SENATE BILL NO. 60 "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), 602(c) and (h), and 603(a), Alaska Rules of Appellate Procedure; and providing for an effective date." 9:03:37 AM SENATOR BILL WIELECHOWSKI, SPONSOR, introduced the legislation. He referred to the Sponsor Statement (copy on file): Senate Bill 60 would save $482,400 per year, remove an unnecessary bureaucracy, and make Alaska's Workers' Compensation program more sustainable by repealing the Alaska Workers' Compensation Appeals Commission. Passing SB 60 will return jurisdiction over appeals of Workers' Compensation Board decisions to the Superior Court. Currently the Appeals Commission handles these cases and their decisions can be appealed to the Supreme Court. For decades, the Superior Court had handled these cases. Operating the Appeals Commission costs $482,400 annually and it currently has two fulltime employees, while the Court System has testified that they can handle these cases with their current budget and staffing levels. The Appeals Commission's workload has decreased considerably since it was created in 2005. In 2007, they had 49 new cases filed and published 42 decisions but by 2022 they only had 14 new cases and published only 5 decisions. In 2015, the House Labor and Workforce Finance Subcommittee found the Appeals Commission to be "an ineffective division" and that "their closure rate and average time for closure is not demonstrably better than the process was before the establishment of the commission." This bill would create a transition period between June 1 and December 1, 2024 when new cases would be filed with the Superior Court, but the Appeals Commission would continue to handle the cases that were already pending. On December 2, all pending cases would be transferred to the Superior Court and the Appeals Commission will be fully repealed on December 31. Alaska's Workers' Compensation regulation is funded by service fees collected from insurance providers and self-insurers. In Fiscal Year 2021 the state collected $6.3 million in fees and the Department of Revenue projects this will fall to $5.8 million in FY 2024 and $5.6 million in FY 2025. Given Alaska's budget deficit and this declining revenue, we simply cannot afford to spend $482,400 to operate a separate commission when the courts are well equipped to handle these cases. Co-Chair Olson noted that the superior court was not a court of appeals, but rather a trial court. Senator Wielechowski replied that the cases would be heard by the Worker Compensation hearing officer, and an appeal would be heard by the superior court. 9:06:36 AM DAVID DUNSMORE, STAFF, SENATOR WIELECHOWSKI, discussed the presentation, "Senate Bill 60, Repeal Workers' Compensation Appeals Commission" (copy on file). He pointed to slide 2, "Senate Bill 60": Repeals the Alaska Workers' Compensation Appeals Commission Returns jurisdiction over Workers' Compensation appeals to the Superior Court Saves $482,400 per year Helps fill the Workers' Compensation budget deficit and make Alaska's Workers' Compensation system more solvent Mr. Dunsmore addressed slide 4, " SB 60 Will Save $482,400 Per Year": Currently the Commission has 2 full-time employees and pays for commissioners' travel and per diem Previously, the Court System has testified that they can absorb these cases with a zero fiscal note Mr. Dunsmore pointed to slide 5, " WCAC Workload has Fallen Dramatically": The Workers' Compensation Appeals Commission workload has declined from 49 cases filed and 42 published decisions in 2007 to 4 cases filed and 5 decisions issued in 2023. Mr. Dunsmore highlighted slide 6: "The Worker's Compensation Appeals Commission is an ineffective division? The Commission during the calendar year of 2013 closed 30 cases for a closure rate of 67 percent with an average time from filing to closure of seven months. This closure rate and average time for closure is not demonstrably better than the process was before the establishment of the commission." House Department of Labor and Workforce Development Finance Subcommittee, February 25, 2015 Mr. Dunsmore looked at slide 7, " The Workers' Compensation Appeals Commission Has Not Closed Cases Faster than the Courts": The Superior Court took "8 to 18 months" to decide Workers' Compensation Appeals. When it was created, it was estimated that the Commission could decide cases in 6 months. Instead, in 2018 it averaged 371 days (12.2 months) to decide cases. Even as their workload decreased, in 2021 they still averaged 282 days (9.3 months) to decide cases. More Commission decisions are appealed to the Supreme Court, adding months to years before final resolution. Sources: Testimony of Paul Lisankie, Director, Division of Workers' Compensation, Senate Labor and Commerce Committee, March 10, 2005. Alaska Workers' Compensation Appeals Commission Annual Report for Calendar Year 2021. 9:10:17 AM Mr. Dunsmore discussed slide 8, "SB 60 Will Reduce Appeals to the Supreme Court": When the Superior Court handled appeals approximately 25 percent of their decisions were appealed to the Supreme Court. Since the Commission was created in 2005, 37 percent of its decisions have been appealed to the Supreme Court. Since 2011, 50 percent of Commission decisions have been appealed. Sources: Testimony of Doug Wooliver, administrative attorney, Alaska Court System, Senate Labor and Commerce Committee, March 10, 2005. Legislative Research Services Report 24.077. Mr. Dunsmore looked at slide 9, "The Office of Management and Budget has identified potential staff turnover as a key component challenge": "The WCAC is challenged to provide timely decisions and orders. WCAC is supported by two staff. While no immediate staff turnover is anticipated, any attrition could result in less support for the commission, making it more difficult to provide timely decisions and orders." Mr. Dunsmore addressed slide 10, "Alaska's Workers' Compensation and Safety Program Faces a Growing Budget Deficit- SB 60 Will Help Fill It": Workers' Compensation and Safety are funded by a tax on Workers' Compensation payments Tax Revenue has fallen significantly and is expected to continue to decline. Saving $482,300 will help close the growing budget gap. Mr. Dunsmore looked at slide 11, "Bottom Line": SB 60 saves $482,400 annually Preserves parties' right to have their cases heard in timely manner Will reduce appeals to the Supreme Court Makes Alaska's Workers' Compensation system more solvent Co-Chair Olson wondered whether there was opposition to the legislation. Mr. Dunsmore replied that there was some opposition in some previous committees from the Workers Compensation Insurance industry. 9:13:19 AM CHARLES COLLINS, DIRECTOR, DIVISION OF WORKERS COMPENSATION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, introduced himself and stated that he could answer questions. Co-Chair Olson noted that the fiscal note showed a $236,000 decrease in FY 25, and then later a $473,000 decrease, and wondered whether those were accurate numbers. Mr. Collins replied in the affirmative. Co-Chair Stedman wondered whether the appeals commission would create a precedence, and whether the court would uphold that precedence. 9:15:02 AM Mr. Collins replied that the commission was a precedent- setting panel, so those decisions guided the board panels. The Supreme Court, however, could overturn those decisions. Co-Chair Stedman surmised that the Department of Labor and Workforce Development (DLWD) would be neutral on the bill, and whether the bill did any harm. Mr. Collins replied that he felt that the commission was effective. Senator Bishop wondered whether there was disagreement on the data on the presentation. Mr. Collins responded that he had some issues with the timing. He expressed concern about the court absorbing the cost, especially when there was a controversial claim. Co-Chair Olson asked whether the commission had not had the decisions rendered within six months. Mr. Collins replied there were many factors that contributed to the decisions. Co-Chair Olson wondered whether a judge was involved in the decision. Mr. Collins responded that the commissioner was an administrative law judge. 9:20:34 AM Co-Chair Olson OPENED public testimony. 9:21:00 AM HEIDI DRYGAS, SELF, JUNEAU (via teleconference), spoke in support of the bill. Co-Chair Olson queried a percentage of the reversed appeals. Ms. Drygas did not have those specific numbers, but recalled that in 2017, it was more than 50 percent. Senator Wielechowski stated that he did not have anything to add. SB 60 was HEARD and HELD in committee for further consideration. 9:27:37 AM AT EASE 9:31:23 AM RECONVENED