Legislature(2017 - 2018)SENATE FINANCE 532
05/11/2018 10:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB79 | |
| HB119 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 119 | TELECONFERENCED | |
| += | HB 79 | TELECONFERENCED | |
| + | 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."
6:30:00 PM
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for CSHB 79(FIN), Work Draft 30-GH1789\E
(Wallace, 5/11/18).
Co-Chair MacKinnon OBJECTED for discussion.
JULI LUCKY, STAFF, SENATOR ANNA MACKINNON, discussed the
changes to the bill. She explained that most of the changes
to the bill were removals. She referenced an Explanation of
Changes document (copy on file), and read sections of the
document:
The Senate Finance CS contains the sections of HB 79
that:
? Ensure Adequate Funding
? Reduce Administrative Costs
? Define Independent Contractors
The SCS also creates a Legislative Workers'
Compensation Working Group to act as an interim
committee to continue work and develop new legislation
for consideration during the 31st Alaska State
Legislature.
Ms. Lucky noted that the new Section 23 of the bill, which
formed the Legislative Workers' Compensation Working Group,
could be found on page 10, Line 12 of the bill. She relayed
that the committee had been concerned about making sure the
bill was balanced and ensuring there was legislative intent
to discuss the issues over the interim. The working group
would be comprised of six members, with three from each
body. The members would consult with stakeholders from the
Department of Commerce, Community and Economic Development
(DCCED); the Department of Labor and Workforce Development
(DLWD); the Medical Services Review Committee; organized
labor; school district administrators; and the state
business community.
Ms. Lucky continued discussing the legislative working
group proposed in the bill. The goal of the group would be
to recommend improvements to the laws relating to workers'
compensation and put forth a report that would be due on or
before December 1, 2018. The intent was to ensure that
there was adequate time for review and put forth
legislation in front of the next legislature. She noted
that the Explanation of Changes document showed items
removed from the bill with a strikethrough, and a
renumbering of those items that would remain in the bill.
Ms. Lucky relayed that she had conferred with the
department and there was no change to the fiscal notes.
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, it was so ordered. The CS for CSHB
79(FIN) was ADOPTED.
6:34:06 PM
AT EASE
6:38:58 PM
RECONVENED
Co-Chair MacKinnon informed that the Committee Substitute
(CS) for CSHB 79(FIN) was posted online.
Co-Chair MacKinnon thanked the commissioner of DLWD for all
of the work that had been done on the issue of workers'
compensation. She explained that the CS was a trimmed down
version of the bill. The committee had identified many
issues that were important to workers; and had learned of
issues to balance for employers before accommodating some
of the administration's requests. She understood that the
CS was not the complete package as proposed by the
administration.
6:40:58 PM
HEIDI DRYGAS, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, thanked the committee for
consideration of the bill. She described the bill as an
"efficiencies bill." She mentioned provisions kept in the
CS including funding for the Division of Workers'
Compensation, electronic filing, and the definition of
independent contractor. She stated that there were several
things left out of the CS that would make the division work
better and hoped the items would be addressed by the
working group over the subsequent summer.
Commissioner Drygas remarked that there had been a lengthy
conversation between labor and industry about addressing
substantive benefits in the interim. She thought the
stakeholders were the best groups (rather than the
department) to address the issues. She stated that she was
eager to see how the working group came together, and that
the department was ready to assist in the endeavor. She
supported the bill with the understanding that there were
sections the department had not supported removing.
Co-Chair MacKinnon indicated that the committee understood
the sentiments of the department. She discussed the
challenge of passing legislation. She considered that if
elected officials could hear both sides of the proposals,
progress would be made. She referenced the work of
Representative Josephson in his proposed legislation
pertaining to damages for workers' compensation. She
emphasized the importance of understanding all sides of the
issue.
6:44:30 PM
Senator Olson referenced the working group as proposed in
the bill. He was pessimistic about making monumental
changes in age-old conflicts such as workers' compensation
and wondered how to make progress.
Commissioner Drygas stated that the bill language did not
come from the department, but she had reviewed it. She was
aware that it was an election year and thought work during
the interim might be difficult. She referenced a group
called The Workers Compensation Ad Hoc Committee, which
included stakeholders from organized labor and industry to
discuss substantive benefits and reform to workers'
compensation. She understood that the committee had worked
very well together for many years. She hoped that the
committee could be revived. She qualified that the group
came from the stakeholders rather from the department. She
noted that it had been 18 years since substantive benefits
had been increased for workers.
Co-Chair MacKinnon stated that the concept of the working
group had come from her office. She referenced a working
group on reducing sexual assault and noted that the
legislature had since implemented every single
recommendation. She referenced implementation of
recommendations from an oil and gas working group. The CS
proposed for the legislature to bring together stakeholders
to share perspectives and subsequently elected officials
would implement the recommendations. She emphasized the
need for accord.
Senator Olson understood that the ad hoc committee was
frustrated after its recommendations were not taken.
Commissioner Drygas could not recall the past actions of
the ad hoc committee and outcome of its recommendations.
She suspected that the work of the ad hoc committee halted
because legislation it worked on was passed over in favor
of legislation that did not include stakeholders. She
reiterated that the events in question took place long
before her tenure in the department.
6:49:24 PM
Vice-Chair Bishop discussed the fiscal notes. He addressed
FN 5 from the Department of Administration, a fiscal impact
note that showed a cost of $40,000 in the first year and
$12,900 in the out years. He read from the Analysis section
on page 2 of the fiscal note:
This bill will have a financial impact on the Division
of Risk Management (DRM).
This bill will clarify, amend, add and repeal several
statutes within workers' compensation. Changes that
will impact DRM include reporting changes to the
Alaska Workers Compensation Board. The Board will move
from a manual process to an Electronic Data Input
(EDI) process, with changes to the appropriate forms
used for reporting.
DRM anticipates a first year cost of $40.0 for the
initial implementation, including changes to the
software and costs related to submitting forms via
EDI. Costs are estimated at $12.9 annually in the out
years. Costs will be absorbed by agencies through the
annual rate process.
Vice-Chair Bishop addressed FN 8 from DLWD, which was a
fiscal impact note. There was an in increase the percent of
fees deposited into the Workers' Safety and Compensation
Administrative Account (WSCAA). The increase did not add to
any premiums from any employers but was built into what was
collected by the Division of Insurance.
Vice-Chair Bishop addressed FN 7 from DLWD, which was a
fiscal impact note. He read from the fiscal note Analysis
on page 2:
This legislation will sunset the Second Injury Fund
(AS 23.30.040). Future claim payments will only be
made on those claims accepted by the effective date.
There will be no reduction in the near future in the
staffing required to process these claim payments
because it will likely take decades for the Fund to
pay these ongoing claim obligations. Ninety-five
percent of these claims are categorized as permanent
total disability (PTD) benefits. PTD benefits are paid
until disability ends or until death.
The reduced Fund liability reflected in this fiscal
note assumes the average age of the claimant at
closure would be 80 years old and two to three cases
would be closed per year due to the death of the
claimants. The reduced revenue reflected in this
fiscal note is because employer and insurance carrier
contribution rates will decline over time as the
Fund's liability is exhausted as prescribed in
statute.
Revenue to the Second Injury Fund (SIF) comes from an
annual assessment on Workers' Compensation insurance
providers and self-insured employers through a
contribution rate that changes every year based on
statute designed to ensure sufficient revenue to cover
expenses. Insurance companies are able to pass this
assessment on to employers through premiums. As SIF
claims decline costs to insurance providers and
self-insured employers will decline, including the
State of Alaska through the Department of
Administration's Risk Management division.
In FY2017, the State of Alaska comprised 11.5 percent
of total SIF revenue ($343,150 of $2,984,507). The
State of Alaska could save as much as $46,000 if it
represented 11.5 percent of the projected total
savings of $400,000 starting FY2020, and this savings
would grow incrementally in the following years. This
cost savings will be passed on to all state agencies
through decreased personal services benefit costs and
included in future year budget salary and benefit
adjustments.
Vice-Chair Bishop noted that the reason that the Second
Injury Fund would sunset was due to the fact that it was no
longer legal to ask an employee if they had a disability.
6:54:31 PM
AT EASE
6:54:57 PM
RECONVENED
Vice-Chair Bishop MOVED to report SCS CSHB 79(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CSHB 79(FIN) was REPORTED out of committee with a "do
pass" recommendation and with three previously published
fiscal impact notes: FN5(ADM), FN7(LWF), and FN8(LWF).
6:55:36 PM
AT EASE
6:58:04 PM
RECONVENED