HOUSE BILL NO. 79 "An Act relating to workers' compensation; repealing the second injury fund upon satisfaction of claims; relating to service fees and civil penalties for the workers' safety programs and the workers' compensation program; relating to the liability of specified officers and members of specified business entities for payment of workers' compensation benefits and civil penalties; relating to civil penalties for underinsuring or failing to insure or provide security for workers' compensation liability; relating to 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 circumstances under which certain nonemployee executive corporate officers and members of limited liability companies may obtain workers' compensation coverage; relating to the duties of injured employees to report income or work; relating to misclassification of employees and deceptive leasing; defining 'employee'; relating to the Workers' Compensation Board's approval of attorney fees in a settlement agreement; and providing for an effective date." 1:45:42 PM Co-Chair Seaton MOVED to ADOPT the proposed committee substitute for HB 79, Work Draft 30-GH1789\R (Wallace, 2/13/18). Representative Wilson OBJECTED for discussion. JANE PIERSON, STAFF, REPRESENTATIVE NEAL FOSTER, explained the changes in the work draft committee substitute (CS). She explained that most of the amendments in the CS were advanced by the Department of Labor and Workforce Development (DOL) and were technical in nature with one exception. She pointed to page 4, line 6 that included the language "is a business entity that is" that was a technical amendment. She moved to the next technical amendment on page 7, line 18 that deleted the following language "by expiration or cancellation of the employer's insurance" and inserted "with the insurance provisions of this chapter." She turned to the next technical change on page 9, line 13 to page 10, line 1 that added Sections 16, Section 17, and Section 18 to allow for electronic filing. She highlighted page 10, lines 11 through 14 that changed "who was permitted to represent a claimant at a workers' compensation hearing" to "any person authorized by regulation of the board" which was a substantive change. Current law specified a person could be represented by anyone with written permission. She elaborated that the House Judiciary Committee version "U" allowed for self- representation, or representation by an attorney licensed to practice law in the state, a parent, if the party is a minor, guardian, or court-appointed representative. Ms. Pierson pointed to page 15, line 18 and noted that the word "in" was eliminated and changed to "under." On page 15, lines 19 through 28 was related to submitting claims to a second injury fund and was technically corrected. She referenced page 22, line 9 and related that AS 23.30.110(d) was changed from "appealed and reenacted" to "as amended." She noted that page 22, lines 14 through 16 contained a conforming amendment. She reviewed that on page 23, line 6, another conforming amendment changed 2017 to 2018 and on page 23, line 7 the final conforming amendment changed 2018 from 2019. 1:49:20 PM Representative Kawasaki requested clarification regarding the substantive change relating to claimant representation to anyone permitted by regulation of the board. He wondered what the regulation would be since it was not defined in the statute. MARIE MARX, DIRECTOR, DIVISION OF LABOR AND WORKFORCE DEVELOPMENT, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, explained that the alternative representative list would be determined by the Alaska Workers' Compensation Board. She reminded committee members that the board had two functions: it had regulatory authority and served as adjudicators and held hearings. She believed the board was in the unique position to know the types of individuals that should represent the claimants. She furthered that the requirement provided the "flexibility" to modify the list. She characterized the provision as a "compromise" from the prior version's provision and existing statute. 1:51:23 PM Representative Guttenberg asked for a review of what the bill would fix. Ms. Marx offered an overview of the workers' compensation process. She expounded that the injured worker filed a claim, which initiated a litigation process. The department and the board had found that when people were represented by "competent counsel" things moved quickly, efficiently and with beneficial outcomes for both parties. In addition, the department had staff that provided the self-represented worker assistance that guided them through the process and explained their rights and duties under the Alaska Worker's Compensation Act. She reported that the assistance helped the process work efficiently. Whereas, when people were represented by "parties that were not a parent of a minor or were court appointed" such as a spouse or friend the process was inefficient and the outcomes for injured workers were not beneficial to the worker or the employer and the cases tended to last longer. The "non-attorney" representative was not bound by ethical and professional rules and often lacked an understanding of the worker's compensation process. The changes were proposed to help injured workers come to a successful conclusion of their cases and help employers reduce litigation expenses. 1:53:30 PM Representative Wilson asked if the same board that made the mediation decision would decide who could represent the claimant. Ms. Marx replied that "since the board had regulatory authority" the board would establish rules on representation. The litigation rules would apply to hearings held by the board. She reported that a board hearing panel consisted of a full-time attorney appointed as the chair, one lay member from industry and one lay member from labor. Representative Wilson was concerned that the entity that made the decision decided who could represent a claimant and it "seemed like a conflict of interest." Ms. Marx replied that the board had regulatory authority prior to statehood and the three member panel existed since 1946. The board established the rules for the hearing process and administration of the Alaska Workers Compensation Act in conjunction with DOL. Representative Wilson maintained her belief regarding a conflict of interest. She thought that the claimant who was not able to have the representation she wanted would not trust the outcome. Ms. Marx emphasized that the regulation process included public comment. When a rule was proposed there was always an oral hearing and period for written comment. The rules were established by the board with input from the department and the public. She characterized the influence of public input on the regulatory process as "huge." 1:56:20 PM Co-Chair Seaton wanted to ensure that a person could be self-represented. He pointed to the words on page 10, lines 11 and 12 "each party may present evidence." He asked if the board could prevent "the defendant" from self- representation. He wanted to ensure the language in the bill could not allow the board to preclude self- representation. Ms. Marx answered that the authority would be turned over to the board. She elucidated that 90 percent of the parties; claimants and employers, were self- represented. The rules would clarify who could represent an employer. She thought it would be helpful to know whether it included the insurance claim administrator and medical billing specialist versus the doctor. She communicated that there was a balance between delineation in statute or board regulation regarding claimant and employer representation. She remarked that a list in statute would be "long" and "inflexible." She voiced that the board had an interest in making sure the process ran efficiently and fairly. She declared that self-representation was a "fixture in our system." She could not imagine a situation where the board would preclude any party from self-representation at the board level. She emphasized that anything was possible, but the scenario was improbable. She assured that as chair of the regulatory hearings she would ensure that the outcomes were in "alignment" with needs of the department and the law. 1:59:55 PM Co-Chair Seaton stated that the prior wording specifically allowed self-representation and asked whether he was correct. Ms. Marx agreed. Co-Chair Seaton guessed that the language had been included to specify that self- representation could not be precluded. He wondered whether further clarity was necessary in the CS. Ms. Marx replied that the department would not oppose including more specific language that a person may be self-represented or otherwise represented as set by the board through regulation. She underscored that it was not the intent to keep people from being self-represented before the board and most parties were "unrepresented." 2:01:57 PM Co-Chair Foster asked for committee adoption of the CS. Representative Wilson voiced that she also wanted to ensure that people could be self-represented. Representative Wilson WITHDREW her OBJECTION. There being NO further OBJECTION, it was so ordered. Co-Chair Foster MOVED to ADOPT Amendment 1, 30-GH1789\R.1 (2/15/18) (copy on file). Page 2, lines 4 - 5: Delete "relating to reemployment benefits;" Representative Wilson OBJECTED for discussion. Co-Chair Foster explained the amendment. He reported that the amendment was proposed by the department and simply removed "relating to reemployment benefits" from the title of the bill since the item was no longer addressed in the bill. Representative Wilson WITHDREW her OBJECTION. There being NO OBJECTION, it was so ordered. 2:03:14 PM Representative Kawasaki wondered if the committee wanted to try to fix the CS. He MOVED to ADOPT Conceptual Amendment 2 with the inclusion of "self-represented or" before the existing language "represented by any person authorized by regulation of the board" on page 10, line 13. There being NO OBJECTION, Conceptual Amendment 2 was ADOPTED. Representative Wilson requested to hold the bill in committee for further review. 2:05:17 PM AT EASE 2:05:52 PM RECONVENED Co-Chair Foster concurred with Representative Wilson and relayed that the committee would hold the bill. Committee discussion ensued regarding the adequate amount of time to further review the bill. HB 79 was HEARD and HELD in committee for further consideration. Co-Chair Foster handed the gavel over to Co-Chair Seaton. 2:07:41 PM AT EASE 2:09:18 PM RECONVENED Co-Chair Seaton communicated that HB 79 would be heard again the following Monday.