Legislature(2003 - 2004)
02/11/2004 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 450-INSURANCE & WORKERS' COMPENSATION SYSTEM CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 450, "An Act providing for a special deposit for workers' compensation insurers; relating to the board of governors of the Alaska Insurance Guaranty Association; relating to covered workers' compensation claims paid by the Alaska Insurance Guaranty Association; stating the intent of the legislature, and setting out limitations, concerning the interpretation, construction, and implementation of workers' compensation laws; relating to restructuring the Alaska workers' compensation system; eliminating the Alaska Workers' Compensation Board; establishing a proposed Division of Workers' Compensation within the Department of Labor and Workforce Development and assigning certain Alaska Workers' Compensation Board functions to the division and the Department of Labor and Workforce Development; establishing a Workers' Compensation Appeals Commission; assigning certain functions of the Alaska Workers' Compensation Board to the Workers' Compensation Appeals Commission; relating to agreements that discharge workers' compensation liability; providing for hearing officers in workers' compensation proceedings; relating to workers' compensation awards; relating to an employer's failure to insure and keep insured or provide security; providing for appeals from compensation orders; relating to workers' compensation proceedings; providing for supreme court jurisdiction of appeals from the Workers' Compensation Appeals Commission; providing for a maximum amount for the cost-of- living adjustment for workers' compensation benefits; providing for administrative penalties for employers uninsured or without adequate security for workers' compensation; relating to assigned risk pools and insurers; and providing for an effective date." Number 0271 PAUL LISANKIE, Director, Division of Workers' Compensation, Department of Labor and Workforce Development, presented the bill, noting that he would focus on the areas that impact the Alaska Workers' Compensation Act and would defer to Linda Hall [director of the Division of Insurance, Department of Community & Economic Development] on portions that address insurance issues. He said he'd focus on three primary goals. MR. LISANKIE pointed out that although he'd previously advised the committee that there wouldn't be any change in benefits now payable under the Alaska Workers' Compensation Act, he would clarify one minor change to this statement later in his testimony. Number 0172 MR. LISANKIE said, second, this bill would formally establish a Division of Workers' Compensation and a position of director of workers' compensation. He holds this position, he noted, although no authority in the Alaska Workers' Compensation Act established this position or gave it particular oversight authorities for the workers' compensation program. He related that most responsibilities of the program aren't in the hands of the Alaska Workers' Compensation Board; there are a number of things the division director and the division do to implement the board's powers. This bill would formally establish the position and give the director responsibility over a number of areas that are, right now, formally in the hands of the Alaska Workers' Compensation Board. MR. LISANKIE informed the committee that, third, this bill attempts to reorganize and streamline the process of resolving disputed benefit claims, and to do the same to the initial appeal process for those disputes. This would result in a speedier decision-making process, and more consistent and predictable decisions. The overall goal is to have a more stable insurance environment in terms of the insurance market. This bill would help do that by invoking a new Workers' Compensation Appeals Commission, which would replace the current Alaska Workers' Compensation Board. TAPE 04-12, SIDE A Number 0032 MR. LISANKIE explained that most changes in the bill implement provisions that would replace the Alaska Workers' Compensation Board with this new commission and with new hearing officers and a new formalized division and director of workers' compensation. He pointed out that the sectional analysis shows a reassignment of functions that already exist in the Alaska Workers' Compensation Act. Because there are a multitude of references to the board in the current Act, changing the board necessitates a lengthy bill. MR. LISANKIE referred to the change in the bill that would impact benefits. He explained that, currently, weekly compensation benefits are paid at a certain basic rate. If someone moves to a different locality outside of Alaska, the division "is tasked with having a company that calculates cost- of-living differences between Alaska - I believe it's keyed to Anchorage - and to wherever the residency of this person is now." Number 0190 MR. LISANKIE referred to Section 86, which proposes putting a cap on any cost-of-living adjustments that go up. The cap would be based on the in-state rate. There would be a comparison of the cost of living in the new area of residence with the cost of living in Alaska. The result would be that no one would get a compensation rate exceeding what is paid to a resident of Alaska. He informed the committee that this was the only change to the benefit package in any of the 58 pages of the bill. MR. LISANKIE explained that Section 10 establishes a director of the Division of Workers' Compensation and outlines the director's responsibilities. The director would be responsible to the commissioner of the Department of Labor and Workforce Development for the overall execution of the duties and responsibilities of the Alaska Workers' Compensation Act and also would be responsible for adopting regulations to implement the Act. Number 0491 MR. LISANKIE pointed out his division's ongoing efforts to stop uninsured employers from operating without the required insurance. Currently, a statute in the Alaska Workers' Compensation Act requires that all employers either self-insure or, more commonly, get insurance coverage through an insurer that's approved for writing workers' compensation liability insurance in Alaska. There is an issue when employers fail their responsibilities to keep insured. MR. LISANKIE reported that, at present, there is a criminal provision that is rarely invoked because of its requirements to get a criminal prosecution. There is also a more commonly invoked provision whereby the investigator locates an employer that is knowingly operating without the required insurance, gives an accusation, and calls the employer in front of the Alaska Workers' Compensation Board to answer. He described two common outcomes. The employer admits to being previously uninsured and having employees, but no longer is in operation. This circumvents a stop-work penalty from being effective. More commonly, the employer admits to being previously uninsured, but is currently insured. Again, there is no reason to invoke a stop-work order, since the employer is now properly insured. Number 0544 MR. LISANKIE surmised that the new provision would give a powerful new tool to the division to pursue uninsured employers by imposing a fine of up to $100 a day for each uninsured employee. He found 180 employers that were proven to be operating without insurance listed in the last annual report, he said. The total number of employees that received coverage as a result was 2,000. He projected that if this penalty were put in place, it could result in substantial revenue. He noted that the primary goal would be to support a zero-tolerance policy. He continued: We're very concerned because the absence of insurance means that the employer is putting their employees at ... physical risk that they may not be able to get medical benefits if they are hurt, and financial risk if they don't get the time-loss benefits that they are entitled to if they get hurt. And the employer that goes uninsured is also gaining an unfair competitive advantage over ... other law-abiding employers in the state. Number 0654 REPRESENTATIVE CRAWFORD asked Mr. Lisankie if he was aware of the committee bill in process that would require owner-operators to provide workers' compensation insurance. He explained, "Because of the fact that many times an owner-operator becomes injured, and then it goes back on the general contractor to provide insurance for that sub[contractor], wouldn't it be a good place to insert that into this bill, rather than take our whole bill through the process, so that more people get covered by workers' compensation insurance?" MR. LISANKIE noted that he was aware of that bill and that it was possible it could be combined. He reiterated that the current Alaska Workers' Compensation Board would be replaced by a Workers' Compensation Appeals Commission. After the current board hears disputed claims, they are initially appealed to the superior court. He said the new commission would replace the superior court as the site of that initial appeal. It would also employ hearing officers to do the initial decision making that is currently done by the board hearing panel. He gave the reasoning, saying the Alaska Workers' Compensation Act was amended at least twice, in 1988 and 2001. He explained: The statutory intent language called for interpretation of the Act to ensure quick, efficient, fair, and predictable delivery of benefits to injured workers, at reasonable cost to employers. This is designed to address those concerns of fairness and predictability. The problem, very quickly, is that there are ... many hearing panels, because they are consisting of two lay board members and a hearing officer. Currently, we have eight authorized hearing officers, but we only have six [positions] that are actually filled. ... [If HB 450 passes into law] the commission would hear the appeal and instead of the board hearing panel, there would just be a hearing officer that would do that initial claim. It would go to the appeal's commission, which would be made up of three commissioners who are appointed by the governor, confirmed by the legislature, based on their experience and expertise in workers' compensation law. ... The final stage would continue to be the Alaska Supreme Court, as it is now. Number 0904 REPRESENTATIVE CRAWFORD asked who would pay the bill for an injured worker who wanted to take a claim through the appeals process all the way to the supreme court. MR. LISANKIE replied that the employee, the injured worker, has the primary responsibility to pay throughout the appeal process; if the employee wins and has an attorney, then the attorney fees and costs are paid typically by the insurer. REPRESENTATIVE CRAWFORD asked for clarification: So rather than going through this board, where you have multiple voices, you would just have one voice that could be slanted either way. And then, from that point forward, you have to pay your own bills. So that would preclude any injured worker that I know from being able to "take it home" past that. I know ... when I was injured, on workers' comp, I had to go back to work way before I was healed because I couldn't afford to live on the $259 a week that I was getting. I couldn't even walk right when I went back out on a construction site. So how in the world would I be able to pay for a lawyer to appeal it? Number 1000 CHAIR ANDERSON asked what the current scenario is when a worker is injured in terms of payment of fees. MR. LISANKIE replied: Right now there ... is a provision that ... if you get an attorney, your attorney works on a contingency [fee basis], and if you prevail, then your insurer is ... ordered to pay. ... Under this new bill, if the ... injured worker is not represented by counsel and they are dissatisfied with the decision from the hearing officer, the director of the division ... would be empowered to file an appeal on their behalf. ... So, that would actually be an improvement as far as that goes. That is going somewhat in the direction of getting representation without having to pay for it. REPRESENTATIVE GATTO commented that "empowered is not required." He asked whether that is correct. MR. LISANKIE replied that he didn't want to comment in case he would mislead the committee. Number 1113 CHAIR ANDERSON announced that public testimony would remain open and that HB 450 would be held over.
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