03/30/2016 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB214 | |
| HB372 | |
| HB281 | |
| HB290 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 372 | TELECONFERENCED | |
| *+ | HB 281 | TELECONFERENCED | |
| *+ | HB 290 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 214 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 30, 2016
3:23 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
COMMITTEE CALENDAR
HOUSE BILL NO. 214
"An Act repealing the Workers' Compensation Appeals Commission;
relating to decisions and orders of the Alaska Workers'
Compensation Board; relating to superior court jurisdiction over
appeals from Alaska Workers' Compensation Board decisions and
orders; repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of
Appellate Procedure, and amending Rules 202(a), 204(a) - (c),
210(e), 508(g), 601(b), 602, and 603, Alaska Rules of Appellate
Procedure; and providing for an effective date."
- MOVED CSHB 214(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 372
"An Act relating to insurance; relating to expenses for
insurance examinations; relating to regulations for insurance
utilization review, benefits determination, health care
insurance grievance resolution procedures, independent review of
adverse determinations or final adverse determinations,
independent review organizations, and continuing education
providers; relating to required provisions for health care
insurance contracts and policies, including health care provider
choice; establishing civil penalties for insurers for failure to
provide requested records; amending the definition of 'wet
marine and transportation' insurance; amending provisions on
limited licenses to include crop insurance; relating to third-
party administrator notification requirements; relating to
certification filing by reinsurance intermediary brokers;
relating to rate filings, delivery of insurance policies or
endorsements; relating to refunds of variable life insurance
policies and variable annuities; establishing limitations on
issuance of long- term care insurance; relating to requirements
for group health insurance policies; amending the definition of
'group health insurance'; relating to motor vehicle service
contracts; relating to notice requirements for meetings of
stockholders or members of a domestic insurer; establishing a
definition of 'bona fide association'; relating to requirements
and penalties for committing a fraudulent or criminal insurance
act; updating criteria for examinations; relating to rate filing
deviations; establishing civil penalties for certain wilful
violations; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 281
"An Act relating to real estate broker licensure; relating to
the real estate commission; and providing for an effective
date."
- HEARD & HELD
HOUSE BILL NO. 290
"An Act extending the termination date of the Real Estate
Commission; and providing for an effective date."
- MOVED HB 290 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 214
SHORT TITLE: REPEAL WORKERS' COMP APPEALS COMMISSION
SPONSOR(s): REPRESENTATIVE(s) OLSON
01/19/16 (H) PREFILE RELEASED 1/8/16
01/19/16 (H) READ THE FIRST TIME - REFERRALS
01/19/16 (H) L&C, JUD
03/14/16 (H) L&C AT 3:15 PM BARNES 124
03/14/16 (H) Heard & Held
03/14/16 (H) MINUTE(L&C)
03/18/16 (H) L&C AT 3:15 PM BARNES 124
03/18/16 (H) Scheduled but Not Heard
03/28/16 (H) L&C AT 3:15 PM BARNES 124
03/28/16 (H) Scheduled but Not Heard
03/30/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 372
SHORT TITLE: OMNIBUS INSURANCE
SPONSOR(s): LABOR & COMMERCE
03/21/16 (H) READ THE FIRST TIME - REFERRALS
03/21/16 (H) L&C
03/28/16 (H) L&C AT 3:15 PM BARNES 124
03/28/16 (H) Heard & Held
03/28/16 (H) MINUTE(L&C)
03/30/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 281
SHORT TITLE: REAL ESTATE BROKER LICENSURE REQS
SPONSOR(s): MUNOZ
01/29/16 (H) READ THE FIRST TIME - REFERRALS
01/29/16 (H) L&C
03/30/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 290
SHORT TITLE: EXTENDING THE REAL ESTATE COMMISSION
SPONSOR(s): LABOR & COMMERCE
02/01/16 (H) READ THE FIRST TIME - REFERRALS
02/01/16 (H) L&C, FIN
03/30/16 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
LAURA STIDOLPH, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Olson, sponsor,
presented changes in the committee substitute (CS) for HB 214,
Version P.
NANCY MEADE, General Counsel
Office of the Administrative Director
Alaska Court System
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
214.
ANNA LATHAM, Legislative Liaison
Office of the Commissioner
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: Answered a questions during the hearing on
HB 214.
MARIE MARKS, Director
Central Office
Division of Workers' Compensation
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing of HB
214.
ANDREW HEMENWAY, Chair
Workers' Compensation Appeals Commission
Division of Workers' Compensation
Anchorage Office
Department of Labor & Workforce Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing of HB
214.
TERRY HARVEY, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking on behalf of Representative Munoz,
sponsor of HB 281, introduced the bill and answered questions.
NANCY BLATCHLEY DAVIS, Chair
Alaska Real Estate Commission
Sitka, Alaska
POSITION STATEMENT: Testified during the hearing of HB 281.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Answered a question during the hearing on
HB 281.
TRACI BARICKMAN, Real Estate Broker
Sutton, Alaska
POSITION STATEMENT: Testified in support of HB 281.
LAURA STIDOLPH, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Olson, chair of
the House Labor and Commerce Standing Committee, sponsor,
introduced HB 290.
LORI WING-HEIER, Director
Division of Insurance
Anchorage Office
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
290.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
290.
ERROL CHAMPION, Chair
Industry Issue Key Work Group
Alaska Association of REALTORS
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing of HB
290.
ACTION NARRATIVE
3:23:23 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:23 p.m. Representatives Olson,
Tilton, Kito, Josephson, Hughes, LeDoux, and Colver were present
at the call to order.
HB 214-REPEAL WORKERS' COMP APPEALS COMMISSION
3:23:31 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 214, "An Act repealing the Workers' Compensation
Appeals Commission; relating to decisions and orders of the
Alaska Workers' Compensation Board; relating to superior court
jurisdiction over appeals from Alaska Workers' Compensation
Board decisions and orders; repealing Rules 201.1, 401.1, and
501.1, Alaska Rules of Appellate Procedure, and amending Rules
202(a), 204(a) - (c), 210(e), 508(g), 601(b), 602, and 603,
Alaska Rules of Appellate Procedure; and providing for an
effective date."
3:24:09 PM4
LAURA STIDOLPH, staff to Representative Kurt Olson, Alaska State
Legislature, speaking on behalf of Representative Olson, sponsor
of HB 214, introduced the proposed committee substitute for HB
214, [labeled 29-LS0854\P], noting that the bill is at the
request of the commissioner of the Department of Labor &
Workforce Development. At the previous hearing on 3/14/16, the
Alaska Court System requested changes bringing back the original
language from the Workers' Compensation Act - enacted prior to
the establishment of the Worker's Compensation Appeals
Commission in 2005 - and adding language related to the transfer
of files to the Alaska Court System.
3:25:06 PM
REPRESENTATIVE HUGHES moved to adopt the proposed committee
substitute (CS) for HB 214, labeled 29-LS0854\P, Wallace,
3/21/16, as the working document.
3:25:21 PM
CHAIR OLSON objected for discussion purposes.
MS. STIDOLPH paraphrased the following summary of changes for HB
214, page 3, lines 6-31, and page 4, lines 1-11 [original
punctuation provided]:
Section 5. AS 23.30
Page 3, Lines 6-31 and Page 4, Lines 1-11
Delete all the material and insert original
language from the Workers' Compensation Act (AS
23.30.125) from 2004 prior to the establishment
of the WCAC.
MS. STIDOLPH said the proposed change to Section 5 was at the
request of the Alaska Court System to return power back to the
superior court. She continued to page 5, lines 24-26, and
paraphrased from the following summary of changes [original
punctuation provided]:
Section 12. Transitional Provisions
Page 5, Lines 24-26 (a)
Delete all material after "shall" and insert "be
transferred to the superior court in the judicial
district where the original claim was filed,
under AS 22.10.020 and Rules 604(b) and 609,
Alaska Rules of Appellate Procedure.
Page 5, Line 30
After "June 1, 2016" insert "within 30 days after
the date that the board decision becomes final."
Page 6, Lines 1-17
Delete all material in (c) and (d) and replace
with new language.
REPRESENTATIVE COLVER asked for the time period available for a
party to appeal after a decision is made.
MS. STIDOLPH said on or [before December 1, 2016], a party
seeking review may file an appeal or petition for review with
the supreme court as stated in [Section 12, subsection (c)].
3:29:40 PM
REPRESENTATIVE COLVER asked for clarification that an appeal of
a decision by the Workers' Compensation Board (board) would be
filed within 30 days.
3:29:52 PM
MS. STIDOLPH said, "It's ... thirty days after the date that the
board decision becomes final." She continued to page 6, line
22, and paraphrased the summary of changes, as follows:
[original punctuation provided]
Section 13. Terms of Commissioners
Page 6, Line 22
Remove "February 20, 2017" and insert "December
31, 2016."
Section 14. Conditional Effect
Page 6, Line 25
Insert "CONDITIONAL EFFECT. This Act takes effect
only if secs. 8 and 10 of this Act receive the
two-thirds majority vote of each house required
by art. IV, sec. 15, Constitution of the State of
Alaska.
REPRESENTATIVE LEDOUX questioned whether HB 214 exactly returns
legislation to the language before changes were made in 2005.
MS. STIDOLPH said yes.
3:31:13 PM
CHAIR OLSON removed his objection. There being no further
objection, Version P was before the committee.
REPRESENTATIVE HUGHES asked why the act takes effect June 1,
2016.
MS. STIDOLPH was unsure.
3:32:08 PM
NANCY MEADE, General Counsel, Administrative Staff, Office of
the Administrative Director, Alaska Court System, informed the
committee the bill reverts the appeals procedure to that in
2005, and the Alaska Court System sought the same wording as
existed in 2005, so that all case precedents would remain
applicable, and to streamline case decision-making. In
addition, the transitional provisions ensure that the files
transferred from the Department of Labor & Workforce Development
(DLWD) are in the proper format.
3:34:05 PM
ANNA LATHAM, Legislative Liaison, Office of the Commissioner,
DLWD, in response to Representative Hughes' question, responded
that DLWD requested the effective date to be June 1, 2016, so
that the Workers' Compensation Appeals Commission (commission)
would have until November 1, to finalize cases.
REPRESENTATIVE JOSEPHSON questioned whether an aggrieved party
would have until November to file an appeal to the commission,
or if they could wait and appeal to the superior court.
MS. MEADE stated that after June 1, an appeal of a final
decision of the commission would be submitted to the superior
court; furthermore, anything pending with the commission in
November will be transferred to the court. In response to an
earlier question from Representative Colver, she pointed out
that proposed Section 5, page 3, lines 6-10, clarifies that the
decision of the commission becomes final on its 31st day, after
which an appeal can be accepted. In response to Representative
Josephson, she said the commission will not accept new appeals
after June 1.
REPRESENTATIVE COLVER assumed filed decisions are written
orders.
MS. MEADE said yes.
REPRESENTATIVE COLVER suggested that during the 31 days there is
an opportunity for a party to ask for partial reconsideration
before the order is final.
3:38:31 PM
MARIE MARKS, Director, Central Office, Division of Workers'
Compensation, DLWD, answered that a decision by the Workers'
Compensation Board is issued in a written format and becomes
effective when signed and served on all parties. At that time,
a prospective appellant has 14 days to ask the board for
reconsideration, and 30 days to appeal its decision to a higher
power. If the board takes no action, the power to reconsider
ends, and she opined that in the proposed version, "if you don't
reach that 30-day window by June first, you need to go ahead and
seek appeal with the superior court. So, it's June first, and
you have to reach your 30-day window before June first, that's
my understanding of the working draft."
REPRESENTATIVE COLVER questioned if a party asked for
reconsideration within the 14-day period, whether that would
stay the 30-day period for appeal.
MS. MARKS said no, the periods proceed at the same time. In
further response to Representative Colver, she said the board
must take action on reconsideration within the 14-day period by
contacting the parties, and if no action is taken, that is a
denial of reconsideration.
REPRESENTATIVE COLVER observed that the board process is
unchanged, except that the appeal would go to the superior
court.
MS. MARKS agreed. She added that every decision issued informs
the parties of their right to ask for reconsideration or
modification; the only change made by the proposed legislation
is that the appeal would go to the superior court rather than
the commission.
3:42:56 PM
REPRESENTATIVE LEDOUX inquired as to how many cases would be
caught in the transition brought about by the legislation.
MS. MEADE was assured there would be about six cases or less
pending before the commission, but not resolved.
REPRESENTATIVE LEDOUX posited if a case is not resolved, the
parties must submit new briefs.
MS. MEADE acknowledged there may be some delay during the
transition process; however, parties would not have to re-brief
because the commission will provide documents in the proper
form. She said she anticipates working with DLWD to minimize
delay.
REPRESENTATIVE COLVER inquired as to whether there still is a
hearing officer who hears the initial request for benefits or
compensation.
MS. MARKS explained that a board decision is made by a board
panel consisting of two or three members: one chair, who is a
staff attorney; one labor representative; and one industry
representative.
3:46:52 PM
REPRESENTATIVE COLVER related his experience that attorney fees
were a time-consuming issue.
MS. MARKS said the fees awarded at the board level follow a
statute that provides for actual attorney fees when restrictions
are met.
MS. MEADE directed attention to the bill on page 4, lines 9-11,
which read:
(g) A court may not make an award of costs and
attorney fees against an injured worker unless the
court finds that the worker's position on judicial
review was frivolous or unreasonable or the judicial
review was sought in bad faith
MS. MEADE said subsection (g) is the statutory guidance given to
the courts on how to award attorney fees. Generally on appeal,
the court has different provisions than at the board level.
MS. MARKS restated that with exceptions, at the board level
attorney fees are full, actual, and reasonable.
MS. MEADE recalled there was much litigation about attorney fees
in workers' compensation cases at the superior court level, and
prior case decisions will be effective.
REPRESENTATIVE COLVER stated that subsection (g) was also a
protection for the worker.
MS. MEADE indicated yes.
REPRESENTATIVE COLVER gave an example of a case in which the
injured worker prevailed and asked, "and then the insurance
company, the workers' comp carrier, then would be liable to
cover the injured worker's fees, right?"
MS. MARKS advised that the board will award reasonable fees to
be paid to the employee's attorney on the issue(s) on which they
prevail, and those fees are a compensation benefit, so the
entity that pays compensation benefits would be responsible.
REPRESENTATIVE COLVER asked for an indication of whether
attorney fees are a big issue.
3:51:36 PM
ANDY HEMENWAY, Chair, Workers' Compensation Appeals Commission,
Anchorage Office, Division of Workers' Compensation, DLWD,
advised that for cases that were appealed from the commission to
the supreme court, attorney fees are a common - but not the most
common - subject for litigation beyond the appeals commission.
The experience at the appeals commission is that it is not a
major subject in terms of the amount of fees.
REPRESENTATIVE LEDOUX asked whether attorneys are granted full
reasonable fees before the appeals commission.
MR. HEMENWAY said the same standards apply before the
commission, as apply before the board.
REPRESENTATIVE LEDOUX asked about attorney fees garnered for
cases before the superior court.
MS. MEADE will provide an answer to the committee.
CHAIR OLSON said the issue can be addressed in the next
committee of referral, the House Judiciary Standing Committee.
REPRESENTATIVE HUGHES asked what differs between the language in
HB 214, and the related statute prior to the changes made in
2005.
MS. MEADE said Section 5, subsection (a) provides timelines that
are slightly different, but clearer. On page 3, lines 11-31 are
copied from the 2005 law; on page 4, lines 5-11 are subsections
which did not appear in the 2005 law, and that were added by
DLWD.
3:57:51 PM
CHAIR OLSON opened public testimony on HB 214; after
ascertaining no one wished to testify, public testimony was
closed.
3:58:42 PM
REPRESENTATIVE HUGHES moved to report the committee substitute
(CS) for HB 214, Version 29-LS0854\P, Wallace, 3/21/16, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 214(L&C) was
reported out of the House Labor and Commerce Standing Committee.
3:59:04 PM
The committee took an at ease from 3:59 p.m. to 4:01 p.m.
HB 372-OMNIBUS INSURANCE
4:01:22 PM
CAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 372, "An Act relating to insurance; relating to
expenses for insurance examinations; relating to regulations for
insurance utilization review, benefits determination, health
care insurance grievance resolution procedures, independent
review of adverse determinations or final adverse
determinations, independent review organizations, and continuing
education providers; relating to required provisions for health
care insurance contracts and policies, including health care
provider choice; establishing civil penalties for insurers for
failure to provide requested records; amending the definition of
'wet marine and transportation' insurance; amending provisions
on limited licenses to include crop insurance; relating to
third-party administrator notification requirements; relating to
certification filing by reinsurance intermediary brokers;
relating to rate filings, delivery of insurance policies or
endorsements; relating to refunds of variable life insurance
policies and variable annuities; establishing limitations on
issuance of long- term care insurance; relating to requirements
for group health insurance policies; amending the definition of
'group health insurance'; relating to motor vehicle service
contracts; relating to notice requirements for meetings of
stockholders or members of a domestic insurer; establishing a
definition of 'bona fide association'; relating to requirements
and penalties for committing a fraudulent or criminal insurance
act; updating criteria for examinations; relating to rate filing
deviations; establishing civil penalties for certain wilful
violations; and providing for an effective date."
CHAIR OLSEN advised a committee substitute was forthcoming.
[HB 372 was held over.]
HB 281-REAL ESTATE BROKER LICENSURE REQS
4:01:40 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 281, "An Act relating to real estate broker
licensure; relating to the real estate commission; and providing
for an effective date."
4:02:30 PM
TERRY HARVEY, staff to Representative Cathy Munoz, Alaska State
Legislature, speaking on behalf of Representative Munoz, sponsor
of HB 281, provided background information on the real estate
industry in Alaska. The real estate business was an industry
consisting of small local individuals who financed property
through banks or local investors. Over time, the real estate
business has become increasingly complex involving contracts,
documents, orders, sales, trust accounts, and foreclosures. The
bill addresses education requirements and experience
requirements for a licensee seeking to apply for a broker
license. There is one broker per real estate firm, whose duties
include oversight of monetary transactions, fees, trust fund
transactions, and the ultimate responsibility for all of the
licensees associated with that firm. The proposed bill would
require additional education credits and real estate experience
of an applicant, and was brought to the legislature by the
Alaska Real Estate Commission and the Alaska Association of
REALTORS. Mr. Harvey said the intent of the bill is to better
serve consumers, ensure high quality transactions, avoid
litigation, and improve standards in Alaska. If passed, in
order to apply for a broker license, a real estate licensee or
associate broker would have to complete 30 hours of education,
and have 48 months of experience. He said the industry supports
the bill.
4:06:47 PM
REPRESENTATIVE COLVER asked if the continuing education
requirement follows a two-year license renewal cycle.
MR. HARVEY explained the bill does not change rules on
continuing education, but adds hours to the education
requirement to apply for a broker license.
REPRESENTATIVE COLVER expressed his concern about continuing
education that is not relevant specifically to Alaska; he
suggested adding a local element to the curriculum, such as
weatherization. He urged the sponsor to contact real estate
professionals regarding directing a portion of the education to
Alaska issues and laws.
REPRESENTATIVE LEDOUX observed that a bill that increases
regulation on an industry is suspect. She pointed out that the
bill would benefit current real estate brokers and make it more
difficult for others to become brokers; in fact, it would take
four years of practice to become a broker, and she questioned
the bill's value to public safety.
REPRESENTATIVE COLVER agreed that professional licensing creates
protection for an industry, and he cautioned against
exclusionary exceptions. He asked for additional background on
why the legislation is necessary.
REPRESENTATIVE HUGHES expressed interest in hearing about
problems that the bill would address.
4:15:07 PM
MR. HARVEY noted that testimony is available from those with
experiences in the real estate industry which would provide the
reasoning behind HB 281, such as the growth of the industry in
Alaska, the responsibilities of a real estate broker, the lack
of standards in Alaska, and examples of situations.
[The committee treated the hearing on HB 281 as open for public
testimony.]
4:16:33 PM
NANCY BLATCHLEY DAVIS, chair, Alaska Real Estate Commission
(AREC), informed the committee the issue was brought forward not
by AREC, but by 25 various licensees who felt brokers were not
sufficiently knowledgeable to protect the public. She said
Alaska ranks in the bottom four of broker licensing
requirements, and AREC seeks not to limit the number of brokers,
but to protect the public. Ms. Davis said AREC sees cases of
public harm that could have prevented with more education. Her
experience was that she needed a mentor to assist with her
upgrade to broker.
REPRESENTATIVE LEDOUX restated her interest in examples [of
problems].
MS. DAVIS said she could not provide an example because there
are no issues in Sitka, but offered to provide information from
AREC.
REPRESENTATIVE JOSEPHSON asked whether broker applicants are
normally real estate licensees.
MS. DAVIS said yes, if upgrading to an associate broker or
broker, licensees have been working for two years. In further
response to Representative Josephson, she said currently,
licensees can work for two years, upgrade to a broker and open
their own business. She said the licensees who approached AREC
felt there was not sufficient experience required to protect the
public.
REPRESENTATIVE LEDOUX asked for examples [of problems] including
the length of time and experience of those involved.
4:21:54 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, said an audit of the
activities of the Alaska Real Estate Commission did not identify
a specific need to change the requirements for licensees, or
identify a risk area. The audit would have shown if there was a
problem reported in meeting minutes, and AREC did not respond.
4:22:54 PM
TRACI BARICKMAN, Real Estate Licensee, said she was representing
herself as a real estate professional and as an educator. She
said she has been licensed for over 23 years - 16 years as a
broker - and has supervised thousands of transactions and
hundreds of licensees. She also serves as a commissioner of the
Alaska Real Estate Commission, has served as an educator in real
estate for 18 years, is a subject matter expert for real estate
industry testing materials, both on the state and on the
national level, and therefore her experience gives her insight
into the conduct of licensees. Ms. Barickman said real estate
is not a "buyer beware" field, and restraint of trade does not
outweigh consumer protection. A broker license in Alaska can be
obtained with only 85 hours of education and 2 years of
experience, which is much less than in other states. She said
she supports HB 281 to protect the public, and related her
recent experience with brokers who could not resolve a dispute
due to lack of an understanding of contract law, experience, and
problem-solving skills, and clients "stood to lose" $10,000 and
a $600,000 contract. Ms. Barickman said in today's climate she
would not like to be in a position supervising those with
minimal education. Protecting Alaskans' homes and financial
future is the responsibility of educators, commissioners, and
legislators.
4:26:40 PM
REPRESENTATIVE COLVER inquired as to whether there is an Alaska-
based continuing education curricula available.
MS. BARICKMAN said broker upgrade curriculum covers general real
estate knowledge in depth, including financial investments;
however, a big part is Alaska law, disclosures, and trust
accounts specific to Alaska.
REPRESENTATIVE COLVER asked whether there is a continuing
education requirement to renew licenses.
MS. BARICKMAN said yes, adding that all licensees are required
to have a minimum of 20 hours of continuing education every 2
years, and of that, 8 hours is mandated by AREC to be Alaska-
specific, and 12 hours is elective. In further response to
Representative Colver, she confirmed that the continuing
education requirement is in regulation.
4:30:30 PM
CHAIR OLSON announced public testimony would remain open.
[HB 281 was held over.]
HB 290-EXTENDING THE REAL ESTATE COMMISSION
4:30:35 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 290, "An Act extending the termination date of
the Real Estate Commission; and providing for an effective
date."
4:31:02 PM
LAURA STIDOLPH, staff to Representative Kurt Olson, Alaska State
Legislature, on behalf of Representative Olson, chair of the
House Labor and Commerce Standing Committee, sponsor of HB 290,
informed the committee the bill extends the termination date of
the Real Estate Commission (commission) to 6/30/18. Each year
the Legislative Audit Division, Legislative Agencies and
Offices, reviews state boards and commissions to determine
whether they should be reestablished. She directed attention to
a document provided in the committee packet entitled, "A Sunset
Review of the Department of Commerce, Community & Economic
Development, Real Estate Commission," dated 7/24/15, and said
in the opinion of the auditors, the commission serves the public
interest by licensing real estate brokers, associate brokers,
and salespeople. In addition, the auditors made a
recommendation that the legislature amend the Real Estate Surety
Fund statutes to provide more complete, effective, and efficient
consumer protection to claimants. Ms. Stidolph recalled
legislation in 2008 that required salespersons and brokers to
acquire error and omissions (E&O) insurance if a master policy
held by the commission is in effect. Therefore, since the
commission has been unable to obtain a master E&O policy,
companion proposed legislation seeks to repeal that provision
and establish a two-year sunset date. She advised that the
auditors' other recommendations have been resolved, and urged
support for HB 290.
4:34:25 PM
REPRESENTATIVE JOSEPHSON asked why licensees cannot get E&O
insurance.
MS. STIDOLPH explained that licensees can get E&O insurance, but
they are not required to by statute if the commission cannot
obtain a master policy. The intent is to repeal and sunset the
requirement related to the commission, thus over the next two
years, licensees will be required to obtain E&O insurance to
protect consumers.
REPRESENTATIVE JOSEPHSON surmised that wise licensees get E&O
insurance, but not through a master policy held by the
commission.
MS. STIDOLPH advised that those who cannot get E&O insurance are
in a [high-] risk pool, and were supposed to be covered through
the master policy. In further response to Representative
Josephson, she said she was unsure how a licensee qualifies as
high-risk.
CHAIR OLSON recalled that the real estate [commission] intended
to create a group of real estate licensees and brokers in the
state for the purposes of insurance, but "then there was little
or no follow-through on it, which is why we're where we're at
now ...."
4:38:39 PM
LORI WING-HEIER, Director, Division of Insurance, Anchorage
Office, Department of Commerce, Community & Economic
Development, advised that the related regulations set an
unrealistic limit of $300 on the amount of the premium [of E&O
insurance]. In addition, at this time, the Division of
Insurance has incomplete underwriting data for a master policy,
a pool, or for a request for proposal (RFP).
REPRESENTATIVE COLVER noted that there are many obstacles to
creating a pool for E&O insurance without a business history.
CHAIR OLSON recalled that the real estate industry proposed a
bill based on the model of a national program. Regarding
insurance legislation, he advised using only model laws
sponsored by the National Association of Insurance Commissioners
or the National Conference of Insurance Legislators.
REPRESENTATIVE COLVER stated his preference would be for
individual licensees to disclose whether they carry E&O
insurance. Further, state regulations of this type cause
opposition, especially without compelling case histories to
warrant legislation.
MS. STIDOLPH advised that the real estate industry indicated
that many licensees and brokers carry E&O insurance, except for
the small pool who are unable to obtain coverage; the master
policy would protect the consumer and allow affected businesses
to operate.
4:46:31 PM
REPRESENTATIVE JOSEPHSON asked whether licensees and brokers
fail to get coverage because there is a complaint, or because of
the cost. He stressed that businesses should be fully insured,
and that this a serious problem.
MS. STIDOLPH stated that data is unavailable as to which brokers
and licensees have insurance coverage.
CHAIR OLSON added that the lack of E&O coverage and malpractice
insurance is not limited to the real estate industry.
REPRESENTATIVE COLVER asked whether E&O coverage could be
established in a manner similar to workers' compensation.
MS. WING-HEIER advised an assigned-risk pool is put to bid every
four years through the National Council on Compensation
Insurance; the division rates proposals that are submitted to
the state and assigns a percentage of the worker's compensation
business.
REPRESENTATIVE COLVER observed that E&O coverage is more like a
bank loan and is based on professional expertise, experience,
and credit, versus "a straight occupational percentage."
4:50:20 PM
MS. WING-HEIER advised that E&O coverage is based on a number of
underwriting factors related to each individual's experience,
which is the data the division is lacking.
REPRESENTATIVE LEDOUX recalled previous testimony that other
businesses - such as doctors and lawyers - do not have E&O
coverage, and questioned why the legislation is focused on the
real estate industry.
MS. STIDOLPH noted that [House Bill 357, passed in the Twenty-
Fifth Alaska State Legislature (2008)] had two parts: 1.) the
realty recovery fund was turned into the realty surety fund,
which shifted responsibility from the Real Estate Commission to
the court system to recover funds; 2.) licensees were required
to have E&O insurance.
CHAIR OLSON, in response to Representative LeDoux, explained the
legislation was sought by the industry, and became statute in
2008, but is not working. He described some of the ongoing
problems for the industry and for some consumers.
REPRESENTATIVE LEDOUX questioned whether the Legislative Audit
Division would normally delve into the topic of education
requirements for a certain profession.
4:54:40 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, responded that the audit
division performs sunset reviews following the legislative
oversight process. She said the division would not look at the
education requirements of an occupation, but at the ability of a
commission to protect the public interest and regulate its
industry. The audit concluded that the Real Estate Commission
is serving the public interest generally, and did not recommend
termination; however, the audit did recommend a six-year
extension if the commission can obtain E&O insurance by January
[2016], and a four-year extension if not. Ms. Curtis pointed
out the E&O requirement became effective in 2010, but
regulations were not effective until October 2014, thus this is
an extensive lag in response to the legislation. Although there
were many reasons given for the delay, the audit concluded the
reasons were inadequate.
REPRESENTATIVE LEDOUX remarked:
I was just trying to figure out whether I should be
reading anything into the fact that legislative audit
hadn't recommended an increase of educational
requirements or an increase of the amount of time that
somebody has to serve as a licensee before they became
a broker. ... And it sounds like you're saying "no."
4:58:08 PM
MS. CURTIS directed attention to page 5 of the aforementioned
audit that was provided in the committee packet, and said [House
Bill 357 in 2008] changed a consumer protection that was in
place. In the past, the division's sunset audits had been
critical of the real estate recovery fund, which limited claims
awards by the Real Estate Commission to $15,000, and in 2007,
the division recommended improving the surety fund. In 2008,
the law was changed - which made it harder for consumers to
collect on a claim - because they had to gain a costly ruling
through the court system; however, the bill also required
insurance to better protect the public. Ms. Curtis advised
that in the matter of providing insurance, the commission has
failed to serve the public interest. Another finding of the
audit was that the investigations conducted by the Division of
Corporations, Business and Professional Licensing, Department of
Commerce, Community & Economic Development were not done in a
timely manner; there were long delays and some cases were closed
without sufficient reason. Therefore, two recommendations were
made: 1.) procure E&O insurance; 2.) improve the timeliness of
the investigations. Ms. Curtis restated the division's
recommendation of a shorter extension, and asked the commission
to demonstrate its ability to obtain E&O insurance.
REPRESENTATIVE JOSEPHSON asked for the source of the monies in
the real estate recovery fund.
MS. CURTIS directed attention to page 15 of the audit, and said
the fund comes from a fee per licensee, which is currently set
at $30, and changes biannually according to the balance in the
fund. In fiscal years 2011 (FY 11) and FY 12, no claims were
paid.
5:03:38 PM
REPRESENTATIVE COLVER asked how difficult it is for small
brokers to obtain E&O insurance.
5:04:05 PM
ERROL CHAMPION, chair, Industry Issue Key Work Group, Alaska
Association of REALTORS, said licensees are independent
contractors, so there are differing operating policies in how
each office conducts business. A licensee may elect to stay a
licensee, or to advance to the position of associate broker and
then to a broker, and only one broker is allowed per office.
Mr. Champion said because of the independent contractor status,
brokers should have E&O insurance as there are no performance
reviews, and the right to terminate someone's employment is
stipulated by the Real Estate Commission. He opined those who
do not have E&O insurance generally work alone in a small
community, and it is difficult to qualify for insurance, but
most large brokerage houses have insurance.
5:06:44 PM
REPRESENTATIVE HUGHES moved to report HB 290 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 290 was reported out of the
House Labor and Commerce Standing Committee.
5:07:06 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:07 p.m.