ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 25, 2002
3:20 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Andrew Halcro, Vice Chair
Representative Kevin Meyer
Representative Pete Kott
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
Representative Norman Rokeberg
COMMITTEE CALENDAR
HOUSE BILL NO. 333
"An Act extending the termination date of the Regulatory
Commission of Alaska; and providing for an effective date."
- MOVED HB 333 OUT OF COMMITTEE AGAIN
WITH A LETTER OF INTENT
HOUSE BILL NO. 393
"An Act relating to unfair and deceptive trade practices and to
the sale of business opportunities; amending Rules 4 and 73,
Alaska Rules of Civil Procedure; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 215
"An Act relating to the use of pharmaceutical agents in the
practice of optometry; and providing for an effective date."
- MOVED CSHB 215(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 318
"An Act relating to a health insurance uniform prescription drug
information card; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 333
SHORT TITLE:EXTENDING THE REGULATORY COM. OF ALASKA
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
01/16/02 1981 (H) READ THE FIRST TIME -
REFERRALS
01/16/02 1981 (H) L&C, FIN
02/13/02 (H) L&C AT 3:15 PM CAPITOL 17
02/13/02 (H) Scheduled But Not Heard
02/20/02 (H) L&C AT 3:15 PM CAPITOL 17
02/20/02 (H) Moved Out of Committee
MINUTE(L&C)
02/25/02 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 393
SHORT TITLE:SALES OF BUSINESS OPPORTUNITIES
SPONSOR(S): REPRESENTATIVE(S)STEVENS
Jrn-Date Jrn-Page Action
02/08/02 2182 (H) READ THE FIRST TIME -
REFERRALS
02/08/02 2182 (H) L&C, JUD
02/25/02 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 215
SHORT TITLE:OPTOMETRISTS AND PHARMACEUTICALS
SPONSOR(S): LABOR & COMMERCE BY REQUEST
Jrn-Date Jrn-Page Action
03/26/01 0730 (H) READ THE FIRST TIME -
REFERRALS
03/26/01 0730 (H) HES, L&C
04/24/01 (H) HES AT 3:00 PM CAPITOL 106
04/24/01 (H) Moved Out of Committee
04/24/01 (H) MINUTE(HES)
04/25/01 1197 (H) HES RPT 3DNP 4NR
04/25/01 1197 (H) DNP: COGHILL, WILSON, CISSNA;
04/25/01 1197 (H) NR: KOHRING, JOULE, STEVENS,
DYSON
04/25/01 1197 (H) FN1: ZERO(CED)
02/22/02 (H) L&C AT 3:15 PM CAPITOL 17
02/22/02 (H) Heard & Held
MINUTE(L&C)
02/25/02 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE GARY STEVENS
Alaska State Legislature
Capitol Building, Room 428
Juneau, Alaska 99801
POSITION STATEMENT: Testified as the sponsor of HB 393.
JULIA COSTER, Assistant Attorney General
Fair Business Practices Section
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Answered questions regarding HB 393.
JOHN W. HESSE, II, Senior Attorney and Director
Government Relations
Direct Selling Association (DSA)
1275 Pennsylvania Avenue, NW, Number 800
Washington, DC 20004-2411
POSITION STATEMENT: Testified that DSA is in support of
Alaska's regulating business opportunities, but the question is
how to do so.
PAM LaBOLLE, President
Alaska State Chamber of Commerce
217 2nd Street, Suite 201
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 393.
DOUG LETCH, Staff
to Representative Gary Stevens
Alaska State Legislature
Capitol Building, Room 428
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions on HB 393 on behalf of
Representative Stevens, sponsor.
CATHERINE REARDON, Director
Division of Occupational Licensing,
Department of Community and Economic Development
PO Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Answered questions relating to HB 215.
ACTION NARRATIVE
TAPE 02-24, SIDE A
[Due to a taping malfunction, the first 2.5 minutes of this
meeting are not available on tape; instead, the first portion of
Side A is from the end of the meeting. Therefore, the first
part of the committee meeting was reconstructed from log notes.]
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:20 p.m.
Representatives Hayes, Meyer, Halcro, and Murkowski were present
at the call to order. Representatives Kott and Crawford arrived
as the meeting was in progress.
HB 333-EXTENDING THE REGULATORY COM. OF ALASKA
CHAIR MURKOWSKI announced the first order of business, HOUSE
BILL NO. 333, "An Act extending the termination date of the
Regulatory Commission of Alaska; and providing for an effective
date."
CHAIR MURKOWSKI informed the committee that there had been a
letter of intent drafted to accompany HB 333, which was moved
from committee on February 20 [2002]. The letter of intent
indicates the House Labor and Commerce Standing Committee and
the Senate Labor and Commerce Standing Committee will conduct
annual oversight hearings of the Regulatory Commission of Alaska
(RCA). The purpose of these hearings is to discuss
investigations and complaint follow-up, case backlogs, and other
matters of public inquiry regarding the RCA's activities.
[Recording begins here]
TAPE 02-24, SIDE A
Number 051
REPRESENTATIVE HALCRO moved that the committee rescind its
action on HB 333 [in moving the bill out of committee on
2/20/02]. There being no objection, HB 333 was before the
committee.
Number 060
REPRESENTATIVE HALCRO moved to adopt the letter of intent and to
report HB 333 out of committee with individual recommendations
and the accompanying fiscal notes.
CHAIR MURKOWSKI asked whether there was any objection; she
specifically asked Representative Kott, who hadn't been present
at the February 20 meeting.
REPRESENTATIVE KOTT answered that he does have some concerns
regarding the way the RCA has been doing business over the last
three or four years. He explained that when the RCA was
structured, one of the main concerns was "would we become
proficient and efficient." He said from what he has heard from
a number of utilities across the state, the main objective has
not been met. He told members:
I think we need to revisit with the RCA membership and
find out what the problem is, and take some corrective
action before this continues to escalate into a
problem that amounts to about the same size as the one
we dealt with when we did the reorganization. I hate
to get into micromanaging these folks, but [from] some
of the discussions that I've had, we may not have any
option.
REPRESENTATIVE KOTT concluded by saying he had no objection to
advancing the bill.
Number 096
CHAIR MURKOWSKI announced that there being no objection, HB 333
was moved [again] from the House Labor and Commerce Standing
Committee with the attached letter of intent.
HB 393-SALES OF BUSINESS OPPORTUNITIES
CHAIR MURKOWSKI announced the next order of business, HOUSE BILL
NO. 393, "An Act relating to unfair and deceptive trade
practices and to the sale of business opportunities; amending
Rules 4 and 73, Alaska Rules of Civil Procedure; and providing
for an effective date."
Number 127
REPRESENTATIVE GARY STEVENS, Alaska State Legislature, testified
as the sponsor of HB 393. He explained that HB 393 addresses
business opportunities, commonly referred to as "biz opps,"
which are work-at-home schemes. Unfortunately, some people
believe these [schemes], and thus are ripped off. This is a
consumer-protection issue that would be best prevented.
Representative Stevens referred to a Red Book Magazine article
entitled "So you want to work at home?" This article reviews
the scams related to work-at-home schemes, he noted.
REPRESENTATIVE STEVENS explained that HB 393 creates a new,
comprehensive statute that regulates the sale of business
opportunities - prepackaged small business deals that target
Alaska. About half of the states are attempting to regulate
these business opportunities. [HB 393] requires that these
businesses register with the state, which these business won't
want to do [otherwise] because it allows the state to know who
and where the business is. This legislation also requires that
the business disclose information to the buyers, and an escrow
account must be used in order to assure delivery of the
products. Furthermore, it requires a 30-day right of
cancellation for the buyer. With these measures, violators will
be subject to civil and criminal penalties. Representative
Stevens related his belief that a legitimate business won't
object to these requirements.
Number 198
CHAIR MURKOWSKI asked whether specific incidents in Alaska had
precipitated HB 393.
REPRESENTATIVE STEVENS replied yes and deferred to the
Department of Law for examples. He mentioned that there are
exemptions for businesses such as Amway or Avon. Furthermore,
this legislation won't impact those legitimate businesses.
REPRESENTATIVE CRAWFORD asked what this $75,000 surety bond
would cost the individual or company.
REPRESENTATIVE STEVENS deferred to the Department of Law.
Number 210
JULIA COSTER, Assistant Attorney General, Fair Business
Practices Section, Civil Division (Anchorage), Department of
Law, testified via teleconference. She began by providing the
committee with examples of complaints. She then explained that
HB 393 is a comprehensive regulatory scheme that requires the
following: the seller of the business opportunity must register
with the state through the Department of Law, which is similar
to the statute relating to telemarketers and charitable
organizations; must disclose certain information through the
registration form; and must provide to the potential provider -
ten days in advance of the contract closure - a disclosure
statement that includes all the terms and conditions of the
contract.
MS. COSTER continued explaining HB 393. It requires that the
seller post a bond in the amount of $75,000. It also requires a
30-day right of cancellation of the contract. If the seller
requires more than 20 percent down, then the seller has to
establish an escrow account; thus anything over the 20 percent
is placed in the escrow account until the buyer provides notice
that he/she has received the products.
MS. COSTER concluded by announcing [the department's] strong
support of HB 393, which it views as discouraging fraudulent
sellers from trying to do business in the state while also
providing an important enforcement tool.
Number 312
CHAIR MURKOWSKI noted that the committee packet includes a
letter [an e-mail from John Hesse dated February 13, 2002] from
the Direct Selling Association (DSA). She asked Ms. Coster to
address that.
MS. COSTER related her understanding that DSA supports HB 393.
However, HB 393 says that businesses costing less than $200 to
purchase are exempt from this legislation. The suggestion of
DSA is to increase that exemption to $500, which is the limit in
many states; she mentioned the FTC [Federal Trade Commission]
franchise rule. Ms. Coster urged the committee to maintain the
$200 limit, however.
MS. COSTER explained that many states with a $200 limit were
contacted regarding the $200-versus-$500 limit; those states
recommended maintaining the $200 limit because without it, the
state wouldn't have the necessary enforcement authority to go
after those businesses under $500 - quite a few businesses.
Many states have experienced that businesses are priced just
below $500, in order to avoid the $500 limit. Ms. Coster again
urged the committee to maintain the $200 limit.
MS. COSTER also pointed out that DSA represents direct sellers,
as opposed to direct business opportunities. She specified that
DSA represents businesses such as Amway and Mary Kay cosmetics,
which wouldn't need to be concerned with the requirements of
this legislation due to the exemption under Section 5.
Number 361
CHAIR MURKOWSKI asked what is done now in regard to enforcement.
MS. COSTER answered that currently the Consumer Protection Act
prohibits unfair and deceptive trade practices. If a business
has represented that it would provide goods or services, but
hasn't done so - and if there is a pattern of that - then it
would be considered an unfair deceptive trade practice.
However, many are "fly-by-night" operations. It is more
difficult to obtain refunds after the fact than to stop these
businesses from selling their product in the state in the first
place. If they fail to register, when their advertisement is in
the newspaper [the department] can tell the business to cease
and desist, and can obtain an injunction to stop the business
from advertising. Without the registration requirements [in HB
393], however, the [department] has to wait until the business
engages in a conduct in which [the product] hasn't been
provided. Going in after the fact is not effective.
Number 382
CHAIR MURKOWSKI asked to whom this applies. If there were an
advertisement in USA Today, for example, the business wouldn't
fall under the requirements for the offer. However, since an
Alaskan could purchase the newspaper and see the advertisement
and could have the product shipped to Alaska, then that business
would fall under HB 393.
MS. COSTER replied in the affirmative. She pointed out that
proposed AS 45.66.070(3) [page 4, lines 23-24] says it applies
to a buyer domiciled in Alaska [if] the business opportunity is
or will be operated in Alaska. Ms. Coster clarified that
[subsection (3) also] says the buyer has to be domiciled in
Alaska.
Number 402
CHAIR MURKOWSKI turned to the fiscal note, which seems to
anticipate ten to twelve business opportunities registering with
the state. She asked who these will be.
MS. COSTER expressed interest in finding out who these will be
as well. She noted that there are legitimate business
opportunities, which will probably register. She reported that
most states have found there are far more business opportunities
out there than do register. Most states have ten to twenty
business opportunities that register a year. The fact that
there are business opportunities operating without registering
provides [the department] the ability to pursue them through
enforcement.
Number 416
CHAIR MURKOWSKI expressed concern with the exemption for Amway,
Mary Kay, and Avon, which she understood Ms. Coster to indicate
would fall under AS 45.66.220(5). However, Chair Murkowski
related her belief that the purpose of Amway is to resell the
product.
MS. COSTER related her understanding that many of the Direct
Selling Association's businesses such as Amway work so that
there isn't a large upfront investment by the person who does
the selling, which is different from many business
opportunities. Direct sellers generally require the purchase of
a demonstration kit with samples for sales demonstration.
Furthermore, the seller of Amway [products] generally purchases
the product inventory at wholesale and resells it for a retail
price. Therefore, Amway is exempt as it relates to AS
45.66.220(5).
MS. COSTER remarked that no business, whether a direct seller or
not, is allowed to make misrepresentations in regard to
earnings, the type of products being sold, and so forth. Those
sorts of things would be covered under the Consumer Protection
Act. This legislation also includes prohibitions relating to
misrepresentations regarding earnings.
CHAIR MURKOWSKI discussed an Avon advertisement in the paper
that guaranteed a certain amount of earnings. She asked if Avon
would not [fall under this] by guaranteeing a certain amount of
earnings.
MS. COSTER said she hesitated to make any comments since she
hadn't seen the advertisement.
Number 464
CHAIR MURKOWSKI directed attention to page 8 regarding the
cancellation of the contract. She said she understood that
section to essentially allow a buyer to cancel the contract at
any time for the reasons outlined in the section, one of which
is if any untrue, misleading, incomplete, or deceptive
statements are made. She asked whether [cancellation] relates
to the sale of the business opportunity or the product itself.
MS. COSTER answered that it would be difficult to distinguish
between the two. She said she didn't know that it was
restricted in any way.
Number 490
REPRESENTATIVE HALCRO referred to page 9, lines 1-6, regarding
notice of cancellation. He asked if the buyer is entitled to
all payments once notice of cancellation is given.
MS. COSTER answered that it would be a complete refund of all
monies.
Number 500
REPRESENTATIVE MEYER inquired as to how many states have a law
such as HB 393. He also asked about Internet advertisements.
MS. COSTER replied that 22-23 states have such a law. Internet
advertisements would be treated like any other advertisement.
If the advertisement makes claims that can't be substantiated,
it would constitute an unfair deceptive trade practice under
state and federal law. However, there could be a question in
regard to jurisdiction; thus she indicated that a purchase would
probably have to be made in order to establish jurisdiction.
REPRESENTATIVE MEYER turned to the fiscal note and related his
understanding that this [would be] a class C felony. He asked
if it costs less to prepare for a class A misdemeanor versus a
class C felony. In that case, he asked, wouldn't it be better
to pursue these violations as a class A misdemeanor?
MS. COSTER explained that the fiscal note is in regard to the
cost to the department regarding the civil enforcement aspect.
This legislation makes a violation of the statute a violation of
the Consumer Protection Act, which provides some civil
enforcement. There are also some costs associated with the
requirements for registration forms and their processing. In
regard to the criminal aspect, she deferred to someone from the
criminal section.
REPRESENTATIVE MEYER said he would hold the question for the
bill's hearing in the House Judiciary Standing Committee.
Number 542
CHAIR MURKOWSKI returned to the notice of cancellation and
pointed out that the cancellation is effective - if it's done by
mail - when deposited in the mail. However, page 9, subsection
(e), requires that the seller refund the buyer within 15 days of
the notice of cancellation. She expressed concern with regard
to the timing.
MS. COSTER replied that a buyer who receives a refund a few days
late probably won't be too upset. She explained that basically
[subsection (e)] establishes a timing mechanism so that the
buyer and the department have some parameters. Usually, a grace
period would be allowed.
CHAIR MURKOWSKI restated Representative Crawford's earlier
question regarding the cost of a surety bond in the amount of
$75,000.
MS. COSTER answered that on average, it would cost approximately
$20 for every thousand dollars of bond being posted. Therefore,
a $75,000 bond for a person with good credit would probably cost
about $1,500.
Number 570
JOHN W. HESSE, II, Senior Attorney and Director, Government
Relations, Direct Selling Association (DSA), testified via
teleconference. Mr. Hesse informed the committee that the
direct selling industry is a global industry that generates more
than $83 billion in worldwide sales. Sales totaled $25.57
billion in the United States last year. He estimated that there
are approximately 30,000 salespeople in Alaska; on average, each
will generate about $2,000 in sales. Therefore, the market in
Alaska probably amounts to about $18 million.
MR. HESSE explained that the association's issue with HB 393 is
a technical legal issue. The association has supported
regulation of business opportunities for 20-30 years.
TAPE 02-24, SIDE B
Number 001
MR. HESSE agreed that 23 other states regulate business
opportunities. However, 27 states don't regulate business
opportunities, and [those states] primarily rely on the
leadership of the FTC. Mr. Hesse emphasized his belief that
there can be clear distinctions made between business
opportunities and direct selling businesses. These statutes
provide a mechanism to make that distinction. However, the $200
threshold is problematic.
MR. HESSE informed the committee that the association has
experienced confusion with the threshold. Therefore, the
association supports a higher threshold because the North
American Association of Securities Administrators (NAASA) Model
Act of 1984 and the Commissioners on Uniform State Law contained
a $500 threshold, which is a larger figure when indexed
backwards for inflation. Most states with a lower threshold
will say that it should be higher [when reviewing the figures in
terms of 2002 dollars].
MR. HESSE echoed Ms. Coster's testimony that comparatively it
costs little money to join a direct selling business, and thus
that distinction can be drawn. He informed the committee that
the association's sellers are mostly women - 73 percent in 2001
- who have other, significant family responsibilities. Mr.
Hesse said, "Our goal really is to make sure that there are not
barriers erected that limit the opportunities that ... are
available to these folks through direct selling."
MR. HESSE specified that the association would like the
threshold to be raised to $500. The association also wants that
threshold to be moved to the definition of a business
opportunity, because it's much more difficult to change the
definition section rather than the exemption section of statute.
In conclusion, Mr. Hesse reiterated that 27 other states don't
regulate this area, and of the 23 states that do, only 3 have a
threshold as low as $200. Although preferring that the
threshold be changed to $500, the association is willing to work
with the department to develop a number between $200 and $500;
however, Mr. Hesse conveyed his understanding that the
department has been unwilling to engage in such a discussion.
Number 061
CHAIR MURKOWSKI surmised that the association's preference is
that Alaska not adopt legislation to regulate these business
opportunities, and that the FTC can perform the oversight.
However, she'd understood the department to say it is difficult
to get the operators of these scam businesses. Therefore, she
asked how beneficial it would be to rely on the federal
regulations.
MR. HESSE answered that the association is neutral regarding
whether Alaska should adopt statutes to regulate business
opportunities. He expressed the need to contact the 27 states
that don't regulate business opportunities and ask why they
don't. The question is not really whether Alaska regulates
business opportunities, but rather how it is done, because
[direct sellers] don't want to be included with some of the
"fly-by-night" operations. Therefore, the association would be
supportive of Alaska's regulating this area.
Number 105
PAM LaBOLLE, President, Alaska State Chamber of Commerce,
testified in support of HB 393, which provides protection from
fraudulent schemes. Ms. LaBolle expressed concern with regard
to the threshold at which business opportunities have to
register. She related her understanding that the fee for
registration would be around $150; however, she'd misunderstood
that the bond would cost $50 rather than $1,500. Therefore, she
questioned why would anyone spend $200 for a business
opportunity. She suggested a higher threshold would be more
appropriate.
MS. LaBOLLE expressed confusion with regard to the surety bond
and pondered whether the registration and the surety bond would
be a one-time fee under which there could be several business
opportunities. She related her understanding that 2 states have
the $200 threshold, 7 states have a threshold between $250 and
$300, and 14 states have a threshold higher than $300. Ms.
LaBolle said there is no desire to place a chilling effect on
any legitimate business opportunities. She added that the
standard should be higher than what it will cost in the
regulatory effort.
Number 163
DOUG LETCH, Staff to Representative Gary Stevens, Alaska State
Legislature, came forward to answer questions on behalf of
Representative Stevens, sponsor. He related his belief that the
$250 threshold may be a more acceptable amount for those in the
business community. He related that Representative Stevens is
comfortable with a $250 threshold. He noted that two states
with a $250 threshold had started at the $500 threshold but
reduced it.
CHAIR MURKOWSKI highlighted the dilemma: there are small,
legitimate operators such as Amway [distributors] who won't go
the extra mile to obtain a surety bond and thus will be
operating in violation. However, these aren't the offenders [HB
393] intends to address. Chair Murkowski voiced her desire that
HB 393 not have a chilling effect on the legitimate operators.
MR. LETCH offered his belief that the exemption in HB 393 covers
legitimate businesses such as Amway, Avon, and Mary Kay.
CHAIR MURKOWSKI asked why there [would be concern] over the
amount of the threshold if the exemption covers them. The
exemption on page 12, line 28, refers to sales-demonstration
equipment and has nothing to do with a dollar amount.
MS. COSTER pointed out that a number of exemptions are listed;
one refers to business opportunities for which the buyer pays
less than $200. Such transactions won't be covered by HB 393.
Another exemption, under Section 3, paragraph (5), refers to the
sale of a product not for resale. This exemption sets no price
limit, but serves an entirely different purpose. Part of this
exemption refers to product inventory that is sold to the buyer
at a wholesale price. She related that this exemption addresses
direct [sellers] such as Amway in that Amway [distributors]
purchase products at wholesale and sell them at retail.
Number 240
CHAIR MURKOWSKI asked, then, why Mr. Hesse wants a higher
threshold, when typically [those businesses would] be exempt
under Section 3, paragraph (5).
MR. HESSE explained that basically [DSA] doesn't want to meet
the legal definition of a business opportunity. Therefore, the
association desires that a business opportunity be defined with
a dollar threshold so that the majority of the membership
doesn't meet the definition.
CHAIR MURKOWSKI related her understanding that the desire is to
further define business opportunity in order to not include
those with an initial fee in excess of $500. However, she
asked, why would it be necessary to change it in the exemption
section?
MR. HESSE answered that if the threshold were increased, then it
could be deleted from the exemption section. Mr. Hesse
specified that the association wishes to have a very precise
definition of business opportunity that excludes his members.
Number 275
REPRESENTATIVE HAYES surmised, then, that the definition from
DSA [included in the letter dated February 21, 2002, from
Alticor Inc.] would have to be incorporated into HB 393 in order
to satisfy this issue.
CHAIR MURKOWSKI agreed, specifying her understanding that DSA
wants the definition of a business opportunity to include a
higher threshold.
Number 285
MR. LETCH related his understanding that DSA wouldn't represent
a business opportunity necessarily, because those selling Amway,
for instance, wouldn't purchase inventory until sales have been
made. He asked if that was correct.
MR. HESSE clarified that it has to do with the amount the
[buyer] purchases. There are members of the sales force who
purchase significant amounts of inventory for resale.
Therefore, the question becomes whether the aforementioned can
be defined as a business opportunity. The desire is to ensure
that those purchasing low-cost consumables have enough room to
make their inventory purchases without falling under the
definition of a business opportunity.
Number 312
CHAIR MURKOWSKI asked Ms. Coster where the problems are
occurring. Are people being scammed for lesser items or more
expensive items?
MS. COSTER replied that the problems span from $35 to $469 to
tens of thousands of dollars. Many cases fall under the $500
level, which is why there is the desire to keep the threshold as
low as possible.
Number 333
MR. HESSE remarked that the question is in regard to the level
of dollar protection that should be afforded the consumer in
terms of the consumers' risk of loss versus the cost to operate
a legitimate business. Based on DSA's experience, the $200
threshold is too low.
Number 359
CHAIR MURKOWSKI stated that she isn't entirely satisfied with
the definition of a business opportunity, and therefore she
expressed the need to meet with the sponsor and the Department
of Law in order to put to rest the concerns of these legitimate
smaller operators. She remarked that she didn't want to
discourage the relatively small, legitimate operators.
CHAIR MURKOWSKI announced that HB 393 would be held over.
HB 215-OPTOMETRISTS AND PHARMACEUTICALS
Number 373
CHAIR MURKOWSKI announced the final order of business, HOUSE
BILL NO. 215, "An Act relating to the use of pharmaceutical
agents in the practice of optometry; and providing for an
effective date." [HB 215 was sponsored by the House Labor and
Commerce Standing Committee by request. Version L, 22-LS0538\L,
Lauterbach, 1/31/02, had been adopted as a work draft on
2/22/02.]
Number 381
REPRESENTATIVE KOTT moved to adopt Amendment 1, labeled 22-
LS0538\L.1, Lauterbach, 2/25/02, which read:
Page 3, following line 22:
Insert a new bill section to read;
"* Sec. 5. The uncodified law of the State of Alaska
is amended by adding a new section to read:
EXISTING ENDORSEMENTS. Notwithstanding AS
08.72.175, as amended by sec. 1 of this Act, and AS
08.72.272, as amended by secs. 2 and 3 of this Act, an
endorsement issued before the effective date of this
Act does not authorize a licensee to prescribe or use
a pharmaceutical agent by systemic administration
until the licensee applies to the Board of Examiners
in Optometry for authorization to prescribe or use a
pharmaceutical agent by systemic administration and
the board finds either
(1) the person's initial license to practice
optometry was issued after December 31, 1999; or
(2) the person has attended and passed a
course covering systemic administration of
pharmaceutical agents that was offered by an
accredited college of optometry and approved by the
Board of Examiners in Optometry."
Renumber the following bill section accordingly.
CHAIR MURKOWSKI asked whether there was any objection. There
being no objection, Amendment 1 was adopted.
CHAIR MURKOWSKI said Amendment 1 addresses the concern of
endorsement without the training from the governor's veto letter
[dated May 10, 2000, regarding the veto by Governor Knowles of
SB 78]. She asked about the subject of "additional training".
She explained that the committee had heard that the optometrists
felt additional training wasn't required because of their
schooling and hours in pharmacology. She asked Ms. Reardon to
address this issue.
Number 408
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Community and Economic Development, referred to
page 3, Section 4, of Version L. She said the transitional
provision of uncodified law seems to say, "In order to get this
endorsement for systemic drugs, one has to have either graduated
or gotten an initial license after 1999 or had a course." She
said she assumes that the purpose of the transitional provision
is because newer graduates will have received this type of
training in their schooling, while there are earlier graduates
of optometry school who may not have received this training.
She noted that the committee may have addressed the issue of
"additional training" in the transitional provision, but
couldn't say for certain that this would satisfy the governor's
concern.
MS. REARDON addressed another concern in the governor's veto
letter, that existing endorsements would unintentionally be
upgraded. She referred to page 3, lines 18-19 [Version L],
which read, "the person's initial license to practice optometry
was issued after December 31, 1999". She asked if that means
one's initial license anywhere, or in Alaska.
CHAIR MURKOWSKI responded, "Their initial license to practice
optometry."
Number 437
MS. REARDON said she doesn't know whether, after 1999, this type
of course has been in the curriculum of all the schools. She
asked why Section 4 is a transitional provision instead of a
regular piece of the legislation.
CHAIR MURKOWSKI said she was now confused with Amendment 1. She
remarked, "So, we have a transitional provision in Section 4,
and then the new Section 5 is the existing endorsements."
Number 444
MS. REARDON said that is correct. She offered that Amendment 1
deals with existing [endorsements], and said she is confused why
Section 4 is described as uncodified law rather than regular
law. She mentioned that it looks as though two of the topics in
the governor's veto letter were addressed.
Number 456
REPRESENTATIVE KOTT said he thinks the main issue in HB 215
addresses qualifications. When one asks if ophthalmologists are
more qualified than optometrists, the answer is usually a
resounding yes. He offered that the issue is whether or not the
optometrists are qualified [to prescribe oral or systemic
drugs], which he thinks they are.
REPRESENTATIVE KOTT told members he was disturbed by a comment
made last week by a gentleman who'd testified, suggesting the
rural community, especially the Native community, is opposed to
[HB 215]. He explained that this gentleman "assumed a position
himself with the local ANB [Alaska Native Brotherhood] chapter",
which Representative Kott called the local camps.
Representative Kott indicated he himself had talked to six
individuals in the "Grand Camp," which the local camp responds
to - the executive committee on the Grand Camp makes a
recommendation on behalf of the ANB community; Representative
Kott reported that "those discussions never took place." He
therefore offered his belief that the testifier was - in
accordance with what he himself knows about the parameters of
the organizational structure - completely out of place.
Representative Kott indicated he was also told that the Alaska
Federation of Natives (AFN) has not taken a position on HB 215.
Number 477
REPRESENTATIVE KOTT said he thinks [HB 215] is an important
piece of legislation for the rural communities. He explained
that [HB 215] bridges the gap between urban and rural
[communities]. He offered that people should have the
opportunity to visit the optometrist if there isn't an
ophthalmologist in the community.
Number 479
REPRESENTATIVE MEYER said he thinks optometrists aren't trying
to take over the ophthalmologists' jobs, but rather are asking
for the ability to prescribe drugs. He said the optometrists
aren't asking to do any surgical type of work. He said to his
understanding, the optometrists are just trying to prescribe
drugs that are necessary and needed in case of an emergency -
and in rural Alaska this situation could come up frequently.
Number 486
REPRESENTATIVE HALCRO, referring to a handout in the packet,
addressed the issue of various state actions on similar
legislation. He remarked, "When you look at all of these states
that have defeated initiatives having to do with widening the
scope of optometry, ... it seems to me it's pretty significant.
I'm just wondering why these various states defeated these
initiatives." He offered that possibly the initiatives were
defeated because of the questions relating to qualifications to
be able to dispense some of [the drugs], or that the
ophthalmologists didn't have a very effective lobbyist in these
states.
Number 497
REPRESENTATIVE KOTT mentioned that because of its rural
communities, Alaska is a little different from some states that
have defeated similar legislation. He said if Alaska had an
ophthalmologist in every major city with the ability to get to
that major city within an hour of driving, he would probably
defeat the initiative. He added, "We don't have that luxury."
Number 510
CHAIR MURKOWSKI acknowledged a nationwide movement to expand the
scope of optometric practice to include laser surgery. She told
members, "I, for one, am absolutely, positively, dead-set
against that." She offered that if some initiatives in other
states have expanded to include laser surgery, as Oklahoma has
done, then the states were right in rejecting that expansion and
practice.
CHAIR MURKOWSKI said her concern with [HB 215] has been that it
is "the camel's nose under the tent" in terms of the practice
and whether the next step is laser [surgery]. She said [the
committee] has seen in writing that this has been attempted in
other states. She added, "We did have the testimony of Jeff
Gonnason saying, 'They tried it. They saw it wasn't going to
work here, so they've disbanded it.'" Chair Murkowski said she
is not entirely convinced "that they're not going to come back
and try to do it again, but there is a point there where you say
no." She added, "You want to cut somebody's eyeball open, you
go all the way through to medical school."
Number 525
REPRESENTATIVE CRAWFORD said right now, he thinks Alaska has
about five times as many optometrists as ophthalmologists. His
concern is that if Alaska continues to broaden the scope of what
optometrists are allowed to do, it will probably shrink the
market for ophthalmologists even more. He said this may be one
unintended consequence of [HB 215].
Number 532
REPRESENTATIVE HAYES asked what the comment of the state medical
board is [on HB 215]. He said he'd thought the board was going
to work together with the ophthalmologists and the eye doctors
to come up with some resolution.
CHAIR MURKOWSKI replied, "They met. They talked about possibly
having a subcommittee. No one can quite recall if anyone was
put on that subcommittee or whether it worked." She said as she
understands it, the state medical board didn't come to a
resolution.
CHAIR MURKOWSKI asked Ms. Reardon if it is fair to say the state
medical board objects to HB 215 as it currently is.
MS. REARDON said yes.
CHAIR MURKOWSKI said as far as [the committee] knows, there's no
ongoing effort for the ophthalmologists and the optometrists to
further work things out.
Number 547
MS. REARDON said there isn't an effort with enough momentum that
is going to bring answers in a timeframe that she thinks will be
helpful to this legislative session.
REPRESENTATIVE HALCRO offered that it seems a good deal of the
motivation behind HB 215 is to make services available in rural
Alaska, where there aren't many ophthalmologists. He asked if
it is possible and makes sense to maybe limit the authority
[optometrists] have - in dispensing and in doing certain
activities - to communities under a certain population. He
asked, "If the intent truly is because Alaska is so
geographically diverse, and we have several small communities
without ophthalmologists, and this just makes it easier and more
cost-effective, should we limit it to those communities?" He
said this would prevent someone in Anchorage from dispensing
services that rightfully an ophthalmologist does, since there
are plenty of [ophthalmologists] in Anchorage.
Number 558
MS. REARDON said she thinks there have been several different
arguments put forward by supporters HB 215. She mentioned that
there has been some reference to rural services, but she wasn't
sure that was the sole purpose of HB 215. She added, "I don't
think that's one of the variations that's been discussed by the
optometry board or the medical board, perhaps because if it's
safe, ... there isn't a reason to prevent it in the urban areas,
and if it's not safe - if it actually is risky - perhaps maybe
we shouldn't inflict that upon the rural areas." She mentioned
that there are licensing laws with population indexes because
sometimes there has to be that decision in rural areas. She
asked if lesser public protection is better because there will
be more access. She referred to a list of communities and the
mailing addresses of the optometrists. She said, "They're not
widely dispersed in what you think of as rural Alaska."
[Tape flips back to beginning of Side A]
TAPE 02-24, SIDE A
Number 001
MS. REARDON said, "From my perspective, you don't see a lot of
people in Fort Yukon or anything like that."
REPRESENTATIVE KOTT offered that market conditions in urban
areas would probably dictate who a person is going visit to get
something taken care of. He said when given the choice, he
would visit the doctor who is more qualified, because he is
going to pay the same amount for the deductible, and he wants
the best health care. He implied that most people would do the
same. Therefore, he said he doesn't think it's necessary to
restrict it based on population base. Representative Kott
mentioned that similar legislation had overwhelming support a
couple of years ago, with - to his recollection - only four
votes in both houses against it. He said he thought it was a
good idea back then, and still thinks it's a fairly good idea.
Number 019
REPRESENTATIVE KOTT moved to report CSHB 215 [version 22-
LS0538\L, Lauterbach, 1/31/02, as amended] out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 215(L&C) was moved out of the
House Labor and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:00 p.m.