Legislature(2017 - 2018)SENATE FINANCE 532
04/12/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB193 | |
| HB79 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 285 | TELECONFERENCED | |
| += | HB 286 | TELECONFERENCED | |
| + | SB 193 | TELECONFERENCED | |
| + | HB 176 | TELECONFERENCED | |
| + | HB 213 | TELECONFERENCED | |
| + | HB 215 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 79 | TELECONFERENCED | |
| += | HB 121 | TELECONFERENCED | |
| += | SB 185 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 79(FIN)
"An Act relating to workers' compensation; relating to
the second injury fund; relating to service fees and
civil penalties for the workers' safety programs and
the workers' compensation program; relating to the
liability of business entities and certain persons 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 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 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 Alaska Workers' Compensation Board's approval of
attorney fees in a settlement agreement; and providing
for an effective date."
10:12:20 AM
AT EASE
10:18:55 AM
RECONVENED
10:19:55 AM
Co-Chair MacKinnon stated that there was a letter from her
husband in the packet, and the testifier was her niece. She
wanted to ensure that there was not an appearance of
impropriety.
10:21:30 AM
LAURA BONNER, SELF, ANCHORAGE (via teleconference), spoke
in support of the bill.
10:23:15 AM
DON ETHERIDGE, AFL-CIO, JUNEAU, spoke in support of the
legislation.
10:25:32 AM
BARBARA HUFF TUCKNESS, DIRECTOR OF GOVERNMENT AND
LEGISLATIVE AFFAIRS, TEAMSTERS LOCAL 959, JUNEAU, testified
in support of the bill.
Co-Chair MacKinnon CLOSED public testimony.
10:28:53 AM
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, stated that the bill should be
considered an efficiencies bill. The bill would assist the
department's ability to administer the workers compensation
system. The bill focused mainly on efficiencies and
modernizing the current system that had not been
significantly reformed in more than ten years. She stated
that the bill had been well vetted and been through several
committees.
MARIE MARX, DIRECTOR, DIVISION OF WORKERS COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, discussed
the presentation, "Workers' Compensation: HB 79 Senate
Finance Committee April 10, 2018" (copy on file).
Ms. Marx highlighted slide 2, "What is Workers'
Compensation?":
A system of insurance that protects workers and
employers from some of the losses caused by on-the-job
accidents and job-related illnesses
Ms. Marx displayed slide 3, "The 'Grand Bargain'":
An employer provides prompt, necessary medical and
wage loss benefits to an injured worker for a work-
related injury.
In exchange, the injured worker receives limited
benefits and gives up the right to sue the employer.
10:30:45 AM
Ms. Marx highlighted slide 4. She stated that the Worker's
Compensation Act guided the division's administration, and
more specifically guided the mission of the Worker's
Compensation Act. The mission was to ensure the quick,
efficient, fair, and predictable delivery of benefits to
injured workers at a reasonable cost to employers. She
stressed that any effort of the division was always
balancing those five pillars.
Ms. Marx discussed slide 5, "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
Ms. Marx addressed slide 6, "SPEED UP DISPUTE RESOLUTION:
SECS. 8-10, 19-21, 39":
Current law
A party requests hearing on claim
Non-attorneys may represent parties
Board must approve attorney fees in settlement
agreement
Division petitions Board to assess a civil
penalty against uninsured employer
HB 79
Board will schedule a hearing shortly after claim
is filed (Secs. 19, 21)
Any person authorized by regulation of the Board
(Sec. 20)
Board does not need to approve if fees are sole
issue that needs Board approval (Sec. 39)
Division assesses civil penalty against uninsured
or underinsured employer; party may appeal
assessment to Board (Secs. 8-10)
Ms. Marx discussed slide 7, "IMPROVE THE DELIVERY OF
MEDICAL CARE: SECS. 14, 23, 25-26":
Current law
No language addressing if and when a provider's
written request for medical care must be
preauthorized
No penalty for untimely preauthorization or
denial
Medical bills paid within 30 days
HB 79
Requires an employer to preauthorize or deny
medical treatment within 60 days of a medical
provider's written request (Sec. 14)
Penalty for untimely preauthorization or denial
(Secs. 23, 25-26)
NO CHANGE
10:35:41 AM
Ms. Marx highlighted slide 8, "Why the Division is Tackling
Misclassification":
? Worker safety
Risk of uninsured losses
? Law-abiding employers bear greater financial burden
Ms. Marx discussed slide 9, "STRENGTHEN FRAUD PROVISIONS:
SECS. 7, 9, 10-11, 28-29, 32, 35-38, 40":
Current law
No definition of misclassification
No affirmative duty to report work or wage-loss
benefits
No owner liability for benefits for some business
entities and no civil penalty liability
No definition of independent contractor and
multifactor balancing test for employee status
Co-Chair MacKinnon queried the definition of "independent
contractor."
10:38:32 AM
AT EASE
10:38:56 AM
RECONVENED
10:39:01 AM
Ms. Marx announced the definition of "independent
contractor." She looked at page 17, line 1 of the bill:
A person employed as an independent contractor; a
person is an independent contractor for the purposes
of this chapter only if the person: A) has an
expressed contract to perform the services, B) is free
from direction and control over the means and matter
of providing services, subject only to the right of
the individual for whom or entity for which the
services are provided to specify the desired results,
completion schedule, or range of work hours; or to
monitor the work for compliance with contract plans
and specifications, or federal, state, or municipal
law, C) incurs most of the expenses for tools, labor,
and other operational costs necessary to perform the
services, except for materials and equipment that
could be supplied, D) has an opportunity for profit
and loss as a result of the services performed for the
other individual or entity, E) is free to hire and
fire employees to help perform the services for the
contracted work, F) has all the business, trade, or
professional licenses required by federal, state, or
municipal authorities for a business or individual
engaging in the same type of services as the person,
G) follows federal Internal Revenue Service (IRS)
requirements by i) obtaining an employer
identification number if required; ii) filing business
or self-employment tax returns for the previous tax
year to report profit or income earned for the same
type of services provided under the contract; iii)
intending to file business or self-employment tax
returns for the current tax year to report profit or
income earned for the same type of services provided
under the contract if the person's business was not
operating in the previous year, and H) meets at least
two the following criteria: i) the person is
responsible for the satisfactory completion of
services that the person has contracted to perform and
is subject to liability for a failure to complete the
contracted work, or maintains liability insurance to
complete the contracted work or other insurance
policies necessary to protect the employee's financial
interest in customers to the person's business; ii)
the person maintains a business location or a business
mailing address separate from the location of the
individual for whom, or the entity for which the
services are performed, and iii) the person provides
contracted services for two or more different
customers within a twelve month period, or engages in
any kind of business advertising, solicitation, or
other marketing efforts reasonably calculated to
obtain new contracts to provide similar services.
Co-Chair MacKinnon wondered whether the section affected
the most recent bill that was passed about ride sharing.
Ms. Marx replied that the language would not affect the
transportation network drivers, because that bill exempted
them from the provisions of the Alaska Workers Compensation
Act.
Ms. Marx continued to discuss slide 9:
Injured worker may file lien for benefits but
Benefits
Guaranty Fund may not
HB 79
Defines misclassification and when it amounts to
fraud (Sec. 36)
Affirmative duty to report (Sec. 36)
More business entity owner liability for benefits
and civil penalties (Secs. 7, 37-38)
Defines independent contractor and clarifies
statutory definition of employee (Secs. 32, 40)
Benefits Guaranty Fund may file lien for
compensation and civil penalties (Secs. 28-29)
Ms. Marx addressed slide 10, "STRENGTHEN FRAUD PROVISIONS
CONT.: SECS. 7, 9, 10-11, 28-29, 32, 35-38, 40":
Current law
No penalty assessed for an employer who has
engaged in fraudulent misclassification
Maximum penalty of $1,000 for each uninsured
employee workday
7 days to pay penalty
Board suspends failure to insure penalties in
full or in part and no guidelines for suspension
No interest paid on payment plans
HB 79
Division may assess a penalty (Secs. 9, 35)
Maximum civil penalty of three times the premium
an employer should have paid (Sec. 9)
30 days to pay penalty or appeal to Board
(Secs. 10-11)
Failure to insure penalties may not be suspended
in full or in part (Sec. 11)
Interest on payment plans (Sec. 11)
10:45:56 AM
Vice-Chair Bishop wondered whether the experience rate was
considered in the calculation. Ms. Marx replied in the
negative. She explained that the calculation would be very
simple. She noted that it would probably be less than the
premium paid, because the premium included the building
blocks. She stressed that the base rate was used.
Co-Chair MacKinnon looked at Sections 9 and 35, and noted
that there was concern about how the DLWD was allowed to do
premium audits. Ms. Marx replied that she had not had an
opportunity to address that concern. She felt that there
may be a misunderstanding. She stressed that the department
did not do premium audits, rather it investigated fraud and
misclassification.
Vice-Chair Bishop wondered whether it was for fraudulent
and injured workers too. Ms. Marx replied in the
affirmative.
Ms. Marx announced that the department's goal was not to
penalize. She stressed that the department's goal was
education.
10:50:21 AM
Co-Chair MacKinnon remarked that with no cap on attorney
fees there was no incentive to settle, but she stressed
that those were her words and not the letter's words. Ms.
Marx replied that the bill did not remove the statute of
limitations. She stated that there was currently a
provision in the act that said that once a claim was filed,
and if an employer denied it, the employee must ask for a
hearing within two years.
Co-Chair MacKinnon noted the more penalties and hostile
business work environment. She asked for more information
about Section 11. Ms. Marx reiterated that with the
efficiencies there would be an end to the protracted
litigation, which would reduce attorneys' fees. She stated
that Section 11 sets forth the process for what happens
after a civil penalty was assessed. She explained that the
goal was not to put employers out of business, so it
allowed for a payment plan.
Co-Chair MacKinnon wanted to work to balance employees and
employers interest. Ms. Marx agreed.
Ms. Marx discussed slide 11, "REDUCE ADMINISTRATIVE COSTS:
SECS. 2-6, 13, 15-18, 22, 24, 27, 30, 33-34, 41, 43":
Current law
An employer pays benefits by check
Division may not require electronic filing
Division approval needed for corporate executive
officer workers' compensation coverage opt out
HB 79
Does not prescribe a specific method of payment
(Sec. 41)
Division may prescribe filing format (Secs. 3-6,
16-18, 22, 24, 27)
Division approval not required; not an employee
if at least 10 percent ownership interest (Sec.
33)
10:55:25 AM
Ms. Marx looked at slide 12, "REDUCE ADMINISTRATIVE COSTS
CONT.: SECS. 2-6, 13, 15-18, 22, 24, 27, 30, 33-34, 41, 43":
Current law
Some medical publications not listed
No deadline for reporting initial coverage; 10
day deadline for termination of coverage and no
penalty if late
Division administers contribution to and
reimbursement from Second Injury Fund
HB 79
Adds publications to list (Sec. 15)
30 day deadline to report initial coverage and
termination of coverage, and penalty if late
(Sec. 13)
Phases out Second Injury Fund (Secs. 2, 30, 34,
41, 43)
Ms. Marx addressed slide 13, "ENSURE ADEQUATE FUNDING: SEC.
1":
Current Law
Worker's compensation insurers pay a fee of 2.7
percent of net workers' compensation premium
written
1.82 percent to WSCAA and 0.88 percent to Alaska
Comprehensive Health Insurance Fund (ACHI)
HB 79
NO CHANGE
2.5 percent to WSCAA and 0.2 percent to ACHI
10:58:10 AM
Vice-Chair Bishop wanted an explanation of the Workers'
Safety and Compensation Administration Account (WSCAA)
funds. Ms. Marx replied that the funds were dedicated
funding to ensure that workers' compensation and safety
programs operated and sufficient funding.
Co-Chair MacKinnon requested that a sectional analysis be
presented the following day.
Co-Chair MacKinnon queried closing comments. Commissioner
Drygas replied in the negative.
Co-Chair MacKinnon discussed the following meeting's
agenda.
CSHB 79(FIN) was HEARD and HELD in committee for further
consideration.