ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 28, 2017
1:33 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Shelley Hughes, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 45
"An Act relating to an exemption from the regulation of
construction contractors."
- MOVED SB 45 OUT OF COMMITTEE
SENATE BILL NO. 40
"An Act relating to workers' compensation; repealing the second
injury fund upon circumstances under which certain nonemployee
executive corporate officers and satisfaction of claims;
relating to service fees and civil penalties for the workers'
safety members of limited liability companies may obtain
workers' compensation coverage; programs and the workers'
compensation program; relating to the liability of specified
relating to the duties of injured employees to report income or
work; relating to officers and members of specified business
entities for payment of workers' misclassification of employees
and deceptive leasing; defining 'employee'; relating to the
compensation benefits and civil penalties; relating to civil
penalties for underinsuring or Workers' Compensation Board's
approval of attorney fees in a settlement agreement; failing to
insure or provide security for workers' compensation liability;
relating to and providing for an effective date."
preauthorization and timely payment for medical treatment and
services provided to injured employees; relating to
incorporation of reference materials in workers' compensation
regulations; relating to proceedings before the Workers'
Compensation Board; providing for methods of payment for
workers' compensation benefits; relating to the workers'
compensation benefits guaranty fund authority to claim a lien;
excluding independent contractors from workers' compensation
coverage; establishing the
- HEARD & HELD
SENATE BILL NO. 29
"An Act repealing the Workers' Compensation Appeals Commission;
relating to decisions and orders of the Workers' Compensation
Appeals Commission; relating to superior court jurisdiction over
appeals from Alaska Workers' Compensation Board decisions;
repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of
Appellate Procedure, and amending Rules 202(a), 204(a) - (c),
210(e), 601(b), and 603(a), Alaska Rules of Appellate Procedure;
and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 15
"An Act relating to possession of an electronic smoking product
or a product containing nicotine by a minor and to selling or
giving an electronic smoking product to a minor; relating to
business license endorsements to sell cigarettes, cigars,
tobacco, products containing tobacco, electronic smoking
products, or products containing nicotine; and relating to
citations for certain offenses concerning tobacco or nicotine
products."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SB 45
SHORT TITLE: EXEMPTION: LICENSING OF CONTRACTORS
SPONSOR(s): LABOR & COMMERCE
02/01/17 (S) READ THE FIRST TIME - REFERRALS
02/01/17 (S) L&C, FIN
02/07/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/07/17 (S) Heard & Held
02/07/17 (S) MINUTE(L&C)
02/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 40
SHORT TITLE: OMNIBUS WORKERS' COMPENSATION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/25/17 (S) READ THE FIRST TIME - REFERRALS
01/25/17 (S) L&C, FIN
02/14/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/14/17 (S) Scheduled but Not Heard
02/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 29
SHORT TITLE: REPEAL WORKERS' COMP APPEALS COMMISSION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/20/17 (S) READ THE FIRST TIME - REFERRALS
01/20/17 (S) L&C, JUD, FIN
02/14/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/14/17 (S) Heard & Held
02/14/17 (S) MINUTE(L&C)
02/28/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
JULIANA MELIN, Staff
Senate Labor and Commerce Standing Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on SB 45 on behalf of
the sponsor.
JANEY HOVENDEN, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided answers to questions on SB 45 that
were asked during a previous hearing.
HEIDI DRYGAS, Commissioner
Department of Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Introduced SB 40 on behalf of the
administration; and answered questions related to SB 29.
MARIE MARX, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Delivered a sectional analysis of SB 40.
AVES THOMPSON, Executive Director
Alaska Trucking Association
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 40.
SHELLY ERICKSON, representing herself
Homer, Alaska
POSITION STATEMENT: Testified in opposition to SB 40.
BRONSON FRYE, Union Local 1959
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 40.
NANCY MEADE, General Counsel
Deputy Administrative Director
Alaska Court System
Anchorage, Alaska
POSITION STATEMENT: Answered questions related to SB 29.
ACTION NARRATIVE
1:33:12 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Stevens, Meyer, Gardner, Hughes, and Chair
Costello.
SB 45-EXEMPTION: LICENSING OF CONTRACTORS
1:35:01 PM
CHAIR COSTELLO announced the consideration of SB 45. She stated
that this is the second hearing and the intent is to go over the
answers to questions previously asked, take Senator Hughes'
question, and move the bill from committee.
1:35:29 PM
JULIANA MELIN, Staff, Senate Labor and Commerce Standing
Committee, directed attention to the handout that responds to
Senator Steven's request for data on the number of contractors
throughout Alaska. She noted that Senator Hughes also wanted
clarification about the implication of the bill for Alaskans.
She deferred to Ms. Hovenden to go over the answers that were
asked during the previous hearing.
1:36:37 PM
JANEY HOVENDEN, Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community and
Economic Development (DCCED), Juneau, Alaska reviewed her
written response to the questions that were posed during the
previous hearing:
1. What is the penalty for unlicensed practice by
contractors?
AS 08.18.125 allows for an administrative fine of
$1,000 for the first offense and $1,500 for the
second or subsequent offense.
2. What is the cost to obtain a contractor's license?
Application fee for initial registration or
residential endorsement: $65
New license $235
Renewal license $235
3. Is it true that in 2013 almost half of the new
construction home sales in the Mat-Su area were
from unlicensed construction companies as claimed
by the Mat-Su Home Builders Association?
The division does not track the number of homes
built or sold. The Department of Labor and
Workforce Development reported that they
conducted 315 inspections to what appeared to be
new homes in Mat-Su in calendar year 2013. On 75
of those new homes, they were unable to determine
who the builder was. Of the remaining 240 homes,
they issued 8 Cease and Desist Orders and 7
Administrative Fines for failure to have proper
licensure. Of those licensing actions, there were
only three instances where the defendant was
acting as an unlicensed homebuilder, the
remaining were for unlicensed sub-contractors.
1:38:41 PM
SENATOR HUGHES asked if a homebuilder would be cited if they
failed to file the required form even though they were honestly
unaware of SB 45 and the obligation it imposes on an
owner/builder who has to sell his house within the timeframe set
out in the bill.
MS. HOVENDEN clarified that there is no penalty provision in the
bill for not filling out and sending in the form. The only
potential penalty would be trying to circumvent the licensure
requirements. That would fall under unlicensed practice rules.
SENATOR HUGHES summarized that the only time someone would be
subject to a citation is if they were also found to be
conducting a business without a license.
MS. HOVENDEN agreed with the recap.
CHAIR COSTELLO thanked Senator Hughes for bringing that forward
and making it part of the public record.
1:43:17 PM
SENATOR STEVENS asked if this is a state licensure issue or if
local communities handle this through building codes.
MS. HOVENDEN replied every municipality has its own building
codes. She didn't know about municipal licensure requirements,
but it is a statewide requirement to be licensed to conduct
business.
1:44:05 PM
SENATOR HUGHES moved to report SB 45 from committee with
individual recommendations and attached fiscal note(s).
CHAIR COSTELLO found no objection and announced that SB 45 was
reported from the Senate Labor and Commerce Standing Committee.
1:44:36 PM
At ease
SB 40-OMNIBUS WORKERS' COMPENSATION
1:46:29 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 40. She stated that the intention is to
receive a presentation by the department, take questions, and
hold the bill for further review.
1:47:15 PM
HEIDI DRYGAS, Commissioner, Department of Department of Labor
and Workforce Development (DOLWD), stated that SB 40 will speed
up the resolution of disputes, improve the delivery of benefits
to injured employees, deter workers' compensation fraud, reduce
administrative costs, and provide adequate funding for the
administration of the system. She related that the system has
not been significantly changed in 10 years. The improvements in
the bill address rising costs, recent legal developments, and
new approaches to improve the system's efficiency and fairness.
The bill focuses on efficiency.
She advised that the department would address benefit issues
such as reemployment benefits and medical costs in another
legislative session.
MARIE MARX, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), began the
introduction of SB 40 by highlighting the pillars of the Alaska
Workers' Compensation system embodied in the mission, which is
to ensure the quick efficient, fair, and predictable delivery of
benefits to workers at a reasonable cost to employers. She
explained what the Division of Workers' Compensation ensures
that both employees and employers comply with the Alaska
Workers' Compensation Act. They also conduct timely hearings
when there is a dispute, operate an appeals program, and
administer the fisherman's fund and the reemployment program.
She advised that Sections 10, 11, 12, 13, 18, 20, and 39 speed
up the dispute resolution. Sections 18 and 20 speed up and
simplify the hearing process by allowing the board to schedule a
hearing shortly after a claim is filed. Under current law the
division waits for an employee to request a hearing, which has
led to inefficiencies. Section 19 ends the practice of allowing
non-attorneys from representing parties before the board. An
individual may still be represented in board proceedings by a
parent, guardian, or court-appointed representative. An
authorized employee of an employer or medical provider currently
may be self-represented and that will not change. The Alaska
Rules of Professional Conduct currently allow a party to be
represented by an attorney or a paralegal in their employ, and
that will not change.
1:52:18 PM
SENATOR HUGHES asked who as a non-attorney would be able to
represent someone.
MS. MARX replied it could be a parent, guardian or court-
appointed representative of a minor. The division will also
continue to allow an authorized employee of a physician to
appear in board proceedings.
SENATOR HUGHES said she heard concern about this provision at a
town hall meeting in Chugiak, but that party may have been
confused.
1:53:53 PM
SENATOR GARDNER asked if excluding non-attorneys would add cost
to the person who requested the hearing.
MS. MARX explained that it actually increases costs for both
sides when people are represented by non-attorneys who are not
bound by ethical and professional rules.
SENATOR GARDNER commented that the recommendation for an IRS
audit is to send a delegate because they can't speak to another
matter the auditor may bring up.
SENATOR HUGHES asked if the division has tracked the outcomes
for people who are represented by a non-attorney.
MS. MARX said she doesn't have that data but her anecdotal
observation is that it tends to cause delays and draw out the
proceedings by months if not years.
SENATOR HUGHES asked if she had anecdotal information about
outcomes and whether or not the non-attorney was helpful.
MR. MARX said anecdotally she saw no better outcomes with non-
attorney representation. She explained that the division has
fulltime staff to provide assistance to those parties who are
unable to retain an attorney. Work comp technicians answer the
phones and help people fill out forms and a workers'
compensation officer will talk in detail about the case and
provide information about how to pursue their rights under the
Alaska Workers' Compensation Act.
1:56:46 PM
MS. MARX advised that the bill also speeds up dispute resolution
by eliminating the requirement for the board to approve
settlement agreements when the only issue is attorney fees. She
noted that when both sides are represented by an attorney the
settlement generally does not need board approval.
Sections 16, 22, 24, and 25 offer further efficiencies. First is
to streamline the process by allowing the Division of Workers'
Compensation to directly assess civil penalties against
uninsured employers instead of petitioning the board and going
to a hearing. The parties would still have the right to appeal
to the Workers' Compensation Board.
1:57:54 PM
The next efficiency is to require an employer to preauthorize or
deny medical treatment within 60 days of a medical provider's
written request.
CHAIR COSTELLO asked if there is any exception if it's an
emergency or the treatment is time sensitive.
MS MARX clarified that preauthorization is not needed for
emergency treatment. For non-emergencies, 60 days was seen as
adequate for an employer to review the medical records and
decide whether to authorize or deny the request without a
penalty.
SENATOR STEVENS expressed concern about delaying treatment after
an injury and asked for examples of medical treatment that could
be delayed 60 days without harm to the patient.
MS. MARX offered the example of an employee who needs surgery to
repair a torn rotator cuff. The employer would have a maximum of
60 days to authorize the treatment before incurring a penalty
for being untimely. She said care may be delayed by that 60-day
limit, but she isn't sure the current system provides the
benefit to an injured worker any better.
2:02:50 PM
COMMISSIONER DRYGAS explained that the original idea was that 30
days was sufficient because it's the same time as paying a
medical bill. However, some stakeholders argued persuasively
that paying a bill timely is different than going through
medical records and evaluating whether or not to authorize the
treatment. That's how the 60-day timeframe came about, but the
legislature has the prerogative to shorten it, she said.
SENATOR STEVENS continued to express reservations about
potentially waiting 60 days to receive treatment for a painful
injury.
SENATOR HUGHES asked what recourse a worker has if treatment is
denied.
MS. MARX said the injured worker could go ahead with the surgery
and potentially assume the cost if it's found to be unrelated to
work, or they could request a hearing on the preauthorization.
That is the current process and it takes longer than 60 days.
CHAIR COSTELLO asked why it takes so long.
MS. MARX replied it's largely the delay during the discovery
process.
2:05:40 PM
SENATOR HUGHES asked if the board members have the medical
expertise to make authorization decisions.
MS. MARX explained that the board doesn't make the complicated
medical evaluations, but they do weigh the expert testimony from
the medical doctors representing each side.
She returned to the discussion about improvements to the
delivery of medical care in Sections 16, 22, 24, and 25. SB 40
provides a penalty for untimely preauthorization or denial of a
request for treatment; it provides that benefits will be paid
every 21 days; and it continues payment of medical bills within
30 days.
2:07:55 PM
SENATOR STEVENS asked if the penalty for untimely
preauthorization or denial is connected to the 60-day timeline
for preauthorization or denial.
MS. MARX replied an employer or insurance company must either
pay or deny within 60 days to avoid a 25 percent penalty. The
same language currently exists for medical bills, but the
deadline is 30 days.
2:08:58 PM
She stated that the division is tackling the topic of
misclassification because: fraudulent misclassification can
result in the death or severe injury of workers; the risk of
uninsured losses can put a company out of business; and law-
abiding employers should not have to pay the price for
misclassification. She emphasized that SB 40 only addresses
independent contractors with regard to workers' compensation.
MS. MARX reviewed the fraud strengthening provisions in SB 40.
Sections 9, 11, 14, 28, 29, 31, 34-38, and 40: define
misclassification and when it amounts to fraud; impose an
affirmative duty on employees receiving workers' compensation
benefits to report work or other types of wage loss replacement
benefits; and define independent contractor and clarify the
statutory definition of employee. She noted the division met
with various stakeholder groups and is in the process of
refining the definition of independent contractor.
SB 40 also grants the Benefit Guarantee Fund the right to file a
lien to ensure that assets are available to pay the benefits for
compensation as well as civil penalties if the employer didn't
carry workers' compensation insurance. Injured workers currently
have this right.
SENATOR HUGHES asked if the definition of independent contractor
would be applicable to just these statutes.
MS. MARX confirmed it only applies to the Alaska Workers'
Compensation Act.
She said SB 40 also strengthens fraud provisions by expanding
the division's ability to assess a civil penalty to include
employers who: are under insured because they have misclassified
workers to attain artificially low workers' compensation
premiums; misrepresented the nature of their business; or
engaged in deceptive leasing practices.
SENATOR GARDNER, noting that classification can be complex,
asked if employers have an opportunity to confirm a
classification with the Department of Labor and Workforce
Development.
MS. MARX answered yes. She explained that when there is an
investigation the employer provides information about proper
codes and classification. Any penalty assessment would be based
on substantial evidence.
COMMISSIONER DRYGAS advised that there is an opportunity for
employers to contact the department if they have questions about
workers' compensation or wage and hour to ensure they are
operating correctly.
MS. MARX added that the division is very proactive in providing
help to employers to ensure they do not have uninsured losses.
The fraud provisions in SB 40 are aimed at employers who are
fraudulently trying to get lower workers' compensation premiums
to underbid a project. This creates an un-level playing field
for law-abiding employers.
SB 40 also changes the maximum civil penalty for failing to
carry workers' compensation insurance to three times the premium
the employer would have paid for each uninsured employee
workday. This reasonable deterrent will take into account the
employer's size, the nature of their business, and the financial
gain they realized by operating without full workers'
compensation insurance. The bill clarifies that civil penalties
may not be suspended, but allows for a payment plan with
interest at the state rate for judgements.
CHAIR COSTELLO asked what the interest rate is right now.
MS. MARX noted that the governing statute is AS 09.30.070(a) and
offered to follow up with the information.
2:17:42 PM
MS. MARX discussed the topic of reducing administrative costs in
Sections 2-8, 15, 17, 21, 23, 26, 27, 30, 32, and 33: employers
may pay benefits electronically, saving time and costs; the
division may prescribe the filing format of reports of injury
and compensation payments; and corporate executive officers are
no longer required to seek division approval before opting out
of workers' compensation coverage for themselves, provided they
have at least 10 percent ownership interest.
SENATOR STEVENS asked if someone could be a 10 percent owner and
still opt to carry workers' compensation insurance.
MS. MARX confirmed that anyone who isn't required to carry
coverage can always opt in. She added that is always encouraged
and more than pays for itself in the event of a catastrophic
injury.
SB 40 also reduces administrative costs by adding medical
publications to a list the department can incorporate into
regulation. The particular version of the codes for procedural
terminology book that will be used is identified through public
notice. The bill also extends to 30 days the time for insurance
companies to report initial and termination coverage to the
department, and imposes a penalty for failure to report timely.
Finally, SB 40 phases out the Second Injury Fund because its
purpose is met by the Americans with Disabilities Act. She
clarified that the fund will continue to be used to pay existing
liabilities.
SENATOR HUGHES asked how much is in the fund right now.
CHAIR COSTELLO also requested the balance in the Benefits
Guarantee Fund.
MS. MARX advised that as of FY2016 the balance in the Second
Injury Fund was $3.792 million and the balance in the Benefits
Guarantee Fund was $2.207 million.
SENATOR HUGHES asked if this will save employers money.
MS. MARX said it would be a cost saving for insurance companies
or employers who get more in reimbursement than they are paying
out.
SENATOR HUGHES asked the length of the phase-out.
MS. MARX said it could be some time because most of the payments
will go on throughout the claimants' lives. The fiscal note
assumes a life expectancy of 80 and that two or three claims
will close each year.
SENATOR HUGHES asked if it could be decades before the fund is
completely phased out.
MS. MARX answered yes.
2:27:23 PM
MS. MARX stated that the provisions in Section 1 of SB 40 ensure
adequate funding for the administration of the Workers'
Compensation Safety Administration Account. SB 40 does not
change current law that provides that insurers pay a fee of 2.7
percent of the net workers' compensation premium written. The
bill does change the amount that goes to the Workers' Safety
Compensation Administrative Account (WSCAA) from 1.82 percent to
2.5 percent. It also changes the amount that goes to the general
fund from .88 percent to .2 percent. This will replenish the
WSCAA account that has been declining since 2005 when the
Workers' Compensation Fraud Unit and the Medical Services Review
Committee were established and funded through the WSCAA account.
The bill addresses the decline by allowing the department to
receive a greater percentage of the annual service fee that
insurers pay.
2:29:02 PM
SENATOR GARDNER asked why any of the annual service fee goes to
the general fund.
MS. MARX said the previous division director told her that 1.82
percent was sufficient to cover the needs in 2000 when the WSCAA
account was established.
CHAIR COSTELLO asked if the legislation has a plan should there
be any residual funds after all the claimants have passed.
COMMISSIONER DRYGAS explained that the fund will be closed to
additional beneficiaries, but it will continue to pay out to
claimants currently receiving benefits from the fund.
CHAIR COSTELLO asked what the plan is should there be remaining
funds after all the claimants have passed.
MS. MARX said that any residual would go to the general fund,
but the idea is to adjust the contribution rate to match the
existing liabilities.
COMMISSIONER DRYGAS recounted that the formula that was devised
in 2000 didn't have an adjustment for additional
responsibilities such as the Workers' Compensation Appeals
Commission and an enhanced Workers' Compensation Fraud Unit.
2:32:44 PM
CHAIR COSTELLO thanked the presenters and opened public
testimony on SB 40.
2:33:17 PM
AVES THOMPSON, Executive Director, Alaska Trucking Association,
Anchorage, Alaska, testified in opposition to SB 40. He
expressed concern with the new language in Section 31 that
defines the tests to determine when a person is an independent
contractor for purposes of workers' compensation coverage. He
outlined the decisions that a trucking business owner/operator
makes and emphasized that the proposed changes to the workers'
compensation statute preclude the use of owner/operators in the
trucking business in a number of ways. He pointed to the
provisions in AS 23.30.230(a)(11)(A)(E) and (F) as examples that
preclude an owner/operator of a trucking business from being
recognized as an independent contractor.
He recommended providing an exemption for truck drivers from the
provisions of the Act in the same way that taxi drivers and
network transportation drivers are exempted in current law and
the proposed law under SB 14. He noted that the ATA provided
language to address this issue for trucking business
owner/operators. He also recommended adopting a distinct truck
driver independent contractor owner/operator definition instead
of tests. He noted the ATA has provided specific language to
Commissioner Drygas in that regard.
MR. THOMPSON informed the committee that the ATA has been
working with Commissioner Drygas and the Workers' Compensation
Division to address these concerns and some progress has been
made.
SENATOR HUGHES asked if he provided the suggested language to
the chair of the Labor and Commerce Committee.
MR. THOMPSON replied he would email it today.
2:39:35 PM
SHELLY ERICKSON, representing herself, Homer, Alaska, testified
in opposition to SB 40. She stated that she is a small business
owner who has a claim against her workers' compensation policy.
She maintained that the law is written in favor of the employee
regardless of the situation. She asked the committee to add a
section on employee fraud to SB 40; require new hires to release
their workers' compensation records, particularly when special
certifications are required; and rewrite the language to ensure
that boat owners aren't assumed to be negligent. She maintained
that the laws are written such that insurance companies have to
"cave" even when they know a deckhand is in a fraudulent
situation. She emphasized the importance of fair consequences
for both employers and employees if they break the law.
2:42:41 PM
BRONSON FRYE, Union Local 1959, Anchorage, Alaska, testified in
support of SB 40. He stated strong support for having clear
definitions for both "independent contractor" and
"misclassification," opining that it is particularly important
in the construction industry. He claimed that certain employers
in this industry are misclassifying their employees as
independent subcontractors and described the unfair advantage
this creates in the bidding process. He maintained that this
either forces employers out of business or causes them to adopt
this unscrupulous business model. He also pointed out how
misclassification can jeopardize the health and safety of unwary
employees. He concluded that workers' compensation insurance
protects both employees and employers when workers are correctly
classified.
2:49:23 PM
CHAIR COSTELLO closed public testimony on SB 40 and held the
bill in committee for further consideration.
2:49:46 PM
At ease
SB 29-REPEAL WORKERS' COMP APPEALS COMMISSION
2:52:46 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 29. She stated that this is the second
hearing and public testimony was closed on 2/14/17. She asked
members if they had questions for Commissioner Drygas.
2:53:19 PM
SENATOR STEVENS asked if the same problems will persist if
workers' compensation appeals are returned to the superior
court.
COMMISSIONER DRYGAS said returning the appeals to the superior
court probably isn't ideal, but any other option costs money.
The superior court dealt with these appeals before and it
routinely handles administrative appeals, which these are. She
said Ms. Meade could speak for the Court System but the 40 some
superior court judges around the state would have to absorb the
30 some workers' compensation appeals each year.
She explained that departments were asked to look at their
statutes and identify what wasn't working. DOLWD identified this
one as not working the way that people had hoped. She said the
Court System submitted a zero fiscal note, which is probably an
acknowledgement that they can absorb the appeals without having
to hire additional staff. "I get the feeling that they are
willing to do that somewhat reluctantly, but they understand the
situation that we're in."
COMMISSIONER DRYGAS said these appeals could be handled by an
administrative law judge but that would be very expensive and
the work comp bench in this state is very short. That would be a
problem even if there was money for a different solution than
returning to the previous procedure. She concluded that
returning the appeals to the superior court is a better solution
than sticking with something that is not working, and it will
save the state some money.
SENATOR STEVENS said he appreciates the explanation, but he was
fairly confident that the legislature would be dealing with this
again in the future.
2:58:52 PM
SENATOR MEYER asked if [her previous testimony] was that 60
percent of the cases are appealed.
COMMISSIONER DRYGAS clarified that - of the cases that are
appealed to the Alaska Supreme Court and decided on the merits,
50 percent are overturned. She offered to follow up with
information on the 20-30 cases from the Workers' Compensation
Board that are appealed to the Workers' Compensation Appeals
Commission.
SENATOR MEYER described going directly to court as skipping a
step. He expressed concern that the proposed change could delay
decisions then commented that it might not be much different
than now if the decision is appealed.
COMMISSIONER DRYGAS clarified that the proposed change does not
skip a step. The case goes from the Workers' Compensation Board
to the superior court and then on to the Alaska Supreme Court if
the decision is appealed. She also reminded members that the
commission was created to address perceived delays, but the
department has found that the commission hasn't gotten cases
through any faster.
SENATOR STEVENS asked if there are other options to consider,
even if they cost more.
COMMISSIONER DRYGAS said there has been discussion about moving
the cases to the Office of Administrative Hearings, which would
carry a positive fiscal note. She pointed out the downside that
the injured worker would have a double administrative layer to
negotiate before they could hear their case in court.
3:03:34 PM
NANCY MEADE, General Counsel and Deputy Administrative Director,
Alaska Court System offered to answer questions on SB 29.
CHAIR COSTELLO expressed appreciation that Court System offered
to take on this additional duty.
SENATOR STEVENS asked how a better response can be expected by
returning to the old system.
MS. MEADE said the Court System can't promise a better response,
but is willing to do it if that is the will of the legislature.
CHAIR COSTELLO announced she would hold SB 29 in committee for
further consideration.
3:05:58 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:05 p.m.