Legislature(2017 - 2018)BUTROVICH 205

02/01/2018 01:00 PM LABOR & COMMERCE

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01:01:52 PM Start
01:02:28 PM SB112
03:29:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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Heard & Held
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        SB 112-WORKERS COMPENSATION;DRUG DATABASE & TEST                                                                    
1:02:28 PM                                                                                                                    
CHAIR  COSTELLO  announced the  consideration  of  SSSB 112.  She                                                               
stated that the  intention was to hear the  introduction and take                                                               
public testimony.                                                                                                               
1:03:11 PM                                                                                                                    
SENATOR CATHY GIESSEL, Alaska  State Legislature, Juneau, Alaska,                                                               
sponsor  of  SB  112  said  she  appreciates  that  this  is  the                                                               
committee on the economy because  that is what the legislation is                                                               
about.  She opined  that  the bill  addresses  the questions  the                                                               
committee entertained at  the start of the  session regarding how                                                               
to create  more jobs, how  to train for  more jobs, how  to boost                                                               
the economy,  and how  to innovate.  This legislation  will leave                                                               
more resources  in the hands  of entities that create  jobs, hire                                                               
Alaskan workers,  and train  Alaskan workers.  It will  boost the                                                               
economy  by  having  a  healthy workforce  and  it  innovates  by                                                               
recognizing  the need  for constant  change, making  adjustments,                                                               
renewing, and transforming.                                                                                                     
1:04:17 PM                                                                                                                    
SENATOR MEYER joined the committee.                                                                                             
SENATOR GIESSEL  said the  history of  caring for  and protecting                                                               
workers began in  Ancient Greece, Rome, and China.  FDR made huge                                                               
changes  through  the Federal  Employers'  Liability  Act in  the                                                               
early 1900s.  She said the  goal today for workers  and employers                                                               
is that nobody gets hurt on the  job. She said this issue is both                                                               
important and  urgent. It is  urgent for schools that  are having                                                               
to spend money  on workers' compensation issues  when money needs                                                               
to  be spent  on teachers  and classrooms.  It is  urgent because                                                               
high workers' compensation costs  are taking resources that local                                                               
governments  could use  to  hire more  police,  clear roads  more                                                               
quickly,  and fund  schools. She  pointed out  that the  State of                                                               
Alaska is an employer and  consequently its citizens are impacted                                                               
by  the workers'  compensation  system that  allows  money to  be                                                               
spent on  things that are not  focused on the injured  worker and                                                               
getting him/her  back on the job.  She said we need  to move past                                                               
the dichotomy  that there  is a conflict  between the  worker and                                                               
the employer because they need each other.                                                                                      
1:06:43 PM                                                                                                                    
SENATOR MICCICHE joined the committee.                                                                                          
SENATOR GIESSEL  stated that  the purpose  of SB  112 is  to make                                                               
sure that  workers who  are injured  on the  job get  healthy and                                                               
return to work  as quickly as possible. The  current system isn't                                                               
doing  that.  Rather,  injured  workers  are  caught  in  endless                                                               
treatments and  money is  diverted to  middlemen and  lawyers. An                                                               
example  is   the  Vocational  Rehabilitation   and  Reemployment                                                               
Program.  A  study done  several  years  ago  found that  only  8                                                               
percent of  injured workers  that chose  to enter  a reemployment                                                               
training program  completed the  program; 92 percent  didn't feel                                                               
it was  worth finishing  and cashed out  for between  $50,000 and                                                               
$70,000. Injured workers  did not get new skills.  She noted that                                                               
there was  no data  showing whether the  8 percent  that finished                                                               
the  program pursued  a new  career in  the field  they had  been                                                               
1:08:28 PM                                                                                                                    
She displayed a graph from  the Department of Labor and Workforce                                                               
Development  (DOLWD)  that shows  what  the  state has  spent  on                                                               
rehabilitation  from  2006  through   2016.  The  annual  average                                                               
payments  are about  $13 million  even though  just 8  percent of                                                               
injured workers in  Alaska finish the program.  She reported that                                                               
in 2014 the average medical claim  in Alaska was $62,000. In 2015                                                               
it dropped  to $49,000.  The 10-year average  in Alaska  has been                                                               
$49,000 whereas the  U.S. average is just $28,500.  She said that                                                               
Alaska  has some  of the  highest  medical costs  in the  country                                                               
which is both unaffordable and unsustainable.                                                                                   
She directed attention to a  graph from the Montana Department of                                                               
Labor and noted that state ranks 11   in the U.S. for the cost of                                                               
health care.  She pointed  out that in  2014 the  average medical                                                               
claim in Montana  was about $44,000 compared to  the average 2014                                                               
cost in Alaska of  $62,000. At that time Alaska ranked 2   in the                                                               
country and is now ranked 5   for cost per medical claim. Another                                                               
chart from  the Alaska DOLWD  shows the average medical  cost per                                                               
claim from 2010 through 2015.  She explained that the chart calls                                                               
out the  work of a  committee under workers'  compensation called                                                               
the  Medical  Services  Review  Committee.  They  looked  at  the                                                               
reimbursement  for  medical  claims  and in  2015  started  price                                                               
setting.  They told  providers they  wouldn't pay  $3,000 for  an                                                               
MRI,  they'd  pay  $1,200.  They   wouldn't  pay  $10,000  for  a                                                               
laminectomy,  they'd pay  $6,000. She  said that's  price setting                                                               
and she  applauds it. She looks  forward to seeing the  effect of                                                               
the  Medical  Services  Review   Committee    work  in  terms  of                                                               
bringing down overall medical costs.                                                                                            
SENATOR  GIESSEL displayed  a DOLWD  chart of  total compensation                                                               
payments for  medical services  for 2006  through 2016.  It shows                                                               
that medical  payments totaled  $140 million  in 2016.  She asked                                                               
the committee to consider what  cutting that number in half would                                                               
mean in  terms of funding  more schools and hiring  more teachers                                                               
and  police. She  emphasized  that addressing  this  is not  just                                                               
important but urgent.                                                                                                           
She  pointed  out that  a  lot  of time  and  money  is spent  on                                                               
conflicts and courtroom  time, not care for  injured workers. She                                                               
displayed a  chart from DOLWD  of legal payments over  a ten-year                                                               
period. It  shows that legal  payments have trended  upward since                                                               
2006.   Interestingly,  the   number  of   workers'  compensation                                                               
injuries  have  trended  down  over   this  same  timeframe.  She                                                               
displayed a DOLWD  chart of the total  compensation payments from                                                               
2006 through 2016. It shows that  in 2016, $270 million was spent                                                               
on  workers' compensation  payments. She  asked the  committee to                                                               
consider what cutting that number in  half would mean in terms of                                                               
filling the fiscal  gap. She pointed to a chart  from the Montana                                                               
Department  of  Labor &  Industry  that  depicts the  percent  of                                                               
premium  median by  state and  by the  structure of  the workers'                                                               
compensation  insurance   market  in   2016.  Alaska   tied  with                                                               
Connecticut at 5   highest; only California, New  Jersey, and New                                                               
York were higher.                                                                                                               
1:13:48 PM                                                                                                                    
SENATOR GIESSEL  directed attention to excerpts  from the January                                                               
2015  report from  the  Alaska Health  Care  Commission that  has                                                               
since been  defunded. One of  the subjects the  commission looked                                                               
at was how  to enact changes in the  Alaska Workers' Compensation                                                               
Act  to  contain  medical  costs  and  improve  quality  of  care                                                               
outcomes.  She highlighted  that  two of  the  four elements  the                                                               
commission recommended  are contained in  SB 112. [These  are (a)                                                               
evidence-based  guidelines  and  (c) restrict  reimbursement  for                                                               
opioid  prescriptions.] She  held  up a  2004  document from  the                                                               
Worker Compensation  Committee of  Alaska (WCCA)  that identifies                                                               
key  reforms   to  workers'  compensation.  Those   elements  are                                                               
contained in SB 112. She noted  that one of the Alaska Council of                                                               
School  Administrators 2018  joint  position statements  includes                                                               
the following:                                                                                                                  
        • The state should continue efforts to control the                                                                      
          cost  of workers'  compensation claims,  including                                                                    
          adoption   of    medical   treatment   guidelines,                                                                    
          improved  management  of  claims and  an  improved                                                                    
          reemployment benefits process.                                                                                        
She said these three elements are contained in SB 112.                                                                          
1:16:16 PM                                                                                                                    
SENATOR GIESSEL said a  key feature in SB 112 is  to focus on the                                                               
injured  worker using  evidence-based  treatment guidelines  from                                                               
the American Society of  Occupational and Environmental Medicine.                                                               
These are listed on the  federal website for health care research                                                               
and  quality national  guideline clearinghouse.  These guidelines                                                               
use  the   National  Academies  of  Sciences,   Engineering,  and                                                               
Medicine recommendations and are  identified for used in workers'                                                               
compensation. This  national guideline  has a  dedicated research                                                               
team at the University of Utah.                                                                                                 
SENATOR  GIESSEL   advised  that   the  University  of   Utah  is                                                               
continually reviewing  the latest  medical research  and updating                                                               
the  treatment  guidelines  for  occupational  and  environmental                                                               
medicine. Eight  states and  the U.S.  Department of  Defense use                                                               
these guidelines  for workers'  compensation cases.  She disputed                                                               
the  claim  that  evidence-based  treatment  guidelines  are  too                                                               
restrictive  and  argued  that  they facilitate  and  inform  the                                                               
treating  clinician  to give  the  best  care. She  displayed  an                                                               
algorithm for low  back pain and explained that it  calls out red                                                               
flags  for the  clinician  to consider  and emergency  procedures                                                               
that might be needed. She  highlighted that Kaiser Permanente has                                                               
integrated  these guidelines  into their  care for  employees and                                                               
beneficiaries  in  northern California.  In  the  first year  the                                                               
medical treatment savings totaled  $250 million. Texas uses these                                                               
guidelines and  has seen that  employees get back to  work faster                                                               
and fully recovered and fewer cases are controverted.                                                                           
1:20:07 PM                                                                                                                    
SENATOR GARDNER  asked if the  presentation speaks to  version R;                                                               
she was trying  to match the language that's  referenced with the                                                               
different sections.                                                                                                             
SENATOR  GIESSEL said  her aide  would go  through the  sectional                                                               
after  the  presentation  and  correct  any  incorrect  sectional                                                               
references if needed. She noted that  the packet also had a quick                                                               
reference chart for the key topics in version R.                                                                                
CHAIR COSTELLO  clarified for the  public that the  committee was                                                               
considering  version  R;  a committee  substitute  had  not  been                                                               
introduced. The  sponsor has  indicated that  she will  alert the                                                               
committee to changes she suggests going forward.                                                                                
1:21:50 PM                                                                                                                    
SENATOR  STEVENS   asked  who  the   $250  million   savings  was                                                               
attributed to.                                                                                                                  
SENATOR GIESSEL  said it was  Kaiser Permanente, a  large managed                                                               
care group  in California that  integrated that  ACOEM guidelines                                                               
that  appear  in SB  112.  She  clarified that  the  presentation                                                               
covered the key  elements in the bill;  the forthcoming sectional                                                               
summary would show where each appears.                                                                                          
SENATOR GIESSEL  returned to the example  of treatment guidelines                                                               
for low back pain. She  explained that the clinician can research                                                               
related terms and look at  workflows and diagnostic criteria. The                                                               
site  also covers  questions  and options  for  the clinician  to                                                               
consider should the patient fail  to recover. She reiterated that                                                               
the dedicated  research team  at the  University of  Utah updates                                                               
this information  and protocols  quarterly. Every two  years they                                                               
look to  see that each  body unit has  been updated and  that the                                                               
document is usable. Emerging evidence is updated immediately.                                                                   
SB 112 also addresses prescribing  controlled substances which is                                                               
identified in  the guidelines.  Part of  the requirement  is that                                                               
the clinician  must notify the  employer that the  injured worker                                                               
is  on an  opioid  if they  return  to work  on  light duty.  The                                                               
clinician also must  document why the opioid  was prescribed. The                                                               
injured worker  may also select  a pain management  specialist to                                                               
manage their  care. She noted  that the  best-practice guidelines                                                               
for opioids are  very conservative. In 2015  the American College                                                               
of  Environmental Medicine  (ACOEM) recommended  no more  than 50                                                               
morphine  milligram equivalents  for  dosing of  opioids. A  year                                                               
later the  Centers for  Disease Control  (CDC) adopted  that same                                                               
guideline for opioids.                                                                                                          
1:27:15 PM                                                                                                                    
SENATOR GIESSEL said the second major  piece of SB 112 focuses on                                                               
making  reemployment benefits  work.  She  reminded members  that                                                               
just  8 percent  of  injured  workers who  choose  to  go into  a                                                               
reemployment program finish and 92  percent cash the benefit out.                                                               
SB 112  proposes moving  the reemployment  benefit to  a voucher.                                                               
The  injured  worker  chooses  the  retraining  program  and  the                                                               
employer either pays for it  directly to the education program or                                                               
reimburses  the   injured  worker  who  submits   an  invoice.  A                                                               
vocational  rehabilitation  specialist  would  be  available  for                                                               
guidance. She  said a criticism of  the bill is that  it fails to                                                               
provide a stipend  during the voucher process and  she invites an                                                               
amendment to fill that gap.                                                                                                     
She  discussed the  following disability  levels addressed  in SB
   • Temporary total disability benefits (TTDs) are capped at                                                                   
     104 weeks (2 years). Exceptions and an appeal process are                                                                  
   • Permanent partial impairment benefits (PPIs) end when the                                                                  
     worker returns to work for the same employer and at a wage                                                                 
     that is greater or equal to that at the time of the injury.                                                                
   • Permanent total disability (PTD) ends when retirement or                                                                   
    Social Security benefits start. (TTD benefits continue)                                                                     
She  discussed the  following elements  in SB  112 that  focus on                                                               
curing the injured employee:                                                                                                    
   • The employee chooses their doctor and may change to a                                                                      
    specialist in another specialty if appropriate. Sec 26.                                                                     
   • Recurring injuries are covered.                                                                                            
   • The bill provides protections for ongoing medical treatment                                                                
     with medications. Sec. 26.                                                                                                 
   • Durable medical equipment is provided, but vendors must be                                                                 
     accredited through the Centers for Medicare and Medicaid                                                                   
     Services to assure quality. Sec. 26 and 33.                                                                                
1:33:22 PM                                                                                                                    
CHAIR COSTELLO asked if the  bill sections in the PowerPoint were                                                               
SENATOR GIESSEL said her aide would check.                                                                                      
She  clarified  that  the bill  does  not  terminate  appropriate                                                               
medical  treatment after  2 years  when it  is still  needed. She                                                               
continued to  point out that Alaska  is the only state  that does                                                               
not cap  attorney's fees in  workers' compensation.  Other states                                                               
limit attorney fees to 12-20  percent of the total settlement and                                                               
the fee  is part of  the settlement. Alaska  has no cap  and adds                                                               
the fee  on top of  the settlement.  SB 112 would  cap attorney's                                                               
fees at 25  percent to 35 percent of the  settlement depending to                                                               
the level  of adjudication  of the case.  She said  another large                                                               
feature  of the  bill moves  the adjudication  of cases  from the                                                               
Workers'  Compensation  Board  to the  Office  of  Administrative                                                               
Hearings. This  will give a  prescribed timeline for  the dispute                                                               
to be heard. Transparent timelines  help the worker know when the                                                               
case  will  be  settled.  The bill  also  allows  for  telephonic                                                               
SENATOR  GIESSEL  reviewed  the  differences  between  a  hearing                                                               
officer and an administrative law  judge. She reported that there                                                               
are about 20,000 workplace injuries  each year and about 1,200 go                                                               
through the  hearing process. The  bill provides that  the burden                                                               
of proof is the clear  and convincing standard, the accident must                                                               
be 50 percent  of the cause of the injury,  and the evidence must                                                               
be medically objective. Medical  records are admitted and quoted,                                                               
evidence  from both  clinicians is  given equal  weight, and  lay                                                               
testimony is allowed but not to decide factual disputes.                                                                        
1:40:44 PM                                                                                                                    
SENATOR GIESSEL  said Alaska  is the only  state that  requires a                                                               
second  independent medical  examination  (IME)  if the  worker's                                                               
physician and the employer's physician  disagree on the findings.                                                               
She said the  second IME is time consuming and  expensive and the                                                               
board  often throws  out the  second IME.  SB 112  eliminates the                                                               
second independent medical examination as part of the process.                                                                  
She  addressed criticisms  of the  bill  calling them  unfounded.                                                               
Section  26 clarifies  that the  bill does  not strip  workers of                                                               
their choice of physician. Section  31 clarifies that the Medical                                                               
Services Review Committee has the  same function. Section 26 lays                                                               
out   continuing  care   for   long-term  injuries.   Unnecessary                                                               
litigation  is  prevented  through  a  defined  timeline.  Alaska                                                               
Native  traditional  knowledge would  be  allowed  to treat  work                                                               
injuries  if  it falls  within  the  medical guidelines.  Another                                                               
criticism  is that  the bill  does nothing  for the  family of  a                                                               
single worker killed on the job.  She pointed out that that's not                                                               
the intent of the bill.                                                                                                         
1:44:08 PM                                                                                                                    
SENATOR  GIESSEL  advised that  Section  73  strictly defines  an                                                               
independent  contractor   to  address  the  ongoing   problem  of                                                               
employers  who try  to avoid  the requirement  to carry  workers'                                                               
compensation  insurance by  calling  their employees  independent                                                               
She summarized  that SB  112 is  focused on  redirecting workers'                                                               
compensation  to  focus  on  the  worker,  not  compensation  for                                                               
middlemen and  lawyers. Her goal  is to ensure  that communities,                                                               
local  governments, schools,  state  government, private  sector,                                                               
and small employers  can continue to have  healthy employees that                                                               
can do  the job. She said  the bill enjoys wide  support from air                                                               
carriers,  the  fishing   industry,  school  administrators,  and                                                               
CHAIR  COSTELLO  asked  Ms.  Nore to  walk  through  a  sectional                                                               
1:47:15 PM                                                                                                                    
KARI  NORE, Staff,  Senator  Giessel,  Alaska State  Legislature,                                                               
Juneau, Alaska, provided the following  sectional analysis for SB
112, version R:                                                                                                                 
She  advised  that members  of  the  medical community  recommend                                                               
removing  Sections 1  and  2 from  the bill  to  ensure that  the                                                               
guidelines  for  the  prescription  drug  monitoring  system  are                                                               
1:47:36 PM                                                                                                                    
At ease                                                                                                                         
1:48:00 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
MS. NORE continued the sectional analysis for SB 112.                                                                           
     Section  3: Amends  AS 23.05.067(e)  to state  that the                                                                    
     legislature  may appropriate  annual  service fees  and                                                                    
     penalties  collected to  the  office of  administrative                                                                    
     Section  4:  Amends  AS  23.10.620   by  adding  a  new                                                                    
     subsection to allow an employer  to require an employee                                                                    
     to  undergo  drug  testing if  the  employee  has  been                                                                    
     prescribed a controlled substance under AS 23.30.096.                                                                      
     Section  5: Amends  AS 23.30.001  regarding legislative                                                                    
     intent relating to workers' compensation.                                                                                  
     Section  6:  Amends  AS 23.30.005(a)  relating  to  the                                                                    
     composition of the Alaska Workers' Compensation Board.                                                                     
MS.  NORE advised  that  the Department  of  Labor and  Workforce                                                               
Development (DOLWD) recommended removing Section 6.                                                                             
     Section 7:  Amends AS 23.30.005(b) to  provide that the                                                                    
     commissioner  may designate  hearing officers  to serve                                                                    
     as chairs  of panels for hearing  settlement agreements                                                                    
     under  AS   23.30.012  or   claims  arising   under  AS                                                                    
     23.30.015  or 23.30.247  and that  the hearings  may be                                                                    
     telephonic  and  do not  need  to  be in  the  judicial                                                                    
     district where the injury occurred.                                                                                        
     Section   8:   Amends   AS   23.30.005(c)   to   remove                                                                    
     requirement  that  the   governor  appoint  members  of                                                                    
     hearing panels.                                                                                                            
     Section  9: Amends  AS 23.30.005(e)  to provide  that a                                                                    
     member  of  one  judicial  district may  serve  on  any                                                                    
     hearing panel.                                                                                                             
     Section  10: Amends  AS  23.30.005(g)  to require  that                                                                    
     claims  and  petitions  be  heard   by  the  office  of                                                                    
     administrative hearings  on a  rotating basis  under AS                                                                    
     Section  11:  Amends  AS 23.30.005(h)  to  require  the                                                                    
     department  to  adopt  regulations, except  on  matters                                                                    
     over which AS 44.62  controls. Makes conforming changes                                                                    
     relating to  the role of  the office  of administrative                                                                    
     Sections  12-16: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section  17: Repeals  and reenacts  AS 23.30.010(a)  to                                                                    
     provide that  a compensable injury must  be established                                                                    
     using relevant  objective medical evidence and  must be                                                                    
     the   major  contributing   cause   of  any   resulting                                                                    
     condition, disability,  or need for  medical treatment.                                                                    
     Provides that  subjective complaints must  be confirmed                                                                    
     by physical examination or diagnostic testing.                                                                             
1:50:44 PM                                                                                                                    
     Section  18:   Amends  AS   23.10.010  by   adding  new                                                                    
     subsections relating  to proving an injury  arising out                                                                    
     of and in the course of employment.                                                                                        
     Sections  19-23: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section 24: Repeals and  reenacts AS 23.30.041 relating                                                                    
     to rehabilitation and  reemployment benefits of injured                                                                    
     workers   and   establishes  a   reemployment   voucher                                                                    
     Section 25:  Makes conforming  changes relating  to the                                                                    
     role of the office of administrative hearings.                                                                             
     Section 26: Amends AS 23.30.095(a)  to require that the                                                                    
     employer furnish  medical treatment in  accordance with                                                                    
     evidence-based  treatment  guidelines. Allows  employer                                                                    
     or  insurer  to request  a  third  party to  conduct  a                                                                    
     utilization  review for  treatment recommended  outside                                                                    
     of  the evidence-based  treatment guidelines.  Provides                                                                    
     that  if medical  treatment  is  recommended two  years                                                                    
     after  the date  of  injury, the  employee  may not  be                                                                    
     afforded  the presumption  of  compensability but  that                                                                    
     the injured will  have a right to review  by the office                                                                    
     of  administrative  hearings.  Allows the  employer  to                                                                    
     designate  a different  attending physician.  Restricts                                                                    
     medical  treatment  allowed  after  an  additional  two                                                                    
     years  of  continued   treatment  to  certain  devices,                                                                    
     prescriptions, and services.                                                                                               
     Sections  27-32: Make  conforming  changes relating  to                                                                    
     the  role of  the  office  of administrative  hearings,                                                                    
     eliminates   board   authority   to   adopt   treatment                                                                    
     frequency standards, allows  suspension of compensation                                                                    
     for refusal of  appropriate diagnostic tests, requires,                                                                    
     in certain circumstances,  submission to examination by                                                                    
     a mental health provider,  and requires palliative care                                                                    
     after   medical  stability   to   be  consistent   with                                                                    
     evidence-based treatment guidelines.                                                                                       
     Section  33:   Amends  AS   23.30.095  by   adding  new                                                                    
     subsections  relating to  payment  for durable  medical                                                                    
     equipment,  prosthetics,  orthotics   or  supplies  and                                                                    
     prescription drugs.                                                                                                        
     Section  34: Amends  AS 23.30  by  adding AS  23.30.096                                                                    
     relating  to   prescribing  or   dispensing  controlled                                                                    
     substances to employees.                                                                                                   
     Section  35:  Amends  AS  23.30.097(d)  to  stale  that                                                                    
     payment for  medical treatment  is not  due immediately                                                                    
     or  on demand,  it  is  due within  30  days after  the                                                                    
     employer receives  the provider's bill and  a completed                                                                    
1:53:03 PM                                                                                                                    
     Section  36:  Amends AS  23.30.097(g)  to  add that  an                                                                    
     employer  shall  reimburse an  employee's  prescription                                                                    
     charges within 30 days after  the employer receives the                                                                    
     employee's request for reimbursement.                                                                                      
     Sections  37-39: Make  conforming  changes relating  to                                                                    
     the  role of  the  office  of administrative  hearings,                                                                    
     replaces  the term  disability, and  removes exceptions                                                                    
     for disclosure  of a record  to certain  physicians and                                                                    
     to the board or commissioner.                                                                                              
     Section   40:   Amends   AS   23.30.108   relating   to                                                                    
     prehearings,  discovery,   and  protective   orders  to                                                                    
     require  those requests  and hearings  be conducted  by                                                                    
     the office of administrative hearings.                                                                                     
     Section  41: Amends  AS  23.30.110(a)  to require  that                                                                    
     claims or  petitions for relief on  all matters, except                                                                    
     those under  AS 23.30.012 and 23.30.247,  be filed with                                                                    
     the office or administrative hearings.                                                                                     
     Sections  42-47: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section 48:  Amends AS 23.30.120(a) to  require that an                                                                    
     employee   establish   a   preliminary   link   between                                                                    
     employment  and  resulting  condition,  disability,  or                                                                    
     need for  medical treatment through  objective relevant                                                                    
     medical    evidence   before    being   afforded    the                                                                    
     presumptions listed in that subsection.                                                                                    
     Section 49:  Makes conforming  changes relating  to the                                                                    
     role of the office of administrative hearings.                                                                             
     Section  50:   Amends  AS   23.30.120  by   adding  new                                                                    
     subsections  relating to  establishing the  preliminary                                                                    
     link and presumption under AS 23.30.120(a).                                                                                
     Section 51:  Makes conforming  changes relating  to the                                                                    
     role of the office of administrative hearings.                                                                             
     Section  52:   Amends  AS   23.30.122  by   adding  new                                                                    
     subsections   relating  to   medical  expert   and  lay                                                                    
     Sections  53-62: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section   63:  Repeals   and   reenacts  AS   23.30.145                                                                    
     governing the award and payment of attorney fees.                                                                          
     Section 64:  Makes conforming  changes relating  to the                                                                    
     role of the office of administrative hearings.                                                                             
     Section 65: Amends AS 23.30.155(j)  to allow 20 percent                                                                    
     of  unpaid installments  to be  withheld when  the only                                                                    
     benefit remaining  is a  lump-sum payment  of permanent                                                                    
     partial  impairment benefits  or upon  approval of  the                                                                    
     office of administrative hearings.                                                                                         
     Section  66:  Amends  AS  23.30.155(m)  to  repeal  the                                                                    
     $1,000  civil   penalty  when   an  annual   report  is                                                                    
     incomplete when filed.                                                                                                     
     Sections  67-68: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section  69:  Amends  AS   23.30.180  to  provide  that                                                                    
     permanent total  disability claims  will be  paid until                                                                    
     the   employee   begins  receiving   social   security,                                                                    
     pension, or other retirement benefits.                                                                                     
1:56:09 PM                                                                                                                    
     Section  70:  Amends  AS   23.30.185  to  provide  that                                                                    
     temporary total  disability claims may not  be paid for                                                                    
     more  than an  aggregate total  of 104  weeks for  each                                                                    
     Section  71:  Amends  AS  23.30.190  by  adding  a  new                                                                    
     subsection to  provide that an employee  who returns to                                                                    
     work for  the same employer  in a position that  pays a                                                                    
     wage equal to or greater than  that paid at the time of                                                                    
     injury  is not  eligible to  receive permanent  partial                                                                    
     impairment benefits.                                                                                                       
     Sections  72-74: Make  conforming  changes relating  to                                                                    
     the role of the office of administrative hearings.                                                                         
     Section  75:  Amends  AS   23.30.230(a)  to  provide  a                                                                    
     definition of "independent contractor."                                                                                    
     Section 76-77: Make conforming  changes relating to the                                                                    
     role of the office of administrative hearings.                                                                             
     Sections 78-80:  Amend the definitions of  "arising out                                                                    
     of  and in  the  course of  employment" and  "attending                                                                    
     physician"  and  adds  the  definition  of  "office  of                                                                    
     administrative hearings."                                                                                                  
     Section 81: Amends  AS 44.64.030(a) to add  AS 23.30 to                                                                    
     list  of statutes  that  the  office of  administrative                                                                    
     hearings has jurisdiction over.                                                                                            
     Section  82: Repeals  AS  23.30.005(f)  (relating to  a                                                                    
     quorum for a hearing  panel), 23.30.095(b) (relating to                                                                    
     the designation  of a physician),  23.30.095(i) (making                                                                    
     interference with selection of  a physician or improper                                                                    
     influence   of  a   medical  opinion   a  misdemeanor),                                                                    
     23.30.095(k) (relating to  a second independent medical                                                                    
     evaluation), 23.30.110(g) (relating  to submission to a                                                                    
     physical   examination),   23.30.135(a)  (relating   to                                                                    
     procedure before the  board), 23.30.155(h) (relating to                                                                    
     the  board's  authority),  23.30.224(b), (e),  and  (f)                                                                    
     (relating  to coordination  of benefits  and employer's                                                                    
     liability  for  payment  under  AS  23.30.041(k)  (also                                                                    
     Section  83:  Adds   an  applicability  provision  that                                                                    
     states that secs.  6-82 of the Act apply  to claims for                                                                    
     injuries  filed  on or  after  the  effective dates  of                                                                    
     those sections.                                                                                                            
     Section  84: Adds  a transition  provision relating  to                                                                    
     the  transition  of  claims from  the  Alaska  Workers'                                                                    
     Compensation  Board  to  the office  of  administrative                                                                    
     Section 85:  Adds a  transition provision  allowing the                                                                    
     Department of  Labor and Workforce Development  and the                                                                    
     office of administrative  hearings to adopt regulations                                                                    
     necessary to implement the changes made by the Act.                                                                        
     Section 86:  Provides for  an immediate  effective date                                                                    
     for sec. 85.                                                                                                               
     Section 87: Section  1 of this Act takes  effect of the                                                                    
     effective date of Sec. 38, ch. 2, SSSLA 2017.                                                                              
MS. NORE advised that Section 87 would be removed per the                                                                       
removal of Sections 1 and 2 of the bill.                                                                                        
1:59:07 PM                                                                                                                    
SENATOR STEVENS asked if the  intention was to remove Sections 1,                                                               
2, and 6.                                                                                                                       
MS. NORE said that's correct.                                                                                                   
CHAIR COSTELLO  said she had  several questions and  would prefer                                                               
that  Ms. Nore  follow up  with written  answers to  provide more                                                               
time for public testimony.                                                                                                      
SENATOR GARDNER  said she  would write  her questions  and submit                                                               
them to the  chair, but she did want to  know the ultimate effect                                                               
of the multiple repeals in Section 82.                                                                                          
MS. NORE  referenced a chart  that lists the repealers  and noted                                                               
that two  in Section 82 are  unintended and will be  removed. She                                                               
explained the following repealers:                                                                                              
   • AS 23.30.005(f) relating to a quorum for a hearing panel is                                                                
     removed  because hearings  will be  moved to  the Office  of                                                               
     Administrative Hearings.                                                                                                   
   • AS 23.30095(b) relating to the designation of  a physician                                                                 
     should not have been repealed.                                                                                             
   • AS 23.30.095(i) relating to interference with the selection                                                                
     of a physician or improper  influencing of a medical opinion                                                               
     also should not have been repealed.                                                                                        
   • AS 23.30.095(k) relating to the second independent medical                                                                 
     evaluation is the SIME referenced earlier.                                                                                 
   • AS 23.30.110(g) relating to the  submission of  a physical                                                                 
     exam is part of the second independent medical exam.                                                                       
   • AS 23.30.135(a) removes overly broad language regarding the                                                                
     board  procedure  and  moving  hearings  to  the  Office  of                                                               
     Administrative Hearings.                                                                                                   
   • AS 23.30.155(h) relating to the board's authority also has                                                                 
     to do with the second independent medical exam.                                                                            
   • AS 23.30.224(b), (e), and (f) relating to the coordination                                                                 
     of benefits  and employers' liability  for payment  under AS                                                               
     23.30.041  is  being  repealed because  it  referred  to  AS                                                               
     23.30.041,  the  repeal  and  reenact  reemployment  benefit                                                               
     section.  AS 23.30.041(k)  in  previous  statutes would  not                                                               
     exist in this bill so those sections must be repealed.                                                                     
2:02:41 PM                                                                                                                    
SENATOR   STEVENS  offered   his  perspective   that  the   first                                                               
legislature  in 1959  got  wrapped around  the  axle on  workers'                                                               
compensation  and it's  been  an  issue since  then.  He said  he                                                               
appreciates the opportunity to think about it.                                                                                  
CHAIR COSTELLO opened  public testimony on SB 112  and asked each                                                               
testifier to limit their comments to two minutes.                                                                               
2:04:01 PM                                                                                                                    
BEN MULLIGAN,  Vice President, Alaska State  Chamber of Commerce,                                                               
Juneau, Alaska, said  the Alaska Chamber is a  nonprofit that was                                                               
founded in  1953 to  promote a  positive business  environment in                                                               
Alaska. It  is a voice for  small and large businesses  and their                                                               
member  companies employ  over 100,000  Alaskans. He  stated that                                                               
workers' compensation  reform has been  a priority of  the Alaska                                                               
Chamber for over a decade.  While the Alaska Chamber supports the                                                               
entire bill, the primary factors  are to reduce medical costs and                                                               
improve   medical  outcomes.   Implementing  the   evidence-based                                                               
guidelines is  important in  reaching those  goals. It  will help                                                               
the  worker  return  to  work faster  and  healthier  and  reduce                                                               
employer costs. Moving some of  the dispute process to the Office                                                               
of  Administrative Hearings  and capping  attorney fees  are also                                                               
important  elements.  Hearings  conducted by  administrative  law                                                               
judges will be more impartial  than the current system. Moving to                                                               
a voucher system  for reemployment benefits will  ensure that the                                                               
money is  paying for retraining  instead of being cashed  out. He                                                               
concluded  saying  the  Alaska  Chamber  supports  the  sponsor's                                                               
efforts  to  reform  workers'  compensation.  It's  important  to                                                               
2:07:42 PM                                                                                                                    
SUSAN  REILLY,  representing  the  Alaska  Alliance  for  Retired                                                               
Americans and  the 700 members  of the  International Association                                                               
of Machinists  (IAM) Local Lodge  601, Fairbanks,  Alaska, voiced                                                               
concern  with  SB 112.  She  reminded  members that  the  initial                                                               
intent  of workers'  compensation was  based on  a grand  bargain                                                               
between workers and  employers. That bargain was  that an injured                                                               
worker  would be  made whole  and allowed  to return  to work  in                                                               
return for not  suing the employer. She said her  concern is that                                                               
there  has  been   no  worker  involvement  in   the  growth  and                                                               
development of  SB 112. "You  need to  get the working  people of                                                               
the state also involved in  the conversation, hopefully those who                                                               
have been  through the  workers' comp  process," she  said. Until                                                               
that  happens the  members  of  local 601  and  the Alliance  for                                                               
Retired  Americans  (who  are concerned  about  what  happens  to                                                               
injured workers at retirement) are unlikely to support SB 112.                                                                  
2:09:25 PM                                                                                                                    
SINCLAIR  WILT, Vice  President,  Westward  Seafoods and  Alyeska                                                               
Seafoods, Dutch Harbor,  Alaska, testified in support  of SB 112.                                                               
He advised  that during the  peak season these  processors employ                                                               
more than  1,000 employees. He stated  support for evidence-based                                                               
treatment for injured employees,  a voucher system for vocational                                                               
rehabilitation, and limiting attorney fees.                                                                                     
2:11:22 PM                                                                                                                    
GARY  STRANNIGAN, Lobbyist,  Liberty  Mutual Insurance,  Seattle,                                                               
Washington,  thanked  the  committee  for hearing  the  bill  and                                                               
commended Senator Giessel  for the work she's done on  SB 112. He                                                               
expressed hope that the measure  would be enacted so that workers                                                               
and employers could begin to realize its benefits.                                                                              
2:12:35 PM                                                                                                                    
CHUCK  BRADY,  President,   Workers'  Compensation  Committee  of                                                               
Alaska  and Workers  Compensation  Manager for  the Arctic  Slope                                                               
Regional Corporation,  testified in support  of SB 112  on behalf                                                               
of  WCCA.  He thanked  Senator  Giessel  for taking  on  workers'                                                               
compensation. He said  he's been in this business  long enough to                                                               
recall that  workers' compensation used  to be a very  small item                                                               
on the  profit and loss  statement. It  has since ballooned  to a                                                               
very large  item on  the P&L  and is a  huge issue  for employers                                                               
trying to  stay profitable.  It's such a  large expense  that for                                                               
many small employers it can  be the difference between being able                                                               
to stay in  business or not able to stay  in business. He pointed                                                               
out that  the bill  doesn't take anything  away from  workers and                                                               
employers, it  contains costs. In 2000  Alaska was ranked 24   or                                                               
25    in  the  country  for  costs  for   insuring  for  workers'                                                               
compensation.  In  four  years  Alaska  ranked  number  one,  all                                                               
because of medical costs. He  stated support for implementing the                                                               
evidence-based  treatment  guidelines,  the  voucher  system  for                                                               
vocational rehabilitation,  and capping  attorney fees.  He urged                                                               
the committee to move SB 112 from committee.                                                                                    
2:15:38 PM                                                                                                                    
DENA  LYTHGOE,  Commercial  Insurance Broker  and  Partner,  Risk                                                               
Consulting,  Anchorage, Alaska,  stated support  for SB  112. She                                                               
said she  daily has  conversations with a  wide range  of clients                                                               
who  have  the   common  concern  about  the   cost  of  workers'                                                               
compensation  and  how  to  fix the  issue.  She  explained  that                                                               
workers'  compensation   is  one  of  every   employer's  largest                                                               
expenses and the  riskier the job the higher the  rate per 100 in                                                               
payroll. She described the  experience modification each employer                                                               
is assigned and provided an  example to illustrate how an injured                                                               
worker claim  can result in  an employer's premiums  doubling for                                                               
three years.  At the end  of the  three years that  employer told                                                               
her he  was thinking about  closing his doors. That  would result                                                               
in 9-11 employees losing their job,  an out of work employer, and                                                               
all the pass-through purchasing  from other Alaska business would                                                               
cease.  She said  SB 112  addresses  ways to  reduce claim  costs                                                               
through   evidence-based  treatment   guidelines,  attorney   fee                                                               
reductions,  and  a  voucher  system.  Such  measures  will  help                                                               
businesses succeed and hire more Alaskans.                                                                                      
2:19:17 PM                                                                                                                    
VINCE  BELTRAMI, President,  Alaska  AFC-CIO, Anchorage,  Alaska,                                                               
said  he  serves  on the  Workers'  Compensation  Medical  Review                                                               
Committee  that  has addressed  many  things  to contain  medical                                                               
costs and  charges in  a way that  includes all  stakeholders. He                                                               
opined that their  efforts have bent the cost-curve  a little. He                                                               
agreed  that   aspects  of  workers'  compensation   need  to  be                                                               
addressed,  but  he  was  very   disappointed  with  SB  112.  It                                                               
radically redefines the basic arrangement  that guides the system                                                               
by tilting the balance in  favor of employers and against workers                                                               
while  creating legal  uncertainty  and potential  constitutional                                                               
issues  for  the  state.  He  agreed with  Ms.  Reilly  that  the                                                               
workers'  compensation   system  is   intended  to  be   a  grand                                                               
compromise.   He  characterized   the  proposed   legislation  as                                                               
unbalanced, potentially legally  vulnerable, incomplete, unclear,                                                               
and  arbitrary. He  stated  that the  50,000  AFL-CIO workers  he                                                               
represents in Alaska  are opposed to SB 112 in  its current form,                                                               
but he looks forward to working on ways to improve the system.                                                                  
2:22:35 PM                                                                                                                    
MICHAEL  FERRIS, representing  self, Anchorage,  Alaska, said  he                                                               
has a small  business called Alaska Enterprise  Solutions. He has                                                               
10  employees and  is  thankful he  has never  had  an injury  or                                                               
claim.  It  would  be financially  devastating  if  the  workers'                                                               
compensation   premiums  increased   dramatically.  He   said  he                                                               
strongly supports  SB 112  and like most  Alaskans would  like to                                                               
see  the current  system reformed.  He cited  high attorney  fees                                                               
that  aren't  capped,  the  high cost  of  a  second  independent                                                               
medical opinion, and the benefit  cash out option as problematic.                                                               
He said  he looks forward to  the common-sense savings in  SB 112                                                               
becoming the new standard for workers' compensation in Alaska.                                                                  
2:24:43 PM                                                                                                                    
MICHAEL  JENSEN, representing  self, Anchorage,  Alaska, said  he                                                               
has been representing injured workers  in Alaska for 34 years. He                                                               
listed the broad variety of  injuries he has represented and said                                                               
that as currently drafted none of  those workers would be able to                                                               
successfully  pursue a  disputed  claim because  the standard  of                                                               
proof  is  so  difficult  to  overcome.  If  they  were  able  to                                                               
establish a claim  the medical treatment would be  limited to two                                                               
years.  An  additional  two  years of  treatment  would  only  be                                                               
available if  they could prove  by clear and  convincing evidence                                                               
that  their  condition  warranted continued  medical  care.  That                                                               
standard  is   equivalent  to  a   criminal  standard   beyond  a                                                               
reasonable  doubt. If  the  insurance company  has  a doctor  who                                                               
disagrees with the treating physician,  the worker would never be                                                               
able to  overcome that  burden. He  disagreed with  the sponsor's                                                               
example of attorney  fees on a $3 million  settlement and pointed                                                               
out  that  defense  legal  fees account  for  two-thirds  of  the                                                               
$15,000 spent  annually on legal fees  for workers' compensation.                                                               
He maintained that it's difficult  to find attorneys to represent                                                               
claimants because  the fees don't  adequately compensate  in most                                                               
cases. He urged the committee to hold the bill.                                                                                 
2:28:01 PM                                                                                                                    
SENATOR GARDNER  asked if  he could provide  a reference  for the                                                               
attorney fee schedule.                                                                                                          
MR.  JENSEN explained  that under  the current  system attorney's                                                               
fees  are calculated  at 10  percent of  what is  awarded to  the                                                               
injured worker. The  attorney does not get paid  unless he/she is                                                               
successful in  getting the  benefits to  the injured  worker. The                                                               
statutory minimum is  10 percent. If that does not  meet the work                                                               
the claimant's  attorney incurred  in prosecuting the  claim, the                                                               
attorney is free  to request an hourly rate.  The Alaska Workers'                                                               
Compensation Board must  approve the rate. The  board consists of                                                               
members  from  industry  and  labor whereas  SB  112  shifts  the                                                               
decision making to government bureaucrats.                                                                                      
2:29:24 PM                                                                                                                    
CHARLES  MCKEE, representing  self, Anchorage,  Alaska, testified                                                               
on SB 112 and voiced concern  that the State of Alaska subjugated                                                               
his claim with his Social Security account.                                                                                     
CHAIR COSTELLO asked if he supports the bill.                                                                                   
MR. MCKEE answered "No."                                                                                                        
2:32:51 PM                                                                                                                    
LEE GOODMAN, representing self,  Anchorage, Alaska, said he's had                                                               
a license  to practice  law for  close to  30 years  and recently                                                               
started  a   small  practice  representing  injured   workers  in                                                               
workers'   compensation   claims.   He   said   he   would   like                                                               
clarification  on the  employer's  right to  choose an  attending                                                               
physician. The sponsor indicated that  is an error in the reading                                                               
of the bill, but  he heard the aide say that  again when she went                                                               
through the  sectional analysis.  Two other  points he  wanted to                                                               
discuss were the burden of proof and attorney fees.                                                                             
He pointed  out that the  clear and convincing standard  seems to                                                               
conflict with  the presumption  of compensability.  He questioned                                                               
how there can  be a presumption that the worker  is covered under                                                               
workers' compensation  and then say the  insurance company doctor                                                               
has  greater  weight  than   the  treating  physician.  Regarding                                                               
attorney fees he said the  fees owing to claimants' attorneys are                                                               
not  huge right  now, and  under the  bill attorneys  wouldn't be                                                               
able to  make a living  practicing claimant's law. He  listed the                                                               
wide range  of injured  workers he has  represented and  said the                                                               
thing  they   have  in  common   is  that  their   benefits  were                                                               
controverted, usually  owing to  a negative  IME report  from the                                                               
employer's physician that conflicts  with the treating physician.                                                               
He maintained  that none of  his clients  are trying to  game the                                                               
system; they  want to  return to work.  Further, he  doesn't know                                                               
any claimant attorneys who take cases they don't believe in.                                                                    
2:37:27 PM                                                                                                                    
At ease                                                                                                                         
2:37:49 PM                                                                                                                    
CHAIR  COSTELLO  reconvened  the  meeting  and  suggested  people                                                               
submit  their comments  in writing  if they  feel they  need more                                                               
time to make their points.                                                                                                      
2:38:42 PM                                                                                                                    
SHELBY  NUENKE-DAVISON,  representing  self,  Anchorage,  Alaska,                                                               
said she  has been a  workers' compensation defense  attorney for                                                               
many  years.  She  applauded  the  sponsor  for  taking  workers'                                                               
compensation on  in a very innovative  way. She said the  idea of                                                               
workers' compensation was  for an employee and  employer to agree                                                               
that the  employee wouldn't sue, and  their work-related injuries                                                               
would  be  paid without  having  to  go  to court.  However,  the                                                               
bargain  has gone  against  the employer.  The  board and  courts                                                               
broadly  interpret "a  substantial factor"  and even  preexisting                                                               
conditions   and  aggravated   symptomatology  are   deemed  work                                                               
related. Benefits  are paid  on cases that  wouldn't stand  up in                                                               
court. She said she applauds  the substantial cause and clear and                                                               
convincing standard.  Oregon has  taken this  approach. Employees                                                               
still  have the  presumption  of compensability  that  has to  be                                                               
rebutted by the  employer. She said she applauds  using the clear                                                               
and  convincing  evidence standard  at  the  third stage  of  the                                                               
analysis and moving the hearings  to an administrative law judge.                                                               
She said she would submit additional comments in writing.                                                                       
2:41:07 PM                                                                                                                    
CLARK  D. WILLIAMS,  representing self,  Fairbanks, Alaska,  said                                                               
he's  read the  workers'  compensation statutes  and  the law  as                                                               
written  does not  resemble the  way  the law  is practiced.  For                                                               
example, the  minimum necessary has been  interpreted as anything                                                               
and everything.  He said it's  been his experience  that workers'                                                               
compensation has become a tool  of retaliation by some employers,                                                               
which  is  a clear  abuse  of  civil  rights. He  said  insurance                                                               
company  doctors are  unimpeachable and  their decisions  are not                                                               
reviewed  by  the board.  Further,  no  state or  federal  agency                                                               
reviews abuses  of the workers'  compensation process.  He shared                                                               
that he  withdrew his workers' compensation  claim under physical                                                               
duress after  spending $5,000 on  attorney fees. His  medical IME                                                               
was  sent via  email from  an account  that was  hacked. Workers'                                                               
Compensation   did    not   investigate   and   did    not   take                                                               
responsibility. He maintained  that he was abused  by the system.                                                               
He suggested the  committee take time to talk  to workers because                                                               
the bill doesn't  address that. He further suggested  the need to                                                               
conduct exit  interviews of injured workers,  actuarial review of                                                               
accident  victims'  mortality  rates  from  suicide  to  criminal                                                               
assault, and  non-related stress injuries.  He said he'd  like to                                                               
see a federal review of the system.                                                                                             
2:44:28 PM                                                                                                                    
JUSTIN MACK,  representing self,  Anchorage, Alaska, said  he's a                                                               
firefighter  in Anchorage  and is  testifying to  express concern                                                               
with SB  112. He said  he believes there  is room to  improve the                                                               
workers' compensation process, but SB  112 is not a solution that                                                               
benefits all  parties. He  opined that SB  112 creates  a reduced                                                               
benefit for Alaskans and shifts  an imbalanced burden of proof to                                                               
the injured worker.  The bill changes the hearing  process from a                                                               
three-member panel  that includes  labor and  industry to  a one-                                                               
person panel with  narrow parameters in which to hear  a case. SB
112 also limits  compensation to the injured  worker's counsel by                                                               
assigning attorney's fees to a  percentage of the awarded benefit                                                               
rather  than  the  actual  cost, which  makes  it  difficult  for                                                               
injured  Alaskans to  get legal  counsel. He  concluded that  the                                                               
system could  be improved in  a way  that benefits the  state and                                                               
its workers, but SB 112 doesn't do that.                                                                                        
2:47:01 PM                                                                                                                    
ERIC  CROFT, representing  self, Anchorage,  Alaska, stated  that                                                               
workers' compensation  rates in Alaska  have been going  down for                                                               
over a decade. He related a story  about a client who was shot at                                                               
work to  illustrate how provisions  in SB 112 would  work against                                                               
her. Section  70 limits temporary  total disability (TTD)  to two                                                               
years  and she  was recovering  for a  lot longer  than that.  He                                                               
noted that the  sponsor said there are exceptions,  but the plain                                                               
language  says more  than 104  weeks is  barred. Second,  medical                                                               
care becomes much  more difficult after two years and  she was in                                                               
mid recovery  at that time. Section  26 says a person  can get up                                                               
to an  additional two years  of medical treatment upon  clear and                                                               
convincing  evidence,  but  it's   limited  to  certain  devices,                                                               
prescriptions, and services. If it's  not listed in that section,                                                               
it's not covered.  Under SB 112 his client would  not have gotten                                                               
the additional  surgeries she  needed to  restore a  semblance of                                                               
her prior lifestyle.  Section 26 also provides  that the employer                                                               
or  insurer may  designate  a different  attending physician.  He                                                               
said there are  many more, but those three  provisions would have                                                               
been catastrophic for  his client. He said he  would send written                                                               
comments and urged the committee to hold SB 112.                                                                                
2:50:37 PM                                                                                                                    
JOE KALAMARIDES, representing self,  Anchorage, Alaska, said he's                                                               
practiced  law  for  many  years and  has  watched  the  worker's                                                               
compensation process  since the 1970s.  What used to  happen when                                                               
change  was  requested  was  that the  unions  and  the  Workers'                                                               
Compensation Commission  would get  together and  come up  with a                                                               
compromise if  necessary. He said  he didn't see  any opportunity                                                               
for  compromise in  SB 112.  In fact,  testimony from  the unions                                                               
indicates that they weren't asked  to give any input until today.                                                               
He noted that changes that were  made to the process in 2005 were                                                               
still  being argued  in  court to  try to  figure  out what  they                                                               
He said  he had three  specific points  to make and  would submit                                                               
additional written comments. First,  he questioned the purpose of                                                               
referring cases to  an administrative law judge  when the current                                                               
panel is  well-balanced and working.  It has  representation from                                                               
management, labor,  and a  workers' compensation  hearing officer                                                               
who  is  a   member  of  the  bar   association.  By  comparison,                                                               
administrative  law judges  cover  a lot  of different  subjects,                                                               
don't  have  the  background to  look  at  workers'  compensation                                                               
cases,  and are  already  overworked. He  said  the second  point                                                               
related  to  the  treating  physician and  he  would  leave  that                                                               
discussion to Mr.  Croft. He also pointed out that  the burden of                                                               
proof is  problematic because  it's very  difficult to  prove the                                                               
major  contributing cause,  particularly for  older workers.  The                                                               
bill  appears to  shift the  grand compromise  referenced earlier                                                               
that  protects both  the employer  and employee  in favor  of the                                                               
employer.  It may  be a  problem to  sort that  out in  court, he                                                               
2:54:57 PM                                                                                                                    
DAVE  JONES,  Assistant  Superintendent, Kenai  Peninsula  School                                                               
District, Kenai, Alaska, said he  was testifying in support of SB
112 and  wanted to thank the  sponsor and her staff  for bringing                                                               
the bill  forward. He  said that  when workplace  injuries occur,                                                               
the employer's objective is to  provide medical treatment, so the                                                               
employee can  be healed and  return to  work in an  expedient and                                                               
cost-efficient  manner.  He opined  that  the  current system  is                                                               
neither expedient  nor cost-efficient.  SB 112 will  help correct                                                               
that.  He   opined  that   using  the   evidence-based  treatment                                                               
guidelines  in conjunction  with  the  predetermined medical  fee                                                               
schedules will  lead to lower  medical costs. The bill  will free                                                               
dollars currently being  spent on higher than  needed medical and                                                               
legal  fees, so  they can  be used  in the  classroom where  they                                                               
2:56:42 PM                                                                                                                    
ELLIOT DENNIS, representing self,  Anchorage, Alaska, said he has                                                               
been practicing  law for over  40 years and has  represented both                                                               
injured workers and insurance companies.  He characterized SB 112                                                               
as very bad  for injured workers. Because many of  the points had                                                               
been covered,  he said he  would endorsed the statements  of Eric                                                               
Croft,  Joe  Kalamarides,  Vince Beltrami,  and  Michael  Jensen.                                                               
However, one  point that  hasn't been made  is what  happens when                                                               
the  injured worker  is cut  off and  is shifted  to Medicare  or                                                               
doesn't  receive   treatment  at  all.  Sometimes   they  end  up                                                               
homeless.  He said  he has  dealt with  multiple individuals  who                                                               
were hurt  on the job  and all they wanted  was to get  fixed and                                                               
back to work.  The insurance companies bring doctors  from out of                                                               
state  to give  an independent  medical examination.  His clients                                                               
have said  the exam  takes about  15 minutes  and their  claim is                                                               
denied. The  IME reports frequently  are the same from  client to                                                               
client. He said  the system needs fixing, but SB  112 does not do                                                               
that. He suggested that the  employees and employers get together                                                               
and hammer out  changes that are needed and  will actually reduce                                                               
2:59:56 PM                                                                                                                    
GINA  WANNER, Program  Manager, Eberle  Vivian Incorporated  said                                                               
her  firm handles  the self-insured  program for  Alaska Airlines                                                               
and she was speaking in support  of SB 112. She noted that Alaska                                                               
Airline sent a  separate endorsement for SB 112.  She opined that                                                               
many of  the sections in the  bill are paramount, but  of primary                                                               
importance are  the clear and  convincing evidence  standard, the                                                               
evidenced-based   treatment,  and   the  voucher   system.  Other                                                               
jurisdictions use  the proposed standard  of proof and  showing a                                                               
substantial cause  being more  than 50 percent  of the  cause has                                                               
become a  standard measure  of determining  compensability. Using                                                               
the evidence-based  medicine guidelines is  also the wave  of the                                                               
future,  she  said.  Importantly,  it's a  benefit  to  both  the                                                               
employer  and the  worker because  it defines  care and  provides                                                               
known  parameters  for  all  parties.   She  said  her  company's                                                               
experience   is  that   people   do  not   proceed  through   the                                                               
reemployment process successfully, so  the voucher system is more                                                               
equitable  and appropriately  timed. The  current system  inserts                                                               
the  vocational  process much  too  early.  On behalf  of  Alaska                                                               
Airlines and  Eberle Vivian, she  asked the committee  to support                                                               
SB 112.                                                                                                                         
3:02:53 PM                                                                                                                    
ERIC  MCDONALD, representing  self,  Kenai, Alaska,  said he  was                                                               
hurt  on  the  job  several years  ago  and  sustained  permanent                                                               
injuries.  From  that perspective  he  was  speaking in  complete                                                               
opposition  to SB  112. He  said  he believes  that most  injured                                                               
workers are  like him; they  just want  to get better.  He shared                                                               
that he  has gone through  four independent  medical examinations                                                               
and he views  that as an unnecessary cost. He  urged people to be                                                               
leery  of some  of the  things that  have been  stated about  the                                                               
bill. He pointed  out that the bill doesn't focus  on the worker,                                                               
it's weighted  in favor of  the insurance company and  profit. He                                                               
urged the committee to hold SB 112.                                                                                             
3:07:33 PM                                                                                                                    
BARBARA WILLIAMS,  representing self,  Wasilla, Alaska,  said she                                                               
has assisted injured  workers for 20 years and  has observed that                                                               
these important  stakeholders are often  left out of  the process                                                               
when  changes are  made to  the system.  She emphasized  that the                                                               
proposed changes  will hurt injured workers,  making medical care                                                               
unavailable and most importantly,  taking away legal counsel when                                                               
benefits are  denied. Cost  containment is  important but  not at                                                               
the cost of worker's compensation and workers generally.                                                                        
MS. WILLAIMS  said attorney compensation  across the  country has                                                               
been going  down for  the past five  years. She  wondered whether                                                               
capping fees would apply only  to attorneys who represent workers                                                               
and  if defense  costs were  included in  the litigation  numbers                                                               
from DOLWD.  She noted that  attorneys working for  employers can                                                               
collect fees  from the  inception of  the claim,  whereas injured                                                               
worker's attorneys are  paid after claims are  contested and only                                                               
for indemnity. Also, defense attorneys  who work for insurers get                                                               
dollar-for-dollar  billing, can  negotiate  fees with  employers,                                                               
and   have  more   contributions  than   the  cost   of  workers'                                                               
compensation litigation compared to plaintiff attorneys.                                                                        
She stated that in California  and other states lay advocates are                                                               
trained and paid to represent  injured workers, whereas in Alaska                                                               
lay   people   who   assist  injured   workers   receive   little                                                               
compensation.  Currently the  state  does not  have enough  legal                                                               
assistance for  workers and employers  equally. She asked  if the                                                               
cost  of independent  medical evaluators  who work  for employers                                                               
are included in the cost analysis.                                                                                              
MS. WILLIAMS said workers' compensation  boards have long allowed                                                               
employers  to   spend  what  they   want  for   employer  medical                                                               
evaluations  while medical  providers  for  injured workers  have                                                               
been  subject  to  a  strict   and  sometimes  unenforceable  fee                                                               
schedule. Currently 47  SIME physicians are not subject  to a fee                                                               
schedule. Injured  workers cannot  hire expert physicians  due to                                                               
cost and because of the  way the regulation has been interpreted,                                                               
it's not  really an  option. She  questioned whether  those costs                                                               
were  considered in  the cost  containment  effort. Workers  have                                                               
great difficulty getting legal counsel  in part because plaintiff                                                               
attorneys are subject to capped  fees while employers are held to                                                               
an  entirely  different standard.  There  are  no attorneys  that                                                               
provide  legal  services to  providers  when  they have  disputed                                                               
MS.  WILLIAMS said  rehabilitation and  the voucher  system looks                                                               
great  for workers,  but  it is  not.  Current rehabilitation  of                                                               
workers and  the program needs  a lot of attention.  Workers have                                                               
not seen increases  in rehabilitation costs in the  past 17 years                                                               
and they  lose important retraining  benefits if they  cannot get                                                               
back to the job  they had at the time of  injury. Taking back the                                                               
stipend benefits at the time  of retraining means injured workers                                                               
cannot  support  themselves  and  their families.  They  have  no                                                               
financial  security  while  they  go to  school,  which  severely                                                               
limits their options.                                                                                                           
MS.  WILLIAMS   said  there   needs  to   be  a   better  working                                                               
relationship   between   the   board   and   the   rehabilitation                                                               
specialist. Also,  referring unfair and  frivolous controversions                                                               
to the  Division of Insurance  for process  investigation doesn't                                                               
fix the  problem. For the past  18 years, since the  audit of the                                                               
Worker's  Compensation  Program  in  2000,  there  have  been  no                                                               
referrals to  the Division of  Insurance. Further, there  is zero                                                               
oversight  on  self-insured  programs  and there  is  no  one  to                                                               
complain to if someone is not getting essential benefits.                                                                       
CHAIR  COSTELLO asked  Ms.  Williams to  submit  her comments  in                                                               
3:14:58 PM                                                                                                                    
FRANCES  SEATER, representing  self,  Anchorage, Alaska,  advised                                                               
that she treats  injured workers and was  testifying to encourage                                                               
the committee  to reject SB 112.  She said providers take  a risk                                                               
accepting  workers' compensation  cases because  those are  often                                                               
referred  to non-plaintiff  care physicians  for IMEs  and second                                                               
IMEs out-of-state.  Too often the results  are discouraging. This                                                               
interferes with the  continued care of injured  workers and makes                                                               
it  increasingly difficult  for the  point of  care physician  to                                                               
continue medically-based  treatment plans. She  expressed concern                                                               
that the  disputed claims  process was too  complex, and  that SB
112  would cause  a  broken  system to  become  more broken.  She                                                               
maintained  that   limiting  medical   care  to  two   years  was                                                               
disrespectful to point  of care physicians, that a  new clear and                                                               
convincing standard  was not needed,  and that  allowing insurers                                                               
to pick  the doctor further  stacks the deck against  the worker.                                                               
She reiterated her suggestion to reject SB 112.                                                                                 
3:17:44 PM                                                                                                                    
GREG  WEAVER, representing  self, Wasilla,  Alaska, testified  in                                                               
opposition to  SB 112.  He related  that he was  hurt on  the job                                                               
about 4.5  years ago  and his employer  was self-insured.  He was                                                               
assigned a nurse case manager  and things went downhill. His case                                                               
was controverted and  after he lost all  benefits he subsequently                                                               
lost his  family, home,  and vehicles. He  said he  believes that                                                               
the workers' compensation deck is  stacked completely against the                                                               
worker.  He concluded  saying  that "There  are a  lot  of us  at                                                               
Bean's Cafe,  there are a lot  of us who have  fallen through the                                                               
net because there is no safety net for us."                                                                                     
3:22:30 PM                                                                                                                    
DARETHA TOLBERT,  representing self, Anchorage, Alaska,  said she                                                               
is in the  same boat as the previous testifier.  Until four years                                                               
ago  she  worked  and  was  self-sufficient.  She  drew  workers'                                                               
compensation  benefits   for  just   four  weeks  when   she  was                                                               
controverted. She  was sent back  and controverted again  and now                                                               
she's being  sent out of state.  She emphasized that this  is not                                                               
cost-effective and urged the committee  to hold SB 112 because it                                                               
does not benefit the injured worker.                                                                                            
3:24:38 PM                                                                                                                    
KEN KESSLER, representing  self, Anchorage, Alaska said  he has a                                                               
few concerns relating to the  independent medical examination. "I                                                               
can clearly  prove that the IME  providers have been paid  off or                                                               
they have  lied. As well as  SIME providers, the same  thing." He                                                               
asked  if  there was  any  kind  of  background check  for  these                                                               
providers to ensure  they're ethical. He said he  was forced into                                                               
training  before  he had  surgery.  Since  the surgery  both  his                                                               
providers and  the insurance providers  state that he  can return                                                               
to work, but  he's not entitled to retraining because  it is only                                                               
offered once. He agreed with the  last two testifiers that SB 112                                                               
was detrimental and should not pass.                                                                                            
3:27:06 PM                                                                                                                    
HEATHER JOHNSON, representing self,  Wasilla, Alaska, stated that                                                               
she  was absolutely  opposed to  SB 112.  She said  the sponsor's                                                               
intention is  good, but she is  only getting input from  one side                                                               
and is missing the larger  picture. She maintained that there was                                                               
corruption  in the  workers'  compensation  system and  suggested                                                               
that insurance  companies should be  required to provide  all the                                                               
medical records. That would reduce SIME costs.                                                                                  
3:29:06 PM                                                                                                                    
CHAIR COSTELLO  closed public  testimony on SB  112 and  held the                                                               
bill in committee.                                                                                                              

Document Name Date/Time Subjects
SB 112 version R.PDF SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Sponsor Statement.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Sectional ver R.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Quick Ref to R.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Support Workers Comp Reform in AK 6 Key Reforms 2004.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Support MDGuidelines Fact Sheet_Treatment and Drug Formulary.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letters of Support as of 1-30-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support Workers' Compensation Committee of Alaska.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support Alaska Airlines.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support AK Truckers Association.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support Alaska Chamber.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support AMA.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support Carlos Luna with ACOEM.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support NAMIC.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112 Letter of Support PSPA.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB112-DCCED-CBPL-01-25-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB112-DOLWD-WC-01-30-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SSSB112-DOA-DRM-01-26-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SSSB112-DOA-OAH-01-29-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112
SB 112- Presentation 2-1-18.pdf SL&C 2/1/2018 1:00:00 PM
SB 112