SENATE BILL NO. 163 "An Act increasing the allowances for injury, disability, or heart attack payable from the fisherman's fund; and providing for an effective date." SENATOR JOE PASKVAN, sponsor, explained the workings of SB 163, which updates the Alaska Fishermen's Fund limit to $10,000. This will bring the program back to a meaningful level of assistance as the payer of last resort for commercial fishermen and crew who sustain injuries or illness while fishing. Senator Paskvan related that the Fund was established in 1951 and was set up to provide for the treatment and care of Alaskan licensed commercial fishermen and crew who are injured while fishing on shore or off shore in Alaska. The upper limit on claims has remained at $2,500 since 1959. If that amount had been adjusted for inflation, it would be worth approximately $18,230 today. While the upper limit on claims has remained unchanged, healthcare costs have steadily risen. Senator Paskvan explained that the Fund is financed by revenue received from each resident and non-resident commercial fisherman and crew for licenses and permit fees. In 2008 there were 13,706 commercial permit holders who contributed to the Fund. That included 135 from the Fairbanks Northstar Borough. The Fund account has grown to $11,500,000, even as healthcare costs have risen, due in part to continuing improvements in fishing industry safety. The bill updates the Fund limit to $10,000 to help ensure that Alaska's fishermen have access to healthcare when injured while fishing. It is important to note that this increase is not projected to jeopardize the sustainability of the Fund. 9:09:31 AM Co-Chair Stedman inquired about commercial fishing opportunities on the Chena River in Senator Paskvan's district. Senator Paskvan said they were extremely limited. He reported that the bill applies to the number of permit holders that travel to commercial areas in the state, such as the slips in Valdez. Co-Chair Stedman noted a zero fiscal note from the Department of Fish and Game and a fiscal note for $63,700 from the Department of Labor and Workforce Development. He noted that the Fund has sufficient monies to absorb that increase. 9:11:38 AM JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, spoke in favor of SB 163. Senator Huggins asked about workman's compensation opportunities for fishers. Mr. McCune explained how money from the permit fee goes into the Fund. He related history from a loan program which began in the 70's for the purpose of keeping Alaskan residents in the fisheries. Senator Huggins asked about money sources for the Fund, other than from permit fees. Mr. McCune replied that there were no other sources of money except for the $50 per permit from the permit holder and $23 from the crews. Co-Chair Stedman restated that for each license, a portion of the fee goes to the Fund. Mr. McCune agreed. Co-Chair Stedman asked for a breakdown of out-of-state versus in- state commercial fishermen. Mr. McCune did not have that information. 9:16:02 AM Senator Olson agreed that health expenses should be covered. He requested more information as to how insurance funds work. He wondered how the Fund ties in with the Native Health Service and which insurance would be primary. Mr. McCune related that the Fund is not the primary payer, but rather secondary to other policies. A council reviews all claims. Also, the incident has to happen on the job. Senator Olson expressed concern that the fund may be penalizing those covered by other plans. Mr. McCune explained how the policy works with other insurance. Most of the claims last year were for around $1,000. Senator Olson pointed out that fishers in his district covered by the Native Health System would not benefit by the Fund and yet have to pay into it. Mr. McCune suggested that if the Fund were to be used as the primary insurer, the money would run out. Those who have no other insurance could use the Fund, but the claim would have to be approved by the council. Senator Olson asked what the deductible is. Mr. McCune said it is currently $2,500, but that can be appealed to the council. The goal is to raise it to $10,000. Senator Olson asked if the insurance is available to all fisheries. Mr. McCune said it was available to all state permit holders and licensed crew members. 9:21:01 AM MIKE MONAGLE, PROGRAM COORDINATOR, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, in response to a question by Co- Chair Stedman, offered to provide a spreadsheet that shows the number of resident and non-resident permits and licenses. The funds are transferred to the Department of Labor monthly from the Department of Fish and Game and twice a year from the Limited Entry Commission. Co-Chair Stedman asked for the department's opinion as to how the fund is working. He wondered if the department supported the bill. PAULA SCAVERA, SPECIAL ASSISTANT, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, stated that both the department and the administration support the bill. Co-Chair Stedman asked if Mr. Monagle wished to address Co- Chair Hoffman's question. Mr. Monagle explained how the Fund works. He called it a "payer of last resorts". Other types of insurance are primary; the Alaska Fishermen's Fund is a secondary payer. 9:23:43 AM Senator Olson discussed the Indian Health Services's (IHS relationship as the primary provider. Mr. Monagle agreed that the Fund would not pay if IHS were the provider. When there is a contract provider, the Fund is considered the primary payer. Senator Olson expressed concern that a Native fisher has to pay into the Fund, but cannot access it. Mr. Monagle agreed that was correct, if there was no deductible. The Fund would cover expenses not paid by IHS. Senator Olson commented that IHS runs all of the clinics in his district. 9:25:56 AM Senator Huggins spoke of special interest groups and worker's compensation. He requested information on upper claims. Mr. Monagle said there is an upper limit of $2,500 currently. That is waived when there are compelling reasons. There is an appeal process to request an extension of benefits. Each year there is approximately $400,000 worth of requests for extended benefits. The council is not limited to $2,500; the administration is. The council is made up of commercial fishermen and meets only twice a year. Mr. Monagle noted that the Fund program is housed in the Division of Workers' Compensation; however, the Workers' Compensation Act specifically excludes commercial fishermen from workers' compensation. Senator Huggins gave a hypothetical example. Mr. Monagle stated that the Fund does not pay death benefits. He related the benefits of the Jones Act, a civil action remedy. He thought that most vessel owners carried indemnity insurance. 9:30:05 AM Co-Chair Stedman asked for more information about a chart entitled, "License Revenue Activity" (copy on file). Mr. Monagle explained that some recent deficits were due, in part, to the council's allowing of large payments. He said there were not many extension requests for claims in excess of $10,000. The council does consider availability of funding when paying large claims. Co-Chair Stedman requested information about 2009 resident and non-resident revenue. Mr. Monagle clarified that licenses for residents are less than for non-residents and the contribution to the Fund is 39 percent of the license fee. Non-residents pay a higher rate. Co-Chair Stedman requested information about claims from both groups. Mr. Monagle offered to provide that information. 9:34:03 AM Senator Huggins asked about the "child" category. Mr. Monagle said there is a child crew member license requirement for those up to 14 years old. Senator Olson asked for clarification on the age requirement. Mr. Monagle said 14 and below. He did not know about enforcement issues. Senator Thomas asked if the data was from a calendar year or a fiscal year. Mr. Monagle said it was a fiscal year. Senator Thomas asked where the money is invested. Mr. Monagle explained that the money is a dedicated fund, not in the general fund. The Fund does not earn interest. A provision in statute says up to 50 percent of the earnings may be used for safety education. Co-Chair Stedman thought it was a General Fund and Other Non-Segregated Investments (GeFONSI) classification. Senator Thomas asked about the trends in the number and costs of claims. There have been fewer claims, but they have been more costly. Receipts are down and benefits paid are somewhat static. 9:37:34 AM Senator Egan asked how increasing the benefit amount to $10,000 would impact the surplus/deficit column. Mr. Monagle reported that the administration's ability to approve a claim is currently limited to $2,500. There are typically 100 appeals twice a year for claims between $2,500 and $10,000, some of which are paid. The department felt that it could sustain an increase of about $65,000 if it paid those claims. 9:39:24 AM Co-Chair Stedman asked for further information about the breakdown of claims. Senator Egan asked who administers the Fund and decides on the amount of the year-end Fund balance. Mr. Monagle said the Fund balance is a moving target and is not set. The council keeps an eye on it when paying extra benefits. SB 163 was heard and HELD in Committee for further consideration. 9:41:54 AM