HB 214-REPEAL WORKERS' COMP APPEALS COMMISSION  3:21:41 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 214, "An Act repealing the Workers' Compensation Appeals Commission; relating to decisions and orders of the Alaska Workers' Compensation Board; relating to superior court jurisdiction over appeals from Alaska Workers' Compensation Board decisions and orders; repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of Appellate Procedure, and amending Rules 202(a), 204(a) - (c), 210(e), 508(g), 601(b), 602, and 603, Alaska Rules of Appellate Procedure; and providing for an effective date." 3:21:52 PM LAURA STIDOLPH, Staff to Representative Olson, informed the committee HB 214 would repeal the Worker's Compensation Appeals Commission. The commission was established in 2005 to expedite the worker's compensation appeals process; however, during the past decade the commission has had a 50 percent decision reversal rate, and the bill has been requested by the commissioner of the Department of Labor & Workforce Development (DLWD). She asked for the adoption of proposed Version E which was provided in the committee packet. 3:23:06 PM REPRESENTATIVE HUGHES moved to adopt the proposed committee substitute (CS) for HB 214, Version 29-LS0854\E, Wallace, 2/24/16, as the working document. CHAIR OLSON objected for the purpose of discussion. 3:23:29 PM HEIDI DRYGAS, Commissioner, Department of Labor & Workforce Development, said DLWD is in support of repealing the Workers' Compensation Appeals Commission and returning the appeals process to the courts. The commission was created to provide expertise in Workers' Compensation cases, but since its inception, nearly 50 percent of its decisions appealed to the Alaska Supreme Court have been reversed. The commission serves as an appellant court, but is comprised of lay commissioners and although they are dedicated, they do not have the necessary legal training. She has learned that the commissioners contribute little to the legal analysis required, thus the chairman must resolve legal issues and write the commission's decisions; therefore, the decisions are not the work of a panel with legal expertise and experience in Workers' Compensation, which was the intent of the legislation. The bill would have minimal impact on the public, and subsequent appeals would be referred to the superior court as prior to 2005. The increase in cases to the court system is estimated at 20-30 cases statewide per year, which would be absorbed into the court system. REPRESENTATIVE HUGHES inquired as to the impetus for the creation of the commission. COMMISSIONER DRYGAS explained that the court system was slow [processing appeals] and it was expected that the commission would be faster. However, the commission is not significantly more efficient, and accrues costs of approximately $400,000. In response to Representative Hughes, she clarified that the cost of the commission is $439,600 per year. REPRESENTATIVE LEDOUX asked whether the commission primarily decides in favor of workers or employers. COMMISSIONER DRYGAS said she did not have that information. 3:28:14 PM REPRESENTATIVE LEDOUX recalled that in 2005 the administration thought that the courts were too worker-friendly, and the intent was that the commission would not be as worker-friendly. COMMISSIONER DRYGAS said her frustration with the process is that an administrative decision is appealed to the Workers' Compensation Board, and then to another administrative agency, which is a "double layer that doesn't make a whole lot of sense ... and the way that the Workers' Compensation Appeals Commission is set up right now, it is, it is essentially dysfunctional." REPRESENTATIVE KITO asked for the number of appeals submitted from the board to the commission per year. He clarified that his question related to the number of cases that would go to the superior court if the commission was eliminated. COMMISSIONER DRYGAS said over the course of 10 years, 342 decisions have been appealed to the commission; of those, 219 resulted in decisions, and 97 were appealed to the Alaska Supreme Court. REPRESENTATIVE KITO surmised that the state would not save $439,000, because there would be a cost to the court system. COMMISSIONER DRYGAS deferred to the court system. REPRESENTATIVE COLVER asked for a description of the process before 2005, and after 2005. COMMISSIONER DRYGAS stated that a Workers' Compensation hearing officer renders a decision, and either party can appeal to the Workers' Compensation Board, whose members are appointed by the governor and confirmed by the legislature. Before 2005, a decision from the board could be appealed to the superior court, then to the Alaska Supreme Court. Currently, an appeal after a decision by the board goes to the appeals commission, bypassing the superior court, and then to the Alaska Supreme Court. REPRESENTATIVE LEDOUX, referred to before 2005, and asked whether a decision from the board was for an appeal "as of right to the superior court, or was it discretionary." 3:35:11 PM ANDREW HEMENWAY, Chair, Workers' Compensation Appeals Commission, Division of Workers' Compensation, Anchorage Office, Department of Labor & Workforce Development, advised that both before 2005 when the superior court heard appeals, and under current law, when appealing to the Workers' Compensation Appeals Commission it is an appeal "as of right," and is not discretionary. He noted that the superior court was required to hear the appeal, as is the Workers' Compensation Appeals Commission. Similarly, he said, the appeal to the Supreme Court was an appeal "as of right." Therefore, he offered, there is no change in terms of the appellant's right to get a hearing. REPRESENTATIVE LEDOUX questioned whether the appeal courts address findings of fact, or rely upon the rulings of the previous entity. MR. HEMENWAY said there is no change in that regard; the superior court was required to defer to the factual findings of the board, and the commission is as well. REPRESENTATIVE LEDOUX understood that the appeals commission - composed of members who are not lawyers - has the responsibility for making legal decisions. MR. HEMENWAY said correct, although the commission chair is required to be an attorney. He added that the proposed original legislation called for three attorney members on the commission, but the legislature changed the composition of the commission to match that of the board. 3:38:39 PM MS. STIDOLPH paraphrased from the following sectional analysis of the proposed committee substitute for HB 214, Version E [original punctuation provided]: Section 1. Amends AS 23.30.005 by adding new subsection to read: The board, in its administrative capacity, shall make available the decisions and orders of the board and the former Workers' Compensation Appeals Commission. Decisions and orders of the former Workers' Compensation Appeals Commission are final and conclusive unless appealed to the Alaska Supreme Court and shall stand instead of the order of the board from which review was taken. Unless reversed by the Alaska Supreme Court, decisions of the former Workers' Compensation Appeals Commission have the force of legal precedent. Section 2. AS 23.30.107(b) removes language referencing the Commission. Section 3. AS.23.30.108(d) removes language referencing the Commission. Section 4. AS 23.30.108 (e) removes language referencing the Commission. Section 5. AS 23.30 is amended by adding a new section to read: A decision or order of the board becomes effective when filed in the office of the board under AS 23.30.110 and becomes final when a party files a petition, or a notice of appeal. Final order is not subject to judicial review. A director may intervene. A court shall award a successful party reasonable costs. Section 6. AS 23.30.155(f) removes statutory reference to the powers and duties of the Commission and adds a reference to the board in AS 23.30.126 Section 7. AS 39.50.200(b)(31) is amended to remove language defining the Workers' Compensation Appeals Commission. Section 8. Repeal Rules 201.1, 401.1, and 501.1, Alaska Rules of Appellate Procedure. Section 9. Repeals statutes referencing the creation, appointment of members, jurisdiction, powers and duties of the commission, powers and duties of the chair of the commission, administrative review, appeals to the commissions, commission proceedings, appointment of the members through OAH, appointment of the chair. Section 10. Changes the Alaska Rules of Appellate Procedure by providing that appeals from the Alaska Workers' Compensation Board can be brought in the superior court. Section 11. The Workers' Comp Appeals Commission continues to function as they presently are until December 1, 2016. Section 12. Transitional Provisions - for appeals not completed before December 2nd shall be automatically transferred to the superior court. Appeals seeking review of Workers' Comp Board decisions that haven't been filed before May 31, 2016 must be filed in the superior court before June 1, 2016. Before June 1, 2016 a party may file for review by the workers' comp appeals commission, after June 1, 2016 a party files for review in the superior court. Before November 1, 2016 a party may request reconsideration of a Workers' Compensation Appeals Commission decision. After November 1, 2016 a party may file an appeal with the Alaska Supreme Court. Section 13. Terms out commissioners on February 2, 2017. Section 14. Conditional effect: this Act takes effect only if secs. 8 and 10 of this Act receive a 2/3 majority vote of each house required by art. IV, sec. 15, Constitution of the State of Alaska. Section 15. Effective date of June 1, 2016. 3:43:22 PM REPRESENTATIVE COLVER referred to the chart entitled, "Alaska Workers' Compensation Appeals Commission," provided in the committee packet. He requested a brief abstract describing types of appeal issues, possible trends, medical issues, disability compensation, and decisions or resolutions that would provide a "thumbnail sketch of what's going on." His experience is that worker's compensation cases can be difficult to resolve. CHAIR OLSON pointed out that the last column on the aforementioned chart indicated 50 percent to 75 percent of the cases going to the Alaska Supreme Court were unchanged. REPRESENTATIVE LEDOUX asked for clarification of the chart. 3:46:43 PM MR. HEMENWAY explained that the Alaska Supreme Court may dismiss a case for several reasons, such as late filing or a settlement. Also, a case can be remanded to the lower court if there are questions, and vacated when laws have changed; these are examples of when the court disposes of a case, but does not make a decision on whether the appeals commission was correct, and the case can make a reappearance. Affirmed, reversed, and affirmed in part/reversed in part are cases in which the court has issued a decision that addresses the merits of the appeals commission's decision. REPRESENTATIVE JOSEPHSON suggested that the Alaska Supreme Court would hear all of the cases eventually, unless they are affected by the statute of limitations. MR. HEMENWAY said: I wouldn't necessarily say that's the case. ... Most of the cases that are dismissed, I'm sure well over half, are dismissed because the parties have settled. ... Sometimes it might be that there's some, some grounds on which the court shouldn't hear it, but a dismissal for reasons other than ... the parties have settled, is, is [a] relatively small number of cases. The cases that are remanded or vacated, they're kind of all over the place .... 3:50:50 PM NANCY MEADE, General Counsel, Office of the Administrative Director, Alaska Court System, advised that she has been working with the bill sponsor who has incorporated some of her suggestions in the proposed committee substitute. Ms. Meade said the court system is neutral on the bill, and will implement it upon passage. The court system's concerns are related to the wording of the bill, so that the case law and interpretation would easily transfer to the court system. Also, the court system seeks to ensure that the cases are transferred in a form conforming to the rules of the appellate court. REPRESENTATIVE KITO asked Mr. Hemenway whether the ten pending cases indicated on the chart are recent. MR. HEMENWAY answered that the number of cases pending are: one from 2011, one from 2013, two from 2014, and six from 2015. REPRESENTATIVE COLVER asked Ms. Meade to comment on how appeals cases affect the workload of the Alaska Supreme Court. MS. MEADE responded that an average of 33 cases per year could be absorbed by the superior court. Further, 10-15 cases could be handled by the Alaska Supreme Court in the course of its normal business, without adverse effects. In further response to Representative Colver, she explained that in 2005, there was a perceived lack of consistency in workers' compensation decisions from the superior court. In order to set precedent, a case would have to go to the Alaska Supreme Court because its decisions bound the superior court and the board. One basis for the change was the concept that moving to an expert commission within DLWD would establish that its decisions would bind the department, but the number of cases that were appealed after 2005 did not change. Therefore, the workload of the Alaska Supreme Court would be not affected, but the workload of the superior court judges would increase with difficult and complex cases. 3:59:05 PM REPRESENTATIVE HUGHES questioned whether the number of cases can be seasonal. MS. MEADE said no. The bill phases-in the cases coming to the court from the commission during a certain period of time. REPRESENTATIVE HUGHES observed that the number of cases before the Alaska Supreme Court rose beginning in 2011, and questioned why the ratio of appeals also increased beginning in 2010 and 2011. MS. MEADE said she was unsure why more cases were appealed. COMMISSIONER DRYGAS deferred to Mr. Hemenway. MR. HEMENWAY noted that from 2005 to 2010, a higher number of cases were appealed and decisions published; after 2010, there was a decrease in the number of decisions published. REPRESENTATIVE HUGHES restated her question. MR. HEMENWAY observed that there was a new commission chair appointed in 2010. 4:04:23 PM CHAIR OLSON opened public testimony on HB 214. After ascertaining that no one wished to testify, Chair Olson announced that public testimony would remain open. [HB 214 was held over.]