Legislature(2005 - 2006)CAPITOL 17

03/30/2005 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 147(L&C) Out of Committee
Heard & Held
Bills Previously Heard/Scheduled
HB 180-WORKERS' COMPENSATION                                                                                                  
  CHAIR ANDERSON announced  that the final order  of business would                                                             
  be HOUSE BILL NO. 180, "An  Act relating to a special deposit for                                                             
  workers'   compensation   and  employers'   liability   insurers;                                                             
  relating   to  assigned   risk   pools;   relating  to   workers'                                                             
  compensation  insurers; stating  the intent  of the  legislature,                                                             
  and  setting  out  limitations,  concerning  the  interpretation,                                                             
  construction, and  implementation of workers'  compensation laws;                                                             
  relating to the Alaska  Workers' Compensation Board; establishing                                                             
  a  division of  workers'  compensation within  the Department  of                                                             
  Labor  and   Workforce  Development,  assigning   certain  Alaska                                                             
  Workers'  Compensation Board  functions to  the division  and the                                                             
  department, and authorizing the  board to delegate administrative                                                             
  and enforcement  duties to the division;  establishing a Workers'                                                             
  Compensation   Appeals   Commission;   providing   for   workers'                                                             
  compensation   hearing   officers    in   workers'   compensation                                                             
  proceedings; relating  to workers' compensation  medical benefits                                                             
  and to charges for and payment  of fees for the medical benefits;                                                             
  relating  to  agreements  that  discharge  workers'  compensation                                                             
  liability; relating to workers'  compensation awards; relating to                                                             
  reemployment benefits  and job dislocation benefits;  relating to                                                             
  coordination  of  workers'  compensation and  certain  disability                                                             
  benefits; relating to division  of workers' compensation records;                                                             
  relating  to  release  of  treatment   records;  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;   relating  to   attorney  fees;   providing  for   the                                                             
  department to  enter into contracts with  nonprofit organizations                                                             
  to  provide  information  services and  legal  representation  to                                                             
  injured  employees; providing  for  administrative penalties  for                                                             
  employers  uninsured or  without adequate  security for  workers'                                                             
  compensation; relating to fraudulent  acts or false or misleading                                                             
  statements in  workers' compensation  and penalties for  the acts                                                             
  or  statements;  providing for  members  of  a limited  liability                                                             
  company to  be included as  an employee for purposes  of workers'                                                             
  compensation;  establishing  a   workers'  compensation  benefits                                                             
  guaranty  fund;  relating  to  the  second  injury  fund;  making                                                             
  conforming amendments;  providing for a  study and report  by the                                                             
  medical  services   review  committee;   and  providing   for  an                                                             
  effective date."                                                                                                              
  3:37:24 PM                                                                                                                  
CHAIR ANDERSON stated  that the ad hoc committee  was still going                                                               
through some negotiations and that it  was not his intent to push                                                               
this  out  without  some  solidarity.    Everyone  from  doctors,                                                               
laborers,  insurance  industry,   Department  of  Insurance,  the                                                               
governors  office, and  the Chamber  of Commerce,  have indicated                                                               
measurable interest  in the bill.   The ad hoc committee  bill is                                                               
being  circulated and  is awaiting  introduction.   He  announced                                                               
that  he would  like to  conclude  public testimony  and then  go                                                               
through the governor's legislation.                                                                                             
3:39:00 PM                                                                                                                    
DOUG  WOOLIVER,  Administrative  Attorney, Alaska  Court  System,                                                               
stated that the court cannot take  a position on the bill, but he                                                               
indicated that he  was here to talk about the  impact of the bill                                                               
on the  court system, particularly  the section that  talks about                                                               
bypassing the superior  court in the appeal process  and have the                                                               
cases go  instead from the  administrative courts to  the supreme                                                               
courts.   For the past  several years,  he indicated that  he had                                                               
seen  about 30-40  cases  a  year, and  that  most  of these  are                                                               
resolved by the Superior Court.   Only eight of them are appealed                                                               
to the Supreme Court.                                                                                                           
3:40:40 PM                                                                                                                    
MR. WOOLIVER  related that  the court does  not believe  that the                                                               
passage of  the bill  will change  these [appeal]  numbers, since                                                               
only  a tiny  fraction of  appeals are  for workers  compensation                                                               
cases that are moved forward.   He then indicated that there were                                                               
three reasons  that he felt  that the  passage of the  bill would                                                               
not impact those  numbers.  First, he said that  there are always                                                               
cases that are very close  despite the facts concerning the case,                                                               
and these people  will try to appeal.  Second,  there is always a                                                               
handful of novel  legal cases that make it to  the higher courts.                                                               
Lastly, there  are many people  that distrust public  agencies or                                                               
the dispute resolution processes.                                                                                               
MR. WOOLIVER  stated that every  year there are  tenacious people                                                               
here that will  continue to appeal, regardless of  the outcome of                                                               
the court  decision.  The  expectation is that again,  there will                                                               
be 30 to  40 cases that are  referred to the higher  courts.  The                                                               
difference now is  that they will go to the  Supreme Court rather                                                               
than the  Superior Court.   He announced  that one of  the stated                                                               
goals here  is to  streamline the process  and get  to resolution                                                               
faster.   Our  concern  here is  that this  will  have the  exact                                                               
opposite effect.   He  explained that if  you bypass  the Supreme                                                               
Court, it  appears that you have  saved time.  He  then said that                                                               
  for some  cases that might be  the case.  However,  there is some                                                             
  misconception here  as far  as saving  time.   The time  spent in                                                             
  both  higher courts  is different.   The  superior court  takes a                                                             
  year or so for its entire process,  from the time you file to the                                                             
  time  that your  case is  finished.   The Supreme  Court is  much                                                             
  longer.  In fact, he said, you  are going to take about 20 months                                                             
  to resolve  the case, rather than  a year.  Because  of this, the                                                             
  courts and  the legal community  believe that this bill  does not                                                             
achieve the goal of faster resolution of cases.  It takes time.                                                                 
  3:43:11 PM                                                                                                                  
  MR. WOOLIVER stated that the  superior courts are one person, and                                                             
  the Supreme Court is a body  of five individuals.  The resolution                                                             
  is done by one  person and is quicker.  Most  of these cases will                                                             
  take longer if you bypass the superior court.                                                                                 
  CHAIR ANDERSON  stated that for  individuals that are  in support                                                             
  of  the Governors  legislation, especially  chamber and  business                                                             
  members that  might have  an understanding  of the  court system,                                                             
  they should address their experiences in their testimony.                                                                     
  REPRESENTATIVE  LEDOUX stated  that  she  recollected that  there                                                             
  were 30-40  cases that  go before the  superior court  each year,                                                             
  and she  asked the witness  if he could  give an estimate  on the                                                             
  number of inconsistencies that have  occurred in judgments handed                                                             
  MR.  WOOLIVER   answered  that   this  inconsistency   is  really                                                             
  perceived and  is relative to the  observer.  He asserts  that in                                                             
  someone's eyes, the judgment is  always going to be inconsistent.                                                             
  Most of  these cases are fact  specific, even the ones  that make                                                             
  it to the  Supreme Court.  They don't have  a lot of presidential                                                             
  value because  they are so  fact oriented.   He pointed  out that                                                             
  anyone could point  out examples of times that  certain judges in                                                             
  certain  regions have  ruled  one  way or  the  other in  similar                                                             
  cases.  He stated tersely that  he has no way of determining what                                                             
  is  inconsistent or  not.   Mr.  Wooliver indicated  that he  was                                                             
  looking at Section 31.                                                                                                        
  REPRESENTATIVE KOTT  asked if  there was  any discussion  on this                                                             
last year, whether from the court system or the administration.                                                                 
  MR.  WOOLIVER recalled  that there  was not  any discussion  last                                                             
  3:46:50 PM                                                                                                                  
REPRESENTATIVE  GUTTENBERG asked,  of the  cases referred  to the                                                               
superior court, how many of these were overturned.                                                                              
MR.  WOOLIVER answered  that a  majority  of these  are not  over                                                               
turned.    However, one  always  faces  an  up hill  battle  when                                                               
dealing with  appeals.  With  the Supreme Court, it  is sometimes                                                               
difficult to overturn since it  concerns a minor provision.  They                                                               
uphold the majority  of the decision but overturn  the case based                                                               
on a minor provision and send  it back for retrial.  Mr. Wooliver                                                               
stated  that  one cannot  look  at  the  outcome, whether  it  be                                                               
affirmed  or  reversed, but  rather  one  must review  each  case                                                               
CHAIR ANDERSON stated that, to  that question, hypothetically, if                                                               
a company has an employee  who files a workers compensation claim                                                               
and  is granted  the request,  and then  the employer  challenges                                                               
this action  and goes through the  appeals process.  He  asked if                                                               
this was generally the scenario.                                                                                                
MR. WOOLIVER answered that he had not checked this.                                                                             
3:49:05 PM                                                                                                                    
REPRESENTATIVE  GUTTENBERG pointed  out  that one  of the  things                                                               
that  he has  heard is  that from  what he  understood, half  the                                                               
cases go  either way, and that  the appeal process when  put into                                                               
play, has  the same results for  both the superior court  and the                                                               
Supreme  Court, where  they are  upheld, and  in this  context he                                                               
said he cannot  determine what is wrong here.   He then asked how                                                               
the legal  practice of  de novo  hearings, in  which the  case is                                                               
heard anew,  is going to upset  this precedent and the  number of                                                               
cases that  are upheld by the  higher courts.  He  then asked how                                                               
many more  people are going to  be appealing with the  passage of                                                               
the bill.                                                                                                                       
3:50:33 PM                                                                                                                    
MR.  WOOLIVER stated  that he  has  tried not  speculate if  they                                                               
would see  a lot  more or  fewer cases.   He  said that  he could                                                               
think  of  reasons  that  would   create  more  cases.    He  the                                                               
stipulated that if people trusted  the board they would see fewer                                                               
cases, and if  they did not trust the board,  they would see more                                                               
cases  particularly with  the new  cases created  by the  de novo                                                               
authority.  The safest route is  to assume that things stay about                                                               
the same as they are now.                                                                                                       
  3:51:09 PM                                                                                                                  
  REPRESENTATIVE  GUTTENBERG stated  that it's  [the legislature's]                                                             
  job to speculate, and therefore  he appreciated that Mr. Wooliver                                                             
  didn't want hazard a guess.                                                                                                   
  MR. WOOLIVER stated that he found  a memo to Dave Donnelly, Chief                                                             
  of Adjudication, which reveals several  facts about 2004 appeals.                                                             
  The  bottom line  is  that most  cases are  upheld.   [The  memo]                                                             
  breaks  down  the statistics  of  the  appeal processes  and  the                                                             
  document reveals  that the  appeal rate is  around 8  percent and                                                             
  the reversal  rate of appealed  Decision and Orders  (D&O's) laid                                                             
  down by the court system is around 16 percent.                                                                                
  REPRESENTATIVE LEDOUX  pointed out  that he indicated  that there                                                             
  30-40  workers'  compensation  cases that  reached  the  superior                                                             
  court and she asked how  many total workers compensation cases go                                                             
  before the panel each year.                                                                                                   
  MR.  WOOLIVER answered  that  he recalls  that  number being  20-                                                             
  30,000 claims, though  there were several other  people here that                                                             
  would be better at answering this question.                                                                                   
  REPRESENTATIVE LEDOUX said  that the number of  appeals each year                                                             
  compared  to the  number of  actual  workers compensation  claims                                                             
  that make it to the appeal process is very miniscule.                                                                         
  MR. WOOLIVER agreed, and said it was a tiny percentage.                                                                       
  3:52:54 PM                                                                                                                  
  REPRESENTATIVE  GUTTENBERG, referring  to Section  10, subsection                                                             
  (c), paragraph  (2), subparagraph  (B), on  page 7,  line 2.   He                                                             
  then asked  if there  was any  kind of  review of  an appointee's                                                             
  background, or is this a standard appointment.                                                                                
  MR.  WOOLIVER  answered that  the  bill  calls for  gubernatorial                                                             
  REPRESENTATIVE LEDOUX  said that  she could not  understand, from                                                             
  reading  the test,  whether  the  body of  the  board, minus  the                                                             
 chair, has to also be a member of the Alaskan Bar Association.                                                                 
  CHAIR ANDERSON answered  that no, he did not think  that they all                                                             
  had to be attorneys.                                                                                                          
  3:54:29 PM                                                                                                                  
JOHN BAKER,  builder, Building Specialty  Inc, indicated  that he                                                               
has been  a builder for  40 years  and originally came  here from                                                               
Minnesota  because of  the problems  that state  was having  with                                                               
workers  compensation rate.   He  said he  sees the  same problem                                                               
happening here in Alaska.  The  rate has gone from 12 dollars for                                                               
every  hundred dollars  spent  on salary  to  $28.86 per  hundred                                                               
dollars paid in  salary.  He then stated that  it is rumored that                                                               
an increase  to $40 per  hundred in wages.   He said that  he and                                                               
others like  him cannot  charge out these  rates to  people since                                                               
they cant  build their homes at  this rate.  Home  appraisers are                                                               
not coming  in at the rates  that are conducive to  conduce banks                                                               
to give out loans to people.   Because of this, he said, we don't                                                               
have the people  working that we usually do.   This makes it very                                                               
hard to  make ends meet  for workers  and their families.   There                                                               
are other  things too.  He  mentioned that raises can't  be given                                                               
when they are deserved.                                                                                                         
3:57:15 PM                                                                                                                    
MR.  BAKER said  there  are  also people  who  are paying  people                                                               
straight   cash   ($20-25)   without  any   additional   workers'                                                               
compensation being  paid on top of  that, which makes it  hard to                                                               
compete with  those who charge  the additional cost  of insurance                                                               
($40-50 range).  The aforementioned  invariably increases the bid                                                               
amount.  He said that he  wanted to keep all his people employed,                                                               
insured, and the whole operation  legal, but increasing rates are                                                               
making it very difficult to compete and stay in business.                                                                       
CHAIR ANDERSON  surmised that the rates  of workers' compensation                                                               
are so high,  that a reduction is necessary in  order to maintain                                                               
3:57:57 PM                                                                                                                    
MR. BAKER  responded by  saying that he  understood the  need for                                                               
the insurance  but when  it gets  to the  point when  workers are                                                               
hurt and  the local economy is  hurt, then it's not  a good thing                                                               
to  continue  to  see  the  rates  increase  to  the  point  that                                                               
businesses go out of business.                                                                                                  
3:58:52 PM                                                                                                                    
CHAIR ANDERSON  asked how much Mr.  Baker's workers' compensation                                                               
rates have increased in the last few years.                                                                                     
  MR.  BAKER answered  that 12  years ago,  the rate  was at  $12 a                                                             
  hundred, and  right now it's around  $28.88 per 100 dollars.   He                                                             
  then  indicated that  there was  a $2.25  rate jump  in the  past                                                             
  couple of weeks.                                                                                                              
CHAIR ANDERSON asked how many men were working in the operation.                                                                
  MR. BAKER said that he had 10 men  working.  He then said that by                                                             
  having this many men, his  workers compensation went from $30,000                                                             
  to a  little over  $80,000 a year.   He said  this rate  hike has                                                             
  taken the fun out of doing business.                                                                                          
  4:00:33 PM                                                                                                                  
  MR. BAKER  indicated that the  general contractors  have projects                                                             
  that are  long whereas  the subcontractors are  only there  for a                                                             
  few  weeks and  they  can get  by  with this  rate.   With  large                                                             
  projects, the  costs are  too high  and can  knock people  out of                                                             
  projects that they would like to be a part of.                                                                                
  4:01:24 PM                                                                                                                  
  REPRESENTATIVE  GUTTENBERG   asked  what  the   committee  should                                                             
  consider in trying to drop the rate.                                                                                          
  MR. BAKER  said that  one of the  things he would  like to  see a                                                             
  flat  rate system  because  it  puts the  rates  within reach  of                                                             
  businesses, though  he doesn't know what  the cost would be.   He                                                             
  then pointed  out that no matter  what, someone is going  to have                                                             
  to pay for  the insurance.  He  then said again that  a flat rate                                                             
  would boost  the lower rate up  to be more in  parity with higher                                                             
  rates.  As  an example, he said that the  average lower rate that                                                             
  is $1.83 and the  rate on his end is up around $30.   This is, he                                                             
  says, at  least 300  times the amount  that the  average business                                                             
  owner pays in the state of Alaska.                                                                                            
  REPRESENTATIVE KOTT, referring to  a previous statement, he asked                                                             
  about the appraisal process and  how the appraisal never seems to                                                             
  meet  the same  costs that  your  building process  entails.   He                                                             
  stated  that he  would assume  that these  appraisers would  take                                                             
  into consideration the costs of labor and materials                                                                           
  4:03:00 PM                                                                                                                  
  MR.  BAKER said  that unfortunately  that is  not the  case right                                                             
  now.    This   is  a  result  of  the   appraisers  basing  their                                                             
  evaluations on  current and  historical prices  of houses  in the                                                             
surrounding  areas.    There  is  always  a  discrepancy  between                                                               
appraisal and  actual cost to build  the home.  Because  of this,                                                               
it  is hard  to  get people  into the  housing  market when  they                                                               
cannot afford the house.                                                                                                        
4:04:10 PM                                                                                                                    
REPRESENTATIVE  KOTT asked  if he  was  familiar with  statistics                                                               
that  were published  by the  Department of  Labor and  Workforce                                                               
Development concerning  cost increases  and its  association with                                                               
increases with  medical costs.   The average increase  in medical                                                               
costs  is  about  around  32   percent  and  this  makes  keeping                                                               
insurance  costs  down  is  dealing   with  medical  costs.    He                                                               
indicated that this is dictated by new technology.                                                                              
MR. BAKER said that three weeks  ago, it was mentioned that the a                                                               
state  of Oregon  slashed the  costs of  worker compensation  but                                                               
this has  resulted in  the fact that  doctors there  have stopped                                                               
taking cases that  are worker compensation claims due  to loss of                                                               
4:06:31 PM                                                                                                                    
MR. BAKER  supposes that if rates  do continue to go  up, it will                                                               
result  in cheating  on  the part  of employers.    He said  that                                                               
people are going to stop hiring  and instead will pay cash by the                                                               
hour for  work and  avoid paying  workmen's compensation.   These                                                               
employers will find people who are willing to work for cash.                                                                    
4:07:14 PM                                                                                                                    
MR. BAKER  stated that men  will continue  to get hurt  and these                                                               
doctors are going to have people coming in without insurance.                                                                   
4:07:35 PM                                                                                                                    
REPRESENTATIVE LEDOUX  asked if he  had any stats for  your areas                                                               
concerning the number of home starts between 2000-2004.                                                                         
MR.  BAKER  indicated  his  company   did  light  commercial  and                                                               
remodeling  and that  that rates  have  gone up,  from $12.80  to                                                               
$30.00.    The  costs  have  gone up  100  percent  for  workers'                                                               
REPRESENTATIVE CRAWFORD,  after sharing  the fact  that he  is an                                                               
ironworker  and  property owner,  stated  that  his insurance  on                                                               
property insurance has gone up  significantly.  He indicated that                                                               
  the rate went up from $197  to $860, although nothing had changed                                                             
  about his policy and  he had not posted any new  claims.  He then                                                             
  asked if  the rate that Mr.  Baker was paying a  few years before                                                             
was an artificial rate due to Freemont being in the marketplace.                                                                
  4:10:16 PM                                                                                                                  
  MR. BAKER  said that he could  not tell you if  its artificial or                                                             
  not, but knew what people were  willing to pay out.  He indicated                                                             
  that workers are  on jobs for three months each  time, and if you                                                             
  multiply the high rate times the  number of men you have working,                                                             
  it's too much.   He then said  that what was going  to happen was                                                             
  that without a  cap on insurance, people would  stop backing away                                                             
  from paying  the insurance.  He  said he saw this  where he lived                                                             
  and said again, that it is very hard to compete against.                                                                      
  REPRESENTATIVE CRAWFORD asked what would  happen if they put more                                                             
  money into enforcement.                                                                                                       
  MR. BAKER  said that's a  hard question.   He indicated  that men                                                             
  have a  right to  work no  matter what,  but it  was not  a level                                                             
  playing field  and he said  that enforcement was not  the answer.                                                             
  Lowering  rates is  the  key.   This  is  the reason  contractors                                                             
  cheat.  Its  not because they are trying to  make more money, but                                                             
  trying to keep costs nominal, and  to do that, they throw out the                                                             
  MARK KLINE, citizen, Fairbanks, read the following statement:                                                                 
       The  reduced fees  mentioned in  section  25 may  quite                                                                  
       possibly  reduce the  quality  of healthcare  available                                                                  
       through the  already existing law.   When  studies were                                                                  
       done during  the Clinton  administration, it  was found                                                                  
       government  regulation   of  healthcare  in   order  to                                                                  
       control  cost decreased  the  quality of  it.   If  the                                                                  
       incentive of  capitalism is lessened, the  quality goes                                                                  
       down hill.  If you  allow the employer to regulate cost                                                                  
       by  controlling   fee  amounts  with   their  preferred                                                                  
       providers,  the amount  mutually  agreed  upon will  be                                                                  
       passed   to  whomever   the  employee   chooses  as   a                                                                  
       physician.    As a  result  of  this action,  employees                                                                  
       won't  have  access  to certain  doctors  unwilling  to                                                                  
       reduce their  rates to the predetermined  amount set by                                                                  
       the employer's preferred provider.                                                                                       
            By limiting access because of fee reduction,                                                                        
       section  25  could  also  effectively  reduce  cost  of                                                                  
     medical  procedures, but  simultaneously will  decrease                                                                    
     chances  of  successful  completion  of  a  portion  of                                                                    
     surgeries.    The  exposure  to  a  number  of  medical                                                                    
     procedures  by   some  of  the   prospective  preferred                                                                    
     providers will  likely be more affordable,  but at what                                                                    
     cost  to the  employee?   Can the  employer's preferred                                                                    
     provider guarantee satisfaction  equivalent to surgeons                                                                    
     of  the highest  level  of proficiency?    It has  been                                                                    
     statistically   shown  surgeons   who  have   essential                                                                    
     credentials,  but  a  limited  current  and  repetitive                                                                    
     exposure to  a given  surgery are  much more  likely to                                                                    
     have an  unsuccessful outcome than those  who have both                                                                    
     attributes.   Under  the  current  law, employees  have                                                                    
     access  to  the  doctors  with  extensive  and  current                                                                    
     experience   in  addition   to  credentials,   although                                                                    
     sometimes quite  expensive.  If  this portion  of HB180                                                                    
     is passed  into law,  they will  not have  this access.                                                                    
     An  employee wishing  to utilize  the more  proficient,                                                                    
     but  expensive surgeon  most likely  won't  be able  to                                                                    
     afford  the  cost  difference they  would  be  burdened                                                                    
     In addition  to quality reduction issue,  I contend the                                                                    
     majority of  the cost problem  employers are  having is                                                                    
     because  of  the  lack   of  appropriate  pursuance  of                                                                    
     safety,  causing  a   rather  significant  quantity  of                                                                    
     injuries and illnesses.   The estimated rate nationally                                                                    
     is 5 injuries per 100  employees.  However, Alaska is 7                                                                    
     injuries per  100 employees, making us  40% higher than                                                                    
     the national average, according  to the Bureau of Labor                                                                    
     Statistics.   This higher incidence could  likely cause                                                                    
     increased prices of insurance  premiums, not to mention                                                                    
     possible safety inadequacies  decreasing the quality of                                                                    
     the work environment.  Not  only is the state of Alaska                                                                    
     higher, it  has been  higher than the  national average                                                                    
     for  some   time,  dating  back   to  the   year  1996.                                                                    
     Apparently, it has been going  on for some time.  Thus,                                                                    
     the  problem is  not just  the high  cost of  insurance                                                                    
     premiums,  but rather  lack of  safety boosting  worker                                                                    
     compensation costs with high premium prices following.                                                                     
4:16:07 PM                                                                                                                    
     I  personally was  employed by  a company  who provided                                                                    
     jobs  for roughly  35 individuals  in Fairbanks.   Over                                                                    
     the course  of one  year's time in  2003 and  2004, the                                                                    
     company generated close to  400,000 dollars in worker's                                                                    
       compensation.   In the following  year, cost  dropped a                                                                  
       significantly large  amount by starting a  pilot safety                                                                  
       program, studying safety  hazards and recent accidents,                                                                  
       and taking  necessary steps to correct  existing safety                                                                  
       problems.   Because  of this  action,  employees had  a                                                                  
       safer work  environment, and employers  decreased their                                                                  
       loss   relative   to   worker  compensation.      Their                                                                  
       ballooning  cost was  primarily  because  of the  large                                                                  
       quantity   of  injuries,   leading  to   paying  higher                                                                  
       premiums,  not  just  because  of   the  high  cost  of                                                                  
       healthcare.   This company's  name is  Lynden Transport                                                                  
       Inc., a  business known for their  excellent service in                                                                  
       transportation  here in  Alaska.   They now  diligently                                                                  
       pursue safety at all times.                                                                                              
       They  however,  are not  the  only  company taking  the                                                                  
       necessary action  to ensure safety and  keep cost down.                                                                  
       The oil  industry as a  whole has the  lowest incidence                                                                  
       of  injuries here  in Alaska,  demonstrating a  genuine                                                                  
       concern for safety.                                                                                                      
  4:17:17 PM                                                                                                                  
       Along with  the quantitative injury  problem increasing                                                                  
       cost,  section 16  of the  bill reduces  the amount  of                                                                  
       permanent impairment  capitol an employee  is entitled.                                                                  
       Not  only   does  it  reduce  this   amount,  it  could                                                                  
       encourage  some   employers  who  have  little   or  no                                                                  
       interest  in  safety  to   reduce  their  efforts  even                                                                  
       further  in preservation  of  the working  environment.                                                                  
       They could afford  to take more chances  because of the                                                                  
     lessened amount of penalty they would be subjected to.                                                                     
       In the comparison table of  maximum allowable rates for                                                                  
       medical  procedures provided  by the  Alaska Department                                                                  
       of  Labor and  Workforce  Development,  dated March  of                                                                  
       2005, I would  like to mention the cost  of living here                                                                  
       may not have been  taken into consideration.  Comparing                                                                  
       rates  in  Oregon  and  Idaho   to  Alaska  without  an                                                                  
       adjustment relative  to the  cost of  living difference                                                                  
       is a  misrepresentation of the  actual cost gap.   Both                                                                  
       Oregon and  Idaho costs of  living are much  lower than                                                                  
            The table also does not factor in the annual 3%                                                                     
       increase in    the  cost of  living here,  nor does  it                                                                  
       show  the  actual  annual increase  in  charges.    The                                                                  
     percentage of  increase in charges for  Arthroscopy for                                                                    
     example as  well as  the rest  of the  other procedures                                                                    
     spans  over a  five-year period.   Arthroscopy  shows a                                                                    
     27% increase.   The  actual annual  increase is  only a                                                                    
     little  over 5%  ($180.00)  for this  procedure.   This                                                                    
     amount  needs   to  be  reduced  even   further  by  3%                                                                    
     ($108.00),  because  3  of  the   5%  of  the  cost  is                                                                    
     justified  by the  cost  of  living increase  occurring                                                                    
     every year.  This leaves  only 2% ($72.00) profit above                                                                    
     and beyond  the cost  of living.   If  adjustments were                                                                    
     made to  the other procedures  in the table,  one would                                                                    
     likely find the same result.   The increases would also                                                                    
     be minimal.   I would also like to point  out any costs                                                                    
     incurred  beyond  the  amount  set  in  the  table  are                                                                    
     written off,  according to information received  from a                                                                    
     hospital here in Alaska.                                                                                                   
     Along with  exclusion of cost  of living, I  would also                                                                    
     like  to  point out  there  are  states whose  cost  of                                                                    
     living are much higher than Alaska.   If one were to do                                                                    
     a comparison  study in this  direction, one  may likely                                                                    
     find our procedural  rates are not quite  so high after                                                                    
     all.  New York is a good example.                                                                                          
REPRESENTATIVE KOTT  asked if Mr.  Kline thought that  the reason                                                               
they  have  these  safety  programs is  to  reduce  the  workers'                                                               
compensation  claims  or if  they  are  offered a  percentage  of                                                               
reduction costs by having a safety program in place.                                                                            
4:19:21 PM                                                                                                                    
MR.  KLINE  answered that  the  reason  they started  the  safety                                                               
program was to reduce their  overhead and healthcare costs, which                                                               
it did so greatly.                                                                                                              
4:19:50 PM                                                                                                                    
CHAIR  ANDERSON  expressed the  desire  for  people to  not  read                                                               
submitted  letters and  instead  give  additional comments  about                                                               
House Bill 180.                                                                                                                 
JOHN  NICKS,  rehabilitation   specialist,  Anchorage,  expressed                                                               
apology to  those employers that have  incurred premium increases                                                               
that  have gone  up so  expeditiously despite  the overall  costs                                                               
rising only  6 percent.   He  then asked  who was  monitoring the                                                               
insurance  companies in  terms  of premium  increases.   He  then                                                               
stated  that he  could  not see  the  intelligence behind  fixing                                                               
  workers  compensation by  reducing benefits  to injured  workers.                                                             
  He then indicated that he wanted  to speak to several sections in                                                             
  the bill.                                                                                                                     
  4:21:26 PM                                                                                                                  
  MR.  NICKS then  stated that  in Section  14, he  thinks that  it                                                             
  would be  important to  remove the  language that  imploring that                                                             
  the  employer  can  stipulate  the  eligibility  of  benefits  of                                                             
  workers  at any  time.   The  problem that  I  hear from  injured                                                             
  workers now,  and most certainly if  the bill does pass,  is that                                                             
  they are encouraged to pursue  the dislocation benefit instead of                                                             
  using  and  facilitating  the  rehab  and  reemployment  benefits                                                             
really are, and how they can benefit from these other benefits.                                                                 
  4:22:56 PM                                                                                                                  
  MR. NICKS  then added  that there  needs to  be someone  that can                                                             
  advise workers about all benefits,  rather than leaving this task                                                             
  to a claims adjuster.  Another  section is Section 15, which adds                                                             
  another  disqualifier  to  the   disposition  of  dislocation  of                                                             
  benefits.   He  then added  that from  his viewpoint,  it sounded                                                             
  like  a permanent  settlement of  retraining,  masquerading as  a                                                             
  benefit.   Accepting  a job  relocation  benefit should  preclude                                                             
  them to  future access.   He ends by  stating that there  is huge                                                             
  difference   between   permanent   impairment   and   disability.                                                             
  Professor Stephen Hawking is a good example.                                                                                  
  4:24:59 PM                                                                                                                  
  MR.  NICKS then  indicated that  Section 16  also had  provisions                                                             
  that he  was concerned  with, primarily  a conflict  of interest.                                                             
  Any rehabilitation  specialist who works  for a company  hired by                                                             
  an insurance company and/or employers  must be excused from being                                                             
  selected or assigned to write the re-employment plan.                                                                         
  4:25:52 PM                                                                                                                  
  MR. NICK then ended by  stating that both employers and employees                                                             
  are  paying  too  much.    He  then  indicated  that  his  health                                                             
  insurance went from $900 a month to  $1800 a month.  There has to                                                             
  be a discussion on why the  rates are being raised and what level                                                             
  of profit is being guaranteed.                                                                                                
  4:26:44 PM                                                                                                                  
WAYNE STEVENS, President, Alaska  State Chamber of Commerce, read                                                               
the following statement:                                                                                                        
     Certain workers' compensation structures and current                                                                       
     escalating rates are an ever-increasing burden on                                                                          
     Alaska's businesses.  The ASCC strongly urges the                                                                          
     State Legislature and Administration to provide the                                                                        
     environment for stable, fair, and competitive                                                                              
     marketplace for both the insurer and insured.  The SAC                                                                     
     encourages the legislature to diligently work toward a                                                                     
     solution to the Workers' Compensation Insurance crisis                                                                     
     and make meaningful insurance and regulatory reform                                                                        
     during the first session of the 24 Legislature.                                                                            
MR. STEVENS  then added  that on a  personal note,  the Chamber's                                                               
insurance premium  cost in 2003  was set  at around $1554.   This                                                               
rose to  $2774, creating a  78% increase with no  claims history.                                                               
He  then  said  that  this  was office  work  and  not  laborious                                                               
endeavors such as construction.                                                                                                 
MR. STEVENS  indicated that he  believed that the  key components                                                               
of the needed reform are the following:                                                                                        
   · Stabilize medical costs                                                                                                    
   · Use of preferred providers and generic drugs                                                                               
   · Adhere to nationally recognized standards of medical                                                                       
   · Create a new appeals commission to resolve appeals                                                                         
   · Streamline vocational rehabilitation                                                                                      
MR. STEVENS continued  by stating that these reforms  are not all                                                               
that is  needed to  restore stability and  balance to  the Alaska                                                               
system, but  that they were a  very important start.   We believe                                                               
they  are an  important first-step  toward workers'  compensation                                                               
system health.  They will  fairly protect injured workers and the                                                               
economic well being of Alaska businesses.                                                                                       
4:29:12 PM                                                                                                                    
MR. STEVENS continued  to state that the  reform legislation does                                                               
not roll  back any injured  worker benefits-rather it  focuses on                                                               
cost   reduction    within   the   system,    helping   eliminate                                                               
inefficiencies with the system so local businesses can flourish.                                                                
  MR.  STEVENS  ended  by  giving   his  support  efforts  to  make                                                             
  substantive  reform  to  Workers'  Compensation.    He  said  the                                                             
  following would help get proper reform:                                                                                       
·     Recognize that there is no one single answer to solve                                                                     
       the problem.                                                                                                             
·     All parties involved must make concessions to make this                                                                   
·     Provide an adequate safety net for workers hurt while on                                                                  
       the job, but not put the healthy worker out of work                                                                      
       when the business they are employed by can no longer                                                                     
       afford the premiums for Workers' Comp insurance.                                                                         
  4:30:04 PM                                                                                                                  
  REPRESENTATIVE  GUTTENBERG  stated  that   he  assumed  that  the                                                             
  Chamber of Commerce had workers'  compensation and wondered if he                                                             
  had called  the company  and asked them  for an  explanation when                                                             
  the rates when went up.                                                                                                       
  MR. STEVENS explained  that when the rates went up,  they went up                                                             
  for everyone,  that it was the  cost of the overall  system. This                                                             
  cost was  shifted to all parties.   He said that  this was partly                                                             
  due to the  insolvency problems that were occurring  at the time,                                                             
  or the rising medical costs that  were a result of the uninsured.                                                             
  He ended by  stating that everyone in the system,  no matter what                                                             
  their claim status is, must bear the costs.                                                                                   
  REPRESENTATIVE CRAWFORD asked if he  thought that there should be                                                             
  more  attention  given  to  enforcement to  make  sure  that  the                                                             
  uninsured have less  impact on the system and  that employers are                                                             
  paying the rate  that has been assigned to  the jurisdiction they                                                             
  are located.                                                                                                                  
  4:32:00 PM                                                                                                                  
  MR. STEVENS stated  that he did not know if  this level of system                                                             
  control and  enforcement would solved  the financial  crisis that                                                             
  was  occurring.     There  are  ways  to  spend   some  money  on                                                             
  enforcement but there are other things that can be done.                                                                      
  REPRESENTATIVE LEDOUX asked if the  Chamber of Commerce supported                                                             
  the  Governor's bill,  more specifically  the section  concerning                                                             
  the setting up of a different appeals system.                                                                                 
MR. STEVENS said  that group is not focusing on  the parts of the                                                               
bill but instead,  we are trying to  stress that it is  up to the                                                               
legislature to solve it.                                                                                                        
4:33:27 PM                                                                                                                    
CHAIR  ANDERSON supplemented  this  question and  asked how  many                                                               
people were in the chamber.                                                                                                     
MR. STEVENS said that there were 500 people.                                                                                    
CHAIR  ANDERSON  then  asked  that  of  the  500  Chamber  member                                                               
employers, how  many employees  each of  these employers  have in                                                               
their employ.                                                                                                                   
MR.  STEVENS  answered  that  there  were  large  employers  with                                                               
thousands  of employees  and  small employers  with  only two  or                                                               
three employees.                                                                                                                
4:34:05 PM                                                                                                                    
CHAIR ANDERSON stipulate that for  the argument, he would suggest                                                               
that  there  are 50,000  employees  total.    He then  said  that                                                               
according  to the  testimony given  earlier, you  have had  input                                                               
given by  people from  within the chamber,  not detailing  how to                                                               
fix it,  but that the  rise in rates has  been disproportionately                                                               
high  and that  it  could  not be  attributable  to accidents  or                                                               
claims, or lawsuits, or overcharging by medical practitioners.                                                                  
4:34:31 PM                                                                                                                    
REPRESENTATIVE KOTT  stated that a  portion of the  increase that                                                               
the  presenter  experienced  had  to  do  with  the  risk  factor                                                               
associated with the industry.                                                                                                   
4:35:09 PM                                                                                                                    
REPRESENTATIVE LYNN  indicated that  the presenter  had indicated                                                               
earlier that  he was  not so worried  about specific  sections of                                                               
the bill  but that one  section is  concerned with roll  backs in                                                               
medical and  asked if there  were going  to be enough  doctors to                                                               
take care of the people on worker's compensation.                                                                               
MR. STEVENS  answered that if  contractors rolled back  prices to                                                               
1990 prices, there  would be fewer steel workers.   This is not a                                                               
perfect  bill,  and we  don't  fix  the  problem, there  will  be                                                               
ancillary  problems  such  as businesses  shutting  down,  people                                                               
  leaving  the  state because  of  the  lack  of attention  to  the                                                             
  4:37:21 PM                                                                                                                  
  REPRESENTATIVE  LYNN  agreed  and  said   that  this  has  to  be                                                             
  addressed this year and he  agreed that if medical care providers                                                             
  don't get  the money that they  want, they are not  going to take                                                             
  care of the problem on their end.                                                                                             
  REPRESENTATIVE CRAWFORD pointed out that  there is no free lunch.                                                             
  Someone is going to pay for  the increase somewhere in the chain.                                                             
  He  made the  observation that  the crisis  in insurance  extends                                                             
  further than  just to worker's  compensation, that it  extends to                                                             
  auto, home,  and health as  well.  He said  that he does  not see                                                             
  any movement  towards going  after those areas.   He  stated that                                                             
  the  bill  before the  committee  right  now denies  many  people                                                             
  benefits that  they have right now.   He ended by  iterating that                                                             
  there is a  problem here but it  would take a lot  more than what                                                             
  is offered in the bill before the committee.                                                                                  
  4:39:29 PM                                                                                                                  
  MR. STEVENS agreed  and stated that crises  abound throughout the                                                             
  legal, medical, and  insurance industry.  He then  stated that it                                                             
  would  take changes  in all  of these  to make  a difference  and                                                             
  create a  system that works.   He then suggested  that, referring                                                             
  to  Representative Crawford's  statement, that  it does  not make                                                             
  any sense  to ignore the plight  of the worker and  job security,                                                             
  since this  is how  they are  insured an income.   If  they don't                                                             
  have jobs, then  the rest of the financial  environment becomes a                                                             
  moot point.                                                                                                                   
  REPRESENTATIVE KOTT asked if the  presenter believed it fair that                                                             
  the  State  Chamber  of  Commerce   get  tossed  into  this  huge                                                             
  insurance  pool  with  other  employers   around  the  state  and                                                             
  experience  substantive increases  that have  nothing to  do with                                                             
  claims paid.                                                                                                                  
  MR. STEVENS answered that he did not  agree with this at all.  He                                                             
  then stated  that cost equalization  did not make sense  and that                                                             
  ironworkers and secretarial  workers did not operate  in the same                                                             
  environment.  Ironworkers have higher  risks, work higher off the                                                             
  ground, and there are many licenses  that are required to work in                                                             
  this industry.   Office  workers do  not have  this type  of hard                                                             
  work environment.                                                                                                             
4:41:22 PM                                                                                                                    
REPRESENTATIVE  KOTT  asked  how  long the  chamber  been  paying                                                               
worker's compensation.                                                                                                          
MR. STEVENS answered  that this had been going on  at least since                                                               
he had been there.                                                                                                              
JERRY FLOCK stated that he did  not want to offend anyone present                                                               
or in  the state offices and  that he wanted his  testimony to be                                                               
heard and  learned from.   He  began by stating  that he  did not                                                               
think that  the problem  had to  do with  how the  laws regarding                                                               
workers' compensation  were written,  but how they  are enforced.                                                               
[Mr.  Flock then  proceeded to  play a  third party  conversation                                                               
which seemed to  be about collecting money owed to  the state for                                                               
company  violations  and  enforcement  of  workers'  compensation                                                               
MR. FLOCK  indicated that  this tape  recording because  it shows                                                               
how the  laws are not being  enforced.  He stated  that the state                                                               
of Alaska had paid $10,500  to him for workers' compensation, and                                                               
added  that  this was  his  employer's  responsibility.   Yet  he                                                               
needed more  help which was  legally due to  him, he did  not get                                                               
it.  He  emphatically stated that his problems  with dealing with                                                               
injuries,  and  the  problems   with  getting  compensation  were                                                               
indicative of the problems that  are being experienced by many in                                                               
the   state,   state    agencies,   social   security,   workers'                                                               
compensation, and the state judicial system.                                                                                    
MR. FLOCK  stated that in conclusion,  he wanted to make  it very                                                               
clear  that the  problems  with workers'  compensation have  been                                                               
going on for  more than three years and that  the legislators are                                                               
not dealing with  the problem, and that this is  the problem.  He                                                               
ended by stating that he  has outstanding medical claims that are                                                               
in his opinion, the states  responsibility and that this claim is                                                               
not disputed  by his  supporters. He  then asked  the legislature                                                               
not to pass the bill.                                                                                                           
DON ETHRIDGE,  Lobbyist, AFL-CIO, pleads  that this bill  not get                                                               
passed, and that his group  was having some problems with several                                                               
sections of the bill.  He then  stated that before he came to the                                                               
meeting, he had  spoken to Barbara Huff, who  indicated that they                                                               
were still  in the  process of meeting  with the  Governors staff                                                               
and the ad hoc committee has  pledged to continue working on this                                                               
and are trying to find ways to save money.                                                                                      
4:50:02 PM                                                                                                                    
  MR.  ETHERIDGE indicated  that there  is also  a commitment  from                                                             
  labor to  stay at the table  until this is fixed.   Mr. Etheridge                                                             
  said  that although  [labor's] chief  concern is  the worker  and                                                             
  more  importantly,  the  injured  worker,  [those  in  the  labor                                                             
  industry]   understand  the   employer's   viewpoints  as   well.                                                             
  [Laborers] have the  same rising costs in their  health trusts as                                                             
  well.  He  related that "we" definitely want a  bill here and are                                                             
  committed to fixing  this.  A good bill means  as much to workers                                                             
  as  it  does to  employers.    Mr.  Ethridge requested  that  the                                                             
  legislation be held until it satisfies everyone.                                                                              
  CHAIR  ANDERSON  asked  since   the  special  session  last  year                                                             
  produced no  agreeable resolution,  he asked  if Mr.  Stevens had                                                             
  come up with a  product that ad hoc and labor  could agree on and                                                             
  MR. ETHERIDGE answered that if  the ad hoc committee supports it,                                                             
  that his  group as well as  himself, does as well.   However, the                                                             
  Governor  did not  use their  input and  came up  with a  bill on                                                             
  their own.                                                                                                                    
  4:53:35 PM                                                                                                                  
  CHAIR ANDERSON  pointed out that  some are not supportive  of the                                                             
  ad  hoc bill,  yet say  they are  supportive of  labor.   Yet Mr.                                                             
  Stevens, who  represents labor, indicated  that he  would support                                                             
  the ad  hoc bill,  though the  bill did  not have  the Governor's                                                             
  support.   He then  asked if they  tried to move  it out  by this                                                             
  Friday, would he then support the bill.                                                                                       
  MR. ETHERIDGE  said no, at this  time he would not  support this.                                                             
  His concern what would happen in  the next committee.  He further                                                             
  stated that he  would like to have  the work on the  bill done in                                                             
  this committee,  since it is  a labor and commerce  committee. He                                                             
  then said  that there  also needs  to be  some assurance  that it                                                             
  wont be  held back or  sent back.  He  then stated that  the bill                                                             
  sponsor  basically  tries  to  get  it  through  the  committees;                                                             
  basically  the bill  is being  pushed around  until everyone  has                                                             
  their  hand in  constructing  and  debating the  bill.   This  is                                                             
  contrary to what the Department of Labor is wanting.                                                                          
  4:55:21 PM                                                                                                                  
  REPRESENTATIVE LYNN asked  what the current status of  the ad hoc                                                             
  committee meeting is with the Governor's people.                                                                              
MR. ETHERIDGE  indicated that  he did not  know what  the current                                                               
status could  be, but  at 3:30,  when he  came to  this committee                                                               
meeting, they  were still meeting,  and the information  from the                                                               
people  in the  meeting  suggested that  new  proposals had  been                                                               
submitted  by the  Governors office.   Once  they finished  their                                                               
meeting, there  were going to go  into a meeting of  their own to                                                               
discuss the new proposals.                                                                                                      
REPRESENTATIVE LYNN  indicated that  he wanted  to work  with the                                                               
absolutely latest  bill and that he  would like to work  with the                                                               
latest bill if it's still in ad hoc committee.                                                                                  
REPRESENTATIVE KOTT asked when was the ad hoc committee formed.                                                                 
4:57:40 PM                                                                                                                    
MR. ETHERIDGE said  that they formed in 1981, when  as now, there                                                               
was a problem with workers'  compensation laws.  They figured out                                                               
that they  needed an ad hoc  committee, since the main  group was                                                               
not getting anywhere.                                                                                                           
4:58:14 PM                                                                                                                    
REPRESENTATIVE KOTT then  asked if the Department of  Labor had a                                                               
suit (meaning the general makeup of the committee).                                                                             
MR.  ETHERIDGE  indicated  that   there  are  five  members  from                                                               
organized  labor,  small  and large  businesses,  and  from  both                                                               
management and worker sides.                                                                                                    
REPRESENTATIVE KOTT asked  if, during the course  of the previous                                                               
summer, did the Governor's administration  provide input into the                                                               
process of their proposal development.                                                                                          
MR. ETHERIDGE  answered that  the ad hoc  people were  present at                                                               
the meetings,  but they did  not bring  forth any ideas  of their                                                               
own.  Instead what  our ad hoc people did was  to start with last                                                               
years failed legislation, and went  through it section by section                                                               
and  then  from  that  point,  they  asked  for  more  additional                                                               
information  from  the  Department  of  Labor.    Some  of  these                                                               
requests have been followed up, and others have not.                                                                            
4:59:50 PM                                                                                                                    
REPRESENTATIVE KOTT  asked if it  was a fair  characterization to                                                               
suggest  that every  substantive piece  of workers'  compensation                                                               
reform has come from the ad hoc committee.                                                                                      
  MR. ETHERIDGE answered  yes, that was correct;  this included the                                                             
  1988 overhaul.                                                                                                                
  REPRESENTATIVE  KOTT asked  that  the  big names  of  the ad  hoc                                                             
  committee be revealed.                                                                                                        
  MR. ETHERIDGE  announced that Kevin Daugherty,  the counselor for                                                             
  the Alaska District  of Council Laborers, and  Dick Catanaugh, of                                                             
  the ABC, is the chair for the management side.                                                                                
  REPRESENTATIVE  KOTT  asked  if  HB  180  had  any  cost  savings                                                             
  whatsoever,  or for  that matter,  reduce, or  at least  hold the                                                             
  line on costs.                                                                                                                
  MR. ETHERIDGE  answered that  he did  not believe  it would.   He                                                             
  said  that there  would likely  be an  increase in  medical rates                                                             
  since injured  workers will  continue to  use the  emergency room                                                             
  instead of  clinics, since medical  care providers  will continue                                                             
  refusing workers'  compensation cases.   The other concern  is an                                                             
  increase in health  trust costs, which would be  increased due to                                                             
  shifts in  causality from  work to home,  when workers  are asked                                                             
  where an injury took place.                                                                                                   
  5:01:53 PM                                                                                                                  
  REPRESENTATIVE KOTT  pointed out  that these gentlemen  [from the                                                             
  ad  hoc committee]  are known  by  him, and  that they  represent                                                             
  pretty  hard-core  views  and this  characteristic  helps  create                                                             
  dialog, where it  will not only benefit injured  workers but also                                                             
  to benefit businesses  that are paying high rates.   He then said                                                             
  that he was  encouraged that the ad hoc people  were meeting with                                                             
  the court  system and he hoped  that these parties could  look at                                                             
  this  bill and  do  something to  fix  the workers'  compensation                                                             
  5:03:42 PM                                                                                                                  
  MR. ETHERIDGE  indicated that the  Department of Labor  wanted to                                                             
  see something done with the bill  and that they were committed to                                                             
  the process.                                                                                                                  
  REPRESENTATIVE  LEDOUX  pointed  out  that  the  section  of  the                                                             
  Governor's bill  which sets up  a new appeals commission  was not                                                             
  duplicated in  the ad hoc  committee's bill.   She then  asked if                                                             
  anyone had pushed to have this in the ad hoc bill.                                                                            
5:05:20 PM                                                                                                                    
MR.  ETHERIDGE said  that the  ad hoc  committee did  establish a                                                               
super  panel  that  included  the   two  most  senior  labor  and                                                               
management people and one of the  paid hearing officers to sit as                                                               
a panel  to make decisions for  the group long after  it had been                                                               
appealed  to  a  higher  group.   The  Governor  was  asking  for                                                               
precedent setting cases and the  ad hoc committee decided to deal                                                               
with it this way.                                                                                                               
5:06:19 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG said,  in  reference  to concerns  about                                                               
health trusts  that were  addressed earlier,  asked what  type of                                                               
cost containment  in managed care  techniques are being  used and                                                               
what,  if any,  are the  application implications  of these  same                                                               
techniques, to the workers' compensation problems.                                                                              
MR.  ETHERIDGE  said  that  the  majority  of  the  trust  raised                                                               
contribution rates.  During the  negotiations most of them raised                                                               
contribution rates.   Some of  them cut back benefits  and others                                                               
had to  do drastic  cuts to  help curtail  costs, since  they had                                                               
gone  from  $10  million  to  $900,000  in  reserves.    He  then                                                               
indicated  that they  had  built  the reserves  back  up and  the                                                               
benefits are back but the rate increase is still in place.                                                                      
REPRESENTATIVE ROKEBERG stated that  he appreciated the candor of                                                               
Mr. Etheridge,  but I don't  share Representative  Kott's opinion                                                               
about the  ad hoc committee.   I believe that this  committee has                                                               
been usurper of  legislative power and its  out responsibility to                                                               
the state of  Alaska to do the  law making.  By  depending on the                                                               
ad hoc  committee we do  the constituents  a disservice.   We are                                                               
not doing our job.                                                                                                              
CHAIR ANDERSON stated  that on this note, he has  decided that on                                                               
Friday,  the  committee  would  go  over each  of  the  bill  and                                                               
hopefully we can  come to a conclusion. He announced  that he did                                                               
not intend  on going along with  the decision made by  the ad hoc                                                               
committee, though he had respect  for the group's efforts.  Input                                                               
needs to be had from groups  ranging from tort reform and medical                                                               
disputes, like the one Mr. Flock is experiencing.                                                                               
5:09:04 PM                                                                                                                    
MR. ETHERIDGE stated  that for clarification 4 of  the members of                                                               
the  ad hoc  committee were  also  the owners  of businesses  and                                                               
members of the chamber of commerce.                                                                                             
  REPRESENTATIVE LEDOUX  asked if the  ad hoc committee  was making                                                             
  any effort to work with the medical care providers.                                                                           
  MR. ETHERIDGE  indicated that  they have  brought in  the medical                                                             
  community and  attorneys that were  interested in talking  to the                                                             
  CHAIR  ANDERSON announced  that  several witnesses  have to  call                                                             
  back when  there is  more time.   He said  that the  last witness                                                             
  that will be  testifying will be Beverly  Aleck, Amchitka Workers                                                             
  who has  given the  committee several  emails, faxes  and letters                                                             
  regarding her subject matter.                                                                                                 
  5:11:55 PM                                                                                                                  
  BEVERLY   ALECK,   representative,  Amchitka   Nuclear   Workers,                                                             
  indicated that  she had  been connected  with the  situation here                                                             
  [Aleutian  Islands] and  its atomic  test  site for  a number  of                                                             
  years.   She said that the  documents that she sent  along to the                                                             
  committee are actually  requests to either amend  the bill before                                                             
  you  or  maybe  a  special  legislative  act  could  be  invoked.                                                             
  Listening  to   the  complex  problems  here,   and  taking  into                                                             
  consideration the extent of the  claims that the Amchitka workers                                                             
  have filed already,  numbering up to $125,000 to  $200,000, it is                                                             
  clear that the  situation in Amchitka should not an  issue of the                                                             
  insurance underwriter.                                                                                                        
  CHAIR ANDERSON  asked that she be  more focused here as  time was                                                             
  limited  and stated,  knowing  her history  and  her interest  in                                                             
  workers' compensation coverage for  the Amchitka worker, that the                                                             
  odds of  it being added  to the  present bill were  difficult and                                                             
  tenuous at  best, since we  already have the bill  structured for                                                             
  the most part.                                                                                                                
  MS. AFLECK continued by stating  that ratifying the Memorandum of                                                             
  Understanding  (MOU)  between  the  State  Workers'  Compensation                                                             
  Board and  the United  States Department of  Energy (DOE).   This                                                             
  letter says  that the  DOE will agree  to indemnify  an agreement                                                             
  with a  DOE contractor.   She  indicates that  her group  has one                                                             
  contractor  that  is  associated  with  the  claims.    She  then                                                             
  mentioned  that a  contractor from  the state  of Nevada,  called                                                             
  Bechtel  Nevada.   Her documents  show that  this contractor  did                                                             
  agree to  file, following an  order that called to  reimburse and                                                             
  pay the claim.                                                                                                                
  5:14:33 PM                                                                                                                  
MS.  AFLECK  announced  that  the  problems  here  are  insurance                                                               
litigating attorneys.   The thing that would  make the procedures                                                               
simpler is to have Bechtel  Corporation instead of clients having                                                               
to fight insurance attorneys.  The  funding for the this seems to                                                               
be coming from the Alaska  Guaranteed Fund, and this funneling is                                                               
inappropriate and  she suggested  that this be  looked at  and an                                                               
inventory be made on this fund.                                                                                                 
5:15:56 PM                                                                                                                    
CHAIR ANDERSON stated  that this needed to be taken  care of in a                                                               
separate bill but that it was important.                                                                                        
5:16:05 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG pointed  out that  he did  not have  the                                                               
packet  that Ms.  Aleck had  passed onto  the committee  and that                                                               
this issue  was important to him,  as his father was  involved in                                                               
this  Amchitka   project  [concerning  nuclear  testing   on  the                                                               
Aleutian  Peninsula].    He  then  asked  that  the  material  be                                                               
forwarded immediately to his office.                                                                                            

Document Name Date/Time Subjects