Legislature(2017 - 2018)HOUSE FINANCE 519
02/05/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB91 | |
| HB79 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 79 | TELECONFERENCED | |
| += | HB 91 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 79
"An Act relating to workers' compensation; repealing
the second injury fund upon satisfaction of claims;
relating to service fees and civil penalties for the
workers' safety programs and the workers' compensation
program; relating to the liability of specified
officers and members of specified business entities
for payment of workers' compensation benefits and
civil penalties; relating to civil penalties for
underinsuring or failing to insure or provide security
for workers' 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 Workers' Compensation Board;
providing for methods of payment for workers'
compensation benefits; relating to the workers'
compensation benefits guaranty fund authority 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 companies may obtain workers' compensation
coverage; relating to the duties of injured employees
to report income or work; relating to
misclassification of employees and deceptive leasing;
defining 'employee'; relating to the Workers'
Compensation Board's approval of attorney fees in a
settlement agreement; and providing for an effective
date."
2:31:40 PM
Co-Chair Foster invited testifiers to the table.
GREG CASHEN, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, introduced the PowerPoint
presentation, "Workers' Compensation: HB 79" dated February
5, 2018 (copy on file). He spoke to Slide 3:
HB 79: Workers' Compensation Efficiencies Bill
? Speed up dispute resolution
? Improve the delivery of medical care to injured
workers
? Strengthen provisions to prevent workers'
compensation fraud by employers and employees
? Reduce administrative costs
? Ensure adequate funding for the administration of
the workers' compensation and workers' safety programs
Mr. Cashen shared that the legislature had consistently
endeavored to create a workers' compensation system that
delivered benefits quickly, efficiently, fairly, and
predictably to injured workers at a reasonable cost to
employers, as mandated by statute. He said that the system
had not been significantly reformed in over 10 years; the
improvements in the bill addressed rising costs, recent
legal development, and new approached to improve the
systems efficiency and fairness. He said that the bill
focused mainly on efficiencies and modernization of the
currently system, while recognizing that benefit issues
like reemployment also needed attention. He related that
reemployment benefits were being addressed in separate
legislation. He described the various ways the department
had worked with stakeholders to craft a comprehensive bill.
2:34:28 PM
MARIE MARX, DIRECTOR, WORKERS' COMPENSATION, DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT, turned to Slide 2. She
highlighted the pillars of the Alaska Workers' Compensation
System as listed on the slide:
• Quick
• Efficient
• Fair
• Predictable
• Reasonable Cost
Ms. Marx asserted that balancing these pillars guided the
divisions administration. She explained that that the
division ensured compliance with the state workers'
compensation act, conducted workers' compensation hearings,
operated an appeals program, processed Fishermen's Fund
claims, and administered vocational rehabilitation benefits
and training program for injured workers.
2:35:37 PM
Ms. Marx explained that HB 79 addressed all the statutory
pillars, focusing especially on fairness, quickness, and
efficiency in the workers' compensation process.
2:36:24 PM
Ms. Marx addressed Slide 4 [Secretary Note: The numbered
items under "Current Law" correlate with the numbered items
under "HB 79" for the duration of this transcription]:
Speeds Up Dispute Resolution:
Secs. 8-10, 19-21, 39
Current law
1. A party requests hearing on claim
2. Non-attorneys may represent parties
3. Board must approve attorney fees in settlement
agreement
4. Division petitions Board to assess a civil
penalty against uninsured employer
HB 79
1. Board will schedule a hearing shortly after claim
is filed (Secs. 19, 21)
2. Any person authorized by regulation of the Board
(Sec. 20)
3. Board does not need to approve if fees are sole
issue that needs Board approval (Sec. 39)
4. Division assesses civil penalty against uninsured
or underinsured employer; party may appeal
assessment to Board (Secs. 8-10)
Ms. Marx explained that the board conducted hearings as
part of a panel but separately had regulatory authority.
2:37:45 PM
Ms. Marx spoke to Slide 5:
Improve the Delivery of Medical Care:
Secs. 14, 23, 25-26
Current law
1. No language addressing if and when a provider's
written request for medical care must be
preauthorized
2. No penalty for untimely preauthorization or
denial
3. Medical bills paid within 30 days
HB 79
1. Requires an employer to preauthorize or deny
medical treatment within 60 days of a medical
provider's written request (Sec. 14)
2. Penalty for untimely preauthorization or denial
(Secs. 23, 25-26)
3. NO CHANGE
2:38:24 PM
Ms. Marx moved to Slide 6;
Why the Division is Tackling Misclassification
? Worker safety
? Risk of uninsured losses
? Law-abiding employers bear greater financial burden
Ms. Marx stated that a great disservice was done to both
workers and law-abiding businesses when the issue was
ignored. She said that when workers were misclassified,
workers died or were severely injured, and uninsured losses
could put companies out of business. She relayed that the
bill defined "independent contractor' and did not keep true
independent contractors from existing and flourishing. The
bill did not change the definition but clarified what was
already in place, which would help workers clearly
understand what it meant to be an independent contractor.
2:39:31 PM
Ms. Marx advanced to Slide 7:
Strengthen Fraud Provisions:
Secs. 7, 9, 11, 25-26, 29, 32-35, 37
Current Law
1. No definition of misclassification
2. No affirmative duty to report work or wage-loss
benefits
3. No owner liability for benefits for some business
entities and no civil penalty liability
4. No definition of independent contractor and
multi-factor balancing test for employee status
5. Injured worker may file lien for benefits but
Benefits Guaranty Fund may not
HB 79
1. Defines misclassification and when it amounts to
2. fraud (Sec. 33)
3. Affirmative duty to report (Secs. 33)
4. More business entity owner liability for benefits
and civil penalties (Secs. 7, 34-35)
5. Defines independent contractor and clarifies
statutory definition of employee (Sec. 29, 37)
6. Benefits Guaranty Fund may file lien for
compensation and civil penalties (Secs. 25-26)
Representative Wilson asked whether the same definition for
"independent contractor" was used as found in statute.
Ms. Marx answered that there was currently no definition,
which had been a problem. The bill would add a definition,
which had been reached through a collaborative process
involving many stakeholders.
Representative Wilson asked for verification that a
definition for "independent contractor" was located nowhere
in statute.
Ms. Marx could not speak to other departments. She
clarified that under the Alaska Workers' Compensation there
was no definition of "independent contractor." She said
that the goal of defining something for workers'
compensation was different than defining something for the
Internal Revenue Service (IRS).
Representative Wilson thought there had been several
definitions of "independent contractor" in statute. She
wanted to be as consistent as possible between departments.
2:42:46 PM
Ms. Marx answered that the bill was clear that the
definition only applied to the Alaska Workers' Compensation
Act.
Representative Pruitt wanted to know why the definition
differed between the IRS and the Worker's Compensation Act.
Ms. Marx answered that the goal of the act was to protect
injured workers and employers from huge uninsured losses,
which differed greatly from the goals of the IRS. She said
that every state in the nation worked this way. She stated
that there was simply not a "one size fits all" definitions
because of the narrow application of the term.
Representative Pruitt understood that there could be
varying definitions of "independent contractor" based on
who needed to pay taxes in a certain way, and still another
definition based on how they should be covered under the
Workers' Compensation Act. He felt that there could be a
uniform definition across state systems.
Ms. Marx used the definition of "resident" as a parallel.
There were many different definitions of "resident" that
were used under different circumstances. She submitted that
the definition of "independent contractor" for workers'
compensation purposes should be very narrow, considering
that the issue was protecting injured workers and employers
from huge uninsured losses that would put them out of
business.
2:47:22 PM
Ms. Marx addressed Slide 8:
Strengthen Fraud Provisions CONT.:
Secs. 7, 9, 11, 25-26, 28, 31-35, 37
Current Law
1. No penalty assessed for an employer who has
engaged in fraudulent misclassification
2. Maximum penalty of $1,000 for each uninsured
employee workday
3. Board suspends penalties in full or in part and
no guidelines for suspension
4. No interest paid on payment plans
HB 79
1. Division may assess a penalty (Secs. 9, 32)
2. Maximum civil penalty of three times the premium
an employer should have paid (Sec. 9)
3. Penalties may not be suspended in full or in part
(Sec. 11)
4. Interest on payment plans (Sec. 11)
2:50:11 PM
Co-Chair Seaton asked whether the penalties on Slide 8,
pertained solely to civil penalties.
Ms. Marx answered in the affirmative. She elaborated that
she was talking about an employee's failure to maintain
workers' compensation insurance as required by law. She
furthered that those penalties went into the injured worker
fund. The fund needed the ability to file liens because
often by the time it came to collect penalties that were
due the assets were depleted.
Co-Chair Seaton understood that if an employee did not have
workers' compensation insurance then administrative costs
would need to be recovered.
Ms. Marx answered in the affirmative. Whenever there was an
uninsured injury the employer was required to pay the
benefits whether there was insurance or not. If employers
did not pay, those amounts were paid by the injured worker
fund, which in turn sought reimbursement of the costs from
the employer.
Ms. Marx turned to Slide 9:
Reduce Administrative Costs:
Secs. 2-6, 13, 15, 19, 21, 24, 27, 30-31, 38, 40
Current Law
1. An employer pays benefits by check
2. Division may not require electronic filing
3. Division approval needed for corporate executive
officer workers' compensation coverage opt out
HB 79
1. Does not prescribe a specific method of payment
(Sec. 38)
2. Division may prescribe filing format (Secs. 3-6,
19, 21, 24)
3. Division approval not required; not an employee
if at least 10% ownership interest (Sec. 30)
2:54:57 PM
Ms. Marx moved to Slide 10:
Reduce Administrative Costs CONT.:
Secs. 2-6, 13, 15, 19, 21, 24, 27, 30-31, 38, 40
Current Law
1. Some medical publications not listed
2. No deadline for reporting initial coverage; 10
day deadline for termination of coverage and no
penalty if late
3. Division administers contribution to and
reimbursement from Second Injury Fund
HB 79
1. Adds publications to list (Sec. 15)
2. 30 day deadline to report initial coverage and
termination of coverage, and penalty if late
(Sec. 13)
3. Phases out Second Injury Fund (Secs. 2, 27, 31,
38, 40)
Ms. Marx turned to Slide 11:
Ensure Adequate Funding:
Sec. 1
Current Law
1. Workers' compensation insurers pay a fee of 2.7%
of net workers' compensation premium written
2. 1.82% to WSCAA and .88% to Alaska Comprehensive
Health Insurance Fund (ACHI)
HB 79
1. NO CHANGE
2. 2.5% to WSCAA and .2% to ACHI
2:57:12 PM
Co-Chair Foster hoped that electronic filing issues related
to limited internet in rural Alaska had been considered.
Ms. Marx answered that reports of injury were filed by
either insurance companies, r third party administrators,
or self-insured employers. She shared that injured workers
never filed directly with the division. She furthered that
if an injured worker was not given a response form the
employer, a paper form was available from the division in
order to file directly. She related that the bill would
allow the division to clarify for insurance companies and
self-employed insurers to standardize the business process.
Representative Wilson pointed to Section 1, page 9 of the
bill. She asked whether there were instances there an
attorney for an employee could be paid for by the state.
Ms. Marx answered that there was a statutory provision in
the Workers' Compensation Act that allowed for a guardian
to be appointed for the purpose of resolving the workers'
compensation claim.
Representative Wilson thought that it could be important to
allow for non-attorneys to represent an injured worker. She
thought that people who could not afford an attorney could
be at a disadvantage.
3:00:24 PM
Ms. Marx replied that the balance was between allowing
those who had filed claims to work their way through the
system and working to keep system operations efficient. She
added that most tribunals had process guidelines related to
who could efficiently represent parties before them. She
suggested that there could be an amendment to provide a
list of allowable representation included non-attorneys.
She said that in her experience non-attorneys made the
process less efficient.
Representative Wilson thought that the injured worker
should be prioritized over efficiency.
Ms. Marx responded that there were systems in place to
assist injured workers. She said that the division had
staff whose job was to provide assistance to unrepresented
parties. She related that the division had a duty under the
law to inform injured workers about their right to
benefits, and how to pursue their right to compensation
under the law. She reiterated her suggesting of crafting a
list of allowable representatives.
3:04:16 PM
Co-Chair Foster noted Paloma Harbour, Director, Division of
Administrative Services, Department of Labor and Workforce
Development was available for questions as well.
Representative Kawasaki referenced Slide 11. He noted that
the handouts were different than the presentation. Ms. Marx
agreed and noted she had made a correction on the record.
Representative Guttenberg asked whether it had been
disruptive for claimants to be represented by a non-
attorney.
Ms. Marx asked for clarification.
Representative Guttenberg wondered whether non-attorney
representation had been productive for claimants.
3:06:55 PM
Ms. Marx replied that, in her experience, non-attorney
representatives did not understand procedures and available
benefits, which made it difficult to bring cases to
resolution in a timely fashion, if at all. She asserted
that the bill would provide for a more efficient process.
3:08:37 PM
Representative Pruitt referenced letters from several
parties who initially had concern but were now supportive.
He wondered if the letters were still valid.
Ms. Marx understood that the stakeholder groups that wrote
the letters maintained their support of the legislation.
3:10:00 PM
Co-Chair Foster OPENED public testimony.
CHARLES MCKEE, SELF, ANCHORAGE (via teleconference), shared
that he was currently navigating the system. He relayed his
case number. He offered a series of personal comments on
the issue of workers' compensation.
Co-Chair Foster CLOSED public testimony. He asked members
to submit any amendments to his office by Monday, January
12, 2018.
HB 79 was HEARD and HELD in committee for further
consideration.
3:16:15 PM
AT EASE
3:17:05 PM
RECONVENED
Co-Chair Foster relayed that amendments on HB 79 were due
on Tuesday, February 6 at 5pm and the bill would be heard
again on Thursday.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 91 Amendment #1.pdf |
HFIN 2/5/2018 1:30:00 PM |
HB 91 |
| HB 79 DOL 02.05.18.pdf |
HFIN 2/5/2018 1:30:00 PM |
HB 79 |
| HB 79 Legal Opinion.pdf |
HFIN 2/5/2018 1:30:00 PM |
HB 79 |