02/08/2010 09:00 AM Senate FINANCE

SENATE BILL NO. 163                                                                                                           
                                                                                                                                
     "An Act increasing the allowances for injury,                                                                              
     disability, or heart attack payable from the                                                                               
     fisherman's fund; and providing for an effective                                                                           
     date."                                                                                                                     
                                                                                                                                
SENATOR JOE  PASKVAN, sponsor, explained the  workings of SB
,  which updates  the Alaska  Fishermen's  Fund limit  to                                                                    
$10,000. This  will bring the  program back to  a meaningful                                                                    
level  of  assistance  as  the  payer  of  last  resort  for                                                                    
commercial  fishermen  and  crew  who  sustain  injuries  or                                                                    
illness while fishing.                                                                                                          
                                                                                                                                
Senator  Paskvan related  that the  Fund was  established in                                                                    
1951 and  was set up to  provide for the treatment  and care                                                                    
of Alaskan  licensed commercial fishermen  and crew  who are                                                                    
injured while fishing  on shore or off shore  in Alaska. The                                                                    
upper limit on claims has  remained at $2,500 since 1959. If                                                                    
that amount  had been  adjusted for  inflation, it  would be                                                                    
worth approximately $18,230 today.  While the upper limit on                                                                    
claims  has   remained  unchanged,  healthcare   costs  have                                                                    
steadily risen.                                                                                                                 
                                                                                                                                
Senator  Paskvan  explained that  the  Fund  is financed  by                                                                    
revenue  received   from  each  resident   and  non-resident                                                                    
commercial fisherman and crew  for licenses and permit fees.                                                                    
In  2008 there  were  13,706 commercial  permit holders  who                                                                    
contributed  to  the  Fund.   That  included  135  from  the                                                                    
Fairbanks Northstar  Borough. The Fund account  has grown to                                                                    
$11,500,000,  even as  healthcare costs  have risen,  due in                                                                    
part to continuing improvements  in fishing industry safety.                                                                    
The bill  updates the Fund  limit to $10,000 to  help ensure                                                                    
that  Alaska's  fishermen  have access  to  healthcare  when                                                                    
injured while  fishing. It  is important  to note  that this                                                                    
increase is  not projected to jeopardize  the sustainability                                                                    
of the Fund.                                                                                                                    
                                                                                                                                
9:09:31 AM                                                                                                                    
                                                                                                                                
Co-Chair   Stedman   inquired   about   commercial   fishing                                                                    
opportunities  on  the  Chena  River  in  Senator  Paskvan's                                                                    
district. Senator Paskvan said  they were extremely limited.                                                                    
He reported  that the bill  applies to the number  of permit                                                                    
holders that travel  to commercial areas in  the state, such                                                                    
as the slips in Valdez.                                                                                                         
                                                                                                                                
Co-Chair  Stedman   noted  a  zero  fiscal   note  from  the                                                                    
Department of  Fish and Game  and a fiscal note  for $63,700                                                                    
from the  Department of Labor and  Workforce Development. He                                                                    
noted that  the Fund  has sufficient  monies to  absorb that                                                                    
increase.                                                                                                                       
                                                                                                                                
9:11:38 AM                                                                                                                    
                                                                                                                                
JERRY MCCUNE, UNITED FISHERMEN OF  ALASKA, spoke in favor of                                                                    
SB 163.                                                                                                                         
                                                                                                                                
Senator   Huggins   asked   about   workman's   compensation                                                                    
opportunities for  fishers. Mr.  McCune explained  how money                                                                    
from the permit  fee goes into the Fund.  He related history                                                                    
from a loan program which began  in the 70's for the purpose                                                                    
of keeping Alaskan residents in the fisheries.                                                                                  
                                                                                                                                
Senator  Huggins asked  about  money sources  for the  Fund,                                                                    
other than from  permit fees. Mr. McCune  replied that there                                                                    
were  no other  sources  of  money except  for  the $50  per                                                                    
permit from the permit holder and $23 from the crews.                                                                           
                                                                                                                                
Co-Chair Stedman  restated that for each  license, a portion                                                                    
of the  fee goes  to the Fund.  Mr. McCune  agreed. Co-Chair                                                                    
Stedman  asked for  a breakdown  of out-of-state  versus in-                                                                    
state  commercial fishermen.  Mr. McCune  did not  have that                                                                    
information.                                                                                                                    
                                                                                                                                
9:16:02 AM                                                                                                                    
                                                                                                                                
Senator  Olson   agreed  that  health  expenses   should  be                                                                    
covered. He  requested more information as  to how insurance                                                                    
funds  work. He  wondered  how  the Fund  ties  in with  the                                                                    
Native Health Service and which  insurance would be primary.                                                                    
Mr. McCune related  that the Fund is not  the primary payer,                                                                    
but rather  secondary to other  policies. A  council reviews                                                                    
all claims. Also, the incident has to happen on the job.                                                                        
                                                                                                                                
Senator  Olson  expressed  concern  that  the  fund  may  be                                                                    
penalizing  those   covered  by  other  plans.   Mr.  McCune                                                                    
explained how  the policy works  with other  insurance. Most                                                                    
of  the claims  last year  were for  around $1,000.  Senator                                                                    
Olson pointed  out that fishers  in his district  covered by                                                                    
the Native Health  System would not benefit by  the Fund and                                                                    
yet have  to pay into it.  Mr. McCune suggested that  if the                                                                    
Fund  were to  be used  as  the primary  insurer, the  money                                                                    
would run out.  Those who have no other  insurance could use                                                                    
the Fund,  but the claim  would have  to be approved  by the                                                                    
council.                                                                                                                        
                                                                                                                                
Senator Olson asked what the  deductible is. Mr. McCune said                                                                    
it  is currently  $2,500, but  that can  be appealed  to the                                                                    
council. The goal  is to raise it to  $10,000. Senator Olson                                                                    
asked if  the insurance is  available to all  fisheries. Mr.                                                                    
McCune said  it was  available to  all state  permit holders                                                                    
and licensed crew members.                                                                                                      
                                                                                                                                
9:21:01 AM                                                                                                                    
                                                                                                                                
MIKE MONAGLE,  PROGRAM COORDINATOR, DEPARTMENT OF  LABOR AND                                                                    
WORKFORCE DEVELOPMENT, in response to a question by Co-                                                                         
Chair Stedman,  offered to provide a  spreadsheet that shows                                                                    
the  number   of  resident  and  non-resident   permits  and                                                                    
licenses.  The funds  are transferred  to the  Department of                                                                    
Labor  monthly from  the  Department of  Fish  and Game  and                                                                    
twice a year from the Limited Entry Commission.                                                                                 
                                                                                                                                
Co-Chair Stedman  asked for the  department's opinion  as to                                                                    
how  the fund  is  working. He  wondered  if the  department                                                                    
supported the bill.                                                                                                             
                                                                                                                                
PAULA SCAVERA,  SPECIAL ASSISTANT,  DEPARTMENT OF  LABOR AND                                                                    
WORKFORCE DEVELOPMENT,  stated that both the  department and                                                                    
the administration support the bill.                                                                                            
                                                                                                                                
Co-Chair Stedman asked if Mr.  Monagle wished to address Co-                                                                    
Chair  Hoffman's question.  Mr.  Monagle  explained how  the                                                                    
Fund works.  He called it  a "payer of last  resorts". Other                                                                    
types of insurance are primary;  the Alaska Fishermen's Fund                                                                    
is a secondary payer.                                                                                                           
                                                                                                                                
9:23:43 AM                                                                                                                    
                                                                                                                                
                                                                                                                                
Senator Olson  discussed the  Indian Health  Services's (IHS                                                                    
relationship  as the  primary provider.  Mr. Monagle  agreed                                                                    
that the Fund  would not pay if IHS were  the provider. When                                                                    
there is  a contract  provider, the  Fund is  considered the                                                                    
primary  payer.  Senator  Olson  expressed  concern  that  a                                                                    
Native fisher  has to pay  into the Fund, but  cannot access                                                                    
it. Mr.  Monagle agreed  that was correct,  if there  was no                                                                    
deductible. The Fund  would cover expenses not  paid by IHS.                                                                    
Senator Olson commented that IHS  runs all of the clinics in                                                                    
his district.                                                                                                                   
                                                                                                                                
9:25:56 AM                                                                                                                    
                                                                                                                                
Senator  Huggins  spoke  of   special  interest  groups  and                                                                    
worker's  compensation. He  requested  information on  upper                                                                    
claims. Mr. Monagle  said there is an upper  limit of $2,500                                                                    
currently.  That   is  waived  when  there   are  compelling                                                                    
reasons. There is an appeal  process to request an extension                                                                    
of  benefits.  Each  year there  is  approximately  $400,000                                                                    
worth of requests for extended  benefits. The council is not                                                                    
limited  to $2,500;  the administration  is. The  council is                                                                    
made  up of  commercial  fishermen and  meets  only twice  a                                                                    
year.                                                                                                                           
                                                                                                                                
Mr. Monagle  noted that  the Fund program  is housed  in the                                                                    
Division  of Workers'  Compensation;  however, the  Workers'                                                                    
Compensation Act specifically  excludes commercial fishermen                                                                    
from workers' compensation.                                                                                                     
                                                                                                                                
Senator  Huggins gave  a hypothetical  example. Mr.  Monagle                                                                    
stated  that  the  Fund  does not  pay  death  benefits.  He                                                                    
related  the  benefits of  the  Jones  Act, a  civil  action                                                                    
remedy.  He   thought  that   most  vessel   owners  carried                                                                    
indemnity insurance.                                                                                                            
                                                                                                                                
9:30:05 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked for more  information about  a chart                                                                    
entitled,  "License Revenue  Activity" (copy  on file).  Mr.                                                                    
Monagle  explained that  some recent  deficits were  due, in                                                                    
part, to the  council's allowing of large  payments. He said                                                                    
there were not many extension  requests for claims in excess                                                                    
of  $10,000.  The  council  does  consider  availability  of                                                                    
funding when paying large claims.                                                                                               
                                                                                                                                
Co-Chair Stedman  requested information about  2009 resident                                                                    
and  non-resident   revenue.  Mr.  Monagle   clarified  that                                                                    
licenses for  residents are less than  for non-residents and                                                                    
the contribution  to the Fund  is 39 percent of  the license                                                                    
fee. Non-residents pay a higher rate.                                                                                           
                                                                                                                                
Co-Chair  Stedman requested  information  about claims  from                                                                    
both   groups.  Mr.   Monagle   offered   to  provide   that                                                                    
information.                                                                                                                    
                                                                                                                                
9:34:03 AM                                                                                                                    
                                                                                                                                
Senator  Huggins  asked  about  the  "child"  category.  Mr.                                                                    
Monagle  said   there  is  a   child  crew   member  license                                                                    
requirement  for those  up to  14 years  old. Senator  Olson                                                                    
asked for clarification on the  age requirement. Mr. Monagle                                                                    
said  14  and  below.  He did  not  know  about  enforcement                                                                    
issues.                                                                                                                         
                                                                                                                                
Senator Thomas  asked if the  data was from a  calendar year                                                                    
or a  fiscal year. Mr.  Monagle said  it was a  fiscal year.                                                                    
Senator  Thomas  asked  where the  money  is  invested.  Mr.                                                                    
Monagle explained  that the money  is a dedicated  fund, not                                                                    
in  the general  fund. The  Fund does  not earn  interest. A                                                                    
provision in statute  says up to 50 percent  of the earnings                                                                    
may be  used for safety education.  Co-Chair Stedman thought                                                                    
it was  a General Fund and  Other Non-Segregated Investments                                                                    
(GeFONSI) classification.                                                                                                       
                                                                                                                                
Senator  Thomas asked  about the  trends in  the number  and                                                                    
costs  of claims.  There have  been fewer  claims, but  they                                                                    
have been more  costly. Receipts are down  and benefits paid                                                                    
are somewhat static.                                                                                                            
                                                                                                                                
9:37:34 AM                                                                                                                    
                                                                                                                                
Senator  Egan asked  how increasing  the  benefit amount  to                                                                    
$10,000  would   impact  the  surplus/deficit   column.  Mr.                                                                    
Monagle  reported  that   the  administration's  ability  to                                                                    
approve a  claim is currently  limited to $2,500.  There are                                                                    
typically  100  appeals  twice a  year  for  claims  between                                                                    
$2,500 and $10,000,  some of which are  paid. The department                                                                    
felt that it  could sustain an increase of  about $65,000 if                                                                    
it paid those claims.                                                                                                           
                                                                                                                                
9:39:24 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman asked  for further  information about  the                                                                    
breakdown of claims.                                                                                                            
                                                                                                                                
Senator Egan asked  who administers the Fund  and decides on                                                                    
the amount  of the year-end  Fund balance. Mr.  Monagle said                                                                    
the Fund  balance is  a moving  target and  is not  set. The                                                                    
council keeps an eye on it when paying extra benefits.                                                                          
                                                                                                                                
SB  163  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:41:54 AM