Legislature(2017 - 2018)BUTROVICH 205
02/01/2018 01:00 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB112 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 112 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 112-WORKERS COMPENSATION;DRUG DATABASE & TEST
1:02:28 PM
CHAIR COSTELLO announced the consideration of SSSB 112. She
stated that the intention was to hear the introduction and take
public testimony.
1:03:11 PM
SENATOR CATHY GIESSEL, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 112 said she appreciates that this is the
committee on the economy because that is what the legislation is
about. She opined that the bill addresses the questions the
committee entertained at the start of the session regarding how
to create more jobs, how to train for more jobs, how to boost
the economy, and how to innovate. This legislation will leave
more resources in the hands of entities that create jobs, hire
Alaskan workers, and train Alaskan workers. It will boost the
economy by having a healthy workforce and it innovates by
recognizing the need for constant change, making adjustments,
renewing, and transforming.
1:04:17 PM
SENATOR MEYER joined the committee.
SENATOR GIESSEL said the history of caring for and protecting
workers began in Ancient Greece, Rome, and China. FDR made huge
changes through the Federal Employers' Liability Act in the
early 1900s. She said the goal today for workers and employers
is that nobody gets hurt on the job. She said this issue is both
important and urgent. It is urgent for schools that are having
to spend money on workers' compensation issues when money needs
to be spent on teachers and classrooms. It is urgent because
high workers' compensation costs are taking resources that local
governments could use to hire more police, clear roads more
quickly, and fund schools. She pointed out that the State of
Alaska is an employer and consequently its citizens are impacted
by the workers' compensation system that allows money to be
spent on things that are not focused on the injured worker and
getting him/her back on the job. She said we need to move past
the dichotomy that there is a conflict between the worker and
the employer because they need each other.
1:06:43 PM
SENATOR MICCICHE joined the committee.
SENATOR GIESSEL stated that the purpose of SB 112 is to make
sure that workers who are injured on the job get healthy and
return to work as quickly as possible. The current system isn't
doing that. Rather, injured workers are caught in endless
treatments and money is diverted to middlemen and lawyers. An
example is the Vocational Rehabilitation and Reemployment
Program. A study done several years ago found that only 8
percent of injured workers that chose to enter a reemployment
training program completed the program; 92 percent didn't feel
it was worth finishing and cashed out for between $50,000 and
$70,000. Injured workers did not get new skills. She noted that
there was no data showing whether the 8 percent that finished
the program pursued a new career in the field they had been
trained.
1:08:28 PM
She displayed a graph from the Department of Labor and Workforce
Development (DOLWD) that shows what the state has spent on
rehabilitation from 2006 through 2016. The annual average
payments are about $13 million even though just 8 percent of
injured workers in Alaska finish the program. She reported that
in 2014 the average medical claim in Alaska was $62,000. In 2015
it dropped to $49,000. The 10-year average in Alaska has been
$49,000 whereas the U.S. average is just $28,500. She said that
Alaska has some of the highest medical costs in the country
which is both unaffordable and unsustainable.
She directed attention to a graph from the Montana Department of
th
Labor and noted that state ranks 11 in the U.S. for the cost of
health care. She pointed out that in 2014 the average medical
claim in Montana was about $44,000 compared to the average 2014
nd
cost in Alaska of $62,000. At that time Alaska ranked 2 in the
th
country and is now ranked 5 for cost per medical claim. Another
chart from the Alaska DOLWD shows the average medical cost per
claim from 2010 through 2015. She explained that the chart calls
out the work of a committee under workers' compensation called
the Medical Services Review Committee. They looked at the
reimbursement for medical claims and in 2015 started price
setting. They told providers they wouldn't pay $3,000 for an
MRI, they'd pay $1,200. They wouldn't pay $10,000 for a
laminectomy, they'd pay $6,000. She said that's price setting
and she applauds it. She looks forward to seeing the effect of
the Medical Services Review Committee work in terms of
bringing down overall medical costs.
SENATOR GIESSEL displayed a DOLWD chart of total compensation
payments for medical services for 2006 through 2016. It shows
that medical payments totaled $140 million in 2016. She asked
the committee to consider what cutting that number in half would
mean in terms of funding more schools and hiring more teachers
and police. She emphasized that addressing this is not just
important but urgent.
She pointed out that a lot of time and money is spent on
conflicts and courtroom time, not care for injured workers. She
displayed a chart from DOLWD of legal payments over a ten-year
period. It shows that legal payments have trended upward since
2006. Interestingly, the number of workers' compensation
injuries have trended down over this same timeframe. She
displayed a DOLWD chart of the total compensation payments from
2006 through 2016. It shows that in 2016, $270 million was spent
on workers' compensation payments. She asked the committee to
consider what cutting that number in half would mean in terms of
filling the fiscal gap. She pointed to a chart from the Montana
Department of Labor & Industry that depicts the percent of
premium median by state and by the structure of the workers'
compensation insurance market in 2016. Alaska tied with
th
Connecticut at 5 highest; only California, New Jersey, and New
York were higher.
1:13:48 PM
SENATOR GIESSEL directed attention to excerpts from the January
2015 report from the Alaska Health Care Commission that has
since been defunded. One of the subjects the commission looked
at was how to enact changes in the Alaska Workers' Compensation
Act to contain medical costs and improve quality of care
outcomes. She highlighted that two of the four elements the
commission recommended are contained in SB 112. [These are (a)
evidence-based guidelines and (c) restrict reimbursement for
opioid prescriptions.] She held up a 2004 document from the
Worker Compensation Committee of Alaska (WCCA) that identifies
key reforms to workers' compensation. Those elements are
contained in SB 112. She noted that one of the Alaska Council of
School Administrators 2018 joint position statements includes
the following:
• The state should continue efforts to control the
cost of workers' compensation claims, including
adoption of medical treatment guidelines,
improved management of claims and an improved
reemployment benefits process.
She said these three elements are contained in SB 112.
1:16:16 PM
SENATOR GIESSEL said a key feature in SB 112 is to focus on the
injured worker using evidence-based treatment guidelines from
the American Society of Occupational and Environmental Medicine.
These are listed on the federal website for health care research
and quality national guideline clearinghouse. These guidelines
use the National Academies of Sciences, Engineering, and
Medicine recommendations and are identified for used in workers'
compensation. This national guideline has a dedicated research
team at the University of Utah.
SENATOR GIESSEL advised that the University of Utah is
continually reviewing the latest medical research and updating
the treatment guidelines for occupational and environmental
medicine. Eight states and the U.S. Department of Defense use
these guidelines for workers' compensation cases. She disputed
the claim that evidence-based treatment guidelines are too
restrictive and argued that they facilitate and inform the
treating clinician to give the best care. She displayed an
algorithm for low back pain and explained that it calls out red
flags for the clinician to consider and emergency procedures
that might be needed. She highlighted that Kaiser Permanente has
integrated these guidelines into their care for employees and
beneficiaries in northern California. In the first year the
medical treatment savings totaled $250 million. Texas uses these
guidelines and has seen that employees get back to work faster
and fully recovered and fewer cases are controverted.
1:20:07 PM
SENATOR GARDNER asked if the presentation speaks to version R;
she was trying to match the language that's referenced with the
different sections.
SENATOR GIESSEL said her aide would go through the sectional
after the presentation and correct any incorrect sectional
references if needed. She noted that the packet also had a quick
reference chart for the key topics in version R.
CHAIR COSTELLO clarified for the public that the committee was
considering version R; a committee substitute had not been
introduced. The sponsor has indicated that she will alert the
committee to changes she suggests going forward.
1:21:50 PM
SENATOR STEVENS asked who the $250 million savings was
attributed to.
SENATOR GIESSEL said it was Kaiser Permanente, a large managed
care group in California that integrated that ACOEM guidelines
that appear in SB 112. She clarified that the presentation
covered the key elements in the bill; the forthcoming sectional
summary would show where each appears.
SENATOR GIESSEL returned to the example of treatment guidelines
for low back pain. She explained that the clinician can research
related terms and look at workflows and diagnostic criteria. The
site also covers questions and options for the clinician to
consider should the patient fail to recover. She reiterated that
the dedicated research team at the University of Utah updates
this information and protocols quarterly. Every two years they
look to see that each body unit has been updated and that the
document is usable. Emerging evidence is updated immediately.
SB 112 also addresses prescribing controlled substances which is
identified in the guidelines. Part of the requirement is that
the clinician must notify the employer that the injured worker
is on an opioid if they return to work on light duty. The
clinician also must document why the opioid was prescribed. The
injured worker may also select a pain management specialist to
manage their care. She noted that the best-practice guidelines
for opioids are very conservative. In 2015 the American College
of Environmental Medicine (ACOEM) recommended no more than 50
morphine milligram equivalents for dosing of opioids. A year
later the Centers for Disease Control (CDC) adopted that same
guideline for opioids.
1:27:15 PM
SENATOR GIESSEL said the second major piece of SB 112 focuses on
making reemployment benefits work. She reminded members that
just 8 percent of injured workers who choose to go into a
reemployment program finish and 92 percent cash the benefit out.
SB 112 proposes moving the reemployment benefit to a voucher.
The injured worker chooses the retraining program and the
employer either pays for it directly to the education program or
reimburses the injured worker who submits an invoice. A
vocational rehabilitation specialist would be available for
guidance. She said a criticism of the bill is that it fails to
provide a stipend during the voucher process and she invites an
amendment to fill that gap.
She discussed the following disability levels addressed in SB
112:
• Temporary total disability benefits (TTDs) are capped at
104 weeks (2 years). Exceptions and an appeal process are
available.
• Permanent partial impairment benefits (PPIs) end when the
worker returns to work for the same employer and at a wage
that is greater or equal to that at the time of the injury.
• Permanent total disability (PTD) ends when retirement or
Social Security benefits start. (TTD benefits continue)
She discussed the following elements in SB 112 that focus on
curing the injured employee:
• The employee chooses their doctor and may change to a
specialist in another specialty if appropriate. Sec 26.
• Recurring injuries are covered.
• The bill provides protections for ongoing medical treatment
with medications. Sec. 26.
• Durable medical equipment is provided, but vendors must be
accredited through the Centers for Medicare and Medicaid
Services to assure quality. Sec. 26 and 33.
1:33:22 PM
CHAIR COSTELLO asked if the bill sections in the PowerPoint were
accurate.
SENATOR GIESSEL said her aide would check.
She clarified that the bill does not terminate appropriate
medical treatment after 2 years when it is still needed. She
continued to point out that Alaska is the only state that does
not cap attorney's fees in workers' compensation. Other states
limit attorney fees to 12-20 percent of the total settlement and
the fee is part of the settlement. Alaska has no cap and adds
the fee on top of the settlement. SB 112 would cap attorney's
fees at 25 percent to 35 percent of the settlement depending to
the level of adjudication of the case. She said another large
feature of the bill moves the adjudication of cases from the
Workers' Compensation Board to the Office of Administrative
Hearings. This will give a prescribed timeline for the dispute
to be heard. Transparent timelines help the worker know when the
case will be settled. The bill also allows for telephonic
hearings.
SENATOR GIESSEL reviewed the differences between a hearing
officer and an administrative law judge. She reported that there
are about 20,000 workplace injuries each year and about 1,200 go
through the hearing process. The bill provides that the burden
of proof is the clear and convincing standard, the accident must
be 50 percent of the cause of the injury, and the evidence must
be medically objective. Medical records are admitted and quoted,
evidence from both clinicians is given equal weight, and lay
testimony is allowed but not to decide factual disputes.
1:40:44 PM
SENATOR GIESSEL said Alaska is the only state that requires a
second independent medical examination (IME) if the worker's
physician and the employer's physician disagree on the findings.
She said the second IME is time consuming and expensive and the
board often throws out the second IME. SB 112 eliminates the
second independent medical examination as part of the process.
She addressed criticisms of the bill calling them unfounded.
Section 26 clarifies that the bill does not strip workers of
their choice of physician. Section 31 clarifies that the Medical
Services Review Committee has the same function. Section 26 lays
out continuing care for long-term injuries. Unnecessary
litigation is prevented through a defined timeline. Alaska
Native traditional knowledge would be allowed to treat work
injuries if it falls within the medical guidelines. Another
criticism is that the bill does nothing for the family of a
single worker killed on the job. She pointed out that that's not
the intent of the bill.
1:44:08 PM
SENATOR GIESSEL advised that Section 73 strictly defines an
independent contractor to address the ongoing problem of
employers who try to avoid the requirement to carry workers'
compensation insurance by calling their employees independent
contractors.
She summarized that SB 112 is focused on redirecting workers'
compensation to focus on the worker, not compensation for
middlemen and lawyers. Her goal is to ensure that communities,
local governments, schools, state government, private sector,
and small employers can continue to have healthy employees that
can do the job. She said the bill enjoys wide support from air
carriers, the fishing industry, school administrators, and
employers.
CHAIR COSTELLO asked Ms. Nore to walk through a sectional
analysis.
1:47:15 PM
KARI NORE, Staff, Senator Giessel, Alaska State Legislature,
Juneau, Alaska, provided the following sectional analysis for SB
112, version R:
She advised that members of the medical community recommend
removing Sections 1 and 2 from the bill to ensure that the
guidelines for the prescription drug monitoring system are
followed.
1:47:36 PM
At ease
1:48:00 PM
CHAIR COSTELLO reconvened the meeting.
MS. NORE continued the sectional analysis for SB 112.
Section 3: Amends AS 23.05.067(e) to state that the
legislature may appropriate annual service fees and
penalties collected to the office of administrative
hearings.
Section 4: Amends AS 23.10.620 by adding a new
subsection to allow an employer to require an employee
to undergo drug testing if the employee has been
prescribed a controlled substance under AS 23.30.096.
Section 5: Amends AS 23.30.001 regarding legislative
intent relating to workers' compensation.
Section 6: Amends AS 23.30.005(a) relating to the
composition of the Alaska Workers' Compensation Board.
MS. NORE advised that the Department of Labor and Workforce
Development (DOLWD) recommended removing Section 6.
Section 7: Amends AS 23.30.005(b) to provide that the
commissioner may designate hearing officers to serve
as chairs of panels for hearing settlement agreements
under AS 23.30.012 or claims arising under AS
23.30.015 or 23.30.247 and that the hearings may be
telephonic and do not need to be in the judicial
district where the injury occurred.
Section 8: Amends AS 23.30.005(c) to remove
requirement that the governor appoint members of
hearing panels.
Section 9: Amends AS 23.30.005(e) to provide that a
member of one judicial district may serve on any
hearing panel.
Section 10: Amends AS 23.30.005(g) to require that
claims and petitions be heard by the office of
administrative hearings on a rotating basis under AS
44.62.
Section 11: Amends AS 23.30.005(h) to require the
department to adopt regulations, except on matters
over which AS 44.62 controls. Makes conforming changes
relating to the role of the office of administrative
hearings.
Sections 12-16: Make conforming changes relating to
the role of the office of administrative hearings.
Section 17: Repeals and reenacts AS 23.30.010(a) to
provide that a compensable injury must be established
using relevant objective medical evidence and must be
the major contributing cause of any resulting
condition, disability, or need for medical treatment.
Provides that subjective complaints must be confirmed
by physical examination or diagnostic testing.
1:50:44 PM
Section 18: Amends AS 23.10.010 by adding new
subsections relating to proving an injury arising out
of and in the course of employment.
Sections 19-23: Make conforming changes relating to
the role of the office of administrative hearings.
Section 24: Repeals and reenacts AS 23.30.041 relating
to rehabilitation and reemployment benefits of injured
workers and establishes a reemployment voucher
program.
Section 25: Makes conforming changes relating to the
role of the office of administrative hearings.
Section 26: Amends AS 23.30.095(a) to require that the
employer furnish medical treatment in accordance with
evidence-based treatment guidelines. Allows employer
or insurer to request a third party to conduct a
utilization review for treatment recommended outside
of the evidence-based treatment guidelines. Provides
that if medical treatment is recommended two years
after the date of injury, the employee may not be
afforded the presumption of compensability but that
the injured will have a right to review by the office
of administrative hearings. Allows the employer to
designate a different attending physician. Restricts
medical treatment allowed after an additional two
years of continued treatment to certain devices,
prescriptions, and services.
Sections 27-32: Make conforming changes relating to
the role of the office of administrative hearings,
eliminates board authority to adopt treatment
frequency standards, allows suspension of compensation
for refusal of appropriate diagnostic tests, requires,
in certain circumstances, submission to examination by
a mental health provider, and requires palliative care
after medical stability to be consistent with
evidence-based treatment guidelines.
Section 33: Amends AS 23.30.095 by adding new
subsections relating to payment for durable medical
equipment, prosthetics, orthotics or supplies and
prescription drugs.
Section 34: Amends AS 23.30 by adding AS 23.30.096
relating to prescribing or dispensing controlled
substances to employees.
Section 35: Amends AS 23.30.097(d) to stale that
payment for medical treatment is not due immediately
or on demand, it is due within 30 days after the
employer receives the provider's bill and a completed
report.
1:53:03 PM
Section 36: Amends AS 23.30.097(g) to add that an
employer shall reimburse an employee's prescription
charges within 30 days after the employer receives the
employee's request for reimbursement.
Sections 37-39: Make conforming changes relating to
the role of the office of administrative hearings,
replaces the term disability, and removes exceptions
for disclosure of a record to certain physicians and
to the board or commissioner.
Section 40: Amends AS 23.30.108 relating to
prehearings, discovery, and protective orders to
require those requests and hearings be conducted by
the office of administrative hearings.
Section 41: Amends AS 23.30.110(a) to require that
claims or petitions for relief on all matters, except
those under AS 23.30.012 and 23.30.247, be filed with
the office or administrative hearings.
Sections 42-47: Make conforming changes relating to
the role of the office of administrative hearings.
Section 48: Amends AS 23.30.120(a) to require that an
employee establish a preliminary link between
employment and resulting condition, disability, or
need for medical treatment through objective relevant
medical evidence before being afforded the
presumptions listed in that subsection.
Section 49: Makes conforming changes relating to the
role of the office of administrative hearings.
Section 50: Amends AS 23.30.120 by adding new
subsections relating to establishing the preliminary
link and presumption under AS 23.30.120(a).
Section 51: Makes conforming changes relating to the
role of the office of administrative hearings.
Section 52: Amends AS 23.30.122 by adding new
subsections relating to medical expert and lay
testimony.
Sections 53-62: Make conforming changes relating to
the role of the office of administrative hearings.
Section 63: Repeals and reenacts AS 23.30.145
governing the award and payment of attorney fees.
Section 64: Makes conforming changes relating to the
role of the office of administrative hearings.
Section 65: Amends AS 23.30.155(j) to allow 20 percent
of unpaid installments to be withheld when the only
benefit remaining is a lump-sum payment of permanent
partial impairment benefits or upon approval of the
office of administrative hearings.
Section 66: Amends AS 23.30.155(m) to repeal the
$1,000 civil penalty when an annual report is
incomplete when filed.
Sections 67-68: Make conforming changes relating to
the role of the office of administrative hearings.
Section 69: Amends AS 23.30.180 to provide that
permanent total disability claims will be paid until
the employee begins receiving social security,
pension, or other retirement benefits.
1:56:09 PM
Section 70: Amends AS 23.30.185 to provide that
temporary total disability claims may not be paid for
more than an aggregate total of 104 weeks for each
claim.
Section 71: Amends AS 23.30.190 by adding a new
subsection to provide that an employee who returns to
work for the same employer in a position that pays a
wage equal to or greater than that paid at the time of
injury is not eligible to receive permanent partial
impairment benefits.
Sections 72-74: Make conforming changes relating to
the role of the office of administrative hearings.
Section 75: Amends AS 23.30.230(a) to provide a
definition of "independent contractor."
Section 76-77: Make conforming changes relating to the
role of the office of administrative hearings.
Sections 78-80: Amend the definitions of "arising out
of and in the course of employment" and "attending
physician" and adds the definition of "office of
administrative hearings."
Section 81: Amends AS 44.64.030(a) to add AS 23.30 to
list of statutes that the office of administrative
hearings has jurisdiction over.
Section 82: Repeals AS 23.30.005(f) (relating to a
quorum for a hearing panel), 23.30.095(b) (relating to
the designation of a physician), 23.30.095(i) (making
interference with selection of a physician or improper
influence of a medical opinion a misdemeanor),
23.30.095(k) (relating to a second independent medical
evaluation), 23.30.110(g) (relating to submission to a
physical examination), 23.30.135(a) (relating to
procedure before the board), 23.30.155(h) (relating to
the board's authority), 23.30.224(b), (e), and (f)
(relating to coordination of benefits and employer's
liability for payment under AS 23.30.041(k) (also
repealed)).
Section 83: Adds an applicability provision that
states that secs. 6-82 of the Act apply to claims for
injuries filed on or after the effective dates of
those sections.
Section 84: Adds a transition provision relating to
the transition of claims from the Alaska Workers'
Compensation Board to the office of administrative
hearings.
Section 85: Adds a transition provision allowing the
Department of Labor and Workforce Development and the
office of administrative hearings to adopt regulations
necessary to implement the changes made by the Act.
Section 86: Provides for an immediate effective date
for sec. 85.
Section 87: Section 1 of this Act takes effect of the
effective date of Sec. 38, ch. 2, SSSLA 2017.
MS. NORE advised that Section 87 would be removed per the
removal of Sections 1 and 2 of the bill.
1:59:07 PM
SENATOR STEVENS asked if the intention was to remove Sections 1,
2, and 6.
MS. NORE said that's correct.
CHAIR COSTELLO said she had several questions and would prefer
that Ms. Nore follow up with written answers to provide more
time for public testimony.
SENATOR GARDNER said she would write her questions and submit
them to the chair, but she did want to know the ultimate effect
of the multiple repeals in Section 82.
MS. NORE referenced a chart that lists the repealers and noted
that two in Section 82 are unintended and will be removed. She
explained the following repealers:
• AS 23.30.005(f) relating to a quorum for a hearing panel is
removed because hearings will be moved to the Office of
Administrative Hearings.
• AS 23.30095(b) relating to the designation of a physician
should not have been repealed.
• AS 23.30.095(i) relating to interference with the selection
of a physician or improper influencing of a medical opinion
also should not have been repealed.
• AS 23.30.095(k) relating to the second independent medical
evaluation is the SIME referenced earlier.
• AS 23.30.110(g) relating to the submission of a physical
exam is part of the second independent medical exam.
• AS 23.30.135(a) removes overly broad language regarding the
board procedure and moving hearings to the Office of
Administrative Hearings.
• AS 23.30.155(h) relating to the board's authority also has
to do with the second independent medical exam.
• AS 23.30.224(b), (e), and (f) relating to the coordination
of benefits and employers' liability for payment under AS
23.30.041 is being repealed because it referred to AS
23.30.041, the repeal and reenact reemployment benefit
section. AS 23.30.041(k) in previous statutes would not
exist in this bill so those sections must be repealed.
2:02:41 PM
SENATOR STEVENS offered his perspective that the first
legislature in 1959 got wrapped around the axle on workers'
compensation and it's been an issue since then. He said he
appreciates the opportunity to think about it.
CHAIR COSTELLO opened public testimony on SB 112 and asked each
testifier to limit their comments to two minutes.
2:04:01 PM
BEN MULLIGAN, Vice President, Alaska State Chamber of Commerce,
Juneau, Alaska, said the Alaska Chamber is a nonprofit that was
founded in 1953 to promote a positive business environment in
Alaska. It is a voice for small and large businesses and their
member companies employ over 100,000 Alaskans. He stated that
workers' compensation reform has been a priority of the Alaska
Chamber for over a decade. While the Alaska Chamber supports the
entire bill, the primary factors are to reduce medical costs and
improve medical outcomes. Implementing the evidence-based
guidelines is important in reaching those goals. It will help
the worker return to work faster and healthier and reduce
employer costs. Moving some of the dispute process to the Office
of Administrative Hearings and capping attorney fees are also
important elements. Hearings conducted by administrative law
judges will be more impartial than the current system. Moving to
a voucher system for reemployment benefits will ensure that the
money is paying for retraining instead of being cashed out. He
concluded saying the Alaska Chamber supports the sponsor's
efforts to reform workers' compensation. It's important to
Alaskans.
2:07:42 PM
SUSAN REILLY, representing the Alaska Alliance for Retired
Americans and the 700 members of the International Association
of Machinists (IAM) Local Lodge 601, Fairbanks, Alaska, voiced
concern with SB 112. She reminded members that the initial
intent of workers' compensation was based on a grand bargain
between workers and employers. That bargain was that an injured
worker would be made whole and allowed to return to work in
return for not suing the employer. She said her concern is that
there has been no worker involvement in the growth and
development of SB 112. "You need to get the working people of
the state also involved in the conversation, hopefully those who
have been through the workers' comp process," she said. Until
that happens the members of local 601 and the Alliance for
Retired Americans (who are concerned about what happens to
injured workers at retirement) are unlikely to support SB 112.
2:09:25 PM
SINCLAIR WILT, Vice President, Westward Seafoods and Alyeska
Seafoods, Dutch Harbor, Alaska, testified in support of SB 112.
He advised that during the peak season these processors employ
more than 1,000 employees. He stated support for evidence-based
treatment for injured employees, a voucher system for vocational
rehabilitation, and limiting attorney fees.
2:11:22 PM
GARY STRANNIGAN, Lobbyist, Liberty Mutual Insurance, Seattle,
Washington, thanked the committee for hearing the bill and
commended Senator Giessel for the work she's done on SB 112. He
expressed hope that the measure would be enacted so that workers
and employers could begin to realize its benefits.
2:12:35 PM
CHUCK BRADY, President, Workers' Compensation Committee of
Alaska and Workers Compensation Manager for the Arctic Slope
Regional Corporation, testified in support of SB 112 on behalf
of WCCA. He thanked Senator Giessel for taking on workers'
compensation. He said he's been in this business long enough to
recall that workers' compensation used to be a very small item
on the profit and loss statement. It has since ballooned to a
very large item on the P&L and is a huge issue for employers
trying to stay profitable. It's such a large expense that for
many small employers it can be the difference between being able
to stay in business or not able to stay in business. He pointed
out that the bill doesn't take anything away from workers and
th
employers, it contains costs. In 2000 Alaska was ranked 24 or
th
25 in the country for costs for insuring for workers'
compensation. In four years Alaska ranked number one, all
because of medical costs. He stated support for implementing the
evidence-based treatment guidelines, the voucher system for
vocational rehabilitation, and capping attorney fees. He urged
the committee to move SB 112 from committee.
2:15:38 PM
DENA LYTHGOE, Commercial Insurance Broker and Partner, Risk
Consulting, Anchorage, Alaska, stated support for SB 112. She
said she daily has conversations with a wide range of clients
who have the common concern about the cost of workers'
compensation and how to fix the issue. She explained that
workers' compensation is one of every employer's largest
expenses and the riskier the job the higher the rate per 100 in
payroll. She described the experience modification each employer
is assigned and provided an example to illustrate how an injured
worker claim can result in an employer's premiums doubling for
three years. At the end of the three years that employer told
her he was thinking about closing his doors. That would result
in 9-11 employees losing their job, an out of work employer, and
all the pass-through purchasing from other Alaska business would
cease. She said SB 112 addresses ways to reduce claim costs
through evidence-based treatment guidelines, attorney fee
reductions, and a voucher system. Such measures will help
businesses succeed and hire more Alaskans.
2:19:17 PM
VINCE BELTRAMI, President, Alaska AFC-CIO, Anchorage, Alaska,
said he serves on the Workers' Compensation Medical Review
Committee that has addressed many things to contain medical
costs and charges in a way that includes all stakeholders. He
opined that their efforts have bent the cost-curve a little. He
agreed that aspects of workers' compensation need to be
addressed, but he was very disappointed with SB 112. It
radically redefines the basic arrangement that guides the system
by tilting the balance in favor of employers and against workers
while creating legal uncertainty and potential constitutional
issues for the state. He agreed with Ms. Reilly that the
workers' compensation system is intended to be a grand
compromise. He characterized the proposed legislation as
unbalanced, potentially legally vulnerable, incomplete, unclear,
and arbitrary. He stated that the 50,000 AFL-CIO workers he
represents in Alaska are opposed to SB 112 in its current form,
but he looks forward to working on ways to improve the system.
2:22:35 PM
MICHAEL FERRIS, representing self, Anchorage, Alaska, said he
has a small business called Alaska Enterprise Solutions. He has
10 employees and is thankful he has never had an injury or
claim. It would be financially devastating if the workers'
compensation premiums increased dramatically. He said he
strongly supports SB 112 and like most Alaskans would like to
see the current system reformed. He cited high attorney fees
that aren't capped, the high cost of a second independent
medical opinion, and the benefit cash out option as problematic.
He said he looks forward to the common-sense savings in SB 112
becoming the new standard for workers' compensation in Alaska.
2:24:43 PM
MICHAEL JENSEN, representing self, Anchorage, Alaska, said he
has been representing injured workers in Alaska for 34 years. He
listed the broad variety of injuries he has represented and said
that as currently drafted none of those workers would be able to
successfully pursue a disputed claim because the standard of
proof is so difficult to overcome. If they were able to
establish a claim the medical treatment would be limited to two
years. An additional two years of treatment would only be
available if they could prove by clear and convincing evidence
that their condition warranted continued medical care. That
standard is equivalent to a criminal standard beyond a
reasonable doubt. If the insurance company has a doctor who
disagrees with the treating physician, the worker would never be
able to overcome that burden. He disagreed with the sponsor's
example of attorney fees on a $3 million settlement and pointed
out that defense legal fees account for two-thirds of the
$15,000 spent annually on legal fees for workers' compensation.
He maintained that it's difficult to find attorneys to represent
claimants because the fees don't adequately compensate in most
cases. He urged the committee to hold the bill.
2:28:01 PM
SENATOR GARDNER asked if he could provide a reference for the
attorney fee schedule.
MR. JENSEN explained that under the current system attorney's
fees are calculated at 10 percent of what is awarded to the
injured worker. The attorney does not get paid unless he/she is
successful in getting the benefits to the injured worker. The
statutory minimum is 10 percent. If that does not meet the work
the claimant's attorney incurred in prosecuting the claim, the
attorney is free to request an hourly rate. The Alaska Workers'
Compensation Board must approve the rate. The board consists of
members from industry and labor whereas SB 112 shifts the
decision making to government bureaucrats.
2:29:24 PM
CHARLES MCKEE, representing self, Anchorage, Alaska, testified
on SB 112 and voiced concern that the State of Alaska subjugated
his claim with his Social Security account.
CHAIR COSTELLO asked if he supports the bill.
MR. MCKEE answered "No."
2:32:51 PM
LEE GOODMAN, representing self, Anchorage, Alaska, said he's had
a license to practice law for close to 30 years and recently
started a small practice representing injured workers in
workers' compensation claims. He said he would like
clarification on the employer's right to choose an attending
physician. The sponsor indicated that is an error in the reading
of the bill, but he heard the aide say that again when she went
through the sectional analysis. Two other points he wanted to
discuss were the burden of proof and attorney fees.
He pointed out that the clear and convincing standard seems to
conflict with the presumption of compensability. He questioned
how there can be a presumption that the worker is covered under
workers' compensation and then say the insurance company doctor
has greater weight than the treating physician. Regarding
attorney fees he said the fees owing to claimants' attorneys are
not huge right now, and under the bill attorneys wouldn't be
able to make a living practicing claimant's law. He listed the
wide range of injured workers he has represented and said the
thing they have in common is that their benefits were
controverted, usually owing to a negative IME report from the
employer's physician that conflicts with the treating physician.
He maintained that none of his clients are trying to game the
system; they want to return to work. Further, he doesn't know
any claimant attorneys who take cases they don't believe in.
2:37:27 PM
At ease
2:37:49 PM
CHAIR COSTELLO reconvened the meeting and suggested people
submit their comments in writing if they feel they need more
time to make their points.
2:38:42 PM
SHELBY NUENKE-DAVISON, representing self, Anchorage, Alaska,
said she has been a workers' compensation defense attorney for
many years. She applauded the sponsor for taking workers'
compensation on in a very innovative way. She said the idea of
workers' compensation was for an employee and employer to agree
that the employee wouldn't sue, and their work-related injuries
would be paid without having to go to court. However, the
bargain has gone against the employer. The board and courts
broadly interpret "a substantial factor" and even preexisting
conditions and aggravated symptomatology are deemed work
related. Benefits are paid on cases that wouldn't stand up in
court. She said she applauds the substantial cause and clear and
convincing standard. Oregon has taken this approach. Employees
still have the presumption of compensability that has to be
rebutted by the employer. She said she applauds using the clear
and convincing evidence standard at the third stage of the
analysis and moving the hearings to an administrative law judge.
She said she would submit additional comments in writing.
2:41:07 PM
CLARK D. WILLIAMS, representing self, Fairbanks, Alaska, said
he's read the workers' compensation statutes and the law as
written does not resemble the way the law is practiced. For
example, the minimum necessary has been interpreted as anything
and everything. He said it's been his experience that workers'
compensation has become a tool of retaliation by some employers,
which is a clear abuse of civil rights. He said insurance
company doctors are unimpeachable and their decisions are not
reviewed by the board. Further, no state or federal agency
reviews abuses of the workers' compensation process. He shared
that he withdrew his workers' compensation claim under physical
duress after spending $5,000 on attorney fees. His medical IME
was sent via email from an account that was hacked. Workers'
Compensation did not investigate and did not take
responsibility. He maintained that he was abused by the system.
He suggested the committee take time to talk to workers because
the bill doesn't address that. He further suggested the need to
conduct exit interviews of injured workers, actuarial review of
accident victims' mortality rates from suicide to criminal
assault, and non-related stress injuries. He said he'd like to
see a federal review of the system.
2:44:28 PM
JUSTIN MACK, representing self, Anchorage, Alaska, said he's a
firefighter in Anchorage and is testifying to express concern
with SB 112. He said he believes there is room to improve the
workers' compensation process, but SB 112 is not a solution that
benefits all parties. He opined that SB 112 creates a reduced
benefit for Alaskans and shifts an imbalanced burden of proof to
the injured worker. The bill changes the hearing process from a
three-member panel that includes labor and industry to a one-
person panel with narrow parameters in which to hear a case. SB
112 also limits compensation to the injured worker's counsel by
assigning attorney's fees to a percentage of the awarded benefit
rather than the actual cost, which makes it difficult for
injured Alaskans to get legal counsel. He concluded that the
system could be improved in a way that benefits the state and
its workers, but SB 112 doesn't do that.
2:47:01 PM
ERIC CROFT, representing self, Anchorage, Alaska, stated that
workers' compensation rates in Alaska have been going down for
over a decade. He related a story about a client who was shot at
work to illustrate how provisions in SB 112 would work against
her. Section 70 limits temporary total disability (TTD) to two
years and she was recovering for a lot longer than that. He
noted that the sponsor said there are exceptions, but the plain
language says more than 104 weeks is barred. Second, medical
care becomes much more difficult after two years and she was in
mid recovery at that time. Section 26 says a person can get up
to an additional two years of medical treatment upon clear and
convincing evidence, but it's limited to certain devices,
prescriptions, and services. If it's not listed in that section,
it's not covered. Under SB 112 his client would not have gotten
the additional surgeries she needed to restore a semblance of
her prior lifestyle. Section 26 also provides that the employer
or insurer may designate a different attending physician. He
said there are many more, but those three provisions would have
been catastrophic for his client. He said he would send written
comments and urged the committee to hold SB 112.
2:50:37 PM
JOE KALAMARIDES, representing self, Anchorage, Alaska, said he's
practiced law for many years and has watched the worker's
compensation process since the 1970s. What used to happen when
change was requested was that the unions and the Workers'
Compensation Commission would get together and come up with a
compromise if necessary. He said he didn't see any opportunity
for compromise in SB 112. In fact, testimony from the unions
indicates that they weren't asked to give any input until today.
He noted that changes that were made to the process in 2005 were
still being argued in court to try to figure out what they
meant.
He said he had three specific points to make and would submit
additional written comments. First, he questioned the purpose of
referring cases to an administrative law judge when the current
panel is well-balanced and working. It has representation from
management, labor, and a workers' compensation hearing officer
who is a member of the bar association. By comparison,
administrative law judges cover a lot of different subjects,
don't have the background to look at workers' compensation
cases, and are already overworked. He said the second point
related to the treating physician and he would leave that
discussion to Mr. Croft. He also pointed out that the burden of
proof is problematic because it's very difficult to prove the
major contributing cause, particularly for older workers. The
bill appears to shift the grand compromise referenced earlier
that protects both the employer and employee in favor of the
employer. It may be a problem to sort that out in court, he
said.
2:54:57 PM
DAVE JONES, Assistant Superintendent, Kenai Peninsula School
District, Kenai, Alaska, said he was testifying in support of SB
112 and wanted to thank the sponsor and her staff for bringing
the bill forward. He said that when workplace injuries occur,
the employer's objective is to provide medical treatment, so the
employee can be healed and return to work in an expedient and
cost-efficient manner. He opined that the current system is
neither expedient nor cost-efficient. SB 112 will help correct
that. He opined that using the evidence-based treatment
guidelines in conjunction with the predetermined medical fee
schedules will lead to lower medical costs. The bill will free
dollars currently being spent on higher than needed medical and
legal fees, so they can be used in the classroom where they
belong.
2:56:42 PM
ELLIOT DENNIS, representing self, Anchorage, Alaska, said he has
been practicing law for over 40 years and has represented both
injured workers and insurance companies. He characterized SB 112
as very bad for injured workers. Because many of the points had
been covered, he said he would endorsed the statements of Eric
Croft, Joe Kalamarides, Vince Beltrami, and Michael Jensen.
However, one point that hasn't been made is what happens when
the injured worker is cut off and is shifted to Medicare or
doesn't receive treatment at all. Sometimes they end up
homeless. He said he has dealt with multiple individuals who
were hurt on the job and all they wanted was to get fixed and
back to work. The insurance companies bring doctors from out of
state to give an independent medical examination. His clients
have said the exam takes about 15 minutes and their claim is
denied. The IME reports frequently are the same from client to
client. He said the system needs fixing, but SB 112 does not do
that. He suggested that the employees and employers get together
and hammer out changes that are needed and will actually reduce
costs.
2:59:56 PM
GINA WANNER, Program Manager, Eberle Vivian Incorporated said
her firm handles the self-insured program for Alaska Airlines
and she was speaking in support of SB 112. She noted that Alaska
Airline sent a separate endorsement for SB 112. She opined that
many of the sections in the bill are paramount, but of primary
importance are the clear and convincing evidence standard, the
evidenced-based treatment, and the voucher system. Other
jurisdictions use the proposed standard of proof and showing a
substantial cause being more than 50 percent of the cause has
become a standard measure of determining compensability. Using
the evidence-based medicine guidelines is also the wave of the
future, she said. Importantly, it's a benefit to both the
employer and the worker because it defines care and provides
known parameters for all parties. She said her company's
experience is that people do not proceed through the
reemployment process successfully, so the voucher system is more
equitable and appropriately timed. The current system inserts
the vocational process much too early. On behalf of Alaska
Airlines and Eberle Vivian, she asked the committee to support
SB 112.
3:02:53 PM
ERIC MCDONALD, representing self, Kenai, Alaska, said he was
hurt on the job several years ago and sustained permanent
injuries. From that perspective he was speaking in complete
opposition to SB 112. He said he believes that most injured
workers are like him; they just want to get better. He shared
that he has gone through four independent medical examinations
and he views that as an unnecessary cost. He urged people to be
leery of some of the things that have been stated about the
bill. He pointed out that the bill doesn't focus on the worker,
it's weighted in favor of the insurance company and profit. He
urged the committee to hold SB 112.
3:07:33 PM
BARBARA WILLIAMS, representing self, Wasilla, Alaska, said she
has assisted injured workers for 20 years and has observed that
these important stakeholders are often left out of the process
when changes are made to the system. She emphasized that the
proposed changes will hurt injured workers, making medical care
unavailable and most importantly, taking away legal counsel when
benefits are denied. Cost containment is important but not at
the cost of worker's compensation and workers generally.
MS. WILLAIMS said attorney compensation across the country has
been going down for the past five years. She wondered whether
capping fees would apply only to attorneys who represent workers
and if defense costs were included in the litigation numbers
from DOLWD. She noted that attorneys working for employers can
collect fees from the inception of the claim, whereas injured
worker's attorneys are paid after claims are contested and only
for indemnity. Also, defense attorneys who work for insurers get
dollar-for-dollar billing, can negotiate fees with employers,
and have more contributions than the cost of workers'
compensation litigation compared to plaintiff attorneys.
She stated that in California and other states lay advocates are
trained and paid to represent injured workers, whereas in Alaska
lay people who assist injured workers receive little
compensation. Currently the state does not have enough legal
assistance for workers and employers equally. She asked if the
cost of independent medical evaluators who work for employers
are included in the cost analysis.
MS. WILLIAMS said workers' compensation boards have long allowed
employers to spend what they want for employer medical
evaluations while medical providers for injured workers have
been subject to a strict and sometimes unenforceable fee
schedule. Currently 47 SIME physicians are not subject to a fee
schedule. Injured workers cannot hire expert physicians due to
cost and because of the way the regulation has been interpreted,
it's not really an option. She questioned whether those costs
were considered in the cost containment effort. Workers have
great difficulty getting legal counsel in part because plaintiff
attorneys are subject to capped fees while employers are held to
an entirely different standard. There are no attorneys that
provide legal services to providers when they have disputed
claims.
MS. WILLIAMS said rehabilitation and the voucher system looks
great for workers, but it is not. Current rehabilitation of
workers and the program needs a lot of attention. Workers have
not seen increases in rehabilitation costs in the past 17 years
and they lose important retraining benefits if they cannot get
back to the job they had at the time of injury. Taking back the
stipend benefits at the time of retraining means injured workers
cannot support themselves and their families. They have no
financial security while they go to school, which severely
limits their options.
MS. WILLIAMS said there needs to be a better working
relationship between the board and the rehabilitation
specialist. Also, referring unfair and frivolous controversions
to the Division of Insurance for process investigation doesn't
fix the problem. For the past 18 years, since the audit of the
Worker's Compensation Program in 2000, there have been no
referrals to the Division of Insurance. Further, there is zero
oversight on self-insured programs and there is no one to
complain to if someone is not getting essential benefits.
CHAIR COSTELLO asked Ms. Williams to submit her comments in
writing.
3:14:58 PM
FRANCES SEATER, representing self, Anchorage, Alaska, advised
that she treats injured workers and was testifying to encourage
the committee to reject SB 112. She said providers take a risk
accepting workers' compensation cases because those are often
referred to non-plaintiff care physicians for IMEs and second
IMEs out-of-state. Too often the results are discouraging. This
interferes with the continued care of injured workers and makes
it increasingly difficult for the point of care physician to
continue medically-based treatment plans. She expressed concern
that the disputed claims process was too complex, and that SB
112 would cause a broken system to become more broken. She
maintained that limiting medical care to two years was
disrespectful to point of care physicians, that a new clear and
convincing standard was not needed, and that allowing insurers
to pick the doctor further stacks the deck against the worker.
She reiterated her suggestion to reject SB 112.
3:17:44 PM
GREG WEAVER, representing self, Wasilla, Alaska, testified in
opposition to SB 112. He related that he was hurt on the job
about 4.5 years ago and his employer was self-insured. He was
assigned a nurse case manager and things went downhill. His case
was controverted and after he lost all benefits he subsequently
lost his family, home, and vehicles. He said he believes that
the workers' compensation deck is stacked completely against the
worker. He concluded saying that "There are a lot of us at
Bean's Cafe, there are a lot of us who have fallen through the
net because there is no safety net for us."
3:22:30 PM
DARETHA TOLBERT, representing self, Anchorage, Alaska, said she
is in the same boat as the previous testifier. Until four years
ago she worked and was self-sufficient. She drew workers'
compensation benefits for just four weeks when she was
controverted. She was sent back and controverted again and now
she's being sent out of state. She emphasized that this is not
cost-effective and urged the committee to hold SB 112 because it
does not benefit the injured worker.
3:24:38 PM
KEN KESSLER, representing self, Anchorage, Alaska said he has a
few concerns relating to the independent medical examination. "I
can clearly prove that the IME providers have been paid off or
they have lied. As well as SIME providers, the same thing." He
asked if there was any kind of background check for these
providers to ensure they're ethical. He said he was forced into
training before he had surgery. Since the surgery both his
providers and the insurance providers state that he can return
to work, but he's not entitled to retraining because it is only
offered once. He agreed with the last two testifiers that SB 112
was detrimental and should not pass.
3:27:06 PM
HEATHER JOHNSON, representing self, Wasilla, Alaska, stated that
she was absolutely opposed to SB 112. She said the sponsor's
intention is good, but she is only getting input from one side
and is missing the larger picture. She maintained that there was
corruption in the workers' compensation system and suggested
that insurance companies should be required to provide all the
medical records. That would reduce SIME costs.
3:29:06 PM
CHAIR COSTELLO closed public testimony on SB 112 and held the
bill in committee.