Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/05/2017 01:30 PM JUDICIARY

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Audio Topic
01:37:59 PM Start
01:39:20 PM Confirmation Hearings
02:06:43 PM SB15
02:19:35 PM SB29
03:00:56 PM Confirmation Hearings
03:01:47 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearings: TELECONFERENCED
Jason Wilson, State Board of Parole
Nora Barlow, Violent Crimes Compensation Board
Joyce Anderson, Select Committee on Legislative
Deborah Fancher, Select Committee on Legislative
Lee Holmes, Select Committee on Legislative
Heard & Held
-- Public Testimony --
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Heard & Held
         SB  29-REPEAL WORKERS' COMP APPEALS COMMISSION                                                                     
2:1229:35 PM                                                                                                                  
CHAIR COGHILL  announced the  consideration of  SB 29  and stated                                                               
his  intention to  take public  testimony. He  asked Commissioner                                                               
Drygas if the bill has a companion.                                                                                             
2:20:25 PM                                                                                                                    
HEIDI  DRYGAS, Commissioner,  Department of  Labor and  Workforce                                                               
Development  (DOLWD), Juneau,  Alaska, said  the House  Judiciary                                                               
Committee passed  a committee substitute  (CS) at the  request of                                                               
the Court System. The changes were technical in nature.                                                                         
SENATOR  MEYER asked  if the  $443,000 savings  reflected in  the                                                               
fiscal note is a savings to the designated general fund.                                                                        
COMMISSIONER DRYGAS  said that's correct; the  money would remain                                                               
in  the  Workers'   Safety  Compensation  Administration  Account                                                               
(WSCAA).  It is  a  designated general  fund  account that  funds                                                               
several of  the department's  programs for  workers' compensation                                                               
and occupational safety and health.                                                                                             
SENATOR MEYER  observed that  this would not  have any  impact on                                                               
the budget.                                                                                                                     
COMMISSIONER DRYGAS  said it should  not impact  the undesignated                                                               
general fund  budget, but  it will save  the state  money because                                                               
the  department  will  spend  $440,000  less.  The  Court  System                                                               
submitted a zero fiscal note  indicating that it could absorb the                                                               
additional caseload.  She noted that  the WSCAA account  is being                                                               
drained at a faster rate than  it is being replenished due to the                                                               
programs  the legislature  tasked the  department to  run without                                                               
additional funding.  The workers'  compensation fraud unit  is an                                                               
SENATOR  MEYER commented  that this  change gives  the department                                                               
$440,000 to use elsewhere.                                                                                                      
COMMISSIONER DRYGAS said  that's correct but it must  be used for                                                               
workers' safety programs.  She added, "If we were  to deplete our                                                               
WSCAA  funding, we  wouldn't have  to augment  that funding  with                                                               
undesignated general fund monies."                                                                                              
SENATOR MEYER asked how the WSCAA  account is funded and who pays                                                               
for it.                                                                                                                         
COMMISSIONER DRYGAS deferred budget questions to Paloma Harbour.                                                                
2:27:18 PM                                                                                                                    
PALOMA  HARBOUR, Director,  Division of  Administrative Services,                                                               
Department of  Labor and  Workforce Development,  Juneau, Alaska,                                                               
explained   that  funding   the   Workers'  Safety   Compensation                                                               
Administration  Account  is  part of  the  workers'  compensation                                                               
costs for an employer. Payments are  based on a percentage of the                                                               
workers' compensation  premiums written from  insurance companies                                                               
and self-insured employers. Responding  to an additional question                                                               
she said  that freeing  up this  money will  help the  WSCAA fund                                                               
last longer.                                                                                                                    
SENATOR  MEYER said  he initially  thought this  would show  as a                                                               
savings to the overall budget.                                                                                                  
SENATOR  WIELECHOWSKI  pointed out  that  the  costs to  run  the                                                               
commission will go  away if appeals are returned  to the superior                                                               
court.  Those monies  can  then  be used  for  things within  the                                                               
Department of Labor and Workforce  Development (DOLWD) or go back                                                               
to the general fund.                                                                                                            
MS.  HARBOUR said  in FY2013  the  department moved  some of  the                                                               
workers' safety programs onto  unrestricted general funds because                                                               
of a  fund insufficiency  in the WSCAA  account. Doing  away with                                                               
the  commission will  prevent the  department from  having to  do                                                               
that in the  future. "We're looking at a  three-year cliff before                                                               
we're out  of balance in this  account and unable to  support the                                                               
other programs."                                                                                                                
COMMISSIONER DRYGAS  added that  when the commission  was created                                                               
in 2005,  the department  was required to  use existing  funds to                                                               
stand up that component as well as  the fraud unit. It has been a                                                               
significant drain on the WSCAA funds.                                                                                           
2:31:44 PM                                                                                                                    
CHARLES L.  BRADY, President, Workers' Compensation  Committee of                                                               
Alaska; and Workers' Compensation  Manager, Arctic Slope Regional                                                               
Corporation,  Anchorage,   Alaska,  said  he  is   testifying  in                                                               
opposition to  SB 29 and  he submitted written testimony  to that                                                               
effect on behalf  of WCCA in March. The foremost  concern is that                                                               
returning  appeals   to  the  superior  court   would  result  in                                                               
significant delays. The assumption  is that workers' compensation                                                               
cases  would be  given lower  priority than  all other  cases. He                                                               
estimated it could take  up to 18 months to get  a case heard and                                                               
that  the  litigation would  be  a  long, drawn-out  process.  He                                                               
opined  that the  cases would  ultimately  end up  in the  Alaska                                                               
Supreme Court.                                                                                                                  
2:35:03 PM                                                                                                                    
DAVID  HALE,   representing  Hale   and  Associates   and  Alaska                                                               
Independent  Insurance  Agents  and Brokers,  Anchorage,  Alaska,                                                               
said he  is testifying  in opposition  to SB 15.  He said  he has                                                               
been in  the insurance business  for more  than 30 years  and his                                                               
recollection  is  that  before  the commission  was  created  the                                                               
process was  cumbersome for both  the employer and  the insurance                                                               
carrier. He said  if the current process satisfies  50 percent of                                                               
the cases it's  worth keeping. He suggested  tweaking the current                                                               
process so  that 75  percent of the  claimants are  satisfied. He                                                               
predicted that returning the appeals  to the superior court would                                                               
add costs and  time delays to both the carrier  and the employer.                                                               
The time  delay of up  to 18  months would also  disadvantage the                                                               
employee. He  concluded saying, "I'd  hate to  see us go  back to                                                               
where we were prior to '05."                                                                                                    
CHAIR  COGHILL  asked  if  he  said that  part  of  the  workers'                                                               
compensation assessment  is designated for  workers' compensation                                                               
MR. BRADY  said yes; the tax  on each premium goes  to the state.                                                               
"That's where this funding comes from for that $440,000."                                                                       
CHAIR COGHILL commented that that  is the designated general fund                                                               
Senator Meyer spoke of.                                                                                                         
MR. BRADY agreed.                                                                                                               
SENATOR MEYER asked  how long it takes under  the current process                                                               
to get a case resolved.                                                                                                         
MR.  BRADY  replied  it  depends   of  the  availability  of  the                                                               
committee, but it can be one or two months.                                                                                     
2:38:18 PM                                                                                                                    
CONSTANCE  LIVSEY,  Attorney,  Burr  Pease  &  Kurtz,  Anchorage,                                                               
Alaska,  said she  is  speaking in  opposition to  SB  29 and  in                                                               
support  of   maintaining  the  commission.  She   said  she  has                                                               
practiced  workers' compensation  law in  Alaska since  1988. She                                                               
has  experience with  both  the superior  court  and the  appeals                                                               
commission process  and the  latter has  far more  advantages for                                                               
practitioners.  Specifically,   the  advantages   are  knowledge,                                                               
experience, and consistency. The  commissioners know this area of                                                               
law,  whereas  superior  court  judges do  not.  "This  is  terra                                                               
incognita to  them." The  results under  the former  process were                                                               
inconsistent  and  non-precedential  and appeals  to  the  Alaska                                                               
Supreme Court were much more inevitable.                                                                                        
MS. LIVSEY opined that the projected  cost savings in the bill is                                                               
an  illusion because  there will  be more  appeals to  the Alaska                                                               
Supreme Court.  She noted that  Ms. Meade testified in  the other                                                               
body that this would be an  added workload for the superior court                                                               
and these  cases would not  take precedence. She opined  that the                                                               
precedential value of the appeals  commission decisions over time                                                               
create a body of law that  helps make cases before the board more                                                               
predictable, helps  employees and  employers understand  the law,                                                               
and  has generally  brought about  a more  efficient, economical,                                                               
and streamlined adjudication process.                                                                                           
CHAIR COGHILL, noting  that superior court decisions  do not have                                                               
precedential   value,  asked   her  to   comment  of   the  value                                                               
MS.  LIVSEY   said  the  fact   that  commission   decisions  are                                                               
precedential  adds  consistency  to  the body  of  law  and  adds                                                               
consistency and  predictability to  the proceedings at  the board                                                               
CHAIR COGHILL  asked how often  there were  preemptory challenges                                                               
prior to 2005 and if that accounted for the lengthier process.                                                                  
MS.  LIVSEY  said  she  does  not  recall  a  lot  of  preemptory                                                               
challenges of  judges; the delays  were a matter of  the workload                                                               
and the fact that the cases can be complex.                                                                                     
2:45:56 PM                                                                                                                    
CHARLES   MCKEE,   representing   himself,   Anchorage,   Alaska,                                                               
testified in  opposition to  SB 29.  He read  excerpts of  the 10                                                               
page document he wrote. He  characterized himself as a victim and                                                               
debt slave. He  asserted that the conversion  is unlawful because                                                               
it is done without full disclosure.                                                                                             
2:49:39 PM                                                                                                                    
ANDREW   HEMENWAY,  representing   himself,  Anchorage,   Alaska,                                                               
advised that  he is speaking  on SB 29 on  his own behalf  as the                                                               
former chair of the Workers'  Compensation Appeals Commission. He                                                               
noted that  the testimony in support  of the bill has  been based                                                               
on  the financial  benefits and  the notion  that the  commission                                                               
decisions tended to favor one  party over the other. He suggested                                                               
that a  possible solution is  to place the  workers' compensation                                                               
appeals  in  the Office  of  Administrative  Hearings. That  body                                                               
conducts  hearings   at  the  trial   level  like   the  Workers'                                                               
Compensation Board.  It has  a good  reputation for  fairness and                                                               
impartiality. That  is one way  to address the  fairness concerns                                                               
in  the workers'  compensation  community. He  said  that can  be                                                               
addressed   in  several   ways   some  of   which  would   entail                                                               
restructuring the commission.  Providing preemptory challenges to                                                               
the administrative  law judge  (ALJ) assigned  to the  case would                                                               
provide an outlet for people who  feel that one side or the other                                                               
is being favored.                                                                                                               
Regarding  impacts  on  the  process, he  said  it  is  generally                                                               
recognized that  the court system  will not be able  handle these                                                               
appeals as quickly  as the appeals commission. That  will have an                                                               
impact on all the parties. Also,  because it is common for pro se                                                               
litigants  to appear  before the  appeals  commission, they  will                                                               
receive more help from staff there than from the superior court.                                                                
He said the consistency that  was mentioned in previous testimony                                                               
is  the  result of  the  appeals  commission having  precedential                                                               
value. That  is an  important aspect  that would  be lost  if the                                                               
appeals  are  returned  to  superior court.  The  last  point  is                                                               
regarding the lay commissioners. They  are not attorneys, so they                                                               
are  not as  knowledgeable about  the arcane  intricacies of  the                                                               
law,  but  they provide  valuable  insights  and a  common  sense                                                               
MR. HEMENWAY  suggested the legislature consider  the alternative                                                               
approach  of sending  the appeals  to a  forum in  the Office  of                                                               
Administrative Hearings.  If the  legislature instead  decides to                                                               
send these  appeals back to  the superior court,  the legislation                                                               
should  include  a  provision  that  gives  the  decisions  of  a                                                               
superior court  judge the same  degree of precedential  value for                                                               
administrative proceedings that the appeals commission has now.                                                                 
2:55:47 PM                                                                                                                    
SENATOR COSTELLO asked what percentage  of the appeals commission                                                               
cases are reversed by the Alaska Supreme Court.                                                                                 
MR.  HEMENWAY recalled  that of  250 published  decisions by  the                                                               
Alaska Workers'  Compensation Appeals Commission, about  100 have                                                               
gone to  the Alaska Supreme Court.  About 30 of those  cases were                                                               
the subject  of an  Alaska Supreme Court  opinion and  about half                                                               
were reversed. Initially,  the court reversed quite a  few of the                                                               
appeals commission decisions, but in  more recent years they have                                                               
been upheld more  often than not. He added that  the record shows                                                               
that when  the superior court  was the initial appellate  body it                                                               
had a  similar track record; of  the cases that were  the subject                                                               
of a  decision, 10-15 percent  of the decisions were  reversed on                                                               
2:58:26 PM                                                                                                                    
SENATOR WIELECHOWSKI asked how many  cases the appeals commission                                                               
hears each year.                                                                                                                
MR. HEMENWAY estimated 15 to 20 per year.                                                                                       
SENATOR  WIELECHOWSKI  calculated  the  cost  under  the  current                                                               
process. "So, we're doing 15-20  per year and we're paying nearly                                                               
$0.5 million for  that when the superior court could  be doing it                                                               
for nothing;  and there is  roughly a 50 percent  reversal rate."                                                               
He asked if that's accurate.                                                                                                    
MR. HEMENWAY  clarified that the  reversal rate is  calculated on                                                               
the total body of decisions. That  is about 10-15 percent. Of the                                                               
cases that  were decided  by the Alaska  Supreme Court,  both the                                                               
superior  court and  the appeals  commission were  reversed about                                                               
half the  time. He added  that most of  the cases are  settled or                                                               
dismissed  before a  final  decision and  in  that situation  the                                                               
appeals commission decision stands.                                                                                             
SENATOR WIELECHOWSKI asked if it's  common for administrative law                                                               
judges to hear appeals of lower body decisions.                                                                                 
MR. HEMENWAY  said no;  their function  is largely  equivalent to                                                               
the Workers' Compensation Board.                                                                                                
CHAIR COGHILL held SB 29 in committee for further review.                                                                       

Document Name Date/Time Subjects
Anderson - Select Committee on Legislative Ethics.pdf SJUD 4/5/2017 1:30:00 PM
Barlow - Violent Crimes Compensation Board.pdf SJUD 4/5/2017 1:30:00 PM
Holmes - Select Committee on Legislative Ethics.pdf SJUD 4/5/2017 1:30:00 PM
Wilson - State Board of Parole.pdf SJUD 4/5/2017 1:30:00 PM
SB 15 - Letter of Support - Mudd.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 15 - Letter of Opposition - McDonald.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 15 - Supporting Document - E-Cigarettes and Public Policy.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 15 - Letter of Opposition - Mapes.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 15 - Supporting Document - FDA Regualtions.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 15 - Letter of Support - Mat-Su Health Foundation.pdf SJUD 4/5/2017 1:30:00 PM
SB 15
SB 29 - Letter of Opposition - WCCA.pdf SJUD 4/5/2017 1:30:00 PM
SB 29
SB 29 - Letter of Opposition - Floerchinger.pdf SJUD 4/5/2017 1:30:00 PM
SB 29