Legislature(2017 - 2018)SENATE FINANCE 532

04/17/2018 09:00 AM Senate FINANCE

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CS FOR HOUSE BILL NO. 38(FIN) am(efd fld)                                                                                     
     "An   Act  relating   to   the   payment  of   workers'                                                                    
     compensation benefits in the  case of permanent partial                                                                    
     impairment;  relating   to  the  payment   of  workers'                                                                    
     compensation death  benefits payable  to a child  of an                                                                    
     employee where  there is no surviving  spouse; relating                                                                    
     to the payment of  workers' compensation death benefits                                                                    
     for an  employee without a  surviving spouse  or child;                                                                    
     and relating  to notice of workers'  compensation death                                                                    
9:05:36 AM                                                                                                                    
REPRESENTATIVE  ANDY JOSEPHSON,  SPONSOR, explained  that it                                                                    
was not unusual for members  to get concepts for legislation                                                                    
from  random sources.  He recalled  that when  he was  first                                                                    
elected he met an individual  that had wanted him to propose                                                                    
legislation  to  ban  blue   headlights.  He  discussed  the                                                                    
motivation  for  sponsoring HB  38,  and  referenced a  2014                                                                    
email  from a  woman who  had lost  her daughter  through an                                                                    
electrical accident  in Midtown  Anchorage. The  young woman                                                                    
had died in  the workplace, and the  Occupational Safety and                                                                    
Health Administration had fined  the employer. The surviving                                                                    
mother  learned that  there  was no  remedy  for the  family                                                                    
above funerary  expenses up to $10,000  because the deceased                                                                    
was not married and had no dependent children.                                                                                  
Representative  Josephson continued  to discuss  the genesis                                                                    
of the  bill. He informed  that there  were 13 to  15 states                                                                    
that had  specified that a  death benefit should be  paid to                                                                    
single workers without children.  The State of Louisiana was                                                                    
the highest  most generous state for  survivor benefits, and                                                                    
afforded  a $140,000  death benefit.  He clarified  that the                                                                    
bill  addressed deaths  at work,  which  were accidents  and                                                                    
could often occur  because of negligence of  an employer. He                                                                    
stated  that in  the context  of workers'  compensation, the                                                                    
issues of negligence and liability were dispensed.                                                                              
Representative Josephson  had been  working on the  bill for                                                                    
about  4 years.  He recounted  that in  the House  Labor and                                                                    
Commerce  Committee  the  bill  originally  had  a  $130,000                                                                    
benefit,  which   had  then  been  reduced   to  $70,000  as                                                                    
currently written in  the bill. He thought  it was important                                                                    
to note that  of the approximately 20  individuals that died                                                                    
at work  in Alaska per  year, normally about  3 or 4  of the                                                                    
individuals  were single  or  childless  workers. The  total                                                                    
that would be  benefitted through the provision  of the bill                                                                    
was about $210,000.                                                                                                             
9:09:53 AM                                                                                                                    
Representative Josephson  continued to discuss his  bill. He                                                                    
did not think  the single childless worker  provision of the                                                                    
bill  was  hugely  fiscally  impactful.  He  referenced  the                                                                    
National  council on  Compensation  Insurance (NCCI),  which                                                                    
reviewed  the legislation  and had  concluded that  the bill                                                                    
would  only increase  workers' compensation  four tenths  of                                                                    
one percent  in Alaska. In researching  the legislation, the                                                                    
sponsor had  found that  there was a  provision in  law that                                                                    
had not  changed since 1968,  when it was determined  that a                                                                    
dependent (such as  a parent with a disability)  of a single                                                                    
childless  individual that  died  at work  would be  awarded                                                                    
$20,000.  Considering  inflation,  the amount  would  exceed                                                                    
$100,000; but the bill established  the payment as $100,000,                                                                    
and the death benefit for  a single childless person without                                                                    
dependents was $70,000.                                                                                                         
Representative  Josephson wanted  to  give  the committee  a                                                                    
sense  of   whether  the   proposed  benefit   amounts  were                                                                    
proportional. He  used the hypothetical  example of  a young                                                                    
parent  with  children  that   would  (upon  death)  receive                                                                    
approximately  $850,000  in workers'  compensation  payments                                                                    
over  the  ensuing  years.  He  pointed  out  the  disparity                                                                    
between  compensation  for  those with  children  and  those                                                                    
without. He  summarized that the  bill would create  a death                                                                    
benefit for single childless people.                                                                                            
Representative  Josephson   stated  that  the   second  more                                                                    
expensive part  of the bill  would update the  permanent and                                                                    
partial impairment  (PPI) benefit. Currently the  state used                                                                    
the  value  figure  of  $177,000;   and  used  a  percentage                                                                    
calculation  to determine  the value  of a  loss of  limb or                                                                    
function.  He used  the example  of an  injured person  that                                                                    
experienced  the  loss of  an  arm.  Under current  law  the                                                                    
injured person  would receive approximately  $100,000. Under                                                                    
the  bill,  such  an  individual  would  receive  closer  to                                                                    
9:13:39 AM                                                                                                                    
Representative  Josephson explained  that  the change  would                                                                    
not make  Alaska the most generous  state in the event  of a                                                                    
permanent or partial disability; but  would put the state in                                                                    
the  average   range  rather  than  the   bottom  third.  He                                                                    
continued discussing  the second  provision of the  bill. He                                                                    
reiterated that the bill created  a death benefit for single                                                                    
childless   people,   increased   the  death   benefit   for                                                                    
individuals  with   dependents  other  than   children,  and                                                                    
increased the PPI.                                                                                                              
Senator Stevens  understood that  under current law,  it was                                                                    
not possible to  sue for wrongful death. He  wondered if the                                                                    
bill would open more possibilities for lawsuits.                                                                                
Representative  Josephson  answered   in  the  negative.  He                                                                    
relayed that there  had been discussion in  committee and on                                                                    
the House  floor about opening  Title IV (the  civil lawsuit                                                                    
code) and  allowing people suffering grievous  injuries from                                                                    
gross negligence to  sue. The bill did not  change the code,                                                                    
but  simply expanded  (for a  few people  per year)  a death                                                                    
benefit  that did  not currently  exist.  He emphasized  the                                                                    
situation in  which an  unmarried childless  person suffered                                                                    
death  at  work  (potentially   through  the  fault  of  the                                                                    
employer)  and received  no  benefits  beyond the  exclusive                                                                    
remedy of funeral coverage.                                                                                                     
9:17:53 AM                                                                                                                    
MEGAN  HOLLAND, STAFF,  REPRESENTATIVE JOSEPHSON,  discussed                                                                    
the presentation  "HB 38: WORKERS' COMPENSATION  BENEFITS IN                                                                    
THE CASE OFPERMANENT PARTIAL IMPAIRMENT  AND DEATH" (copy on                                                                    
Ms. Holland  informed that Section  1 of the bill  named the                                                                    
legislation  in honor  an individual  that had  died in  the                                                                    
Ms.   Holland  turned   to  slide   3,  "PERMANENT   PARTIAL                                                                    
IMPAIRMENT (PPI) INDEX CPI ADJUSTMENT":                                                                                         
     Section 2                                                                                                                  
     ? AS  23.30.190(a), adjusts the Whole  Person Value for                                                                    
          ? Increase of 44.35% from $177,000 to $255,506                                                                        
     ? This  value was originally  set at $135,000  in 1988,                                                                    
     and was last adjusted for inflation 18 years ago                                                                           
     ? How are PPI benefits calculated?                                                                                         
          ? Percentage of disability x $177,000                                                                                 
          ? Percentage of disability determined by the                                                                          
          American Medical Association Guides to the                                                                            
          Evaluation of Permanent Impairment                                                                                    
     Section 3                                                                                                                  
     ?  Requires  that  the  Whole   Person  Value  used  to                                                                    
     calculate PPI benefits be adjusted  for inflation on an                                                                    
     annual basis                                                                                                               
9:19:54 AM                                                                                                                    
Ms. Holland showed slide 4, "WHY INCREASE THE PPI INDEX?":                                                                      
      Inflation has degraded this value for 18 years                                                                            
     ? Depending on  the body part, Alaska  ranks around the                                                                    
     30th percentile compared to other states                                                                                   
     ? The  Alaska AFL-CIO  unanimously passed  a resolution                                                                    
     in  2016 asking  the legislature  to adjust  this value                                                                    
     for inflation                                                                                                              
Ms. Holland displayed slide 5, "NOTICE OF DEATH BENEFITS":                                                                      
     Section 4                                                                                                                  
     ? Requires that in the  case of work-related death, the                                                                    
     employer  must notify  the  personal representative  of                                                                    
     the employee's estate of:                                                                                                  
          1. Compensation available                                                                                             
          2. Statute of limitations for obtaining Workers'                                                                      
          Compensation benefits                                                                                                 
          3. Where to obtain legal and grief counselors                                                                         
     ? Requires  that the  employer notify  immediate family                                                                    
     members  or dependents  if the  personal representative                                                                    
     is unknown                                                                                                                 
Ms. Holland that the requirements outlined in Section 4                                                                         
were already standard practice.                                                                                                 
Ms. Holland reviewed slide 6, "DEATH BENEFIT FOR                                                                                
FINANCIALLY DEPENDENT FAMILY MEMBERS":                                                                                          
     Section 5(4)                                                                                                               
     ?  If  there  is  no surviving  spouse  or  financially                                                                    
     dependent  children,   immediate  family   members  are                                                                    
     eligible  for  a  death benefit  of  42%  of  spendable                                                                    
     weekly wages                                                                                                               
          ? Capped at $20,000                                                                                                   
          ? Has not been adjusted for inflation since 1968                                                                      
          ? HB38 conservatively increases this value to                                                                         
          ? If adjusted for inflation, this value would                                                                         
          fall somewhere between $140,000-150,000                                                                               
          ? Why raise the cap?                                                                                                  
               ? $20,000 in wages cannot do in 2018 what it                                                                     
               did in 1968                                                                                                      
Ms. Holland spoke to slide 7, "NEW DEATH BENEFIT":                                                                              
     Section 5(6)                                                                                                               
     ?  Creates a  new death  benefit in  the case  that the                                                                    
     deceased worker  has no  surviving spouse  or children,                                                                    
     and no financially dependent family members                                                                                
     ?  Currently  the  only   benefit  provided  to  family                                                                    
     members  of deceased  workers  of this  type  is up  to                                                                    
     $10,000 in funeral costs                                                                                                   
     ? $70,000 payable  in a lump sum to  a surviving parent                                                                    
     if there is  one, $35,000 to each if there  are two, or                                                                    
     $70,000 divided  equally amongst  all legal  parents if                                                                    
     there are more than two.                                                                                                   
     ? If there are no  surviving parents, the estate of the                                                                    
     deceased would receive the $70,000 death benefit                                                                           
     ?  This  amount  was  taken   from  a  similar  benefit                                                                    
     provided in the state of Louisiana                                                                                         
Ms. Holland detailed that there were 13 other states that                                                                       
had a similar death benefit to what was being proposed in                                                                       
the bill.                                                                                                                       
9:23:27 AM                                                                                                                    
Ms. Holland discussed slide 8, "WHY CREATE A DEATH BENEFIT                                                                      
FOR WORKERS WITHOUT DEPENDENTS?"                                                                                                
     ?  "Grand  Bargain"   of  Workers'  Compensation  means                                                                    
     families cannot sue for wrongful death                                                                                     
     ? Families of  all other types of  workers receive some                                                                    
     sort of compensation                                                                                                       
     ? 13 other states provide similar death benefits                                                                           
     ? Their  reason: remaining financial  obligations often                                                                    
     follow unexpected death                                                                                                    
     ? Nominal fiscal impact                                                                                                    
     ?   Provides  a   solution  without   compromising  the                                                                    
     existing system of Workers' Compensation                                                                                   
     WHY NOT OPEN THIS TO LITIGATION?                                                                                           
     ?  Undermines foundational  structure  of our  Workers'                                                                    
     Compensation system                                                                                                        
     ?  Lawsuit already  allowed in  cases  with "intent  to                                                                    
     ?  No   other  state  allows  litigation   in  Workers'                                                                    
     Compensation cases with gross negligence                                                                                   
     ? Unfair  to employers who pay  premiums for protection                                                                    
     against potential financial burden of lawsuit                                                                              
    ? Benefits don't "flow" to dependent family members                                                                         
     ?  Jeopardizes  both  the stability  of  employers  and                                                                    
     families of the deceased                                                                                                   
Ms. Holland spoke to slide 9, "DEATH BENEFITS FOR CHILDREN                                                                      
OF THE DECEASED":                                                                                                               
     Section 6                                                                                                                  
     ? Under  current statute, children of  deceased workers                                                                    
     are  only eligible  for benefits  as long  as they  are                                                                    
     considered a child under AS 23.30.395(8)                                                                                   
     ?  HB38 extends  the  eligibility for  children of  the                                                                    
     deceased worker  to five years  after the person  is no                                                                    
     longer consider a child under AS 23.30.395(8)                                                                              
     ? Why?                                                                                                                     
          ? Widow(er)s receive benefits for 12 years                                                                            
          following the death of the deceased employee                                                                          
          ? A child of the deceased may receive benefits                                                                        
          for an incredibly short period of time                                                                                
Ms. Holland discussed hypothetical scenarios concerning                                                                         
death benefits for children of deceased workers, and the                                                                        
need for Section 6 of the bill.                                                                                                 
9:27:14 AM                                                                                                                    
Ms. Holland read slide 10, "FISCAL IMPACTS." She noted that                                                                     
there were essentially two separate portions of the bill                                                                        
with differing fiscal impacts.                                                                                                  
Ms. Holland turned to slide 11, "PPI INCREASE":                                                                                 
     ?  Increase in  Whole  Body Value  for calculating  PPI                                                                    
     payouts by 44.35%                                                                                                          
     ?  Based on  a 10-year  average, this  is projected  to                                                                    
     increased PPI payouts by $512,850                                                                                          
     ?  Cost passed  on via  increased receipt  authority to                                                                    
     the Division of Risk Management                                                                                            
     ?   DVR   would   increase   its   payroll   deductions                                                                    
     accordingly to garnish necessary funds                                                                                     
     ? Subsequent Increase in Second  Injury Fund (SIF) fees                                                                    
     of $30,771                                                                                                                 
     ? SIF fees calculated as  6% of total benefits paid the                                                                    
     previous FY                                                                                                                
     ?  Increase  of  PPI  benefits  of  $512,850  leads  to                                                                    
     increase in second injury fund  fees by 6% of $512,000,                                                                    
     or $30,771                                                                                                                 
     ? If  the SIF were to  be phased out, these  fees would                                                                    
     continue to decrease until they ceased to be necessary                                                                     
Ms.  Holland  directed attention  to  the  fiscal notes  and                                                                    
discussed  a  projected  increased payout  of  PPI  benefits                                                                    
(based  off  a  10-year   average)  which  would  amount  to                                                                    
$512,850. The cost would be  passed on via receipt authority                                                                    
to  the Division  of Risk  Management, which  would increase                                                                    
its payroll  deductions accordingly  to cover the  cost. She                                                                    
noted  that the  bill  would affect  payouts  to the  Second                                                                    
Injury  Fund  (SIF). The  fund  fees  were calculated  at  6                                                                    
percent of the  total benefits payed in  the previous fiscal                                                                    
year.  The bill  resulted  in  an increase  of  SIF fees  of                                                                    
approximately  $30,000.  She  noted  that  the  costs  would                                                                    
decrease if the SIF were phased out.                                                                                            
Representative  Josephson  referenced   HB  79,  legislation                                                                    
which would end the Second Injury Fund (SIF).                                                                                   
Co-Chair  MacKinnon asked  for the  sponsor to  give a  high                                                                    
overview of the SIF.                                                                                                            
Representative Josephson  explained that the SIF  created an                                                                    
incentive to hire previously injured workers.                                                                                   
Vice-Chair  Bishop  echoed  the comments  of  Representative                                                                    
9:30:12 AM                                                                                                                    
Ms. Holland reviewed slide 12, "FATAL DEATH BENEFITS":                                                                          
     1.   Death  benefit   for   deceased  workers   without                                                                    
     surviving  spouse, children,  or financially  dependent                                                                    
     family members:                                                                                                            
     ? Difficult  to determine cost  by fiscal year    can't                                                                    
     predict workplace deaths                                                                                                   
     ?  Only one  state employee  has  died due  to a  work-                                                                    
     related injury in the past five years                                                                                      
     ? DRM  could absorb costs associated  with these deaths                                                                    
     due to their infrequency                                                                                                   
     2.  Increase  to   benefit  for  financially  dependent                                                                    
     family  members   and  extension  of   eligibility  for                                                                    
     ? Zero fiscal impact                                                                                                       
     ?  Fiscal  note states  zero  fiscal  impact for  fatal                                                                    
     death benefits                                                                                                             
Ms.  Holland  considered that  the  fiscal  impacts for  the                                                                    
death benefit change provision were  nominal. She had spoken                                                                    
with  the  Division  of  Risk  Management  about  the  newly                                                                    
proposed  death benefit  and  its  potential fiscal  impact.                                                                    
Because workplace  deaths were  so infrequent, and  the bill                                                                    
only  addressed those  in the  case  of unmarried  childless                                                                    
individuals,  the  division would  most  likely  be able  to                                                                    
absorb  the costs  of the  new benefit  without much  fiscal                                                                    
impact. If there were to be  a spike in the specific type of                                                                    
death  addressed   by  the  proposed  benefit,   the  fiscal                                                                    
ramifications would be different.                                                                                               
Senator  von  Imhof  asked  how  the  new  provisions  would                                                                    
translate  to increased  rates for  businesses  if the  bill                                                                    
were to pass.                                                                                                                   
Ms. Holland had asked  the Division of Workers' Compensation                                                                    
to prepare a document [entitled  " FY19 CORA Projection with                                                                    
HB38 Additional PPI Cost Estimate]  to reflect how increased                                                                    
costs  would be  passed to  respective departments  to cover                                                                    
the  increase  (copy  on  file).   She  furthered  that  the                                                                    
increase was done  based on the amount of  personnel as well                                                                    
as  the frequency  of injury  claims.  She reviewed  various                                                                    
projected increases  for departments. She  acknowledged that                                                                    
the  bill would  increase the  total cost  of the  system by                                                                    
approximately 2.3 to 2.8 percent.                                                                                               
9:34:04 AM                                                                                                                    
Senator  von  Imhof thought  Alaska  was  the fifth  highest                                                                    
workers' compensation premium state,  and the bill would add                                                                    
more  to  a  very  high-cost system.  She  thought  workers'                                                                    
compensation  affected how  and when  businesses could  hire                                                                    
employees. She  asked about a potential  increase in monthly                                                                    
Representative Josephson  stated that  NCCI had  prepared an                                                                    
analysis  of the  bill, which  indicated  that the  combined                                                                    
fiscal increase  from the bill  would be 2.3 percent  to 2.8                                                                    
percent.  He emphasized  that .4  percent was  attributed to                                                                    
the  proposed  increase  in death  benefits,  and  the  vast                                                                    
majority of the  increase was contained in  the proposed PPI                                                                    
update.  He  referenced  a  supporting  document  that  gave                                                                    
information on  the state's improving status  (as a workers'                                                                    
compensation provider) and the  overall decrease in workers'                                                                    
compensation cost.                                                                                                              
Representative   Josephson  shared   the  concerns   of  the                                                                    
committee  regarding the  expense of  workers' compensation,                                                                    
and  thought it  was impacted  by the  high cost  of medical                                                                    
care in  the state  for non-workers'  compensation injuries.                                                                    
He thought there was a  belief with some merit that workers'                                                                    
compensation patients  could be very lucrative  for doctors.                                                                    
He referenced  independent efforts (such as  legislation) to                                                                    
rein in  some of  the expenses and  submitted that  the bill                                                                    
had merit beyond the considerations of expense.                                                                                 
Representative  Josephson continued  to address  Senator von                                                                    
Imhof's  comments.  He  reminded  that  the  proposed  death                                                                    
benefit provision only affected three families per year.                                                                        
9:37:52 AM                                                                                                                    
Senator  von Imhof  expressed  sympathy for  the  loss of  a                                                                    
child. She  stated that she  represented small  business and                                                                    
needed to consider things from  its viewpoint. She discussed                                                                    
the state's  fiscal challenges.  She mentioned  the endeavor                                                                    
to keep a fully funded Permanent Fund Dividend.                                                                                 
Vice-Chair Bishop  requested a chart that  showed the number                                                                    
of deaths by  occupation. He thought the  committee might be                                                                    
surprised to see the breakdown.                                                                                                 
Representative  Josephson thought  that  state employees  in                                                                    
the  Department  of  Transportation  and  Public  Facilities                                                                    
represented  31  percent   of  total  workers'  compensation                                                                    
claims, while  the Department of Health  and Social Services                                                                    
represented  almost  20  percent  of  claims.  He  mentioned                                                                    
individuals  working  at  the Alaska  Psychiatric  Institute                                                                    
getting injured while working  with patients. The Department                                                                    
of  Corrections  represented  15 percent  of  claims;  while                                                                    
Department of Public Safety had  almost 9 percent of claims,                                                                    
which he thought was surprisingly low.                                                                                          
Vice-Chair  Bishop appreciated  the  information but  wanted                                                                    
more  information   on  workers'  compensation   in  various                                                                    
Ms. Holland recalled  that the effective date  had failed to                                                                    
pass the House  floor. The original version of  the bill had                                                                    
an effective  date of  January 1,  2019. If  the legislation                                                                    
were  to  pass  the   legislature,  the  bill  would  become                                                                    
effective  much  sooner  than originally  intended,  thereby                                                                    
increasing costs.                                                                                                               
9:42:02 AM                                                                                                                    
Co-Chair MacKinnon  asked about  the death of  an individual                                                                    
that  was  single  and  childless. She  asked  if  the  bill                                                                    
proposed  to divide  a benefit  of $70,000  between parents.                                                                    
She  asked if  there was  consideration of  live-in partners                                                                    
and other family  members that might not be  included in the                                                                    
bill definitions.                                                                                                               
Representative  Josephson stated  that because  of increased                                                                    
marriage  freedom,  consideration  of live-in  partners  was                                                                    
less  of an  issue. He  recalled that  former Governor  Tony                                                                    
Knowles   had  required   medical   coverage  for   same-sex                                                                    
partners. He stated  that under Title 13  (probate code), it                                                                    
was  possible for  people  to  die with  debt,  which was  a                                                                    
factor considered in  the development of the  bill. The bill                                                                    
would  help the  family pay  debts of  the deceased.  In the                                                                    
event that there was no  surviving parent, the benefit would                                                                    
work  its  way through  probate  and  could possibly  go  to                                                                    
siblings. He stated that the  bill also worked to conform to                                                                    
the Title  23 definition  of parent. He  discussed different                                                                    
iterations of a parent respective to the deceased.                                                                              
Co-Chair  MacKinnon explained  that  she  was referencing  a                                                                    
potential estrangement  from parents, and the  bill proposed                                                                    
a benefit  for parents  over a chosen  partner. She  did not                                                                    
think all the variables were being considered.                                                                                  
Co-Chair   MacKinnon  discussed   the   subject  of   naming                                                                    
legislation after  individuals. She discussed  the emotional                                                                    
content of  public testimony and  debate, and  the challenge                                                                    
of considering the ramifications of the legislation.                                                                            
9:47:34 AM                                                                                                                    
Representative  Josephson specified  that the  named portion                                                                    
of the bill  in Section 1 would be uncodified.  He stated he                                                                    
had  not had  exposure  to  the bill  topic  prior to  being                                                                    
contacted  by  the parent  of  a  deceased single  childless                                                                    
worker.  He reminded  that the  bill  only affected  3 to  4                                                                    
people per  year that  passed away at  work. He  thought the                                                                    
PPI update was critical.                                                                                                        
Representative Josephson thought it  was difficult to have a                                                                    
perfect  system  in  the  circumstance  of  estrangement  of                                                                    
families. He  added that  other states  had similar  laws as                                                                    
the  bill  proposed  with  regard   to  death  benefits  for                                                                    
9:49:17 AM                                                                                                                    
AT EASE                                                                                                                         
9:50:12 AM                                                                                                                    
Ms. Holland asked to briefly  address the subject of a death                                                                    
benefit  to parents  of a  single childless  worker with  no                                                                    
dependent family  members. She  stated that there  were four                                                                    
options:  one surviving  parent would  receive $70,000,  two                                                                    
surviving parents would each receive  $35,000, three or more                                                                    
legal surviving  parents would  equally divide  $70,000, and                                                                    
if there were  no surviving parents the  death benefit would                                                                    
go  to the  estate of  the  deceased. She  noted that  there                                                                    
could be an easy fix to  the bill. In the State of Wisconsin                                                                    
there  was  a similar  death  benefit,  which accounted  for                                                                    
estrangement of parents.                                                                                                        
Co-Chair  MacKinnon referenced  an occurrence  in Juneau  in                                                                    
which  a man  lost  his fianc?.  She discussed  hypothetical                                                                    
scenarios    in    which   individuals    had    non-married                                                                    
relationships that  could be more financially  involved than                                                                    
the parents that were designated for survivor benefits.                                                                         
Co-Chair MacKinnon OPENED public testimony.                                                                                     
9:55:45 AM                                                                                                                    
MARIANNE  BURKE,   SELF,  ANCHORAGE   (via  teleconference),                                                                    
testified in support  of the bill. She  referenced her visit                                                                    
to  the capital  the  previous week.  She  relayed that  her                                                                    
daughter  was  a new  electrical  apprentice  that had  been                                                                    
electrocuted   due  to   her   employer's  negligence.   She                                                                    
referenced the  United States Constitution and  due process.                                                                    
She lamented  the lack  of legal  remedy for  her daughter's                                                                    
life. She thought  HB 38 would give some  remedy to families                                                                    
that lost  children to  accident or  negligence on  the job.                                                                    
She urged the committee to pass the bill.                                                                                       
9:59:58 AM                                                                                                                    
Ms. Burke addressed the proposed  $70,000 death benefit. She                                                                    
would have  used funds to  honor her deceased  daughter. She                                                                    
referenced Senator von Imhof's  previous remarks about small                                                                    
business.  She asserted  that businesses  were not  paying a                                                                    
fair  share. She  stated she  had met  many injured  workers                                                                    
that were not being satisfactorily compensated.                                                                                 
Ms.  Burke  referenced  Co-Chair MacKinnon's  remarks  about                                                                    
extended   family  and   domestic   partners.  She   thought                                                                    
immediate  family  was more  affected  by  the death  of  an                                                                    
individual. She  did not feel  she had received  due process                                                                    
for her daughter's death.                                                                                                       
Co-Chair  MacKinnon expressed  sympathy and  regret for  Ms.                                                                    
Burke's loss on behalf of the committee.                                                                                        
10:04:14 AM                                                                                                                   
KEVIN  DOUGHERTY, SELF,  EAGLE  RIVER (via  teleconference),                                                                    
spoke in  support of  the bill.  He noted  that he  had been                                                                    
general counsel  with the Alaska Laborers  Union since 1981.                                                                    
He was  thankful that  the rate of  fatalities in  the state                                                                    
had decreased. He thought  the previous testifier's comments                                                                    
were valuable.  He discussed the  issue of  single childless                                                                    
deceased workers. He acknowledged  that the committee needed                                                                    
to consider the  cost of the bill. He  referenced a document                                                                    
authored  by the  Division of  Insurance that  discussed the                                                                    
decrease in approved premium rates (copy on file).                                                                              
Mr. Dougherty  referenced NCCI and its  consideration of the                                                                    
bill.  He   discussed  workers'  compensation   coverage  of                                                                    
children and  parents. He discussed  Alaska probate  law. He                                                                    
thought it would be a mistake not to move forward with the                                                                      
bill because of family definitions.                                                                                             
10:09:53 AM                                                                                                                   
Co-Chair MacKinnon mentioned a letter of support from the                                                                       
AFL-CIO (copy on file).                                                                                                         
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
Co-Chair MacKinnon asked for a high-level overview of the                                                                       
Ms. Holland addressed a Sectional Analysis of the bill                                                                          
(copy on file):                                                                                                                 
     Section 1:  Provides that the  act may be known  as the                                                                    
     Abigail Caudle Act.                                                                                                        
     Section 2:  Increases the  base amount  for calculating                                                                    
     the compensation  for the permanent  partial impairment                                                                    
     from $177,000 to $255,506.                                                                                                 
     Section 3:  Provides that  the director  shall annually                                                                    
     adjust the PPI benefit for inflation.                                                                                      
     Section 4:  Requires that in  the event that  an injury                                                                    
     causes death,  the employer is  required to  notify the                                                                    
     employee's personal representative  of the compensation                                                                    
     available,  the statute  of limitations,  and where  to                                                                    
     obtain  a list  of legal  counsel and  grief counselors                                                                    
     who may be able to assist.                                                                                                 
     Section 5:  Increases the  maximum aggregate  amount of                                                                    
     death  benefits payable  to parents,  grandchildren, or                                                                    
     siblings  dependent  on the  deceased  at  the time  of                                                                    
     injury from  $20,000 to $100,000. Adds  a new paragraph                                                                    
     providing  that  in the  event  there  is no  surviving                                                                    
     spouse   or  children,   and   no  eligible   financial                                                                    
     dependents of the deceased at  the time of injury, that                                                                    
     the  amount   of  death  benefits  available   will  be                                                                    
     $70,000, and  is payable in  a lump sum to  the parents                                                                    
     if they are alive, or to  the estate of the decedent if                                                                    
     they are not.                                                                                                              
     Section 6:  Extends the timeframe  under which  a child                                                                    
     of  the deceased  is eligible  for death  benefits from                                                                    
     until they are no longer considered a child, to five                                                                       
     years after the person is no longer considered a child                                                                     
     under AS 23.30.395(8).                                                                                                     
Co-Chair MacKinnon  asked if there was  retroactivity in the                                                                    
Ms. Holland answered in the negative.                                                                                           
10:13:47 AM                                                                                                                   
Senator  von Imhof  wanted to  learn more  about the  "grand                                                                    
bargain"  under which  families could  not sue  for wrongful                                                                    
death,  and  the  fact  that no  other  states  allowed  for                                                                    
litigation   in  workers'   compensation  cases   for  gross                                                                    
MARIE  MARX,  DIRECTOR,  DIVISION OF  WORKERS'  COMPENSATION                                                                    
DEPARTMENT OF  LABOR AND  WORKFORCE DEVELOPMENT,  thought it                                                                    
would  be  helpful  to  provide  some  history  on  workers'                                                                    
compensation. She  noted that severe injuries  had increased                                                                    
drastically  during   the  industrial   revolution.  Injured                                                                    
workers  would sue  and  receive a  high  reward or  receive                                                                    
nothing. Employers  were put out of  business by significant                                                                    
awards  to the  injured party.  Subsequently, 50  states put                                                                    
forth  a  contract  to  keep  employers  in  business  while                                                                    
providing  benefits  to  injured workers.  Through  workers'                                                                    
compensation,   injured  workers   receive  prompt   limited                                                                    
benefits that cover medical  costs, lost wages, reemployment                                                                    
benefits  (if eligible),  and death  benefits. There  was no                                                                    
allowance  for pain  and suffering  or punitive  damages. In                                                                    
exchange, workers  could not sue  the employer and it  was a                                                                    
no-fault system.                                                                                                                
Ms.  Marx explained  that the  workers' compensation  system                                                                    
was  set up  to  ensure that  benefits  flowed smoothly  and                                                                    
quickly to  injured workers. She  thought it worked  well in                                                                    
most cases. She noted that  there were about 20,000 injuries                                                                    
reported each  year, and in  the vast majority of  cases the                                                                    
benefits flowed to the injured  worker. No states allowed to                                                                    
sue  for negligence  but suing  for intentional  conduct was                                                                    
10:17:00 AM                                                                                                                   
Senator  von   Imhof  asked  about  the   situation  of  the                                                                    
testifier  when   her  daughter  was   electrocuted  through                                                                    
alleged negligence. She asked  about a hypothetical scenario                                                                    
under which the company did  not change its policies and the                                                                    
same  negligence caused  the death  of  another worker.  She                                                                    
wondered  if a  company  would be  able  to continue  unsafe                                                                    
practices to the detriment of workers.                                                                                          
Ms.  Marx stated  that there  were  consequences outside  of                                                                    
workers'  compensation that  addressed employer's  standards                                                                    
of safety.  She relayed that  there were things in  place to                                                                    
incentivize  employers to  maintain safe  work environments.                                                                    
She reiterated  that workers' compensation  was a  system of                                                                    
benefits  that was  set  up  only to  make  sure an  injured                                                                    
worker received  medical costs  and lost  wages and  did not                                                                    
put employers out of business.                                                                                                  
Vice-Chair  Bishop stated  that if  negligence was  willful,                                                                    
the matter was treated differently.                                                                                             
Senator von  Imhof asked if there  were consequences outside                                                                    
workers' compensation to address negligence.                                                                                    
Ms. Marx answered in the affirmative.                                                                                           
Co-Chair  MacKinnon stated  that according  to the  previous                                                                    
testifier  there was  not another  recourse for  her set  of                                                                    
circumstances. She  was not  sure of  the particular  set of                                                                    
circumstances surrounding the loss of life.                                                                                     
Vice-Chair  Bishop  about  the  definition  of  adult  under                                                                    
Section 6.                                                                                                                      
Ms. Marx stated that the  definition of child was defined in                                                                    
the Workers' Compensation Act.                                                                                                  
Vice-Chair Bishop asked  at what age was a  person no longer                                                                    
a child.                                                                                                                        
Ms. Marx  stated that unmarried dependent  children received                                                                    
benefits to  age 19 or older  while in high school  or doing                                                                    
their first  four years of  trade school,  technical school,                                                                    
or college. The  time period could be longer if  a child was                                                                    
dependent through a disability.                                                                                                 
10:21:08 AM                                                                                                                   
Co-Chair MacKinnon asked if the  bill proposed to extend the                                                                    
age up to 24 with the same caveats.                                                                                             
Ms. Marx answered in the affirmative.                                                                                           
Vice-Chair  Bishop asked  about  the estimated  cost to  the                                                                    
private sector.                                                                                                                 
SCOTT  JORDAN,   DIRECTOR,  DIVISION  OF   RISK  MANAGEMENT,                                                                    
DEPARTMENT OF  ADMINISTRATION, was not sure  of the increase                                                                    
would to the private sector.                                                                                                    
Co-Chair  MacKinnon  stated  that the  committee  wanted  to                                                                    
understand   how   the  employer's   workers'   compensation                                                                    
payments would be adjusted.                                                                                                     
Vice-Chair Bishop agreed.                                                                                                       
Ms. Marx  stated that  the price  estimate discussed  by the                                                                    
committee  was from  NCII, which  was  an organization  that                                                                    
priced  out changes  to workers'  compensation systems.  She                                                                    
relayed that NCII had priced  out a 2.8 percent increase ($8                                                                    
million  total) for  the entire  bill including  private and                                                                    
public entities.                                                                                                                
Co-Chair  MacKinnon  informed that  there  was  a letter  of                                                                    
opposition  in  the member's  packets  (copy  on file).  She                                                                    
asked  members to  reach out  to small  businesses in  their                                                                    
districts to get feedback.                                                                                                      
Ms. Marx clarified  that the estimated increase  in the base                                                                    
premiums was 2.8 percent.                                                                                                       
Co-Chair MacKinnon  stated that the committee  would like to                                                                    
understand the dollar amount impact  to employers and how it                                                                    
was calculated.                                                                                                                 
Vice-Chair Bishop  wanted to illustrate that  it was pennies                                                                    
on the dollar for employee costs in the private sector.                                                                         
Senator von Imhof  stated that it was pennies  on the dollar                                                                    
currently,  although  Section  3  of the  bill  provided  an                                                                    
annual  increase  due  to inflation.  She  thought  a  chart                                                                    
reflecting  the cost  to employers  would  be helpful,  with                                                                    
consideration  of the  size of  business and  inflation. She                                                                    
asserted  that  actions  taken in  the  present  would  have                                                                    
future consequences.                                                                                                            
10:26:56 AM                                                                                                                   
Co-Chair Hoffman asked  if it was true that it  was not only                                                                    
businesses that paid workers'  compensation costs, but there                                                                    
was a portion paid by the employee.                                                                                             
Ms.  Marx relayed  that workers'  compensation  was paid  to                                                                    
injured workers by self-insured employers and insurers.                                                                         
Senator  Olson asked  if  it  was true  that  there were  no                                                                    
recoverable dollars  for the family  of the deceased  in the                                                                    
case of a death of a worker that was single and childless.                                                                      
Mr.  Jordan  stated  that the  only  benefit  available  for                                                                    
single childless  workers without  dependents was  a $10,000                                                                    
funeral expense benefit.                                                                                                        
Senator Olson  expressed surprise  that the statute  had not                                                                    
been changed previously.                                                                                                        
Mr.  Jordan  thought  workers'  compensation  was  there  to                                                                    
compensate an  employee for an injury;  or in the case  of a                                                                    
death, to compensate the dependents  of the worker. If there                                                                    
were no dependents, there was no one to compensate.                                                                             
10:29:36 AM                                                                                                                   
Vice-Chair Bishop reminded that no  one went to work wishing                                                                    
to  not  come home  at  the  end of  the  day.  He had  been                                                                    
severely injured  on the  job in 1975  and had  survived the                                                                    
injury with the aid of a co-worker.                                                                                             
Co-Chair MacKinnon thanked Vice-Chair Bishop for his story.                                                                     
Co-Chair  MacKinnon acknowledged  that there  was a  balance                                                                    
between families  that suffered  great losses  and employers                                                                    
that were  trying to put  people to work. She  thought there                                                                    
was reluctance  to advance legislation  because it  could be                                                                    
amended   in   any  way   on   the   floor.  She   discussed                                                                    
collaboration  and discussed  the importance  of working  to                                                                    
accomplish positive change.                                                                                                     
10:32:53 AM                                                                                                                   
Co-Chair  Hoffman asked  what other  states  had done  about                                                                    
inflation in workers' compensation benefits.                                                                                    
Ms. Marx did not have  information what other state statutes                                                                    
provided  for   inflation.  She   offered  to   provide  the                                                                    
information at a later time.                                                                                                    
Co-Chair   MacKinnon  drew   attention   to   a  packet   of                                                                    
information from the Legislative  Research Division (copy on                                                                    
file),  which  she  thought   might  contain  some  research                                                                    
Co-Chair  MacKinnon  informed  that   the  fiscal  note  was                                                                    
inaccurate because  the effective date  of the bill  had not                                                                    
Co-Chair  MacKinnon  set  the bill  aside.  She  stated  the                                                                    
committee would work on a new  fiscal note as well as issues                                                                    
that were brought up in  committee. She stated that proposed                                                                    
amendments were due by the  following day. She asked members                                                                    
to inform her  of concerns as early as  possible. She stated                                                                    
that  she did  not support  the inflation-proofing  concept,                                                                    
for  reasons   stated  earlier  in  the   meeting.  She  was                                                                    
concerned about costs inflating in future years.                                                                                
CSHB 38(FIN)  was HEARD  and HELD  in committee  for further                                                                    
10:36:32 AM                                                                                                                   
AT EASE                                                                                                                         
10:37:18 AM                                                                                                                   

Document Name Date/Time Subjects
HB038 Explanation of Changes vers A-N.A 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Sectional Analysis ver N.A 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Side-by-Side Comparison 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Sponsor Statement 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - AFL-CIO Resolution 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - Alaska Workers' Compensation Div. of Insurance 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - FY19 DRM WC Projections with HB38 PPI Cost Increase Estimate 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - Inflation Calculation 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - Letter of Opposition 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - Letter of Support 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - PPI by State 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB038 Supporting Document - Similar Legislation 4.6.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB400 Letters of Support.pdf SFIN 4/17/2018 9:00:00 AM
HB 400
HB400 Sectional Analysis.pdf SFIN 4/17/2018 9:00:00 AM
HB 400
HB400 Sponsor Statement.pdf SFIN 4/17/2018 9:00:00 AM
HB 400
HB 38 Supporting Document - PPT Presentation 4.16.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB 38 Testimony of Marianne E Burke.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB 38 DOL 2016 Annual Report - Fatality Rate.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB 38 Kevin Daughtery Testimony with Supporting Document.pdf SFIN 4/17/2018 9:00:00 AM
HB 38
HB 38 DOLWD-LSS Response to SFIN 4.18.18.pdf SFIN 4/17/2018 9:00:00 AM
HB 38