Legislature(2003 - 2004)
06/22/2004 01:30 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
June 22, 2004
1:50 p.m.
TAPE(S) 04-72
MEMBERS PRESENT
Senator Ralph Seekins, Chair
Senator Scott Ogan, Vice Chair
Senator Johnny Ellis
Senator Hollis French
Senator Gene Therriault
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 1002
"An Act providing for a special deposit for workers'
compensation insurers; relating to assigned risk pools and
workers' compensation insurers; relating to the board of
governors of the Alaska Insurance Guaranty Association; stating
the intent of the legislature, and setting out limitations,
concerning the interpretation, construction, and implementation
of workers' compensation laws; relating to restructuring the
Alaska workers' compensation system; eliminating the Alaska
Workers' Compensation Board; establishing a division of workers'
compensation within the Department of Labor and Workforce
Development and assigning certain Alaska Workers' Compensation
Board functions to the division and the Department of Labor and
Workforce Development; establishing a Workers' Compensation
Appeals Commission; assigning certain functions of the Alaska
Workers' Compensation Board to the Workers' Compensation Appeals
Commission and the office of administrative hearings; relating
to agreements that discharge workers' compensation liability;
providing for administrative law judges in workers' compensation
proceedings; relating to workers' compensation awards; relating
to an employer's failure to insure and keep insured or provide
security; providing for appeals from compensation orders;
relating to workers' compensation proceedings; providing for
supreme court jurisdiction of appeals from the Workers'
Compensation Appeals Commission; providing for a maximum amount
for the cost-of-living adjustment for workers' compensation
benefits; providing for administrative penalties for employers
uninsured or without adequate security for workers'
compensation; relating to fraudulent acts or false or misleading
statements in worker's compensation; and providing for an
effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 1002 - No previous action to record.
WITNESS REGISTER
Mr. Doug Wooliver
Alaska Court System
303 K St.
Anchorage, AK 99501-2084
POSITION STATEMENT: Answered questions about workers'
compensation cases in the Alaska Court System
Commissioner Greg O'Claray
Department of Labor & Workforce
Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Discussed the need for reform of the
workers' compensation system
Ms. Linda Hall, Director
Division of Insurance
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Discussed the impact of the current system
on workers' compensation rates
ACTION NARRATIVE
TAPE 04-72, SIDE A
CHAIR RALPH SEEKINS called the Senate Judiciary Standing
Committee meeting to order at 1:50 p.m. Chair Seekins and
Senator Ogan were present. Because a quorum was not present,
Chair Seekins announced the committee would hold a work session
until other members arrive. He asked Commissioner O'Claray to
begin and, since Senator French arrived, he officially called
the meeting to order.
SB 1002-INSURANCE & WORKERS' COMPENSATION SYSTEM
COMMISSIONER GREG O'CLARAY, Department of Labor and Workforce
Development (DOLWD), asked to set the stage for why this
legislation was before the committee. He reminded members that
legislation [SB 311] was introduced during the regular session
that went through several iterations. The Administration met
with representatives of organized labor, business, defense
attorneys and claimants' attorneys to get input on the changes
made to that bill. He indicated that Mr. Nordstrand would detail
the differences between SB 311 as passed by the Senate and SB
1002 later.
COMMISSIONER O'CLARAY said it is critical to deal with the
workers' compensation system now. Workers' compensation law is
very complex and has taken years to fine tune to where it is
today. The last major fine-tuning took place in 1988, which
immediately followed a 25 percent increase in premiums. In the
last few years, rates have been escalating again. He said over
the last three years, the average rate on a cumulative basis has
increased 35 percent. During the last year, some businesses have
experienced a 60 to 70 percent increase in their premium rates.
Early last year, the Administration focused on dealing with ways
to adjust the workers' compensation system to slow down the
escalation of premium costs. The Administration looked at three
alternatives. First, it looked at changing benefits, which
amount to about 38 percent of the $210 million paid out in 2002
to injured workers. He pointed out that a little over 50 percent
of the $210 million went to medical providers for care. The
amount that was paid to lawyers equaled about $11 million. That
was the only area the Administration felt it could address
without attacking reimbursement rates or benefits for injured
workers, which the Governor was not willing to change at this
time.
COMMISSIONER O'CLARAY said the major criticism of the
representatives of organized labor of SB 311 was aimed at two
areas: the cost of the commission created under SB 311; and the
fact that organized labor and industry felt their decision
making influence on the commission panel would be reduced
regarding appeals. Since adjournment of the regular session and
the call for the special session, the Administration worked to
change the bill substantially.
CHAIR SEEKINS asked Senator Gary Stevens and Senator Bert
Stedman to join members.
COMMISSIONER O'CLARAY said if the Legislature does not deal with
this issue during this special session, he fears in future years
the only solution will be to reduce medical reimbursement costs
and benefits to reduce the rates.
MS. LINDA HALL, Director of the Division of Insurance, said
making changes to the workers' compensation environment is
necessary for the following reasons, the first being premium
increases. She said as of January 1, 2004, the average rate
increase in Alaska was 21.2 percent; 17 classifications
increased more than 50 percent. She referred to a chart in
members' packets that represents the NCCI's overview of rate
increases in 39 states. Alaska rated at the bottom with the
highest increase in premiums for workers' compensation. Alaska
has experienced a gradual increase. In 2002, the rates increased
an average of 10.2 percent; in 2003, the increase was 3.5
percent; in 2004, the increase was 21.2 percent. In addition,
Alaska [insurance] carriers have experienced a decrease in
profitability - Alaska carriers have lost 5 percent more on
average compared to other states between 1997 and 2002. In the
year 2000, an average of $1.54 was paid out in claims for every
$1 in premiums taken in. The cost of medical benefits has
increased; those benefits comprise 55 percent of workers'
compensation premiums.
The fourth component of Alaska's unattractive insurance
marketplace is its assigned risk pool. Alaska's assigned risk
pool has placed the largest burden on insurance companies from
losses in the assigned risk pool of any state.
MS. HALL told members she believes Alaska needs available and
affordable workers' compensation insurance and it needs to make
the marketplace more attractive. She indicated that SB 1002
contains a number of insurance provisions - some from SB 311 and
some new provisions. She described those as follows:
· Section 3 is from SB 311 and adds a requirement for an
increase in deposits from all insurers - a flat $1 million
special deposit.
· Section 4 is new. It requires a separate deposit by
insurance companies for their share of the losses in
Alaska's assigned risk pool. Today, when there are losses
in the pool, insurance companies pay their prorated share
of those. If insolvency occurs, those losses are
reallocated among the carriers left in the marketplace. If
deposits are required, money would be available to draw
from so that an additional burden is not placed on
insurers.
· Section 5 creates an order of priority in insolvency
proceedings.
· Section 6 is new and requires that the assigned risk pool
operate on a self-funding basis on a three-year moving
average.
· Section 7 is from SB 311. It changes the composition of the
Guaranty Association Board of Governors to provide broader
representation.
· Section 111 repeals the 25 percent statutory cap on the
surcharge for assigned risk pool rates. In order to make
the pool self-funding, the artificial cap must be removed.
MS. HALL said those are the six insurance provisions in SB 1002
and offered to answer questions.
CHAIR SEEKINS asked Ms. Hall about the industry's position on
Section 4.
MS. HALL said the industry is desirous of Section 4 because
although it will tie up their assets, the industry is already
statutorily required to make deposits. She noted that she was
encouraged by industry to include that provision.
CHAIR SEEKINS announced a brief at-ease at 2:00 p.m.
Upon reconvening at 2:05 p.m., CHAIR SEEKINS asked Mr.
Nordstrand to address the committee.
MR. SCOTT NORDSTRAND, Deputy Attorney General, Civil Division,
Department of Law (DOL), told members he would provide a summary
of the differences between SB 311 and SB 1002. He began:
I've given you a two-page sheet here that I think will
be of some help - a significant differences sheet and
the second page is actually a simplified chart so that
we can all sort of follow along.
Let me start at the beginning. I'll start where the
commissioner left off with the two basic concerns that
were identified by the critics of SB 311 [that] I
think really fall into two categories. One was the de
novo review question and the relationship between the
appeals commission and the hearing panels or whoever
actually did the trial - what was the review
relationship? Secondly was the cost of the commission,
vis-a-vis the amount of cases that it would have to
handle based upon an estimate of what Superior Court
appeals are brought now because, of course, the
commission would be replacing the Superior Court.
What we looked at is we took the old bill, which - let
me just run through it quickly here. The old bill, SB
311, had hearings conducted by panels of three. A new
and improved hearing officer would sit on that panel -
a lawyer admitted to practice in the State of Alaska
with some experience in workers' comp. This person
would be joined by two hearing board members - one
from industry, one from labor, a citizen panel member
... and, much like the current system, they would hear
the cases. They would decide the cases. The only real
distinction at that level had to do with what power
each of them had. In the bill there was a provision
that the hearing officer or hearing examiner as we
called them would have the power to say what the law
is and instruct the other members on the law to run
the hearing, that sort of thing. But other than that,
it was pretty much like the present system and, as you
know, that was an accommodation from our first bill
that began with just an administrative hearing officer
- part of the process that we went through when
negotiating with organized labor about this.
That was the first level. The second level was a
commission of three attorneys appointed by the
governor, confirmed by the legislature, again with
experience in workers' compensation law. And, of
course, the intent was to create - I guess the two
watchwords that we had for the bill were consistency
and efficiency and we thought that this new system
would do that.
Now let's compare the criticisms to that structure and
what we've done in the new structure. Criticism number
one was the cost of the commission itself. Three
fairly high paid attorneys - that was somewhat by
design to attract attorneys to take those positions
but we understood the criticism. So what we did first
was we eliminated two of the lawyers from the
commission in the new bill and replaced these two
lawyers so that there'd be only one remaining. One
lawyer would act as chairman of the appeals commission
under SB 1002. The other commissioners would be
replaced by citizen representatives, much like the
original hearing panel. So essentially we changed the
place where citizen representation participated in the
process and we created two employer and two employee
positions for commissioners to sit on this commission.
They would be a five-member commission at this point
and they, too, would receive advice from the attorney
on the panel as to what the law was but, frankly,
we're not requiring that they have to follow that
advice in this bill.
The members of this commission will sit in panels of
three, just like the three attorney panels would have
sat, but we didn't want to put too much of a burden on
citizen members so we had two each so there could be
some relief pitching, so to speak, and they wouldn't
have to do all of the cases with two volunteers. They
are provided to be paid fairly well as far as
volunteer commissions go - $200 a day per diem, which
is designed to get people who are qualified and
capable to want to take these positions. Even at that
the cost associated with having one full-time
commissioner - and, by the way, we reduced the cost of
that commissioner significantly too in this bill. The
old bill was about $100,000 a [year] for the chair.
The present bill is a range 27 A through F, which is
comparable to the chief administrative law judge under
SB 203, and that's between 76 and 91 thousand,
depending on which step the person would come in
at....
So, overall, we've cut the cost of two commissioners
and used lay people on the commission and we think the
savings there means that - and you know I'm not the
fiscal note guy but it about cut the cost in half from
the $600 and some odd thousand dollars down to 300 or
less. That's what I estimate that to be and the fiscal
notes speak for themselves.
So that's how we addressed the cost. And the other way
we addressed the cost, by the way, is at the hearing
level. At the hearing level we eliminated lay
participation altogether and just not having this
hearing panel saved $60,000 off the bat at that level
because there is 7 and 7, as you recall. And rather
than have anyone in the Department of Labor do these
hearings who might be beholden to the commission, and
I think that was some of the criticism of the old
hearing of the hearing examiner provisions in SB 311,
to move all the hearings to the central panel in the
Department of Administration that's to be created and
I guess start up in July of '05.
So an administrative law judge from the central panel
will be assigned to hear each case and they will be
required to have certain workers' compensation
experience that's consistent with what we had before
the hearing examiners in our old bill, so we're not
'dumbing' down the position in terms of experience and
capabilities. They'll have to have the same experience
and so they'll do the hearings.
Now let's get to the second criticism, not just cost
but de novo. And this is where I think this proposal
is very, I think, innovative and answers the concerns
that were raised, legitimate concerns. And that is,
rather than having a commission of lawyers have de
novo review of factual determinations of this three
person panel below where the lay people participated,
both for labor and industry, we're going to let an
administrative law judge do the initial hearing and
then let the lay people - a majority of lay people on
the commission can have the de novo review. They will
have the power to review de novo to create consistency
and right wrongs that need to be righted or to affirm
decisions that we assume most of them would be
affirmed. And so, in that way, we've addressed, we
think, both of the concerns about access to the system
for lay people and those with experience with labor
and management would increase the access. We've
expanded the influence. And then we've addressed the
cost as well.
CHAIR SEEKINS asked how this [new system] will establish a body
of precedent.
MR. NORDSTRAND said the key in understanding the multiplicity of
decision makers in the present system is:
... that right now we've got all these different
panels, all kinds of different combinations. There
could be 30; there could be 10, who knows? It depends
on how you take the 7-7 and 8 and mix them up. And
they come to a decision collectively and then it goes
to 30, 40 different Superior Court judges. None of
these decision makers at each level have the power to
tell the other set that they are wrong. One Superior
Court judge, for example, deciding a legal question on
the Workers' Compensation Act cannot say ... I've
decided that this is the law so this Superior Court
judge must agree with me and decide that way.
The same is true of these panels. One panel of three
at the hearing level can't tell another panel of three
that's the law you have to decide our way. Precedent
is the sense of coming together of the law in a way
that allows those below to understand what the law is
and follow it. The only way to do that is to have a
central place where decisions are made.
Now the one accommodation to consistency that we've
made for practical reasons is we have five members on
this panel and so there's two labor or two
employer/employee so there could conceivably be a
difference of opinion between one panel of an
employer/employee and the chair and another one. We
would hope that part of the role of the chair would be
to avoid that and to encourage consistency and thought
because that same attorney chairman will be there for
all the decisions. But now we will be able to have
precedent established by this commission that can be
relied upon by the six administrative law judges who
will be doing workers' comp and we'll just have that
many less decision makers and that much more certainty
and outcome. So that's the consistency issue.
CHAIR SEEKINS announced that Senator Therriault joined the
committee some time ago. He then opened the meeting to questions
from members.
SENATOR FRENCH asked where the de novo review section is located
in the bill.
MR. NORDSTRAND referred Senator French to page 43, paragraph
(b), and pointed out that the language is identical to the
version of SB 311 that passed out of the Senate Judiciary
Committee.
SENATOR FRENCH asked about the number of Superior Court judges.
MR. NORDSTRAND did not have the exact number but said that
Anchorage alone has 13.
SENATOR FRENCH asked if DOL considered assigning these cases to
one Superior Court judge for the sake of consistency.
MR. NORDSTRAND said that was considered and part of the answer
to the question is that given the fact that Superior Court
judges tend to remain on the bench for extended periods of time,
the idea of creating that kind of single authority on all
workers' compensation cases would centralize power and decision
making and not be good public policy. He added that DOL is
comfortable with having representatives of labor and management
sit at the commission level, not just attorneys or a single
judge.
SENATOR OGAN thanked Mr. Nordstrand for the work he has done on
this legislation and noted he supported SB 311 but is more
comfortable with the new version. He maintained that he has been
a big supporter of the administrative law judge central panel
idea for a long time. He believes the general public is unaware
of the impact that the adjudication of administrative law has on
them. He explained that he supported SB 311, even without the
administrative panel, because businesses are being strangled by
rising insurance costs. He asked Mr. Nordstrand to address the
reasons for the huge increase in those costs and whether SB 1002
will create some relief.
MR. NORDSTRAND referred to Commissioner O'Claray's statement
about the $11 million cost of legal fees and said if one assumes
that 20,000 claims are filed each year but only a few hundred go
to a hearing and between 40 and 50 go to Superior Court, and
perhaps 12 are appealed to the Supreme Court, one must realize
that the money is being spent where attorneys are participating.
He indicated, for the sake of argument, that attorneys' fees
might be awarded in 500 cases per year so the $11 million is
being spent in a very few number of cases. He continued:
I understand, and you're welcome to have the director
of the Division of Workers' Comp come here and talk to
you a little bit about the scheduling issues that
happen because of the citizen panels at the hearing
level. That's not to say that folks don't do their
best to participate and that they try to accommodate
the schedule for hearings, but hearings can be long,
drawn-out affairs. Often hearings have to proceed with
only two members - one hearing officer and a labor
member or an industry member and there is not the
benefit of that balance simply because there's no one
available. That's what they do - they go forward.
And so it's difficult to accommodate scheduling at
that level with that many different hearings because
you're talking about hundreds. And so what we can do
with the central panel situation is we have
essentially six captive judges whose job will be to
take care of these hearings day in, day out everyday.
So, at the outset, I think scheduling will become
easier. Time is money and law and I think that can
help.
Even more important though is what happens at the
commission level, the appeal level. We heard testimony
in Senate Finance from defense practitioners who
talked about the time it takes for a board decision
record to be certified on appeal to Superior Court. It
can be very long. I mean we had one, the attorney who
spoke I think was Connie [Indisc.] from Holmes
Weddell. She mentioned she had a case that had been
more than a year in time to just get the record ready
to start the process. And then the next step is
briefing and briefing is conducted in the Superior
Court in a very formal way that it should be, much
like the Supreme Court. This bill will allow the
commission some flexibility on how much briefing, how
detailed it will have to be depending on the case. In
other words it won't necessarily have to be at that
same, I guess, Supreme Court level that is required
now in Superior Court.
And then finally is the time for decision-making. In
this bill, the commission has 90 days from the time
the case is right, either because the briefing is done
and there's no oral argument to be held or the oral
argument is done. In the case of the Superior Court,
the recommended time is up to 180 days. So the whole
process will be shorter.
Now let me tell you why I think that saves money. The
obvious way it saves money is just lawyers working on
a case less time probably is going to save money.
Anybody who has ever hired a lawyer probably knows
that. But secondly, there's the effect on the
participants. If you're an employer and you're paying
benefits either as a self-insured employer or your
insurance company is paying him after a board decision
and then you go on to go to the Superior Court, you
think you've been wronged, this is an incorrect
decision, I shouldn't have to pay some or all of these
benefits - when you go forward with this case, you
could have two years to wait, a year and a half to
wait to find out - and let's say in this particular
case you were right. The Superior Court judge says you
were right - you shouldn't have paid. The result for
you is basically a bad one. It's good news, bad news.
You don't have to pay anymore but you likely will
never get all the money you paid back so the longer
the process takes, the more it could affect that
employer in a bad way and that is a cost to the system
but there's an even more important cost and that's the
alternative.
If an employee is denied benefits at the board level
now, and they want to appeal, they go through a
superior court process that could take two years, a
year and a half, a year. But all that time they're
going to have no benefits, they're going to have no
medical payments, they're going to have house payments
to make and they're going to have all those troubles
that could be alleviated in a more quick manner. What
we're hoping is that this commission can do a case,
start to finish, on average in six to eight months as
opposed to a year or more and that will in and of
itself save money.
Now how much money and what it will do to rates? I'm
not the expert but we think that this efficiency
element will reduce the cost of at least some portion
of that $11 million.
SENATOR OGAN interjected to say he feels the administrative law
judge panel system creates a fair and impartial way to review
the administrative law because the panel is not employed by the
commissioner [who made the decision]. He pointed out that other
states have found that having an independent panel provides
accountability and improves efficiency and regulations. He then
stated for the record that he does not have a financial interest
in this legislation but he does have an active workers'
compensation claim so he declared a potential conflict of
interest.
CHAIR SEEKINS noted that in previous discussions about SB 311,
many commented that any reform to the existing workers'
compensation process would come at a cost to the injured
employee. He asked Mr. Nordstrand if he sees any validity to
that claim.
MR. NORDSTRAND said he would challenge anyone to look at the
bill and find that problem in the system. He stated,
Frankly, we are starting now with an administrative
law judge panel that was unanimously passed by both
houses of the Legislature. It is a great idea and we
are simply adopting that as the basis for making that
initial decision so I can't imagine how that would not
be fair to start with. And secondly ... we've dialed
back the lawyers in the process here. We had three
lawyers to do the commission and now we've said ...
we'll only have one and we'll actually give over the
majority of the commission to the lay panel member, to
the citizens, representatives as they were on the
workers' comp board and ... it's hard to see how that
couldn't be viewed as at least fair and even-handed.
2:25 p.m.
CHAIR SEEKINS asked Mr. Nordstrand if he believes that SB 1002
will shorten the process between the claim and the final
adjudication, thereby either addressing illegitimate claims and
bringing that settlement earlier in the process and eliminating
the long interim period for either party, and result in less
expense.
MR. NORDSTRAND said that is true but added that there is another
element of consistency that has nothing to do with the specific
cases that go to the commission itself. That element involves
the cases that people decide not to take to the commission. He
explained that over time, the commission will hand down
decisions that will outline details of the law that are
presently unclear. Those details will provide greater certainty
about what would happen if a particular case went before the
commission. He suspected that once the workers' compensation
attorneys learn that the law is consistent in certain areas,
they will not appeal those cases again.
SENATOR FRENCH said he was no fan of the appeals commission but
in SB 311, three lawyers would have been interpreting the law
for the hearing panel. In SB 1002, a lawyer and two lay people
will be telling judges what the law is, which he sees as "topsy-
turvy." He questioned how one can expect the workers'
compensation system to gain respect for decisions made by lay
people when judges underneath them have already done a good job
at it.
MR. NORDSTRAND replied that in the present system, lay people
tell claimants what the law is because most of the cases are not
appealed. He countered:
All we're saying is that administrative law judges
that are not judges in the traditional sense - I mean
they are hearing officers, they are professional, they
are going to be impartial but they're not
constitutional judges, they're not Superior Court
judges. We are simply letting the commission that is
going to be the central authority with regard to the
law and the factual conclusions that are reached in
cases have the final say. If the law is wrong, there
is a very simple remedy and that is the Supreme Court
and I'm sure they'll correct the commission a time or
two.
SENATOR OGAN noted that four of the five Senate Judiciary
Committee members are lay people and they pass laws, thereby
telling judges what the law is. He added that there are people
who are not trained attorneys who have good judgment.
CHAIR SEEKINS referred to paragraph (b) on page 43, the de novo
review provision, and noted the de novo review is restricted at
the first level regarding the credibility of testimony of the
witness. The review panel will not be deciding who is telling
the truth; the panel of attorneys will make that decision.
MR. NORDSTRAND affirmed that is correct and said the same
limitations that were imposed upon the trial level and the
commission level apply [in that provision.] He reminded members
that there are two kinds of de novo review. In de novo review of
law, the judge interprets the law for those below. In SB 1002,
the de novo review applies to factual conclusions. He explained:
But the difference between weighing the evidence and
this substantial evidence test that now applies is
what we're talking about here and what we're going to
do is to let the commission weigh the evidence, like
this. A substantial evidence test to review is sort of
like saying if a case comes before an administrative
law judge or currently a panel and it may or may not
be a workplace injury ... one idea is well, he hurt
his back fishing on the Kenai, the other one says he
was lifting a box at work. That's the issue. Well, at
the end of the hearing there will be evidence on both
sides. There will be testimony from all parties. There
will be doctor's evidence. There will be all kinds of
evidence. And a substantial evidence test simply means
the board or the hearing panel picked occupational
injury at work and there was a substantial pile of
evidence to support that conclusion but we're not
going to go look at the pile over here by 'went
fishing and hurt his back' because we've got this pile
here and it's substantial. All we're saying de novo
review is is that you get to grab onto both bits of
evidence and see if it makes sense in the judgment of
this one attorney and two citizen members. That's the
review that's allowed here but not on credibility as
you say.
CHAIR SEEKINS said he just wanted to be clear that this bill
does not require absolute de novo review. He then asked if, in
conclusions of law, one member of the review panel is an
attorney.
MR. NORDSTRAND said that is correct and explained that the new
commission will have one attorney schooled in workers'
compensation, who will serve as chair. That person is charged
with advising the other lay members with what the law is. He
noted the person is not charged with instructing the lay people
intentionally because there might be an occasion where the other
two panel members might want to overrule the attorney. If the
matter comes down to a legal question, the case is likely to go
before the Supreme Court.
CHAIR SEEKINS repeated, for the purpose of clarification, that
the intent is not to reduce compensation for those people with
legitimate injuries but rather to shorten the timeframe from the
time those people appeal until a final decision is made.
MR. NORDSTRAND agreed and added the intent is also to encourage
less litigation by consistency of decision making and creating a
clear body of law.
SENATOR FRENCH asked for information about the decision rates by
Superior Court judges and the degree to which the Supreme Court
overturns those decisions. He felt it necessary to see evidence
that the Superior Court judges are making inconsistent
decisions.
MR. NORDSTRAND said he does not have those numbers but numbers
were presented in committee hearings in the past, although he
did not know where they were generated.
CHAIR SEEKINS thought members had those numbers and said he
believes the appeal numbers are very low and that the Superior
Court judges have done a good job in coming up with decisions
that have not been overturned on appeal.
MR. NORDSTRAND said knowing how many times a Superior Court
judge reverses a panel says nothing about consistency because
there is no consistency among the decisions made by Superior
Court judges.
SENATOR FRENCH clarified that he was asking how many times
Superior Court judges are overturned by the Supreme Court on
workers' compensation decisions.
CHAIR SEEKINS believed the number was less than 2 percent.
SENATOR FRENCH said if he were trying to convince this body to
change the law, he would have those numbers handy because that
would provide strong evidence that the Superior Court judges are
rendering inconsistent decisions.
CHAIR SEEKINS said he was not sure that is what the committee is
trying to address. He continued by saying that Mr. Nordstrand is
saying a body of law can be built so that a person can look at
previous decisions when contemplating an appeal.
MR. NORDSTRAND agreed and noted that a defense practitioner
testified before the Senate Finance Committee last month and
said a board panel in Fairbanks recently rendered a decision on
a legal question concerning workers' compensation law. The
following week, a panel from Anchorage addressed the same legal
question and reached the opposite conclusion. He said the
Anchorage case is likely to be appealed to a Superior Court
judge.
TAPE 04-72, SIDE B
MR. NORDSTRAND said an appeal will probably also be filed in the
Fairbanks Superior Court and the results could flip. He said the
only way there can be a final resolution to that dispute is for
one or both parties will have to ask the question before the
Supreme Court. He said under SB 1002, that would not be allowed
to go beyond the commission level and he believes that will be
good for the whole system.
SENATOR THERRIAULT noted that according to information from a
previous witness, 36 cases are appealed to the Superior Court
and 25 percent of those cases are appealed to the Supreme Court.
He maintained that the committee has no information on the
number of cases that are overruled, but a lot of cases are not
appealed so that inconsistency is left to stand.
MR. NORDSTRAND added that people stop litigating for a lot of
reasons. He said two-thirds of those cases fall off because the
claimants believe the Superior Court was correct or that their
chances of prevailing in the Supreme Court are low. Therefore,
the inconsistencies remain and that is what could be avoided
with passage of SB 1002. He noted another thing that was added
to the bill at the suggestion of Senator Bunde that allows the
director of the Division of Workers' Compensation to investigate
workers' compensation fraud and it gives people who want to
provide information on potential fraud a certain level of
immunity. That is patterned after the insurance code provisions.
It will allow those with the expertise on workers' compensation
to assist in investigating fraud.
SENATOR THERRIAULT asked Mr. Nordstrand to cite those sections.
He also noted that he has heard complaints from constituents
about the length of time workers' compensation claims take to
resolve. Those people are also aware of others who are abusing
the system so he supports the provision to stop the abuse.
SENATOR OGAN said his workers' compensation claim is the result
of an injury he sustained while flying on state business. He has
seen several doctors, one appointed by the workers' compensation
system. He has found the doctors to have a wide difference in
attitudes. He asked if most litigation is for disability claims.
MR. NORDSTRAND did not know but pointed out that the fraud
provisions in Section 98 also apply to doctors and anyone else
involved in the system.
SENATOR OGAN clarified that the doctors he referred to were not
trying to defraud the system but merely had different positions.
MR. NORDSTRAND said instances of too much treatment for a
particular injury that benefits the providers are reported all
of the time.
CHAIR SEEKINS announced that members need to attend other
meetings today so the committee would take public testimony
tomorrow. He asked anyone who is interested in testifying to
contact Brian Hove, committee aide.
SENATOR THERRIAULT asked Mr. Wooliver for information on the
number of Superior Court judges in Alaska.
MR. WOOLIVER said the Alaska Court System has 34 Superior Court
judges.
2:50 p.m.
CHAIR SEEKINS recessed the meeting to the call of the chair.
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