Skip to content Back to Top

News Media Advisory
Administration Schedules Workers’
Compensation Press Briefing Today

Jun. 18, 2004
No. 04-61

JUNEAU – Administration officials will provide a news media briefing today on workers’ compensation legislation to be introduced at the special session of the Alaska State Legislature convening Tuesday, June 22.

The briefing is scheduled for 2:30 p.m. today (Friday, June 18) in the third floor governor’s conference room at the Capitol.

Officials participating in the briefing will include Commissioner Greg O’Claray, Alaska Department of Labor and Workforce Development and Paul Lisankie, Director, Division of Workers’ Compensation.

WORKERS’ COMPENSATION REFORM BILL
A MEASURED RESPONSE TO INCREASED CLAIM COSTS AND
INSURANCE PREMIUMS IMPACTING ALASKAN BUSINESSES AND WORKERS

Premiums, benefits paid, and claim costs rising. In 2002 Alaska workers’ compensation benefits and claims costs exceeded $ 210 million, including $11 million in legal fees and costs.
From 1997-2002 the insurance companies in the Alaska workers’ compensation market paid out an average of $1.24 in benefits and claim costs for each dollar in premiums collected.
This year average workers compensation premiums increased 21% but premiums for 17 types of workers went up over 50%. (The increases exceeding 50% affect workers in positions such as hospital non-professional, household appliance installation & repair, day nurseries, child care & day camps, barber shops and hair salons, building & property management, and geophysical seismic exploration.)
Bill does not change benefits paid to injured workers residing in Alaska, while capping payments to outside residents at the Alaska rate.
No change to compensation rates or benefits, including rehabilitation and medical benefits.
Compensation rates for total disability paid to non-residents capped at the rate they would receive if residing in Alaska.

Bill addresses claim costs and speeds final determination of workers’ entitlement to benefits by making initial adjudication of disputed claims and subsequent appeals process more efficient.

Disputed claims heard and resolved by single administrative law judge (ALJ) rather than current 3-member Board panel. ALJs’ availability increases flexibility for scheduling hearings.

ALJs will be required to have special expertise and will be employed by the independent Office of Administrative Hearings created by SB 203.

Initial appeals will be heard by a five member Appeals Commission, rather than individual Superior Court judges.

To minimize administrative costs, and maintain citizen participation, the Commission is composed of four citizen members (2 from labor, 2 from industry) and one full-time, experienced attorney serving as Chair. A panel consisting of the Chair plus one industry and one labor member will hear appeals. The Chair will administer the Commission and advise the members on the law.
The Commission has 90 days to decide an appeal; half the time allowed the Superior Court. Record preparation costs and delays (sometimes a year or more over the six months appeal time limitation in Superior Court) will be decreased. Commission can also schedule hearings more rapidly than the Superior Court.
Specific provisions insure Commission impartiality, including prohibiting political activity by the Chair and prohibiting conflicts of interest of the members.
Claim costs and benefit entitlement uncertainty reduced by increasing consistency and predictability of appeal decisions and making them legal precedent.
Single Commission with expertise plus citizen participation will decide all appeals. Appeals decided by a single entity, rather than dozens of different Board hearing panels and Superior Court judges, will increase predictability and consistency in the interpretation and application of the law.
Commission decisions are binding legal precedent (unlike current Superior Court decisions) and may be appealed directly to the Alaska Supreme Court.
Insurance code amendments strengthen Insurance Guaranty Fund and Assigned Risk Pool for protection of employers, insurers, and workers.
Workers’ compensation insurers required to deposit special cash or securities to provide protection beyond the Insurance Guaranty Association.
Assigned Risk Pool made self-funding by lifting the surcharge cap.
Assigned Risk Pool loss reserves collateralized.
Active, accountable and experienced Division Director given new enforcement tools to protect employers and workers by enforcing insurance requirements & investigating fraud.
Takes enforcement power and responsibilities of the Board and gives them to experienced Workers’ Compensation Division Director with:
Investigation powers, including subpoena and record inspection;
Power to intervene in hearings directly;
Power to make decisions affecting enforcement; and
New powers to investigate fraud.
Director may seek new penalty (up to $100/day/uninsured employee) against uninsured employers and obtain default judgment in faster, streamlined process to stop defaulting employers from leaving the state and their liabilities behind.
New workers' compensation fraud provisions.
Persons who report fraud are given immunity for good faith reports and reports from workers’ compensation industry are required if fraud is known.
Fraud claims cover health care providers, insurers and other industry participants, not just employee claimants.

COMPLAINTS REGARDING PRIOR LEGISLATION (SB 311) ADDRESSED

Appeals Commission too expensive.
Only one full-time Commissioner.
Administrative costs are reduced.

Appeals Commission de novo review power reduces influence of lay members.
Lay members added to Appeals Commission exercise de novo review of hearing officers.
Lay members at appellate level give greater influence on outcomes than current system.

Commission Members should be vetted by Alaska Judicial Council.
Unconstitutional intrusion on executive branch appointment powers in violation of separation of powers doctrine and Article 3, Section 26 of the Alaska Constitution.

* * * *

News Media Contacts:
Paul Lisankie, Director, DOLWD Workers’ Compensation Div., 907.465.2790 or
Joe Holbert, Special Assistant/Communications, 907.465.5673

###