Legislature(2003 - 2004)
03/04/2004 01:32 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32 p.m. Present were Senators
Gary Stevens, Ralph Seekins, Hollis French and Chair Con Bunde.
Senator Bettye Davis was excused. The first order of business to
come before the committee was SB 311.
MR. DOUGLAS L. SMITH, Arctic Slope Regional Corporation, Energy
Services Division, supported SB 311 as it is written. "It does
not sway the advantage to either company or employee, but, in
fact, favors both." He did not have a copy of the proposed
amendment.
CHAIR BUNDE said a copy of the amendment was being faxed to him.
MR. MIKE JENSEN, Anchorage attorney who specializes in
representing injured workers in Alaska workers' compensation
claims, said he has 20 years of experience in this area and
three other attorneys, Chancy Croft, Joe Calamites and Steven
Constantino have extensive experience as well. They have all
looked at the proposed amendment and have some concerns.
We do not feel the current system is broken and should
be fixed, especially if it means creating a new
bureaucracy that is estimated to cost in excess of
$700,000 a year more than the current system.
The current system does provide for a representative
of industry and a representative of labor. These
proposed amendments would take that away - so that the
decision maker would be solely a hearing officer at
the initial administrative level and then three
commissioned members who are selected by the
administration.
As far as the current system and expediency, we do not
think the amendments would add anything as far as
expediency. The current system issues over 300
opinions per year. Of those, only 10 percent are ever
appealed to the courts. Of those 10 percent, I would
say only a third are ever reversed. In other words of
the minority of appeals that are taken to the courts,
the vast majority of those appeals wind up affirming
what the board has done.
As far as the time concerns that the administration
pointed out, they did cite the case of Bradbury v.
Chugach Electric. That was the case in which I
represented Mr. Bradbury whose wife died at work. The
administration states that the time [indisc.] as the
reason for making these proposed changes.
I should point out to Mr. Chairman and the other
members of the committee...that decision, first of
all, it wasn't 1,400 days. The administration was off
by about a half a year and, of that time, over a
third, if not more, was spent between the Superior
Court waiting for the Supreme Court to issue its
decision. As far as the board was concerned, it heard
the case within six to nine months after the claim was
filed and we don't see how creating an appeals
commission would in any way speed that process up.
But, if the appeals commission is a good amendment to
adopt, we feel it could be improved to make it less
political in that we would urge the committee to
require that the appeals commission have at least one
representative who has experience with the practice of
law representing industry and then let the other
representative or member with experience represent
labor. Then, of course, the third member could be
either way. At least that way, there would be an
assurance that at least depending upon who is in the
administration, Democrat or Republican, that at least
one representative of industry is always there as well
as one representative of labor. It would thereby take
out what I feel would otherwise politicize the
commission.
In addition, we would propose that the commission
members be given terms of up to a minimum of five
years. That, again, would foster the idea of
depoliticizing the commission. In addition, it would
enlarge the pool of applicants that the administration
could choose from in selecting commission members,
because with five years, it's my understanding that
the commission member would be vested in the PERS
system thereby making it more attractive for members
to be found.
There are some other changes that we would propose. As
far as at the hearing level, we would recommend that
instead of having the decision decided strictly by one
hearing officer, that these cases be heard as the
board is currently constituted with a representative
of industry again and a representative of labor again
with a hearing officer on that board. That would
insure, again, that this process remains neutral, that
it remains fair to both sides and that it
depoliticizes the system.
MR. JENSEN said additional changes were stated in a letter that
would be sent to the Legislature as soon as the other three
lawyers had signed off on it. It asks that intent language
states that nothing in the amendment changes the substance of
law - clarifying that the changes are strictly procedural and,
thereby, avoiding additional unnecessary litigation.
In addition, I think that if attorney's fees could be
limited to $400 without obtaining board or director
approval of fees, that would allow a lot of needless
litigation in that currently a lot of unrepresented
injured workers are unable to get the advice of an
attorney and then wind up filing claims that need to
be litigated by industry. By allowing these workers to
at least seek the advice of competent counsel, may
avoid filing any unnecessary litigation that it caused
from misinformation and misunderstanding of the act.
He said these changes would make a much fairer system and
protect the interests of both industry and labor and
depoliticize the system. He also understands that the ad hoc
committee was not involved in the proposed changes and now that
they are involved he thought:
By creating a permanent workers' compensation advisory
council... with two members from industry and two
members from labor, as well as the members from the
guaranty association, the public or the Division of
Insurance might assist the Legislature in getting
competent advice and proposals to act upon.
MR. DON GRAY, Claims Administrator, Arctic Slope Regional
Corporation, supported SB 311 as written and without the
amendment. [Indisc.]
MR. DENNIS MELLINGER, Arctic Slope, supported SB 311.
MS. LAURA JACKSON, Claims Manager, University of Alaska, said
she is also a member of the Multidisciplinary Insurance
Association of Alaska and past president of the Alaska Adjusters
Association. She is currently on the board of the Workers'
Compensation Committee of Alaska and a member of the ad hoc
committee. She said she was testifying on her own behalf today
as a person who has assisted people through the Alaska Workers'
Compensation system for over 17 years.
I am here to tell you that the Workers' Compensation
system in Alaska is broken. It is cumbersome,
confusing, slow-moving and not user friendly to either
the employer or the employee. The recommended changes
will simplify and clarify the process. Replacing the
delays due to the lengthy Superior Court appeals
process with an appeals commission comprised of people
knowledgeable about the act and the process will speed
the resolution of the disputes.
In addition, in response to Senator French's
amendment, the decisions that come out of Superior
Court are inconsistent as have been the decisions that
come out of the board, itself, and their panels. I
believe that people specifically knowledgeable about
the act and the act as it was intended by the
Legislature, you our representatives, when it was
promulgated, that it would be a more consistent fair
and expeditious process being heard by people who
understand and know the act and are familiar with it.
It is my belief that in short order we will all find a
workers' compensation system that will indeed be more
efficient and predictable. Therefore, it will decrease
the cost to employers and the time delay to employees
and more importantly result in fair and adequate
compensation to our injured workers.
MS. JACKSON "put on her ad hoc hat" to read a letter into the
record from the Alaska Labor Management Ad Hoc Committee on
Workers' Compensation, dated March 4, 2004, addressed to Speaker
of the House, Pete Kott, and Senate President, Gene Therriault.
Gentlemen:
The Ad Hoc Committee, which consists of
representatives from industry and labor historically
has met periodically to address issues that affect
substantive changes, issues that affect benefits in
the Workers' Compensation Act. In January, management
and labor decided that time had come to address such
issues again. In the meantime, the administration
proposed SB 311 and HB 450, which deal with procedural
issues, issues regarding the makeup and management of
the board. Although the Ad Hoc Committee had never
dealt with such issues previously, labor recommended
the Ad Hoc Committee consider the bill. The committee
reached agreement on sections of the bill that refer
to the Guaranty Fund, capping out-of-state workers'
compensation at what the employees would have earned
in-state, placing administrative responsibilities
formerly rested in the board with the Workers'
Compensation Division director, uninsured penalties
and replace the Superior Court with an appeals
commission. The committee has scheduled no further
meetings on the issue. We do, however, anticipate
meeting in the future on substantive issues of concern
to both management and labor.
Sincerely,
Judith A. Peterson, President, WCCA
Kevin Dougherty, Alaska Laborers
Members of the Ad Hoc Committee
MR. KEVIN DOUGHERTY, Co-Chair, Ad Hoc Committee, said he is
attorney for the Alaska District Council of Laborers and that
they did reach agreement on the Guaranty Fund and the non-
resident cost of living adjustment and agreed to preserve the
board as it is, but have an appeals commission replace the
Superior Court and added some uninsured employer penalties of a
civil nature. They hadn't agreed on a number of issues and he
suggested that those items not move forward.
I would like to point out that the Ad Hoc Committee
has been in place for about 23 years. After
legislation that we have worked on jointly with the
employer, the decreases in premiums have added up to
over 40 percent decrease in premiums. During that
time, our goal has been to retain benefits and we go
at it in the same sphere as here. So, it is critical
that the administration's bill does nothing to impact
benefits. That's, of course, why my organization, the
Alaska Laborers, are opposed to section 9 of the bill
and opposed to section 10 of the bill, which would
have wiped out the bill. But, fortunately, we have the
news to report to you, as Ms. Jackson said, that we do
have agreement on five solid issues which we hope will
help the act overall.
CHAIR BUNDE asked if anyone else wanted to testify on SB 311.
Seeing no one, he closed public testimony.
SENATOR FRENCH moved amendment 1.
23-GS2023\A.1
Craver
A M E N D M E N T 1
OFFERED IN THE SENATE BY SENATOR FRENCH
TO: SB 311
Page 1, lines 10 - 11:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 1, line 12:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 2, lines 5 - 6:
Delete "providing for supreme court jurisdiction of appeals
from the Workers' Compensation Appeals Commission;"
Page 5, line 22:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 5, line 24:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 6, line 1:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 7, lines 21 - 22:
Delete "Workers' Compensation Appeals Commission"
Insert "workers' compensation hearings office"
Page 7, line 27, through page 11, line 2:
Delete all material and insert:
"* Sec. 11. AS 23.30 is amended by adding a new section to
read:
Sec. 23.30.007. Workers' compensation hearings
office. (a) There is established in the Department of
Labor and Workforce Development a workers' compensation
hearings office. The hearings office hears original
petitions when a claim is filed under this chapter and has
jurisdiction to hear appeals from decisions and orders of
the director.
(b) The commissioner shall appoint a chief hearing
officer and assistant hearing officers.
(c) The chief hearing officer may
(1) employ and supervise office staff and
hearing officers and appoint a hearings office clerk;
(2) establish and implement a time management
system for the hearings office, staff, and hearing
officers;
(3) assign the work of the hearing officers and
staff so that hearings and appeals are resolved as
expeditiously and competently as possible, including
designating hearing officers to hear preliminary matters;
and
(4) prepare an annual budget of the hearings
office.
(d) The hearings office, in its administrative
capacity, shall maintain, index, and make available for
public inspection the final administrative decisions and
orders of the hearing officers. To promote consistency
among legal determinations, the chief hearing officer may
review and circulate among the other hearing officers the
drafts of formal decisions, decisions upon reconsideration,
and other legal opinions of the other hearing officers of
the hearings office. The drafts are confidential documents
and are not subject to disclosure.
(e) The hearings office, in its administrative
capacity, may adopt regulations implementing its authority
and duties under this chapter, including rules of procedure
and evidence for proceedings before hearing officers in
workers' compensation proceedings under AS 23.30.090 and
23.30.110 and for the adjudication of all claims and
petitions under this chapter. The provisions of AS 44.62
(Administrative Procedure Act) apply to the adoption of
regulations by the hearings office.
(f) The hearings office shall award a successful
party reasonable costs and, if the party is represented by
an attorney, attorney fees that the hearings office
determines to be fully compensatory and reasonable.
However, the hearings office may not make an award of
attorney fees against an injured worker unless the hearings
office finds that the worker's position on appeal was
frivolous or unreasonable or the appeal was taken in bad
faith.
(g) The hearings office, in its administrative
capacity, may adopt and alter an official seal and do all
things necessary, convenient, or desirable to carry out the
powers expressly granted or necessarily implied in this
chapter."
Page 13, line 9:
Delete "with the office of the commission [BY"
Insert "by a hearing officer ["
Page 14, line 9:
Delete "commission"
Insert "hearings office"
Page 29, lines 27 - 28:
Delete "office of the commission"
Insert "hearings office"
Page 30, line 3:
Delete "or commission"
Page 30, line 14:
Delete "office of the commission, and the office of the
commission "
Insert "hearings office, and the hearings office"
Page 31, line 4, following "defense.", through line 17:
Delete all material.
Insert "[IF A DISCOVERY DISPUTE COMES BEFORE THE BOARD FOR
REVIEW OF A DETERMINATION BY THE BOARD'S DESIGNEE, THE BOARD MAY
NOT CONSIDER ANY EVIDENCE OR ARGUMENT THAT WAS NOT PRESENTED TO
THE BOARD'S DESIGNEE, BUT SHALL DETERMINE THE ISSUE SOLELY ON
THE BASIS OF THE WRITTEN RECORD. THE DECISION BY THE BOARD ON A
DISCOVERY DISPUTE SHALL BE MADE WITHIN 30 DAYS. THE BOARD SHALL
UPHOLD THE DESIGNEE'S DECISION EXCEPT WHEN THE BOARD'S
DESIGNEE'S DETERMINATION IS AN ABUSE OF DISCRETION.]"
Page 32, line 1:
Delete "office of the commission"
Insert "hearings office"
Page 32, lines 8 - 9:
Delete "office of the commission"
Insert "chief hearing officer"
Page 32, lines 27 - 28:
Delete "commission"
Insert "director"
Page 34, line 7:
Delete "commission"
Insert "hearings office"
Page 34, line 11:
Delete "partially exempt service under AS 39.25.120"
Insert "classified service under AS 39.25.100"
Page 34, lines 12 - 13:
Delete ", but is not a public employee for purposes of
AS 23.40"
Page 34, line 31:
Delete "commission"
Insert "hearings office"
Page 35, line 5:
Delete "commission"
Insert "hearings office"
Page 35, lines 30 - 31:
Delete "commission or"
Page 36, line 5:
Delete "commission or"
Page 36, line 6:
Delete "The commission clerk"
Insert "A hearing officer"
Page 36, line 9:
Delete "commission"
Insert "hearing officer"
Page 36, line 24:
Delete "office of the commission"
Insert "hearings office"
Page 36, line 27:
Delete "office of the commission"
Insert "hearings office"
Page 37, line 2:
Delete "commission"
Insert "hearings office"
Page 37, line 4, through page 41, line 21:
Delete all material and insert:
"* Sec. 64. AS 23.30.125(a) is amended to read:
(a) A compensation order becomes effective when filed
with the director [IN THE OFFICE OF THE BOARD] as provided
in AS 23.30.110, and, unless proceedings to suspend it or
set it aside are instituted as provided in (c) of this
section, it becomes final on the 31st day after it is
filed.
* Sec. 65. AS 23.30.125(c) is amended to read:
(c) If not in accordance with law, a compensation
order filed by a hearing officer as provided in (a) of this
section may be suspended or set aside, in whole or in part,
through injunction proceedings in the superior court
brought by a party in interest against the division [BOARD]
and all other parties to the proceedings [BEFORE THE
BOARD]. The payment of the amounts required by an award
may not be stayed pending final decision in the proceeding
unless upon application for an interlocutory injunction the
court on hearing, after not less than three days' notice to
the parties in interest and the director [BOARD], allows
the stay of payment, in whole or in part, where irreparable
damage would otherwise ensue to the employer. The order of
the court allowing a stay must [SHALL] contain a specific
finding, based upon evidence submitted to the court and
identified by reference to it, that irreparable damage
would result to the employer, and specifying the nature of
the damage.
* Sec. 66. AS 23.30.125(d) is amended to read:
(d) If an employer fails to comply with a
compensation order making an award that has become final, a
beneficiary of the award or the director [BOARD] may apply
for the enforcement of the order to the superior court. If
the court determines that the order was made and served in
accordance with law, and that the employer or the officers
or agents of the employer have failed to comply with it,
the court shall enforce obedience to the order by writ of
injunction or by other proper process to enjoin upon the
employer and the officers and agents of the employer
compliance with the order.
* Sec. 67. AS 23.30.125(f) is amended to read:
(f) Subject to an employer's or employee's burden of
proof, a finding of fact made by the hearing officer
[BOARD] as a part of a compensation order is conclusive
unless the court specifically finds that a reasonable
person could not have reached the conclusion made by the
hearing officer [BOARD]."
Renumber the following bill sections accordingly.
Page 46, lines 4 - 11:
Delete all material.
Renumber the following bill sections accordingly.
Page 55, line 24:
Delete ", the commission,"
Page 56, lines 3 - 9:
Delete all material and insert:
"(35) "director" means the director of the
division of workers' compensation;
(36) "division" means the division of workers'
compensation;
(37) "hearing officer" means a hearing officer
employed under AS 23.30.112 to hear workers' compensation
claims and petitions under this chapter;
(38) "hearings office" means the workers'
compensation hearings office established by AS 23.30.007."
Page 56, lines 13 - 20:
Delete all material and insert:
"* Sec. 103. AS 39.25.120(c) is amended by adding a new
paragraph to read:
(20) the reemployment benefits administrator of
the division of workers' compensation in the Department of
Labor and Workforce Development."
Renumber the following bill sections accordingly.
Page 56, line 25:
Delete "and"
Insert ";"
Following "AS 23.30.395(3)":
Insert "; and AS 39.50.200(b)(31)"
Page 56, line 28:
Delete "sec. 86"
Insert "sec. 87"
Page 56, line 29:
Delete "sec. 86"
Insert "sec. 87"
Page 57, lines 13 - 18:
Delete all material.
Renumber the following bill sections accordingly.
Page 58, line 13:
Delete "Section 110"
Insert "Section 109"
Page 58, line 14:
Delete "sec. 111"
Insert "sec. 110"
CHAIR BUNDE objected for discussion purposes.
SENATOR FRENCH explained that amendment 1 would remove the
appeals commission that would replace the appeals function of
the Superior Court. SB 311 calls for the appointment of three
appeals commissioners who would be confirmed by the Legislature.
The bill calls for two range 29 commissioners with the
commission chair set at range 30.
Our committee heard testimony... that the Superior
Court hears some 36 workers' comp appeals each year.
Creating three new highly paid state employees to hear
36 appeals per year seems extravagant. The proposed
amendment would keep the appeals function in the
Superior Court.
The amendment also keeps the hearing officers in
classified service. SB 311 as it stands would
reclassify the hearing officers into partially exempt
service. Keeping the hearing officers in classified
service gives these decision makers greater autonomy.
The proposed amendment does not alter the basic thrust
of SB 311; it merely streamlines the reforms that the
bill envisions. I'll close by saying that I believe
the most apolitical appeals panel available is in the
Superior Court. These are judges appointed to long
terms. They are mostly isolated from the political
process. They have all the autonomy in the world to
hear these appeals. From the testimony we heard from
Mr. Wooliver [Alaska Court System], they're rarely
overturned when those decisions go to the Supreme
Court.
I also took to heart the part of his testimony about
how a litigant feels facing an in-house appeals
commission. I can just speak for myself - I'd want a
guy in a black robe to decide my case. I'd want
someone who isn't a state employer per se in the
Department of Administration to hear my case. And I
think what we're going to do is simply create this
enormous pass-through of decisions through the appeals
commission on to the Supreme Court clogging their
calendar more. So, I think in these tough budget times
to create three new - two range 29s and a range 30 - a
range 30 is over $100,000 per year. I just think that
there are school districts all over the state that
would love to have some of these employees that we're
thinking about creating here.
For that reason and also for the reason of keeping the
hearing officers in classified service, that's a way
to give them some political cover for the tough
decisions they make every day. Keep them in classified
service and let them go about their business
unsupervised, really, by a state supervisor who may be
putting pressure on them to go one way or the other.
CHAIR BUNDE remarked that his concern about the cost resonates
with him.
I, at this point, think that maybe the total cost to
the public might be less avoiding the Superior Court,
but again those are areas that I don't have a lot of
personal experience. I would prefer to send the bill
forward as it is and let Judiciary review that issue
and continue my opposition to the amendment.
A roll call vote was taken on amendment 1. Senators Gary Stevens
and Chair Bunde voted nay; Senator French voted yea. Amendment 1
was not adopted.
1:58 - 2:04 - at ease
CHAIR BUNDE said that SB 311 would be set aside for the moment.
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM
CHAIR CON BUNDE announced SB 311 to be back before the committee
and that public testimony had been closed. Amendments had been
addressed.
SENATOR RALPH SEEKINS moved to pass SB 311 from committee with
individual recommendations and attached fiscal note. SENATOR
FRENCH objected. A roll call vote was taken. Senators Seekins,
Gary Stevens and Chair Bunde voted yea; and Senator French voted
nay; and SB 311 moved from committee. The chair noted that he
would ask the Senate President for a Judiciary referral.
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