Legislature(2023 - 2024)BUTROVICH 205
03/27/2024 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB60 | |
| HB28 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 60 | TELECONFERENCED | |
| += | HB 28 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 60-REPEAL WORKERS' COMP APPEALS COMMISSION
1:35:14 PM
CHAIR CLAMAN announced the consideration of SENATE BILL NO. 60
"An Act repealing the Workers' Compensation Appeals Commission;
relating to decisions and orders of the Workers' Compensation
Appeals Commission; relating to superior court jurisdiction over
appeals from Alaska Workers' Compensation Board decisions;
repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of
Appellate Procedure, and amending Rules 202(a), 204(a) - (c),
210(e), 601(b), 602(c) and (h), and 603(a), Alaska Rules of
Appellate Procedure; and providing for an effective date."
CHAIR CLAMAN said this is the third hearing of SB 60 in the
Senate Judiciary Committee. A Judiciary committee substitute
(CS), version \B, was adopted as the working document in the
January 22 hearing. The intention is to consider new committee
substitute version \S. He invited Ms. Kakaruk to present the
explanation of changes.
1:36:09 PM
SENATOR GIESSEL joined the meeting.
1:36:49 PM
BREANNA KAKARUK, Staff, Senator Matt Claman, Alaska State
Legislature, Juneau, Alaska, presented the explanation of
changes for SB 60 from version \B to version \S.
[Original Punctuation Provided]
Explanation of Changes
Senate Judiciary Committee: Version B to Version S
The CS for Senate Bill 60 (Judiciary) version S
replaces version B of the bill by placing the
jurisdiction of the former Workers' Compensation
Appeals Commission under the office of administrative
hearings (OAH). OAH would have jurisdiction to hear
appeals from final decision and orders of the board.
In version S, the office would designate one primary
administrative law judge and one alternate law judge
to hear and decide all appeals to the office.
In SB 60 version B, the Workers' Compensation Appeals
Commission would be repealed and jurisdiction over
appeals of Workers' Compensation decisions would
return to the Superior Court.
1:37:50 PM
CHAIR CLAMAN announced invited testimony on SB 60. He invited
Mr. Ferestien to put himself on the record and provide his
thoughts and comments about CS versions \B and \S.
1:38:26 PM
DANA FERESTIEN, Regional President, Alaska National Insurance
Company, CopperPoint Insurance Company, Seattle, Washington,
testified by invitation on SB 60. He provided a brief history on
the Alaska National Insurance Company (ANIC). It was founded in
1980 for the purpose of providing a stable market for workers
compensation insurance for the employers of Alaska. Alaska
National insures more than a third of the Alaska workers
compensation voluntary market. It served for many years as a
servicing carrier for Alaska's assigned risk plan, and currently
services a majority of the pool.
MR. FERESTIEN stated that ANIC supports the proposed committee
substitute (CS), which would send appeals to the Office of
Administrative Hearings (OAH) rather than the Workers'
Compensation Appeals Commission. He said the change effectively
addresses concerns about the cost of operating the Commission
and the recent decline in its caseload following the COVID
shutdown. While he acknowledged that the Commission's annual
operating cost is significant, he pointed out that it is funded
by premium taxes, making the system self-sustaining. He
recognized that committee members may still wish to pursue cost
savings but cautioned reductions in operating expenses should
not come at the expense of the system or the employers and
employees it serves.
1:40:11 PM
MR. FERESTIEN said it was important to provide context about the
workers' compensation system, which he described as the product
of the "Grand Bargain." He explained that under this bargain,
workers injured in the scope of their employment, receive
medical care and scheduled compensation without regard to fault.
This process is designed to promote healing and a quick return
to work. He said the system emphasizes efficiency,
predictability, and minimizing litigation. He asserted that the
original version of SB 60 is contrary to and undercuts the Grand
Bargain by routing appeals to the Superior Court while the CS
supports and preserves it. He elaborated by making the following
three points:
Binding Precedent
Decisions from OAH would provide binding precedent and guidance
for employers, employees, and the attorneys that represent them
in workers compensation cases. He contrasted this with the
Superior Court, whose decisions are binding only on the parties
to a specific case and do not establish precedent for future
cases. He said this would lead to a less predictable and less
efficient system, where the same issue could be decided
differently in separate cases.
1:42:31 PM
Designated Administrative Law Judge
The committee substitute (CS) provides for a single
administrative law judge to act as the primary decision-maker
for appeals, mirroring the structure of the Appeals Commission.
He emphasized that administrative law judges are subject-matter
experts, in contrast to Alaska's 40-plus Superior Court judges,
who are generalists. He explained that under the Superior Court
approach, workers' compensation cases would rotate across
different judges throughout the state, many of whom might only
hear one such case in their entire career. He cautioned that
this lack of specialization would reduce consistency and
expertise in decision-making.
Delays
The focus is on the timeframe to get injured workers back to
work and on with their lives. Alaska Superior Courts have a
significant case backlog, taking, at best, 18 months to get to
trial. That timeline does not include the earlier stages of the
claims process, such as hearings before the Workers'
Compensation Board. He emphasized that this extended wait time
is contrary to the core purpose of workers' compensation, which
is to heal, compensate, and return injured workers to their jobs
as promptly as possible. In contrast, OAH would have a single,
dedicated judge managing what currently appears to be a
relatively light caseload. While the exact timeline for
decisions is unknown, he suggested that decisions from OAH could
be expected significantly faster than from the Superior Court.
1:44:50 PM
MR. FERESTIEN said for these reasons, Alaska National Insurance
Company supports the committee substitute. He said it represents
a sound and well-considered compromise that balances fiscal
responsibility with a fair, efficient, and accurate decision-
making body. The measure preserves the principles of the Grand
Bargain, safeguards workers, offers a fair forum for employers,
and reaches a practical resolution. He thanked the committee for
the opportunity to provide comments.
1:45:29 PM
SENATOR TOBIN sought clarification about whether any workers'
compensation entity has the authority to create binding
precedent.
MR. FERESTIEN replied, it is his understanding, that the Alaska
Worker's Compensation Appeals Commission (AWCAC) decisions are
binding and followed in subsequent cases. He said that this is
in contrast to the Alaska Superior Court. He expressed his
belief that expert testimony at prior hearings indicated Appeals
Commission decisions set precedent and are followed in
subsequent cases.
1:46:17 PM
SENATOR TOBIN expressed her understanding that the legislature
cannot constitutionally require the courts to give precedential
value to Appeals Commission decisions and asked for clarity
about this.
1:46:32 PM
MR. FERESTIEN prefaced his response by noting he is not an
attorney, but stated his understanding that Commission decisions
are binding on the Workers' Compensation Board. He explained
that, when the system functions as intended, employers and their
insurance companies receive notice of a claim, determine
compensability, and begin paying benefits. He estimated this
scenario occurs in 90 to 99 percent of cases. The primary
objective is to begin supporting the worker as soon as possible.
A small percentage of claims, between one and ten percent, are
appealed to the Board, which typically provides effective
administrative resolution.
MR. FERESTIEN continued that only a handful of cases proceed
beyond the Board to the Appeals Commission or another appellate
body. He stressed, under the current structure, the Board is
required to follow Commission decisions, which create binding
precedent that ensures consistency and predictability when
claimants appear before the Board. In contrast, decisions issued
by the Superior Court are not binding on future cases.
MR. FERESTIEN further explained that appeals beyond the Superior
Court level go to the Alaska Supreme Court; the Supreme Court
may uphold existing precedent under stare decisis or may
overturn prior cases and do something different.
1:48:34 PM
CHAIR CLAMAN expressed his understanding that, in terms of
precedent, the Workers' Compensation Appeals Commission is bound
by its own prior decisions. He stated that the Commission looks
to its previous rulings to guide future decisions, as it serves
as the appellate body for the Workers' Compensation Board.
However, if a party is dissatisfied with a Commission decision
and appeals to the Alaska Supreme Court, the Commission's
decisions carry no binding precedential value for the Supreme
Court. The Supreme Court reviews such cases independently, and
if it agrees with the Commission's reasoning, its ruling then
becomes binding precedent.
CHAIR CLAMAN offered a slight variation to better explain
precedent as it pertains to workers' compensation in Alaska and
the Superior Court. He noted that Superior Court judges are not
bound by each other's decisions. For example, a ruling by Judge
Smith may be persuasive to Judge Jones, but Judge Jones is not
obligated to follow it. Similarly, the Workers' Compensation
Board is not required to necessarily follow Superior Court
decisions in the same way it must follow Appeals Commission
decisions. He asked whether this distinction aligned with
others' understanding or if there was a different
interpretation.
MR. FERESTIEN expressed that the chair said it more artfully
than he had.
1:50:20 PM
SENATOR TOBIN said the chairs explanation provided clarity.
MR. FERESTIEN commented that, while facts in each case may
differ, the issues often overlap. He explained that whether the
matter involves medical benefits, return to work, or another
issue, the interpretation of statutes and regulations are
frequently similar. He emphasized that it is the interpretation
within the decision that is most useful to the Board in
subsequent cases.
1:51:11 PM
SENATOR KAUFMAN stated that the original bill would reduce costs
by incorporating the function of the Appeals Commission into
existing court operations, which are already ongoing. He
explained that this approach was expected to lower expenses. He
expressed uncertainty about how CS version \S would achieve the
same objective, asking whether OAH costs would remain the same.
MR. FERESTIEN replied that it would require a study to give a
precise answer in dollars and cents and acknowledged that any
figure offered without such analysis would be speculative. He
noted material differences between the current structure and the
proposal. Mainly, the existing Appeals Commission carries three
full-time salaries, whereas CS version \S proposes to house the
work within an entity that is already funded.
MR. FERESTIEN observed that if the Court System could absorb the
caseload without adding staff, the Office of Administrative
Hearings might be able to do close to the same. He said that
meaningful savings appeared likely; quantifying those savings
could reveal costs roughly equivalent to those projected for the
original bill.
1:52:59 PM
CHAIR CLAMAN referenced testimony, which noted that roughly half
a million dollars in Appeals Commission costs are funded through
the state general fund generated from workers compensation
insurance premiums paid by policyholders.
MR. FERESTIEN confirmed, expressing his understanding that the
funding comes from dedicated dollars generated by the premium
tax on workers' compensation policies. He concluded that the
system is self-sustaining based on that structure.
1:53:31 PM
CHAIR CLAMAN outlined the following assumptions:
- the workers' compensation system is self-sustaining,
- the bill's provisions are adopted so that the Superior Court
hears workers' compensation appeals, and
- the Superior Court fiscal note indicates it can absorb the
cost within its existing system.
CHAIR CLAMAN asked whether, assuming these assumptions hold,
policyholders would realize savings by eliminating their share
of the half-million-dollar cost associated with operating the
Appeals Commission.
MR. FERESTIEN replied that rates are established through an
actuarial analysis of loss cost. He explained that the National
Council on Compensation Insurance (NCCI), in coordination with
the Division of Insurance director, conducts a rigorous annual
process to set those rates. He stated that it seems unlikely the
state would experience savings as a result of the change. He
made a side note, stating that the state has seen a significant
decline in rates over the past years. He surmised that
transferring appeals to the Superior Court would likely create
upward pressure on loss cost and, all else being equal, could
result in higher rates over time.
1:55:08 PM
SENATOR KAUFMAN asked about the impetus for shifting workers'
compensation appeals in Alaska from the Superior Court to the
Workers' Compensation Appeals Commission, and whether he could
elaborate on the history and factors that contributed to that
change.
MR. FERESTIEN replied that he did not have knowledge of that
rationale. He was not involved in the industry until 2005. He
emphasized that an administrative process focused on resolution
and returning injured workers to the workforce aligns more
closely with the core principles and public policy objectives of
a workers' compensation system. The goal is to avoid the
courthouse, minimize legal involvement, and prevent increased
costs resulting from litigation.
1:57:53 PM
CHAIR CLAMAN invited Ms. Hall to identify herself for the record
and to proceed with her testimony.
1:58:16 PM
JOELLE HALL, President, American Federation of Labor and
Congress of Industrial Organizations (AFL-CIO) Alaska,
Anchorage, Alaska, testified by invitation on SB 60. She noted
that the federation has backed versions of this bill for several
years, beginning with similar legislation introduced eight or
nine years ago, and has consistently favored eliminating the
Workers' Compensation Appeals Commission.
MS. HALL voiced concern that the committee substitute would
place every worker's compensation appeal in the hands of a
single administrative law judge. Although such a structure might
appear efficient, she argued it would concentrate too much power
in one appointee whose biases and background are unknown. Under
that model, the only recourse would be an appeal to the Alaska
Supreme Court. While Superior Court judges may lack deep
familiarity with workers' compensation, she maintained that
distributing appeals among many judges is preferable to allowing
one individual to control every case, a situation she warned
could invite lobbying pressure given the monetary stakes
involved.
MS. HALL characterized the current system, appeals from the
Workers' Compensation Board to the Appeals Commission, as
duplicative, describing it as "two executive-level bodies"
reviewing the same claim before it reaches the courts. Instead,
the AFL-CIO supports the original version of SB 60, which would
allow the executive branch a single opportunity to adjudicate a
claim and, if necessary, send the matter directly to the courts.
She acknowledged that she is not a technical expert in workers
compensation. She said vesting authority in one person, over all
appeals, is inconsistent with the principles of the Grand
Bargain, which underlies the workers' compensation system.
2:01:41 PM
CHAIR CLAMAN invited Mr. Dunsmore to identify himself for the
record.
2:01:52 PM
DAVID DUNSMORE, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, introduced himself and put himself
on the record.
2:02:11 PM
SENATOR KAUFMAN commented on increasing the number of entities
that hear claim disputes within a single branch of government.
He said there is a certain logic in dividing that responsibility
between two branches. If a party is not satisfied with the
outcome at the executive level, the next step would be an appeal
in the judicial branch. He acknowledged that some individuals
may find court burdensome. He asked the bill sponsor for his
perspective on keeping the appeal process within the executive
branch versus shifting it to the judiciary.
2:02:59 PM
MR. DUNSMORE replied that the sponsor supports the bill as
originally introduced. The original bill proposes to restore
jurisdiction to the Superior Court, which heard these cases
before the Workers Compensation Appeals Commission was
established. He expressed appreciation to the committee for
exploring options but said CS version \S simply replaces one
executive branch agency with another without addressing the
underlying structural issues.
MR. DUNSMORE stated that version \S likely would not result in
significant cost savings. He said that the Office of
Administrative Hearings (OAH) is already overstretched and
dealing with staffing shortages. While some cost savings might
result from eliminating lay commission member travel and per
diem, the major cost savings would come from eliminating two
full-time positions.
2:04:12 PM
MR. DUNSMORE expressed his belief that shifting appeals between
administrative agencies would perpetuate the inefficiencies
introduced by the Appeals Commission. He explained that prior to
the creation of the Commission, only about 25 percent of
Superior Court workers' compensation decisions were appealed to
the Alaska Supreme Court. By contrast, approximately 50 percent
of Appeals Commission decisions are appealed to the Supreme
Court. He emphasized that Supreme Court appeals add months, if
not years, to the resolution process. He expressed concern that
decisions issued by OAH could be appealed at a similarly higher
rate, thereby perpetuating the same inefficiencies.
MR. DUNSMORE indicated that the bill sponsor believes the
original version presents the most efficient path forward. It
offers meaningful cost savings and helps address the current
funding shortfall, as the workers' compensation system no longer
receives sufficient designated general fund revenue to cover the
full cost of the program.
2:06:17 PM
CHAIR CLAMAN reminded members that the working document before
the committee is CSSB 60, version \B, the sponsor's version. He
invited discussion on whether to adopt new CS version \S or
continue with the current version.
2:06:42 PM
SENATOR KIEHL addressed the Department of Administration's
budget, stating if OAH were to take on these appeals, it would
charge the workers' compensation system approximately $280 per
hour. Therefore, transferring appeals to OAH would not yield the
same cost savings as transferring them to the Superior Court.
SENATOR KIEHL said another budget issue is OAH chargebacks. He
noted that the governor's budget is asking for more than
$700,000 in unrestricted general funds. He stated that, in terms
of cost savings, transferring appeals to the Superior Court
would result in greater savings than assigning them to OAH.
SENATOR KIEHL referenced a current backlog challenge in the
Supplemental Nutrition Assistance Program (SNAP) and the volume
of fair hearings now being appealed. He described the situation
as a "pig in the python" that will eventually work through the
system.
2:08:11 PM
SENATOR KIEHL stated he has always been most comfortable with
the structure of appeals proceeding from the Superior Court to
the Supreme Court, rather than from an administrative process,
as proposed in version \S. He pointed out that under its current
structure, OAH decisions are appealed to the Superior Court,
noting that version \S would carve out an exception to that
framework, treating workers' compensation appeals differently.
SENATOR KIEHL expressed that he is probably most comfortable
with the working document before the committee, CS version \B;
it maintains the original bill and fixes the effective dates.
2:08:58 PM
SENATOR KAUFMAN stated that, based on what he has learned, he is
more inclined to support the original bill.
2:09:18 PM
SENATOR TOBIN expressed appreciation for the discussion and the
opportunity to learn more about the current appeals structure,
as well as possible alternatives that may offer some cost
savings. She expressed her support for version \B, acknowledging
that the savings may not reach the level anticipated under the
original bill and looks forward to continued discussion about
ensuring individuals receive a fair appeals process.
2:09:50 PM
CHAIR CLAMAN found that no committee member sought to adopt CS
version \S.
CHAIR CLAMAN solicited the will of the committee.
2:10:03 PM
SENATOR KIEHL moved to report CSSB 60, work order 33-LS0330\B,
from committee with individual recommendations and attached
fiscal note(s).
2:10:19 PM
CHAIR CLAMAN found no objection and CSSB 60(JUD) was reported
from the Senate Judiciary Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 60 version S.pdf |
SJUD 3/27/2024 1:30:00 PM |
SB 60 |
| SB 60 Explanation of Changes version B to S 3.27.2024.pdf |
SJUD 3/27/2024 1:30:00 PM |
SB 60 |
| HB 28 version R.pdf |
SJUD 3/27/2024 1:30:00 PM |
HB 28 |
| HB 28 Explanation of Changes 3.27.2024.pdf |
SJUD 3/27/2024 1:30:00 PM |
HB 28 |
| SB 60 version S Letter of Support - APCIA.pdf |
SJUD 3/27/2024 1:30:00 PM |
SB 60 |