Legislature(2005 - 2006)BELTZ 211

03/22/2005 01:30 PM LABOR & COMMERCE

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                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 22, 2005                                                                                         
                           1:36 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Ben Stevens                                                                                                             
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Johnny Ellis                                                                                                            
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 140                                                                                                             
"An   Act   relating   to  spyware   and   unsolicited   Internet                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 137                                                                                                             
"An Act  providing that  an institution  providing accommodations                                                               
exempt from  the provisions of  the Uniform  Residential Landlord                                                               
and  Tenant Act  may  evict tenants  without  resorting to  court                                                               
proceedings under AS 09.45.060 - 09.45.160."                                                                                    
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 130                                                                                                             
"An Act relating  to a special deposit  for workers' compensation                                                               
and  employers' liability  insurers;  relating  to assigned  risk                                                               
pools; relating  to workers'  compensation insurers;  stating the                                                               
intent  of   the  legislature,   and  setting   out  limitations,                                                               
concerning the  interpretation, construction,  and implementation                                                               
of workers'  compensation laws; relating  to the  Alaska Workers'                                                               
Compensation   Board;    assigning   certain    Alaska   Workers'                                                               
Compensation  Board   functions  to  the  division   of  workers'                                                               
compensation   in  the   Department   of   Labor  and   Workforce                                                               
Development and to that department,  and authorizing the board to                                                               
delegate administrative  and enforcement duties to  the division;                                                               
establishing   a   Workers'  Compensation   Appeals   Commission;                                                               
providing for workers' compensation  hearing officers in workers'                                                               
compensation  proceedings;  relating   to  workers'  compensation                                                               
medical benefits and  to charges for and payment of  fees for the                                                               
medical benefits; relating to  agreements that discharge workers'                                                               
compensation   liability;  relating   to  workers'   compensation                                                               
awards;  relating to  reemployment benefits  and job  dislocation                                                               
benefits; relating  to coordination of workers'  compensation and                                                               
certain  disability benefits;  relating to  division of  workers'                                                               
compensation records;  relating to release of  treatment records;                                                               
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;   relating  to   attorney  fees;   providing  for   the                                                               
department to  enter into contracts with  nonprofit organizations                                                               
to  provide  information  services and  legal  representation  to                                                               
injured  employees; providing  for  administrative penalties  for                                                               
employers  uninsured or  without adequate  security for  workers'                                                               
compensation; relating to fraudulent  acts or false or misleading                                                               
statements in  workers' compensation  and penalties for  the acts                                                               
or  statements;  providing for  members  of  a limited  liability                                                               
company to  be included as  an employee for purposes  of workers'                                                               
compensation;  establishing  a   workers'  compensation  benefits                                                               
guaranty  fund;  relating  to  the  second  injury  fund;  making                                                               
conforming amendments;  providing for a  study and report  by the                                                               
medical  services   review  committee;   and  providing   for  an                                                               
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 140                                                                                                                  
SHORT TITLE: BAN INTERNET SPYWARE                                                                                               
SPONSOR(s): SENATOR(s) THERRIAULT                                                                                               
03/10/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/05       (S)       L&C, JUD                                                                                               
03/22/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 137                                                                                                                  
SHORT TITLE: EVICTING INSTITUTIONAL PROPERTY USERS                                                                              
SPONSOR(s): SENATOR(s) SEEKINS                                                                                                  
03/08/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/08/05       (S)       L&C, JUD                                                                                               
03/22/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 130                                                                                                                  
SHORT TITLE: WORKERS' COMPENSATION                                                                                              
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
03/03/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/03/05       (S)       L&C, FIN                                                                                               
03/08/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/08/05       (S)       Heard & Held                                                                                           
03/08/05       (S)       MINUTE(L&C)                                                                                            
03/10/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/10/05       (S)       Heard & Held                                                                                           
03/10/05       (S)       MINUTE(L&C)                                                                                            
03/15/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/15/05       (S)       Heard & Held                                                                                           
03/15/05       (S)       MINUTE(L&C)                                                                                            
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/17/05       (S)       Heard & Held                                                                                           
03/17/05       (S)       MINUTE(L&C)                                                                                            
03/22/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
Senator Gene Therriault                                                                                                         
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 140                                                                                         
CURTIS CLOTHIER, Manager                                                                                                        
Data Processing                                                                                                                 
Legislative Affairs                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Supports SB 140.                                                                                          
BENJAMIN EDELMAN, PhD. student                                                                                                  
Harvard University                                                                                                              
Boston Massachusetts                                                                                                            
POSITION STATEMENT:  Supports SB 140.                                                                                         
JOE MICHEL                                                                                                                      
Staff to Senator Seekins                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced SB 137 for sponsor.                                                                            
MIKE SFRAGA                                                                                                                     
University of Alaska                                                                                                            
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 137.                                                                                          
MIKE HOSTINA                                                                                                                    
University Of Alaska                                                                                                            
POSITION STATEMENT: Supports SB 137.                                                                                          
BARBARA WILLIAMS                                                                                                                
Alaska Injured Workers Alliance                                                                                                 
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposes SB 130.                                                                                           
JERRY FLOCK                                                                                                                     
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 130.                                                                                          
PAUL LISANKIE, Director                                                                                                         
Division of Workers Compensation                                                                                                
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Commented on SB 130.                                                                                      
ACTION NARRATIVE                                                                                                              
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting to  order at 1:36:34 PM.  Present were Senators                                                             
Ben Stevens,  Seekins and Chair  Bunde. Senator Davis  arrived at                                                               
                  SB 140-BAN INTERNET SPYWARE                                                                               
CHAIR CON BUNDE announced SB 140 to be up for consideration.                                                                    
SENATOR THERRIAULT, sponsor of SB 140, gave a short introduction                                                                
before presenting a slide show.                                                                                                 
     I've  introduced   SB  140   to  accomplish   two  main                                                                    
     objectives. The first is to  send a message to computer                                                                    
     invaders that it  will be illegal in  Alaska to conduct                                                                    
     certain practices  involving the injection  of unwanted                                                                    
     and  malicious  programs  into  computers.  The  second                                                                    
     objective  is  to   heighten  through  the  legislative                                                                    
     process  both the  awareness of  the  magnitude of  the                                                                    
     spyware problem  and how  to deal with  it in  the most                                                                    
     cost-effective  and time-efficient  manner.... We  have                                                                    
     through  research   made  contact  with   a  nationally                                                                    
     recognized expert [Ben Edelman]  who has worked with us                                                                    
     in drafting SB 140....                                                                                                     
Virtually  every  branch  of local  and  state  governments  have                                                               
spyware problems.  The cost of  protecting private  citizens from                                                               
spyware  is  $21  billion  nationally.   This  is  based  on  the                                                               
estimated three  to six minutes each  day people use to  clean or                                                               
otherwise  deal   with  unwanted   programs  that   affect  their                                                               
computers. The challenge  is to keep the  legislation targeted at                                                               
unscrupulous  and malicious  sources without  making it  so broad                                                               
that it will damage legitimate uses of computer programs.                                                                       
SENATOR THERRIAULT said that SB 140  is broadly based on the Utah                                                               
model with some features of  the California version worked in. It                                                               
may  be  difficult to  prosecute  those  who ply  their  invasive                                                               
practices in Alaska,  but the magnitude of the  problem moved him                                                               
to  declare such  activities illegal  so that  legal recourse  is                                                               
available to those who wish to pursue the violators.                                                                            
CURTIS CLOTHIER,  Manager, Data Processing,  Legislative Affairs,                                                               
narrated a presentation called "Spyware 101."                                                                                   
1:42:13 PM                                                                                                                    
He  explained that  spyware is  software  that collects  personal                                                               
information  or  makes  changes on  your  computer  without  your                                                               
knowledge or  consent. Sometimes  it's accompanied by  an Addware                                                               
program   that  launches   customized  advertising.   Spyware  is                                                               
relatively new; the first document  case being in early 2000. But                                                               
it started  to hit radar screens  in 2003 when a  study indicated                                                               
that two out  of 100 support calls to help  desks were related to                                                               
spyware. Now it is estimated to be two out of five calls.                                                                       
1:44:18 PM                                                                                                                    
CHAIR BUNDE asked if anti-virus programs would help.                                                                            
MR. CLOTHIER  answered no;  virus guards  usually check  only for                                                               
viruses. Spyware usually  makes its way through  the Web browser.                                                               
Most virus guards are aimed at  Email or viruses that are already                                                               
on a computer in files.                                                                                                         
1:45:26 PM                                                                                                                    
He described  ways spyware can get  on a computer -  generally by                                                               
installation of  an application  that is  free with  the end-user                                                               
license agreement  too long.  It generally  causes a  computer to                                                               
slow down or crash.                                                                                                             
1:46:54 PM                                                                                                                    
Spyware  doesn't   necessarily  collect  bad   information.  Some                                                               
computers   have  it   preloaded  and   it  gives   manufacturers                                                               
information about a computer's health.  The customer is generally                                                               
informed, however. Other  software has a free version  and a paid                                                               
version.  The  free  version   includes  advertising.  "It's  the                                                               
knowledge and consent thing, which  I think is really critical in                                                               
loading software."                                                                                                              
1:47:41 PM                                                                                                                    
Once spyware is on a computer,  it requires a call to a technical                                                               
support person who  can run several different  programs, but that                                                               
is not always successful.                                                                                                       
1:48:25 PM                                                                                                                    
MR. CLOTHIER said  that despite his division's  best efforts, the                                                               
legislature gets  on average  four to five  machines a  week that                                                               
are infected with spyware - each  taking as much as several hours                                                               
to fix. He  said that, "Spyware prevention and  removal now takes                                                               
up more of our time than virus and spam issues."                                                                                
He said there  isn't any one good solution to  the problem. He is                                                               
trying to focus on educating his  customers. He tells them not to                                                               
click on advertisements to download  software. Programs are being                                                               
developed,  but  they cost  money.  All  indicators lead  him  to                                                               
believe it will be a problem well into the future.                                                                              
1:51:47 PM                                                                                                                    
CHAIR BUNDE asked how enforcement would work.                                                                                   
MR. CLOTHIER replied that programs  can trace things, but that in                                                               
the  vast majority  of cases,  people are  covering their  tracks                                                               
pretty  well. Many  times  they  have moved  on  from a  physical                                                               
location by the time they are found.                                                                                            
CHAIR  BUNDE asked  if  this law  were  passed, would  legitimate                                                               
vendors have to  stop their activity while  the serious criminals                                                               
would still be operating.                                                                                                       
MR. CLOTHIER  replied that license agreements  are made difficult                                                               
on  purpose and  he was  sure vendors  could do  a better  job of                                                               
making  it  clear  what  they  are  intending  to  do  with  free                                                               
software.  "Certainly, it's  such a  mess right  now that  no one                                                               
reads and people who aren't  really savvy to the technology, just                                                               
say yes to everything and trap themselves."                                                                                     
CHAIR BUNDE remarked, "We need  to protect people from themselves                                                               
a little bit - sort of like a seat belt law."                                                                                   
1:53:50 PM                                                                                                                    
BENJAMIN EDELMAN, PhD. student at  Harvard University, said he is                                                               
a  independent researcher  testing  spyware in  his  lab. It  has                                                               
become  quite a  serious problem.  Some  do bona  fide spying  by                                                               
tracking  purchases  and  credit  cards, but  others  track  your                                                               
Websites to  find out which ones  you like to visit  and have pop                                                               
ups - generally  with offers from competitors of  the sites asked                                                               
for. There is nothing legitimate  with putting yourself out there                                                               
as Hertz when you are Budget.                                                                                                   
Hard  enforcement is  needed, because  stealing  credit cards  is                                                               
already against  the law.  There is no  clear benefit  to passing                                                               
another law that would continue to  be broken. Pop ups need to be                                                               
addressed, because  some people think it  is a grey area  - as in                                                               
the   Hertz/Budget  scenario.   It  creates   troubling  economic                                                               
incentives where  everyone and his  brother wants to sneak  on to                                                               
your computer with a pop up ad.                                                                                                 
SB  140 focuses  on pop  up ads.  It says  it's not  a legitimate                                                               
business practice to  show a user an ad for  one company when the                                                               
user asked for  that company's competitor or for  some other site                                                               
by domain name.                                                                                                                 
      So, if I picked up my cell phone and I called 1-800-                                                                      
     American,  trying  to  reach  American  Airlines,  that                                                                    
     wouldn't  be legitimate  for Sprint  to  connect me  to                                                                    
     United  instead  -  even  if   United  offered  a  nice                                                                    
     advertising fee  to my cell  phone company.  That's not                                                                    
     fair competition....                                                                                                       
Courts have  gone both ways,  but this  bill makes it  very clear                                                               
that it can't be done in Alaska.                                                                                                
1:59:41 PM                                                                                                                    
California  passed a  bill last  year  that names  about a  dozen                                                               
specific tactics that are absolutely  abominable - like using one                                                               
person's computer as part of  an attack against another computer.                                                               
They  named a  lot  of  behaviors that  are  problematic, but  he                                                               
thought  it was  ultimately  ineffective  because the  outrageous                                                               
tactics are not  the ones that are used by  the biggest companies                                                               
trying to sneak on to users' computers.                                                                                         
2:02:10 PM                                                                                                                    
Utah's  governor signed  a  bill  into law  on  which  SB 140  is                                                               
modeled.  He emphasized  that constitutional  issues  need to  be                                                               
looked  at. Critics  of bills  like this  might suggest  granting                                                               
extra protection  to trademark holders  and that would,  in turn,                                                               
be bad for  consumers. This would suggest that Hertz  has a right                                                               
to  have  their  site  displayed   on  screen  and  Budget  can't                                                               
interfere with that. That is giving a windfall to Hertz.                                                                        
He  thought it  was important  to  think through  who exactly  is                                                               
being harmed and who is being benefited.                                                                                        
     It seems  to me that  users are receiving the  brunt of                                                                    
     the benefit....  When a user  types in  Hertz.com, it's                                                                    
     quite clear  the user  wants Hertz.  The user  does not                                                                    
     want  10   different  pop  up  ads   for  10  different                                                                    
He  was  surprised  at  the number  of  software  companies  that                                                               
objected to the state of Utah  passing any bill having to do with                                                               
soft  ware.  They   thought  they  should  be   exempt  from  any                                                               
government  regulation,  especially  from any  state  regulation.                                                               
"That seems entirely  wrong to me. People who  make products have                                                               
to comply with laws in all 50 states...."                                                                                       
MR. EDELMAN said that enforcement  is difficult especially if the                                                               
companies are offshore, but the  people who are doing the biggest                                                               
harm are  big companies.  Gator, a big  spyware firm,  is talking                                                               
about going  public. Other spyware  companies are big  firms with                                                               
lobbyists and lawyers.                                                                                                          
     These are  folks we can get  to and to the  extent that                                                                    
     they have  big companies advertising with  them, Budget                                                                    
     Car Rental  or Expedia or  you name  it, we can  get to                                                                    
     their advertisers,  too. It is  not impossible  to find                                                                    
     these folks....                                                                                                            
2:06:36 PM                                                                                                                    
SB 140  has two different  ways to identify  spyware - one  is to                                                               
ask the user  if he is an  Alaskan resident and the  other is for                                                               
the computer's IP address to indicate it's an Alaska address.                                                                   
2:08:26 PM                                                                                                                    
Chair  Bunde  asked   Senator  Therriault  if  he   knew  of  any                                                               
opposition to this bill from companies in Alaska.                                                                               
SENATOR  THERRIAULT  replied  that  he   had  not  heard  of  any                                                               
opposition.  He   thought  the   committee  might  ask   for  the                                                               
difference between a cookie and spyware.                                                                                        
CHAIR BUNDE asked if a cookie is a form of spyware.                                                                             
MR. EDELMAN  replied that  it isn't  a form of  spyware. It  is a                                                               
data file  that a  Website can  place on  a person's  computer so                                                               
that it can store information, like  a password. They do not slow                                                               
down a computer, make it  crash or send your information anywhere                                                               
else. They don't  cause problems. There is no need  to talk about                                                               
cookies in a spyware bill.                                                                                                      
SENATOR  DAVIS   asked  what  Mr.  Edelman   thought  about  this                                                               
particular bill.                                                                                                                
MR.  EDELMAN  said he  thinks  it  is  a  strong bill;  it  makes                                                               
specific people  and entities  accountable. It  has a  clear plan                                                               
for  enforcement -  by private  parties  under existing  statutes                                                               
pertaining to  unfair competition  and consumer  protection. Some                                                               
legislation in  other states  places the burden  on the  state to                                                               
hire  investigators and  lawyers to  figure out  who the  spyware                                                               
purveyors are.   The harm is actual and targets  a lot of people;                                                               
it is a grey problem and courts haven't handled it consistently.                                                                
CHAIR BUNDE thanked  him for his testimony and said  SB 140 would                                                               
be addressed again on Thursday.                                                                                                 
2:15:36 PM Recess 2:19:37 PM                                                                                                
          SB 137-EVICTING INSTITUTIONAL PROPERTY USERS                                                                      
CHAIR CON BUNDE announced SB 137 to be up for consideration.                                                                    
JOE  MICHEL,   staff  to  Senator  Seekins,   sponsor,  said  the                                                               
University of Alaska requested this  legislation which stems from                                                               
a few cases where disruptive  students have used the court system                                                               
to stall  evictions from  their unit  until it's  most convenient                                                               
for  them. The  students' infractions  were way  beyond what  was                                                               
allowed  under their  student  housing  contract. The  University                                                               
needed to remove  these students from their  housing before their                                                               
disruptive behavior started affecting other students.                                                                           
He said this bill is an  attempt to correct a discrepancy between                                                               
legislative intent and  some recent lower court  decisions on the                                                               
Uniform Landlord Tenant Act in AS 34.03.330. It reads:                                                                          
     'Unless  created  to  avoid  the  application  of  this                                                                    
     chapter,  the following  arrangements are  not governed                                                                    
     by this  chapter: residence  at an  institution, public                                                                    
     or private, if incidental  to detention or provision of                                                                    
     medical  geriatric,  educational counseling,  religious                                                                    
     or other similar services.'  And [this] basically means                                                                    
     public   service   institutional   entities   such   as                                                                    
     hospitals,  schools,   counseling  centers   or  higher                                                                    
     educational establishments are  not compatible with the                                                                    
     heightened  protections that  were  designed under  the                                                                    
     Landlord Tenant Act.                                                                                                       
He said  the University  of Alaska  has put  into place  a three-                                                               
strike  system intending  to work  with students  regarding their                                                               
university housing. There's  a review and an  appeals process for                                                               
major  infractions.  The university  has  shown  a dedication  to                                                               
working with students who are not observing housing rules.                                                                      
2:23:48 PM                                                                                                                    
MIKE  SFRAGA, University  of Alaska,  said it  is their  role and                                                               
mission   to  serve   its  students.   Some  students   make  the                                                               
environment  not as  productive  as might  be.  Processes are  in                                                               
place that allow the university to do a case by case review.                                                                    
     It is  certainly not the  intent of  any of us  to make                                                                    
     undue challenges  to our students in  terms of hurdles.                                                                    
     In fact, we look to  do things on a case-by-case basis,                                                                    
     although within a framework,  to address issues because                                                                    
     we don't want to treat all students the same way....                                                                       
     So,  we have  those  processes that  were presented  to                                                                    
     you.  These  are   internal  processes,  administrative                                                                    
     guidelines that we follow.... If  we find that it is in                                                                    
     the  best interests  of the  institution, our  students                                                                    
     and a  particular student,  we will  ask them  to leave                                                                    
     the  residence. The  student  has the  right  in a  due                                                                    
     process  procedure   to  appeal  that  to   a  dean  of                                                                    
     students. Then certainly the dean  of students can make                                                                    
     the final decision.                                                                                                        
If the  student does  not agree with  the final  appeal decision,                                                               
they can go to superior court for an appeal as well.                                                                            
     I  guess we  would like  to emphasize  that this  is an                                                                    
     educational  institution.   These  are   not  arbitrary                                                                    
     dismissals of  students. There is  a process  in place.                                                                    
     We follow that process and  we have a responsibility to                                                                    
     make  sure   that  our  environment  is   conducive  to                                                                    
     education while maintaining the  processes in place and                                                                    
     understanding  that   our  role   is  to   educate  out                                                                    
2:26:23 PM                                                                                                                    
MIKE HOSTINA,  University of Alaska,  said he would  answer legal                                                               
questions. He said:                                                                                                             
     Our  concern  is  we  ended  up in  a  few  cases  with                                                                    
     students really  getting two bites  of the  apple. They                                                                    
     follow   the   administrative  procedure   within   the                                                                    
     university.  If they  don't  like  that outcome,  they,                                                                    
     then, go to  court to seek to block  their removal from                                                                    
     housing.  We end  up with  multiple processes  going on                                                                    
     and I think it was you,  Mr. Chairman, who hit the nail                                                                    
     right on  the head.  We have some  school-house lawyers                                                                    
     here on  campus and they've  cost us literally  tens of                                                                    
     thousands  of   dollars  and   hundreds  of   hours  of                                                                    
     administrative  time   to  accomplish   what  everybody                                                                    
     agrees, even  the courts agree, should  be a relatively                                                                    
     simple process. But, the courts  have felt obligated to                                                                    
     require an eviction action, because  of the language of                                                                    
     the current forcible entry and detainer statute.                                                                           
CHAIR BUNDE asked how many students have been a problem.                                                                        
MR. HOSTINA  said that just  one student had cost  the university                                                               
tens of  thousands dollars and hundreds  of hours of time  in the                                                               
two years he has been there.                                                                                                    
CHAIR BUNDE  saw no further questions  and said he would  hold SB
137 for another hearing.                                                                                                        
                  SB 130-WORKERS' COMPENSATION                                                                              
CHAIR CON BUNDE announced SB 130 to be up for consideration.                                                                    
BARBARA  WILLIAMS,  Alaska  Injured  Workers  Alliance,  did  not                                                               
support SB  130, because rolling back  the rates would lead  to a                                                               
bigger shortage of physicians to  treat injured workers. Further,                                                               
she said  it didn't address  the problems with the  fee schedule.                                                               
Some  health care  providers  the Alliance  surveyed  hold a  fee                                                               
schedule and  regularly have their  bills reduced below  the rate                                                               
set out in it. She stated:                                                                                                      
     This  would mean  that  globally,  if insurance  review                                                                    
     companies  are reducing  payments,  there  is no  clear                                                                    
     idea of how much a  company is saving on medical costs.                                                                    
     What it  does reveal  to us is  that the  medical costs                                                                    
     are already being  cut. It also tells us  that not only                                                                    
     are  insurance companies  saving  money,  but they  are                                                                    
     providing  little  information  on what  those  savings                                                                    
     might be.                                                                                                                  
     We  also  have  no   enforcement  of  the  current  fee                                                                    
     schedule.  It  would appear  that  there  is more  cost                                                                    
     shifting  here than  enforcement  of  this current  fee                                                                    
     schedule.  We need  reliable  data  and information  to                                                                    
     address these costs.                                                                                                       
Her survey has information from an audit review indicating that                                                                 
the bills are being reduced at Providence Hospital. Regarding                                                                   
medical benefits, she said:                                                                                                     
     We do not  believe that a preferred provider  list or a                                                                    
     drug   list   would   be   appropriate   for   Workers'                                                                    
     Compensation. This  further limits  the care  and drugs                                                                    
     workers   could  potentially   receive  and   insurance                                                                    
     companies now  have control over what  they are willing                                                                    
     to  pay  for. The  current  law  does not  provide  for                                                                    
     preauthorization  of  service  and pushing  a  list  of                                                                    
     providers  and   drugs  would  further   complicate  an                                                                    
     already complex process.                                                                                                   
     Equally, the  injured employees  would like  to suggest                                                                    
     the employer  is to be  held to an  independent medical                                                                    
     evaluator provider list. Injured  workers would like to                                                                    
     see  only one  doctor at  a time  unless a  referral is                                                                    
     provided.  Right now,  currently,  injured workers  are                                                                    
     subject to panels of doctors paid for by employers.                                                                        
     Adjudication of  claims - We  do not feel  the proposed                                                                    
     education  would   better  serve  injured   workers  or                                                                    
     employers. There  is currently no education  process to                                                                    
     explain  to them  how they  should  participate in  the                                                                    
     adjudication process.  Complex changes in  the proposed                                                                    
     bill will, in our view,  increase time delay appeals to                                                                    
     about the  same time  that we're currently  looking at.                                                                    
     Additionally, we do not feel  that an over panel should                                                                    
     have the authority to set  precedence over Superior and                                                                    
     Supreme  Court. The  balance must  be  restored to  the                                                                    
     impartial  process  to create  a  fair  chance for  all                                                                    
     parties. We're giving  a lot of power  to an unbalanced                                                                    
     board or division and we feel this is wrong.                                                                               
     Retraining benefits  - We feel that  a clear retraining                                                                    
     process  that  provides  results  for  injured  workers                                                                    
     would  be of  greater benefit  than the  proposed bill.                                                                    
     Injured  workers  know  little  or  nothing  about  the                                                                    
     retraining process and this will  add more red tape and                                                                    
     confusion to  an already complex  part of  the benefits                                                                    
     available   to  injured   workers.   Workers  need   to                                                                    
     understand  and  not  guess about  what  benefits  they                                                                    
     Overall,  we know  that the  personnel in  the division                                                                    
     have  little  or no  training  on  the complex  hearing                                                                    
     process, the  Workers' Compensation  Act and  little or                                                                    
     no  medical  training.  Yet,  they  must  make  complex                                                                    
     decisions based  on the  information that  is available                                                                    
     to them. We  need to encourage training  for all staff,                                                                    
     make  benefits more  clear and  base rate  increases on                                                                    
     tangible,  factual  data.  We   do  not  need  to  make                                                                    
     sacrifices for the  sake of expediency, but  we do need                                                                    
     to  make  informed  changes based  on  facts.  We  have                                                                    
     little  or  no  information on  the  complex  [indisc.]                                                                    
     medical costs, rehabilitation,  retraining benefits and                                                                    
     know the hearing process is far from impartial....                                                                         
     Legal counsel  would not  become more  available unless                                                                    
     defense costs  are fully reported.  Plaintiff attorneys                                                                    
     are making  approximately 50 cents on  the dollar while                                                                    
     defense attorneys get dollar  for dollar what they bill                                                                    
     for. Why  not drop the  defense costs to match  that of                                                                    
     injured workers to contain costs?                                                                                          
     Insurance  premiums  should  be  frozen  until  we  can                                                                    
     figure  out  this  mess  so   that  employers  are  not                                                                    
     overcharged   for  their   insurance  product.   Hiring                                                                    
     advocates in  theory is  good, but  who wants  the job?                                                                    
     Legal  services is  a non-profit  and  Alaska pro  bono                                                                    
     programs are  not geared for Workers'  Compensation. At                                                                    
     minimum, it could potentially take  up to two years for                                                                    
     them to get  the nuances of the program as  well as the                                                                    
     practices and procedures. We urge you not to pass this                                                                     
MS.  WILLIAMS  said that  a  bill  from Providence  Hospital  was                                                               
$14,000  and  by  not  utilizing  the  proper  fee  schedule,  it                                                               
collected only $11,000. She said  there is no mechanism to report                                                               
accurate figures to the Division of Workers' Compensation.                                                                      
2:37:57 PM                                                                                                                    
CHAIR BUNDE asked who belongs to her organization.                                                                              
MS. WILLIAMS replied that the  Alaska Injured Workers Alliance is                                                               
a  non-profit  organization  educating  injured  workers.  It  is                                                               
partnering  with Alaska  Public  Interest  Research Group  Alaska                                                               
Public Interest  Research Group (AKPIRG)  on this  issue, because                                                               
she feels there are consumer issues involved.                                                                                   
2:38:56 PM                                                                                                                    
JERRY FLOCK,  injured worker,  said he  has fallen  through every                                                               
possible crack  in the current  system. "Because my  employer was                                                               
uninsured,  my employer  got to  pick what  medical it  would and                                                               
would not pay for."                                                                                                             
He said there  have been problems with  workers' compensation for                                                               
a  while. An  audit report  dated October  31, 1999,  was written                                                               
about  the insufficiencies  of workers'  compensation. SB  130 is                                                               
just  a bandaid.  The Division  of Workers'  Compensation already                                                               
has police powers. In his case,  the state had to pay $10,000 for                                                               
an operation,  because his employer wasn't  insured. His employer                                                               
had an  annual edit error  and there is  a $10,000 fine  for that                                                               
and $100 per day fine for 10 days afterwards.                                                                                   
     That  means this  employer owes  the state  a total  of                                                                    
     $77,000. Will  the state go  for it? No, they  don't go                                                                    
     for it. They  don't even ask for it, but  yet the state                                                                    
     will  come after  me for  a $10,000  surgery that  they                                                                    
     paid for.                                                                                                                  
2:44:58 PM                                                                                                                    
MR.  FLOCK discussed  the penalty  section and  how his  employer                                                               
allowed his  insurance to lapse 18  times, but was still  able to                                                               
get a business license.                                                                                                         
2:46:03 PM                                                                                                                    
CHAIR BUNDE  said his  point is well-taken.  He said  even though                                                               
Mr. Lisankie couldn't  comment on Mr. Flock's case,  he wanted to                                                               
know what  enforcement tools the  division has and how  well they                                                               
are being used on people who drop their insurance.                                                                              
2:46:28 PM                                                                                                                    
PAUL  LISANKIE,  Director,   Division  of  Workers  Compensation,                                                               
replied that  he didn't have  the specifics of Mr.  Flock's case,                                                               
but  it  is well-known  in  the  division.  This  is why  he  has                                                               
mentioned to the  committee that the division needs  some kind of                                                               
a hammer  to get on top  of an uninsured employer  quickly rather                                                               
than to try to come in after the  fact and clean up the mess. Mr.                                                               
Flock's testimony indicated  how difficult it is  to get anything                                                               
once a problem has transpired.                                                                                                  
He  disagreed that  this bill  doesn't change  anything, however.                                                               
Under this bill, the director of  the division could order a stop                                                               
work order immediately,  as opposed to what happens  now where an                                                               
investigator  comes back,  gets  a hearing  scheduled before  the                                                               
Workers'  Compensation  Board and  then  there  is a  hearing  to                                                               
decide if the employer is still uninsured at that moment.                                                                       
     I have  no doubt that  there are employers that  do run                                                                    
     without insurance  for a  period of  time. If  they get                                                                    
     detected, their normal response  oftentimes is to bring                                                                    
     their insurance current  and go forward. That  can be a                                                                    
     recurrent  problem  and  that  would  be  some  of  the                                                                    
     factors   that   would   be   considered   under   this                                                                    
     bill...that the  board could consider how  much to fine                                                                    
     that employer.                                                                                                             
     I think also  based on Mr. Flock's  testimony, which is                                                                    
     eloquent  as far  as what  happens when  you get  court                                                                    
     orders and  then you try  to enforce them in  the court                                                                    
     system  against  somebody  who  may  or  may  not  have                                                                    
2:49:23 PM                                                                                                                    
CHAIR  BUNDE remarked  that  it  is hard  to  collect money  from                                                               
someone who  doesn't have  it. He said  he would  continue taking                                                               
public  testimony on  Thursday and  would address  a CS  one week                                                               
from today.  There being no  further business to come  before the                                                               
committee, he adjourned the meeting at 2:51:19 PM.                                                                            

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