Legislature(1997 - 1998)
04/23/1997 03:27 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 23, 1997 3:27 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative John Cowdery, Vice Chairman Representative Bill Hudson Representative Jerry Sanders Representative Joe Ryan Representative Tom Brice Representative Gene Kubina MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 116 "An Act relating to workers' compensation self-insurance." - MOVED CSHB 116(L&C) OUT OF COMMITTEE * HOUSE BILL NO. 192 "An Act regulating chemical dependency counselors; and providing for an effective date." - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE * HOUSE BILL NO. 203 "An Act relating to actions for unlawful trade practices." - HEARD AND HELD HOUSE BILL NO. 218 "An Act relating to regulation and examination of insurers and insurance agents; relating to kinds of insurance; relating to payment of insurance taxes and to required insurance reserves; relating to insurance policies; relating to regulation of capital, surplus, and investments by insurers; relating to hospital and medical service corporations; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 136 "An Act relating to the regulation of physical therapists and physical therapy assistants; extending the termination date of the State Physical Therapy and Occupational Therapy Board; and providing for an effective date." - BILL CANCELLED (* First public hearing) PREVIOUS ACTION BILL: HB 116 SHORT TITLE: WORKERS COMPENSATION SELF-INSURANCE GROUP SPONSOR(S): REPRESENTATIVE(S) KOTT, Hudson, Foster, Berkowitz, Hodgins, Kelly, Dyson, Davis, Phillips, Kohring, Ogan, Green, Elton JRN-DATE JRN-PG ACTION 02/05/97 243 (H) READ THE FIRST TIME - REFERRAL(S) 02/05/97 243 (H) LABOR & COMMERCE 02/07/97 277 (H) COSPONSOR(S): KOHRING 02/13/97 349 (H) COSPONSOR(S): OGAN 02/17/97 376 (H) COSPONSOR(S): GREEN 02/21/97 430 (H) COSPONSOR(S): ELTON 02/26/97 (H) L&C AT 3:15 PM CAPITOL 17 02/26/97 (H) MINUTE(L&C) 04/18/97 (H) L&C AT 3:15 PM CAPITOL 17 04/18/97 (H) MINUTE(L&C) 04/23/97 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 192 SHORT TITLE: CHEMICAL DEPENDENCY COUNSELORS SPONSOR(S): REPRESENTATIVE(S) IVAN, Bunde, Foster, Grussendorf JRN-DATE JRN-PG ACTION 03/14/97 665 (H) READ THE FIRST TIME - REFERRAL(S) 03/14/97 665 (H) L&C, FINANCE 04/23/97 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 203 SHORT TITLE: ACTIONS FOR UNLAWFUL TRADE PRACTICES SPONSOR(S): REPRESENTATIVE(S) DYSON, Croft JRN-DATE JRN-PG ACTION 03/18/97 738 (H) READ THE FIRST TIME - REFERRAL(S) 03/18/97 738 (H) L&C, JUDICIARY 04/23/97 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER REPRESENTATIVE IVAN IVAN Alaska State Legislature Capitol Building, Room 418 Juneau, Alaska 99801 Telephone: (907) 465-4942 POSITION STATEMENT: Prime sponsor of HB 192. SANDRA DEASON 4330 South Bragaw Anchorage, Alaska 99508 Telephone: (907) 561-1336 POSITION STATEMENT: Testified on HB 192. W. HARRISON CHILDERS, Certified Drug and Alcohol Counselor II and Nationally-certified Addiction Counselor II Charter North Counseling Center 1650 South Bragaw Anchorage, Alaska 99508 Telephone: (907) 274-7313 POSITION STATEMENT: Testified on HB 192. WILLIAM D. McCOLL, Director Government Relations National Association of Alcoholism and Drug Abuse Counselors 1911 North Fort Myer Drive, Suite 900 Arlington, Virginia 22209 Telephone: (800) 548-0497; Fax (703) 741-7698 POSITION STATEMENT: Testified in support of HB 192. GARY TURNER, Village Services Manager Yukon-Kuskokwim Health Corporation P.O. Box 528 Bethel, Alaska 99559 Telephone: (907) 543-6740 POSITION STATEMENT: Testified regarding HB 192. ARDYCE TURNER Yukon-Kuskokwim Health Corporation P.O. Box 528 Bethel, Alaska 99559 Telephone: (907) 543-6760 POSITION STATEMENT: Testified regarding HB 192. BETH KERSEY, Program Director Phillips Ayagnirvik Yukon-Kuskokwim Health Corporation P.O. Box 528 Bethel, Alaska 99559 Telephone: (907) 543-6724 POSITION STATEMENT: Testified regarding HB 192. PATRICIA WINTYR American Counselors Association of Alaska 4411 Abby Way Juneau, Alaska 99801 Telephone: (907) 780-4999 POSITION STATEMENT: Testified in support of HB 192. CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2534 POSITION STATEMENT: Provided department's position and answered questions regarding HB 192. LORI NAMYNIUK, President Substance Abuse Directors Association P.O. Box 190221 Anchorage, Alaska 99519 Telephone: (907) 258-5578 POSITION STATEMENT: Testified in support of HB 192. REPRESENTATIVE FRED DYSON Alaska State Legislature Capitol Building, Room 428 Juneau, Alaska 99801 Telephone: (907) 465-2199 POSITION STATEMENT: Sponsor of HB 203. DAVEED SCHWARTZ, Assistant Attorney General Commercial Section Civil Division (Anchorage) Department of Law 1031 West 4th Avenue, Suite 200 Anchorage, Alaska 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Provided department's position in support of HB 203 and answered questions. HELEN BEIRNE P.O. Box 111125 Anchorage, Alaska 99511 (No telephone number provided) POSITION STATEMENT: Testified in support of HB 203. STEPHEN CONN, Executive Director Alaska Public Interest Research Group P.O. Box 101093 Anchorage, Alaska 55510 Telephone: (907) 278-3661 POSITION STATEMENT: Testified in support of HB 203. RICK GILMORE 8001 Blink Street Anchorage, Alaska 99504 Telephone: (907) 333-3356 POSITION STATEMENT: Testified in support of HB 203. PEGGY MULLIGAN, Capital City Task Force Member American Association of Retired Persons P.O. Box 240335 Douglas, Alaska 99824 Telephone: (907) 364-3144 POSITION STATEMENT: Testified in support of HB 203. REPRESENTATIVE ERIC CROFT Alaska State Legislature Capitol Building, Room 430 Juneau, Alaska 99801 Telephone: (907) 465-2199 POSITION STATEMENT: Answered questions regarding HB 203. ACTION NARRATIVE TAPE 97-47, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee to order at 3:27 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson and Ryan; there was a quorum. Representative Sanders arrived at 3:56 p.m., and Representatives Kubina and Brice arrived at 5:11 p.m. HB 116 - WORKERS COMPENSATION SELF-INSURANCE GROUP Number 0044 CHAIRMAN ROKEBERG said the committee would first address House Bill No. 116, "An Act relating to workers' compensation self-insurance," for the purpose of moving it out of committee. Number 0061 REPRESENTATIVE BILL HUDSON made a motion and asked unanimous consent to move HB 116, version 0-LS0463\H, Ford, 4/16/97, as amended and with accompanying fiscal notes, out of committee. Number 0135 CHAIRMAN ROKEBERG objected to ensure that the public hearing was closed. Noting that Mr. Grossi and Ms. Burke were available, he asked whether there were any questions. Hearing none, he closed the public hearing. Chairman Rokeberg withdrew his objection, then asked whether there was a further objection to the motion. There being none, CSHB 116(L&C) moved out of the House Labor and Commerce Standing Committee. Number 0219 CHAIRMAN ROKEBERG called a brief at-ease at 3:30 p.m. He called the meeting back to order at 3:31 p.m. HB 192 - CHEMICAL DEPENDENCY COUNSELORS Number 0234 CHAIRMAN ROKEBERG announced the next item of business was House Bill No. 192, "An Act regulating chemical dependency counselors; and providing for an effective date." Number 0285 REPRESENTATIVE IVAN IVAN, prime sponsor, read the sponsor statement into the record: "The bill before us today establishes a State Board of Chemical Dependency Counseling examiners under Title 8 of the Alaska Statutes. Alcohol and substance abuse is a growing concern for Alaskans. And a requirement of state licensing for chemical dependency counseling professionals provides consumer protection and promotes the best possible professional-quality care for Alaskans seeking and/or in need of treatment services. "This bill changes a voluntary certification process to professional state licensing as a standard of practice. Currently, there is no mechanism in place in Alaska to prevent anyone, with or without specific training or experience, from calling themselves a chemical dependency counselor. "The bill before you establishes minimum levels of academic or experiential training requirements and supervised experience to practice as a Counselor Associate, Counselor Level I, II, or a Clinical Supervisor. "Alaskans age 12 and older sought chemical dependency treatment services 9,165 times in fiscal year 1996 (admissions and re- admissions) from programs receiving some state funding. Additionally, there are an estimated 2,000 individuals who received treatment services through private practice, private hospitals or federal government providers. "There are currently 55 programs providing services, which are certified by the State Alcohol & Drug Abuse office. Currently, there are over 700 certified chemical dependency counselors, and it is anticipated that there will be growth in this field in the near future." REPRESENTATIVE IVAN summarized the bill's purpose: to standardize a certification process for alcohol counselors, with the objectives of consumer protection, quality care, and professional ethics and conduct. He noted that in his own district, with many small communities, there are many places where alcohol-related or drug- related problems affect the community. Number 0554 REPRESENTATIVE IVAN advised members that there are elders in the communities who have provided these services. Some fear those elders may be displaced because of this legislation. "But this legislation certainly will recognize them, and there's ways and means to include those people that are currently practicing their field in providing alcohol counseling," he explained. REPRESENTATIVE IVAN said he would forward eight proposed technical amendments; he offered to discuss them. The Senate Labor and Commerce Committee had also forwarded nine or more changes. Representative Ivan indicated he would come up with a committee substitute. A representative from the Department and Commerce and Economic Development (DCED), Division of Occupational Licensing, would address the fiscal note and any concerns. Number 0663 REPRESENTATIVE JOHN COWDERY asked whether the most prevalent abuse in Representative Ivan's district relates to alcohol or drugs. REPRESENTATIVE IVAN replied, "Alcohol is historically number one." Number 0715 REPRESENTATIVE COWDERY stated his understanding that many villages have voted to be "dry." REPRESENTATIVE IVAN responded that in their efforts to combat problems related to alcohol, communities have utilized the state option of laws to control it. He said, "And in my area, most communities are dry/wet; in some communities ... you can have alcohol in your private possession." He noted that historically in the U.S., something that is banned tends to get there when people can afford it. Number 0763 REPRESENTATIVE COWDERY asked whether Emmonak is in his district. REPRESENTATIVE IVAN explained that while he comes from the Yukon- Kuskokwim delta region, the district he represents from Akiak goes south toward Dillingham. Emmonak, north of the Yukon River, is in Representative Foster's district. REPRESENTATIVE COWDERY asked whether Representative Ivan could estimate the population of Emmonak. REPRESENTATIVE IVAN said he hadn't been there for six years, but he would guess 800 to 900 people. Number 0808 REPRESENTATIVE COWDERY recalled that a few winters ago, 12 youths in Emmonak committed suicide because of alcohol and drugs. He said it is hard to comprehend for such a small village how large an impact that would have. He stated his belief that this is a good piece of legislation. REPRESENTATIVE IVAN replied that certainly that is one of the biggest problems. There have been occasional waves of suicides, including copy-cat activities, which come like an epidemic. Even in his own community and extended family, some have lost relatives from alcohol. Number 0900 REPRESENTATIVE COWDERY reported that he'd talked to elders in rural Alaska who'd indicated it had destroyed the traditional ways of the families; many youths were no longer even going to fish camps. Because of alcohol, sometimes they would get on a snow machine, for example, run out of gas and freeze to death. REPRESENTATIVE IVAN added that many people try to drink up their alcohol, whether they are on a river boat or snow machine, before arriving at a dry community; that is where some of the problems, such as accidents, occur. Number 0963 REPRESENTATIVE JOE RYAN said he has no problem with the bill. Those who would be licensed already have a profession, but now it would be more recognizable and acceptable. He asked, "Is this going to mandate this service for any particular person, or it's still going to be voluntary?" REPRESENTATIVE IVAN replied, "The voluntary aspect is still there; the churches and the community elders have performed that to the maximum." He said this would make the occupation equivalent to other occupations, which come under the Board of Clinical Social Work Examiners or Board of Nursing, for example, to ensure that people are qualified and that they don't abuse those they are treating. It will provide consumer protection. CHAIRMAN ROKEBERG invited Representative Ivan to join the committee at the table. He asked that testifiers restrict testimony to two or three minutes. Number 1061 SANDRA DEASON came forward to testify, saying she chairs the Alaska coalition for licensure. A member of the current statewide certification commission, she was representing rural Alaska through the Association of Rural and Alaska Native Drug and Alcohol Program (ARANDAP) and the Substance Abuse Directors Association. MS. DEASON provided some history. In 1993, there was a voluntary certification commission. That year, the Indian Health Service, which funds a great number of the providers, required higher standards for certification. Ms. Deason noted that her group is affiliated with the National Alcoholism and Drug Abuse Counselors (NAADAC). MS. DEASON indicated at that time, they unified rural and urban Alaska in the certification process. Prior to 1993, there were approximately 200 certified professionals in the field; most were in the urban Anchorage area. Rural Alaska had little accessibility to obtain certification through education, simply because of their remoteness, and they did not have representation on the commission. MS. DEASON stated: "At that time, the rural providers delegated four of us onto the commission, and also the substance abuse directors delegated two people onto the commission. Following the year of 1993, the number jumped up into the thousands, certified professionals. And of that number, most were real providers. As Ivan had stated, consumer protection is definitely the number one priority; and following consumer protection is also accessibility to rural Alaska. "With dwindling dollar amounts, dwindling funding, it is essential that rural Alaska continue to get quality of care and accessibility. We cannot do that by flying people in, from the urban settings, out to provide services in the scenario that you talked of, the 12 youth suicides in the Emmonak area; that was a chain reaction that year, and the amount of money that would have been spent to fly people in to heal the community, versus having providers or resources in that community, I mean, there's no way to equalize it. If there are providers in the communities that can deliver the services, and who are familiar with and fall under some standards to provide services, the quality of health care in all of rural Alaska, all urban Alaska, of course, becomes quality care." Number 1240 MS. DEASON continued: "I am very concerned. I've spent 16 years working in the substance abuse field. My concern is, and always has been, that there are people out there who are providing services who are not ... certified, because it is a voluntary process at this point. And sometimes those services are much more detrimental than they are valuable, as far as a health service. And what we would like to see is that everybody would be required to follow a set of standards to practice. ... So, we wouldn't eliminate rural Alaska; we would want those people who have been out there practicing these standards and providing these services to still have access to licensure, without eliminating them. "And so, what we did is we rolled over our current certification standards into licensure standards, which are quite high standards for certification. I've done extensive research in the last year, with the Lower 48 states, those who have licensure, those who don't, those who have voluntary, those who have mandatory. And ... what all of us did on the coalition is we've ... seen what worked in some states and what didn't in others." She indicated that other than the amendments they have, it is a very clean bill. Number 1304 REPRESENTATIVE RYAN noted that everyone seemed fairly satisfied with the bill. He offered to make a motion to move it. CHAIRMAN ROKEBERG responded that he was going to hold the bill over for "further activities" that would come to light in the testimony. He acknowledged the presence of Representative Dyson and invited him to join the committee at the table. Number 1336 W. HARRISON CHILDERS, Certified Drug and Alcohol Counselor II and Nationally-certified Addiction Counselor II, Charter North Counseling Center, came forward to testify, specifying that he works in the private sector. They see this as a public protection and believe it is in everyone's best interest, including the state's. MR. CHILDERS cited an example of public protection. Under the current voluntary system, people coming out of prison can practice as chemical dependency counselors, and there are no sanctions or ways to control that. He hopes this bill will provide a way to investigate those people and to focus on everyone's best interest. He concluded by saying they favor passage of this bill, which is good for the state and is "just good business." Number 1391 REPRESENTATIVE HUDSON asked: With there being no licensure, how are the bona fides established under the present system? MR. CHILDERS explained that there are about 700 certified addiction professionals in Alaska. There is a voluntary system, with a code of ethics attached to membership in that organization. A board has been put together to investigate allegations. As he sees it, the crux of the issue is that there is no way to "enforce allegations of misconduct" at this point. Although people who are not licensed or even certified counselors have been cited, nobody on the board has power to do anything about that. REPRESENTATIVE HUDSON asked whether it is an ad hoc board. An unidentified speaker said yes. Number 1450 CHAIRMAN ROKEBERG asked who now certifies counselors. MR. CHILDERS said it is the Alaska Commission for Chemical Dependency Professionals. CHAIRMAN ROKEBERG stated his understanding that the existing commission grants certification, but without state authority. Number 1499 REPRESENTATIVE HUDSON asked whether there is public funding for that. MR. CHILDERS said there is some funding; others could speak to that. Number 1526 WILLIAM D. McCOLL, Director, Government Relations, National Association of Alcoholism and Drug Abuse Counselors (NAADAC), testified via teleconference from Washington, D.C., in support of HB 192. With more than 17,000 members, NAADAC is one of the largest national organizations representing the interests of alcoholism and drug addiction treatment and prevention professionals. They've assisted in authoring licensure bills throughout the U.S., and they provided relatively minor technical input into HB 192. MR. McCOLL stated, "NAADAC strongly supports the enactment of state licensure laws. Such laws establish an organized system which ensures that the delivery of this vital health care service is provided by trained and experienced professionals who have met rigorous training requirements prior to being licensed or certified by the state as alcohol and drug counselors. This is important for the protection of consumers of these services in the state of Alaska." MR. McCOLL continued, "Counselors who have met the licensing criteria outlined in this bill will constitute the one group of professionals who specialize in the diagnosis, assessment and treatment of alcoholism and other substance abuse disorders. These counselors possess a constellation of knowledge that is unique to the alcoholism and drug abuse counseling profession and which distinguishes them from other health care professions. We believe that the licensure of alcohol and drug counselors will help to ensure that the citizens of this state who suffer from an addiction disease will receive care from a qualified, experienced and competent professional." Number 1618 CHAIRMAN ROKEBERG asked what the national entry requirements are for education and whether NAADAC provides a national examination. MR. McCOLL replied, "NAADAC does provide a national examination. We are a certifying body. We have three exams. They are for the NCAC, which is our lowest level of certification and which has no educational requirement; the NCAC II, which has a slightly higher educational requirement, a bachelor's degree; and then the Masters of Addictions Counselors, MAC, which, as it states, requires a master's degree." MR. McCOLL continued, "The answer to your first question: The level in the states right now somewhat varies. The trend has been, I think, of late, to enact laws which may contain some educational requirements. However, I would add that that's certainly not uniform. New Mexico just passed a bill without any educational requirements." He added that ten states now have licensure or mandatory certification. Number 1690 REPRESENTATIVE COWDERY asked whether the national exam addresses issues pertaining to Yupik or Alaska Native populations. MR. McCOLL indicated the exam addresses issues considered more universal in addiction studies. He said there are minority concerns within NAADAC itself, and they have established a minority committee which relays those types of concerns. He offered to find out from the persons who create the certification exam whether any questions regard Alaska Natives; however, he doesn't believe that is the case. Number 1749 REPRESENTATIVE COWDERY observed, from his 40 or 50 years here and time spent in rural areas, that elders rather than outsiders may be more respected and looked to for talks and encouragement. MR. McCOLL replied, "I certainly understand your concern. I think that the addiction treatment profession has a very clear commitment to respecting Native rights, and certainly the kinds of questions that we are talking about are very much geared towards a sort-of-a- universalist practice, which can be modified, of course, for (indisc.) under those types of heritages." Number 1802 REPRESENTATIVE HUDSON referred to Mr. McColl's indication that NAADAC had helped other states in their move to licensure. He asked whether most counselors in other states had been grandfathered in or were disenfranchised. MR. McCOLL answered that usually there is a move to grandparent those existing counselors in, depending on the state. For example, he believed that Maine had an eight-year grandparenting clause; however, that included a master's requirement. He pointed out that of the ten states that had enacted laws, only four had enacted any degree requirements. Number 1845 REPRESENTATIVE HUDSON asked whether Mr. McColl was familiar with the "Alkali Lake proposal" a few years before, which incorporated "some pretty peculiar and specific drug and alcohol dependency, primarily alcohol dependency, measures in that area." MR. McCOLL said he wasn't familiar with that specific legislation. Number 1874 CHAIRMAN ROKEBERG referred to educational requirements in some states. He asked whether within the bylaws, or elsewhere, experience levels could be exchanged for education. MR. McCOLL replied that some states had made that an option, and it is well within the tradition. It is clear to him that each state needs to decide. For Alaska, based on its rural population, he believes that type of exchange is quite fitting. CHAIRMAN ROKEBERG asked whether for Mr. McColl's national association, the examination is the primary method of entry into certification. MR. McCOLL said that is correct. He stated, "I'd like to draw a distinction here. NAADAC certification is a private, voluntary certification. And we do certify at three levels, based on educational requirements. ... And many states do use NAADAC's written exams. However, the state certifications very frequently will accomplish ... their goals by doing things like trading off experience levels with years of education, that type of thing. That's not an unusual type of arrangement for a state to make." Number 1935 CHAIRMAN ROKEBERG asked whether any other national organizations work parallel to or in competition with NAADAC. MR. McCOLL said there are other certifying organizations, some national, including the "international certification reciprocity consortium" and the "FECC," for which he knew only the acronym. CHAIRMAN ROKEBERG thanked Mr. McColl and exchanged contact information. MR. McCOLL said he'd send information regarding whether his organization asks questions specific to Alaska Native issues. Number 2050 GARY TURNER, Village Services Manager, Yukon-Kuskokwim Health Corporation, testified via teleconference from Bethel, specifying that he works with the Village Alcohol Education Counselors (VAEC) program. He oversees village-based counselors in 18 villages who serve about 36 villages in total. MR. TURNER expressed concern about the testing. When he'd failed the test by one question, he'd felt incompetent. He believed it was culturally biased, not taking into account traditional values of Natives. He explained, "We have to kind of look at the world backwards to pass this test. We have to look at it the other way, and it goes against all our own values and how we see the world." MR. TURNER said he believes that many of their counselors are Level II counselors out there. He stated, "They've been in appeal for ten years. Just because they can't pass this test, they're not considered Level II in the academic world. And trying to teach these people these things, to try to look at this test differently, has been my goal. I'm taking the test again Saturday, and I feel I'm prepared to do a good job, but that doesn't guarantee me that I'll pass. I'll keep trying." MR. TURNER said he is trying to obtain his degrees; he foresees that if they don't stop this progression of being licensed and needing a certain academic degree, they will lose many Native counselors. Others would come in and provide services without understanding the culture, traditions and values, which would not benefit the Native people. MR. TURNER stated, "The people who are in place now are the ones that should be providing the services and not be limited because of these simple things like you need to be Level II and these are the things you need to pass. Maybe in the future we'll need a degree to do that. And it doesn't take in account that what we have, experience, lifestyle, the things that we've been doing for centuries, is going to benefit our people, not a piece of paper that says you're a Level II counselor or that you have this degree, bachelor's degree in human services. If we go that route, we're going to lose a bunch of our people in the field." Number 2188 CHAIRMAN ROKEBERG asked whether Mr. Turner believes the existing commission could develop an examination that is not culturally biased and that would apply to rural Alaskans. MR. TURNER said with strong input from rural areas, and with rural residents included in that process, he strongly believes they can do that. CHAIRMAN ROKEBERG asked whether, if that were the case, an examination should be required to gain certification. MR. TURNER agreed and said they also propose that someone certified as a Level II, for example, according to current standards, could supervise someone else for five years; that second person could possibly automatically become Level II under that supervision. MR. TURNER restated his recommendation that any test should take into consideration Native values and traditions. He stated, "It doesn't have to be an easy test, but at least we'll have a chance at it without being tricked: Two negatives means a positive; I don't know that stuff. And big terminology like `multifacet,' we don't know what those things mean. So, we take the test already beating ourselves. That doesn't mean we're stupid or we're incompetent." Number 2218 CHAIRMAN ROKEBERG wished Mr. Turner the best of luck on his exam. Number 2292 ARDYCE TURNER, Yukon-Kuskokwim Health Corporation, testified via teleconference from Bethel that she is the new "FAF coordinator/ supervisor." She stated, "This is going to be my third attempt at taking this test. I also found it to be very culturally biased. And what I mean is, my perspective isn't the national perspective, and I found it very frustrating, even though I did study here and there, you know." Her first try, she'd been 15 away from passing. Her second try, she'd been six away. MS. TURNER said she'd wished the NAADAC would send a survey or make recommendations for the rural area; often, it seems like taking a test blindfolded, feeling their way around and hoping for the right answer. She agreed with Gary Turner that there are a lot of trick questions, such as use of the word "multifaceted." She considers herself an educated woman, a parent, a mother, and a student as well. She is still going to school and is a year away from an undergraduate degree. Number 2367 CHAIRMAN ROKEBERG asked whether Ms. Turner would be taking the NAADAC test. MS. TURNER said yes. CHAIRMAN ROKEBERG wished her luck on that. Number 2384 BETH KERSEY, Program Director, Phillips Ayagnirvik (drug and alcohol program), Yukon-Kuskokwim Health Corporation, testified via teleconference from Bethel. She oversees a program with a staff of 60, primarily counselors, of which 27 are village-based. They cover approximately 57 villages in the region. MS. KERSEY thanked Representative Ivan for introducing the bill. She works with both Gary Turner and Ardyce Turner. Although they support licensure and understand its importance, they want to ensure careful consideration of a few points. First, the commission appointed by the governor must reflect Alaska's cultural diversity; Ms. Kersey proposed that the language be stronger. MS. KERSEY said second, they want to make it clear that the strength of rural Alaska lies in its "natural helpers, who may be the young people and certainly the elders." She stated, "And we want to make sure that they're going to fit into the clause that allows them to be able to still turn around and do, kind of, what we might consider counseling but not have to be licensed. So, I would assume that they're going to be able to fit under the clause that says that as long as they're responsible to a tribal group, that then they can be exempt from licensure." MS. KERSEY mentioned the concept of "an inherent training, which would bring people in from the villages." Individuals willing to act as natural helpers would reach out to members in the communities in such a way that licensure wouldn't be required, nor would they be charged with a misdemeanor for doing what tradition has taught them to do. She also expressed concern, as an administrator, about filling vacancies that arise. TAPE 97-47, SIDE B Number 0006 MS. KERSEY mentioned the need to get people to where they can do counseling and respond to their community fairly quickly. She stated, "So, having this counselor associate, where they've got to wait for a year, I have real concerns. I also wonder what we're going to do until they can make that counselor associate level in the year interim, again, because we don't have people with these credentials waiting in the villages." She restated her support of licensure but requested consideration of these other points. Number 0034 CHAIRMAN ROKEBERG asked whether Ms. Kersey was referring to an exemption for "traditional-type" counseling. MS. KERSEY referred to pages 2 and 3. She said it seems that someone who reports to a tribal group could be exempt from any kind of licensure if there were "natural helpers" out there. CHAIRMAN ROKEBERG asked whether they would be employed or paid. MS. KERSEY referred to page 3, lines 2 through 4, which says, "and the person remains accountable to the established authority of the religious denomination or the ruling body of the tribal group and no separate charge is made for the services". She said it appears someone maybe could do this without worrying about being charged with a misdemeanor. Number 0100 PATRICIA WINTYR, American Counselors Association of Alaska, came forward to testify, indicating they are also working on licensure for counselors. She stated, "I definitely support this legislation. And some of the wording potentially limits the practice of counselors, something we've been doing long before there was the drug abuse counseling. On page 2, it says a person who is not licensed under this chapter may not engage in chemical dependency counseling for compensation, et cetera." She specified she was referring to lines 18 through 20. MS. WINTYR referred to page 9, line 31, continuing to page 10, which defines "chemical dependency counseling" as the provision of intervention, assessment, counseling and aftercare for persons who are alcoholics or drug abusers or who participate in inhalant abuse or for the members of their families who are affected by the use or abuse of alcohol, drugs or inhalants. MS. WINTYR suggested eliminating that or rewording it because counselors couldn't be in business if they were unable to counsel those with alcoholism and drug abuse in their families. It is limiting and possibly infringes on established rights of counselors, marriage and family therapists, psychologists and social workers. Although she often sends people to chemical dependency/abuse counselors, she could also counsel them well. One cannot be in the counseling business without learning a lot about working with abuse. She added, "Probably every client I work with is affected by alcohol abuse in their family." Number 0270 REPRESENTATIVE HUDSON asked whether she wanted to remove "for the members of their families." MS. WINTYR said yes. It says on page 2 that a person who is not licensed under this chapter may not engage in chemical dependency counseling for compensation, which is later defined on page 9; those two go together. If she practiced counseling that way, she would be in violation, a class B misdemeanor. "And I don't think that you want to do that to the number of Alaskan counselors or psychologists; I mean, it just doesn't make sense," she added. Number 0318 CHAIRMAN ROKEBERG said they'd not be moving the bill that day. He asked whether she had additional testimony. MS. WINTYR replied, "No, I definitely support the testimony otherwise." CHAIRMAN ROKEBERG asked Ms. Wintyr to provide written comments. Number 0350 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, came forward to testify, noting that the board and associated licensing activities in this bill would be part of her division. She stated, "I did work with the supporters of the bill to go through the version in the other house, and I have a number of relatively small, from my perspective, clean-up provisions that I think that - I haven't spoken with the sponsor but with some of the folks sitting behind me - seem to be mutually acceptable, ... which I'd hoped you might consider for a draft CS." She asked whether they wanted her to run through those. CHAIRMAN ROKEBERG replied that they'd be sending this bill to a subcommittee. He asked that Ms. Reardon provide those in writing. Number 0406 REPRESENTATIVE IVAN indicated the fiscal note had raised concern in the Senate Labor and Commerce Committee, and he believes the start- up costs for this control board will be substantial. However, he believes once this board is up and running, they could provide the best possible service. In addition, the people who will be counseled or affected by this bill will stay away from the Department of Public Safety, Department of Corrections and Department of Health and Social Services and therefore not impact those departments fiscally in the future. He asked Ms. Reardon to comment on the fiscal note. Number 0458 MS. REARDON referred to page 2 of the fiscal note and said they'd tried to provide a detailed description. She explained, "What I've calculated is that there are approximately 700 licensees, based on the number of people who are currently licensed or certified by the commission. It seems to range from 650 to 800 in their history; so, I picked the number 700. And I estimated that it would take a full-time Range 12 clerk, licensing examiner, to staff the board meetings and work with the licensees, the applicants, and do all of the paper processing and all of that." MS. REARDON said the fiscal note also includes a half-time investigator for disciplinary and complaint investigations, which is the first item under personal services. "It includes $9,100 of travel money for the board to meet, and ... $2,000 of that is for the investigator to go to areas where events might occur that need to be investigated," she said. Number 0522 MS. REARDON pointed out that the contractual services line is a big item in the fiscal note. The smaller parts are the costs of public noticing, regulations, telephones and so forth; the big item relates to examinations, with $75,000 to contract with an outside company to write three exams. "We just picked $25,000 each," she explained. "And that's where the decisions about what happens with exams matter a lot. My understanding is that ... the existing commission has been using the Level I national exam for its Level II ... counselors in this bill. And so, that wouldn't cost us anything to develop, if the board chose to continue using that exam." MS. REARDON said because they are using the Level I exam as the test for Level II counselors, it is her understanding that no existing test remains for "the Level I people or the associates." She believes that is being researched. The board might want to contract out to have those created, or perhaps the existing tests wouldn't be considered acceptable from an Alaska perspective and new tests would need to be written. A big item in the fiscal note, that was part of the discussion in the Senate Labor and Commerce Committee the previous day, because building in that $75,000 made the numbers big and made the license fees come out larger. MS. REARDON stated, "Also, if people are going to be paying us to take the exam and we buy the exam from the national exam company, that money flows through our budget; so, it shows as revenue and expenditures. If they pay the exam company directly, it stays outside our budget; then you don't see it here. So, part of not being sure whether the board will choose to have exams or not, since it's permissive language in the bill, means that ... it's a little bit hard to know whether or not to build it into the fiscal note." MS. REARDON further explained, "My concern was that if I didn't build it into the fiscal note, and two years from now the board wants to get exams written and wants to have everybody take them, I'd say, `Well, I have no expenditure authority to do any of that.' So, I put it in the fiscal note. ... If we had an understanding that the board would not require examinations without going back to the legislature for expenditure authority, then I probably wouldn't put it in the fiscal note." She said that had been one of the big issues the previous day in the Senate. MS. REARDON said in addition, there is $10,200 in the fiscal note for paying the Office of the Attorney General to prosecute the disciplinary cases and do regulation review. She concluded by saying those are the major items in there; she offered to discuss the details if the subcommittee or the sponsor so desired. Number 0668 CHAIRMAN ROKEBERG stated his understanding that the educational and examination formats are issues for the commission to settle. The fiscal note provides a baseline from which the subcommittee and the bill sponsor can work. He suggested that Ms. Reardon could consult with them as necessary. Number 0711 MS. REARDON agreed. She pointed out that, as with all of their programs, the department would fall under the mandate that licensing fees and other fees received for exams and so forth must cover all of the costs. Therefore, the fiscal note will always be a "net wash" to the general fund. However, she expects that the fees will be more expensive than what people are currently paying to the nonprofit commission; she wants people considering licensure to be aware of that. MS. REARDON advised members that fees for what she considers mental health licensing boards, such as for marriage and family therapists, psychologists and social workers, run $350 to $500 every two years, depending on the profession. However, they have smaller numbers of licensees; for example, psychologists have fewer than 200 licensees, compared to 700 here. From the previous day's testimony, she believes those affected by the bill now pay $125 for a two-year license. She expects that even if they take the whole exam issue off the fiscal note, figuring that if exams are developed, it will be through a budget allocation in a future year, the fees would still probably run about $350. Number 0756 REPRESENTATIVE IVAN said he didn't want the fiscal note to kill the bill or slow its progress. He stated his belief that eventually the licenses will become affordable. In addition, he hopes this will indirectly save money, in terms of people they take care of. Number 0784 CHAIRMAN ROKEBERG said he didn't see revenues from the actual license examination fees. He asked about that. MS. REARDON referred to the bottom of page 3 of the fiscal note and explained that she hadn't been sure how many people would be taking the exams. She stated, "So, if we got to it, in a subcommittee, the exam discussion, I could probably, you know, array the costs a little bit." In this fiscal note, however, they had put all of the burden on the actual licenses. CHAIRMAN ROKEBERG said presumably, there would be examinations given and revenues generated by that, which would in turn lower the biannual fees. MS. REARDON agreed. Number 0868 MS. REARDON said she'd move speedily through other issues. She restated that it will cost more than people have been paying, and she doesn't want to take them by surprise. Referring to testimony by Ms. Wintyr, she pointed out there is an exemption for the other licensed mental health professions, such as marriage and family therapists, psychologists and social workers; they wouldn't need to get this license as well. She read from page 3, lines 8 and 9, which says a "person licensed in this state under laws outside this chapter when performing activities that are within the scope of the person's licensure" is exempted. MS. REARDON pointed out, however, that while a psychiatrist with a license would be exempted, Ms. Wintyr is correct that someone not in a licensed profession, such as a professional counselor, which Ms. Wintyr is, wouldn't be exempt and would need to get this license to do chemical dependency counseling. MS. REARDON noted that she had a whole collection of minor issues. She suggested dealing with them at the subcommittee level unless the committee preferred otherwise. CHAIRMAN ROKEBERG said that was an excellent idea. Number 0946 REPRESENTATIVE HUDSON referred to the fiscal note and to testimony about the difficulty some have relating to the exams and qualifications in rural Alaska. He sees the major problem in rural Alaska and doesn't see a lot of people out there making lots of money as licensed professionals. If it costs $500 to get a license, nobody out there would do this kind of service, and it is in rural Alaska that they are needed. "And I would hope that you'd take a hard look at that whole situation and see if there isn't some way in which we can accommodate that or provide it," he said. REPRESENTATIVE HUDSON asked whether Ms. Reardon would have a hand in creating the qualifications for the counselors, particularly in rural Alaska. He noted that in Juneau, Anchorage and Fairbanks, there were many highly educated people. However, the lion's share of the problems are in rural Alaska. He expressed hope that this legislation could lead to professionals not necessarily from a high-academic point of view but from cultural relationships and some training. In addition, he'd like to see an affordable cost that is conducive to encouraging people to acquire these licenses. Number 1061 MS. REARDON responded that the regulation-writing authority will rest solely in the hands of the board. "If I'm around, and if I'm convincing, then ... the director may have a role," she added. The qualifications in terms of training and experience are fairly specifically laid out, "if we ignore the exam issue." She said it is important that the legislature be comfortable with those. MS. REARDON explained, "To enter into the profession as a counselor associate, which is the lowest level, you will need to have ... one year of training in an approved training course, under this law, under the supervision of a licensee. And I don't know whether that's doable or not, but I assume that the (indisc.) believe so." Number 1112 REPRESENTATIVE IVAN said he appreciates Representative Hudson's recommendation and they will look at the level of licenses being offered. He suggested perhaps the costs could be "met at different education or experience levels, versus chemical supervisor license fee costs," and he acknowledged that some of these people aren't making $80,000 to $100,000 a year. Number 1154 REPRESENTATIVE HUDSON stated his belief that they should be leaning towards a program similar to that for health aides in the villages, for example. He suggested devising in the subcommittee a way to get a qualified person in every village, at no cost to the person, who would be selected. "And we should be able to find the moneys, because I think that it's such a high public importance to do that," he concluded. Number 1198 MS. REARDON asked for confirmation that he was referring to having a funding source from the general fund, not from program receipts. REPRESENTATIVE HUDSON said that was his thinking. MS. REARDON said she was looking forward to working with the sponsor and any subcommittee. She was glad they were talking about costs now and working on the issue of the fiscal note, because she didn't want to catch people by surprise and have unintended consequences. Number 1236 CHAIRMAN ROKEBERG asked whether anyone else wished to testify. He announced that they would hold HB 192 over. He expressed the desire to send this to a subcommittee including the Senate Labor and Commerce Committee, the existing commission and the bill sponsor, to develop "a bill that everybody can live with in an affordable and effective manner." He emphasized his belief that this is excellent legislation. He stated, "Hopefully, at a point where it reaches its maturity, we of this committee would be happy to take it back up and move it along in an expeditious manner, when it reaches that point." CHAIRMAN ROKEBERG said the subcommittee should perhaps insert a section on the examination criteria, particularly as it relates to the types of questions, including definitions of terms, making it clear that the examination meets the diverse needs of Alaska and ensures adequate training and knowledge, without the difficulties such as those discussed by the testifiers from Bethel. He suggested that could be done through some "artful drafting in statute." Number 1349 LORI NAMYNIUK, President, Substance Abuse Directors Association, testified in support of HB 192 on behalf of herself and her association. She believes it will ensure consumer protection and enhance the quality of care. It has statewide support, not only from her association but also from ARANDAP and the Alaska Native Health Board. It will also ensure access to services in rural areas. MS. NAMYNIUK referred to concerns expressed from Bethel and said this bill would protect providers like Gary Turner, in that currently within the bill there are no degree requirements; experience is important, as is supervision. "And this would also give us opportunity to be involved in the development of the testing standards," she concluded, thanking the sponsor. Number 1427 CHAIRMAN ROKEBERG appointed Representatives Hudson, Ryan and Kubina to the subcommittee, advising them of their charge to meet with the Senate, the sponsor, and the people involved. He announced HB 192 was being held over. CHAIRMAN ROKEBERG called a brief at-ease at 4:47 p.m. He called the meeting back to order at 4:48 p.m. HB 203 - ACTIONS FOR UNLAWFUL TRADE PRACTICES CHAIRMAN ROKEBERG announced the next item of business, House Bill No. 203, "An Act relating to actions for unlawful trade practices." Number 1513 REPRESENTATIVE FRED DYSON, sponsor, advised members that Representative Croft and the person on line from the Office of the Attorney General would address technical questions about Alaska's consumer protection law. He stated, "Since the mid-80s, we have continued to defund the Attorney General's consumer fraud department. And it's been reduced to the level where only the most extreme cases are they able to handle. And ... the response for dealing with consumer fraud has largely fallen to the BBB, the Better Business Bureau, who has no legal standing in enforcement." REPRESENTATIVE DYSON said this bill purports to equip private citizens with most of the power of the Attorney General in terms of seeking relief from fraud and injunctive power to stop it while it is occurring. It appeals to him because it gives private citizens the power to do the enforcement and to seek relief. REPRESENTATIVE DYSON explained that part of the problem previously was, as he remembered it, a $200 limit for punitive damages. This made it virtually impossible to find an attorney willing to take the case. As he understood it, it was also impossible to get an injunction to stop a fraudulent act until going to court and obtaining a verdict of guilty. This bill provides the means to cure all of those problems. Number 1674 REPRESENTATIVE DYSON noted that a fair amount of fraud occurs in Alaska, He cited examples related to telemarketing, used cars in Anchorage, "bait-and-switch" deals involving meat, mail-order and pyramid schemes, and airline discount ticket deals. Nationwide, Alaska is the state least prepared, in terms of available staff or resources, to deal with consumer fraud. The Better Business Bureau in Alaska has been receiving 100 to 300 calls a day. In 1995, the last year for which figures are available, there were 20,562 calls relating to concerns about consumer fraud. Since January of this year, Representative Dyson indicated he and Representative Croft had been working a good deal with the Administration, and he believes the Administration is wholeheartedly in favor of this. Number 1804 REPRESENTATIVE COWDERY asked Representative Dyson to comment about the amount of "actual damages or $500" in Section 2. He said it seems to be a very small figure. REPRESENTATIVE DYSON stated, "Remember, it was $200 before," then indicated the punitive damages are triple the actual damages award. He deferred to Mr. Schwartz for technical answers. CHAIRMAN ROKEBERG invited Representative Dyson to join the committee at the table. Number 1889 DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section, Civil Division (Anchorage), Department of Law, testified via teleconference from Anchorage, saying he is in charge of consumer protection enforcement for the department. He stated, "The Department of Law's official position on this bill is that we enthusiastically support it. We see it as a way of enhancing a private litigant's ability to sue under the consumer protection act and to exercise their private right of action ... to obtain redress for a consumer protection violation, and this being especially important in our era of dwindling public resources devoted to consumer protection enforcement." MR. SCHWARTZ pointed out that the department hasn't taken individual complaints from the public in the area of consumer protection for about ten years; that function had been eliminated. Whereas they once had about 16 people in a separate consumer protection section, they now have a very small staff to litigate the most egregious violations, some of which Representative Dyson had mentioned. They try to litigate cases involving large numbers of consumers and try to get refunds. Although fairly successful with what they do, they are only a shadow of the staff that existed in the 1980s. Number 2002 MR. SCHWARTZ agreed this bill will enhance a consumer's ability and incentive to sue under the consumer protection act. Referring to Representative Cowdery's question about Section 2, Mr. Schwartz stated, "Section 2, as amended, would expand the types of actions available. Currently, under the private right of action section of the consumer protection statute, a person must suffer an ascertainable loss of money or property in order to bring a private action under the consumer protection act. Last year, the legislature amended the consumer protection act to make unwanted telephone solicitation a violation of the consumer protection act." MR. SCHWARTZ pointed out that the new Anchorage telephone directory and "some other books" contain black dots next to a few customers' names. He explained, "If a telemarketer calls a person with a black dot next to their name, that's a violation of the consumer protection act. Those consumers may not suffer any ascertainable loss of money or property, but they are `otherwise aggrieved' under the consumer protection act, and they would have a cause of action under the consumer protection act with this wording on lines 9 and 10, `or who is otherwise aggrieved.'" MR. SCHWARTZ continued, "Additionally, under the current private right of action section, a person may obtain their actual damages or $200 for their entire case, whichever is greater, and they may only get three times their actual damages if they can prove a willful or intentional violation. The amendment would automatically triple the actual damages that would be awarded to a consumer and would also give a consumer the greater of three times their actual damages or $500 per violation. So, even though it looks like a small step up from $200 to $500, right now a consumer who doesn't get his actual damages but gets $200 statutory damages instead would get $200 for their entire case. Under the amendment, they would get $500 per violation." MR. SCHWARTZ continued, "For example, someone with a black dot next to their name gets ten calls from a telemarketer, each call being a violation. Under the current statute, they've suffered no actual damages; so, they'd get only $200. Under this amended statute, since they've suffered no actual damages, they could get $500 per telephone call, or $5,000. So, that's how that might work." Number 2219 MR. SCHWARTZ reported that Sections 1 and 3 are housekeeping provisions to recognize other changes in the bill. Section 4 allows a person to bring an action for injunctive relief, which is significant because of the state's inability, due to lack of resources, to obtain an injunction in every instance of a consumer protection violation. This would also encourage a private litigant or a consumer group to engage in private enforcement of the statute. MR. SCHWARTZ stated, "The section of the bill dealing with attorneys fees and costs, that's also part of Section 4, is very significant because a prevailing plaintiff would be able to get an award of full attorneys fees and costs and would only be subjected to the payment of attorneys fees to a prevailing defendant if it were shown that the plaintiff's suit was frivolous. This amendment would bring Alaska in line with the vast majority of states and ... would, I believe, take us out of the same league as Mississippi." MR. SCHWARTZ said his general comment about the bill is that it would indeed encourage more private litigants to enforce their rights under the consumer protection act, and it would generally be a good thing for consumers. Number 2380 REPRESENTATIVE RYAN asked whether anything in this consumer protection law talks about due diligence on the part of the consumer. He noted that a Persian saying found in the Old Testament says, "A buyer needs 100 eyes; a seller needs but one." He asked, "Where is it that you are completely held harmless for anything anybody hoodwinks you into, and the other person is the only one that has any guilt? Do you not have a responsibility to be aware how you spend your money and to what agreements you make?" MR. SCHWARTZ replied that most certainly, consumers should be aware that there are a variety of business practices. However, just about every state has a consumer protection act. TAPE 97-48, SIDE A Number 0006 REPRESENTATIVE COWDERY commented that there are many things Alaska has that other states don't, including Prudhoe Bay and the permanent fund. Referring to "pyramid clubs," he said he receives a letter at least once a year from somebody who is totally convinced it is workable, usually someone he knows. He asked, "Following up on Representative Ryan's comment, how do you handle a situation like that?" He also asked how this is different from small claims court. Number 0125 MR. SCHWARTZ explained, "A consumer can sue under the consumer protection act in small claims court. Of course, the dollar recovery limit in small claims court is $5,000. And in many instances, the consumer's actual damages will be much greater than $5,000. And so, that would bring the consumer into the area of district or superior court. So, small claims court is actually an avenue of redress for consumers who have small claims, claims under $5,000." MR. SCHWARTZ pointed out that pyramid schemes are illegal. A pyramid scheme of the worst variety is one where "spots on a chart" are being sold, with no product involved at all. In contrast, there are multi-level marketing companies such as Amway that are legal. However, these companies may not work sometimes, and it may depend on the motivation of the person who gets involved. Number 0262 CHAIRMAN ROKEBERG referred to new text in Section 2, beginning on page 1, line 15, which says, "Nothing in this subsection prevents a person who brings an action under this subsection from pursuing other remedies available under the law, including common law." Chairman Rokeberg said this is a rather unusual statement. His reading of it would be that a person could bring a cause of action for anything allowable under statute; in addition, if there is any other concept in common law, he could bring a cause of action on that, whether or not it was codified in Alaska statute. He asked whether that is a correct interpretation. MR. SCHWARTZ replied that he believes this last sentence in Section 2 is consistent with something in the consumer protection statute at AS 45.50.471(c), which says, "The unlawful acts and practices listed in (b) of this section are in addition to and do not limit the types of unlawful acts and practices actionable at common law or under other state statutes." MR. SCHWARTZ said, "So, I guess the answer to the question is that right now, a private litigant and the state, exercising the Attorney General's common law authority, may bring an action simultaneously under the state consumer protection act and under the common law and pursue statutory and common law remedies. So, this sentence that you're focusing on here is consistent with, and may be just an added clarification of, the ability of a litigant to sue ... simultaneously under state law and common law." Number 0421 CHAIRMAN ROKEBERG asked whether that is under the consumer protection title or for any cause of action. MR. SCHWARTZ said these amendments refer only to Alaska's own unfair trade practices and consumer protection act. Number 0449 CHAIRMAN ROKEBERG referred to page 2, lines 9 and 10. He mentioned Mr. Schwartz's reference to the "telephone situation" and the distinction that presently there must be an ascertainable loss or property loss. Section 3 deletes "the loss resulted" and inserts "the cause of action arose." Chairman Rokeberg asked whether that is because if there is fraudulent activity but no actual loss, then a cause of action would arise out of that activity. MR. SCHWARTZ affirmed that. That change of language in Section 3 recognizes that persons who haven't suffered an ascertainable loss of money or property, but who are otherwise aggrieved, could also bring a cause of action. Number 0533 CHAIRMAN ROKEBERG referred to page 2, lines 27 and 28, which says, "unless the court determines that the cause of action brought by the plaintiff is frivolous." He stated his understanding that Alaska has no vexatious litigation statute or frivolous lawsuit statute, except perhaps the recent tort reform bill. He asked whether that is correct. MR. SCHWARTZ said he isn't aware of such a statute, although in other states this is a common provision. It would have the effect of encouraging private enforcement of the consumer protection statute. Number 0627 HELEN BEIRNE testified via teleconference from Anchorage as an aggrieved private citizen. She recounted how a car was sold to her fraudulently in 1994. It had been listed in the paper as a 1993 model with 12,000 miles and a three-year warranty with one year remaining. Someone with her knew more about cars than she did, and the car appeared to be in mint condition. However, within four days, it had significant mechanical problems, and she discovered under the warranty that it had been in a major accident and was unsafe. DR. BEIRNE stated, "They agreed that many of the repairs that had been made on the car by a local body shop here would have made it not very discernible to someone, unless they put it up on a rack and did a major inspection. So, on advice of an attorney, I did take it back to the gentleman and ask him if he would just take his car back and return my money. Of course, he would not and again indicated that all he'd told me was true, that it was really a family car and he couldn't afford to keep it, et cetera, et cetera. This is a common story, I think, that all of you have heard." DR. BEIRNE continued, "When this failed, I did then start tracking the car down and found that he had indeed purchased it from a salvage yard, at a very reduced price, and in conjunction with his body shop had brought this up into what appeared to be absolutely mint condition. Other things that came to light was that he was doing this frequently. ... It'd be difficult to say, but he had as many as a hundred ads in the paper over the year and had many cars listed under his name. He was unlicensed." DR. BEIRNE continued, "And in all cases, as I started contacting these people, in most cases - there were people who were professional individuals - most of them didn't have the finances, nor did they have the time, to actually pursue it. There were two or three who had sued him, and they dropped it because they realized after, I think, counsel from attorneys and others that even if they won, they would indeed lose." DR. BEIRNE continued, "And later on, ... I did choose to carry this to a jury trial, which he requested, and I realized that these individuals who work in these systems know all of the delay tactics. They will take it to the very `nth' degree, and then eventually people drop it. They can't afford to spend the time, the energy and the money to pursue it. It appeared that after he realized I was not going to do that -- and the reason I didn't is it was in my first year of retirement as director of the Municipality of Anchorage's health department, and it wasn't the way I would choose to spend my first year of retirement, but I thought I would pursue it." Dr. Beirne said a young woman attorney contributed a great deal of time, and she also had the moral support of Mr. Gilmore. In addition, she'd contacted the Office of the Attorney General. Number 0853 DR. BEIRNE reported that she'd won that case, being awarded $25,000 by the jury, to repay her for what she'd put into the car, plus attorneys fees and fixing up other cars for transportation, and so forth. Her interest in this bill arises from the fact that even after judgment, it took two years to work it through the system. As soon as this individual had realized he wouldn't win, he'd divested himself of all his earnings, funds and accounts. DR. BEIRNE said the jury, in its wisdom, had asked the judge whether this man could resell the car if he got it back, since Dr. Beirne hadn't wanted it; the judge had said yes, he could resell it. "So, they gave the car to me, for what it's worth, because they didn't want him to have it," she noted. DR. BEIRNE indicated the chance of collecting anything once a case is settled is almost nil if the defendant has been working the system for a long time. "Also, you can't stop them, under the present law, from going out and doing it, even without a business license," Dr. Beirne said. She noted that some of these issues are addressed in the bill, including the increase to $500 and the ability of a person to obtain an injunction prohibiting a seller or leaser to continue to engage in the unlawful act; she believes these will be of value. Number 0983 DR. BEIRNE said, however, she believes AS 45.50.537 will probably be of the greatest assistance to some who chooses to pursue it. It appears that there will be some financial assistance, as long as it is not a frivolous case. DR. BEIRNE advised members that in the process, she'd learned a great deal. It appears that many people pick up salvaged vehicles; some had testified on behalf of the man who sold her the car. As for "owner beware," she believes it is difficult for even fairly astute average citizens to determine when they are being fraudulently involved. Dr. Beirne would like to see the bill pass, as she believes some of the relief would be helpful. Number 1050 STEPHEN CONN, Executive Director, Alaska Public Interest Research Group (AKPIRG), testified via teleconference from Anchorage. He stated, "I think Representative Dyson is doing us all a major service by this bill. As you may know, we have tracked the state of consumer protection for at least a decade at AKPIRG. We just completed a research report, and there is no question that the current state of affairs is that the private citizen must be armed with the legal resources to go forward, if they do have the guts and the stamina, as Dr. Beirne had, not only on her own behalf but to deal with a person who, as she indicated, has been selling hundreds of these vehicles to unsuspecting consumers, "unbonded, unlicensed, cheating the honest car dealer as much as the honest consumer." Had Dr. Beirne had private injunctive relief, as set forth in the bill, she could have stopped this guy cold. MR. CONN indicated that while the state was once the chief consumer protector, with vast resources, now people like Dr. Beirne carry the torch for all consumers. He applauded the sponsor for coming up with a simple, easy bill that is carefully crafted to allow people like Dr. Beirne to go forward and get some justice for herself and others in the marketplace. Number 1172 CHAIRMAN ROKEBERG welcomed Representative Croft to the table. He called on Les Gara and Jim Forbes to testify via teleconference, but he was informed that they'd had to leave. He noted that Dr. Beirne was a former member of this body. Number 1225 RICK GILMORE testified via teleconference from Anchorage as a private citizen. He had formerly been president of the Better Business Bureau of Alaska, for four years, during which time they saw numerous egregious cases. He indicated he'd like to throw his full support behind this bill. He commended Daveed Schwartz and his staff for their work despite inadequate funding. He believes this common sense bill can return some power to consumers. MR. GILMORE referred to comments about due diligence and mentioned the billions of dollars in telemarketing fraud yearly. He stated, "These guys are very, very well educated in what they do and how to take advantage of people." While he agrees education is needed, these perpetrators will prosper and bilk Alaskans out of millions of dollars a year without legislation such as this. Number 1283 REPRESENTATIVE RYAN restated his beliefs about due diligence and personal responsibility. MR. GILMORE replied that he wasn't denying that at all. However, having dealt with many of these "bad guys" over the years, he'd found they are very, very sophisticated in what they do; in some cases, even the most prudent people could fall into their pattern of fraud. Number 1323 REPRESENTATIVE COWDERY asked Mr. Gilmore to comment on senior citizens in Anchorage being vulnerable to this type of thing. MR. GILMORE indicated that happens nationwide. For example, he'd dealt with an 83-year-old Ketchikan woman who'd been bilked out of her entire life savings, more than $87,000, by a Las Vegas telemarketing company over a three-year period. Unfortunately, she'd passed away; her daughter discovered the fraud and reported it to the Better Business Bureau. Mr. Schwartz and Mr. Gilmore had worked with the attorney general's office in Nevada, which was going after this guy. "But unfortunately, they told us up-front that because the woman was deceased and the fact that they could find no assets for this guy, there wasn't much recourse," he said. Number 1374 CHAIRMAN ROKEBERG requested Mr. Gilmore's opinion about the need for this law and the ability of the Better Business Bureau to adequately protect consumers in Alaska. MR. GILMORE said he wasn't trying to toot his own horn, but much of that has been lost since he is no longer there. He doesn't know what direction the organization is now taking. He suggested that Mr. Schwartz might be able to answer that. Number 1407 MR. SCHWARTZ pointed out that the Better Business Bureau, for all of its fine efforts, is not an enforcement agency. It can try to persuade businesses to resolve consumer complaints, but if the businesses don't want to resolve them, nothing short of enforcement will cause a violation of the law to be corrected. He cited a recent case in which he'd obtained a permanent injunction; consumers had been totally fooled by a local Anchorage tire and auto parts retailer who sold, as new tires, hundreds of used tires covered with new rubber on the treads and sidewalls. Although the consumers carefully shopped around to different locations for the best price and quality, no amount of care on their part would have clued them in. "So, we had to step in and enforce the law, and we actually did; and we're getting refunds for over 150 people and over $50,000 in refunds," he stated. That is an example where the Better Business Bureau wouldn't have been able to get that kind of comprehensive relief for consumers. Number 1499 MR. GILMORE reported that in addition to working with the Office of the Attorney General and helping to identify some of these egregious things, they'd tried to educate people. But because they only had offices in certain parts of the state, the scope was very limited. He believes that should be taken into consideration. Number 1549 PEGGY MULLIGAN, Capital City Task Force Member, American Association of Retired Persons (AARP), came forward to testify, advising members that she would provide her written testimony and an AARP model bill. Referring to Representative Ryan's "100 eyes" comment, she said they'd received $20,000 from the national AARP and money from the western region, which they planned to use for educational purposes, their top priority activity for the summer. MS. MULLIGAN stated, "We do support House Bill 203. Since the Department of Law's Consumer Protection Section was eliminated in the late 1980s, Alaskan consumers have grown increasingly vulnerable, costing an estimated $10 million a year. We feel that this bill empowers Alaskans to fight back fraud, and it also empowers citizens to be able to attract attorneys. We intend to spend the summer educating seniors and other Alaskans of current fraud practices in the state, collect evidence of fraud attempts in the state. We'll work with other groups to help Alaskans become aware of telemarketing and consumer fraud and such other activities, as may seem appropriate." MS. MULLIGAN continued, "I know that Representative Ryan thinks that it's strange that people can be conned into a telemarketing fraud. However, they are very sophisticated, and it is not always that easy to identify. One of the things they suggest is that in the first minute of a call, you insist that the caller give his name, the company he represents, what he is selling, what the item costs, the telephone number, the fax number, the location and the identity of this company. And I think that if you did that, if we can educate people to do that, in many times, you will see that who you have on the line is not ... an honest person." She concluded by saying the AARP certainly supports this bill, as well as Representative Croft's sponsor substitute for HB 49. Number 1682 CHAIRMAN ROKEBERG commented that he is a member of the AARP. He asked whether anyone else wished to testify, then announced he wasn't closing the public hearing. He stated his belief that it is an excellent bill in its intent; however, he is uncomfortable with some provisions. His biggest concern is that although this gives the right to citizens to protect themselves, he sees a glaring potential for abuse. He asked Mr. Schwartz and Representative Croft to address that. Referring to Representative Ryan's comments, he said it is sometimes difficult to draw the line between a bad decision and what is fraudulent. He noted the previous requirement of having a demonstrable loss and suggested they were lowering the proof of damage or potential damage. He believes there is a need for that but it still concerns him. Number 1788 MR. SCHWARTZ responded that he doesn't anticipate any abuse of the consumer protection enforcement based upon this bill. Some of these provisions are not unlike provisions available in other states, and he hasn't seen the kind of abuse that one might fear. It would still take a lot of effort to sue under the consumer protection act, and any attorney who would seek to sue under the consumer protection act is going to have to meet the burden of proof established by the Alaska Supreme Court in State vs. O'Neill Investigations and its "progeny." MR. SCHWARTZ said he believes Alaska case law has set some standards. In addition, the consumer protection statute itself says the courts are to be guided by the decisions of the federal trade commission. There is a huge body of well-settled law under the federal trade commission act concerning what constitutes an unfair and deceptive act or practice. Therefore, attorneys suing under this particular statute will be held to that burden of proof and still be put to the test, and it will not be a "slam-dunk" case or a lowering of standards of burdens of proof in order to make that a violation. "What it does do is it encourages more private citizens to enforce their rights through the consumer protection act in an area in which, indeed, the state's resources are not what they once were," he concluded. Number 1881 CHAIRMAN ROKEBERG asked Representative Croft to respond to the concerns he himself had raised about potential abuse of the powers given to an individual to bring a cause of action without any loss. For example, would it be up to the courts to determine first whether the activity was unfair? Was there a statutory burden to ensure the activity was in fact unfair or deceptive? REPRESENTATIVE CROFT asked whether that was the main concern. CHAIRMAN ROKEBERG indicated it was that for starters. Number 1926 REPRESENTATIVE CROFT explained that there is a rather heavy burden to show fraud. He asked Mr. Schwartz to correct any misstatements, then indicated one must show that the person knew, or should have known, that something wasn't as it was represented. Fraud is usually one of the most difficult things to show in civil actions. The provision for a minimum amount of damage and removing the ascertainable loss is to protect when there have been all the elements of fraud, but without a physical loss. Representative Croft mentioned Dr. Beirne's case. He said even if there is no physical loss, one should be able to stop the action and, in some cases, punish it. Number 2000 MR. SCHWARTZ said when he'd mentioned the unwanted telephone solicitation section of the consumer protection act and how it had been amended, Representative Croft was out of the room. He restated that that section of our statute allows a person who has a black dot next to his or her name in a residential telephone directory to have a cause of action under the consumer protection act if hounded by a telemarketer. Even if that consumer makes no purchase, he or she is aggrieved under the consumer protection act, despite having suffered no ascertainable loss of money or property. Under this bill, that consumer would be allowed to recover statutory damages of $500 per violation, because there were no actual damages. MR. SCHWARTZ pointed out that a person seeking an injunction under Section 4 would still have to meet the burden of proof for obtaining injunctive relief, showing irreparable harm and a probability of success on the merits. That person would be held to the standards of proof established under Alaska case law, which are not always easy to meet, as a judge will look at the evidence very closely before enjoining what looks to be unlawful conduct. Number 2078 CHAIRMAN ROKEBERG asked what statutory protections a business person has from a frivolous action, either for injunctive relief or as a further cause of action for damages. MR. SCHWARTZ said currently, a business person who is on the wrong end of a lawsuit but who prevails can obtain reasonable attorneys fees and costs. Under this bill, even, a business that is the victim of a frivolous lawsuit could still obtain reasonable attorneys fees and costs under the court rules and case law. That is one significant protection that our system has provided. MR. SCHWARTZ stated, "I think there's a real disincentive on the part of consumers to bring an action that is going to appear to be, to an attorney, frivolous. I think there's even a disincentive right now to bring meritorious actions, because of the way in which the law is worded, which doesn't provide a lot of incentive for private litigation." Number 2138 CHAIRMAN ROKEBERG referred to the added section for attorneys fees and costs. He asked whether Mr. Schwartz was suggesting that if they added "defendant" along with "plaintiff," that is the existing case. He asked, "Or would that be necessary to give both parties equal footing as far as whoever prevailed should get the award?" MR. SCHWARTZ indicated the law is currently worded so that the prevailing party can obtain reasonable attorneys fees and costs. Number 2146 CHAIRMAN ROKEBERG asked why this is in the bill, then. MR. SCHWARTZ explained that this bill would change the existing state of affairs so that a prevailing plaintiff could get not only reasonable Rule 82 fees, which amount to about 20 percent of the attorneys fees; rather, the plaintiff could get full reasonable attorneys fees and costs when prevailing over a defendant. However, the plaintiff would only be subjected to paying the defendant's attorneys fees if the plaintiff lost and the suit was shown to be frivolous. MR. SCHWARTZ noted that this amendment to the attorneys fees and costs section of the consumer protection statute would bring Alaska in line with the vast majority of states' consumer protection acts now. According to the national consumer law center, Mississippi is the only other state with an attorney fee statute similar to Alaska's, in which a plaintiff losing a consumer protection case would have to pay reasonable attorneys fees and costs to a defendant. Number 2205 CHAIRMAN ROKEBERG said he finds it disturbing. He asked, "But you're suggesting this language is consistent with the norm nationally?" MR. SCHWARTZ said that is correct. He stated, "Not only did I survey the other statutes, but I did check with the national consumer law center, and that is indeed the case." Number 2223 REPRESENTATIVE CROFT referred to earlier discussion of vexatious litigation and said, "Right now, for a frivolous lawsuit, there are substantial penalties. You're right: There's more coming." CHAIRMAN ROKEBERG said, "For attorneys, not plaintiffs or defendants." Number 2244 REPRESENTATIVE CROFT replied that under Civil Rule 11, the party is responsible for them as well; it is anyone who signs the pleading. This norm is appropriate because these are, by definition, injured people with a claim that they've been defrauded. They are often at battle with organizations that are difficult to find or difficult to isolate. While he appreciated the concern for the legitimate business that could be on the wrong end of this, he emphasized that the burden of proving fraud is extremely difficult. It is not like a normal negligence suit. It requires an intentional act to defraud someone. Therefore, all the hurdles are there in the standard for the injunction or the standard for criminal fraud. Number 2308 CHAIRMAN ROKEBERG responded that it is the charge of this committee to make sure that the commerce and labor activities of the state are carried out in due course, without anything infringing upon them. He said some of his questions may more properly belong in a judiciary committee. However, his primary concern is the level playing field, "and the ability and the effect on business activity without some countervailing force." CHAIRMAN ROKEBERG asked Mr. Schwartz: If a suit was found to be frivolous and the defendant prevailed, would the award of fees be based on Rule 82 or be for full fees? Number 2363 MR. SCHWARTZ replied that if the defendant were able to show that the suit was frivolous, then according to Section 4 of the bill, which amends the consumer protection statute, Rule 82 attorneys fees and costs would probably be awarded. CHAIRMAN ROKEBERG suggested there wasn't a level playing field. MR. SCHWARTZ pointed out that consumers generally don't have a level playing field when it comes to dealing with businesses that are out to deceive them. CHAIRMAN ROKEBERG said he was talking about a finding of "frivolousness," looking at the language of the bill. MR. SCHWARTZ replied that he wasn't sure what else to add, other than that he believed Rule 82 attorneys fees would result if the defendant could show that the plaintiff's suit was frivolous. Number 2419 CHAIRMAN ROKEBERG stated his understanding that a plaintiff who prevailed would receive full attorneys fees. However, if there was a finding of a frivolous lawsuit, the defendant would only be awarded Rule 82 legal fees. He asked whether that is correct. MR. SCHWARTZ said yes and added that the rationale is to encourage more private litigation under the consumer protection act. There has not been a lot of private litigation under the consumer protection act thus far. CHAIRMAN ROKEBERG submitted that they were giving a tool to consumers to bring their private cause of action, an enormous expansion of the ability of the consumers to protect themselves and the rest of the public. "And I agree with the premise of the bill in that regard," he said. TAPE 97-48, SIDE B Number 0006 CHAIRMAN ROKEBERG continued, stating his belief that they are granting a significantly greater power to the plaintiff than to the defendant. He specified that he wasn't looking at the legal aspects but at "the basis of the bill before us right now." He said his concern was directed more to the sponsor. MR. SCHWARTZ commented that the defendant could also bring a lawsuit for abuse of process if the plaintiff was found to have brought a frivolous lawsuit, which may be another protection for a defendant. He next referred to the concept of one competitor trying to gain an unfair advantage over another. He said businesses have not often invoked the consumer protection act as a tool to fight other businesses; he didn't know whether this would encourage that or not. However, he suspects that the vast majority of litigation under this statute would continue to be on the part of end-use consumers who are purchasing products from retailers, rather than a lawsuit by one business against another. CHAIRMAN ROKEBERG suggested in the dog-eat-dog business world, additional tools without "sideboards" on them could be misused for business purposes, not just consumer protection purposes. Number 0079 REPRESENTATIVE GENE KUBINA noted that Chairman Rokeberg is on the House Judiciary Standing Committee. He asked whether perhaps that issue could be addressed there. CHAIRMAN ROKEBERG suggested there are other things they could address there. He said if the sponsor looked at this and could overcome his concerns, he'd be happy to bring it back up. He agrees with the concept of the bill. But while he could support giving a tool to the public, he wants to ensure that it is drafted so it has no deleterious effect on business. "We want to get the rascals; we don't want to interrupt commerce," he said. CHAIRMAN ROKEBERG stated his understanding that Alaska has no vexatious litigation statute. He said, "If Representative Croft wants to bring to this committee some examples of frivolous activities being in the courts, this committee would be real happy to see it actually happen. If you ... cite me some examples, then I'm going to be a lot more comfortable." He suggested the bill should speak to that more specifically and give a little more balance, at the very least an amendment to provide reasonable fees for both parties if the lawsuit was found to be frivolous or perhaps intended to infringe upon commerce, which would be even beyond frivolous. He noted that many times cases are brought with the hope of settlement, which he characterized as a form of legal extortion. (HB 203 was held over.) ADJOURNMENT Number 0219 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 5:55 p.m.