SENATE LABOR AND COMMERCE COMMITTEE March 13, 1997 1:33 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Jerry Mackie, Vice Chairman Senator Mike Miller Senator Tim Kelly Senator Lyman Hoffman MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 119 "An Act relating to fraternal benefit societies; and providing for an effective date." - MOVED CSSB119(L&C) OUT OF COMMITTEE SENATE BILL NO. 92 "An Act relating to veterinarians; extending the termination date of the Board of Veterinary Examiners; and providing for an effective date." - HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION SB 119 - No previous action to be considered. SB 92 - See Labor and Commerce Committee minutes dated 3/6/97. Confirmation Hearings: Board of Chiropractic Examiners Dr. LeRoy Nordstrom - Anchorage Board of Registration of Architects, Engineers, and Land Surveyors Ms. Daphne E. Brown - Anchorage Board of Pharmacy Ms. Bonnie Stewart - Anchorage Mr. Stanley Thompson - Anchorage WITNESS REGISTER Mr. Richard Kleven, Assistant Vice President Law Division Lutheran Brotherhood 625 Fourth Ave. South Minneapolis, Minnesota 55415 POSITION STATEMENT: Supported SB 119. Mr. Don Koch, Chief Market Surveillance Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 POSITION STATEMENT: Supported SB 119. ACTION NARRATIVE TAPE 97-11, SIDE A Number 001 SB 119 FRATERNAL BENEFIT SOCIETIES  CHAIRMAN LEMAN called the Senate Labor and Commerce Committee meeting to order at 1:33 p.m. and announced SB 119 to be up for consideration. MR. RICHARD KLEVEN, Assistant Vice President, Law Division, Lutheran Brotherhood, said they are a fraternal brotherhood society and he is here on behalf of the National Fraternal Congress of America, an association of approximately 90 fraternal benefit societies. He said they support SB 119 which will revise our statute that regulates them. They have done this in a number of other states and they have essentially the model law that's before the Committee in 34 other states to date. Alaska has six fraternals: the Knights of Columbus, Independent Order of Foresters, Sons of Norway, Aid Association for Lutherans, Lutheran Brotherhood, and Woodmen of the World. Fraternals are membership groups and are very accountable to their members. They exist to benefit the members and their communities providing them with individual life and annuity insurance. They must also have a system of local lodges, by law. Fraternals exist for social and fellowship reasons, but also to provide services to communities like local volunteer units. The reason a new section on fraternal orders is needed is because in the 30 years since the fraternal code was passed there has been a lot of change - at the economic level and federal level, especially with taxation and securities regulation which has had an effect on insurers. Some provisions need to be modernized so fraternals can continue to provide the same service. The proposed legislation allows fraternals to write variable life and annuity products. It gives some flexibility in the code as new products are developed in the life and health insurance industry that fraternals can use (with the approval of the director of the Insurance Division). It provides clearer language regarding the ability of fraternals to have subsidiaries as long they are organized to further the fraternal purposes of the organization. It will clarify how members can use their insurance to meet their own estate or tax planning needs. It also makes it clear that fraternals are subject to the same insurance and regulatory practice rules as are other life insurers. It also gives the director of the Division of Insurance clearer and stronger authority over them. The language is also modernized to flow better in terms of interpretation. This legislation will not change the essential character of what fraternal orders are and won't have any appreciable change in their presence in the market for insurance. MR. KLEVEN said that two amendments would be offered, one from the Department regarding conforming the law to the Kassenbaum-Kennedy law that was passed regarding health insurance last summer. The other amendment deals with intermediate assembly and he believes it is a technical amendment. It clarifies that if a society has an intermediate assembly (a group of delegates that's elected to elect the higher level group) that those people have to be members. SENATOR MACKIE moved to adopt amendment #1. There were no objections and it was so adopted. MR. DON KOCH, Division of Insurance, supported SB 119. He said they have worked with Mr. Kleven and have done a number of internal reviews including financial and Department of Law. He explained the reason for conforming with the Kassenbaum-Kennedy, Public Law 104-191, was there will be a number of requirements placed on insurers and their group health plans as to portability of those plans and there were no references in this proposal that would reflect the appropriate sections of the insurance code that would be needed to comply with the KK bill, and therefore, State statutes and fraternal benefit societies. MR. KOCH explained that insurance is not the primary focus of a fraternal; it is almost incidental to things they do. SENATOR MACKIE moved to adopt amendment #2 as corrected (line 15 the reference is corrected to AS 21.54). There were no objections and it was so ordered. SENATOR MACKIE moved to pass CSSB 92(L&C) from committee with individual recommendations and the accompanying $0 fiscal note. There were no objections and it was so ordered. SB 92 BOARD OF VETERINARY EXAMINERS; LICENSE  CHAIRMAN LEMAN announced SB 92 to be up for consideration. MS. ANNETTE KREITZER, Staff to Senator Leman, said she tried to come up with language that reflected the desires of the Committee which would require amending 08.981.65 (Qualifications for a license) and 08.981.84 (Licensure by credentials). After reviewing her memo, Ms. Reardon and Mr. Welker noted one item that is a policy question for the Committee - whether or not the State is going to require the CCT and the NBE exam for credentialed applicants. Right now section 2 says that they pass the written exam of the State and pass the practical examination of skills, but section 3, Licensure by credential under the amendment, only includes State written or practical exam, she said. The question is are credential applicants being given the choice of passing either the Alaskan written exam or the CCT, but not both. CHAIRMAN LEMAN said he thought the issue was that the Board might require it, but the concern is that it might be too restrictive. He said that existing statutes require applicants from the United States to be a graduate of an accredited veterinary school. MS. KREITZER added, or pass the NBE Committee's Education Commission for Foreign Veterinary Graduates. The current statute has an "or." CHAIRMAN LEMAN said in Engineering there is an option for people who do not graduate from an accredited school. Although he believes it is highly unlikely that anyone would fall in that category, but he thought it unwise to preclude it in case someone wanted to teach themselves or have alternate training - as long as they can pass the practical exams and do everything else that shows they are qualified to practice as a veterinarian. He is not opposed to having certain restrictions for the foreign applicants so they can demonstrate that they are at least qualified to sit for the exam. SENATOR MACKIE asked if there were three ways to be a veterinarian under the new language; one, to have graduated from an accredited school, two, to have passed the Education Commission on Foreign Veterinary Graduates Certification process; or three, to have passed the NBE. MS. KREITZER replied that that was her understanding. CHAIRMAN LEMAN said he wanted to correct their understanding. He said there are two provisions. The third one Senator Mackie listed was an "and" provision. SENATOR KELLY asked if you are an American and have graduated from an accredited American veterinary school, do you still have to take a test. CHAIRMAN LEMAN answered yes. MR. RANDY WELKER, Legislative Audit, clarified that section two addresses if you are trying to come into Alaska and get your initial license to be a veterinarian. You must have graduated from an accredited school or have passed the Foreign Veterinary Graduates examination and then have satisfied the other requirements which are the State written exam and a practical exam (CCT which is also written). MS. KREITZER interjected that passing the NBE is one of the four requirements of the foreign test and this is why the language was changed to the "certification process." MR. WELKER continued saying that section three's proposed change says if you are licensed in another jurisdiction and you want to get licensed in Alaska, right now, the way the amendment is worded, you would have to have the same as the other, plus satisfy 2, 3, 4, and 5. That takes the NBE out of the equation for licensed by credentials. There is nothing in there saying a graduate from an accredited school has to have passed that test. The law they are trying to amend says that to come in, you have to have been licensed under standards that were equivalent to or greater than the State's at the time you were initially licensed. SENATOR MACKIE asked if they currently have to do a State written or practical exam. MR. WELKER replied no; that right now the law says the standards they have to meet when they were licensed originally in their state have to be equivalent to the requirements in Alaska at the time they were licensed in the other state. SENATOR MACKIE asked if the proposed language makes the requirements more stringent. MR. WELKER replied that it was more stringent, but that was in response to the fact that the Board is headed towards requiring the CCT of all applicants whether they had passed it before or not. CHAIRMAN LEMAN said he was hesitant to make policy changes when they didn't fully understand the impacts of those changes. SENATOR MACKIE said he was having a hard time following, also, and wanted the amendment presented as a CS. CHAIRMAN LEMAN said they would do that and bring it up at another meeting. CHAIRMAN LEMAN said they would have the confirmation hearing for Dr. LeRoy Nordstrom, Board of Chiropractic Examiners. DR. NORDSTROM said he would like to be reappointed to the Board of Chiropractic Examiners where he has been serving for eight months without reappointment. He reported that they are almost finished with roughing out the legislation that is needed to develop a peer review board. He also commented he thought they should increase the minimum standards of care as time goes on. CHAIRMAN LEMAN asked him if he supported the legislation regarding the HMOs. Dr. Nordstrom said he supported it and said that chiropractic should be included in HMOs and CPOs along with medical doctors, osteopaths, and dentists. There were no further questions from the Committee. CHAIRMAN LEMAN stated that Ms. Daphne Brown was unable to be with them again today. He asked the Committee what they wanted to do regarding her and the other appointees. SENATOR MA CKIE moved to forward Dr. Nordstrom's, Ms. Brown's, Ms. Stewart's, and Mr. Thompson's appointments to the full body for consideration in a joint session. There were no objections and it was so ordered. CHAIRMAN LEMAN adjourned the meeting at 2:15 p.m.