Legislature(2003 - 2004)
03/04/2004 01:32 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM CHAIR CON BUNDE called the Senate Labor and Commerce Standing Committee meeting to order at 1:32 p.m. Present were Senators Gary Stevens, Ralph Seekins, Hollis French and Chair Con Bunde. Senator Bettye Davis was excused. The first order of business to come before the committee was SB 311. MR. DOUGLAS L. SMITH, Arctic Slope Regional Corporation, Energy Services Division, supported SB 311 as it is written. "It does not sway the advantage to either company or employee, but, in fact, favors both." He did not have a copy of the proposed amendment. CHAIR BUNDE said a copy of the amendment was being faxed to him. MR. MIKE JENSEN, Anchorage attorney who specializes in representing injured workers in Alaska workers' compensation claims, said he has 20 years of experience in this area and three other attorneys, Chancy Croft, Joe Calamites and Steven Constantino have extensive experience as well. They have all looked at the proposed amendment and have some concerns. We do not feel the current system is broken and should be fixed, especially if it means creating a new bureaucracy that is estimated to cost in excess of $700,000 a year more than the current system. The current system does provide for a representative of industry and a representative of labor. These proposed amendments would take that away - so that the decision maker would be solely a hearing officer at the initial administrative level and then three commissioned members who are selected by the administration. As far as the current system and expediency, we do not think the amendments would add anything as far as expediency. The current system issues over 300 opinions per year. Of those, only 10 percent are ever appealed to the courts. Of those 10 percent, I would say only a third are ever reversed. In other words of the minority of appeals that are taken to the courts, the vast majority of those appeals wind up affirming what the board has done. As far as the time concerns that the administration pointed out, they did cite the case of Bradbury v. Chugach Electric. That was the case in which I represented Mr. Bradbury whose wife died at work. The administration states that the time [indisc.] as the reason for making these proposed changes. I should point out to Mr. Chairman and the other members of the committee...that decision, first of all, it wasn't 1,400 days. The administration was off by about a half a year and, of that time, over a third, if not more, was spent between the Superior Court waiting for the Supreme Court to issue its decision. As far as the board was concerned, it heard the case within six to nine months after the claim was filed and we don't see how creating an appeals commission would in any way speed that process up. But, if the appeals commission is a good amendment to adopt, we feel it could be improved to make it less political in that we would urge the committee to require that the appeals commission have at least one representative who has experience with the practice of law representing industry and then let the other representative or member with experience represent labor. Then, of course, the third member could be either way. At least that way, there would be an assurance that at least depending upon who is in the administration, Democrat or Republican, that at least one representative of industry is always there as well as one representative of labor. It would thereby take out what I feel would otherwise politicize the commission. In addition, we would propose that the commission members be given terms of up to a minimum of five years. That, again, would foster the idea of depoliticizing the commission. In addition, it would enlarge the pool of applicants that the administration could choose from in selecting commission members, because with five years, it's my understanding that the commission member would be vested in the PERS system thereby making it more attractive for members to be found. There are some other changes that we would propose. As far as at the hearing level, we would recommend that instead of having the decision decided strictly by one hearing officer, that these cases be heard as the board is currently constituted with a representative of industry again and a representative of labor again with a hearing officer on that board. That would insure, again, that this process remains neutral, that it remains fair to both sides and that it depoliticizes the system. MR. JENSEN said additional changes were stated in a letter that would be sent to the Legislature as soon as the other three lawyers had signed off on it. It asks that intent language states that nothing in the amendment changes the substance of law - clarifying that the changes are strictly procedural and, thereby, avoiding additional unnecessary litigation. In addition, I think that if attorney's fees could be limited to $400 without obtaining board or director approval of fees, that would allow a lot of needless litigation in that currently a lot of unrepresented injured workers are unable to get the advice of an attorney and then wind up filing claims that need to be litigated by industry. By allowing these workers to at least seek the advice of competent counsel, may avoid filing any unnecessary litigation that it caused from misinformation and misunderstanding of the act. He said these changes would make a much fairer system and protect the interests of both industry and labor and depoliticize the system. He also understands that the ad hoc committee was not involved in the proposed changes and now that they are involved he thought: By creating a permanent workers' compensation advisory council... with two members from industry and two members from labor, as well as the members from the guaranty association, the public or the Division of Insurance might assist the Legislature in getting competent advice and proposals to act upon. MR. DON GRAY, Claims Administrator, Arctic Slope Regional Corporation, supported SB 311 as written and without the amendment. [Indisc.] MR. DENNIS MELLINGER, Arctic Slope, supported SB 311. MS. LAURA JACKSON, Claims Manager, University of Alaska, said she is also a member of the Multidisciplinary Insurance Association of Alaska and past president of the Alaska Adjusters Association. She is currently on the board of the Workers' Compensation Committee of Alaska and a member of the ad hoc committee. She said she was testifying on her own behalf today as a person who has assisted people through the Alaska Workers' Compensation system for over 17 years. I am here to tell you that the Workers' Compensation system in Alaska is broken. It is cumbersome, confusing, slow-moving and not user friendly to either the employer or the employee. The recommended changes will simplify and clarify the process. Replacing the delays due to the lengthy Superior Court appeals process with an appeals commission comprised of people knowledgeable about the act and the process will speed the resolution of the disputes. In addition, in response to Senator French's amendment, the decisions that come out of Superior Court are inconsistent as have been the decisions that come out of the board, itself, and their panels. I believe that people specifically knowledgeable about the act and the act as it was intended by the Legislature, you our representatives, when it was promulgated, that it would be a more consistent fair and expeditious process being heard by people who understand and know the act and are familiar with it. It is my belief that in short order we will all find a workers' compensation system that will indeed be more efficient and predictable. Therefore, it will decrease the cost to employers and the time delay to employees and more importantly result in fair and adequate compensation to our injured workers. MS. JACKSON "put on her ad hoc hat" to read a letter into the record from the Alaska Labor Management Ad Hoc Committee on Workers' Compensation, dated March 4, 2004, addressed to Speaker of the House, Pete Kott, and Senate President, Gene Therriault. Gentlemen: The Ad Hoc Committee, which consists of representatives from industry and labor historically has met periodically to address issues that affect substantive changes, issues that affect benefits in the Workers' Compensation Act. In January, management and labor decided that time had come to address such issues again. In the meantime, the administration proposed SB 311 and HB 450, which deal with procedural issues, issues regarding the makeup and management of the board. Although the Ad Hoc Committee had never dealt with such issues previously, labor recommended the Ad Hoc Committee consider the bill. The committee reached agreement on sections of the bill that refer to the Guaranty Fund, capping out-of-state workers' compensation at what the employees would have earned in-state, placing administrative responsibilities formerly rested in the board with the Workers' Compensation Division director, uninsured penalties and replace the Superior Court with an appeals commission. The committee has scheduled no further meetings on the issue. We do, however, anticipate meeting in the future on substantive issues of concern to both management and labor. Sincerely, Judith A. Peterson, President, WCCA Kevin Dougherty, Alaska Laborers Members of the Ad Hoc Committee MR. KEVIN DOUGHERTY, Co-Chair, Ad Hoc Committee, said he is attorney for the Alaska District Council of Laborers and that they did reach agreement on the Guaranty Fund and the non- resident cost of living adjustment and agreed to preserve the board as it is, but have an appeals commission replace the Superior Court and added some uninsured employer penalties of a civil nature. They hadn't agreed on a number of issues and he suggested that those items not move forward. I would like to point out that the Ad Hoc Committee has been in place for about 23 years. After legislation that we have worked on jointly with the employer, the decreases in premiums have added up to over 40 percent decrease in premiums. During that time, our goal has been to retain benefits and we go at it in the same sphere as here. So, it is critical that the administration's bill does nothing to impact benefits. That's, of course, why my organization, the Alaska Laborers, are opposed to section 9 of the bill and opposed to section 10 of the bill, which would have wiped out the bill. But, fortunately, we have the news to report to you, as Ms. Jackson said, that we do have agreement on five solid issues which we hope will help the act overall. CHAIR BUNDE asked if anyone else wanted to testify on SB 311. Seeing no one, he closed public testimony. SENATOR FRENCH moved amendment 1. 23-GS2023\A.1 Craver A M E N D M E N T 1 OFFERED IN THE SENATE BY SENATOR FRENCH TO: SB 311 Page 1, lines 10 - 11: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 1, line 12: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 2, lines 5 - 6: Delete "providing for supreme court jurisdiction of appeals from the Workers' Compensation Appeals Commission;" Page 5, line 22: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 5, line 24: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 6, line 1: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 7, lines 21 - 22: Delete "Workers' Compensation Appeals Commission" Insert "workers' compensation hearings office" Page 7, line 27, through page 11, line 2: Delete all material and insert: "* Sec. 11. AS 23.30 is amended by adding a new section to read: Sec. 23.30.007. Workers' compensation hearings office. (a) There is established in the Department of Labor and Workforce Development a workers' compensation hearings office. The hearings office hears original petitions when a claim is filed under this chapter and has jurisdiction to hear appeals from decisions and orders of the director. (b) The commissioner shall appoint a chief hearing officer and assistant hearing officers. (c) The chief hearing officer may (1) employ and supervise office staff and hearing officers and appoint a hearings office clerk; (2) establish and implement a time management system for the hearings office, staff, and hearing officers; (3) assign the work of the hearing officers and staff so that hearings and appeals are resolved as expeditiously and competently as possible, including designating hearing officers to hear preliminary matters; and (4) prepare an annual budget of the hearings office. (d) The hearings office, in its administrative capacity, shall maintain, index, and make available for public inspection the final administrative decisions and orders of the hearing officers. To promote consistency among legal determinations, the chief hearing officer may review and circulate among the other hearing officers the drafts of formal decisions, decisions upon reconsideration, and other legal opinions of the other hearing officers of the hearings office. The drafts are confidential documents and are not subject to disclosure. (e) The hearings office, in its administrative capacity, may adopt regulations implementing its authority and duties under this chapter, including rules of procedure and evidence for proceedings before hearing officers in workers' compensation proceedings under AS 23.30.090 and 23.30.110 and for the adjudication of all claims and petitions under this chapter. The provisions of AS 44.62 (Administrative Procedure Act) apply to the adoption of regulations by the hearings office. (f) The hearings office shall award a successful party reasonable costs and, if the party is represented by an attorney, attorney fees that the hearings office determines to be fully compensatory and reasonable. However, the hearings office may not make an award of attorney fees against an injured worker unless the hearings office finds that the worker's position on appeal was frivolous or unreasonable or the appeal was taken in bad faith. (g) The hearings office, in its administrative capacity, may adopt and alter an official seal and do all things necessary, convenient, or desirable to carry out the powers expressly granted or necessarily implied in this chapter." Page 13, line 9: Delete "with the office of the commission [BY" Insert "by a hearing officer [" Page 14, line 9: Delete "commission" Insert "hearings office" Page 29, lines 27 - 28: Delete "office of the commission" Insert "hearings office" Page 30, line 3: Delete "or commission" Page 30, line 14: Delete "office of the commission, and the office of the commission " Insert "hearings office, and the hearings office" Page 31, line 4, following "defense.", through line 17: Delete all material. Insert "[IF A DISCOVERY DISPUTE COMES BEFORE THE BOARD FOR REVIEW OF A DETERMINATION BY THE BOARD'S DESIGNEE, THE BOARD MAY NOT CONSIDER ANY EVIDENCE OR ARGUMENT THAT WAS NOT PRESENTED TO THE BOARD'S DESIGNEE, BUT SHALL DETERMINE THE ISSUE SOLELY ON THE BASIS OF THE WRITTEN RECORD. THE DECISION BY THE BOARD ON A DISCOVERY DISPUTE SHALL BE MADE WITHIN 30 DAYS. THE BOARD SHALL UPHOLD THE DESIGNEE'S DECISION EXCEPT WHEN THE BOARD'S DESIGNEE'S DETERMINATION IS AN ABUSE OF DISCRETION.]" Page 32, line 1: Delete "office of the commission" Insert "hearings office" Page 32, lines 8 - 9: Delete "office of the commission" Insert "chief hearing officer" Page 32, lines 27 - 28: Delete "commission" Insert "director" Page 34, line 7: Delete "commission" Insert "hearings office" Page 34, line 11: Delete "partially exempt service under AS 39.25.120" Insert "classified service under AS 39.25.100" Page 34, lines 12 - 13: Delete ", but is not a public employee for purposes of AS 23.40" Page 34, line 31: Delete "commission" Insert "hearings office" Page 35, line 5: Delete "commission" Insert "hearings office" Page 35, lines 30 - 31: Delete "commission or" Page 36, line 5: Delete "commission or" Page 36, line 6: Delete "The commission clerk" Insert "A hearing officer" Page 36, line 9: Delete "commission" Insert "hearing officer" Page 36, line 24: Delete "office of the commission" Insert "hearings office" Page 36, line 27: Delete "office of the commission" Insert "hearings office" Page 37, line 2: Delete "commission" Insert "hearings office" Page 37, line 4, through page 41, line 21: Delete all material and insert: "* Sec. 64. AS 23.30.125(a) is amended to read: (a) A compensation order becomes effective when filed with the director [IN THE OFFICE OF THE BOARD] as provided in AS 23.30.110, and, unless proceedings to suspend it or set it aside are instituted as provided in (c) of this section, it becomes final on the 31st day after it is filed. * Sec. 65. AS 23.30.125(c) is amended to read: (c) If not in accordance with law, a compensation order filed by a hearing officer as provided in (a) of this section may be suspended or set aside, in whole or in part, through injunction proceedings in the superior court brought by a party in interest against the division [BOARD] and all other parties to the proceedings [BEFORE THE BOARD]. The payment of the amounts required by an award may not be stayed pending final decision in the proceeding unless upon application for an interlocutory injunction the court on hearing, after not less than three days' notice to the parties in interest and the director [BOARD], allows the stay of payment, in whole or in part, where irreparable damage would otherwise ensue to the employer. The order of the court allowing a stay must [SHALL] contain a specific finding, based upon evidence submitted to the court and identified by reference to it, that irreparable damage would result to the employer, and specifying the nature of the damage. * Sec. 66. AS 23.30.125(d) is amended to read: (d) If an employer fails to comply with a compensation order making an award that has become final, a beneficiary of the award or the director [BOARD] may apply for the enforcement of the order to the superior court. If the court determines that the order was made and served in accordance with law, and that the employer or the officers or agents of the employer have failed to comply with it, the court shall enforce obedience to the order by writ of injunction or by other proper process to enjoin upon the employer and the officers and agents of the employer compliance with the order. * Sec. 67. AS 23.30.125(f) is amended to read: (f) Subject to an employer's or employee's burden of proof, a finding of fact made by the hearing officer [BOARD] as a part of a compensation order is conclusive unless the court specifically finds that a reasonable person could not have reached the conclusion made by the hearing officer [BOARD]." Renumber the following bill sections accordingly. Page 46, lines 4 - 11: Delete all material. Renumber the following bill sections accordingly. Page 55, line 24: Delete ", the commission," Page 56, lines 3 - 9: Delete all material and insert: "(35) "director" means the director of the division of workers' compensation; (36) "division" means the division of workers' compensation; (37) "hearing officer" means a hearing officer employed under AS 23.30.112 to hear workers' compensation claims and petitions under this chapter; (38) "hearings office" means the workers' compensation hearings office established by AS 23.30.007." Page 56, lines 13 - 20: Delete all material and insert: "* Sec. 103. AS 39.25.120(c) is amended by adding a new paragraph to read: (20) the reemployment benefits administrator of the division of workers' compensation in the Department of Labor and Workforce Development." Renumber the following bill sections accordingly. Page 56, line 25: Delete "and" Insert ";" Following "AS 23.30.395(3)": Insert "; and AS 39.50.200(b)(31)" Page 56, line 28: Delete "sec. 86" Insert "sec. 87" Page 56, line 29: Delete "sec. 86" Insert "sec. 87" Page 57, lines 13 - 18: Delete all material. Renumber the following bill sections accordingly. Page 58, line 13: Delete "Section 110" Insert "Section 109" Page 58, line 14: Delete "sec. 111" Insert "sec. 110" CHAIR BUNDE objected for discussion purposes. SENATOR FRENCH explained that amendment 1 would remove the appeals commission that would replace the appeals function of the Superior Court. SB 311 calls for the appointment of three appeals commissioners who would be confirmed by the Legislature. The bill calls for two range 29 commissioners with the commission chair set at range 30. Our committee heard testimony... that the Superior Court hears some 36 workers' comp appeals each year. Creating three new highly paid state employees to hear 36 appeals per year seems extravagant. The proposed amendment would keep the appeals function in the Superior Court. The amendment also keeps the hearing officers in classified service. SB 311 as it stands would reclassify the hearing officers into partially exempt service. Keeping the hearing officers in classified service gives these decision makers greater autonomy. The proposed amendment does not alter the basic thrust of SB 311; it merely streamlines the reforms that the bill envisions. I'll close by saying that I believe the most apolitical appeals panel available is in the Superior Court. These are judges appointed to long terms. They are mostly isolated from the political process. They have all the autonomy in the world to hear these appeals. From the testimony we heard from Mr. Wooliver [Alaska Court System], they're rarely overturned when those decisions go to the Supreme Court. I also took to heart the part of his testimony about how a litigant feels facing an in-house appeals commission. I can just speak for myself - I'd want a guy in a black robe to decide my case. I'd want someone who isn't a state employer per se in the Department of Administration to hear my case. And I think what we're going to do is simply create this enormous pass-through of decisions through the appeals commission on to the Supreme Court clogging their calendar more. So, I think in these tough budget times to create three new - two range 29s and a range 30 - a range 30 is over $100,000 per year. I just think that there are school districts all over the state that would love to have some of these employees that we're thinking about creating here. For that reason and also for the reason of keeping the hearing officers in classified service, that's a way to give them some political cover for the tough decisions they make every day. Keep them in classified service and let them go about their business unsupervised, really, by a state supervisor who may be putting pressure on them to go one way or the other. CHAIR BUNDE remarked that his concern about the cost resonates with him. I, at this point, think that maybe the total cost to the public might be less avoiding the Superior Court, but again those are areas that I don't have a lot of personal experience. I would prefer to send the bill forward as it is and let Judiciary review that issue and continue my opposition to the amendment. A roll call vote was taken on amendment 1. Senators Gary Stevens and Chair Bunde voted nay; Senator French voted yea. Amendment 1 was not adopted. 1:58 - 2:04 - at ease CHAIR BUNDE said that SB 311 would be set aside for the moment. SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM CHAIR CON BUNDE announced SB 311 to be back before the committee and that public testimony had been closed. Amendments had been addressed. SENATOR RALPH SEEKINS moved to pass SB 311 from committee with individual recommendations and attached fiscal note. SENATOR FRENCH objected. A roll call vote was taken. Senators Seekins, Gary Stevens and Chair Bunde voted yea; and Senator French voted nay; and SB 311 moved from committee. The chair noted that he would ask the Senate President for a Judiciary referral.