SB 60-REPEAL WORKERS' COMP APPEALS COMMISSION  2:48:44 PM CHAIR BJORKMAN reconvened the meeting and announced the consideration of SENATE BILL NO. 60 "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 BJORKMAN invited Mr. Dunsmore to put himself on the record and recap the bill. He said this bill was first heard on February 27. 2:49:14 PM DAVID DUNSMORE, Staff, Senator Bill Wielechowski, Alaska State Legislature, Juneau, Alaska, said SB 60 would repeal the Alaska Workers' Compensation Appeals Commission (WCAC), which handles appeals directly from the Alaska Workers' Compensation Board. SB 60 would restore jurisdiction of those appeals to the Alaska Court System. The repeal would save the state $472,900 per year. He said the Alaska Court System provided a zero fiscal note. 2:50:13 PM CHAIR BJORKMAN asked whether, taking into account the history and structure of the Workers' Compensation Appeals Commission, there is another quasi-judicial, decision-making board in the state that follows a similar process of appealing to an intermediary entity before petitioning the Alaska Supreme Court. MR. DUNSMORE expressed his belief that the answer is no, stating he believes this is a unique structure where the appeals commission takes on the role that the Superior Court plays in other administrative matters. CHAIR BJORKMAN asked whether a different state agency could take on this role. MR. DUNSMORE replied that the Office of Administrative Hearings (OAH) contracts with certain agencies to handle administrative hearings. It has been discussed in the past whether moving this responsibility to OAH would be appropriate. He said that Senator Wielechowski's position is this would not result in cost savings. It is appropriate for the courts to hear these appeals since they are from the initial deliberative administrative body. CHAIR BJORKMAN wondered what recourse a person who disputes a workers' compensation claim decision would have if the Workers' Compensation Appeals Commission were eliminated. 2:52:53 PM MR. DUNSMORE replied that SB 60 would restore the jurisdiction for those appeals to the Alaska Superior Court. A workers' compensation appeal would be handled like other administrative appeals and decisions. The Superior Court would handle the part of the Workers' Compensation Appeals Commission. CHAIR BJORKMAN said the Workers' Compensation Appeals Commission was created in 2006. He said that initially, the number of cases rose; however, the number of cases heard in the past ten years has decreased significantly. He asked what caused the Workers' Compensation Appeals Commission workload to decrease by two- thirds or more. MR. DUNSMORE replied that he cannot provide a specific answer to that question. However, the commission is an appeals body that primarily handles matters of law, and as more case law is developed, there is less ambiguity that parties might choose to challenge. He said that the decrease in workload is likely due, in part, to this factor. CHAIR BJORKMAN said that it is his understanding, as well, that there has been significant work toward mediation in the proceedings before the Alaska Workers' Compensation Board that likely avoids appeals to the commission. 2:54:48 PM SENATOR DUNBAR commented that since 2006, industry often reports about its tremendous focus on safety. He expressed hope that workers' compensation claims are decreasing as a whole because there are fewer injured workers. Safety is a commitment in almost every industry. Alaska has seen a significant reduction in workplace injuries. He expressed curiosity about who appeals to the commission, for example, the employee, the insurer, or other party. MR. DUNSMORE replied that he has not seen a breakdown of the number of appeals from claimants and the number from insurers. SENATOR DUNBAR noted that he found only one statement in his packet either for or against SB 60, and that statement came from insurers in favor of keeping WCAC. He expressed his belief that the committee did not receive any statements of opposition from workers' groups. He said this seems to indicate that perhaps insurers might take advantage of the Workers' Compensation Appeals Commission more frequently, but it is hard to know with only one piece of commentary in the packet. 2:56:44 PM CHAIR BJORKMAN expressed his understanding that before 2005/2006, when the Workers' Compensation Appeals Commission was established, it took the Superior Court 8 - 18 months to render a decision. Since then, the timeframe to issue a decision has averaged around one year. In 2015, a Department of Labor and Workforce Development (DOLWD) report stated that the timeliness of those decisions changed very little. He sought confirmation as to the accuracy of this information. MR. DUNSMORE expressed his belief that the information is correct. He noted that a significant decrease in workload has led to enhanced efficiency within the commission in recent years. He expressed his belief that enacting SB 60 would improve the average speed of reaching a final resolution in cases. He explained that during the deliberation on legislation to create the Workers' Compensation Appeals Commission, committee minutes indicated that approximately 25 percent of appeals from the Superior Court were appealed to the Supreme Court. In recent years, about 50 percent of the commission's cases were appealed. The sponsor believes that restoring jurisdiction to the [superior] court would expedite the average time to reach final resolution for cases. This is because an appeal to the Supreme Court can add months or years to the time it takes to get a final resolution. CHAIR BJORKMAN sought clarification that currently appeals go straight from the Workers' Compensation Appeals Commission to the Supreme Court and that repealing the Worker's Compensation Appeals Commission would restore jurisdiction to the Superior Court. MR. DUNSMORE replied that is correct. 2:59:10 PM CHAIR BJORKMAN opened invited and public testimony on SB 60. 3:00:10 PM CHAIR BJORKMAN expressed his intention to ask Mr. Collins questions to provide more depth to the deliberations. [Technical audio difficulty.] 3:00:38 PM At ease. 3:01:52 PM CHAIR BJORKMAN reconvened the meeting and asked Mr. Collins how the process for a workers' compensation claimant works currently and how a claimant would be affected if SB 60 were enacted. 3:02:39 PM CHARLES COLLINS, Director, Division of Workers' Compensation, Department of Labor and Workforce Development (DOLWD), Juneau, Alaska, explained the current workers' compensation process in Alaska. Under the existing system, an injured employee has the right to file a claim and receive the appropriate benefits. He said it is supposed to be a non-confrontational law; however, on occasion, employers may contest claims if they suspected errors in a claim or had concerns about certain benefits, like indemnity or medical. In such cases, the matter can be brought before the Alaska Workers' Compensation Board. This board consists of a hearing officer employed by the Division of Workers' Compensation and two panel members, one representing labor and one representing industry. MR. COLLINS said the board conducts an adjudication process, and its decision is published. If any party, be it the employer, an insurance company acting on behalf of the employer, or the employee, believes the case was not properly decided, they have the right to appeal. Currently, these appeals are directed to the Workers' Compensation Appeals Commission that deals exclusively with workers' compensation matters. The appeals commission consists of an administrative law judge or commissioner with workers' compensation law expertise, two industry members, and two labor members, all of whom are past Alaska Workers' Compensation Board members. 3:04:42 PM MR. COLLINS said appeals are submitted in writing to the appeals commission or, occasionally, via oral testimony. The Workers' Compensation Appeals Commission has the option to remand it back, remand it back in part, or uphold the board's decision. Due process allows a party the right to further appeal to the Supreme Court. He said all of these things happen occasionally. He offered a few statistics about appeals to the Workers' Compensation Appeals Commission. In the past three years, 54 percent of those appeals involved legal assistance, and 46 percent were pro se, unrepresented employees. [Technical audio difficulty.] 3:05:46 PM At ease. 3:06:45 PM CHAIR BJORKMAN reconvened the meeting. He asked whether there are other similar bodies specifically assembled to review decisions made by another quasi-judicial body. MR. COLLINS replied that the closest comparable body would be the Office of Administrative Hearings (OAH). OAH hears appeals from many departments, including occasional unemployment insurance tax appeals from DOLWD. OAH was established to provide a centralized venue for administrative law matters and due process. Alaska refrained from using OAH for workers' compensation cases because of the specialized nature of workers' compensation law. CHAIR BJORKMAN asked whether committee members had questions or if Mr. Collins wanted to add to his testimony. MR. COLLINS said he would like to submit additional information. He said workers' compensation law is in Title 23 of the Alaska Statutes and 8 AAC 45 of the Alaska Administrative Code. He held up a book governing workers' compensation law and underscored that this area of law is considerably more specialized than many types of law in the state. He noted that having a specialized knowledge of workers' compensation is not required to practice it but reiterated that it is a specialized subset of the law in its own right. 3:10:00 PM CHAIR BJORKMAN asked if other states have a structure similar to the Workers' Compensation Appeals Commission in Alaska. MR. COLLINS replied every state administers workers' compensation law differently. Workers' compensation is a state prerogative, and its administration differs from state to state. Several states have commissions where appeals stay within their workers' compensation domain and eventually make it to the Supreme Court. For instance, Maryland does not have panels; they have judges overseeing the first hearings, which can be appealed to a commission judge with whom they work closely and is more interchangeable than in Alaska. In contrast, Alaska separates the appeals commission from the workers' compensation adjudication process. While the appeals commission falls under the Director of the Division of Workers' Compensation, it is separate from the adjudication side. Information is not shared until formal paperwork is sent indicating an appeal has been initiated. The two entities operate from separate locations, maintaining a distinct separation. CHAIR BJORKMAN sought confirmation that in other states, the workers' compensation board has an internal appeals process to review their decisions, address potential issues, and subsequently make another decision. MR. COLLINS replied that is correct. Some states are more aligned internally and do not set their process off. He noted that the specific procedures vary from state to state, but there is always an appeals component. There are very few states that go directly to the courts. For example, Nebraska does not have a workers' compensation board. He expressed his belief that everything goes through the courts there. The breadth of what happens across America and worldwide varies, and Alaska's approach falls within the more common area. 3:13:06 PM CHAIR BJORKMAN asked Ms. Mead what the additional caseload on the court system would be and the effect on its capacity to carry out its functions if WCAC were eliminated. 3:13:38 PM NANCY MEADE, General Counsel, Alaska Court System (ACS), Anchorage, Alaska, said she submitted a zero fiscal note. She explained that SB 60 will represent more work for the ACS judges; however, that will not justify another judge or staff person. She anticipates that the appeals will be spread around the state, but most will be filed in Anchorage or Juneau. She reiterated that these cases are very difficult, but the court can handle them. ACS receives appeals from other agencies and the Office of Administrative Hearings, which are handled differently in the Superior Court from other cases. Superior Court cases are usually trials, but agency appeals are submitted mostly on documents. There is often no oral argument, so they are paper-intensive. They are a little bit of a side issue for judges compared to the day-to-day work of hearings, monitoring the progress of ongoing trials, and pretrial preparation. It is hard to anticipate their numbers and effect on the court system. She said in past years there were 30 to 35 cases per year. However, during the pandemic, those numbers plummeted because fewer people were working and fewer things were happening in state government and business. However, if the case numbers returned to 30 to 35, that would mean an increase in administrative appeals that would need to be handled by Superior Court judges. She said the judges in Anchorage will get more cases than others, possibly three per Anchorage civil judge. She reiterated that these are time-consuming, difficult cases. In the past, before WCAC, cases were resolved in eight to eighteen months. She expressed her concern about this statistic, noting judges are not generally familiar with these cases, and each case presents a learning opportunity for the judge to whom it is assigned. She testified that ACS can accept these cases if that is the policy of the legislature. 3:16:19 PM SENATOR DUNBAR said the sponsor provided evidence indicating that before the appeals commission was established, about 25 percent of the Superior Court decisions were appealed to the Supreme Court, whereas 50 percent of WCAC decisions have been appealed to the Supreme Court since 2011. He expressed his understanding that SB 60 would increase the workload on Superior Court judges. He asked whether the bill might decrease the workload on the Supreme Court because the Superior Court judges might resolve the cases in a way that reduces their susceptibility to appeal. MS. MEADE replied that she has not been able to verify or find data on that difference and how many cases go to the Supreme Court, so she said that she could not comment on that matter. She conveyed that one of the advantages of having a Workers' Compensation Appeals Commission is that the decision of that commission binds the Alaska Workers' Compensation Board, which creates precedent. Each decision creates a precedent, which might explain why fewer cases are going to WCAC. The body of law is well established now. The same is not true of Superior Court judges. She said that if Judge Jones in Anchorage renders a decision on a workers' compensation appeal, that decision will not impact a different Superior Court judge. The court system will not get settled law until the Supreme Court renders a decision in a case. So, this is something that could be lost by eliminating the Workers' Compensation Appeals Commission. She reiterated that Superior Court decisions do not have precedential value, which is one of the reasons these cases were given to an appeals commission in the past. 3:18:31 PM SENATOR DUNBAR said that with 50 percent of WCAC decisions appealed to the Alaska Supreme Court, it is rendering decisions on the appeals commission's rulings, and those decisions are generating precedent. He sought confirmation that those Supreme Court decisions have generated precedent for the last 17 to 18 years. MS. MEADE replied yes; however, a majority of those appealed to the Supreme Court were ultimately dismissed or denied. The Alaska Supreme Court only publishes a handful of workers' compensation opinions yearly, which has been fairly consistent. 3:19:46 PM CHAIR BJORKMAN closed public testimony on SB 60. CHAIR BJORKMAN commented that this bill requires legislators to make a policy call on whether the $500,000 cost to operate the Worker's Compensation Appeals Commission is worth its value to workers and employers. Arguments for and against have accumulated over its 17-year history. He expressed his belief that the Senate Judiciary Committee should review the quasi- judicial, judicative questions and, for that reason, he wishes to move SB 60 to the next committee of referral. He expressed his intention to sign "no recommendation" to this bill today, continue policy discussions, and weigh the merits of the bill. CHAIR BJORKMAN found no further discussion and solicited the will of the committee. 3:21:16 PM SENATOR GRAY-JACKSON moved to report SB 60, work order 33- LS0330\A, from committee with individual recommendations and attached fiscal note(s). CHAIR BJORKMAN found no objection and SB 60 was reported from the Senate Labor and Commerce Standing Committee.