Legislature(2003 - 2004)

04/14/2004 08:08 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
        SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM                                                                     
CHAIR SEEKINS announced  that at the last hearing on  SB 311, the                                                               
committee  considered  a   proposed  committee  substitute  (CS),                                                               
labeled 23-G2.  Since that time,  Legislative Legal  and Research                                                               
Services  redrafted  that  version,  which  is  now  labeled  23-                                                               
GS2023\D and referred to as version D.                                                                                          
SENATOR OGAN  moved to  adopt version D  as the  working document                                                               
before the committee.                                                                                                           
CHAIR  SEEKINS announced  that without  objection, version  D was                                                               
adopted.  He  noted  that  at the  last  meeting,  the  committee                                                               
reviewed the  points of agreement between  the Administration and                                                               
labor  representatives  on  the   bill  and  was  considering  an                                                               
amendment [Amendment 1], which reads as follows.                                                                                
                                                        (1:51 PM)                                                               
                      A M E N D M E N T  1                                                                                  
OFFERED IN THE SENATE                        BY_________________                                                                
   JUDICIARY COMMITTEE                                                                                                          
     TO: Proposed CSSB 311(JUD)(23-G2)                                                                                          
Page 38, lines 2-4:                                                                                                             
     Delete "testimony presented by a witness who appears in a                                                                  
hearing.  When  credibility  is  disputed,  the  hearing  panel's                                                               
determination  of  credibility  must  be  supported  by  specific                                                               
     Insert "a witness. A finding by the hearing panel                                                                          
concerning  the  weight to  be  accorded  a witness's  testimony,                                                               
including medical  testimony and  reports, is conclusive  even if                                                               
the   evidence  is   conflicting  or   susceptible  to   contrary                                                               
conclusions. The  findings of  the hearing  panel are  subject to                                                               
the  same standard  of  review as  a jury's  finding  in a  civil                                                               
Page 41, line 4:                                                                                                                
     Delete ", hearing panel,"                                                                                                  
Page 41, lines 5-10:                                                                                                            
     Delete "Unless not supported by specific findings, a                                                                       
hearing panel's  findings regarding the credibility  of testimony                                                               
of  a witness  who  appeared in  the hearing  is  binding on  the                                                               
commission, but  all other findings,  including the weight  to be                                                               
accorded medical testimony  and reports, may be set  aside by the                                                               
commission. The findings  of the hearing panel, if  not set aside                                                               
by the commission, are conclusive."                                                                                             
     Insert "When reviewing decisions of a hearing panel, the                                                                   
commission  shall  use  the  same  standard  of  review  as  that                                                               
established by the Alaska Supreme  Court in workers' compensation                                                               
CHAIR SEEKINS noted  that Amendment 1 was  originally drafted for                                                               
incorporation  into version  23-G2, therefore  the page  and line                                                               
numbers will have to be adjusted  to mesh with version D, however                                                               
the content of the amendment remains the same.                                                                                  
SENATOR FRENCH moved to adopt Amendment 1.                                                                                      
SENATOR OGAN objected for the purpose of discussion.                                                                            
CHAIR SEEKINS  said that  Amendment 1 was  proposed by  the labor                                                               
representatives, and asked Mr. John Giuchici to speak to it.                                                                    
MR.  JOHN  GIUCHICI, representing  the  IBEW,  told members  that                                                               
without Amendment  1, the  legislation would  be an  injustice to                                                               
the whole workers' compensation process. He stated:                                                                             
     If the  hearing panel and  the hearing officer  are not                                                                    
     afforded   any    weight   for   future    appeals   or                                                                    
     reconsideration  and  all  of   the  fact  finding  and                                                                    
     judgmental  and credibility  issues that  are addressed                                                                    
     at the hearing  panel level are not  taken into account                                                                    
     in any appeal  process, that is just  totally unfair to                                                                    
     both  parties. There  doesn't appear  to  be any  other                                                                    
     administrative bodies  that totally  ignore all  of the                                                                    
     evidence and  fact-finding done by the  [indisc.] panel                                                                    
     to make  the decision.  For someone to  just substitute                                                                    
     judgment  at  a later  date  and  discount any  factual                                                                    
     evidence that  was used to determine  something is just                                                                    
     totally unfair.                                                                                                            
SENATOR OGAN asked to hear from the Administration.                                                                             
CHAIR SEEKINS asked Mr. Giuchici  how Amendment 1 will change the                                                               
structure of the process.                                                                                                       
MR. GIUCHICI  explained that  section .122  of the  current bill,                                                               
Credibility  of  witnesses,  is currently  written  to  give  the                                                               
hearing  panel the  sole power  to determine  the credibility  of                                                               
testimony presented by  a witness who appears at  a hearing. That                                                               
would allow  a carrier to  bring in a  witness who does  not even                                                               
actively  practice medicine,  and  acts as  a  "hired gun."  That                                                               
witness's testimony would supersede  a deposition by an attending                                                               
physician, employees, witnesses, or  medical records. He believes                                                               
it is  totally lopsided  to allow  a carrier  to hire  someone to                                                               
testify,   especially   if    that   person's   credentials   are                                                               
questionable  and whose  testimony  will  discard the  practicing                                                               
medical doctor's  deposition. He said  that most of  the language                                                               
in Amendment 1 has been in  statute for many years and has worked                                                               
well.  It  requires  all  the   evidence  to  be  considered.  He                                                               
cautioned  that some  people  make  a living  off  of writing  an                                                               
opinion  for  the  carrier  after  reviewing  the  records.  They                                                               
testify  and   slant  the  information   anyway  they   want  to.                                                               
Meanwhile, the  attending physician  might not  be able  to leave                                                               
his practice  for an  entire day  to testify  and instead  does a                                                               
deposition.  Amendment 1  will require  the  deposition from  the                                                               
attending  physician to  carry  equal weight  to  any expert  the                                                               
carrier wants to bring in.                                                                                                      
SENATOR OGAN declared a potential  conflict of interest as he has                                                               
an active workers' compensation claim in progress.                                                                              
MS. KRISTIN  KNUDSEN, assistant  attorney general,  Department of                                                               
Law (DOL), told members that she  has worked for DOL for 15 years                                                               
in the  workers' compensation  arena. She  represented plaintiffs                                                               
in  workers'   compensation  cases  and  worked   as  a  workers'                                                               
compensation hearing  officer for  the State  of Oregon  prior to                                                               
that. She  asked to  address a  point made  by Mr.  Giuchici, and                                                               
said it involves an  area of the law that is subject  to a lot of                                                               
misinformation and  misunderstanding. That  is, the  concept that                                                               
if a carrier  brought a witness in that  person's testimony would                                                               
override  a  physician's  testimony.  She pointed  out  that  two                                                               
things  are at  issue. The  first is  known as  the standard  for                                                               
reviewing  findings of  credibility. Credibility  has to  do with                                                               
whether or  not a witness is  telling the truth. The  second area                                                               
is the  weight of the  evidence; that  is which evidence  is more                                                               
persuasive. The fact  that a physician testified  in person would                                                               
not  give more  weight to  testimony  given by  deposition or  to                                                               
reports that  are detailed and  explain the  physician's opinion.                                                               
She continued:                                                                                                                  
     So the  first thing I would  like to do is  to reassure                                                                    
     Mr. Giuchici that under this  current system, it is not                                                                    
     ... something  that he should  worry about -  a carrier                                                                    
     bringing in  a live  witness and sort  of automatically                                                                    
     overriding the  report and any deposition  testimony of                                                                    
     a  practicing   physician  who  treated   the  patient.                                                                    
     Instead  the hearing  panel  would have  to  go in  and                                                                    
     weigh  the  evidence.  I  have,  for  the  purposes  of                                                                    
     clarity, attempted to give to  the committee a chart in                                                                    
     a question  and answer  format on  this subject  of the                                                                    
     standard of review.                                                                                                        
CHAIR  SEEKINS  announced  that  Senator  Therriault  joined  the                                                               
committee some time ago.                                                                                                        
MS. KNUDSEN referred to the  chart she provided [entitled Current                                                               
System -  Proposed System] and  explained that under  the current                                                               
system,  the  credibility  of  a witness  is  determined  by  the                                                               
workers'  compensation board;  that  would not  change under  the                                                               
proposed system. In  view of the Supreme Court's  decision in the                                                               
Whitesides case, DOL  felt the right of a witness  to have his or                                                               
her  credibility determined  by the  immediate trier  of fact  in                                                               
hearing is very  significant. DOL wished to retain  that power in                                                               
the  hearing panel.  The hearing  panel would  have the  power to                                                               
weigh the evidence  and make findings of fact  and conclusions of                                                               
law.  What  is  different  is  that on  review  by  the  Workers'                                                               
Compensation Appeals  Commission, the  commission would  have the                                                               
power  to  review  the  whole  record and  look  at  whether  the                                                               
evidence  was carefully  and rationally  examined  and to  decide                                                               
whether to reweigh that evidence in  the record.  She pointed out                                                               
that there  would be  no new  hearing or  new evidence,  which is                                                               
known as administrative review de novo on the record.                                                                           
CHAIR SEEKINS asked  if, under the proposed  system, [the appeals                                                               
commission]  would  not  call  in   new  witnesses  or  take  new                                                               
testimony,  it would  only review  the record  of the  proceeding                                                               
before the panel.                                                                                                               
MS. KNUDSEN said that is correct and  has been in SB 311 from the                                                               
beginning: no new  evidence would be presented  to the commission                                                               
and no  new hearing  would take place.  That system  differs from                                                               
the current system, in which  the Superior Court may exercise its                                                               
discretion  to hold  a new  trial and  take new  testimony if  it                                                               
wished to do  so. In that respect, the  commission is constrained                                                               
to the record.  If the commission is concerned  that the evidence                                                               
is  inadequate,  the commission  could  remand  the case  to  the                                                               
hearing panel  for the  purpose of  gathering more  evidence. She                                                               
repeated there will not be a  disregard for the evidence taken by                                                               
the hearing  panel; instead  the hearing  panel will  control the                                                               
intake of evidence.                                                                                                             
MS. KNUDSEN  again referred  to the chart  and told  members that                                                               
the rule  of conclusiveness basically  says that when a  court is                                                               
reviewing  an administrative  agency's decision,  it should  look                                                               
for  substantial evidence  in light  of the  record to  determine                                                               
whether  or not  that agency  made an  appropriate decision  - it                                                               
does  not  reweigh  the  evidence. In  the  current  system,  the                                                               
workers'  compensation   board  is   entitled  to  the   rule  of                                                               
conclusiveness under section .122. She described:                                                                               
     Now when  we went  to the  hearing panel  system, there                                                                    
     was  some  concern  about,...in our  current  act,  the                                                                    
     board is  the only  thing that's  referred to  and it's                                                                    
     the board  that acts.  The hearing  panels act  for the                                                                    
     whole  board...and  to  eliminate any  question  as  to                                                                    
     whether or not  the hearing panels were  in fact acting                                                                    
     for the whole board, that  it was a single tier agency,                                                                    
     .122 was inserted in 1982.                                                                                                 
     Here  we have  a  single administrative  agency in  our                                                                    
     current system. What  we are going to  in this proposed                                                                    
     system is a two-tiered  administrative agency where you                                                                    
     have  two tiers  of  adjudicatory  authority. You  have                                                                    
     your hearing  panel and then  you have  the commission.                                                                    
     The commission is not a  court. It is an administrative                                                                    
     agency  and  as the  top  tier  of that  administrative                                                                    
     agency  under basic  principles of  administrative law,                                                                    
     it is the  one to which the courts  must give deference                                                                    
     in  terms of  its finding  and that's  why the  current                                                                    
     bill is written the way it is.                                                                                             
SENATOR  FRENCH asked  if  that  is exactly  the  danger for  the                                                               
employee  who is  appearing in  front of  the panel  in that  the                                                               
evidence that the panel weighs  could be reweighed by the appeals                                                               
commission and  then set in  stone when it  goes up on  appeal to                                                               
the Supreme Court.  Therefore,  the appeals commission could undo                                                               
the victory  that the worker won  with the hearing panel  and the                                                               
Supreme  Court  could  not  reweigh  that  evidence  because  the                                                               
appeals commission already did that.                                                                                            
MS.  KNUDSEN  said  the proposed  Workers'  Compensation  Appeals                                                               
Commission could  reweigh the evidence  but it does not  have to.                                                               
Its  decision would  also be  subject to  review. The  commission                                                               
must  have substantial  evidence  in the  record  to support  its                                                               
finding  and the  commission's findings  are  subject to  Supreme                                                               
Court review.                                                                                                                   
CHAIR SEEKINS asked if the hearing  panel makes a finding and the                                                               
commission  changes the  finding because  it determines  that the                                                               
record  supports  a  different  conclusion, the  only  avenue  of                                                               
appeal would  be to  the Supreme Court,  which would  examine the                                                               
entire record in the same way the commission did.                                                                               
MS.  KNUDSEN said  the  Supreme Court  would  examine the  entire                                                               
record,  but  its  focus  would   be  to  determine  whether  the                                                               
commission's  findings were  supported with  substantial evidence                                                               
in  light of  the entire  record. The  court, however,  would not                                                               
disturb the  findings on credibility  because those  findings are                                                               
binding  on  the  commission.  Therefore, if  a  worker  were  to                                                               
testify  that an  unwitnessed event  occurred and  that witness's                                                               
credibility   was   disputed,   the  proposed   hearing   panel's                                                               
determination of the worker's credibility would be binding.                                                                     
SENATOR  THERRIAULT asked  whether the  appeals commission  would                                                               
have  to substantiate  its  conclusion if  it  differed from  the                                                               
hearing  panel's  conclusion.  He  pointed  out  in  the  current                                                               
system, a  commissioner who reaches  a different  conclusion does                                                               
not  have to  substantiate that  conclusion. If  DOL then  has to                                                               
represent the state  in that case, it has no  written findings on                                                               
which  to  base its  case.  For  that  reason, another  piece  of                                                               
legislation  that deals  with hearing  panels  proposes that  all                                                               
conclusions be in writing.                                                                                                      
MS. KNUDSEN said the commission  is statutorily required to issue                                                               
written decisions  based on findings  of fact and  conclusions of                                                               
law.  The  statute specifies  that  if  the commission  does  not                                                               
disturb the  findings of  the hearing  panel, those  findings are                                                               
considered as adopted if the case  is not appealed to the Supreme                                                               
SENATOR FRENCH felt the question  regarding the written decisions                                                               
and the record  made in front of the  workers' compensation board                                                               
right now  deserves examination  so that  the committee  does not                                                               
proceed  on  a false  premise.  He  looked  at decisions  on  the                                                               
workers' compensation board's website and  found them to be quite                                                               
comprehensive.  He distributed  two  of those  decisions to  show                                                               
members the  thoroughness of the  work done by the  current board                                                               
and that workers do not win  all cases. He said he was responding                                                               
to  Senator Therriault's  comment  that sometimes  the record  is                                                               
unwritten or unsubstantiated.                                                                                                   
SENATOR  THERRIAULT  clarified  that  the  other  legislation  he                                                               
referred to  does not apply  to the workers'  compensation board.                                                               
His goal  is to  assure that the  same standard  of documentation                                                               
that  the  legislature  would  be  requiring  for  other  appeals                                                               
processes is the same as the workers' compensation board.                                                                       
MR. GIUCHICI  interjected to ask  what the objection is  to using                                                               
the standard of review used by a jury in a civil action.                                                                        
MS. KNUDSEN explained that the  current statutory standard is the                                                               
standard applied  by the Supreme  Court when it is  reviewing the                                                               
board's decision. She continued:                                                                                                
     What we  are talking about  is not really  changing the                                                                    
     Supreme  Court's  standard  of  review.  The  reviewing                                                                    
     court's standard of review,  looking down, isn't really                                                                    
     changing.  What  is  changing is  which  tier  of  this                                                                    
     proposed   administrative  agency   that  standard   is                                                                    
     applied  to.  Getting  to Senator  Therriault's  point,                                                                    
     it's a very basic  principle of administrative law that                                                                    
     the - what we call  the conclusiveness, the standard of                                                                    
     review  that's  applied,  the  findings  of  fact,  are                                                                    
     entitled to  the same as a  jury - that kind  of thing,                                                                    
     is   applied  to   the  director's   decision  or   the                                                                    
     commissioner's    decision    if   it's    a    regular                                                                    
     administrative  appeal through  an administrative  body                                                                    
     and...the  commissioner's  decision,   the  one  that's                                                                    
     appealed into  the court and  precisely because  of the                                                                    
     problem that Senator  Therriault raised, it's sometimes                                                                    
     difficult  to   figure  out  what   the  commissioner's                                                                    
     findings  of  fact were.  In  this  situation, what  is                                                                    
     being proposed  is simply that the  proposed commission                                                                    
     as the highest level  of this administrative body would                                                                    
     be subject  to that standard  of review instead  of the                                                                    
     lowest body  of this administrative body.  We don't, as                                                                    
     a rule...it would not be  an orthodox way of looking at                                                                    
     an administrative structure.                                                                                               
     Number two,  this idea  of the  higher body  having the                                                                    
     rule of conclusiveness, the standard  of review that is                                                                    
     articulated here,  is the majority rule.  As Larson has                                                                    
     said,  this  is  the  majority rule  and  in  its  most                                                                    
     orthodox   form  no   exception   is   made  even   for                                                                    
     determinations  of credibility.  We are  modifying that                                                                    
     here  into what  is called  the modified  majority rule                                                                    
     because we  are making an exception  for determinations                                                                    
     of credibility, which  really, you know, need  to be by                                                                    
     this hearing  panel so that  witnesses, a  claimant, or                                                                    
     an  employer coming  before the  hearing panel  has the                                                                    
     opportunity to  go face-to-face with the  person who is                                                                    
     determining credibility.                                                                                                   
     The other  thing is  that this kind  of a  system, this                                                                    
     two-tiered administrative  system that  we're proposing                                                                    
     here, promotes the consistency  that we're looking for.                                                                    
     It also  is in line  with what the  National Commission                                                                    
     on State Compensation Law  report provided. It provides                                                                    
     an error check, if you will,  a check by experts in the                                                                    
     field  who  are  going  in  this  proposed  bill,  this                                                                    
     committee  substitute, going  to be  drawn from  varied                                                                    
     backgrounds so [there will] be  an employee attorney on                                                                    
     this panel, there  will be an employer  attorney on the                                                                    
     panel. So there is a  balance on the commission itself,                                                                    
     as well as a balance on the hearing panel....                                                                              
     I just wanted to add one  more final point, and that is                                                                    
     that  for some  reason  some  attorneys have  mentioned                                                                    
     that  they're concerned  with the  idea this  change in                                                                    
     the  standard of  review might  somehow bleed  over and                                                                    
     somehow change the standards for  a stay pending appeal                                                                    
     and  I  just wanted  to  reassure  the members  of  the                                                                    
     committee that  that was  not intended.  The assignment                                                                    
     of  conclusiveness to  review by  the highest  level of                                                                    
     the adjudicatory  agency does  not alter  the standards                                                                    
     for  the  grant  of  a   stay  pending  review  by  the                                                                    
       commission and that there was no intent to repeal                                                                        
     Olson Logging versus Larson.                                                                                               
SENATOR  FRENCH said  his question  goes to  a fundamental  point                                                               
that  has been  raised repeatedly  about the  appeals commission,                                                               
and that  is that DOL is  looking for consistency. He  asked what                                                               
evidence  DOL  can  provide  that the  decisions  issued  by  the                                                               
workers'  compensation board  are inconsistent  and whether  that                                                               
evidence is backed by a high reversal rate at the court level.                                                                  
MS.  KNUDSEN said  she has  not  counted reversal  rates but  she                                                               
tried to prepare for the  committee some information illustrating                                                               
why  the commission  should  have the  discretion  to review  and                                                               
reweigh evidence. She said she  could provide copies of decisions                                                               
after the  meeting, but  did not  want to  disclose the  names of                                                               
employers. She noted in one case,  an employee worked at a remote                                                               
site  and  was  later  diagnosed  with hepatitis  C  by  a  local                                                               
physician.  He also  obtained  a "checkbox"  letter,  which is  a                                                               
letter written  by his attorney  to the physician  asking whether                                                               
the  physician  believed  the  disease   was  work  related.  The                                                               
physician believed  it was.  In the  meantime, a  second employee                                                               
was diagnosed  with hepatitis  C in the  field. The  employer had                                                               
that employee  examined by experts  at Stanford  University. That                                                               
examination  was disputed  so the  board sent  the second  man to                                                               
Scripps  Institute in  La Jolla.  The experts  from Stanford  and                                                               
Scripps testified  that it  was very  unlikely that  employee had                                                               
contracted  hepatitis  C  at  the  remote  site,  though  it  was                                                               
remotely possible. The  board found in its  decision the checkbox                                                               
letter  to be  more  definitive than  the  expert testimony.  The                                                               
board  believed the  close temporal  relationship was  important,                                                               
even  though  the  experts  testified that  hepatitis  C  can  be                                                               
asymptomatic for a very long  time. The board's decision was also                                                               
based on the fact that the  employer could not prove the employee                                                               
contracted the disease elsewhere.                                                                                               
MS.  KNUDSEN said  in that  type  of a  situation, the  appellant                                                               
might  want to  ask the  commission to  reweigh the  evidence. In                                                               
that  case,  the other  co-worker  gave  permission for  his  lab                                                               
results  to be  presented to  the board,  which the  board cannot                                                               
compel.  Those  results showed  the  two  men to  have  different                                                               
genotypes  of  the   virus.    The  following   year,  the  board                                                               
determined  that  it  was  medically  impossible  for  the  first                                                               
employee  to   have  contracted  the  disease   [from  the  other                                                               
employee]. She  told members that  "medically impossible"  is not                                                               
the standard an employer has to meet.                                                                                           
MS.  KNUDSEN said  in the  next case  that she  looked at,  which                                                               
contained similar  characteristics with expert examination  and a                                                               
checkbox  letter,  the board  said  the  checkbox letter  had  no                                                               
indicia  of   reliability.  She   said  that   is  the   kind  of                                                               
inconsistency that will be addressed by the commission.                                                                         
SENATOR   OGAN   asked  Ms.   Knudsen   if   she  believes   that                                                               
inconsistency is due to the  structure of the existing system and                                                               
that Amendment 1 would undermine that.                                                                                          
MS. KNUDSEN  said she does.  The idea of the  CS is to  provide a                                                               
binding  level  of   review  by  experts  in  the   field  at  an                                                               
administrative  level before  the case  goes to  the courts.  DOL                                                               
feels the commission needs the  discretion to reweigh evidence or                                                               
to remand the case to the hearing panel to gather more evidence.                                                                
CHAIR SEEKINS asked what the commission  would do, if in the case                                                               
she  mentioned,  the   review  got  to  the   commission  and  it                                                               
questioned the decision based on the evidence.                                                                                  
MS. KNUDSEN  said she could  argue before the commission  that it                                                               
should remand the case to the  hearing panel for more evidence or                                                               
that the evidence should be reweighed.                                                                                          
CHAIR  SEEKINS asked  if the  commission  overturned the  hearing                                                               
panel's decision and the case  was appealed to the Supreme Court,                                                               
what the Supreme Court would review.                                                                                            
MS. KNUDSEN said the Supreme  Court would review the commission's                                                               
findings of fact.                                                                                                               
TAPE 04-38, SIDE B                                                                                                            
She continued  to explain  the commission would  be bound  by the                                                               
credibility  determinations, for  example  the  testimony of  the                                                               
worker, so the credibility determinations  would "go up" with the                                                               
commission's findings  of fact. The  Supreme Court would  look at                                                               
the  commission's findings  of fact  and determine  whether those                                                               
findings  were supported  with  substantial  evidence. She  added                                                               
that  in  that  case,  the   presumption  of  compensability  was                                                               
overcome and  "they are  in the mode  of weighing  the evidence."                                                               
She further  explained that would  not happen if  the presumption                                                               
of compensability was not overcome.                                                                                             
SENATOR FRENCH stated that if  the workers' compensation board is                                                               
making inconsistent  decisions, something  more than  an anecdote                                                               
would  prove Ms.  Knudsen's case.  He  asked her  to provide  the                                                               
committee with statistics showing the  decisions are all over the                                                               
map.  He then  commented  the current  system  is a  three-tiered                                                               
system:  workers'  compensation  board, Superior  Court,  Supreme                                                               
Court.  Because  people  see this  legislation  as  removing  the                                                               
middle  layer  of  review,  he   suggested  keeping  the  current                                                               
standard of  review in  place to increase  confidence in  the new                                                               
system for the time being. That  way, people will know what legal                                                               
rules and standard of review will  apply when they go in front of                                                               
the appeals commission.                                                                                                         
CHAIR SEEKINS took public testimony.                                                                                            
MR.  CHUCK   LUNDEEN  (ph),   chief  counsel   Liberty  Northwest                                                               
Insurance, said,  in response  to both  Mr. Giuchici  and Senator                                                               
French's  concern about  fairness, he  read the  proposed CS  and                                                               
finds that it  clearly states that there has to  be a full review                                                               
of all of the evidence at  the appeals commission level. He feels                                                               
fairness to both employers and employees  would be part of the de                                                               
novo  review  process.  Everyone  will   have  an  open  shot  at                                                               
reviewing a lower level decision  and reweighing the evidence. He                                                               
stated support for the bill but opposition to Amendment 1.                                                                      
MR.  MIKE  JENSEN  told members  he  represents  injured  workers                                                               
before  the workers'  compensation board  and in  the long  shore                                                               
workers  and federal  workers' compensation  system. He  noted he                                                               
submitted  written  testimony  to the  committee  expressing  his                                                               
concerns with the bill but further stated:                                                                                      
     The  amendment dealing  with the  credibility issue  is                                                                    
     .122.  The way  we  read the  credibility amendment  is                                                                    
     that  the hearing  panel will  only have  the power  to                                                                    
     determine the  credibility of testimony presented  by a                                                                    
     witness.  Now testimony  presented  by a  witness -  it                                                                    
     adds  the words  who appears  in a  hearing, which,  in                                                                    
     other words, means  that a hearing panel  will not have                                                                    
     the authority  to decide credibility issues  on anybody                                                                    
     who is not  present at the hearing,  whose testimony is                                                                    
     presented  through deposition  or  who submits  medical                                                                    
     reports.  So,  for  example,  treating  doctors,  their                                                                    
     credibility  could   not  be  determined   unless  they                                                                    
     testified  at  a  hearing.  Employer  experts  -  their                                                                    
     credibility  could   not  be  determined   unless  they                                                                    
     testified at  a hearing. Employers -  their credibility                                                                    
     could  not be  determined  unless they  testified at  a                                                                    
     hearing. And,  for that matter, injured  workers, their                                                                    
     credibility  could  also  not   be  determined  by  the                                                                    
     hearing panel  unless they testified  at a  hearing. By                                                                    
     leaving  the present  language in  the  current act  in                                                                    
     place, the hearing panel has  the power to consider the                                                                    
     weight  to  be  accorded witness  testimony,  including                                                                    
     medical  testimony  and  reports.  It  does  not  limit                                                                    
     itself to  those people  who testify  at a  hearing. We                                                                    
     think  that  change is  very  important,  not just  for                                                                    
     employees, but  also for  employers. What  we're trying                                                                    
     to prevent here is  the increasing costs that currently                                                                    
     injured  workers  have  to  bear  when  pursuing  their                                                                    
     compensation case. But, in effect,  and this is unusual                                                                    
     for me to say representing  injured workers, we're also                                                                    
     trying  to  save the  industry  some  of the  costs  by                                                                    
     adopting  these  changes  the  way we  see  it.    Both                                                                    
     parties will  have two bites  of the apple.  There will                                                                    
     be  no disincentive  to either  party to  go and  retry                                                                    
     their cases,  in effect, or re-present  their cases and                                                                    
     their  arguments to  the  commission.  I was  concerned                                                                    
     that it  would greatly increase  the amount of  time it                                                                    
     takes  to  resolve  a  claim,   which  is  in  nobody's                                                                    
     interest.  Number two,  it would  greatly increase  the                                                                    
     cost of  pursuing a claim,  which again is  in nobody's                                                                    
     interest.  In addition,  that's  just the  cost to  the                                                                    
     parties - in addition there's  the cost to the State of                                                                    
     Alaska  of creating  a new  bureaucracy that  this bill                                                                    
MR. JENSEN said in response to  the case Ms. Knudsen referred to,                                                               
bad facts  make bad law and  the legislature should not  make the                                                               
changes  dealing  with credibility  and  the  weight of  evidence                                                               
based upon one  case. There is no guarantee a  commission will be                                                               
any better.  Any changes  should be based  on empirical  data. He                                                               
said the current system is fair and he sees no need for change.                                                                 
CHAIR  SEEKINS  asked Ms.  Knudsen  if  it  is DOL's  intent,  in                                                               
relation to  section .122,  that the hearing  would not  have the                                                               
same opportunity  to weigh  the evidence of  a witness  that does                                                               
not  appear before  it, for  example,  testimony in  the form  of                                                               
reports or records.                                                                                                             
MS. KNUDSEN  said it  is not  the intent  to deprive  the hearing                                                               
panel  of  the  power  to exercise  its  authority  to  determine                                                               
credibility, whether that be through  depositions. The issue that                                                               
DOL was addressing  by inserting "at a hearing" was  not to limit                                                               
the hearing panel's authority but  to clarify that the witnesses'                                                               
right  to have  their  credibility determined  at  a hearing  was                                                               
protected  by that  credibility determination  being binding  all                                                               
the way up.  She said credibility determinations by  the trier of                                                               
fact are generally subject to a very high standard of review.                                                                   
SENATOR OGAN  asked for  a yes  or no answer  to the  question of                                                               
whether the witness must be present at the hearing.                                                                             
MS. KNUDSEN said the witness does  not have to be present to have                                                               
a credibility  determination by the  hearing panel. She  said the                                                               
words "at a  hearing" were included in response  to the Whiteside                                                               
CHAIR  SEEKINS maintained  that if  a person  appears before  the                                                               
panel, that panel is the sole determiner of credibility.                                                                        
MS.  KNUDSEN agreed  and said  the panel  is the  sole determiner                                                               
regardless, however if the person  appears before the panel, that                                                               
determination   is  binding   and  cannot   be  changed   by  the                                                               
CHAIR SEEKINS asked Mr. Giuchici if that was his understanding.                                                                 
MR.  GIUCHICI said  it was  not. He  questioned, if  that is  the                                                               
case, why the current language is unacceptable.                                                                                 
MS. KNUDSEN said the current law  does two things in one statute.                                                               
It addresses  credibility and it addresses  the conclusiveness of                                                               
a finding of fact that being  the weight assigned by the board to                                                               
particular evidence.  Credibility and weight  differ; credibility                                                               
goes to truthfulness while weight is  based not only on truth but                                                               
on opinion.  Lay witnesses  can also  have honest  differences in                                                               
perception or  recall without  those differences  impacting their                                                               
credibility. She said  the credibility issue is  not disturbed in                                                               
the proposed CS.                                                                                                                
SENATOR THERRIAULT pointed to Section 61  on page 37 and said the                                                               
language could be clarified.                                                                                                    
MS. KNUDSEN said she would take a look at rewriting it.                                                                         
CHAIR SEEKINS asked Ms. Knudsen  to tell members what standard is                                                               
used in  a jury's finding in  a civil action, which  Mr. Giuchici                                                               
referred to.                                                                                                                    
MS.  KNUDSEN  said the  Supreme  Court's  standard of  review  in                                                               
relation to the  workers' compensation board is  that the Supreme                                                               
Court  upholds the  findings of  fact of  the board  if they  are                                                               
supported by substantial evidence in  light of the entire record.                                                               
Substantial  evidence is  evidence that  is relevant  and that  a                                                               
reasonable mind might expect to support the conclusion.                                                                         
CHAIR  SEEKINS  jested  that  everyone who  agrees  with  him  is                                                               
MS. KNUDSEN  said different  standards apply  to overturn  a jury                                                               
verdict. For a new trial, there  must have been such slight or no                                                               
evidence to  support the  jury verdict.  For a  directed verdict,                                                               
the standard is  something that no reasonable  minds could differ                                                               
CHAIR SEEKINS asked Ms. Knudsen if  DOL's intent was to not allow                                                               
the determination  of the credibility  of a witness  who appeared                                                               
before a hearing panel to be questioned at a higher level.                                                                      
MS. KNUDSEN said  that is correct because the  witness's right is                                                               
being protected.                                                                                                                
SENATOR FRENCH asked Ms. Knudsen,  as she works on that language,                                                               
to  address  the  credibility determination  with  respect  to  a                                                               
deposition or medical report. He  then said that Amendment 1 does                                                               
that  well and  will give  people confidence  that the  hard work                                                               
done at the trial level  in the workers' compensation system will                                                               
not be tampered with as it moves up the chain.                                                                                  
CHAIR  SEEKINS   commented  that  everyone  wants   justice,  not                                                               
something to be tampered with.                                                                                                  
SENATOR FRENCH  acknowledged that  "tampering" was a  poor choice                                                               
of words.                                                                                                                       
MS.  KNUDSEN asked  that  Mr.  Nordstrand speak  to  the "at  the                                                               
hearing" issue.                                                                                                                 
MR. SCOTT  NORDSTRAND, Deputy  Attorney General,  Civil Division,                                                               
Department of Law,  said that phrase goes to the  theory that the                                                               
determination of credibility  of a witness should  be deferred to                                                               
the people who  actually see the witness and  watch the witness's                                                               
reaction to  questions in the  courtroom. He said in  contrast, a                                                               
deposition  can  be in  written  transcript  form or  a  pre-made                                                               
video, which is the reason  for the distinction between witnesses                                                               
who  give  testimony   in  person.  He  suggested   that  a  good                                                               
compromise would be  to remove "at the hearing" so  as to include                                                               
depositions  and  reports. He  noted  that  differs from  Senator                                                               
French's  amendment because  it  addresses  both credibility  and                                                               
CHAIR SEEKINS  referred to  the second  sentence of  Amendment 1,                                                               
"When credibility is disputed,  the hearing panel's determination                                                               
of  credibility  must be  supported  by  specific findings,"  and                                                               
asked if  the panel  would have to  support its  determination of                                                               
credibility based on findings  when determining credibility among                                                               
witnesses whose testimony conflicts.                                                                                            
MR. NORDSTRAND said that is correct  and explained that to get to                                                               
the deferential  standard, the  panel must  give reasons  for its                                                               
credibility  determination. Under  the  existing  system, if  the                                                               
facts  are  not  there,  the  Supreme  Court  can  overturn  that                                                               
CHAIR  SEEKINS  asked  Mr. Giuchici  his  understanding  of  that                                                               
MR.  GIUCHICI said  he still  does not  understand why  the words                                                               
"who appears at a hearing" must be included.                                                                                    
CHAIR  SEEKINS  noted Mr.  Nordstrand  suggested  that phrase  be                                                               
removed. He  then said  it appears that  this section  deals with                                                               
the  process before  the hearing  panel, not  the review  process                                                               
later on.                                                                                                                       
MS. KNUDSEN said that is correct.                                                                                               
CHAIR  SEEKINS   asked  if  [the  current   board]  supports  its                                                               
determinations of  credibility with  findings when  two witnesses                                                               
are in opposition.                                                                                                              
MR. GIUCHICI said absolutely.                                                                                                   
CHAIR  SEEKINS  said in  effect,  the  CS codifies  the  existing                                                               
MS.  KNUDSEN affirmed  that  is correct.  She  noted the  Supreme                                                               
Court brought this issue to the fore in the Hawk (ph) case.                                                                     
SENATOR THERRIAULT asked Ms. Knudsen  if she added that phrase in                                                               
response to a particular court case.                                                                                            
MS. KNUDSEN  said it  was added because  of DOL's  concerns about                                                               
the Whitesides case,  however she does not  believe removing that                                                               
phrase will  impair the  hearing panel's  ability to  comply with                                                               
CHAIR SEEKINS  asked if, in  the second sentence of  Amendment 1,                                                               
the credibility dispute must be confined to the hearing process.                                                                
MS. KNUDSEN said that is correct  and is simply a codification of                                                               
the current state of the law.                                                                                                   
CHAIR  SEEKINS asked  if removing  the  words "who  appears at  a                                                               
hearing" will do any damage to DOL's intent.                                                                                    
MS. KNUDSEN said it will not.                                                                                                   
The  committee  took   a  3-minute  recess  at   9:35  a.m.  Upon                                                               
reconvening,  Senators   French,  Therriault  and   Seekins  were                                                               
CHAIR SEEKINS asked both Mr.  Giuchici and Mr. Nordstrand if they                                                               
were agreeable  to that  change, as well  as changing  the second                                                               
sentence  of Amendment  1 by  adding "before  the hearing  panel"                                                               
after  "disputed". He  said that  would confine  this process  to                                                               
what happens in front of the hearing panel.                                                                                     
MR.  GIUCHICI said  he is  comfortable with  that language,  with                                                               
Section .122                                                                                                                    
MR. NORDSTRAND was also agreeable to that change.                                                                               
CHAIR SEEKINS  announced a brief  recess to await the  arrival of                                                               
other  members.  Upon  reconvening,  members  discussed  amending                                                               
Amendment  1,  made  several  attempts to  do  so  and  discussed                                                               
rewriting Amendment 1 altogether for the purpose of clarity.                                                                    
TAPE 04-39, SIDE A                                                                                                            
A roll  call vote was taken  on Amendment 1. The  motion to adopt                                                               
Amendment 1  failed with Senators  Ellis and French in  favor and                                                               
Senators Ogan, Therriault and Seekins opposed.                                                                                  
SENATOR THERRIAULT  moved to adopt  Amendment 2, to  rewrite Sec.                                                               
122 on lines 26 through 29 on page 37 to read:                                                                                  
     Sec. 23.30.122 Credibility of witnesses. The hearing panel                                                               
has  the sole  power to  determine the  credibility of  testimony                                                               
presented  by  a  witness.  When credibility  is  disputed  in  a                                                               
procedure before the hearing panel,  the panel's determination of                                                               
credibility must be supported by specific findings.                                                                             
CHAIR  SEEKINS announced  that Amendment  2 was  adopted with  no                                                               
SENATOR  FRENCH  moved  to  adopt Amendment  3,  which  reads  as                                                               
follows. [Amendment  3 contains the  content of lines  10 through                                                               
22 of Amendment 1. Page and line numbers will need correction.]                                                                 
                      A M E N D M E N T  3                                                                                  
Page 41, line 4:                                                                                                                
     Delete ", hearing panel,"                                                                                                  
Page 41, lines 5-10:                                                                                                            
     Delete "Unless not supported by specific findings, a                                                                       
hearing panel's  findings regarding the credibility  of testimony                                                               
of  a witness  who  appeared in  the hearing  is  binding on  the                                                               
commission, but  all other findings,  including the weight  to be                                                               
accorded medical testimony  and reports, may be set  aside by the                                                               
commission. The findings  of the hearing panel, if  not set aside                                                               
by the commission, are conclusive."                                                                                             
     Insert "When reviewing decisions of a hearing panel, the                                                                   
commission  shall  use  the  same  standard  of  review  as  that                                                               
established by the Alaska Supreme  Court in workers' compensation                                                               
SENATOR THERRIAULT objected for the purpose of discussion.                                                                      
SENATOR FRENCH told members the thrust  of Amendment 3 is to have                                                               
the  appeals  commission use  the  Superior  Court's standard  of                                                               
review; the  Supreme Court would  retain its standard  of review.                                                               
He said that will give the  players in the system confidence that                                                               
the  same  legal  standards  that   apply  now  to  the  workers'                                                               
compensation board will apply in the future.                                                                                    
MR.  GIUCHICI  said   that  is  the  intent   of  the  claimants,                                                               
representatives and labor folks he has spoken with.                                                                             
MS.   KNUDSEN  pointed   out  that   Amendment  3   creates  some                                                               
incongruity  because the  director  of the  division of  workers'                                                               
compensation  makes  some  decisions. Senator  French's  proposal                                                               
would  not apply  to those  decisions while  the hearing  panel's                                                               
decisions would  be subject  to a  different standard  of review.                                                               
She advised that  the administrative system will have  to work as                                                               
a whole. In that system, the  commission will be the top decision                                                               
maker, therefore  the commission's  findings should  be subjected                                                               
to the  deference accorded  by the courts  to the  final decision                                                               
maker in an administrative proceeding.  She emphasized this is an                                                               
administrative/agency  system, not  a court  system, so  the same                                                               
basic  principles  of  administrative  law should  apply  to  the                                                               
entire system.                                                                                                                  
CHAIR SEEKINS  said Amendment 3  would apply  to a review,  not a                                                               
MS. KNUDSEN  said that is  correct. No new hearing,  testimony or                                                               
trial  is contemplated.  In that  respect, it  is very  different                                                               
from  the  court system  because  it  can  hold an  entirely  new                                                               
MR. GIUCHICI responded:                                                                                                         
     I disagree with  Kris in the respect  that the director                                                                    
     has administrative  decisions made and that's  all fine                                                                    
     with  us   with  self-insured  certificates   and  that                                                                    
     nature. The panel still [indisc.]  jury in the decision                                                                    
     making  process so  I just  think that  those types  of                                                                    
     acts  should  be reserved  and  not  confused with  the                                                                    
     director's [indisc.].                                                                                                      
     I think that the  director doing administrative work is                                                                    
     totally separate from the hearing  panel that is acting                                                                    
     as  a sort  of jury  and coming  up with  decisions for                                                                    
     lawyers and plaintiffs.                                                                                                    
10:00 a.m.                                                                                                                      
CHAIR SEEKINS asked  if Amendment 3 is a restatement  of what the                                                               
committee  just  discussed  about the  hearing  panel's  findings                                                               
being binding on the commission.                                                                                                
MS. KNUDSEN said it is the  original language of the bill and was                                                               
intended to  restate the requirements  in section .122.  With the                                                               
adoption  of  Amendment 2,  the  deletion  would not  affect  the                                                               
requirement  of specific  findings that  need to  be made  by the                                                               
commission.  She  clarified  that  it  is  a  redundancy  but  is                                                               
intended  to  re-emphasize  that  the  hearing  panel  determines                                                               
SENATOR  THERRIAULT asked  Senator French  why he  would want  to                                                               
delete the phrase, "Unless not  supported by specific findings, a                                                               
hearing panel's  findings regarding the credibility  of testimony                                                               
of  a witness  who  appeared in  the hearing  is  binding on  the                                                               
commission," since  the committee had a  lengthy discussion about                                                               
the fact that the determination  of credibility would be binding.                                                               
He  thought  leaving that  language  intact  would provide  extra                                                               
SENATOR  FRENCH  responded  by  saying he  did  not  prepare  the                                                               
amendment  himself, but  the crucial  issue is  the weight  to be                                                               
accorded medical  testimony and the other  findings. He explained                                                               
that the  heart of the  issue is that  the winning side  does not                                                               
"get some cement,  if you will, poured over that  win and then it                                                               
goes forward under a tighter standard of review."                                                                               
He then moved to amend Amendment 3 to delete (on lines 14-16):                                                                  
                    AMENDMENT TO AMENDMENT 3                                                                                
     Delete "Unless  not supported  by specific  findings, a                                                                    
     hearing  panel's finings  regarding the  credibility of                                                                    
     testimony of a  witness who appeared in  the hearing is                                                                    
     binding on the commission,"                                                                                                
     And begin Amendment 3 with the word "but" on line 16,                                                                      
CHAIR SEEKINS  referred to line  31 on page  40 of version  D and                                                               
noted the phrase, "unless not  supported by specific findings" is                                                               
not in version D.                                                                                                               
SENATOR FRENCH  offered to redraft  Amendment 3 and  withdrew his                                                               
motion to adopt it.                                                                                                             
10:10 a.m.                                                                                                                      
CHAIR SEEKINS agreed and recessed the meeting until 5:30 p.m.                                                                   

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