Legislature(2009 - 2010)BUTROVICH 205

04/05/2010 11:00 AM Senate JUDICIARY

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 8:30 am 4/7/10 --
-- Please Note Time Change --
Uniform Rule 23 Waived
Heard & Held
Heard & Held
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Moved CSSB 292(JUD) Out of Committee
          SB 303-WORKERS' COMPENSATION AND CONTRACTORS                                                                      
CHAIR FRENCH announced the consideration of SB 303.                                                                             
11:14:42 AM                                                                                                                   
SENATOR  JOE  PASKVAN, sponsor  of  SB  303,  said this  bill  is                                                               
designed  to  establish  responsibility  and  accountability.  It                                                               
advances  conservative principles  and fundamental  capitalism by                                                               
requiring   owners,  general   contractors   and   others  on   a                                                               
construction project to comply with  the basic principle that is,                                                               
"If you  break it you pay  for it." He added  that it's important                                                               
to understand  that in  Alaska under the  concept of  general law                                                               
known as apportionment, an owner  or general contractor who is 25                                                               
percent at  fault is only  liable for  25 percent of  the injury.                                                               
It's not  the case that someone  who is 1 percent  at fault would                                                               
be 100 percent responsible.                                                                                                     
SENATOR  PASKVAN  reminded the  committee  that  this nation  was                                                               
formed  on  the concept  that  the  government and  its  citizens                                                               
should  be   responsible  and  accountable  for   their  wrongful                                                               
conduct.  This  was a  basic  and  fundamental principle  to  the                                                               
founding  of  this country  and  likewise,  the core  concept  in                                                               
Alaska was that the government  may be responsible for wrongdoing                                                               
to individual  citizens. However, that  changed in 2004  with the                                                               
creation  of  a  privileged  class that  was  immune  from  their                                                               
wrongful conduct. SB 303 seeks to remove immunity.                                                                              
11:17:37 AM                                                                                                                   
SENATOR PASKVAN  noted that  an argument  that has  been advanced                                                               
says  that  SB 303  will  promote  double  dipping, but  that  is                                                               
patently  not  true.  AS  23.30.015(g),   which  deals  with  the                                                               
workers'  compensation system  when third  parties are  at fault,                                                               
has since  statehood said that  if the employee  recovers damages                                                               
from the third party, that  employee shall reimburse the employer                                                               
for  what  they  paid  to  the  workers'  compensation  insurance                                                               
carrier.  Thus,  there  is no  potential  whatsoever  for  double                                                               
dipping, he said.                                                                                                               
SENATOR PASKVAN said there has  been a question about whether the                                                               
worker's compensation remedy is adequate,  but he would point out                                                               
that the workers' compensation system  was never designed to be a                                                               
full   remedy    system.   Within   the   true    definition   of                                                               
employer/employee, it  has always been  designed to be  a partial                                                               
remedy that would be applied  irrespective of fault. The idea was                                                               
to protect  workers who were doing  the work every day  for their                                                               
employers. For  example, if an unmarried  25-year-old worker with                                                               
no children were to be killed  on a construction site through the                                                               
fault  of someone  else  and not  necessarily  the employer,  the                                                               
exclusive  remedy now  is reasonable  funeral benefits.  It's bad                                                               
social  policy,  he  said,  if there  is  immunity  from  killing                                                               
someone because  of fault and  the only responsibility is  to the                                                               
workers' compensation policy,  which is paid by  the employer and                                                               
not necessarily  the person at  fault. The  workers' compensation                                                               
system provides for  no future lost wages and  no general damages                                                               
to the children or spouse of  a worker who had a crippling injury                                                               
or was  killed. The workers'  compensation system  simply doesn't                                                               
compensate for that loss.                                                                                                       
11:21:00 AM                                                                                                                   
SENATOR PASKVAN  recapped that SB  303 addresses the  notion that                                                               
responsibility  and accountability  attach when  wrongful conduct                                                               
exists and that  the exclusive remedy provision  falls within the                                                               
true  definition of  the employer/employee  relationship. SB  303                                                               
removes the  immunity that currently protects  a privileged class                                                               
from  the  consequences  of their  wrongful  conduct.  This  will                                                               
promote the  betterment of Alaska  as a matter of  social policy,                                                               
he concluded.                                                                                                                   
SENATOR WIELECHOWSKI asked, "If an  employer under current law is                                                               
criminally negligent and…a subcontractor's  employee is killed or                                                               
injured, would they be covered under existing law?"                                                                             
SENATOR  PASKVAN replied  the general  contractor is  immune even                                                               
under the high moral standard of criminal negligence.                                                                           
11:23:08 AM                                                                                                                   
SENATOR WIELECHOWSKI  asked if  there would  be any  recourse for                                                               
that injured, maimed or killed employee.                                                                                        
SENATOR  PASKVAN  replied their  sole  remedy  would be  workers'                                                               
compensation coverage. He continued to say:                                                                                     
     Under the  current law the  definition of  employer and                                                                    
     the  exclusive remedy  provisions of  the law  are very                                                                    
     expansive, so  they include  the entire  vertical chain                                                                    
     within the definition  of employer in order  to be part                                                                    
     of the  exclusivity protections that are  given to what                                                                    
     one  considers  the  direct employer.  So  the  general                                                                    
     contractor  in your  example  would  be immune  because                                                                    
     they  come within  the exclusive  remedy provisions  of                                                                    
     the workers' comp statutes.                                                                                                
SENATOR WIELECHOWSKI asked if SB 303 would fix that.                                                                            
SENATOR PASKVAN answered yes.                                                                                                   
SENATOR WIELECHOWSKI  asked if under  this bill a worker  who was                                                               
injured  or killed  because  of the  criminal  negligence of  the                                                               
general contractor  could get  their worker's  compensation award                                                               
and then sue the general contractor.                                                                                            
SENATOR PASKVAN replied that's correct.                                                                                         
SENATOR WIELECHOWSKI  asked if there is  an apportionment because                                                               
that's where the double-dipping argument would come up.                                                                         
SENATOR PASKVAN  replied if you  were to assume that  the general                                                               
contractor was 100 percent at  fault, then the general contractor                                                               
would  pay  the  injured  worker  100  percent  of  the  damages.                                                               
Workers'  compensation would  then  be reimbursed  so that  there                                                               
would be  no double recovery.  It is  expressly set forth  in the                                                               
statute that  irrespective of fault, medical  expenses, potential                                                               
retraining,  and a  partial compensation  of past  wages will  be                                                               
reimbursed  to  the  workers' compensation  insurer  out  of  the                                                               
recovery from  the 100 percent  fault of the  general contractor.                                                               
Irrespective  of  fault  the  employee  recovers  under  workers'                                                               
compensation,  but the  question  that remains  is whether  those                                                               
that are at fault would  have a responsibility and accountability                                                               
to the  injured worker. SB  303 says  that those at  fault should                                                               
have a responsibility to the injured worker.                                                                                    
11:26:15 AM                                                                                                                   
SENATOR COGHILL  asked if there is  still a tort liability  to an                                                               
employer contractor who is under the exclusive liability.                                                                       
SENATOR PASKVAN  replied not if  it's within the definition  of a                                                               
true employee/employer relationship.                                                                                            
SENATOR COGHILL asked if the  criminal liability would fall under                                                               
the exclusive exemption.                                                                                                        
SENATOR PASKVAN said that's correct.                                                                                            
SENATOR COGHILL  observed that the  concept "if you break  it you                                                               
fix it"  doesn't apply. He  asked what  the recovery would  be if                                                               
the  employer contractor  is under  the  exclusive liability  and                                                               
somebody  is  damaged with  a  lifelong  injury because  workers'                                                               
compensation would become the sole remedy.                                                                                      
SENATOR PASKVAN  explained that before the  workers' compensation                                                               
system was  developed about  100 years  ago the  injured employee                                                               
could  sue  the  employer  if the  employer's  fault  caused  the                                                               
injury. It wasn't until the  Industrial Revolution that a concept                                                               
started  to  develop  in America  that  the  employer's  business                                                               
product should bear  the cost of the workers who  were injured in                                                               
the course  and scope of  their employment and that  the employee                                                               
should be compensated  irrespective of fault. To  balance the raw                                                               
capitalism with  responsibility and  accountability and  the idea                                                               
that  workers  should  be  protected  irrespective  of  fault,  a                                                               
workers'  compensation  system  was  developed.  That  very  good                                                               
system has  been maintained in the  U.S. for about 100  years and                                                               
in Alaska until 2004.                                                                                                           
11:29:11 AM                                                                                                                   
SENATOR COGHILL said  he's having a hard  time understanding that                                                               
workers'  compensation  becomes  the   universal  remedy  if  the                                                               
contractor  has a  subcontractor  or an  employee  and there's  a                                                               
problem.     He's    wondering     if     this    creates     the                                                               
employer/employee/subcontractor  relationship  that would  be  in                                                               
this exclusive liability class  under workers' compensation while                                                               
the project  owner is singled out  as the "deep pockets"  and has                                                               
to bear  a tort  liability for  the actions  of those  within the                                                               
exclusive liability  class regardless of  the case. He  asked for                                                               
help understanding that relationship.                                                                                           
SENATOR   PASKVAN   explained   that  outside   of   the   direct                                                               
employee/employer  relationship,  everybody  that  is  above  the                                                               
subcontractor would  be responsible for only  their percentage of                                                               
the fault.                                                                                                                      
SENATOR COGHILL asked if that's  within the workers' compensation                                                               
apportionment or a tort apportionment.                                                                                          
SENATOR PASKVAN  replied a liability/tort apportionment  of fault                                                               
above  the  employer/employee  remains the  exclusive  remedy  of                                                               
workers'  compensation. For  example, if  anyone had  an employee                                                               
within  that  direct   employer/employee  relationship,  workers'                                                               
compensation is  the only  remedy that  the injured  employee can                                                               
have against the  employer. Regardless of whether  it's a general                                                               
contractor, a project  owner, or a project manager,  all of those                                                               
within  the  vertical  chain  above   would  be  responsible  and                                                               
accountable only for their apportioned fault.                                                                                   
SENATOR COGHILL  asked if  under that scenario  there is  still a                                                               
tort liability issue.  He noted that the sponsor  has appealed to                                                               
his sense  of fairness, but it  seems as though the  employer and                                                               
the subcontractor live  in the exclusive liability  area and only                                                               
have  a  responsibility  to  the  workers'  compensation  system.                                                               
Anybody outside  of that including the  manager, project manager,                                                               
or the  project owner  can be  apportioned a cost  if there  is a                                                               
responsibility.  He  asked  if that  apportioned  cost  would  be                                                               
assigned as  a result of a  lawsuit. If that's the  case, he said                                                               
his  understanding  is  that  it   would  go  into  the  workers'                                                               
compensation payment - hence the double dipping discussion.                                                                     
11:32:58 AM                                                                                                                   
SENATOR  PASKVAN said  SB 303  would impose  responsibility on  a                                                               
project owner or  general contractor under a tort  system only if                                                               
fault were proven. The project  owner, for example, would have no                                                               
responsibility for  payment of the workers'  compensation premium                                                               
that is  the responsibility of  the subcontractor. The  only risk                                                               
that a project owner has is if  they were at fault. Then if there                                                               
was  an allocation  or  percentage of  fault,  the project  owner                                                               
would only have risk for their allocated portion of 100 percent.                                                                
SENATOR COGHILL  summarized that  the exclusive liability  of the                                                               
workers'  compensation   system  is  not  adequate   for  certain                                                               
failures,  but  because  of the  employer/employee  relationship,                                                               
even if  it's a  subcontractor, they live  under those  rules. He                                                               
added that  it sounds like there's  a desire to take  the project                                                               
owners outside  of that because  they may have a  negligence that                                                               
may be  greater than  what could be  claimed under  the exclusive                                                               
CHAIR FRENCH  asked Senator Paskvan  if he had practiced  in this                                                               
area of law and if so, did he represent both sides.                                                                             
SENATOR PASKVAN answered yes he's  practiced for 30 years and for                                                               
the first 10  years he did both plaintiff work  and defense work.                                                               
He  said  he  has  represented  many  general  contractors  doing                                                               
corporate  work and  has represented  contractors that  have been                                                               
involved in  construction projects. It was  those business owners                                                               
that would  ask him to  recover for the  family of an  injured or                                                               
deceased employee.  In so doing the  workers' compensation policy                                                               
would  get paid  back  so it  wouldn't  be a  black  mark on  the                                                               
subcontractor's workers'  compensation policy and it  wouldn't be                                                               
the subcontractor  that bore  the price of  injury or  death that                                                               
was caused by somebody else.                                                                                                    
11:36:40 AM                                                                                                                   
CHAIR FRENCH commented that he was  on the losing end of what was                                                               
a vigorously fought battle when the  100 years of settled law was                                                               
changed in 2004. He asked if  SB 303 restores Alaska state law to                                                               
the pre 2004 state of fairness.                                                                                                 
SENATOR  PASKVAN said  yes; the  intent of  SB 303  is to  return                                                               
Alaska to the system that was created in statute in 1959.                                                                       
CHAIR FRENCH asked the members  to hold further questions for the                                                               
sponsor  until they'd  heard  from witnesses  who  may provide  a                                                               
contrasting point of view.                                                                                                      
11:37:50 AM                                                                                                                     
KIP KNUDSON,  External Affairs Manager, Tesoro  Alaska, asked the                                                               
committee to set SB 303 aside  because they were having the wrong                                                               
debate about the  wrong issue. He said he  specifically heard the                                                               
sponsor claim  that workers' compensation  is not  sufficient and                                                               
that  the majority  of workers  injured or  killed are  under the                                                               
exclusive   remedy  provision   of   the  workers'   compensation                                                               
arrangement.  He  continued  to  say that  the  discussion  about                                                               
making a  project owner  pay their  fair share  is "noise  on the                                                               
side."  He said  he  believes  that the  2004  reform created  an                                                               
appreciable  safety   benefit  for   the  Alaska   workplace  and                                                               
certainly for Tesoro Alaska.                                                                                                    
MR. KNUDSON  reminded the members  that the last time  the Senate                                                               
Judiciary Committee discussed a bill  similar to SB 303 there was                                                               
a case before  the Supreme Court that discussed  whether the 2004                                                               
change violated equal  protection. The decision in  that case was                                                               
that no violation occurs. Now  the discussion centers on who pays                                                               
when somebody is injured or hurt, he said.                                                                                      
MR. KNUDSON  said his perspective of  the 2004 change is  that it                                                               
created  a  safety benefit,  specifically  by  tearing down  high                                                               
legal barriers that were erected  pre 2004 between project owners                                                               
and contractors. These barriers were  anything but conducive to a                                                               
safe workplace.                                                                                                                 
11:39:44 AM                                                                                                                   
MR. KNUDSON offered his belief  that there is confusion about the                                                               
allocation of  fault and  control of  the workplace  that existed                                                               
prior to  2004 and he  would like  Mr. Clarkson to  clarify those                                                               
key concepts.                                                                                                                   
KEVIN  CLARKSON,   private  attorney,  Anchorage,  said   he  has                                                               
practiced in this  area for quite some time and  Tesoro asked him                                                               
to testify  on this bill.  Mr. Knudson specifically asked  him to                                                               
address the  underlying purpose of the  workers' compensation law                                                               
in the pre  2004 context, that being that the  employee was to be                                                               
relieved  of  the need  to  prove  the employer's  liability.  He                                                               
explained that  employees were  to be given  a certain  remedy if                                                               
they were  hurt while on  the worksite. In exchange  the employer                                                               
was  supposed   to  get  exclusive  liability   in  the  workers'                                                               
compensation system, but that's not what occurred.                                                                              
MR. CLARKSON  said he respectfully  disagrees with  the sponsor's                                                               
assertion that  the old system  was a "you  break it you  pay for                                                               
it" system.  In reality  what would happen  is the  project owner                                                               
would  contract with  a contractor  or subcontractor  and require                                                               
indemnification for  anything that might happen  that resulted in                                                               
injury to their  employees while on the worksite.  The result was                                                               
that the contractor or subcontractor  - who were supposed to have                                                               
exclusive liability  - would double  pay. They would pay  for the                                                               
workers'  compensation and  they would  also pay  for the  third-                                                               
party  tort liability  because of  the  indemnity agreement  they                                                               
made with the project owner.                                                                                                    
11:42:42 AM                                                                                                                   
MR. CLARKSON  said that from  his perspective the benefit  of the                                                               
2004 change is  that it created an ability for  the project owner                                                               
and the contractors to cooperate  more fully to promote safety on                                                               
the worksite. Before  2004 if an owner like BP  contracted with a                                                               
drilling contractor  like Rowan Drilling  to bring their  rig and                                                               
employees onto the BP worksite to  drill for oil and one of those                                                               
employees  got hurt,  Rowan would  pay the  workers' compensation                                                               
for its  employee and  the employee  would sue  PB for  the third                                                               
party  liability claiming  that  BP controlled  the worksite  and                                                               
thus had  responsibility for  making sure  that the  worksite was                                                               
safe. This is in spite of  the fact the worksite for the employee                                                               
was Rowan Drilling's rig. But if  BP had put even one employee on                                                               
the  drilling  rig or  if  it  had contractually  maintained  any                                                               
safety oversight, BP would suddenly  have a third-party liability                                                               
for  everything that  took  place on  Rowan's  drilling rig  that                                                               
resulted in  the injury  of the  employee. The  only way  that BP                                                               
could remove itself from that risk  was to remove itself from any                                                               
involvement  in  the  safety  aspects of  the  operation  of  the                                                               
drilling rig.                                                                                                                   
MR.  CLARKSON  said  that  giving  the  project  owner  exclusive                                                               
liability protection and the responsibility  to see that workers'                                                               
compensation  is provided  creates  an environment  in which  the                                                               
project owner  and the contractor  can cooperate  and collaborate                                                               
to  increase  safety  on  the  worksite.  Under  the  old  system                                                               
litigation became  more complicated because of  fault allocation.                                                               
For example, a  project owner like Tesoro who owns  a refinery in                                                               
Kenai could have somebody who  is simply driving an asphalt truck                                                               
for a company  that is contracted to deliver asphalt  to a Tesoro                                                               
customer  come  on  the worksite,  climb  onto  their  employer's                                                               
asphalt  truck, fall  off and  get injured,  and Tesoro  would be                                                               
sued because the event occurred  on their site. Tesoro would then                                                               
have to  look for anybody or  everybody to allocate fault  to and                                                               
join those  entities to  the case.  He related  that he  had been                                                               
involved in a case where  that scenario occurred. The worker died                                                               
as a result  of falling off his employer's tanker  when it was on                                                               
the  Tesoro refinery.  To avoid  liability Tesoro  had to  join a                                                               
series of  other companies and  entities to allocate  fault. This                                                               
made the case more complicated and costly.                                                                                      
MR. CLARKSON  recapped that the  pre 2004  system was not  one of                                                               
"if you  break it you  pay for  it." Employers actually  paid for                                                               
the  workers' compensation  and  for  the third-party  liability,                                                               
whereas the current  law creates an environment  where safety can                                                               
be enhanced through cooperation.                                                                                                
11:45:23 AM                                                                                                                   
KEVIN DOUGHERTY,  Attorney, Alaska Laborers, said  he supports SB
303  as a  means to  get the  workers' compensation  law back  on                                                               
track. He said he has  represented Alaska Laborers since 1981 and                                                               
he served  on Governor  Hickel's workers'  compensation committee                                                               
in 1990. He said he would  make three points. First, the workers'                                                               
compensation law that was enacted in  Alaska in 1915 was built on                                                               
traditional  values  and  it  was  fair  to  widows  and  injured                                                               
workers.  That changed  in 2004  when the  loophole was  created.                                                               
Fortunately, SB  303 would close  that loophole and  restore that                                                               
long-standing  law. Second,  the  bill would  promote safety.  He                                                               
related that in the '80s and  '90s major strides were made in the                                                               
oil  and  construction industries  with  respect  to safety,  and                                                               
injuries decreased. There really didn't  need to be a loophole in                                                               
the law  to somehow promote  safety, he said. Third,  it's always                                                               
good  public  policy  to  ensure that  statutes  are  honest  and                                                               
straight forward. To that end,  the definition of employer should                                                               
only include employers and not some other legal fiction.                                                                        
MR. DOUGHERTY recapped  that he supports SB 303  because it would                                                               
create an  even playing  field for  everyone in  the construction                                                               
industry  and it  would make  the statutes  straight forward  and                                                               
honest. Alaskans would be well served by this, he concluded.                                                                    
11:48:11 AM                                                                                                                   
JERRY  LEE, representing  himself, related  that he  was hurt  in                                                               
November 2005 while  working for a subcontractor  who was working                                                               
for   a  general   contractor.  The   job  entailed   building  a                                                               
scaffolding  for  the  general  contractor who  was  supposed  to                                                               
secure,  tarp,  and  heat  it  before he  and  others  used  that                                                               
scaffolding.  Following a  terrible accident,  he found  out that                                                               
the general  contractor hadn't properly secured  the scaffolding.                                                               
Mr. Lee  explained that he was  on the third level  when the wind                                                               
came  up and  blew the  scaffolding over.  Then the  wall he  and                                                               
others were working on collapsed and  he was crushed. He lost the                                                               
use of  a lower leg, has  ongoing problems with his  back, and is                                                               
30 percent  disabled. He received  worker's compensation  and his                                                               
medical expenses  are being  paid currently. At  the time  of the                                                               
accident  he was  paid $42/hour  and now  he works  for $10/hour.                                                               
"This needs to be changed," he said.                                                                                            
CHAIR FRENCH thanked him for taking  the time to testify and said                                                               
it's  always  good  to  hear   from  people  who  have  had  real                                                               
experience  under   legal  concepts   that  can   sometimes  seem                                                               
MR.  LEE added  that this  was his  first accident  in a  25-year                                                               
construction  career and  he'll never  be able  to work  in field                                                               
11:51:08 AM                                                                                                                   
BRAD   THOMPSON,  Director,   Risk   Management,  Department   of                                                               
Administration,  said   the  2004   amendment  to   the  workers'                                                               
compensation  statutes  extended   the  statutory  definition  of                                                               
employer to both  the contractor and the project  owner. He noted                                                               
he is  speaking from  the perspective that  the project  owner is                                                               
generally  the state.  Pre 2004  the employee  could have  remedy                                                               
from  workers' compensation  through  the  subcontractor. If  the                                                               
subcontractor  was  uninsured,  the  contractor had  to  pay  but                                                               
weren't shielded  from tort liability  even though they  paid the                                                               
worker's  compensation  benefit.  Post   2004  both  the  general                                                               
contractor and  impliedly the  subcontractor are  responsible for                                                               
workers'  compensation. In  fact, AS  23.30.045(d) obligates  the                                                               
state  before  it awards  a  contract  to  see a  certificate  of                                                               
insurance  from the  general contractor  showing  that they  have                                                               
workers' compensation. It also obligates  the state to pay in the                                                               
event that the contractor or subcontractor is uninsured.                                                                        
CHAIR FRENCH asked  if there's anything in the  law that requires                                                               
that to  happen on jobs  where BP,  Exxon, or anybody  other than                                                               
the state is the project owner.                                                                                                 
MR.  THOMPSON  replied  he  doesn't   believe  that  there  is  a                                                               
requirement for  private enterprise  to protect itself  that way,                                                               
but  it  is  common  business  practice  to  make  sure  that  an                                                               
independent contractor  is insured.  That's a qualifier  of their                                                               
capability of performance, he said.                                                                                             
11:54:46 AM                                                                                                                   
MR. THOMPSON  continued to explain  that when the state  sees the                                                               
certificate of insurance,  the state is noticed  as a certificate                                                               
holder should that coverage lapse or  not be paid. If the premium                                                               
isn't  paid   the  coverage  lapses,  but   the  employees  don't                                                               
necessarily know  that. When  the state is  the project  owner it                                                               
would  receive  a  notice  of cancellation  and  would  have  the                                                               
ability to take  project funds to continue  coverage. Clearly the                                                               
state  is  a  good  project owner  with  respect  to  maintaining                                                               
certainty  that there  is workers'  compensation for  the general                                                               
contractor and their employees, he  said. Should there somehow be                                                               
a lapse,  the state  is the statutory  employer and  would retain                                                               
the  obligation to  pay the  benefit  should there  be an  unpaid                                                               
remedy under  the Workers' Compensation  Act to  the contractor's                                                               
employee   or  impliedly   the  subcontractor's   employee.  That                                                               
wouldn't change under SB 303.                                                                                                   
MR. THOMPSON continued:                                                                                                         
     When '04 was  enacted, we didn't put a  fiscal note in.                                                                    
     It did  provide…a second way  of us to be  obligated to                                                                    
     pay the remedy of workers'  comp. The first time was if                                                                    
     they  were  uninsured. And  this  is  now undoing  that                                                                    
     protection so we're  back to where we  were before. Our                                                                    
     practice will  be the same  - we make certain  there is                                                                    
     coverage for  the general. There's often  concern about                                                                    
     a  sub. Is  he a  sub? Is  he an  employee? …  That's a                                                                    
     separate matter  to address…. But  the State  of Alaska                                                                    
     and other municipalities  are…careful before awarding a                                                                    
     contract and  in maintaining  the contract  coverage to                                                                    
     make certain that the people  working on those jobs are                                                                    
     receiving the  benefit of workers' comp.  We would lose                                                                    
     the  protection  of exclusive  remedy  if  [SB] 303  is                                                                    
SENATOR  WIELECHOWSKI  asked,  "If   the  state  were  criminally                                                               
negligent,  under  current  law  then  the  state's  not  liable,                                                               
MR. THOMPSON  replied AS 45.45.900  precludes you from  having an                                                               
indemnity  that  protects  you from  your  own  sole  negligence.                                                               
Depending  on  the  facts, criminal  negligence  likely  is  sole                                                               
negligence. He explained that when  the state lets contracts, the                                                               
terms  and   conditions  include  hold  harmless   and  indemnity                                                               
provisions and  the additional requirement of  additional insured                                                               
status.  The state  pays for  that  extra protection  on all  its                                                               
projects and  that extra cost is  added to the project  budget to                                                               
protect that comparative allocation, he said.                                                                                   
11:57:09 AM                                                                                                                   
CHAIR FRENCH closed public testimony  and announced he would hold                                                               
SB 303 until the next hearing.                                                                                                  

Document Name Date/Time Subjects