04/02/2018 09:00 AM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB112 | |
| SB38 | |
| SB205 | |
| HB79 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 112 | TELECONFERENCED | |
| += | SB 38 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
| += | SB 205 | TELECONFERENCED | |
| + | HB 79 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 2, 2018
9:09 a.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Kevin Meyer, Vice Chair
Senator Berta Gardner
Senator Peter Micciche
MEMBERS ABSENT
Senator Gary Stevens
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 112
"An Act relating to the controlled substance prescription
database; relating to disability; excluding independent
contractors from workers' compensation coverage; employer-
required drug testing; relating to the office of administrative
hearings; and providing for an effective date." relating to the
Alaska Workers' Compensation Board; relating to the payment of
workers' compensation or benefits; relating to compensable
injuries; relating to rehabilitation and reemployment of injured
workers; relating to reemployment vouchers; relating to the
treatment or care of employees; relating to use of evidence-
based treatment guidelines; relating to prescribing or
dispensing a controlled substance to an employee for a
compensable injury; relating to workers' compensation
prehearings; relating to the filing of claims for workers'
compensation benefits or petitions for other relief; relating to
the burden of proof and credibility of witnesses in workers'
compensation matters; relating to attorney fees; relating to the
filing of a verified annual report; relating to permanent total
disability; relating to temporary total
- MOVED CSSSSB 112(L&C) OUT OF COMMITTEE
SENATE BILL NO. 38
"An Act relating to the registration and duties of pharmacy
benefits managers; relating to procedures, guidelines, and
enforcement mechanisms for pharmacy audits; relating to the cost
of multi-source generic drugs and insurance reimbursement
procedures; relating to the duties of the director of the
division of insurance; and providing for an effective date."
- MOVED CSSB 38(L&C) OUT OF COMMITTEE
SENATE BILL NO. 205
"An Act relating to the Regulatory Commission of Alaska; and
relating to telecommunications regulations, exemptions, charges,
and rates."
- HEARD & HELD
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 79(FIN)
"An Act relating to workers' compensation; relating to the
second injury fund; relating companies may obtain workers'
compensation coverage; relating to the duties of injured to
service fees and civil penalties for the workers' safety
programs and the workers' employees to report income or work;
relating to misclassification of employees and compensation
program; relating to the liability of business entities and
certain persons deceptive leasing; defining 'employee'; relating
to the Alaska Workers' Compensation for payment of workers'
compensation benefits and civil penalties; relating to civil
Board's approval of attorney fees in a settlement agreement; and
providing for an penalties for underinsuring or failing to
insure or provide security for workers' effective date."
compensation liability; relating to preauthorization and timely
payment for medical treatment and services provided to injured
employees; relating to incorporation of reference materials in
workers' compensation regulations; relating to proceedings
before the Alaska Workers' Compensation Board; relating to the
authorization of the workers' compensation benefits guaranty
fund to claim a lien; excluding independent contractors from
workers' compensation coverage; establishing the circumstances
under which certain nonemployee executive corporate officers and
members of limited liability
- MOVED CSHB 79(FIN) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 170(JUD)
"An Act relating to securities, registration, exempt securities,
exempt transactions, broker-dealers, agents, investment advice,
investment advisers, investment adviser representatives, federal
covered securities, federal covered investment advisers,
viatical settlement interests, small intrastate security
offerings, Canadian broker-dealers, and Canadian agents;
relating to protecting older and vulnerable adults from
financial exploitation; relating to administrative, civil, and
criminal enforcement provisions, including restitution and civil
penalties for violations; relating to an investor training fund;
establishing increased civil penalties for harming older persons
and vulnerable adults; relating to corporations organized under
the Alaska Native Claims Settlement Act; amending Rules 4, 5,
54, 65, and 90, Alaska Rules of Civil Procedure, and Rule 602,
Alaska Rules of Appellate Procedure; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 112
SHORT TITLE: WORKERS COMPENSATION;DRUG DATABASE & TEST
SPONSOR(s): SENATOR(s) GIESSEL
04/12/17 (S) READ THE FIRST TIME - REFERRALS
04/12/17 (S) L&C, FIN
01/22/18 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
01/22/18 (S) L&C, FIN
02/01/18 (S) L&C AT 1:00 PM BUTROVICH 205
02/01/18 (S) Heard & Held
02/01/18 (S) MINUTE(L&C)
03/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/08/18 (S) Heard & Held
03/08/18 (S) MINUTE(L&C)
04/02/18 (S) L&C AT 9:00 AM BELTZ 105 (TSBldg)
BILL: SB 38
SHORT TITLE: PHARMACY BENEFITS MANAGERS
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
01/25/17 (S) READ THE FIRST TIME - REFERRALS
01/25/17 (S) L&C, FIN
03/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/28/17 (S) Heard & Held
03/28/17 (S) MINUTE(L&C)
03/19/18 (S) L&C AT 6:00 PM BELTZ 105 (TSBldg)
03/19/18 (S) Heard & Held
03/19/18 (S) MINUTE(L&C)
04/02/18 (S) L&C AT 9:00 AM BELTZ 105 (TSBldg)
BILL: SB 205
SHORT TITLE: TELECOMMUNICATIONS REGULATION/EXEMPTIONS
SPONSOR(s): MEYER
02/19/18 (S) READ THE FIRST TIME - REFERRALS
02/19/18 (S) L&C
02/27/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/27/18 (S) Heard & Held
02/27/18 (S) MINUTE(L&C)
03/08/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/08/18 (S) Heard & Held
03/08/18 (S) MINUTE(L&C)
04/02/18 (S) L&C AT 9:00 AM BELTZ 105 (TSBldg)
BILL: HB 79
SHORT TITLE: OMNIBUS WORKERS' COMPENSATION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/25/17 (H) READ THE FIRST TIME - REFERRALS
01/25/17 (H) L&C, JUD, FIN
02/20/17 (H) L&C AT 3:15 PM BARNES 124
02/20/17 (H) Heard & Held
02/20/17 (H) MINUTE(L&C)
03/01/17 (H) L&C AT 3:15 PM BARNES 124
03/01/17 (H) <Bill Hearing Canceled>
03/06/17 (H) L&C AT 3:15 PM BARNES 124
03/06/17 (H) Heard & Held
03/06/17 (H) MINUTE(L&C)
03/08/17 (H) L&C AT 3:15 PM BARNES 124
03/08/17 (H) <Bill Hearing Canceled>
03/15/17 (H) L&C AT 3:15 PM BARNES 124
03/15/17 (H) -- MEETING CANCELED --
03/17/17 (H) L&C AT 3:15 PM CAPITOL 106
03/17/17 (H) <Bill Hearing Canceled>
03/20/17 (H) L&C AT 3:15 PM BARNES 124
03/20/17 (H) Heard & Held
03/20/17 (H) MINUTE(L&C)
03/22/17 (H) L&C AT 3:15 PM BARNES 124
03/22/17 (H) Moved CSHB 79(L&C) Out of Committee
03/22/17 (H) MINUTE(L&C)
03/24/17 (H) L&C RPT CS(L&C) NT 3DP 1DNP 1NR 2AM
03/24/17 (H) DP: JOSEPHSON, STUTES, KITO
03/24/17 (H) DNP: KNOPP
03/24/17 (H) NR: WOOL
03/24/17 (H) AM: SULLIVAN-LEONARD, BIRCH
03/31/17 (H) JUD AT 1:00 PM GRUENBERG 120
03/31/17 (H) Heard & Held
03/31/17 (H) MINUTE(JUD)
04/05/17 (H) JUD AT 1:00 PM GRUENBERG 120
04/05/17 (H) Heard & Held
04/05/17 (H) MINUTE(JUD)
04/13/17 (H) JUD AT 5:30 PM GRUENBERG 120
04/13/17 (H) Moved CSHB 79(JUD) Out of Committee
04/13/17 (H) MINUTE(JUD)
04/14/17 (H) JUD RPT CS(JUD) NT 2DP 5NR
04/14/17 (H) DP: LEDOUX, CLAMAN
04/14/17 (H) NR: EASTMAN, KOPP, KREISS-TOMKINS,
FANSLER, REINBOLD
02/05/18 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/05/18 (H) Heard & Held
02/05/18 (H) MINUTE(FIN)
02/15/18 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/15/18 (H) Heard & Held
02/15/18 (H) MINUTE(FIN)
02/19/18 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/19/18 (H) Moved CSHB 79(FIN) Out of Committee
02/19/18 (H) MINUTE(FIN)
02/21/18 (H) FIN RPT CS(FIN) NT 3DP 2DNP 3NR 2AM
02/21/18 (H) DP: GUTTENBERG, SEATON, FOSTER
02/21/18 (H) DNP: WILSON, TILTON
02/21/18 (H) NR: ORTIZ, THOMPSON, GRENN
02/21/18 (H) AM: KAWASAKI, PRUITT
03/12/18 (H) TRANSMITTED TO (S)
03/12/18 (H) VERSION: CSHB 79(FIN)
03/14/18 (S) READ THE FIRST TIME - REFERRALS
03/14/18 (S) L&C, FIN
04/02/18 (S) L&C AT 9:00 AM BELTZ 105 (TSBldg)
WITNESS REGISTER
NATASHA MCCLENAHAN, Staff
Senator Mia Costello
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the committee substitute for SB
112 and the committee substitute SB 38.
SENATOR CATHY GIESSEL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 112
RICHARD HOLT, Chair
Board of Pharmacy
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 38.
EDRA MORLEDGE, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the committee substitute for SB
205.
CHRISTINE O'CONNOR, Executive Director
Alaska Telecom Association
Anchorage, Alaska
POSITION STATEMENT: Provided information on SB 205.
EMILY NAUMAN, Deputy Director
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Provided information on SB 205.
DAVID PARISH, Common Carrier Specialist IV
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided information on SB 205.
STEPHEN MCALPINE, Chair
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided information on SB 205.
KRISTIN SCHUBERT, Manager
Commission Section
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided information on SB 205.
JAMES JACKSON, Legal Counsel
GCI
Anchorage, Alaska
POSITION STATEMENT: Provided information on SB 205.
HEIDI DRYGAS, Commissioner
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Provided introductory comments on HB 79.
MARIE MARX, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Presented HB 79.
BRONSON FRYE, Painters Union Local 1959
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 79.
LAURA BONNER, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 79.
DON ETHERIDGE, Lobbyist
Alaska AFL-CIO
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 79.
CHRIS DIMOND, Organizer
Pacific Northwest Regional Council of Carpenters
Juneau, Alaska
POSITION STATEMENT: Testified in support HB 79.
ACTION NARRATIVE
9:09:21 AM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 9:09 a.m. Present at the call to
order were Senators Gardner, Meyer, Micciche, and Chair
Costello.
SB 112-WORKERS COMPENSATION;DRUG DATABASE & TEST
9:10:30 AM
CHAIR COSTELLO announced the consideration of SB 112 and noted
the proposed committee substitute (CS).
9:10:54 AM
NATASHA MCCLENAHAN, Staff, Senator Mia Costello, Alaska State
Legislature, Juneau, Alaska, reviewed the following changes from
version L to S of SB 112:
• Retains language that repeals and reenacts AS
23.30.145 governing the award and payment of
attorney fees.
• Retains language amending AS 23.30.230(a) to
provide a definition of "independent contractor."
• Retains an applicability provision that states
secs. 1-2 of the Act apply to claims for injuries
filed on or after the effective dates of those
sections.
• Establishes the Workers' Compensation Working
Group in the Department of Commerce Community and
Economic Development, division of insurance, to
review the State's Worker's compensation system
and provide recommendations to the Legislature
for reforming the system. The workgroup shall
provide a report to the Legislature by December
1, 2018.
• Removes all other sections in Version L
9:12:22 AM
SENATOR MEYER moved to adopt the work draft CS for SSSB 112, 30-
LS0318\S, as the working document.
CHAIR COSTELLO found no objection and version S was adopted. She
said the bill retains two of the elements that came in the
second version as introduced by the sponsor. She worked with
parties involved in this issue and realized that it would be
best to create a working group, so the parties can work out
differences. The report to the legislature would be due December
1, 2018 and then the working group would disband on the last day
of January 2019.
9:13:41 AM
SENATOR GARDNER said she believes that attorneys for the
employers or insurance companies are often on retainer. The cost
or time to pursue a case is of no direct consequence to the
employer's attorney, but the injured worker's attorney is very
much impacted by the provision that limits what they can earn.
Section 1 would make it more difficult for injured workers to
get representation.
CHAIR COSTELLO said the next committee of referral can work with
the working group to resolve any issues it sees. She noted that
the bill goes to Senate Finance next.
9:15:00 AM
SENATOR GARDNER said she sees this as a Labor and Commerce
issue.
9:15:12 AM
SENATOR MEYER said his question is more finance related, but the
fiscal note adds 24 full-time employees for the Department of
Administration that come from the Workers' Compensation
Division. He asked if there will be a corresponding decrease
from the Workers' Compensation Division.
MS. MCCLENAHAN said that section that spurred that fiscal note
was removed from the current version of the bill.
SENATOR MEYER said then this is not the correct fiscal note for
the committee substitute.
MCCLENAHAN agreed.
SENATOR MEYER asked the sponsor of SB 112 to comment.
9:16:35 AM
SENATOR CATHY GIESSEL, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 112, said she has no comment on the committee
substitute. She defers to the will of the committee.
SENATOR MEYER said this appears to be a compromise.
9:17:11 AM
SENATOR MEYER moved to report [the CS for SSSB 112], version S,
from committee with individual recommendations and forthcoming
fiscal note(s).
9:17:32 AM
SENATOR GARDNER objected.
CHAIR COSTELLO asked for a roll call vote.
9:17:59 AM
A roll call vote was taken. Senators Micciche, Meyer, Costello
voted in favor of the motion and Senator Gardner voted against
it. Therefore, the motion to report CSSSSB 112(L&C) from
committee passed with a 3:1 vote.
SB 38-PHARMACY BENEFITS MANAGERS
9:18:15 AM
CHAIR COSTELLO announced the consideration of SB 38 and noted
the proposed committee substitute (CS).
9:18:29 AM
SENATOR MEYER moved to adopt the work draft CS for SB 38, 30-
LS0190\D, as the working document.
CHAIR COSTELLO objected for an explanation.
9:18:49 AM
NATASHA MCCLENAHAN, Staff, Senator Mia Costello, Alaska State
Legislature, Juneau, Alaska, presented the following changes
from version A to version D for SB 38.
• Page 6, Lines 22-25: Changes language in relation
to pharmacies' appeals of pharmacy benefits
manager's reimbursements for multi-source generic
drugs below pharmacy acquisition cost in which a
pharmacy benefits manager may grant a network
pharmacy's appeal.
• Removes unrequired language that referenced a
definition for the board of pharmacy.
• Page 9, Line 6 updates language to correctly
reference AS 21.97.900(27).
• Updates the effective date provision to reflect
July 1, 2019.
9:19:33 AM
CHAIR COSTELLO removed her objection and version D was adopted.
SENATOR MICCICHE asked Mr. Holt to speak to the changes.
9:20:33 AM
RICHARD HOLT, Chair, Board of Pharmacy, Anchorage, Alaska,
stated support for SB 38 on behalf of the Board of Pharmacy.
SENATOR MICCICHE asked if the board specifically supports the
committee substitute, version D.
MR. HOLT confirmed the board approves of the changes in version
D.
9:21:18 AM
At ease
9:21:54 AM
CHAIR COSTELLO reconvened the meeting.
9:22:04 AM
SENATOR MEYER moved to report the CS for SB 38, version D, from
committee with individual recommendations and attached fiscal
note(s).
9:22:19 AM
CHAIR COSTELLO announced that without objection, CSSB 38(L&C)
moves from the Senate Labor and Commerce Standing Committee
9:22:33 AM
At ease
SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
9:28:21 AM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 205. She noted the proposed committee
substitute (CS).
9:28:56 AM
SENATOR MEYER moved to adopt the work draft CS for SB 205, 30-
LS1431\U, as the working document.
CHAIR COSTELLO objected for an explanation.
9:29:20 AM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State
Legislature, Juneau, Alaska, said there are four primary
changes:
• Requires telecommunications utilities to continue
to pay an annual Regulatory Cost Charge to the
Regulatory Commission of Alaska.
• Requires the Regulatory Commission of Alaska to
provide in their annual report to the Legislature
details pertaining to how much activity is spent
on each area of telecommunication regulatory
oversight.
• Removes exemption for AS 42.05.145.
• Removes transition language that is no longer
applicable.
9:30:20 AM
CHAIR COSTELLO removed her objection and version U was adopted.
SENATOR GARDNER asked Ms. Morledge to repeat the third change.
MS. MORLEDGE said it removes the exemption for AS 42.05.145, the
exemption for telecommunications regulation policy and
restrictions on regulation of telephone directories.
SENATOR MICCICHE asked what the new report might be because that
cost will be passed on to rate payers.
CHAIR COSTELLO said she'd like to defer the question until after
the sectional.
9:31:46 AM
MS. MORLEDGE read the following sectional analysis for SB 205,
version U.
Section 1 Municipal powers and duties. AS 29.35.070
Public Utilities. Section 7 repeals AS 42.05.810,
therefore it is removed from reference in this section
of the statute.
Section 2 Alaska Public Utilities Regulatory Act. AS
42.05.141 Adds two new subsections (e) and (f) to the
general powers and duties of the RCA. These
subsections state that the Commission may not
designate a local exchange carrier or an interexchange
carrier as the carrier of last resort, and that the
Commission may designate an eligible
telecommunications carrier consistent with the federal
code that allows for federal subsidies under the
Universal Service Fund.
A carrier of last resort is a telecommunications
company that commits (or is required by law) to
provide service to any customer in a service area that
requests it, even if serving that customer would not
be economically viable at prevailing rates.
The Universal Service Fund is a system of
telecommunications subsidies and fees managed by the
U.S. Federal Communications Commission intended to
promote universal access to telecommunications
services at reasonable and affordable rates for all
consumers.
Section 3 Annual Report This section requires the
RCA to submit an annual report to the Legislature
detailing the activity and costs related to regulating
each type of telecommunications carrier.
Section 4 Amends AS 42.05.254(a) from the previous
Committee Substitute that eliminated the Regulatory
Cost Charge. This section maintains the current RCC
funding mechanism of calculating and assessing the
charge and applies it to all telecommunications
companies.
Sections 5 & 6 both relate to implementing the
Regulatory Cost Charge for all telecommunications
companies.
Section 7 - Alaska Public Utilities Regulatory Act. AS
42.05.711 Exemptions. This section exempts
telecommunications carriers from the Act except for
the following provisions:
• AS 42.05.141(f) New section in the bill
(Section 2 above)
• AS 42.05.221 Requiring a Certificate of
Public Convenience and Necessity ? AS 42.05.231
Provision for applying for the certificate
• AS 42.05.241 Conditions of issuing/denial of
a certificate ? AS 42.05.251 Allow public
utilities to obtain a permit for the use of
streets in municipalities
• AS 42.05.254 Regulatory cost charge
• AS 42.05.261 Prohibits a public utility from
discontinuing or abandoning service for which a
certificate has been issued
• AS 42.05.271 Allows the RCA to amend, modify,
suspend or revoke a certificate
• AS 42.05.281 Prohibiting a sale, lease,
transfer or inheritance of certificate without
RCA permission
• AS 42.05296 Requirements for providing
telephone services for certain impaired
subscribers
• AS 42.05.306 Allows discounted rates for
customers receiving benefits from a social
services assistance program administered by the
state or federal government
• AS 42.05.631 Allows a public utility to
exercise the power of eminent domain
• AS 42.05.641 Extends RCA's jurisdiction to
public utilities operating in a municipality
• AS 42.05.830 Requires the RCA to establish
exchange access charges to be paid by long
distance carriers to compensate local exchange
carriers for the cost of originating and
terminating long distance services
• AS 42.05.850 Relating to the administration
of access charges by an exchange carrier
association
• AS 42.05.840 Allows the RCA to establish a
universal service fund
• AS 42.05.860 Prohibits a carrier from
restricting the resale of telecommunications
services
Section 8 AS 42.05.820 No Municipal Regulation. In
addition to a long distance telephone company, this
section amends AS 42.05.820 to add 'local exchange
carrier' that is exempted in whole or in part from
this chapter from being regulated by a municipality.
Section 9 AS 42.05.890 Definitions. This section
defines "local exchange carrier," "long distance
telephone company," and "long distance telephone
service."
Section 10 Related to implementing Section 4, the
Regulatory Cost Charge.
Section 11 Repealers. This section repeals the
following provisions, as the changing nature of the
industry and market conditions have rendered them
obsolete:
• AS 42.05.325 Registration and regulation of
alternate operator services also unnecessary
at this point
• AS 42.05.800 Findings
• AS 42.05.810 Competition unnecessary in
today's market, which experts can speak on.
MS. MORLEDGE noted that Ms. O'Connor could answer detailed
questions.
9:37:50 AM
CHAIR COSTELLO listed the individuals available to answer
questions.
SENATOR GARDNER asked what kind of change Section 4 describes.
9:39:05 AM
CHRISTINE O'CONNOR, Executive Director, Alaska Telecom
Association, Anchorage, Alaska, said that change is spreading
the cost across a broader section. About half of the telecoms in
Alaska don't pay the RCC [Regulatory Cost Charge] because they
have become exempt. The committee substitute would cause all
telecoms to resume paying the regulatory cost charge. That
provides a broader base to support the Regulatory Commission of
Alaska (RCA).
SENATOR GARDNER said she didn't know if that was good or bad.
Noting that Section 7 has a description of the services for
which the utility that provides telecommunications services is
not exempt, she asked what is being exempted. She asked for an
answer in common language, not numbers. All the sections apply
to telecommunications services and now a bunch are being
exempted. She asked what they are.
CHAIR COSTELLO asked the drafter to comment on which sections
the exemptions are for.
9:41:09 AM
EMILY NAUMAN, Deputy Director, Legislative Legal Services,
Legislative Affairs Agency, Juneau, Alaska, said she would
submit her answer in writing because the answer isn't as
straightforward as it might seem. The challenge is that she
wouldn't want to misstate what statutes apply. All the statutes
other than the ones listed in the RCA statutes will apply with
the exception that some of those statutes are specific to
certain types of utilities or certain types of behavior that a
telecommunications company might never engage in.
SENATOR GARDNER rephrased the question. She asked if there is
any impact on consumers in exempting any of those provisions or
are they no longer relevant to the industry.
MS. NAUMAN suggested the RCA would be better able to answer that
question.
9:42:32 AM
DAVID PARISH, Common Carrier Specialist IV, Regulatory
Commission of Alaska, Anchorage, Alaska, said the RCA would no
longer be able to assign COLRs [Carrier of Last Resort]. The
primary impacts for consumers would be the RCA would lose
current jurisdiction over interconnection agreements, so
disputes between carriers would no longer come to the RCA. Also,
the RCA would have no exercise of economic jurisdiction over
rate making for the carriers across the state that have no
competition. That is for both left market and interexchange
markets. He did not know if there would be negative effects
immediately, but should a carrier want to raise rates in a
monopoly market, there would be no obligation for the increase
to be vetted and approved by the commission.
9:44:27 AM
SENATOR MEYER commented that this bill pertains only to
landlines.
MR. PARISH agreed.
SENATOR MEYER asked the percent of people who have landlines.
MR. PARISH estimated that it was below 50 percent. There is a
steady decline with residential use. Businesses tend to keep
their landlines longer, but the erosion is steady.
9:46:06 AM
STEPHEN MCALPINE, Chair, Regulatory Commission of Alaska,
Anchorage, Alaska, said when the power goes down and the cell
towers are no longer operable, someone without a landline can
come to his house and make a call. He has two landlines.
SENATOR MEYER asked if the CS addresses the concerns Mr.
McAlpine raised at a previous meeting.
MR. MCALPINE said, as Mr. Parish indicated, there are two
overriding issues. The bill is getting better, but this is the
type of bill that ought to be developed over time. The RCA has
had to deal with carriers that decide to stop service. He asked
where customers go to complain about that. That is what is
happening in the MatSu. Some of the customers have been cut off
because they have been losing the better system that MTA
[Matanuska Telephone Association] has decided not to provide.
Because MTA is deregulated, consumers do not have the ability to
come to the RCA's consumer protection arm. They are going to the
FCC [Federal Communications Commission]. He cannot say anything
further because it is on the RCA's public meeting agenda on
Wednesday. Carriers of last resort are receiving tens of
millions in subsidies in competitive markets. He would like that
to go to high-cost areas or to development of other kinds of
telecommunications that could better serve the rural areas of
Alaska. The second concern is the failure to agree on
interconnection. In case of a dispute between two carriers,
current statute provides that the utility would apply to the
commission to arbitrate.
MR. MCALPINE said he didnt know when those changes were
developed. This bill appeared without any prior notice and as
they work through it, there are multiple concerns and problems.
Many have been addressed, but he would like to see a good bill
come out at the end of the pipe rather than the one currently
before the committee.
SENATOR MEYER asked if the added year-end report was a concern
for the RCA.
MR. MCALPINE said the RCA does calculate time dedicated to
different activities. He isn't sure what "should provide the
legislature with detailed activity" means exactly. It could
require more staff time, but they could do it.
SENATOR GARDNER asked the impact of the provision in Section 8
that adds a local exchange carrier to the exemption from
municipal regulation.
MR. PARISH said this already exists for long distance carriers.
His understanding is that it means a municipality cannot step in
and start regulating since the RCA, under this bill, would not
have jurisdiction.
9:53:49 AM
MS. O'CONNOR agreed with Mr. Parrish. She went on to address
issues raised earlier. The latest national figures indicate just
42 percent of households have landlines, but those are still
important and they are not in any way proposing to eliminate
landlines or to degrade that service. Local rates are capped
federally. If they wish to raise rates, which is not happening
today, they would be limited by the federal rate ceiling.
Regarding Chair McAlpines comments about the COLR, she said
that obligation continues under the certificate process. It is
one of the listings not being exempted. The commission is
currently looking into one situation. This bill doesn't change
that. Regarding the funds companies are receiving to provide
service, there is a docket in which the RCA is actively pursuing
how to change that. The chair and commissioners have stated
their goal is to reform that and industry is actively
participating and has submitted draft regulations, comments, and
proposals to implement those changes.
MS. O'CONNOR clarified that the bill requires that the annual
report be formatted to show the detail of the telecom
activities. It is intended to use the data already collected.
The RCA annual report format changes and some years it is
difficult to see how much activity is attributed to each form of
telecommunications. They were not suggesting any additional data
be collected, just that the presentation provide a similar
detail as was provided in the FY2017 report.
9:59:05 AM
SENATOR MICCICHE said the fiscal note still says the regulatory
cost charge (RCC) would be removed for telecommunications
services, so that needs updating. Looking at the last line of
the fiscal note, he asked that if in the future the RCC funding
mechanism is removed from telecommunications, if that would
reduce the workload of the RCA. He asked what is the likelihood
that the RCC would be passed on to other regulated utility
sectors.
MR. PARRISH said he assumed that the question is referencing if
RCCs are eliminated for telecommunication companies. He asked if
that was correct.
SENATOR MICCICHE said they haven't had an updated fiscal note.
Before the bill was amended, it eliminated the RCC for
telecommunications services and the fiscal note said it could be
shifted to the other regulated utilities, which has been a
concern of his. He asked if the RCA doesn't regulate
telecommunications, wouldn't that reduce the RCA work load and
avoid a cost shift to the other regulated utilities.
10:01:10 AM
KRISTIN SCHUBERT, Manager, Commission Section, Regulatory
Commission of Alaska, Anchorage, Alaska, said in regard to
shifting RCCs to other regulated utilities, they are still going
to be doing work on telecoms, and so that burden is going to be
shifted to the other utilities because the RCCs are calculated
using labor ratios. Since they cannot charge telecoms RCCs, that
burden gets put on the other utilities, so their charges will
increase.
SENATOR MICCICHE said since that has been removed in Section 4
now, it maintains the current RCC funding mechanism. Nothing
will change, but he should be on the lookout for a change in the
future that could unfairly distribute that cost to other
utilities.
MS. SCHUBERT answered yes.
MR. PARRISH said this was something the commission addressed at
the public meeting. The current draft is fairer. One of the
interesting things is that when other utility sectors become
deregulated, the commission generally does no work for them.
With telecommunications it's a strange beast because they have
lots of delegated authority from the FCC to provide ongoing
regulation even of deregulated carriers. Bringing back a
requirement for otherwise economically deregulated entities that
they do perform regulatory work for to pay some of those costs
would be an improvement over the current landscape.
MS. O'CONNOR said their legal expert can speak to the concerns
about interconnection disputes.
10:04:21 AM
JAMES JACKSON, Legal Counsel, GCI, Anchorage, Alaska, said he is
not sure what raised the concern from Mr. Parrish and Mr.
McAlpine regarding joint use and interconnection. The statute is
confusing on this issue. The sections on joint use and
interconnection are AS 42.05.311 and AS 42.05.321. "It's true
that those are not listed as sections which will still apply to
us," he said. That is because the statute is somewhat strange.
It is stated within those sections that they still apply to
utilities that are exempt under AS 42.05.711. Specifically, AS
42.05.321 which is entitled Failure to Agree upon Joint Use or
Interconnection, gives the commission the authority to resolve
those disputes. Subsection (d) of AS 42.05.321 says this section
and AS 42.05.311 apply to all utilities, whether or not they are
exempt from other regulation under AS 42.05.711. Since the
exemption this bill grants is under AS 42.05.711, the section on
joint use will still apply.
10:07:01 AM
CHAIR COSTELLO stated her intention to hold SB 205 for further
consideration.
10:07:16 AM
At ease
HB 79-OMNIBUS WORKERS' COMPENSATION
10:07:22 AM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of HB 79. [CSHB 79(FIN) was before the committee
and this is the first hearing.]
10:10:40 AM
HEIDI DRYGAS, Commissioner, Department of Labor and Workforce
Development (DOLWD), Juneau, Alaska, said HB 79 improves the
department's ability to administer the Workers' Compensation
Division. Last year they presented companion bill SB 40 to the
committee. Since then HB 79 made its way through the House and
has seen changes and improvements. It is an efficiencies bill.
It modernizes the system, which has not been significantly
reformed in more than 10 years. It speeds up the resolution of
disputes, improves the delivery of benefits to injured
employees, deters workers' compensation fraud, reduces
administrative costs, and provides adequate funding for the
administration of the workers' compensation system. HB 79 was
well vetted and passed in the House with support from the
minority and majority.
10:11:55 AM
MARIE MARX, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), Juneau,
Alaska, said she always starts with the department's mission
when she presents on workers' compensation. It is to ensure the
quick, efficient, fair, and predictable delivery of benefits to
injured workers at a reasonable cost to employers. She directed
attention to the slide showing the other pillars that guide the
division's administration of Alaska's Workers' Compensation Act.
The governor's bill focuses on the fairness, quickness, and
efficiency of the workers' compensation process.
MS. MARX said she would present the bill by topic instead of
numerical order. Each section is listed by topic and she would
refer to page numbers as they work through HB 79, version N.
MS. MARX first addressed the topic of speeding up dispute
resolution. She said HB 79 simplifies and quickens the hearing
process by letting the board schedule a hearing shortly after a
claim is filed instead of waiting until one of the parties
requests a hearing, which can be many years down the road.
MS. MARX said it changes who may represent a claimant in a
workers' compensation hearing. Now a non-attorney may represent
parties. The bill proposes that anyone authorized by regulation
of the board may represent parties. They have had instances
where non-attorneys who were not bound by ethical and
professional rules represented someone, such as a brother or
spouse, before the board. Often, that person's assistance is not
helpful but delays outcomes for injured workers. At first the
bill said non-attorneys may not represent parties, but through
the hearing process, this was changed.
She said HB 79 streamlines settlement agreements by eliminating
a requirement that the board approve attorney fees if fees are
the only issue that requires board approval. It also streamlines
the process of imposing civil penalties against an uninsured
employer by allowing the division to assess the penalty directly
rather than petitioning the board to set the penalty. An
employer may appeal the penalty before the board.
MS. MARX addressed the second topic of improving the delivery of
medical care. She said currently no language addresses if and
when a provider's written request for medical care, usually for
surgery, must be preauthorized. The bill requires an insurance
company or self-insured employer to preauthorize or deny medical
treatment within 60 days of a medical provider's written
request. This gap has led to a lot of litigation and delayed the
delivery of care to injured workers. The bill does not change
the requirement that medical bills must still be paid within 30
days.
10:16:21 AM
SENATOR GARDNER said 60 days seems like a long time to wait for
surgery. She asked why 60 days was selected.
MS. MARX said the only duty the employer has now is to pay a
medical bill within 30 days of receiving it. By the time the
medical bill is received by the self-insured employer or
insurance company, the care has already happened. They have
already had the opportunity for one of their doctors to evaluate
the injured worker. It is different for preauthorization of
surgery, which is generally very expensive surgery. Sixty days
would give time the employer or insurance company time to refer
to the worker to a physician of their choice and get the medical
records from the doctors. At times it's difficult to get medical
records within 45 days. Now the injured worker needs surgery and
the doctor won't move forward without the certainty of being
paid. The worker doesn't want to be on the hook either. Sixty
days was a compromise to balance the injured worker's need for
care and efficiency and reasonable cost for the employer.
10:18:24 AM
MS. MARX addressed the issue of misclassification before moving
on. She said not tackling misclassification is a great
disservice to workers and law-abiding businesses. When workers
are fraudulently misclassified, workers die or are severely
injured and huge uninsured losses can put a company out of
business. They must keep workers safe and law-abiding employers
should not have to pay the price for misclassification.
She then took up the third topic, strengthen fraud provisions.
She said HB 79 strengthens fraud provisions by defining
misclassification and when it amounts to fraud.
She said there is no affirmative duty to report work or wage-
loss benefits. If asked, workers cannot misrepresent that, but
there is not an affirmative duty to tell an insurance company or
self-insured company that they are receiving benefits. HB 79
does impose an affirmative duty on the injured worker to report
their injury.
MS. MARX said currently a loophole exists where LLCs [limited
liability companies] escape liabilities for benefits and civil
penalties because the act was created when corporations were in
existence. The bill will make LLCs that operate without
insurance just as liable as corporate officers for uninsured
injuries and penalties.
She said the bill defines independent contractor, which is the
biggest change since the committee heard SB 40. This definition
is the result of working with many stakeholder groups who
initially vehemently opposed the original definition. This
definition is a result of collaboration between stakeholders and
the department. The definition will accomplish the mission of
preventing fraud and misclassification while also ensuring that
bona fide independent contractors continue to operate and
flourish.
She said HB 79 allows the Benefits Guaranty Fund, which is the
injured workers fund, to file a lien for compensation and civil
penalties. The Benefits Guaranty Fund pays a claim when an
employer does not carry insurance. Then the fund has to be
reimbursed by the uninsured employer. By the time that happens,
the assets are gone. An injured worker already has the right to
file a lien.
10:22:07 AM
MS. MARX said HB 79 expands the division's ability to asses a
civil penalty to include employers who are underinsured because
they have misclassified workers in a variety of ways. Now the
division only has the ability to assess a penalty for failing to
carry any insurance. The bill changes the calculation and the
maximum civil penalty. The maximum penalty now is $1,000 for
each uninsured employee workday, which has resulted in
astronomically high penalties that employers cannot pay. The
calculation of these penalties doesn't survive appeal and has
led to a lot of litigation. The employers who do not keep
records on the number of employers they have are rewarded.
She said the maximum penalty in HB 79 is three times the premium
an employer should have paid. HB 79 a simpler calculation
because it only requires the employer's overall payroll data.
The new penalty will result in a reasonable deterrent that takes
into account the employer's size, the nature of the business,
and the financial gain the employer realized by not paying the
full workers' compensation insurance. She provided an example.
Their hope is that if penalties are more in line with reality,
the division will be able to collect more. These penalty amounts
go to the injured worker fund. With HB 79, penalties may not be
suspended in full or in part. Right now, the board has suspended
penalties, which is arbitrary. The board can always reduce or
reverse a penalty. HB 79 allows employers to establish a payment
plan, so they won't go out of business.
10:25:27 AM
MS. MARX addressed the fourth topic, reducing administrative
costs. She said current law says the employer must pay by check.
Times have changed, so the bill does not prescribe a specific
method of payment. Currently, the division may not require
electronic filing. The bill says the division may prescribe the
filing format. The division has moved almost completely to
electronic filing except for a few things that must be done by
paper. The bill will modernize that.
She said there is a corporate executive officer workers'
compensation coverage opt out, which involves a lot of paperwork
that must be submitted. The bill streamlines that. If someone
has at least 10 percent ownership, that is enough to say that
person is not an employee and does not need workers'
compensation insurance. The division has a great database that
makes verifying that easy.
10:26:58 AM
SENATOR MICCICHE asked if simplifying the corporate opt out
would result in a significant change in the numbers opting out
or would it be close to what it is now.
MS. MARX said its difficult to tell how many officers would
then be considered non-employees. Now there are many corporate
officers who have no ownership in the business and are added.
Corporations change that makeup of their officers every few
months. She guessed the bill would make sure that those who
legitimately have an interest in the company would be exempted.
SENATOR MICCICHE said it's more black and white criteria. He
asked if there was another reason a corporate executive could
opt out.
MS. MARX agreed that it is very black and white, which was the
intent. She answered no to the second question. She added that
HB 79 is not a bill that deals with substantive benefits. It is
an efficiencies bill that seeks to make things clearer for the
public.
10:29:02 AM
MS. MARX continued to review administrative efficiencies. She
said the Medical Services Review Committee looks at different
publications to come up with a medical fee schedule. More
publications are added to that list.
MS. MARX said there is currently no consequence if insurers do
not meet the deadline to tell them when an employer has coverage
or not. By granting a 30-day deadline (instead of ten) with a
penalty, they hope that will reduce wasted effort for
investigating failure-to-insure cases. The bill also phases out
the Second Injury Fund, which reduces costs for the department
and employers. The fund's purpose is to encourage employers to
hire or retain disabled individuals, but the purpose is moot
with the Americans with Disabilities Act and other laws that bar
employment discrimination. As claims are paid out, the
employers' contribution will drop to zero. These claims are for
permanent disability. The fiscal note estimates the average age
of claimants will be 80 and two to three will be phased out each
year.
10:32:10 AM
MS. MARX addressed the final topic, ensure adequate funding for
the Workers' Safety and Compensation Administration Account
(WSCAA) in Section 1. She said the WSCAA balance is rapidly
declining. In 2005, the Alaska Legislature added programs funded
by WSCAA, but no increase in the WSCAA service fee rate was made
for the increased costs to operate these programs. The bill does
not increase the service fees companies pay, but more of the fee
will be allocated to the department. That is a difference of
$1.8 million. If the change is not implemented, WSCAA will have
a shortfall in 2020.
10:33:49 AM
CHAIR COSTELLO opened public testimony on HB 79.
10:34:13 AM
BRONSON FRYE, Painters Union Local 1959, Anchorage, Alaska,
testified in support of HB 79. He said he was just appointed to
the Workers' Compensation Board. Unscrupulous contractors are
requiring as a condition of employment that their workers get
business licenses and work as independent subcontractors. These
are not legitimate independent subcontractors. An entire crew of
workers working on a singular job on a singular project are all
classified as independent subcontractors. He gave the example of
the drywall workers for the Dena'ina Center. Because workers'
compensation premiums are so high in the inherently dangerous
construction industry, they can account for up to 30 percent of
labor cost. If an employer misclassifies workers, he can lower
labor costs and have a competitive advantage in the bidding
process against honest, law-abiding employers. This is a
fairness-in-contracting issue. Also, liability for injury at
work is shifted to the worker with independent contractor
misuse. Workers' compensation exists for a reason. HB 79 has a
multifactor test to determine a true independent contractor. It
will reduce workers' compensation fraud, create fairness in
contracting in the construction industry, and protect workers.
10:37:58 AM
LAURA BONNER, representing self, Anchorage, Alaska, testified in
support of HB 79. She said her husband suffered a debilitating
injury years ago. HB 79 allows better and quicker access to
medical care and quicker resolution of disputes. This is
important to the injured worker and their families who are
dealing with the stress of the injury. She expressed pleasure
with the language defining an independent contractor and
strengthening the fraud provisions. She has served on the
Workers' Safety Advisory Council because safety and injured
workers have been a concern of hers. She urged the committee to
pass HB 79 from committee. It is better than the bill passed
earlier today.
10:40:25 AM
DON ETHERIDGE, Lobbyist, Alaska AFL-CIO, Juneau, Alaska,
testified in support of HB 79. He said any efficiencies should
be made. Alaska AFL-CIO was involved in the working group to
define independent contractors and is happy with the result. He
related how difficult it can be for injured workers to receive
their compensation checks by mail. The bill makes improvements.
10:42:33 AM
CHRIS DIMOND, Organizer, Pacific Northwest Regional Council of
Carpenters, Juneau, Alaska, testified in support HB 79. He said
making government more efficient is always a move in the right
direction. The definition of independent contractor is a long
overdue reform. He related cases in Juneau of fraud. HB 79
protects workers' rights and safety. It will keep contractors
working more fairly.
10:44:39 AM
CHAIR COSTELLO closed public testimony on HB 79.
SENATOR MEYER asked about the change on slide 4 of the
presentation that states HB 79 will allow persons authorized by
regulation of the board to represent parties. He asked if the
bill would prevent an injured person using his cousin to
represent him.
MS. MARX said the bill would allow the board to develop, through
the regulatory process, a list of the parties who can represent
parties before the board. The board serves two functions, to
make regulation and to hear claims. The hearing panel is in the
best position to know the type of individual who is able to
represent injured workers. Through the public process, there
will be a list created. She noted that she served as a hearing
officer for six years. She gave anecdotal experience to
illustrate problems that can arise.
SENATOR MEYER asked if the names on the list would be primarily
attorneys.
MS. MARX said the 18-member Workers' Compensation Board would
come up with the list. She envisions that besides Alaska
attorneys, the list could contain perhaps outside counsel,
retired attorneys, paralegals, medical billing specialists, and
others. The list would be appropriate to create through
regulation rather than statute.
SENATOR MEYER asked if she anticipated a long list.
MS. MARX said yes and very specific and detailed to provide
clarity.
CHAIR COSTELLO said that Senator Meyer made a good point. They
are hoping for common sense and flexibility with this list.
COMMISSIONER DRYGAS said the initial draft said no non-attorneys
for a lot of reasons. This is a compromise where it would make
sense for non-attorneys to represent.
SENATOR MEYER said he wanted to ensure that the injured worker
has choices.
10:51:47 AM
SENATOR GARDNER asked if the department has the resources to
look into possible cases of fraud when they hear stories like
the ones Mr. Dimond referenced.
COMMISSIONER DRYGAS said yes and no. The fraud unit will
investigate if they hear something. Right now, the test of being
an independent contractor versus an employee is cumbersome,
which is why they are changing it in law. The department is
cash-strapped currently. Next year, FY2020, WISCA funding will
be depleted.
10:53:26 AM
SENATOR MICCICHE said he had the same concern as Senator Meyer.
Another concern is with Section 7 that redefines LLC. He
questioned whether a Workers' Compensation bill was the right
place to do that.
MS. MARX clarified it does not redefine an LLC. Right now, there
is a loophole. Under the current Workers' Compensation Act,
employers must have workers' compensation for employees. If they
don't, the employer and those in charge of the business are
responsible for uninsured claims. LLCs do not have the same
liability. Those LLC members who run the corporation, even if it
is one member, completely escape the liability that corporations
have for uninsured injuries. This levels the playing field for
all members. There is a need to close the loophole of companies
to escape liability.
SENATOR MICCICHE said he understands the intent but would rather
it be dealt with in a section of law that defines what an LLC
can do with that limit of liability rather than eliminating the
loophole in this bill. He said it needs to be dealt with more
comprehensively.
COMMISSIONER DRYGAS said it's there to maintain consistency in
the statute. The corporate section is already in the statute,
which is why they addressed the LLC there. She acknowledged that
one could argue both sides.
10:58:23 AM
SENATOR MEYER moved to report HB 79, version N, from committee
with individual recommendations and attached fiscal note(s).
10:58:45 AM
CHAIR COSTELLO announced that without objection, CSHB 79(FIN)
moved from the Senate Labor and Commerce Standing Committee.
10:59:01 AM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 10:59 a.m.