Legislature(2003 - 2004)

05/07/2004 06:30 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM                                                                               
                                                                                                                                
[Contains discussion of HB 450]                                                                                                 
                                                                                                                                
Number 0864                                                                                                                     
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be CS  FOR SENATE BILL  NO. 311(JUD)(efd fld), "An  Act providing                                                               
for  a  special  deposit   for  workers'  compensation  insurers;                                                               
relating  to  the board  of  governors  of the  Alaska  Insurance                                                               
Guaranty Association; stating the  intent of the legislature, and                                                               
setting   out   limitations,   concerning   the   interpretation,                                                               
construction, and  implementation of workers'  compensation laws;                                                               
relating  to  restructuring   the  Alaska  workers'  compensation                                                               
system;  eliminating  the  Alaska  Workers'  Compensation  Board;                                                               
establishing  a  division  of workers'  compensation  within  the                                                               
Department  of  Labor  and Workforce  Development  and  assigning                                                               
certain  Alaska  Workers'  Compensation Board  functions  to  the                                                               
division and  the Department of Labor  and Workforce Development;                                                               
establishing   a   Workers'  Compensation   Appeals   Commission;                                                               
assigning certain  functions of the Alaska  Workers' Compensation                                                               
Board  to the  Workers' Compensation  Appeals Commission  and the                                                               
Workers'  Compensation  Hearings  Board; relating  to  agreements                                                               
that  discharge workers'  compensation  liability; providing  for                                                               
hearing  examiners and  hearing panels  in workers'  compensation                                                               
proceedings; relating  to workers' compensation  awards; relating                                                               
to an  employer's failure to  insure and keep insured  or provide                                                               
security;  providing   for  appeals  from   compensation  orders;                                                               
relating  to  workers'  compensation proceedings;  providing  for                                                               
supreme  court   jurisdiction  of   appeals  from   the  Workers'                                                               
Compensation Appeals  Commission; providing for a  maximum amount                                                               
for  the  cost-of-living  adjustment  for  workers'  compensation                                                               
benefits;  providing for  administrative penalties  for employers                                                               
uninsured   or    without   adequate   security    for   workers'                                                               
compensation; and relating to assigned risk pools and insurers."                                                                
                                                                                                                                
Number 0930                                                                                                                     
                                                                                                                                
SCOTT  NORDSTRAND,  Deputy   Attorney  General,  Civil  Division,                                                               
Department of  Law, reported  that HB 450  was the  original bill                                                               
which  has since  been changed  and he  described the  process it                                                               
went through  to become SB 311.   He said the  process began with                                                               
the  administration trying  to draft  legislation in  response to                                                               
the increasing  workers' compensation  rates that  were announced                                                               
late  last  year.   He  pointed  out that  the  bill  was also  a                                                               
response to  the problems with  the guarantee fund and  the costs                                                               
incurred from  the failure of  [Fremont Indemnity Company].   The                                                               
Division  of   Insurance,  the  Department  of   Labor,  and  the                                                               
Department of  Law were challenged  by the administration  to see                                                               
if there  could be a  reform in workers' compensation  that could                                                               
improve the  system and make it  more efficient.  He  stated that                                                               
there were two alternatives looked  at, how the benefits are paid                                                               
out and the system of adjudication.   The latter was looked at to                                                               
see if  efficiencies could be  created in terms of  what insurers                                                               
and  employers can  expect  in  outcomes that  are  heard by  the                                                               
commission, he reported.                                                                                                        
                                                                                                                                
MR.  NORDSTRAND  explained  that  HB 450  was  drafted  and  then                                                               
challenged in the  Senate by Senator Seekins to try  to find some                                                               
middle ground.   The result  was a hybrid bill  in the form  of a                                                               
committee  substitute (CS)  for SB  311(JUD).   He referred  to a                                                               
packet given to the members  of the committee which describes the                                                               
differences between  the original  bill and the  current CS.   He                                                               
summarized  the  main  change  as  being  that  the  division  of                                                               
workers'   compensation  established   a  workers'   compensation                                                               
appeals commission, and instead  of having hearing examiners hear                                                               
the  cases alone,  there is  now  a labor  representative and  an                                                               
industry representative, as well as  a hearing examiner who would                                                               
make legal decisions  and act like a judge, with  the lay members                                                               
acting  like a  jury.   "Let  the professional  decide the  legal                                                               
issues, the procedural issues, but  let's have the involvement of                                                               
the lay  board members from industry  and labor," he said.   That                                                               
was the  first major compromise  that is integrated in  [SB 311],                                                               
he explained.                                                                                                                   
                                                                                                                                
MR. NORDSTRAND  related that the  second major compromise  was at                                                               
the  commission  level.    "There  were  to  be  three  attorneys                                                               
appointed  by the  governor, confirmed  by  the legislature,  for                                                               
terms of  five years,  and what  we did there  was, we  agreed to                                                               
have  one   of  these  attorneys  have   experience  representing                                                               
employees  in workers'  comp,  and one  employer,  and the  other                                                               
could be either or both or some combination," he explained.                                                                     
                                                                                                                                
Number 1170                                                                                                                     
                                                                                                                                
MR.  NORDSTRAND referred  to the  "What's the  Difference?" chart                                                               
and explained that  it compares the current  system, the original                                                               
bill,  and the  CS, describing  different issues.   "We  sat down                                                               
with labor  and hammered out  a compromise that, frankly,  we got                                                               
to within  one issue  - one issue  alone."  He  said that  in the                                                               
Judiciary   Committee  this   chart  was   discussed  and   Kevin                                                               
Dougherty, the  attorney for organized labor,  worked through it.                                                               
There was  agreement on every  issue except for  the relationship                                                               
between the  commission and the  hearing panels, in terms  of how                                                               
much review  the commission  can have  regarding the  decision in                                                               
the hearing panels, he explained.   The administration's position                                                               
was  that the  commission  should  have what  is  called de  novo                                                               
review  - not  trial -  of the  record so  that they  could relay                                                               
evidence  and essentially  smooth out  the edges  of inconsistent                                                               
decisions, either statewide or even  within the same locality, he                                                               
related.   Labor's position  was that  they wanted  that standard                                                               
that  had  been  used  for  the  superior  courts,  that  is  the                                                               
"substantial evidence  test".  He  said that the  real difference                                                               
between the  [de novo] test,  in a practical  way, if there  is a                                                               
question of whether on not an  employee was injured on the job or                                                               
not, is  that evidence is  taken and weighed independently.   For                                                               
the  substantial  evidence  test,   the  amount  of  evidence  is                                                               
considered.  "It's the weighing  versus looking to see if there's                                                               
any evidence - substantial evidence  - to support that decision,"                                                               
he said.  He continued:                                                                                                         
                                                                                                                                
     We think  that the key to  making predictable decision-                                                                    
     making in the workers'  compensation system, so there's                                                                    
     a   similarity  in   outcome   between  Fairbanks   and                                                                    
     Anchorage and Juneau and Kenai,  and all of these other                                                                    
     cases, when you've got this  panoply of board panels to                                                                    
     start   with,   many,   many   different   combinations                                                                    
     presently  being appealed  to  a superior  court of  40                                                                    
     different combinations,  and the only place  the answer                                                                    
     is  ever told  as to  what the  law really  is, is  the                                                                    
     supreme  court.   We say  that  if you  could create  a                                                                    
     commission that had  the power to smooth  out the rough                                                                    
     edges,  essentially,  of  the decisions,  to  take  the                                                                    
     egregious errors if there are  some, and there would be                                                                    
     very few  we suspect,  but fix  them and  rebalance it,                                                                    
     that that would be a better  system.  And let me say in                                                                    
     closing, this is  the system that is used  in most [of]                                                                    
     the states.  We've done our  survey of all of the other                                                                    
     states.   This kind of  system is exactly what  is done                                                                    
     in other states as a  sort of a two-level agency review                                                                    
     and  then  an  appeal,  often to  a  court  of  appeals                                                                    
     directly -  very seldom  to a  supreme court  - because                                                                    
     most  states  now  have  civil   courts  of  appeal  as                                                                    
     intermediate courts.                                                                                                       
                                                                                                                                
Number 1369                                                                                                                     
                                                                                                                                
CHAIR ANDERSON  asked Mr. Nordstrand  to give  two illustrations;                                                               
one of de novo and one not.                                                                                                     
                                                                                                                                
MR.  NORDSTRAND gave  an example  where  a witness  saw a  person                                                               
jumping on a trampoline in the  back yard who landed funny on his                                                               
back  and limped  away.   The injured  person may  then claim  to                                                               
never  having  been   on  a  trampoline  and  to   not  having  a                                                               
trampoline.   There could  be all kinds  of evidence  either way.                                                               
The  credibility of  witnesses  is  left to  the  panel, and  the                                                               
panel,  after   finding  the  neighbor  credible,   believes  the                                                               
neighbor who saw the person on  the trampoline.  The panel has to                                                               
weigh the amount  of evidence and decide.  In  another case there                                                               
is  a co-worker  in the  kitchen who  sees a  person slip  on the                                                               
floor, fall, and limp away.   "Now that's another bit of evidence                                                               
that  could  be balanced,  but  at  some  point, though,  a  fact                                                               
finder's  got to  make a  choice,  and that's  really what  we're                                                               
talking about is  whether or not that  appellate commission could                                                               
rebalance and make that choice.                                                                                                 
                                                                                                                                
CHAIR ANDERSON clarified that it is  "a matter of how far you can                                                               
expand the review of the evidence."                                                                                             
                                                                                                                                
Number 1530                                                                                                                     
                                                                                                                                
MR. NORDSTRAND agreed:                                                                                                          
                                                                                                                                
     It's  really about  ... the  question  of weighing  it.                                                                    
     Once  you've got  the evidence  in, and  it's all  been                                                                    
     admitted and  it's all  in the  record, someone  has to                                                                    
     look a  this pile  and that pile  [of evidence]  and go                                                                    
     like this and say, "I believe  that way."  Now we don't                                                                    
     get  to say,  "She's not  telling the  truth, he's  not                                                                    
     telling the truth."  Whatever  findings the panel said,                                                                    
     go on  that. ... At the  end of the day  ... it's about                                                                    
     whether or not you can rebalance.                                                                                          
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if Mr. Nordstrand  would be back                                                               
because he said he has questions.                                                                                               
                                                                                                                                
CHAIR ANDERSON said he would be back.                                                                                           
                                                                                                                                
Number 1591                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  about the  legislative intent  of                                                               
the bill.  He stated:                                                                                                           
                                                                                                                                
     The  legislative  intent  is  to  reform  the  workers'                                                                    
     compensation  system, to  insure  continued payment  of                                                                    
     benefits in the event of  a insurer insolvency, to give                                                                    
     parties affected  by the  insolvency of  above workers'                                                                    
     compensation insurer a voice  on the board of governors                                                                    
     of the  Alaska Insurance  Guaranty Association,  and to                                                                    
     reduce  the  overall  costs  of  workers'  compensation                                                                    
     premiums to  employers.  It doesn't  say anything about                                                                    
     an intent there to enhance or  to do a better job about                                                                    
     getting workers'  compensation benefits to  the injured                                                                    
     worker -  to make it  any better.   There are a  lot of                                                                    
     people  that  get pushed  out  of  the system  for  one                                                                    
     reason or another and get  treated unevenly as is right                                                                    
     now.                                                                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD  questioned why  that was  not a  part of                                                               
the original intent of the bill.                                                                                                
                                                                                                                                
MR. NORDSTRAND responded that  Representative Crawford is looking                                                               
at the intent section for the  guaranty fund portion of the bill,                                                               
which only  applies to Sections 3-6.   He said that  Section 8 is                                                               
the intent for the reform section and he quoted in part:                                                                        
                                                                                                                                
     This   chapter   be   interpreted  to   ensure   quick,                                                                    
     efficient,  fair,  predictable delivery  of  indemnity,                                                                    
     medical  payments.   Cases shall  be  decided on  their                                                                    
     merits except  where otherwise  provided by  law, shall                                                                    
     not be  construed in the  favor of one party,  shall be                                                                    
     impartial and  fair.  This actually  is intent language                                                                    
     from the 1988  reforms that was uncodified  law, and we                                                                    
     actually negotiated at some length  with the members of                                                                    
     organized labor.                                                                                                           
                                                                                                                                
Number 1696                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG noted  that sometimes  where something                                                               
is  found in  a bill  signifies its  importance, and  having that                                                               
intent language in  Section 8 is not a friendly  statement to the                                                               
workers, he opined.                                                                                                             
                                                                                                                                
MR. NORDSTRAND said  that is because of the  drafting rules which                                                               
require that they have to be put  in order as they show up in the                                                               
statute.  He  also pointed out that [Section 8]  is the beginning                                                               
of the workers' compensation reform portion of the bill.                                                                        
                                                                                                                                
Number 1737                                                                                                                     
                                                                                                                                
GREG O'CLARAY,  Commissioner, Department  of Labor  and Workforce                                                               
Development, stated that there is  a general disagreement between                                                               
the  representatives of  organized labor  and the  administration                                                               
with respect  to the de  novo review.   He commended  the parties                                                               
for attempting to  work out their differences.  He  said that his                                                               
purpose  for monitoring  the  progress of  the  bill is  twofold:                                                               
one, the administration was interested  in trying to do something                                                               
for small business  to stave off the escalating  cost of workers'                                                               
compensation  premiums,  and  two,  to  balance  that  with  "the                                                               
absolute adherence  to this policy  that this  department follows                                                               
as close as  any other policy that we are  charged with, and that                                                               
is that we  would not diminish the benefits  that workers receive                                                               
when  they're injured  in the  course of  their employment."   He                                                               
opined that  those two points have  been lost in the  debate.  He                                                               
said  that  Governor  Murkowski is  very  concerned  about  small                                                               
businesses owners being able to  survive in a business climate of                                                               
escalating [workers' compensation] rates.                                                                                       
                                                                                                                                
CHAIR ANDERSON gave  an example of his  mother's business's rates                                                               
raising by  $15,000 from  last year  without any  injuries having                                                               
taken place.   He asked  Commissioner O'Claray if this  bill will                                                               
fix the problem and rates will go down.                                                                                         
                                                                                                                                
COMMISSIONER  O'CLARAY   replied  that  he  has   not  heard  any                                                               
testimony that  guarantees rate reduction or  savings, but warned                                                               
if  something is  not  done  to refine  the  system, it's  almost                                                               
guaranteed that these  costs will continue to escalate.   He said                                                               
that  [SB  311]  is  not   the  perfect  bill  because  there  is                                                               
disagreement,  but it  is needed  "on  the books,"  not only  for                                                               
long-term efficiencies  and potential  cost savings,  but because                                                               
"we  need to  do something  that makes  sure that  our system  is                                                               
going to  be able to be  modernized and brought into  the twenty-                                                               
first century."  Many other states use this approach, he noted.                                                                 
                                                                                                                                
COMMISSIONER O'CLARAY  said that  compared to the  original draft                                                               
of the bill,  this version is much improved.   It does retain lay                                                               
panels and  recognizes the concerns  of working people,  just not                                                               
on the de  novo question, he added.  He  said that the Department                                                               
of Labor will be monitoring  [the de novo] function very closely.                                                               
He  noted  that  business communities  and  Governor  Murkowski's                                                               
administration  support   this  bill,  and  it   is  on  Governor                                                               
Murkowski's priority  list, and  he urged  the committee  to move                                                               
[SB 311] on to the next committee.                                                                                              
                                                                                                                                
Number 1965                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD opined that  this approach, "to have more                                                               
certainty", appears that  it will deny more  benefits to workers.                                                               
He stated that the best  way to lower workers' compensation rates                                                               
is  to have  less  accidents  because of  safer  job  sites.   He                                                               
suggested that that is the avenue that should be taken.                                                                         
                                                                                                                                
COMMISSIONER O'CLARAY  agreed that the  best way to  reduce costs                                                               
of workers' compensation  is to reduce accidents on the  job.  He                                                               
said that  this will not  be the  last the committee  hears about                                                               
improved efforts in that regard.                                                                                                
                                                                                                                                
REPRESENTATIVE GUTTENBERG spoke of  another bill that came before                                                               
the committee  that was designed  to better predict rates  and to                                                               
give stability to  workers' compensation.  He said  that [SB 311]                                                               
completely  rewrites the  workers'  compensation law,  sets up  a                                                               
whole new hearing procedure, changes  one of the basic tenants of                                                               
the previous  bill, which is the  de novo issue, and  there is no                                                               
mention   of   a   cost   savings   to   the   employer   or   of                                                               
increased/decreased benefits to  the injured worker.   There is a                                                               
$560,000 fiscal note going out to  the year 2010, he pointed out,                                                               
and  then  he   asked  where  the  savings   and  the  structural                                                               
efficiencies are.                                                                                                               
                                                                                                                                
COMMISSIONER O'CLARAY replied:                                                                                                  
                                                                                                                                
     You're asking  the wrong person with  respect to trying                                                                    
     to quantify that.   But, any time you  make things more                                                                    
     efficient, any  time you add  more predictability  to a                                                                    
     body of law, I think  it gives the long-term ability to                                                                    
     claim savings.  ... Frankly, I  think we ought  to give                                                                    
     the bill an opportunity to work.                                                                                           
                                                                                                                                
Number 2110                                                                                                                     
                                                                                                                                
JIM SAMPSON,  Executive President, Alaska American  Federation of                                                               
Labor  and   Congress  of  Industrial   Organizations  (AFL-CIO),                                                               
requested that  the House Labor  and Commerce  Standing Committee                                                               
hold [SB 311] until the  major disagreements are resolved between                                                               
the  parties.   He  said  he  believes  that  given time  in  the                                                               
interim, the parties  will be able to  resolve their differences.                                                               
"As  the  bill is  written  now,  we  believe it  will  encourage                                                               
unnecessary appeals and  delays in process, not  reduce them," he                                                               
said.   He agreed that there  had been no testimony  to show that                                                               
this bill will reduce employment costs.                                                                                         
                                                                                                                                
Number 2162                                                                                                                     
                                                                                                                                
MR. SAMPSON pointed  out that the biggest problem  with the bill,                                                               
as Mr.  Nordstrand described, is  in the hearing  process itself.                                                               
He said  the process has  caused some  problems, but this  is the                                                               
first  time in  25 years  that labor,  the party  that represents                                                               
injured workers  in the state,  has not been  given a say  in the                                                               
drafting of  the bill.   For three  months prior to  the session,                                                               
Mr.  Nordstrand's  office reached  out  to  almost everybody  but                                                               
labor, he  stated.  He  related that  since the early  80's there                                                               
has been a process in the  state that has worked well where labor                                                               
and management have worked together  to reduce premiums by almost                                                               
50  percent.   He said  employer costs  have been  reduced almost                                                               
$400,000 in that  period of time, which shows a  proven record of                                                               
trying to work together to reach  consensus on a very complex and                                                               
difficult issue.                                                                                                                
                                                                                                                                
MR. SAMPSON spoke  about the hearing process.  As  it stands now,                                                               
the governor  selects a three-person  panel of attorneys,  all of                                                               
whom are political appointees, to  take the place of the superior                                                               
court.  He  said that these appointees would be  able to re-weigh                                                               
evidence  without taking  testimony.   He said  that while  labor                                                               
does not  object to  a process whereby  one can  substitute their                                                               
judgment on the law, "we just  don't agree to a process that will                                                               
allow them to use their judgment on the facts."                                                                                 
                                                                                                                                
MR. SAMPSON continue to say:                                                                                                    
                                                                                                                                
     In fact,  the labor  panel and  the employer  panel and                                                                    
     the hearing officer  have worked well.   They can weigh                                                                    
     the  facts  themselves quite  well  and  have for  many                                                                    
     years.   The standard  now - is  there enough  facts to                                                                    
     support  the decision  - that's  the  standard that  we                                                                    
     want to  keep.   We want  labor to  be involved  in the                                                                    
     decision.   We want  the employer representative  to be                                                                    
     involve in the decision, so  that is a major difference                                                                    
     of opinion between us.                                                                                                     
                                                                                                                                
Number 2312                                                                                                                     
                                                                                                                                
MR. SAMPSON  said that  labor appointed an  ad hoc  committee and                                                               
started  meeting  about this  bill.    "We have  compromised  and                                                               
compromised and compromised  to make a bad bill the  best bill we                                                               
could make it," he  said.  As it now written,  he opined that the                                                               
bill  should be  called  "The Attorney  Retirement  Bill -  2004"                                                               
because it was  written for attorneys by attorneys.   He said his                                                               
organization  is still  committed  to working  on  the bill,  but                                                               
needs more time.                                                                                                                
                                                                                                                                
MR.  SAMPSON  restated  that  the biggest  problem  is  with  the                                                               
appeals  commission.   The  members  would  have more  power  and                                                               
authority  than  a  superior  court  judge,  they  are  political                                                               
appointments  and  not from  a  list  submitted by  the  judicial                                                               
council,  and they  would not  operate under  the same  standards                                                               
that the  courts are required to.   He noted that  evidence shows                                                               
there are  only 36 appeals per  year to the court  so each member                                                               
would  review  about 12  appeals  per  year,  and in  the  Senate                                                               
Judiciary Committee,  Senator French  said that a  superior court                                                               
judge handles about 600 cases a  year.  He asked the committee to                                                               
understand that  this is a  very difficult, complex area  of law,                                                               
and it needs more time in order to work through these issues.                                                                   
                                                                                                                                
TAPE 04-52, SIDE B                                                                                                            
Number 2366                                                                                                                     
                                                                                                                                
MR. SAMPSON opined  that in 1988 the legislature went  too far in                                                               
the  restructuring of  workers' compensation,  but it  drove down                                                               
rates.   Every major workers'  compensation bill for the  last 25                                                               
years has  been costed out, he  noted.  [Labor] has  always asked                                                               
NCII,  the  insurers,  for  their opinion  as  to  what  proposed                                                               
legislation   would  do   for   reducing   rates;  however,   the                                                               
administration has not  sent this bill out to be  costed out, and                                                               
there has  been no testimony  that there  will be a  reduction of                                                               
employer premiums, he  said.  He disagreed  with the Commissioner                                                               
O'Claray and suggested that this bill could be costed out.                                                                      
                                                                                                                                
CHAIR ANDERSON  commented that Mr.  Sampson's statement  that the                                                               
governor's office  did not come to  his office right away  in the                                                               
summer  is not  compelling because  the committee  has held  this                                                               
bill for  months and there has  been time to negotiate.   He also                                                               
complimented  Mr. Sampson  because  he said  it  sounds like  Mr.                                                               
Sampson has  been negotiating.   He asked  Mr. Sampson if  it all                                                               
boils down to the de novo issue or if it is a number of issues.                                                                 
                                                                                                                                
Number 2287                                                                                                                     
                                                                                                                                
Mr. Sampson replied that they  all generally surround the hearing                                                               
process and  the power of  the political appointments  to reweigh                                                               
evidence  without  taking testimony.    He  said that  these  are                                                               
legal,  technical  issues  that  [labor] has  worked  on  and  he                                                               
maintained  that it  would politicize  the workers'  compensation                                                               
system  for  every  administration   causing  wide  swings.    He                                                               
emphasized that politics should stay out of it.                                                                                 
                                                                                                                                
CHAIR  ANDERSON  asked if  Mr.  Sampson  has considered  ways  to                                                               
reduce employer rates.                                                                                                          
                                                                                                                                
MR.  SAMPSON  said  he  is  willing to  spend  whatever  time  is                                                               
necessary to look at those issues.   None of those issues such as                                                               
medical costs  were looked at in  this bill, he pointed  out.  He                                                               
suggested that Chair  Anderson write his mother and  let her know                                                               
that there  is no guarantee that  the rates would go  down at all                                                               
because  there is  nothing in  the bill  that would  lead one  to                                                               
believe  that rates  will  be  reduced.   He  said  that the  two                                                               
parties that should have been at  the table are the ones that pay                                                               
the bills, not the lawyers.                                                                                                     
                                                                                                                                
Number 2155                                                                                                                     
                                                                                                                                
PAMELA  LaBOLLE,  President,  Alaska State  Chamber  of  Commerce                                                               
(ASCC), reported  that she represents  700 businesses  who employ                                                               
approximately 70,000  Alaska workers.   She said she had  heard a                                                               
recent speech by  a Senator from California who  used the example                                                               
of how important a good  [workers' compensation and unemployment]                                                               
system in a  state is to make  a state good for  business.  Idaho                                                               
had  placed an  ad in  California newspapers  that showed  that a                                                               
high-tech  industry  in  California   with  200  employees  costs                                                               
employers  $400,000  and  that   same  industry  in  Idaho  costs                                                               
$40,000, she said.                                                                                                              
                                                                                                                                
REPRESENTATIVE   ROKEBERG  asked   if   that   is  for   workers'                                                               
compensation.                                                                                                                   
MS.  LaBOLLE  replied  that  it   is  for  workers'  compensation                                                               
insurance costs.   She  continued to  say that  two months  ago a                                                               
businessman in  Juneau with 50  employees paid $98,000.   He only                                                               
had two minor claims on his  record, she said.  "That means we've                                                               
reached that California example", she  opined.  "It is our belief                                                               
- and we strongly believe this  - that when you have fairness and                                                               
consistency  and  people who  are  examining  the  law as  it  is                                                               
written and applying it to these  cases ... that you are going to                                                               
have  predictability,  and  predictability  means  a  savings  in                                                               
money."  If a business's insurance  company has no idea about how                                                               
a  case   is  going  to   be  determined  because  there   is  no                                                               
predictability, it won't  appeal the case, and the  rates will go                                                               
up, she pointed out.  She  opined that the proposed bill does not                                                               
take away from workers who have  a case because of an injury, and                                                               
it will  provide for a closer  examination to make sure  that the                                                               
claims are legitimate.                                                                                                          
                                                                                                                                
MS. LaBOLLE  said that there are  three legs to the  process, the                                                               
state, which  is the policymaker,  the workers, and  the business                                                               
community, who are  the ones that pay the bill.   She stated that                                                               
business  was  never consulted  about  this  legislation and  the                                                               
administration  negotiated with  labor only,  not business.   She                                                               
said  [business] preferred  not to  have the  lay panel  and felt                                                               
that  without the  de  novo  portion the  bill  has  no value  to                                                               
business.    She  suggested  that   the  bill  should  be  passed                                                               
unamended.                                                                                                                      
                                                                                                                                
Number 1856                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUTTENBERG referred  to  Mr. Sampson's  testimony                                                               
that in the  past [workers' compensation bills]  were costed out.                                                               
He asked Ms. LaBolle if the  ASCC had attempted to find out where                                                               
the savings were before they decided to support the bill.                                                                       
                                                                                                                                
MS. LaBOLLE replied that if  there is predictability and a chance                                                               
of knowing  whether a case can  be appealed, then there  will not                                                               
be  automatic payoffs  "to cut  your losses"  and that  will save                                                               
money.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked if any  other states [that have a                                                               
similar plan] are seeing a decrease in workers' compensation.                                                                   
                                                                                                                                
MS. LaBOLLE said  she does not know except for  the Idaho example                                                               
that she gave.                                                                                                                  
                                                                                                                                
REPRESENTATIVE LYNN  asked if the administration  did not contact                                                               
the business community as a whole or just not ASCC.                                                                             
                                                                                                                                
MS. LaBOLLE  replied that  ASCC was not  contacted, and  she said                                                               
does not believe  any other businesses were contacted.   She said                                                               
she does  not feel  that it was  necessary [to  contact business]                                                               
because  she opined  that  the creation  of the  bill  was not  a                                                               
political  move  and  the  administration  was  responding  to  a                                                               
critical situation.                                                                                                             
                                                                                                                                
REPRESENTATIVE  LYNN said  he  is amazed  that  business was  not                                                               
contacted.                                                                                                                      
                                                                                                                                
Number 1706                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  said he  is intrigued  by the  fact that                                                               
Idaho  is  at  $40,000  compared  to  California  at  [$400,000],                                                               
referring to  Ms. LaBolle's  earlier example.   He asked  what is                                                               
making Idaho so much cheaper.                                                                                                   
                                                                                                                                
MS.  LaBOLLE said  she  does not  know.   She  reported that  the                                                               
California  Senator   was  making  the  point   that  the  policy                                                               
decisions when setting up a  system such as workers' compensation                                                               
are critical in keeping costs down.                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG thanked  Ms. LaBolle for her  10 years of                                                               
service.                                                                                                                        
                                                                                                                                
[CSSB 311(JUD)(efd fld) was heard and held.]                                                                                    

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