications a change in court rules would be
necessary. He admitted he could be mistaken and that this is a
fair question for the drafters to review.
Number 1926
REPRESENTATIVE CRAWFORD asked Ms. Hall:
Speaking to Mr. Wooliver's contention that ... there's
a perception of balance now with the workers'
compensation appeal board, because we've got three
people, one ... supposedly a neutral party, why would
we go away from that and go to one political
appointee, if ... that's going to probably make more
appeals rather than less appeals?
MS. HALL deferred to Director Lisankie, Division of Workers'
Compensation.
Number 1857
REPRESENTATIVE CRAWFORD asked whether this bill would make it
more profitable for insurance companies to have these changes.
MS. HALL replied:
I think the changes that are going to affect insurance
companies, they affect the workers' compensation
system as it affects employers and employees. The
insurance company ends up paying the cost of claims.
It is my understanding that the theory behind this
change in the board is to bring about more consistency
and predictability.
The current decisions rendered by the ... potential
300 combination of panels that would comprise the
workers' compensation board ... do not set precedent.
They're not public, so if a decision is rendered in a
case in Kodiak, it doesn't necessarily have any impact
on the decision - interpretation of law - in
Fairbanks.
It's that lack of precedent that's currently missing,
that we're looking to find more predictability and
more consistency in the system, with the idea that,
with predictability and consistency, there's a better
ability to project costs.
CHAIR ANDERSON turned the gavel over to Vice Chair Gatto.
Number 1787
DON ETHERIDGE, Lobbyist for Alaska State AFL-CIO [American
Federation of Labor and Congress of Industrial Organizations],
testified:
We have one request for this, and that's to send this
bill before the ad hoc committee. For the last 23
years on all workers' comp issues that have been out
there, labor and management have got together and ...
formed an ad hoc committee to work on these.
We've always stepped up to the plate, when necessary,
to make cuts to the system. The system is ... as
important to us as it is to anybody else out there, as
far as for injured workers. And we would like to have
the opportunity to look at this bill before it's
passed.
There's a lot to that bill. We're told that it
doesn't change benefits, except for a couple of small
areas. Well, we'd like to have an opportunity to look
at that through the ad hoc committee, and ... figure
that out and ... see if there is anything that we can
do to recommend changes.
When the workers' comp rates were skyrocketing back in
the '80s, we stepped up to the plate and we made cuts
to the system at that time, through the ad hoc
committee with labor and management, and put cuts
[such] that we still are not up to that rate as we
were in 1988. ...
Labor has made appointments to the ... committee, and
the WCCA [Workers' Compensation Committee of Alaska]
has made their appointments, and they're trying to
schedule to get together and start looking at this
piece of legislation. We'd like to have the
opportunity to comment on it before it's passed.
VICE CHAIR GATTO asked if Mr. Etheridge was saying there's a
standing ad hoc committee.
Number 1693
MR. ETHERIDGE explained that for the past 23 years, two groups
appointed by the AFL-CIO and the WCCA have looked at proposed
legislation and made recommendations.
[Vice Chair Gatto returned the gavel to Chair Anderson.]
CHAIR ANDERSON asked what recommendations Mr. Etheridge would
make in the current bill.
MR. ETHERIDGE said he couldn't recommend changes, but the ad hoc
committee could. He surmised there will be appeals if there
isn't balanced representation. He is not opposing anything in
the bill at this time, he said, but again asked for the
opportunity for the ad hoc committee to look at the bill, make
recommendations, and present another view other than that of the
administration.
Number 1583
REPRESENTATIVE GATTO asked if Mr. Etheridge was not aware that
the bill was being developed.
MR. ETHERIDGE replied that he had heard of it, but had no idea
of the content. He said:
It was being kept guarded, secret. We were told there
was a 100-page bill a couple of times, ... were told a
lot of different stories, but we haven't had any
information of what the bill actually did until after
you guys got it. ... Nine days ago, we had a 58-page
bill dropped on us that we'd never seen before. I
would have expected to have enough time to have the ad
hoc committee involved with it, and have them look at
this on an objective basis.
Number 1527
CHAIR ANDERSON asked Mr. Etheridge if he could think of a
timeline in terms of the ad hoc committee. He stated, "I can't
keep holding the bill too long. I know I will get tripped if I
keep delaying too long."
MR. ETHERIDGE announced that the ad hoc committee was scheduling
a meeting for Friday [February 20, 2004].
CHAIR ANDERSON responded that part of the reason for urgency
came from the collapse of Fremont Insurance in California.
MR. ETHERIDGE replied:
That was the reason for the earlier bill that you
passed out, in order to cover that. ... Anything in
here, I don't see, at this point, cuts the cost of
workers' comp. With the ad hoc committee sitting on
it and looking at it - we've done that in the past -
we've always been able to cut the cost. ... In '88 we
cut the cost down; we're not even back up to that
point. We've always been willing to step up to the
plate and do what we have got to do to make it work,
because this workers' comp system is more important to
the working people, in the long run, than it is ...
[to] most anybody else.
Number 1410
REPRESENTATIVE GUTTENBERG asked for clarification for the 1988
incident that Mr. Etheridge had referred to.
MR. ETHERIDGE responded:
In '88, ... like we are now, the prices of workers'
comp continually rose and rose and rose, to the point
where people were about ... to go out of business, or
they were going to lose the workers' comp system. So
the ad hoc committee got together. They sat down and
they went through the workers' comp and cut benefits.
... We haven't even got back to that point from all
the cuts that were made at that time.
Number 1341
REPRESENTATIVE GUTTENBERG asked if the ad hoc committee had ever
been involved in the drafting of legislation so that there would
be representatives from both sides involved.
MR. ETHERIDGE responded:
There was usually a bill drafted, and the ad hoc
committee came along and went through it, and ... had
a CS [committee substitute] ready to go. The last go-
round ... was three or four years ago .... We had
Senators that were trying to add to the employee side
of things on the ad hoc committee, and labor came out
in opposition to ... approving for the benefit of the
worker, because it was the agreement between that this
was what it was going to be. So, we had to oppose
what was being offered by the Senators here, to
improve the system for the workers. It wasn't part of
the deal, so we ... backed off of it.
CHAIR ANDERSON noted that a letter in support of HB 450 had been
distributed; it was dated February 13, 2004, from Kevin Smith,
Executive Director, Alaska Municipal League Joint Insurance
Association.
Number 1269
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce,
testified:
We represent approximately 700 business members who
employ approximately 7,000 Alaskans. And we are here
to support House Bill 450. We think that we really
are in a time of crisis when it comes to our ...
association fund of the workers' comp insurance
association fund. And we appreciate the efforts that
the Division of Insurance has made to try to alleviate
the crisis, and to look toward the future for making
sure that we don't get into this situation ... again.
The 21 percent average increase in rates ... that was
dropped on employers in January was quite a wakeup
call. We had ... Ms. Hall speak to us at the chamber
lunch last week, and I asked, before introducing her,
who all was aware of it, ... thinking that perhaps it
hadn't reached everyone's' radar screen. I do believe
it was 100 percent of hands raised in this group of
... 75 or 80 people. It's definitely on the front
burner - top importance to the business community.
And so the efforts to make sure that the insolvencies
don't impact (indisc.), and we support that part of
the bill. Regarding the ... change in the appeals
commission, we also think this is a very good idea.
This group of professional people, who ... are trained
and knowledgeable in workers' compensation law, will
have greater expertise than ... [a] labor's panel.
They would ... have a better opportunity to build the
kind of case law that will help the process as it goes
through the appeals court, and through the ... supreme
court. There will be quicker resolution of the cases,
... we believe, especially as time goes by and their
expertise is ... honed.
And the one thing that we disagree with, previous
testimony, we don't think -- and from my point of
view, there is no perception of ... fairness right now
because even though there's one labor and one business
representation on the board, the hearing officer -
they are (indisc.). And so that does not give the
feeling that there is equal balance.
I understand that the hearing officers have a union
that they are part of, and so they are of the union
thinking, ... where business is not.
MS. LaBOLLE commented that the present panels are perceived to
be imbalanced and that HB 450 would improve the system, would
bring payments to injured workers, and would resolve issues more
quickly and with greater feelings of fairness.
Number 1067
REPRESENTATIVE GUTTENBERG said:
You just stated ..., to my amazement, that somebody in
a union cannot be fair. I'm trying to scratch my head
about that. These are professional hearing officers.
Let's leave that lie. I've been trying to find where
in this there are qualifications for the new hearing
officer. All I've been able to find, and I can't find
it again, is that the director shall appoint hearing
officers. And I don't see any qualifications for that
hearing officer. I don't know who they would be,
where they would come from, or what qualifications
they would have.
MS. LaBOLLE replied, "It's my understanding that the three
members of the field's commission would be members of the Alaska
bar, and ... there are qualifications in this legislation. I
can't cite it for you. Perhaps back to the director ..."
CHAIR ANDERSON clarified:
There's an analysis by the governor's office, and it
states that a single hearing officer would replace the
three-member board panel. And I think what [Ms.
LaBolle] was saying was, of that three-member board
panel, there's a hearing officer, an employer
representative, and an employee representative.
Employee representative is considered labor; employer
representative, ... which she represents - she's
chamber [of commerce] - she's just saying, ... "Hey,
we want it fair and we need to analyze."
And I agree, she's saying, in actuality, the hearing
officer is part of a union, too, so to an extent that
person, he or she, is also labor-represented, because
they are in a union, whereas chances are, the business
representative isn't [in] a union. So, if you just
looked at that construct of three people - there's
really two labor and one employer - [it] doesn't mean
it's impartial or partial, or she's not commenting on
that. Is that accurate?
Number 0937
MS. LaBOLLE replied that was accurate and further said:
If I may respond to the one statement of
Representative Guttenberg: I did not, at all, mean to
imply that labor can't be fair and that they didn't be
fair. It is the perception ..., just as labor has
just argued, that they felt ... it was fair that it
was one of each. And this impartial person, we have
concern that if it came down to concerning a ... new
organized-labor aspect of an issue versus, say,
management aspect of an issue, anyone belonging to a
union is more inclined to be in the favor of organized
labor, which is what unions are about.
Number 0885
REPRESENTATIVE CRAWFORD remarked:
That really just takes my breath away in that, because
of me being in a union, Representative Gatto being in
the union, Representative Guttenberg being in the
union, that we can't be fair and impartial here. ...
I'm absolutely amazed. I think that we have the
ability to make a fair and impartial decision, even
though I've been a union member for 32 years. But to
imply that I can't go with what I feel is right
because I have an allegiance to a union is -- I'm
shocked.
MS. LaBOLLE responded:
I am sorry to have shocked you. However, I think that
what I find shocking is that it isn't understood that
labor and management have differing viewpoints ... in
a great many areas. I am not implying at all that you
cannot be [impartial] or Representative Gatto cannot
be [impartial], or anyone else on this panel cannot be
impartial.
What I am saying is that there is a perception that we
want total impartiality, and no representation from
one side or the other. And regarding this ad hoc
group, now, I'm just about to have my eleventh
anniversary as the head of the state chamber, and I
have to say I have no idea who's on the ad hoc group.
I think that they ... may be a very knowledgeable,
well-recognized group of individuals. But who are
they? And what role do they have of replacing the
public process of bringing legislation before the ...
legislature, before a committee, everyone having total
access to speaking to the legislation?
Number 0748
REPRESENTATIVE CRAWFORD responded:
Some of the management people on the ad hoc group
would be Dick Cattanach of the AGC [Associated General
Contractors]. There were a number of people there ...
that represented the management side on this question.
And my next question was going to be: Would you have
thought that it was a good idea for the last
administration, or the next possible administration,
to rewrite the workers' comp laws without ... input
from the business side on the ad hoc group, that they
just came and presented this without your input?
I assume that what you're saying is that the last
administration was ... anti-business and this one is
pro-business, so that you get your ... kind of folks
on the workers' comp board.
MS. LaBOLLE replied:
I am confused. I don't believe I said anything about
the last administration or any future administration
.... Regarding how I would feel about somebody just
presenting this without ... having management ... or
business input, well, guess what: we didn't. We
weren't part of writing this bill. ...
As I've said, you've mentioned one person on the ad
hoc committee. I am completely sincere when I tell
you I have no idea who comprises the ad hoc committee.
Now, it's possible that because not a great deal of
workers' compensation insurance issues have come up
before the legislature in the last 11 years - although
there was something passed probably about my third
year in this job, and I had heard there was such a
group, I still do not know who it is, what they are
about, what their goal is.
REPRESENTATIVE CRAWFORD replied, "Maybe it's about time you
started looking into it."
Number 0592
REPRESENTATIVE GATTO said he is a member of two chambers [of
commerce] and that he could be considered unreasonable by the
unions. In addition, he stated, he was a member of the
Firefighters and Paramedics' Union for 20 years, so he could be
considered "unreasonable" by the chambers. He continued:
Yet, I don't consider myself biased in any direction.
I really am very much interested in the facts, and
when I hear of an ad hoc committee, even if the
committee was composed of just "some people," I really
want to hear their side.
I would hope that you would take the effort also, to
scrutinize this bill and say, "The concerns I have are
very, very serious and here they are on this page, ...
and that page," because that's what we will hear from
the other side. By getting both sides in the mix like
that, I have to applaud you if you'll do that. And if
you won't, then you deserve what you get.
So, I expect you to be involved, as ... I expect Mr.
Etheridge is interested in being involved, and kind of
objected when he felt that he wasn't involved. And
hopefully I would find you objecting in the same way,
that, "Gee, I don't feel that I was involved enough,
and perhaps is this an opportunity for me to get
involved." I think we'll reach a very good consensus
if we get people from both sides.
MS. LaBOLLE responded:
I so appreciate Representative Gatto's comments, and
the only thing is that I'm only doing what I know to
do, and that is to look at a piece of legislation
that's been introduced from the viewpoint of my
members, the business community. And ... we have not
been invited to participate. ... However, I'm just
doing what I know, and that's to look ... at a piece
of legislation and give our comments on it, as we have
always done. And we know that they will be addressed
with impartiality from them all, because we are all
working for what's best for Alaska, for its workers,
and for the business people who keep the economy
going.
Number 0413
CHAIR ANDERSON told the committee:
The amendments don't change the type or amount or
computation of benefits, as currently written. It
does change outside residents - it caps them at a
certain rate. And it's noted by the governor's office
that there's an active, accountable, and effective
division director. ...
It's contended that the enforcement tools will be
better. It also ... stated that there's consistency,
... predictability in the process. Whether you agree
completely, partly, or not at all with that, it sounds
like where we don't have consensus is on the
reorganization.
The sponsor says it's a streamlining of the
adjudicative and appeals process - basically, how you
go through the system. I don't want to get into a
labor/business argument. I'm as pro-labor, pro-
business -- I hope ... all members are, at least
currently present. I just want to remind you that if
we can fix this as the makers of public policy, it's
important.
I have had constituents write me over the last week;
I've had labor say, please allow the ad hoc committee
to analyze it. I've had other individuals write me -
business people - saying, "Every time I go here, it's
about pulling out my wallet and paying, because I've
never won in any sense." ... So there's still a
dilemma, and I think we have to meet in the middle.
... [Ms. LaBolle] talked about and Mr. Etheridge
talked about if we can have this ad hoc committee meet
- I mean, want to work with you.
We certainly don't want a split vote on the committee.
I love to see ... uniformity and agreement, and we
can't always reach that, but if you could expedite
that. ... We've talked about nine days, and you
haven't looked at it, but the other side of it is, not
to you but to your members, start looking, because we
have to hurry in terms of fixing some these aspects.
The things I talked about - not affecting the
computation, giving better accountability and
effectiveness for the director, looking at
streamlining, predictability in the process so there's
consistency and there's fairness - those things, I
would hope, we all want.
And so with that being said, I'm going to hold the
bill. And I hope everyone agrees; it sounds like you
do. ... On Friday, we can get communication from Mr.
Etheridge to let us know, ... and that would give you
Friday and Monday, at least, to look and maybe to
involve the chamber so we don't have a debate again.
If that's not the case, then just be prepared to have
a little more testimony, and I have to afford that,
after you bring back what your amendments might be, or
if you like the bill, or if you have revisions.
Number 0215
CHAIR ANDERSON announced that public testimony would remain open
and that HB 450 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:50 p.m.
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