SB 76-REPEAL WORKERS' COMP APPEALS COMMISSION  2:01:59 PM CHAIR BISHOP announced that the final order of business would be SENATE BILL NO. 76, "An Act repealing the Workers' Compensation Appeals Commission; relating to decisions and orders of the Workers' Compensation Appeals Commission; relating to superior court jurisdiction over appeals from Alaska Workers' Compensation Board decisions; repealing Rules 201.1, 401.1, and 501.1, Alaska Rules of Appellate Procedure, and amending Rules 202(a), 204(a) - (c), 210(e), 601(b), 602(c) and (h), and 603(a), Alaska Rules of Appellate Procedure; and providing for an effective date." CHAIR BISHOP noted that this was the first hearing, there was a committee substitute to consider, and only invited testimony would be heard. 2:02:29 PM SENATOR STEVENS moved to adopt the committee substitute (CS) for SB 76, work order 31-LS0493\M, as the working document. CHAIR BISHOP objected for an explanation of changes. He asked the sponsor to give an overview of the bill before talking about the changes in the CS. 2:02:57 PM SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau, Alaska, sponsor of SB 76, stated that this bill repeals the Workers' Compensation Appeals Commission, which would save the state more than $425,000 a year. He explained that workers injured on the job in Alaska file workers' compensation claims. In 2018, 17,694 reports of injury or occupational illness were filed, which was a 3.8 percent decrease from 2017. When disputes arise, these claims are referred to the Alaska Workers' Compensation Board (WCB) that is composed of a hearing officer who is typically an attorney who works for the state, one representative from labor, and one from management. Under existing law, appeals of the Alaska Workers' Compensation Board are referred to the Workers' Compensation Appeals Commission (WCAC). Of the 17,694 injury reports, the WCB held 213 hearings. The Workers' Compensation Appeals Commission issued 10 decisions in 2016, 10 decisions in 2017, and 14 decisions in 2018. Even though only a few cases are appealed to the WCAP, the annual cost of the commission is $425,000. He said his position is that these appeals could be absorbed by the superior court. In fact, from statehood until 2005 when the commission was created, the superior court heard workers' compensation cases. SENATOR WIELECHOWSKI offered his belief that this is the only instance of an agency in the executive branch where the final decision is not appealable to the superior court. The argument for creating this commission was that the public would benefit from having a commission that had a particular expertise in workers' compensation. However, the workers' compensation system is not more complex than mental health issues, family legal issues, or other complex issues that the superior court handles on a regular basis. SENATOR WIELECHOWSKI said based on the numbers, shortened timeframes have not materialized. Further, about 50 percent of the Workers' Compensation Appeals Commission decisions appealed to the Alaska Supreme Court (ASC) are reversed. In 2005, when the WCAC was established, 25 percent of the cases were appealed to the ASC. That has risen to 79 percent in recent years. SENATOR WIELECHOWSKI said another argument in favor of creating a commission was to have cases decided more quickly. However, at the time the commission was established the superior court took from 7-18 months to issue its decisions. In 2018, the WCAC's Annual Report shows that it took an average of 12 months to issue final decisions. He said the concept of abolishing the commission has been around for a number of years. Five years ago the House Finance budget subcommittee for the Department of Labor and Workforce Development (DOLWD) recommended that the WCAC be eliminated. The subcommittee noted the cost savings and found that the closure rate was not demonstratively better than the process prior to the establishment of the commission. He noted that the report was in members' packets. Subsequently, a bill was filed to abolish the WCAC and the House voted 40-0 to appeal it. He said SB 76 is virtually identical to the one that passed the House. He directed attention to the fiscal note and said the savings would be half the amount reflected in the fiscal note (FN) for 2020 due to the delay. He offered his belief that this bill, which would abolish the WCAC, would have very little impact on members' constituents. 2:09:55 PM DAVID DUNSMORE, Staff, Senator Bill Wielechowski, Alaska State Legislature, Juneau, Alaska, on behalf of the sponsor, said the only change in the proposed committee substitute (CS) for SB 76 was to replace all instances of 2019 with 2020 since the bill did not pass the legislature last session. 2:10:36 PM CHAIR BISHOP removed his objection. SENATOR COSTELLO asked if there was any opposition to SB 76. SENATOR WIELECHOWSKI said no. There were two letters submitted in the past expressing opposition. One was from an attorney who represents employers and the other was from a group of employers who had formed an organization. SENATOR STEVENS asked for an explanation of appeals under both processes. 2:11:36 PM SENATOR WIELECHOWSKI explained that currently an injured worker would file a claim with the Workers' Compensation Board (WCB). An overwhelming majority of these cases are resolved by the board, he said. When cases are appealed, they are referred to the Workers' Compensation Appeals Commission (WCAC). The WCAC is an agency within the executive branch. Either party has the right to appeal to the Alaska Supreme Court (ASC). The WCAC has averaged 19 published decisions per year and 10-14 published decisions between 2016 and 2018. SENATOR WIELECHOWSKI explained that under the bill, it would revert to the pre-2005 process. Appeals from the Workers' Compensation Board decisions would be referred to superior court. Parties could appeal the superior court's decisions to the Alaska Supreme Court. This bill would essentially substitute the superior court for the Workers' Compensation Appeals Commission. 2:13:12 PM MR. DUNSMORE read the following sectional analysis of SB 76: Section 1 establishes that the Workers' Compensation Board (Board) shall maintain records of the repealed Workers' Compensation Appeals Commission (Commission). It also establishes that Commission decisions remain as legal precedent unless overturned or modified by the courts. Section 2 removes references to the Commission. Section 3 removes a reference to the Commission. Section 4 removes a reference to the Commission Section 5 creates a new AS 23.30.126 governing appeals of Workers' Compensation Board decisions. Subsection (a) establishes that Board decisions and orders become effective when filed, that these decisions and orders can be modified or reconsidered, and that a party may appeal a decision or order to the superior court. Subsection (b) establishes that Board decisions and orders are not automatically stayed pending judicial review and establishes the criteria for when a court may issue a stay. Subsection (c) establishes that factual findings made by the Board shall be conclusive if supported by substantial evidence and that AS 44.62.570 governing administrative appeals shall apply to the appeals of Board decisions. Subsection (d) allows the director of the Division of Workers' Compensation to intervene in appeals and to file appeals if a party is not represented by an attorney and the case presents an unsettled question of law. 2:14:45 PM Section 6 is a conforming amendment to reflect the changes made by Section 5. Section 7 removes a reference to the Commission. Section 8 repeals the court rules related to the Commission. Section 9 repeals the statutes related to the Commission. Section 10 contains indirect court rule amendments to reflect the changes made by Section 5. Section 11 establishes which procedures apply to appeals pending before the Commission between June 1 and December 1, 2020. Subsection (a) establishes that the Commission shall continue to handle cases through December 1, 2019 and that the Commission shall continue all cases pending on December 1, 2020. Subsection (b) establishes that the new procedure in Section 5 does not apply to cases before December 1, 2020. Subsection (c) establishes that the old statutes apply for appeals of final decisions made by the commission and issued by December 1st. Section 12 establishes transitional provisions. Subsection (a) establishes that starting June 1, 2020 all new appeals of Board decisions shall be filed with the Superior Court under Section 5. Subsection (b) establishes that appeals of Commission rulings issued by December 1, 2020 shall be filed with the Supreme Court. Subsection (c) ends the Commission's ability to order reconsideration of cases on December 2, 2020. All outstanding requests for reconsideration pending on that date would be automatically rejected, and any party whose request was denied may appeal their case to the Supreme Court. 2:17:07 PM CHAIR BISHOP asked what recourse someone has if they want to appeal. MR. DUNSMORE answered that any pending requests for reconsideration at the commission level would be automatically denied, and the person could file an appeal to the Alaska Supreme Court. MR. DUNSMORE continued the sectional analysis. Subsection (d) requires the Commission to transfer the files for all pending cases to the Superior Court on December 2, 2020 and to provide the parties 30 days' notice of the transfer of jurisdiction. If the court finds that the records do not meet the requirements of the Rules of Appellate Procedure, it may order the Commission to make necessary changes and resubmit them. Section 13 ends the terms of all Commission members on December 31, 2020. Section 14 makes this act only take effect if the court rule changes in Sections 8 and 10 are adopted. Section 15 provides a June 1, 2020 effective date. 2:18:23 PM SENATOR STEVENS asked who serves on the compensation board. SENATOR WIELECHOWSKI answered that the Workers' Compensation Board consists of hearing officers. He offered to provide the information but recalled that five hearing officers, who are typically attorneys, are designated by the commissioner. There are also appointees for labor and for management, appointed by the governor and approved by the legislature. He said the WCAC is similar, with an attorney serving as the chair and two members appointed by the governor from labor and two from management, approved by the legislature. He characterized these as "very good people." He said he knows them all. He previously served as a hearing officer. He said, "They are outstanding public servants." One of the concerns is that the commission is acting as an appellate court and deciding issues of law, but some members have little legal training. In deciding Workers' Compensation Board decisions, that's a real benefit because it gives people a perspective in the workplace. However, in deciding appellate law issues like a superior court would, it is a little bit of a detriment, he said. 2:20:23 PM SENATOR GRAY-JACKSON asked why the commission was established in 2005. SENATOR WIELECHOWSKI answered that it was intended to create expertise in workers' compensation. He reiterated that since it is structured as an appellate court, the commission members must decide complex legal issues with very little legal training. Another argument was cases would be decided quicker, but that has not been the case. The cost does not justify the results, he said. SENATOR GRAY-JACKSON related her understanding that the WCAC has not been cost-effective. SENATOR WIELECHOWSKI said that has been an argument. 2:22:28 PM CHANCY CROFT, representing self, Anchorage, Alaska, said he is a retired attorney and retired legislator. He did not like the creation of the Workers' Compensation Appeals Commission from the beginning, he said. One issue that has not been discussed is that the three members of the "appellate court" aren't always available whereas a superior court judge can always make a decision on a case. MR. CROFT said compensation must be paid when it is ordered and when it is not paid within 14 days of the order there is a penalty. This compensation includes time loss benefits and medical benefits. The commission often does not meet within 14 days, he said. The WCAC adopted a procedure, likely out of necessity but it is still a substantial defect. This procedure indicates the WCAC could later enter an order that said the case is stayed so no penalty would be due. Because that would be after the 14-day period, the penalty would already have been in effect. The commission adopted a technique that is called "nunc pro tunc" which means "now for then" The commission would grant the stay months after the case had been filed. In an overwhelming majority of cases, compensation wasn't paid, and neither was the penalty. He said that has harmed injured workers in terms of time loss benefits. He cited a 2019 case where time loss and medical benefits were ordered. Both were affected by that procedure, he said. He agreed with the sponsor that many appeals have been reversed by the Alaska Supreme Court. In 2019, six WCAC cases were appealed to the Supreme Court; two of those decisions were affirmed and four were unanimously reversed. He noted that the superior court heard a seventh workers' compensation case, which was a fluke. He emphasized that the appeals commission hasn't had as good a record as the superior court had previously. 2:27:41 PM CHAIR BISHOP stated that he would hold SB 76 for further consideration.