SENATE BILL NO. 120 An Act relating to the state's sovereign immunity for certain actions regarding injury, illness, or death of state-employed seamen and to workers' compensation coverage for those seamen; and providing for an effective date. KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF ADMINISTRATION, explained that SB 120 consists of two issues: · The policy question of whether or not State employed seamen should be under a worker's compensation model or allowed to continue to pursue the Jones Act remedy through litigation; · The legal issue. (He noted that the Department of Law would discuss that concern.) Mr. Jardell stated that the policy call of the Administration has been around for approximately eight years. During the 1980's, the Alaska Marine Highway System (AMHS) union labor agreements stipulated the State to pay Alaska Workers' Compensation Act (AWCA) benefits in lieu of the traditional Jones Act and other maritime remedies. Many employees preferred the AWCA as a more complete and immediate no-fault payment (non-taxable wage indemnification rather than a modest daily maintenance stipend) - avoiding controversy, delays, and the extra costs inherent in protracted civil litigation. A single employee's constitutional challenge resulted in the Alaska Supreme Court System decision, which precludes the practice under current law. Mr. Jardell pointed out that the issue has been around for the past eight years and has finally "come to the table". The Administration has determined that placing State employees under workmen's compensation for injuries would be the best policy. There are several benefits to that, most of which center around the benefit to the employee not needing to litigate before receiving compensation. There would be an additional benefit of a cost savings to the State. SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, reiterated that the legislation would take the State employees that are seamen and put them into the State compensation system. It would remove the State from the business of providing traditional maritime remedies under the Jones Act. The legal vehicle by which the State can do that is the amendment of State statute that waives sovereign immunity. The State can withdraw the consent to be sued and assert our sovereign immunity. Or instead, the State can provide worker's compensation for the State seamen employees. Ms. Cox pointed out that the employees affected would include the workers on the Alaska Marine Highway vessels, additional seamen employed by State agencies who work on research vessels and law enforcement vessels. The objective would be to provide a uniform system of compensation for on the job injuries for all State employees. The Alaska Supreme Alaska Court System, in a decision in 1990, approved the approach that the bill takes. That decision involved a public safety seaman, the State of Alaska, Department of Public Safety versus Robert Brown. The Alaska Supreme Court stated that the State could take this approach if it was the Legislature's desire. Ms. Cox stated that case should not be confused with the disapproved collective bargaining which involved Dale Brown. Ms. Cox noted that this approach has been taken by other jurisdictions in other states. She emphasized that this will not affect the rights of seaman in the private sector. Ms. Cox pointed out that the idea has been a remedy that was in effect for an eight-year period until 1991. There was legal disagreement some years ago whether the bill would work as a matter of federal law that could override the State sovereign immunity even if the State choose to amend the statute. Given the Alaska Supreme Court System decisions of the last five years, the proposed approach is legally viable. Ms. Cox advised that it is expected that this approach will save the State money in litigation costs. Additionally, there would not be the same types of damages available in a worker's compensation remedy that is available in a lawsuit. Another significant savings would be in the area of illness. Currently, an employee that becomes ill on the vessel can leave work and be paid their unearned wages until the end of the voyage without docking their sick leave. Under the worker's compensation plan, unless they suffer from an occupational disease, they would not be receiving a similar amount of maintenance payments. Those expenses would be transferred into their sick leave account. She acknowledged that the system handling illness claims would be changed dramatically. Ms. Cox added that the effective date provision states that st, the change in the law would go into affect July 12003 and would address new injuries and illnesses arriving after that date. There is a three-year statute of limitation for maritime lawsuits. The Department will continue to handle litigation for a couple years into the future for those injuries which occurred prior to the effective date of the legislation. BRAD THOMPSON, DIRECTOR, DIVISION OF RISK MANAGEMENT, DEPARTMENT OF ADMINISTRATION, stated that Risk Management acted as the insurance agency for State agencies including maritime claims. He pointed out a zero fiscal note in the packet, however, anticipated fiscal savings. Risk Management is funded uniquely on a cash flow basis for the anticipated costs on claims due to be paid back on a fiscal period. That appropriation is collected on assessments from State agencies based on experience in claims, loss or exposure. The amount is calculated on the actual costs incurred on a claim. The costs are anticipated to decrease with the change of remedy. In time, the cost to the Department of Transportation & Public Facilities, Department of Public Safety and Department of Fish & Game will decrease with a cost savings and will reflect in future assessments. At this time, Risk Management is funded each year on the anticipated State claims and a negative amount is not indicated. It is a reflection of a type and method of funding of the Risk Management program. Mr. Thompson pointed out the analysis of the Alaska Marine Highway claims as compared to the other State employee claims. He reiterated that there would be a savings. At-Ease: 2:55 P.M.  SB 108 was HELD in Committee for further consideration.