Legislature(2011 - 2012)BELTZ 105 (TSBldg)

04/05/2011 02:00 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 103 WORKERS' COMPENSATION FOR FIREFIGHTERS TELECONFERENCED
Heard & Held
*+ SB 116 WORKERS' COMP.: COLL BARGAINING/MEDIATION TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 100 PERS TERMINATION COSTS TELECONFERENCED
Moved SB 100 Out of Committee
+= HB 119 AIDEA: PROCUREMENT; PROJECTS TELECONFERENCED
Moved SCS CSHB 119(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 5, 2011                                                                                          
                           2:05 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. 100                                                                                                             
"An  Act  relating  to  employer   contributions  to  the  Public                                                               
Employees' Retirement System of  Alaska; relating to requirements                                                               
that employers  who terminate  some or  all participation  in the                                                               
Public  Employees' Retirement  System of  Alaska pay  termination                                                               
costs; and making the changes retroactive."                                                                                     
                                                                                                                                
     - MOVED SB 100 OUT OF COMMITTEE                                                                                            
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 119(EDT)                                                                                
"An  Act  relating  to the  procurement  of  supplies,  services,                                                               
professional   services,   and   construction  for   the   Alaska                                                               
Industrial  Development and  Export  Authority;  relating to  the                                                               
definition  of  'own'  for   the  economic  development  account;                                                               
relating to  the definitions  of 'development  project', 'plant',                                                               
'facility', and  'project' for the Alaska  Industrial Development                                                               
and  Export   Authority;  relating   to  the   Alaska  Industrial                                                               
Development and Export  Authority creating subsidiaries regarding                                                               
projects  financed  under  AS 44.88.172;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED SCS CSHB 119(L&C) OUT OF COMMITTEE                                                                                 
                                                                                                                                
SENATE BILL NO. 103                                                                                                             
"An  Act  amending  the   medical  examination  requirements  for                                                               
firefighters entitled  to a presumption  of compensability  for a                                                               
disability resulting from certain diseases."                                                                                    
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 116                                                                                                             
"An  Act offering  mediation  of  disputed workers'  compensation                                                               
claims by a  hearing officer or other classified  employee of the                                                               
division  of   workers'  compensation  and   allowing  collective                                                               
bargaining  agreements to  supersede  certain  provisions of  the                                                               
Alaska Workers' Compensation Act;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 100                                                                                                                  
SHORT TITLE: PERS TERMINATION COSTS                                                                                             
SPONSOR(s): SENATOR(s) PASKVAN                                                                                                  
                                                                                                                                
03/14/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/11       (S)       L&C, FIN                                                                                               
03/29/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
03/29/11       (S)       Heard & Held                                                                                           
03/29/11       (S)       MINUTE(L&C)                                                                                            
04/05/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: HB 119                                                                                                                  
SHORT TITLE: AIDEA: PROCUREMENT; PROJECTS                                                                                       
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/11       (H)       EDT, FIN                                                                                               
02/03/11       (H)       EDT AT 10:15 AM BARNES 124                                                                             
02/03/11       (H)       Heard & Held                                                                                           
02/03/11       (H)       MINUTE(EDT)                                                                                            
02/08/11       (H)       EDT AT 10:15 AM BARNES 124                                                                             
02/08/11       (H)       Moved CSHB 119(EDT) Out of Committee                                                                   
02/08/11       (H)       MINUTE(EDT)                                                                                            
02/11/11       (H)       EDT RPT CS(EDT) NT 4DP 3NR                                                                             
02/11/11       (H)       DP: THOMPSON, MUNOZ, OLSON, FOSTER                                                                     
02/11/11       (H)       NR: GARDNER, TUCK, HERRON                                                                              
02/22/11       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/22/11       (H)       Moved CSHB 119(EDT) Out of Committee                                                                   
02/22/11       (H)       MINUTE(FIN)                                                                                            
02/23/11       (H)       FIN RPT CS(EDT) NT 4DP 6NR 1AM                                                                         
02/23/11       (H)       DP: FAIRCLOUGH, NEUMAN, JOULE, COSTELLO                                                                
02/23/11       (H)       NR:   T.WILSON,    GUTTENBERG,   EDGMON,                                                               
                         DOOGAN, STOLTZE, THOMAS                                                                                
02/23/11       (H)       AM: GARA                                                                                               
03/23/11       (H)       BEFORE THE HOUSE                                                                                       
03/23/11       (H)       TRANSMITTED TO (S)                                                                                     
03/23/11       (H)       VERSION: CSHB 119(EDT)                                                                                 
03/25/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/25/11       (S)       L&C, FIN                                                                                               
03/31/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
03/31/11       (S)       Heard & Held                                                                                           
03/31/11       (S)       MINUTE(L&C)                                                                                            
04/05/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 103                                                                                                                  
SHORT TITLE: WORKERS' COMPENSATION FOR FIREFIGHTERS                                                                             
SPONSOR(s): JUDICIARY                                                                                                           
                                                                                                                                
03/16/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/16/11       (S)       L&C, FIN                                                                                               
04/05/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 116                                                                                                                  
SHORT TITLE: WORKERS' COMP.: COLL BARGAINING/MEDIATION                                                                          
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/25/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/25/11       (S)       L&C, FIN                                                                                               
04/05/11       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DANA OWEN                                                                                                                       
Staff to Senator Egan                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 119.                                                                                      
                                                                                                                                
STACY SCHUBERT                                                                                                                  
Alaska Housing Finance Corporation (AHFC)                                                                                       
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SCS CSHB 119(L&C).                                                                              
                                                                                                                                
SENATOR FRENCH                                                                                                                  
Alaska State Legislature                                                                                                        
Capitol Bldg.                                                                                                                   
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 103.                                                                                        
                                                                                                                                
LAW HENDERSON, Workers' Compensation Administrator                                                                              
Department of Risk Management                                                                                                   
Municipality of Anchorage, said he opposed the amendment to AS                                                                  
23.30.121 [SB 103] for several reasons.                                                                                         
POSITION STATEMENT: Opposed SB 103 and HB 116.                                                                                
                                                                                                                                
TOM WESTCOTT, President                                                                                                         
Alaska Professional Firefighters Association                                                                                    
Eagle River, AK                                                                                                                 
POSITION STATEMENT: Supported CSSB 103 (L&C), version M.                                                                      
                                                                                                                                
PAUL HANDBY, career firefighter                                                                                                 
Representing himself                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 103.                                                                                         
                                                                                                                                
DANA OWEN                                                                                                                       
Staff to the Senate Labor and Commerce Committee                                                                                
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Presented SB 116 [labeled 27-LS0549\I] on                                                                 
behalf of the Senate Labor and Commerce Committee, sponsor.                                                                     
                                                                                                                                
STEVE RANK                                                                                                                      
Iron Workers International &                                                                                                    
Impact                                                                                                                          
California                                                                                                                      
POSITION STATEMENT: Supported SB 116 concepts.                                                                                
                                                                                                                                
KEVIN GREGERSON, Program Administrator                                                                                          
Union Construction Workers' Compensation Program                                                                                
Minnesota                                                                                                                       
POSITION STATEMENT: Supported SB 116 concepts.                                                                                
                                                                                                                                
FRED BROWN, Executive Director                                                                                                  
Health Care Cost Management Corporation of Alaska                                                                               
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 116.                                                                                         
                                                                                                                                
LAIRD GRANTHAM                                                                                                                  
Carpenters Local 1243                                                                                                           
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 116.                                                                                         
                                                                                                                                
PAUL GROSSI, lobbyist                                                                                                           
Alaska State Pipe Trades &                                                                                                      
Iron Workers                                                                                                                    
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 116.                                                                                         
                                                                                                                                
DAVID MECUEN, President                                                                                                         
California Erectors &                                                                                                           
Co-chair,  California  Field  Iron  Workers  Negotiated  Workers'                                                               
Compensation Program                                                                                                            
California                                                                                                                      
POSITION STATEMENT: Supported SB 116.                                                                                         
                                                                                                                                
MIKE MONAGLE, Director                                                                                                          
Division of Workers' Compensation                                                                                               
Department of Labor and Workforce Development (DOLWD)                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Said the administration  had no  position on                                                             
SB 116.                                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
2:05:38 PM                                                                                                                    
CHAIR DENNIS EGAN  called the Senate Labor  and Commerce Standing                                                             
Committee meeting  to order at 2:05  p.m. Present at the  call to                                                               
order  were Senators  Menard, Giessel,  Davis, Paskvan  and Chair                                                               
Egan.                                                                                                                           
                                                                                                                                
                 SB 100-PERS TERMINATION COSTS                                                                              
                                                                                                                                
2:06:12 PM                                                                                                                    
CHAIR EGAN announced SB 100 to be up for consideration.                                                                         
                                                                                                                                
SENATOR PASKVAN, sponsor  of SB 100, said since  the last hearing                                                               
this  bill  has  received  the following  additional  letters  of                                                               
support from  around the state: the  City of Palmer, the  City of                                                               
Fairbanks, the  City of St. Paul,  the City of Ketchikan  and the                                                               
City of Wasilla.  They have received resolutions  from the Alaska                                                               
Municipal League  (AML), the  City of  Nome, the  Fairbanks North                                                               
Star Borough,  and heard support  directly from  the Municipality                                                               
of  Anchorage,  Bristol Bay  and  many  other places  around  the                                                               
state. They  received a  fiscal note  that the  Finance Committee                                                               
would  thoroughly  vet.  Mike   Lamb,  Chief  Financial  Officer,                                                               
Fairbanks  North Star  Borough,  and an  AML representative  were                                                               
available to answer questions.                                                                                                  
                                                                                                                                
CHAIR EGAN objected to take questions.                                                                                          
                                                                                                                                
2:07:55 PM                                                                                                                    
SENATOR  MENARD stated  that this  bill  has nothing  to do  with                                                               
defined benefits (DB) or defined contributions (DC).                                                                            
                                                                                                                                
CHAIR EGAN withdrew his objection.                                                                                              
                                                                                                                                
SENATOR  PASKVAN  moved to  report  SB  100 from  committee  with                                                               
individual recommendations  and attached fiscal note.  There were                                                               
no objections and it was so ordered.                                                                                            
                                                                                                                                
2:09:03 PM                                                                                                                    
At ease from 2:09:03 PM to 2:10:32 PM.                                                                                          
                                                                                                                                
              HB 119-AIDEA: PROCUREMENT; PROJECTS                                                                           
                                                                                                                                
2:10:32 PM                                                                                                                    
CHAIR  EGAN announced  HB 119  to be  up for  consideration [CSHB                                                               
119(EDT)  version  M  was  before   the  committee].  He  said  a                                                               
committee  substitute   had  been  prepared   [SCSCSHB  119(L&C),                                                               
version 27-GH1745\I] and that his staff would present it.                                                                       
                                                                                                                                
2:11:13 PM                                                                                                                    
DANA OWEN,  staff to Senator  Egan, explained the changes  in the                                                               
bill  had been  discussed in  the  last hearing,  but the  Alaska                                                               
Housing Finance  Corporation (AHFC)  had asked  to be  added; the                                                               
SCS  now includes  those changes.  Those changes  were okay  with                                                               
AIDEA and everybody else in  the administration who is interested                                                               
in this issue.                                                                                                                  
                                                                                                                                
He said the  first change amends the title; so  lines 7-9 on page                                                               
1 contain  reference to  the AIDEA sections  of the  bill. Beyond                                                               
that, beginning  on line 12,  sections 1-5, through page  3, line                                                               
26, are all the new AHFC sections of the bill.                                                                                  
                                                                                                                                
The only  other changes  occur on  the last  page, page  6, where                                                               
sections 12  and 13  are new  as a result  of the  AHFC sections.                                                               
Section 14  is the old effective  date and now Section  15 refers                                                               
strictly to  the AHFC  sections of the  bill. He  understood that                                                               
AIDEA  wanted  an  immediate effective  date  because  they  have                                                               
projects that are pending that  they need this authorization for.                                                               
AHFC  may  have  projects,  but didn't  express  an  interest  in                                                               
needing immediate authorization.                                                                                                
                                                                                                                                
CHAIR  EGAN objected  for questions.  He said  the administration                                                               
supports this committee substitute.                                                                                             
                                                                                                                                
SENATOR MENARD  said waiting  until July  is a  little convoluted                                                               
and wondered if  AHFC could have complied with  the same starting                                                               
date as AIDEA did.                                                                                                              
                                                                                                                                
MR.  OWEN said  the bill  could be  changed. He  suggested asking                                                               
AHFC if they would like to have an immediate effective date.                                                                    
                                                                                                                                
2:14:32 PM                                                                                                                    
STACY  SCHUBERT,  Alaska   Housing  Finance  Corporation  (AHFC),                                                               
stated they had no objection to that change.                                                                                    
                                                                                                                                
SENATOR  MENARD  moved as  conceptual  Amendment  1 an  immediate                                                               
effective date  for both entities.  There were no  objections and                                                               
it was so ordered.                                                                                                              
                                                                                                                                
SENATOR  PASKVAN moved  to report  SCS CSHB  119(L&C) as  amended                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note. There were no objections and it was so ordered.                                                                    
                                                                                                                                
2:16:20 PM                                                                                                                    
At ease from 2:16:20 PM to 2:17:48 PM.                                                                                          
                                                                                                                                
         SB 103-WORKERS' COMPENSATION FOR FIREFIGHTERS                                                                      
                                                                                                                                
2:17:48 PM                                                                                                                    
CHAIR EGAN announced SB 103 to be up for consideration.                                                                         
                                                                                                                                
2:18:20 PM                                                                                                                    
SENATOR PASKVAN  moved to bring  CSSB 103( ),  27-LS0595\M before                                                               
the committee.                                                                                                                  
                                                                                                                                
CHAIR EGAN objected for discussion purposes.                                                                                    
                                                                                                                                
SENATOR  FRENCH,  sponsor  of  SB 103,  recapped  that  the  bill                                                               
addresses a  piece of legislation  that passed in 2008  that made                                                               
statutory  changes to  the Workers'  Compensation Program  giving                                                               
firefighters  the  presumption   of  compensability  for  certain                                                               
diseases that  they incur  because of  the work  they do  that so                                                               
often leads  them to  exposure to smoke  and chemicals.  He said,                                                               
"It was  the intent of  the legislature that  this compensability                                                               
presumption go  to firefighters who  had done two  things: they'd                                                               
served  for  seven  years  and  who  had  received  the  required                                                               
physical exams  during that seven  year period and had  not shown                                                               
any evidence of the disease."   However, a wording change made in                                                               
one  committee  had the  unanticipated  effect  of narrowing  the                                                               
scope   of  the   compensability   presumption   to  only   those                                                               
firefighters who had  had an initial physical  examination at the                                                               
time  of their  hire.  This  was not  the  intent  and it  wasn't                                                               
discussed  in  committee.  It  didn't come  to  light  until  the                                                               
Workers' Compensation  Board began  to implement  regulations and                                                               
began to hear cases brought to  it asking to apply the disability                                                               
presumption. Recognizing  the problem, the  Workers' Compensation                                                               
Board passed  a resolution  supporting an  amendment such  as the                                                               
one  in  this  bill  today  to  give  the  presumption  to  those                                                               
firefighters  who  have  worked  for seven  years,  had  all  the                                                               
required exams and had shown no evidence of disease.                                                                            
                                                                                                                                
In  addition, Senator  French said,  a letter  from the  National                                                               
Council  on Compensation  Insurance  says they  believe the  cost                                                               
impact is minimal  and think that money may be  saved by avoiding                                                               
future litigation costs.                                                                                                        
                                                                                                                                
The  second change  the bill  makes is  to clarify  that the  law                                                               
applies  to state  as well  as  municipal firefighting  agencies,                                                               
which picks up a few firefighters  who work for the University of                                                               
Alaska in Fairbanks.  The original bill referred  to a definition                                                               
that  was on  the books  at the  time that  didn't include  state                                                               
firefighters.  So,   "state  or"   was  added  to   the  existing                                                               
definition.                                                                                                                     
                                                                                                                                
SENATOR  FRENCH said  they tried  very  hard to  make the  change                                                               
through regulation, but Legislative  Legal said it "just wouldn't                                                               
fly that way."                                                                                                                  
                                                                                                                                
SENATOR PASKVAN  said he  wanted to make  sure the  University of                                                               
Alaska Fairbanks  (UAF) Fire  Department wasn't  excluded because                                                               
it is in an unusual class by itself.                                                                                            
                                                                                                                                
SENATOR FRENCH responded that page  2 defines "firefighter" as "a                                                               
person  employed by  a state  or municipal  fire department"  and                                                               
that the  UAF firefighters  are absolutely  a subdivision  of the                                                               
state.                                                                                                                          
                                                                                                                                
SENATOR PASKVAN asked  if language on page 2,  lines 23-28, makes                                                               
sure of the retroactive component  so that they actually undo the                                                               
problem that was unintentionally created.                                                                                       
                                                                                                                                
SENATOR FRENCH replied that's "the meat of the bill."                                                                           
                                                                                                                                
2:23:01 PM                                                                                                                    
LAW  HENDERSON, Workers'  Compensation  Administrator, Office  of                                                               
Risk Management,  Municipality of Anchorage, said  he opposed the                                                               
amendment to AS  23.30.121 [SB 103] for several  reasons. He said                                                               
in  2008  the  legislature  enacted   this  presumption  to  give                                                               
firefighters  a   certain  protection  for  diseases   that  were                                                               
considered   work  related.   To  trigger   that  presumption   a                                                               
firefighter must  establish they were given  a qualifying medical                                                               
examination  before firefighting  that did  not show  evidence of                                                               
the disease as well as an  annual medical exam during each of the                                                               
first seven  years of  employment that did  not show  evidence of                                                               
the disease.                                                                                                                    
                                                                                                                                
MR.  HENDERSON said  the first  problem with  the legislation  is                                                               
that  the municipality,  like  most  municipalities, didn't  even                                                               
offer annual physical exams in  1986; they weren't even mandatory                                                               
until  OSHA required  them  in 1989.  Moreover,  testing for  the                                                               
diseases listed in the statute  weren't done or available in most                                                               
cases  until  the 90s  and  in  fact  some testing  still  cannot                                                               
establish  some  of  these  cancers.  He  said  the  municipality                                                               
doesn't know  what constitutes  the medical  examination required                                                               
under the statute.                                                                                                              
                                                                                                                                
Further,  the  statute  directed  the  Department  of  Labor  and                                                               
Workforce Development  (DOLWD) to define  the type and  extent of                                                               
medical  examination needed  to  trigger the  presumption and  to                                                               
create the form for use during  these exams, but no regulation is                                                               
currently in effect  defining the type and  extent of examination                                                               
needed. He said  although the legislation was passed  in 2008, no                                                               
regulation was  presented to the lieutenant  governor until early                                                               
this year  and that will  take effect  later this month.  No form                                                               
has  been  developed.  Thus,  the record  is  devoid  of  medical                                                               
examinations necessary  to trigger the presumption  - even though                                                               
it might exist going forward.                                                                                                   
                                                                                                                                
MR.  HENDERSON  said  despite  the lack  of  the  needed  medical                                                               
examinations,   the  Alaska   Workers'  Compensation   Board  has                                                               
nevertheless found  in favor of  at least one  firefighter simply                                                               
based  on his  statement that  he  had had  a qualifying  medical                                                               
examination. No  medical report was offered  and probably doesn't                                                               
exist. This one case alone will  probably cost the city more than                                                               
$250,000; another  case within the  municipality may  exceed $1.6                                                               
million. Several  other cases are  pending. In  addition, because                                                               
of AS 23.30.121, the municipality is  now unable to insure any of                                                               
its  firefighters for  losses  over  $1 million  as  it has  been                                                               
historically able to do for  all workers' compensation claims. He                                                               
explained  that while  the municipality  is  self-insured with  a                                                               
retention level of $1 million  per workers' compensation loss per                                                               
occurrence,  when  an  injury  happens   to  a  firefighter,  the                                                               
municipality is now compelled to pay  the first $2 million of the                                                               
loss  even if  it  is  unrelated to  a  disease  listed under  AS                                                               
23.30.121. Thus  the legislation has created  an unfunded mandate                                                               
on the  municipality and he  assumed similar  entities throughout                                                               
the state. He pointed out that  smaller entities may be unable to                                                               
fund a self-insurance  program as they may be unable  to fund the                                                               
first $2 million of a loss.                                                                                                     
                                                                                                                                
MR. HENDERSON  said cost  and loss of  insurance aren't  his only                                                               
concerns. Another is the lack  of medical evidence supporting the                                                               
causation.  The Alaska's  Workers'  Compensation  Board has  held                                                               
that if a  condition is one of those listed,  medical opinions or                                                               
studies   to  the   contrary  are   insufficient  to   rebut  the                                                               
presumption. Thus, this  legislation as applied by  the board has                                                               
created  an irrebutable  presumption. According  to the  American                                                               
Cancer Society, cancer  is now the second leading  cause of death                                                               
in the United  States and one out of every  two Americans will be                                                               
diagnosed with it as some point in their lives.                                                                                 
                                                                                                                                
The  question is  whether firefighting  activities put  one at  a                                                               
greater risk  to these cancers.  Twenty-four states  have enacted                                                               
presumption  laws  similar  to  Alaska's.  The  impact  of  these                                                               
statutes  and the  medical research  regarding firefighters  were                                                               
recently  analyzed in  April 2009  and a  report by  the National                                                               
League  of   Cities  entitled  "Assessing   Firefighting  Cancer-                                                               
Presumption Laws  and Current Firefighting Cancer  Research." The                                                               
report  points to  many problems  with the  legislation. Loss  of                                                               
insurance  is  one.  Another  is the  lack  of  medical  research                                                               
establishing  a causal  relationship between  firefighting and  a                                                               
specific  type  of  cancer.  According  to  the  report,  of  the                                                               
thousands of cancer studies taking  place from 1995 to 2008, only                                                               
17 studies looked  at firefighters as a possible  risk factor for                                                               
contracting cancer.  The research concluded  there was a  lack of                                                               
substantive scientific evidence  currently available to determine                                                               
that firefighters face greater risk than the general population.                                                                
                                                                                                                                
2:29:08 PM                                                                                                                    
Another concern  is equity and  questions about fairness  come up                                                               
when  one  class of  employees  obtains  expanded benefits  while                                                               
other employees  such as sanitation workers  and automotive fleet                                                               
personnel  who may  also be  exposed  to similar  hazards as  the                                                               
firefighters are not covered to the same extent.                                                                                
                                                                                                                                
Alaska  already has  a presumption  under AS  23.30.120 that  has                                                               
worked well  since statehood, Mr.  Henderson said. He  urged them                                                               
to repeal  AS 23.30.121 or short  of that to reject  the proposed                                                               
amendment as it  would make every firefighter  who ever developed                                                               
cancer entitled  to the  benefits despite  the lack  of available                                                               
testing as the examination wouldn't  show evidence of the disease                                                               
during the  first seven  years of employment  as the  testing was                                                               
not available.                                                                                                                  
                                                                                                                                
CHAIR EGAN asked him to summarize.                                                                                              
                                                                                                                                
MR. HENDERSON  said these  tests are  available for  some cancers                                                               
but for others it is cost prohibitive or unavailable.                                                                           
                                                                                                                                
SENATOR PASKVAN asked if he  or the municipality objected to this                                                               
law in 2008 when it was passed.                                                                                                 
                                                                                                                                
MR. HENDERSON answered no; but they did in 2007.                                                                                
                                                                                                                                
SENATOR PASKVAN  said it passed  in 2008 and this  amendment just                                                               
corrects an unintentional problem. Did he agree?                                                                                
                                                                                                                                
MR. HENDERSON answered no.                                                                                                      
                                                                                                                                
2:32:26 PM                                                                                                                    
TOM   WESTCOTT,  President,   Alaska  Professional   Firefighters                                                               
Association,  Eagle River,  said they  supported CSSB  103 (L&C),                                                               
version M. He said this version  doesn't change the intent of the                                                               
original law; on  the contrary, it captures the  intent and makes                                                               
it  clearer.   It  has  two   aspects,  the  physicals   and  the                                                               
definition.  The definition  captures  groups like  the UAF  fire                                                               
department.                                                                                                                     
                                                                                                                                
He said some  of what Mr. Henderson said  wasn't accurate because                                                               
the Occupational  Safety and Health Administration  (OSHA) adopts                                                               
standards  and the  National Fire  Protection Association  (NFPA)                                                               
regulation 1582  has the standard  for firefighter  physicals. He                                                               
also noted that at the time  this legislation passed, they had to                                                               
demonstrate  the  scientific  studies  backing up  the  link  for                                                               
cancer to  their profession.  And while  it's true  that everyone                                                               
someday  may  get cancer,  getting  it  at  40  or 38  makes  the                                                               
difference.  Evidence  of this  was  shown  over and  over  again                                                               
during this process.                                                                                                            
                                                                                                                                
2:34:42 PM                                                                                                                    
PAUL HANDBY said  he is a career firefighter for  Juneau and is a                                                               
member  of Alaska  State  Firefighters  Association. He  conveyed                                                               
that he would be omitted  from protection under existing language                                                               
in SB 103, because he  had an extensive  pre-employment physical,                                                               
but  each department  had  the latitude  to  determine their  own                                                               
required physicals and during budgetary  times these physicals on                                                               
an   annual  basis   can   prohibitively   expensive.  So,   many                                                               
municipalities don't  require them.  The change  in the  CS would                                                               
cover him  in the unlikely event  he would be stricken  by one of                                                               
the  named  carcinogens or  something  that  was related  to  his                                                               
occupation.                                                                                                                     
                                                                                                                                
CHAIR EGAN asked if he supported SB 103.                                                                                        
                                                                                                                                
MR. HANDBY replied emphatically yes.                                                                                            
                                                                                                                                
SENATOR  FRENCH offered  that it  is easy  to forget  the crucial                                                               
role  firefighters  play in  protecting  our  communities. It  is                                                               
known that  exposure to  noxious chemicals that  they see  in the                                                               
course of their  employment makes them sick. This  issue was gone                                                               
over carefully  in 2007 and 2008  when this bill passed.  He said                                                               
he  was disappointed  in the  testimony  on this  topic from  the                                                               
Municipality  of Anchorage.  Firefighters take  risks for  us and                                                               
this covers  them when they're  on the  job. Once they  leave the                                                               
employment of  the municipality,  once they  retire, they  are on                                                               
their own for their cancers that they develop later on.                                                                         
                                                                                                                                
This bill got  a zero fiscal note from the  state risk management                                                               
and  it got  a letter  of support  from the  National Council  on                                                               
Compensation  Insurance.  He  said  they looked  "high  and  low"                                                               
through the record to find  out what supported the amendment that                                                               
carved out  and required  that initial exam  and couldn't  find a                                                               
single word of  testimony supporting it. He  wanted Mr. Henderson                                                               
to bring it to his attention if he found something different.                                                                   
                                                                                                                                
CHAIR EGAN closed public testimony and  held SB 103 for a further                                                               
hearing.                                                                                                                        
                                                                                                                                
        SB 116-WORKERS' COMP.: COLL BARGAINING/MEDIATION                                                                    
                                                                                                                              
2:39:34 PM                                                                                                                    
CHAIR EGAN announced SB 116 to be up for consideration.                                                                         
                                                                                                                                
SENATOR  PASKVAN  moved to  bring  SB  116, labeled  27-LS0549\I,                                                               
before the committee.                                                                                                           
                                                                                                                                
CHAIR EGAN objected for discussion purposes.                                                                                    
                                                                                                                                
2:40:21 PM                                                                                                                    
DANA  OWEN, staff  to the  Senate Labor  and Commerce  Committee,                                                               
presented SB  116 [labeled 27-LS0549\I]  on behalf of  the Senate                                                               
Labor and  Commerce Committee,  sponsor. He  said the  concept of                                                               
this bill  was brought to  them by  a number of  different people                                                               
who  recognize that  there have  been problems  with the  current                                                               
Workers' Compensation  system. Originally,  workers' compensation                                                               
was established  to bring speedy,  timely conclusion  to workers'                                                               
compensation  claims for  injuries that  workers received  on the                                                               
job. For  workers it  provided a  means to  be treated  for their                                                               
injuries  with dispatch  and for  the employers  it brought  some                                                               
sense of stability and finality.  They knew they couldn't be sued                                                               
and they  were also  promised they would  have a  reasonably cost                                                               
effective workers' compensation premium.                                                                                        
                                                                                                                                
He said  they had heard  anecdotally for many years  that workers                                                               
have had  great difficulty concluding their  claims. Some workers                                                               
have had  their cases  drag on  for several  years and  they know                                                               
from repeated  contacts by  employers that  workers' compensation                                                               
costs  are viewed  as being  excessive. California  and Minnesota                                                               
are two  states who have  had many  years of experience  with the                                                               
kind of workers'  compensation system that this  bill would allow                                                               
and this  idea makes  the time to  conclude those  claims shorter                                                               
and reduces costs.                                                                                                              
                                                                                                                                
MR. OWEN said  this bill would allow within  the current workers'                                                               
compensation system for an employer  and a group of employees who                                                               
are  represented by  a collective  bargaining  unit to  establish                                                               
beforehand  the terms  under  which  their workers'  compensation                                                               
claims will  be resolved. One  of the key  parts of this  is that                                                               
the   injured   worker   will  be   directed   toward   mediation                                                               
immediately.  Currently  that  mediation  happens  only  after  a                                                               
series  of conflicts.  So, the  two  parties could  agree in  the                                                               
beginning to the  doctor who would initially see  the patient and                                                               
also  to  the   doctor  who  would  provide   a  second  opinion.                                                               
Currently,  the system  generally  takes  three physicians;  this                                                               
would eliminate  one of them. The  net effect would be  to reduce                                                               
costs and to shorten the time for getting people back to work.                                                                  
                                                                                                                                
SENATOR  GIESSEL said  their packets  have a  colored chart  that                                                               
appears   different  than   what  he   described.  She   saw  two                                                               
independent medical  evaluations in the present  system, but none                                                               
in the bill.                                                                                                                    
                                                                                                                                
MR. OWEN explained that the  confusion may be in his description.                                                               
Under  current   workers'  compensation   you  could   get  three                                                               
different  medical  examinations. As  proposed  in  the bill  (by                                                               
agreement between  the two parties),  an injured worker  can have                                                               
as few as two.                                                                                                                  
                                                                                                                                
SENATOR GIESSEL said  that is not what she sees  in the chart and                                                               
or the bill.                                                                                                                    
                                                                                                                                
MR. OWEN  replied that he  is describing the approach  some other                                                               
states are using. This is an example  of one of the ways that two                                                               
parties,  under collective  bargaining, could  agree on  how they                                                               
would handle the claims.                                                                                                        
                                                                                                                                
SENATOR GIESSEL said  language in (1)(B) on page  1, lines 13-14,                                                               
says mediation shall  be conducted by a hearing  officer or other                                                               
classified  employee of  the Division  of Workers'  Compensation.                                                               
She assumed that the employee  would be a classified employee and                                                               
asked  if that  meant the  injured  worker would  be mediated  by                                                               
another classified employee.                                                                                                    
                                                                                                                                
MR. OWEN replied  yes; the bill envisions  using hearing officers                                                               
currently in the division to do the mediation.                                                                                  
                                                                                                                                
SENATOR PASKVAN asked  if this applies to all  workers around the                                                               
state.                                                                                                                          
                                                                                                                                
MR.  OWEN  answered  yes;  all  workers  who  are  covered  under                                                               
collective bargaining agreements.                                                                                               
                                                                                                                                
2:46:38 PM                                                                                                                    
STEVE  RANK,  Iron  Workers International  and  Impact,  a  labor                                                               
management  cooperative  trust fund,  said  he  is based  out  of                                                               
California.  He  explained  that California  experienced  extreme                                                               
medical  costs and  litigation; both  employers and  workers were                                                               
frustrated with  the system.  In 2003,  labor and  management got                                                               
together   and  developed   a  collectively   bargained  workers'                                                               
compensation that  allows employers and labor  representatives to                                                               
sit  down  and  pre-designate  medical providers  so  that  their                                                               
injured workers are provided "the  best medical attention not the                                                               
worst."                                                                                                                         
                                                                                                                                
He  said  these programs  are  voluntary  and don't  require  any                                                               
insurance carrier  or employer to participate.  "They're designed                                                               
to improve  the delivery of  medical benefits to  injured workers                                                               
period." Nothing  in this bill  takes benefits away  from injured                                                               
workers.                                                                                                                        
                                                                                                                                
MR. RANK  said that now  workers don't have  to wait six  or nine                                                               
months to hear about their  claim. Through cooperative efforts of                                                               
the   insurance   carriers,   the   employers   and   the   labor                                                               
representatives  these claims  are  expedited to  make sure  that                                                               
workers are attended to and  that their questions are answered by                                                               
an  ombudsman who  is available  24/7. Published  statistics from                                                               
the states of  California and Minnesota show that  these types of                                                               
programs reduce  medical costs, lost work  days and, importantly,                                                               
litigation.  This  program attempts  to  give  injured workers  a                                                               
method  of  dealing  with  their   issues  without  resorting  to                                                               
unnecessary litigation  in a  system that,  in many  cases, can't                                                               
answer their questions.                                                                                                         
                                                                                                                                
2:50:11 PM                                                                                                                    
KEVIN  GREGERSON,   Program  Administrator,   Union  Construction                                                               
Workers' Compensation Program, Minnesota,  said he developed this                                                               
program back  in 1997  on behalf of  a labor/management  board of                                                               
trustees  and has  been running  it  ever since.  The program  he                                                               
administers  came  out  of 1995  statute  that  Minnesota  passed                                                               
allowing  for these  alternative collectively  bargained workers'                                                               
compensation programs.                                                                                                          
                                                                                                                                
MR. GREGERSON  said he was  asked to compare his  experience with                                                               
the  State of  Minnesota's workers'  compensation system  for the                                                               
last  13  years.  He  said  recent data  showed  that  having  an                                                               
ombudsman  to  answer  question   for  all  parties  resulted  in                                                               
significant  improvement in  terms of  injured workers  receiving                                                               
benefits on  a timely  basis. They  have seen  a reduction  of 40                                                               
percent in the  average cost of a workers'  compensation claim as                                                               
compared to claims  for a similar injury in  a similar occupation                                                               
going  through the  State  of  Minnesota's workers'  compensation                                                               
system. The biggest reason for  that is that they had preselected                                                               
the physicians, the vocational  rehabilitation counselors and the                                                               
attorneys  who serve  as mediators  and arbitrators  who interact                                                               
with their injured participants and contractors.                                                                                
                                                                                                                                
2:53:18 PM                                                                                                                    
He also said that language in  Alaska statute gives the Labor and                                                               
Management Committee the authority to  determine how they want to                                                               
perform  independent medical  examinations.  This  is really  the                                                               
legislature  empowering  labor and  management  to  figure out  a                                                               
better  way  to  deliver  the  same  set  of  statutory  benefits                                                               
utilizing people  that they have  mutual trust with and  have the                                                               
ability  to work  with who  understand the  construction industry                                                               
and the unique aspects that that industry faces.                                                                                
                                                                                                                                
2:54:41 PM                                                                                                                    
FRED  BROWN,  Executive  Director, Health  Care  Cost  Management                                                               
Corporation of  Alaska, Fairbanks, said  they support SB  116. He                                                               
said his letter  is with the committee, but he  wanted to mention                                                               
that  his  corporation  is focused  on  controlling  health  care                                                               
costs. Associated  charts show Alaska  is among the  highest cost                                                               
states  in  the  union  for  delivery  of  workers'  compensation                                                               
benefits generally and specifically that  75 percent of the total                                                               
costs of workers' compensation are medical.                                                                                     
                                                                                                                                
MR.  BROWN said  the  2009 report  of  the Workers'  Compensation                                                               
Medical Services Review  Committee observed on page  10 that even                                                               
though  there is  the opportunity  to  create preferred  provider                                                               
networks,  there  is  no  incentive to  do  so,  because  statute                                                               
doesn't  require providers  to  participate. So,  they view  this                                                               
langauge as an opportunity for  labor and management to negotiate                                                               
together  with  providers  to   institute  a  preferred  provider                                                               
network if they choose to do so.                                                                                                
                                                                                                                                
SENATOR  PASKVAN asked  if he  knows what  the potential  savings                                                               
might be if this system is followed.                                                                                            
                                                                                                                                
MR. BROWN  replied that his organization  can sometimes negotiate                                                               
significant discounts in the neighborhood of 50-60 percent.                                                                     
                                                                                                                                
2:57:17 PM                                                                                                                    
LAIRD  GRANTHAM,  Carpenters  Local   1243,  Fairbanks,  said  he                                                               
supported SB 116. He said that  from 2005 to 2009, Alaska has had                                                               
the highest workers' compensation rates  in the nation. They make                                                               
Alaska  the  very  least  competitive  state  in  the  union  for                                                               
conducting business according to a  CNBC report. Because of this,                                                               
they  see  more  "shady  employers"  who  have  no  insurance  or                                                               
misclassify  their   employees  to  cut  costs   and  "cheat  the                                                               
industry." He said  this bill will allow for  quick resolution of                                                               
a claim and at a much lower cost to all parties.                                                                                
                                                                                                                                
Just yesterday, Mr. Grantham said,  his office received a request                                                               
for information  about a workers'  compensation claim  dated back                                                               
to  1988  and  remarked,  "Why   should  any  one  individual  or                                                               
companies have  to wait that  long for  any type of  closure?" He                                                               
said it's time to allow this voluntary program in Alaska.                                                                       
                                                                                                                                
2:58:47 PM                                                                                                                    
PAUL GROSSI,  lobbyist for the  Alaska State Pipe Trades  and the                                                               
Iron  Workers, said  he supported  SB 116  and that  most of  his                                                               
points  were already  covered. But,  he  said, all  of them  have                                                               
probably  had some  experience with  constituent complaints  from                                                               
either employers about  the cost of the system  or from employees                                                               
about how cumbersome  the system is.  He used  to be the director                                                               
of  Workers'  Compensation  in  Alaska  and  used  to  get  these                                                               
complaints; he knows what they are about.                                                                                       
                                                                                                                                
MR. GROSSI  stated that this  bill is just enabling  language. It                                                               
will  allow  groups  under  a  collective  bargaining  system  to                                                               
improve the ways  to deal with some of  the costs, inefficiencies                                                               
and  difficulties in  getting treatment.  When  he first  started                                                               
working at  the Division of Workers'  Compensation, medical costs                                                               
were 30 percent  of the entire cost and now  they are 75 percent.                                                               
"So, there  is a drastic need  to address some of  these issues."                                                               
This bill allows pilot projects on improvements to the system.                                                                  
                                                                                                                                
3:02:07 PM                                                                                                                    
LAW HENDERSON,  Workers' Compensation Coordinator,  Department of                                                               
Risk Management,  Municipality of  Anchorage, said he  opposed SB                                                               
116. He  said the  Municipality of  anchorage has  eight separate                                                               
bargaining units and one exempt unit.  With SB 116, it could very                                                               
likely   end  up   being  governed   by  two   separate  workers'                                                               
compensation  systems, one  with  a due  process protection  (the                                                               
current one) and one without.                                                                                                   
                                                                                                                                
He noted  that Section  1 of  the bill  simply codifies  what the                                                               
Division  of Workers'  Compensation has  been doing  for about  a                                                               
decade already - which is fine.  The problem is in Section 2 that                                                               
creates   a  new   workers'  compensation   system  through   the                                                               
collective  bargaining  process.   AS  23.30.285(a)(1)  says  the                                                               
division would  have to hire  more employees devoted to  this new                                                               
alternative  or  parallel system.  Beyond  that,  the statute  is                                                               
vague. It his  understanding that the system  envisioned under SB                                                               
116 is what Minnesota does,  but that system stripped the parties                                                               
of  discovery and  selection rights  afforded  under the  current                                                               
system. For  example, under  the current  system an  employer may                                                               
obtain an independent medical evaluation  to determine whether an                                                               
injury is  work-related or not  and if not  work-related, whether                                                               
disability,  permanent impairment,  medical  vocational or  other                                                               
benefits  are warranted  under the  Alaska Workers'  Compensation                                                               
Act. Under the  system envisioned in SB 116, the  employer has no                                                               
right  to an  independent  medical  examination. Without  medical                                                               
evidence  to  support  a  denial  of  benefits,  an  employer  is                                                               
prevented by  law from denying  benefits. If denied  without such                                                               
evidence,  an  employer  faces  a  25  percent  penalty  and  the                                                               
adjuster faces possible loss of his license.                                                                                    
                                                                                                                                
3:04:39 PM                                                                                                                    
Thus, he  said, under SB  116, an  employer is unable  to develop                                                               
contrary  medical  evidence  and  is compelled  to  simply  write                                                               
checks for  benefits having  lost any  mechanism for  testing the                                                               
validity of the  employee's claim. Under the  current system, the                                                               
Alaska  workers'   compensation  Board  itself  may   request  an                                                               
independent medical  evaluation by  a physician of  its choosing.                                                               
Under SB 116, no such  evaluation is permitted. Under the current                                                               
system, the  employee is free  to treat with whoever  he chooses;                                                               
under SB  116 they  can only  select from  the list  developed by                                                               
their  trust.   The  current   system  has   numerous  vocational                                                               
counselors available  to the employee;  under SB 116  an employee                                                               
is limited to  those developed by the trust.  The only similarity                                                               
between the two systems is who  pays for them - insurers and self                                                               
insureds -  thereby increasing the  cost of the  overall workers'                                                               
compensation system.  In short, SB  116 would develop  a parallel                                                               
system devoid  of the constitutional due  process protections and                                                               
choices available under the current system.                                                                                     
                                                                                                                                
CHAIR EGAN said he assumed he opposed SB 116.                                                                                   
                                                                                                                                
MR. HENDERSON responded yes.                                                                                                    
                                                                                                                                
3:06:31 PM                                                                                                                    
DAVID  MECUEN, President,  California Erectors,  California, said                                                               
he  is  also  co-chair  of  the  California  Field  Iron  Workers                                                               
Negotiated Workers' Compensation Program.  He explained that they                                                               
developed   this  program   in   2003   because  their   workers'                                                               
compensation program  was "out  of control."  Forty-three percent                                                               
of  their base  wage  was being  paid  for workers'  compensation                                                               
premium, but  after legislative changes, California  is paying 14                                                               
percent  of  base wage  for  workers'  compensation premium  -  a                                                               
substantial savings.                                                                                                            
                                                                                                                                
MR. MCCUEN  said California has  a parallel program; it  has both                                                               
signatory  and  non-signatory   employees  covered  through  this                                                               
program. It  is not a  burden whatsoever  and it has  worked well                                                               
for  them.  He has  not  heard  one  complaint from  the  workers                                                               
covered  under the  negotiated program  and  delivery of  medical                                                               
care is "a lot better than it  used to be." Someone had a rotator                                                               
cuff injury; in  the old days it would have  taken him six months                                                               
before  he would  actually get  authorization for  surgery. Under                                                               
their new program, the person  got authorization within two weeks                                                               
and  returned   to  work  within   six  months.  The   costs  are                                                               
considerably  less;  so much  so  that  they  have been  able  to                                                               
actually pay their guys more for temporary disability.                                                                          
                                                                                                                                
He said nothing  in their process prohibits  attorneys from being                                                               
involved, so  if an  injured worker  wants representation  he can                                                               
have it. He said it's a much  better way of doing business and it                                                               
saves money for everybody.                                                                                                      
                                                                                                                                
3:09:55 PM                                                                                                                    
MR. MCCUEN  said it also saves  money for the state  by lessening                                                               
the  burden on  their workers'  compensation appeals  process. In                                                               
California,  an  appeal  takes 1-4  years;  under  their  current                                                               
dispute resolution  program they get  mediation in 2-6  weeks and                                                               
if  it does  go  to arbitration,  which is  very  rare, it  takes                                                               
another 2-4  weeks. It's  a much  faster process  with phenomenal                                                               
savings. "Everybody wins under this."                                                                                           
                                                                                                                                
SENATOR PASKVAN asked how long their program has been operating.                                                                
                                                                                                                                
MR. MCCUEN answered eight years.                                                                                                
                                                                                                                                
SENATOR  PASKVAN  asked  in  what   categories  the  savings  are                                                               
located.                                                                                                                        
                                                                                                                                
MR.  MCCUEN  replied  much  of the  savings  comes  from  quicker                                                               
resolution  of  the  problems  and  reduction  in  medical  rates                                                               
through   a  preferred   provider  program   (PPO).  Using   PPOs                                                               
eliminates  doctors who  don't  work  with workers'  compensation                                                               
patients and  in most cases the  doctors they use are  the ones a                                                               
worker  would  choose  to  see   on  his  own.  Their  costs  are                                                               
discounted  by  20-30 percent  and  if  someone  wants to  see  a                                                               
specialist it  takes about  one-third the time  it used  to take.                                                               
They  also  see savings  through  reduced  MOD rates  (Experience                                                               
Modification  Rate) by  several percentage  points which  reduces                                                               
claim costs.  Issues are  resolved much  faster which  saves even                                                               
more money.  In the old system  an injury took six  months to get                                                               
back to work system and now it takes generally takes six weeks.                                                                 
                                                                                                                                
3:13:01 PM                                                                                                                    
SENATOR PASKVAN verified that the  base rate was 43 percent eight                                                               
years ago and now it's 14 percent.                                                                                              
                                                                                                                                
MR. MCCUEN  replied that was correct,  but that was for  his firm                                                               
only.                                                                                                                           
                                                                                                                                
SENATOR  PASKVAN  asked  if  that   reduction  in  base  rate  is                                                               
monitored by private insurers.                                                                                                  
                                                                                                                                
MR. MCCUEN  answered that  California has  a state  rating bureau                                                               
and  the state  rates  his  firm based  on  costs  and number  of                                                               
claims;  that  has  also  gone down.  Their  category,  which  is                                                               
construction over two  stories, has seen a  dramatic reduction as                                                               
a result of alternative dispute  resolution (ADR), for which they                                                               
also set the rate.                                                                                                              
                                                                                                                                
3:14:33 PM                                                                                                                    
MIKE  MONAGLE,  Director,   Division  of  Workers'  Compensation,                                                               
Department of  Labor and Workforce  Development (DOLWD),  said he                                                               
was available to answer questions,  but the administration had no                                                               
position on SB 116.                                                                                                             
                                                                                                                                
SENATOR PASKVAN  said he saw  the two  components of the  bill as                                                               
different  types of  alternative  dispute  resolution models.  He                                                               
asked Mr. Monagle if he saw a benefit with both models.                                                                         
                                                                                                                                
MR.  MONAGLE  replied he  wasn't  sure  what  he meant  by  "both                                                               
models."  There is  an  alternative  dispute resolution  process,                                                               
which includes mediation and if  that is not successful, they can                                                               
go to arbitration.                                                                                                              
                                                                                                                                
SENATOR  PASKVAN said  in other  words  in Section  1 any  worker                                                               
injured under  any circumstance can attend  mediation; that's one                                                               
method.  The second  section  talks  about collective  bargaining                                                               
agreements  where   any  employer   dealing  with   a  collective                                                               
bargaining agent, if  they want to, can reach an  agreement as to                                                               
an alternative dispute resolution  mechanism. His question to Mr.                                                               
Monagle  is if  he sees  the benefit  of the  alternative dispute                                                               
resolution process an improvement in  both methods whether it's a                                                               
represented worker or a non-represented worker.                                                                                 
                                                                                                                                
3:16:39 PM                                                                                                                    
MR. MONAGLE replied  first about Section 1  saying that mediation                                                               
has been taking  place in the workers' compensation  system for a                                                               
number of years;  last year they mediated about  40 complex cases                                                               
with about  90 percent satisfactory settlement  that was approved                                                               
by the  board. He thinks that  mediation is a valuable  tool that                                                               
can often lead to reduced disputes and quicker resolution.                                                                      
                                                                                                                                
The second section also has  a mediation and arbitration process.                                                               
It's is difficult  for him to answer, because it  talks about the                                                               
ultimate  dispute   resolution  process   being  set  out   in  a                                                               
collective  bargaining   agreement.  His   workers'  compensation                                                               
officers mediate  terms under the  Workers' Compensation  Act and                                                               
don't mediate terms under a collective bargaining agreement.                                                                    
                                                                                                                                
3:18:08 PM                                                                                                                    
SENATOR  PASKVAN asked  if all  workers in  Alaska are  currently                                                               
covered by workers' compensation statutes.                                                                                      
                                                                                                                                
MR. MONAGLE replied yes - with a few statutory exceptions.                                                                      
                                                                                                                                
SENATOR PASKVAN asked  if he viewed Section 2 as  an exception to                                                               
the workers'  compensation coverage.  Is the  alternative dispute                                                               
resolution  a viable  cost savings  method  and what  would be  a                                                               
better method if there is one?                                                                                                  
                                                                                                                                
MR.  MONAGLE   replied  that  he   didn't  know   of  alternative                                                               
possibilities   for   resolving    disputes   in   the   workers'                                                               
compensation  system,   but  Section   2  allows   employers  and                                                               
employees  to come  up  with  a solution  to  disputes through  a                                                               
collective  bargaining  process  that  may  mirror  the  Workers'                                                               
Compensation Act. Current experience  is that a mediation process                                                               
can bring quicker resolution, but  he couldn't speak specifically                                                               
to the terms of what a collective bargaining agreement might be.                                                                
                                                                                                                                
3:21:10 PM                                                                                                                    
SENATOR GIESSEL  asked what  he would describe  as broken  in the                                                               
Workers' Compensation Act now.                                                                                                  
                                                                                                                                
MR. MONAGLE replied that the bill  does a good job of identifying                                                               
some  areas   in  the  workers'  compensation   system  that  are                                                               
"broken."  He explained  that the  department  receives 20,000  -                                                               
25,000 reports of  injury every year and in the  vast majority of                                                               
these cases the injured worker  receives speedy medical treatment                                                               
and timely  disability benefits, but a  small percentage actually                                                               
end up in complex disputes. These get a lot of attention.                                                                       
                                                                                                                                
Medical costs  in the system are  high and last year  he found it                                                               
took about  two years from  the time a  dispute is begun  until a                                                               
final decision  was made. One  of the  areas the bill  touches on                                                               
that the  current workers' compensation  system does  not address                                                               
is a return to work program.                                                                                                    
                                                                                                                                
SENATOR GIESSEL said she is  by profession a health care provider                                                               
who  has  provided  workers'  compensation  services  to  injured                                                               
workers and  asked him to  describe what kind of  case management                                                               
an employee gets to help him negotiate the system.                                                                              
                                                                                                                                
MR.  MONAGLE  answered  that   they  have  workers'  compensation                                                               
officers as part of their staff  and they are available to assist                                                               
injured workers  in knowing what  their rights are. For  the most                                                               
part,  an injured  worker under  the  current system  is free  to                                                               
receive  the medical  treatment  of their  choice.  There are  no                                                               
restrictions on  whom they can treated  by or from or  the nature                                                               
or scope of  their treatment. The employer reserves  the right to                                                               
send the  injured worker to  a doctor of their  choice. Sometimes                                                               
there  are  medical  disputes  over whether  a  certain  mode  of                                                               
treatment is  necessary or  not. Often  when those  disputes come                                                               
before the  board, they have a  panel of medical experts  that it                                                               
can assign.  If the  parties are still  in dispute,  the workers'                                                               
compensation board  is free  to weigh  all that  medical evidence                                                               
and  find what  portion -  all,  some or  none -  is credible  in                                                               
awarding benefits  to the injured worker  or withholding benefits                                                               
from him.                                                                                                                       
                                                                                                                                
3:25:21 PM                                                                                                                    
SENATOR MENARD  asked how  often the  medical board  meets saying                                                               
she was trying to figure out how  big the holdup is. How bad is a                                                               
medical dispute for the business  climate overall? PPOs are never                                                               
popular.                                                                                                                        
                                                                                                                                
MR. MONAGLE  replied that  there is  no person  or board  that an                                                               
injured person  has to await  to approve their  treatment. Delays                                                               
typically  have to  do with  hearing  back from  the employer  or                                                               
their  insurance company  on whether  they  believe something  is                                                               
compensable or not.                                                                                                             
                                                                                                                                
SENATOR  GIESSEL said  the  process  now has  the  option for  an                                                               
independent  evaluation. How  often is  that used  and what  does                                                               
that entail?                                                                                                                    
                                                                                                                                
MR. MONAGLE replied typically it's  the employer who asks for the                                                               
independent  medical   evaluation  and  that  is   based  on  the                                                               
experience of  a particular case  manager or  claim administrator                                                               
and if  he believes  there is sufficient  evidence to  warrant an                                                               
independent  review.  Normally,  the   process  begins  when  the                                                               
insurance  company asks  the  injured worker  to  sign a  medical                                                               
release. Then  they will  look at copies  of his  medical records                                                               
for any  red flags;  for instance  if he  previously had  a motor                                                               
vehicle accident and they think  maybe his current complaints are                                                               
more related to that accident  than his occupational injury, then                                                               
they might ask for an  independent medical examiner and ask those                                                               
types of questions to determine  whether or not there is contrary                                                               
medical evidence  to warrant the  payment of  a claim or  not. He                                                               
said the vast majority of these cases are paid with no dispute.                                                                 
                                                                                                                                
3:29:29 PM                                                                                                                    
SENATOR GIESSEL  asked if he  saw the  removal of that  option to                                                               
ask for an independent medical  evaluation from an employer or an                                                               
employee in SB 116.                                                                                                             
                                                                                                                                
MR. MONAGLE replied  that Section 2 provides  that the collective                                                               
bargaining  agreement   can  establish   an  exclusive   list  of                                                               
providers   and  an   exclusive  list   of  independent   medical                                                               
evaluators.  Now,  the  assumption  he  is  making  is  that  the                                                               
employer  and  the employee  have  agreed  to  the terms  of  the                                                               
collective  bargaining agreement  and therefore,  have agreed  to                                                               
establish  that exclusive  list and  abide  by the  terms of  the                                                               
agreement. In  that regard some  rights are preserved  by parties                                                               
because they aren't forced into these agreements.                                                                               
                                                                                                                                
SENATOR GIESSEL thanked him and said since they had heard from                                                                  
lots of employee groups that she wanted also to hear from some                                                                  
employers.                                                                                                                      
                                                                                                                                
3:31:31 PM                                                                                                                    
CHAIR EGAN said they would invite employers. Finding no further                                                                 
business to come before the committee, he adjourned the meeting                                                                 
at 3:31 p.m.                                                                                                                    

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