State News : Alaska

The Governor signed SB 206 affecting workers compensation. It is effective 1/1/25.

NOTICE. The notice deadline in section AS 23.30.100(a) has been shortened from 30 days to 15 for Employee to report the injury to Employer.

REEMPLOYMENT: While the Board has to notify people of their rights sooner, the time frames for Employer’s mandatory referral was extended from 90 days to 120 days. The tuition amount went up to $22,150 and can be adjusted every 5 years to account for inflation. The SCODDOTS are replaced with the OIN database published by the US Dept of Labor. This is more objective than having rehab specialists develop job descriptions in every claim. This is a good change—updated objective job descriptions including jobs that didn’t exist back in the day when SCODDOTs were created.

A major change is the adoption of a “stay at work” program as AS 23.30.043. It will be developed by the rehab specialist and provided to the employee, employee, program coordinator, and attending physician. The board has to adopt regulations to develop the standards and procedures a rehab specialist must use to develop the stay at work plan. It is apparent that the employer will need to be responsive and be involved in this process. Fortunately, there is an opt-out provision. An employer may elect not to participate or continue to participate in the stay at work plan at any time before completion of the plan. This section is vague, with the discretion left to the board to implement regulations and procedures.  This is a process that we should try to be involved in as employer representatives and provide perspective on how this will impact real life. 

In addition, a last minute addendum was tacked on that resulted in a major change is the presumption of compensability for PTSD for a number of professions mostly related to first responders. AS 23.30.118. The notice timeline, presumption standard and rebuttal standard are all altered by this bill.

 The PTSD has to be diagnosed by a psychologist or psychiatrist. The diagnosis must come within 3 years after the last day of employee’s employment. We are not sure where/why this timeline came from as it is different from 2-year latent injury, and it doesn’t seem to be tied to any particular event, just general employment as a reason in one of the identified positions is sufficient to trigger the presumption of compensability. It also eliminates the comparison with others in a similar role. A broad category that it may apply to is “employees who are certified under state law to perform emergency medical services.” It appears broad enough to potentially include home health care workers and medical providers.

 Relevant definitions are in AS 18.08.200:

(9) “emergency medical services system” means a system that provides for the arrangement of personnel, facilities, and equipment for the effective and coordinated delivery of health care services, including trauma care, under emergency conditions, occurring either as a result of the patient's condition or of natural disasters or similar situations, and that is administered by a statewide network that has the authority and resources to provide effective administration of the system;

(13) “provider of emergency medical services” means a person whose occupation or profession is, or has been, the delivery or administration of emergency medical services; a person who has a fiduciary position with, or has a fiduciary interest in, a health activity, facility or other health agency, or a legal or financial interest in the rendering of any component of emergency medical services.”

Once the presumption has attached, there is a secondary change in the legal standard for rebuttal. The phrase “may be rebutted by a preponderance of the evidence that the employee’s PTSD resulted from factors that were not work related” is problematic because it means that we cannot controvert based on “substantial evidence.” Preponderance of the evidence is a factual determination by a trier of fact. This means that once the presumption of compensability is triggered by a psychologist or psychiatrist as minimally as, “Jane Doe has been diagnosed with PTSD and is unable to work. She was a nurse within the last 3 years,” there is no ability to controvert and the claim must go to hearing to establish whether the preponderance of evidence demonstrates that the PTSD resulted from factors that are not work related. The presumption for compensability “may be rebutted by a preponderance of the evidence that the employee’s PTSD resulted from factors that were not work related.” This appears to create an entirely new standard when compared to AS 23.30.010(b) which is that the work stress must be the predominant cause of the work injury.

In a practical application it means that large groups of first responders could all be taken off work at once with no recourse for Employers until after a merits hearing (which can take 9 months or more). There are also likely butterfly effect ramifications and increased stress that will result from understaffing. Without the comparison and controversion abilities there is little opportunity for mitigation. This portion of the legislation really deserved public comment and more thought.

Many clients are asking whether the new COLA calculation for workers at the maximum compensation rate adopted by the Alaska Supreme Court in the Roberge case will apply retroactively to the inception of a claim, will only apply going forward (prospective application), or whether there will be some intermediate limit placed on past benefits that can be claimed and awarded based on fairness. The Court in Roberge did not address that issue. The Supreme Court has the authority to determine whether a new rule should be applied retroactively or prospectively, but it would take litigation to reach that result. The application of Roberge is therefore an issue that can be legally challenged, and we expect the issue to be litigated.

When the Supreme Court altered the calculation of disability benefits under the Act in the past, it applied four factors to determine whether a new rule should be applied retroactively or only prospectively:

1)            Whether the holding either overrules prior law or decides an issue of first impression whose resolution was not anticipated;

2)            Whether the purpose and intended effect of the new rule of law is best accomplished by a retroactive or a prospective application;

3)            The extent of reasonable reliance upon the old rule of law; and

4)            The effect on the administration of a retroactive application of the new rule of law.

Based on these factors as applied in other cases, we expect the Board and the Court to decide that Roberge will generally apply retroactively to any claims that are open to adjudication and/or preserved for appeal.

Still, each case is different and may present facts that support a limitation on retroactive application of Roberge. For example, if a compensation rate issue was raised and settled in a case, an adjustment will likely not be allowed. If a C&R covering indemnity benefits was done, claiming additional past disability benefits will also likely be prohibited. And if more than two years has passed since the last payment of benefits, the statute of limitations in section .105 of the Act might apply.

On the other hand, for workers or beneficiaries currently receiving undisputed PTD or death benefits, there is likely no statute of limitations running on a claim for increased weekly benefits and there is a significant risk that increased benefits will be awarded from the inception of those benefits. The Supreme Court would have to determine if it would be unfair to employers to impose increased liability going back many years and the Court could adopt a limit of some kind, but it would take litigation to reach that result.

We recommend a practical approach to the issue of retroactive application of Roberge: determine the exposure and assess if litigating the issue will be worthwhile. Settlement may be preferable, or voluntarily paying additional past benefits may be the best option in order to avoid legal cost exposures.

If you decide to challenge liability for retroactive benefits, the most conservative approach is a petition asking for a Board determination whether and how far back a compensation rate adjustment needs to be made. A more aggressive approach is to file a controversion notice on the basis that Roberge does not apply retroactively under the factors described above. Since the issue of retroactive application of the rule adopted in Roberge is a question of law, a controversion on that basis could be filed in good faith. The worker would have to decide whether to challenge the controversion. Ultimately the issue will have to be decided by the Alaska Supreme Court. 

In February, the Alaska Supreme Court issued a decision in Roberge v. ASRC in which it established a new method for applying the cost-of-living adjustment (COLA) under AS 23.30.175 for workers who are entitled to benefits at the maximum compensation rate. As a result, workers residing out-of-state who have been paid TTD benefits may be entitled to a higher compensation rate based on the new rule.

Prior to the Court’s decision, the rule as stated by the Appeals Commission was that employers and insurers would cap TTD/PTD benefits at the maximum compensation rate and then apply the applicable COLA adjustment to reduce the rate below the maximum. Using that method, a worker who was subject to COLA reductions would never receive the maximum Alaska rate where the cost of living was less than in Alaska.

However, in the Roberge case, the Supreme Court held that the Commission erred in its interpretation of the COLA statutes. The Court held that, for workers paid at the maximum compensation rate, employers and insurers must first apply the COLA adjustment to the “uncapped” TTD rate (the TTD rate that would apply if there was no maximum rate). If the COLA adjustment lowered the “uncapped” TTD rate below the maximum rate, that lower rate would apply. If the COLA adjustment did not lower the “uncapped” TTD rate below the maximum rate, the maximum rate would still apply, effectively eliminating the COLA.

This is best illustrated through an example:

A worker is injured on 9/20/21, is single with no dependents (S-1) and lives in Atlanta, Georgia after injury. The COLA rate for Atlanta is .6977. Gross weekly earnings equal $2,500.00. The board’s Benefit Calculator states that the spendable weekly wage (SWW) is $1,901.33 and the maximum TTD rate is $1,298.00. The Benefit Calculator does not state what the TTD rate would be if there was no maximum rate.

Prior formula: Based on GWE of $2,500.00, the maximum compensation rate of $1,298.00 applies per the board’s Benefit Calculator. The COLA for Atlanta of .6977 is applied to the maximum rate and reduces the TTD rate to $905.61 ($1,298 x .6977 = $905.61).

Revised formula under Roberge:

1)      For workers at the maximum TTD rate, determine the TTD rate as if there was no maximum rate (the “uncapped” TTD rate). In this example, based on a GWE of $2,500, the spendable weekly wage (SWW) would be $1,901.33 and the “uncapped” TTD rate would be $1,521.06 (80% of the SWW). The board’s Benefit Calculator provides the SWW but not the “uncapped” TTD rate. Multiply the SWW by .8 to get the “uncapped” TTD rate.

2)      Apply the COLA to the “uncapped” TTD rate. In this example, multiply $1,521.06 by .6977. The result is $1,061.24.

3)      Determine if the result from step 2 is above the maximum TTD rate for that year. If so, the maximum rate applies and no COLA is taken. If less than the maximum rate, the result from step 2 applies. In this example, the TTD rate of $1,061.24 from step 2 applies after the COLA.

In this example, the worker would receive $155.63 more per week in TTD benefits under the new formula compared to the prior COLA calculation method. The overall impact of this change is that a COLA might not apply in the case of a very high wage earner or may lead to a lower COLA adjustment than before. 

Be aware that this procedure is only necessary if the worker is at the maximum compensation rate prior to application of a COLA. If the board’s Benefit Calculator indicates that the TTD rate is less than the maximum before any COLA, this procedure need not be followed and the COLA should be calculated as usual.

ALSO BE AWARE THAT THIS NEW FORMULA WILL APPLY IN DEATH CASES WHERE THE MAXIMUM COMPENsATION RATE APPLIES.

In light of the Court’s ruling in Roberge, we recommend that you review all cases where the maximum TTD/PTD rate applies and where a COLA has been taken to determine if a rate adjustment is necessary. This will avoid unnecessary attorney’s fees and litigation costs. 

We issued a newsletter on 9/27/21 describing our view that a two-part causation test applies in Alaska to occupational diseases cases such as COVID-19 claims. We discussed that to be compensable, an occupational disease 1) must be caused by the conditions of the employment, and 2) the employment must create a risk of contracting the disease that is greater than that which generally prevails in employment and living conditions. Under this test, if work presents the same risk of contracting a disease as generally exists in employment and living conditions (e.g., co-worker spread of a common contagious disease), the disease is not an “occupational disease” for benefit purposes even if acquired at work.

Because this test was adopted in Alaska Supreme Court cases issued in 1966 and 1985 and has not been significantly discussed since then, it was unclear if the Board would follow that case law or strike out in a different direction. However, on January 13, 2023, the Board issued a decision adopting the above two-part legal test, denying compensability of a COVID-19 claim by an employee of Chugach Electric Company who alleged she contracted it from a co-worker. See, Cheryl Rapp v Chugach Electric Company, AWCB No 23-0004 (January 13, 2023).

In that case, Ms. Rapp and a co-worker were employed as customer service representatives and worked in proximity to each other in office cubicles. They did their work by telephone and did not have physical contact with the public. The co-worker, Jenny, exhibited signs of illness and on 8/4/21 tested positive for COVID. Ms. Rapp began to experience symptoms of COVID on 8/13/21, nine days after her last exposure to Jenny. She tested negative for COVID that day. Symptoms progressed and by 8/16, Ms. Rapp lost her sense of smell. She tested positive for COVID on 8/17. Ms. Rapp claimed about two weeks of TTD benefits and medical costs related to her bout of COVID. Medical care for her COVID infection was minimal, consisting of three visits to her regular doctor. Ms. Rapp has since fully recovered.

The Board denied the claim under both tests described above. Based on medical evidence from an IME physician, the Board concluded it was more probable than not that Ms. Rapp’s COVID was not contracted at work because of the delay between the last exposure and the onset of symptoms. The Board also found that even if contracted at work, the risk of contracting COVID was no greater for Ms. Rapp than the risk generally present in employment and living conditions at that time. That is, co-worker spread of diseases in that kind of employment setting is common, and there was nothing about Ms. Rapp’s work that elevated that risk above that experienced by workers in general.

We view this case as significant because of the Board’s recognition that the two-part causation test described above applies to communicable diseases such as COVID, especially the second test which requires that the risk of contracting the disease through work has to be “greater than that which generally prevails in employment and living conditions.” Under this test, a worker can contract a disease such as COVID from a co-worker, yet the disease would not be “occupational” for benefit purposes if the risk of contracting it was no greater than the risk that generally exists in similar employment settings and living conditions. Since COVID was a pandemic, the risk of contracting it generally existed in both employment settings and in living conditions.

Bear in mind that each case is different and must be evaluated based on the facts presented. COVID can be a compensable occupational disease for some workers and not others. Evaluating the risk in each employment setting will be important in order to determine the best course of action in a particular case.