SB 295: "An Act relating to workers' compensation; changing the description of the fairness standard for monitoring workers' compensation rates; requiring disclosure on workers' compensation billing statements of the insurers' overhead amounts used to calculate adjustments to workers' compensation prospective loss cost; requiring disclosure of the premium charged a business for overhead expenses; prohibiting settling of workers' compensation claims when an employer asserts a claim of fraud against an employee until the issue of whether a fraud occurred is resolved; and including workers' compensation within the public advocacy monitoring responsibilities of the Department of Law."
00 SENATE BILL NO. 295 01 "An Act relating to workers' compensation; changing the description of the fairness 02 standard for monitoring workers' compensation rates; requiring disclosure on workers' 03 compensation billing statements of the insurers' overhead amounts used to calculate 04 adjustments to workers' compensation prospective loss cost; requiring disclosure of the 05 premium charged a business for overhead expenses; prohibiting settling of workers' 06 compensation claims when an employer asserts a claim of fraud against an employee 07 until the issue of whether a fraud occurred is resolved; and including workers' 08 compensation within the public advocacy monitoring responsibilities of the Department 09 of Law." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. AS 21.39.010 is amended to read: 12 Sec. 21.39.010. Purpose. The purpose of this chapter is to promote the public
01 welfare by regulating insurance rates in order that they will be just and reasonable 02 and not [BE EXCESSIVE, INADEQUATE, OR] unfairly discriminate 03 [DISCRIMINATORY], and to authorize and regulate cooperative action among 04 insurers in rate making and in other matters within the scope of this chapter. Nothing 05 in this chapter is intended (1) to prohibit or discourage reasonable competition, or (2) 06 to prohibit or encourage, except to the extent necessary to accomplish the purpose of 07 this chapter, uniformity in insurance rates, rating systems, rating plans or practices. 08 This chapter shall be liberally interpreted to carry into effect the intent of this section. 09 * Sec. 2. AS 21.39.030(a) is amended to read: 10 (a) Rates, including loss costs under AS 21.39.043 or any other provision of 11 law, shall be made in accordance with the following provisions: 12 (1) rates must be just and reasonable and may not be [SHALL NOT 13 BE EXCESSIVE, INADEQUATE, OR] unfairly discriminatory; 14 (2) rates must be evaluated using the lowest reasonable cost 15 prudently incurred of doing business providing workers' compensation 16 insurance; 17 (3) consideration shall be given to past and prospective loss experience 18 inside and outside this state; to the conflagration and catastrophe hazards; to a 19 reasonable margin for underwriting profit and contingencies; to dividends, savings, or 20 unabsorbed premium deposits allowed or returned by insurers to their policyholders, 21 members, or subscribers; to past and prospective expenses both countrywide and those 22 specially applicable to this state; and to all other relevant factors inside and outside 23 this state; for purposes of this paragraph, 24 (A) for the purpose of calculating loss cost adjustment for 25 workers' compensation under this section and AS 21.39.043, the following 26 items are considered to be overhead: 27 (i) commission and brokerage expense; 28 (ii) other acquisition expense; 29 (iii) general expense; 30 (iv) taxes, licenses, and fees; 31 (v) underwriting profit and contingencies;
01 (vi) investment income offset; and 02 (vii) other expenses as determined by regulation. 03 (B) an employer's workers' compensation billing statement 04 must include 05 (i) the total overhead submitted by a workers' 06 compensation insurer under (A) of this paragraph; and 07 (ii) the prospective loss cost adjustment charged to 08 each business for overhead expenses as a product of the approved 09 overhead rate multiplied by the company's workers' compensation 10 payroll; 11 (4) [(3)] the systems of expense provisions included in the rates for use 12 by an insurer or group of insurers may differ from those of other insurers or group of 13 insurers to reflect the requirements of the operating methods of the insurer or group of 14 insurers with respect to any kind of insurance, or with respect to a subdivision or 15 combination thereof for which subdivision or combination separate expense provisions 16 are applicable; 17 (5) [(4)] risks may be grouped by classifications for the establishment 18 of rates and minimum premiums; classification rates may be modified to produce rates 19 for individual risks in accordance with rating plans that establish standards for 20 measuring variations in hazards or expense provisions, or both; the standards may 21 measure any differences among risks that can be demonstrated to have a probable 22 effect upon losses or expenses; 23 (6) [(5)] in the case of fire insurance rates, consideration may be given 24 to the experience of the fire insurance business during a period of not more than the 25 most recent five-year period for which experience is available; 26 (7) [(6)] when there is an established program to inspect new and 27 existing dwellings and the program has been certified by the director as likely to 28 reduce the incidence of fires in inspected dwellings, then in any rate plan used in this 29 state, dwellings that have been found by the inspection to meet the standards 30 established by the program shall have credits applied to the rate in amounts approved 31 by the director.
01 * Sec. 3. AS 21.39.040(f) is amended to read: 02 (f) The director may, by written order, suspend or modify the requirement of 03 filing on a kind of insurance, subdivision, or combination of them, or on classes of 04 risks, the rates for which cannot practicably be filed before they are used or the filing 05 and approval of which are, in the director's opinion, not desirable or necessary for the 06 protection of the public. The orders shall be made known to insurers and rating 07 organizations affected by them. The director may make an examination that the 08 director may consider advisable to ascertain whether the rates affected by the order 09 meet the standards set out in AS 21.39.030(1) - (3) [AS 21.39.030(a)(2)]. 10 * Sec. 4. AS 21.39.080(b) is amended to read: 11 (b) If the appeal is based upon the failure of the rating organization to make a 12 filing on behalf of the member or subscriber, that is based on a system of expense 13 provisions that differs, in accordance with the right granted in AS 21.39.030(a)(4) 14 [AS 21.39.030(a)(3)], from the system of expense provisions included in a filing made 15 by the rating organization, the director shall, if the appeal is granted, order the rating 16 organization to make the requested filing for use by the appellant. In deciding the 17 appeal, the director shall apply the standards set out in AS 21.39.030. 18 * Sec. 5. AS 23.30.012 is amended by adding a new subsection to read: 19 (c) If an employer asserts than an employee made false or misleading 20 statements, representations, or submissions related to a benefit under this chapter, as 21 set out in AS 29.30.250(a), the board may not approve an agreement until the board 22 determines whether the employer's assertion is valid. 23 * Sec. 6. AS 42.05.254(a) is amended to read: 24 (a) A regulated public utility operating in the state shall pay to the commission 25 an annual regulatory cost charge in an amount not to exceed the maximum percentage 26 of adjusted gross revenue that applies to the utility sector of which the utility is a part. 27 The regulatory cost charges that the commission expects to collect from all regulated 28 utilities may not exceed the sum of the following percentages of the total adjusted 29 gross revenue of all regulated public utilities derived from operations in the state: (1) 30 not more than .7 percent to fund the operations of the commission, and (2) not more 31 than .17 percent to fund operations of the public advocacy function under
01 AS 42.04.070(c) and AS 44.23.020(e) within the Department of Law related to 02 matters under AS 42.04 and this chapter. An exempt utility shall pay the actual cost 03 of services provided to it by the commission. 04 * Sec. 7. AS 42.05.254(b) is amended to read: 05 (b) The commission shall by regulation establish a method to determine 06 annually the amount of the regulatory cost charge for a public utility. If the amount the 07 commission expects to collect under (a) of this section and under AS 42.06.286(a) 08 exceeds the authorized budgets of the commission and the Department of Law public 09 advocacy function under AS 42.04.070(c) and AS 44.23.020(e) related to matters 10 under AS 42.04 and this chapter, the commission shall, by order, reduce the 11 percentages determined under (h) of this section so that the total amount of the fees 12 collected approximately equals the authorized budgets of the commission and the 13 Department of Law public advocacy function under AS 42.04.070(c) and 14 AS 44.23.020(e) related to matters under AS 42.04 and this chapter for the fiscal 15 year. 16 * Sec. 8. AS 42.05.254(e) is amended to read: 17 (e) The commission shall administer the charge imposed under this section. 18 The Department of Revenue shall collect and enforce the charge imposed under this 19 section. The Department of Administration shall identify the amount of the operating 20 budgets of the commission and the Department of Law public advocacy function 21 under AS 42.04.070(c) and AS 44.23.020(e) related to matters under AS 42.04 and 22 this chapter that lapse into the general fund each year. The legislature may 23 appropriate an amount equal to the lapsed amount to the commission and to the 24 Department of Law public advocacy function under AS 42.04.070(c) and 25 AS 44.23.020(e) related to matters under AS 42.04 and this chapter for operating 26 costs for the next fiscal year. If the legislature does so, the commission shall reduce 27 the total regulatory cost charge collected for that fiscal year by a comparable amount. 28 * Sec. 9. AS 42.05.254(h) is amended to read: 29 (h) The commission shall by regulation establish a method to determine 30 annually the maximum percentage of adjusted gross revenue that will apply to each 31 regulated public utility sector and the maximum percentage of gross revenue that will
01 apply to the regulated pipeline carrier sector. Other than the cost of services provided 02 to exempt utilities, the method established shall allocate the commission's costs, and 03 the Department of Law's certified costs of its public advocacy function under 04 AS 42.04.070(c) and AS 44.23.020(e) related to matters under AS 42.04 and this 05 chapter, among the regulated public utility sectors and the regulated pipeline carrier 06 sector based on the relative amount of the commission's annual costs and the 07 Department of Law's certified costs that is attributable to regulating each sector. For 08 purposes of this subsection, the Department of Law shall annually certify to the 09 commission the costs of its public advocacy function under AS 42.04.070(c) and 10 AS 44.23.020(e) related to matters under AS 42.04 and this chapter. 11 * Sec. 10. AS 42.06.286(a) is amended to read: 12 (a) A pipeline carrier operating in the state shall pay to the commission an 13 annual regulatory cost charge in an amount not to exceed the sum of the following 14 percentages of gross revenue derived from operations in the state: (1) not more than .7 15 percent to fund the operations of the commission, and (2) not more than .17 percent to 16 fund operations of the public advocacy function under AS 42.04.070(c) and 17 AS 44.23.020(e) within the Department of Law related to matters under this 18 chapter. A regulatory cost charge may not be assessed on pipeline carrier operations 19 unless the operations are within the jurisdiction of the commission. 20 * Sec. 11. AS 42.06.286(b) is amended to read: 21 (b) The commission shall by regulation establish a method to determine 22 annually the amount of the regulatory cost charge. If the amount the commission 23 expects to collect under (a) of this section and under AS 42.05.254(a) exceeds the 24 authorized budgets of the commission and the Department of Law public advocacy 25 function under AS 42.04.070(c) and AS 44.23.020(e) related to matters under this 26 chapter, the commission shall, by order, reduce the percentage determined under (e) 27 of this section so that the total amount of the fees collected approximately equals the 28 authorized budgets of the commission and the Department of Law public advocacy 29 function under AS 42.04.070(c) and AS 44.23.020(e) related to matters under this 30 chapter for the fiscal year. 31 * Sec. 12. AS 42.06.286(c) is amended to read:
01 (c) The commission shall administer the charge imposed under this section. 02 The Department of Revenue shall collect and enforce the charge imposed under this 03 section. The Department of Administration shall identify the amount of the operating 04 budgets of the commission and the Department of Law public advocacy function 05 under AS 42.04.070(c) and AS 44.23.020(e) related to matters under this chapter 06 that lapse into the general fund each year. The legislature may appropriate an amount 07 equal to the lapsed amount to the commission and to the Department of Law public 08 advocacy function under AS 42.04.070(c) and AS 44.23.020(e) related to matters 09 under this chapter for operating costs for the next fiscal year. If the legislature does 10 so, the commission shall reduce the total regulatory cost charge collected for that 11 fiscal year by a comparable amount. 12 * Sec. 13. AS 44.23.020(e) is amended to read: 13 (e) There is established within the Department of Law the function of public 14 advocacy for regulatory affairs and workers' compensation. The attorney general 15 shall participate as a party in a matter that comes before the Regulatory Commission 16 of Alaska and the Alaska Workers' Compensation Board when the attorney general 17 determines that participation is in the public interest.