04/01/2003 01:35 PM Senate L&C

             SB 120-CLAIMS BY STATE-EMPLOYED SEAMEN                                                                         
                                                                                                                                
CHAIR BUNDE announced SB 120 to be up for consideration.                                                                        
                                                                                                                                
MS.  SUSAN COX,  Assistant Attorney  General, summarized  that at                                                               
the last  hearing she was requested  to draft a response  to some                                                               
legal questions  raised in a  letter from a  constituent, Lanning                                                               
Trueb  of  Beard  Stacey  Trueb  & Jacobsen.  She  laid  out  the                                                               
background for the  legal approach taken in the bill  and why the                                                               
Department of Law believes that  approach is not only acceptable,                                                               
but  is expressly  authorized by  language in  a decision  of the                                                               
Alaska Supreme Court. She also commented  on why SB 120 would not                                                               
violate  the Alaska  Constitution's  equal protection  provision,                                                               
federal maritime law supremacy issues,  and the argument for some                                                               
need for  uniformity of maritime  law that would  supercede state                                                               
sovereign  immunity. In  addition, sovereign  immunity is  not an                                                               
issue the legislature can deal with in statute.                                                                                 
                                                                                                                                
MR.  PAUL GROSSI,  Director, Division  of Workers'  Compensation,                                                               
said, regarding  the $71,000  fiscal note,  that the  division is                                                               
hoping  this  universe  of  employees  is not  going  to  be  too                                                               
different than  other employee  groups and  that amount  would be                                                               
enough to cover them. He noted it could be a little bit more.                                                                   
                                                                                                                                
CHAIR  BUNDE  asked  what  the compensation  was  under  the  old                                                               
system.                                                                                                                         
                                                                                                                                
MR. GROSSI  replied that  the division  doesn't really  have good                                                               
records prior to the use of computers.                                                                                          
                                                                                                                                
CHAIR BUNDE asked if losses would have been higher than $71,000.                                                                
                                                                                                                                
MR.  GROSSI  replied  that  the   fiscal  note  only  covers  the                                                               
adjudication and  administration of the claims.  The losses would                                                               
be  covered through  risk management  but  would be  paid by  the                                                               
individual departments where those losses occurred.                                                                             
                                                                                                                                
SENATOR SEEKINS noted that according  to the data, there are more                                                               
cases under  the Jones Act  and the  awards are higher.  He asked                                                               
why it would cost more.                                                                                                         
                                                                                                                                
MR.  GROSSI  explained  the  fiscal note  reflects  the  cost  of                                                               
administrating   and  litigating   any   claims  under   Workers'                                                               
Compensation. He  didn't have  a guesstimate  of what  the claims                                                               
would be under Workers' Compensation next year.                                                                                 
                                                                                                                                
SENATOR SEEKINS asked if the  division made any effort to compare                                                               
the cost of litigation to what the state is now experiencing.                                                                   
                                                                                                                                
MR. GROSSI  replied this proposal  uses a different system  so it                                                               
would be hard to say exactly what the amount would be.                                                                          
                                                                                                                                
SENATOR SEEKINS  said the  committee needs  more than  the fiscal                                                               
note to  determine what the  impact would  be on the  treasury of                                                               
the State of Alaska.                                                                                                            
                                                                                                                                
CHAIR BUNDE thought  the committee needed a  negative fiscal note                                                               
from the Department of Law.                                                                                                     
                                                                                                                                
MR.  BRAD  THOMPSON,  Director,   Division  of  Risk  Management,                                                               
indicated the reason  the fiscal note is not  negative is because                                                               
of  the method  of  funding  the claims  under  the state's  self                                                               
insurance program. He explained:                                                                                                
                                                                                                                                
     There is expected savings  of very significant numbers.                                                                    
     If  you recall  my  testimony  last committee  meeting,                                                                    
     comparing on a 100  full-time equivalent basis the rate                                                                    
     of claim  and the severity  where the dollars  paid per                                                                    
     100 - if  you take those comparisons  between the Jones                                                                    
     Act  and Workers'  [Compensation]  on an  average of  a                                                                    
     five-year history  that I presented, it  should show us                                                                    
     if it pencils out the  same average - about $850,000 in                                                                    
     the future savings. The reason  I don't show a negative                                                                    
     for that  amount is again  because of the  method. Risk                                                                    
     Management is appropriated the  dollars that we collect                                                                    
     from  the  state  agencies that  fiscal  year  for  the                                                                    
     claims to be paid that  fiscal year. So, this will save                                                                    
     the state dollars, but it's  just the method that we at                                                                    
     Risk Management are funded.                                                                                                
                                                                                                                                
CHAIR BUNDE said it should save about $800,000.                                                                                 
                                                                                                                                
MR. THOMPSON agreed.                                                                                                            
                                                                                                                                
SENATOR SEEKINS  asked if the division  is subject to Rule  82 if                                                               
there is litigation.                                                                                                            
                                                                                                                                
MR. THOMPSON  replied that  his numbers  reflect the  total cost,                                                               
including defense expenses.                                                                                                     
                                                                                                                                
SENATOR SEEKINS  moved to pass  SB 120  and its fiscal  note from                                                               
committee with individual recommendations.                                                                                      
                                                                                                                                
The  roll was  called. SENATORS  DAVIS, STEVENS,  FRENCH, SEEKINS                                                               
and BUNDE voted yea and SB 120 moved from committee.