05/07/2004 06:30 PM House L&C
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
May 7, 2004
6:30 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Carl Gatto, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 282(RES)
"An Act relating to the identification of finfish in food
products and to the misbranding of food products consisting of
or containing finfish."
- MOVED CSSB 282(RES) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 311(JUD)(efd fld)
"An Act providing for a special deposit for workers'
compensation insurers; relating to the board of governors of 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 and the Workers' Compensation Hearings Board;
relating to agreements that discharge workers' compensation
liability; providing for hearing examiners and hearing panels 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; and relating to assigned risk pools and
insurers."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 282
SHORT TITLE: RESTAURANTS ETC DISCLOSE WILD/FARMED FISH
SPONSOR(S): SENATOR(S) ELTON BY REQUEST OF SALMON INDUSTRY TASK
FORCE
01/28/04 (S) READ THE FIRST TIME - REFERRALS
01/28/04 (S) RES, FIN
03/03/04 (S) RES AT 3:30 PM BUTROVICH 205
03/03/04 (S) Scheduled But Not Heard
03/05/04 (S) RES AT 3:30 PM BUTROVICH 205
03/05/04 (S) Moved CSSB 282(RES) Out of Committee
03/05/04 (S) MINUTE(RES)
03/08/04 (S) RES RPT CS 4DP 1NR SAME TITLE
03/08/04 (S) NR: OGAN; DP: LINCOLN, STEVENS B,
03/08/04 (S) ELTON, WAGONER
04/28/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/28/04 (S) Scheduled But Not Heard
04/29/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/29/04 (S) Heard & Held
04/29/04 (S) MINUTE(FIN)
05/03/04 (S) FIN RPT CS(RES) 4DP 3NR
05/03/04 (S) DP: WILKEN, DYSON, HOFFMAN, STEVENS B;
05/03/04 (S) NR: GREEN, OLSON, BUNDE
05/03/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
05/03/04 (S) Moved CSSB 282(RES) Out of Committee
05/03/04 (S) MINUTE(FIN)
05/05/04 (S) TRANSMITTED TO (H)
05/05/04 (S) VERSION: CSSB 282(RES)
05/06/04 (H) READ THE FIRST TIME - REFERRALS
05/06/04 (H) FSH, L&C
05/07/04 (H) FSH AT 9:00 AM CAPITOL 124
05/07/04 (H) L&C AT 6:15 PM CAPITOL 17
BILL: SB 311
SHORT TITLE: INSURANCE & WORKERS' COMPENSATION SYSTEM
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
02/09/04 (S) READ THE FIRST TIME - REFERRALS
02/09/04 (S) L&C, FIN
02/10/04 (S) L&C AT 1:30 PM BELTZ 211
02/10/04 (S) Heard & Held
02/10/04 (S) MINUTE(L&C)
02/19/04 (S) L&C AT 1:30 PM BELTZ 211
02/19/04 (S) Heard & Held
02/19/04 (S) MINUTE(L&C)
02/26/04 (S) L&C AT 1:30 PM BELTZ 211
02/26/04 (S) Heard & Held
02/26/04 (S) MINUTE(L&C)
03/04/04 (S) L&C AT 1:30 PM BELTZ 211
03/04/04 (S) Moved SB 311 Out of Committee
03/04/04 (S) MINUTE(L&C)
03/05/04 (S) L&C RPT 1DP 1DNP 2NR
03/05/04 (S) DP: BUNDE; DNP: FRENCH; NR: SEEKINS,
03/05/04 (S) STEVENS G
03/12/04 (S) JUD REFERRAL ADDED AFTER L&C
03/26/04 (S) JUD AT 8:00 AM BUTROVICH 205
03/26/04 (S) Heard & Held
03/26/04 (S) MINUTE(JUD)
04/05/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/05/04 (S) Heard & Held
04/05/04 (S) MINUTE(JUD)
04/07/04 (S) JUD AT 5:30 PM BUTROVICH 205
04/07/04 (S) -- Meeting Canceled --
04/14/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/14/04 (S) Moved CSSB 311(JUD) Out of Committee
04/14/04 (S) MINUTE(JUD)
04/15/04 (S) JUD RPT CS 1DP 1DNP 2NR 1AM NEW TITLE
04/15/04 (S) DP: SEEKINS; DNP: ELLIS;
04/15/04 (S) NR: THERRIAULT, OGAN; AM: FRENCH
04/15/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/15/04 (S) Scheduled But Not Heard
04/21/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/21/04 (S) Scheduled But Not Heard
04/22/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/22/04 (S) Heard & Held
04/22/04 (S) MINUTE(FIN)
04/23/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/23/04 (S) Heard & Held
04/23/04 (S) MINUTE(FIN)
04/26/04 (S) FIN RPT CS(JUD) 4DP 2DNP 1NR
04/26/04 (S) DP: GREEN, WILKEN, BUNDE, STEVENS B;
04/26/04 (S) DNP: HOFFMAN, OLSON; NR: DYSON
04/26/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/26/04 (S) Moved CSSB 311(FIN) Out of Committee
04/26/04 (S) MINUTE(FIN)
05/01/04 (S) TRANSMITTED TO (H)
05/01/04 (S) VERSION: CSSB 311(JUD)(EFD FLD)
05/03/04 (H) READ THE FIRST TIME - REFERRALS
05/03/04 (H) L&C, FIN
05/07/04 (H) L&C AT 6:15 PM CAPITOL 17
WITNESS REGISTER
PAULA CADIENTE, Staff
to Senator Kim Elton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 282 on behalf of Senator
Elton, sponsor of the bill.
ERNESTA BALLARD, Commissioner
Office of the Commissioner
Department of Environmental Conservation (DEC)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of SB 282
and answered questions.
SCOTT NORDSTRAND, Deputy Attorney General
Civil Division
Department of Law
Juneau, Alaska
POSITION STATEMENT: Spoke about the transformation of HB 450
into SB 311 and answered questions about the bill.
GREG O'CLARAY, Commissioner
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 311.
JIM SAMPSON, Executive President
Alaska American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
Fairbanks, Alaska
POSITION STATEMENT: Requested that the House Labor and Commerce
Standing Committee hold [SB 311] until the major disagreements
are resolved between the parties.
PAMELA LaBOLLE, President
Alaska State Chamber of Commerce (ASCC)
Juneau, Alaska
POSITION STATEMENT: Testified in favor of passing SB 311
unamended.
ACTION NARRATIVE
TAPE 04-52, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 6:30 p.m. Representatives
Anderson, Gatto, Lynn, and Guttenberg were present at the call
to order. Representatives Dahlstrom, Rokeberg, Crawford arrived
as the meeting was in progress.
SB 282-RESTAURANTS ETC DISCLOSE WILD/FARMED FISH
Number 0200
PAULA CADIENTE, Staff to Senator Kim Elton, Alaska State
Legislature, presented SB 282 on behalf of Senator Elton,
sponsor of the bill. She explained that the bill requires food
service establishments that sell to the general public to
identify whether fish products are wild or farmed. State law
now provides for labeling in retail grocery stores, she
reported. She termed the bill a consumer awareness choice
issue, especially given scientific and popular press on toxin
loads and other problems with industrial fish. More than half
the fish consumed at the consumer level is consumed in
restaurants. These consumers deserve the same "heads up" as
shoppers in the grocery store, she said. This bill came out of
the work of the Joint Legislative Salmon Task Force, which was
comprised of processors, harvesters, public members, and
legislators, she reported. The House Special Committee on
Fisheries moved [SB 282] out this morning with unanimous do-pass
recommendations, she concluded.
REPRESENTATIVE ROKEBERG asked how the fish would be identified
in restaurants.
MS. CADIENTE replied that they could put a little sticky note on
the menu or list on the menu whether the fish is wild or farmed.
REPRESENTATIVE ROKEBERG asked if the bill specifies how it
should be done.
MS. CADIENTE said it does not.
REPRESENTATIVE GUTTENBERG asked how long the restaurants will be
allowed to take to implement this policy.
MS. CADIENTE replied that there is no effective date on the
bill.
Number 0368
ERNESTA BALLARD, Commissioner, Office of the Commissioner,
Department of Environmental Conservation (DEC), reported that
the sponsor of the bill has been advised of several wording
changes in the form of amendments that would make it possible
for DEC to implement this law in a fashion consistent with
existing statute and regulation. She said that they are
essential to the efficiency and effectiveness of this law. She
mentioned a fiscal note which has been zeroed out and the fact
that without funding, DEC has no resources to implement this
law.
Number 0433
REPRESENTATIVE DAHLSTROM asked, "If there are no funds available
and there is not a date in place for anyone to meet the
requirements, I'm assuming that we're hoping everyone goes on a
good neighbor policy and just does it."
COMMISSIONER BALLARD responded that with no funds "we would be
unable to promulgate regulations which would advise restaurants
how to comply."
REPRESENTATIVE CRAWFORD inquired how much the fiscal note was.
COMMISSIONER BALLARD said the fiscal note was $77,200 the first
year and $69,300 the second year.
REPRESENTATIVE ROKEBERG asked why the note was so high.
COMMISSIONER BALLARD replied that the fiscal note would
accommodate one environmental health technician who would be
hired to implement the requirements of this bill. That person's
job would be to collect the menus to determine the accuracy of a
statement that the fish is fresh or farmed, to inspect, and to
enforce compliance. She reported that there are several-
thousand food establishments that would be covered by this
regulation, and it would not be a simple task.
REPRESENTATIVE ROKEBERG suggested using e-mail for public
notification.
REPRESENTATIVE CRAWFORD said it seems to him that the
enforcement would be from individual Alaskans who did not see [a
label] on the menu.
COMMISSIONER BALLARD reported that the fiscal note was prepared
by [DEC] staff who have for many years enforced restaurant food
requirements and who understand the workload that would be
required by both customer complaints and implementing
regulations, as well as enforcement and inspection to ensure
that this law is complied with.
Number 0654
REPRESENTATIVE GATTO asked if it is DEC's obligation to
determine if the fish is properly identified on the menu. Could
deceit be investigated, he asked.
COMMISSIONER BALLARD replied that deceit is a possibility. The
food safety legislation, which passed both the House and the
Senate this week, extends the protections of the consumer
protection attorney to this industry and to this subject matter.
There would be a requirement for [DEC] staff to be aware of the
deception and then the coordination with the consumer protection
attorney to see if fraud and deceit were carried out. More
problematic is that many of the suppliers in restaurants may not
know what the source of their purchased wholesale fish product
is, she reported. She said that would require DEC to be
involved in determining that a statement or assertion that a
product was fresh or farmed was accurate.
CHAIR ANDERSON closed public testimony.
REPRESENTATIVE GUTTENBERG pointed out that he heard this bill
earlier today in House Special Committee on Fisheries and it
seems like good public policy. He said that the fiscal note was
an issue that the committee took up and decided that DEC had the
discretion to decide whether or not to implement this law. He
said it is important for health and economic reasons to go
forward with this bill. He termed this bill as one of the
better bills to come out of the [Joint Legislative Salmon Task
Force] because it is good for Alaskans economically, socially,
and for health reasons.
Number 0798
REPRESENTATIVE GUTTENBERG moved to report CSSB 282(RES) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSB 282 (RES), was
reported out of the House Labor and Commerce Standing Committee.
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM
[Contains discussion of HB 450]
Number 0864
CHAIR ANDERSON announced that the final order of business would
be CS FOR SENATE BILL NO. 311(JUD)(efd fld), "An Act providing
for a special deposit for workers' compensation insurers;
relating to the board of governors of 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 and the
Workers' Compensation Hearings Board; relating to agreements
that discharge workers' compensation liability; providing for
hearing examiners and hearing panels 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; and relating to assigned risk pools and insurers."
Number 0930
SCOTT NORDSTRAND, Deputy Attorney General, Civil Division,
Department of Law, reported that HB 450 was the original bill
which has since been changed and he described the process it
went through to become SB 311. He said the process began with
the administration trying to draft legislation in response to
the increasing workers' compensation rates that were announced
late last year. He pointed out that the bill was also a
response to the problems with the guarantee fund and the costs
incurred from the failure of [Fremont Indemnity Company]. The
Division of Insurance, the Department of Labor, and the
Department of Law were challenged by the administration to see
if there could be a reform in workers' compensation that could
improve the system and make it more efficient. He stated that
there were two alternatives looked at, how the benefits are paid
out and the system of adjudication. The latter was looked at to
see if efficiencies could be created in terms of what insurers
and employers can expect in outcomes that are heard by the
commission, he reported.
MR. NORDSTRAND explained that HB 450 was drafted and then
challenged in the Senate by Senator Seekins to try to find some
middle ground. The result was a hybrid bill in the form of a
committee substitute (CS) for SB 311(JUD). He referred to a
packet given to the members of the committee which describes the
differences between the original bill and the current CS. He
summarized the main change as being that the division of
workers' compensation established a workers' compensation
appeals commission, and instead of having hearing examiners hear
the cases alone, there is now a labor representative and an
industry representative, as well as a hearing examiner who would
make legal decisions and act like a judge, with the lay members
acting like a jury. "Let the professional decide the legal
issues, the procedural issues, but let's have the involvement of
the lay board members from industry and labor," he said. That
was the first major compromise that is integrated in [SB 311],
he explained.
MR. NORDSTRAND related that the second major compromise was at
the commission level. "There were to be three attorneys
appointed by the governor, confirmed by the legislature, for
terms of five years, and what we did there was, we agreed to
have one of these attorneys have experience representing
employees in workers' comp, and one employer, and the other
could be either or both or some combination," he explained.
Number 1170
MR. NORDSTRAND referred to the "What's the Difference?" chart
and explained that it compares the current system, the original
bill, and the CS, describing different issues. "We sat down
with labor and hammered out a compromise that, frankly, we got
to within one issue - one issue alone." He said that in the
Judiciary Committee this chart was discussed and Kevin
Dougherty, the attorney for organized labor, worked through it.
There was agreement on every issue except for the relationship
between the commission and the hearing panels, in terms of how
much review the commission can have regarding the decision in
the hearing panels, he explained. The administration's position
was that the commission should have what is called de novo
review - not trial - of the record so that they could relay
evidence and essentially smooth out the edges of inconsistent
decisions, either statewide or even within the same locality, he
related. Labor's position was that they wanted that standard
that had been used for the superior courts, that is the
"substantial evidence test". He said that the real difference
between the [de novo] test, in a practical way, if there is a
question of whether on not an employee was injured on the job or
not, is that evidence is taken and weighed independently. For
the substantial evidence test, the amount of evidence is
considered. "It's the weighing versus looking to see if there's
any evidence - substantial evidence - to support that decision,"
he said. He continued:
We think that the key to making predictable decision-
making in the workers' compensation system, so there's
a similarity in outcome between Fairbanks and
Anchorage and Juneau and Kenai, and all of these other
cases, when you've got this panoply of board panels to
start with, many, many different combinations
presently being appealed to a superior court of 40
different combinations, and the only place the answer
is ever told as to what the law really is, is the
supreme court. We say that if you could create a
commission that had the power to smooth out the rough
edges, essentially, of the decisions, to take the
egregious errors if there are some, and there would be
very few we suspect, but fix them and rebalance it,
that that would be a better system. And let me say in
closing, this is the system that is used in most [of]
the states. We've done our survey of all of the other
states. This kind of system is exactly what is done
in other states as a sort of a two-level agency review
and then an appeal, often to a court of appeals
directly - very seldom to a supreme court - because
most states now have civil courts of appeal as
intermediate courts.
Number 1369
CHAIR ANDERSON asked Mr. Nordstrand to give two illustrations;
one of de novo and one not.
MR. NORDSTRAND gave an example where a witness saw a person
jumping on a trampoline in the back yard who landed funny on his
back and limped away. The injured person may then claim to
never having been on a trampoline and to not having a
trampoline. There could be all kinds of evidence either way.
The credibility of witnesses is left to the panel, and the
panel, after finding the neighbor credible, believes the
neighbor who saw the person on the trampoline. The panel has to
weigh the amount of evidence and decide. In another case there
is a co-worker in the kitchen who sees a person slip on the
floor, fall, and limp away. "Now that's another bit of evidence
that could be balanced, but at some point, though, a fact
finder's got to make a choice, and that's really what we're
talking about is whether or not that appellate commission could
rebalance and make that choice.
CHAIR ANDERSON clarified that it is "a matter of how far you can
expand the review of the evidence."
Number 1530
MR. NORDSTRAND agreed:
It's really about ... the question of weighing it.
Once you've got the evidence in, and it's all been
admitted and it's all in the record, someone has to
look a this pile and that pile [of evidence] and go
like this and say, "I believe that way." Now we don't
get to say, "She's not telling the truth, he's not
telling the truth." Whatever findings the panel said,
go on that. ... At the end of the day ... it's about
whether or not you can rebalance.
REPRESENTATIVE GUTTENBERG asked if Mr. Nordstrand would be back
because he said he has questions.
CHAIR ANDERSON said he would be back.
Number 1591
REPRESENTATIVE CRAWFORD asked about the legislative intent of
the bill. He stated:
The legislative intent is to reform the workers'
compensation system, to insure continued payment of
benefits in the event of a insurer insolvency, to give
parties affected by the insolvency of above workers'
compensation insurer a voice on the board of governors
of the Alaska Insurance Guaranty Association, and to
reduce the overall costs of workers' compensation
premiums to employers. It doesn't say anything about
an intent there to enhance or to do a better job about
getting workers' compensation benefits to the injured
worker - to make it any better. There are a lot of
people that get pushed out of the system for one
reason or another and get treated unevenly as is right
now.
REPRESENTATIVE CRAWFORD questioned why that was not a part of
the original intent of the bill.
MR. NORDSTRAND responded that Representative Crawford is looking
at the intent section for the guaranty fund portion of the bill,
which only applies to Sections 3-6. He said that Section 8 is
the intent for the reform section and he quoted in part:
This chapter be interpreted to ensure quick,
efficient, fair, predictable delivery of indemnity,
medical payments. Cases shall be decided on their
merits except where otherwise provided by law, shall
not be construed in the favor of one party, shall be
impartial and fair. This actually is intent language
from the 1988 reforms that was uncodified law, and we
actually negotiated at some length with the members of
organized labor.
Number 1696
REPRESENTATIVE GUTTENBERG noted that sometimes where something
is found in a bill signifies its importance, and having that
intent language in Section 8 is not a friendly statement to the
workers, he opined.
MR. NORDSTRAND said that is because of the drafting rules which
require that they have to be put in order as they show up in the
statute. He also pointed out that [Section 8] is the beginning
of the workers' compensation reform portion of the bill.
Number 1737
GREG O'CLARAY, Commissioner, Department of Labor and Workforce
Development, stated that there is a general disagreement between
the representatives of organized labor and the administration
with respect to the de novo review. He commended the parties
for attempting to work out their differences. He said that his
purpose for monitoring the progress of the bill is twofold:
one, the administration was interested in trying to do something
for small business to stave off the escalating cost of workers'
compensation premiums, and two, to balance that with "the
absolute adherence to this policy that this department follows
as close as any other policy that we are charged with, and that
is that we would not diminish the benefits that workers receive
when they're injured in the course of their employment." He
opined that those two points have been lost in the debate. He
said that Governor Murkowski is very concerned about small
businesses owners being able to survive in a business climate of
escalating [workers' compensation] rates.
CHAIR ANDERSON gave an example of his mother's business's rates
raising by $15,000 from last year without any injuries having
taken place. He asked Commissioner O'Claray if this bill will
fix the problem and rates will go down.
COMMISSIONER O'CLARAY replied that he has not heard any
testimony that guarantees rate reduction or savings, but warned
if something is not done to refine the system, it's almost
guaranteed that these costs will continue to escalate. He said
that [SB 311] is not the perfect bill because there is
disagreement, but it is needed "on the books," not only for
long-term efficiencies and potential cost savings, but because
"we need to do something that makes sure that our system is
going to be able to be modernized and brought into the twenty-
first century." Many other states use this approach, he noted.
COMMISSIONER O'CLARAY said that compared to the original draft
of the bill, this version is much improved. It does retain lay
panels and recognizes the concerns of working people, just not
on the de novo question, he added. He said that the Department
of Labor will be monitoring [the de novo] function very closely.
He noted that business communities and Governor Murkowski's
administration support this bill, and it is on Governor
Murkowski's priority list, and he urged the committee to move
[SB 311] on to the next committee.
Number 1965
REPRESENTATIVE CRAWFORD opined that this approach, "to have more
certainty", appears that it will deny more benefits to workers.
He stated that the best way to lower workers' compensation rates
is to have less accidents because of safer job sites. He
suggested that that is the avenue that should be taken.
COMMISSIONER O'CLARAY agreed that the best way to reduce costs
of workers' compensation is to reduce accidents on the job. He
said that this will not be the last the committee hears about
improved efforts in that regard.
REPRESENTATIVE GUTTENBERG spoke of another bill that came before
the committee that was designed to better predict rates and to
give stability to workers' compensation. He said that [SB 311]
completely rewrites the workers' compensation law, sets up a
whole new hearing procedure, changes one of the basic tenants of
the previous bill, which is the de novo issue, and there is no
mention of a cost savings to the employer or of
increased/decreased benefits to the injured worker. There is a
$560,000 fiscal note going out to the year 2010, he pointed out,
and then he asked where the savings and the structural
efficiencies are.
COMMISSIONER O'CLARAY replied:
You're asking the wrong person with respect to trying
to quantify that. But, any time you make things more
efficient, any time you add more predictability to a
body of law, I think it gives the long-term ability to
claim savings. ... Frankly, I think we ought to give
the bill an opportunity to work.
Number 2110
JIM SAMPSON, Executive President, Alaska American Federation of
Labor and Congress of Industrial Organizations (AFL-CIO),
requested that the House Labor and Commerce Standing Committee
hold [SB 311] until the major disagreements are resolved between
the parties. He said he believes that given time in the
interim, the parties will be able to resolve their differences.
"As the bill is written now, we believe it will encourage
unnecessary appeals and delays in process, not reduce them," he
said. He agreed that there had been no testimony to show that
this bill will reduce employment costs.
Number 2162
MR. SAMPSON pointed out that the biggest problem with the bill,
as Mr. Nordstrand described, is in the hearing process itself.
He said the process has caused some problems, but this is the
first time in 25 years that labor, the party that represents
injured workers in the state, has not been given a say in the
drafting of the bill. For three months prior to the session,
Mr. Nordstrand's office reached out to almost everybody but
labor, he stated. He related that since the early 80's there
has been a process in the state that has worked well where labor
and management have worked together to reduce premiums by almost
50 percent. He said employer costs have been reduced almost
$400,000 in that period of time, which shows a proven record of
trying to work together to reach consensus on a very complex and
difficult issue.
MR. SAMPSON spoke about the hearing process. As it stands now,
the governor selects a three-person panel of attorneys, all of
whom are political appointees, to take the place of the superior
court. He said that these appointees would be able to re-weigh
evidence without taking testimony. He said that while labor
does not object to a process whereby one can substitute their
judgment on the law, "we just don't agree to a process that will
allow them to use their judgment on the facts."
MR. SAMPSON continue to say:
In fact, the labor panel and the employer panel and
the hearing officer have worked well. They can weigh
the facts themselves quite well and have for many
years. The standard now - is there enough facts to
support the decision - that's the standard that we
want to keep. We want labor to be involved in the
decision. We want the employer representative to be
involve in the decision, so that is a major difference
of opinion between us.
Number 2312
MR. SAMPSON said that labor appointed an ad hoc committee and
started meeting about this bill. "We have compromised and
compromised and compromised to make a bad bill the best bill we
could make it," he said. As it now written, he opined that the
bill should be called "The Attorney Retirement Bill - 2004"
because it was written for attorneys by attorneys. He said his
organization is still committed to working on the bill, but
needs more time.
MR. SAMPSON restated that the biggest problem is with the
appeals commission. The members would have more power and
authority than a superior court judge, they are political
appointments and not from a list submitted by the judicial
council, and they would not operate under the same standards
that the courts are required to. He noted that evidence shows
there are only 36 appeals per year to the court so each member
would review about 12 appeals per year, and in the Senate
Judiciary Committee, Senator French said that a superior court
judge handles about 600 cases a year. He asked the committee to
understand that this is a very difficult, complex area of law,
and it needs more time in order to work through these issues.
TAPE 04-52, SIDE B
Number 2366
MR. SAMPSON opined that in 1988 the legislature went too far in
the restructuring of workers' compensation, but it drove down
rates. Every major workers' compensation bill for the last 25
years has been costed out, he noted. [Labor] has always asked
NCII, the insurers, for their opinion as to what proposed
legislation would do for reducing rates; however, the
administration has not sent this bill out to be costed out, and
there has been no testimony that there will be a reduction of
employer premiums, he said. He disagreed with the Commissioner
O'Claray and suggested that this bill could be costed out.
CHAIR ANDERSON commented that Mr. Sampson's statement that the
governor's office did not come to his office right away in the
summer is not compelling because the committee has held this
bill for months and there has been time to negotiate. He also
complimented Mr. Sampson because he said it sounds like Mr.
Sampson has been negotiating. He asked Mr. Sampson if it all
boils down to the de novo issue or if it is a number of issues.
Number 2287
Mr. Sampson replied that they all generally surround the hearing
process and the power of the political appointments to reweigh
evidence without taking testimony. He said that these are
legal, technical issues that [labor] has worked on and he
maintained that it would politicize the workers' compensation
system for every administration causing wide swings. He
emphasized that politics should stay out of it.
CHAIR ANDERSON asked if Mr. Sampson has considered ways to
reduce employer rates.
MR. SAMPSON said he is willing to spend whatever time is
necessary to look at those issues. None of those issues such as
medical costs were looked at in this bill, he pointed out. He
suggested that Chair Anderson write his mother and let her know
that there is no guarantee that the rates would go down at all
because there is nothing in the bill that would lead one to
believe that rates will be reduced. He said that the two
parties that should have been at the table are the ones that pay
the bills, not the lawyers.
Number 2155
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce
(ASCC), reported that she represents 700 businesses who employ
approximately 70,000 Alaska workers. She said she had heard a
recent speech by a Senator from California who used the example
of how important a good [workers' compensation and unemployment]
system in a state is to make a state good for business. Idaho
had placed an ad in California newspapers that showed that a
high-tech industry in California with 200 employees costs
employers $400,000 and that same industry in Idaho costs
$40,000, she said.
REPRESENTATIVE ROKEBERG asked if that is for workers'
compensation.
MS. LaBOLLE replied that it is for workers' compensation
insurance costs. She continued to say that two months ago a
businessman in Juneau with 50 employees paid $98,000. He only
had two minor claims on his record, she said. "That means we've
reached that California example", she opined. "It is our belief
- and we strongly believe this - that when you have fairness and
consistency and people who are examining the law as it is
written and applying it to these cases ... that you are going to
have predictability, and predictability means a savings in
money." If a business's insurance company has no idea about how
a case is going to be determined because there is no
predictability, it won't appeal the case, and the rates will go
up, she pointed out. She opined that the proposed bill does not
take away from workers who have a case because of an injury, and
it will provide for a closer examination to make sure that the
claims are legitimate.
MS. LaBOLLE said that there are three legs to the process, the
state, which is the policymaker, the workers, and the business
community, who are the ones that pay the bill. She stated that
business was never consulted about this legislation and the
administration negotiated with labor only, not business. She
said [business] preferred not to have the lay panel and felt
that without the de novo portion the bill has no value to
business. She suggested that the bill should be passed
unamended.
Number 1856
REPRESENTATIVE GUTTENBERG referred to Mr. Sampson's testimony
that in the past [workers' compensation bills] were costed out.
He asked Ms. LaBolle if the ASCC had attempted to find out where
the savings were before they decided to support the bill.
MS. LaBOLLE replied that if there is predictability and a chance
of knowing whether a case can be appealed, then there will not
be automatic payoffs "to cut your losses" and that will save
money.
REPRESENTATIVE GUTTENBERG asked if any other states [that have a
similar plan] are seeing a decrease in workers' compensation.
MS. LaBOLLE said she does not know except for the Idaho example
that she gave.
REPRESENTATIVE LYNN asked if the administration did not contact
the business community as a whole or just not ASCC.
MS. LaBOLLE replied that ASCC was not contacted, and she said
does not believe any other businesses were contacted. She said
she does not feel that it was necessary [to contact business]
because she opined that the creation of the bill was not a
political move and the administration was responding to a
critical situation.
REPRESENTATIVE LYNN said he is amazed that business was not
contacted.
Number 1706
REPRESENTATIVE CRAWFORD said he is intrigued by the fact that
Idaho is at $40,000 compared to California at [$400,000],
referring to Ms. LaBolle's earlier example. He asked what is
making Idaho so much cheaper.
MS. LaBOLLE said she does not know. She reported that the
California Senator was making the point that the policy
decisions when setting up a system such as workers' compensation
are critical in keeping costs down.
REPRESENTATIVE ROKEBERG thanked Ms. LaBolle for her 10 years of
service.
[CSSB 311(JUD)(efd fld) was heard and held.]
ADJOURNMENT
The House Labor and Commerce Standing Committee meeting was
recessed to a call of the chair at 7:30 p.m. [The meeting was
reconvened on May 8, 2004.]
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