SB 29-REPEAL WORKERS' COMP APPEALS COMMISSION  2:14:07 PM CHAIR COGHILL announced the consideration of SB 29. He welcomed Commissioner Drygas and Director Marx. HEIDI DRYGAS, Commissioner, Department of Labor and Workforce Development (DOLWD), Juneau, Alaska, stated that SB 29 will repeal the Workers' Compensation Appeals Commission and return the appeals process to the courts. She explained that the commission was created to streamline the appeals process and provide expertise in handling workers' compensation cases. However, since the commission was created in 2005, 50 percent of its decisions on the merits have been reversed by the Alaska Supreme Court. This high reversal rate emphasizes the fact that the commission is ineffective. The commission is essentially an appellate court, but it is not composed of a panel of lawyers. Rather, the lay commissioners have no legal training, so it falls to the commission's chair to resolve the legal issues and write the commission's decisions. Therefore, the commission's decisions are the work of just one person, not the work of a panel with legal expertise in workers' compensation. This is a further departure from the intent of the original legislation. Also, the chair is either a former member of the plaintiff's bar or the defense bar, which raises concerns of bias from both sides. COMMISSIONER DRYGAS reported that eliminating the Workers' Compensation Appeals Commission is anticipated to save the department over $220,000 for the remainder of FY18, and over $440,000 in subsequent years. She emphasized that the impact on the public will be minimal. The Court System, which regularly hears administrative appeals, will see an increase of about 20- 30 cases a year. She understands that the Court System can absorb the volume, which is reflected in the zero fiscal note. She concluded, "The commission is a specialty tribunal we can no longer afford in this state's fiscal climate." 2:17:46 PM MARIE MARX, Director, Workers' Compensation Division, Department of Labor and Workforce Development (DOLWD) Juneau, Alaska, reviewed the following sectional analysis for SB 29: Section 1 amends AS 23.30.005, by adding a new subsection, clarifying that unless reversed or modified by a court, decisions of the former commission have the force of legal precedent. It also specifies that the Workers' Compensation Board will be the entity responsible for making sure those decisions are available to the public. Section 2 amends AS 23.30.107(b), by removing reference to the appeals commission in existing statutes. Section 3 amends AS 23.30.108(d), by removing reference to the appeals commission in existing statutes. Section 4 amends AS 23.30.108(e), by removing reference to the appeals commission in existing statutes. Section 5 amends AS 23.30, by adding a new section, clarifying when a board order becomes effective and is final, when it may be stayed, and clarifying when the board's findings are conclusive and binding on a reviewing court, and when the director may intervene in an appeal or petition for review. Section 6 amends AS 23.30.155, by adding a new subsection changing a statutory reference from the appeals commission to the superior court. Section 7 amends AS 39.50.200(b)(31), by removing reference to the appeals commission. Section 8 amends the uncodified law of the State of Alaska, by amending Rule 204(c)(2) Alaska Rules of Appellate Procedure, to address bonds for appeal purposes. Section 9 repeals Rules 201.1, 401.1, and 501.1, Alaska Rules of Appellate Procedure. Section 10 repeals AS [23.30.007,] 23.30.008, 23.30.009, 23.30.125, 23.30.127, 23.30.128, 23.30.129, 23.30.155(f), 23.30.395(10); AS 39.25.110(40); AS 44.64.020(a)(12), and 44.64.020(a)(13). These are statutes that deal with commission proceedings, that reference the commission, that deal with commission appointments, and appeals to the commission. Section 11 amends the uncodified law of the State of Alaska, by adding a new section relating to indirect court rule amendments. Section 12 amends the uncodified law of the State of Alaska, by adding conditional effect language that the Act takes effect only if secs. 8, 9 and 11 receive the two-thirds majority vote of each house required by art. IV, sec. 15 of the Alaska Constitution. Section 13 amends the uncodified law of the State of Alaska, by adding a new section relating to applicability of amendments to proceedings pending before the Commission. Section 14 amends the uncodified law of the State of Alaska, by adding transitional language clarifying proceedings seeking review of a board decision and order that have not yet been filed before the Commission, must be filed in the superior court on or after June 1, 2017 Any appeals not completed by the appeals commission on or before December 1, 2017 will be transferred to the superior court on December 2, 2017, and clarifying procedures for requests for reconsideration during the transition period. Section 15 amends the uncodified law of the State of Alaska, by adding transitional language. Section 16 clarifies when the Act takes effect. 2:21:31 PM SENATOR COSTELLO asked for an explanation of rules 602(c) and (h), Alaska Rules of Appellate Procedure. Those are repealed in the title of the House companion bill, but not in SB 29. MS. MARX deferred the question to Kimber Rodgers with the Department of Law. 2:22:38 PM KIMBER RODGERS, Assistant Attorney General, Civil Division, Labor and State Affairs Section, Department of Law, Anchorage, Alaska, explained that those rules relate to notice of appeal and the parties to the appeal. She said they realized they were indirectly amending those rules because the bill permits the director of the Division of Workers' Compensation to file an appeal for review in the superior court or to intervene in an appeal or petition for review in the superior court. SENATOR COSTELLO summarized that the Senate 29 does not reference those rules in the title, but it's implied in the bill. MS. RODGERS said that's correct; it's in the bill so it needed to be referenced in the title. The House version also added language explaining the indirect amendment. CHAIR COGHILL suggested Nancy Meade supplement the explanation. COMMISSIONER DRYGAS said she understands that the changes in the House version were at the request of the Court System. 2:25:49 PM CHAIR COGHILL asked if Section 1 establishes that past decisions of the Workers' Compensation Appeals Commission have legal precedent. MS. MARX explained that Workers' Compensation Appeals Commission appeals currently have the force of legal precedent. Section 1 ensures that decisions that have occurred remain precedential and binding on the Alaska Workers' Compensation Board. CHAIR COGHILL asked if the decisions the court makes would also have the force of legal precedent. MS. MARX replied superior court decisions would not have precedential effect on the Alaska Workers' Compensation Board decisions. She deferred to Ms. Meade to talk about the precedential value of superior court decisions. CHAIR COGHILL asked if the precedent is nullified if the superior court overturns a decision of the commission. MS. MARX explained that the appeals commission decisions would not be appealed to the superior court so that court would not have the opportunity to reverse decisions of the appeals commission. Should the bill pass, appeals of Workers' Compensation Board decisions would go directly to the superior court. COMMISSIONER DRYGAS added that if the commission is repealed, board decisions that are appealed would go straight to superior court and those decisions would not have precedential value on the board. If a case is appealed from the superior court to the Alaska Supreme Court, that decision would have precedential value. 2:29:37 PM SENATOR MEYER asked who might oppose the bill. COMMISSIONER DRYGAS said she anticipates there will be testimony from both sides. However, the testimony in favor of keeping the commission won't address the cost of keeping the commission. She related that when she started as commissioner two years ago she was asked to look at the statutes and identify what was not working that the legislature could undue. The Workers' Compensation Appeals Commission was identified during that process. "It didn't live up to its expectations." SENATOR MEYER observed that this will not only save the state money but also provide faster resolution of appeals. COMMISSIONER DRYGAS replied it may not be faster but it will be just as fair. The people she has talked to from the plaintiffs' bar are ready to take a little delay in exchange for returning to the judicial process. The current process with the board and the commission is a double administrative layer. That has always been somewhat a concern. SENATOR MEYER asked if she said that a large percentage of the decisions were appealed to the Supreme Court. COMMISSIONER DRYGAS clarified that just a limited number of cases are appealed to the Supreme Court after they go through the commission process. She noted that the case records show that there has been a significant decline in the number of cases that have been appealed from the board to the commission. The anecdotal evidence is that individuals thought they would not get a fair shake, so they settled short of appealing to the commission. SENATOR MEYER noted that Ms. Meade indicated in a previous committee that this change would not have a fiscal impact on the Court System. CHAIR COGHILL asked if switching to the court wouldn't have a cost factor for the worker and employer. 2:37:02 PM COMMISSIONER DRYGAS replied there is a cost of doing business in the Court System that every citizen faces when they appeal a case. Filing fees and associated costs probably would not prevent a litigant from appealing a case and she didn't believe attorney fees under either process would differ significantly. CHAIR COGHILL asked Ms. Meade to discuss the Court System perspective. 2:39:05 PM NANCY MEADE, General Counsel and Deputy Administrative Director, Administrative Staff, Alaska Court System, advised that there is a significant difference between SB 29 and the amended House bill. The House committee substitute reflects work she and the department did to ensure that the procedures would be the most effective and efficient possible. She said the differences between the two bills are primarily in Section 5. They are mostly procedural and probably completely noncontroversial. For example, the amended House bill ensures that the procedure in the statute about when a decision is final and can be appealed aligns with the procedure in the court rules for when cases can be appealed from administrative agencies. The House committee substitute reflects procedural and technical differences that are important to the Court System to ensure a smooth process. MS. MEADE said the court can absorb these cases without hiring another judge or additional staff, if that is the choice of the legislature. She estimated that the court would get about 33 new cases a year for the superior court judges statewide to handle. Most of the cases would occur in Anchorage where there are 11 superior court judges. She advised that the process probably would not be any faster. She estimated that the average time for the judge to issue a decision might be up to a year. She explained that it was at her suggestion that the House committee substitute amends Rules 602(c) and (h), Alaska Rules of Appellate Procedure. These were overlooked in the original versions of the bill. "Those are added back in and the Rules attorney will basically cross out appeals commission every time it appears in the appellate rules because they were added to the appellate rules in 2005 when the change occurred." 2:44:16 PM CHAIR COGHILL asked if preemption allows a litigant to request a different judge, whereas that option doesn't exist with the commission. MS. MEADE said yes. She explained that in any court case each party has one chance to bump the assigned judge. There is a five-day time limit for doing so, which would not be a significant delay in the resolution of the case. 2:46:50 PM CHAIR COGHILL held SB 29 in committee for further review.