Legislature(2015 - 2016)BARNES 124
03/25/2015 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB114 | |
| HB164 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 114 | TELECONFERENCED | |
| *+ | HB 164 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 114-WORKERS' COMPENSATION: DEATH BENEFITS
3:18:40 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 114, "An Act relating to the calculation and
payment of workers' compensation benefits in the case of
permanent partial impairment; relating to the calculation and
payment of workers' compensation death benefits payable to a
child of an employee where there is no surviving spouse;
relating to the calculation and payment of workers' compensation
death benefits for an employee without a surviving spouse or
child; relating to notice of workers' compensation death
benefits; and providing for an effective date."
3:18:49 PM
REPRESENTATIVE JOSEPHSON, speaking as sponsor of HB 114, stated
that the first thing HB 114 does is to increase the PPI
[permanent partial impairment] amount, which has not been
changed since 2000. The second part would offer a remedy for
the estates of workers who have been killed or died at the
workplace.
3:20:21 PM
REPRESENTATIVE JOSEPHSON said this bill was about a policy call
under the Alaska Supreme Court decision related to AS 23.30,
Ranney v. Whitewater Engineering, 122 P.3d 214 (Alaska 2005).
In the foregoing case, Ms. Ranney, was unmarried with a long-
time live-in boyfriend, Gary Stone and argued that she should
receive death benefits when Mr. Stone died. The Alaska Supreme
Court unanimously ruled that she should not receive them. It
held that the legislature had undertaken some "line drawing" in
the workers' compensation code. It noted that legislators
frequently engage in line drawing. He suggested that the
legislature needs to redraw some of the lines.
3:21:29 PM
REPRESENTATIVE JOSEPHSON stated that HB 114 would ask the
legislature to reconsider redrawing some of the lines. He
related that numerous single childless people live in Alaska.
He further stated that if a single person dies at the workplace
with no obvious third-party liability, for example, if the
person falls off a ladder and dies, the remedy would be in Title
[AS] 23. Although he said he was not a personal injury lawyer,
he suggested if the ladder had a bad rung and the person fell,
the state might sue the manufacturer of the ladder. Typically,
workplace deaths are due to a generally unsafe workplace or
employee negligence and in instances in which an employee dies
and is childless, AS 23 provides the estate with $10,000 for
funeral expenses and nothing more.
3:22:38 PM
REPRESENTATIVE JOSEPHSON offered that the employer might be
subject to some occupational safety violations when a death
occurs, but there wouldn't be any incentive to improve workplace
safety. In the specific case that led to him filing this bill,
an OSHA [Occupational Safety and Health Administration]
investigation occurred. Overall, current law lacks any remedy
for single people who die in the workplace, and often people
postpone marriage or having children. He offered his view that
this issue needs reform. In instances in which nothing
malfunctions in the workplace or was tortuously manufactured,
such as a badly designed product that exploded, Alaska does not
allow the estate to sue for wrongful death nor is there any
remedy other than the $10,000 funerary expenses previously
mentioned.
3:24:48 PM
REPRESENTATIVE JOSEPHSON referred to Section 1, which was an
uncodified provision that requests the Act be called the Abigail
Caudle Act, to reference an employee who was killed in the
workplace in 2011. At the time, Ms. Caudle was working for an
electrical contractor at a midtown Anchorage branch of Alaska
USA and she suffered an electric accident, fell, and died as a
result of those injuries.
REPRESENTATIVE JOSEPHSON stated that Section 2 would increase
the permanent partial impairment (PPI) rating, noting that the
PPI amount has not been increased from a whole body figure of
$177,000. This language would increase the rating to $255,584
to reflect today's figures. He said that a doctor could find a
person suffered a partial permanent injury and if so, the system
has scales for this depending on the loss.
3:26:28 PM
REPRESENTATIVE JOSEPHSON said that Section 3 would provide
notice of death benefits so it is very clear to the estate of
the deceased what the remedies are, including that the estate
can hire an attorney, seek grief counseling, and other things an
employer should provide.
REPRESENTATIVE JOSEPHSON referred to Section 4, noting that
current law provides for funeral expenses. He provided details
of the progression of spendable weekly wages a widow, widower,
child, or children will receive ranging from zero to 100
percent, depending on the number of surviving family members.
In response to Representative LeDoux he agreed this was current
statute. He continued, noting that an only child without a
surviving spouse would receive 100 percent of the benefits.
REPRESENTATIVE JOSEPHSON expressed concern that a teenager may
receive only a few months of financial assistance and funeral
expenses if his/her parent died in the workplace, since the
support would end at either age 18 or 19 - he wasn't certain of
the age limit; however, under the bill payments would continue
for five years. He characterized current law as constituting a
lack of generosity in the system. He reviewed paragraph (3) of
existing law, pertaining to a surviving spouse who remarries and
benefits are ceased after two years. Paragraph (4) [on page 3,
lines 12-17] would increase the amount from the $20,000 allowed
for people dependent on the person who died in the workplace,
such as an elderly parent or siblings, to the whole body amount
of $177,000 or potentially $255,000 if the PPI is increased
under the bill.
3:32:49 PM
REPRESENTATIVE LEDOUX related her understanding that under
current law if the decedent was supporting relatives, they could
receive $20,000, but a child over 18 years of age would not
receive anything unless they supported a grandchild, who could
receive benefits.
REPRESENTATIVE JOSEPHSON answered yes. He referred to the
language in [paragraph] (4), stating that a son who was 18 and a
half years old could receive an additional 6 months in benefits,
but the person's grandchild, as a dependent could receive more
as a percentage of the deceased's spendable weekly wages. In
response to Representative LeDoux, he answered that existing law
limited the support to $20,000. He surmised the theory was that
the nuclear family gets less important outside the ring of [the
immediate family such as] parents or children.
3:35:15 PM
REPRESENTATIVE LEDOUX expressed concern since many parents
currently support their children through college.
REPRESENTATIVE JOSEPHSON said this bill would allow for an
extension. He referred to [page 3, line 25] to proposed Section
5, which would extend the death benefits paid to a child to age
24 to allow death benefits to continue and not stop at age 19,
and it would continue as a fraction of the spendable weekly
allowance, presumably to get the child of the deceased through
college.
3:36:27 PM
REPRESENTATIVE JOSEPHSON directed attention to a final scenario,
which brings Ms. Burke to Juneau. He indicated the deceased
worker was single without any dependents. This bill proposes
the estate would receive half of the whole body allowance in
death benefits, which is approximately half of the $177,000
[PPI] under current law or $88,000. He directed attention to
the fiscal note impact due to changes in the PPI, he said. He
acknowledged that Chair Olson has his own bill related to PPI,
which has not been increased since 2000 and should be adjusted
to reflect the 2015 value.
3:38:01 PM
CHAIR OLSON commented that the fiscal note was significant.
REPRESENTATIVE JOSEPHSON said he also had questions about the
fiscal note.
3:38:29 PM
REPRESENTATIVE JOSEPHSON referred to [paragraph] (6), and
questioned differentiating between the estate of the single
person with or without children. He suggested that the figures
used were half the amount available under the modified
[paragraph] (4), or half of $177,000. Proposed Section 5 would
adjust the amount based on the Consumer Price Index (CPI). He
offered his belief that the benefits of passing HB 114 is that
that it improve workplace safety, although it would be difficult
to quantify; and it would reflect the PPI; and fundamentally
would confirm that just because a person is single and dies in
the workplace doesn't mean the individual's estate is not due
any settlement.
3:41:08 PM
CHAIR OLSON asked whether the fiscal note applies only to state
employees.
LEASA DAVIS, Division of Risk Management, Department of
Administration (DOA) answered yes; stating that the fiscal note
was based on the AWCB [Alaska Workers' Compensation Board] data
for the past five years. She related her calculation, based on
the PPI [permanent partial impairment ratings] benefit payout
multiplied by 45,000. She said she reviewed the claim history
and reported that one person died in the line of duty without
leaving a family or dependents and the death benefit amount was
averaged over five years.
3:42:20 PM
CHAIR OLSON asked whether the private sector would have more
fatalities than the state.
MS. DAVIS answered that more fatalities happen with certain
industries, such as high risk occupations, including public
safety or those individuals who fly as part of their job duties.
3:42:51 PM
REPRESENTATIVE LEDOUX asked for further clarification on the
fiscal note. She asked whether these changes would cost the
state $291 million.
MS. DAVIS explained that she inadvertently listed whole numbers
of $291,632 for six months and $583,263 for a full year. She
apologized for the error.
3:43:31 PM
REPRESENTATIVE KITO directed attention to the fourth paragraph
of the fiscal note analysis that indicated the bill could result
in a yearly average increase of $23,585.40. He questioned this
figure since there has only been one instance in the past five
years. He asked for further clarification on the basis for the
$291,000 and $500,000 projections.
MS. DAVIS explained the formula she used to arrive at the fiscal
note figures. The fiscal note was based on the annual PPI
[permanent partial impairment] payout over five years multiplied
by the increase of the percentage of 44 percent. She also
reviewed the six percent second injury fund amount and records
to discover only one individual died due to an on the job
fatality without any dependents. She averaged the foregoing
death benefits over five years.
3:45:06 PM
REPRESENTATIVE KITO asked whether most of the increased costs in
the fiscal note were due to the consumer price index (CPI)
increase.
MS. DAVIS answered that she did not include the CPI since the
state is entering a deflationary period so the future figures
are unknown. She explained that the bulk of costs are due to
the actual PPI rate increase itself since the department sees a
large number of PPI ratings for state employees.
REPRESENTATIVE KITO related his understanding that it was based
on the historic catch up costs.
3:45:43 PM
REPRESENTATIVE COLVER related his understanding that the state
entity is self-insured. He asked whether there was any type of
reinsurance or umbrella policy for these kinds of claims.
MS. DAVIS answered no. She stated that the state was completely
self-insured.
REPRESENTATIVE COLVER suggested that in his experience most
government entities have another level of insurance as well as
reinsurance.
CHAIR OLSON suggested that he was referring to liability
insurance, and this bill relates to workers' compensation, which
has an exclusive remedy.
REPRESENTATIVE COLVER said he was seeking a way to reduce the
state's exposure.
3:46:52 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community & Economic Development (DCCED), said that
according to the National Council on Compensation Insurance - a
statistical rating organization that sets rates in Alaska - the
bill could possibly have a 4 percent impact on rates.
3:47:51 PM
MS. WING-HEIER, in response to Representative Colver, agreed
self-insured entities frequently have a stop-loss or excess
workers' compensation policy, typically in excess of $500,000 or
$1 million, which is common for large employers. Further,
larger employers often do not have policies because of the high
cost. If entities don't purchase the insurance, the division
refers to the amount as the "burn layer." Basically, if
entities do not exceed the costs very often, it is frequently
better to save the [insurance fees] and use the money for claims
expenses. She offered her belief that was what the state
decided to do.
3:48:34 PM
CHAIR OLSON commented that if HB 114 were to pass, the bulk of
the claims would fall under private policyholders rather than on
the state.
MS. WING-HEIER added that most large employers may have small
claims of $20,000 to $100,000 with an occasional large claim due
to a significant injury or fatality.
3:49:13 PM
REPRESENTATIVE COLVER asked for the average fatality rate.
MS. WING-HEIER deferred to the Division of Workers' Compensation
to respond.
3:49:53 PM
MICHAEL MONAGLE, Director, Central Office, Division of Workers'
Compensation, Department of Labor & Workforce Development
(DLWD), responded to an earlier question, noting that a child
dependent was a child up to age of 19, with an additional four
more years if they were attending college. In addition, he read
a portion of the definition of "child" in existing law [under AS
23.30.395 (8)] as follows, " ... are wholly dependent upon the
deceased employee ...." Thus the death benefits can continue
beyond the age of 19 if the child is dependent on the deceased
employee. He clarified that the benefit was not limited to
grandchildren, grandparents, or parents.
3:51:13 PM
REPRESENTATIVE LEDOUX related a scenario in which the decedent
died while a child was a sophomore in high school, went to
college, but decides to go to medical school. She asked whether
the workers' compensation would cover it.
MR. MONAGLE answered no, since it says the first four years of
college and the statute doesn't anticipate graduate school. He
read additional language for the definition of "child" which
read, " ... are wholly dependent upon the deceased employee and
incapable of self-support by reason of mental or physical
disability, [and persons of any age while they are attending the
first four years of vocational school, trade school, or college,
and persons of any age while they are attending high school;"].
In response to Representative Josephson, he offered the citation
for the definition as AS 23.30.395 (7).
3:52:39 PM
REPRESENTATIVE HUGHES asked for more of a foundation since she
was not familiar with workers' compensation. She recalled that
the rates for the private sector might increase by 4 percent.
She suggested that was an automatic payment, but she understood
that the surviving family members often file lawsuits.
MR. MONAGLE answered that it depends. He informed members that
workers' compensation is an exclusive liability, in fact, you
cannot bring a separate action against employers even if they
are negligent; however, there is a third-party exposure, for
example, if a rung of a ladder or other machinery was defective.
Since the exclusive liability does not extend to the third
party, a lawsuit could be filed. However, workers' compensation
law provides for an offset so the survivor would not receive the
full death benefit plus the full third-party recovery since the
employer would be allowed to reduce their benefit payments.
3:54:27 PM
REPRESENTATIVE JOSEPHSON asked whether the third-party recovery
was from the second injury fund.
MR. MONAGLE answered no. He explained a separate provision in
law allows an employer to offset any third-party recovery. He
explained that the second injury fund was established through
assessments against employer indemnity benefits. The second
injury fund would be used in instances in which an employer
hires a person with a qualifying preexisting condition and the
employee has a subsequent workplace injury made worse by the
pre-existing condition. If an employer hires an employee,
knowing the employee has had a lot of back injuries, but the
employee is subsequently injured, the fund will reimburse the
employer for the indemnity benefit payments so long as it meets
all the requirements for second injury fund reimbursement.
3:55:23 PM
MARIANNE BURKE began her testimony, as follows:
You have no idea what I've gone through to this point.
This is bittersweet - to talk to you - I'm excited,
but I'm saddened for the reason I stand before you.
My daughter [Abigail Caudle] was killed in the
workplace and no value at all - zero - was given for
her life. When you talk about different money and
stuff in the workplace environment - there was nothing
given for her life, but the funeral costs. That's it
- because she had no dependents. There is no
liability to the employer. Nothing happened to the
employers whatsoever because of "no fault" insurance.
Nothing happens. If there is any payout, the
insurance pays it - and I'll get to that in a minute.
I just want to emphasize those two points before I
start.
3:57:07 PM
MS. BURKE continued her testimony, as follows:
My daughter was the second child of four children, two
boys and two girls. Her sister and she would play
dolls growing up. She enjoyed soccer, basketball,
babysitting, day care - she worked at Home Depot. She
volunteered at ChangePoint church doing lighting for
all of their services for three years. She helped
with the youth group at ChangePoint.
MS. BURKE paused to show photographs of her daughter.
MS. BURKE continued. She said:
My daughter was a new apprentice with Raven Electric
so she was not with the unions. The private sector is
not as "up" as the unions are sometimes. She was
[indisc.] with a live wire. They were working on an
open junction box in a bank remodel job taking down
lights. The journeyman did not turn off the circuit
breaker or lock and tag as he was supposed to. This
was because he wasn't planning on doing that lighting
that night. Usually he would bring temporary lights,
but he wasn't planning on doing that work that night
so they used the lights that were there and just
turned off light switches. Abigail had an inadequate
non-contact tester. It did not clamp onto the wire;
it just went near the wire so it did not sense the
live wire. She tried it twice. It showed green, safe
or to go. And she touched the live wire; got locked
up. Her coworkers tried to get her off the ladder.
They couldn't. They finally kicked the ladder real
hard and she fell off to the floor. She went into
seizures. The others told that about 440 volts that
went through her body. She [indisc.] defibrillator
and she was taken to the hospital. She was 26 years
old and she died on June 21, 2011. I cannot tell you
how much we miss Abigail [indisc.]. Her sister does
not have a sister anymore. Her brothers do not have a
sister that they had anymore to talk with and be
support with. Thank you.
3:59:32 PM
MS. BURKE said that about three months after her daughter's
death she called numerous lawyers, but none would represent her
since her daughter's death fell under workers' compensation.
She said the lawyers she contacted informed her they would not
win the case and that similar cases had been taken to the Alaska
Supreme Court and the plaintiff did not prevail. In fact, she
couldn't even get any lawyer to take the case pro bono. Two
years after her daughter's death she began fighting - by herself
- for death benefits for her daughter She could not sue the
employer, she said, due to House Bill 323 that passed the
legislature in 2004. Since her daughter's death was a work
related death she also could not file a civil lawsuit or obtain
any type of justice. Subsequently, the legislature considered
House Bill 303, which would have allowed wrongful death cases to
be filed civilly, but that bill did not pass, in part, since it
was opposed by the business sector.
4:00:49 PM
MS. BURKE declared that workers' compensation laws give zero
value to people like her daughter, a single worker without any
dependents, except for funeral costs. Although the employer,
[Raven Electric] received five citations from OSHA [the US
Department of Labor, Occupational Safety and Health
Administration], in which four violations were determined to
contribute to her daughter's death, the company only paid
$11,000 to OSHA. In fact, OSHA advised her that after three
years the employer's slate will be wiped clean. She was
astonished at this outcome since her daughter's death
constituted gross negligence by the employer. As the sponsor
said earlier, the Abigail Caudle Act would update the value of
an employee's life by increasing the PPI [permanent partial
impairment] amount to $256,000, noting the PPI has not been
adjusted in 15 years.
4:01:41 PM
MS. BURKE stated that if the PPI figures were updated all of the
people who are injured will receive compensation based on
today's wages. Survivors of workers killed on the job would
receive something, describing her feelings as hollow feelings
since nothing was given for her daughter's life. She
recommended the statute of limitations should be raised from one
year to four years. She reported that California has a four-
year statute of limitation in wrongful deaths, and even though
she recognizes that this bill pertains to workers' compensation,
the statute of limitation still needs to be raised to four
years. She explained that two years passes by quickly during a
period of grief when losing a loved one and one year was simply
insufficient.
4:02:47 PM
MS. BURKE said that this issue is a bipartisan issue and
although she her political affiliation is Republican, a
Democrat, Representative Josephson, stepped up to help her. She
stressed that this issue adversely affects families. She urged
the legislature to pass HB 114. Even though the bill may need
additional work and businesses don't want to pay more for
workers' compensation, perhaps businesses could elect to provide
a life insurance policy for their employees or require them to
obtain life insurance. Most importantly, under current law,
employers can avoid purchasing safety equipment since they are
not held accountable and lawsuits can't be filed against them.
She felt it was crucial that the law recognizes that every
person has value. She said one problem with workers'
compensation was due to "no fault" insurance, which she
characterized as being a nationwide problem.
4:04:23 PM
CHAIR OLSON stated that having an exclusive remedy means that
workers' compensation will pay immediately, whether or not the
claim is perceived as legitimate and it could be controverted if
issues arise.
MS. BURKE offered his belief, shared by the workers'
compensation staff she spoke to, that when a death occurs in the
workplace it should cease to be a workers' compensation case.
This was especially true in instances in which employers are
negligent, which was the case in her daughter's death since the
employees did not lock and tag, the employees did not
communicate, and the employer failed to do a number of things it
should have done. In fact, Abigail was a new apprentice, brand
new, trusting her journeymen that she was safe, she said. Her
daughter's journeymen weren't even in the room when the
electrical accident occurred. In closing she emphasized that
when deaths occur, the matter should not fall under workers'
compensation to allow for justice. She thanked members for
allowing her to testify.
[HB 114 was held over.]
4:06:23 PM
The committee took a brief at-ease.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB164 ver A.PDF |
HL&C 3/25/2015 3:15:00 PM |
HB 164 |
| HB164 Sponsor Statement.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 164 |
| HB164 Sectional Analysis.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 164 |
| HB114 ver A.PDF |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Sponsor Statement.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Sectional Analysis.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Fiscal Note-DOA-DRM-03-20-15.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Fiscal Note-DOLWD-WC-03-27-15.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Supporting Documents-Research Report 2-4-15.PDF |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB114 Supporting Documents-Intestate Statutes.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 114 |
| HB164 Supporting Documents-DOI Presentation-3-25-15.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 164 |
| HB164 Fiscal Note-DOA-DOI-3-24-15.pdf |
HL&C 3/25/2015 3:15:00 PM |
HB 164 |