Legislature(2017 - 2018)HOUSE FINANCE 519

02/15/2018 01:30 PM House FINANCE

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HOUSE BILL NO. 38                                                                                                             
     "An  Act relating  to the  calculation  and payment  of                                                                    
     workers'   compensation  benefits   in   the  case   of                                                                    
     permanent   partial   impairment;   relating   to   the                                                                    
     calculation and payment  of workers' compensation death                                                                    
     benefits payable to a child  of an employee where there                                                                    
     is  no surviving  spouse; relating  to the  calculation                                                                    
     and  payment of  workers'  compensation death  benefits                                                                    
     for an  employee without a  surviving spouse  or child;                                                                    
     relating  to  notice  of  workers'  compensation  death                                                                    
     benefits; and providing for an effective date."                                                                            
2:09:56 PM                                                                                                                    
Co-Chair Seaton  commented that the  bill had  one committee                                                                    
hearing during the prior session.                                                                                               
REPRESENTATIVE   ANDY   JOSEPHSON,   SPONSOR,   provided   a                                                                    
refresher  of  the  legislation.  The  bill  had  originated                                                                    
because  he  had learned  that  a  woman  was killed  in  an                                                                    
electrical accident  at the workplace in  Anchorage. She had                                                                    
no  dependents and  was  unmarried  therefore, the  workers'                                                                    
compensation system  only paid  for her funeral  expenses up                                                                    
to $10  thousand. He indicated  that it was against  the law                                                                    
for  her  estate   to  sue  for  wrongful   death.  He  also                                                                    
discovered  that  the  formula  for  one-time  payments  for                                                                    
permanent, partial disability had  not increased since 2000.                                                                    
He  reported  that he  filed  a  similar  bill in  the  29th                                                                    
legislature. The current bill had  two prior hearings in the                                                                    
House   Labor  and   Commerce  committee.   He  listed   the                                                                    
provisions  in   the  bill.  He  explained   that  the  bill                                                                    
considered  what the  partial impairment  rate should  be in                                                                    
2017  based  on  the   established  formula.  He  referenced                                                                    
legislative research  (copy on  file) ["Impact  of Inflation                                                                    
on   Statutory  Compensation   for  Partial   but  Permanent                                                                    
Impairment  under  the  Alaska  Workers'  Compensation  Act"                                                                    
Legislative   Research   Services]    that   confirmed   the                                                                    
multiplier, based  on inflation, would be  $255.506 thousand                                                                    
by degree  of impairment  of a  bodily part.  He exemplified                                                                    
that  the  impairment of  a  shoulder  would result  in  "x"                                                                    
dollars  based on  the  formula. He  noted  that Alaska  was                                                                    
somewhere in  the range  of 30  out of  other states  with a                                                                    
current payment  of $177 thousand. The  provision included a                                                                    
Consumer  Price Index  (CPI) feature,  which  was common  in                                                                    
other laws. He  offered that Section 4 included  a notice of                                                                    
death benefits  that provided  more time  for the  family or                                                                    
the  estate  of the  deceased  to  understand their  rights.                                                                    
Section  5  provided a  death  benefit  for the  parents  or                                                                    
estate of the deceased.                                                                                                         
2:13:42 PM                                                                                                                    
Representative   Josephson    provided   an    example.   He                                                                    
hypothesized  that if  and customer  and worker  were in  an                                                                    
elevator at a  store and the elevator  crashed killing both,                                                                    
the  worker in  Alaska  was entitled  to  a $10,000  funeral                                                                    
expense and the  customer's estate would be able  to sue for                                                                    
civil  liability under  Title  9. The  bill  provided a  $70                                                                    
thousand  benefit   that  was  bestowed  to   the  surviving                                                                    
parent(s) of the deceased or  the estate if the parents were                                                                    
deceased.  He  emphasized that  the  amount  was not  chosen                                                                    
randomly.  He  accessed  a research  document  that  he  had                                                                    
corroborated   with  the   National   Conference  of   State                                                                    
Legislatures  (NCSL)  work  that  showed  in  Minnesota  the                                                                    
amount  was $60  thousand, in  New York  the amount  was $50                                                                    
thousand, and in  Louisiana the amount was  $75 thousand per                                                                    
parent. He offered that many  states employed a formula that                                                                    
the number was derived from. Out of the states that                                                                             
provided a whole number Louisiana  was the most generous and                                                                    
Alaska would fall in the 2nd  or 3rd position at $70,000. He                                                                    
believed that  the merits were twofold.  First, Alaska would                                                                    
provide  a  death  benefit  to  the  estate.  Secondly,  the                                                                    
provision acted as further incentive  for the willingness of                                                                    
an  employer  to ensure  the  safety  of their  workers.  He                                                                    
provided an example of a  construction fatality last year in                                                                    
Anchorage. The worker had no  dependents or spouse and noted                                                                    
that the  incidents were not  unusual. He furthered  that in                                                                    
relation  to the  death of  the  electrical worker,  Abigail                                                                    
Caudle,  the Workers'  Compensation  Board  issued a  ruling                                                                    
that there  was nothing  that could be  done for  her mother                                                                    
and that the  issue needed to be  addressed via legislation.                                                                    
Ms. Caudles mother, Marianne  Burke understood that although                                                                    
she  would  not  receive  any compensation  she  wanted  her                                                                    
daughter's tragic loss  of life to mean  something. He noted                                                                    
that she hired  the law office of Eric Chancy  Croft and the                                                                    
case was before the Alaska Supreme Court.                                                                                       
2:17:36 PM                                                                                                                    
Representative Neuman  asked how  a step  child who  had not                                                                    
been   legally  adopted   would   fit   into  the   picture.                                                                    
Representative  Josephson  believed   that  the  step-parent                                                                    
would  have  to  prove  dependency. He  read  a  section  in                                                                    
current law  "if there was no  widow or widower or  child or                                                                    
children   then  for   the   support   of  father,   mother,                                                                    
grandchildren,  brothers,  and   sisters  if  dependent  the                                                                    
deceased at  the time of  injury?" [not cited]  and surmised                                                                    
that if an individual could  prove dependency they would get                                                                    
a benefit  depending on  the factors in  each case  like the                                                                    
age of the  deceased, etc. He exemplified  a grandparent who                                                                    
did not  adopt the  deceased grandchild, but  dependency was                                                                    
proven; a death benefit would be paid.                                                                                          
2:20:05 PM                                                                                                                    
Representative  Neuman asked  for  the definition  of how  a                                                                    
person  would prove  to be  a dependent.  He wondered  if it                                                                    
would  be beneficial  to have  language defining  dependency                                                                    
included  in   the  legislation.   Representative  Josephson                                                                    
replied  that he  did not  want to  complicate the  issue in                                                                    
law. He explained that typically,  in the absence of a rule,                                                                    
the court created a logical test  that included 3 or 4 major                                                                    
elements  and  would  consider  elements  like  how  long  a                                                                    
dependent  lived with  the deceased  and  whether they  were                                                                    
wholly reliant  on the deceased.  He stated the  example was                                                                    
prevalent in case law. He  thought defining dependency would                                                                    
become complicated  and deduced that it  existed in statute.                                                                    
He clarified  that he was  not changing the system  that was                                                                    
already  in statute.  Representative Neuman  thought it  was                                                                    
important  to  hear  about  the  sponsor's  intent.  He  had                                                                    
personally dealt with  the issue in the past,  which was the                                                                    
reason for his familiarity  with the subject. Representative                                                                    
Josephson referenced  AS 23.30.215 relating  to compensation                                                                    
for death.  He shared that  case law relating to  the statue                                                                    
was included.  He shared a  case regarding  "sole dependency                                                                    
not condition  of award" and  stated the case  was Employers                                                                    
Liability Insurance  Corporation versus  Dole from  1966. He                                                                    
indicated that  an attorney would examine  the statute since                                                                    
it was still  relevant law. He listed  other cases regarding                                                                    
dependency  cited  in statute  and  noted  that the  Supreme                                                                    
Court had weighed in on prior cases relating to dependency.                                                                     
2:24:24 PM                                                                                                                    
Representative  Ortiz   referenced  testimony   that  Alaska                                                                    
ranked 30th out  of other states. He asked  what category he                                                                    
had been referencing.  Representative Josephson replied that                                                                    
according to  DOL statistics the  amount the state  paid for                                                                    
loss or  injury to  a body  part placed  Alaska in  the 30th                                                                    
ranking  among states.  Representative  Ortiz asked  whether                                                                    
the   state   also   ranked   30th   for   death   benefits.                                                                    
Representative  Josephson  answered   in  the  negative.  He                                                                    
deduced that  the state was  "roughly on par  with Minnesota                                                                    
and New  York." He relayed  how Hawaii calculated  its death                                                                    
benefit. He  reported that  the formula  was "25  percent of                                                                    
312 times  the effective  maximum weekly death  benefit rate                                                                    
to  the  non-dependent  parents."  He offered  that  he  was                                                                    
perplexed by  the formula. He believed  that "fundamentally,                                                                    
a life is a life." He  wanted to dignify the lives of single                                                                    
individuals  without  dependents.   He  commented  that  the                                                                    
situation  that  Ms.  Burke experienced  by  only  receiving                                                                    
funerary  expenses was  "profoundly hurtful  and offensive."                                                                    
He  voiced  that the  issue  was  also  what his  bill  "was                                                                    
2:27:12 PM                                                                                                                    
Representative  Neuman referred  to Ms.  Burke's court  case                                                                    
mentioned  earlier in  the meeting.  He wondered  if passing                                                                    
legislation could  change the statute  and affect  the court                                                                    
case.  Representative  Josephson  believed the  court  would                                                                    
rule based on existing law.  He deferred the question to the                                                                    
attorney representing the case.                                                                                                 
ERIC  CROFT,   ATTORNEY,  ANCHORAGE   (via  teleconference),                                                                    
indicated that he was an amicus  for Ms. Burke and her case.                                                                    
He explained  that she represented herself  and appealed her                                                                    
case to  the Alaska Supreme  Court. She lost  previous cases                                                                    
but  one year  ago the  court issued  an order  and asked  a                                                                    
question.  He  read  from  the   court  order,  "Under  what                                                                    
circumstances  if any  can the  amount of  benefits provided                                                                    
under the Alaska  Workers' Compensation Act be so  low as to                                                                    
deprive  an  injured  worker  or   his  beneficiaries  of  a                                                                    
substantial  remedy   such  that  the  statute   violates  a                                                                    
workers' right  to due process."  He believed the  court was                                                                    
struggling with the  concept that no benefit was  given to a                                                                    
category of  workers. He delineated  that when  the Workers'                                                                    
Compensation  Act was  implemented  many years  ago most  26                                                                    
year old  persons were married. Currently,  approximately 80                                                                    
percent of  26 year  olds in  the workforce  were unmarried.                                                                    
The problem  exacerbated over time.  He believed  the courts                                                                    
were "troubled" with not providing  benefits to the category                                                                    
of workers.  He deduced  that the courts  were uncomfortable                                                                    
with  the results  but also  uncomfortable  with "doing  the                                                                    
legislatures job"  of "writing  something into  statute." He                                                                    
thought  they would  welcome a  fix to  a problem  they were                                                                    
having difficulty solving.                                                                                                      
2:31:41 PM                                                                                                                    
Co-Chair  Seaton asked  for clarification  on Representative                                                                    
Neuman's question.                                                                                                              
Representative Neuman  clarified that  he was  interested in                                                                    
how the bill would impact the current court case.                                                                               
Representative Josephson replied that  the effective date of                                                                    
HB  38 would  change to  January  1, 2019.  The current  law                                                                    
would apply at the time of  a ruling. He speculated that the                                                                    
court  may  deny  Ms.  Burke's   claim  if  the  legislature                                                                    
addressed the issue.                                                                                                            
Representative  Ortiz   referenced  a  letter   in  members'                                                                    
packets   from  the   National  Federation   of  Independent                                                                    
Business  (NFIB) [dated  February 12,  2018] (copy  on file)                                                                    
and  noted  that  according  to  the  federation  the  state                                                                    
remained the  5th highest at  145 percent of the  median for                                                                    
the workers  compensation program in costs  to employers. He                                                                    
asked how much  the bill would increase  costs to employers.                                                                    
Representative  Josephson  replied  that opposition  to  the                                                                    
bill  was  scarce.  He  pointed out  the  Division  of  Risk                                                                    
Management,  Department  of Administration  (DOA)  indicated                                                                    
that  the workers  would absorb  some of  the costs  for the                                                                    
state. The  formula would spread  the cost of  $500 thousand                                                                    
among  20  thousand state  workers.  He  agreed the  state's                                                                    
workers compensation  rates were higher because  the state's                                                                    
medical costs were much higher.                                                                                                 
2:35:12 PM                                                                                                                    
Representative  Wilson  MOVED  to  ADOPT  Amendment  1,  30-                                                                    
LS0160\O.3 (Wallace, 4/20/17) (copy on file):                                                                                   
     Page 1, line 1, following "Act":                                                                                           
     Insert  "relating  to  the  exclusiveness  of                                                                              
     liability  of  an  employer  in  the  case   of                                                                            
     permanent  partial  impairment or death;"                                                                                  
     Page 1, following line 10:                                                                                                 
     Insert a new bill section to read:                                                                                         
     "* Sec. 2. AS 23.30.055 is repealed and reenacted to                                                                       
     Sec.   23.30.055.  Exclusiveness   of  liability.   (a)                                                                    
     The  liability  of  an employer prescribed in AS                                                                           
     23.30.045  is exclusive  and  in  place  of all  other                                                                     
     liability  of   the employer     and     any     fellow                                                                    
     employee    to    the    employee,    the    employee's                                                                    
     legal representative,   husband   or  wife,    parents,                                                                    
     dependents,   next  of  kin,  and   anyone otherwise                                                                       
     entitled  to  recover  damages  from  the  employer  or                                                                    
     fellow employee  at law or in   admiralty  on   account                                                                    
     of   the  injury   or  death. The   liability  of   the                                                                    
     employer is  exclusive even if the  employee's claim is                                                                    
     barred under AS 23.30.022.                                                                                                 
     (b)  Notwithstanding (a)  of this  section, an  injured                                                                    
     employee, or  the employee's legal   representative  in                                                                    
     case   death    results     from   the   injury,    may                                                                    
     elect   to  claim  compensation  under this  chapter or                                                                    
     to maintain  an action against  the employer at  law or                                                                    
     in admiralty  for damages on  account of the  injury or                                                                    
     death, if                                                                                                                  
     (1)      an  employer    fails  to  secure  payment  of                                                                    
     compensation as  required by this chapter; or                                                                              
     (2)   the injury to  the employee results  in permanent                                                                    
     partial impairment,  permanent  total   disability,  or                                                                    
     death   and  was   caused   by   gross  negligence   of                                                                    
     the employer.                                                                                                              
     (c)   In an  action   under (b)  of  this section,  the                                                                    
     defendant   may  not   plead  as  a defense  that   the                                                                    
     injury  was caused   by the  negligence  of   a  fellow                                                                    
     servant, or   that  the employee assumed   the  risk of                                                                    
     the  employment, or  that  the injury  was  due to  the                                                                    
     contributory negligence of the employee.                                                                                   
     (d)     In  this  section, "employer"    includes,   in                                                                    
     addition  to   the  meaning  given   in AS 23.30.395, a                                                                    
     person  who, under  AS  23.30.045(a),  is liable for or                                                                    
     potentially        liable  for   securing  payment   of                                                                    
     Renumber the following bill sections accordingly.                                                                          
Vice-Chair Gara OBJECTED for discussion.                                                                                        
Representative   Wilson   explained   the   amendment.   She                                                                    
emphasized that  there was a difference  between an accident                                                                    
and negligence;  the employer  had received  violations. She                                                                    
recalled that  the death  of   Abigail Caudle  "probably did                                                                    
not have to  happen." She reiterated that  the survivors had                                                                    
no  right to  sue. She  explained that  her amendment  would                                                                    
apply to page 1, lines 21  through 23 of the legislation and                                                                    
inserted the following language:                                                                                                
     (2)   the injury to  the employee results  in permanent                                                                    
     partial impairment,  permanent  total   disability,  or                                                                    
     death   and  was   caused   by   gross  negligence   of                                                                    
     the employer.                                                                                                              
Representative Wilson  elaborated that gross  negligence was                                                                    
a much  higher standard  than just  an accident.  She opined                                                                    
that  if  a child  was  lost  to  an employer  who  received                                                                    
violations and ignored  them causing the death  of the child                                                                    
the survivors  should have the  option to sue.  She believed                                                                    
that  the  law  was  unfair  and  that  an  accident  and  a                                                                    
preventable  incident resulting  in  death were  not on  the                                                                    
same level.                                                                                                                     
Vice-Chair  Gara  wanted  to understand  the  amendment.  He                                                                    
provided  his  understanding  of the  workers'  compensation                                                                    
system  and  characterized  it as  a  no-fault  system.  The                                                                    
injured worker  received less compensation  than in  a civil                                                                    
lawsuit but  did not have  to prove employer  negligence. He                                                                    
asked   how  the   amendment  would   change  the   balance.                                                                    
Representative Wilson understood that  the amendment did not                                                                    
change the  balance at all.  She detailed that  the employee                                                                    
or survivors  could opt  for the  existing process  but once                                                                    
they chose  to engage  in a civil  lawsuit the  court ruling                                                                    
stood even  if the  workers' compensation system  would have                                                                    
awarded more.  She emphasized that  gross negligence  had to                                                                    
be proven.                                                                                                                      
2:38:19 PM                                                                                                                    
Vice-Chair  Gara stated  that generally  negligence did  not                                                                    
have to  be proven in  the workers' compensation  system and                                                                    
the  worker received  less compensation  as  a tradeoff.  He                                                                    
emphasized that  workers compensation  was the  only remedy.                                                                    
He did  not understand what  the amendment did.  He wondered                                                                    
why  gross negligence  was  being proposed  for  a no  fault                                                                    
system.  Representative  Wilson  agreed that  currently  the                                                                    
system  was a  no fault  system. She  explained that  if the                                                                    
worker or  survivor knew the  injury or death was  caused by                                                                    
gross   negligence   the   amendment   would   provide   the                                                                    
opportunity to  engage in  a lawsuit.  The bill  offered the                                                                    
option  to choose  civil law  or  the no  fault system.  She                                                                    
opined that gross negligence could  be proven in many cases.                                                                    
It  was  her understanding  that  in  the story  brought  by                                                                    
Representative   Josephson   the  employer   received   many                                                                    
violations that  were ignored and  resulted in the  death of                                                                    
the worker.                                                                                                                     
Co-Chair  Seaton  asked  about gross  negligence,  which  he                                                                    
believed was  determined at  the court  level. He  stated it                                                                    
was  not determined  prior  to a  court  proceeding. He  was                                                                    
trying   to  understand   if  he   was  missing   something.                                                                    
Representative Wilson  replied that her intent  was ensuring                                                                    
the spouse or  family received "the full value  of what they                                                                    
had" if a  company could have possibly  prevented a worker's                                                                    
death.  She voiced  that she  was  not an  attorney and  was                                                                    
dependent on legal advice.                                                                                                      
2:42:11 PM                                                                                                                    
Representative  Josephson believed  that some  employers and                                                                    
business  owners  may  be concerned  by  the  amendment.  He                                                                    
stated the  amendment would leave  employers exposed  to all                                                                    
Title  9   [Code  of  Civil  Procedure]   remedies.  He  was                                                                    
concerned  about  who would  pay  for  the injured  worker's                                                                    
medical care while the court  case was proceeding that could                                                                    
take a year or more for a resolution.                                                                                           
MARIE  MARX, DIRECTOR,  DIVISION  OF WORKERS'  COMPENSATION,                                                                    
DEPARTMENT OF  LABOR AND  WORKFORCE DEVELOPMENT,  stated her                                                                    
understanding  of the  question related  to the  amendment's                                                                    
impact to the. She answered  that it would allow the injured                                                                    
worker to recover in court  for gross negligence which would                                                                    
provide full  and just  compensation. However,  the workers'                                                                    
compensation system  was a "social contract?  founded on the                                                                    
bargain" of  limited quick prompt  benefits in  exchange for                                                                    
forfeiting the  right to sue  their employer.  She described                                                                    
the bargain as  the "underpinning of our  whole system." She                                                                    
shared  that the  system had  been put  in place  during the                                                                    
Industrial Revolution to protect  workers who often lost and                                                                    
received  nothing in  court and  to  protect employers  from                                                                    
being  put out  of business  from very  large court  awards.                                                                    
The amendment would implement  a completely different system                                                                    
and remove  the benefit  of the  bargain for  employers. She                                                                    
emphasized that  the employers benefit of  the bargain would                                                                    
be  reduced, which  was  a concern.  She  offered that  most                                                                    
states  allowed tort  suits for  "intentional conduct."  The                                                                    
exemption   did  remove   the   party   from  the   workers'                                                                    
compensation  system. She  could  not find  any states  that                                                                    
allowed  a   worker  to  sue   for  gross   negligence.  She                                                                    
questioned how the lawsuit would work procedurally and                                                                          
administratively for the system.                                                                                                
2:46:37 PM                                                                                                                    
Representative  Wilson understood  the no-fault  system. She                                                                    
stated that in  both cases; a company  that ensured worker's                                                                    
safety  and   a  company  where  repeated   violations  were                                                                    
ignored, and  a worker  died, were treated  the same  in the                                                                    
workers' compensation  system. She asked if  she was correct                                                                    
to state  that in both  cases the monetary  compensation was                                                                    
the same. Ms.  Marx answered in the  affirmative. The Alaska                                                                    
Supreme Court  had decided that  to take oneself out  of the                                                                    
workers' compensation  system there had  to be an  intent to                                                                    
harm; gross negligence did not  remove the employer from the                                                                    
system.  Workers' Compensation  was a  no-fault system.  The                                                                    
issues  of  work place  safety  were  addressed through  the                                                                    
Division  of   Occupational  Safety   and  Health   and  may                                                                    
separately  offer  mechanisms  to address  workplace  safety                                                                    
issues.  She  summarized   that  the  workers'  compensation                                                                    
system was a  no-fault system unless there  was clear intent                                                                    
to harm.                                                                                                                        
Representative   Pruitt  asked   whether  currently   if  an                                                                    
individual elected  not to go through  workers' compensation                                                                    
the person  could sue.  Ms. Marx  answered in  the negative.                                                                    
She clarified  that currently "it  was an  exclusive remedy;                                                                    
both parties must proceed  through the workers' compensation                                                                    
system  unless   the  employer  failed  to   carry  workers'                                                                    
compensation, which was required by law.                                                                                        
2:49:02 PM                                                                                                                    
Representative Guttenberg asked how  far the amendment would                                                                    
walk  away  from  the  exclusive  remedy  and  the  no-fault                                                                    
system.  He  wondered about  degrading  the  system and  the                                                                    
social  compact  if  the   amendment  was  adopted  whereby,                                                                    
workers' compensation would not  be the exclusive remedy any                                                                    
longer  and  everyone  had to  prove  gross  negligence.  He                                                                    
imagined a  scenario where an  employer denied  remedies for                                                                    
everything  and the  worker had  to engage  in lawsuits  for                                                                    
everything; the  exclusive remedy  was gone, and  the system                                                                    
was broken due  to the amendment. He asked  for comment. Ms.                                                                    
Marx  answered  that  it  may   be  because  of  the  issues                                                                    
Representative  Guttenberg mentioned  that Alaska  and other                                                                    
state's  Supreme  Courts had  drawn  a  bright line  between                                                                    
nonintentional  conduct and  intent  to  harm. She  surmised                                                                    
that the  reason may  be that once  the bargain  was chipped                                                                    
away  at  the  underpinning  of  the  workers'  compensation                                                                    
system  began to  erode.  Allowing an  employee  to elect  a                                                                    
remedy  deprived the  employer the  benefit of  the bargain;                                                                    
the employer was  not sued in exchange  for prompt benefits.                                                                    
Representative Guttenberg  agreed that the employer  did not                                                                    
get  sued, but  the employee  was not  made whole.  Ms. Marx                                                                    
affirmed  that his  statement  was the  crux  of the  social                                                                    
2:52:12 PM                                                                                                                    
Co-Chair  Seaton  referenced  Amendment  1.  He  provided  a                                                                    
scenario of  someone who received workers'  compensation and                                                                    
subsequently sued and  received a remedy from  the court. He                                                                    
wondered if the individual would  have to repay the workers'                                                                    
compensation  system. Representative  Wilson  stated it  was                                                                    
her  understanding that  a person  could choose  one or  the                                                                    
other   but  not   both  and   could  not   choose  worker's                                                                    
compensation once the court proceedings  began and could not                                                                    
sue once  workers' compensation  was chosen.  She understood                                                                    
the  system was  a compromise.  She was  concerned that  the                                                                    
current system did not seem  fair in gross negligence cases.                                                                    
She WITHDREW Amendment 1.                                                                                                       
2:55:08 PM                                                                                                                    
Vice-Chair Gara  MOVED to  ADOPT Amendment  2, 30-LS0160\R.2                                                                    
(Wallace, 2/15/18) (copy on file):                                                                                              
     Page 4, line 8:                                                                                                            
     Delete "2018"                                                                                                              
     Insert "2019"                                                                                                              
Co-Chair Seaton  explained the amendment. He  indicated that                                                                    
the  amendment  changed  the  effective  date  of  the  bill                                                                    
because it was offered in the prior session.                                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
2:56:49 PM                                                                                                                    
Representative   Neuman   knew   of  companies   that   were                                                                    
financially stable  and could be self-insured.  He asked how                                                                    
the  workers'  compensation  system  addressed  self-insured                                                                    
companies.  Ms. Marx  replied  that the  state  was a  self-                                                                    
insured   employer.   She   explained  that   the   Workers'                                                                    
Compensation  Act  applied  to  employers  but  in  practice                                                                    
either the  insurance company paid benefits  or self-insured                                                                    
employers paid the benefits directly.  The benefit due by an                                                                    
employer  was  paid  by either  the  insurance  company  who                                                                    
represented the  employer or the self-insured  employer paid                                                                    
the benefit directly.                                                                                                           
SCOTT  JORDAN,   DIRECTOR,  DIVISION  OF   RISK  MANAGEMENT,                                                                    
DEPARTMENT  OF   ADMINISTRATION,  agreed  with   Ms.  Marx's                                                                    
Representative   Neuman  related   a  story   from  personal                                                                    
experience of  a constituent who  worked for  a self-insured                                                                    
employer and was injured and could  not work for the rest of                                                                    
his  life;  his  ability  to get  compensation  was  limited                                                                    
because the  business was self-  insured. He  questioned his                                                                    
recollection. Mr.  Jordan asked  whether the  individual was                                                                    
an employee  of the company. Representative  Neuman answered                                                                    
that the person was an  employee. Ms. Marx answered that the                                                                    
limits  on benefits  and the  restrictions on  lawsuits were                                                                    
the  same  regardless  of whether  the  employer  was  self-                                                                    
insured  or was  represented by  its insurance  company. She                                                                    
delineated that  if Representative Neuman's  constituent was                                                                    
an  employee of  a self-insured  company the  benefits would                                                                    
flow  through the  Worker's  Compensation  Act. She  deduced                                                                    
that  it   sounded  like  the   person  may  have   been  an                                                                    
independent  contractor.  Independent contractors  were  not                                                                    
eligible for workers'  compensation benefits. Representative                                                                    
Neuman  relayed  that  some   employers  were  firing  their                                                                    
employees  and  asking  them to  return  as  an  independent                                                                    
contractor due to high insurance rates in Alaska.                                                                               
3:02:05 PM                                                                                                                    
Co-Chair Seaton  stated that a  question that had  arisen in                                                                    
the  discussion was  whether there  was not  an impetus  for                                                                    
employers  to have  a  safe work  environment.  He asked  if                                                                    
everyone  paid  the  same   for  the  workers'  compensation                                                                    
insurance. He wondered if some  businesses had to pay higher                                                                    
workers'  compensation rates  if they  had a  claims history                                                                    
due to  an unsafe work  environment. Ms. Marx  answered that                                                                    
"generally yes."  She elaborated that  workers' compensation                                                                    
premiums were approved by the  Alaska Division of Insurance.                                                                    
The premiums began  with a base rate and  increased in terms                                                                    
of  risk, employer  experience, size  of payroll,  and other                                                                    
considerations. The  amount could be increased  or decreased                                                                    
and varied by employer.                                                                                                         
Representative Wilson  asked whether building code  or other                                                                    
violations  especially  when  an  employee  did  sustain  an                                                                    
injury  impacted the  workers'  compensation  rate. She  had                                                                    
heard  of   cases  where  Occupational  Safety   and  Health                                                                    
Administration   (OSHA)    cited   employers    for   unsafe                                                                    
3:04:19 PM                                                                                                                    
Ms.  Marx deferred  to the  Division of  Insurance that  was                                                                    
responsible  for  setting the  rates.  She  relayed that  in                                                                    
addition,  the National  Council  on Compensation  Insurance                                                                    
proposed rates  to the division and  regulated disputes over                                                                    
rates. She  understood that the experience  of the employer,                                                                    
which   included  its   injury   history   was  taken   into                                                                    
consideration. She deferred to the division for details.                                                                        
HB  38  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair  Seaton reviewed  the  schedule  for the  following                                                                    

Document Name Date/Time Subjects
HB038 Supporting Document - FY19 DRM WC Projections with HB38 PPI Cost Increase Estimate 2.12.18.pdf HFIN 2/15/2018 1:30:00 PM
HB 38
HB 79 CS version R.pdf HFIN 2/15/2018 1:30:00 PM
HB 79
HB 38 Rep Josephson WC HFC Oppose ltr.pdf HFIN 2/15/2018 1:30:00 PM
HB 38
HB 79 - Changes from version U to version R.pdf HFIN 2/15/2018 1:30:00 PM
HB 79
HB 38 amendments #1 and #2.pdf HFIN 2/15/2018 1:30:00 PM
HB 38
HB 79 -Amendment #1.pdf HFIN 2/15/2018 1:30:00 PM
HB 79