Legislature(2003 - 2004)
04/09/2003 01:40 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 164 - CLAIMS BY STATE-EMPLOYED SEAMEN Number 1423 CHAIR McGUIRE announced that the next order of business would be HOUSE BILL NO. 164, "An Act relating to the state's sovereign immunity for certain actions regarding injury, illness, or death of state-employed seamen and to workers' compensation coverage for those seamen; and providing for an effective date." Number 1509 TOM BRIGGS, Director, Marine Operations, Central Office, Alaska Marine Highway System (AMHS), Department of Transportation & Public Facilities (DOT&PF), said that the AMHS supports HB 164 because it feels that the bill benefits both the state and state-employed seamen. He offered that the Jones Act is intended to compensate seamen for illness or injury on long voyages away from home, and to protect them from the risk of abandonment. He opined, however, that AMHS employees do not face those same risks, since typical AMHS voyages last only one or two weeks and employees are never too far from home. MR. BRIGGS remarked HB 164 will have a fiscal impact on the AMHS because there are considerable general fund costs associated with the fact that the Jones Act is the exclusive remedy for AMHS employees. For example, the cost to the AMHS for unearned wages is approximately a quarter of million dollars. He noted that the provision in the union contract that allows for unearned wages to the exclusion of annual leave or sick leave was put there after the Alaska Supreme Court case, Dale Brown v. State & Div. of Marine Highway Systems. He opined that passage of HB 164 will increase the state's chances of being able to successfully negotiate the removal of this unearned wages provision. MR. BRIGGS pointed out that in 1983, the representative from the Inlandboatmen's Union of the Pacific (IBU) worked very hard, on behalf of state-employed seamen, to get the contract changed to allow for a workers' compensation remedy instead of a Jones Act remedy. On the issue of whether the Jones Act provides a better remedy, he relayed that he has been told of cases in which injured seamen have become destitute while waiting for resolution of their personal injury claims under the Jones Act. He said that the AMHS is satisfied that workers' compensation will adequately address maintenance and cure issues, and indicated that having a workers' compensation system in place will prevent frivolous lawsuits. MR. BRIGGS said the AMHS believes that seriously injured employees will have adequate occupational disability coverage via the Public Employees' Retirement System (PERS) and the Supplemental Benefits System (SBS). He mentioned that state- employed seamen are provided with retirement benefits and health care benefits, and opined that those seamen are not typically exposed to hazardous working conditions. He offered his belief that state-employed seamen face risks no greater than those faced by laborers, heavy equipment operators, and public safety personnel employed by the state. He said it is the AMHS's contention that passage of HB 164 will give adequate remedy to its employees, and asked that the bill be passed out of committee. Number 1784 REPRESENTATIVE GARA said he is troubled by the assertion that AMHS employees file more claims than other classes of state employees, because the statistics provided at the last hearing on HB 164 compared AMHS employees, who almost all do manual labor, with the types of state employees that don't do manual labor. He asked whether there are any statistics comparing AMHS employees with other state employees that do as much manual labor as those in the AMHS. MR. BRIGGS said he did not have such statistics at this time. In response to further questions, he said that although state employees who do manual labor might have a higher rate of claims than was illustrated in the aforementioned statistics for departments other than the AMHS, he did not think it would be as much as two and three times higher as is the case with the AMHS employees. He mentioned that when a seaman is sick or injured, in addition to paying that person unearned wages, there is also the cost of paying wages - sometimes overtime wages - to a replacement employee and providing transportation to and from the vessel. He said he suspected that if state-employed seamen had to use sick leave when ill rather than receiving unearned wages as they do now, there would be fewer claims filed. REPRESENTATIVE GARA asked Mr. Briggs whether, if given the time, he could provide a comparison using a group of workers who do manual labor similar to what is performed by state-employed seamen. He added that he would deem such a comparison relevant. MR. BRIGGS said he could, adding that he might also be able to provide information from the Washington state ferry system. REPRESENTATIVE GARA, turning to the governor's transmittal letter and its assertion that maritime law generates greater compensation awards, said he is troubled by the idea that they should change the law to reduce the compensation that injured workers get as a way to balance the budget. He asked Mr. Briggs to comment. MR. BRIGGS said he agreed: "You don't want to balance the budget on the back of the workers." But that's not the intent, he argued. "We believe, and I think this can be substantiated by talking to some of the seamen themselves, that there are instances, more regular instances, where a person is deprived of adequate compensation under the Jones Act remedy than they would have been under the [workers'] compensation," he stated. REPRESENTATIVE GARA said that according to his understanding, Mr. Tseu, Regional Director, Alaska Region, Inlandboatmen's Union of the Pacific (IBU) expressed concerns about HB 164 when he testified before the House Labor and Commerce Standing Committee. Number 2016 CHAIR McGUIRE announced that the hearing on HB 164 would be recessed in order to again take up HB 249. [The hearing on HB 164 was recessed until later in the meeting.] HB 164 - CLAIMS BY STATE-EMPLOYED SEAMEN Number 1757 CHAIR McGUIRE announced that the committee would resume the hearing on HOUSE BILL NO. 164, "An Act relating to the state's sovereign immunity for certain actions regarding injury, illness, or death of state-employed seamen and to workers' compensation coverage for those seamen; and providing for an effective date." Number 1720 J. LYNN MELIN, Port Captain, Central Offices, Alaska Marine Highway System, Department of Transportation & Public Facilities (DOT&PF), provided the following testimony: I have 20 years in the industry, approximately 11 of them offshore, sailing American ships, foreign ports. I'm a graduate of the United States Merchant Marine Academy [USMMA]; I hold an "Unlimited Masters/Oceans license - all tonnage, all oceans." In addition, I have an MBA [Master of Business Administration] from the University of Maryland. ... My purpose is twofold. One as a sailor. And one because of my observations as port captain within [the AMHS]. I've been here three and a half years; every injury and illness report that occurs aboard our vessels crosses my desk, and I read it. I also have some participation in pulling documents together, finding out what the injury was - illness is pretty self-explanatory - and we try to find the bottom line on what happened. I want to state straight up ... that I am where I am because of the Jones Act. The Jones Act has a definite place in our country. ... It's main intention with regard to personnel, in my opinion, is that it is for seamen who go offshore. If a seaman goes from Baltimore to Poland, or wherever he may go, and he breaks his leg, and he gets off the ship in Poland, it is the obligation of the employer to bring him back to the states. It is also the obligation of the employer to maintain his wages until his articles are closed - that ship returns back to the [U.S.]. I believe that that definition of taking care of seamen is appropriate; I think it's where it's supposed to be. That seaman has no other remedy. His only other remedy, other than the unearned wages or the wages that he earns 'til the ship gets to the U.S. port, is to sue. The company is not obligated to provide him any type of compensation, any type of sick leave, after that voyage ends. And I think that's where the Jones Act does play a role. What it does is, it gives that seaman the ability to go back to the company and say, "Because you are unseaworthy, because you have had problems with your work environment, you owe my for my broken leg; it was your fault." Number 1640 And that's where the seaman's remedy is: he sues, he goes to court, he gets his remedy and he gets it up front. The problem with this remedy is that ... he doesn't have any other compensation coming in while the court case is going through the courts. ... He doesn't have any unemployment; he doesn't have any [workers' compensation]. He may have some benefits from a union, but that is not a guarantee. His only compensation comes at the conclusion of that lawsuit, which is why, when you do have injuries that are substantial, that affect the man's or woman's working career, then those lawsuits should be substantial. They should be able to help him get through with his life, especially if his injury was caused by an unseaworthy condition. That is my understanding of the intent of seamen's injuries and illnesses within the Jones Act. MS. MELIN continued: Now, within [the AMHS], there ... are other compensations that [AMHS] employees receive. They receive sick leave - they earn it, it's part of ... our contractual obligation - and they also receive unearned wages to the end of the voyage. So if a seamen, in our case, broke a leg on day one of his voyage, he would get wages until the voyage ended - which in most cases in the Southeast are one to two weeks, and they go longer up in the Southwest system - ... [and] because it's a broken leg, he's probably out for five or six weeks or whatever the case may be, he then would be entitled to the sick leave that he has earned as employee to the State of Alaska. The question is, ... then is he entitled to additional compensation by suing the state ... because he broke a leg [by doing] ... whatever [he was doing when it] happened? ... The question is: Is it not enough to say that we do take care of our employees, that we do bring sick leave into effect, [that] we do want to bring [workers' compensation] into effect? We have cases within [the AMHS], one in particular, that the gentleman was practically destitute by the time his case closed. ... It took approximately four years for that case to come to a conclusion, and he was doing nothing in the meantime. So, the question is, where is the benefit? I'm not sure that the right to sue the employer is the answer. I think where our thoughts need to be, is, what does the person need - what does the employee need? And [workers' compensation] certainly seems to be able to handle that. Number 1460 MS. MELIN added: Now, ... what's the percentage of major injury? There has been one [case] since I've been here - I've been here three and a half years; I do not know where that [case] is. There have been a couple that have been brought up to me in the last ten years. Are they the exception? The answer is yes. Do we have the individuals onboard the ships that have injuries - slips and falls, sprain the wrists - get the flu? Do they need to be entitled to Jones Act compensation? I'm not sure. I think that they can be compensated with sick leave, that they can be compensated with [workers' compensation], and that we should look at it that way. Seamen who go offshore do not have sick leave. I sailed 11 years offshore. If I broke my leg the day before the ship got back to U.S. port, the next day I was done - I had no compensation coming to me - unless I sued the employer. However, if I was going away for a three-month trip, and I broke my leg on day two, I would be entitled to compensation for the next three months. That would give me time to heal, get back on my feet and get back to work. And that is the intent: for these people to get up, get going, and get back to work. Number 1372 JAMES P. JACOBSEN, Attorney at Law, Beard Stacey Trueb & Jacobsen, LLP, offered the following testimony: I would only make two really very brief points. Number one is [regarding] ... the statistics that Mr. Thompson [Director, Division of Risk Management, Department of Administration] provided to the committee [on 4/7/03]: I think there's been a misunderstanding between the committee and Mr. Thompson on those statistics. If I understood his testimony, there would have been about 340 Jones Act claims in the last two years, and Ms. Cox [Chief Assistant Attorney General, Civil Division (Juneau), Department of Law (DOL)] testified there are about 15 pending suits. It occurs to me that what Mr. Thompson stated were Jones Act claims were merely reports of accident or injury on the ship, rather than actual claims or cases in which monies were paid to a seaman pursuant to a legal judgment or pursuant to a settlement agreement. I would think that if you focus on the number of claims where there was a settlement agreement assigned or a judgment entered against the state, it occurs to me that you will find that probably the amount of claims is vastly diminished from what was represented in the statistics. And I will also say that the [AMHS] and [Ms. Melin] can testify to this too and confirm this. The state ferries are covered under the international safety management [ISM] code and they must have a safety management system [SMS] in place. And this system has applied to the ferries for the last three or four years, and it actually requires the reporting of all accidents, or injuries, to the management so that they can look into it and see how those can be avoided in the future. So, whether or not a seaman intends to file a Jones Act claim against his or her employer, they are still required, under the ISM and SMS, to report an accident so that the management can look into it. Number 1270 MR. JACOBSEN continued: The second point was the Director's [Mr. Briggs's] point about paying unearned wages to the end of the voyage. Changing this to workers' [compensation] is not going to change the liability at all to the [AMHS] on that because sick leave is, my understanding is, it's an unfunded obligation in that when a state employee retires, he or she gives up their sick leave compensation. And it's a use-it-or-lose-it [benefit], and, therefore, rather than just paying wages to the end of the voyage under the union contract ..., the [AMHS] will then be paying sick leave for those same days, and so it won't make any difference at all, I don't think, based on my understanding, as to what, ultimately, the [AMHS] will end up paying when a worker has to get off the vessel, whether they're sick or whether they're injured. REPRESENTATIVE GRUENBERG turned to page 1, line 12, which deletes the phrase "under this section". He said he is reluctant to remove that language. He asked why that language should be eliminated. Number 1124 SUSAN COX, Chief Assistant Attorney General, Civil Division (Juneau), Department of Law (DOL), offered two explanations for the deletion of that phrase. One, it clarifies that the retentions of immunity in AS 09.50.250(1)-(5) are not the exclusive expressions of immunity in statute. Two, it would preclude someone from making the argument that there is contradictory language elsewhere in statute. REPRESENTATIVE GARA asked whether the administration would be amenable to an amendment that would allow "both parties" to negotiate workers' compensation into the contract. Under such an amendment, if the parties don't agree to have workers' compensation apply, the Jones Act would still apply. MS. COX opined that the Alaska Supreme Court case, Dale Brown v. State & div. of Marine Highway Systems, determined that such provisions are void in the face of federal law. REPRESENTATIVE GARA observed, however, that the Dale Brown decision simply says that absent an expression of legislative intent, the Jones Act applies and that the legislature can change that situation if it so chooses. The legislature, he surmised, could make a statutory change to the effect that workers' compensation laws apply if the parties agree to it. MS. COX acknowledged that such an option, if placed in AS 09.50.250, might be possible. In response to further questions, she mentioned that although railroad workers throughout the country are ordinarily covered by the Federal Employers' Liability Act (FELA) - which is incorporated by reference into the Jones Act - Alaska Railroad employees are not; instead, the Alaska workers' compensation law covers those employees. REPRESENTATIVE GARA asked whether there are any other seamen in Alaska who are not subject to the Jones Act. MS. COX said no; in Alaska, the people who actually qualify as seamen under the Jones Act have only that as their remedy. She mentioned, however, that there are "seamen in other states, who are employed by other states," who have workers' compensation remedies instead of Jones Act remedies. Number 0565 REPRESENTATIVE GRUENBERG mentioned that there are historical reasons, having to do with protecting wards of the admiralty, for the development of the Jones Act. MS. COX agreed, but mentioned that the working conditions of state-employed seamen today are quite different, as are their benefits. REPRESENTATIVE GRUENBERG spoke in favor of the aforementioned suggested amendment regarding allowing parties to negotiate which remedy will apply. He asked whether other states have "allowed this to be the subject of collective bargaining." MS. COX mentioned that the dissenting opinion in the Dale Brown decision said that the majority had ignored the labor law across the country and that this really was an area in which the unions could collectively bargain. She noted, however, that she did not know whether there were any case citations associated with that dissenting opinion, or whether the subject of the collective bargaining spoken of related to workers' compensation remedies versus Jones Act and other maritime remedies. REPRESENTATIVE GRUENBERG suggested that perhaps the aforementioned amendment could be crafted to include the phrase, "to the extent allowed by federal law". MS. COX pointed out, however, that the point of HB 164 is to say, "we're not doing it under vestiges of federal law." Thus, "we'd have to be doing it through the vehicle of AS 09.50.250 in order for this to be operative," she added, because, outside of the state's waiver of sovereign immunity, the state is not allowed to bargain "this kind of substitution" with its unions. REPRESENTATIVE GRUENBERG surmised, then, that "if we waive sovereign immunity, we could." MS. COX replied, "That's the theory." Number 0305 KEVIN JARDELL, Assistant Commissioner, Office of the Commissioner, Department of Administration, said that the administration would be opposed to Representative Gara's suggestion. He said the administration views the decision to have workers' compensation apply to state-employed seamen as a policy call, the same type of policy call made for law enforcement officers who also work in dangerous situations. He added that if workers' compensation is not fairly compensating state employees, then that would be a different policy call and a different bill. He opined, however, that it is the administration's position that employees are "well taken care of and well cared for" under workers' compensation, and is therefore the policy that the administration has elected to pursue. "We think it's better for the vast majority if not all of the employees; we think it's better for [DOT&PF]; we think it's better for the state," he added. He also opined that there is still the question [even with a statutory change] of whether a union can bargain away its members' "rights of litigation." MR. JARDELL, in response to a question, said that he did not have any case law to support his position on the suggested change; rather, it is just his instinct that the courts would still reject a collective bargaining agreement on this issue. He said it is the administration's strong belief that policy dictates that workers' compensation is the better remedy for the employees. REPRESENTATIVE GARA indicated that although he respects that the administration is making a policy decision, he can't accept that it is the administration's position to decide which remedy is better for workers. "I'd like to hear from the workers themselves," he qualified. With regard to the issue of whether his suggested change would present a legal problem, he opined: If the Alaska Supreme Court says, "The Jones Act can apply," and if the Alaska Supreme Court says, "The workers' [compensation] law can apply," then the Alaska Supreme Court would say that you can come up with a contract that lets either of those laws, that they've said can apply, apply. So, if they've said that either of those can apply, they would respect a contract that picked which one of those laws should apply. There's no doubt in my mind. If you come up with legal precedent to support your position, I'd like to see it, but I just can't accept the legal interpretation that you've [offered as a basis to reject this amendment. If it's researched, I can accept it; if it's instinctive, I can't accept it.] [The preceding bracketed portion was taken from the Gavel to Gavel recording on the Internet.] TAPE 03-35, SIDE A Number 0041 REPRESENTATIVE GARA made a motion to adopt Conceptual Amendment 1, which read [original punctuation provided]: - Allow parties to negotiate to be covered by Wkrs comp law. But don't mandate it. With no agreement, the Jones Act will apply. Number 0052 CHAIR McGUIRE objected. MR. JARDELL reiterated that he doesn't know whether the court would view that as an individual right and one that can be waived by the union. He said that "it" causes him concern. He relayed that there are five separate bargaining units that "deal with" seamen. He said, "Bargaining over, 'We will give you 50 more dollars if you waive your rights to Jones Act compensation,' isn't the type of policy call that the administration believes is a good one." He again said that the administration believes that workers' compensation provides a fair remedy, adding that if such is not the case, either the legislature or the governor should revisit the issue to ensure that it does provide an adequate remedy for all state employees. REPRESENTATIVE GARA opined that contrary to how such might sound, the latter portion of Mr. Jardell's statement is not really an open invitation to change the current workers' compensation laws. Speaking in favor of Conceptual Amendment 1, he said: Here's what I know is clear. If you suffer a substantial injury, you're entitled to full compensation under the Jones Act. If you suffer a substantial injury, you're entitled to partial wage compensation and then very partial compensation for physical injury under the workers' [compensation] statute. That is the reason for the statement by the administration in its letter recommending that we adopt this bill change; it's the reason for their statement that under existing law, the existing law results in ... "significantly greater compensation awards to injured employees." It's just not an issue that's debatable. That's why many employers like the workers' [compensation] system better, because awards are limited. There are benefits to the workers' [compensation] system; there are detriments to the workers' [compensation] system. The detriment is that your whole body is valued at $170,000 and, depending on whether you've lost 100 percent of your body or just 50 percent or 25 percent, you get a portion of that $177,000 to compensate you for your loss of your ability to fish, your loss of your ability to hike, your loss of your ability to swing a child around, your loss of your ability to do anything with your family. It values all of that, apart from the wage claim and the medical costs claim, all of that at a portion of $170,000. Number 0365 REPRESENTATIVE GARA added: I think there are serious problems with the workers' compensation statute. I think that it is a false choice to say, "Put workers in the workers' [compensation] statute now, which pays limited compensation, and then later on consider whether or not you want to change it." We know what kind of system this bill is asking us to put workers in. I think it presents problems. I don't want to balance the budget on the backs of workers; I don't want to balance the budget by taking away workers rights to receive full compensation. For now, I ... will entertain comments from the unions that are affected, before this reaches the floor. But I think it is fair to give people the choice which law they want to apply: the law that saves the state money, which is the workers' [compensation] law - I think we all agree that the workers' [compensation] law would save the state money; that's the reason for the bill - or existing law. Let it be negotiated. We know in the '80s, the workers' [compensation] law was at the point and compensated at a level that unions didn't mind being covered by it. I suspect that the workers' [compensation] law is far less generous today than it was 15 years ago from the perspective of injured workers. They might want to negotiate it into their contracts; they might not. But I think we should leave it as a matter of free choice. I don't think if workers don't want this law to apply to them, I don't think we should force them to have a law they don't want to apply, to apply. I don't think we should take rights away that workers don't want give up, in order to balance the budget. So, this amendment that I present probably will save the administration money; ... it will in those cases where the workers' [compensation] law is negotiated into a contract. It won't where it's not. But I see this as an issue of fairness and not a way to solve the state's budget woes. CHAIR McGUIRE relayed that according to conversations she's had with the representative from the Inlandboatmen's Union of the Pacific (IBU), although there is mixed opinion among members of the IBU, "it appears to be the belief of the general population of workers that more of them would benefit under the no-fault- based workers' [compensation] system, whereby you're guaranteed instant compensation for your illness and without a statute of limitations." She reminded members that under the Jones Act, a seaman must bring a suit, which must find fault, and that there is a statute of limitations. She suggested that while one of the goals of HB 164 is to save money, another goal is to compensate a higher percentage of seamen more certainly. Number 0572 A roll call vote was taken. Representatives Gara and Gruenberg voted in favor of Conceptual Amendment 1. Representatives Ogg, Holm, Samuels, and McGuire voted against it. Therefore, Conceptual Amendment 1 failed by a vote of 2-4. Number 0619 REPRESENTATIVE SAMUELS moved to report HB 164 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 164 was reported from the House Judiciary Standing Committee.
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