HOUSE FINANCE COMMITTEE April 12, 2000 1:55 P.M. TAPE HFC 00 - 113, Side 1. TAPE HFC 00 - 113, Side 2. TAPE HFC 00 - 114, Side 1. TAPE HFC 00 - 114, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:55 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Representative Austerman Representative Moses Representative Bunde Representative Phillips Representative J. Davies Representative Williams Representative G. Davis ALSO PRESENT Representative Norman Rokeberg; Janet Seitz, Staff, Representative Norman Rokeberg; Alison Elgee, Deputy Commissioner, Department of Administration; John Cyr, President, National Education Association (NEA), Juneau; Dwight Perkins, Deputy Commissioner, Department of Labor and Workforce Development; Paul Grossi, Director, Division of Worker's Compensation, Department of Labor and Workforce Development; Dale Anderson, Staff, Representative Eldon Mulder; Mitch Gravo, Lobbyist, State Homebuilders' Association, Juneau. TESTIFIED VIA TELECONFERENCE Colleen Savoie, Health Care Consultant, Brady & Company, Anchorage; Jim Jordan, Executive Director, Alaska State Medical Association (ASMA), Anchorage; Mary Marshburn, Director, Division of Motor Vehicles (DMV), Department of Administration, Anchorage; Mark Pfeffer, Architect, Brookings, Oregon; Collen Savoir, Anchorage; Paul Lyle, Fairbanks; John Athens, Fairbanks; Kevin Daughtery, Anchorage. SUMMARY HB 211 An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date. HB 211 was HEARD and HELD in Committee for further consideration. HB 324 An Act requiring written consent by the person who is the subject of the information before releasing personal information contained in motor vehicle records, to comply with 18 U.S.C. 2721; and providing for an effective date. HB 324 was reported out of Committee with a "do pass" recommendation and with a fiscal note by Department of Administration dated 2/2/00. HB 419 An Act relating to the weekly rate of compensation and minimum and maximum compensation rates for workers' compensation; specifying components of a workers' compensation reemployment plan; adjusting workers' compensation benefits for permanent partial impairment, for reemployment plans, for rehabilitation benefits, for widows, widowers, and orphans, and for funerals; relating to permanent total disability of an employee receiving rehabilitation benefits; relating to calculation of gross weekly earnings for workers' compensation benefits for seasonal and temporary workers and for workers with overtime or premium pay; setting time limits for requesting a hearing on claims for workers' compensation, for selecting a rehabilitation specialist, and for payment of medical bills; relating to termination and to waiver of rehabilitation benefits, obtaining medical releases, and resolving discovery disputes relating to workers' compensation; setting an interest rate for late payments of workers' compensation; providing for updating the workers' compensation medical fee schedule; and providing for an effective date. CS HB 419 (FIN) was reported out of Committee with a "no recommendation" and with fiscal notes by the Office of the Governor dated 3/29/00, Department of Labor and Workforce Development dated 3/29/00 and the University of Alaska dated 3/29/00. HB 439 An Act relating to the compensation of certain public employees and officials not covered by collective bargaining agreements; and providing for an effective date. HB 439 was HEARD and HELD in Committee for further consideration. HB 445 An Act relating to a rural school construction and planned maintenance pilot program; and providing for an effective date. CS HB 445 (FIN) was reported out of Committee with "individual recommendations" and with a zero fiscal note by the House Finance Committee. HOUSE BILL NO. 211 An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date. REPRESENTATIVE NORMAN ROKEBERG stated that patients need assurance that the quality of their health care will not be compromised as managed care expands. CS HB 2II (L&C) requires managed care entities to provide a reasonable standard of health care, and holds them civilly liable if they do not. It also establishes requirements for contracts between managed care entities and their health care providers, patients and their group managed care plans, health care insurers and the insured, providing patients with the following: • Access to emergency room services; • Availability of medical services or adequate referral options; • Full disclosure of treatment options; • Choice of health care providers, including specialists; • Clear descriptions of covered items and services, benefits, procedures, compensation methods, availability (and exclusions) of prescription medications and the availability of translation or interpreter services; • A point-of-service plan option; • Follow-through of preapproved payment; • Quick utilization review decisions; • Opportunity for appeals of utilization review decisions; and • Added protection from denial, reduction, or termination of payment for health care services. Representative Rokeberg noted that in addition, the legislation would provide health care providers the freedom to share all testing and treatment options with their patients, and would let them advocate for their patients without the risk of being penalized or terminated by the managed care entity they contract with. It also prohibits contracts between managed care entities and health care providers from including "hold harmless" clauses for the managed care entity or financial incentives for providers to withhold medically necessary services. Representative Rokeberg noted that while the legislation streamlines the health care system, managed care might also increase the vulnerability of patients and doctors, resulting in a lower quality of care. The legislation is necessary to ensure continued quality health care in the face of a growing managed care industry. Representative Rokeberg continued his analysis of the legislation before Committee members. · Section 2: Imposes civil liability on managed care entities for certain health care acts. Creates a defense to the civil action and certain exclusions to liability. · Section 3: Imposes certain provisions that must be included in a contract between a health care provider and a managed care entity. Specifies that certain provisions cannot be included in a contract between a health care provider and a managed care entity. Prohibits an indemnification clause in a contract between a provider and a managed care entity. Requires that group managed care plans include certain contract provisions. Imposes certain requirements regarding a covered persons choice of a health care provider, including a non-network option, continuing treatment by a health care provider whose contract is terminated, and notification when a provider contract is terminated for cause. Specifies that medical and financial information concerning a covered person or applicant is confidential. Establishes an external appeals mechanism for covered persons. Adds a provision regarding religious non-medical providers. · Section 4: Makes a violation of AS 21.07 an unfair insurance trade practice. · Section 5: Prohibits a health care insurer from limiting information on care or treatment. Requires that treatment decisions are made by a licensed health care provider trained in the area in question and that denial of coverage occurs only after consultation. Representative Rokeberg spoke to the handout distributed addressing the federal Employee Retirement Income Security Act (ERISA) which was passed in 1974. [Copy on File]. That piece of federal law regulates employee pension and welfare plans. Co-Chair Therriault noted that the letters from the medical association had been drafted to the "M" version of the legislation. He asked the differences between the two versions. Representative Rokeberg pointed out that the April 12 letter from the Alaska State Medical Association (ASMA) addressed the "W" version. [Copy on File]. COLLEEN SAVOIE, (TESTIFIED VIA TELECONFERENCE), HEALTH CARE CONSULTANT, BRADY & COMPANY, ANCHORAGE, noted three areas of concern with the proposed legislation. She commented on the conflict with ERISA. Ms. Savoie suggested placing language in the bill which would clarify that ERISA supercedes language contained in the bill. That action could remove all conflict. She added that there are several items of concern regarding conflict resolution such as removing the fiduciary responsibility from the planned fiduciary. Such an example would be the controversy over medical necessity language which should be included in the plan and decided by the plan's fiduciary. Ms. Savoie pointed out that language had been included in several versions of HB 211 and defined by the medical community. Ms. Savoie noted, an additional concern that the bill does not protect client participants. The bill is a "physicians advocate" bill. She emphasized that in the end, it will have an adverse affect on all the participants. This legislation was not requested by the Alaskan public, but instead it was drafted by the Alaskan physician organizations. Ms. Savoie stated that members and families belonging to the organizations represented by her, do oppose the passage of HB 211 many of which are labor organizations. Ms. Savoie continued, the third area of concern is that the legislation would be detrimental and costly to health care plan sponsors and the participants. She pointed out that health care costs in Alaska are the highest in the nation and that these costs will continue to increase over the years. The costs will be passed down to the plan participants. Ms. Savoie stressed that it is the "physicians" who will be receiving the additional income if the bill passes. JIM JORDAN, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE DIRECTOR, ALASKA STATE MEDICAL ASSOCIATION (ASMA), ANCHORAGE, advised that the proposed version does contain protection for the Alaska clients. He voiced opposition to comments made by the previous speaker. Mr. Jordan added that ASMA feels that the ERISA pre-emption of various states regulating "quality of care" issues, has been significantly narrowed through recent court decisions and it is expected that the National Patients Bill of Rights will address that issue. Mr. Jordan noted that the current version of the bill would provide an important patient protection. The issues of liability and medical necessity need to be addressed by the Legislature during the next session. Representative Rokeberg requested Mr. Jordan explain the importance of inclusion of ERISA in the bill. Mr. Jordan replied that there is a question as to how ERISA is currently constructed and how far the State can go in regulating that. He noted that this is a complex issue and up until the last couple of years, the courts have narrowly interpreted ERISA. In recent years, there have been several court cases that have moved away from that decision. At this time, it is important to determine the quality of care issues versus quantity. The court has specified that in the decisions regarding the quality of care, the State will regulate. That area would still be dependent upon interpretations made by the court. There are three issues in the midst of the debate. The first two are medical necessity and liability and the third deals with the ERISA concerns, expected to be clarified through federal legislation. Vice Chair Bunde inquired what would happen if a situation was not an emergency, and how then would the appeal be addressed. Representative Rokeberg replied that there are two tracks of response. The first is the 24-hour track and the second would be eighteen-days to appeal. Vice Chair Bunde voiced concern with the payment and that itemizing the qualifications of the appeal process would be paid for by the participants. He questioned how the appeal would come to resolution. Representative Rokeberg replied that it would be through a third party external review system. Representative Rokeberg advised that it would cost nothing. In response to Representative Bunde, Representative Rokeberg stated that if the person did not like the appeal, that person could go to court, which would create an arbitration situation. Representative Rokeberg stated that the legislation provides for truly independent review and judgement which is the centerpiece of the legislation. Representative Bunde clarified that the last review would rest with the independent third party before it goes to court. (TAPE CHANGE, HFC 00 - 113, Side 2).  Representative Rokeberg pointed out the letter included in member's packets from Blue Cross and Blue Shield of Alaska indicating their support of the bill. [Copy on File]. JOHN CYR, PRESIDENT, NATIONAL EDUCATION ASSOCIATION (NEA), PRESIDENT OF NEA-ALASKA HEALTH TRUST, JUNEAU, noted that NEA Health Trust insures the health of about 15,000 Alaskans, and is an ERISA trust. He voiced concern when he heard that the ERISA trust interpretation would be decided by the court. He asked what this would cost the NEA Health Trust down the road in legal fees. If a person were insured with the NEA Alaska Health Trust, there exists only a question of whether or not the procedure you need would be covered in the health plan. There is an appeals procedure that is built into that process. He stated that the main concern now is if a service is covered or not. Mr. Cyr requested that language be added to the bill which clearly states that ERISA trusts are not covered by this bill. He emphasized that by litigating some sections of the bill would mean that ultimately, NEA members would bear those costs. Additionally, Mr. Cyr asked what the proposed legislation would do to health care costs. At this time, the school districts across the State are looking at a 15-20% increase to health care costs across the board. As an employer, the cost of health went up 44% last year. Small businesses can not afford any future raises in the health care costs. Co-Chair Therriault asked if ERISA indicated that State law does not apply, would there need to be language added which clarifies that State law does not apply to the federal law. Mr. Cyr commented that he did not believe so until previous testimony regarding the courts being the final decision making body. Co-Chair Therriault advised that the Committee would hold the bill to determine if that concern was valid. Representative Rokeberg stated that the testimony from Mr. Jordan indicates that the line of cases has to do with quantity and quality. Only if it were a quality care issue, would case law come down. He emphasized that the bill would not apply to Mr. Cyr's organization. Representative J. Davies questioned how removing the ERISA concern would "hurt" the bill. Representative Rokeberg stated that it was a quality of care issue, and should be applicable. Representative J. Davies stated that could exclude an entire section of actions of quantity. Representative Rokeberg replied that would not be appropriate; he noted that there are a large number of people that would not be affected by the bill. Mr. Cyr reiterated that NEA Health Trust does not oppose the bill, however, they currently have an ERISA trust, which insures about 15,000 Alaskans. He stated that he would like to see continue in the future. If the passage of the bill meant that health care costs would increase for members that are insured, then NEA would oppose the legislation. Co-Chair Therriault clarified that the risk of litigation which NEA is fearful of, is regarding whether they are included in the bill or not. Representative J. Davies asked if Mr. Cyr understood the distinction between quantity and quality and if it would be appropriate to State regulate that. Mr. Cyr replied that if it is the quality of health care that is the issue, and NEA is not a "player", then it would not be a concern. If there is a question regarding the quality of the service that NEA provides, he pointed out that there already exists a major appeals process within their system. Co-Chair Therriault asked the services that NEA provides. Mr. Cyr replied that NEA serves all the teachers in the Anchorage area school district and all the outlining districts. NEA is self-insured and pays health care costs for all their covered employees. The issues of quality are the timeliness of return, and are handled internally. Those issues are covered under ERISA and it is preferred that they stay that way. When the Health Trust was established, it was set up under that set of guidelines. Representative J. Davies stated that he did not understand the difference between quality and quantity. Mr. Cyr stressed that under ERISA, there is a fiduciary responsibility to their membership to have enough financial savings and insurance to meet their medical needs. Representative Rokeberg noted that a definition of ERISA does exist. He stressed that NEA is exempt because they are self-insured. It is only those ERISA groups that are currently covered by insurance companies that would be impacted by this bill. The potential impact may have provisions at the federal level which would effect ERISA. Representative Rokeberg requested Mr. Jordan to provide case examples. Mr. Jordan stated that there had been an extensive legal analysis provided to the Chair of the House Judiciary Committee. He spoke to the quantity versus quality concerns voiced by Representative J. Davies. When the court makes a determination of the privacy of regulation of the regulatory authority that would be a mandated benefit such as the State mandating that there be coverage for diabetes, would be a quantity type issue. It appears that would be preempted from having the State regulate the interests. Mr. Jordan continued, the quality concern is more difficult to explain. He stated that the definition assumes that an item would need to be covered under the health plan. That could have to do with a particular service that a patient might want that the health plan determines is not medically necessary. It is the type of discussion of what is "not medically necessary", which is a quality issue concern. This area is where the court would decide whether to allow more regulatory authority. Mr. Jordan noted that these types of cases are being brought forward by the people enrolled under these plans. He acknowledged that this is one of the key issues being discussed on the federal legislation level. Currently, the ERISA plan participants are not necessarily covered because of the ERISA pre- exemption language. Federal law does have priority over State law. Representative J. Davies asked further clarification of "medical necessity". He questioned the consequences of not being able to come to an agreement in Committee. Representative Rokeberg replied that a common law definition of medical necessity has been used since statehood. Medical necessity is either defined or indicated in all provided contracts. Whether it is fully defined or not is the issue. The medical profession wishes to redefine it and are working their way around the system. They believe this is justifiable. He assumed that the issue is how to have cost containment and place constraints on them. Every plan is different and the standards will be different. He noted that the review process created in the bill, uses the terms medical necessity and sets out the scope of the contract. Additionally, it will determine the perimeters of the external review board definition. Representative J. Davies summarized comments made by Representative Rokeberg, pointing out that it is determined in the external review process and then ultimately in court. Representative Rokeberg agreed. Vice Chair Bunde asked if cost was a factor considered in the medical judgement. Representative Rokeberg replied that sometimes cost should be a factor and that being aware of cost makes all providers more sensitive to that concern. Representative J. Davies asked if the bill touched the issue of whether the doctors were aware of these costs and their interest in that. He suggested that the decision for the medical group to prescribe would mean more money in their pockets. Representative Rokeberg exclaimed that there is a prohibition to giving incentives. HB 211 was HELD in Committee for further consideration. (TAPE CHANGE, HFC 00 - 114, Side 1).  HOUSE BILL NO. 419 An Act relating to the weekly rate of compensation and minimum and maximum compensation rates for workers' compensation; specifying components of a workers' compensation reemployment plan; adjusting workers' compensation benefits for permanent partial impairment, for reemployment plans, for rehabilitation benefits, for widows, widowers, and orphans, and for funerals; relating to permanent total disability of an employee receiving rehabilitation benefits; relating to calculation of gross weekly earnings for workers' compensation benefits for seasonal and temporary workers and for workers with overtime or premium pay; setting time limits for requesting a hearing on claims for workers' compensation, for selecting a rehabilitation specialist, and for payment of medical bills; relating to termination and to waiver of rehabilitation benefits, obtaining medical releases, and resolving discovery disputes relating to workers' compensation; setting an interest rate for late payments of workers' compensation; providing for updating the workers' compensation medical fee schedule; and providing for an effective date. Representative J. Davies noted a change to Amendment 1, 1- LS1418\I.2, Ford, 4/12/00. [Copy on File]. The change would be to Page 1, Line 14, inserting "sub" before "contractor". Representative J. Davies MOVED to ADOPT Amendment #1. Co- Chair Therriault OBJECTED for the purpose of discussion. Representative J. Davies commented on the intent of the amendment. Present law states that the contractor is responsible for providing workmen's comp insurance for the employees of the subcontractor. The law was written to protect those employees. It was not written to require the contractor to provide insurance for the subcontractor. At present time, it is the practice to interpret it that way. That in fact makes the subcontractor an employee of the contractor. The amendment would clarify that the statute means insuring just the employees and not the subcontractor, himself. Representative J. Davies pointed out that there currently are court cases over this issue. The proposed language provides clarification. The consequences of leaving the language vague, creates circumstances where there would be people working without being insured. He reiterated that the proposed language would clarify the understanding. Vice Chair Bunde asked why the contractor would be responsible for the subcontractor's employees. Representative J. Davies advised that this is a public policy issue decided in the past. The question lies in regard to where the subcontractor with no employees "falls". This needs to be defined one way or another. Representative Phillips stated that was already contained in state law. She understood that the contractor does take care of insurance for the employees but not for an independent subcontractor. Representative G. Davis addressed that the language of the amendment would clarify the conflict. DWIGHT PERKINS, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, agreed that there does exist a problem and recognized that there is a timing issue in the legislation. He noted that there had been discussion in HB 378, a similar bill, previously. Mr. Perkins noted that the Labor Union does have a concern with the legislation. He noted that the Department would defer to the ad hoc committee's recommendations. Mr. Perkins interjected that the Department wanted to work with the homebuilders. He noted that there is concern that the legislation could weigh down the worker's comp fee bill, which previously passed the House floor. PAUL GROSSI, DIRECTOR, DIVISION OF WORKER'S COMPENSATION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, stated that the Department does not have a major position on the amendment. He additionally deferred to the ad hoc committee recommendations. He emphasized that the Department did not want to stop the bill. Co-Chair Therriault questioned the proposed problems presented from organized labor. Mr. Perkins responded that those concerns were along the line of why a subcontractor was not considered an employee and why shouldn't that individual be covered by the contractor's worker's compensation insurance. Mr. Perkins pointed out that law requires that if there are employees, that they must be covered by worker's comp. The conflict arises within the Division of Insurance. Representative J. Davies noted that the law states that the contractor is responsible for the subcontractor's employees if the subcontractor does not have insurance. The assumption is that the subcontractor will carry the insurance. Representative Phillips stressed that would be a separate issue from employee insurance. Mr. Grossi interjected that the general contractor would have liability; a sole proprietor subcontractor is not required in current statute to have worker's compensation insurance. Vice Chair Bunde stated that any subcontractor who did not have the insurance would have a competitive advantage over a subcontractor who did pay the insurance costs. Mr. Grossi agreed that their costs would be less. Representative J. Davies pointed out the Letter of Intent which provides further clarification of the amendment. Co-Chair Therriault WITHDREW his OBJECTION to the amendment. He advised concern that it could change the title. He requested further information from the ad hoc group. KEVIN DAUGHTERY, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, explained that he did have concern with the amendment. He noted that there has always been concern when traditional business practices change. He stated that the amendment would provide a modification to current law. Mr. Daughtery commented that when an owner/operator works as a subcontractor, then the general contractor must insure that proper worker's comp insurance is available. If that were removed, it would change the current process. Mr. Daughtery spoke to the seriousness of this problem. He suggested that language be added to the fee bill. He noted that there is currently an ongoing disagreement with the Department. He acknowledged that this is serious business and that these problems in the construction industry are being addressed on the national level. He reiterated that he was opposed to the amendment as drafted. Representative Phillips stressed that the provision is not a modification to current law but rather a clarification of current law. She emphasized that the amendment clarifies the existing practice. Co-Chair Mulder pointed out that the amendment was drafted to address the subcontractor who does not have employees. Mr. Daughtery argued that the amendment would be a modification to current practice. In the construction industry, if there is a situation where everyone on a job claims to be an owner/operator, the problem is the safety of the workers. They would be disadvantaged by the process. He reiterated that it would be a statutory change and would impact the industry. Co-Chair Mulder asked if this was a subversion of what was intended. Mr. Daughtery explained that there are rules, which start on the federal level. He noted that this language would be wrong, and would "loosen" the law. Co-Chair Therriault suggested that making it tighter would be a clear modification to the existing law. MITCH GRAVO, LOBBYIST, STATE HOME BUILDERS' ASSOCIATION, Juneau, testified on the amendment. He stressed that the amendment would restate Section #1 in the statutes in a different manner. The amendment only addresses if the contractor would be required to cover with insurance for a subcontractor with no employees. There is no statutory authority for the contractor to cover the subcontractor. He added that there currently are a couple of homebuilders dealing with a dispute regarding coverage with an insurance company. Mr. Gravo stressed that the intent of the legislation clarifies that if a contractor has hired a subcontractor and there are no employees, the contractor would not be required to purchase workmen's compensation insurance for that worker. There being NO further OBJECTION, Amendment #1 was adopted. Representative J. Davies MOVED to ADOPT the House Finance Committee Letter of Intent. Representative G. Davis spoke in support of the Letter of Intent. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #2, 1- LS1418\I.1, Ford, 4/11/00. [Copy on File.] Mr. Grossi discussed Amendment #2. He stated that the amendment would mitigate concerns regarding the waiver of reemployment benefits and that a doctor would have to recommend reemployment benefits. There being NO OBJECTION, it was so adopted. Representative Foster MOVED to report CSHB 419 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 419 (FIN) was reported out of Committee with a "no recommendation" and with a House Finance Letter of Intent and fiscal notes by the Office of the Governor dated 3/29/00, Department of Labor and Workforce Development dated 3/29/00 and University of Alaska dated 3/29/00. HOUSE BILL NO. 445 An Act relating to a rural school construction and planned maintenance pilot program; and providing for an effective date. Representative J. Davies MOVED to ADOPT the proposed committee substitute, work draft 1-LS1596\G, Ford, 4/12/00. There being NO OBJECTION, it was adopted. DALE ANDERSON, STAFF, REPRESENTATIVE MULDER, discussed the committee substitute and the changes made to it from the original version of the legislation. He observed that changes had been made in response to concerns regarding sole source bids. MARK PFEFFER, (TESTIFIED VIA TELECONFERENCE), ARCHITECT, BROOKINGS, OREGON, spoke in support of the legislation. He stressed that the legislation would streamline the schedule and produce savings. He stated that the legislation would allow all the traditional methods of design process between architects and owners and between owners and contractors, while at the same time, allows for a management process that provides accountability. Representative J. Davies referenced Line 19, Page 2. He questioned if including "price" would be redundant. Representative J. Davies MOVED to delete the second occurrence of "price" on Line 19, Page 2. There being NO OBJECTION, it was adopted. Vice Chair Bunde provided members with an email from a constituent regarding the bill. [Copy on File]. Co-Chair Mulder noted that there was a zero House Finance Committee fiscal note. Representative Foster MOVED to report CSHB 445 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 445 (FIN) was reported out of Committee with "individual recommendations" and with a new zero fiscal note by the House Finance Committee. HOUSE BILL NO. 324 An Act requiring written consent by the person who is the subject of the information before releasing personal information contained in motor vehicle records, to comply with 18 U.S.C. 2721; and providing for an effective date. MARY MARSHBURN, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, DIVISION OF MOTOR VEHICLES (DMV), ANCHORAGE, stated that the reason for HB 324 was to bring statewide law into accordance with the past federal legislation regarding confidentiality of vehicle records. The information is confidential under current State law and would continue to be so. Ms. Marshburn pointed out that current State law mirrors the former federal law and would release vehicle records for a limited amount of uses. One of those permitted uses would be for marketing and telecommunications. For that use, recently passed federal legislation directs the states to update their regulations and the penalty for not being in st compliance is a $5000 dollar per day, beginning June 1. Vice Chair Bunde asked if it would be prohibited to use that information in political campaigns. Ms. Marshburn replied that the personal information could not be used. (TAPE CHANGE, HFC 00 - 114, Side 2).  In response to Representative Williams, Ms. Marshburn reiterated that the penalty would be $5000 dollars a day. She noted that the loss of revenue expected by the State would be approximately $200 thousand dollars a year. She pointed out that the fiscal note had been drafted to the worst case scenario and indicated that the Department could submit a revised fiscal note. Representative G. Davis MOVED to report HB 324 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 324 was reported out of Committee with "individual recommendations" and with the Department of Administration fiscal note dated 2/2/00. HOUSE BILL NO. 439 An Act relating to the compensation of certain public employees and officials not covered by collective bargaining agreements; and providing for an effective date. ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, stated that the bill provides for cost-of- living increases the same as those provided in the collective bargaining agreements that the Administration has reached with the twelve unions representing State employees, which would be a lump sum payment of up to $1,200 (prorated at $50 per pay period) for fiscal year 2001, a two percent increase in fiscal year 2002, and a three percent in fiscal year 2003. Ms. Elgee noted that the bill was modified in the House State Affairs Committee to remove legislators. She pointed out that the fiscal note accompanying the bill, incorporates the cost of including the legislators. That cost was provided to the Committee as part of the budget amendments submitted in February 2000 from the Governor's Office. PAUL LYLE, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS, asked to waive testimony on the bill until amendments had been proposed. JOHN ATHENS, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS, requested to waive his testimony on the bill until the amendments had been submitted. Representative G. Davis advised that he supported the legislation should the other labor contracts be approved. Representative Bunde stated the only change that he would suggest would be to draw a cut off the increase at Range 24 and higher. Representative J. Davies MOVED to include legislators as well as State employees. Representative Austerman OBJECTED. He questioned what that action would really represent in regard to pay increases. Ms. Elgee explained that the legislators would then become subject to percentage increases as proposed for other employees. Representative Austerman maintained his objection, indicating that until there was a clear message from the Legislature that the employee contract would be funded, he found it difficult to vote for such an amendment. A roll call vote was taken on the motion. IN FAVOR: J. Davies, G. Davis, Foster, Moses OPPOSED: Williams, Austerman, Bunde, Grussendorf Representative Phillips, Co-Chair Mulder and Co-Chair Therriault were not present for the vote. The MOTION FAILED (4-4). HB 439 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 4:20 P.M.