New workers' comp statute likely to see court challenge

Posted: Monday, May 30, 2005

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JUNEAU - A two-year struggle by Gov. Frank Murkowski to change Alaska's workers' compensation laws passed the Legislature this year, but it could be a short-lived victory for the governor as many predict the new laws will be challenged in court.

Lawyers, lawmakers and members of the Murkowski administration say the bill makes changes that could violate the Alaska Constitution.

Murkowski says he wants to make the system more efficient for workers and to lower premiums for employers. Alaska has the second-highest workers' compensation rates in the nation, just behind California, according to the administration. He called the legislation a "first step" toward fixing the system at a news conference following the end of the special legislative session Wednesday.

Murkowski has pushed the bill for the last two sessions. In 2004, it was included in a special session but failed to make it to the House or Senate for a vote. It was added to the agenda of this year's special session by the governor, who proclaimed it must-pass legislation.

The bill, which now awaits the governor's signature, establishes a five-member appeals commission for disputed claims, bypassing the Superior Court, which currently hears about 30 to 40 appeals annually.


Democrats have opposed creating a commission because members would be appointed by the governor. An administrative law judge, also appointed by the governor, would provide a list of names from which he could pick.

Rep. Harry Crawford, D-Anchorage, says this gives the administration too much power.

"I would be surprised if they didn't give the administrative law judge a list of people they want to appoint," Crawford said.

Chancy Croft, a former Democratic representative from Anchorage and workers' compensation appeals lawyer, said the appeals commission could violate the separation of powers between the judicial and executive branches of government.

"What the governor wants is to set up a governor's court in the executive branch," said Croft, father of Rep. Eric Croft, D-Anchorage.

Croft said he also is concerned that workers would have to appeal decisions by the commission to the Alaska Supreme Court, potentially delaying payments.

"I think it's going to be a double burden," he said. "Our constitution set up the Supreme Court as a final court, not the initial appellate court."

Deputy Attorney General Scott Nordstrand said the state's Workers' Compensation Board which now decides claims also is appointed by the governor and confirmed by the Legislature. He said the appeals commission also requires members to have served on the board for at least 18 months.

Crawford said he is reviewing the bill with lawyers in Anchorage to determine if the commission is constitutionally sound.

The bill also creates a job dislocation benefit, allowing employees to take a payment of up to $13,500 instead of receiving job training. Crawford, an ironworker from Anchorage, said he was denied a workers' compensation claim in 1982 when he fell 22 feet onto concrete and broke both of his feet while working on the Sullivan Arena.

The company he worked for offered a cash benefit and he took it, he said.

"They waited me out to the point where I was about three payments behind on my mortgage and other things," Crawford said. "I took the money because I was desperate."

Crawford said he believes others who need quick money will forgo retraining and be left unable to work in another field.

Proponents of the measure say it will give workers more options.

Another potential pitfall in the bill resides in the definition of what constitutes the substantial cause of the injury. The original version of the bill would have required the injury to be the "major contributing cause" if preexisting workplace injuries are exacerbated by a new injury.

The new version of the bill changes the definition to "the substantial cause."

Janine Gibford of the American Insurance Association said a firm definition of predominant cause is common language in most workers' compensation laws across the nation. But the new definition is more vague, she said.

"You have to define the term substantial," she said.

Some have argued that it could be subject to lawsuits if claims are denied under the proposed language. Chancy Croft said the standard aims to reduce the number of claims, but the cost savings could be lost through increased litigation.

Croft said the bill was written in closed-door meetings during the special legislative session, which led to the loose language.

Gibford said she, too, has concerns that the new language could lead to lawsuits. She said she was assured by the Murkowski administration that a cleanup bill next year would address any problems.

Another section of the bill that could face a constitutional challenge is in a change to the "compensation readjustment" formula that determines how much money a worker is eligible for based on his or her weekly wage. The readjustment allows certain injured workers to determine their compensation rate based on the pay they received in either of the preceding two years of work, whichever is higher.

Division of Workers' Compensation Director Paul Lisankie said the provision could be problematic because it treats seasonal workers different from year-round employees.

Croft said those who work the same number of hours over the two-year period could be discriminated against if they worked the same number of hours each year as opposed to working the majority of the time in either year.

The state adjusted its workers' comp laws in the mid-1990s, following a lawsuit by Warren K. Gilmore against his employer, Klukwan Forest Products Inc.

In that case the Alaska Supreme Court determined that the state's former method of determining compensation rates created "large differences in compensation between similarly situated injured workers."

"I have concerns that it could be stepping into Gilmore troubles again," Lisankie said.

The bill creates a 13-member workers' compensation task force, charged with reviewing Alaska's and other states' workers' compensation laws and reporting to the Legislature before Dec. 1, 2005.

The task force members include one member of the House and Senate, one member of the Democratic minority from either house and 10 members of the public. The members are picked by the Senate president and speaker of the House.

A nine-member medical services review committee also established in the bill will study medical and related benefits and submit them with the task force's report.

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