Legislature(2001 - 2002)

05/01/2002 03:52 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                    
                   SENATE JUDICIARY COMMITTEE                                                                                 
                           May 1, 2002                                                                                          
                            3:52 p.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Robin Taylor, Chair                                                                                                     
Senator John Cowdery                                                                                                            
Senator Gene Therriault                                                                                                         
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Dave Donley, Vice Chair                                                                                                 
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR HOUSE BILL NO. 296(CRA)                                                                                                  
"An   Act    relating   to    mergers   and   consolidations    of                                                              
municipalities."                                                                                                                
     MOVED SCS CSHB 296(JUD) OUT OF COMMITTEE                                                                                   
                                                                                                                                
HOUSE BILL NO. 52 am                                                                                                            
"An  Act relating  to the  Interstate Compact  for Adult  Offender                                                              
Supervision and  the State Council  for Interstate  Adult Offender                                                              
Supervision;  amending  Rules 4  and  24,  Alaska Rules  of  Civil                                                              
Procedure; and providing for an effective date."                                                                                
     MOVED HB 52am OUT OF COMMITTEE                                                                                             
                                                                                                                                
SENATE BILL NO. 369                                                                                                             
"An Act  relating to trusts,  including trust protectors,  trustee                                                              
advisors,  and transfers  of trust  interests,  and to  creditors'                                                              
claims against  property subject  to a  power of appointment;  and                                                              
providing for an effective date."                                                                                               
     MOVED SB 369 OUT OF COMMITTEE                                                                                              
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                              
                                                                                                                                
HB 296 - See CRA minutes dated 4/10/02 and 4/17/02.                                                                             
                                                                                                                                
HB 52 - No previous action to record.                                                                                           
                                                                                                                                
SB 369 - No previous action to record.                                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Steve Schweppe                                                                                                              
City of Ketchikan                                                                                                               
344 Front St.                                                                                                                   
Ketchikan, AK  99901                                                                                                            
POSITION STATEMENT:  No position stated on SCS CSHB 296(JUD)                                                                  
                                                                                                                                
Mr. Kevin Waring                                                                                                                
Local Boundary Commission                                                                                                       
Department of Community and Economic Development                                                                                
       th                                                                                                                       
550 W 7 Ave., Suite 1770                                                                                                        
Anchorage, AK  99501-3510                                                                                                       
POSITION STATEMENT:  Supports Section 1 of SCS CSHB 296(JUD) but                                                              
opposes Sections 2 and 3                                                                                                        
                                                                                                                                
Mayor Tim Bourcy                                                                                                                
City of Skagway                                                                                                                 
PO Box 415                                                                                                                      
Skagway, AK 99840                                                                                                               
POSITION STATEMENT:  Supports SCS CSHB 296(JUD)                                                                               
                                                                                                                                
Mr. Robert Blasco, Attorney                                                                                                     
           th                                                                                                                   
801 West 10 St., Suite 300                                                                                                      
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Answered a technical question related to SCS                                                             
CSHB 296(JUD)                                                                                                                   
                                                                                                                                
Representative Jim Whitaker                                                                                                     
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Supports SCS CSHB 296(JUD)                                                                               
                                                                                                                                
Ms. Candace Brower                                                                                                              
Department of Corrections                                                                                                       
431 N Franklin, Suite 400                                                                                                       
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Supports HB 52am                                                                                         
                                                                                                                                
Mr. Richard Masters                                                                                                             
Council of State Governments                                                                                                    
No address provided                                                                                                             
POSITION STATEMENT:  Supports HB 52am                                                                                         
                                                                                                                                
Mr. William Craig                                                                                                               
613 Degraff St.                                                                                                                 
Sitka, AK  99835                                                                                                                
POSITION STATEMENT:  Supports HB 52am                                                                                         
                                                                                                                                
Ms. Pat Tuthill                                                                                                                 
No address provided                                                                                                             
POSITION STATEMENT: Supports HB 52am                                                                                          
                                                                                                                                
Mr. Kermit Humphries                                                                                                            
National Institute of Corrections                                                                                               
320 First St., N.W.                                                                                                             
Washington, D.C. 20534                                                                                                          
POSITION STATEMENT:  Supports HB 52am                                                                                         
                                                                                                                                
Mr. Doug Blattmachr                                                                                                             
No address available                                                                                                            
POSITION STATEMENT:  Supports SB 369                                                                                          
                                                                                                                                
Mr. Steve Greer, Attorney                                                                                                       
4041 B St.                                                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 369                                                                                          
                                                                                                                                
Mr. Jon Sherwood                                                                                                                
Division of Medical Assistance                                                                                                  
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
POSITION STATEMENT:  Expressed concern about SB 369                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-23, SIDE A                                                                                                            
Number 001                                                                                                                      
                                                                                                                                
                                                                                                                                
CHAIRMAN  ROBIN  TAYLOR  called  the  Senate  Judiciary  Committee                                                            
meeting to  order at  3:52 p.m. Senators  Cowdery, Therriault  and                                                              
Chair Taylor  were present.  The first matter  to come  before the                                                              
committee was HB 296.                                                                                                           
                                                                                                                                
            HB 296-MUNICIPAL MERGER AND CONSOLIDATION                                                                       
                                                                                                                                
                                                                                                                                
CHAIRMAN TAYLOR informed members that a committee substitute (CS)                                                               
had been prepared.                                                                                                              
                                                                                                                                
SENATOR COWDERY moved to adopt the Senate Judiciary committee                                                                   
substitute (labeled Cook 5/1/02) in lieu of the original bill.                                                                  
                                                                                                                                
CHAIRMAN TAYLOR announced that without objection, the CS was                                                                    
adopted. He then took teleconference testimony.                                                                                 
                                                                                                                                
MR. STEVE SCHWEPPE,  testifying from Ketchikan,  said he submitted                                                              
a written statement to the committee.                                                                                           
                                                                                                                                
CHAIRMAN  TAYLOR acknowledged  receipt  and  distribution of  that                                                              
testimony and thanked  Mr. Schweppe for his efforts.  Mr. Schweppe                                                              
had  no further  comments  to add  and  committee  members had  no                                                              
questions, so Chairman Taylor continued taking public testimony.                                                                
                                                                                                                                
MR.  KEVIN  WARING,  Local  Boundary  Commission  (LBC),  informed                                                              
members he  submitted written  testimony. He then  went on  to say                                                              
the LBC supports  Section 1 of HB 296, which fixes  an omission in                                                              
existing law.  However, the  LBC is opposed  to Sections 2  and 3,                                                              
which  would change  the  manner  in which  votes  are counted  in                                                              
consolidation elections  for boroughs and cities.  The current law                                                              
provides  that consolidation  proposals  be approved  by a  simple                                                              
majority of  the voters  in the area  that would be  consolidated.                                                              
The  proposed  change  would  require   separate  approvals  by  a                                                              
majority  of voters  in  each city  to be  consolidated  and by  a                                                              
majority  of  the voters  in  the  borough area  outside  affected                                                              
cities.  In  the  LBC's  view,  the  present  procedure  basically                                                              
provides for one  person, one vote, and majority  rule, which fits                                                              
with the Alaska  Constitution and legislative policy  for the last                                                              
30  years.  The  proposed  language  would  allow  a  minority  of                                                              
residents  to  veto  a  consolidation  proposal  as  installing  a                                                              
weighted vote.  He repeated the LBC  is opposed to Sections  2 and                                                              
3.                                                                                                                              
                                                                                                                                
MR. WARING said he would like to  clarify what might be a drafting                                                              
error in the bill.  Section 2 adds a new section  to AS 29.06.100.                                                              
That section  in law now deals  with the content  of consolidation                                                              
petitions.  The  proposed new  section  requires  the petition  to                                                              
include  guidelines  in  the  petition  for  how  the  outcome  of                                                              
consolidation  elections is  decided. The  LBC suggests that  this                                                              
amendment  to  election  procedures might  be  more  appropriately                                                              
placed in  AS 29.06.140,  the section of  statute that  deals with                                                              
consolidation elections and election  procedures. He noted the LBC                                                              
has statutory powers to amend petitions.  If the committee decides                                                              
to include  the changes  in Sections 2  and 3  of HB 296,  the LBC                                                              
believes  a relocation  of  Section  2 would  clarify  legislative                                                              
intent and prevent any possible confusion.                                                                                      
                                                                                                                                
CHAIRMAN  TAYLOR  thanked Mr.  Waring  and  called Mr.  Bourcy  to                                                              
testify.                                                                                                                        
                                                                                                                                
MAYOR TIM  BOURCY, City of Skagway,  informed members the  City of                                                              
Skagway has  a borough petition before  the LBC at this  time. The                                                              
City of Skagway is in support of  HB 296 but is concerned that the                                                              
bill does not address annexation issues.                                                                                        
                                                                                                                                
CHAIRMAN TAYLOR  informed Mayor Bourcy  that a sentence  was added                                                              
in the Senate Judiciary CS that provides  for the same application                                                              
on annexation.                                                                                                                  
                                                                                                                                
MR. BOURCY thanked the committee and said he would support that.                                                                
                                                                                                                                
CHAIRMAN  TAYLOR  read  that  sentence  on page  2,  line  26,  as                                                              
follows,  "This subsection  is to  be consistent  with the  voting                                                              
requirements for annexation specified  in AS 29.06.040," and asked                                                              
Representative Whitaker to address the CS.                                                                                      
                                                                                                                                
REPRESENTATIVE WHITAKER, sponsor  of HB 296, said he is in support                                                              
of the CS and hopes the committee does what it thinks is best.                                                                  
                                                                                                                                
CHAIRMAN TAYLOR  asked Mr. Blasco  if the CS  needs to have  a (1)                                                              
placed at the end of line 27, page 2.                                                                                           
                                                                                                                                
MR. ROBERT  BLASCO, attorney,  replied,  "Yes, Senator Taylor,  if                                                              
that's possible. There  are different sections to  that portion of                                                              
Title  29 and  the one  that references  the  concerns that  we've                                                              
raised as to annexation is actually Section 1."                                                                                 
                                                                                                                                
CHAIRMAN TAYLOR moved Amendment 1,  to add a parenthetical 1 after                                                              
".040" on  page 2, line 27.  There being no objection,  the motion                                                              
carried.                                                                                                                        
                                                                                                                                
SENATOR THERRIAULT noted Amendment 1 should have read (c)(1).                                                                   
                                                                                                                                
CHAIRMAN TAYLOR agreed and moved  Amendment 2, to insert (c) after                                                              
".040" and  prior to  (1). There being  no objection,  Amendment 2                                                              
was adopted.                                                                                                                    
                                                                                                                                
SENATOR COWDERY moved SCS CSHB 296(JUD)  as amended from committee                                                              
with individual recommendations.                                                                                                
                                                                                                                                
CHAIRMAN TAYLOR  noted that without  objection, SCS  CSHB 296(JUD)                                                              
and  its  accompanying  fiscal  note  moved  from  committee.  The                                                              
committee then took up HB 52.                                                                                                   
                                                                                                                                
          HB 52-COMPACT FOR ADULT OFFENDER SUPERVISION                                                                      
                                                                                                                                
CHAIRMAN  TAYLOR announced  the committee  has  held an  extensive                                                              
hearing on this bill. He then took testimony.                                                                                   
                                                                                                                                
MS.  CANDACE BROWER,  legislative  liaison for  the Department  of                                                              
Corrections,  explained that  the Interstate  Compact governs  the                                                              
state-to-state   transfer  and/or   travel   and  supervision   of                                                              
offenders.  Currently, the Compact  in place  was enacted  in 1937                                                              
and is  outdated. The ability to  transfer between states  is much                                                              
different now  than it was in  1937, when 1,000  offenders crossed                                                              
state lines. Now,  one-quarter of a million offenders  cross state                                                              
lines each year. The current Compact  promotes slow and unreliable                                                              
exchange  of  case  information and  frequent  violations  of  the                                                              
Compact rules  result in  otherwise supervised offenders  slipping                                                              
through the cracks.                                                                                                             
                                                                                                                                
MS. BROWER stated  the new Compact creates oversight  of offenders                                                              
on a  national basis.  It creates  a state  council, of  which the                                                              
Compact  administrator  becomes  a commissioner  to  the  national                                                              
commission.  The  national  commission  will  be made  up  of  one                                                              
commissioner  from  each state.  Each  state  gets one  vote.  The                                                              
Interstate  Commission  will  also   have  non-voting,  ex-officio                                                              
members  who are  interested parties  that can  contribute to  the                                                              
facility of the Compact. There will  also be paid staff, including                                                              
an executive  director, and Interstate  Commission staff  who will                                                              
oversee  the day-to-day  activities of the  Compact, which  Alaska                                                              
does  not  currently  have.  Today,   each  state  has  a  Compact                                                              
administrator  who participates in  a formal  body, but  that body                                                              
has no power to enforce compliance  with the Compact so states can                                                              
do  what  they  wish.  The  executive  director  and  staff  would                                                              
administer enforcement  and compliance with the  provisions of the                                                              
Compact. They  would enforce  its bylaws and,  as directed  by the                                                              
Commission,  perform other  duties  as assigned.  The new  Compact                                                              
will provide  uniform procedures,  a mechanism  for acquiring  and                                                              
maintaining  routine data and  will provide  a structure  to adopt                                                              
new rules  and to guarantee  or enforce  compliance. It  will also                                                              
provide for adequate  consideration of victims,  more oversight at                                                              
both the  state and national levels,  and a way to  hold offenders                                                              
more accountable.                                                                                                               
                                                                                                                                
MS. BROWER  pointed out  that committee packets  contain a  map of                                                              
the states  that have enacted the  Compact at this time:  31 as of                                                              
today. That  number is  expected to  increase to  35 by  June. One                                                              
reason it  is so important that  the Alaska Legislature  pass this                                                              
legislation  this year is  that the  first 35  states to  enact it                                                              
will be at the  table to set the rules and decide  how the Compact                                                              
will be  operated. Alaska's population  is small, therefore  it is                                                              
important  that  it protect  its  interests. In  addition,  Alaska                                                              
exports more  offenders than  it imports so  it will  benefit from                                                              
belonging to the  Compact. She pointed out she  revised the fiscal                                                              
note  after consulting  with  some  of the  folks  working on  the                                                              
Compact. The fees  are not expected to be initiated  until July of                                                              
2003 so there will be no fiscal impact until FY 04.                                                                             
                                                                                                                                
CHAIRMAN TAYLOR asked if the amount is $16,000.                                                                                 
                                                                                                                                
MS. BROWER  said that is correct for  FY 04. The amount  for FY 03                                                              
will be zero.                                                                                                                   
                                                                                                                                
CHAIRMAN TAYLOR took public testimony.                                                                                          
                                                                                                                                
MR.   RICHARD  MASTERS,   Special   Counsel,   Council  of   State                                                              
Governments (CSG),  said he echoes Ms. Brower's  comments. The CSG                                                              
has  been  involved  in the  Compact  bill  for  a long  time  and                                                              
assisted in the  original draft in 1937. The  proposed legislation                                                              
is   the  result   of   a  year-long   study   in  which   Compact                                                              
administrators  under the  existing mechanism  came together  with                                                              
representatives  from the  legislative  branch, attorneys  general                                                              
offices and  decided the existing  mechanism is not working  as it                                                              
depends almost entirely on cooperation.  It is simply not designed                                                              
to function in an environment where  an offender can move from one                                                              
part of the country  to another in a matter of  hours. In addition                                                              
to the  50,000 known  offenders who  are under supervision,  there                                                              
are a large number of offenders whose  whereabouts are unknown. HB
296  is an  attempt  to update  the  63-year old  law  to make  it                                                              
effective  by  giving  authority  to  states  to  make  sure  that                                                              
compliance is achieved.                                                                                                         
                                                                                                                                
MR. MASTERS  pointed out  that the threshold  for creation  of the                                                              
commission  that  would allow  the  rule  making  to begin  is  35                                                              
states.  Currently  31 states  have  enacted legislation  and  two                                                              
states have legislation  waiting to be signed  by their governors.                                                              
Eight other  states have passed  legislation through  one chamber.                                                              
The CSG hopes Alaska  will be present at the table  when the rules                                                              
are  reconsidered and  adopted to  enforce  this important  public                                                              
policy mechanism.                                                                                                               
                                                                                                                                
MR. WILLIAM  CRAIG, speaking on  his own behalf,  informed members                                                              
he  is  a former  police  officer  and noted  the  bill  addresses                                                              
victims' rights  but it does not  cover witnesses or  past members                                                              
of the  criminal justice  system  who may have  concerns about  an                                                              
individual. He said he does not worry  about most of the people he                                                              
encountered  throughout his  brief career,  but he  would like  to                                                              
know the status  of a few people.  He is aware of  prosecutors and                                                              
witnesses in  the same  situation. He hoped,  if Alaska  does join                                                              
the Compact, that issue is addressed.                                                                                           
                                                                                                                                
CHAIRMAN   TAYLOR   noted   that  Linda   Zaugg,   Department   of                                                              
Corrections, was available to answer  questions. He then continued                                                              
taking public testimony.                                                                                                        
                                                                                                                                
MS. PAT TUTHILL,  testifying via teleconference,  told members the                                                              
following  story  of her  daughter  Peyton  Tuthill and  her  very                                                              
preventable murder.  After Peyton graduated from  college in South                                                              
Carolina,  she went  to the mountains  of Wyoming  for a  survival                                                              
course  camping trip  for  four weeks.  Peyton  gave  back to  the                                                              
community  through  her  involvement   with  the  American  Cancer                                                              
Society, working  as an advocate  for the elderly, and  then moved                                                              
to Denver to  attend graduate school. After six  months in Denver,                                                              
she  entered  her apartment  at  noon  to  let  her dog  out.  She                                                              
encountered  a man over  300 pounds  who brutally tortured,  raped                                                              
and  killed  her. The  offender,  Donta  Page, had  recently  been                                                              
transferred and released  from prison in Maryland  and traveled to                                                              
Denver  where  he  was  to be  under  three  years  of  supervised                                                              
probation in  a halfway house. He  was lost in the system.  No one                                                              
knew he  was there. He  was removed from  his program  for hostile                                                              
behavior and was  to be given a bus ticket to  return to prison in                                                              
Maryland. However, the current Compact  was blatantly ignored. The                                                              
current  Compact  does  not  have   the  technology,  database  or                                                              
uniformity  to  notify and  keep  track  of these  prisoners.  So,                                                              
instead  of waiting  for the bus  ticket, he  broke into  Peyton's                                                              
apartment where she met her tragic and violent death.                                                                           
                                                                                                                                
MS. TUTHILL  said the  1937 Compact  was enacted  when there  were                                                              
only  1,000 offenders  moving  across  state lines.  Over  250,000                                                              
offenders are now  moving across state lines.  Ms. Tuthill stated,                                                              
"Peyton should have never died like  this. No one should ever have                                                              
to  die like  this.  This new  Compact,  with  provisions and  the                                                              
witness/victim involvement in the  new Compact is going to prevent                                                              
such tragic  deaths. And I  have to make  a decision every  day if                                                              
I'm going to live or die. And I feel  like I'm Peyton's voice now,                                                              
the voice of  other victims. And I live this  legislation everyday                                                              
in the  hope that it will  be passed because  I know what  it will                                                              
do.  And  I hear  words  from  Peyton everyday  and  her  favorite                                                              
passage was, when  we act from our hearts, speak  from our hearts,                                                              
we're standing in  our full strength, for our heart  is a place of                                                              
courage,  honor,  integrity,  wisdom,   and  passion."  She  asked                                                              
committee members to support HB 52.                                                                                             
                                                                                                                                
CHAIRMAN TAYLOR expressed  sympathy to Ms. Tuthill  for the tragic                                                              
loss of her daughter and then asked Mr. Humphries to testify.                                                                   
                                                                                                                                
MR.  KERMIT HUMPHRIES,  National Institute  of Corrections  (NIC),                                                              
said  one  of  his  responsibilities  at  the  NIC  has  been  the                                                              
development and  passage of this  Interstate Compact. As  a former                                                              
probation/parole  officer in  Alaska for  eight years, he  noticed                                                              
that  in all  of those  years, only  one state,  on one  occasion,                                                              
returned  an  offender  who  had  come  to  Alaska  on  interstate                                                              
supervision  and  violated  that   arrangement.  Many  times,  the                                                              
Department  of  Corrections  would  do the  paperwork,  but  other                                                              
states would terminate  jurisdiction for the offender  so that the                                                              
offender would  stay in  Alaska, or they  would issue  an in-state                                                              
warrant.  In  that   case,  only  residents  of   that  state  are                                                              
protected.  In only  one  case that  he  supervised  was there  an                                                              
extradition back  to the  sending state. He  could not  recall any                                                              
other officers  who ever  had anyone returned.  He said  Alaska is                                                              
particularly  vulnerable  to  the   lack  of  enforcement  on  the                                                              
existing Compact.  The new Compact was drafted  because department                                                              
of corrections' spokesmen from all  around the country came to the                                                              
NIC saying the  existing compact was broken and posed  a danger to                                                              
public safety.                                                                                                                  
                                                                                                                                
CHAIRMAN TAYLOR noted  with no further testimony  or questions, he                                                              
would entertain a motion to move the bill.                                                                                      
                                                                                                                                
SENATOR  COWDERY  moved HB  52am  from committee  with  individual                                                              
recommendations and its accompanying fiscal note of $16,000.                                                                    
                                                                                                                                
CHAIRMAN  TAYLOR  announced  that without  objection,  the  motion                                                              
carried.                                                                                                                        
                                                                                                                                
         SB 369-POWERS OF APPOINTMENTS/TRUSTS/CREDITORS                                                                     
                                                                                                                                
CHAIRMAN TAYLOR  noted he recently  introduced SB 369 as  Chair of                                                              
the  Senate  Judiciary  Committee  because  there  has  been  some                                                              
difficulty  getting the  House  bill to  the  Senate. He  informed                                                              
members  that the  committee has  had extensive  hearings on  this                                                              
subject in  the past.  He stated  his intent to  move SB  369 from                                                              
committee today  and to  ship it  over to the  House if  the House                                                              
bill  does  not  get  to  the  Senate  soon.  He  then  asked  Mr.                                                              
Blattmachr or Mr. Greer to explain the provisions of the bill.                                                                  
                                                                                                                                
MR. DOUG  BLATTMACHR said  that back  in 1997 and  1998, a  lot of                                                              
trust legislation was passed by the  Alaska Legislature, which had                                                              
the disadvantage  of going first.  Other states have been  able to                                                              
improve  on  Alaska's  legislation   and  make  their  legislation                                                              
clearer. SB 369 will do four things:                                                                                            
                                                                                                                                
   · It gives statutory authorization for provisions that are                                                                   
     commonly found in trusts;                                                                                                  
   · It cleans up a glitch or two in the present law;                                                                           
   · It adds three provisions found in the Delaware law;                                                                        
   · It clarifies what attorneys presently believe the law to be                                                                
     in statute.                                                                                                                
                                                                                                                                
MR. BLATTMACHR said the bill is basically a clean-up bill.                                                                      
                                                                                                                                
CHAIRMAN TAYLOR asked  Mr. Blattmachr to stand by  in case members                                                              
had questions and then took public testimony.                                                                                   
                                                                                                                                
MR. JON  SHERWOOD, Division of  Medical Assistance,  Department of                                                              
Health  and  Social  Services (DHSS),  expressed  concern  with  a                                                              
provision  in  SB  369  that may  run  afoul  with  another  trust                                                              
provision  in  statute.  He  explained  that  under  the  Medicaid                                                              
eligibility  rules, people  with assets  can qualify for  Medicaid                                                              
coverage by putting income or assets  into a small class of trusts                                                              
[a Miller  trust]. As part of  the criteria to qualify,  the trust                                                              
must provide that upon the death  of the beneficiary, the state be                                                              
reimbursed for  the amount of Medicaid  expenses or the  corpus of                                                              
the  trust,  whichever is  smaller.  DHSS  is concerned  that  the                                                              
state's ability  to collect on these  trusts might be  affected by                                                              
the  provisions in  SB 369  that  authorize a  trust protector  to                                                              
change or  modify the  distributions to  beneficiaries. Since  the                                                              
legislation  was enacted  that  created that  class  of trusts  in                                                              
about 1994, the state has collected  on 61 trusts for an amount of                                                              
about $650,000. DHSS currently has  about 200 trust cases open, in                                                              
which Medicaid  clients are still  alive. He said that  people who                                                              
use  these  devices  essentially   impoverish  themselves  to  get                                                              
Medicaid. They  typically have very  high long term care  needs or                                                              
prescription drug costs that are not covered by Medicare.                                                                       
                                                                                                                                
MR. BLATTMACHR asked  to clarify some confusion  and explained the                                                              
trust  protector  provision  would  only  apply  if  the  document                                                              
authorized  a trust protector  and gave  the trust protector  that                                                              
particular  power.  The  Medicaid   trusts  would  not  have  that                                                              
provision, therefore SB 369 would have no affect.                                                                               
                                                                                                                                
MR. STEVE GREER asked to address  a concern raised by the Attorney                                                              
General's Office at a different hearing  and stated, "What they're                                                              
missing is  the first three core  words of the statute  that says,                                                              
'A  trust instrument  may  provide....'" Mr.  Greer  said that  an                                                              
attorney would  be guilty of  malpractice if he  or she drew  up a                                                              
Miller trust with a trust protector provision.                                                                                  
                                                                                                                                
CHAIRMAN TAYLOR said, "It wouldn't qualify, would it?"                                                                          
                                                                                                                                
MR. GREER said  it would not. He  said the issue is a  red herring                                                              
and has no viability at all.                                                                                                    
                                                                                                                                
MR. SHERWOOD said  his agency would take the position  that such a                                                              
trust  would  not  qualify  but  it  is  seeking  clear  statutory                                                              
language because  it has  come into  conflict with attorneys  over                                                              
the interpretation of trust laws.  DHSS's decisions are subject to                                                              
appeal to fair hearing in Superior Court.                                                                                       
                                                                                                                                
MR. GREER  informed members  that he spoke  with Una  Gandbhir, an                                                              
acknowledged expert  on Medicaid  trusts, and she  was incredulous                                                              
that this issue was raised by DHSS  because it signifies that DHSS                                                              
doesn't understand  what a trust  protector is. He noted  a common                                                              
example of a trust  protector would be one in which  he sets up an                                                              
irrevocable trust  for the benefit of  his child. He then  names a                                                              
bank as  the trustee  of that trust.  At some  point in  time, the                                                              
bank may be inappropriate as the  trustee, therefore, in the trust                                                              
instrument,  he could have  given and  named anyone  who is  not a                                                              
beneficiary  of the  trust the power  to remove  and replace  that                                                              
trustee.  If he  did not  have the  trust  protector provision  in                                                              
there, the beneficiary would be forced  to go to court and undergo                                                              
a  costly  and  expensive  court proceeding  to  get  the  trustee                                                              
removed. He  repeated that this provision  has nothing to  do with                                                              
the Miller trust issue raised by  DHSS. One would not have a trust                                                              
protector  provision in  a Miller  trust any more  than one  could                                                              
have a Miller trust that was revocable.                                                                                         
                                                                                                                                
CHAIRMAN TAYLOR agreed that one couldn't have either. He asked,                                                                 
                                                                                                                                
     How  would  a trust  qualify  for the  application,  Mr.                                                                   
     Sherwood,  that they  would  be attempting  to  achieve,                                                                   
     which is  to put those assets  in trust, let  the income                                                                   
     pay  over -  that's  the way  it  works,  right, to  the                                                                   
     state,  and  you then  provide  benefits  because  their                                                                   
     income's too low during that period. Right?                                                                                
                                                                                                                                
He then asked if DHSS is reimbursed  for certain costs it incurred                                                              
after the person passes on.                                                                                                     
                                                                                                                                
MR. SHERWOOD said it is.                                                                                                        
                                                                                                                                
CHAIRMAN  TAYLOR said  if he  set  up an  irrevocable trust,  DHSS                                                              
would not qualify him to receive benefits.                                                                                      
                                                                                                                                
MR.  SHERWOOD said  that is  correct  and added  that DHSS  became                                                              
aware of this provision yesterday. He stated,                                                                                   
                                                                                                                                
     You  know,  what I  would  be  concerned about  is  that                                                                   
     someone dies,  the residual beneficiary after  the state                                                                   
     is also  say, a disabled  person with needs  and someone                                                                   
     might   make  the  determination   that  that   residual                                                                   
     beneficiary  would, you  know, a  trust protector  could                                                                   
     make that.                                                                                                                 
                                                                                                                                
CHAIRMAN TAYLOR said  DHSS cannot accept a trust  protector either                                                              
because that would  violate the very intent of the  trust that was                                                              
set up to qualify for the benefits.                                                                                             
                                                                                                                                
MR. SHERWOOD said DHSS would prefer  "suspenders and a belt rather                                                              
than having to go in and litigate."                                                                                             
                                                                                                                                
CHAIRMAN TAYLOR  said he  planned to move  the bill to  the Senate                                                              
Rules  Committee because  time  is  limited but  that  he did  not                                                              
expect further  action to be taken  on the bill for  another week.                                                              
He offered  to work with Mr.  Sherwood and the  Attorney General's                                                              
Office  designee to  draft an  amendment  if, in  fact, a  problem                                                              
exists.                                                                                                                         
                                                                                                                                
MR. SHERWOOD thanked Chairman Taylor.                                                                                           
                                                                                                                                
SENATOR  COWDERY  moved  SB 369  from  committee  with  individual                                                              
recommendations. There being no objections, the motion carried.                                                                 
                                                                                                                                
CHAIRMAN TAYLOR  noted his  third attempt to  have a  hearing with                                                              
Arthur Robinson but,  once again, the timing did  not work out. He                                                              
said he will try again and adjourned the meeting at 4:36 p.m.                                                                   

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