Legislature(2011 - 2012)BELTZ 105 (TSBldg)
04/05/2011 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB100 | |
| HB119 | |
| SB103 | |
| SB116 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 103 | TELECONFERENCED | |
| *+ | SB 116 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 100 | TELECONFERENCED | |
| += | HB 119 | TELECONFERENCED | |
SB 116-WORKERS' COMP.: COLL BARGAINING/MEDIATION
2:39:34 PM
CHAIR EGAN announced SB 116 to be up for consideration.
SENATOR PASKVAN moved to bring SB 116, labeled 27-LS0549\I,
before the committee.
CHAIR EGAN objected for discussion purposes.
2:40:21 PM
DANA OWEN, staff to the Senate Labor and Commerce Committee,
presented SB 116 [labeled 27-LS0549\I] on behalf of the Senate
Labor and Commerce Committee, sponsor. He said the concept of
this bill was brought to them by a number of different people
who recognize that there have been problems with the current
Workers' Compensation system. Originally, workers' compensation
was established to bring speedy, timely conclusion to workers'
compensation claims for injuries that workers received on the
job. For workers it provided a means to be treated for their
injuries with dispatch and for the employers it brought some
sense of stability and finality. They knew they couldn't be sued
and they were also promised they would have a reasonably cost
effective workers' compensation premium.
He said they had heard anecdotally for many years that workers
have had great difficulty concluding their claims. Some workers
have had their cases drag on for several years and they know
from repeated contacts by employers that workers' compensation
costs are viewed as being excessive. California and Minnesota
are two states who have had many years of experience with the
kind of workers' compensation system that this bill would allow
and this idea makes the time to conclude those claims shorter
and reduces costs.
MR. OWEN said this bill would allow within the current workers'
compensation system for an employer and a group of employees who
are represented by a collective bargaining unit to establish
beforehand the terms under which their workers' compensation
claims will be resolved. One of the key parts of this is that
the injured worker will be directed toward mediation
immediately. Currently that mediation happens only after a
series of conflicts. So, the two parties could agree in the
beginning to the doctor who would initially see the patient and
also to the doctor who would provide a second opinion.
Currently, the system generally takes three physicians; this
would eliminate one of them. The net effect would be to reduce
costs and to shorten the time for getting people back to work.
SENATOR GIESSEL said their packets have a colored chart that
appears different than what he described. She saw two
independent medical evaluations in the present system, but none
in the bill.
MR. OWEN explained that the confusion may be in his description.
Under current workers' compensation you could get three
different medical examinations. As proposed in the bill (by
agreement between the two parties), an injured worker can have
as few as two.
SENATOR GIESSEL said that is not what she sees in the chart and
or the bill.
MR. OWEN replied that he is describing the approach some other
states are using. This is an example of one of the ways that two
parties, under collective bargaining, could agree on how they
would handle the claims.
SENATOR GIESSEL said language in (1)(B) on page 1, lines 13-14,
says mediation shall be conducted by a hearing officer or other
classified employee of the Division of Workers' Compensation.
She assumed that the employee would be a classified employee and
asked if that meant the injured worker would be mediated by
another classified employee.
MR. OWEN replied yes; the bill envisions using hearing officers
currently in the division to do the mediation.
SENATOR PASKVAN asked if this applies to all workers around the
state.
MR. OWEN answered yes; all workers who are covered under
collective bargaining agreements.
2:46:38 PM
STEVE RANK, Iron Workers International and Impact, a labor
management cooperative trust fund, said he is based out of
California. He explained that California experienced extreme
medical costs and litigation; both employers and workers were
frustrated with the system. In 2003, labor and management got
together and developed a collectively bargained workers'
compensation that allows employers and labor representatives to
sit down and pre-designate medical providers so that their
injured workers are provided "the best medical attention not the
worst."
He said these programs are voluntary and don't require any
insurance carrier or employer to participate. "They're designed
to improve the delivery of medical benefits to injured workers
period." Nothing in this bill takes benefits away from injured
workers.
MR. RANK said that now workers don't have to wait six or nine
months to hear about their claim. Through cooperative efforts of
the insurance carriers, the employers and the labor
representatives these claims are expedited to make sure that
workers are attended to and that their questions are answered by
an ombudsman who is available 24/7. Published statistics from
the states of California and Minnesota show that these types of
programs reduce medical costs, lost work days and, importantly,
litigation. This program attempts to give injured workers a
method of dealing with their issues without resorting to
unnecessary litigation in a system that, in many cases, can't
answer their questions.
2:50:11 PM
KEVIN GREGERSON, Program Administrator, Union Construction
Workers' Compensation Program, Minnesota, said he developed this
program back in 1997 on behalf of a labor/management board of
trustees and has been running it ever since. The program he
administers came out of 1995 statute that Minnesota passed
allowing for these alternative collectively bargained workers'
compensation programs.
MR. GREGERSON said he was asked to compare his experience with
the State of Minnesota's workers' compensation system for the
last 13 years. He said recent data showed that having an
ombudsman to answer question for all parties resulted in
significant improvement in terms of injured workers receiving
benefits on a timely basis. They have seen a reduction of 40
percent in the average cost of a workers' compensation claim as
compared to claims for a similar injury in a similar occupation
going through the State of Minnesota's workers' compensation
system. The biggest reason for that is that they had preselected
the physicians, the vocational rehabilitation counselors and the
attorneys who serve as mediators and arbitrators who interact
with their injured participants and contractors.
2:53:18 PM
He also said that language in Alaska statute gives the Labor and
Management Committee the authority to determine how they want to
perform independent medical examinations. This is really the
legislature empowering labor and management to figure out a
better way to deliver the same set of statutory benefits
utilizing people that they have mutual trust with and have the
ability to work with who understand the construction industry
and the unique aspects that that industry faces.
2:54:41 PM
FRED BROWN, Executive Director, Health Care Cost Management
Corporation of Alaska, Fairbanks, said they support SB 116. He
said his letter is with the committee, but he wanted to mention
that his corporation is focused on controlling health care
costs. Associated charts show Alaska is among the highest cost
states in the union for delivery of workers' compensation
benefits generally and specifically that 75 percent of the total
costs of workers' compensation are medical.
MR. BROWN said the 2009 report of the Workers' Compensation
Medical Services Review Committee observed on page 10 that even
though there is the opportunity to create preferred provider
networks, there is no incentive to do so, because statute
doesn't require providers to participate. So, they view this
langauge as an opportunity for labor and management to negotiate
together with providers to institute a preferred provider
network if they choose to do so.
SENATOR PASKVAN asked if he knows what the potential savings
might be if this system is followed.
MR. BROWN replied that his organization can sometimes negotiate
significant discounts in the neighborhood of 50-60 percent.
2:57:17 PM
LAIRD GRANTHAM, Carpenters Local 1243, Fairbanks, said he
supported SB 116. He said that from 2005 to 2009, Alaska has had
the highest workers' compensation rates in the nation. They make
Alaska the very least competitive state in the union for
conducting business according to a CNBC report. Because of this,
they see more "shady employers" who have no insurance or
misclassify their employees to cut costs and "cheat the
industry." He said this bill will allow for quick resolution of
a claim and at a much lower cost to all parties.
Just yesterday, Mr. Grantham said, his office received a request
for information about a workers' compensation claim dated back
to 1988 and remarked, "Why should any one individual or
companies have to wait that long for any type of closure?" He
said it's time to allow this voluntary program in Alaska.
2:58:47 PM
PAUL GROSSI, lobbyist for the Alaska State Pipe Trades and the
Iron Workers, said he supported SB 116 and that most of his
points were already covered. But, he said, all of them have
probably had some experience with constituent complaints from
either employers about the cost of the system or from employees
about how cumbersome the system is. He used to be the director
of Workers' Compensation in Alaska and used to get these
complaints; he knows what they are about.
MR. GROSSI stated that this bill is just enabling language. It
will allow groups under a collective bargaining system to
improve the ways to deal with some of the costs, inefficiencies
and difficulties in getting treatment. When he first started
working at the Division of Workers' Compensation, medical costs
were 30 percent of the entire cost and now they are 75 percent.
"So, there is a drastic need to address some of these issues."
This bill allows pilot projects on improvements to the system.
3:02:07 PM
LAW HENDERSON, Workers' Compensation Coordinator, Department of
Risk Management, Municipality of Anchorage, said he opposed SB
116. He said the Municipality of anchorage has eight separate
bargaining units and one exempt unit. With SB 116, it could very
likely end up being governed by two separate workers'
compensation systems, one with a due process protection (the
current one) and one without.
He noted that Section 1 of the bill simply codifies what the
Division of Workers' Compensation has been doing for about a
decade already - which is fine. The problem is in Section 2 that
creates a new workers' compensation system through the
collective bargaining process. AS 23.30.285(a)(1) says the
division would have to hire more employees devoted to this new
alternative or parallel system. Beyond that, the statute is
vague. It his understanding that the system envisioned under SB
116 is what Minnesota does, but that system stripped the parties
of discovery and selection rights afforded under the current
system. For example, under the current system an employer may
obtain an independent medical evaluation to determine whether an
injury is work-related or not and if not work-related, whether
disability, permanent impairment, medical vocational or other
benefits are warranted under the Alaska Workers' Compensation
Act. Under the system envisioned in SB 116, the employer has no
right to an independent medical examination. Without medical
evidence to support a denial of benefits, an employer is
prevented by law from denying benefits. If denied without such
evidence, an employer faces a 25 percent penalty and the
adjuster faces possible loss of his license.
3:04:39 PM
Thus, he said, under SB 116, an employer is unable to develop
contrary medical evidence and is compelled to simply write
checks for benefits having lost any mechanism for testing the
validity of the employee's claim. Under the current system, the
Alaska workers' compensation Board itself may request an
independent medical evaluation by a physician of its choosing.
Under SB 116, no such evaluation is permitted. Under the current
system, the employee is free to treat with whoever he chooses;
under SB 116 they can only select from the list developed by
their trust. The current system has numerous vocational
counselors available to the employee; under SB 116 an employee
is limited to those developed by the trust. The only similarity
between the two systems is who pays for them - insurers and self
insureds - thereby increasing the cost of the overall workers'
compensation system. In short, SB 116 would develop a parallel
system devoid of the constitutional due process protections and
choices available under the current system.
CHAIR EGAN said he assumed he opposed SB 116.
MR. HENDERSON responded yes.
3:06:31 PM
DAVID MECUEN, President, California Erectors, California, said
he is also co-chair of the California Field Iron Workers
Negotiated Workers' Compensation Program. He explained that they
developed this program in 2003 because their workers'
compensation program was "out of control." Forty-three percent
of their base wage was being paid for workers' compensation
premium, but after legislative changes, California is paying 14
percent of base wage for workers' compensation premium - a
substantial savings.
MR. MCCUEN said California has a parallel program; it has both
signatory and non-signatory employees covered through this
program. It is not a burden whatsoever and it has worked well
for them. He has not heard one complaint from the workers
covered under the negotiated program and delivery of medical
care is "a lot better than it used to be." Someone had a rotator
cuff injury; in the old days it would have taken him six months
before he would actually get authorization for surgery. Under
their new program, the person got authorization within two weeks
and returned to work within six months. The costs are
considerably less; so much so that they have been able to
actually pay their guys more for temporary disability.
He said nothing in their process prohibits attorneys from being
involved, so if an injured worker wants representation he can
have it. He said it's a much better way of doing business and it
saves money for everybody.
3:09:55 PM
MR. MCCUEN said it also saves money for the state by lessening
the burden on their workers' compensation appeals process. In
California, an appeal takes 1-4 years; under their current
dispute resolution program they get mediation in 2-6 weeks and
if it does go to arbitration, which is very rare, it takes
another 2-4 weeks. It's a much faster process with phenomenal
savings. "Everybody wins under this."
SENATOR PASKVAN asked how long their program has been operating.
MR. MCCUEN answered eight years.
SENATOR PASKVAN asked in what categories the savings are
located.
MR. MCCUEN replied much of the savings comes from quicker
resolution of the problems and reduction in medical rates
through a preferred provider program (PPO). Using PPOs
eliminates doctors who don't work with workers' compensation
patients and in most cases the doctors they use are the ones a
worker would choose to see on his own. Their costs are
discounted by 20-30 percent and if someone wants to see a
specialist it takes about one-third the time it used to take.
They also see savings through reduced MOD rates (Experience
Modification Rate) by several percentage points which reduces
claim costs. Issues are resolved much faster which saves even
more money. In the old system an injury took six months to get
back to work system and now it takes generally takes six weeks.
3:13:01 PM
SENATOR PASKVAN verified that the base rate was 43 percent eight
years ago and now it's 14 percent.
MR. MCCUEN replied that was correct, but that was for his firm
only.
SENATOR PASKVAN asked if that reduction in base rate is
monitored by private insurers.
MR. MCCUEN answered that California has a state rating bureau
and the state rates his firm based on costs and number of
claims; that has also gone down. Their category, which is
construction over two stories, has seen a dramatic reduction as
a result of alternative dispute resolution (ADR), for which they
also set the rate.
3:14:33 PM
MIKE MONAGLE, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), said he
was available to answer questions, but the administration had no
position on SB 116.
SENATOR PASKVAN said he saw the two components of the bill as
different types of alternative dispute resolution models. He
asked Mr. Monagle if he saw a benefit with both models.
MR. MONAGLE replied he wasn't sure what he meant by "both
models." There is an alternative dispute resolution process,
which includes mediation and if that is not successful, they can
go to arbitration.
SENATOR PASKVAN said in other words in Section 1 any worker
injured under any circumstance can attend mediation; that's one
method. The second section talks about collective bargaining
agreements where any employer dealing with a collective
bargaining agent, if they want to, can reach an agreement as to
an alternative dispute resolution mechanism. His question to Mr.
Monagle is if he sees the benefit of the alternative dispute
resolution process an improvement in both methods whether it's a
represented worker or a non-represented worker.
3:16:39 PM
MR. MONAGLE replied first about Section 1 saying that mediation
has been taking place in the workers' compensation system for a
number of years; last year they mediated about 40 complex cases
with about 90 percent satisfactory settlement that was approved
by the board. He thinks that mediation is a valuable tool that
can often lead to reduced disputes and quicker resolution.
The second section also has a mediation and arbitration process.
It's is difficult for him to answer, because it talks about the
ultimate dispute resolution process being set out in a
collective bargaining agreement. His workers' compensation
officers mediate terms under the Workers' Compensation Act and
don't mediate terms under a collective bargaining agreement.
3:18:08 PM
SENATOR PASKVAN asked if all workers in Alaska are currently
covered by workers' compensation statutes.
MR. MONAGLE replied yes - with a few statutory exceptions.
SENATOR PASKVAN asked if he viewed Section 2 as an exception to
the workers' compensation coverage. Is the alternative dispute
resolution a viable cost savings method and what would be a
better method if there is one?
MR. MONAGLE replied that he didn't know of alternative
possibilities for resolving disputes in the workers'
compensation system, but Section 2 allows employers and
employees to come up with a solution to disputes through a
collective bargaining process that may mirror the Workers'
Compensation Act. Current experience is that a mediation process
can bring quicker resolution, but he couldn't speak specifically
to the terms of what a collective bargaining agreement might be.
3:21:10 PM
SENATOR GIESSEL asked what he would describe as broken in the
Workers' Compensation Act now.
MR. MONAGLE replied that the bill does a good job of identifying
some areas in the workers' compensation system that are
"broken." He explained that the department receives 20,000 -
25,000 reports of injury every year and in the vast majority of
these cases the injured worker receives speedy medical treatment
and timely disability benefits, but a small percentage actually
end up in complex disputes. These get a lot of attention.
Medical costs in the system are high and last year he found it
took about two years from the time a dispute is begun until a
final decision was made. One of the areas the bill touches on
that the current workers' compensation system does not address
is a return to work program.
SENATOR GIESSEL said she is by profession a health care provider
who has provided workers' compensation services to injured
workers and asked him to describe what kind of case management
an employee gets to help him negotiate the system.
MR. MONAGLE answered that they have workers' compensation
officers as part of their staff and they are available to assist
injured workers in knowing what their rights are. For the most
part, an injured worker under the current system is free to
receive the medical treatment of their choice. There are no
restrictions on whom they can treated by or from or the nature
or scope of their treatment. The employer reserves the right to
send the injured worker to a doctor of their choice. Sometimes
there are medical disputes over whether a certain mode of
treatment is necessary or not. Often when those disputes come
before the board, they have a panel of medical experts that it
can assign. If the parties are still in dispute, the workers'
compensation board is free to weigh all that medical evidence
and find what portion - all, some or none - is credible in
awarding benefits to the injured worker or withholding benefits
from him.
3:25:21 PM
SENATOR MENARD asked how often the medical board meets saying
she was trying to figure out how big the holdup is. How bad is a
medical dispute for the business climate overall? PPOs are never
popular.
MR. MONAGLE replied that there is no person or board that an
injured person has to await to approve their treatment. Delays
typically have to do with hearing back from the employer or
their insurance company on whether they believe something is
compensable or not.
SENATOR GIESSEL said the process now has the option for an
independent evaluation. How often is that used and what does
that entail?
MR. MONAGLE replied typically it's the employer who asks for the
independent medical evaluation and that is based on the
experience of a particular case manager or claim administrator
and if he believes there is sufficient evidence to warrant an
independent review. Normally, the process begins when the
insurance company asks the injured worker to sign a medical
release. Then they will look at copies of his medical records
for any red flags; for instance if he previously had a motor
vehicle accident and they think maybe his current complaints are
more related to that accident than his occupational injury, then
they might ask for an independent medical examiner and ask those
types of questions to determine whether or not there is contrary
medical evidence to warrant the payment of a claim or not. He
said the vast majority of these cases are paid with no dispute.
3:29:29 PM
SENATOR GIESSEL asked if he saw the removal of that option to
ask for an independent medical evaluation from an employer or an
employee in SB 116.
MR. MONAGLE replied that Section 2 provides that the collective
bargaining agreement can establish an exclusive list of
providers and an exclusive list of independent medical
evaluators. Now, the assumption he is making is that the
employer and the employee have agreed to the terms of the
collective bargaining agreement and therefore, have agreed to
establish that exclusive list and abide by the terms of the
agreement. In that regard some rights are preserved by parties
because they aren't forced into these agreements.
SENATOR GIESSEL thanked him and said since they had heard from
lots of employee groups that she wanted also to hear from some
employers.
3:31:31 PM
CHAIR EGAN said they would invite employers. Finding no further
business to come before the committee, he adjourned the meeting
at 3:31 p.m.
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