Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/25/2010 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= SB 258 DENTAL CARE INSURANCE TELECONFERENCED
Moved CSSB 258(L&C) Out of Committee
*+ SCR 16 ECONOMIC DEVELOPMENT PLANNING COMMISSION TELECONFERENCED
Heard & Held
*+ SB 303 WORKERS' COMPENSATION AND CONTRACTORS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 25, 2010                                                                                         
                           1:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Joe Paskvan, Chair                                                                                                      
Senator Joe Thomas, Vice Chair                                                                                                  
Senator Kevin Meyer                                                                                                             
Senator Con Bunde                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bettye Davis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE CONCURRENT RESOLUTION NO. 16                                                                                             
Creating  and  relating  to  the  Economic  Development  Planning                                                               
Commission.                                                                                                                     
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
SENATE BILL NO. 258                                                                                                             
"An  Act prohibiting  health care  insurers  that provide  dental                                                               
care coverage  from setting  a minimum  age for  receiving dental                                                               
care coverage, allowing  those insurers to set a  maximum age for                                                               
receiving dental  care coverage  as a dependent,  and prohibiting                                                               
those insurers  from setting fees  that a dentist may  charge for                                                               
dental services not covered under the insurer's policy."                                                                        
                                                                                                                                
     - MOVED CSSB 258(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 303                                                                                                             
"An Act relating to a  subcontractor's, contractor's, and project                                                               
owner's liability for workers'  compensation, to sole proprietors                                                               
and partnerships  without employees, and to  managers or managing                                                               
members  of limited  liability companies,  and excluding  certain                                                               
persons  from  liability for  securing  the  payment of  workers'                                                               
compensation  benefits   to  employees;  and  providing   for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SCR 16                                                                                                                  
SHORT TITLE: ECONOMIC DEVELOPMENT PLANNING COMMISSION                                                                           
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/15/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/15/10       (S)       L&C, FIN                                                                                               
03/25/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 258                                                                                                                  
SHORT TITLE: DENTAL CARE INSURANCE                                                                                              
SPONSOR(s): SENATOR(s) HUGGINS                                                                                                  
                                                                                                                                
02/05/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/05/10       (S)       HSS, L&C                                                                                               
02/15/10       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
02/15/10       (S)       Moved SB 258 Out of Committee                                                                          
02/15/10       (S)       MINUTE(HSS)                                                                                            
02/17/10       (S)       HSS RPT   3DP 1NR                                                                                      
02/17/10       (S)       DP: DAVIS, ELLIS, THOMAS                                                                               
02/17/10       (S)       NR: PASKVAN                                                                                            
03/02/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/02/10       (S)       Heard & Held                                                                                           
03/02/10       (S)       MINUTE(L&C)                                                                                            
03/25/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 303                                                                                                                  
SHORT TITLE: WORKERS' COMPENSATION AND CONTRACTORS                                                                              
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/08/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/08/10       (S)       L&C, JUD                                                                                               
03/25/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JEFF STEPP                                                                                                                      
Staff to Senator Paskvan                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SCR 16.                                                                                      
                                                                                                                                
ERIN HARRINGTON                                                                                                                 
Staff to Representative Austerman                                                                                               
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Explained provisions in SCR 16.                                                                           
                                                                                                                                
ROB ERAL                                                                                                                        
Staff to Representative Herron                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SJR 16.                                                                                      
                                                                                                                                
SHARON LONG                                                                                                                     
Staff to Senator Huggins                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 258 for the sponsor.                                                                      
                                                                                                                                
DR. JOHN WOHLER, DDS, representing himself                                                                                      
 and the Alaska Dental Society                                                                                                  
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported CSSB 278().                                                                                     
                                                                                                                                
DR. DAVID LOGAN, DDS                                                                                                            
Alaska Dental Society                                                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported CSSB 278().                                                                                     
                                                                                                                                
TRENA HEIKES, Director                                                                                                          
Division of Workers' Compensation                                                                                               
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Neutral position on SB 303.                                                                               
                                                                                                                                
MICHELLE KAHLE, representing herself                                                                                            
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 303.                                                                                         
                                                                                                                                
JOHN LEWIS, President                                                                                                           
Iron Workers Local 751                                                                                                          
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 303.                                                                                         
                                                                                                                                
KEVIN DOUGHERTY                                                                                                                 
Alaska Laborers                                                                                                                 
Eagle River, AK                                                                                                                 
POSITION STATEMENT: Supported SB 303.                                                                                         
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:34:27 PM                                                                                                                    
CHAIR JOE PASKVAN  called the Senate Labor  and Commerce Standing                                                             
Committee meeting  to order at 1:34  p.m. Present at the  call to                                                               
order were Senators Bunde, Meyer, and Paskvan.                                                                                  
                                                                                                                                
        SCR 16-ECONOMIC DEVELOPMENT PLANNING COMMISSION                                                                     
                                                                                                                                
1:35:26 PM                                                                                                                    
CHAIR PASKVAN announced SCR 16 to be up for consideration.                                                                      
                                                                                                                                
JEFF STEPP, staff to Senator  Paskvan, said this resolution is an                                                               
opportunity to  follow through on  a recommendation  mentioned in                                                               
an  earlier committee  overview  of economic  development in  the                                                               
state  of  Alaska. He  recalled  that  one  thing that  has  been                                                               
universally identified  among the states  is that input  from the                                                               
private sector  is lacking. In collaborating  with Representative                                                               
Austerman's  office   the  Labor   and  Commerce   Committee  has                                                               
submitted SCR 16,  the main goal of which is  to facilitate input                                                               
from the private  sector in the implementation  of state economic                                                               
development policy.  He said a committee  substitute (CS) arrived                                                               
in their  office just a  few minutes before the  meeting started.                                                               
But they  would talk about  the changes and  have the CS  and the                                                               
fiscal note for the committee next time.                                                                                        
                                                                                                                                
1:38:06 PM                                                                                                                    
SENATOR JOE THOMAS joined the committee.                                                                                        
                                                                                                                                
1:38:23 PM                                                                                                                    
ERIN HARRINGTON, staff to Representative  Austerman, said she had                                                               
been  working with  Mr. Stepp  on this  initiative and  explained                                                               
that SCR  16 creates an Economic  Development Planning Commission                                                               
within the Legislature.  It would be a 10-member  task force that                                                               
would  work to  integrate the  Legislature into  some of  the on-                                                               
going economic  development initiatives in the  state. In January                                                               
efforts were discussed such as  Alaska Forward and the Governor's                                                               
Legacy Initiative. The  idea is to make sure  the Legislature has                                                               
the  opportunity  to participate  in  those  and particularly  to                                                               
participate  in the  implementation of  any ideas  that developed                                                               
through the  processes. She said  her presentation  addresses the                                                               
expected CS.                                                                                                                    
                                                                                                                                
1:40:08 PM                                                                                                                    
This   commission   would   report   suggested   strategies   and                                                               
legislation  to the  Governor, the  Legislative Budget  and Audit                                                               
Committee  (LB&A),   and  to   the  Legislative   Council.  Their                                                               
activities would sunset  at the end of fiscal year  2012. They do                                                               
not want to duplicate any  long term economic development efforts                                                               
that might  be created through  Alaska Forward or others,  but to                                                               
just create a very specific  working group within the Legislature                                                               
so it  can be engaged  and implement  them as the  processes move                                                               
forward.                                                                                                                        
                                                                                                                                
MS.  HARRINGTON said  SCR 16  allows the  Legislature to  monitor                                                               
ongoing  initiatives  and  it  creates  a  mechanism  for  it  to                                                               
collaborate  with  the  private   sector  on  issues  related  to                                                               
economic  development,  and  to  identify  where  legislation  is                                                               
necessary.  Representative Austerman's  work  suggested that  the                                                               
state isn't  going to necessarily  lead economic  development but                                                               
in  many  cases  it  has  the   tools  to  support  it.  It  also                                                               
demonstrates  the Legislature's  ongoing  commitment to  economic                                                               
development initiatives.                                                                                                        
                                                                                                                                
Finally,  it  responds  to   some  identified  shortcomings  from                                                               
previous economic  development efforts.  She referenced  a letter                                                               
from  Senator  Torgerson which  included  a  copy of  the  Alaska                                                               
Forward  Phase 1  Report noting  that previous  efforts sometimes                                                               
fell  apart   at  the  implementation   stage  either   with  the                                                               
administration  or  because  legislative action  was  needed  but                                                               
there hadn't  been good communication  about what that  might be.                                                               
This tries to address that proactively.                                                                                         
                                                                                                                                
MS.  HARRINGTON said  the current  processes are  Alaska Forward,                                                               
which  has  been  organized  with   the  Alaska  Partnership  for                                                               
Economic  Development,  and the  Legacy  Process  which has  been                                                               
running out of  the Governor's Office. Alaska  Forward was funded                                                               
with  $500,000  from  the  Denali  Commission  to  support  their                                                               
efforts  to do  a statewide  strategic plan  related to  economic                                                               
development. Phase 1 is done and  they are in the fundraising and                                                               
kick off stage  of phase 2. In phase 1  they spent only $350,000-                                                               
375,000, so they  have some money left over;  they'll be spending                                                               
roughly twice that on the next stage.                                                                                           
                                                                                                                                
The Legacy  Process that was  established by the  Executive Order                                                               
from the  former governor  has been  continued in  under Governor                                                               
Parnell's leadership.  This process  is morphing and  is expected                                                               
to run  parallel to the Alaska  Forward process so that  they are                                                               
mutually  supportive.   Other  regional  and   industry  specific                                                               
economic development  efforts are going  on in the state  and are                                                               
mentioned in  the report. Kinds  of opportunities  the commission                                                               
might identify  are tax incentives, loan  programs, and targeting                                                               
economic clusters  that could benefit from  additional support or                                                               
need an additional boost from state efforts.                                                                                    
                                                                                                                                
She  said  the Commission  would  work  to draft  legislation  in                                                               
advance  of each  of  the two  upcoming  legislative sessions  so                                                               
action  could  be  taken  if   appropriate.  This  could  include                                                               
restructuring of departments, tax incentive or loan programs.                                                                   
                                                                                                                                
1:45:40 PM                                                                                                                    
ROB ERAL, staff  to Representative Herron, remarked  that slide 7                                                               
showed the  various appointment  authorities for  the Commission;                                                               
the  Finance   co-chairs  have  a   large  roll.  The   last  two                                                               
commissioners are  automatically ex officio members.  All members                                                               
would serve until the sunset  date. They just received the Alaska                                                               
Forward Phase  1 report  that stated  the commission  could start                                                               
work  April 30  at  the earliest.  The  first reporting  deadline                                                               
would at  the beginning of  the 2011  session. Phase 2  of Alaska                                                               
Forward  will  be a  summit  in  the  spring  or fall.  A  second                                                               
reporting  deadline is  before the  2012 session.  Then it  would                                                               
sunset June 30, 2012.                                                                                                           
                                                                                                                                
He said  that all agencies found  a lack of cohesive  thinking on                                                               
economic development in Alaska and  think the commission could be                                                               
a  filter and  a bridge  to  take that  information from  diverse                                                               
sources and  present it  to the  Legislature. Legislators  on the                                                               
commission  could  have  access  to Legislative  Legal  to  draft                                                               
legislation and could recommend policy changes to the governor.                                                                 
                                                                                                                                
MR. EARL said the forthcoming  fiscal note will be about $130,000                                                               
- most  of it for  commission staff at range  21, step C,  with a                                                               
little bit of travel per diem.                                                                                                  
                                                                                                                                
1:48:29 PM                                                                                                                    
SENATOR BUNDE  asked if  it wouldn't be  more efficient  to bring                                                               
the report straight to the Labor and Commerce chairs.                                                                           
                                                                                                                                
MS. HARRINGTON  responded that  Legislative Legal  suggested that                                                               
LB&A  interact  with  administration  on issues  related  to  the                                                               
budget  and  agencies, and  the  Legislative  Council, being  the                                                               
policy body for the Legislature,  could perhaps provide a broader                                                               
reach. It is open to discussion.                                                                                                
                                                                                                                                
SENATOR  BUNDE said  the  creation of  this  commission seems  to                                                               
anticipate  proposing some  legislation, and  they should  remove                                                               
filters rather  than adding additional  ones. If  the Legislature                                                               
is  not in  session,  perhaps Legislative  Council  might be  the                                                               
right route. He didn't understand LB&A's role in this.                                                                          
                                                                                                                                
CHAIR PASKVAN said  they are looking for the  comments of private                                                               
enterprise   and  he   thought  that   Labor  and   Commerce  was                                                               
appropriately involved in that.                                                                                                 
                                                                                                                                
1:50:22 PM                                                                                                                    
SENATOR BUNDE said  he hears from business  and enterprise people                                                               
all the  time and asked why  these business people can't  talk to                                                               
their elected representatives. Wouldn't that be a lot cheaper?                                                                  
                                                                                                                                
MS.  HARRINGTON  agreed,  but  the  concern  this  resolution  is                                                               
attempting to address is the one  that has been vocalized that at                                                               
times it doesn't seem that  the three stakeholders in these kinds                                                               
of  processes are  equally  engaged. Sometimes  in  the past  the                                                               
administration and public have been  engaged they have been told,                                                               
but the  Legislature hasn't been.  Or the Legislature  and public                                                               
have been engaged but the  administration hasn't. This resolution                                                               
seeks to  address that concern  by assuring that  the Legislature                                                               
has  a direct  route  of engagement  in  implementation of  these                                                               
processes.                                                                                                                      
                                                                                                                                
SENATOR BUNDE  said you're battling  the inherent  three branches                                                               
of government.                                                                                                                  
                                                                                                                                
SENATOR  MEYER  said  Anchorage   has  the  Economic  Development                                                               
Association that  has legislators as  ex officio members  as well                                                               
as the Anchorage Assembly.                                                                                                      
                                                                                                                                
CHAIR  PASKVAN   said  Fairbanks  has  an   Economic  Development                                                               
Authority, as well.                                                                                                             
                                                                                                                                
SENATOR  MEYER said  the Valley  does, too;  so the  bulk of  the                                                               
population is already  covered by some economic  group. He shared                                                               
Senator Bunde's  concern about having  so many  commissions. What                                                               
did   she   think   about  using   local   economic   development                                                               
organizations?                                                                                                                  
                                                                                                                                
MS. HARRINGTON answered  that was an excellent  point. The Alaska                                                               
Partnership  for Economic  Development (APED)  has been  the lead                                                               
organization  on  the  Alaska Forward  planning  process  and  is                                                               
actually  an  umbrella  organization  of  these  regional  Alaska                                                               
Regional   Development  Organizations   (ARDORS).  The   lack  of                                                               
integration  on statewide  concepts  was identified  and that  is                                                               
what led  them to  the development of  the APED  organization and                                                               
the Alaska  Forward move. The  president of  AEDC is on  the APED                                                               
Board,  Marty  Mativa  from  the   Mat-Su  RDC  is  actually  the                                                               
president of APED  right now. This commission is  not intended to                                                               
replace the  leadership of that organization  and their statewide                                                               
vision; it is intended to make  sure they, the private sector and                                                               
the groups  that are going to  be involved in Alaska's  long term                                                               
economic development and  have a direct line of  contact with the                                                               
Legislature and,  moreover, have  some of  the tools  and support                                                               
that would  be needed in  actually creating legislation  where it                                                               
would be appropriate.                                                                                                           
                                                                                                                                
1:55:05 PM                                                                                                                    
SENATOR THOMAS said he has  heard concerns that there hasn't been                                                               
as much activity  as one would expect when you  have a Department                                                               
of Economic  Development. Making sure services  aren't duplicated                                                               
would be  helpful as  well as  figuring out  why the  state isn't                                                               
moving forward as fast as it should be.                                                                                         
                                                                                                                                
1:57:54 PM                                                                                                                    
CHAIR PASKVAN  recognized Commissioner Curtis  Thayer, Department                                                               
of Commerce, Community and  Economic Development (DCCED), sitting                                                               
in the audience. He said SCR 16 would be held for further work.                                                                 
                                                                                                                                
                  SB 258-DENTAL CARE INSURANCE                                                                              
                                                                                                                                
1:58:36 PM                                                                                                                    
CHAIR PASKVAN  announced SB  258 to be  up for  consideration. He                                                               
moved to adopt  CSSB 258() 26-LS1418\R. There  were no objections                                                               
and it was so ordered.                                                                                                          
                                                                                                                                
1:59:58 PM                                                                                                                    
SHARON LONG,  staff to Senator  Huggins, sponsor of SB  258, said                                                               
the committee  substitute (CS) is  a result of  a lot of  work on                                                               
this bill since it was  last heard. The dental professionals, the                                                               
insurance industry and small business  worked together to clarify                                                               
the  provisions  of  the  bill   and  craft  a  compromise  which                                                               
satisfies  the  original aims  of  the  measure. She  drew  their                                                               
attention  to  a  new  letter from  the  National  Federation  of                                                               
Independent  Business Alaska  removing  their  opposition to  the                                                               
bill.                                                                                                                           
                                                                                                                                
2:01:07 PM                                                                                                                    
DR. JOHN WOHLER, DDS, representing  himself and the Alaska Dental                                                               
Society,  Fairbanks,  said  he  thought  that  CSSB  278()  would                                                               
benefit  everybody   involved.  The  bill  adds   an  option  for                                                               
contracts  with a  dentist to  limit fees  on non-covered  dental                                                               
services under managed care. Dental  insurances will benefit from                                                               
increased  access  to  providers  who  otherwise  nationally  are                                                               
opting out of these contracts.                                                                                                  
                                                                                                                                
This will give dentists a  lot more options within their practice                                                               
to incorporate good contract language  and policies. Managed care                                                               
patients will be  able to stay with their current  dentist and it                                                               
will reduce  barriers to  access in  Alaska by  keeping providers                                                               
from opting out of the network.                                                                                                 
                                                                                                                                
DR.  WOHLER   said  the  CS   is  also  going  to   increase  the                                                               
predictability of  costs for services from  network providers and                                                               
the  costs will  be  easier  for the  dental  patient to  follow.                                                               
With this language they expect to see more dentists opting in.                                                                  
                                                                                                                                
He  said that  patients who  don't  have managed  care will  also                                                               
benefit because it  will reduce cost shifting.  He explained that                                                               
a lot  of times when dentists  get dental work or  health care at                                                               
cost (think of emergency rooms) the  money doesn't go away, it is                                                               
just  shifted  on to  other  paying  patients. The  managed  care                                                               
insurance companies themselves are  going to benefit because they                                                               
will have  a larger number  of participating providers  that they                                                               
can  market  to their  audience  and  have  a better  product  to                                                               
market.  They will  also have  an ability  to market  savings and                                                               
increase  provider participation  under  managed  care plans  for                                                               
those providers who  do opt in to fee  scheduling for non-covered                                                               
services.                                                                                                                       
                                                                                                                                
Obviously, he said  the dentist benefits from  having the ability                                                               
to join the network without  having the insurance company dictate                                                               
fees for  services that aren't being  paid a benefit. If  they do                                                               
already participate  in a contract they  have a choice to  opt in                                                               
or  opt  out  of  a  contract  that  caps  fees  for  non-covered                                                               
services.                                                                                                                       
                                                                                                                                
2:05:05 PM                                                                                                                    
SENATOR BUNDE  asked if the  recently passed federal  health care                                                               
bill includes  dental care and if  it does how would  that impact                                                               
this legislation.                                                                                                               
                                                                                                                                
MR. WOHLER replied that he didn't think it affected dentists.                                                                   
                                                                                                                                
2:06:11 PM                                                                                                                    
DR. DAVID LOGAN, DDS, Alaska  Dental Society, Juneau, agreed with                                                               
Dr. Wohler's comments. He said  the CS represents a collaborative                                                               
effort  between the  Dental Society  and the  industry. They  are                                                               
happy with the CS and said he would answer questions.                                                                           
                                                                                                                                
CHAIR PASKVAN found no questions.                                                                                               
                                                                                                                                
2:07:21 PM                                                                                                                    
CHAIR PASKVAN closed public testimony.                                                                                          
                                                                                                                                
2:08:16 PM                                                                                                                    
SENATOR THOMAS moved to report  CSSB 258(L&C) from committee with                                                               
individual  recommendations  and  attached zero  fiscal  note(s).                                                               
There were no objections and it was so ordered.                                                                                 
                                                                                                                                
2:08:54 PM                                                                                                                    
CHAIR PASKVAN called an at ease for signing from 2:08-2:11 p.m.                                                                 
                                                                                                                                
          SB 303-WORKERS' COMPENSATION AND CONTRACTORS                                                                      
                                                                                                                                
2:11:25 PM                                                                                                                    
CHAIR  PASKVAN called  the  meeting  back to  order  at 2:11  and                                                               
announced  SB 303  to be  up for  consideration. He  said he  was                                                               
advancing this particular legislation  and would be presenting it                                                               
to the committee. He said:                                                                                                      
                                                                                                                                
     The intent  of this  bill is to  address responsibility                                                                    
     and  accountability, which  are  core  values that  are                                                                    
     promoted by  SB 303. I  submit that this  bill advances                                                                    
     conservative principles and  fundamental capitalism. It                                                                    
     does this  by requiring owners and  general contractors                                                                    
     and others to  comply with the basic  principle "if you                                                                    
     break it you pay for it."                                                                                                  
                                                                                                                                
     Under this,  if an  owner or  general contractor  is 25                                                                    
     percent  at  fault they  are  only  responsible for  25                                                                    
     percent of the injury damages.                                                                                             
                                                                                                                                
He pointed out  that as a nation  250 years ago, we  fought a war                                                               
challenging  the concept  that "the  king can  do no  wrong." Our                                                               
nation  was formed  based upon  the concept  that our  government                                                               
should  be  responsible  and  accountable  to  its  citizens  for                                                               
government's  wrongful conduct.  In Alaska,  the general  concept                                                               
has been that  immunity of our sovereign is  the exception rather                                                               
than the  rule. In  other words,  governments may  be responsible                                                               
for  their  wrongful conduct  to  the  citizens of  Alaska.  When                                                               
wrongful  conduct exists,  responsibility and  accountability for                                                               
that  wrongful conduct  should attach.  SB  303 removes  immunity                                                               
which  protects the  privileged  from the  consequences of  their                                                               
wrongful conduct.                                                                                                               
                                                                                                                                
SENATOR  BUNDE  said   he  is  a  veteran   of  several  workers'                                                               
compensation vigorous  discussions, and  asked if he  was correct                                                               
in  believing that  in 2004  the Legislature  said subcontractors                                                               
(subs)  have  to be  responsible  for  workers' compensation  for                                                               
their  employees  and  the  generals,  therefore,  would  not  be                                                               
responsible. And that Senator Paskvan's  goal is to say that subs                                                               
aren't responsible but the generals are.                                                                                        
                                                                                                                                
CHAIR PASKVAN  said no. "The intent  is is that each  employer is                                                               
responsible for  complying with  the law,  which means  that they                                                               
must have workers' compensation coverage."                                                                                      
                                                                                                                                
SENATOR BUNDE remarked, "So, subs and generals will have..."                                                                    
                                                                                                                                
CHAIR  PASKVAN answered,  "All employers  whether -  however they                                                               
might  be  classified -  whether  they're  a general  contractor,                                                               
first  tier  subcontractor,  second   tier  subcontractor  -  all                                                               
employers  would  remain  obligated  under the  law  to  purchase                                                               
workers' compensation coverage."                                                                                                
                                                                                                                                
SENATOR BUNDE asked if that seemed  to be double coverage in some                                                               
cases.                                                                                                                          
                                                                                                                                
CHAIR PASKVAN replied, "The employer  is covering each employer's                                                               
employees. So, there is no double coverage in that regard."                                                                     
                                                                                                                                
2:15:39 PM                                                                                                                    
SENATOR MEYER  asked if he  is the  general and he  hires Senator                                                               
Bunde  as the  sub, who  is responsible  for purchasing  workers'                                                               
compensation.                                                                                                                   
                                                                                                                                
CHAIR  PASKVAN   answered  the  sub  would   be  responsible  for                                                               
purchasing   workers'  compensation   coverage   for  the   sub's                                                               
employees.                                                                                                                      
                                                                                                                                
SENATOR MEYER  asked, "So,  the general  is not  responsible? The                                                               
subcontractor would be the responsible party?"                                                                                  
                                                                                                                                
CHAIR PASKVAN answered  that the subcontractor is  supposed to by                                                               
law purchase workers' compensation for  his employees. One of the                                                               
problems now is that the system  is being scammed by subs who are                                                               
not  purchasing it  because they  can  bid work  for less,  which                                                               
constitutes  an unfair  bidding  practice. This  type of  problem                                                               
arises  when someone  is provided  a financial  incentive to  not                                                               
comply  with  the law  by  not  purchasing workers'  compensation                                                               
coverage.                                                                                                                       
                                                                                                                                
SENATOR BUNDE asked if he also  said that the generals would have                                                               
to have workers' compensation.                                                                                                  
                                                                                                                                
CHAIR PASKVAN responded, "For the general's employees."                                                                         
                                                                                                                                
SENATOR  BUNDE asked,  "And the  sub is  not an  employee of  the                                                               
general?"                                                                                                                       
                                                                                                                                
CHAIR  PASKVAN  replied, "The  sub  is  not  an employee  of  the                                                               
general.  That  is  why  they have  simply  a  business  contract                                                               
relationship not an employment contract relationship."                                                                          
                                                                                                                                
SENATOR  BUNDE  said  that  current law  requires  subs  to  have                                                               
workers' compensation.                                                                                                          
                                                                                                                                
CHAIR  PASKVAN replied,  generally speaking,  yes. The  intent of                                                               
this  bill is  to  remove the  immunity that  would  apply if  an                                                               
employee's  injury were  to result  from wrongful  conduct of  an                                                               
owner or a general contractor.                                                                                                  
                                                                                                                                
SENATOR BUNDE  said he  thought he  understood now.  "The general                                                               
will have  to buy workers'  compensation for  potential employees                                                               
and, in effect,  the general contractor becomes  the state agency                                                               
that enforces his  subs to buy workers'  compensation, because if                                                               
they don't it's going to fall back on the general."                                                                             
                                                                                                                                
CHAIR  PASKVAN  responded,  "For   purposes  of  the  removal  of                                                               
immunity it would not be  covered under the workers' compensation                                                               
policy."                                                                                                                        
                                                                                                                                
SENATOR BUNDE apologized for being so obtuse.                                                                                   
                                                                                                                                
CHAIR  PASKVAN added  further, "If  there  is accountability  and                                                               
responsibility  for wrongful  conduct,  the general  contractor's                                                               
liability coverage  would be responsible  to the employee  of the                                                               
subcontractor  for  that   general  contractor's  apportioned  or                                                               
allocated fault."                                                                                                               
                                                                                                                                
SENATOR  BUNDE  said  he  thought he  now  understood  that  what                                                               
Senator Paskvan was  saying was that he, as  a general contractor                                                               
who employs  Senator Meyer, and doesn't  supervise him adequately                                                               
and  he  doesn't  have  workers' compensation  and  there  is  an                                                               
injury;  it's going  to fall  back on  himself because  he didn't                                                               
enforce state law on Senator Meyer.                                                                                             
                                                                                                                                
CHAIR  PASKVAN  responded,  "We're  somewhat  talking  about  two                                                               
different things here. The question  is whether your conduct as a                                                               
general contractor is  wrongful conduct. And if  that conduct was                                                               
wrongful,  an employee  of the  subcontractor  injured or  caused                                                               
injury  to  an employee,  then  your  wrongful conduct  would  be                                                               
accountable under the law."                                                                                                     
                                                                                                                                
SENATOR BUNDE quipped, "Could you  title this the attorney's full                                                               
employment bill?"                                                                                                               
                                                                                                                                
CHAIR PASKVAN responded, "I think  that it's a citizen's right to                                                               
redress grievances for wrongful conduct."                                                                                       
                                                                                                                                
SENATOR BUNDE  asked if this bill  was trying to fix  the problem                                                               
that  some subs  buy  workers' compensation  and  some don't  and                                                               
there may  or may not  be generals that knowingly  or unknowingly                                                               
employ these subs who don't buy workers' compensation.                                                                          
                                                                                                                                
CHAIR PASKVAN  replied that it's  broader than that in  the sense                                                               
that  "it   removes  immunity  that  currently   says  there  are                                                               
privileged or special interests that  are not accountable and not                                                               
responsible  for  their  wrongful conduct  that  injures  someone                                                               
else."                                                                                                                          
                                                                                                                                
SENATOR THOMAS  said the  bill gets  at two  issues. One  is that                                                               
you're  supposed  to  have workers'  compensation  insurance  and                                                               
you're  supposed to  post it.  It is  posted the  in Tom  Stewart                                                               
Legislation  Office Building.  So, if  a general  overlooks those                                                               
types  of things,  and in  fact the  subcontractor does  not have                                                               
workers' compensation, then they would be responsible.                                                                          
                                                                                                                                
The second part  is in reference to Legal Service  Opinion 3 that                                                               
says someone  could be  criminally negligent  and be  exempt from                                                               
obligation to the injured parties  based on the existing statute.                                                               
SB  303 changes  that.  He knew  of an  example  where a  general                                                               
contractor  actually supervised  the subcontractor  and indicated                                                               
that a particular  situation was safe because they  were the ones                                                               
responsible for purging a tank; the  tank blew up and someone was                                                               
killed. In fact,  they were responsible; the sub  only sent their                                                               
workers  in to  do the  work  based on  the general  contractor's                                                               
certification that  the tank had  been purged  and it was  a safe                                                               
working environment. In fact, it was found that it was not.                                                                     
                                                                                                                                
He summarized  that the  bill gets at  those two  situations: one                                                               
where no  workers' compensation exists for  the subcontractor and                                                               
second where there  is what could be considered,  and often times                                                               
is,  criminal or  negligent  behavior on  behalf  of the  general                                                               
contractor beyond  the ability of the  subcontractor to recognize                                                               
or know.                                                                                                                        
                                                                                                                                
SENATOR  BUNDE said  in that  example the  losses would  probably                                                               
have been covered by workers'  compensation, assuming the sub was                                                               
obeying  the law.  This would  give  those that  suffered a  loss                                                               
another opportunity for recovery.                                                                                               
                                                                                                                                
SENATOR MEYER responded, "Correct."                                                                                             
                                                                                                                                
2:24:28 PM                                                                                                                    
CHAIR PASKVAN  said the question  ultimately is  whether workers'                                                               
compensation is designed  to be a full compensation  system - and                                                               
it is  unquestionably not. For  example, if you have  a unmarried                                                               
25  year-old   and  he  was   killed,  under   Alaska's  workers'                                                               
compensation  law the  total workers'  compensation benefits  are                                                               
reasonable funeral expenses  currently set at $5000.  That is the                                                               
maximum recovery a family could  consider receiving for the death                                                               
of their  son for someone  else's wrongful conduct. He  said most                                                               
people would find that somewhat less than moral.                                                                                
                                                                                                                                
CHAIR  PASKVAN,  finding  no further  questions,  welcomed  Trena                                                               
Heikes,  director for  the Division  of Workers'  Compensation to                                                               
the  committee  and  asked  her  to  explain  what  benefits  are                                                               
provided  under the  workers' compensation  system  and how  that                                                               
might differ from accountability outside of the system.                                                                         
                                                                                                                                
2:25:22 PM                                                                                                                    
TRENA  HEIKES,  Director,   Division  of  Workers'  Compensation,                                                               
Department of Labor and  Workforce Development (DOLWD), explained                                                               
that  workers' compensation  is always  required of  any business                                                               
that hires employees. The 2004  amendments didn't change that. In                                                               
her  25-year  history of  litigating  for  employers on  workers'                                                               
compensation  before taking  this job  she found  that there  has                                                               
always been always been a  "subcontractor under clause," which is                                                               
what she thought Senator Bunde was  referring to. It means if the                                                               
sub doesn't carry  insurance, then those above him  would have to                                                               
pick it up. That just transfers  the burden up to insure that the                                                               
employees of the subcontractor would be covered.                                                                                
                                                                                                                                
What happened in 2004 was  that regardless of whether the project                                                               
owner  or the  contractor above  that sub  paid for  the workers'                                                               
compensation they  would were  put into  "the chain  of potential                                                               
liability" and,  therefore, given employer status  which exempted                                                               
them from  any negligence  that may  occur on  the job  site. For                                                               
example, an  incident happened in  2007 where two young  men were                                                               
killed in a crane accident.  Workers' compensation death benefits                                                               
were  paid, but  the estates  could  take no  action against  the                                                               
negligent project owner because of the 2004 amendment.                                                                          
                                                                                                                                
MS.  HEIKES said  that workers'  compensation would  still exist,                                                               
but this bill would give the  employee the right to sue the third                                                               
party  who   caused  the  negligence.   This  right   is  allowed                                                               
everywhere else in workers' compensation  law. The only exception                                                               
is in the construction area because of the 2004 amendment.                                                                      
                                                                                                                                
She also  said there  would be no  double recovery  and explained                                                               
that if the subcontractor carried  insurance in that example, the                                                               
project owner would get an "offset"  for the amount that was paid                                                               
by workers'  compensation benefits  in that  litigation (language                                                               
in another section).                                                                                                            
                                                                                                                                
MS. HEIKES gave  an example of what the 2004  amendments did: she                                                               
is  an employee  and Senator  Bunde runs  into her  while she  is                                                               
driving her vehicle on a normal day.  She can sue him in tort for                                                               
negligence.  However, if  she was  running errands  (construction                                                               
related)  for  her   employer  and  the  project   owner  or  the                                                               
contractor ran  into her,  she couldn't  sue him.  Her limitation                                                               
would be under workers' compensation laws.                                                                                      
                                                                                                                                
MS.  HEIKES  explained  that  was the  trade  off  when  workers'                                                               
compensation  was developed.  Employers would  pay regardless  of                                                               
fault, but  there would  be a cap  on the damages  - no  pain and                                                               
suffering  or  lost  future  wages   once  medical  stability  is                                                               
reached.  Under  the  act  the  worker  could  go  to  vocational                                                               
training or permanent impairment.                                                                                               
                                                                                                                                
2:29:53 PM                                                                                                                    
SENATOR BUNDE  said that was  his understanding -  everyone would                                                               
pay but you have immunity from  suit, because it was a trade off.                                                               
And if  this legislation passes,  he assumed that  generals would                                                               
stop buying workers'  compensation if they don't  have any direct                                                               
employee because it wouldn't give them immunity from a lawsuit.                                                                 
                                                                                                                                
MS.  HEIKES  responded  that  they  would  still  carry  workers'                                                               
compensation  because under  the Workers'  Compensation Act  they                                                               
would  still be  responsible for  the "contractor  under" as  she                                                               
explained before.  If their subs  don't have insurance  they want                                                               
to make sure they are insured.                                                                                                  
                                                                                                                                
SENATOR BUNDE  said, "So, everybody  gets the bargain  except the                                                               
general then  - the bargain  being we're  going to pay  but we're                                                               
immune  from suit.  So,  we're saying  okay  the workers'  comp's                                                               
bargain is broken for some people."                                                                                             
                                                                                                                                
MS. HEIKES replied that was one  way of putting it. The other way                                                               
is to  say that in  the construction arena those  injured workers                                                               
are  limited  and unable  to  seek  redress for  negligence  that                                                               
occurred in the work place.                                                                                                     
                                                                                                                                
SENATOR BUNDE asked  if negligence occurred with a  sub, if there                                                               
would   be  limited   opportunity  to   seek  redress   for  that                                                               
negligence.                                                                                                                     
                                                                                                                                
MS. HEIKES  replied, "If it's  solely the  employer's negligence,                                                               
that's correct."  She said  she didn't  follow his  argument. The                                                               
bargain  isn't broken,  because they  are not  employers of  that                                                               
individual. The  law says general contractors  have an obligation                                                               
to make  sure every sub,  when he submits  a bid, shows  proof of                                                               
insurance  for workers'  compensation,  because  otherwise he  is                                                               
liable. If he's not doing that it's a risk he's taking.                                                                         
                                                                                                                                
CHAIR  PASKVAN added  that  in federal  contracting  you have  to                                                               
produce certificates of coverage for  many types of coverage. The                                                               
question is  if there is a  failure to comply with  the law, what                                                               
should happen. The focus of this  bill is the wrongful conduct of                                                               
a project  owner or a  general contractor that results  in injury                                                               
to an employee of the  subcontractor. Ultimately, the question is                                                               
whether  responsibility  and  accountability  for  that  wrongful                                                               
conduct should be the policy of the State of Alaska.                                                                            
                                                                                                                                
SENATOR BUNDE said  hypothetically what if he  is a subcontractor                                                               
and he  has workers' compensation,  but he does  something stupid                                                               
and  an employee  is  injured. That  employee  gets his  workers'                                                               
compensation  benefit,  but then  he  cannot  sue him  separately                                                               
because he has purchased workers' compensation.                                                                                 
                                                                                                                                
MS. HEIKES said that was correct.                                                                                               
                                                                                                                                
SENATOR  BUNDE  continued  the hypothetical  saying  now  he's  a                                                               
general contractor,  something happens,  there's an  injury, they                                                               
can sue  him if he  has done  something stupid or  negligent. So,                                                               
the bargain is broken for generals, but not for subs.                                                                           
                                                                                                                                
MS. HEIKES said  she thought he was confused because  there is no                                                               
employment relationship between that  general and the employee of                                                               
the sub.                                                                                                                        
                                                                                                                                
SENATOR  BUNDE  said,  "You  use a  technicality  and  break  the                                                               
bargain or make sure you employ everybody that works for you."                                                                  
                                                                                                                                
CHAIR PASKVAN  added that  ultimately if  the general  makes sure                                                               
the  subs comply  with  the law  and  have workers'  compensation                                                               
coverage, he has  zero risk of paying  compensation premiums. The                                                               
only way they are subject  to accountability for wrongful conduct                                                               
is  if  they  engage in  it  and  it  hurts  an employee  of  the                                                               
subcontractor  or someone  other than  their employee.  This does                                                               
not change  the exclusive remedy  provision of Alaska  statute in                                                               
the  sense of  the  direct  employer/employee relationship.  That                                                               
exclusive  remedy of  the workers'  compensation statute  remains                                                               
the same; it  just removes from the definition  of employer those                                                               
that are not true employers.                                                                                                    
                                                                                                                                
SENATOR  BUNDE said  he understood  where  he was  going, but  he                                                               
didn't agree with it.                                                                                                           
                                                                                                                                
SENATOR  MEYER asked  if the  administration is  neutral on  this                                                               
bill.                                                                                                                           
                                                                                                                                
MS. HEIKES answered yes.                                                                                                        
                                                                                                                                
SENATOR MEYER  said in 2004  this issue had  a lot of  support at                                                               
both the  executive and the legislative  level. It was part  of a                                                               
special session that  was very emotional and  contentious. One of                                                               
the   reasons   they   addressed  this   was   because   workers'                                                               
compensation was  too expensive for contractors  or they couldn't                                                               
even get it.  Those costs were getting passed on  and so then the                                                               
project costs just got higher. He  asked if that was correct, and                                                               
if it is changed back, will costs go back up.                                                                                   
                                                                                                                                
MS.  HEIKES said  she was  in private  practice at  the time  but                                                               
remembered that the  reason wasn't motivated by  cost of premium,                                                               
but  rather by  the  indemnification clauses  found in  contracts                                                               
between contractors  and project  owners where the  project owner                                                               
required the  contractor to indemnify  and hold him  harmless for                                                               
any damages arising  out of it. The contractor would  have to pay                                                               
for  the employees'  workers' compensation  losses  but then  the                                                               
employee would  sue the  project owner.  The project  owner would                                                               
request indemnification  in that tort liability.  In summary, she                                                               
said,  the  contractor   was  paying  both,  and   that  was  the                                                               
motivation.                                                                                                                     
                                                                                                                                
SENATOR MEYER  said if  he understood  this bill  correctly, they                                                               
wouldn't be going back to that situation.                                                                                       
                                                                                                                                
MS. HEIKES replied  that this language just  removes the language                                                               
that was added in 2004.                                                                                                         
                                                                                                                                
CHAIR  PASKVAN said  they are  also looking  into the  provisions                                                               
that wouldn't  allow indemnifications for  those at the  very top                                                               
of the  economic system  to be imposed  in contracts  putting the                                                               
obligation on those towards the  bottom of the economic chain. He                                                               
thought  there were  public policy  issues if  someone who  is at                                                               
fault requires  someone else to  pay for it.  Significant changes                                                               
have occurred  to Alaska law  in the  last 20-30 years  that deal                                                               
with indemnification  for "knock  for knock" and  immunity issues                                                               
with respect to allocation of damages.                                                                                          
                                                                                                                                
He said  his intent today is  to make people aware  of the issues                                                               
that are  important and ultimately  to determine that  those core                                                               
concepts  of  accountability  and responsibility  -  conservative                                                               
principles of "if  you break it you pay for  it" should attach as                                                               
public policy of the state of Alaska. He also pointed out:                                                                      
                                                                                                                                
     Under   current  workers'   compensation  law   is  the                                                                    
     obligation of  reimbursement and if you  are successful                                                                    
     in establishing  accountability and  responsibility and                                                                    
     recover   for  that   wrongful  conduct,   the  injured                                                                    
     employee's  obligation under  the law  is to  reimburse                                                                    
     the workers'  compensation insurer. The intent  of that                                                                    
     is to remove the  burden from the workers' compensation                                                                    
     insurer  which has  the sole  obligation  now for  even                                                                    
     others' wrongful  conduct. And, you know,  the question                                                                    
     is fundamentally  is whether it's fair  that a workers'                                                                    
     compensation  insurer  has  to   pay  for  a  different                                                                    
     entity's fault. The  intent of this would be  - is that                                                                    
     if  it  is  100  percent of,  for  example,  a  general                                                                    
     contractor's fault,  that the  injured employee  of the                                                                    
     subcontractor would obtain future  lost wages, pain and                                                                    
     suffering.  You  know,  an  estate  -  the  spouse  can                                                                    
     recover loss  of consortium -  kids can get  a recovery                                                                    
     for their  loss of a  parent. And  as part of  that the                                                                    
     injured  or  killed  employee's estate  reimburses  the                                                                    
     workers'  compensation insurance  carrier out  of those                                                                    
     proceeds. That is  a balanced system. So, it  is not in                                                                    
     any sense a double recovery system.                                                                                        
                                                                                                                                
     That  is  why  also  in the  introduction  is  that  if                                                                    
     someone is only  25 percent at fault, they  are not 100                                                                    
     percent liable  for damages. They are  only responsible                                                                    
     and accountable  for their allocated percentage.  And I                                                                    
     think that  that is part  of "if  you break it  you pay                                                                    
     for it,"  but if you are  only 25 percent at  fault for                                                                    
     breaking it  you only  pay 25 percent.  I think  it's a                                                                    
     more appropriate public policy.                                                                                            
                                                                                                                                
SENATOR MEYER commented that he  is trying to understand the bill                                                               
and he is  gun shy because a  lot of blood has  been shed already                                                               
over this  issue. He  asked if the  percentage was  determined by                                                               
the courts.                                                                                                                     
                                                                                                                                
CHAIR PASKVAN  replied that  the Legislature  about 20  years ago                                                               
enacted  AS 09.17.080  which deals  with  allocation of  wrongful                                                               
conduct.  If there  are  multiple parties  to  such a  litigation                                                               
allocation of fault is ultimately  determined by a jury. If there                                                               
is only  one defendant, then  obviously the only parties  are the                                                               
injured person  and the person  that is  claimed to be  at fault,                                                               
and the  allocation is simply  between those two  entities. Under                                                               
Alaska's  law,  if  a  defendant  believes  that  someone  shares                                                               
responsibility,  should   they  be  found  at   fault,  then  the                                                               
defendant's   obligation   is   to  identify   that   potentially                                                               
responsible person, join them in  the litigation so that then the                                                               
jury would  have everyone that  every party  believes potentially                                                               
should share responsibility before the  court. Then you rely upon                                                               
the good judgments of the citizens  of the state to say who bears                                                               
what responsibility -  including the plaintiffs if  there is such                                                               
an allocation.                                                                                                                  
                                                                                                                                
He said this bill  is in no way designed to make  it easier for a                                                               
plaintiff to recover  or to adjust in any way  the amount that he                                                               
would  recover. In  other  words, if  they  are comparatively  at                                                               
fault,  they cannot  recover for  that percentage  that might  be                                                               
allocated to the plaintiff.                                                                                                     
                                                                                                                                
2:45:23 PM                                                                                                                    
SENATOR MEYER  asked if he could  assume that the jury  would not                                                               
find both the sub and  the general 100 percent responsible giving                                                               
the victim 200 percent.                                                                                                         
                                                                                                                                
CHAIR PASKVAN  said it is  the jury's  duty to add  the component                                                               
allocations of responsibility  up to only 100  percent. Under the                                                               
original  allocation   of  the  fault  statute   certain  limited                                                               
circumstances allow two  or more persons to be  considered as one                                                               
entity for  the purposes of  any particular percentage  of fault.                                                               
That was  removed so that  each legal  entity that is  before the                                                               
court is responsible solely for their percentage.                                                                               
                                                                                                                                
MS. HEIKES  added the  2004 amendment took  out everyone  who was                                                               
potentially liable  in a "contractor  under" situation  from ever                                                               
having to pay for negligence.                                                                                                   
                                                                                                                                
2:47:38 PM                                                                                                                    
SENATOR BUNDE  said you won't  get more  than 100 percent  out of                                                               
workers'  compensation,  but  if  this passes  a  person  has  an                                                               
opportunity to sue  in civil court where they  could get hundreds                                                               
of thousands as well as  the $5000 from workers' compensation. It                                                               
allows more recovery but in a different venue.                                                                                  
                                                                                                                                
CHAIR PASKVAN replied that it is  more recovery in the sense that                                                               
it would  be the citizens' on  a jury's determination of  what is                                                               
appropriate  and full  compensation, which  might include  future                                                               
lost  wages, which  are prohibited  under the  compact. It  might                                                               
include pain and  suffering, loss of enjoyments of life.  It is a                                                               
system that relies upon the good judgment of the citizens.                                                                      
                                                                                                                                
SENATOR  BUNDE recalled  the judgment  for McDonalds'  hot coffee                                                               
and didn't share his confidence.                                                                                                
                                                                                                                                
MS. HEIKES added that this bill  is the only one that prohibits a                                                               
victim access to  the tort fees in the  litigation system because                                                               
of the employment relationship on the construction site.                                                                        
                                                                                                                                
CHAIR  PASKVAN said  that is  important to  consider when  moving                                                               
forward.                                                                                                                        
                                                                                                                                
2:50:16 PM                                                                                                                    
MICHELLE KAHLE, representing herself,  said she supported SB 303,                                                               
because it repeals and rectifies  the grave errors of the Seekins                                                               
amendment of  2004. She said  it was  painful for her  to testify                                                               
because her son Tyler and his  co-worker were killed when the man                                                               
lift they  were in collapsed  at the Rock  Creek Mine in  Nome in                                                               
July of  2007. The  man lift  had been set  there for  over three                                                               
days  improperly   and  unsafe.   All  parties   responsible  for                                                               
management ignored it until it was too late.                                                                                    
                                                                                                                                
She  clarified that  her testimony  today would  not help  in any                                                               
litigation, but  rather she felt  compelled to share her  pain so                                                               
that some  other mother doesn't  have to  suffer the same  in the                                                               
future. She said  this issue has many different  facets which she                                                               
thought was  partly the reason  the Seekins amendment  was passed                                                               
in 2004.  Prior to that,  project owners and  contractors carried                                                               
liability insurance  which protected them, but  post-Seekins they                                                               
still have  this expense. The  cost of their  liability insurance                                                               
has not changed.                                                                                                                
                                                                                                                                
Prior to  the Seekins  amendment, employees  who were  injured or                                                               
killed  due to  negligence at  work  could bring  a legal  action                                                               
against  all   responsible  parties  except  that   employer  who                                                               
provided  the   workers'  compensation   under  which   they  are                                                               
exempted. Post-Seekins  employees have no recourse.  They have to                                                               
be  happy  with  the  benefits  that  are  provided  by  workers'                                                               
compensation  alone  regardless  of  the  negligence  of  project                                                               
owners and contractors.  They are now immune  from any litigation                                                               
and they don't even have to buy a workers' compensation policy.                                                                 
                                                                                                                                
2:54:27 PM                                                                                                                    
MS. KAHLE  said she wanted  to give  them a little  background so                                                               
they  understand that  the  actions  of these  laws  have a  real                                                               
effect. Tyler  was their  only child; his  life was  priceless to                                                               
them. His life  was worth $5000 according to  the Alaska workers'                                                               
compensation law.  In the fall of  2006 he was only  19 years old                                                               
and was  completing his first  semester in college. He  came home                                                               
very happy and announced that he  had gotten a job opportunity in                                                               
Alaska and he  was going to take  a semester off and  go to work.                                                               
They protested and wanted him to  stay at home and in school, but                                                               
they knew they couldn't financially  help him through college and                                                               
they were also afraid that  he might find Alaska irresistible and                                                               
stay.                                                                                                                           
                                                                                                                                
He said  he was either  going to  go to Iraq  or Alaska -  and he                                                               
said, "Mom, you  decide." She asked which option  they would have                                                               
picked  to bring  him home  safely. On  January 2007  he went  to                                                               
Alaska. He smiled and said, "What's  wrong, Mom, I'm not going to                                                               
Iraq." But she said, "He came home in a box just the same."                                                                     
                                                                                                                                
MS. KAHLE  said the owner  and the  contractor of the  project he                                                               
was working  on were  responsible for  safety compliance.  On the                                                               
day of the  accident the project manager actually  took a picture                                                               
of  the lift,  at 2:24  p.m., precariously  leveled with  timbers                                                               
sitting there  for the last  three days. They obviously  felt the                                                               
positioning  of the  lift was  so dangerous  that they  felt they                                                               
needed to take  a picture of it. Yet, no  one bothered to prevent                                                               
her  son's co-worker,  Craig Bagley,  from  going back  up in  it                                                               
after taking the  picture. Tyler innocently entered  the lift for                                                               
just a ride to the ground. He  wasn't even working in it. He left                                                               
his  safety harness  and  as  they started  to  descend, it  came                                                               
crashing down catapulting the men  to their deaths. At 10:30 p.m.                                                               
Wisconsin time their phone rang.  She answered it expecting their                                                               
nightly call  from Tyler. Instead  of hearing the details  of his                                                               
day, she received the details of his death.                                                                                     
                                                                                                                                
They were  told that they were  only entitled to a  $5000 funeral                                                               
benefit;  and incidentally  his funeral  cost $14,000.  Then they                                                               
found  out that  all of  their  other rights  to sue  responsible                                                               
parties were no  longer there. They were taken away  in 2004. She                                                               
said, "We found  in Alaska it's cheaper to kill  an employee than                                                               
to train  them." She  guaranteed them that  it cost  the employer                                                               
and the  project owner more  than the $5000  they had to  pay for                                                               
Tyler's funeral  to train the  remaining staff properly  after he                                                               
died. She asked what incentive there  is to expend money to train                                                               
employees and  for management to  be safe when they  are required                                                               
to pay for their workers'  compensation premiums anyway. "Killing                                                               
an  employee due  to negligence  didn't cost  them an  additional                                                               
cent."                                                                                                                          
                                                                                                                                
MS. KAHLE  said the  contractor who  was supervising  the quality                                                               
and condition  of the project  was not responsible  for anything;                                                               
the  project   owner  was  responsible  for   nothing.  The  2004                                                               
amendment took away employees' right  to sue, as well as justice.                                                               
Usually  when a  law  is  changed and  it  takes away  somebody's                                                               
benefits it gives them something  in return. This did nothing for                                                               
the  employee  whatsoever;  it  only  benefited  contractors  and                                                               
project owners. That in itself should have been a red flag.                                                                     
                                                                                                                                
2:59:00 PM                                                                                                                    
She said most businesses today at  the very least have $1 million                                                               
in  general  liability insurance.  If  her  son had  been  killed                                                               
getting a tour of the project  instead of working there, his life                                                               
would have been valued differently.  Why? "Is my son's life worth                                                               
less because he  was killed by the negligence at  work instead of                                                               
in an  automobile crash?"  In hindsight she  said she  wished she                                                               
would have  picked Iraq because,  "Evidently it's safer to  go to                                                               
war than to work in Alaska."                                                                                                    
                                                                                                                                
3:01:01 PM                                                                                                                    
JOHN  LEWIS,  President,  Iron   Workers  Local  751,  Anchorage,                                                               
supported  SB  303.  He  said   the  2004  amendment  changed  AS                                                               
43.30.055  to  provide immunity  to  project  owners and  general                                                               
contractors  from  legal  challenges  by  workers  injured  while                                                               
working  on  the  job.  Prior  to this  change  to  the  Workers'                                                               
Compensation Act, an injured worker  retained the right to pursue                                                               
other companies  and employers through  legal action as  a result                                                               
of their negligence.                                                                                                            
                                                                                                                                
One of the outrageous arguments used  to push the passage of this                                                               
amendment  was  that  it  would prevent  double  dipping  by  the                                                               
injured  worker  -  in  short keeping  a  worker  from  receiving                                                               
workers' compensation benefits  as well as winning in  court in a                                                               
civil suit. In reality, this argument  was a red herring since AS                                                               
23.30.015 was  already in  place and clearly  stated if  a worker                                                               
did, in  fact, receive  money through  court action,  any benefit                                                               
received   through  workers'   compensation   would  be   repaid;                                                               
therefore, eliminating any double dipping.                                                                                      
                                                                                                                                
What  this  law  really  did   was  create  a  path  for  general                                                               
contractors and project  owners to cut corners on  safety with no                                                               
fear of  financial loss to  the victims  of accidents -  while at                                                               
the  same time  allowing  them the  ability to  sue  down or  sue                                                               
subcontractors  for   the  very   type  of  accident   that  they                                                               
themselves are now  protected from by this  statute. For example,                                                               
the  iron worker  industry is  one that  is affected  by enormous                                                               
workers'  compensation rates  due to  the extreme  risk involved.                                                               
The way AS 23.30.055 is now written  if an iron worker is hurt by                                                               
the action  of someone else,  his employer  would now be  the one                                                               
who would  bear the  cost. One accident  could very  easily raise                                                               
the employer's  workers' compensation rate  to where they  are no                                                               
longer able  to compete in  the very competitive  bidding process                                                               
of  steel erection.  "Why should  the person  responsible for  an                                                               
injury not  be the responsible person  when it comes time  to pay                                                               
for that situation?"  If you cause an accident, then  you are the                                                               
one who should be responsible for it.                                                                                           
                                                                                                                                
MR. LEWIS said  AS 23.30.055 as now  written indemnifies everyone                                                               
else  who may  be the  true responsible  party while  essentially                                                               
shifting the  blame or  cost to  the employer  who very  well may                                                               
have  taken every  step possible  to  safeguard their  employees.                                                               
This section  of the statute was  formed to provide a  clear path                                                               
for resolution in  the event the worker was injured  or killed on                                                               
the  job. A  means  to clearly  identify  the worker's  exclusive                                                               
remedies was to use workers'  compensation insurance to take care                                                               
of costs to regain their health.  Instead it has become a message                                                               
for general contractors and owners  to push subcontractors to cut                                                               
corners on safety to reduce their overall costs.                                                                                
                                                                                                                                
He didn't  want to accuse  anyone of intentionally  cutting costs                                                               
knowing they are going to hurt  or kill someone, but he would say                                                               
that it's easy  to cut costs in the hopes  that nobody gets hurt.                                                               
"How many  estimators do you know  that would like their  boss to                                                               
know they save  money on the job?  I would venture to  say all of                                                               
them."  In closing  he respectfully  asked for  their support  in                                                               
passing SB 303 which would simply  restore AS 23.30.055 as it was                                                               
originally written prior to the 2004 change.                                                                                    
                                                                                                                                
3:05:11 PM                                                                                                                    
KEVIN DOUGHERTY, Alaska Laborers,  Eagle River, supported SB 303.                                                               
He said  he worked in 1981  on the ad hoc  committee for workers'                                                               
compensation, served  on Governor Hickel's  workers' compensation                                                               
committee in 1990  and has had a couple of  decades of experience                                                               
working in the field. He wanted  to make three points in favor of                                                               
the bill.  First is that  Alaska's workers' compensation  law has                                                               
been founded on  very traditional values since it  was enacted in                                                               
1915.  A message  to the  Legislature from  the Governor  in 1915                                                               
states  those bedrock  values of  respecting  both employees  and                                                               
employers. This  has been the  act's history until  this loophole                                                               
was  created  in  2004  and   exempted  people  with  an  evasive                                                               
definition of parties.  This bill would close  that loophole that                                                               
never should have occurred.                                                                                                     
                                                                                                                                
He said  he was very  much aware of  the special session  in 2004                                                               
that  Senator Meyer  and Senator  Bunde mentioned,  but that  was                                                               
separate from this issue. He said  SB 303 would restore that rule                                                               
of basic equality  for all Alaskans to have access  to the courts                                                               
if they are injured  or if they have a son who  was killed on the                                                               
job.                                                                                                                            
                                                                                                                                
Secondly, he  said SB 303  would be  an incentive for  safety. In                                                               
the  real world  of  construction or  any  industry, you  promote                                                               
safety  by having  responsible parties  be responsible  for their                                                               
own actions. "It's  the best tool we can have.  And it has worked                                                               
well, I'm  pleased to say,  if you look  at the amount  of people                                                               
that have  died on the job  or been injured." Those  numbers have                                                               
really come down in the past 20-30 years.                                                                                       
                                                                                                                                
3:08:02 PM                                                                                                                    
Finally, he  said, this bill  really assures that  the definition                                                               
of  "employer" should  only  be  for true  employers.  It is  not                                                               
forthright  or honest  to  say  that someone  is  an employer  by                                                               
definition   when  they   aren't;  the   public  would   consider                                                               
artificial  terms  deceptive. The  system  of  having the  actual                                                               
employer be entitled  to the treatment of exclusive  remedy was a                                                               
good one  and has worked for  almost 100 years, since  1915. This                                                               
bill  would correct  an  injustice that  occurred  with the  2004                                                               
amendment.                                                                                                                      
                                                                                                                                
CHAIR PASKVAN  asked him to provide  the committee a copy  of the                                                               
historical overview he referenced earlier.                                                                                      
                                                                                                                                
3:10:17 PM                                                                                                                    
CHAIR PASKVAN said  he would not close public  testimony and held                                                               
SB 303. Finding no further  business to come before the committee                                                               
he adjourned the meeting at 3:11 p.m.                                                                                           

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