03/31/2023 03:15 PM House LABOR & COMMERCE

          HB  92-FISHERMEN'S FUND: VESSEL OWNER CLAIMS                                                                      
                                                                                                                                
4:07:23 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced  that the next order of  business would be                                                               
HOUSE BILL NO. 92, "An  Act relating to claims against protection                                                               
and indemnity insurance policies of  vessel owners."  [Before the                                                               
committee,  adopted as  a working  document on  3/14/23, was  the                                                               
proposed  committee  substitute  (CS)  for  HB  92,  Version  33-                                                               
LS0520\B, Marx, 3/9/23 ("Version B").]                                                                                          
                                                                                                                                
4:07:57 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:07 p.m. to 4:08 p.m.                                                                       
                                                                                                                                
4:08:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SARAH  VANCE, Alaska State Legislature,  on behalf                                                               
of  the  sponsor,  the  House  Special  Committee  on  Fisheries,                                                               
presented   CSHB   92,  Version   B,   and   gave  a   PowerPoint                                                               
presentation,  titled,  "HB  92 Fishermen's  Fund:  Vessel  Owner                                                               
Claims"  [hard  copy included  in  the  committee packet].    She                                                               
stated that  the proposed  legislation is at  the request  of the                                                               
Department  of  Labor and  Workforce  Development,  and it  would                                                               
increase  the  vessel owner  deductible  reimbursement  to up  to                                                               
$15,000.   She added  that the  proposed legislation  would allow                                                               
both the vessel  owners and the crew members to  receive the same                                                               
reimbursement, as seen  on slide 2.  She stated  that there would                                                               
also be  potential cost savings,  as premiums could be  less, and                                                               
it  could protect  against loss  from medical  and legal  claims.                                                               
Moving  to  slide  3,  she   noted  that  the  bill  regards  the                                                               
Fishermen's  Fund, and  she  gave a  summary of  the  fund.   She                                                               
reiterated  that the  proposed  legislation  would create  equity                                                               
between vessel owners  and crew, which does  not currently exist.                                                               
She  discussed the  liabilities with  the current  protection and                                                               
indemnity insurance structure on vessels.                                                                                       
                                                                                                                                
REPRESENTATIVE VANCE stated that  the department was requested to                                                               
examine  the  fund  concerning  the  effects  of  increasing  the                                                               
reimbursement  to $15,000.    On  slide 4,  she  pointed out  the                                                               
effect of  the proposed legislation's worst-case  scenario on the                                                               
Fishermen's Fund, and  she pointed out the  best-case scenario on                                                               
slide 5.  She added that  the best-case scenario had used a nine-                                                               
year average.   She suggested  in the best-case scenario the fund                                                               
would  be kept  stable with  small increases  over time,  and she                                                               
expressed the  understanding that  the fund managers  have agreed                                                               
that this would keep the fund healthy over time.                                                                                
                                                                                                                                
REPRESENTATIVE  VANCE, moving  to  slide 6,  reiterated that  the                                                               
proposed legislation would establish  equity between crew members                                                               
and vessel  owners.  She  maintained that the bill  would utilize                                                               
the  fund for  what  it was  intended  to do,  which  is to  help                                                               
commercial fisherman.                                                                                                           
                                                                                                                                
4:12:44 PM                                                                                                                    
                                                                                                                                
VELMA  THOMAS,  Administrator,   Fishermen's  Fund  Advisory  and                                                               
Appeals  Council, Division  of Workers'  Compensation, Department                                                               
of Labor  and Workforce  Development, addressed  Version B.   She                                                               
stated that  the proposed  legislation is  based on  a resolution                                                               
from  the Fishermen's  Fund Council,  with these  council members                                                               
representing  all regions  of the  state.   She  stated that  the                                                               
council  members are  available for  questions pertaining  to the                                                               
bill.                                                                                                                           
                                                                                                                                
4:13:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK pointed out the  lack of a fiscal note and                                                               
questioned the impact on the fund over time.                                                                                    
                                                                                                                                
4:14:04 PM                                                                                                                    
                                                                                                                                
CHARLES  COLLINS, Director,  Division  of Workers'  Compensation,                                                               
Department  of Labor  and Workforce  Development, responded  that                                                               
the chart presented in the  PowerPoint presentation addresses the                                                               
impact on  the fund over  time.   He explained that  this depicts                                                               
going  backwards nine  years,  looking  at all  the  claims.   He                                                               
continued that 80 percent of the  claims turned in were less than                                                               
$2,500  each, with  20 percent  of  these rising  to the  maximum                                                               
benefit, either $5,000 for crew  or $10,000 for the vessel owner.                                                               
He  stated  that this  was  used  for  the projection,  with  the                                                               
revenue  from  permit and  licensing  fees  staying static.    He                                                               
deduced that  the fund would still  stay at $8 billion  with this                                                               
conservative  view.    He  pointed out  that  the  fund  predates                                                               
statehood, and the job of the council is to oversee this.                                                                       
                                                                                                                                
REPRESENTATIVE CARRICK,  with a  follow-up question,  asked about                                                               
other current utilizations of the fund.                                                                                         
                                                                                                                                
MR. COLLINS responded that statute  allows money from the fund to                                                               
be  allocated  by the  legislature  for  fisher safety  programs;                                                               
however, he expressed the understanding  that this has never been                                                               
done.   He added  that this would  be the only  other use  of the                                                               
fund.   He stated that the  fund represents a user  group funding                                                               
themselves, allowing the state to monitor the fairness of this.                                                                 
                                                                                                                                
4:17:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE questioned  whether  the fund  operates                                                               
the same as  workers' compensation.  In other words,  if a fisher                                                               
is  injured,  he questioned  whether  the  payment at  a  medical                                                               
facility would be required up front.                                                                                            
                                                                                                                                
MR. COLLINS  clarified that commercial  fishermen do  not qualify                                                               
for workers' compensation.   He stated that  the Fishermen's Fund                                                               
is placed under the Division  of Workers' Compensation because it                                                               
is a similar program, but the funds are not comingled.                                                                          
                                                                                                                                
MS. THOMAS,  addressing how claims  work, explained  that injured                                                               
fishers' remedies are  limited; either they can file  a claim for                                                               
benefits to receive  help from the fund or they  can seek medical                                                               
assistance  through the  federal Jones  Act for  medical benefits                                                               
and lost wages.   She stated that the Fishermen's  Fund only pays                                                               
for medical benefits and not for  lost wages.  She continued that                                                               
a claim must  be filed to receive these benefits.   She explained                                                               
that there are two types of  benefits, one for the injured fisher                                                               
and one for  the vessel owner.  She continued  that if the vessel                                                               
owner has insurance  in place to cover crew members,  this can be                                                               
reimbursed.                                                                                                                     
                                                                                                                                
4:20:09 PM                                                                                                                    
                                                                                                                                
CHAIR  SUMNER  questioned  whether  the  Fishermen's  Fund  is  a                                                               
designated fund.                                                                                                                
                                                                                                                                
MS. THOMAS stated  that as the fund  administrator, she expressed                                                               
the  understanding that  the fund  has always  been a  designated                                                               
fund.   In response to a  follow-up question, she stated  that in                                                               
2018 an  adjustment was made  on the  vessel owner portion.   She                                                               
continued that in  2010 an adjustment was made  by increasing the                                                               
injured-worker benefit portion.   She added that  from this there                                                               
was  expectation of  an increase  in expenses,  but this  did not                                                               
happen.    She  explained  that  the reason  for  this  could  be                                                               
attributed to the  federal Affordable Care Act;  if an individual                                                               
has  other insurance  the fund  becomes a  secondary payer.   She                                                               
suggested that  most medical  providers in  the state  know about                                                               
the  fund and  have the  claim packets  available, and  they will                                                               
assist  the fishers.   She  stated that  as long  as the  medical                                                               
bills are  received by  the department and  the criteria  is met,                                                               
payments  will be  made right  away.   If an  individual receives                                                               
treatment and  uses personal  insurance, the  fund can  help with                                                               
expenses  on  the  out-of-pocket  portions.   She  expressed  the                                                               
opinion  that individuals  with  personal  insurance have  helped                                                               
with the health of the fund over  the last few years, as the fund                                                               
has only had to pay 20 percent of these medical costs.                                                                          
                                                                                                                                
4:23:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX  questioned  whether  a  fiscal  note  would                                                               
affect the fund.                                                                                                                
                                                                                                                                
MR.  COLLINS responded  that  the department  has  issued a  zero                                                               
fiscal note  because there would  be no cost  to the budget.   In                                                               
response to a follow-up question  concerning whether agreement on                                                               
the  terms was  across  the  board, he  stated  that the  fishing                                                               
associates, such  as the  United Fishermen  of Alaska,  wanted to                                                               
move the amount to $10,000;  however, the House Special Committee                                                               
on the Fishery's  went to $15,000 because  this would incentivize                                                               
the industry.   He reiterated that if the vessel  owner has other                                                               
insurance, and there is a claim  against the vessel, the fund can                                                               
be applied to  this deductible.  He stated that  the industry has                                                               
concerns  over  the  increasing  costs  and  deductibles  of  the                                                               
protection  and indemnity  insurance; however,  he expressed  the                                                               
opinion that the fund is still  healthy enough to cover this.  He                                                               
referenced the  success of the  Fishermen's Fund and  stated that                                                               
the council works diligently to keep it this way.                                                                               
                                                                                                                                
4:26:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   RUFFRIDGE   questioned    the   specificity   of                                                               
addressing  "heart  attacks" in  the  proposed  legislation.   He                                                               
suggested that this  is because of the remoteness of  some of the                                                               
fishing grounds and the cost of transporting the individuals.                                                                   
                                                                                                                                
MS.  THOMAS answered  that over  the last  five years  there have                                                               
been only  two heart attack claims.   She added that  some claims                                                               
do not  meet the qualifying  criteria.   She stated that  a valid                                                               
fishing license would  need to be presented, and  for some claims                                                               
this  has not  been presented.   She  expressed the  opinion that                                                               
this  being  in  the  proposed   legislation  would  not  have  a                                                               
significant effect on expenses.                                                                                                 
                                                                                                                                
MR. COLLINS added that there is  no change in the language of the                                                               
bill other  than the  $15,000, as the  heart attack  language has                                                               
been there since around 1977.                                                                                                   
                                                                                                                                
4:28:46 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that CSHB 92, Version B, was held over.