Legislature(2019 - 2020)BELTZ 105 (TSBldg)

03/05/2019 01:30 PM LABOR & COMMERCE

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01:32:27 PM Start
01:33:18 PM Confirmation Hearing(s):
01:46:46 PM SB61
02:16:13 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
-- Public Testimony on All Appointees --
- Board of Certified Real Estate Appraisers -
Ashley Stetson
- Board of Nursing - Shannon Connelley, Marisha
Moved SB 61 Out of Committee
-Invited Testimony Followed by Public Testimony-
        SB  61-COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS                                                                    
1:46:46 PM                                                                                                                    
CHAIR  REINBOLD reconvened  the meeting.  She announced  that the                                                               
final order  of business  would be  SENATE BILL  NO. 61,  "An Act                                                               
relating  to claims  against protection  and indemnity  insurance                                                               
policies of vessel owners."                                                                                                     
1:46:58 PM                                                                                                                    
SENATOR COSTELLO clarified that the  committee would be taking up                                                               
the original  version of  the bill.  Senator Bishop  objected for                                                               
discussion purposes.                                                                                                            
1:47:39 PM                                                                                                                    
SENATOR  GARY  STEVENS,  Alaska State  Legislature,  as  sponsor,                                                               
paraphrased  from  his  sponsor   statement.  He  said  that  the                                                               
Workers'  Compensation  Fishermen's Fund  is  also  known as  the                                                               
Commercial  Fishermen's Fund  (CFF)  and is  commonly called  the                                                               
"Fishermen's Fund."  It serves  as a  fallback for  insurance and                                                               
workers' compensation  for commercial  fishermen who  are injured                                                               
on  the  job. The  CFF  is  self-funded  from  a portion  of  the                                                               
commercial fishing licensure fees and  the fund is intended to be                                                               
insurance of last resort. This bill,  SB 61, makes a small change                                                               
to  allow  the  Commercial  Fishermen's  Fund  to  pay  the  full                                                               
deductible,  up  to  $5,000,  for  the  holder  of  Protection  &                                                               
Indemnity (P&I)  insurance. He suggested  that this  policy shift                                                               
should be beneficial to all stakeholders.                                                                                       
      Relating to Claims Against Protection and Indemnity                                                                       
              Insurance Policies of Vessel Owners                                                                               
     Access  to  health  insurance  and  health  care  is  a                                                                    
     concern  among  fishermen  and especially  presents  an                                                                    
     obstacle   to  those   younger  fishermen   seeking  to                                                                    
     continue  the next  generation in  Alaska's sustainable                                                                    
     Alaska's    Territorial    leaders    recognized    the                                                                    
     significance of  the fishing industry in  1951 with the                                                                    
     creation  the  Commercial  Fisherman's Fund  (CFF)  "to                                                                    
     provide for  the care of  sick and  disabled fishermen"                                                                    
     working in Alaska's fishing fleet.                                                                                         
     The fund was capitalized  with an initial appropriation                                                                    
     of $5,000  and has  since proven successful  in serving                                                                    
     as   workers'  compensation   for  injured   fishermen.                                                                    
     Benefits paid by the CFF  have continued to be financed                                                                    
     using  a portion  of the  commercial fishing  licensure                                                                    
     fees paid  to the  State. Over the  years, the  CFF has                                                                    
     remained stable as  it fulfills the goals  of the fund,                                                                    
     providing  medical relief  for crewmen  injured on  the                                                                    
     job.  The CFF  has in  fact grown  even as  health care                                                                    
     costs   have  risen,   due   in   part  to   continuing                                                                    
     improvements in fishing industry safety.                                                                                   
     Meanwhile  another  protection  available  for  fishing                                                                    
     vessels   and   vessel   owners,  is   their   optional                                                                    
     enrollment  in  private  Protection &  Indemnity  (P&I)                                                                    
     policy  insurance, to  fully cover  crewmembers in  the                                                                    
     event of an  injury or illness at sea.  As an incentive                                                                    
     and reward  for vessel  owners to carry  P&I insurance,                                                                    
     in  2010  the  Alaska   Legislature  adopted  a  policy                                                                    
     allowing  the  CFF to  pay  out  50%  of a  P&I  policy                                                                    
     holder's  deductible, up  to $5,000,  when a  claim for                                                                    
     benefits is  made to both  the CFF  and the P&I  of the                                                                    
     vessel  owner.   The  50%   deductible  cap   was  made                                                                    
     experimentally to protect the solvency of the CFF.                                                                         
     Consistent  revenue  from  commercial  fishing  license                                                                    
     fees,  coupled  with  well-managed claims  against  the                                                                    
     CFF, have  demonstrated an  added incentive  for vessel                                                                    
     owners  to obtain  P&I insurance  is justified.  Senate                                                                    
     Bill  61   would  allow  the   CFF  to  pay   the  full                                                                    
     deductible,  up  to  $5000,   for  the  holder  of  P&I                                                                    
     insurance.  This  policy  shift  is  not  projected  to                                                                    
     jeopardize  the sustainability  of the  CFF and  should                                                                    
     prove to be  a win for all  stakeholders, including the                                                                    
     State of  Alaska. Thank you  for your  consideration of                                                                    
     this important legislation.                                                                                                
1:48:50 PM                                                                                                                    
TIM   LAMKIN,  Staff,   Senator   Gary   Stevens,  Alaska   State                                                               
Legislature,  stated this  bill has  been before  the legislature                                                               
previously.  He  said   the  program  is  a   popular  and  fully                                                               
functional  one. He  provided background  for the  fund, that  in                                                               
2010, the legislature  passed a bill to provide  an incentive for                                                               
vessel owners to  provide insurance on their vessels  and to help                                                               
cover their crew. At the time  the incentive was put in place, it                                                               
provided a provision  to allow vessel owners 50  percent of their                                                               
deductible on  the protection &  indemnity (P&I) insurance  as an                                                               
incentive   to  provide   liability   insurance.   This  was   an                                                               
experimental proposal and was monitored  to ensure the change did                                                               
not weaken  the solvency of the  fund. Under SB 61,  the proposal                                                               
would  allow vessel  owners reimbursement  for the  deductible at                                                               
100 percent,  up to  $5,000. This  reimbursement would  be funded                                                               
from the Commercial Fisherman's Fund (CFF), he said.                                                                            
1:51:58 PM                                                                                                                    
MR. LAMKIN  referred to  the sectional analysis  of SB  61, which                                                               
read as follows:                                                                                                                
     Sec. 1: AS  23.35.145 (1) If a fisherman  files a claim                                                                    
     for  benefits  under  the Commercial  Fisherman's  Fund                                                                    
     (CFF) program, and also files  a claim against a vessel                                                                    
     owner's protection  and indemnity (P&I)  insurance, the                                                                    
     vessel owner is entitled to  receive a benefit from the                                                                    
     CFF equivalent  to 100%  of the  P&I deductible,  up to                                                                    
       $5,000. This is a change from it being 50% of the                                                                        
1:52:30 PM                                                                                                                    
CHAIR REINBOLD opened public testimony on SB 61.                                                                                
1:52:47 PM                                                                                                                    
BOB  KEHOE,   Executive  Director,  Purse  Seine   Vessel  Owners                                                               
Association,  stated  he also  serves  as  vice-president of  the                                                               
United Fisherman of Alaska (UFA).  He offered PSVOA's support for                                                               
the bill and asked committee members to please support SB 61.                                                                   
He  provided background  information  on the  Purse Seine  Vessel                                                               
Owners Association  (PSVOA), which is a  commercial fishing trade                                                               
association  that  represents  the  small  boat  fleet  operating                                                               
throughout Alaska  and the  West Coast.  The PSVOA  manages three                                                               
fishermen-owned marine  insurance pools with 900  member vessels.                                                               
All  profits  generated  by   these  marine-insurance  pools  are                                                               
distributed back  to its members.  This helps to keep  costs down                                                               
for  property and  liability (P&I)  insurance. He  explained that                                                               
P&I insurance is "a fancy word" for liability insurance.                                                                        
MR.   KEHOE  stated   that  this   bill  would   expand  on   the                                                               
legislature's efforts  in 2010 to  provide a  financial incentive                                                               
to vessel  owners to  provide P&I insurance  to fully  cover crew                                                               
members in  the event  of an  injury. The  Commercial Fisherman's                                                               
Fund (CFF)  is meant to  be a fund of  last resort, he  said. The                                                               
benefits  are  limited   to  $10,000,  but  the   board  has  the                                                               
discretion to award more money in certain instances, he said.                                                                   
He  said that  vessel owners  are not  required by  law to  carry                                                               
insurance  for   their  crewmembers.   This  is   different  than                                                               
shoreside  employers who  are  required by  law  to insure  their                                                               
employees  under  the  state  workers'  compensation  system.  In                                                               
addition,  the  cost  of  vessel  insurance  is  relatively  high                                                               
compared to  rates paid  by shoreside  employers. For  example, a                                                               
purse  seine operation  typically consists  of four  crewmembers,                                                               
and the cost to insure the crew  can be as high as $400 per month                                                               
per crewmember.  As small independent  business owners,  the cost                                                               
of liability insurance is a major fixed cost, he said.                                                                          
He said that  this bill will ease the financial  burden on vessel                                                               
owners  to  pay  the  cost   of  P&I  insurance,  by  paying  the                                                               
deductible in  the event  of an injury.  It will  further promote                                                               
the goal  to ensure that all  of the medical needs  of an injured                                                               
crewmember  will  be  satisfied.   In  closing,  he  respectfully                                                               
requested that the committee support moving the bill forward.                                                                   
1:55:51 PM                                                                                                                    
SENATOR BIRCH  referred to the  fiscal note analysis.  He related                                                               
that  from FY  14-17 the  fund  averaged about  seven claims  per                                                               
MR. KEHOE deferred  to the Fishermen's Fund  Advisory and Appeals                                                               
Council to respond. He believed that  the number of injuries is a                                                               
much higher figure. He surmised  the figure might refer to vessel                                                               
owners  who  applied  for  this  benefit.  He  acknowledged  that                                                               
fishing can be  a dangerous occupation, but  efforts are underway                                                               
to continuously improve the fishing industry's safety.                                                                          
1:58:19 PM                                                                                                                    
SENATOR BIRCH  acknowledged that seven claims  seemed pretty low.                                                               
He asked for further clarification on the figures.                                                                              
1:58:52 PM                                                                                                                    
GREY  MITCHELL,  Director,  Division  of  Workers'  Compensation,                                                               
Central  office, Department  of Labor  and Workforce  Development                                                               
(DOLWD), explained  that essentially  two groups  can potentially                                                               
make  claims against  the Commercial  Fisherman's Fund  (CFF). He                                                               
explained that  39 percent of  resident crewmember  license fees,                                                               
currently  a   $60  fee,  are   deposited  into   the  Commercial                                                               
Fishermen's Fund to cover the cost  of medical care in case of an                                                               
injury. The  fund covers fishermen  who are not covered  by other                                                               
insurance when  the vessel owner does  not have a P&I  policy, he                                                               
said. He said  the CFF is not just crewmembers'  last resort, but                                                               
their  only  resort. Benefits  are  limited  to $10,000  and  any                                                               
additional  benefits must  be approved  by  the Fishermen's  Fund                                                               
Advisory  and  Appeals  Council.  He said  requests  happen  more                                                               
frequently  as  medical  costs continue  to  increase,  and  many                                                               
claims exceed the $10,000 threshold.                                                                                            
He  said  vessel  owners  who  have  P&I  insurance  must  pay  a                                                               
deductible when  a claim is  made against the policy.  This bill,                                                               
SB 61, would  adjust the reimbursement for vessel  owners from 50                                                               
percent to 100  percent, up to a maximum of  $5,000. He explained                                                               
that  the  CFF's benefits  for  injured  crewmembers working  for                                                               
vessel  owners  with  P&I  are capped  at  $5,000.  Benefits  for                                                               
injured crewmembers who  are uninsured are capped  at $10,000, he                                                               
said.  These are  the two  groups who  benefit from  the CFF,  he                                                               
2:01:48 PM                                                                                                                    
MR.  MITCHELL said  the  fiscal note  identified  the average  of                                                               
seven  claims, but  that figure  is increasing.  Reimbursement of                                                               
the deductible  amount is  an effort  to incentivize  more vessel                                                               
owners  to   carry  P&I  insurance,  he   said.  Currently,  when                                                               
uninsured  crewmembers get  injured,  their only  recourse is  to                                                               
apply to the CFF, and their  benefits are capped at $10,000. When                                                               
vessel owners  have P&I insurance, their  crewmembers potentially                                                               
have coverage for  the full cost of their medical  costs and also                                                               
indemnity benefits that may cover lost wages.                                                                                   
He explained  that in the  past five  years, an average  of seven                                                               
individual [vessel owners] came  forward for reimbursement of the                                                               
deductible costs.  He suggested the  annual number of  claims for                                                               
injured crewmembers  is closer to  300, but the  administrator of                                                               
the fund can speak to the details.                                                                                              
SENATOR BISHOP interjected  that the current number  of claims is                                                               
273 claims.                                                                                                                     
REPRESENTATIVE  BIRCH  asked  for further  clarification  on  the                                                               
number of crewmembers in the state.                                                                                             
2:03:13 PM                                                                                                                    
MR.  MITCHELL responded  that roughly  10,000 crewmembers  obtain                                                               
resident  or non-resident  commercial fishing  licenses annually.                                                               
The  CFF  receives  its  revenue  from  two  sources,  crewmember                                                               
license  fees and  vessel  owner  permit fees.  He  said that  39                                                               
percent of  nonresident crewmember  license fees of  $280, capped                                                               
at $50,  and resident commercial  crewmember license fees  of $60                                                               
are  transferred   to  the  CFF.  The   remainder  of  commercial                                                               
crewmember license fees  fund Alaska Department of  Fish and Game                                                               
(ADF&G)   and  Commercial   Fisheries  Entry   Commission  (CFEC)                                                               
programs.   Another  source   of  revenue   for  the   Commercial                                                               
Fishermen's  Fund is  from  vessel permit  fees  on an  estimated                                                               
8,000-10,000 vessel owners, also capped at $50.                                                                                 
2:05:38 PM                                                                                                                    
SENATOR BISHOP asked  whether he was comfortable  with the fiscal                                                               
note  from  the Department  of  Labor  and Workforce  Development                                                               
MR.  MITCHELL  answered  yes,  but he  acknowledged  that  it  is                                                               
difficult to estimate the increased liability to the fund.                                                                      
2:06:07 PM                                                                                                                    
VELMA   THOMAS,   Program  Coordinator,   Workers'   Compensation                                                               
Fishermen's Fund; Fishermen's Fund  Advisory and Appeals Council,                                                               
Division  of  Workers'  Compensation,  Department  of  Labor  and                                                               
Workforce  Development  (DOLWD), stated  she  did  not foresee  a                                                               
significant  impact  on the  Fishermen's  Fund  in the  next  few                                                               
years.  The number  of claims  has decreased  over the  years, in                                                               
part, due to additional safety  training for commercial fishermen                                                               
or  perhaps  because  more  fishermen  have  their  own  personal                                                               
2:06:46 PM                                                                                                                    
SENATOR  BISHOP agreed.  He  stated  that there  has  been a  100                                                               
percent decrease in claims over a four-year period.                                                                             
2:07:08 PM                                                                                                                    
SENATOR GRAY-JACKSON  asked whether there are  instances in which                                                               
a crewmember is hurt but does not file a claim.                                                                                 
MS.  THOMAS answered  that  it  is possible.  She  said that  the                                                               
division  only tracks  statistics on  fishermen who  file claims,                                                               
via  the  medical  providers,  such  as  Providence  or  Bartlett                                                               
Memorial Hospital.  Most providers  have packets  to hand  out to                                                               
commercial fishermen  who are injured, but  some crewmembers fish                                                               
for a season and then go out of state and never file a claim.                                                                   
2:08:25 PM                                                                                                                    
CHAIR REINBOLD opened public testimony on SB 61.                                                                                
2:08:36 PM                                                                                                                    
FRANCIS  LEACH, Executive  Director, United  Fishermen of  Alaska                                                               
(UFA),  said that  UFA  is the  largest  statewide fishing  trade                                                               
association,  representing  35 commercial  fishing  organizations                                                               
and   hundreds   of    commercial   fishermen   and   crewmembers                                                               
participating in state and federal  waters in the state. She said                                                               
that the  UFA supports  SB 61. She  thanked the  sponsor, Senator                                                               
Stevens,  for   bringing  this  bill   forward.  She   said  that                                                               
crewmembers  working  on  commercial   fishing  vessels  are  not                                                               
covered  under  the Alaska  Workers'  Compensation  System. If  a                                                               
crewmember is  injured while working  on a vessel, the  person is                                                               
entitled   to  receive   benefits   from   his/her  employer   as                                                               
established under  federal maritime  law. These  benefits include                                                               
payment of the crewmember's medical  bills for treatment of work-                                                               
related  injuries.  This  bill  will  enable  commercial  fishing                                                               
vessel owners to purchase insurance  for their crewmembers, which                                                               
is always  a good thing in  this line of work  since injuries can                                                               
and do  happen. In closing, she  said that members should  have a                                                               
letter of support from the UFA in their packets.                                                                                
2:10:10 PM                                                                                                                    
CLAY  BEZENEK,  Member,  Fishermen's Fund  Advisory  and  Appeals                                                               
Council  (FFAAC), Division  of Workers'  Compensation, Department                                                               
of Labor and  Workforce Development (DOLWD), said  that he serves                                                               
on the FFAAC. He  said he is also a member of  UFA and the United                                                               
Southeast Alaska Gillnetters. He offered his support for SB 61.                                                                 
He  stated  that the  legislature  passed  a  bill in  2010  that                                                               
increased  the deductible  limit. At  the time,  the council  had                                                               
concerns as "shepherd-keepers of  the fund" about the possibility                                                               
of an inordinate number of claims  against the CFF so the council                                                               
and legislature put stop gaps in the bill to protect the fund.                                                                  
MR.  BEZENEK referred  to SB  61 as  a housekeeping  measure. The                                                               
council expressed some  concern that a significant  number of P&I                                                               
claims might happen by raising  the claim threshold. However, the                                                               
council  ran  a  lot  of  scenarios  and  projections  and  feels                                                               
comfortable the  fund is  adequately protected.  He said  the P&I                                                               
insurance holders  are acting  responsibly by  carrying insurance                                                               
for  their  crewmembers.  They   should  have  their  deductibles                                                               
covered and not have additional financial burden, he said.                                                                      
2:12:35 PM                                                                                                                    
CHAIR REINBOLD closed public testimony on SB 61.                                                                                
2:12:56 PM                                                                                                                    
SENATOR  BISHOP asked  for further  clarification on  whether the                                                               
sponsor wants an effective date.                                                                                                
MR. LAMPKIN said he was not  sure it is necessary. In response to                                                               
an earlier question,  he referred Senator Birch to  a document in                                                               
members' packets titled, "Fisherman Fund Fact Sheet."                                                                           
2:13:46 PM                                                                                                                    
CHAIR REINBOLD asked Senator Bishop to review the fiscal note.                                                                  
2:13:59 PM                                                                                                                    
SENATOR  BISHOP  briefly  reviewed   the  fiscal  note  from  the                                                               
Department of  Labor and Workforce  Development (DOLWD).  He said                                                               
that  the   appropriation  is  to  [the   Division  of]  Workers'                                                               
Compensation,  the allocation  is the  Fishermen's Fund,  and the                                                               
Office of  Management and Budget  (OMB) component number  is 343.                                                               
The  fund source  is 1032,  Fishermen's Fund,  Designated General                                                               
Fund (DGF),  in the amount  of $16,100 from FY  20 to FY  25. The                                                               
fiscal note  analysis indicates that there  is sufficient revenue                                                               
in the  Fishermen's Fund  to cover  this increased  liability, he                                                               
2:15:22 PM                                                                                                                    
SENATOR BISHOP removed his objection.                                                                                           
2:15:28 PM                                                                                                                    
SENATOR COSTELLO moved  to report SB 61,  work order 31-LS0528\A,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note.  There being no  objection, SB 61 was  reported from                                                               
the Senate Labor and Commerce Standing Committee.                                                                               

Document Name Date/Time Subjects
L&C Real Estate Appraisers Resume - Stetson.pdf SL&C 3/5/2019 1:30:00 PM
Governor's Appointees to Boards and Commissions
L&C Board of Nursing Resume - Connelly.pdf SL&C 3/5/2019 1:30:00 PM
Governor's Appointees to Boards and Commissions
L&C Board of Nursing Resume - Dieters.pdf SL&C 3/5/2019 1:30:00 PM
Governor's Appointees to Boards and Commissions
SB61 Ver. A.pdf SL&C 3/5/2019 1:30:00 PM
SB 61
SB61 Sponsor Statement 02.27.19.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61
SB61 Sectional Version A.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61
SB 61 Fishermens Fund - Research Fact Sheet - 03.01.19.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61
SB061-DOLWD-FF-03-01-19.pdf SL&C 3/5/2019 1:30:00 PM
SB 61
SB 61 Support Letter SEAFA.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61
SB 61 Support Letter PSVOA.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61
SB 61 Support Letter UFA.pdf SFIN 3/27/2019 9:00:00 AM
SL&C 3/5/2019 1:30:00 PM
SB 61