Legislature(2017 - 2018)BARNES 124

04/10/2017 03:15 PM House LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 3:45 PM --
Moved CSHB 38(L&C) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 9(L&C) Out of Committee
-- Public Testimony --
Moved CSHB 124(L&C) Out of Committee
-- Public Testimony --
           HB  38-WORKERS' COMPENSATION: DEATH BENEFITS                                                                     
4:07:19 PM                                                                                                                    
CHAIR KITO announced  that the second order of  business would be                                                               
HOUSE  BILL NO.  38,  "An  Act relating  to  the calculation  and                                                               
payment  of  workers'  compensation   benefits  in  the  case  of                                                               
permanent  partial impairment;  relating to  the calculation  and                                                               
payment  of workers'  compensation  death benefits  payable to  a                                                               
child  of  an  employee  where  there  is  no  surviving  spouse;                                                               
relating to the calculation and  payment of workers' compensation                                                               
death  benefits for  an employee  without a  surviving spouse  or                                                               
child;  relating   to  notice  of  workers'   compensation  death                                                               
benefits; and providing for an effective date."                                                                               
4:07:26 PM                                                                                                                    
REPRESENTATIVE  WOOL  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)   for  HB  38,  Version   30-LS0160\J,  Wallace,                                                               
3/23/17,  as the  working document.   There  being no  objection,                                                               
Version J was before the committee.                                                                                             
4:07:59 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON,  prime sponsor  of HB 38,  reviewed the                                                               
two changes in Version  J.  He said the first  change is that the                                                               
amount of money that would be  received by the estate of a person                                                               
who  died without  a spouse  or  children is  reduced from  about                                                               
$125,000 in  the original version to  $70,000 in Version J.   The                                                               
reason for  that reduction, he  continued, is  that it is  a more                                                               
modest number, but is also  pegged at the highest number afforded                                                               
by  a state  in the  U.S., which  is Louisiana  which is  also at                                                               
approximately  $70,000.   He  pointed  out that  New  York is  at                                                               
REPRESENTATIVE JOSEPHSON said the second  change is that there is                                                               
a category of dependents, as noted  on page 3, lines 12-16, where                                                               
a  person   may  be  living   alone  but  have  people   who  are                                                               
recognizable as legal dependents.   For example, a man might have                                                               
an 80-year-old  mother living in  an independent  living facility                                                               
that is reliant him  for $1,000 a month and it  could be that the                                                               
man's estate could prove that.   In that group, he explained, the                                                               
bill would reduce  that number to $100,000, which  had been based                                                               
on the whole-body number of $255,000.                                                                                           
REPRESENTATIVE JOSEPHSON  discussed the two things  that the bill                                                               
would do.  First, he said,  for the first time in Alaska history,                                                               
the life of  a person who never married and  didn't have children                                                               
but who dies at work would  have legally recognizable value.  The                                                               
bill says  it's recognizable as  $70,000, whereas  currently it's                                                               
only  recognizable in  a funeral  benefit  of $10,000.   This  is                                                               
paying homage and  respect to single childless people  who die at                                                               
work.  Second,  he stated, the bill would  increase the permanent                                                               
partial  impairment  (PPI) whole  body  number  from $177,000  to                                                               
$255,000 to reflect an increase in inflation.                                                                                   
4:11:41 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  brought  attention to  his  PowerPoint                                                               
presentation entitled,  "HB 38, Abigail Caudle  Act".  Displaying                                                               
the fourth  slide entitled,  "What is the  current law?"  he said                                                               
the current  law for  PPI is  $177,000 and  HB 38  would increase                                                               
that  to $255,000.   He  referenced a  document in  the committee                                                               
packet from  Legislative Research  Services that says  the amount                                                               
would be  $255,000 had  the consumer price  index been  in effect                                                               
the last 17 years.   A way to think about  this, he suggested, is                                                               
that it's as if minimum wage is  being paid at whatever it was in                                                               
the  year  2000.   The  bill  would  raise  the PPI  rating  from                                                               
$177,000 for the whole body to  $255,000 and would link it to the                                                               
consumer price index.                                                                                                           
REPRESENTATIVE  JOSEPHSON continued  discussing the  fourth slide                                                               
and  explained  that, under  current  law,  for deceased  workers                                                               
there is  no provision for  compensating the estate if  there are                                                               
no  surviving  widow,  widower, or  dependents.    Two  different                                                               
concepts are  included in  the same  bill, he  explained, because                                                               
they both are in workers' compensation  statutes and it is like a                                                               
mini-omnibus workers' compensation bill.                                                                                        
REPRESENTATIVE JOSEPHSON moved to  the fifth slide entitled, "How                                                               
do we fix  it?" and discussed the first bullet  point.  He stated                                                               
that if the  PPI were properly set at $177,000  in the year 2000,                                                               
then it would be  proper that it's set at $255,000  now.  If it's                                                               
not that  now, he continued,  then one  is really saying  that it                                                               
never should have  been $177,000 in the year 2000.   He addressed                                                               
the next set of bullet points  and noted that if the deceased did                                                               
not have dependents that lived  at home but there were dependents                                                               
that relied  on the  deceased, then the  bill would  increase the                                                               
amount from $20,000 to $100,000.   He pointed out that the figure                                                               
of $20,000 hasn't changed since 1968,  so the amount of money the                                                               
state  gives  to those  dependents  hasn't  changed in  about  50                                                               
years.    The real  reform,  along  with  reforming the  PPI,  he                                                               
stated, is the creation of  a workers' compensation award for the                                                               
estate of the person who died unmarried and without children.                                                                   
4:14:44 PM                                                                                                                    
REPRESENTATIVE KNOPP brought attention to  page 3, line 19, which                                                               
states, "if  there is no widow  or widower or child  or children,                                                               
and  the father,  mother,  grandchildren,  brothers, and  sisters                                                               
were not  dependent on the deceased  at the time of  injury, then                                                               
$70,000 is payable in a lump  sum to the estate of the decedent."                                                               
He asked  why the  state would  in this case  pay $70,000  to the                                                               
REPRESENTATIVE JOSEPHSON replied that  there are three things the                                                               
state can do with single people who  could be of any age.  One is                                                               
nothing  - leave  the law  the  way it  is.   But, he  continued,                                                               
imagine talking to the parent of  a 22-year-old child who died at                                                               
the work  place, like Abigail  Caudle did,  but hadn't yet  met a                                                               
spouse or  borne a  child.   Raven Electric,  Inc. did  have some                                                               
OSHA  fines, and,  in effect,  it is  being said  that all  Raven                                                               
Electric  had  to  do  was  cut a  check  for  Abigail's  funeral                                                               
expenses.  He  asked,  How would you have  that conversation with                                                               
Marianne Burke, her mother?   It  is being said that the value of                                                               
a single person's life is less  to the legal system than everyone                                                               
else.    Other  states  provide this  benefit,  he  pointed  out.                                                               
Version J cuts this benefit almost  in half, down to $70,000 from                                                               
the original  [proposed] benefit of  $125,000.  This  benefit, he                                                               
argued, would create a little  further incentive for a company to                                                               
say  it better  have a  safe work  place.   This is  an exclusive                                                               
remedy,  he  further noted,  as  these  single, childless  people                                                               
cannot sue, and their estates cannot sue.                                                                                       
REPRESENTATIVE  JOSEPHSON  continued  his   answer  by  posing  a                                                               
scenario in  which two people  are in  an elevator at  a business                                                               
when  the  elevator  suddenly   crashes  downward,  killing  both                                                               
people.  One of the people  was an unmarried, childless worker at                                                               
the  business and  the  other a  customer of  the  business.   He                                                               
explained that  the customer  could collect  potentially millions                                                               
of  dollars in  damages, but  under Alaska  law the  worker would                                                               
receive  nothing.   Two  lives  experienced  the same  thing,  he                                                               
continued, and  this is an  injustice that [the  legislature] can                                                               
correct.   He  referred to  the [Division  of Legal  and Research                                                               
Services']  research  paper  provided to  committee  members  and                                                               
pointed  out that  it states  there would  not be  an appreciable                                                               
amount  of  workers'  compensation   impact.    For  example,  he                                                               
continued, the  State of Oregon  said a change in  these benefits                                                               
would not  materially affect workers' compensation  premium rates                                                               
due to the small number of compensable deaths each year.                                                                        
4:18:36 PM                                                                                                                    
REPRESENTATIVE KNOPP maintained  that the aforementioned elevator                                                               
scenario  is  not  an  apples-to-apples  comparison  because  the                                                               
customer  would collect  under civil  or criminal  litigation and                                                               
the employee's  family would have the  same option.  It  isn't an                                                               
apples-to-apples comparison,  he continued, because  the customer                                                               
would  not collect  under workers'  compensation litigation.   He                                                               
asked why  an employee's family  would not be eligible  under the                                                               
same  rules that  applied  to the  customer as  far  as civil  or                                                               
criminal litigation.                                                                                                            
REPRESENTATIVE  JOSEPHSON  responded  that Title  9  is  Alaska's                                                               
personal injury  or torts statute  and is  the rules of  the road                                                               
for personal  injury damages, and  Title 23 is Alaska's  rules of                                                               
the road  for workers' compensation.   In the  elevator scenario,                                                               
he  explained, the  worker's benefits  would fall  entirely under                                                               
[Title 23],  and that statute  says the worker would  get $10,000                                                               
funeral  expenses, period.   If  the family  goes to  the supreme                                                               
court like Abigail  Caudle's mother did, he said,  he thinks that                                                               
ultimately the  court will say  it can't help because  the people                                                               
in  Juneau won't  help.   Abigail's  mother went  to the  [Alaska                                                               
Workers'  Compensation Appeals  Commission], he  continued, which                                                               
told her that  policy arguments must be  directed to legislature,                                                               
which will  be in connection with  currently pending legislation.                                                               
He added, "That is the bill before us."                                                                                         
REPRESENTATIVE JOSEPHSON  continued and stated that  the ultimate                                                               
answer to Representative Knopp's question  is, "It's not like you                                                               
could  really, really  try to  file  a wrongful  death and  maybe                                                               
they'll let you do  it - it is 1,000 percent  prohibited."  If it                                                               
is not in  the workers' compensation statute,  he continued, "and                                                               
you're  a worker,  you don't  get a  benefit."   In the  elevator                                                               
scenario,  he  added,  the  customer's family  at  least  gets  a                                                               
feeling  that the  issue of  not checking  the elevator  shaft or                                                               
doing maintenance  will get  recognized and  the family  can come                                                               
after the  business for damages  as appropriate.   The customer's                                                               
family would get that, but the worker's family would not.                                                                       
4:21:14 PM                                                                                                                    
REPRESENTATIVE BIRCH stated that  this must be hugely frustrating                                                               
to attorneys.   He said  he looks  at workers' compensation  as a                                                               
form  of insurance  providing for  wage  replacement and  medical                                                               
benefits to employees injured in  the course of employment.  But,                                                               
he posited,  what is  being talked  about [in  the bill]  is life                                                               
insurance.  While workers' compensation  pays to bury someone, he                                                               
said,  he  struggles  to  understand  how  workers'  compensation                                                               
migrates over into a life  insurance policy, which is effectively                                                               
what  the  bill does.    Every  employer  must pay  for  workers'                                                               
compensation and it is for  medical benefits and to replace wages                                                               
lost due  to injury.  He  asked what prohibits any  employee from                                                               
buying  a large  [life] insurance  policy  like he  has done  for                                                               
himself.    He requested  the  sponsor  to address  how  workers'                                                               
compensation is being migrated into a life insurance deal.                                                                      
REPRESENTATIVE  JOSEPHSON  answered  that  it  presumes  that  an                                                               
unsophisticated person  in their early twenties  would think that                                                               
they could die  at this job and  need to provide a  remedy to the                                                               
people who  care about  him or her.   It's not  a fix  for unsafe                                                               
workplaces, so it doesn't solve that  problem, he said.  The bill                                                               
adds [paragraph] (6)  to a death benefit section  where there are                                                               
already  death benefits  being paid  out.   He  noted that  other                                                               
states do  this and  that the [proposed]  award is  fairly modest                                                               
and would not materially change  the workers' compensation rates.                                                               
There really  are only three  options, he  said:  do  nothing; do                                                               
something  like  this  bill; or  offer  these  single,  childless                                                               
people  the chance  to sue  [the  employer's] pants  off.   Under                                                               
wrongful death,  he continued, they  would then carry  the burden                                                               
by a preponderance  of the evidence that  they themselves weren't                                                               
negligent.   He added that if  he were an employer,  he would not                                                               
be sure he'd  want the third option because the  damages total in                                                               
workers' compensation  could be  far greater.   Given  that other                                                               
states are doing  this, if he were the employer,  he would say he                                                               
could work with this.  Otherwise, it seems highly unjust.                                                                       
REPRESENTATIVE  BIRCH  noted that  the  Department  of Labor  and                                                               
Workforce  Development  can  fine  an employer  for  unsafe  work                                                               
conditions, so he  surmised the department would also  be able to                                                               
 sue the pants off of" an  employer for an unsafe work condition.                                                               
He  said  all  he  hears   about  workers'  compensation  is  how                                                               
expensive  it is,  especially for  jobs that  are more  dangerous                                                               
than others.   Workers' compensation  rates are high  and getting                                                               
higher, he  opined, and HB  38 doesn't seem  like it is  going to                                                               
mitigate  the  cost of  workers'  compensation  and therefore  he                                                               
would like to see the additional cost component.                                                                                
4:26:30 PM                                                                                                                    
REPRESENTATIVE    WOOL   recalled    Representative   Josephson's                                                               
statement about  how to  have the  conversation with  the family.                                                               
Obviously,   he  continued,   it  would   be  a   very  difficult                                                               
conversation, whether or  not the individual has  dependents.  He                                                               
said  he  agrees in  some  ways  with Representative  Birch  that                                                               
workers' compensation  insurance covers  certain things  and life                                                               
insurance covers  other things.   He  offered his  agreement that                                                               
the current $10,000  for funeral expense is a paltry  amount.  He                                                               
inquired whether  the sponsor  is saying that  by adding  more it                                                               
would make a bad situation a little better.                                                                                     
REPRESENTATIVE JOSEPHSON replied yes.   He related that last year                                                               
in Anchorage  a hole  was dug in  the ground and  the man  in the                                                               
hole died  when it  caved in.   The man  was young  and therefore                                                               
could have been single and childless.   He said the difference is                                                               
that it is one  thing to go to the other family  and say that the                                                               
state has  a remedy  for the  widow or  children that  will offer                                                               
them a modicum  of solace.  It's another thing,  he continued, to                                                               
go to  the other person and  say your child didn't  have any kids                                                               
and never married and while the  parent can sue it will likely be                                                               
thrown out immediately, no damages can  be filed, and there is no                                                               
award from workers' compensation.                                                                                               
4:28:41 PM                                                                                                                    
REPRESENTATIVE  WOOL posed  a scenario  in which  he works  for a                                                               
company and is driving the company  car one day when suddenly the                                                               
brakes don't work, and he drives off  the road and is killed.  He                                                               
said he  would think  he has some  legal recourse  for negligence                                                               
and  that people  could sue,  so he  therefore finds  it hard  to                                                               
believe that that would not be  the case.  He further stated that                                                               
it is hard  to believe that if it were  blatant negligence then a                                                               
customer  could  sue to  the  full  extent  of  the law,  but  an                                                               
employee could  not, which  is shocking, he  added.   He surmised                                                               
that  more  people  die  in  the fishing  industry  than  in  the                                                               
restaurant industry and asked whether  the fishing industry would                                                               
therefore be more affected.                                                                                                     
REPRESENTATIVE JOSEPHSON  offered his  belief that the  Jones Act                                                               
or other  maritime acts  would answer  that.   He said  he thinks                                                               
fishermen are covered  differently.  He added  that for fishermen                                                               
there is  a huge carve-out  under federal  law often in  terms of                                                               
Jones Act damages.   In terms of  Representative Wool's scenario,                                                               
he agreed  it would  be negligent  of the company.   He  gave his                                                               
assurance  to  the  committee  that it  truly  is  the  exclusive                                                               
remedy.   He  said it  might be  that if  the brake  manufacturer                                                               
could be sued  independent of the company that owned  the car for                                                               
which  the  brakes  gave  out   there  could  be  possibility  of                                                               
litigation.  Workers' compensation is  the grand compact that was                                                               
designed  to  end litigation,  he  continued,  although it  never                                                               
really did do that.                                                                                                             
REPRESENTATIVE STUTES pointed out  that fishermen are independent                                                               
contractors and  therefore not covered by  workers' compensation,                                                               
so the bill's provisions would not  apply.  She commented that it                                                               
seems odd  to have any  kind of law  that would make  a carve-out                                                               
where it had to  be said to someone that his or  her child has no                                                               
value.  She said it is  inconceivable to her to think along those                                                               
lines and  therefore it is very  difficult for her when  it is an                                                               
easy remedy to fix.                                                                                                             
4:32:00 PM                                                                                                                    
REPRESENTATIVE  KNOPP  stated that  instead  of  putting a  death                                                               
benefit into the  workers' compensation bill he  would rather see                                                               
legislation  that would  allow  surviving  members, dependent  or                                                               
not, to  have a course of  legal action against the  employer for                                                               
something  unjust.   He said  he has  issues with  there being  a                                                               
death benefit of  $10,000 in funeral expense on page  2, line 27,                                                               
and $70,000 in addition to be  given to the estate of someone who                                                               
has died  and has no  dependents, and  this figure being  tied to                                                               
the  rate of  inflation.   More important,  he continued,  is the                                                               
provision for partial impairment.   He drew attention to language                                                               
on page  1, line 12,  through page 2,  line 2, which  states: "In                                                               
case  of  impairment  partial  in   character  but  permanent  in                                                               
quality,  and not  resulting in  permanent total  disability, the                                                               
compensation is $255,506 [$177,000]  multiplied by the employee's                                                               
percentage  of permanent  impairment of  the whole  person."   He                                                               
opined that this is complicated and complex.                                                                                    
REPRESENTATIVE JOSEPHSON responded that  the $70,000 provision is                                                               
not tied to  inflation and is a fixed amount.   Twenty years from                                                               
now, he continued, $70,000 may not  seem like what it is now, and                                                               
someone may  ask to increase  it.  Regarding  partial impairment,                                                               
he pointed out  that the cited language is existing  law, not the                                                               
bill, and that  what HB 38 does is grow  the number from $177,000                                                               
to $250,000.  He further pointed  out that that is not the amount                                                               
the person gets,  it is the base amount from  which a permanently                                                               
damaged appendage or bodily organ  would be multiplied.  He noted                                                               
that about a  dozen other states do this;  for example, Minnesota                                                               
provides  $60,000;  New  York  provides  $50,000;  and  Louisiana                                                               
provides $75,000 to each surviving parent.                                                                                      
4:36:01 PM                                                                                                                    
REPRESENTATIVE  WOOL  moved  to   report  CSHB  38,  Version  30-                                                               
LS0160\J,  Wallace, 3/23/17,  out  of  committee with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no  objection, CSHB  38(L&C) was  reported from  House Labor  and                                                               
Commerce Standing Committee.                                                                                                    

Document Name Date/Time Subjects
HB38 Supporting Document - 2017 Research Report 3.24.17.pdf HL&C 4/10/2017 3:15:00 PM
HB 38
HB0038 ver J 3.24.17.pdf HL&C 4/10/2017 3:15:00 PM
HB 38
HB038 Explanation of Changes version A to version J 4.10.17.pdf HL&C 4/10/2017 3:15:00 PM
HB 38
HB038 PowerPoint Presentation 4.10.2017.pdf HL&C 4/10/2017 3:15:00 PM
HB 38
HB038 ver J Sectional Analysis 4.10.2017.pdf HL&C 4/10/2017 3:15:00 PM
HB 38
HB038 ver J Side-by-side 4.10.2017.pdf HL&C 4/10/2017 3:15:00 PM
HB 38