Legislature(1997 - 1998)

01/16/1998 09:00 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         January 16, 1998                                      
                            9:00 a.m.                                          
MEMBERS PRESENT                                                                
Senator Gary Wilken, Chairman                                                  
Senator Loren Leman, Vice-Chairman                                             
Senator Jerry Ward                                                             
Senator Johnny Ellis                                                           
MEMBERS ABSENT                                                                 
Senator Lyda Green                                                             
COMMITTEE CALENDAR                                                             
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 189(JUD) am                       
"An Act relating to sale, gift, exchange, or distribution of                   
tobacco and tobacco products."                                                 
     HEARD AND HELD                                                            
SENATE BILL NO. 197                                                            
"An Act relating to health care services provided by, and practices            
of, a health maintenance organization; and prohibiting health                  
maintenance organizations from limiting free speech of health care             
     HEARD AND HELD                                                            
PREVIOUS SENATE COMMITTEE ACTION                                               
HB 189 - See Rules minutes dated 5/10/97.                                      
SB 197 - See HESS minutes dated 1/14/98.                                       
WITNESS REGISTER                                                               
Gordon Evans                                                                   
Health Insurance Assn. of America                                              
318 4th Street                                                                 
Juneau, Alaska                                                                 
POSITION STATEMENT:  Commented on SB 197.                                      
Representative John Cowdery                                                    
Alaska State Capitol                                                           
Juneau, Alaska  99801-1182                                                     
POSITION STATEMENT:  Sponsor of HB 189.                                        
Anne Marie Holen                                                               
Alaska Native Health Board                                                     
Anchorage, Alaska                                                              
POSITION STATEMENT:  Supports some provisions of HB 189.                       
Michael Livingston                                                             
P.O. Box 112612                                                                
Anchorage, Alaska  99511                                                       
POSITION STATEMENT:  Commented on HB 189.                                      
Joyanne Bloom                                                                  
Juneau Tobacco Prevention Network                                              
883 Basin Road                                                                 
Juneau, Alaska                                                                 
POSITION STATEMENT:  Commented on HB 189.                                      
Dean Guaneli                                                                   
Assistant Attorney General                                                     
Department of Law                                                              
P.O. Box 110300                                                                
Juneau, Alaska  99811-0300                                                     
POSITION STATEMENT:  Commented on HB 189.                                      
Jennifer Strickler                                                             
Division of Occupational Licensing                                             
Department of Commerce and Economic Development                                
P.O. Box 110806                                                                
Juneau, Alaska  99811-0806                                                     
POSITION STATEMENT:  Answered questions about license suspension.              
Marco Pignalberi                                                               
Staff to Representative Cowdery                                                
Alaska State Capitol                                                           
Juneau, Alaska  99801-1182                                                     
POSITION STATEMENT:  Commented on HB 189.                                      
Bob Bartholomew                                                                
Income & Excise Audit Division                                                 
Department of Revenue                                                          
P.O. Box 110420                                                                
Juneau, Alaska  99811-0420                                                     
POSITION STATEMENT:  Commented on HB 189.                                      
ACTION NARRATIVE                                                               
TAPE 98-2, SIDE A                                                              
Number 001                                                                     
          SB 197 - REGULATING HEALTH MAINTENANCE ORGS.                         
CHAIRMAN WILKEN called the Senate Health, Education and Social                 
Services (HESS) Committee to order at 9:06 a.m.  Present were                  
Senators Wilken, Ward and Leman.  Chairman Wilken announced the                
first order of business was to continue taking public testimony on             
SB 197, which would also be heard in committee on Wednesday,                   
January 21, at the sponsor's request.                                          
GORDON EVANS, representing the Health Insurance Association of                 
America (HIAA), clarified HIAA's position on SB 197.  In previous              
testimony, Mr. Evans stated that HIAA believed SB 197 is                       
unnecessary; opposed Section 2 which mandates certain benefits for             
chiropractors;  and did not oppose the provisions in Sections 1 and            
3.  HIAA believes Section 1, which proposes to amend current law to            
require a carrier to include, in its evidence of coverage,                     
guidelines explaining when treatment may be denied, is unnecessary             
because managed care plans are currently required to file a                    
Schedule of Benefits with the Division of Insurance when                       
establishing plans in Alaska.   The Schedule of Benefits, which is             
provided to encourage active enrollment, is a legal document that              
describes in detail what the plan does and does not cover, and                 
rules and procedures governing eligibility.  Instead, HIAA would be            
willing to provide to the patient or health care provider, upon                
request, a written explanation of an adverse determination.                    
Regarding Section 3, MR. EVANS said three of the five parts impose             
limits on communication between a health care provider and the                 
enrollee, and require written notification of cause for termination            
of a health care provider.  HIAA believes those provisions are                 
contractual matters.  Most managed care firms guard their current              
customers and information about their plan for purposes of                     
confidentiality.  Consequently, plans will include contractual                 
provisions asking the health care provider to agree to not                     
disparage the health plan to enrollees or attempt to induce the                
enrollees to leave a plan or join another.  These types of                     
contractual provisions are not unique to HMOs; they are imposed by             
other employers through contracts or employment manuals: no                    
business can tolerate its employees driving customers away.  As the            
general contractor employing the provider, health plans could be               
held jointly liable for libelous statements by a provider or                   
spurious claims which may impact another provider's business.                  
Also provider's who might have multiple contractual arrangements               
with health facilities and plans could attempt to steer patients to            
facilities in which they have a personal financial interest.                   
Finally, the medical community has protected itself against                    
disclosure of data which compares physicians and facilities  based             
upon clinical outcomes.  The same level of analytical objectivity              
should be required in any qualitative statements made by physicians            
who are in a contractual relationship with an HMO.                             
MR. EVANS read part of the written testimony he submitted for the              
committee file and concluded his remarks by saying insurers should             
not be required to subject every denial of health care coverage to             
a second provider's opinion.  HIAA always opposes mandating                    
benefits because that practice will drive up costs and ultimately              
limit the affordability of quality care for consumers.  Mr. Evans              
stated he would be willing to work with the sponsor on changes to              
SB 197 that HIAA could support.                                                
Number 140                                                                     
SENATOR WARD asked if the sponsor requested that SB 197 be held in             
committee.  CHAIRMAN WILKEN repeated the bill would be held until              
Wednesday at the sponsor's request.                                            
                HB 189 - RESTRICT TOBACCO SALES                                
REPRESENTATIVE JOHN COWDERY, sponsor of HB 189, announced that he              
would first discuss the original version of HB 189 and then the                
proposed committee substitute.  HB 189 prohibits self-service                  
displays of tobacco products in retail stores.  Self-service                   
displays are notoriously susceptible to shoplifting and impulse                
buying by minors.  Their elimination has proven to be a popular                
means of removing access by minors to cigarettes.  More than 180               
cities throughout the U.S. have already implemented prohibitions on            
self service tobacco displays.  Sixty days ago the Municipality of             
Anchorage (MOA) unanimously passed an ordinance modeled after HB
189 and last year the House unanimously passed HB 189.  The                    
operative statement of the bill is found is Section 3 and requires             
sales to occur in a manner that allows only sales clerks to control            
access to tobacco products.                                                    
REPRESENTATIVE COWDERY discussed the remaining sections of the                 
bill.  Section 2 changes the penalty provision from a violation                
punishable by $300 to a class B misdemeanor punishable by a fine of            
not more than $1000.  Section 1 of the bill establishes the offense            
of selling or giving tobacco to a minor and contains the                       
culpability standard necessary to prosecute an offense under this              
act.  By changing the penalty level of the offense from a violation            
to a class B misdemeanor, the culpability standard must be                     
increased from negligent conduct to knowing conduct.  The Attorney             
General's Office prefers to keep negligent behavior as the standard            
of culpability which is possible because of a court ruling in                  
October of 1997 in the Exxon-Valdez case.  Representative Cowdery              
said he favors  maintaining the negligent standard if the stiffer              
penalty can be imposed.                                                        
REPRESENTATIVE COWDERY continued.  Section 4 of HB 189 applies to              
businesses licensed as cigarette manufacturers, distributors,                  
direct-buying retailers, or vending machine operators, and allows              
for the suspension or revocation of the license for authorizing the            
sale of tobacco products to minors.                                            
Section 5 repeals two subsections of the statute relating to the               
regulation of cigarette vending machines because those subsections             
were included in HB 159.  REPRESENTATIVE COWDERY suggested                     
restoring those subsections in the proposed committee substitute.              
This action would incorporate existing law related to vending                  
Section 6 notes the Legislature's intent that HB 159 and HB 189                
both be given maximum effect.  This section will become unnecessary            
in the proposed committee substitute.                                          
Number 226                                                                     
SENATOR ELLIS asked if Representative Cowdery was referring to the             
proposed committee substitute before the committee.                            
CHAIRMAN WILKEN noted he would entertain a motion to accept SCS                
CSSSHB 189(HESS) (Ford 0-LS0711\K) as the working version before               
the committee.  SENATOR LEMAN so moved.  There being no objection,             
CHAIRMAN WILKEN announced SCS CSSSHB 189(HESS) was adopted as the              
working document of the committee and explained that is the                    
committee substitute Representative Cowdery was referring to.                  
Number 237                                                                     
SENATOR LEMAN said that while recently shopping at a "warehouse                
buying club" he noticed a large section of tobacco products                    
displayed in a manner accessible to anyone.  He asked if this bill             
will preclude carton sales in those stores.                                    
REPRESENTATIVE COWDERY answered that type of situation gets into               
the question of wholesale and retail sales; it is his intent to                
require that only clerks can access the product for the customer.              
SENATOR LEMAN asked if the products would be caged.  REPRESENTATIVE            
COWDERY said that could be one way to isolate them.                            
SENATOR WARD said he introduced a similar piece of legislation to              
raise the penalties for selling tobacco products to minors to that             
for selling alcohol to minors.  He noted the increase in tobacco               
taxes was supposed to stop minors from smoking, and asked why this             
legislation was necessary.                                                     
REPRESENTATIVE COWDERY answered he did not vote for the tax bill.              
Regardless of the tax on cigarettes, HB 189 will restrict access to            
tobacco by minors.                                                             
Number 285                                                                     
SENATOR WILKEN noted two people were waiting to testify via                    
teleconference from Anchorage.                                                 
ANN MARIE HOLEN, representing the Tobacco Control Program with the             
Alaska Native Health Board, and Citizens to Protect Kids from                  
Tobacco, gave the following testimony.  Her groups are very pleased            
to see continued interest among policy makers in reducing the                  
burden of tobacco-caused deaths in the State.  Almost all nicotine             
addicts get hooked in their teens, so it is extremely important to             
make it harder to get tobacco during those vulnerable years.  She              
strongly supports the provision in HB 189 that would remove self-service tobacc
assisted.  This is a simple measure that would eliminate                       
shoplifting of tobacco products if properly enforced.  Right now               
shoplifting is a major source of tobacco for young smokers as other            
states' surveys have shown.  Also, by removing self-service                    
displays, advertising methods that accompany those displays will be            
eliminated.  MS. HOLEN expressed concern about raising the                     
culpability standard to "knowingly" because enforcement officials              
will have to prove that a clerk knew he or she was selling to an               
underaged buyer.  This standard would erect such an obstacle to                
meaningful enforcement as to essentially eliminate it.  The                    
standard was changed in 1992 from "knowingly" to "negligently"                 
because the law was unenforceable.  Losing one's business license              
for tobacco sales to minors is a severe consequence; current law               
already provides for that.  The most important thing is to actively            
enforce the laws already on the books.  She urged committee members            
to support banning self-service displays, tightening vending                   
machine restrictions, and closing the loophole that allows minors              
to sell to minors.                                                             
Number 337                                                                     
SENATOR WARD asked Ms. Holen to submit documentation to                        
substantiate her comment that the tobacco tax has reduced teenage              
smoking.  MS. HOLDEN clarified that she did not refer to the                   
tobacco tax in her testimony but added she does expect the                     
increased tobacco tax to reduce youth smoking by about 20 percent.             
She noted all tobacco control experts agree this problem needs a               
comprehensive approach and the tobacco tax increase is one part of             
a comprehensive strategy.                                                      
SENATOR WARD asked Ms. Holen to provide the committee with                     
information about the 20 percent reduction.  She agreed.                       
Number 361                                                                     
MICHAEL LIVINGSTON, a police officer, made the following comments              
on his own behalf.  The Alaska Police Standards Council says that              
one of the fundamental duties of Alaska law enforcement officers is            
to safeguard human lives and to protect the innocent against                   
deception. Most Alaskans become addicted to tobacco when they are              
in their early teens when it is not even legal for them to possess             
it.  He has issued around 150 tickets to minors during the past                
five years for possession of tobacco.  In 1997 he issued 32                    
citations to store clerks for selling tobacco to minors.  AS                   
11.76.100, written in 1992, does not need modification.  If HB 189             
is adopted, it will be unenforceable because police will have to               
prove that clerks knowingly sold to minors.  Of the 32 citations,              
only one clerk admitted she knew the buyer was a minor.  Mr.                   
Livingston believed the $300 fine is an adequate penalty and that              
there is no reason to change the offense from a violation to a                 
misdemeanor.  He agrees that the restriction on access is a good               
idea, but HB 189 will be unenforceable if the "knowingly" standard             
is required.   He believes sales of tobacco to minors has already              
been dramatically reduced in Anchorage as a result of enforcement.             
He urged the committee not to adopt the "knowingly" standard                   
proposed under HB 189.                                                         
CHAIRMAN WILKEN asked Mr. Livingston if he is an Anchorage                     
policeman.  MR. LIVINGSTON said he does work for the Anchorage                 
Police Department but he is not representing them today.                       
Number 401                                                                     
SENATOR WARD applauded Mr. Livingston for his enforcement efforts              
and asked if Mr. Livingston considers tobacco addiction to be on               
the same level as alcohol addiction.  MR. LIVINGSTON thought both              
alcohol and tobacco are very serious concerns, and added that if               
the State does not continue to reduce the sale of tobacco to                   
minors, hundreds of thousands of dollars under the SINAR amendment             
for alcohol and drug counseling will be jeopardized.                           
JOYANNE BLOOM, representing the Juneau Tobacco Prevention Network,             
thanked Chairman Wilken for hearing this measure which will help to            
keep tobacco out of the hands of youth.  The Network has been                  
offering smoking cessation classes in the high school and has been             
educating vendors.  She noted last Spring nine citations were                  
issued after a sting operation occurred in Juneau.  Two of those               
citations were thrown away because the clerks were under the age of            
19.  That loophole will be fixed by HB 189.  She noted youth are               
selling stolen cigarettes in the high school for $1 each.                      
Regarding the negligent versus knowingly standard, a clerk would               
have to check a minor's ID and sell that person cigarettes anyway              
to be charged with a misdemeanor under the knowingly standard.                 
SENATOR LEMAN said a person would be breaking current law if he/she            
sold to a minor without checking an ID because of the negligent                
standard.  MS. BLOOM agreed and said during the arraignments at the            
court, she learned that some asked for the ID and did not look at              
it carefully enough, but more often the ID was not checked and the             
minor lied about his/her age.                                                  
SENATOR WARD stated he believes tobacco kills more people than                 
alcohol, and that stiffening laws regarding alcohol has had a                  
favorable effect.  He asked Ms. Bloom if she thought that if all               
tobacco retailers were educated on its effects and also subject to             
severe penalties, it would have a reducing effect.  MS. BLOOM                  
agreed that tobacco kills far more people, but said the $300 fine              
imposed during the arraignments really hurt the vendors.  After                
that occurred, the Network sent out forms to all vendors for their             
employees' signatures, explaining the consequences of tobacco sales            
by employees.                                                                  
SENATOR WARD asked Ms. Bloom if she thought vendors would be more              
careful about who they hire if they knew they might lose their                 
license to sell tobacco.  MS. BLOOM thought they would.                        
Number 500                                                                     
DEAN GUANELI, Assistant Attorney General, Department of Law,                   
addressed his comments to the committee substitute, which might                
have the effect of limiting enforceability of the current statute.             
The Alaska Supreme Court made a definitive ruling in October of                
1997 regarding the minimum level of culpability necessary under the            
Alaska Constitution to establish a criminal law violation: that                
level is simple negligence.  If one applies a knowingly standard of            
mental culpability, it would be nearly impossible to enforce this              
law because that would require a situation in which a clerk looked             
at an ID, determined the buyer was under 19, and sold tobacco                  
products anyway.  He recommended retaining the negligence standard             
by amending the committee substitute on page 1, lines 7, 9, 12, and            
page 2, line 24, by replacing the word "knowingly" with the word               
"negligently," and on page 3, lines 2-3 by replacing the word                  
"knowing" with "simple negligence."                                            
MR. GUANELI explained the second aspect of HB 189 that affects                 
enforceability goes to the penalty section.  He agreed with Officer            
Livingston that it is not necessary to make these offenses criminal            
because a violation punishable by a fine is enough.  Most violators            
will be store clerks, who will risk losing their jobs for selling              
to minors.  In addition, when conduct is criminalized, the offender            
has the right to a court-appointed attorney and jury trial, which              
will delay the process.  Most offenders to date were caught red-handed, pled gu
enforcement mechanisms, the business license endorsement of the                
store owner can be suspended or revoked.  Mr. Guaneli felt that is             
the stronger deterrent and that employers will need to train                   
employees to ensure they are carefully checking IDs.                           
Mr. Guaneli stated the current statute, AS 43.70.075, provides that            
a business license holder have a separate endorsement to sell                  
tobacco products.  If a violation occurs, the Department of                    
Commerce can revoke the endorsement.  For a first offense, the                 
maximum suspension is 45 days; for a second offense within two                 
years, the maximum is 90 days.  Rather than reclassify the offense,            
Mr. Guaneli said the amount of suspension time could be increased.             
Number 564                                                                     
SENATOR LEMAN agreed with Mr. Guaneli regarding reclassifying the              
offense because he believes swift and predictable penalties are                
more effective if enforced consistently than those that are drawn              
out, even though they are more severe.  He asked if the department             
is enforcing the current law, and if not, why.                                 
MR. GUANELI agreed with Senator Leman's point and noted a                      
representative from the Department of Commerce and Economic                    
Development was available to answer that question.                             
CHAIRMAN WILKEN asked if Representative Cowdery agreed to the four             
proposed changes to the committee substitute.  REPRESENTATIVE                  
COWDERY said he did.                                                           
CHAIRMAN WILKEN commented that being involved in the wholesale food            
business, he is aware of the efforts stores are trying to make to              
restrict tobacco sales.  He noted one of the cardinal rules of the             
business is to never be out of anything, especially tobacco, and               
believed a 45 day suspension would be a serious deterrent.                     
SENATOR LEMAN stated under current law the minimum fine is $300.               
He asked what the maximum amount of that fine could be.  MR.                   
GUANELI answered there are certain violations under Alaska law that            
carry up to a $1,000 fine and do not trigger the right to a jury               
trial and counsel.  That right is triggered by offenses that denote            
criminality.  He thought the maximum fine imposed for this offense             
could be as high as $1,000.  SENATOR LEMAN noted his interest in               
working with the sponsor to retain the offense as a violation, and             
possibly increase the fine.                                                    
JENNIFER STRICKLER, Administrative Manager of the Division of                  
Occupational Licensing and Business License Administrator,                     
Department of Commerce and Economic Development, gave the following            
testimony.  Suspension of endorsements to sell tobacco was enforced            
for the first time in 1997.  In order for the department to take               
action in these cases, the statute requires a conviction.  The                 
department gets those records from the court system.  To date, five            
businesses have had their endorsements suspended for 45 days.                  
Those businesses were hurt by the suspension.  Currently, one                  
business has a license suspended, and 20 cases are under review by             
the Attorney General's Office.                                                 
Number 549                                                                     
SENATOR LEMAN thought that publicity about the suspensions can be              
an effective tool to change behavior.  He asked if any of these                
cases were publicized.  MS. STRICKLER said several newspaper                   
articles have been published and some businesses are watching each             
other for compliance.                                                          
CHAIRMAN WILKEN asked if license revocation is limited to the                  
particular site where the violation occurred, even though the                  
licensee might own ten stores.  MS. STRICKLER said that was                    
SENATOR ELLIS asked if Chairman Wilken's intention was to work with            
the sponsor on the negligence standard and the penalty section.  He            
commented he is undecided on the proposal to raise the penalty                 
amount.  He asked if the vending machine provisions were put back              
into the committee substitute, and noted his concern that that                 
language may not be expansive enough.  He explained that vending               
machines can be located in employee break rooms, which is                      
reasonable when the employees are all adults.  A problem does                  
arise, however, if the employer also employs minors.                           
MARCO PIGNALBERI, staff to Representative Cowdery, stated the same             
vending machine issue has been raised with the Municipality of                 
Anchorage, in regard to its ordinance.  He noted his intent to                 
discuss the problem with the MOA to determine a solution, as the               
concern is a legitimate one.                                                   
SENATOR ELLIS asked if a business is both a retailer and a                     
wholesaler, such as COSTCO, whether it would be exempt from the                
restriction on self-serve tobacco displays.                                    
BOB BARTHOLOMEW, Assistant Director of the Income and Excise Tax               
Division of the Department of Revenue, said that Section 4, line               
28, of the proposed committee substitute, provides for an exemption            
if the sale is a wholesale transaction and the person is licensed              
as a distributor.  He interpreted that to mean if a business                   
conducts retail transactions, and is licensed as a distributor, the            
exemption would not apply, requiring that business to keep tobacco             
products segregated.                                                           
SENATOR ELLIS asked if the Department of Law agrees with that                  
interpretation.  CHAIRMAN WILKEN noted he would ask a                          
representative of the Department of Law to discuss that issue at               
the next meeting.  He announced the committee would reschedule HB
189 at the sponsor's request.                                                  
SENATOR LEMAN clarified he was not necessarily supporting an                   
increased fine for the violation; he was suggesting it as an                   
alternative to the creation of a misdemeanor. He suspected a $300              
fine would be a deterrent.                                                     
CHAIRMAN WILKEN added one could also lose his/her opportunity to               
remain employed.  He announced Barbara Brink, of the Alaska Public             
Defender's Office was available to answer questions via                        
teleconference.  There being no questions, and no further testimony            
on HB 189, CHAIRMAN WILKEN made the following announcements.  Both             
the House and Senate HESS committees have been invited to a                    
presentation on March 27 on child development during ages zero to              
five.  He introduced staff, and noted the next meeting would be                
held on Wednesday, January 21.                                                 
DEVELOPMENT IS MARCH 26.)                                                      
There being no further business to come before the committee,                  
CHAIRMAN WILKEN adjourned the meeting at 10:20 a.m.                            

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