Legislature(2019 - 2020)ADAMS ROOM 519

04/24/2019 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 30                                                                                                             
     "An Act  relating to the exclusiveness  of liability of                                                                    
     an  employer in  the  case of  death;  relating to  the                                                                    
     payment of  workers' compensation benefits in  the case                                                                    
     of permanent partial impairment;  relating to notice of                                                                    
     workers' compensation  death benefits; relating  to the                                                                    
     payment   of  workers'   compensation  death   benefits                                                                    
     payable to  a child  of an employee  where there  is no                                                                    
     surviving spouse;  relating to the payment  of workers'                                                                    
     compensation death  benefits for an employee  without a                                                                    
     surviving  spouse  or  child;   and  providing  for  an                                                                    
     effective date."                                                                                                           
1:30:46 PM                                                                                                                    
REPRESENTATIVE  ANDY  JOSEPHSON,  BILL  SPONSOR,  introduced                                                                    
himself. He relayed  that 90 percent of the  contents of the                                                                    
bill had  been circulating through the  building since 2014.                                                                    
The bill  made it  through the House  in the  previous year,                                                                    
reached the Senate Finance Committee, and died there.                                                                           
Representative   Josephson  turned   to  slide   2  of   his                                                                    
PowerPoint Presentation:  "HB 30  - The Abigail  Caudle Act"                                                                    
(copy on file).  He explained that the bill  was named after                                                                    
Abigail Caudle who  died in an electrical  accident in 2011.                                                                    
He attended an event at  the location where she passed away.                                                                    
There were  members of the  public and the media  there. Her                                                                    
mother, Marianne Burke, spoke as well.                                                                                          
Representative  Josephson continued  to slide  3: "Reviewing                                                                    
Workers' Compensation  Statutes." He reported that  the bill                                                                    
did  three principle  things.  First,  it updated  permanent                                                                    
partial  impairment (PPI).  Currently,  there was  a PPI  of                                                                    
$177,000  for the  entire body.  When a  person survived  an                                                                    
accident a  doctor could  declare they  had a  percentage of                                                                    
disability. The  bill updated the  amount to  about $254,000                                                                    
to $255,000.  Second, the  bill updated  a benefit  that the                                                                    
legislature  created in  1968 originally  in  the amount  of                                                                    
$20,000. The  amount would  be increased  to $150.000  for a                                                                    
death   benefit  for   non-nuclear  family   dependents.  He                                                                    
provided an example  of a 25-year-old slope  worker who died                                                                    
and had a disabled parent that lived with that person.                                                                          
Representative Josephson continued that  the bill would also                                                                    
create  a new  benefit  that applied  to  persons that  were                                                                    
single  and childless.  Under current  law if  a person  was                                                                    
single,  childless, and  died at  work,  their estate  would                                                                    
receive no benefit.  Essentially, a person could  not sue in                                                                    
personal injury or  tort if they were injured on  the job. A                                                                    
person's  remedy existed  only  in the  Title  23 silo.  The                                                                    
theory of the law was that  for a person that was single and                                                                    
childless there was no dependent  to pay. The only thing the                                                                    
law did was  pay for funeral expenses. It  left other family                                                                    
members with no way to  express their grief through the law.                                                                    
He noted  a case  brought to the  Alaska Supreme  Court. The                                                                    
bill  would  create  a  $120,000 benefit  to  parents  of  a                                                                    
deceased individual. If the person's  parents were no longer                                                                    
alive, the  estate would receive  $120,000. The  funds could                                                                    
be used to  help pay for any existing debt  of the deceased.                                                                    
He  commented that  on  the fiscal  note,  because very  few                                                                    
people died at  work (a handful per year in  Alaska of which                                                                    
only  one   single  childless  person  died),   the  expense                                                                    
associated with the bill did not  really have to do with the                                                                    
new benefit. The expense was connected to the updated PPI.                                                                      
Representative  Josephson noted  there  was a  snafu in  the                                                                    
prior committee  where they  adopted a  committee substitute                                                                    
(Version  U)   which  updated  the  1968   from  $20,000  to                                                                    
$150,000.  He continued  that  when the  bill  moved out  of                                                                    
committee,  they selected  a different  version (Version  S)                                                                    
that neglected to  reflect their previous work.  There was a                                                                    
technical  error  that  could  not  be  addressed  until  it                                                                    
reached the House Finance Committee. He thanked members.                                                                        
1:38:32 PM                                                                                                                    
ELISE  SORUM-BIRK,  STAFF,  REPRESENTATIVE  ANDY  JOSEPHSON,                                                                    
continued  to  explain slide  4.  The  bill also  allowed  a                                                                    
dependent  child  left  without  a  parent  to  continue  to                                                                    
receive  benefits  for five  years  after  they reached  the                                                                    
definition  of "adulthood"  under the  workers' compensation                                                                    
Ms.  Sorum-Birk  explained  that  the bill  dealt  with  the                                                                    
single worker with no dependents  who died on the job. There                                                                    
was  no remedy  under  current law.  The  parents could  not                                                                    
collect  workers'  compensation,  and they  could  not  file                                                                    
suit. The original version of  the bill provided the ability                                                                    
for the family  to file suit but was removed  from the Labor                                                                    
and Commerce committee substitute.  House Bill 30 amended AS                                                                    
23.30.055 to  allow the  parent or  questioned state  of the                                                                    
deceased   to   receive    compensation   through   workers'                                                                    
compensation.  It  also  added  a new  subsection  under  AS                                                                    
23.30.215 (a)  to provide  the death  benefit Representative                                                                    
Josephson  spoke  to  previously. She  reiterated  that  the                                                                    
death benefit was $120,000 payable  to the parents or estate                                                                    
of  the  deceased.  If  there were  two  parents  that  were                                                                    
separated, the amount would be  divided equally. Each parent                                                                    
would receive $60,000. If there  were no parents, the entire                                                                    
amount would be  awarded to the estate of  the deceased. She                                                                    
highlighted  that the  benefit would  be slightly  different                                                                    
from   other  death   benefits   currently  under   workers'                                                                    
compensation in  that it  would be  paid out  in a  lump sum                                                                    
rather than being paid over time.                                                                                               
Ms. Sorum-Birk continued  to slide 5 and slide  6 to discuss                                                                    
the  PPI. The  rates had  not been  adjusted since  2000. In                                                                    
1988  the amounts  were updated  to $135,000.  In 2000  they                                                                    
were updated to $177,000. House  Bill 30 adjusted the amount                                                                    
to  $255,854 to  account  for inflation.  She  pointed to  a                                                                    
handout in members'  packets about PPI by  state. Alaska was                                                                    
very close to  the bottom of the list for  all of the listed                                                                    
benefits.  If  the  state  were  to  adjust  the  amount  to                                                                    
$255,854, Alaska would move to the national average.                                                                            
Ms. Sorum-Birk  moved to the  next item that dealt  with the                                                                    
death benefit  paid to a  non-child dependent which  had not                                                                    
changed  in 53  years.  Under  AS.23.30.215(a)(4) the  death                                                                    
benefit  could  be  paid  to  a  dependent  father,  mother,                                                                    
grandchild,  brother, or  sister.  The amount  needed to  be                                                                    
brought up to date.                                                                                                             
Ms. Sorum-Birk  moved to slide  7: "Once  dependent children                                                                    
become legal adults all benefits  cease." She explained that                                                                    
HB 30  created a  new subsection to  extend the  payment for                                                                    
dependent  children  5  years.   She  noted  that  dependent                                                                    
children became legal adults, after the age of 19.                                                                              
Ms.  Sorum-Birk   turned  to   slide  8  which   showed  the                                                                    
definition  of  a child.  She  read  the definition  in  the                                                                    
Workers Compensation Act directly from the slide:                                                                               
     Definition of "child"                                                                                                      
     From AS 23.30.395 (8) includes                                                                                             
         "persons who are under 19"                                                                                          
         "persons who, though 19 years of age or over, are                                                                   
          wholly dependent upon the deceased employees and                                                                      
          incapable of self- support by reason of mental or                                                                     
          physical disability"                                                                                                  
         "persons of any age while they are attending the                                                                    
          first four years of vocational school, trade                                                                          
          school, or college"                                                                                                   
         "persons of any age while attending high school"                                                                    
Ms. Sorum-Birk provided additional  information on the third                                                                    
bullet point regarding a person  attending the first 4 years                                                                    
of vocational school, trade school,  or college. as the bill                                                                    
was currently written,  if she were to start  collage at the                                                                    
age of 19,  pursue a 4-year degree, and graduate  in 4 years                                                                    
at age 22, she could  continue to receive benefits until age                                                                    
27.  The bill  could be  amended  if the  committee was  not                                                                    
comfortable with the provision.                                                                                                 
1:43:34 PM                                                                                                                    
Representative Josephson noted that  essentially the way the                                                                    
item ended  up in the  bill and stayed  in the bill  all the                                                                    
way  until  reaching the  Senate  Finance  Committee was  by                                                                    
considering circumstances  that might leave a  child without                                                                    
either parent  and with  a very  limited benefit.  It turned                                                                    
out that the definition of a  child was under the age of 19.                                                                    
Under current  law children were  paid a  maintenance amount                                                                    
for 4  years as long  as they  were enrolled in  school. The                                                                    
bill  would  add  an  additional  5 years  to  the  4  years                                                                    
bringing someone  into their late  twenties as long  as they                                                                    
were a student in their  early twenties. The committee might                                                                    
want to  scale the  amount back  to a total  of 5  years. He                                                                    
reminded members  that they  were not  dealing with  a large                                                                    
number of people.                                                                                                               
1:45:58 PM                                                                                                                    
Representative Josephson  spoke to  slide 9. The  example he                                                                    
used  was  an elevator  accident  where  a customer  and  an                                                                    
employee  rode  to their  deaths  when  a cable  broke.  The                                                                    
estate of the customer riding  in the elevator could recover                                                                    
money for damages under Title 9.  The estate could sue for a                                                                    
number of things which he  read from the slide. However, the                                                                    
estate of  the single,  childless worker would  only receive                                                                    
funeral expenses.  He highlighted the  incredible disparity.                                                                    
He noted  that 12 other states  did what his bill  would do.                                                                    
The figure of  $120,000 was chosen based on  the figure used                                                                    
by the state of Louisiana.                                                                                                      
Representative LeBon asked  about Representative Josephson's                                                                    
early reference  regarding the case  of an  employee without                                                                    
children or  a spouse dying  in a work related  accident. He                                                                    
asked if the  bill prescribed the benefit  going upstream to                                                                    
the    parents.     Representative    Josephson    responded                                                                    
Representative  LeBon  suggested  that Johnny  take  out  an                                                                    
insurance police  with his parents  as beneficiaries.  As he                                                                    
understood insurance,  the parents  could take out  a policy                                                                    
on Johnny if they felt they  needed the benefit. He asked if                                                                    
what  he  was  saying  was  true.  Representative  Josephson                                                                    
though  Representative LeBon's  statement was  true. He  was                                                                    
unclear about the last part.                                                                                                    
Representative LeBon  guessed that the parents  would have a                                                                    
vested stake in protecting the  life of their child and they                                                                    
could insure  it. Representative  Josephson had  never heard                                                                    
of  someone  taking  insurance out  on  their  children.  An                                                                    
injury could  be based  on gross negligence  on the  part of                                                                    
the   employer.   However,    there   were   not   currently                                                                    
consequences for the  employer. There was a  theory that the                                                                    
employer would not improve their  safety record without some                                                                    
sort  of incentive.  There was  also the  argument that  the                                                                    
employee would have  to pay out of pocket  for the insurance                                                                    
1:50:10 PM                                                                                                                    
Representative LeBon returned  to Representative Josephson's                                                                    
example  of  the  elevator  incident.   He  wondered  if  it                                                                    
possible for a  company to take out a  life insurance policy                                                                    
on  its  employees  as  part   of  their  benefits  package.                                                                    
Representative Josephson responded  that the legislature had                                                                    
some sort of death disability  payment in place. He supposed                                                                    
it  was  possible.  Ms. Sorum-Birk  also  noted  that  life-                                                                    
insurance was voluntary, unlike  employers being required to                                                                    
have Worker's Compensation benefits.                                                                                            
Representative LeBon mentioned spending  time in the banking                                                                    
industry. His employer  had always insured his  life. It was                                                                    
an employee  benefit and a  standard practice for  the bank.                                                                    
He  thought   if  an  employer  cared   enough  about  their                                                                    
employees, they  would have  life insurance  as part  of the                                                                    
benefits   package   available.   Representative   Josephson                                                                    
responded that he was unsure  that it was available. Some of                                                                    
the  jobs were  hazardous. In  other words,  they came  with                                                                    
more risk.                                                                                                                      
Co-Chair  Wilson concluded  that in  a riskier  profession a                                                                    
person  might  want  to  make sure  they  had  an  insurance                                                                    
Representative  Josephson  responded   that  it  would  make                                                                    
sense. However,  he reminded  members that  the cost  in the                                                                    
bill  was  related to  the  PPI.  If  there was  a  horrible                                                                    
accident in which  a worker in Alaska lost their  leg at the                                                                    
hip, it would  be equal to 40 percent  impairment. Under the                                                                    
state's workers' compensation law,  Alaska would pay $71,000                                                                    
for the  loss of a leg.  He was certain that  a person would                                                                    
not   voluntarily   give   up   their   leg   for   $71,000.                                                                    
Pennsylvania, for the same lost  leg, would pay $389,000. He                                                                    
explained  that  although  there  was  a  new  benefit  used                                                                    
infrequently, the  $120,000 risk  was being spread  all over                                                                    
the state.  He reiterated  that most of  the benefit  was in                                                                    
the PPI update.                                                                                                                 
Representative  Knopp  noted that  Representative  Josephson                                                                    
would advise a  young woman, 18.5 years of  age whose father                                                                    
had died,  to enroll in  school. He supposed that  there was                                                                    
no prior obligation  to have been enrolled in  school at the                                                                    
time of  her father's  death. He asked  if he  was accurate.                                                                    
Ms. Sorum-Birk thought his interpretation was correct.                                                                          
Representative Knopp  thought the  bill would  limit someone                                                                    
receiving  benefits for  5  years. Representative  Josephson                                                                    
corrected  himself that  it  was  a period  of  4 years.  He                                                                    
suggested that  as long as  they were  under the age  of 19,                                                                    
even if  they were  not enrolled in  a school  program, they                                                                    
would  get a  spendable weekly  allowance. However,  if they                                                                    
were not enrolled  in school, he would advise them  to do so                                                                    
prior  to  their  19th  birthday   so  that  benefits  would                                                                    
continue for the 4 years.                                                                                                       
1:55:13 PM                                                                                                                    
Co-Chair Wilson OPENED Public Testimony.                                                                                        
MARIANNE    BURKE,   MOTHER    OF   ABIGAIL    CAUDLE   (via                                                                    
teleconference),  indicated that  it was  her daughter  that                                                                    
was  killed  in 2011  by  gross  negligence. She  was  given                                                                    
nothing  for  her  daughter's life  with  the  exception  of                                                                    
$10,000   for  funeral   expenses.  Her   daughter,  a   new                                                                    
apprentice, was  working without supervision on  a live wire                                                                    
with a  cheaper "non-contact"  tester and  was electrocuted.                                                                    
After  the accident,  the funeral,  and  many emotions,  she                                                                    
tried  to seek  a  legal remedy.  However,  no lawyer  would                                                                    
represent her because they relayed  that Abagail's death was                                                                    
a  workers compensation  death. She  explained that  because                                                                    
the  accident occurred  in  the  work place  she  had to  go                                                                    
through workers'  compensation layers who stated  that there                                                                    
was no remedy.  There was nothing given for  a single person                                                                    
killed in  the workplace because  her daughter did  not have                                                                    
any  dependents. The  purpose of  the bill  was to  remedy a                                                                    
single person killed in the  workplace as well as increasing                                                                    
the  PPI  of those  employees  that  were injured.  It  also                                                                    
allowed the right  for a person to go through  a civil suit.                                                                    
She was unable to pursue a civil suit.                                                                                          
Ms. Burke  continued that she filed  a workers' compensation                                                                    
claim working up through the  Alaska Supreme Court. The U.S.                                                                    
Supreme Court  currently had her  case and a  docket number.                                                                    
She  reported that,  early on  when she  filed the  workers'                                                                    
compensation  case,  the  Workers'  Compensation  Board  was                                                                    
trying to dismiss  her case. The board claimed  that she did                                                                    
not  have dependents  and requested  to see  her taxes.  She                                                                    
found out that the board wanted  her taxes in order to prove                                                                    
that Abigail did not have  any dependents. Ms. Burke did not                                                                    
provide copies  of her taxes,  as she appealed  the request.                                                                    
Carol Sloan  who worked  for workers'  compensation reported                                                                    
that she  was the first  to get through, otherwise  the case                                                                    
would have been dismissed.                                                                                                      
Ms. Burke elaborated that the  employer's side was trying to                                                                    
get her case  dismissed because she filed within  2 years of                                                                    
her daughter's death rather than  1 year. The court ruled in                                                                    
her favor. The  employer was also trying to  hold her liable                                                                    
for attorney's  fees. The Alaska  Supreme Court  again ruled                                                                    
in  Ms.  Burkes'  favor,  and   she  did  not  have  to  pay                                                                    
attorney's fees.                                                                                                                
Ms.  Burke reiterated  her disgust  in  the justice  system.                                                                    
There was no liability on  the part of the grossly negligent                                                                    
employer.   Nothing  happened   to  Raven   Electric.  Their                                                                    
insurer,  Liberty Mutual,  paid  the funeral  costs and  the                                                                    
Occupational Safety  and Health Administration  (OSHA) fines                                                                    
of  about $11,000.  She claimed  that  OSHA was  not a  good                                                                    
check and balance for  negligent employers. Nothing happened                                                                    
to  the  employer. She  believed  some  sort of  payout  was                                                                    
necessary  to  keep  the employers  accountable.  Ms.  Burke                                                                    
emphasized that  there was  nothing given  for a  human life                                                                    
who  was single  with no  dependents. She  urged members  to                                                                    
make   some  applicable   changes.  She   stressed  to   the                                                                    
legislature  that  it needed  to  address  the situation  by                                                                    
taking action on the bill. She  noted there was a statute on                                                                    
the   books  -   employer's  liability   for  negligence   -                                                                    
AS.23.25.010.  The statute  outlined that  the employer  was                                                                    
liable  for  inadequate  machinery and  for  the  employer's                                                                    
mistakes. She mentioned being on  a number of rabbit trails.                                                                    
Employers  were  supposed  to   be  liable.  There  were  no                                                                    
repercussions for  employers to practice  appropriate safety                                                                    
2:02:31 PM                                                                                                                    
KEVIN  DOUGHERTY,  ATTORNEY,   ALASKA  DISTRICT  COUNCIL  OF                                                                    
LABORERS (via teleconference), relayed  that HB 30 was vital                                                                    
to families  of Alaskans  whose family  members died  on the                                                                    
job or  were injured  significantly. He had  the opportunity                                                                    
to work  with Ms. Burke.  He met  people over the  years and                                                                    
throughout Alaska  whose family  members were killed  on the                                                                    
job  and   were  told  they   would  not  be   provided  any                                                                    
compensation  for  the  loss  of life.  He  wanted  to  walk                                                                    
through  the  practical  impact  of  not  getting  the  bill                                                                    
Mr. Dougherty  explained that  currently, about  20 Alaskans                                                                    
had lost  their lives  in the  workplace. He  reported that,                                                                    
fortunately, the  number was declining.  Most of  the people                                                                    
who were killed in the  workplace had family or spouses, and                                                                    
the current law  worked for them. However,  the young single                                                                    
person  remained uncovered.  Alaska's Worker's  Compensation                                                                    
law   had  a   loophole   for  employers.   There  were   no                                                                    
consequences for  employers who  were grossly  negligent. He                                                                    
pointed  out that  life  insurance  was voluntary,  whereas,                                                                    
Worker's Compensation was not. He  suggested that it was the                                                                    
employer's   responsibility   to    have   proper   Worker's                                                                    
Compensation  Insurance. The  Workers' Compensation  Appeals                                                                    
Commission pointed  out they would  have liked to  have done                                                                    
something  for Abigail  Caudle's  family  but indicated  the                                                                    
issue had  to be  addressed by the  legislature. It  was the                                                                    
legislature's responsibility to correct the problem.                                                                            
Mr.  Dougherty  spoke about  a  decrease  in voluntary  loss                                                                    
costs  and the  assigned risk  pool. As  a matter  of public                                                                    
policy he hoped  the legislature would pass the  bill out of                                                                    
respect for human life.                                                                                                         
2:08:11 PM                                                                                                                    
CHARLES MCKEE,  SELF, ANCHORAGE (via  teleconference), spoke                                                                    
about his  own Worker's  Compensation Claim.  [His testimony                                                                    
was unrelated to the bill].                                                                                                     
2:13:53 PM                                                                                                                    
LAURA  BONNER, SELF,  ANCHORAGE (via  teleconference), spoke                                                                    
in  support of  HB  30  and the  increase  to  the PPI.  She                                                                    
reminded members  that Alaska's rates had  not been adjusted                                                                    
for  almost  20  years.  She   also  supported  the  changes                                                                    
regarding  unmarried workers  with no  known dependents  who                                                                    
lost  their lives  on  the  job. She  talked  about her  own                                                                    
Worker's Compensation  claim and the effects  on her family.                                                                    
She  thought it  was  right  to value  a  life  lost in  the                                                                    
workplace. She reiterated her support for the bill.                                                                             
2:15:43 PM                                                                                                                    
MARK BUTLER, SELF, ANCHORAGE  (via teleconference), spoke in                                                                    
support of  HB 30.  He knew Abigail  Caudle. He  thought the                                                                    
changes  outlined in  the bill  encouraged  young people  to                                                                    
work through the ranks. He urged support of the bill.                                                                           
2:17:32 PM                                                                                                                    
Co-Chair Wilson CLOSED Public Testimony.                                                                                        
Co-Chair  Wilson   indicated  there  were  2   fiscal  notes                                                                    
associated  with  the  bill.  Fiscal   note  1  had  an  OMB                                                                    
component  number  71.  She invited  Mr.  Jordon  to  review                                                                    
fiscal note 1 and Mr. Mitchell to review fiscal note 2.                                                                         
2:17:45 PM                                                                                                                    
SCOTT  JORDAN,   DIRECTOR,  DIVISION  OF   RISK  MANAGEMENT,                                                                    
DEPARTMENT  OF ADMINISTRATION,  reported that  the total  on                                                                    
the fiscal  note was strictly  for the PPI increase.  It was                                                                    
about  a  44  percent  increase. The  division  had  done  a                                                                    
10-year look  back at the  average the state paid  out every                                                                    
year. The 10-year average was  approximately $979,000 and 44                                                                    
percent equaled  about $434,000.  The additional  amount was                                                                    
$26,059 for  the payment  of benefits  to the  second injury                                                                    
fund  with the  workers'  compensation  division. The  total                                                                    
amount  per year  was estimated  at about  $460,400. In  the                                                                    
first year,  because of  the effective date  of the  bill on                                                                    
January 1, 2020, the amount reflected only 6 months.                                                                            
Representative Sullivan-Leonard  asked about the  44 percent                                                                    
increase.  She  wondered  if  the  employer  would  feel  an                                                                    
increase in  premiums. Mr. Jordan  responded that  the state                                                                    
was self-insured, and the premiums  would get transferred to                                                                    
the agencies but not dollar-for-dollar.                                                                                         
2:20:07 PM                                                                                                                    
Representative  LeBon  asked  if   employers  would  feel  a                                                                    
financial impact. Mr. Jordan responded in the affirmative.                                                                      
Representative LeBon asked if  the administration had looked                                                                    
at the  impact to  the private  sector employer.  Mr. Jordan                                                                    
thought the  reference to not  having much  financial impact                                                                    
had to do  with the payout to dependents.  He explained that                                                                    
there were not many  workers' compensation death cases where                                                                    
there were  no dependents.  In the last  45 years  the state                                                                    
had  only  one case  in  which  a  worker  died and  had  no                                                                    
Representative  LeBon suggested,  since the  risk of  payout                                                                    
was extremely  small, there would  not be a  material change                                                                    
in  the premiums  paid by  the employers  to have  the added                                                                    
coverage. Mr. Jordan  responded that he could  not make such                                                                    
a calculation  for the  fiscal note.  He furthered  that the                                                                    
fiscal note by the  Department of Administration was limited                                                                    
to the increase in the PPI  payout. He noted that the change                                                                    
would be reflected in the premiums back to agencies.                                                                            
Co-Chair Wilson  suggested that the fiscal  note reflected a                                                                    
change  in interagency  receipts.  The interagency  receipts                                                                    
were general fund dollars received  from other agencies. She                                                                    
asked   if   she   was  accurate.   Mr.   Jordan   responded                                                                    
Co-Chair   Wilson   clarified   that  employees   from   the                                                                    
Department  of Transportation  and  Public Facilities  (DOT)                                                                    
would be  paying a  certain amount per  person to  cover the                                                                    
costs  of  the  bill.  The  money would  be  given  to  Risk                                                                    
Management as their  portion if the bill were  to be passed.                                                                    
Mr.  Jordan responded,  "Madam Chair,  that is  correct." He                                                                    
did not  have the calculation.  Co-Chair Wilson asked  for a                                                                    
dollar amount  increase per employee.  Mr. Jordan  would get                                                                    
the information to the committee.                                                                                               
Co-Chair  Wilson  asked  for  the  number  of  active  state                                                                    
employees.  Mr. Jordan  did not  know the  figure but  would                                                                    
find out  and provide it  to the committee.  Co-Chair Wilson                                                                    
thought  the information  would help.  She also  asked about                                                                    
the  calculation  and  what  it was  based  on.  Mr.  Jordan                                                                    
indicated  the calculation  was based  on payroll.  He noted                                                                    
the calculation was based on  full time employees (FTEs). He                                                                    
clarified  that  3  part-time  positions  were  equal  to  1                                                                    
full-time position.                                                                                                             
2:23:41 PM                                                                                                                    
Representative Carpenter  asked if  the fiscal  note applied                                                                    
to  both public  sector  and private  sector employees.  Mr.                                                                    
Jordan responded  that the fiscal  note only applied  to the                                                                    
State of Alaska.                                                                                                                
Representative Carpenter asked about  a fiscal impact to the                                                                    
private   sector.  Co-Chair   Wilson   commented  that   the                                                                    
legislature did  not make  fiscal notes  for anyone  but the                                                                    
state.  Representative  Carpenter   thought  some  employers                                                                    
would have a problem.                                                                                                           
Co-Chair Wilson informed members that  the bill would not be                                                                    
moving in the current hearing.                                                                                                  
Representative LeBon reported having  checked with a private                                                                    
sector employer  about the bill. The  employer was concerned                                                                    
about  the   material  increase  in   workers'  compensation                                                                    
premiums for the private sector.                                                                                                
Co-Chair Wilson asked for a review  of fiscal note 2 with an                                                                    
OMB component number of 344 dated April 23, 2019.                                                                               
2:25:15 PM                                                                                                                    
AT EASE                                                                                                                         
2:29:27 PM                                                                                                                    
GREY MITCHELL, DIRECTOR,  DIVISION OF WORKERS' COMPENSATION,                                                                    
DEPARTMENT  OF  LABOR  AND WORKFORCE  DEVELOPMENT,  directed                                                                    
members' attention to  the fiscal note. He  pointed out that                                                                    
the department  anticipated zero  costs associated  with the                                                                    
legislation. However, the  department anticipated additional                                                                    
revenue. He reported the revenue  for FY 20 was estimated at                                                                    
$246,000 which  increased from FY  21 and on to  $492,000 in                                                                    
revenue.  He  spoke  to  the reason  for  the  increase.  He                                                                    
explained  that   the  Division  of   Workers'  Compensation                                                                    
collected   funds   based   on  the   amount   of   workers'                                                                    
compensation premiums that were paid by private employers.                                                                      
Mr.  Mitchell  explained  that   the  Division  of  Workers'                                                                    
Compensation  was funded  through a  portion of  the premium                                                                    
tax that  was collected by  the Division of  Insurance where                                                                    
the workers  compensation division  received 2.5  percent of                                                                    
the  overall  premiums  paid  in   the  private  sector  for                                                                    
workers' compensation.  In addition, the  division collected                                                                    
a 2.9  percent fee for  all self-insured employers  like the                                                                    
State of Alaska.  He continued that the  National Council of                                                                    
Compensation  of   Insurers  was  the  rating   agency  that                                                                    
provided  workers' compensation  information for  Alaska and                                                                    
monitored  compliance with  workers' compensation  rules for                                                                    
insurers in  Alaska. The division  asked them for  an impact                                                                    
assessment of  HB 30 including  the increase to the  PPI and                                                                    
death benefits. They estimated that  the total market impact                                                                    
could be  between $9  million and $10  million per  year for                                                                    
both   private  sector   and   public  sector   self-insured                                                                    
employers.  The increase  equated  to about  3.5 percent  in                                                                    
overall workers' compensation costs.                                                                                            
Mr. Mitchell  reported that the  fiscal note was based  on a                                                                    
breakdown of 2 amounts. There  was an increase of $6 million                                                                    
in the private sector market  at 2.5 percent and an increase                                                                    
of $3  million in  the self-insured  market at  2.9 percent.                                                                    
The total that the division arrived at was $237,000.                                                                            
Mr.  Mitchell pointed  to another  line in  the fiscal  note                                                                    
labeled "Second  Injury" which related to  the second injury                                                                    
fund.   He  explained   that   the   Division  of   Workers'                                                                    
Compensation collected a fee  from insurers and self-insured                                                                    
employers - the smaller  amount referenced by the Department                                                                    
of  Administration in  its fiscal  note.  The second  injury                                                                    
fund contribution  was 5 percent  of the  indemnity benefits                                                                    
that were paid  out by an insurer  for workers' compensation                                                                    
or  by a  self-insured  employer  for workers'  compensation                                                                    
purposes. Mr. Mitchell relayed that  to arrive at the fiscal                                                                    
note  amount,  the  division calculated  that  $5.1  million                                                                    
would be  paid out in  additional PPI benefits based  on the                                                                    
proposed  legislation.  At  5 percent  of  the  amount,  the                                                                    
division  calculated $255,000  in  additional second  injury                                                                    
fund  contributions  that  would be  due  from  self-insured                                                                    
employers and insurers for workers' compensation costs.                                                                         
Mr. Mitchell  mentioned that there  was one  other provision                                                                    
in the  bill that  required the division  to develop  a form                                                                    
that  would be  used by  an employer  following a  workplace                                                                    
fatality to  notify the  next of  kin or  the estate  of the                                                                    
statute   of   limitations    for   obtaining   a   workers'                                                                    
compensation  benefit claim  and providing  a list  of legal                                                                    
counselors  and  grief  counselors.  The  division  expected                                                                    
there would be an  associated regulation which would provide                                                                    
a definition for  grief counselor. He thought  that it would                                                                    
get rolled into  an existing regulation package  and did not                                                                    
anticipate a cost.                                                                                                              
Mr.  Mitchell reported  that the  division had  a couple  of                                                                    
concerns with  the bill.  The first concern  had to  do with                                                                    
the cost  to the market.  The division had  experienced some                                                                    
significant   reductions   for   FY  19.   He   reported   a                                                                    
14.8 percent reduction  in the voluntary market,  the market                                                                    
that  most employers  got their  insurance from.  Many small                                                                    
employers  could  not  obtain their  insurance  through  the                                                                    
traditional market and had to  go to the assigned risk pool,                                                                    
a group  that saw an  even larger reduction of  17.5 percent                                                                    
in  2019.  He suggested  that  it  was  the first  year  the                                                                    
division  had  seen   double-digit  reductions  in  workers'                                                                    
compensation  costs. The  costs had  been going  down slowly                                                                    
over the  last few  years. The division  recommended caution                                                                    
related to the  reduction. In the 2018 study put  out by the                                                                    
State of  Oregon, Alaska  was still the  4th highest  in the                                                                    
nation  for workers'  compensation  costs.  In 2016,  Alaska                                                                    
ranked  5th in  the nation.  Alaska had  moved in  the wrong                                                                    
direction  even though  the state  had been  reducing costs.                                                                    
The state needed  to be careful about  increasing costs. One                                                                    
of the  statutory missions  under AS  23.30.001 was  to make                                                                    
sure the costs remained affordable for employers.                                                                               
Mr. Mitchell reported another concern  having to do with the                                                                    
5-year  extension for  a child.  The definition  of a  child                                                                    
under the workers' compensation  law included children up to                                                                    
the age of 19. Children  would be covered through their 18th                                                                    
year through the spendable weekly  wage benefits that were a                                                                    
percentage  of the  earnings of  their  deceased parent.  It                                                                    
also covered  a separate  benefit for the  first 4  years of                                                                    
college or trade school. He  argued that the periods did not                                                                    
have to  be successive.  A person  could receive  the weekly                                                                    
benefits up  until they reached  the age  of 19, take  a few                                                                    
years  off, then  go to  school. They  could reapply  and be                                                                    
instated while in their first  4 years of college regardless                                                                    
of  their age.  He  thought there  was  a potential  problem                                                                    
which was  not clarified in  the bill which might  result in                                                                    
litigation. There could  be 5-year periods added  on to both                                                                    
of the periods: 5 years  beyond the initial period when they                                                                    
reached the  age of 19  and another  5 years past  the first                                                                    
4-year period  of college  or trade  school. He  thought the                                                                    
division's concern deserved  some clarification. The sponsor                                                                    
had  mentioned changing  the benefit  to a  5-year extension                                                                    
rather than covering something special  in the first 4 years                                                                    
of schooling. He was available for questions.                                                                                   
Co-Chair  Wilson  indicated the  bill  would  be set  aside.                                                                    
Amendments were due Friday, April 29, 2019 by 5:00pm.                                                                           
HB  30  was   HEARD  and  HELD  in   committee  for  further                                                                    

Document Name Date/Time Subjects
AIE Comment Letter on HB 30.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Sectional Analysis 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Sponsor Statement 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Summary of Changes 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Supporting Document - Alaska Workers' Compensation Div. of Insurance 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Supporting Document - PPI by State 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030 Supporting Document - Similar Legislation 4.16.19.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030- supporting document- letter from Kevin Dougherty.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030- supporting document- letter from marianne burke.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030- supporting document letter of support AFL CIO.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
SB061_FishermensFund_Research_WhitePaper_ProgramSummary_29March2019.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
SB061_FishermensFund_SponsorStatement_27Feb2019.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
SB061_FishermensFund_SupportLetter_PSVOA_28Feb2019.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
SB061_FishermensFund_SupportLetter_SEAFA_02March2019.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
SB061_FishermensFund_SupportLetter_UFA_04March2019.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
SB061_FishermensFund_Sectional_VersionA.pdf HFIN 4/24/2019 1:30:00 PM
SB 61
HB 30 PowerPoint Presentation Finance updated.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB 30 AIE Comment Letter on HB 30.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB 30 Support AK Ironworkers .pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB 30 FN NEW DLWD WC.pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB 30 FY20 CORA Projection with HB30 Additional PPI Cost Estimate (004).pdf HFIN 4/24/2019 1:30:00 PM
HB 30
HB030- WC rate reduction per wage paid.pdf HFIN 4/24/2019 1:30:00 PM
HB 30