Legislature(2019 - 2020)ADAMS 519

03/05/2020 01:30 PM FINANCE

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Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
Heard & Held
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."                                                                                                           
2:00:24 PM                                                                                                                    
Co-Chair Johnston invited the bill sponsor to the table.                                                                        
REPRESENTATIVE ANDY  JOSEPHSON, SPONSOR, asked if  the chair                                                                    
wanted  a  reintroduction  to the  bill.  Co-Chair  Johnston                                                                    
responded in the affirmative.                                                                                                   
Representative Josephson  explained that  when a  person was                                                                    
partially injured at work, a  doctor declared whether or not                                                                    
they had a degree of  disability. Sometimes a disability was                                                                    
obvious  to  the  eye  and,   sometimes  further  study  was                                                                    
necessary.  For   example,  a  back  injury   might  require                                                                    
additional  assessment. The  state  had a  permanent-partial                                                                    
impairment  (PPI) rating  and a  whole-body multiplier.  The                                                                    
bill changed  the whole-body multiplier  which had  not been                                                                    
adjusted in  20 years. Alaska  ranked between 40th  and 50th                                                                    
place amongst the 50 states  in terms of impairment ratings.                                                                    
The legislation  would result  in Alaska  moving up  to 26th                                                                    
place in  ranking in the  United States. The bill  deleted a                                                                    
category of  death benefit for  the single  childless worker                                                                    
and  replaced it  with a  requirement that  a new  worker in                                                                    
Alaska  received  notice   of  their  Worker's  Compensation                                                                    
benefits.  The bill  was  designed to  put  people who  were                                                                    
single  and childless  on  notice that  they  might want  to                                                                    
purchase life  insurance, as there  was no remedy  for their                                                                    
family if they were to pass away.                                                                                               
Representative Josephson  indicated the bill made  one other                                                                    
provision  change for  a child  whose parent  died at  work.                                                                    
Currently, the child would have  4 years of medical coverage                                                                    
through Worker's  Compensation beginning  at age 19  as long                                                                    
as they  were enrolled  at a  vocational school  or college.                                                                    
The bill removed  the provision of having to  be enrolled in                                                                    
school. He provided a couple  of examples. He suggested that                                                                    
by removing  the school stipulation, the  provision was more                                                                    
equitable because it captured  all different kinds of people                                                                    
between the ages of 19 and 23.                                                                                                  
2:04:55 PM                                                                                                                    
Representative  Wool asked  if  the purpose  of the  initial                                                                    
provision  was to  help  a person  up to  23  years of  age,                                                                    
essentially a  dependent, while  they were  attending school                                                                    
and  not  earning   money.  He  wondered  if   there  was  a                                                                    
distinction between a  person in school and a  person in the                                                                    
workforce relating to their status as a dependent.                                                                              
Representative  Josephson  indicated  that the  language  in                                                                    
AS 23.33.95  was odd  and, he  was not  suggesting making  a                                                                    
change to it.  However, the way the statute  was written, it                                                                    
seemed to infer  that a dependent could be 40  years old. If                                                                    
their 65-year-old father died in  the workplace because of a                                                                    
work-related  accident,  they  could  be  eligible  for  the                                                                    
benefit. However,  the language  suggested the  survivor had                                                                    
to be  enrolled in  school at the  moment of  their parent's                                                                    
death. Instead of making a  change to the language, the bill                                                                    
was  stipulating that  the benefit  would be  available from                                                                    
ages 19-23.                                                                                                                     
Representative   Wool  asked   for  clarification   about  a                                                                    
40-year-old  dependent who  lived  with  their parents,  and                                                                    
could  not  live  on  their  own.  Representative  Josephson                                                                    
reminded  members they  were referring  to  current law.  He                                                                    
opined  that it  did not  require  that a  person live  with                                                                    
their parent. However,  he agreed that there  was a category                                                                    
of  dependents who  were  either  cognitively or  physically                                                                    
disabled  and could  receive their  weekly  allowance for  a                                                                    
significant amount of  time. It would remain  the same under                                                                    
the legislation.                                                                                                                
Vice-Chair Ortiz  recalled the  bill sponsor  reporting that                                                                    
the passage of the bill would  place Alaska in the middle of                                                                    
the  ranking   of  the  rest   of  the  United   States  for                                                                    
compensation for death.                                                                                                         
Representative Josephson  responded that he was  not talking                                                                    
about compensation for death,  which was a different matter.                                                                    
The  bill was  talking  about compensation  for a  permanent                                                                    
injury.  He  reported  that  the  Department  of  Labor  and                                                                    
Workforce Development  (DOL) two  years prior  reported that                                                                    
for the  loss of an  arm from  the shoulder down  Alaska was                                                                    
32nd in  payment rankings. He  furthered that  Alaska ranked                                                                    
33rd in  compensation for the  loss of  a hip, 35th  for the                                                                    
loss of  an eye, 33rd  for the loss  of an ear.  He believed                                                                    
Alaska's rankings were worse because  there were about 10 or                                                                    
11 states that  had a different way of  calculating loss. He                                                                    
referred to an  information sheet which he held  up from DOL                                                                    
that showed the  loss of 1 eye  at work   Alaska  was not on                                                                    
the page.  The page had to  be flipped to find  Alaska. If a                                                                    
person  lost  an  eye  at work  in  Maryland,  the  Worker's                                                                    
Compensation Plan would pay just  over $250,000. If a person                                                                    
were  to  lose their  eye  at  work  in Alaska,  they  would                                                                    
receive $44,000 or  less than 20 percent of  what they would                                                                    
receive in Maryland.                                                                                                            
ELISE  SORUM-BIRK,  STAFF,  REPRESENTATIVE  ANDY  JOSEPHSON,                                                                    
noted the number used in the bill was based on inflation.                                                                       
Co-Chair  Johnston  invited  Mr.  Mitchell  to  discuss  the                                                                    
fiscal notes.                                                                                                                   
2:10:14 PM                                                                                                                    
GREY MITCHELL, DIRECTOR,  DIVISION OF WORKERS' COMPENSATION,                                                                    
DEPARTMENT   OF  LABOR   AND   WORKFORCE  DEVELOPMENT   (via                                                                    
teleconference), relayed  that the  department had  2 fiscal                                                                    
notes.  The  first  dealt  with  the  Worker's  Compensation                                                                    
component. The  fiscal note  illustrated a  revenue increase                                                                    
associated with increasing  the permanent-partial impairment                                                                    
benefits. The revenue increase was  estimated to be $110,000                                                                    
per year. The fiscal note  showed an increase of $55,000 for                                                                    
FY  21 and  an  increase of  $110,000 per  year  from FY  22                                                                    
through  FY  26.  The  amount  was based  on  a  44  percent                                                                    
increase in PPI benefits. He  elaborated that the reason the                                                                    
revenue increased to  the division was because  there were 2                                                                    
taxes.  The  first tax  was  collected  by the  Division  of                                                                    
Insurance  on  all  premiums  issued.  The  increase  of  44                                                                    
percent was expected to increase  premiums in a like amount.                                                                    
The other revenue  source was a service fee  placed on self-                                                                    
insured  employers such  as the  State of  Alaska and  other                                                                    
large employers  that had the resources  to self-insure. The                                                                    
insurers  were  required  to  pay   2  percent  of  all  the                                                                    
indemnity benefits they paid out over the year.                                                                                 
Mr.  Mitchell reviewed  the second  fiscal note  which dealt                                                                    
with the  Second Injury  Fund. He  explained that  in Alaska                                                                    
there  was a  fund that  paid benefits  for workers  who had                                                                    
pre-existing conditions and who  had claims that met certain                                                                    
conditions.  In  order  to  pay the  claims,  there  was  an                                                                    
assessment  against of  all of  the indemnity  benefits that                                                                    
were paid  out over  a year by  all employers.  He expounded                                                                    
that the  assessment was based  on the amount of  revenue in                                                                    
the account at  a given time over the year.  The claims that                                                                    
were charged against the account  determined a reserve rate.                                                                    
He reported  in the previous  year the reserve rate  was set                                                                    
at  5  percent.  He  suggested  that  for  every  dollar  of                                                                    
indemnity  benefit  payment,  an employer  was  required  to                                                                    
submit 5  percent to  the Second  Injury Fund.  The increase                                                                    
was based on  an estimate of an increase of  $4.2 million in                                                                    
indemnity payments.  He continued that the  amount was based                                                                    
on indemnity payments  that were made in  2018 multiplied by                                                                    
44  percent.  The  estimated  amount  of  the  increase  was                                                                    
$105,000 in FY  21 and $210,000 each year for  FY 22 through                                                                    
FY 26.                                                                                                                          
2:14:52 PM                                                                                                                    
Representative Wool referred to  language on the second page                                                                    
of the fiscal note which stated:                                                                                                
     "Studies  indicate that  significant benefit  increases                                                                    
     are  typically  accompanied   by  changes  in  claimant                                                                    
     behavior. Changes in claimant  behavior might result in                                                                    
     an increased number of PPI claims."                                                                                        
Representative Wool  asked if more  people would  claim they                                                                    
lost their eye because  they would receive additional money.                                                                    
He did not  see how extra claims would  result. He suggested                                                                    
the loss of a limb would be difficult to fake.                                                                                  
Mr. Mitchell responded  that Representative Wool's statement                                                                    
was  true. The  National Council  of Compensation  Insurance                                                                    
(NCCI)  had  done  an  extensive  evaluation  based  on  the                                                                    
previous year's  version of HB  30. The language was  in the                                                                    
previous  year's analysis.  He suggested  that changing  the                                                                    
benefits to  such a  large amount, 44  percent, in  a single                                                                    
year   might  influence   claimant   behavior.   It  was   a                                                                    
consideration. He agreed that no  one would fake the loss of                                                                    
an eye  or a  similar injury. He  reported that  because the                                                                    
language  was included  in the  NCCI analysis,  the division                                                                    
included it in the fiscal note explanation.                                                                                     
Representative Wool just wanted to point it out.                                                                                
Mr.  Mitchell  clarified  that Mr.  Jordan  had  a  separate                                                                    
fiscal  note  from  the   Department  of  Administration  to                                                                    
review. The  fiscal note  showed the  effect the  bill would                                                                    
have on an  employer. The note showed the cost  to the state                                                                    
related to increasing the PPI benefit amount.                                                                                   
2:17:11 PM                                                                                                                    
SCOTT  JORDAN,   DIRECTOR,  DIVISION  OF   RISK  MANAGEMENT,                                                                    
DEPARTMENT    OF   ADMINISTRATION,    reported   that    the                                                                    
department's fiscal  note reflected the 44  percent increase                                                                    
on what  the state paid out  for the PPI rating.  The fiscal                                                                    
note reflected a  10-year average of what it  paid out which                                                                    
was $979,286  per year. The amount  fluctuated from year-to-                                                                    
year.  He  continued  that the  44  percent  increase  would                                                                    
increase the  amount by $434,313  and the fee  that Director                                                                    
Mitchell had  mentioned was also  included for  $26,059. The                                                                    
fiscal note  for FY 21  was half  of the amount  because the                                                                    
effective date  would be  half of the  year or  $230,200. In                                                                    
the out years  from FY 22 through FY 26  the amount would be                                                                    
$460,400 per year.                                                                                                              
Representative  Josephson  wanted  to   see  a  fiscal  note                                                                    
because the point of the bill was to provide more benefit.                                                                      
He  noted that  in the  Worker's Compensation  Annual Report                                                                    
from 2018  showed total compensation payments  statewide had                                                                    
decreased  from $292  million  in 2015  to  $225 million  in                                                                    
2018.  He  was  unclear  the  reason  for  the  change.  The                                                                    
decrease  was about  $70 million  in  indemnity and  medical                                                                    
benefit payments.                                                                                                               
Co-Chair  Johnston  reported  the  amendments  were  due  by                                                                    
March 9, 2020  at 5:00  PM. She relayed  the agenda  for the                                                                    
following day.                                                                                                                  
HB  30  was   HEARD  and  HELD  in   committee  for  further                                                                    

Document Name Date/Time Subjects
HB 127 Dental Health Provider Shortage Areas 3.3.2020.pdf HFIN 3/5/2020 1:30:00 PM
HB 127
HB127 Letters of Support 05.01.19.pdf HFIN 3/5/2020 1:30:00 PM
HB 127
HB 127 Response to Qusestions HFIN 3.3.2020.pdf HFIN 3/5/2020 1:30:00 PM
HB 127
HB 182 ANDVSA Letter of Support.pdf HFIN 3/5/2020 1:30:00 PM
HB 182
HB 182 RAINN 2.27.20.pdf HFIN 3/5/2020 1:30:00 PM
HB 182