SB 147-WORKERS' COMP EMPLOYER LIABILITY  CHAIR ELLIS announced SB 147 to be up for consideration. SENATOR HOLLIS FRENCH, sponsor of SB 147, said this bill tries to fix a severe inequity that the addition of three words "or potentially liable" for securing payment or compensation to the workers' compensation statutes created when it last went through the legislature. This means that employers who are merely "potentially liable" for buying a workers' compensation policy, but who do not actually purchase a policy, can still get the benefit of the exclusiveness of remedy provisions in workers' compensation statutes. 3:24:37 PM LINDA HALL, Director, Division of Insurance, Department of Community, Commerce and Economic Development, said she has talked with four attorneys and she is not quite sure she understands it. 3:25:58 PM SENATOR BUNDE asked if Tesoro didn't have workers' compensation and hired a sub who did have workers' compensation and the sub's employee got hurt, was his compensation limited to workers compensation. But if Tesoro purchased workers' compensation and the person gets hurt, is Tesoro immune from tort suits. 3:27:46 PM MS. HALL said she couldn't answer the question. PAUL LISANKIE, Director, Division of Worker's Compensation, Alaska Department of Labor and Workforce Development, said he is not an expert in tort legislation either, but he attempted to explain: Under the 2004 law the project owner would be potentially liable for everybody below for their workers' compensation only if the people that had the primary responsibility failed to cover that responsibility. So they would only be responsible for that injured subcontractor if both the subcontractor employer and the intermediary general contractor, both of them, failed to cover the workers' compensation coverage. Then the project owner would be responsible for paying those workers' compensation benefits and in exchange, in a sense, they would not be liable for being sued for the damages. That was under '04. They weren't very likely to have to pay workers' compensation. I would certainly agree with that characterization, that the primary responsibility is with the subcontractor employer. And presumably most of them follow the law. If they fail, then it would move up one step to the general contractor for whom they are working and most of them follow the law and have workers' compensation liability coverage. But in the event that both of those fail, then it would flow up to the project owner and under the laws that were changed in 2004, they would now have responsibility for workers' compensation payments that they didn't use to have. But the change in '04 was they were added to the mix of people that had this very somewhat attenuated liability for the workers' compensation benefits to the lower employees. They didn't use to have that. It used to stop at the general contractor. They were the only intermediary other than the actual employer that was required to pay workers' compensation benefits. In '04 the project owners were added to be kind of suspenders on top of the belt on top of the belt. So it was like primary responsibility with the employer, secondary responsibility with the general contractor, and tertiary responsibility with the project owner. In exchange, for that, if you think it's worth anything, you know, then they were exempt from being sued for that same injury - even if they were negligent. So now what this bill before you is talking about is taking it back in the other direction and saying that that is a too attenuated liability. It's extremely unlikely....that they will end up paying workers' compensation even if they have coverage. So, as I understand it, it will be changed so that if for some reason they actually pay the benefits, that they will not be sued or they cannot be sued. But the mere fact that they might under some set of circumstances be liable will not longer shield them from a tort suit for their own negligence. 3:32:03 PM SENATOR BUNDE asked if under current law the owner that doesn't have to buy workers' comp, and if it went to trial the most they would be liable for would be the workers' compensation benefits. MR. LISANKIE replied with what he understood from discussions with Ms. Hall and others that a project owner is typically a company, and it has the responsibility to cover workers' compensation benefits for its employees; this would be an add on to that. The question is how much credit should be extended potentially to an employee - not their own - but of this other company that is working for them. 3:33:38 PM SUSAN ORLANSKY, Attorney, Feldman Orlansky & Sanders, Anchorage, said Mr. Lisankie's understanding of the law comports with her understanding both of how it is working currently and how it would be changed under this bill. SENATOR BUNDE asked if this bill passes, then the owner would not be forced to buy workers' compensation, but even if he bought it, an employee of a subcontractor who got hurt could sue the owner. MS. ORLANSKY said she understands the way the bill would work is if an employee of a subcontractor were hurt and the subcontractor didn't carry workers' compensation insurance and the general contractor didn't either, if the project owner had workers' compensation or stepped up to the plate and provided the equivalent of workers' compensation benefits, then he would be exempt from a tort suit. If the cause of the accident was due to the project owner's negligence and he didn't have workers' compensation coverage, he could be subject to a tort lawsuit. 3:36:03 PM SENATOR BUNDE said he agreed with Senator French about fairness. If this passes it would be unfair for owners of companies that would buy the insurance but still be subject to a personal injury suit. However, it may not be any fairer to leave it in place. 3:38:41 PM SENATOR HOFFMAN said he still doesn't feel comfortable with the issue. CHAIR ELLIS said he would like to expand the discussion to allow more members of the Senate to express themselves. 3:39:28 PM SENATOR FRENCH added that there is a policy decision to be made here and he agreed with expanding the discussion. There is no perfect solution to every legal issue. However, he thought this bill restores a fundamental balance in the workers' compensation law. CHAIR ELLIS said he would hold the bill for further consideration.