HB 114-WORKERS' COMPENSATION: DEATH BENEFITS  3:18:40 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 114, "An Act relating to the calculation and payment of workers' compensation benefits in the case of permanent partial impairment; relating to the calculation and payment of workers' compensation death benefits payable to a child of an employee where there is no surviving spouse; relating to the calculation and payment of workers' compensation death benefits for an employee without a surviving spouse or child; relating to notice of workers' compensation death benefits; and providing for an effective date." 3:18:49 PM REPRESENTATIVE JOSEPHSON, speaking as sponsor of HB 114, stated that the first thing HB 114 does is to increase the PPI [permanent partial impairment] amount, which has not been changed since 2000. The second part would offer a remedy for the estates of workers who have been killed or died at the workplace. 3:20:21 PM REPRESENTATIVE JOSEPHSON said this bill was about a policy call under the Alaska Supreme Court decision related to AS 23.30, Ranney v. Whitewater Engineering, 122 P.3d 214 (Alaska 2005). In the foregoing case, Ms. Ranney, was unmarried with a long- time live-in boyfriend, Gary Stone and argued that she should receive death benefits when Mr. Stone died. The Alaska Supreme Court unanimously ruled that she should not receive them. It held that the legislature had undertaken some "line drawing" in the workers' compensation code. It noted that legislators frequently engage in line drawing. He suggested that the legislature needs to redraw some of the lines. 3:21:29 PM REPRESENTATIVE JOSEPHSON stated that HB 114 would ask the legislature to reconsider redrawing some of the lines. He related that numerous single childless people live in Alaska. He further stated that if a single person dies at the workplace with no obvious third-party liability, for example, if the person falls off a ladder and dies, the remedy would be in Title [AS] 23. Although he said he was not a personal injury lawyer, he suggested if the ladder had a bad rung and the person fell, the state might sue the manufacturer of the ladder. Typically, workplace deaths are due to a generally unsafe workplace or employee negligence and in instances in which an employee dies and is childless, AS 23 provides the estate with $10,000 for funeral expenses and nothing more. 3:22:38 PM REPRESENTATIVE JOSEPHSON offered that the employer might be subject to some occupational safety violations when a death occurs, but there wouldn't be any incentive to improve workplace safety. In the specific case that led to him filing this bill, an OSHA [Occupational Safety and Health Administration] investigation occurred. Overall, current law lacks any remedy for single people who die in the workplace, and often people postpone marriage or having children. He offered his view that this issue needs reform. In instances in which nothing malfunctions in the workplace or was tortuously manufactured, such as a badly designed product that exploded, Alaska does not allow the estate to sue for wrongful death nor is there any remedy other than the $10,000 funerary expenses previously mentioned. 3:24:48 PM REPRESENTATIVE JOSEPHSON referred to Section 1, which was an uncodified provision that requests the Act be called the Abigail Caudle Act, to reference an employee who was killed in the workplace in 2011. At the time, Ms. Caudle was working for an electrical contractor at a midtown Anchorage branch of Alaska USA and she suffered an electric accident, fell, and died as a result of those injuries. REPRESENTATIVE JOSEPHSON stated that Section 2 would increase the permanent partial impairment (PPI) rating, noting that the PPI amount has not been increased from a whole body figure of $177,000. This language would increase the rating to $255,584 to reflect today's figures. He said that a doctor could find a person suffered a partial permanent injury and if so, the system has scales for this depending on the loss. 3:26:28 PM REPRESENTATIVE JOSEPHSON said that Section 3 would provide notice of death benefits so it is very clear to the estate of the deceased what the remedies are, including that the estate can hire an attorney, seek grief counseling, and other things an employer should provide. REPRESENTATIVE JOSEPHSON referred to Section 4, noting that current law provides for funeral expenses. He provided details of the progression of spendable weekly wages a widow, widower, child, or children will receive ranging from zero to 100 percent, depending on the number of surviving family members. In response to Representative LeDoux he agreed this was current statute. He continued, noting that an only child without a surviving spouse would receive 100 percent of the benefits. REPRESENTATIVE JOSEPHSON expressed concern that a teenager may receive only a few months of financial assistance and funeral expenses if his/her parent died in the workplace, since the support would end at either age 18 or 19 - he wasn't certain of the age limit; however, under the bill payments would continue for five years. He characterized current law as constituting a lack of generosity in the system. He reviewed paragraph (3) of existing law, pertaining to a surviving spouse who remarries and benefits are ceased after two years. Paragraph (4) [on page 3, lines 12-17] would increase the amount from the $20,000 allowed for people dependent on the person who died in the workplace, such as an elderly parent or siblings, to the whole body amount of $177,000 or potentially $255,000 if the PPI is increased under the bill. 3:32:49 PM REPRESENTATIVE LEDOUX related her understanding that under current law if the decedent was supporting relatives, they could receive $20,000, but a child over 18 years of age would not receive anything unless they supported a grandchild, who could receive benefits. REPRESENTATIVE JOSEPHSON answered yes. He referred to the language in [paragraph] (4), stating that a son who was 18 and a half years old could receive an additional 6 months in benefits, but the person's grandchild, as a dependent could receive more as a percentage of the deceased's spendable weekly wages. In response to Representative LeDoux, he answered that existing law limited the support to $20,000. He surmised the theory was that the nuclear family gets less important outside the ring of [the immediate family such as] parents or children. 3:35:15 PM REPRESENTATIVE LEDOUX expressed concern since many parents currently support their children through college. REPRESENTATIVE JOSEPHSON said this bill would allow for an extension. He referred to [page 3, line 25] to proposed Section 5, which would extend the death benefits paid to a child to age 24 to allow death benefits to continue and not stop at age 19, and it would continue as a fraction of the spendable weekly allowance, presumably to get the child of the deceased through college. 3:36:27 PM REPRESENTATIVE JOSEPHSON directed attention to a final scenario, which brings Ms. Burke to Juneau. He indicated the deceased worker was single without any dependents. This bill proposes the estate would receive half of the whole body allowance in death benefits, which is approximately half of the $177,000 [PPI] under current law or $88,000. He directed attention to the fiscal note impact due to changes in the PPI, he said. He acknowledged that Chair Olson has his own bill related to PPI, which has not been increased since 2000 and should be adjusted to reflect the 2015 value. 3:38:01 PM CHAIR OLSON commented that the fiscal note was significant. REPRESENTATIVE JOSEPHSON said he also had questions about the fiscal note. 3:38:29 PM REPRESENTATIVE JOSEPHSON referred to [paragraph] (6), and questioned differentiating between the estate of the single person with or without children. He suggested that the figures used were half the amount available under the modified [paragraph] (4), or half of $177,000. Proposed Section 5 would adjust the amount based on the Consumer Price Index (CPI). He offered his belief that the benefits of passing HB 114 is that that it improve workplace safety, although it would be difficult to quantify; and it would reflect the PPI; and fundamentally would confirm that just because a person is single and dies in the workplace doesn't mean the individual's estate is not due any settlement. 3:41:08 PM CHAIR OLSON asked whether the fiscal note applies only to state employees. LEASA DAVIS, Division of Risk Management, Department of Administration (DOA) answered yes; stating that the fiscal note was based on the AWCB [Alaska Workers' Compensation Board] data for the past five years. She related her calculation, based on the PPI [permanent partial impairment ratings] benefit payout multiplied by 45,000. She said she reviewed the claim history and reported that one person died in the line of duty without leaving a family or dependents and the death benefit amount was averaged over five years. 3:42:20 PM CHAIR OLSON asked whether the private sector would have more fatalities than the state. MS. DAVIS answered that more fatalities happen with certain industries, such as high risk occupations, including public safety or those individuals who fly as part of their job duties. 3:42:51 PM REPRESENTATIVE LEDOUX asked for further clarification on the fiscal note. She asked whether these changes would cost the state $291 million. MS. DAVIS explained that she inadvertently listed whole numbers of $291,632 for six months and $583,263 for a full year. She apologized for the error. 3:43:31 PM REPRESENTATIVE KITO directed attention to the fourth paragraph of the fiscal note analysis that indicated the bill could result in a yearly average increase of $23,585.40. He questioned this figure since there has only been one instance in the past five years. He asked for further clarification on the basis for the $291,000 and $500,000 projections. MS. DAVIS explained the formula she used to arrive at the fiscal note figures. The fiscal note was based on the annual PPI [permanent partial impairment] payout over five years multiplied by the increase of the percentage of 44 percent. She also reviewed the six percent second injury fund amount and records to discover only one individual died due to an on the job fatality without any dependents. She averaged the foregoing death benefits over five years. 3:45:06 PM REPRESENTATIVE KITO asked whether most of the increased costs in the fiscal note were due to the consumer price index (CPI) increase. MS. DAVIS answered that she did not include the CPI since the state is entering a deflationary period so the future figures are unknown. She explained that the bulk of costs are due to the actual PPI rate increase itself since the department sees a large number of PPI ratings for state employees. REPRESENTATIVE KITO related his understanding that it was based on the historic catch up costs. 3:45:43 PM REPRESENTATIVE COLVER related his understanding that the state entity is self-insured. He asked whether there was any type of reinsurance or umbrella policy for these kinds of claims. MS. DAVIS answered no. She stated that the state was completely self-insured. REPRESENTATIVE COLVER suggested that in his experience most government entities have another level of insurance as well as reinsurance. CHAIR OLSON suggested that he was referring to liability insurance, and this bill relates to workers' compensation, which has an exclusive remedy. REPRESENTATIVE COLVER said he was seeking a way to reduce the state's exposure. 3:46:52 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community & Economic Development (DCCED), said that according to the National Council on Compensation Insurance - a statistical rating organization that sets rates in Alaska - the bill could possibly have a 4 percent impact on rates. 3:47:51 PM MS. WING-HEIER, in response to Representative Colver, agreed self-insured entities frequently have a stop-loss or excess workers' compensation policy, typically in excess of $500,000 or $1 million, which is common for large employers. Further, larger employers often do not have policies because of the high cost. If entities don't purchase the insurance, the division refers to the amount as the "burn layer." Basically, if entities do not exceed the costs very often, it is frequently better to save the [insurance fees] and use the money for claims expenses. She offered her belief that was what the state decided to do. 3:48:34 PM CHAIR OLSON commented that if HB 114 were to pass, the bulk of the claims would fall under private policyholders rather than on the state. MS. WING-HEIER added that most large employers may have small claims of $20,000 to $100,000 with an occasional large claim due to a significant injury or fatality. 3:49:13 PM REPRESENTATIVE COLVER asked for the average fatality rate. MS. WING-HEIER deferred to the Division of Workers' Compensation to respond. 3:49:53 PM MICHAEL MONAGLE, Director, Central Office, Division of Workers' Compensation, Department of Labor & Workforce Development (DLWD), responded to an earlier question, noting that a child dependent was a child up to age of 19, with an additional four more years if they were attending college. In addition, he read a portion of the definition of "child" in existing law [under AS 23.30.395 (8)] as follows, " ... are wholly dependent upon the deceased employee ...." Thus the death benefits can continue beyond the age of 19 if the child is dependent on the deceased employee. He clarified that the benefit was not limited to grandchildren, grandparents, or parents. 3:51:13 PM REPRESENTATIVE LEDOUX related a scenario in which the decedent died while a child was a sophomore in high school, went to college, but decides to go to medical school. She asked whether the workers' compensation would cover it. MR. MONAGLE answered no, since it says the first four years of college and the statute doesn't anticipate graduate school. He read additional language for the definition of "child" which read, " ... are wholly dependent upon the deceased employee and incapable of self-support by reason of mental or physical disability, [and persons of any age while they are attending the first four years of vocational school, trade school, or college, and persons of any age while they are attending high school;"]. In response to Representative Josephson, he offered the citation for the definition as AS 23.30.395 (7). 3:52:39 PM REPRESENTATIVE HUGHES asked for more of a foundation since she was not familiar with workers' compensation. She recalled that the rates for the private sector might increase by 4 percent. She suggested that was an automatic payment, but she understood that the surviving family members often file lawsuits. MR. MONAGLE answered that it depends. He informed members that workers' compensation is an exclusive liability, in fact, you cannot bring a separate action against employers even if they are negligent; however, there is a third-party exposure, for example, if a rung of a ladder or other machinery was defective. Since the exclusive liability does not extend to the third party, a lawsuit could be filed. However, workers' compensation law provides for an offset so the survivor would not receive the full death benefit plus the full third-party recovery since the employer would be allowed to reduce their benefit payments. 3:54:27 PM REPRESENTATIVE JOSEPHSON asked whether the third-party recovery was from the second injury fund. MR. MONAGLE answered no. He explained a separate provision in law allows an employer to offset any third-party recovery. He explained that the second injury fund was established through assessments against employer indemnity benefits. The second injury fund would be used in instances in which an employer hires a person with a qualifying preexisting condition and the employee has a subsequent workplace injury made worse by the pre-existing condition. If an employer hires an employee, knowing the employee has had a lot of back injuries, but the employee is subsequently injured, the fund will reimburse the employer for the indemnity benefit payments so long as it meets all the requirements for second injury fund reimbursement. 3:55:23 PM MARIANNE BURKE began her testimony, as follows: You have no idea what I've gone through to this point. This is bittersweet - to talk to you - I'm excited, but I'm saddened for the reason I stand before you. My daughter [Abigail Caudle] was killed in the workplace and no value at all - zero - was given for her life. When you talk about different money and stuff in the workplace environment - there was nothing given for her life, but the funeral costs. That's it - because she had no dependents. There is no liability to the employer. Nothing happened to the employers whatsoever because of "no fault" insurance. Nothing happens. If there is any payout, the insurance pays it - and I'll get to that in a minute. I just want to emphasize those two points before I start. 3:57:07 PM MS. BURKE continued her testimony, as follows: My daughter was the second child of four children, two boys and two girls. Her sister and she would play dolls growing up. She enjoyed soccer, basketball, babysitting, day care - she worked at Home Depot. She volunteered at ChangePoint church doing lighting for all of their services for three years. She helped with the youth group at ChangePoint. MS. BURKE paused to show photographs of her daughter. MS. BURKE continued. She said: My daughter was a new apprentice with Raven Electric so she was not with the unions. The private sector is not as "up" as the unions are sometimes. She was [indisc.] with a live wire. They were working on an open junction box in a bank remodel job taking down lights. The journeyman did not turn off the circuit breaker or lock and tag as he was supposed to. This was because he wasn't planning on doing that lighting that night. Usually he would bring temporary lights, but he wasn't planning on doing that work that night so they used the lights that were there and just turned off light switches. Abigail had an inadequate non-contact tester. It did not clamp onto the wire; it just went near the wire so it did not sense the live wire. She tried it twice. It showed green, safe or to go. And she touched the live wire; got locked up. Her coworkers tried to get her off the ladder. They couldn't. They finally kicked the ladder real hard and she fell off to the floor. She went into seizures. The others told that about 440 volts that went through her body. She [indisc.] defibrillator and she was taken to the hospital. She was 26 years old and she died on June 21, 2011. I cannot tell you how much we miss Abigail [indisc.]. Her sister does not have a sister anymore. Her brothers do not have a sister that they had anymore to talk with and be support with. Thank you. 3:59:32 PM MS. BURKE said that about three months after her daughter's death she called numerous lawyers, but none would represent her since her daughter's death fell under workers' compensation. She said the lawyers she contacted informed her they would not win the case and that similar cases had been taken to the Alaska Supreme Court and the plaintiff did not prevail. In fact, she couldn't even get any lawyer to take the case pro bono. Two years after her daughter's death she began fighting - by herself - for death benefits for her daughter She could not sue the employer, she said, due to House Bill 323 that passed the legislature in 2004. Since her daughter's death was a work related death she also could not file a civil lawsuit or obtain any type of justice. Subsequently, the legislature considered House Bill 303, which would have allowed wrongful death cases to be filed civilly, but that bill did not pass, in part, since it was opposed by the business sector. 4:00:49 PM MS. BURKE declared that workers' compensation laws give zero value to people like her daughter, a single worker without any dependents, except for funeral costs. Although the employer, [Raven Electric] received five citations from OSHA [the US Department of Labor, Occupational Safety and Health Administration], in which four violations were determined to contribute to her daughter's death, the company only paid $11,000 to OSHA. In fact, OSHA advised her that after three years the employer's slate will be wiped clean. She was astonished at this outcome since her daughter's death constituted gross negligence by the employer. As the sponsor said earlier, the Abigail Caudle Act would update the value of an employee's life by increasing the PPI [permanent partial impairment] amount to $256,000, noting the PPI has not been adjusted in 15 years. 4:01:41 PM MS. BURKE stated that if the PPI figures were updated all of the people who are injured will receive compensation based on today's wages. Survivors of workers killed on the job would receive something, describing her feelings as hollow feelings since nothing was given for her daughter's life. She recommended the statute of limitations should be raised from one year to four years. She reported that California has a four- year statute of limitation in wrongful deaths, and even though she recognizes that this bill pertains to workers' compensation, the statute of limitation still needs to be raised to four years. She explained that two years passes by quickly during a period of grief when losing a loved one and one year was simply insufficient. 4:02:47 PM MS. BURKE said that this issue is a bipartisan issue and although she her political affiliation is Republican, a Democrat, Representative Josephson, stepped up to help her. She stressed that this issue adversely affects families. She urged the legislature to pass HB 114. Even though the bill may need additional work and businesses don't want to pay more for workers' compensation, perhaps businesses could elect to provide a life insurance policy for their employees or require them to obtain life insurance. Most importantly, under current law, employers can avoid purchasing safety equipment since they are not held accountable and lawsuits can't be filed against them. She felt it was crucial that the law recognizes that every person has value. She said one problem with workers' compensation was due to "no fault" insurance, which she characterized as being a nationwide problem. 4:04:23 PM CHAIR OLSON stated that having an exclusive remedy means that workers' compensation will pay immediately, whether or not the claim is perceived as legitimate and it could be controverted if issues arise. MS. BURKE offered his belief, shared by the workers' compensation staff she spoke to, that when a death occurs in the workplace it should cease to be a workers' compensation case. This was especially true in instances in which employers are negligent, which was the case in her daughter's death since the employees did not lock and tag, the employees did not communicate, and the employer failed to do a number of things it should have done. In fact, Abigail was a new apprentice, brand new, trusting her journeymen that she was safe, she said. Her daughter's journeymen weren't even in the room when the electrical accident occurred. In closing she emphasized that when deaths occur, the matter should not fall under workers' compensation to allow for justice. She thanked members for allowing her to testify. [HB 114 was held over.] 4:06:23 PM The committee took a brief at-ease.