04/04/2016 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| HB372 | |
| HB299 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 125 | TELECONFERENCED | |
| += | HB 372 | TELECONFERENCED | |
| + | HB 299 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 4, 2016
3:22 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 125(RES)
"An Act adding legislative nonvoting members to the board of
directors of the Alaska Gasline Development Corporation."
- MOVED HCS CSSB 125(RES) OUT OF COMMITTEE
HOUSE BILL NO. 372
"An Act relating to insurance; relating to expenses for
insurance examinations; relating to regulations for insurance
utilization review, benefits determination, health care
insurance grievance resolution procedures, independent review of
adverse determinations or final adverse determinations,
independent review organizations, and continuing education
providers; relating to required provisions for health care
insurance contracts and policies, including health care provider
choice; establishing civil penalties for insurers for failure to
provide requested records; amending the definition of 'wet
marine and transportation' insurance; amending provisions on
limited licenses to include crop insurance; relating to third-
party administrator notification requirements; relating to
certification filing by reinsurance intermediary brokers;
relating to rate filings, delivery of insurance policies or
endorsements; relating to refunds of variable life insurance
policies and variable annuities; establishing limitations on
issuance of long- term care insurance; relating to requirements
for group health insurance policies; amending the definition of
'group health insurance'; relating to motor vehicle service
contracts; relating to notice requirements for meetings of
stockholders or members of a domestic insurer; establishing a
definition of 'bona fide association'; relating to requirements
and penalties for committing a fraudulent or criminal insurance
act; updating criteria for examinations; relating to rate filing
deviations; establishing civil penalties for certain wilful
violations; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 299
"An Act excluding certain persons from participating in the
Public Employees' Retirement System of Alaska."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 125
SHORT TITLE: LEGISLATIVE MEMBERS OF AGDC BOARD
SPONSOR(s): SENATOR(s) COSTELLO
01/19/16 (S) PREFILE RELEASED 1/15/16
01/19/16 (S) READ THE FIRST TIME - REFERRALS
01/19/16 (S) L&C, RES
02/02/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/02/16 (S) Heard & Held
02/02/16 (S) MINUTE(L&C)
02/04/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/04/16 (S) Moved CSSB 125(L&C) Out of Committee
02/04/16 (S) MINUTE(L&C)
02/08/16 (S) L&C RPT CS 4DP SAME TITLE
02/08/16 (S) DP: COSTELLO, GIESSEL, MEYER, STEVENS
03/02/16 (S) RES AT 3:30 PM BUTROVICH 205
03/02/16 (S) Moved CSSB 125(RES) Out of Committee
03/02/16 (S) MINUTE(RES)
03/04/16 (S) RES RPT CS 4DP 1DNP 1NR SAME TITLE
03/04/16 (S) DP: GIESSEL, COGHILL, MICCICHE,
COSTELLO
03/04/16 (S) DNP: WIELECHOWSKI
03/04/16 (S) NR: STOLTZE
03/23/16 (S) TRANSMITTED TO (H)
03/23/16 (S) VERSION: CSSB 125(RES)
03/25/16 (H) READ THE FIRST TIME - REFERRALS
03/25/16 (H) RES, L&C
03/30/16 (H) RES AT 1:00 PM BARNES 124
03/30/16 (H) Heard & Held
03/30/16 (H) MINUTE(RES)
04/01/16 (H) RES AT 1:00 PM BARNES 124
04/01/16 (H) Moved HCS CSSB 125(RES) Out of
Committee
04/01/16 (H) MINUTE(RES)
04/04/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 372
SHORT TITLE: OMNIBUS INSURANCE
SPONSOR(s): LABOR & COMMERCE
03/21/16 (H) READ THE FIRST TIME - REFERRALS
03/21/16 (H) L&C
03/28/16 (H) L&C AT 3:15 PM BARNES 124
03/28/16 (H) Heard & Held
03/28/16 (H) MINUTE(L&C)
03/30/16 (H) L&C AT 3:15 PM BARNES 124
03/30/16 (H) Heard & Held
03/30/16 (H) MINUTE(L&C)
04/04/16 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 299
SHORT TITLE: PERS PARTICIPATION: CONTRACTORS
SPONSOR(s): WILSON
02/05/16 (H) READ THE FIRST TIME - REFERRALS
02/05/16 (H) STA, L&C
03/22/16 (H) STA AT 8:00 AM CAPITOL 106
03/22/16 (H) Moved HB 299 Out of Committee
03/22/16 (H) MINUTE(STA)
03/23/16 (H) STA RPT 5DP
03/23/16 (H) DP: SPOHNHOLZ, STUTES, KELLER, VAZQUEZ,
LYNN
04/04/16 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
SENATOR MIA COSTELLO
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor of SB 125,
introduced the bill.
WESTON EILER, Staff
Senator Mia Costello
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Senator Costello, sponsor of
SB 125, presented the sectional analysis of CSSB 125(RES).
EMILY NAUMAN, Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
HCS CSSB 125(RES).
REPRESENTATIVE LIZ VAZQUEZ
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HCS CSSB
125(RES).
LORI WING-HEIER, Director
Division of Insurance
Anchorage Office
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented the committee substitute for HB
372, and answered questions.
JEANNIE MONK, Senior Program Officer
Alaska State Hospital and Nursing Home Association
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 372.
JON ZASADA, Policy Integration Director
Alaska Primary Care Association
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 372.
REPRESENTATIVE TAMMIE WILSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor, introduced HB 299.
MITCH FLYNN, Fire Chief
Steese Volunteer Fire Department
Fairbanks, Alaska
POSITION STATEMENT: Testified in favor of HB 299.
KATHY LEA, Chief Pension Officer
Division of Retirement and Benefits
Central Office
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
299.
ACTION NARRATIVE
3:22:43 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:22 p.m. Representatives Olson,
Tilton, Kito, Josephson, Hughes, and LeDoux were present at the
call to order. Representative Colver arrived as the meeting was
in progress.
3:23:13 PM
SB 125-LEGISLATIVE MEMBERS OF AGDC BOARD
3:23:01 PM
CHAIR OLSON announced that the first order of business would be
CS FOR SENATE BILL NO. 125(RES), "An Act adding legislative
nonvoting members to the board of directors of the Alaska
Gasline Development Corporation."
3:23:31 PM
SENATOR MIA COSTELLO, Alaska State Legislature, speaking as the
sponsor, informed the committee [HCS CSSB 125(RES)] is a bill
that strengthens and diversifies the board of directors (board)
for the Alaska Gasline Development Corporation (AGDC), which is
the state's primary representative in the Alaska LNG project,
and will be the focal point for policy decisions in the coming
years. She said the bill would facilitate communication and a
teamwork approach between the board and the legislature by
adding three legislators as nonvoting members to the board, one
from the Senate, one from the House, and one from either
minority caucus. The bill also ensures the original intent of
the legislature by reserving four out of the five public seats
on the board for appointees with expertise in natural gas,
pipeline construction, finance, project management, or other
relevant experience. Senator Costello stated that having
legislators on a board as important as AGDC would provide
perspective, institutional knowledge, and continuity. She read
from a memorandum provided in the committee packet from
Legislative Legal Services, Legislative Affairs Agency, dated
3/30/16, and signed by Emily Nauman, as follows [in part]:
Given the split in how other states treat nonvoting
legislative members, perhaps nothing can be relied
upon to divine the outcome in this state.
SENATOR COSTELLO then referred to a ruling in South Carolina in
2013 that upheld legislators having an ex-officio role on state
boards and commissions [document not provided]. She opined that
legislators serving in nonvoting positions alleviates
constitutional concerns, and pointed out that precedent has been
established by the fact that legislators currently serve on
state boards and commissions, including state corporations such
as the Knik Arm Bridge and Toll Authority, the Alaska Aerospace
Corporation, the Alaska Seafood Marketing Institute, the Alaska
Commission on Postsecondary Education, the Alaska Health Care
Commission, the Alaska Criminal Justice Commission, and the
Alaska Tourism Marketing Board. She urged for the committee's
support.
3:27:07 PM
WESTON EILER, staff to Senator Mia Costello, Alaska State
Legislature, on behalf of Senator Costello, paraphrased the
sectional analysis for SB 125, Version S, as follows: [original
punctuation provided]
Section 1: Amends AS 31.25.020(a), (Alaska Gasline
Development Corporation), Governing body. Adds a
member of the House, appointed by the Speaker, a
member of the Senate, appointed by the Senate
President and a member of the minority caucus jointly-
appointed by the presiding officers, as nonvoting
members to the AGDC Board.
Section 2: Amends AS 31.25.020(b), (Alaska Gasline
Development Corporation), Governing body. Requires
four of the five public board members to have
qualifications in natural gas pipeline construction,
operation and marketing; finance; large project
management; or other expertise and experience relevant
to the corporation.
Section 3: Amends AS 31.25.020(d), (Alaska Gasline
Development Corporation), Governing body. States
legislative members of the board may not be reimbursed
or compensated by AGDC for their service on the board
and related costs.
Section 4: Adds new subsection AS 31.25.020(e),
(Alaska Gasline Development Corporation), Meetings of
the board. Specifies legislative members of the board
may participate in all board activities except voting.
Legislative members may not be excluded from executive
sessions, and may not be appointed for a term longer
than two years.
Section 5: Amends AS 31.25.030(a), (Alaska Gasline
Development Corporation), Meetings of the board.
Conforming language outlining that only voting members
of the AGDC Board may be selected to serve as chair,
secretary or treasurer. Also defines a quorum as a
majority of voting members of the board.
Section 6: Amends AS 31.25.040(a), (Alaska Gasline
Development Corporation), Administration of affairs;
program directors. Conforming language that Sectional
Analysis - SB 125 2 allows only voting members of the
board to manage the assets and business of the
corporation and that voting members will delegate
supervision of the administration of the corporation
to the executive director.
MR. EIHER noted that conforming changes are also found in
Sections 7, 8, and 9, and Section 11 provides an immediate
effective date.
3:29:14 PM
REPRESENTATIVE JOSEPHSON directed attention to a memorandum
provided in the committee packet from the Department of Law
(DOL) dated 3/20/16, that referred to AGDC as an executive
branch entity. He then directed attention to a table provided
in the committee packet by Senator Costello entitled,
"Legislative Membership on State of Alaska Boards and
Commissions" and asked whether the entities listed thereon were
executive branch agencies.
MR. EILER deferred to Legislative Legal and Research Services on
the definition, and opined the entities complied on the list are
a variety of capacities in which legislators, as nonvoting
members, advise the functions of the administration through
commissions, independent state corporations, divisions, and
departments of state government, "by which the legislature is
advising the administration, and the overall process of state
government."
REPRESENTATIVE LEDOUX inquired as to any boards and commissions
on which legislators serve that are identical - legally - to the
corporate structure of AGDC.
MR. EILER offered to provide additional information comparing
state corporations; he added that there are many similarities
between state corporations involved in large projects, and
legislators are serving in a nonvoting, ex-officio manner on
boards of directors that make business decisions.
REPRESENTATIVE JOSEPHSON referred to another memorandum (memo)
[document not provided] dated 12/7/15 in which Emily Nauman, an
attorney for Legislative Legal and Research Services, concluded
that the proposal related to the bill was likely not
constitutional; however, in the 3/30/16 memo she said it may not
be constitutional when " ... speaking to nonvoting membership
...." He asked for the basis for her change in position.
3:34:51 PM
MR. EILER recalled that the issue of "voting legislative
members" was the subject of an earlier Legislative Legal and
Research Services memo.
REPRESENTATIVE JOSEPHSON remarked:
... legislative lawyers on the seventh of December
were inclined to say, "This proposal, broadly
speaking, doesn't, is not consistent with the
constitution." Last week, the same attorney said,
"Well, it may very well be consistent with the
constitution." And I'm asking, whether you know ...
what the difference is.
MR. EILER offered to research previous Legislative Legal and
Research Services opinions on this matter. He acknowledged that
voting legislative members "would run into conflict, with
regards to the constitutional issues." He directed attention to
page 4 of the memo dated 3/30/16, which read [in part]:
What is clear is that the issue of nonvoting
legislative members on executive branch boards is
unsettled. ... I do not believe the risk is great
enough that I would advise removing the legislative
board members from the bill.
REPRESENTATIVE LEDOUX suggested the committee address questions
directly to Ms. Nauman in this regard.
3:37:12 PM
The committee took an at ease from 3:37 p.m. to 3:39 p.m.
3:40:00 PM
EMILY NAUMAN, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency,
directed attention to page 3 of a memo dated 12/7/15 [document
not provided], and pointed out that she noted ex-officio members
may possibly reduce the infringement on executive branch powers,
thereby lessening the constitutional issues. The main point of
the 12/7/15 memo addressed legislative members serving on the
AGDC board that would be voting and participating in officer
selection and other duties. The 3/30/16 memo deals with
legislative members who are ex-officio and nonvoting members.
Ms. Nauman opined that a court opinion is needed to determine
whether nonvoting legislative members are unconstitutional.
REPRESENTATIVE JOSEPHSON said the aforementioned attorney
general's opinion relies upon 1968 and 1976 State of Alaska
decisions, and on several attorney's general opinions (AGOs).
He said AGO's are presumptively law and asked whether Ms. Nauman
does not rely on state opinions "as sort of an overall
jurisprudential analysis."
MS. NAUMAN said correct. She added that there is no AGO that
addresses nonvoting legislative members seated on boards and
commissions.
REPRESENTATIVE KITO questioned the need for legislative
representation on the AGDC board because legislators can attend
any AGDC meeting, and request and receive information from the
corporation. Furthermore, if legislative members do not have
the ability to vote, he inquired as to the role of legislative
board members.
SENATOR COSTELLO reminded the committee of the importance of the
gasline project to Alaska's future. Recently, there has been a
high turnover of AGDC board members, and members of the
legislature have held a long interest in the project, and
developed the project's guiding documents. She acknowledged
that legislative members can attend meetings, except the board
meetings often go into executive sessions that exclude members
of the legislature. She opined service on the AGDC board is no
different than that on the Alaska Seafood Marketing Institute or
the Alaska Travel Industry Association boards. Senator Costello
restated the intent of the bill is to foster communication,
cooperation, and trust, and legislative members are needed on
the board to represent the people of Alaska and advise the
corporation.
3:45:08 PM
REPRESENTATIVE KITO turned to the following concerns:
legislative members in attendance during executive sessions; the
continuity of the board; the qualifications of the board
members. He pointed out that legislators are lay leaders and
although his personal expertise is in engineering, he would not
presume to understand the technicalities of, for example, a gas
liquefaction plant, and cautioned that "we're relying on lay
legislators like ourselves that might not have technical
expertise in natural gas pipelines to be that continuity." In
addition, legislators could be called on by the board to
participate in decisions whenever necessary. He pointed out
that although a legislative member of the board could
participate in an executive session, he/she would be unable to
share information with the full legislature, which calls into
question the benefits thereof. Representative Kito restated his
question as to the role of the legislative board member.
SENATOR COSTELLO said legislators have to decide whether to
"agree ... with the premise of the bill which is the people's
branch has a seat at the table, no matter if that table is
inside a locked door or outside in the public view." Regarding
the value, she recalled that the legislature passed [Senate Bill
138, passed in the Twenty-Eighth Alaska State Legislature] - the
guiding structure for the project - and legislators are
interested in further participation in the project.
CHAIR OLSON stated his and other members' concern with the
current structure of the board, which has board members with
experience limited to serving on the Alaska Gasline Port
Authority. He reviewed the qualities of two unsuccessful
appointees to the AGDC board, and said legislators want to see
legislative members on the board because " ... the direction
that it may be going may not be the direction that was
envisioned by the bulk of the people that got the ball rolling."
REPRESENTATIVE HUGHES expressed strong support for the provision
of the bill that requires expertise and experience. She
inquired as to the nature of executive sessions, and asked for
the reasons the AGDC board would go into executive session.
MR. EILER advised that AGDC is exempt from many parts of the
Administrative Procedure Act, except for the open meetings law.
He deferred to AGDC.
3:51:36 PM
REPRESENTATIVE HUGHES asked whether the bill sponsor can assure
the committee that if there are nonvoting legislative members on
the board, the board would remain apolitical.
SENATOR COSTELLO pointed out that the legislature votes on the
appointments of members of the board, except for the
commissioners. She remarked:
I would like to see the people's branch be represented
there. Whether you see that as political ... I see it
as only adding value to, to the board, and adding some
depth in terms of the history of the legislation, the
history of the project.
REPRESENTATIVE HUGHES then asked whether the sponsor is
confident that if during executive sessions with legislative
board members present, the other AGDB board members would be
free to "lay things out on the table."
SENATOR COSTELLO opined that all board members would follow
guidelines and procedures.
REPRESENTATIVE JOSEPHSON inquired as to the laws related to when
executive branch officials can listen to legislative executive
sessions; for example, whether they can attend an executive
session of a Legislative Budget and Audit (JBUD) committee
meeting.
SENATOR COSTELLO declined to answer.
MS. NAUMAN said she was not aware of any law that allows a
member of the executive branch to sit in on a legislative
committee executive session. In further response to
Representative Josephson, she restated her answer.
REPRESENTATIVE JOSEPHSON questioned whether other commissions
and boards such as the Alaska Aerospace Corporation, Department
of Military & Veterans' Affairs, and the Knik Arm Bridge and
Toll Authority, Department of Transportation & Public
Facilities, have been challenged by a claim that legislators
should not serve.
SENATOR COSTELLO said, "Not that I am aware."
3:57:16 PM
CHAIR OLSON was told that Commissioner Sheldon Fisher,
Department of Administration, was invited to the last
Legislative Council meeting executive session but declined to
attend at the direction of the governor.
REPRESENTATIVE KITO advised that Legislative Council and
Legislative Budget and Audit committees have the ability to
invite any individual, but an individual must be invited to
participate in executive sessions.
CHAIR OLSON understood that any member of the House and Senate
can attend, but not participate in, an executive session.
REPRESENTATIVE LEDOUX asked whether the committee would hear
testimony from the administration in opposition to the bill.
She gave her history of serving on the Aerospace Corporation
board of directors.
3:59:56 PM
CHAIR OLSON opened public testimony.
4:00:22 PM
REPRESENTATIVE LIZ VAZQUEZ, Alaska State Legislature, reminded
the committee that the board is not set up as part of the
executive branch - reporting directly to the governor - but is
set up as an independent corporation and is exempt from
personnel and procurement regulations, and statutes that pertain
to the rest of the state. She opined AGDC is only required to
comply with the open meetings law; in fact, if a legal decision
rendered in the state were found, it would relate to an entity
closer to or within the executive branch, as opposed to AGDC,
which is "totally distinct."
4:01:53 PM
CHAIR OLSON, after ascertaining that no one further wished to
testify, closed public testimony.
REPRESENTATIVE COLVER expressed his concern that with a
constitutional issue outstanding, AGDC board actions may be
subject to litigation, and "cloud business that we expect AGDC
to do." He read from the Constitution of the State of Alaska,
Article II, Section 5, as follows [in part]:
No legislator may hold any other office or position of
profit under the United States or the state.
REPRESENTATIVE COLVER continued, noting that AGDC is supposed to
look and act like a business, and should not be encumbered with
politics.
CHAIR OLSON advised that there are "at least a dozen other
boards, similar boards, and to the best of my knowledge, we've
never had that issue arise ...."
REPRESENTATIVE KITO questioned the benefit of adding members to
a board that is operating. Adding three additional members,
especially legislative members whose appointments will change
every two years, does not provide continuity. He said the bill
is not necessary.
REPRESENTATIVE JOSEPHSON stated the following concerns: 1.)
memos written by Legislative Legal Services that cite two other
states are persuasive authority, however, the memo written by
the Department of Law cites actual state authority on dual
office holding and separation of powers, and is supported by
three AGO statements; 2.) turnover on the board due to legal
requirements of residency; 3.) politicizing of the agency; 4.)
the inability of legislative board members to share executive
session comments; 5.) constitutionality; 6.) possible
litigation. He said he was a "no vote."
REPRESENTATIVE HUGHES gave her experience serving on the board
of directors of the Alaska Travel Industry Association, and said
the addition of legislative members to the AGDC board could
improve communications.
4:09:34 PM
REPRESENTATIVE HUGHES moved to report [HCS CSSB 125(RES],
Version 29-LS1250\S, out of committee with individual
recommendations and the accompanying fiscal notes.
4:09:44 PM
REPRESENTATIVE JOSEPHSON objected.
4:10:26 PM
A roll call vote was taken. Representatives Tilton, Hughes,
LeDoux, Colver, and Olson voted in favor of HCS CSSB 125(RES).
Representatives Kito and Josephson voted against it. Therefore,
HCS CSSB 125(RES) was reported out of the House Labor and
Commerce Standing Committee by a vote of 5-2.
4:10:47 PM
The committee took an at ease from 4:10 p.m. to 4:14 p.m.
HB 372-OMNIBUS INSURANCE
4:14:57 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 372, "An Act relating to insurance; relating to
expenses for insurance examinations; relating to regulations for
insurance utilization review, benefits determination, health
care insurance grievance resolution procedures, independent
review of adverse determinations or final adverse
determinations, independent review organizations, and continuing
education providers; relating to required provisions for health
care insurance contracts and policies, including health care
provider choice; establishing civil penalties for insurers for
failure to provide requested records; amending the definition of
'wet marine and transportation' insurance; amending provisions
on limited licenses to include crop insurance; relating to
third-party administrator notification requirements; relating to
certification filing by reinsurance intermediary brokers;
relating to rate filings, delivery of insurance policies or
endorsements; relating to refunds of variable life insurance
policies and variable annuities; establishing limitations on
issuance of long- term care insurance; relating to requirements
for group health insurance policies; amending the definition of
'group health insurance'; relating to motor vehicle service
contracts; relating to notice requirements for meetings of
stockholders or members of a domestic insurer; establishing a
definition of 'bona fide association'; relating to requirements
and penalties for committing a fraudulent or criminal insurance
act; updating criteria for examinations; relating to rate filing
deviations; establishing civil penalties for certain wilful
violations; and providing for an effective date."
4:15:15 PM
REPRESENTATIVE HUGHES moved to adopt the committee substitute
(CS) for HB 372, Version 29-LS1379\H, Wallace, 3/30/16, as the
working document.
CHAIR OLSON objected for discussion purposes.
4:15:27 PM
LORI WING-HEIER, Director, Division of Insurance, Anchorage
Office, Department of Commerce, Community & Economic
Development, presented changes made by the CS for HB 372,
Version H, as follows:
· Beginning on page 3, Section 4 is amended by adding to the
title "relating to health care insurance policies" in order
to clarify that workers' compensation is not included in
the definition of health care insurance policies.
· Section 5 is deleted, affecting subsequent section numbers.
· Beginning on page 19, Section 31 is changed by adding the
words, "the specific" and "the exact change in" in
subsection (b). Sections 46 and 50 were deleted, and the
foregoing added to clarify that insurers give notice to the
consumer of 45 days after changes in the premium and form
filings are known.
· Beginning on page 7, Section 8 was Section 5, and now
applies to obstetrics/gynecology (OB/GYN) in order to avoid
federal preemption, and adds the words "a participating
health care professional who specializes in obstetrics or
gynecology shall agree to adhere to the health care
insurer's policies and procedures, including procedures
regarding referrals, obtaining prior authorization and
providing services under a treatment plan, if any, approved
by the health care insurer."
MS. WING-HEIER said the above are all the changes made by the CS
except for renumbering.
4:20:38 PM
REPRESENTATIVE JOSEPHSON asked for the reason to avoid federal
preemption.
MS. WING-HEIER explained that federal preemption threatens
state-based insurance regulations. In addition, state
compliance with the [Patient Protection and Affordable Care Act
of 2010 (PPACA)] aids in health care reforms, a possible waiver
or other provisions, in providing better and more affordable
insurance products for consumers, and in interaction with the
Centers for Medicare and Medicaid Services (CMS).
REPRESENTATIVE HUGHES asked whether the statement needed to
comply with federal law is specific to OB/GYN providers.
MS. WING-HEIER said yes. Previous iterations of the bill used
substantially similar language.
REPRESENTATIVE HUGHES questioned whether there has been a
reaction from OB/GYN providers in Alaska.
MS. WING-HEIER said providers were previously aware of the
provision. In further response to Representative Hughes, she
offered that the purpose of the provision directed at OB/GYN
providers was to provide transparency and avoid miscommunication
between the provider, consumer, and the insurer.
REPRESENTATIVE HUGHES restated her previous concern that the
insurer must not dictate a patient's care; she posed a situation
in which an insurer approved a treatment plan and the provider
deviated from the plan, and asked whether the insurer would pay
for the approved parts of the plan without penalty.
MS. WING-HEIER said the consumer always has the right to go out
of network for a different procedure, and the insurance company
retains the right to pay from the benefit plan; the provision
clarifies for the consumer what to expect "so there will not be
a surprise billing."
4:25:28 PM
REPRESENTATIVE HUGHES restated her concern that this provision
is a federal requirement.
REPRESENTATIVE LEDOUX confirmed that original Section 5 had been
deleted.
MS. WING-HEIER said correct.
REPRESENTATIVE JOSEPHSON surmised that subsection (h) is part of
the policy and values of PPACA to ensure that women's health
care is fundamental, and is "part and parcel of a general
package of, of primary care."
MS. WING-HEIER said she did not disagree in this regard, but
declined to explain the intent of PPACA.
4:27:27 PM
CHAIR OLSON opened public testimony on HB 372.
4:27:44 PM
JEANNIE MONK, Senior Program Officer, Alaska State Hospital and
Nursing Home Association (ASHNHA), informed the committee that
HB 372 is a complex bill, of which ASHNHA has not had sufficient
time to fully understand or vet. The stated intent of the bill
is to conform Alaska Statutes to federal law and to the National
Association of Insurance Commissioners (NAIC) standards;
however, which portions of the bill are based on what model is
unknown to ASHNHA. Ms. Monk expressed appreciation that Section
5 had been deleted. However, two areas of concern remain: 1.)
on page 8, lines 15-22, Section 11, the definition of emergency
medical condition does not include the prudent layperson
standard which is a standard in federal law that addresses the
need for insurance to cover a visit to an emergency room based
not on diagnosis, but on the possibility of serious illness, and
ASHNHA urged for the bill to confirm with the definition in
PPACA; 2.) on page 20, lines 15 and 20, Section 32, add the term
"or omits information" to the definition of a fraudulent
insurance act, and ASHNHA is concerned that adding this could
turn "any average bill submission into a fraudulent claim," and
seeks the deletion of "or omits information," or the addition of
"intentionally."
REPRESENTATIVE JOSEPHSON returned attention to Section 11, and
asked whether the present proposed definition of emergency
medical condition is too restrictive, and sets too high a
standard for a visit to the emergency room.
MS. MONK said yes. The prudent layperson standard is a lower
standard.
REPRESENTATIVE JOSEPHSON surmised ASHNHA seeks to protect
patient rights in Section 11.
MS. MONK said that's exactly right. In further response to
Representative Josephson, she said in Section 32, ASHNHA's
interest is to protect the person who submits an insurance bill,
which could be a patient or a provider.
REPRESENTATIVE HUGHES pointed out on page 20, line 8, Section
32, read:
(b) A fraudulent insurance act is committed by a
person who, with intent to injure, defraud, or deceive
REPRESENTATIVE HUGHES asked if ASHNHA considered that this
language addresses the concern of intent.
4:34:26 PM
MS. MONK offered to consult with others on this matter and
respond.
REPRESENTATIVE LEDOUX opined that the new language, "or omits
information" would lead to litigation on whether a claim should
be accepted.
MS. MONK agreed.
MS. WING-HEIER advised that part of addressing the cost of
health care is addressing fraud; in fact, any fraudulent act has
to have intent and cannot be a simple clerical error, a
misstatement, or a one-time occurrence. She said this is not
about insurance companies failing to pay claims, but about
someone who is committing fraud.
REPRESENTATIVE KITO asked how the division determines intent if
an insurance company makes an accusation of fraud.
MS. WING-HEIER explained the division would not look at one
claim or claimant, but the provider would have to file multiple
claims against an insurer and establish a pattern of fraud.
REPRESENTATIVE HUGHES suggested that the word "incomplete" found
on page 20, line 15, equates to "or omits information."
MS. WING-HEIER said no, incomplete information is missing
information. In further response to Representative Hughes, she
added that "incomplete information" could be a form that was
half completed, but "omits information" is withholding
information that has been requested.
4:40:00 PM
JON ZASADA, Policy Integration Director, Alaska Primary Care
Association (APCA), informed the committee APCA is the statewide
membership organization of Alaska's community health centers.
Because APCA members are safety-net health providers, his
organization's comments are focused on the potential impact of
the bill on its members. Mr. Zasada said APCA members
appreciate the deletion of Section 5. Returning attention to
page 20, Section 32, subsection (b), paragraphs (2) and (3), he
said APCA suggested adding the word "intentionally" in front of
"or omits information" after consulting with community health
associations in other states.
REPRESENTATIVE HUGHES questioned whether page 20, lines 8 and 9
take care of APCA's concern related to fraudulent intent.
MR. ZASADA said APCA seeks to add the word intentionally to make
the paragraphs "crystal clear."
REPRESENTATIVE JOSEPHSON returned attention to page 8, Section
11, and asked whether APCA agrees with ASHNHA's inclusion of the
prudent layperson standard in Section 11.
MR. ZASADA disclosed that APCA does not provide emergency
services, but does agree with ASHNHA.
4:43:56 PM
CHAIR OLSON, after ascertaining that no one further wished to
testify, closed public testimony.
[HB 372 was held over.]
4:44:41 PM
The committee took an at ease from 4:44 p.m. to 4:46 p.m.
HB 299-PERS PARTICIPATION: CONTRACTORS
4:46:27 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 299, "An Act excluding certain persons from
participating in the Public Employees' Retirement System of
Alaska."
4:46:44 PM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, speaking
as the sponsor of HB 299, paraphrased the sponsor statement, as
follows: [original punctuation provided]
HB 299, is being brought forward on behalf of the
501(C)3, nonprofit corporation volunteer fire
departments within the Fairbanks North Star Borough,
operating as "independent contractors". They are
currently under contract with the borough to provide
emergency response services. Each nonprofit fire
department has both full time paid employees and
trained volunteers as emergency responders. Each of
these organizations provides benefit plans for all
members. Dolan vs King County was a lawsuit between
the County and independent non-profit organizations
which provided indigent legal services to the county.
Over a period of thirty years, King County asserted
increasing budgetary and day to day authority over the
formerly independent non-profit organizations. In
doing so, it asserted more control over the groups
that provided the services. Employees of the
organizations sued the County for the state employee
benefits. They argued that the County's funding and
control over their "independent" organizations
essentially made them state employees for the purposes
of participating in the Public Employees Retirement
System (PERS) and under pertinent statutes and common
law principles, the Supreme Court agreed that
employees of the organizations were "employees" under
state law, and, as such, were entitled to be enrolled
in the PERS. HB 299 would clearly define who is
eligible for the Public Employees' Retirement System
of Alaska and give added protection to municipalities
against such liability. In times of such fiscal strife
this legislation would encourage the exploration and
utilization of cost effective measures for services
and promote independent organizations and business.
This bill emphasizes the need, however, to maintain
the proprieties of the independent relationship when
contracting for the provision of essential public
service. I would appreciate your support of HB 299.
REPRESENTATIVE WILSON added that Washington passed a similar law
to prevent further litigation.
4:49:05 PM
CHAIR OLSON asked how many fire service areas would be affected.
REPRESENTATIVE WILSON responded that Fairbanks has five and
Ketchikan has the same issue.
CHAIR OLSON indicated that the Matanuska-Susitna region may have
as well.
REPRESENTATIVE WILSON, as an aside to Representative Colver,
said Fairbanks North Star Borough has approximately 109 road
service areas. Representative Wilson pointed out [Identifier:
DOA-DRB-HB299-03-18-16] is a zero fiscal note. She paraphrased
the sectional analysis, as follows:
· Section 1 Contractors and employees of contractors are
excluded from this plan
· Section 2 "same thing"
· Section 3 adds "a person who is compensated on a
contractual or fee basis"
REPRESENTATIVE WILSON advised that Section 3 would not impact
the "university fire service area" employees, who are members of
the Public Employees' Retirement System (PERS), because the
contract with FNSB is with the University of Alaska.
REPRESENTATIVE KITO inquired as to whether individuals are
covered under another retirement plan.
REPRESENTATIVE WILSON said yes. She added that those affected
by the bill have their own medical and retirement plans;
however, they are not employees of FNSB and would not qualify
for PERS. In further response to Representative Kito, she
explained that in Washington, a nonprofit that was providing
services sued for coverage under the county system and
prevailed. Subsequently, Washington clarified its laws related
to who is a contractor and who is an employee; the purpose of HB
299 is to clarify that contractors who contract with
municipalities are separate entities, and therefore are not
eligible for membership in PERS.
4:52:38 PM
REPRESENTATIVE JOSEPHSON directed attention to the sponsor
statement and read [in part]:
In times of such fiscal strife this legislation would
encourage the exploration and utilization of cost
effective measures for services and promote
independent organizations and business.
REPRESENTATIVE JOSEPHSON asked whether HB 299 was designed to
help privatize employees who are now public employees.
REPRESENTATIVE WILSON said absolutely not.
REPRESENTATIVE HUGHES asked whether a problem related to this
issue has arisen.
REPRESENTATIVE WILSON answered that "being proactive is much
better and much more affordable."
REPRESENTATIVE COLVER questioned how contracts with firefighters
are established.
REPRESENTATIVE WILSON explained that there is a mill rate for
each fire service area, which is separate of the contract
between FNSB for emergency medical services (EMS) that are paid
by the number of ambulance calls made.
REPRESENTATIVE COLVER surmised EMS is provided by the private
sector or a 501(c) 3 nonprofit entity that is not housed in a
FNSB fire department facility.
REPRESENTATIVE WILSON clarified that EMS is part of the fire
department; the fire service protection is based on a mill rate
and EMS is a different area paid by a contract with FNSB. The
ambulances, and volunteer and paid responders, are housed in the
fire station.
4:55:29 PM
REPRESENTATIVE COLVER concluded that EMS coverage is not by a
service area, but is area-wide. He asked about the chain of
command.
REPRESENTATIVE WILSON said the staff is directed by the fire
chief and an EMS (indisc.). In further response to
Representative Colver, she affirmed that the contractual
relationship is just between FNSB and the fire service area.
REPRESENTATIVE COLVER questioned whether previous part-time
employees have asked to be covered by PERS.
REPRESENTATIVE WILSON said no. The employees are covered by
their own plans and work fulltime or part-time for the fire
service area.
REPRESENTATIVE COLVER recalled that in the Matanuska-Susitna
(Mat-Su) Borough, EMS staff is hired by the borough; however, in
order to avoid paying benefits and retirement, employees were
kept on part-time status, and this led to a legal action against
the Mat-Su Borough over employees' right to PERS. He cautioned
that "this area of this PERS with the fire department and the
EMS employees is a very expensive proposition for, for
government."
REPRESENTATIVE WILSON restated that the proposed legislation
addresses independent contractors, and none of these [employees]
are employees of FNSB. The Mat-Su Borough hired people on a
part-time status, but these [individuals] are hired by the fire
service areas as independent contractors.
4:58:48 PM
MITCH FLYNN, Fire Chief, Steese Volunteer Fire Department
(SVFD), informed the committee SVFD is a 501(c)3 nonprofit
organization in Fairbanks, and an independent contractor with
the Fairbanks North Star Borough (FNSB) that provides fire and
EMS services within a service area on an annual basis.
Recently, FNSB revealed problems with SVFD's contracts that may
pose a financial liability risk to fire service and EMS service
area taxpayers. Although improvements to its contracts have
been made, SVFR remains concerned about a possible claim from a
current or past employee who may sue for PERS benefits. The
purpose of HB 299 is to eliminate the aforementioned threat to
PERS, and is not to prevent the fulfillment of current
contracts, or to remove employees currently receiving PERS
benefits from the system. Mr. Flynn said there are six
nonprofit fire departments statewide which contract with
municipal governments to provide fire and EMS services. The
Steese Volunteer Fire Department has its own medical and
retirement benefits programs and members do not intend or expect
to participate in PERS. He asked the committee to support HB
299 in order to protect PERS and those employees who are
rightfully entitled to PERS membership.
REPRESENTATIVE COLVER asked whether it is problematic for
municipalities to contract with nonprofits or others, and seek
an exclusion from PERS.
5:02:37 PM
KATHY LEA, Chief Pension Officer, Division of Retirement and
Benefits, Department of Administration, said it is common for
municipalities to contract-out for certain aspects of their
work; however, from the perspective of PERS, it is important for
independent contractors to remain independent from the control
of the municipality related to finances, behavior, or physical
arrangement. If not, the independent contractor is no longer
independent, and can be considered an employee.
REPRESENTATIVE COLVER inquired as to the hours an employee is
required to work to be entitled to PERS.
5:03:49 PM
MS. LEA said the threshold for part-time service is a minimum of
15 hours regularly scheduled every week, and fulltime service
requires at least 30 hours of work regularly scheduled every
week.
5:04:21 PM
CHAIR OLSON announced that public testimony would remain open.
[HB 299 was held over.]
5:04:35 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:04 p.m.