Legislature(2007 - 2008)CAPITOL 17
04/30/2007 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB197 | |
| HCR8 | |
| HB200 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HCR 8 | TELECONFERENCED | |
| += | HB 197 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 200 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 30, 2007
3:06 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 197
"An Act relating to the issuance of shares of professional
corporations to a trust, to trusts, to trustees, to the removal
of a trustee, to the compensation of a trustee and a person
employed by a trustee, to a trustee's accepting or rejecting a
trusteeship, to co- trustees, to a vacancy in a trusteeship, to
the resignation of a trustee, to delivery of trust property by
former trustees, to the reimbursement of trustee expenses, to
the certification of a trust, to the suitability of a trustee,
to the place of administration of a trust, to a trustee's power
to appoint property to another trust, to a change of the
percentage of trust property to be considered principal, to the
determination of the value of a trust, and to a settlor's intent
when transferring property in trust; amending Rules 54 and 82,
Alaska Rules of Civil Procedure; and providing for an effective
date."
- MOVED HB 197 OUT OF COMMITTEE
HOUSE CONCURRENT RESOLUTION NO. 8
Establishing a task force to make recommendations regarding job
descriptions and salary changes for the commissioners and
support staff of the Regulatory Commission of Alaska.
- MOVED CSHCR 8(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 200
"An Act relating to the presumption of coverage for a workers'
compensation claim for disability as a result of certain
diseases for certain occupations."
- MOVED HB 200 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 197
SHORT TITLE: TRUSTS
SPONSOR(s): JUDICIARY
03/14/07 (H) READ THE FIRST TIME - REFERRALS
03/14/07 (H) JUD, FIN
04/04/07 (H) JUD AT 1:00 PM CAPITOL 120
04/04/07 (H) Moved Out of Committee
04/04/07 (H) MINUTE(JUD)
04/05/07 (H) JUD RPT 4DP 2NR
04/05/07 (H) DP: GRUENBERG, LYNN, HOLMES, RAMRAS
04/05/07 (H) NR: COGHILL, SAMUELS
04/05/07 (H) FIN REFERRAL REMOVED
04/05/07 (H) L&C REFERRAL ADDED AFTER JUD
04/20/07 (H) L&C AT 3:00 PM CAPITOL 17
04/20/07 (H) Scheduled But Not Heard
04/30/07 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HCR 8
SHORT TITLE: RCA TASK FORCE
SPONSOR(s): REPRESENTATIVE(s) OLSON
04/20/07 (H) READ THE FIRST TIME - REFERRALS
04/20/07 (H) L&C, FIN
04/30/07 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 200
SHORT TITLE: WORKERS' COMP: DISEASE PRESUMPTION
SPONSOR(s): REPRESENTATIVE(s) DAHLSTROM
03/14/07 (H) READ THE FIRST TIME - REFERRALS
03/14/07 (H) L&C, JUD
04/27/07 (H) L&C AT 3:00 PM CAPITOL 17
04/27/07 (H) Heard & Held
04/27/07 (H) MINUTE(L&C)
04/30/07 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
JANE PIERSON, Staff
to Representative Jay Ramras
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 197 on behalf of the House
Judiciary Standing Committee, sponsor, which is chaired by
Representative Ramras.
DAVID G. SHAFTEL, Attorney at Law
Shaftel Law Offices
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 197.
STEPHEN E. GREER
Anchorage, Alaska
POSITION STATEMENT: Described HB 197 as good, default
legislation and answered questions from the committee.
RICHARD THWAITES (ph)
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 197.
DOUGLAS J. BLATTMACHR, President and CEO
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 197.
BETH CHAPMAN, Attorney at Law
(No address provided)
POSITION STATEMENT: Testified as one who worked on forming HB
197, and answered questions from the committee.
CHRISTY CATLIN
AT&T Alascom
POSITION STATEMENT: Testified in support of the formation of
the task force, during the hearing on HCR 8.
KELLY HUBER, Staff
to Representative Nancy Dahlstrom
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Dahlstrom,
prime sponsor, described the changes made in a proposed
committee substitute labeled 25-LS0748\C, Bannister/Bailey,
4/30/07.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:06:41 PM. Representatives
Gatto, Ramras, Buch, Gardner, Neuman, and Olson were present at
the call to order. Representative LeDoux arrived as the meeting
was in progress.
HB 197-TRUSTS
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 197, "An Act relating to the issuance of shares
of professional corporations to a trust, to trusts, to trustees,
to the removal of a trustee, to the compensation of a trustee
and a person employed by a trustee, to a trustee's accepting or
rejecting a trusteeship, to co- trustees, to a vacancy in a
trusteeship, to the resignation of a trustee, to delivery of
trust property by former trustees, to the reimbursement of
trustee expenses, to the certification of a trust, to the
suitability of a trustee, to the place of administration of a
trust, to a trustee's power to appoint property to another
trust, to a change of the percentage of trust property to be
considered principal, to the determination of the value of a
trust, and to a settlor's intent when transferring property in
trust; amending Rules 54 and 82, Alaska Rules of Civil
Procedure; and providing for an effective date."
3:06:54 PM
JANE PIERSON, Staff to Representative Jay Ramras, Alaska State
Legislature, introduced HB 197 on behalf of the House Judiciary
Standing Committee, sponsor, which is chaired by Representative
Ramras. She offered the definition of the term "trust" as
follows:
A property interest held by one person as trustee at
the request of another for the benefit of the third
party.
MS. PIERSON said a trust involves three elements: a trustee who
holds the trust property and is subject to equitable duties to
deal with [the trust] for the benefit of another; a beneficiary
to whom all trustees owe equitable duties to deal with the trust
property for their benefit; and a trust property that is held in
trust for the beneficiary.
MS. PIERSON stated that the goal of HB 197 is to ensure that
Alaska is one of "the premier places for trusts in the [United]
States." She emphasized the importance of Alaska's staying
competitive with other states that do not have personal income
tax. She said a trust industry is important to Alaska, because
it provides employment for accountants, attorneys, insurance
agents, bankers, and their support staff. She reported that
there is between $30-70 million on deposit with Alaskan banks
through the Alaska Trust Company (ATC) alone. Alaska also
receives over $2 million in annual revenue in trusts.
Furthermore, there are over 1,000 out-of-state clients who have
sought to hold a trust in Alaska because of its unique trust
laws. She relayed that Alaska has passed 15 pieces of
legislation since 1997 to keep the industry vibrant and
competitive.
MS. PIERSON paraphrased the sponsor statement [included in the
committee packet], which read as follows [original punctuation
provided]:
HB197 bill provides for the following:
1. That shares in a professional corporation may be
held by the trustees of the professional's revocable
trust.
2. Expands the coverage of AS 13.36.157, which
allows the trustee of a trust to transfer trust assets
to a similar trust. This expansion will only occur if
the trust has an Alaskan trustee and the trust has its
primary administration in Alaska.
3. Allows the Alaska trustee of a charitable trust
to change the percentage of the value of the trust
that will be considered income whenever the trustee
determines that the new percentage is necessary and
prudent.
4. Clarifies that a settlor's express intention to
protect trust assets from beneficiary's potential
future creditors is not evidence of an intent to
defraud.
5. States needed provisions relating to trustees:
compensation, accepting or declining trusteeship, co-
trustees, vacancy, resignation, removal, delivery of
property by former trustee, reimbursement of expenses,
and certification of trust.
MS. PIERSON noted that [the fourth point in the sponsor
statement] is probably the biggest policy question in the bill.
3:10:10 PM
REPRESENTATIVE RAMRAS, as chair of the House Judiciary Standing
Committee, sponsor of HB 197, noted that his friend, Bob Gillam,
who has more money under management than all the other
commercial banks in the state combined, talks about Alaska's
unique geography in relation to the Pacific markets and other
U.S. markets, and characterizes Alaska as an "under-optimized
market place" due to its geography in relation to the global
capital markets. Representative Ramras stated that Alaska is
desperate for more capital, because capital creates jobs,
improves the state's banking, and enhances the state's economy.
He said only a fraction of the money in the Alaska permanent
fund "resides" in Alaska. The proposed legislation, he said,
will help aggregate capital to the banking system. He stated,
"It's a good bill, because it keeps Alaska in a very elite class
competitively [with] just several other states."
3:12:36 PM
REPRESENTATIVE GARDNER directed attention to the third point in
the sponsor's statement [text provided previously] and asked,
"Does that mean they have flexibility about what part of it
remains in the trust and what part can be spent?"
MS. PIERSON deferred to experts waiting to testify.
3:13:34 PM
MS. PIERSON, in response to Representative Neuman, clarified
that the fourth point in the sponsor statement [text provided
previously] refers to future creditors, not current creditors.
3:14:47 PM
DAVID G. SHAFTEL, Attorney at Law, Shaftel Law Offices,
testified in support of HB 197. He told the committee that he
is one of a group of attorneys who, since 1996, has provided
suggestions to the legislature for statutes that would improve
state and trust administration. In that time, he noted, the
legislature has passed 15 statutes that have greatly improved
"the situation here in Alaska." He stated, "It's really
improved our position both for residents of Alaska and also for
nonresidents who desire to use Alaska approaches in their estate
planning."
MR. SHAFTEL stated that HB 197 is an excellent piece of
legislation. The bill proposes a number of default provisions
for trustees that have heretofore not existed in statute. He
noted that the provisions are often covered in a well written
trust document; however, the bill would ensure certain
provisions are covered when not contained in trust documents.
He offered to answer questions from the committee.
3:18:06 PM
REPRESENTATIVE LeDOUX referred to Section 14 of the bill
[beginning on page 12, line 6, through page 13, line 19], and
stated that she is trying to figure out what the law is today
with respect to "fraudulent transfers [by way of] vis a vis
trust agreements," and what changes will be made through HB 197.
MR. SHAFTEL explained that Section 14 does not deal with
fraudulent transfers. He stated that if a transfer is
fraudulent, through a trust or another vehicle, that transfer
will be set aside. He said [Section 14] is designed to address
"asset protection planning," which is not fraudulent, but is
done well in advance of anyone's experiencing a creditor
problem. Mr. Shaftel relayed that Alaska has taken a positive
stance towards providing guidance in statutes which support
asset protection planning. He continued:
The problem that this particular phrase is intended to
address is where arguments have been made in several
cases where they say, "Well, if we find any evidence
at all in the attorneys' records or the clients'
records that indicate that they wanted to do asset
protection planning, then that planning should be
considered inappropriate and not effective."
Now, that's never been the law, but ... that argument
has been addressed in a couple of cases. We had one
case where it was an unpublished opinion by the [9th
Circuit Court of Appeals] that seemed to ... pick up
and follow that kind of reasoning, even though the
facts were horrible in that case and they justified
finding that it was a fraudulent transfer and set
aside (indisc. -- noise interference).
MR. SHAFTEL said when his clients seek him out to discuss estate
planning, they almost always also talk to him about asset
protection planning. He offered examples. He concluded, "All
this particular provision does is to make it clear that the
state of Alaska does not think that asset protection planning in
itself ... is not inappropriate."
3:22:19 PM
Mr. Shaftel, in response to a request for further clarification,
offered an example as follows:
You come into my office, and you say:
"Dave, I want you to set up some trusts for my kids,
and here's why: I want to put some assets in there
and I want to make sure that those assets get to my
kids, and that if I have a bad situation in my law
practice down the line, and I get sued for
malpractice, that my creditors can't reach these
assets that I've put in there now for my kids. I
don't have any problems right now, Dave - there are no
judgments against me, nobody has filed any claims
against me, [and] as far as I know I've never done
anything wrong that would result in that kind of a
judgment - but I want to make sure that that's the
case."
So, I write down in my file that Representative LeDoux
has come in for estate planning and that we've talked
about asset protection planning, we've talked about
providing money in trust so that her children can go
to college - and I have those notes in my file.
Now, ... 10 years from now you get sued - ... maybe
it's out of your law practice [or] maybe it's because
you were negligent in driving your car - and there's a
big judgment against you. And that creditor says, "I
want to get at those children's trust; I want the
money in there." And there's discovery, and that
creditor gets a hold of my notes, and it says, "Look,
right there, ten years ago, Representative LeDoux said
to Dave Shaftel that she wanted to do some asset
protection planning. That I argue to you, judge, is
an intent to defraud."
Now, stopping right there: that's not a law that I
know of anywhere, except it has been argued, and as I
say it did appear in one circuit court case. And so,
Alaska being a state which has taken a positive and
strong position towards allowing asset protection
planning, this would help in our statutes to make it
clear. It's not a fraudulent transfer situation, but
the fact that the settlor - and that's Representative
LeDoux in my example - had an expressed intention to
protect trust assets from potential future creditors
is not evidence of an intent to defraud.
3:25:46 PM
REPRESENTATIVE LeDOUX, regarding Mr. Shaftel's example, asked
how it would be possible for a creditor to have access to that
file.
MR. SHAFTEL answered, "If you were forced into bankruptcy, the
bankruptcy steps into your shoes, and in those situations they
make the argument that the privilege doesn't apply."
3:26:16 PM
REPRESENTATIVE GATTO said, "Suppose you have a traffic accident,
which has nothing to do with your assets, after you've already
given them away. ... That person who's suffered harm, according
to this, would not be able to come back and attach the
grandchildren's trust fund. Am I correct?"
MR. SHAFTEL noted that every state has what's called a
"fraudulent transfer statute." He said there always exists the
issue of who is a future creditor and how far down the line
future creditors have some type of rights. He continued:
And if they're anticipatable, near-future creditors,
then ... some case law allows them to have those types
of rights. And in Alaska, there's a four-year
limitations period that relates to future creditors.
... Normally, what we're talking about - and I want to
make sure I'm addressing exactly your question ... -
in a traffic accident, it's not anticipatable. And
you're right, there should not be, in that situation,
a successful argument on the part of a creditor that
they could get at those assets. And if I included the
traffic accident in my example, that is not as good an
example as the malpractice situation or a business
situation where future creditors are somewhat
anticipatable, and that's where the courts sometimes
have moved.
REPRESENTATIVE LeDOUX described a hypothetical situation in
which, at the time a transfer is made, a man did not realize
that he had a child and subsequently he was required to pay
child support.
MR. SHAFTEL replied that it would depend on the facts of the
situation. He said the question to ask is whether or not a
person has made an attempt to evade creditors. He stated that
regardless of whether HB 197 passes or not, it may be that that
child in the example "could not reach those assets."
3:29:51 PM
REPRESENTATIVE LeDOUX said she has a problem with that.
REPRESENTATIVE GARDNER shared her understanding that the
provision [proposed in Section 14] addresses the determination
that the setting up of a trust is not fraudulent; it doesn't
address whether or not the trust can be overturned.
Mr. Shaftel responded that Ms. Gardner's statement is absolutely
correct. He continued:
If there are facts that show that it was a fraudulent
transfer, then under our fraudulent transfer statute,
that transfer can be attacked - if there are other
facts. All we're talking about here is the mere fact
that asset protection was discussed at the time that
the transfer occurred. That mere fact is not enough
in itself to establish that it's a fraudulent
transfer.
3:31:22 PM
STEVE GREER said he is one of the practitioners to whom Mr.
Shaftel referred who has contributed suggestions toward the
proposed legislature. He mentioned Beth Chapman, whom he said
is "primarily responsible for this bill." He offered to answer
questions from the committee. He remarked that "this" has
undergone much discussion over the past 6-7 months by the
aforementioned group. He described HB 197 as good, default
legislation that articulates and puts into statutory form the
law as "most of us have understood it to be."
REPRESENTATIVE NEUMAN noted that Section 5 addresses the issue
of compensation, and he asked Mr. Greer to expound on the
subject.
MR. GREER replied that it has been his practice to state that a
trustee is entitled to reasonable compensation and not to get
into definite language as to what is reasonable. He related
that trusts often are drafted 30 or more years before coming
into fruition; therefore, it is difficult to specify what might
be reasonable that far in the future under today's terms. He
stated that a person who performs services is entitled to
reasonable compensation, and the best way to discern what is
reasonable is to ask what banks charge for similar services. He
said the court system has a standard. He continued:
We know if we go down to the probate court, the
probate court will say, "Does this trustee have any
special expertise?" If so, there's a certain hourly
rate that they allow. If they don't have any special
expertise, then there's another hourly rate that they
will allow.
3:34:46 PM
RICHARD THWAITES (ph), Alaska Trust Company, indicated that he
was involved in the beginning stages of forming HB 197, and
subsequently became involved in the Alaska Trust Company. He
stated that during his early years in the trust business, he
would see trusts people drafted themselves, which were fully
legal documents, but which simply directed, for example, to
"'leave everything in trust' - period." The proposed
legislation, he said, "kind of goes to that issue." Regarding
compensation, Mr. Thwaites stated:
What I had to do in one of the those cases early on in
my career was go to court, because the superior court
probate division retains jurisdiction over trusts.
And we literally had to go through and create all of
these sorts of things for that trust. Currently the
court still ... retains that jurisdiction if a
beneficiary chooses to challenge the reasonableness of
the fees; even though the fees are set forth in the
schedule, those fees can be challenged at the level
and the court will render a decision as to whether
they were reasonable or not.
Sometimes, in one or two cases, the fees actually go
up because of an extraordinarily aggressive and
involved beneficiary increasing the costs of the
administration of the trust. That's pretty rare, but
it still could happen.
3:36:19 PM
DOUGLAS J. BLATTMACHR, President and CEO, Alaska Trust Company,
testified in support of HB 197. He said the Alaska Trust
Company has been working with the [Alaska] Bar Association for
years in an effort to strengthen Alaska's laws regarding trusts.
He offered to be available for questions from the committee.
3:36:59 PM
BETH CHAPMAN, Attorney at Law, confirmed that she has been
working on HB 197 for the past year and a half. Regarding
Representative Gardner's question related to the charitable
trust, Section 12, she explained that a few years ago there was
a change in the law as to how trusts and particular charitable
trusts were invested. Under the prior law, she explained, a
person would invest for "income only," which is what would be
given to the charities; however, that limited the ability to
"grow the fund." She said [Section 12] would allow charitable
trustees to distribute a percentage of the trust every year,
rather than just distributing income, which generates more
revenue to the charities while preserving the fund for the long
term.
REPRESENTATIVE GATTO remarked that it makes him nervous not to
have heard any opposition to the bill, especially considering
the dramatic language changes, for example, the proposed new
language [underlined and bold] on page 12, [in Section 14,
subsection (b), paragraph (1)], which read as follows:
*Sec. 14. AS 34.40.110(b) is amended to read:
(b) If a trust contains a transfer
restriction allowed under (a) of this section, the
transfer restriction prevents a creditor existing when
the trust is created or a person who subsequently
becomes a creditor from satisfying a claim out of the
beneficiary's interest in the trust, unless the
creditor is a creditor of the settlor and
(1) the settlor's transfer of property
in trust was made with the intent to defraud that
creditor, and a cause of action or claim for relief
with respect to the fraudulent transfer complies with
the requirements of (d) of this section; however, a
settlor's expressed intention to protect trust assets
from a beneficiary's potential future creditors is not
evidence of an intent to defraud;
MS. CHAPMAN explained that asset protection has been practiced
for many years. She offered examples of various types of asset
protection. She continued:
Last year the 9th Circuit Court of Appeals came out
with a decision ... in which they ... indicated that
if, in the attorney's file, there was an express
intent that there would be asset protection, that that
... could in fact be an intent to defraud a creditor.
Under the laws that exist now, you can't intend to
defraud a creditor if you don't know about the
creditor. And when we do asset protection, it's not
done to ... avoid current creditors. In fact, none of
us would do that, and in most cases, affidavits have
to be signed that, in fact, there [are] no current
creditors and that people have enough assets to
continue to pay their bills and liabilities.
The decision from the 9th Circuit [Court of Appeals]
was really - as always - bad facts. Somebody had set
up a trust, transferred all of their assets into it -
corporations that were shells - knowing that they
were, in fact, trying to avoid potential creditors.
This language is designed to override that dictate in
the 9th Circuit Court of Appeals' decision, and that
is its primary purpose - not to change the law, which
has always been the same, which is ... that if there
is a fraudulent conveyance, it will be ... set aside.
REPRESENTATIVE GATTO offered a hypothetical example in which a
person, having not yet been indicted, but knowing he will be,
transfers his assets "to everybody and his uncle" to "avoid
having them attached." He asked if the language in the proposed
legislation would allow such action.
MS. CHAPMAN replied no. She continued:
If you had ... creditors you knew or [who] were likely
to appear, under our state laws that would not allow
you to avoid those creditors. There is a statute of
limitation; there's a period of time in which, ... if
somebody comes up after you've set up a trust and
tries to undo it, they would still have that option,
and the facts and circumstances would still be
considered by the court.
REPRESENTATIVE LeDOUX asked, "So, how would this apply to the
... federal RICO [Racketeer Influenced and Corrupt Organizations
Act] laws?"
MS. CHAPMAN replied that this [bill] would not have any effect
on [federal laws]. She reiterated that asset protection, in and
of itself, will not be considered an intent to defraud, but all
other facts and circumstances would be considered by the court.
3:43:07 PM
MS. CHAPMAN, in response to a question from Representative
Neuman, clarified that Section 12 addresses the amount of money
that would be paid to charities, while Section 5 addresses the
compensation schedule. She said, "In that provision, it's not
what the trustee says is reasonable; it's what the person who
established the trusts said." She continued:
For example, I have clients who ... - maybe their
niece or nephew's going to be the trustee - and they
want to pay $1,000 a month. If the ... parent who set
up the trust says $1,000 a month is what they think is
reasonable, then that's going to be deemed reasonable.
MS. CHAPMAN, in response to a follow-up question, further
addressed Section 12. She said under current law, many trusts
have been written to pay out only income such as dividends or
interest earned on a bank account. Charities don't like that,
she said, because they don't get very much money. Thus,
trustees are trying to balance long-term preservation of a trust
fund for the benefit of charities, and yet generate revenues to
pay out to those charities every year. She stated:
This gives the trustees the flexibility to move from
an income standard to a percentage standard, so that
they could pay out, for example, an average amount of
5 percent of the value of the trust every year to the
charities. Trustees will look at: Is that percentage
going to be enough to benefit the charities, but at
the same time ensure that we're growing the fund for
the future?
REPRESENTATIVE NEUMAN said that sounds like a good idea. He
asked when the original language became law and who was
responsible for the law.
MS. CHAPMAN offered her understanding that Section 12 is the
result of the Uniform Principle and Income Act of 2003, and Mr.
Shaftel was principally involved. She said:
This came to my attention when I was representing a
charitable trust that needed to make a change, because
the charities were asking for more funds and we
realized we had this 10-year limitation. I researched
all state laws, and we have no idea why it was there,
and the legislative history doesn't tell us.
MS. CHAPMAN, in response to a follow-up question, related that
the bulk of HB 197 is new. The purpose, she reviewed, is to put
default provisions in law for those who have trusts written
without those provisions.
3:47:52 PM
CHAIR OLSON, upon ascertaining that there was no one else to
testify, closed public testimony.
REPRESENTATIVE NEUMAN opined that HB 197 is good legislation
that allows everyone to play by the same rules.
REPRESENTATIVE GATTO restated his unease regarding there being
no testimony from "some other person besides the people who
essentially benefit from the bill."
REPRESENTATIVE RAMRAS, in response to Representative Gatto's
concern, offered his understanding that the aforementioned group
of attorneys came together to work on this legislation so that
Alaska would be a better place in which to leave capital. He
expressed the desire for the state to have a competitive
environment rather than having Alaskans set up trusts under the
laws of other states. He concluded, "I really think that this
is a document that clarifies and makes kosher the relationship
between the trustee and the beneficiary, and that in this case,
... this collection of trust attorneys are looking out for both
ends of the transaction and trying to keep a very clean
relationship between both of those parties."
3:52:56 PM
REPRESENTATIVE LeDOUX echoed Representative Gatto's concern.
She said she would like to hear from the "creditors' bankruptcy
bar" as well as the attorneys involved in the aforementioned 9th
Circuit Court of Appeals' case, although she stated her
suspicion that "they probably aren't even aware that we're
hearing this bill."
3:53:55 PM
CHAIR OLSON said HB 197 has been out since March 14, 2007, and
he offered his understanding that there has been no opposition
voiced to his office. He stated his supposition that the
aforementioned bar would be following "any bill related to this
type of activity."
REPRESENTATIVE LeDOUX opined that Chair Olson's makes a "big
assumption." She pointed out that the 9th Circuit Court of
Appeals attorneys in question may not even be in Alaska.
Furthermore, anyone who does not have a lobbyist following
his/her interests most likely is not tracking a bill, she
stated.
MS. CHAPMAN responded to the committee members' concerns as
follows:
First of all, I want to point out that my law firm is
a full-service law firm, and we represent major
corporations, as well as individuals. And I practice
primarily in the trust and estates area.
On the asset protection area, I think the reason that
there is not any objection to it is because we're not
doing anything that's not already in existing law;
it's just clarifying what it means to have an intent
to defraud. If there is a fraudulent conveyance, that
can be brought forward, and there is nothing in this
bill that would prevent somebody from bringing the
same [arguments] that they would have brought from
before. Instead, it's addressing the ... term asset
protection in and of itself, which is used by ...
everybody: lawyers, ... professional corporations,
... limited liability companies - that's asset
protection. So, it's really not changing that at all.
... The reason, again, I think there's no objection is
because there's not anything in here that is saying
that a creditor does not have the rights that they
currently have under state law; it's just a
clarification.
The 9th Circuit Court of Appeals decision is out of
the state of Washington, not out of the state of
Alaska.
MS. CHAPMAN said she represents beneficiaries and families; very
rarely does she represent a corporate trustee. She said, "We
have used these laws to save our clients [a] significant amount
of attorneys' fees." Before the existence of laws that allowed
default provisions or modified trusts, she said, significant
amounts of money were spent going to court. She continued:
Now, we're able to use these laws to help families
take care of their children. I work a lot in the area
of disability trusts, and we have used these
provisions to really help beneficiaries and help
families, and ... in fact, in my practice, I would say
I'm in court a lot less than I used to be, and I'm
very thankful for that, because I think it benefits
Alaskans and allows families to take care of their
children and loved ones.
3:57:38 PM
REPRESENTATIVE NEUMAN moved to report HB 197 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 197 was reported from House
Labor and Commerce Standing Committee.
The committee took an at-ease from 3:58 p.m. to 4:00 p.m.
HCR 8-RCA TASK FORCE
4:00:12 PM
CHAIR OLSON announced that the next order of business would be
HOUSE CONCURRENT RESOLUTION NO. 8, Establishing a task force to
make recommendations regarding job descriptions and salary
changes for the commissioners and support staff of the
Regulatory Commission of Alaska.
4:00:25 PM
REPRESENTATIVE NEUMAN moved to adopt the committee substitute
(CS) for HCR 8, Version 25-LS0859\M, Kane, 4/20/07, as the
working document. There being no objection, Version M was
before the committee.
CHAIR OLSON presented Version M as chair of the House Labor and
Commerce Standing Committee, sponsor of HCR 8. He reported that
on February 22, 2007, the Regulatory Commission of Alaska
transmitted to the governor a number of proposed changes to its
statutes. The proposal suggested that the governor seek
legislative determination for the appropriate salaries of the
commissioners. Version M, he noted, proposes that a legislative
task force be set up to work during the interim to review the
salaries of the commissioners, as well as recommending job
descriptions for the commissioners and considering the need for
additional staff support for the RCA. The task force would
consist of nine members: two majority and one minority member
from the Senate, two majority and one minority from the House,
Governor Sarah Palin or her designee, Attorney General Talis J.
Colberg or his designee, and Commissioner Emil Notti or his
designee. The task force would report back to the legislature
in the beginning of the next session. The resolution would
sunset on May 30, 2008.
4:02:03 PM
CHRISTY CATLIN, AT&T Alascom, testified in support of the
formation of the task force.
4:02:29 PM
CHAIR OLSON, after ascertaining that there was no one else to
testify, closed public testimony.
4:02:56 PM
REPRESENTATIVE LeDOUX moved to report CSHCR 8, Version 25-
LS0859\M, Kane, 4/20/07, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHCR 8(L&C) was reported out of the House Labor
and Commerce Standing Committee.
The committee took an at-ease from 4:03 p.m. to 4:05 p.m.
HB 200-WORKERS' COMP: DISEASE PRESUMPTION
4:05:26 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 200, "An Act relating to the presumption of
coverage for a workers' compensation claim for disability as a
result of certain diseases for certain occupations."
4:05:39 PM
KELLY HUBER, Staff to Representative Nancy Dahlstrom, Alaska
State Legislature, on behalf of Representative Dahlstrom, prime
sponsor, described the changes made in the proposed committee
substitute (CS), labeled 25-LS0748\C, Bannister/Bailey, 4/30/07,
[although no motion had been made to bring Version C before the
committee as a working document]. She noted that there had been
some confusion as to whether or not HB 200 was a "mandatory
bill." She explained that Legislative Legal and Research
Services drafted the bill and did not believe that "the language
in it made this mandatory." For purposes of clarification,
language was added to Version C on page 3, [subsection (e)],
which read as follows:
(e) The provisions of (c)(2) of this section may
not be interpreted to require a municipality or other
employer of fire fighters covered under AS 23.30.243,
peace officers, or emergency medical and rescue
personnel, including a municipality or other
organization that uses volunteers, to provide a
qualifying medical examination.
MS. HUBER, in response to a question from Representative Neuman,
explained that if a municipality decides not to have, for
example, everyone in its fire department take the
"prequalifying" exam, then "nobody is going to be covered."
REPRESENTATIVE LeDOUX asked, "Doesn't that gut the whole bill?"
MS. HUBER said the original bill language shows that "the
department already had to determine to give the qualifying
exams."
REPRESENTATIVE LeDOUX offered her understanding that there is a
letter from the Municipality of Anchorage opposing the bill.
She asked, "If we do this, I mean, it sounds nice, but what are
we really doing?"
REPRESENTATIVE GARDNER asked if an incoming firefighter told
that he/she must have an exam in order to get presumptive
coverage could opt to get that exam independently.
MS. HUBER revealed that she, too, had had the same thought;
however, the sponsor was told by Legislative Legal and Research
Services that that would not be allowed under the language of
the bill.
REPRESENTATIVE GARDNER responded that she concurs with
Representative LeDoux regarding the futility of passing the bill
[as it would be amended through Version C].
MS. HUBER replied, "... The sponsor wanted to bring it forward,
but she likes the original bill, as well."
REPRESENTATIVE GATTO noted that the Anchorage Fire Department
has a required annual exam. He asked if that would count.
MS. HUBER said the qualifying exam noted in the bill would be
determined by regulations; therefore, it would be unknown until
those regulations were written whether or not the Anchorage Fire
Department's exam would qualify.
MS. HUBER, in response to Representative LeDoux, pointed to
language on page 3, line 18, of Version C, also found in the
original bill version [on the same page and line numbers], which
read: "personnel who were given a qualifying medical
examination". She stated, "The idea, then, is therefore
somebody would have had to okay the exam. So, therefore, the
municipality or the governing entity would have had to approve
it. And so, that's how Legislative Legal [and Research
Services] is reading this."
REPRESENTATIVE LeDOUX exclaimed, "Even in the old version
nobody's going to be required to do anything."
MS. HUBER answered that's correct. She indicated that Version C
simply clarifies the bottom line intent that the city or the
governing entity or the fire department would determine whether
or not it wants its personnel included under the presumptive
clause.
REPRESENTATIVE LeDOUX asked Ms. Huber what the sponsor would
think about "taking that out," either in the original bill or
Version C.
MS. HUBER replied, "We'd have to make sure we're leaving in the
exam part." She indicated that with a conceptual amendment, "we
would let it be the committee's decision at that point."
4:12:43 PM
REPRESENTATIVE NEUMAN surmised that the sponsor is offering
Version C as a means to achieve uniformity in the bill, so that
all departments would be working under the same guidelines.
MS. HUBER reiterated that the reason for Version C is to clarify
"whether or not this bill was going to be mandatory." In
response to Representative Neuman, she confirmed there is no
difference between the original bill and Version C, other than
the added language in Version C, which clarifies what was
already in the bill.
REPRESENTATIVE NEUMAN said he is getting mixed signals. He
explained that he cannot understand Ms. Huber's previous
statement that the sponsor prefers the original bill version to
Version C if there is essentially no difference between the two.
MS. HUBER said the sponsor does not have a problem with Version
C; "she did not want people to misunderstand what the bill is
doing." She added, "But if Representative LeDoux's idea goes
forward, ... I don't know that she would have a problem with
it."
REPRESENTATIVE NEUMAN asked, "Don't all fire departments require
an exam anyhow?"
REPRESENTATIVE GATTO recalled that when he first began work as a
fire fighter, there was probably a requirement for "some
evidence of an exam." He said later on there were annual
medical examinations, which included tests of the heart and
lungs. He shared his understanding that the bill does not
clarify that it must be an approved exam. He stated that he has
had repeated difficulties with the municipality, whether in
regard to retirement and benefits or medical plans. He said,
"And that's why I'm kind of looking at this language right here;
I think we have met the requirements here by going to your
doctor or the first time the department gives you an exam, or at
least pays for the exam."
CHAIR OLSON stated his belief that it is the intent of the
sponsor that Version C would garner more support as the bill
moved forward.
MS. HUBER said she thinks the bill has a great deal of support
already "for the presumption ... for these particular rescue
workers." She reiterated that the sponsor did not want anyone
to be misled. She directed attention to page 3, line 28, of
Version C [line 24 of the original bill], which read: "(f) The
department shall, by regulation, define". On ensuing lines, she
noted, the language read, "the type and extent of the medical
examination that is needed to eliminate evidence". She asked
Representative Gatto, "Do you think that the ones that you're
talking about will do that in the end?"
REPRESENTATIVE GATTO responded:
... It was very specific which exams were done and how
they were done. And we followed it as we followed a
menu. So, if that's not in regulation, I'd be
surprised, because you had to do it or you couldn't
work. So, it must have been in regulation, but I'm
really trying to second guess that.
The committee took a brief at-ease.
REPRESENTATIVE LeDOUX stated, "Yes, he makes a very good
argument that could be used in a court of law, that even if they
don't give a specific test, ... you're still under the purview
of this bill and ... the presumption applies." However, she
suggested that the committee decide exactly how it wants the
bill to read, rather than leaving any ambiguity. She asked,
"When this bill passed last year, did this have a voluntary
component to it?"
MS. HUBER offered her understanding that "the language was the
way it was in the bill before you on Friday," other than some
unrelated changes. She added, "But everything else, I believe,
is the same as what passed the House last year."
REPRESENTATIVE GARDNER confessed to having become confused. She
said she had understood the intent of the bill was to provide
coverage for a list of presumptive illnesses. She added, "And
if we make it optional, then we've done nothing at all, because
the biggest fire fighter employer has already said the world
will fall in if we do it."
REPRESENTATIVE NEUMAN cautioned the committee's making extensive
changes after looking at the bill for a limited amount of time.
He said he would prefer to support the wishes of the sponsor.
REPRESENTATIVE GATTO said it is important to remember that the
proposed legislation really addresses workers' compensation.
Statistically, he relayed, fire fighters die at an earlier age.
He said, "The concept is: we think it's job related. And this
bill says we don't think it anymore - we're just going to say
it's job related. And that's that presumptive clause." He
reiterated that he does not think municipalities are always
helpful, and he stated that he thinks the fire fighters are
asking for helping through HB 200. He said he agrees with the
fire fighters.
4:22:56 PM
REPRESENTATIVE LeDOUX said she wants to give the help that is
deserved to fire fighters, but she is afraid that either of the
two versions of the bill "have a hole so big that you could
drive a fire truck through it."
MS. HUBER asked Representative LeDoux if she would be amenable
to the idea of allowing the original bill out of committee, with
the promise of the sponsor working with the chair of the next
committee of referral to address Representative LeDoux's
concerns.
REPRESENTATIVE LeDOUX said, "Absolutely."
MS. HUBER said she would also be willing to address
Representative Gatto's expressed concerns regarding the
regulations and how that relates to the testing.
REPRESENTATIVE NEUMAN said he thinks the sponsor offered Version
C in response to committee concerns, and he would like to honor
her request by proposing Version C.
4:24:21 PM
CHAIR OLSON, after ascertaining that there was no one to
testify, closed public testimony.
REPRESENTATIVE NEUMAN moved to adopt the committee substitute
(CS) for HB 200, Version 25-LS0748\C, Bannister/Bailey, 4/30/07,
as the working document.
REPRESENTATIVE GARDNER objected.
A roll call vote was taken. Representatives Ramras, Neuman, and
Olson voted in favor of the motion to adopt the committee
substitute (CS) for HB 200, Version 25-LS0748\C,
Bannister/Bailey, 4/30/07, as the working document.
Representatives Gatto, LeDoux, and Gardner voted against it.
Therefore, the motion failed by a vote of 3-3.
REPRESENTATIVE GATTO shared his vivid memories of his early
years with the fire department, when he visited retired fire
fighters who were surviving with respirators, living in cheap
trailers, trying to get by on their retirement income, and not
getting much help. The desire was there to help these retired
fire fighters, but it was not possible, because "we needed the
approval of the department to give away money that we had in our
retirement account." He said it is time to make up for those
days, which is why he supports HB 200.
REPRESENTATIVE GARDNER said she also supports the bill, but she
is troubled by its ambiguity regarding the issue of whether or
not it would be mandatory. She expressed her wish that by the
time the bill comes to the House floor, the intent is clear
regarding the listed diseases, "the presumption that they're
work related," and the intent to provide coverage for them.
4:26:51 PM
REPRESENTATIVE LeDOUX said she agrees with Representative
Gardner, and she expressed her desire to see her work with the
bill sponsor to tighten up the language of the bill so that a
municipality could not get out of providing coverage simply
because it decides not to give the examination.
REPRESENTATIVE GATTO suggested making the exam mandatory.
REPRESENTATIVE LeDOUX responded, "Make either the exam mandatory
or, if they decide not to give the exam, then it's their tough
luck - that they have the option of giving the exam."
REPRESENTATIVE GATTO said, "It counts as if they gave it."
MS. HUBER renewed her promise to work on these issues with the
bill sponsor before the bill's hearing in the next committee of
referral.
4:27:48 PM
REPRESENTATIVE GATTO moved to report HB 200 out of committee
with individual recommendations and the accompanying fiscal
notes.
CHAIR OLSON objected.
4:29:16 PM
A roll call vote was taken. Representatives Gardner, Gatto,
Neuman, and LeDoux voted in favor of moving HB 200 out of
committee with individual recommendations and the attached
fiscal notes. Representatives Ramras, and Olson voted against
it. Therefore, HB 200 was reported out of the House Labor and
Commerce Standing Committee by a vote of 4-2.
REPRESENTATIVE NEUMAN explained that he voted yes because
although he had supported Version M because of its
clarification, he did not want to hold up the bill in committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:32 p.m.
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