Legislature(2011 - 2012)BELTZ 105 (TSBldg)

03/22/2011 02:00 PM LABOR & COMMERCE

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* first hearing in first committee of referral
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Heard & Held
<Bill Hearing Rescheduled to 3/24/11>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSSB 70(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 22, 2011                                                                                         
                           2:19 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Dennis Egan, Chair                                                                                                      
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Linda Menard                                                                                                            
Senator Bettye Davis                                                                                                            
Senator Cathy Giessel                                                                                                           
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 70                                                                                                              
"An Act establishing the Alaska Health Benefit Exchange; and                                                                    
providing for an effective date."                                                                                               
     - MOVED CSSB 70(L&C) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 78                                                                                                              
"An Act relating to liability of certain limited liability                                                                      
organizations holding liquor licenses."                                                                                         
     - HEARD AND HELD                                                                                                           
CS FOR HOUSE BILL NO. 28(FIN)                                                                                                   
"An  Act  relating to  temporary  courtesy  licenses for  certain                                                               
nonresident professionals and to  a temporary exemption from fees                                                               
and other licensing  requirements for active duty  members of the                                                               
armed forces."                                                                                                                  
     - BILL HEARING RESCHEDULED TO 3/24/11                                                                                      
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  70                                                                                                                  
SHORT TITLE: ALASKA HEALTH BENEFIT EXCHANGE                                                                                     
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
01/26/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/26/11       (S)       L&C, FIN                                                                                               
02/08/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
02/08/11       (S)       Heard & Held                                                                                           
02/08/11       (S)       MINUTE(L&C)                                                                                            
02/15/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/15/11       (S)       Heard & Held                                                                                           
02/15/11       (S)       MINUTE(L&C)                                                                                            
03/08/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
03/08/11       (S)       Bill Postponed To March 17                                                                             
03/22/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB  78                                                                                                                  
SHORT TITLE: LIQUOR LICENSE HOLDER LIABILITY                                                                                    
SPONSOR(s): SENATOR(s) MCGUIRE BY REQUEST                                                                                       
02/04/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/04/11       (S)       L&C, JUD                                                                                               
03/22/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
SENATOR FRENCH                                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 70.                                                                                         
BEVERLY SMITH                                                                                                                   
Christian Science Committee on Publication for Alaska                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 70 with some additional                                                                      
WILLIAM STREUR, Commissioner-Designee                                                                                           
Department of Health and Social Services (DHSS)                                                                                 
Juneau, AK                                                                                                                      
POSITION STATEMENT: Opposed SB 70.                                                                                            
ESTHER TEMPLE                                                                                                                   
Staff to Senator McGuire                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 78 for the sponsor.                                                                       
BOB KLEIN, Chairman                                                                                                             
Alcohol Beverage Control Board (ABC)                                                                                            
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 78.                                                                                          
DICK ROSTEN                                                                                                                     
Attorney with Dorsey & Whitney                                                                                                  
Representing Alyeska Resort                                                                                                     
No address provided                                                                                                             
POSITION STATEMENT: Answered questions on SB 78 issues.                                                                       
ACTION NARRATIVE                                                                                                              
2:19:02 PM                                                                                                                    
CHAIR DENNIS EGAN  called the Senate Labor  and Commerce Standing                                                             
Committee meeting to order at  2:19 p.m. All members were present                                                               
at the call to order.                                                                                                           
2:20:14 PM                                                                                                                    
             SB  70-ALASKA HEALTH BENEFIT EXCHANGE                                                                          
CHAIR EGAN announced SB 70 to be up for consideration.                                                                          
SENATOR PASKVAN moved to adopt CSSB 70( ), labeled 27-LS0286\I.                                                                 
CHAIR EGAN objected for discussion purposes.                                                                                    
SENATOR FRENCH, sponsor  of SB 70, that  the committee substitute                                                               
(CS)  is a  result of  many hours  of work  from this  committee,                                                               
Senator Egan  and his  staff, Andy  Moderow, interest  groups and                                                               
members of the administration.                                                                                                  
He  said the  changes start  on page  2 where  the makeup  of the                                                               
board  that  will oversee  the  operations  of the  exchanges  is                                                               
changed. The  board was originally  13 members and that  has been                                                               
reduced to  7. He thought it  was a good change  that streamlines                                                               
the operations of  the board. The voting members  now include the                                                               
Department Health  and Human Services (DHSS)  commissioner or his                                                               
designee,   one   representative    of   small   employers,   one                                                               
representative of the health care  insurance business, one member                                                               
with  expertise  in  health  plan   financing,  one  member  with                                                               
expertise in  health plan administration,  a health  care actuary                                                               
or  someone with  similar economic  experience, and  one consumer                                                               
representative.  In addition  to those  members, the  director of                                                               
the Division of Insurance will act as a non-voting member.                                                                      
Also, now on  line 9, page 3, subsection (i)  confirms that board                                                               
members won't be  civilly or criminally liable for  the acts they                                                               
take  within the  scope  of their  employ,  a standard  liability                                                               
exemption for state employees who  work within the scope of their                                                               
duties. Also on lines 18-20,  page 3, all numbers were renumbered                                                               
because (a)(2) was deleted.                                                                                                     
The next  substantive change  was on  line 31, page  3 -  line 4,                                                               
page 4,  and it requires  the Division of Insurance  to implement                                                               
procedures    relating    to     health    plan    certification,                                                               
recertification and  decertification - something the  division is                                                               
very familiar with  and uniquely qualified to  undertake. On page                                                               
4, lines 10-14,  language requires the division  to determine the                                                               
level of  each qualifying  plan that will  be offered  within the                                                               
Language  on page  6,  lines 13-17,  places  the Navigator  Grant                                                               
Program  under  the Division  of  Insurance,  again to  give  the                                                               
division  a strong  voice in  the operation  of the  exchange and                                                               
allow  them to  help the  program take  effect. Also  on page  6,                                                               
lines  26-28, the  legislation  directs  complaints about  health                                                               
benefit  plans  to the  Division  of  Insurance  and not  to  the                                                               
federal government as the old draft did.                                                                                        
2:24:11 PM                                                                                                                    
On page 7, lines 1-4 require  the Division of Insurance to review                                                               
the rate of premium growth  both inside and outside the exchange,                                                               
a crucial aspect  to see if it's working -  keeping premiums at a                                                               
reasonable level  and providing recommendations about  whether or                                                               
not expanding  the size  of a small  employer from  50-100 people                                                               
for  the purpose  of  SHOP marketplace  makes  sense for  Alaska.                                                               
Before, this  responsibility rested  with the exchange  board and                                                               
it would now go to the  Division of Insurance to strengthen their                                                               
voice in the exchange's operation.                                                                                              
Lines 5-8 on page 7 require  the division to develop policies and                                                               
procedures to minimize adverse selection  within the exchange and                                                               
between plans sold inside and outside the exchange.                                                                             
2:25:28 PM                                                                                                                    
Lines 26-29 on  page 7 give the board the  authority to establish                                                               
advisory  groups to  provide expertise  and input  about exchange                                                               
operations.  Advisory groups  can  be rather  informal; they  are                                                               
collections of interested,  knowledgeable individual citizens who                                                               
can  provide  expertise  and  advice   to  the  board  about  the                                                               
operation of the exchange.                                                                                                      
On page 8,  lines 1-13 establish a new  annual accounting report;                                                               
it  reviews new  enrollment, changes  in enrollment,  tax credits                                                               
and individual  responsibility exemptions broken down  by insurer                                                               
and by benefit plan where  applicable. Again, it's the overseeing                                                               
of what  the exchange's  effect on  the marketplace  of insurance                                                               
has statewide both in and outside the exchange.                                                                                 
Also on lines  14-23 on page 8 require the  exchange to cooperate                                                               
with an  investigation by the  Division of Insurance;  this makes                                                               
it   explicit.  It   also  requires   cooperation  with   federal                                                               
2:26:42 PM                                                                                                                    
Lines 2-5  on page  9 state  that the exchange  will rely  on the                                                               
Division  of Insurance  determination relating  to the  potential                                                               
for Interstate  compacts. This goes  back to the idea  of pooling                                                               
and of buying insurance across  state lines and is something that                                                               
small states like Alaska may be able to benefit from.                                                                           
Also  on  page  9,  lines  6-28 require  the  exchange  board  to                                                               
establish a plan of operation,  which is reviewed and approved by                                                               
the director  of the  Division of Insurance.  If a  suitable plan                                                               
isn't developed,  the new subsection  allows for the  director to                                                               
adopt reasonable  regulations to  carry out  the responsibilities                                                               
of the exchange.                                                                                                                
SENATOR FRENCH  said lines  17-18 on  page 14 at  the end  of the                                                               
bill  solve   the  so-called  "AFLAC  problem,"   which  is  when                                                               
insurance  companies don't  offer plans  inside the  exchange and                                                               
don't want  to pay for  its operation.  This seems fair;  so only                                                               
those  companies  offering  plans  inside the  exchange  will  be                                                               
assessed a fee to run it.                                                                                                       
On page  14, lines  24-25 were  changed to  give the  Division of                                                               
Insurance  authority  to  adopt regulations  to  implement  their                                                               
authority under  the legislation. Similarly, lines  25-17 on page                                                               
19  were  changed  to  give  the  director  of  the  Division  of                                                               
Insurance  the ability  to adopt  regulations that  also make  it                                                               
clear  that  such  regulations   won't  be  effective  until  the                                                               
effective date of the statutory changes.                                                                                        
SENATOR FRENCH said  the last two changes were  conforming to the                                                               
adopted  practice with  respect  to, for  example,  the Board  of                                                               
Fisheries which has  the power to adopt their  regulations or the                                                               
Board of Game's identical power.                                                                                                
2:28:53 PM                                                                                                                    
He said language  on page 19, line 31, had  been modified to make                                                               
the transitional  provisions related to board  terms effective on                                                               
July  1,   2011.  Before,  those  provisions   had  an  immediate                                                               
effective date.                                                                                                                 
2:29:21 PM                                                                                                                    
SENATOR MENARD asked since the  seventh person, either the CEO or                                                               
executive director,  won't have voting privileges,  how would the                                                               
board be able to break a tie.                                                                                                   
SENATOR FRENCH answered that his  understanding is subsection (b)                                                               
on page  2, lines  14-17, puts  the commissioner  of DHSS  on the                                                               
board, but  he isn't numbered;  then six more members  are listed                                                               
for a  total of seven. So,  the board has a  natural tie-breaking                                                               
function within itself.                                                                                                         
SENATOR MENARD said she missed that.                                                                                            
2:31:44 PM                                                                                                                    
BEVERLY  SMITH, Christian  Science Committee  on Publication  for                                                               
Alaska, said she  is the legislative and  media representative in                                                               
Alaska.  She asked  to add  one more  duty to  the Alaska  Health                                                               
Benefit Exchange  Board. She  read from a  handout she  had given                                                               
the committee two weeks ago that explained:                                                                                     
     The   Alaska  Health   benefit  Exchange   Board  shall                                                                    
     consider  the  extent  and  circumstances  under  which                                                                    
     benefits   for  spiritual   care   services  that   are                                                                    
     deductible  under   section  213(d)  of   the  Internal                                                                    
     Revenue  Code  as  of  January 2,  2010  will  be  made                                                                    
     available under the exchange.                                                                                              
She said  the handout provides the  explanation and justification                                                               
for this request and in her words:                                                                                              
     The goal of health care  reform is coverage for all. In                                                                    
     2014 when  everyone is required to  purchase insurance,                                                                    
     the premiums  should be of  value to  every individual.                                                                    
     That  includes those  who rely  on  spiritual care  for                                                                    
     their health  care. Each person  should be able  to use                                                                    
     that insurance that  they have paid for to  pay for the                                                                    
     health care they have found most effective.                                                                                
     There  are federal  insurance programs  and some  state                                                                    
     plans that  offer benefits for  spiritual care,  and on                                                                    
     the back of the handout  I have listed some examples of                                                                    
     spiritual  care  coverage.  Alaska Care,  here  in  the                                                                    
     state, provides state  employees and retirees' benefits                                                                    
     for   costs   of    Christian   Science   practitioners                                                                    
     authorized by  the First Church of  Christ Scientist in                                                                    
     Boston.  And  I  think the  Insurance  Exchange  should                                                                    
     offer the public the same programs that are available                                                                      
     to state workers and retirees.                                                                                             
     Some  parameters that  are set  in the  amendment would                                                                    
     include   those  spiritual   care  services   that  are                                                                    
     recognized by the IRS as  medical deductions. Those are                                                                    
     -  and  I checked  with  Washington,  D.C. -  Christian                                                                    
     Science,   Religious   Science   and   Navajo   Healing                                                                    
2:35:09 PM                                                                                                                    
MS. SMITH said the reason  they are asking for this consideration                                                               
now instead of  after the exchange is set up  is because when the                                                               
state  of  Massachusetts  was setting  up  its  exchange,  church                                                               
officials went  to legislators and  were told to not  worry about                                                               
it, but  wait until  the legislation goes  through and  then deal                                                               
with the  insurance exchange companies.  So, they did  that. Then                                                               
the  insurance  companies said  they  needed  to only  offer  the                                                               
benefits  that   were  directed  to   them  in  statute   by  the                                                               
legislature. So, here they are  front loading this legislation to                                                               
provide the possibility of having  the insurance companies in the                                                               
exchange  provide  benefits  for   spiritual  care  so  that  all                                                               
citizens  have access  to the  health care  of their  choice. Ms.                                                               
Smith  said this  is an  issue of  fairness and  many have  found                                                               
spiritual  healing to  be  effective. She  didn't  see that  this                                                               
would add anything to the fiscal note.                                                                                          
2:37:05 PM                                                                                                                    
SENATOR  MENARD  asked  if Kansas,  Missouri,  Oregon,  Illinois,                                                               
California, Oklahoma, Colorado, Texas  [mentioned in the handout]                                                               
are  the states  that have  allowed Christian  Science, religious                                                               
science and Navajo Healing Services to do this.                                                                                 
MS. SMITH  answered no; these  are examples of states  that allow                                                               
coverage for Christian  Science care in their  state plans. Right                                                               
now the federal  government, through the IRS,  allows those three                                                               
particular  entities  to  claim  their health  care  expenses  as                                                               
medical deductions in their income taxes.                                                                                       
SENATOR MENARD asked which states put it into an exchange.                                                                      
MS. SMITH replied that she is  aware of one recently, Utah, which                                                               
passed a bill  setting up a task force to  investigate setting up                                                               
the exchange. It  isn't as far along as Alaska  is, but spiritual                                                               
care is an accepted consideration.                                                                                              
SENATOR MENARD  asked if  Alaska would be  the first  to actually                                                               
follow through should this pass out.                                                                                            
MS. SMITH replied yes and she thought that would be great.                                                                      
SENATOR  DAVIS  asked if  they  tried  to get  Christian  healing                                                               
practices in the Massachusetts bill after it was passed.                                                                        
MS. SMITH replied yes, but they weren't able to get it in.                                                                      
2:39:55 PM                                                                                                                    
SENATOR PASKVAN  said he understood  systems that say  prayer can                                                               
heal, but  the question that one  ultimately has to come  back to                                                               
is, "We're  a civil  law authority;  we're not  religious leaders                                                               
here.   So,   the   question  is   what   standard   of   medical                                                               
treatment/care is it  that is being followed.  Given otherwise, I                                                               
see  no objective  treatment standard  other than  just a  belief                                                               
MS.  SMITH  answered right  now  they  are  going with  what  the                                                               
federal  government  has  recognized as  acceptable  for  medical                                                               
deductions through  the IRS and with  various insurance companies                                                               
that do grant  benefits for spiritual care. There is  a record of                                                               
healing  and  it  has been  recognized  as  effective.  Christian                                                               
Science  healing practitioners  have  to meet  standards and  are                                                               
granted authorization through the church.                                                                                       
SENATOR PASKVAN asked if anything  in the law currently prohibits                                                               
anyone from participating in a prayer healing process.                                                                          
MS. SMITH  answered that  everyone is  allowed to  participate in                                                               
whatever faith  tradition they  have, but  only certain  ones are                                                               
granted this recognition through the IRS.                                                                                       
SENATOR  PASKVAN  asked  if  the   ultimate  intent  is  to  have                                                               
government monies be used for "that healing ceremony."                                                                          
MS. SMITH  replied no. But she  knows that those who  do not have                                                               
insurance now would be able  to purchase it through the exchange.                                                               
And those that  do not have the money to  purchase would get some                                                               
subsidy. That would be where  government money would be involved,                                                               
she guessed. She  reiterated that citizens should be  able to get                                                               
benefits that they  pay for and should be able  to have choice in                                                               
their health care benefits.                                                                                                     
SENATOR MENARD asked  her to clarify exactly what  she was asking                                                               
MS.  SMITH replied  that she  wanted  consideration of  spiritual                                                               
benefits to  be included  in this  package; whether  it's through                                                               
her  proposed  amendment  or some  other  vehicle  the  committee                                                               
thinks would work.                                                                                                              
SENATOR MENARD said she wanted the sponsor to respond.                                                                          
2:45:30 PM                                                                                                                    
SENATOR  FRENCH said  this  is a  difficult  question and  better                                                               
suited for  a separate  piece of legislation  that will  focus on                                                               
the issue of  the efficacy of spiritual healing  and whether it's                                                               
something  insurance  companies  should  reimburse  practitioners                                                               
for. That is ultimately what it would lead to.                                                                                  
2:47:55 PM                                                                                                                    
SENATOR PASKVAN moved to adopt Amendment 1 as follows:                                                                          
                          AMENDMENT 1                                                                                       
    OFFERED IN THE SENATE                BY SENATOR PASKVAN                                                                     
     TO:  CSSB 70(L&C), Draft Version "I"                                                                                       
     Page 10, line 10, following "entities":                                                                                    
          Insert "; the exchange shall make records of                                                                          
     application  for  or  receipt of  grants  or  donations                                                                    
     under  this paragraph  available to  the public  on the                                                                    
     exchange's  Internet  website   within  30  days  after                                                                    
     application or receipt"                                                                                                    
He explained  that the  purpose of this  amendment is  to require                                                               
timely disclosures of  any contributions that may  come into this                                                               
exchange -  within 30 days on  its website. The exchange  on page                                                               
10, lines  9-10, is given the  ability to "apply for  and receive                                                               
grants  or  donations  from   federal,  state,  local  government                                                               
foundations,  or private  entities." The  idea is  to make  these                                                               
monies are "transparent and open."                                                                                              
SENATOR  MENARD  reasoned  that  she  runs  "a  pretty  efficient                                                               
office"  and sometimes  "30 days  just  came and  went," and  she                                                               
preferred going to 60 days.                                                                                                     
SENATOR PASKVAN responded  that if the exchange found  30 days to                                                               
be an impossible  burden, he hoped they would advise  them of it.                                                               
The intent  of this bill is  if there are donations  from private                                                               
entities and decisions that are  coming out of that exchange that                                                               
they be transparent - "a paper trail in and decisions out."                                                                     
SENATOR FRENCH said he supported the amendment.                                                                                 
SENATOR  MENARD  moved  to  adopt  Amendment  1.  There  were  no                                                               
objections and it was so ordered.                                                                                               
SENATOR GIESSEL said  she just got copy of a  letter addressed to                                                               
Senator French  from the Governor's  Office, dated March  11. The                                                               
last paragraph summarizes it:                                                                                                   
     No health  insurance exchange legislation  is necessary                                                                    
     during  this  2011  legislative session.  We  have  the                                                                    
     internal capacity  through DHSS  and DCCED  to complete                                                                    
     the planning  work for the insurance  exchange mandated                                                                    
     by federal law. Accordingly, I  do not support SB 70 on                                                                    
     policy grounds,  nor do  I believe  a state  statute is                                                                    
     required for the state to begin implementation.                                                                            
She hadn't  seen this until  an hour  ago, and asked  the sponsor                                                               
for his comment.                                                                                                                
2:52:59 PM                                                                                                                    
SENATOR  FRENCH thanked  her for  bringing  it up.  His reply  to                                                               
governor was  sent a day  later that  had several thoughts.  As a                                                               
member of the  legislative branch of government, he  was sure she                                                               
was jealous of  their prerogatives and power. He  was certain she                                                               
would be  hesitant to cede to  the governor the authority  to set                                                               
up  a  structure like  this.  He  pointed out  the  collaborative                                                               
nature of  the committee  process, the back  and forth  of ideas,                                                               
the compromise that takes place  when they do business in public,                                                               
on the record, with the cameras  running - open to any suggestion                                                               
the public  may bring  forward -  as opposed to  what would  be a                                                               
closed-door,  top-down, agenda-driven  operation from  inside the                                                               
governor's office.                                                                                                              
SENATOR FRENCH  said he  has a  great amount  of respect  for the                                                               
DHSS   commissioner  and   the   people  who   work  within   the                                                               
administration  that and  they had  been very  helpful with  this                                                               
specific bill. But there is a  reason why the legislature has its                                                               
power and duties  and they have theirs; they  administer the laws                                                               
the legislature writes.    He thought that collaboratively the 60                                                               
of them  could come up  with a  better health care  exchange than                                                               
the  administration   could  acting  essentially   alone  without                                                               
legislators' input.                                                                                                             
SENATOR GIESSEL commented that originally  it was in the hands of                                                               
the  governor. It  was only  the  introduction of  the bill  that                                                               
brought it  to the  legislative arena. "A  bill was  not required                                                               
for the  establishment of the  exchange," she said.  The governor                                                               
indicated,  with the  ruling  of his  attorney  general, that  he                                                               
would implement an exchange and  she is questioning the necessity                                                               
of going through the lengthy process of passing legislation.                                                                    
SENATOR  FRENCH  responded  that  he didn't  know  of  any  other                                                               
governor   that  had   taken  the   position  that   no  enabling                                                               
legislation  is  necessary. Some  governors  are  opposed to  the                                                               
Affordable Care  Act; they don't  like the individual  mandate or                                                               
the changes  in the reforms. Some  are opposed to the  whole idea                                                               
of  insurance  reform and  getting  affordable  insurance in  the                                                               
hands of every citizen. Then  there are shades of opposition down                                                               
the  line  and Alaska's  governor  has  been fairly  blunt  about                                                               
pushing back against what he sees as an unconstitutional act.                                                                   
Senator  French said  he has  a different  view and  has publicly                                                               
disagreed.  He thought  the federal  bill  envisioned each  state                                                               
creating its  own health care exchange  through the collaborative                                                               
process of  legislation. If  he had thought  at the  beginning of                                                               
the session  when the governor was  "standing four-square opposed                                                               
to the  federal bill" that  he intended  to create a  health care                                                               
exchange  through his  own administration,  perhaps he  would not                                                               
have  filed  the  bill.  But  he  did,  because  he  thinks  it's                                                               
important that  everyone has a  voice and  does their job  to put                                                               
the exchange  into effect in a  way that they all  think is best.                                                               
If  the governor  "winds up  creating something  exactly like  my                                                               
bill, God bless him  and we can all go forward  and have a health                                                               
care exchange  that works  for Alaskans."  In the  meantime, they                                                               
have a duty to continue their work.                                                                                             
2:57:25 PM                                                                                                                    
CHAIR EGAN asked if the administration supports SB 70.                                                                          
WILLIAM STREUR,  Commissioner-Designee, Department of  Health and                                                               
Social Services (DHSS), replied no.                                                                                             
CHAIR EGAN  asked now that the  Florida court has ruled  that the                                                               
Patient Protection  and Affordable Care  Act must be  accepted by                                                               
law, if  the administration intends  to comply with  that mandate                                                               
or to provide an insurance exchange  if SB 70 doesn't pass. Is he                                                               
aware  that the  federal government  might institute  one if  the                                                               
state declines to do so?                                                                                                        
COMMISSIONER  STREUR replied  that the  administration is  in the                                                               
process of planning an exchange for  the State of Alaska and will                                                               
continue with that until legislation  is either overturned or new                                                               
rules come  forward regarding  it. They do  not want  the federal                                                               
government involved in any way.                                                                                                 
CHAIR EGAN  asked how the administration's  exchange would differ                                                               
from SB 70.                                                                                                                     
COMMISSIONER  STREUR answered  that he  didn't know,  because the                                                               
design of  the exchange is still  in the planning stages.  One of                                                               
their issues  with this bill  is that  they need the  latitude to                                                               
design  what is  best  for  the State  of  Alaska  based on  best                                                               
practices they see in various developing exchanges.                                                                             
CHAIR  EGAN asked  if he  is  saying the  administration has  the                                                               
authority to establish that now.                                                                                                
COMMISSIONER STREUR  replied, "We believe the  administration has                                                               
the authority to plan for  and design and implement the exchange.                                                               
However, to  go live with the  exchange we are probably  going to                                                               
need legislation; we  are going to need statute. We  are going to                                                               
need something,  because it has  to be self-funded and  there are                                                               
many  rules  around  that  that   are  best  established  through                                                               
SENATOR  DAVIS  said  that doesn't  keep  this  legislation  from                                                               
moving forward, because something has to  be out there by 2014 or                                                               
the federal government will do it for us.                                                                                       
COMMISSIONER  STREUR replied  that  by 2014  the  state needs  an                                                               
exchange that  is up and  running; by  January 2013 they  have to                                                               
have a "solid plan" in place to implement the exchange.                                                                         
SENATOR  DAVIS  moved to  report  CSSB  70(L&C) as  amended  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There were no objections and it was so ordered.                                                                        
3:01:14 PM                                                                                                                    
At ease from 3:01 to 3:03 p.m.                                                                                                  
3:03:40 PM                                                                                                                    
             SB  78-LIQUOR LICENSE HOLDER LIABILITY                                                                         
CHAIR  EGAN announced  SB 78  to  be up  for consideration.  [27-                                                               
LS0282\M version was before the committee.]                                                                                     
ESTHER TEMPLE, staff  to Senator McGuire, sponsor of  SB 78, said                                                               
the intent of this bill is  to provide equal treatment to limited                                                               
liability  companies  (LLC)  and   foreign  LLCs  in  the  liquor                                                               
liability context as they are treated in the business generally.                                                                
She  explained  that  presently  persons  engaged  in  businesses                                                               
commonly use  LLCs instead of  corporations while  leaving intact                                                               
the limited liability  of the LLC members for  all other business                                                               
purposes.  Currently,  AS  04.21.035   is  an  exception  to  the                                                               
protections against  individual liability offered to  partners of                                                               
properly  registered  and  maintained  LLPs and  LLCs.  In  other                                                               
words, partners and members of LLPs  and LLCs are not relieved of                                                               
the obligation or  the liability otherwise imposed  upon a liquor                                                               
license holder under  Title 4. So, in order to  avoid that result                                                               
owners of liquor businesses that  hold a liquor license that seek                                                               
limited  liability  protection  have  to do  business  through  a                                                               
corporate entity.                                                                                                               
She said  that businesses have  increasingly turned to LLCs  as a                                                               
preferred  entity for  doing business  in order  to have  greater                                                               
management  and   efficiency  without  sacrificing   the  limited                                                               
liability protection  from business  creditors that  are afforded                                                               
to owners of corporations.                                                                                                      
MS. TEMPLE said that LLCs are  commonly used in Alaska as well as                                                               
in the United  State as limited liability  protection entities in                                                               
place  of corporations.  Therefore,  SB 78  would amend  existing                                                               
statute  to state  that the  liability  will be  imposed only  on                                                               
partners of a limited liability  partnership or a foreign limited                                                               
liability  partnership, but  will  no  longer apply  a  LLC or  a                                                               
foreign  LLC.   If  passed,  SB   78  would   encourage  business                                                               
development by reflecting the fact  that LLCs are more similar to                                                               
those  used   in  the  business   world  as  an   alternative  to                                                               
corporations and are  less commonly used as  alternatives to sole                                                               
proprietorships or  general partnerships,  which pass  on general                                                               
liability to their owners.                                                                                                      
3:06:55 PM                                                                                                                    
SENATOR PASKVAN asked  if a foreign corporation can  own a liquor                                                               
license.  He  knows  that state-formed  corporations  can  own  a                                                               
liquor license.  The reason  he asked  is because  "foreign LLPs"                                                               
are included in the language of SB 78.                                                                                          
MS. TEMPLE answered  that she didn't know that  answer, but would                                                               
look into it for him.                                                                                                           
CHAIR EGAN asked if anyone in the audience could answer.                                                                        
3:08:30 PM                                                                                                                    
BOB KLEIN,  chairman, Alcohol Beverage Control  Board (ABC), said                                                               
he  is an  industry member  because he  is the  Brown Jug  Liquor                                                               
Stores director  of sales in  Anchorage. He  is also a  member of                                                               
CHARR and serves on their Government Affairs Committee.{                                                                        
MR. KLEIN  related that he  was on the  ABC board when  LLCs were                                                               
first introduced into Title 4  language. Their intent at the time                                                               
was  to  give  LLCs  the same  protections  as  partnerships  and                                                               
corporations.  Recently  he  found  that they  missed  the  mark,                                                               
because of inexperience and it  now makes sense to insert Senator                                                               
McGuire's changes.                                                                                                              
SENATOR PASKVAN  said he agreed with  him. He asked if  a foreign                                                               
LLP could own a liquor license.                                                                                                 
MR. KLEIN responded that he didn't know the answer.                                                                             
3:11:08 PM                                                                                                                    
DICK  ROSTEN, Attorney,  Dorsey &  Whitney, representing  Alyeska                                                               
Resort  as well  as other  holders  of liquor  licenses said  the                                                               
answer is yes;  foreign corporations can own a  liquor license if                                                               
they are qualified to do business in Alaska.                                                                                    
SENATOR  PASKVAN  asked if  they  do  it  by forming  an  Alaskan                                                               
MR.  ROSTEN  replied  that  they use  a  different  process.  Any                                                               
corporation  that is  not formed  in  Alaska is  known under  our                                                               
statutes as a  "foreign corporation" whether they  were formed in                                                               
Canada or  in Nevada  or Delaware. They  go through  a qualifying                                                               
process followed by a certificate  of authority to own a business                                                               
in Alaska.                                                                                                                      
SENATOR PASKVAN asked if the  assets of either the foreign entity                                                               
or an Alaskan entity are equally subject to a judgment.                                                                         
MR.  ROSTEN  answered  yes:  whoever   holds  a  liquor  license,                                                               
regardless of whether  it's an Alaskan domestic  corporation or a                                                               
Nevada corporation, for example, those assets would be at risk.                                                                 
SENATOR PASKVAN asked if that is established as part of the                                                                     
process of qualifying to do business in Alaska by the foreign                                                                   
MR. ROSTEN answered yes.                                                                                                        
3:13:44 PM                                                                                                                    
CHAIR EGAN thanked everyone for  their comments and closed public                                                               
testimony. He announced that SB 78  would be held, and finding no                                                               
further business to  come before the committee,  he adjourned the                                                               
meeting at 3:15 p.m.                                                                                                            

Document Name Date/Time Subjects
SB 70 CS v I.PDF SL&C 3/22/2011 2:00:00 PM
SB 70
SB 70 version I - changes from original.pdf SL&C 3/22/2011 2:00:00 PM
SB 70