Legislature(2017 - 2018)BARNES 124
01/20/2017 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Organizational Meeting | |
| Approval of Drafting Requests for Potential Committee Legislation by Request of the Deptartment of Labor & Workforce Development | |
| Approval of Drafting Requests for Potential Committee Legislation by Request of the Department of Commerce, Community, and Economic Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
January 20, 2017
3:16 p.m.
MEMBERS PRESENT
Representative Sam Kito, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Louise Stutes
Representative Chris Birch
Representative Gary Knopp
Representative Colleen Sullivan-Leonard
MEMBERS ABSENT
Representative Bryce Edgmon (alternate)
COMMITTEE CALENDAR
ORGANIZATIONAL MEETING
APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPARTMENT OF LABOR & WORKFORCE
DEVELOPMENT
APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENTORGANIZATIONAL MEETING
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HEIDI DRYGAS, Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Requested drafting of legislation.
DEBORAH KELLY, Director
Division of Labor Standards & Safety
Department of Labor & Workforce Development (DWLD)
Juneau, Alaska
POSITION STATEMENT: Provided details for proposals for
legislation.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community, and Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Requested drafting of legislation.
KEVIN ANSELM, Director
Division of Banking & Securities
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Addressed the need to update the Alaska
Securities Act.
ACTION NARRATIVE
3:16:48 PM
CHAIR SAM KITO called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives Wool,
Josephson, Stutes, Birch, Knopp, Sullivan-Leonard, and Kito were
present at the call to order.
^ORGANIZATIONAL MEETING
ORGANIZATIONAL MEETING
3:17:39 PM
CHAIR KITO announced that the first order of business would be a
committee organizational discussion.
CHAIR KITO discussed committee meeting protocol, including that
staff should be utilized for passing notes and electronic
devices are permitted and encouraged for documents. He also
mentioned protocol for committee members, including written
committee request forms, and that amendments for bills drafted
by Legislative Legal and Research Services should be submitted
to his office 24 hours ahead of time in order to be included in
the bill packet.
^APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPTARTMENT OF LABOR & WORKFORCE
DEVELOPMENT
APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPTARTMENT OF LABOR & WORKFORCE
DEVELOPMENT
3:20:35 PM
CHAIR KITO announced that the second order of business would be
drafting requests for potential committee legislation by request
of the Department of Labor & Workforce Development.
3:21:03 PM
HEIDI DRYGAS, Commissioner, Department of Labor & Workforce
Development (DLWD), introduced proposals for legislation. The
first proposal would bring DWLD into compliance with federal
occupational safety and health penalty standards, which were
enacted in 2015. She informed that as of January 1, 2017, the
department is not in compliance with federal law. The second
proposal pertains to the reporting of inspections of boiler and
pressure devices, would institute a small fee for the manual
data entry of private inspector reports by department staff, and
would reduce the report submission timeframe from 30 days to 10
days due to the advent of electronic filing.
3:22:20 PM
DEBORAH KELLY, Director, Division of Labor Standards & Safety,
Department of Labor & Workforce Development (DWLD), introduced a
proposal regarding Alaska Occupational Safety and Health
(AKOSH). She stated that Occupational Safety and Health
Administration (OSHA) gives states the option of adopting a
state plan. She stated Alaska Occupational Safety and Health
(AKOSH) is Alaska's state plan. She remarked:
What this means is AKOSH receives federal grants and
is responsible for the safety and health standards
that protect almost all Alaskan workers. One of the
major requirements of the state plans is it must be at
least as effective as federal OSHA. Alaska's program
may develop and implement safety and health standards
that fit Alaska's unique environment using input from
Alaskan industries, employers, employees, and the
public. So quite a bit more responsive than federal
OSHA standard rule making.
MS. KELLY related that AKOSH may inspect most private or
public employers in Alaska, with a few federal exceptions,
and if during the course of an inspection an employer is
found to be violating a safety or health standard, AKOSH
issues a citation which comes with a monetary penalty. Ms.
Kelly continued as follows:
Now, the maximum penalties and one minimum that AKOSH
is allowed to assess is encompassed in Alaska statute.
And I'd just like to clarify quickly before getting to
the proposal that these are maximums. The actual
penalties that employers pay are adjusted based on a
lot of factors: the size of the business, the gravity
of the violation, and good faith efforts or other
mitigating factors.
MS. KELLY related that in 2015, Congress passed a law
requiring a lot of federal agencies to adjust their
penalties for inflation going back to 1990. She said OSHA
complied with the law in July of last year, and AKOSH has 6
months to adopt federal changes; as of January 1, 2017,
Alaska was out of compliance with the federal requirement.
MS. KELLY stated that the proposal is to authorize the
department to: increase the penalties to federal levels;
adjust to future yearly consumer price index changes as
required by the federal act; adopt the maximum penalty
amounts by regulation; and limit the maximum penalties set
by regulation to the corresponding federal penalties. She
clarified that the proposal would, in effect, allow the
department to set the current federal amount in regulation
- no more, no less - and allow AKOSH to come into
compliance with federal law and to stay in compliance.
3:25:53 PM
REPRESENTATIVE BIRCH asked why anyone would oppose this proposal
and whether the department could set an automatic enrollment of
AKOSH into future federal standards changes.
3:26:26 PM
MS. DRYGAS responded that she agrees with Representative Birch,
and the department has given the commissioner of the department
the ability to make the penalty adjustments in regulation up to
but not greater than the federal amount. She stated the
department could continue to change it for Consumer Price Index
(CPI) as the federal rates change.
3:26:55 PM
REPRESENTATIVE BIRCH asked if this would show up again as a
requirement or if it could be handled administratively.
3:27:00 PM
MS. DRYGAS responded that if the legislature adopts the proposal
through legislation the division could oversee its requirements.
3:27:06 PM
CHAIR KITO clarified that the committee would see the language
when the bill is drafted.
3:27:26 PM
REPRESENTATIVE WOOL moved that the committee authorize the chair
to draft a bill, on behalf of the House Labor and Commerce
Standing Committee, which brings the state of Alaska into
Compliance with the Federal Occupational Safety and Health
requirements. There being no objection, it was so ordered.
3:28:02 PM
MS. KELLY explained boiler and pressure vessel inspections. She
remarked:
Boilers around Alaska are routinely inspected as a
safety measure to prevent catastrophic failures.
Inspections are done by the State of Alaska or private
inspectors employed by insurance companies or the
device owners themselves. The Mechanical Inspection
section of [the Division of] Labor Standards & Safety
administers these inspections. Besides inspecting, we
also collect and review the inspections and ensure
that the boiler owners stay in compliance with Alaska
law. So, mechanical inspection uses jurisdiction
online, which is a software that allows the inspectors
in the field to enter their data directly into our
database. It also allows inspectors to access
information in the field. The majority of inspectors
are using this system.
Some reports, though, are still submitted by emailing
electronic documents which require Mechanical
Inspection to manually enter that data into the
database. Mechanical Inspection estimates 350 to 400
hours a year are spent on this data entry on behalf of
these companies who don't want to use jurisdiction
online. Our proposal is to charge a small fee for
each report submitted not using that online system.
This would compensate mechanical submission for doing
this data entry on behalf of the companies who choose
not to use this system.
MS. KELLY stated the proposal reduces the time allowed from 30
days to 10 days. Currently inspectors have 30 days after the
inspection to submit a report to Mechanical Inspection. The
limit was set when written reports on carbon copies were
necessary, but now they are all submitted electronically. The
department believes 10 days is an adequate amount of time, which
will allow device owners to comply with the law faster.
3:30:44 PM
REPRESENTATIVE KNOPP stated he is okay with the fee, but asked
what part of the process is time sensitive and what the time
frame is of the inspections for the devices.
3:32:47 PM
MS. KELLY responded the reason for the time frame is to reduce
the time [device owners] are out of compliance. The time period
does vary between two to five years based on the type of device.
3:31:47 PM
REPRESENTATIVE SULLIVAN-LEONARD asked what a "small fee" to the
companies not in compliance with the system is considered.
MS. KELLY responded that the proposed starting point for the fee
is $10 per report.
MS. DRYGAS, in response to a follow-up question, said the amount
a company would pay in a year depends on how many inspections or
reports a particular inspector is filing.
3:33:36 PM
REPRESENTATIVE SULLIVAN-LEONARD asked to see a fiscal note.
3:33:51 PM
MS. KELLY responded that about 3,200 inspection reports come in
per year from inspectors not using the online system; therefore
the $10 fee would result in about $32,000 per year.
3:34:22 PM
REPRESENTATIVE WOOL moved that the committee authorize the chair
to draft a bill, on behalf of the House Labor and Commerce
Standing Committee, which modifies filing requirements for
boiler inspections. There being no objection, it was so
ordered.
3:34:42 PM
The committee took an at-ease from 3:35 p.m. to 3:36 p.m.
^APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENT
APPROVAL OF DRAFTING REQUESTS FOR POTENTIAL COMMITTEE
LEGISLATION BY REQUEST OF THE DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENT
3:36:48 PM
CHAIR KITO announced the final order of business would be
drafting requests for potential committee legislation by request
of the Department of Commerce, Community, and Economic
Development.
3:37:13 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community, and Economic Development (DCCED), stated
that Alaska is a member of the National Association of Insurance
Commissioners (NAIC), which acts like the Senate and House in
that model bills move from task force to work group and are
vetted by the public, industries, and regulatory agencies. Then
they are in a plenary [meeting], where they are voted on to
determine if the bill should become a model law that all states
should adopt. She asked for support for the Alaska Life and
Health Insurance Guarantee Association (ALHGA), a non-profit
entity created by state law under Title 21, Chapter 79, of
Alaska Statute. She said ALHGA protects consumers when an
insurance company is insolvent. The member insurers, those
other insurers doing business in the State of Alaska are
"assessed ... to pay" the claims of the policy holders. Policy
holders may not be made whole in some instances due to limits
dictated in statute. The proposed bill would increase some
limits and bring the state into compliance with the most recent
model of NAIC/ALHGA bills. The current bill was adopted in
2009, and Alaska's law has not been changed to comply with what
other states are doing.
MS. WING-HEIER denoted the other proposed change would include
hospital and medical service corporations within the definition
of an insured member of the association. She said 20 states now
include hospital and medical service corporations in their
definitions. These entities are insurance companies, but their
organizational structure is a hospital or medical service
corporation. In Alaska, one such entity controls over 50
percent of the market in the medical area and is currently
exempt from assessments from ALHGA. Without the participation
of hospital and medical service corporations in the assessment,
the division cannot make policy holders whole. Ms. Wing-Heier
asked that the hospital and medical service corporations be
included as a member of the association, so they can also be
assessed the 2 percent in the event of an insolvency to make
policy holders whole under medical life policies, annuity
contracts, and long-term care policies covered within this
chapter.
3:41:38 PM
REPRESENTATIVE BIRCH inquires as to the source from which the 2
percent is derived.
MS. WING-HEIER responded the 2 percent is from the annual
premium, and in some cases multi-year assessments were needed to
reimburse the policy holders.
REPRESENTATIVE BIRCH asked what the magnitude of the receipts
approximates.
MS. WING-HEIER stated that in 2016, the premiums that were
written totaled close to $300 million in medical, with a similar
amount in life policies. She stated that assessments are only
done when a company is insolvent, and they only assess to what
is needed to pay the claims of the policy holders at that time.
REPRESENTATIVE BIRCH asked if Providence Alaska Medical Center
in Anchorage would take the $300 million to $600 million.
3:43:31 PM
MS. WING-HEIER responded it's not hospitals, it's organizations
that have filed under the structure of corporations that are
exempt. The only one in Alaska is Premera Blue Cross
("Premera"), which is over 50 percent of the medical market, so
the division could not raise enough funds for a large
insolvency.
3:44:10 PM
REPRESENTATIVE KNOPP asked how commonly insolvency happens.
3:44:40 PM
MS. WING-HEIER stated it's not common, but "when it happens it's
large dollars." The last large insolvency the division had in
life and health is Penn Treaty Network America Insurance Company
which did not impact Alaska greatly. "Industrial Indemnity
Fremont" became insolvent, and its claims are still being paid
close to 15 years later.
3:45:30 PM
REPRESENTATIVE KNOPP clarified that this is not a voluntary
program, and he asked how it is that Premera is not
participating.
MS. WING-HEIER responded it's because of the way the statute is
written, exempting them based on their organizational structure.
3:46:06 PM
REPRESENTATIVE STUTES asked if this is commonplace in hospitals
and medical associations in other states.
MS. WING-HEIER stated every state has a guarantee association,
some operate a little differently. The hospital and medical
corporations affected by the proposed change would not include
Providence Alaska Medical or Alaska Regional Hospital, but would
include insurance companies that have a different organizational
structure. To make it equitable when the division does an
assessment, and to make sure there is adequate funding, the
division must look at "bringing them in".
REPRESENTATIVE STUTES asked whether there is an indication that
Premera would reconsider being an insurer in the State of
Alaska. She stated "we only have one left, we ... gotta be
careful here."
MS. WING-HEIER offered her understanding that Premera would not
be surprised by the legislation. She referenced a conversation
she had with Premera, during which the corporation said it
didn't want to see legislation that was backdated, which would
make it accept liability for Penn Treaty and others.
REPRESENTATIVE STUTES asked if Premera is expecting to go
forward with business in Alaska.
MS. WING-HEIER explained she does not think Premera would be
surprised, because it knows the division, as well as other
states, had concerns with it not being included in the guarantee
association.
3:48:35 PM
REPRESENTATIVE WOOL asked whether insolvency is national or if
the company can section off state by state.
MS. WING-HEIER responded it would be hard to do, generally the
entire company would go into liquidation.
REPRESENTATIVE WOOL asked whether 2 percent of the premiums
would go to cover the possibility [of insolvency], and asked if
[the collected funds] would be passed onto the insured.
MS. WING-HEIER responded they could.
3:49:42 PM
REPRESENTATIVE KNOPP asked if the collected funds ever quit or
if they accumulate.
MS. WING-HEIER answered that the association does not collect
anything, no assessment, until it needs to pay the claims.
3:50:42 PM
REPRESENTATIVE KNOPP clarified that the association may collect
funds to help [policy holders] if other companies, not necessary
Premera, were to become insolvent.
3:51:01 PM
CHAIR KITO clarified that the proposal would allow for the
collection of the fee, if required, but would not mandate one.
It would open up the door to collect from this kind of
corporation that has not been eligible before. The fee would
not be collected if there was not a company in insolvency, only
if there were claims to pay, otherwise the companies would not
be charged.
3:51:41 PM
MS. WING-HEIER agreed with Chair Kito's statement. She added
that the division does not collect and keep money in the bank to
pay future claims.
3:52:03 PM
REPRESENTATIVE WOOL moved that the committee authorize the chair
to draft a bill on behalf of the House Labor and Commerce
Standing Committee that creates the Alaska Life and Health
Insurance Guarantee Association. [No objection was stated, and
the committee treated the motion as so ordered.]
3:52:29 PM
The committee took an at-ease from 3:52 p.m. to 3:54 p.m.
3:54:16 PM
KEVIN ANSELM, Director, Division of Banking & Securities,
Department of Commerce, Community and Economic Development
(DCCED), addressed the need to update the Alaska Securities Act,
which provides the legal framework for offering or selling
securities within Alaska or from outside the state to Alaskans,
including the registration of firms and sales persons, filing of
securities, and enforcement. The division licenses about 95,000
salespersons and about 1,000 securities firms, most of which are
out of state. Ms. Anselm said the Securities Act also regulates
the Alaska Native Claims Settlement Act (ANCSA) Corporation and
the shareholder proxy provisions. She noted that the securities
industry had increased dramatically. She suggested an update to
the Alaska Securities Act would simplify and update Alaska's
security laws to be similar to provisions in other states. She
noted that most current provisions haven't been updated since
statehood and are based on an Act from 1956. For example,
Alaska law still allows filings by telegraph.
MS. ANSELM said the division also proposes lifting the Alaska
Securities Act out of the ANCSA provisions, which would
highlight the difference between ANCSA and regular securities
activity and would allow the ANCSA constituents to deal more
directly with the ANCSA law. She stated that there is currently
no provision in the law for restitution for consumers harmed by
scams. The department suggests the legislature direct some
enforcement funds towards investor and market education for
Alaskans.
3:58:33 PM
MS. ANSELM assessed another provision would allow the division
to require continuing education for investment professionals,
where there currently are not requirements. She mentioned that
without updates to the law businesses will not be able to grow
and develop economically and keep up, and they face more hurdles
here than other states. ANCSA corporations and shareholders are
constrained by the provisions, which are only designed for one
type of business. There are fewer opportunities for consumer,
investor, and marketplace education. One of the biggest issues
is the lack of good enforcement provisions in the Alaska
Securities Act; there is no restitution allowed for victimized
Alaskans, and there's a $25,000 maximum civil penalty for
scammers. She listed recent securities scams in Alaska,
including: a scam by Michael Scow, who convinced an elderly
Alaskan to invest $12,000 in building his business and used the
money for something else; the Fortune Oil and Gas, LLC scam,
which resulted in $3.1 million in losses to Alaskans; the SOS
Disasterplan.com scam, in which $540,000 of worthless stock was
issued, the Global Arena Capital Corp scam, in which the
corporation sold junk bonds to an Alaskan fisherman; and a scam
by Troy Stafford and Patrick Williams, who sold an Alaskan a
$40,000 investment in a bogus company. Ms. Anselm reiterated
that work is needed on the Alaska Securities Act.
4:02:17 PM
REPRESENTATIVE BIRCH asked if an individual could pursue legal
action to recover what he/she had lost as a result of a scam.
MS. ANSELM confirmed that is correct, but there are limitations
there as well.
4:02:55 PM
REPRESENTATIVE SULLIVAN-LEONARD asked for an example of how
enforcement provisions would be enhanced under the proposals
requested by the division.
MS. ANSELM answered that some of the provisions allowing the
division to order restitution would allow a larger recovery of
up to $100,000 per violation, and allow penalties to be raised
in civil court.
REPRESENTATIVE SULLIVAN-LEONARD inquired if increasing staff
would be necessary to carry out enforcement.
MS. ANSELM responded that the division is not looking to
increase staff. The division brings in about $13 million
through licensing on the securities side, and the division's
entire budget is about $3.2 million.
4:04:47 PM
REPRESENTATIVE WOOL commented that 95,000 registered entities
seems like a lot for a state of 700,000.
MS. ANSELM agreed. She listed reasons for the high ratio
including: stock brokers want to be listed in all 50 states for
a larger market; and Alaska has the highest per capita income in
the country, making Alaskans targets.
REPRESENTATIVE WOOL indicated that increasing the penalty for an
out of state scammer does not make it any easier to collect the
penalty.
MS. ANSELM agreed, but added that the penalty should be more
than "just a little cost of doing business."
4:06:12 PM
REPRESENTATIVE JOSEPHSON pointed out that last year a similar
proposal was a priority of the administration, and this proposal
has already undergone some vetting.
4:06:35 PM
REPRESENTATIVE KNOPP asked, of the examples given by Ms. Anselm,
if failed business propositions would be considered differently
from true scams.
4:07:32 PM
MS. ANSELM stated the examples given are cases where the
division took action, and the division took 38 enforcement
actions in the last year. She expounded that anytime someone
takes money from someone else and doesn't do with it what he/she
promised, that's a misrepresentation, and if someone expected to
get money back, then it is a violation of the Alaska Securities
Act, which she described as "very broad."
4:08:30 PM
REPRESENTATIVE WOOL moved that the committee authorize the chair
to draft a bill on behalf of the House Labor and Commerce
Standing Committee that updates the Alaska Securities Act.
There being no objection, it was so ordered.
4:09:32 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOLWD Request-OSHA Fact Sheet 1-20-2017.pdf |
HL&C 1/20/2017 3:15:00 PM |
|
| DCCED Request-Alaska Securities Act 1-20-17.pdf |
HL&C 1/20/2017 3:15:00 PM |
|
| DCCED Request-Alaska Life and Health Guarantee Association 1-20-17.pdf |
HL&C 1/20/2017 3:15:00 PM |
|
| DCCED Request-ALHIGA Legislation Background 1-20-17.pdf |
HL&C 1/20/2017 3:15:00 PM |
|
| DOLWD Request-Boiler Inspector Handout 1-20-17.pdf |
HL&C 1/20/2017 3:15:00 PM |
|
| DOLWD Request-AKOSH Penalties Handout 1-20-17.pdf |
HL&C 1/20/2017 3:15:00 PM |