03/15/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: "how Equality Policies Work to Strengthen Economies and the Labor Force." | |
| SB28 | |
| HB267 | |
| SB116 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 267 | TELECONFERENCED | |
| += | SB 116 | TELECONFERENCED | |
| = | SB 28 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 15, 2012
1:48 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
PRESENTATION: "How Equality Policies Work to Strengthen
Economies and the Labor Force."
- HEARD
SENATE BILL NO. 28
"An Act making sales of and offers to sell certain energy
resources at prices that are unconscionable an unlawful act or
practice under the Alaska Unfair Trade Practices and Consumer
Protection Act."
- MOVED SB 28 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 267(L&C)
"An Act relating to the Real Estate Commission; and providing
for an effective date."
- MOVED 2d CSHB 267(JUD) OUT OF COMMITTEE
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 AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 28
SHORT TITLE: PRICE GOUGING INVOLVING ENERGY RESOURCES
SPONSOR(s): SENATOR(s) WIELECHOWSKI, ELLIS, FRENCH
01/19/11 (S) PREFILE RELEASED 1/7/11
01/19/11 (S) READ THE FIRST TIME - REFERRALS
01/19/11 (S) L&C, FIN
03/13/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/13/12 (S) Heard & Held
03/13/12 (S) MINUTE(L&C)
03/15/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 267
SHORT TITLE: REAL ESTATE SALES LICENSEES/COM'N
SPONSOR(s): REPRESENTATIVE(s) MUNOZ, OLSON
01/17/12 (H) PREFILE RELEASED 1/13/12
01/17/12 (H) READ THE FIRST TIME - REFERRALS
01/17/12 (H) L&C
02/06/12 (H) L&C AT 3:15 PM BARNES 124
02/06/12 (H) Moved CSHB 267(L&C) Out of Committee
02/06/12 (H) MINUTE(L&C)
02/08/12 (H) L&C RPT CS(L&C) 4DP
02/08/12 (H) DP: CHENAULT, THOMPSON, HOLMES, OLSON
02/13/12 (H) JUD REFERRAL ADDED
02/20/12 (H) JUD AT 1:00 PM CAPITOL 120
02/20/12 (H) Moved 2d CSHB 267(JUD) Out of Committee
02/20/12 (H) MINUTE(JUD)
02/22/12 (H) JUD RPT 2D CS(JUD) NT 5DP 2NR
02/22/12 (H) DP: LYNN, GRUENBERG, THOMPSON, HOLMES,
PRUITT
02/22/12 (H) NR: KELLER, GATTO
02/24/12 (H) MOTION TO ADOPT CS(L&C) WITHDRAWN UC
02/24/12 (H) 2D CS(JUD) ADOPTED UNAN CONSENT
02/24/12 (H) TRANSMITTED TO (S)
02/24/12 (H) VERSION: 2D CSHB 267(JUD)
02/27/12 (S) READ THE FIRST TIME - REFERRALS
02/27/12 (S) L&C
03/15/12 (S) L&C AT 1:30 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)
04/05/11 (S) Heard & Held
04/05/11 (S) MINUTE(L&C)
01/19/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
01/19/12 (S) Heard & Held
01/19/12 (S) MINUTE(L&C)
02/21/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/21/12 (S) -- MEETING CANCELED --
02/23/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/23/12 (S) Scheduled But Not Heard
02/28/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/12 (S) Scheduled But Not Heard
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/01/12 (S) Heard & Held
03/01/12 (S) MINUTE(L&C)
03/15/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CHRISTINE COUGHMAN, Montana State Senator
Missoula, MT
POSITION STATEMENT: Gave presentation on "How Equality Policies
Work to Strengthen Economies and the Labor Force."
JAMIE GREER, nondiscrimination activist and lobbyist
Missoula, MT
POSITION STATEMENT: Supplemented Ms. Coughman's presentation on
equality policies.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 28.
ED SNIFFEN, Assistant Attorney General
Civil Division
Commercial and Fair Business Section
Alaska Department of Law
Anchorage, AK
POSITION STATEMENT: Commented on Alaska's anti-trust and
consumer protection statutes relative to SB 28.
TERRY HARVEY, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on HB 267 for the sponsor.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community and Economic Development
(DCCED)
POSITION STATEMENT: Commented on Alaska's Workers' Compensation
system and how she thought SB 116 would affect insurance
premiums.
PAUL GROSSI, Lobbyist
Pipefitters and Iron Workers
Juneau, AK
POSITION STATEMENT: Supported SB 116.
MIKE MONAGLE, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Juneau, AK
POSITION STATEMENT: Pointed out the division's concerns with SB
116.
ACTION NARRATIVE
1:48:56 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:48 p.m. Present at the call to
order were Senators Menard, Davis and Chair Egan. Senators
Giessel and Paskvan joined the meeting a couple of minutes
later.
^Presentation: "How Equality Policies Work to Strengthen
Economies and the Labor Force."
Presentation: "How Equality Policies
Work to Strengthen Economies and the Labor Force."
1:49:34 PM
CHAIR EGAN welcomed Christine Coughman to give a presentation on
equality work policies.
CHRISTINE COUGHMAN, Montana State Senator, thanked the Chair.
She stated that in addition to being a Senator, she had been
director of the Human Rights Network, which takes a broad view
of human rights in Montana: everything from helping communities
respond to violence and intimidation that occurs to minority
populations and white supremacist rhetoric and activities of
groups such as the Militia and Freemen. They look at health care
as a human right along with a broad base of issues. Even though
she no longer works there, she still looks at gay, lesbian,
bisexual and transgender equality as a civil rights issue, and
believes that what is good for human rights is also good for
business.
1:50:33 PM
SENATOR GIESSEL joined committee.
MS. COUGHMAN said equality really means fairness, and fairness
provides a multitude of intangible benefits to businesses
everywhere. Many people are looking for a work place that
recognizes the relationships that all employees have. It means
having a much more open and innovative business climate that
ensures fundamental fairness and basic civil rights for
everyone. Alaska has an opportunity, as other states do, to lead
by embracing non-discrimination polices ensuring that all
shareholders, employees and consumers can live their lives to
their fullest potential.
MS. COUGHMAN said to not underestimate what it means to a gay or
lesbian employee to live in fear of losing their job should
their family life become a topic of conversation among their
colleagues. Keeping their lives secret from people who may wish
them harm may become their focus rather than being productive in
their jobs.
Further, equality benefits corporate recruitment, retention and
morale, she said. Demographers have found that the new
generation of highly desirable workers are likely to choose
where they want to live first and then look for their job. They
often cite diversity and inclusive policies in the work force as
a reason why they want to move to a community in order to accept
employment. The discussion in Montana is often about why young
people are leaving the state for opportunities elsewhere, and
people should stay open to the possibility that these kinds of
policies help people decide to come to a community. Whether or
not a person is gay or lesbian, he or she wants to feel that
there are inclusive policies of diversity in the work force
where they live and work.
MS. COUGHMAN said the younger generation is much more
comfortable with these policies than others in terms of wanting
them present in order to go to work and feel good about their
company.
1:56:26 PM
SENATOR PASKVAN joined the committee.
MS. COUGHMAN said equality policies would put Alaska businesses
in the strongest and most competitive position to attract,
recruit and retain the best and brightest employees as well as
keep high caliber employees in the state. Alaska employers risk
losing same sex-couples and their allies to Vancouver, Seattle
or other places where these polices are already in place. Great
states and cities must demonstrate a commitment to creating
open, healthy and equitable environments in which to live and
work. Businesses would face lower recruiting costs with an
expanded pool of qualified candidates.
There is some threat of negative publicity around these issues,
as well. For instance, recently, two employees of the University
of Montana sued the university system because they were denied
health benefits for their partners. It went all the way to the
Montana Supreme Court that ruled in favor of the plaintiffs,
because the University system had a policy that allowed opposite
sex but unmarried couples to receive health benefits. The Court
said you must treat unmarried same-sex couples the same; you
cannot discriminate against one over the other. The University
could have decided to drop that benefit, but it would have
affected a large number of people already getting it. And they
did make the right choice to keep it. She said the State of
Montana followed suit, and as a result she and her partner were
able to take advantage of the same benefits as her colleagues
do, making her equal to them in the Senate.
MS. COUGHMAN said she wished she could say Montana had been
successful in passing statewide non-discriminating policies, but
that is not the case. They have tried 10 times over the last two
decades to pass additions to their human rights law that would
provide non-discrimination policies in employment, housing,
benefits and public accommodations. Even though they have not
been successful, people are getting educated in the process.
This issue has now has moved to the municipalities, like
question 5 in Anchorage.
1:58:55 PM
She said that one city in Montana had already adopted non-
discrimination policies and other cities are lining up. It
really does beg for a statewide solution in many ways, because
really, do you want your citizens receiving different
protections based on where they happen to work or recreate and
visit?
MS. COUGHMAN said the reason she asked Jamie Greer to chat with
them is because he is on the forefront of the effort to organize
for non-discrimination benefits in cities across the state of
Montana. She invited him forward to address the committee.
1:59:33 PM
JAMIE GREER, non-discrimination activist and lobbyist, Missoula,
Montana, said his job primarily is reaching out to business
owners and making sure they understand not just what they are
doing and why it's important, but also helping them find ways to
come forward in their support and also change their internal
policies. Right now in Montana, similar to what is happening in
Alaska, gay, lesbian, bisexual and transgender residents are not
included in the Montana Human Rights Act. He is approaching
businesses and saying what they are doing is not unique and they
are not alone.
He said that 89 percent of Fortune 500 companies in this country
already have workplace policies that protect gay and lesbian
individuals, and Wal-Mart Stores, Inc., the largest private
employer in the world, recently added transgender people to
their nondiscrimination policy. He is trying to branch out and
build support on a local level using a list of substantial
corporations that are doing business located in the Pacific, the
Pacific Northwest and the West.
MR. GREER said 190 major businesses achieved the top score of
100 on the Human Rights Campaign's equality index, which can
easily be found on line. That means that major corporations are
already taking the steps to protect gay and lesbian employees,
and they are doing this because it makes sense in terms of
keeping the best and the brightest employees at their
corporations. An increasing number of companies, large and
small, are reimbursing gay and lesbian employees for the taxes
that they pay on health insurance benefits for their spouses and
domestic partners. It's a tax that does not apply to
heterosexual married couples.
2:02:53 PM
SENATOR MENARD asked where they have gone on a scale from one to
ten as far as improvement.
MS. COUGHMAN answered they have gone from 1 to 7.2. They passed
a non-discrimination bill out of one House in a previous year.
This year the Senate passed a different equality bill related to
language that remains in their felony laws regarding same-sex
neighbors; the House hadn't been cooperating though.
SENATOR MENARD asked how many states favor this issue.
MR. GREER didn't know the specific number, but almost 50 percent
of Americans have either statewide or municipal protections.
SENATOR DAVIS welcomed Senator Coughman to the state, commending
and encouraging her on her work.
SB 28-PRICE GOUGING INVOLVING ENERGY RESOURCES
2:05:47 PM
CHAIR EGAN announced consideration of SB 28.
SENATOR WIELECHOWSKI, sponsor of SB 28, said he had received
many phones calls and emails in support of SB 28 and none
opposing it.
2:07:32 PM
SENATOR GIESSEL asked Mr. Sniffen, Department of Law, if he had
investigated fuel prices in the past.
ED SNIFFEN, Assistant Attorney General, Department of Law, said
his responsibilities include enforcement of anti-trust and
consumer protection statutes. In that role, he had investigated
fuel prices in the last decade.
SENATOR GIESSEL asked if he found any issues.
MR. SNIFFEN replied that pricing investigations are tricky,
because anti-trust law requires finding evidence of collusion or
coordinated conduct. The department has retained experts to look
at fuel pricing in the State of Alaska, the details of which are
confidential, but they have released a couple of reports setting
out their findings. No evidence of illegal activity - any
collusion or coordinated conduct - had been found of among the
refiners, distributors or retailers in the state.
He said one of the good things about this particular bill is
that it would remove the requirement to actually find collusion
or coordinated conduct. They could look at conduct that is just
"unconscionable." But the tricky thing would be if determining
unconscionable would be any easier than determining collusion or
coordinated conduct.
SENATOR GIESSEL asked if he knew of a definition of
unconscionable.
MR. SNIFFEN responded that case law provides some guidance on it
using words like excessive or exorbitant. In discussions with
Senator Wielechowski's office, they decided that unconscionable
would be slightly easier to identify than collusion or
coordinated conduct, only because a couple of cases actually
define what that means, although he didn't know how it would
apply in Alaska. For example, in Pennsylvania and Ohio they say
unconscionable means something that affronts the sense of
justice, decency and reasonableness. Senator Wielechowski
pointed out that in most states, price gouging laws require a
declared state of emergency before the laws kick in; then you
have a baseline. You could point out a company that had raised
its price by 300 percent only because Hurricane Katrina came in
and wiped out a lot of people. But because of Alaska's lack of
competition, distributors and refiners can charge what they like
without a declared state of emergency, and he had never had to
look at an unconscionable price.
SENATOR GIESSEL remarked that he just said he didn't have a
determination of "unconscionable price."
MR. SNIFFEN replied that was right, and he would have to come up
with a test if this bill passed. Also, if you are going to tell
somebody they can't charge something, the follow-up might be
having to tell them what they can charge. An accounting would be
required to determine what their costs are, what their
investment risks are and what their return on capital is. Then
it starts to look a lot like regulation, which is what the RCA
does.
SENATOR GIESSEL said page 2, line 2, refers to "fuel for space
heating." In Anchorage that fuel is natural gas; in other areas
it's diesel. What does this refer to and who regulates that
price?
MR. SNIFFEN answered most diesel fuel that is used for heating
(delivered by a tank wagon or a truck) is the kind of space
heating fuel that would be covered by this bill, but natural gas
could also be used, and that is regulated by the RCA. The RCA
does not regulate prices for fuel oil.
SENATOR GIESSEL asked if this language conflicts with the RCA's
regulatory authority over natural gas.
2:15:09 PM
MR. SNIFFEN replied maybe, but by default, it would only apply
to the commodity that is regulated by the RCA. He didn't know if
there would be an actual conflict in the sense that the RCA
would not attempt to regulate this kind of fuel product.
SENATOR WIELECHOWSKI responded that this provision was added in
a committee several years ago by the Senate Energy Committee; at
that time, Senator Hoffman and Senator Stedman were concerned
about high costs in rural and Southeast Alaska, particularly, in
areas that use diesel oil for heating. It was never the intent
to regulate an energy source that is currently regulated by the
RCA.
SENATOR PASKVAN asked Mr. Sniffen to comment on the difficulty
in applying a collusion or coordinated conduct standard in a
smaller limited market where there could be either an oligopoly
or a monopoly.
MR. SNIFFEN answered that it's very difficult to find illegal
collusion or coordinated conduct in a smaller market, because
prices are displayed for everyone to see. There is no need for
competitors to engage in illegal conduct, because everyone knows
what everyone else is doing. Even in Anchorage, where there is
robust competition for gasoline, collusion between retailers is
very difficult to uncover. Several years ago, the Attorney
General's Office found evidence that some retailers had meetings
and agreed to fix the price on gasoline, and he took action by
shutting the stations down. But absent a "mole" or "whistle
blower" who is at those kinds of meetings, it is very difficult
to find.
2:18:51 PM
SENATOR WIELECHOWSKI said originally the bill had a specific
trigger of 10 percent higher than Seattle gas prices. Refiners
didn't like that; it was too specific, even though the two
prices had tracked for years. Then they tried using "excessive"
or "exorbitant" and were finally advised by attorneys that using
"unconscionable" was a better standard, because it is used in
other states and in regulatory hearings and has a body of case
law behind it. The Attorney General has reported investigating
this issue twice, but they have been limited to collusion and
anti-trust issues; they have not investigated whether or not the
prices are unconscionable.
SENATOR WIELECHOWSKI pointed out that all this bill does is
empower the Attorney General, if he believes there is evidence
of very high prices without warrant, to investigate, and if he
finds evidence, he can file a lawsuit. He explained that
originally the bill was drafted so that anyone could file a
lawsuit. Tesoro said that their main concern was that they
didn't want to fight 100 lawsuits. He was told by the
representative that if that provision were changed to only allow
the Attorney General to file a lawsuit, they would not oppose
the bill. The next day after he made the change, Tesoro came in
and opposed the bill. So there are tight restrictions on this
bill; it is designed to protect Alaskan consumers.
SENATOR WIELECHOWSKI stated that he was not saying anyone was
acting other than they would in a free market; people are going
to try to make as much money as they possibly can. The problem
in the State of Alaska is there is no free market here, and that
situation allows legal price gouging. This bill just says that
in that situation the Attorney General is empowered to
investigate and if they find evidence of gouging with
unconscionable prices, they have the ability to file a lawsuit.
2:22:12 PM
SENATOR GIESSEL moved conceptual Amendment 1 as follows:
I move that SB 28 be amended to include health care
(from both providers and facilities), rental housing,
and the sale of grocery food items. That they be
covered by and subject to the same anti-gouging
provisions as the refiners, distributors and retailers
of certain energy resources.
She apologized for the conceptual form and said her amendment
was still in drafting. She explained that the Department of
Administration was struggling to contain the accelerating health
care costs. Alaskans pay 50 percent more for health care than
people in Seattle. In fact, many insurers are sending their
beneficiaries to Seattle for health care services, because the
prices are so high in Alaska. She had heard the same about
rental housing and grocery prices in some locations.
SENATOR DAVIS asked the sponsor if this amendment would affect
the title and what his thoughts were on it.
SENATOR WIELECHOWSKI replied the amendment would require a title
change; he had additional problems with it, because he didn't
think the state should be in the business of regulating the free
market unless it's absolutely necessary. The significant
difference between groceries, for instance, and gasoline prices,
is that there is one place to buy gasoline; one refiner refines
80 to 82 percent of gasoline, and another refines 10 percent.
There is an oligopoly when it comes to gasoline and heating in
the State of Alaska, but if he doesn't like what he is charged
for a dozen eggs or a carton of milk at Safeway, he can go to
any of another dozen stores that are around. If he doesn't like
what his doctor at Providence charges, he can go to other health
care providers. He has hundreds of choices in rental property.
There is a free market for those items; there is not a free
market for gasoline. That is the major difference.
SENATOR GIESSEL said many Alaskan communities have extremely
limited grocery and housing opportunities and certain groups
offer specialized health care. So it does apply to these other
vendors.
SENATOR WIELECHOWSKI said Senator Giessel was correct and that
would be an excellent bill for to file on her own and take
through the committee process.
2:26:47 PM
SENATOR MENARD said she had one strong concern with the
amendment and that was that it had not had due process. She knew
the direction in which Senator Giessel was going and wanted to
hear from those other industries about why citizens of Alaska
feel gouged, but it's way too late in the session to tackle this
amendment.
SENATOR PASKVAN objected to the amendment. A roll call vote was
taken. Senator Giessel voted yea; Senators Menard, Davis,
Paskvan and Egan voted nay. Therefore, the amendment failed.
2:29:05 PM
SENATOR PASKVAN moved to report SB 28 from committee to the next
committee of referral with individual recommendations and
attached fiscal note, if any. Senator Giessel objected. A roll
call vote was taken: Senators Menard, Davis, Paskvan and Egan
voted yea; and Senator Giessel voted nay. Therefore, SB 28
passed from the Senate Labor and Commerce Standing Committee.
HB 267-REAL ESTATE SALES LICENSEES/COM'N
2:29:26 PM
CHAIR EGAN announced consideration of HB 267 [2n CSHB 267(JUD)
was before the committee].
TERRY HARVEY, staff to Representative Cathy Munoz, sponsor of HB
267, said the committee heard the Senate companion bill a few
weeks back. It was sponsored by the chair, so he knew they were
familiar with it. He said this bill resolves three areas of
concern brought to them by the Alaska Realtors Association. It
modifies real estate law in one area and offers clarity in
several others. The modifier will allow a licensee to share a
part of all of their commission with a charitable organization;
this is not allowed under current statutes that say a licensee
can only share that information with another licensee. This
makes an exception for charitable organizations and promotes
charitable giving within the industry.
2:31:20 PM
HB 267 also clarifies that a licensed assistant can only work
for one brokerage at a time. It also clarifies the closing
process for a brokerage. Currently, if a broker becomes ill or
incapacitated or violates the law, only another licensed broker
may be assigned by the Real Estate Commission to perform the
incapacitated broker's functions. This change allows the
flexibility for the Real Estate Commission to choose among other
licensees for that duty, like a real estate sales professional.
This was deemed a reasonable concept, because some areas of
Alaska have only one broker in the entire community or perhaps
for many miles. The idea was to allow other licensees to be
designated by the commission to come in to perform the function
as needed.
MR. HARVEY said the House Judiciary Committee broadened the
title to include temporary permits, licensed assistants and
charitable organizations. Also more clarity was added to the
licensed assistant language that now reads:
The licensed assistant is not employed to perform
activities requiring licensure under this chapter for
more than one licensed real estate broker.
2:34:16 PM
SENATOR PASKVAN asked the Alaska Real Estate Commission's
position.
MR. HARVEY replied the Alaska Realtors Association supported the
changes, and he understood from them that the Real Estate
Commission also supported the changes.
CHAIR EGAN noted that Mr. Champion was shaking his head yes.
SENATOR PASKVAN asked if he knew of any serious opposition from
within the profession.
MR. HARVEY said he was not aware of any at this time.
2:35:54 PM
SENATOR PASKVAN moved to report 2d CSHB 267(JUD), version I,
from committee to the next committee of referral with individual
recommendations and attached zero fiscal note. There were no
objections and it was so ordered.
2:36:27 PM
At ease from 2:36 to 2:37 p.m.
SB 116-WORKERS' COMP.: COLL BARGAINING/MEDIATION
2:37:27 PM
CHAIR EGAN announced the consideration of SB 116. He said the
committee would consider an amendment by Senator Giessel.
SENATOR GIESSEL explained that the proposed amendment [27-
LS0549\X.1] would allow individuals to choose his or her own
health care provider rather than bargaining away that patient
choice.
2:38:40 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), commented
that she had done a lot of work with the Workers' Compensation
system as it affects insurance costs in particular. She was
concerned they were looking at a new system that will only apply
to employers and employees that are engaged in a collective
bargaining arrangement. Approximately 25 percent of the
workforce would be impacted by this bill - if they choose to and
they may not. Some provisions could be advantageous to other
employers and she wasn't sure why they would adopt something for
less than 25 percent of the state's workforce.
2:40:28 PM
MS. HALL said that supporters of HB 116 have alleged there would
be cost savings, but in working with the Division of Workers'
Compensation, she hadn't found a study supporting that claim. A
University of California Berkeley Study of California carve-outs
since 1993 concluded that, "Overall carve-outs do not appear to
harm employees, sometimes they help." Data analysis of one
carve-out showed that it had no effect on costs in dispute
rates.
She said Alaska's costs are driven by the high cost of health
care. Currently, 76 percent of the costs of our system are
driven by medical costs in comparison to a 59 percent average
nationwide. So if lawmakers allow a deviation from the current
system that has any potential to reduce medical costs, she
thought it should be something that all employers could engage
in.
MS. HALL said she had heard this system could cause a single
employer to simultaneously run multiple workers' compensation
systems. The Municipality of Anchorage, for instance, has about
seven collective bargaining units. If they each decided to set
up some type of this arrangement, the municipality would be
running eight different systems (including the state system). It
would be a "system run amuck."
2:43:18 PM
She said these are general thoughts she has had. Another concern
was that that they were considering implementing a new program
and yet the Medical Service Review Committee, a group that was
formed by this legislature, had made an extensive report with a
lot of recommendations for changes in the system as a whole, and
she hadn't seen any real debate of any of those measures. This
committee spent months studying new systems, new ways to develop
fee schedules and had a number of recommendations that were in
HB 12. It proposed the adoption of an advisory committee to
serve as a sounding board for the legislature to review
proposals and make recommendations for various types of changes
in an open and transparent environment.
MS. HALL said a number of options had been put forward to
improve our system including medical treatment guidelines and
utilization guidelines. It appears, and it has been stated, that
the administration of this new exemption program would be
through some kind of trust. But the bill doesn't mention the
trust or how it would be funded. With today's system costs and
with Montana's reforms, she worried that Alaska would be back in
first place as having the highest workers' compensation premiums
in the country - and that is not a place we want to be.
2:45:07 PM
MS. HALL said that SB 116 also provides for the identification
of medical treatment providers, medical evaluators and
vocational rehabilitation specialists who would be the exclusive
source of treatment, but there weren't any principles or
guidelines. So there is a potential for a multitude of little
groups without any consistency, and that concerned her in an
area as critical as workers' compensation. Basically, she wanted
to see a system whose emphasis is on getting an injured worker
back to work and didn't see this doing that.
CHAIR EGAN asked if she had comments on the amendment.
MS. HALL answered no.
2:46:22 PM
PAUL GROSSI, lobbyist, Pipefitters and Iron Workers, said
adopting the amendment to SB 116 would eliminate potential cost
savings and they wouldn't be able to support it any longer.{
SENATOR PASKVAN asked what he thought of the director's concerns
about limited application.
MR. GROSSI responded that her concern was that all employers and
employees wouldn't be affected, which is true, but that doesn't
mean it shouldn't be tried. It could potentially be a "pilot
project" from which things could be extrapolated for the larger
population. So that is not a reason to stop it.
He said the director's concern about it leading to two different
systems isn't really accurate, because if an employer thinks
this is not effective for them they could choose to not be a
part of it. No one is being forced into this system. This is
just enabling language.
SENATOR PASKVAN asked his understanding of competing physicians
being able to meet and communicate.
2:50:55 PM
MR. GROSSI replied that he is not an expert on this type of
system, but to him it means that doctors would be permitted by
law to form groups to bid on these types of systems to get this
work.
SENATOR GIESSEL said a 2009 report from the Minnesota Department
of Labor indicated that the costs have actually gone up in
Minnesota where this system is used over the past few years.
Alaska has an even smaller pool of health care providers and
although it's similar to Minnesota in that Minnesota is kind of
rural, it has the Mayo Clinic and some large universities. She
asked if he had run any numbers as far as costs.
MR. GROSSI answered no; Director Hall talked about a small
California study but he wasn't sure if it was accurate. Getting
back to Minnesota, he said you have to look at costs relative to
the rest of the system. He guessed that costs would still go up
in Alaska, but they might not go up as much. While he didn't
have any numbers on workers' compensation, itself, some of the
labor groups and their employers have formed similar systems for
their health care benefits that have shown a savings.
SENATOR GIESSEL asked if overall he regarded the existing
workers' compensation system as broken - excessively expensive
and slow to settle claims.
MR. GROSSI replied that he wouldn't couch it as broken yet, but
it is becoming more expensive, and most of it is because of
rising health care costs along with some litigation. At least
there is the potential to improve by trying something different.
The "broken" term could be used in the near future, if they
don't start doing something. They should consider Director
Hall's suggestions, too, because this measure is not the one
answer to fix the system.
2:55:53 PM
MIKE MONAGLE, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), observed
that Director Hall had mentioned the cost of benefits and how
Alaska has been going back and forth with the State of Montana
for the last 10 years on who is number one and two in the
country on workers' comp costs. Last year, Montana put serious
reforms for medical costs in place, and as a result, the
National Council on Compensation Insurance, Inc. (NCCI), the
rating organization that also rates Alaska, lowered the premium
costs in Montana by 25 percent, and he had no doubt when the
premium studies come out this year that Alaska will take over
the number one spot on workers' comp costs again.
He also observed that as the director, he often gets comments
from injured workers that the system is difficult to navigate
and complex and he fears that adding carve outs would complicate
it more.
2:57:59 PM
MR. MONAGLE said as far as the selection of medical doctors
goes, he didn't see any incentive to bring costs down under this
process. The Health Care Commission's study noted the biggest
cost driver to the system was lack of competition. Just because
you have a list of doctors who step forward to say they are
interested in participating, that doesn't equate to an incentive
to reduce their fees. And unless something is done to reduce
fees, he didn't see any changes to the medical costs in the
workers' comp system.
Finally, Mr. Monagle said part of the legislation presupposes
that a carve-out will reduce costs, but the 2002 Berkeley study
mentioned by Director Hall and the 2012 State of California
study found no significant differences between rates for a
carve-out employer and the rates for an employer who received
their benefits through the insurance marketplace. He had looked
extensively and hadn't found a single study that said carve-outs
will, in fact, reduce workers' comp rates.
SENATOR PASKVAN said if you can reduce just the mediation costs
(resolution without using lawyers) and the employer isn't
required to use the new system, there is a chance that medical
costs could be reduced a little bit, too.
MR. MONAGLE referenced the California study that found no
difference in the number of disputes in the carve-out process
versus disputes under the workers' comp claim system. He said,
although it's not in statute, the division already does
mediations; he did 60 last year. One of the things that is
concerning about the process is that although the bill doesn't
mandate mediation, it does say once you choose to mediate, and
once that process is broken off either by the hearing officer or
the parties, it must go to arbitration. That process doesn't
simplify the system, but it does add costs to it.
3:01:13 PM
MR. MONAGLE explained that the prior version of SB 116 had an
appellate provision saying that the arbitrator's decision could
be appealed to the Workers' Comp Appeals Commission, but he
didn't see that in the CS, where it would seem as though the
arbitrator's decision would be final, and that could potentially
lead to some additional administrative costs.
CHAIR EGAN said the committee still had questions about Senator
Giessel's amendment. He held SB 116 in committee.
3:02:06 PM
There being no further business to come before the committee,
Chair Egan adjourned the Senate Labor and Commerce meeting at
3:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 116 lttr opposing, WCCommittee of AK 030512.pdf |
SL&C 3/15/2012 1:30:00 PM |
SB 116 |