03/03/2021 05:45 PM House LABOR & COMMERCE

        HB  30-WORKERS' COMP: DEATH; PERM PARTIAL IMPAIR                                                                    
                                                                                                                                
6:44:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ announced  that  the next  order of  business                                                               
would  be HOUSE  BILL  NO.  30, "An  Act  relating  to notice  of                                                               
workers' compensation death benefits;  relating to the payment of                                                               
workers' compensation  benefits in the case  of permanent partial                                                               
impairment;  relating to  the  payment  of workers'  compensation                                                               
death benefits; and providing for an effective date."                                                                           
                                                                                                                                
6:44:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDY  JOSEPHSON,  Alaska  State  Legislature,  as                                                               
prime  sponsor, presented  HB 30.   He  stated that  the proposed                                                               
bill is fairly straightforward.   He shared that the catalyst for                                                               
the bill originally was his learning  about a young woman who had                                                               
died in  an electrical  accident, and  since she  did not  have a                                                               
spouse or have  children, there was no one to  sue on her behalf.                                                               
He  explained  that there  was  no  workers' compensation  remedy                                                               
under  title  AS 23.    This  situation  made him  interested  in                                                               
worker's  compensation and  researching AS  23.   He shared  that                                                               
when he  began investigating  this seven or  eight years  ago, he                                                               
discovered that Alaska's permanent  partial impairment rating had                                                               
not been updated  since the year 2000, and it  still has not been                                                               
updated  to this  day.   He  explained that  a permanent  partial                                                               
impairment rating  refers to situations  in which a  person lives                                                               
through an injury,  but has a permanent disability  rating due to                                                               
a body part  no longer functioning properly  because of permanent                                                               
injuries sustained from the accident.                                                                                           
                                                                                                                                
REPRESENTATIVE  JOSEPHSON continued  by sharing  the formula  for                                                               
what  he  referred  to  as  the  "whole  body  number"  which  is                                                               
multiplied by the  percentage of disability.  He  cited Section 2                                                               
of HB 30 on page 2:                                                                                                             
                                                                                                                                
     * Sec. 2. AS 23.30.190(a) is amended to read:                                                                            
                (a)  In   case  of  impairment   partial  in                                                                    
     character but  permanent in quality, and  not resulting                                                                    
     in  permanent  total  disability, the  compensation  is                                                                    
     $273,000   [$177,000]multiplied   by   the   employee's                                                                
     percentage  of   permanent  impairment  of   the  whole                                                                    
     person. The  percentage of permanent impairment  of the                                                                    
     whole  person is  the percentage  of impairment  to the                                                                    
     particular body part, system,  or function converted to                                                                    
     the  percentage of  impairment to  the whole  person as                                                                    
     provided under  (b) of  this section.  The compensation                                                                    
     is payable  in a single  lump sum, except  as otherwise                                                                    
     provided in AS 23.30.041,  but the compensation may not                                                                    
     be discounted for any present value considerations.                                                                        
                                                                                                                                
REPRESENTATIVE JOSEPHSON shared that  the impact of amending this                                                               
legislation is  that Alaska would  move from "something  like the                                                               
forty-fifth  [most   generous]  state"   in  terms   of  workers'                                                               
compensation, with  only four states  less generous  than Alaska,                                                               
"to  the  middle of  the  pack."    He  reiterated that  the  key                                                               
component of the bill is to update permanent partial impairment.                                                                
                                                                                                                                
6:48:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   explained  that  he   had  originally                                                               
proposed  a  death  benefit  to  be  included  in  the  bill  for                                                               
individuals  such  as the  previously  mentioned  woman who  died                                                               
childless and  without a spouse;  however, that addition  was met                                                               
with objection during  the drafting of the bill  and was removed.                                                               
He  emphasized that  the bill  in  its current  state is  "almost                                                               
strictly" an  inflation adjustment  that updates  various numbers                                                               
in  workers' compensation  law.   He noted  that he  said "almost                                                               
strictly" because  the bill also creates  notice requirements for                                                               
death  benefits and  also for  the process  of getting  grievance                                                               
counseling.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOSEPHSON continued  that the  theory behind  the                                                               
bill is  the following:   if an unmarried and  childless 18-year-                                                               
old person died on a  construction worksite, the person's parents                                                               
would  have no  remedy  to the  individual's  death because  they                                                               
couldn't sue in  personal injury.  He shared  his thought process                                                               
that  the employer  should notify  their employees  that workers'                                                               
compensation  will  not  provide  anything in  the  case  of  the                                                               
employees'  death,  and  that  the   employees  should  get  life                                                               
insurance to be fully covered.                                                                                                  
                                                                                                                                
REPRESENTATIVE JOSEPHSON  directed attention to  page 3 of  HB 30                                                               
and shared that the bill  would update funeral costs from $10,000                                                               
to $12,000.   It  would also  update an  amendment that  was last                                                               
adjusted in 1968 by increasing  compensation for individuals that                                                               
were dependent upon a deceased  individual, but do not qualify as                                                               
direct descendants, from $20,000 to $150,000.                                                                                   
                                                                                                                                
6:50:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON then directed  attention to Section 5 of                                                               
the bill.   He  said currently  when a parent  dies and  leaves a                                                               
child with  no other parent  providing for the child,  under law,                                                               
the  child would  receive workers'  compensation benefits  though                                                               
age 19  and then  would get  benefits for  another four  years if                                                               
attending vocational  school or college.   Under Section  5, that                                                               
benefit would extend to individuals  who might be in the military                                                               
instead of vocational school or college.   He added that the bill                                                               
has two fiscal notes, which net  out to around $270,000 as a cost                                                               
to the state.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON concluded  that his  office received  a                                                               
letter from  the Alaska Municipal  League (AML) in  opposition to                                                               
the  bill; however,  he  noted  that the  last  paragraph of  the                                                               
letter states  that the  key feature of  the bill,  the permanent                                                               
partial impairment rating, should be  changed.  Not only that, he                                                               
added, but the letter states  that the rating should be inflation                                                               
proof, which is a suggestion that  is more extensive than what is                                                               
being proposed under HB 30.                                                                                                     
                                                                                                                                
6:53:14 PM                                                                                                                    
                                                                                                                                
ELISE  SORUM-BIRK, Staff,  Representative Andy  Josephson, Alaska                                                               
State Legislature, offered a PowerPoint  presentation on HB 30 on                                                               
behalf of Representative Josephson, prime  sponsor.  She began on                                                               
slide 2 of  her presentation, "Four Major Goals,"  and listed the                                                               
goals, which read as follows [original punctuation provided]:                                                                   
                                                                                                                                
        • To adjust Permanent Partial Impairment (PPI)                                                                          
          rates for inflation                                                                                                   
        • To adjust rates for funeral expenses and death                                                                        
          benefits for inflation                                                                                                
        • To ensure that workers are made aware of the                                                                          
          disparity in benefits for single and childless                                                                        
          workers                                                                                                               
        • to clarify the law relating to benefit payments                                                                       
          for orphan children after age 19                                                                                      
                                                                                                                                
MS.  SORUM-BIRK   proceeded  to   slide  3,   "Permanent  Partial                                                               
Impairment  (PPI)  rates have  not  been  adjusted for  inflation                                                               
since 2000,"  and reiterated that  PPI is based on  percentage of                                                               
the whole body.  She summarized  the slide and explained that the                                                               
method of  calculating PPI was  established in 1988 and  has only                                                               
been updated once  since then in the year 2000.   She shared that                                                               
HB  30 adjusts  the  $177,000  PPI rate  established  in 2000  to                                                               
$273,000 to account for inflation.                                                                                              
                                                                                                                                
6:55:49 PM                                                                                                                    
                                                                                                                                
MS. SORUM-BIRK continued  to slide 4, "'How much is  a limb worth                                                               
-ProPublica,'" which  included a  graphic from  a report  done by                                                               
ProPublica showing the comparison of how  much a limb is worth in                                                               
Alaska  compared to  the national  average based  off PPI  rates.                                                               
She  shared  that  the  graphic  is  customizable  and  committee                                                               
members  can go  to the  website to  see how  Alaska compares  to                                                               
other states.                                                                                                                   
                                                                                                                                
MS. SORUM-BIRK  moved on to slide  5, "The death benefit  paid to                                                               
non-child dependents  has not  been adjusted  in over  50 years,"                                                               
and said  that other than PPI  rates, the bill would  also update                                                               
some death benefit  rates.  She summarized the  slide, which read                                                               
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
        • Under AS 23.20.215(a)(4) the death benefit paid to a                                                                  
          dependent father, mother, grandchild, brother or                                                                      
          sister is a maximum of only $20,000                                                                                   
        • This amount was set in 1968                                                                                           
        • HB 30 amends this statute to adjust for inflation and                                                                 
          sets new amount at $150,000                                                                                           
                                                                                                                                
MS.  SORUM-BIRK  advanced  to  slide 6,  "Lump  sum  amounts  for                                                               
funeral expenses  and one-time payments  to widow or  widower are                                                               
updated," and  explained that there  are two more  updated dollar                                                               
amounts outlined  in Section 4  of the  bill, which are  lump sum                                                               
amounts for funeral expenses and  one-time payments to a widow or                                                               
widower  of the  deceased.   She  gave examples  from the  slide,                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
        • Under AS 23.30.215(a)(1) the cap amount for                                                                           
        funeral expenses is set at a maximum of $10,000                                                                         
               - HB 30 sets new amount at $12,000                                                                               
        • Under AS 23.30.215(a)(5) the lump sum amount                                                                          
          given to a widow/widower (or child if no                                                                              
          surviving spouse) expenses is set at $5,000                                                                           
          - HB 30 adjusts this amount to $8,000                                                                                 
        • The current rates for both benefits were                                                                              
          established in 2000.                                                                                                  
                                                                                                                                
MS.  SORUM-BIRK continued  to slide  7, "Definition  of 'child,'"                                                               
and  shared that  a  child is  defined  differently for  workers'                                                               
compensation purposes.   She read the definition  from the slide,                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
        • 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"                                                                        
        • HB  30    creates    a   new    subsection    AS                                                                      
          23.30.215(j)that    extends   the    payment   for                                                                    
          "dependent children" (whose single parent died at                                                                     
          work) to age 23 across the board.                                                                                     
                                                                                                                                
6:59:42 PM                                                                                                                    
                                                                                                                                
MS.  SORUM-BIRK proceeded  to slide  8, "The  Elevator Paradigm,"                                                               
and  explained  that it  shows  how  few  benefits a  single  and                                                               
childless  worker   would  receive  compared  to   their  married                                                               
counterpart with children.   The slide read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     What damages do they receive?                                                                                              
          Customer-                                                                                                             
                  • Economic damages                                                                                            
                  • Non-economic damages                                                                                        
                  • Pain and Suffering                                                                                          
                  • Loss of Consortium                                                                                          
                  • Punitive                                                                                                    
                  • Up to $1.5 million                                                                                          
                                                                                                                                
          Single childless worker -                                                                                             
                  • Funeral Expenses                                                                                            
                                                                                                                                
MS. SORUM-BIRK  moved on to slide  9, "The parent or  estate of a                                                               
single  worker with  no dependents  who dies  on the  job has  no                                                               
remedy," and shared  that Section 1 of HB  30 addresses providing                                                               
notice to  employees about the  available death benefits  and how                                                               
those  benefits  differ  for  single   childless  workers.    She                                                               
emphasized the importance of single  childless workers being made                                                               
aware of the  difference in benefits.  The slide  read as follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
        • Under current   law   single   workers   without                                                                      
          dependents are the only class of worker who                                                                           
          receives only funeral expenses                                                                                        
        • Parents cannot collect worker's compensation                                                                          
        • HB 30 does not add a new benefit for this class                                                                       
          of workers like previous iterations of this                                                                           
          legislation have                                                                                                      
        • HB 30 adds a new section AS 23.10.435 to provide                                                                      
          all employees with notice of a death benefits and                                                                     
          to make them aware of the lack of benefits for                                                                        
          single workers without dependents                                                                                     
                                                                                                                                
7:01:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY  asked  what the  increases  in  workers'                                                               
compensation have been over the years.                                                                                          
                                                                                                                                
REPRESENTATIVE  JOSEPHSON interjected  that he  believes workers'                                                               
compensation has decreased, not increased.                                                                                      
                                                                                                                                
7:02:43 PM                                                                                                                    
                                                                                                                                
MS. SORUM-BIRK responded  that between 2004 and 2017  there was a                                                               
27 percent decline in the  amount spent by businesses on workers'                                                               
compensation  related  to  total   wages  paid.    Comparatively,                                                               
indemnity benefits decreased  from $0.65 to $0.38  per $100 spent                                                               
on  wages between  2004 and  2017.   Overall, indemnity  benefits                                                               
shrunk by 40.8 percent during that time period.                                                                                 
                                                                                                                                
7:03:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  added  that workers'  compensation  rates  have                                                               
decreased by more  than 50 percent in the last  four years, which                                                               
has been driven  by a decline in on-the-job injuries.   He shared                                                               
that Alaska is  now tenth in the nation whereas  a few years ago,                                                               
Alaska was first.                                                                                                               
                                                                                                                                
7:04:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAUFMAN  stated that  he just performed  an online                                                               
search  and shared  that the  search shows  Alaska as  having the                                                               
highest workers' compensation rate.                                                                                             
                                                                                                                                
CO-CHAIR SPOHNHOLZ asked for his source.                                                                                        
                                                                                                                                
REPRESENTATIVE   KAUFMAN  said   that  the   website  he   found,                                                               
"howmuch.com,   understanding    money,"   used    the   workers'                                                               
compensation  information sourced  from the  National Academy  of                                                               
Social Insurance in 2017.                                                                                                       
                                                                                                                                
7:05:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS shared  that the  number Representative  Kaufman                                                               
found was correct years ago but  is not correct anymore.  He said                                                               
that  he   would  be  happy  to   follow  up  on  this   and  get                                                               
Representative Kaufman the correct figures.                                                                                     
                                                                                                                                
7:05:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON   explained    that   part   of   what                                                               
Representative Kaufman  may be referring  to is the high  cost of                                                               
medical care.   He said that HB  30 does not concern  the cost of                                                               
health  care, it  concerns  situations  of death.    Some of  the                                                               
factors  that   contribute  to  the  higher   costs  of  workers'                                                               
compensation  in  Alaska wouldn't  apply  in  this situation,  he                                                               
explained.   He added that this  bill should cost the  state some                                                               
money since the purpose of it  is to increase the amount of money                                                               
paid to people  who are permanently disabled.   He continued with                                                               
an example,  sharing that  if a  person in  Alaska lost  an index                                                               
finger while working,  the person would only get  about $5,000 in                                                               
compensation.   If an individual were  to lose an arm  in Nevada,                                                               
that person  would get $800,000,  while in Alaska the  benefit is                                                               
just over $100,000.  The median in  the country for a lost arm is                                                               
$170,000, he  said.  He  reiterated that the intended  purpose is                                                               
to address permanent disability or death.                                                                                       
                                                                                                                                
7:08:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SOHNHOLZ  thanked   Representative  Josephson  for  the                                                               
important clarification.                                                                                                        
                                                                                                                                
7:08:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NELSON asked what the  impact to premiums would be                                                               
for workers' compensation.                                                                                                      
                                                                                                                                
MS.  SORUM-BIRK responded  that that  information is  included in                                                               
the  fiscal  note  from  the  Department  of  Labor  &  Workforce                                                               
Development that is in the packets that members received.                                                                       
                                                                                                                                
7:09:34 PM                                                                                                                    
                                                                                                                                
CHARLES  COLLINS, Director,  Division  of Workers'  Compensation,                                                               
shared that  the National Council of  Commercial Insurance (NCCI)                                                               
- the actuarial for  the State of Alaska - did a  workup on HB 30                                                               
and found  that rates would increase  by 2.9 percent if  the bill                                                               
were implemented  January 1, 2022.   He noted that on  January 1,                                                               
2021, insurance rates  had been lowered for the eighth  year in a                                                               
row by 14 percent.                                                                                                              
                                                                                                                                
7:10:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ announced HB 30 was held over.