Legislature(2017 - 2018)BARNES 124

03/01/2017 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HB 90 Out of Committee
-- Public Testimony --
<Bill Hearing Canceled>
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HB 114 Out of Committee
Moved HB 121 Out of Committee
         HB 90-OCC. LICENSING FEES; INVESTIGATION COSTS                                                                     
3:26:24 PM                                                                                                                    
CHAIR KITO  announced that the  final order of business  would be                                                               
HOUSE BILL  NO. 90,  "An Act  relating to  occupational licensing                                                               
fees; relating  to an  occupational investigation  surcharge; and                                                               
providing for an effective date."                                                                                               
3:27:02 PM                                                                                                                    
CHRYSTAL KOENEMAN,  Staff, Representative Sam Kito,  Alaska State                                                               
Legislature, presented  HB 90 on  behalf of  Representative Kito,                                                               
prime sponsor.   She  stated that  HB 90  would spread  the total                                                               
investigation  surcharge  across  all  licensees,  regardless  of                                                               
profession.   The  proposed investigative  surcharge replace  the                                                               
amount that the licensees currently  pay in their overall license                                                               
fee.   She  noted  that the  bill  would have  no  impact on  any                                                               
deficits among  the various boards;  she remarked,  "Those boards                                                               
will still be required to pay  off that deficit."  She added that                                                               
the  department  has stated  that  HB  90  would not  impact  the                                                               
investigations:   under  HB 90,  there  would be  no increase  in                                                               
investigations and there would be no diminishment of service.                                                                   
3:28:07 PM                                                                                                                    
REPRESENTATIVE   JOSEPHSON   asked  what   the   administration's                                                               
response is to the proposed bill.                                                                                               
3:28:29 PM                                                                                                                    
JANEY HOVENDEN,  Director, Division of  Corporations, Businesses,                                                               
and  Professional  Licensing  (DCBPL),  Department  of  Commerce,                                                               
Community  &  Economic  Development   (DCCED),  stated  that  the                                                               
administration has  no position  on HB  90, although  many boards                                                               
have  weighed in  and awaited  a  solution to  the volatility  in                                                               
investigative costs.   She noted that some  boards have submitted                                                               
their position.                                                                                                                 
REPRESENTATIVE  JOSEPHSON asked  Ms. Koeneman  if HB  90 is  "the                                                               
grand solution that we've been looking for."                                                                                    
3:29:36 PM                                                                                                                    
MS. KOENEMAN answered,  "I hope so."  She expressed  that she has                                                               
worked on  this issue for  seven years  and there have  been many                                                               
different proposals over the years.   Some of the proposals would                                                               
have utilized  the General  Fund which  is not  "palatable" given                                                               
the state's current fiscal situation.                                                                                           
3:30:18 PM                                                                                                                    
REPRESENTATIVE STUTES  noted her support  of the bill  because in                                                               
the past,  boards have  had difficulties  and the  department has                                                               
had issues with proper accounting.   She said, "I'm not trying to                                                               
cast any dispersions  currently. ... My thought is this  may be a                                                               
wider overview so  things won't go so far  before they're brought                                                               
back around."                                                                                                                   
3:31:22 PM                                                                                                                    
REPRESENTATIVE BIRCH  noted that  in 2010-2011  the investigative                                                               
budget was  $6.8 million,  in 2012-2013 it  was $7.5  million, in                                                               
2014-2015 it was  $8.3 million, and in 2016-2017  it is estimated                                                               
to  be over  $9 million.   He  characterized this  as significant                                                               
growth.  He  mentioned that the main cost driver  seems to be the                                                               
investigative work.  He asked  how the investigators are managed.                                                               
He asked,  "How do you  get to a point  where you don't  need any                                                               
investigators, where  everybody is  doing what they  are supposed                                                               
to be doing?"                                                                                                                   
3:32:51 PM                                                                                                                    
ANGELA BIRT,  Chief Investigator,  Anchorage Office,  Division of                                                               
Corporations,  Businesses,  and Professional  Licensing  (DCBPL),                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED),  responded  that  the  22  investigative  staff  members                                                               
engage   in  positive   timekeeping  and   support  43   licensed                                                               
professions  with 21  sitting  boards.   She  explained that  two                                                               
staff members  were added last  year under  Senate Bill 74.   She                                                               
explained  that  some  staff members  are  dedicated  to  certain                                                               
programs because  these programs  have enough  of a  workload and                                                               
other  staff members  work  on an  as-needed  basis during  surge                                                               
times,  such  as biennial  license  renewals.   Renewals  require                                                               
reviewing applications  because under  statute, any  "yes" answer                                                               
to a professional  fitness question has to  have an investigative                                                               
review.  She remarked:                                                                                                          
     I, like you, would prefer that  we get to a point where                                                                    
     people  do  not  have  to  endure  investigations,  but                                                                    
     unfortunately we  do have some consumers  that have bad                                                                    
     experiences and  the investigative staff  provides them                                                                    
     with  an opportunity  to redress  those  and talk  with                                                                    
     both sides to  determine whether or not  a violation of                                                                    
     the law has occurred.                                                                                                      
MS.  BIRT informed  the committee  that  the investigative  staff                                                               
keeps  track  of  time  to  the  quarter  hour  and  charges  the                                                               
particular program for  the time spent supporting it.   The costs                                                               
vary significantly between programs.                                                                                            
3:34:30 PM                                                                                                                    
REPRESENTATIVE  BIRCH asked  if the  complaints are  public.   He                                                               
asked how the  investigative staff directs its  energy and effort                                                               
in responding to a criticism or initiating an investigation.                                                                    
MS. BIRT  answered that the  primary driver of  investigations is                                                               
consumer complaints.   She explained,  "We triage those  based on                                                               
the  severity  of the  complaint  and  the potential  for  public                                                               
harm."   She  expressed that  reports of  doctors overprescribing                                                               
medications  are  an  example of  high-visibility,  high-priority                                                               
investigations.       Some   complaints   driven    by   customer                                                               
dissatisfaction  are  investigated and  often  do  not involve  a                                                               
violation of the law.  She remarked:                                                                                            
     For instance,  if you contract  to come up here  and go                                                                    
     big  game  hunting and  you  don't  get a  sheep,  that                                                                    
     doesn't necessarily  mean that your guide  did anything                                                                    
     wrong.  When we receive a  complaint we do need to look                                                                    
     into  it, we  do need  to  solicit the  input from  the                                                                    
     person who is licensed and  ask them what happened, and                                                                    
     that does take time and  effort on the investigators to                                                                    
     collect all  the materials in  order to provide  a full                                                                    
     and fair inquiry.                                                                                                          
MS.  BIRT explained  that in  many  investigations involving  the                                                               
health care industry, investigators  must collect medical records                                                               
from before, during, and after  treatment to determine whether or                                                               
not  the treatment  was  appropriate.   She  noted that  consumer                                                               
complaints are  the most common;  complaints from  facilities who                                                               
let licensed  staff go  due to  mental, behavioral,  or substance                                                               
problems  are the  highest priority.    Other complaints  include                                                               
inconsistencies  in applications  or  falsified applications  for                                                               
licensure.   She remarked,  "In order to  make the  best decision                                                               
about whether or  not a person is safe to  practice in Alaska and                                                               
should be given  a license, the boards rely on  us to collect the                                                               
information to make their decisions."                                                                                           
3:37:25 PM                                                                                                                    
REPRESENTATIVE  BIRCH asked  if the  complaints are  recorded and                                                               
allocated to the 43 professions and  21 sitting boards.  He asked                                                               
where the bulk of the resources are going.                                                                                      
MS. BIRT  responded, "The primary  drivers of our  complaints are                                                               
based  on the  licensee base."   She  noted that  there are  over                                                               
16,000 practicing nurses, which is  about a third of the licensed                                                               
professionals in the state, and  two investigators are designated                                                               
to that program because of  the volume.  Other investigators have                                                               
responsibility for up to 10  programs with small licensing bases.                                                               
She commented that some sectors  receive few complaints and other                                                               
sectors  get many.   She  remarked, "Some  sectors are  extremely                                                               
litigious, so we  have less opportunity to  resolve these without                                                               
going into a hearing, which increases cost."                                                                                    
3:39:09 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  pointed out that a  schedule of revenue                                                               
and  expenditures  dated  October  27,  2016,  [included  in  the                                                               
committee  packet] shows  a budget  of about  $11 million,  which                                                               
came  almost   entirely  from  the  licensees   themselves.    He                                                               
remarked, "So  we see  an increase  in the  budget, but  it's all                                                               
self-funded, except for this $12,000."                                                                                          
3:39:52 PM                                                                                                                    
MS. HOVENDEN responded, "That's correct."                                                                                       
REPRESENTATIVE JOSEPHSON  mentioned that the number  of licensees                                                               
has grown  by 20,000 in  the last six or  seven years.   He asked                                                               
whether  more  people asking  to  be  licensed demonstrates  that                                                               
there  is more  money in  the  economy, that  people are  getting                                                               
insurance  claims  filed more  easily,  and  that there  is  more                                                               
confidence in each industry.                                                                                                    
MS. HOVENDEN  answered yes.   She added  that the  department has                                                               
added  some  licensing  programs  and has  seen  an  increase  of                                                               
licensing in the existing programs.                                                                                             
3:40:48 PM                                                                                                                    
REPRESENTATIVE WOOL  pointed out  that the proposed  surcharge is                                                               
estimated at  $55, which he stated  is "a pretty good  deal."  He                                                               
noted   that  the   surcharge   would   slightly  increase   some                                                               
[licensees'] payments and  would save others a large  amount.  He                                                               
drew  attention  to  the  current fee  of  $3,800  for  midwives'                                                               
licensing.  He remarked, "Now  the investigative portion would be                                                               
55, and  I understand  there is  old debt that  needs to  be paid                                                               
off."    He  stated  that the  current  investigative  costs  per                                                               
licensee  was $639  for midwives  and $776  for naturopaths,  and                                                               
both groups have roughly the same  amount of licensees.  He asked                                                               
if old debt  is the reason midwives' current licensing  fee is so                                                               
3:42:35 PM                                                                                                                    
MS. KOENEMAN  answered that  the high  fee is  the result  of two                                                               
things:   paying off debt  of prior investigations  and spreading                                                               
the costs among few licensees.                                                                                                  
REPRESENTATIVE WOOL asked whether  requiring all licensees to pay                                                               
a $55  investigative charge in  addition to licensing  fees would                                                               
encourage more investigations:   There would be  no incentive for                                                               
any group to "keep an eye  on its members" if investigative costs                                                               
were distributed among 74,000 licensees.                                                                                        
3:43:55 PM                                                                                                                    
MS.  HOVENDEN offered  her  opinion  that a  flat  fee would  not                                                               
affect  the   amount  of   investigations.     The  cost   of  an                                                               
investigation shouldn't  impact whether  or not  an investigation                                                               
is pursued or the validity of an investigation.                                                                                 
3:44:35 PM                                                                                                                    
CHAIR KITO offered his understanding  that Representative Wool is                                                               
concerned that changing the funding  methodology would change the                                                               
amount of investigations that occur.   He expressed that there is                                                               
a  kind  of firewall  in  place:    the investigations  start  by                                                               
complaints  from individuals  or members  of the  board and  such                                                               
complaints  would  not  be  affected  by a  change  in  the  cost                                                               
3:45:29 PM                                                                                                                    
REPRESENTATIVE KNOPP stated  that he does not like the  bill.  He                                                               
remarked, "I think  I just heard her say  that all investigations                                                               
should  be  pursued regardless  of  costs."   He  explained  that                                                               
boards are  created to  regulate an  industry and  control costs.                                                               
He said  that there is  no incentive for  a board to  control its                                                               
activities  and costs  when costs  are spread  without individual                                                               
board responsibility.   He pointed  out that  investigative costs                                                               
vary  greatly  by  profession.    He  offered  his  opinion  that                                                               
spreading the cost  is not the appropriate way to  go and that HB
90 wouldn't fix the problem.   He offered that it would be better                                                               
to   let  the   boards  discuss   how  to   control  costs   with                                                               
individualized responsibility.                                                                                                  
3:47:37 PM                                                                                                                    
CHAIR KITO, after  ascertaining that there was no  one who wished                                                               
to testify, closed public testimony on HB 90.                                                                                   
3:47:47 PM                                                                                                                    
REPRESENTATIVE WOOL commented  that he understands Representative                                                               
Knopp's concern.   He pointed  out that investigative  costs also                                                               
include pursuing  non-licensed individuals,  and those  costs are                                                               
largely  borne by  the responsible,  [licensed] individuals.   He                                                               
expressed that HB 90 would help disperse that situation.                                                                        
3:48:43 PM                                                                                                                    
REPRESENTATIVE  BIRCH   observed  that   the  Board   of  Massage                                                               
Therapists had 756 licensees and  spent $879 in investigations in                                                               
2014 and 2015,  which amounted to about a dollar  per person.  He                                                               
said he  agrees with Representative  Knopp.  He noted  that there                                                               
is a  $622 cost with every  Euthanasia licensee.  He  stated, "If                                                               
you get  a permit and there's  a $6,000 charge, I'm  ok with that                                                               
because  it  seems like  it's  a  cost-causer, cost-payer."    He                                                               
expressed  that  he likes  the  current  system, which  maps  out                                                               
"what's going on."                                                                                                              
3:50:17 PM                                                                                                                    
CHAIR  KITO  maintained  that  HB 90  would  resolve  one  issue:                                                               
investigations are  not equitable across boards.   This disparity                                                               
leads to  boards with fewer  members having  higher investigative                                                               
costs, and those  with large membership end up  with lower costs;                                                               
however, the  department is asked  to provide the same  amount of                                                               
safety and  security to all boards.   He remarked that  it seemed                                                               
worthwhile  to him  to  spread the  costs  among the  professions                                                               
because the  investigators are  available to  support all  of the                                                               
3:51:02 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  stated his support for  HB 90, although                                                               
he remarked  that it is not  a perfect solution.   He said, "Part                                                               
of  the reason  I'm comfortable  with this  bill is  because it's                                                               
$55."   He characterized that  such a  fee would be  a well-spent                                                               
form of  insurance:  Board  membership and licensing  costs could                                                               
be subject  to hikes because  of bad actors; therefore  he called                                                               
the bill  "a victory for 75,000  people."  He expressed  that the                                                               
issue has been  discussed for many years and it  is unfair to say                                                               
that  one  profession  should  be subject  to  massive  fees  and                                                               
licensure expenditures when a solution like HB 90 is available.                                                                 
3:52:42 PM                                                                                                                    
REPRESENTATIVE WOOL moved  to report HB 90 out  of committee with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
3:53:03 PM                                                                                                                    
REPRESENTATIVE KNOPP objected.                                                                                                  
3:53:07 PM                                                                                                                    
A roll call  vote was taken.   Representatives Stutes, Josephson,                                                               
Wool, and Kito  voted in favor of HB 90.   Representatives Knopp,                                                               
Sullivan-Leonard, and Birch  voted against it.   Therefore, HB 90                                                               
was  reported  out  of  the House  Labor  and  Commerce  Standing                                                               
Committee by a vote of 4-3.