Legislature(1999 - 2000)
04/19/2000 02:15 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 419-WORKERS' COMPENSATION
REPRESENTATIVE NORM ROKEBERG, sponsor of HB 419, gave the following
explanation of the bill. HB 419 is a major rewrite of the workers'
compensation statute of 1988. This bill raises benefits to the
workers and, as a result, raises premiums to employers. Premiums
will increase from 7.7 percent to 8.7 percent to help defer the
cost of the additional benefits provided to workers. This increase
is long overdue. HB 419 was put together by the Ad Hoc Committee
on Workers' Compensation, organized labor, the workers and business
of the state and himself. HB 419 strikes a delicate balance
therefore he counsels against making major changes to the bill. The
House held substantial hearings on this bill and the Legislative
Audit Division recently audited the Workers' Compensation Division.
HB 419 contains the recommendations from that audit except one that
would provide for stiffer penalties for underinsured employers.
MR. PAUL GROSSI, Director of the Division of Workers' Compensation
in the Department of Labor and Workforce Development (DOLWD)
informed committee members that the department supports HB 419. It
provides much needed increases in workers' compensation benefits
which have not increased for 12 years. The bill also contains
provisions for employers that pertain to procedures. It contains
a simple method for waiving retraining benefits, it streamlines
timelines, and it clarifies what benefits are paid during the
rehabilitation process. It also increases the timeline for paying
medical bills, it provides a two year timeline for hearing
requests, it establishes a simple process to obtain medical
releases and it provides for an annual update of usual and
customary fees.
MR. WILLY VAN HEMERT made the following comments. He is a
representative of the Workers' Compensation Committee of Alaska and
he co-chaired the Ad Hoc Committee. He supports HB 419 as a
balanced package. It contains some reasonable increases in
benefits. It currently benchmarks the maximum and minimum weekly
wage which will increase from $700 to $773, the fifth highest in
the United States. It also increases the death benefit to 100
percent of spendable up to the maximum weekly wage. That will make
Alaska the only state that pays above 85 percent. It addresses all
of the issues in the Workers' Compensation Division audit that
related to legislative action. He offered to answer questions.
MR. MATT O'BRIEN, President of the Alaska AFL-CIO, said without the
Ad Hoc Committee system in which management and labor can work
together to negotiate a settlement, opposing parties would have
offered conflicting legislation that would have gone nowhere. Even
with a cooperative effort, it has taken 12 years to adjust and
correct some of the problems that occurred in 1988. Legislation
passed in 1991 but it was vetoed by the Governor.
CHAIRMAN TAYLOR announced that HB 419 was again before the
committee.
MR. KEVIN DOUGHERTY, Co-Chair of the Ad Hoc Committee on Workers'
Compensation, informed committee members that he represented the
labor side during the negotiations. He supports the bill as it
represents a consensus on items that the committee agreed to.
REPRESENTATIVE ROKEBERG asked that any proposed amendments be faxed
to the Legislative Information Offices.
SENATOR DONLEY moved to adopt Amendment 1, labeled 1-LS1418\M.13.
Amendment 1 reads as follows.
7/19/:0
A M E N D M E N T 1
OFFERED IN THE SENATE BY SENATOR DONLEY
TO: CSHB 419(RLS)
Page 3, line 31, following ";":
Delete "and"
Insert "[AND]"
Page 4, line 3, following "plan":
Insert "; and
(10) a provision requiring that, after a person has
been assigned to perform medical management services for an
injured employee, the person shall send written notice to the
employee, the employer, and the employee's physician
explaining in what capacity the person is employed, whom the
person represents, and the scope of the services to be
provided"
SENATOR DONLEY explained that Amendment 1 would require a person
who is assigned to perform medical management services for injured
workers to send a full disclosure notice to the injured worker and
his or her physician stating who that person is representing and
the scope of the services that person is to provide.
CHAIRMAN TAYLOR objected to the motion for the purpose of
discussion. He stated that he has encountered this problem in the
past when representing people. He noted the biggest problem he has
with the bill is that he cannot find an attorney to represent
anyone because the attorneys fees were stripped from the bill
during the last rewrite.
Number 2061
MR. GROSSI commented that some employers and insurance companies
employ medical management people who are usually nurses and who are
assigned to a case. They review the medical records and talk with
the injured employee. Often they will schedule medical evaluations
and then advise the employer on the injury. The Workers'
Compensation Board also has rehabilitation counselors who determine
eligibility for re-employment benefits. Mr. Gross said the
Department of Labor has no problem with Amendment 1.
MR. VAN HEMERT asked if there will be adequate time to notify the
employee, employer, and the employee's physician if the injury is
serious. He said on the face of it, he does not see Amendment 1 as
a problem.
There being no further discussion or objection to Amendment 1,
CHAIRMAN TAYLOR announced that it was adopted.
SENATOR DONLEY moved to adopt Amendment 2 which reads as follows.
A M E N D M E N T
OFFERED IN THE SENATE BY SENATOR DONLEY
TO: CSHB 419(RLS)
Page 8, line 25:
Delete "a new subsection"
Insert "new subsections"
Page 8, following line 28:
Insert a new subsection to read:
"(q) Unless compensation due the employee under this
chapter is paid by negotiable instrument that can be cashed
not more than three business days after being issued, the
employer shall increase the weekly rate of compensation due
the employee under AS 23.30.175 by two percent."
SENATOR DONLEY explained that this provision was included in the
workers' compensation bill that was passed by the legislature in
1991 but was vetoed by the Governor. It requires that when the
insurance company pays compensation to an injured employee, it pay
with a negotiable instrument that can be cashed no more than three
days after being issued. One company paid injured workers with
checks issued from the Bahamas and the workers had to wait several
weeks for the checks to clear.
CHAIRMAN TAYLOR objected for the purpose of discussion.
Number 1713
MR. DOUGHERTY stated that both Amendments 1 and 2 are good in
substance to consider long term and that those two issues were part
of the 1991 bill but all participants have a commitment to stick
with the bill sent to the Senate Judiciary Committee for several
reasons. He suggested the Ad Hoc Committee review the proposed
amendments during the summer rather than adopt them now and slow
the bill down.
REPRESENTATIVE ROKEBERG pointed out that the three day limit in
Amendment 2 pertains to banking law, not workers' compensation. He
suggested removing the three day limit and instead requiring that
the negotiable instrument must be drawn on a state or federally
insured financial institution.
MR. GROSSI indicated that right now payments must be made within 14
days by an instrument that is negotiable in the State of Alaska.
He was not sure whether Amendment 2 is more or less than current
statute.
MR. VAN HEMERT stated WCCA opposes Amendment 2. He added that
Amendment 2 also removes Section 14 of the bill which was an issue
related to the payment of interest.
SENATOR DONLEY asked how much time the Ad Hoc Committee spent
examining the 1991 bill that passed the legislature and why the
Committee did not incorporate any of those provisions.
MR. VAN HEMERT said he was not involved in 1991 but he was involved
in the 1995 Ad Hoc Committee. For good or bad, labor and
management bring issues to the table and that issue was not brought
forward by either side.
SENATOR DONLEY said he was surprised because in communications with
members on the committee when it was first forming, he suggested
using the 1991 amendments as the starting point. He asked Mr. Van
Hemert if the Ad Hoc Committee ever considered any of those
amendments.
MR. VAN HEMERT said he did not have the 1991 amendments when the
committee was confering.
SENATOR DONLEY remarked that illustrates the weaknesses in the ad
hoc process. Back in 1988, the legislature was promised that
committee would continue. Many commitments were made at that time
which have not been kept. When he was asked early on in the
process what kinds of things the committee should look at, he
suggested the 1991 bill but it was never discussed. He expressed
concern about deferring to a group that was not elected to make
public policy. He said he is willing to continue to work on
Amendment 2 with Representative Rokeberg. He then withdrew
Amendment 2.
CHAIRMAN TAYLOR cited AS 21.89.030 which provides that, "an
insurance company doing business in this state may not pay a
judgment or settlement of a claim in this state for a loss incurred
in this state with an instrument other than a negotiable bank check
payable on demand and bearing even date with the date of writing or
by electronic funds transfer."
Number 1381
SENATOR DONLEY moved to adopt Amendment 3 which reads as follows.
A M E N D M E N T 3
OFFERED IN THE SENATE BY SENATOR DONLEY
TO: CSHB 419(RLS)
Page 3, line 31, following ";":
Delete "and"
Insert "[AND]"
Page 4, line 3, following "plan":
Insert "; and
(10) a provision relating to health insurance
benefits that complies with AS 23.30.047"
Page 5, following line 32:
Insert a new bill section to read:
"* Sec. 8. AS 23.30 is amended by adding a new section to read:
Sec. 23.30.047. Benefits for health insurance. (a) An
employer who pays compensation to an injured employee under
AS 23.30.041(k), 23.30.180, 23.30.185, 23.30.190, 23.30.200,
or 23.30.215 and who provided health insurance to the employee
at the date of injury shall also reimburse the employee for
health insurance coverage for the employee and covered
dependents, as provided in this section.
(b) Payment required under this section is equal to the
employer's current contribution for health insurance or the
amount paid by the employee for replacement coverage,
whichever amount is less. Payment required under this section
commences when the employee's health insurance provided by the
employer's contribution ceases and shall continue until the
employee is no longer receiving compensation described in (a)
of this section, or for 18 months, whichever period is
shorter.
(c) Payment is not required under this section until the
employee provides proof of health insurance coverage. In this
subsection, "health insurance" includes
(1) an individual policy of health insurance; or
(2) a notice of self-payment for continuance of
coverage required under 29 U.S.C. 1161 (Consolidated Omnibus
Budget Reconciliation Act of 1985) or under a union health or
welfare trust agreement.
(d) If benefits required under this section are not paid
within 30 days after the employer receives a request for
payment, the employer shall pay a penalty equal to 25 percent
of the amount due."
Renumber the following bill sections accordingly.
Page 12, line 28:
Delete "2 - 19"
Insert "2 - 20"
Page 12, line 29:
Delete "20"
Insert "21"
Page 12, line 30:
Delete "21"
Insert "22"
SENATOR DONLEY explained that Amendment 3 picks up a provision that
were in the 1991 legislation. That provision dealt with a
situation when a worker loses a job due to an injury and collects
workers' compensation whether insurance coverage provided by that
employer will still be available for the worker's family members.
CHAIRMAN TAYLOR asked if Amendment 3 would provide such coverage
for 18 months. He thought some rights and benefits would be
available under COBRA although the premium would be paid by the
employee.
MR. GROSSI stated the value of the health insurance can be
calculated into the workers' compensation rate itself and used
toward health insurance coverage.
CHAIRMAN TAYLOR asked if the bill needs an offset for that
calculation.
MR. GROSSI said it probably does.
Number 1164
SENATOR DONLEY stated the benefits are a percentage of the weekly
wage so it is still at a percentage of what the total compensation
package would be, evening including the health care.
MR. GROSSI said it is at 80 percent of the spendable weekly wage
which is 80 percent of the net. That would also include the value
of the benefit.
SENATOR DONLEY stated even if it is rolled in, it is discounted by
20 percent. He asked if the COBRA insurance is available at the
same rate as if it had been paid for by the employer and whether
the same insurance has to be made available.
MR. FREY replied COBRA plans can be incrementally higher but the
difference is only slightly higher than the regular premium.
CHAIRMAN TAYLOR commented that under today's system, the injured
employee who receives workers' compensation but is no longer
employed, receives, as part of the compensation, an amount to pay
for health coverage. He asked if the 80 percent net pay, with
health care costs factored in, is based on the full cost of the
premium or the amount that the employer contributed toward the
premium, for example 80 percent.
MR. FREY replied it is based on the full amount of the monthly
premium.
SENATOR DONLEY asked if COBRA requires coverage to be provided by
the same company that was providing the coverage prior to the
injury.
Mr. FREY explained that COBRA is a federal law. In his experience
as a trustee for the laborers' health care trust fund, the Union
must offer comparable insurance upon certain triggering events. He
was not certain whether the coverage must be identical but it does
have to be comparable.
MR. BOB LOHR, Director of the Division of Insurance, asked that Dan
Brow, the Consumer Services Specialist, to address that question.
MR. BROW stated that under the federal guidelines for COBRA, the
insurance plan for the former employee is allowed to continue as
indicated under specific circumstances. However, the ability to
continue that plan is contingent upon the insurance plan remaining
in existence. If an employee elected COBRA coverage, with the
termination of the employer's plan, the COBRA coverage would
terminate.
CHAIRMAN TAYLOR commented that the COBRA coverage will remain in
effect for 18 months as long as the premium is paid. He noted the
insurance coverage will cost a little more while the worker's
income stream will be discounted by about 20 percent because of the
workers' compensation calculation. He thought this bill might have
a major financial impact.
SENATOR DONLEY remarked, "Mr. Chairman, now that we've created a
record that shows that the public policy call is - what we really
want is workers to be covered. We want their families to remain to
be covered for a reasonable period of time. It is really terrible
public policy that somebody injured on the job would lose their
health benefits. The workers' comp system is supposed to be
designed to make people whole, not to make them less than whole.
If they were working, they would have this coverage. But I think,
now that we've established on the record that the existing system
provides 80 percent of this coverage, I'd be willing to withdraw
this amendment only with that understanding, that the existing
system is at least providing 80 percent of this very important
valuable coverage for Alaskan families and injured workers. If it
wasn't for that, then I think that this would be an absolute
essential to place in this bill. So with that I'd go ahead and
withdraw Amendment 3."
CHAIRMAN TAYLOR announced that Amendment 3 was withdrawn with no
objection.
SENATOR DONLEY proposed Amendment 4 which would change, on page 10,
line 8, the funeral expense provision. That provision was last set
in 1982. The bill proposes to adjust the amount for inflation
since 1988. He has received numerous communications from families
in tragic situations over the last decade where a worker in the
family has died. The families have complained about the terrible
inadequacy of the $2500 funeral expense coverage. He does not
believe $3300 goes far enough. He stated this should not have much
of an effect actuarially because the number of workers who die on
the job is small. He moved to adopt Amendment 4 to change the $3300
amount to $10,000.
Number 594
MR. GROSSI estimated that 20 to 30 Alaskan workers suffer this
tragedy.
CHAIRMAN TAYLOR objected for the purpose of discussion.
REPRESENTATIVE ROKEBERG stated that the amount is for funeral
expenses and that $4500 to $6,000 should be adequate.
SENATOR DONLEY agreed that the cost of a funeral is probably
between $4,000 and $6,000 which makes him question why the bill
only contains $3,300 for a person who is killed in the workplace.
He pointed out there are other intangible costs associated with the
death of the major breadwinner of a family which are very stressful
for the family. He thought to pay $10,000 for the 20 or 30 Alaskan
families who suffer such a loss is reasonable.
CHAIRMAN TAYLOR thought $10,000 was a bit high and said he would
compromise at $5,000.
SENATOR DONLEY said he appreciates the committee's consideration of
this issue because although it effects only a few folks, their
letters are very touching.
CHAIRMAN TAYLOR maintained his objection to adopt Amendment 4.
AN UNIDENTIFIED SPEAKER said he agrees in principle with Senator
Donley. He noted that 17 states provide $5,000 and only five
states provide more than $5,000. He added the basic charge for a
funeral with full services is $4,700.
A roll call vote was taken on the motion to adopt Amendment 4.
That amendment failed with Senators Ellis and Taylor voting "nay"
and Senator Donley voting "yea."
CHAIRMAN TAYLOR moved to change, on page 10, line 8, the amount of
$3,300 to $5,000. There being no objection, the motion carried.
REPRESENTATIVE ROKEBERG suggested changing Amendment 2 to read:
(q) Unless compensation due the emmployee under this chapter
is paid by negotiable instrument that is drawn on a state or
federal financial institution, the employer shall increase the
weekly rate of compensation due the employee under AS
23.30.175 by two percent.
REPRESENTATIVE ROKEBERG noted that "a state or federal financial
institution" is defined in statute. He thought that language
addresses Senator Donley's concern with offshore trust-checks that
are slow to clear.
SENATOR DONLEY moved to adopt Amendment 2.
CHAIRMAN TAYLOR objected and asked if Senator Donley intended to
move Amendment 2 as amended.
SENATOR DONLEY renewed his motion to adopt Amendment 2 containing
the language as proposed by Representative Rokeberg.
TAPE 00-25, SIDE A
Number 0000
There being no further discssion, CHAIRMAN TAYLOR announced that
Amendment 2 as amended was adopted. He stated his only frustration
with this legislation is that the Ad Hoc Committee did not address
the issue of attorney's fees and whether or not injured workers in
this state would have improved representation. He believes that is
one of the most serious defects in the law. There may be no
incentive on the part of employees to worry about it but injured
workers have difficulty finding an attorney to represent them and
if that occurs, most of the great laws that are passed do not count
for much. It has caused the State board to reach out beyond its
authority to compensate people and it has caused some insurance
companies to misuse and abuse employees.
SENATOR DONLEY stated that he examined that question extensively in
1988 and he found that the defense attorney costs were in some
cases four or five times the costs of the workers' attorneys. The
insurance companies were spending a tremendous amount of money to
defend cases while it was very difficult for injured workers to
find anyone to represent them. He agreed with Chairman Taylor on
that issue and added that is another weakness of the ad hoc
process. While the ad hoc process has benefits from not including
the actual people who represent the parties on either side, it also
fails to draw from their knowledge about the specific types of
things that are going wrong.
REPRESENTATIVE ROKEBERG commented that Senator Donley made a good
point. He suggested involving legislative Labor and Commerce
Committee members or their designees in the ad hoc committee
process in the future.
SENATOR DONLEY moved SCS CSHB 419(JUD) from committee with
individual recommendations. There being no objection, the motion
carried.
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