HB 63-REPEAL WORKERS' COMP APPEALS COMMISSION  2:01:57 PM CHAIR VANCE announced that the final order of business would be HOUSE BILL NO. 63, "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." 2:02:13 PM REPRESENTATIVE RAUSCHER, prime sponsor, presented HB 63. He shared the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 63 would save $433,000 per year, remove an unnecessary bureaucracy, and make Alaska's Workers' Compensation program more sustainable by repealing the Alaska Workers' Compensation Appeals Commission. Passing House Bill 63 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 $433,000 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 of 2023 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 On December 2, all pending cases would be transferred to the Superior Court and the Appeals Commission will be fully repealed on December 31.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 $5.9 million in FY 2022 and $5.4 million in FY 2023. Given Alaska's budget deficit and this declining revenue, we simply cannot afford to spend $433,000 to operate a separate commission when the courts are well equipped to handle these cases. 2:04:37 PM MR. MCKEE, on behalf of Representative Rauscher, prime sponsor, presented the sectional analysis for HB 63 [included in the committee packet], which read as follows [original punctuation provided]: Section 1 establishes that the Workers' Compensation Board (Board) shall maintain records of the repealed Workers' Compensation Appeals Commission (Commission). It also establishes that Commission decisions remain as legal precedent unless overturned or modified by the courts. Section 2 removes references to the Commission. Section 3 removes a reference to the Commission. Section 4 removes a reference to the Commission. Section 5 creates a new AS 23.30.126 governing appeals of Workers' Compensation Board decisions. Subsection (a) establishes that Board decisions and orders become effective when filed, that these decisions and orders can be modified or reconsidered, and that a party may appeal a decision or order to the superior court. Subsection (b) establishes that Board decisions and orders are not automatically stayed pending judicial review and establishes the criteria for when a court may issue a stay. Subsection (c) establishes that factual findings made by the Board shall be conclusive if supported by substantial evidence and that AS 44.62.570 governing administrative appeals shall apply to the appeals of Board decisions. Subsection (d) allows the director of the Division of Workers' Compensation to intervene in appeals and to file appeals if a party is not represented by an attorney and the case presents an unsettled question of law. Section 6 is a conforming amendment to reflect the changes made by Section 5. Section 7 removes a reference to the Commission. Section 8 repeals the court rules related to the Commission. Section 9 repeals the statutes related to the Commission. Section 10 contains indirect court rule amendments to reflect the changes made by Section 5. Section 11 establishes which procedures apply to appeals pending before the Commission between June 1 and December 1, 2023. Subsection (a) establishes that the Commission shall continue to handle cases through December 1, 2023 and that the Commission shall continue all cases pending on December 1, 2023. Subsection (b) establishes that the new procedure in Section 5 does not apply to cases before December 1, 2023. Subsection (c) establishes that the old statutes apply for appeals of final decisions made by the commission and issued by December 1st. Section 12 establishes transitional provisions. Subsection (a) establishes that starting June 1, 2023, all new appeals of Board decisions shall be filed with the Superior Court under Section 5. Subsection (b) establishes that appeals of Commission rulings issued by December 1, 2023 shall be filed with the Supreme Court. Subsection (c) ends the Commission's ability to order reconsideration of cases on December 2, 2023. All outstanding requests for reconsideration pending on that date would be automatically rejected, and any party whose request was denied may appeal their case to the Supreme Court. Subsection (d) requires the Commission to transfer the files for all pending cases to the Superior Court on December 2, 2023 and to provide the parties 30 days' notice of the transfer of jurisdiction. If the court finds that the records do not meet the requirements of the Rules of Appellate Procedure, it may order the Commission to make necessary changes and resubmit them. Section 13 ends the terms of all Commission members on December 31, 2023. Section 14 makes this act only take effect if the court rule changes in Sections 8 and 10 are adopted. Section 15 provides a June 1, 2023 effective date. 2:08:42 PM MR. MCKEE directed attention to a PowerPoint presentation, titled "House Bill 63 Repeal Workers' Compensation Appeals Commission" [hard copy included in the committee packet]. He began on slide 2, "House Bill 63," which read as follows [original punctuation provided]: 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. MCKEE continued to slide 3, which featured a flowchart of the workers' compensation claim appeals process. He moved to slide 4, "HB 63 Will Save $482,400 Per Year," which read as follows [original punctuation provided]: 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 2:10:06 PM MR. MCKEE directed attention to the graph on slide 5, indicating that the commission's workload had declined from 49 cases filed and 42 published decisions in 2007 to 4 cases filed and 5 decisions issued in 2023. Slide 6 read as follows [original punctuation provided]: "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 2:11:15 PM MR. MCKEE continued to slide 7, "The workers' Compensation Appeals Commission Has Not Closed Cases Faster than the Courts," which read as follows [original punctuation provided]: • The Superior Court took "8 to 18 months" to decide Workers' Compensation Appeals. • When the Appeals Commission was created, it was estimated that the Commission could decide cases in 6 months. • Instead, in 2018 it averaged 12.2 months to decide cases. • Even as their workload decreased, in 2021 they still averaged 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. MR. MCKEE proceeded to slide 8, "HB 63 Will Reduce Appeals to the Supreme Court," which read as follows [original punctuation provided]: When the Superior Court handled appeals approximately 25% of their decisions were appealed to the Supreme Court. Since the Commission was created in 2005, 36% of its decisions have been appealed to the Supreme Court. Since 2011, 50% 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 19-175. 2:12:41 PM MR. MCKEE moved to slide 9, which read as follows [original punctuation provided]: Alaska's Workers' Compensation and Safety Program Faces a Growing Budget Deficit-HB 63 Will Help Fill It • Workers' Compensation and Safety are funded by a tax on Workers' Compensation payments • These programs cost $9.1 million annually and are projected to remain flat • Saving $482,4000 will help close the growing budget gap. MR. MCKEE concluded on slide 10, "Bottom Line," which read as follows [original punctuation provided]: HB 63 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 2:13:37 PM REPRESENTATIVE ALLARD asked whether there were any attorneys or paralegals on the commission. MR. MCKEE stated that the chair was a lawyer; however, the two commissioners were not. In response to a follow up question, he confirmed that the caseload had decreased significantly, but the time it takes to render a decision remained the same. REPRESENTATIVE ALLARD highlighted the letter from Mr. Croft, an attorney, in the supporting documents. 2:14:55 PM REPRESENTATIVE GROH asked why the number of cases had fallen over the years. MR. MCKEE pointed out that more safety measures were being implemented by companies, resulting in fewer grievances being filed. REPRESENTATIVE RAUSCHER explained that businesses were constantly holding safety meetings and implementing safety measures to decrease injuries on the job because compensation costs money. 2:16:35 PM REPRESENTATIVE GRAY sought to confirm that there was a zero fiscal note for up to 30 cases. MR. MCKEE confirmed that the commission could take up to 30 cases at no additional cost. In response to a follow up question, he said the courts would determine the fiscal cost if the case count were to rise above 30. 2:17:40 PM CHAIR VANCE announced that HB 63 would be held over.