Legislature(1999 - 2000)
04/15/2000 02:50 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
April 15, 2000
2:50 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Chairman
Senator Tim Kelly, Vice Chairman
Senator Dave Donley
Senator Loren Leman
Senator Lyman Hoffman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
Confirmation Hearing on Governor's Appointees:
Alaska Workers' Compensation Board -Harriet M. Lawlor
Alaska State Board of Accountancy -Lottie Fleeks and Dean W. Nelson
Alcoholic Beverage Control Board -Robert Klein and ToniLee Jackson
State Board for Registration for Architects, Engineers, and Land
Surveyors -Kathleen L. Gardner and Ernie Seimoneit
Board of Barbers and Hairdressers - Darae Crews
Alaska Labor Relations Agency -Richard D. Brickley and Robert Doyle
Board of Marine Pilots - Captain Michael Spence, Jeffrey Thompson
and Barbara Huff Tuckness
Occupational Safety and Health Review Board - Timothy Sharp
Personnel Board - Charles Borg
Board of Certified Real Estate Appraisers - Eileen Bechtol
Board of Veterinary Examiners - Dr. Jean Battig
Alaska Workers' Compensation Board - Harriet Lawlor
CONFIRMATIONS ADVANCED
HOUSE BILL NO. 265
"An Act extending the termination date of the Alaska regional
economic assistance program; and providing for an effective date."
-MOVED HB 265 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 310(L&C)
"An Act relating to the Alaska Insurance Guaranty Association."
-MOVED CSHB 310(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 398(JUD)
"An Act relating to the Alaska Life and Health Insurance Guaranty
Association."
-MOVED CSHB 398(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 337(JUD)
"An Act relating to claims against permanent fund dividends to pay
amounts owed to the Department of Labor and Workforce Development
under the Alaska Employment Security Act and to fees for processing
certain claims against permanent fund dividends; and providing for
an effective date."
-MOVED CSHB 337(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 339(L&C)
"An Act authorizing the Alaska Commercial Fishing and Agriculture
Bank to make loans relating to tourism and development or
exploitation of natural resources."
-MOVED CSHB 339(L&C) OUT OF COMMITTEE
SENATE CS FOR HOUSE BILL NO. 422(L&C)
"An Act relating to workers' compensation benefits for injuries
resulting from consumption of alcohol or use of drugs; and
providing for an effective date."
-MOVED SCSHB 422(L&C) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
HB 265 - No previous action to record.
HB 310 - No previous action to record.
HB 398 - No previous action to record.
HB 337 - No previous action to record.
HB 339 - No previous action to record.
HB 422 - No previous action to record.
WITNESS REGISTER
Ms. Melanie Lesh
Staff to Representative Austerman
Alaska State Capitol
Juneau, AK 99811
POSITION STATEMENT: Commented on HB 265.
Ms. Janet Seitz
Staff to Representative Rokeberg
Alaska State Capitol
Juneau, AK 99811
POSITION STATEMENT: Commented on HB 310.
Mr. Don Thomas, Counsel
Alaska Insurance Guaranty Association
No address provided
POSITION STATEMENT: Commented on HB 310.
Mr. John Manley
Staff to Representative Harris
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified for the sponsor of HB 398.
Mr. Dwight Perkins
Deputy Commissioner
Department of Labor and Workforce Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Supports HB 337.
Mr. Dale Anderson
Staff to Representative Mulder
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified for the sponsor of HB 339.
Mr. Ed Crane, President
Alaska Commercial Fishing and Agriculture Bank
2550 Denali
Anchorage, AK
POSITION STATEMENT: Supports HB 339.
Representative Norm Rokeberg
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 422.
ACTION NARRATIVE
TAPE 00-15, SIDE A
Number 001
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee
meeting to order at 2:50 p.m. Present were Senators Leman, Hoffman
and Mackie.
CHAIRMAN MACKIE announced that all appointees were available to
testify before the Committee on the previous Thursday but the
meeting was canceled. He noted the following names were forwarded
to the Committee for consideration.
Alaska State Board of Accountancy -Lottie Fleeks and Dean W. Nelson
Alcoholic Beverage Control Board -Robert Klein and ToniLee Jackson
State Board for Registration for Architects, Engineers, and Land
Surveyors -Kathleen L. Gardner and Ernie Seimoneit
Board of Barbers and Hairdressers - Darae Crews
Alaska Labor Relations Agency -Richard D. Brickley and Robert Doyle
Board of Marine Pilots - Captain Michael Spence, Jeffrey Thompson
and Barbara Huff Tuckness
Occupational Safety and Health Review Board - Timothy Sharp
Personnel Board - Charles Borg
Board of Certified Real Estate Appraisers - Eileen Bechtol
Board of Veterinary Examiners - Dr. Jean Battig
Alaska Workers' Compensation Board - Harriet Lawlor
CHAIRMAN MACKIE asked if any member wished to comment on the
Governor's appointees.
There being no questions or comments, SENATOR LEMAN moved to
forward the names of the appointees to the Senate for consideration
during a joint session. There being no objection, it was so
ordered.
HB 265-ALASKA REGIONAL ECONOMIC ASSIST. PROGRAM
MS. MELANIE LESH, aide to Representative Alan Austerman, explained
that HB 265 will extend the sunset date of the Alaska Regional
Development Organizations (ARDORs) to 2003. To date, 13 regional
entities have been organized to promote economic development in
Alaska and a plan is underway to add one more in Fairbanks. This
program is funded with an AIDEA dividend given to the Department of
Community and Economic Development (DCED) through a reimbursable
services agreement. Of the $650,000 total, $620,000 is directly
granted to the 13 ARDORs. DCED's budget contains the remaining
$30,000 for administration; half is used for travel expenses for
non-employee members for ARDOR travel.
SENATOR LEMAN moved to report HB 265 with its accompanying fiscal
note from committee with individual recommendations. There were no
objections and it was so ordered.
HB 310-ALASKA INSURANCE GUARANTY ASSOCIATION
CHAIRMAN MACKIE announced HB 310 to be up for consideration.
MS. JANET SEITZ, staff to Representative Rokeberg, sponsor of HB
310, informed committee members this legislation was introduced at
the request of the Alaska Insurance Guaranty Association. HB 310
provides a mechanism to protect policy holders and claimants in the
event that a property and liability insurer licensed to sell
policies in Alaska becomes insolvent. It updates the Alaska Act to
bring it into conformance with the 1996 National Association of
Insurance Commissioners' Post Assessment Property and Liability
Insurance Guaranty Model Act.
SENATOR LEMAN asked if Section 2 applies to fraternal benefit
societies.
MR. DON THOMAS, Executive Director of the Alaska Life and Health
Guaranty Association, said it does not apply to fraternal
organizations.
SENATOR LEMAN noted that fraternal societies are not included in
the list of excluded organizations.
MR. THOMAS replied he was told they are not admitted members of the
Association.
There being no further questions or testimony, SENATOR LEMAN moved
to report HB 310 from committee with individual recommendations and
its accompanying zero fiscal note. There being no objection, the
motion carried.
HB 398-LIFE AND HEALTH INSURANCE GUARANTY ASSN
CHAIRMAN MACKIE announced HB 398 to be up for consideration.
JOHN MANLEY, staff to Representative Harris, prime sponsor of HB
398, explained that HB 398 is very similar to HB 310 except that it
applies to the Alaska Life and Health Insurance Guaranty
Association (ALHIGA). It adopts a model act produced by the
National Association of Insurance Commissioners and updates Alaska
statutes to make them consistent and on par with other states. HB
398 will ensure that the ALHIGA benefits are implemented more
promptly, efficiently, and at a lower cost to policy holders; it
clarifies ambiguous language that could promote lawsuits; and it
provides added benefits to policy holders by extending it to other
people. He noted Mr. George and Mr. Thomas were available to
answer questions.
SENATOR LEMAN asked if HB 398 does not apply to the fraternal
benefit societies because they do not belong to ALHIGA.
MR. MANLEY said that is correct.
SENATOR LEMAN moved to report HB 398 from committee with individual
recommendations and its accompanying zero fiscal note. There being
no objection, the motion carried.
HB 337-AMTS OWED ON UNEMPLOYMENT TAX: CLM V. PFD
CHAIRMAN MACKIE announced HB 337 to be up for consideration.
DWIGHT PERKINS, Deputy Commissioner of the Department of Labor and
Workforce Development (DOLWD), stated support for HB 337 and made
the following comments. HB 337 will speed the recovery of overpaid
unemployment insurance benefits that are indebted to the State of
Alaska by attaching permanent fund dividends after due process has
been followed. The total debt balance of overpaid claims as of
12/31/99 was more than $9 million. The two categories of fraud and
non-fraud overpaid unemployment insurance benefits would be
returned to the trust fund when collected. The penalty amount will
be deposited directly into the general fund. With the passage of
HB 337, DOLWD estimates it could return over $1.5 million to the
trust fund and over $750,000 to the general fund. Every year
thereafter, DOLWD expects to deposit $700,000 to $800,000 in the
trust fund and $400,000 to $500,000 in the general fund. The
passage of this legislation is good for the unemployment insurance
trust fund, it is good for employers, and it is good for the
general fund. It provides another tool to collect money that is
lawfully owed to the State of Alaska.
SENATOR LEMAN asked why it took DOLWD so long to suggest this
change. He noted this bill could have been attached to legislation
pertaining to collections that passed last year.
DEPUTY COMMISSIONER PERKINS replied that each year DOLWD looks for
good housekeeping legislation that makes sense and will bring in
money to the State.
SENATOR LEMAN expressed support for HB 337.
There being no further testimony or questions, SENATOR LEMAN moved
HB 337 from committee with individual recommendations. He thought
the fiscal note should show a gain but he pointed out the bill will
be heard in the Senate Finance Committee. With no objection, the
motion carried.
Number 209
HB 339-CFAB LOANS FOR TOURISM & NAT RESOURCES
CHAIRMAN MACKIE announced HB 339 to be up for consideration.
MR. DALE ANDERSON, staff to Representative Mulder, explained the
measure expands the lending authority of the Commercial Fishing and
Agriculture Bank (CFAB) to two new areas: tourism and natural
resource development. Nearly 20 years ago the State appropriated
$32 million to CFAB, which has been repaid. At this point, CFAB is
operating as a private enterprise lending institution in Alaska.
HB 339 will expand and strengthen the portfolio of the
organization. He offered to answer questions.
SENATOR TIM KELLY asked what CFAB knows about natural resource
extraction.
MR. ANDERSON replied CFAB representatives were available to answer
that question.
SENATOR TIM KELLY asked if natural resource development will
include oil and gas projects.
MR. ANDERSON said, that like any private lending institution
getting involved in a new area, CFAB may not have the expertise in
that area at this time but it could hire a loan officer with that
expertise. He does not think it is unusual for an institution to
expand its scope of operations but it must be done with care.
SENATOR TIM KELLY noted CFAB will be competing with banks in the
private sector that make loans in these areas.
MR. ANDERSON said CFAB will be in competition. He explained that
the only tie CFAB has to the State at this juncture is the seed
money, which was paid back in full. CFAB employees are not State
employees. CFAB currently operates in areas of Alaska that other
banks do not. CFAB has been involved with the fishing industry.
Many people have told Representative Mulder that HB 339 is the
answer to their needs in rural Alaska because of the effective way
that CFAB has dealt with small businesses in those areas.
SENATOR LEMAN asked how CFAB will secure loans in the areas of
tourism and natural resource development.
MR. ANDERSON said the only restriction in the bill is that CFAB
cannot hold a limited entry permit as collateral for a loan outside
of a fishing industry use.
SENATOR TIM KELLY asked if CFAB is subject to the Alaska Banking
Code.
MR. ANDERSON said it is not.
SENATOR TIM KELLY asked if CFAB pays taxes.
MR. ANDERSON replied CFAB pays income tax to both the State and
the federal government. He added that CFAB has given many other
benefits to the state in the form of donations for the fight to
keep the IRS's hands off of limited entry permits. He noted that
CFAB serves a niche that banks do not always extend into.
SENATOR LEMAN asked if this bill will dilute CFAB's commitment to
the fishing industry in Alaska.
MR. ANDERSON said he believes the bill will strengthen it by giving
CFAB an expanded portfolio. Right now the borrowers are the owners
of CFAB. The CFAB board of directors is made up of fishermen
except for one farmer. They will be monitoring the growth of the
organization. The House Labor and Commerce Committee placed loan
limits in the bill and the House Finance Committee tightened it
further so that borrowers must be residents, must use the funds in
Alaska, and must use the funds directly in the industry they are
borrowing for.
SENATOR TIM KELLY asked if the board of directors, made up of
fishermen, will be making decisions on tourism loans and natural
resource loans.
MR. ANDERSON replied the make-up of the board can be changed.
SENATOR TIM KELLY asked if CFAB has changed the make-up of the
board yet.
MR. ANDERSON said it has not because right now CFAB is a fishing
bank.
SENATOR TIM KELLY again asked what fishermen know about tourism
loans and natural resource loans.
SENATOR LEMAN noted, as others get involved, they may be elected to
the board.
Number 352
SENATOR TIM KELLY asked if a person becomes a member by getting a
loan.
MR. ANDERSON said that is correct.
CHAIRMAN MACKIE commented he is somewhat sympathetic to CFAB's
desire to expand its portfolio and financial strength. He asked a
CFAB representative to respond to the fact that CFAB was created to
help Alaskan fishermen purchase permits and boats at a time when
many wealthier people from out of state were buying up permits and
boats. He also asked what kind of a guarantee CFAB can give to
ensure that rural Alaskans will be able to come to CFAB to get into
the fishing industry if this legislation passes.
MR. ED CRANE, President and CEO of CFAB, replied that CFAB's first
internal discussion about this expansion was in 1990 so this idea
is not new. Regarding CFAB's original purpose and mission,
Chairman Mackie is correct. CFAB learned how to do what it does
the hard way as it made mistakes in its early years. Since 1985
however, CFAB has been a contradiction in terms. It has been
relatively conservative when financing commercial fishermen,
processors and agricultural projects. The most significant
practical restraint on CFAB is that in order to maintain its
current source of funding, which is borrowed from the National Bank
of Cooperatives, the majority of CFAB loans must be to producers
that are fishermen. Beyond that, six of CFAB's seven directors are
commercial fishermen. The orientation of the bank is commercial
fishing and CFAB does not intend to change that. CFAB sees now and
in the years ahead a greater need for CFAB's services in that area
simply because so many of the people who obtained the original
permits in 1975 are reaching the age of retirement.
MR. CRANE stated that HB 339 was not introduced so that CFAB could
find something else to do. The fact is that CFAB's concentration
on commercial fishing has had some negative impacts from time to
time in terms of cash flow and operations. During 1997 and 1998,
when Bristol Bay had salmon run failures, CFAB had a difficult
time. In addition, that concentration makes lenders extremely
nervous. Ten years ago CFAB was one of the largest borrowers from
the Spokane Bank for Cooperatives - CFAB was important to them.
Due to mergers and consolidations, CFAB now represents only .003
percent of the loan volume of the National Bank of Cooperatives.
CFAB is the only borrower of its kind and that makes the National
Bank very nervous.
MR. CRANE repeated that concentrating in one area is too risky.
CFAB addressed natural resource industries and tourism for a number
of reasons. Both industries are spread throughout the State and
exist in rural Alaska. The smaller operators, from a credit
standpoint, tend to look like the fishermen that CFAB is familiar
with. Regarding CFAB's knowledge of the oil and gas industry,
CFAB's current knowledge is very limited but the expertise is
available. Beyond that, CFAB is not looking to get a piece of BP's
business, but many support activities will need financing. CFAB is
thinking about the entrepreneurs and small businesses that are
part of the total infrastructure.
MR. CRANE commented that State agencies like AIDEA or the
Agricultural Revolving Loan Fund have a board that functions as the
loan making body. CFAB's board does not do that; instead it
represents the owners, the stockholders, and the established
standards and they approve the hiring of staff. CFAB's
professional staff make the loan decisions. The Board's function
is to ensure that the staff conforms to basic credit standards.
CHAIRMAN MACKIE asked if CFAB was developed because the fishermen
and farmers had difficulty getting commercial loans.
MR. CRANE said the amount available for loans through CFAB is based
on CFAB's capital, which is presently just under $20 million, as
well as the quality of its loans. Based on CFAB's current loan
agreements, it could actually make 3½ times the loans it currently
has before it would run up against any borrowing constraints.
CFAB's board of directors is totally committed to expanding. In
addition, CFAB informed fishermen statewide about HB 339 and asked
them to respond. Of the 26 percent who responded, 82 percent were
in favor of pursuing HB 339. These fishermen understand that it is
their capital that is at risk because if CFAB fails, part of the
$20 million will be lost.
CHAIRMAN MACKIE asked if the initial investment in CFAB has been
paid back to the State.
MR. CRANE replied CFAB retired the last of that stock in September
of 1998.
CHAIRMAN MACKIE asked Mr. Crane to address the Alaska Banker's
Association question regarding why CFAB would make a loan that a
traditional bank would reject and how that will strengthen CFAB's
financial portfolio.
MR. CRANE stated it is an oversimplification on the part of the
Alaska Bankers' Association to say that if a borrower cannot borrow
from them, it is because the borrower is weak. He noted that most
of the loans that CFAB makes today to commercial fishermen are
loans that commercial banks are not likely to deal with, simply
because of the relatively small size or, from a credit standpoint,
they are "messy." CFAB applicants tend to be relatively
unsophisticated financially. Commercial banks serve their
stockholders and do not have CFAB's mission. CFAB has found that
in communities like Sitka, Petersburg, and Kodiak, when a
commercial bank wants a particular borrower, CFAB cannot compete
because it does not have the physical presence nor does it offer
the services that commercial banks do. He maintained that he does
not understand the Alaska Bankers' Association's concern about
competition because there is nothing wrong with competition. On
the other hand, if CFAB is making unsound loans, who would it being
competing with? He said CFAB is certainly not going to put anyone
out of business.
Number 502
SENATOR HOFFMAN asked if the Alaska Bankers' Association's
opposition was made known to the House.
MR. CRANE replied it was from day one.
CHAIRMAN MACKIE said he just wanted to be sure that CFAB's mission
is intact.
SENATOR TIM KELLY asked why CFAB decided to expand into both the
tourism and natural resource industries when it decided to increase
its risk factor. He noted that is a big bite for a small operation
with 13 employees.
MR. CRANE replied that HB 339 is broad in that respect. CFAB has
no plans to make big splashes but it is looking for diversification
and as much flexibility as possible. In addition, he would prefer
to make the changes at one time rather than approach the
legislature several times. He stated that he suspects that the
current players will be gone before HB 339 has an impact on CFAB's
portfolio. He repeated that CFAB is not thinking that by next year
it will have invested $15 million in these new industries.
SENATOR TIM KELLY asked if CFAB is regulated by the Banking
Securities Act.
MR. CRANE replied CFAB is audited by the State, through the
Legislature and the Executive Branch.
SENATOR TIM KELLY asked if CFAB is subject to the Alaska Banking
Code.
MR. CRANE said it is not. He noted that subject is misleading.
CFAB is not subject to the Alaska Banking Code because 20 years ago
the Legislature concluded it should be called a bank rather than a
loan company. CFAB does not take deposits or establish trust
accounts. CFAB borrows and lends money only. CFAB is incorporated
under a specific statute. He said he does not know what provisions
of the Alaska Banking Code would apply to CFAB anyway. CFAB's
statute is fairly comprehensive in terms of clarifying what it can
and should do. Beyond that, CFAB is required to make annual
reports to the Legislature. It must be audited by public auditors
and provide the audit to the public, the Legislature and the
Executive Branch. The State bank examiners report on CFAB each year
and that report is distributed to legislators. In addition, the
Legislature could send its own auditor to audit CFAB's books. The
final point of regulation is that CFAB is member owned. It's board
of directors is elected by its members.
CHAIRMAN MACKIE stated the issue is why the Legislature would be
unwilling to let CFAB expand when it has met its obligations to the
State and its stockholders stand to lose.
MR. CRANE agreed and pointed out if the Legislature could invest
$32 million in a capital project that would create economic
opportunities and had no maintenance costs, and then be paid back,
it would be a good investment.
SENATOR TIM KELLY asked if the $32 million investment in CFAB was
paid back in cash.
MR. CRANE replied it was paid back on a discounted present value
basis. The actual amount of cash paid between 1992 and 1998 was
$23 million. The money was not due until July 20, 2000. CFAB had
entered into an agreement with the Department of Revenue to pay in
installments and the amount was indexed to U.S. government agency
obligations. The idea behind the arrangement was that the State
could invest in that mix of treasury obligations, pay State debt
down or put that money into higher-yielding State loan funds and
come out with the equivalent of $32 million.
TAPE 00-15, SIDE B
There being no further testimony, SENATOR LEMAN moved HB 339 from
committee with individual recommendations and its accompanying
fiscal note. There being no objection, it was so ordered.
HB 422-WORKERS' COMPENSATION: DRUGS & ALCOHOL
CHAIRMAN MACKIE announced the committee would consider HB 422.
REPRESENTATIVE NORM ROKEBERG, sponsor of HB 422, explained that
this measure is a simple bill that changes the standards of the
workers' compensation statutes regarding intoxication and use of
drugs. It changes the standard from intoxication to consumption of
alcoholic beverages and from the use of drugs to being under the
influence of drugs. The intent of HB 422 is to make people more
responsible for their actions and allow companies to establish a
zero tolerance policy that can be reflected in the determination of
the workers' compensation board. The current law as interpreted by
the board has resulted in payment of benefits even though in
certain instances the workers had been drinking alcohol. HB 422
gives employers a better standard by which to evaluate the ability
to deny benefits to workers. In other words, a person who violates
a zero tolerance policy will not receive benefits. HB 422 does not
shift the burden of proof; the employer must still have a
preponderance of the evidence and prove the proximate cause of the
injury was alcohol or drug use.
SENATOR DONLEY noted there can be more than one proximate cause of
an incident and adding consumption as a proximate cause does not
seem appropriate at all if the other proximate causes were the
responsibility of the employer.
REPRESENTATIVE ROKEBERG said he agrees with Senator Donley if other
proximate causes exist.
SENATOR DONLEY said the bill says if one of the proximate causes is
drinking then the claim is cut off, even if there are other
proximate causes.
REPRESENTATIVE ROKEBERG said that is correct. If the employee had
been drinking and the drinking was the proximate cause of the
injury, the employee is cut off.
SENATOR DONLEY repeated if someone negligently backed up and dumped
a load of dirt on top of the employee another proximate cause would
exist.
REPRESENTATIVE ROKEBERG replied the preponderance standard is there
for proximate cause. The employer would have to prove that alcohol
or drug use was the proximate cause of the injury.
SENATOR DONLEY asked where the preponderance standard is located.
REPRESENTATIVE ROKEBERG said it is in case law.
SENATOR DONLEY stated this bill will change the statute.
REPRESENTATIVE ROKEBERG maintained that proximate cause is still
there.
SENATOR DONLEY indicated the preponderance standard is not in the
statute and the bill changes the standard from intoxication to
alcohol use.
REPRESENTATIVE ROKEBERG stated language on page 2, line 9, reads,
"the injury was not proximately caused by," which is where the
proof comes in. The only change is whether the employee was
completely intoxicated or was using drugs. The employee's legal
rights are protected if alcohol or drug use was not the proximate
cause in the injury.
SENATOR DONLEY said he thinks the statute makes sense as is.
Intoxication is a different standard than mere consumption.
Intoxication as an element of the cause makes sense.
REPRESENTATIVE ROKEBERG agreed that it lowers that standard but it
does not change the proof requirements for proximate cause.
Number 449
CHAIRMAN MACKIE stated the bill says consumption or use versus
intoxication or under the influence.
REPRESENTATIVE ROKEBERG said that is correct and clarified that the
proximate cause standard of proof remains so the proof must be
based on a preponderance of evidence according to the court rules.
CHAIRMAN MACKIE asked if, under current statute, the injured
employee would have to prove to the board that the proximate cause
was not intoxication.
REPRESENTATIVE ROKEBERG said the proximate cause issue is separate
from the use issue. He gave the following example. In the BB case
before the Workers' Compensation Board, an employee on the North
Slope went through a guard gate. Other people smelled alcohol on
the employee's breath. The company has a zero tolerance policy.
The employee was driving on a straight road, swerved, flipped the
truck and injured himself. A bottle of whiskey was found in the
truck. He was taken back to the camp and examined by a doctor but
a blood alcohol test was not taken for hours. The Board concluded
that the company could not prove the employee was intoxicated even
though the Board said in its findings he had been drinking alcohol.
The Board determined the proximate cause was the truck flipping.
CHAIRMAN MACKIE noted a person cannot be charged with drinking
while intoxicated unless one can prove that person was intoxicated
beyond the legal limit. He pointed out that using Representative
Rokeberg's example, if an employee had one drink and flipped a
truck, the employee would not be eligible for workers' compensation
benefits under HB 422.
REPRESENTATIVE ROKEBERG said that is where the proximate cause
comes in because the employer would have to prove that the use of
alcohol was the proximate cause of the accident.
SENATOR DONLEY noted that is what he finds objectionable about the
bill. He said dominant or substantial causes are easier to
understand. If liquor was the dominant cause of the accident, he
could understand the denial of benefits but that is why he thinks
intoxication is a better standard. HB 422 is based on the fact
that alcohol consumption was in the chain of events. Preponderance
is an evidentiary standard, not a cause standard, therefore,
finding alcohol use to be a proximate cause by a preponderance of
the evidence does not mean that the proximate cause was the
dominant cause of the event.
REPRESENTATIVE ROKEBERG stated a preponderance of the evidence
standard is used by the Workers' Compensation Board.
CHAIRMAN MACKIE said for someone to be entitled to a workers'
compensation claim, that person would have to show that the
consumption of alcoholic beverages did not cause the injury while
under current law the person would have to prove he or she was not
intoxicated.
REPRESENTATIVE ROKEBERG said that is the distinction. He pointed
out if an employee had a cocktail with lunch and then had an
accident during work hours, the scope of duties of the employee
will come into play. Number 1 would be the employer's written
policy about consumption of alcohol use. According to Paul Grassi,
the Director of the Workers' Compensation Division, a company does
not have to controvert the claim. If an employee had a few drinks
after work but was called back to work and informed the employer of
the drinking, any injury that occurred would be covered under
workers' compensation.
SENATOR DONLEY said if the employee was injured while driving back
to work, that would be covered under tort law.
CHAIRMAN MACKIE asked if workers' compensation would cover the
employer while driving back to work under current law.
REPRESENTATIVE ROKEBERG said that would depend on company policy.
SENATOR DONLEY felt that would apply if the employee was driving
from one work location to another but not when driving from home to
work.
CHAIRMAN MACKIE commented the bill does not change the proximate
cause provision but it does change the standard from intoxication
to consumption.
SENATOR DONLEY stated if the bill goes to a looser standard, it
should redefine whether it is the dominant cause.
CHAIRMAN MACKIE asked Representative Rokeberg if he agreed with
Senator Donley.
REPRESENTATIVE ROKEBERG was unsure.
Number 436
SENATOR DONLEY noted the Committee has to think about what will
happen to the employee if denied. The employee has already given
up his or her rights to the tort system so the employee is only
covered under workers' compensation. He questioned if the employee
loses the workers' compensation rights whether that person will be
precluded from any recovery at all.
REPRESENTATIVE ROKEBERG could not answer.
SENATOR LEMAN recounted a case in which a widow sued under tort law
after her husband was killed on the job. She used that system
because she knew that the payment under workers' compensation would
be [inaudible]. He thought both systems were available to people.
REPRESENTATIVE ROKEBERG stated the issue is whether the
Legislature, as a matter of policy, wants to support the employers
if they have a zero tolerance policy or tell the workers that they
will be covered under workers' compensation even if they drink or
use drugs on the job. The current law requires intoxication so an
employee can have a few drinks but not be drunk, which he believes
is lax.
SENATOR LEMAN said he believes the consumption of any alcoholic
beverages increases one's chances of an accident or injury,
especially when operating equipment. Therefore, giving employers
the right to make that decision, especially if they have equipment,
is the right move. He said he has no problem with this standard.
CHAIRMAN MACKIE agreed.
REPRESENTATIVE ROKEBERG offered to work with Senator Donley to
prepare amendments to be heard in the Senate Rules Committee.
SENATOR DONLEY noted he would prefer to work on amendments in the
Labor and Commerce Committee. He noted that Alaska statute may
already set out that people should be discouraged from drinking at
the workplace, but if an employee had a drink and that is only one
of the causes of an accident, he questioned whether it is the best
public policy to cut them off entirely so that their families end
up on welfare with no way to pay the medical bills.
CHAIRMAN MACKIE asked Senator Donley if he thought he could draft
an amendment to improve the bill.
SENATOR DONLEY said yes, and that first he would like to find out
how the proximate cause interplays with dominant versus one factor.
He would also find out what the remedy would be if this does occur.
REPRESENTATIVE ROKEBERG said this bill is about the State's public
policy toward backing up employers when employees breach a zero
tolerance policy.
CHAIRMAN MACKIE asked Representative Rokeberg to work with Senator
Donley and noted he would bring the bill up again next week. He
then adjourned the meeting at 3:02 p.m.
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