Opinion ID: 2629515
Heading Depth: 4
Heading Rank: 2

Heading: The state's objectives are legitimate.

Text: The next step of equal protection analysis is to identify the state's objectives to see if they are legitimate. [31] We consider the challenged statutory provisions in light of the purposes of the entire workers' compensation act as well as the 2004 amendments. [32] Based on statements made by legislators during consideration of the 2004 amendments, [33] the parties and amici curiae identify several legislative objectives: to ensure or expand workers' compensation coverage for workers, to increase workplace safety, to prevent double dipping, and to provide protection from tort liability to those who are potentially liable for securing workers' compensation coverage. All of these purposes are legitimate. Schiel concedes that extending workers' compensation coverage is a legitimate state interest but contends that absent some evidence that there was a significant problem with employers failing to provide coverage, the legislature was simply solving a nonexistent problem. Schiel also asserted at oral argument before us that the amendments were unnecessary because AS 23.30.165 gave an injured employee the right to file a lien on property related to his job, making a property owner potentially liable for workers' compensation benefits even before the 2004 amendments. [34] Whether legislative action is necessary to solve a specific problem does not determine whether a legislative goal is legitimate. A legislative goal is legitimate if it properly falls within the police power of the state. [35] We have recognized that the purpose of the Alaska Workers' Compensation Actensuring the quick, efficient, fair, and predictable delivery of indemnification and medical benefits to injured workers at a reasonable cost to employers is a legitimate goal. [36] Expanding or ensuring coverage for workers is also a legitimate goal. Schiel takes issue with two of the identified objectives: preventing double dipping and providing protection for entities that are only potentially liable, rather than actually liable, for workers' compensation benefits. Schiel argues that double dipping, in the sense of an injured worker getting a double recovery, was legally impossible before the 2004 amendments, so elimination of that type of double dipping would not be a legitimate objective of the legislation. Our review of the legislative history leads us to conclude that the legislature was concerned with employers having to pay both for workers' compensation benefits and for tort damages. [37] Even though an employer who secured workers' compensation insurance was immune from suit under the former statute, it could agree in a contract to indemnify a potential third party for damages arising from a work-related accident. [38] The master services contract between UNOCAL and Peak had an indemnification provision requiring Peak to indemnify UNOCAL for any damages related to personal injury at the work site. The legislature appears to have been interested in protecting contractors who paid workers' compensation benefits from having to indemnify the project owner for damages: Senator Ralph Seekins, sponsor of the legislation, cited an example of a subcontractor who had to pay workers' compensation benefits but, because of an indemnification agreement, also had to defend against a tort suit the worker filed against the project owner. [39] Several witnesses testified in favor of the bill because it would prevent companies from having to pay both workers' compensation benefits and tort damages. Jack Miller, counsel to the Alaska State Chamber of Commerce, testified that the state, municipalities, and private companies all imposed liability for both workers' compensation and tort remedies onto the subcontractor or contractor, so that these employers had a double liability under current law. Eden Larson, president of the Associated Builders and Contractors, supported the legislation because of concerns about contractors having to pay both workers' compensation benefits and tort damages under indemnification agreements. Prevention of double payment by an employer is a legitimate state interest because it protects the basic trade-off that underlies the workers' compensation system: workers receive compensation for work-related injuries regardless of fault, and employers have limited liability. [40] Preventing double payment is also related to the workers' compensation act's purpose of ensuring the quick, efficient, fair, and predictable delivery of indemnity and medical benefits to injured workers at a reasonable cost to the employers who are subject to the provisions of this chapter. [41] Some witnesses questioned whether preventing double payment was a legitimate legislative goal because those who were paying twice were contracting away their own rights, but there is no question that double payment is an issue appropriate for legislative action, even if it might have been addressed differently elsewhere. [42] Providing protection from tort liability for those who are potentially liable for workers' compensation benefits is also consistent with the basic trade-off that underlies the workers' compensation system [43] and is related to providing coverage to workers at a reasonable cost to employers. The legislature extended liability for workers' compensation to project owners and in exchange provided them with protection from tort suits. Although a project owner may rarely pay workers' compensation benefits, as Larson's treatise notes, a general contractor or project owner is under a continuing potential liability; it has thus assumed a burden in exchange for which it might well be entitled to immunity from damage suits, regardless of whether on the facts of a particular case actual liability exists. [44] For all of the reasons we have discussed, we conclude that the legislature's objectives in enacting the 2004 amendments to AS 23.30.045 and .055 are legitimate.