Legislature(1995 - 1996)
02/22/1995 08:05 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 120
"An Act relating to public employers defending and
indemnifying public employees and former public
employees with respect to claims arising out of conduct
that is within the scope of employment."
REPRESENTATIVE BRIAN PORTER, sponsor of HB 120, gave a brief
overview of the legislation. He noted that the bill passed
the House last year but failed to pass the Senate. He
observed that the legislation would place current state
policy regarding the indemnification of public employees in
statute. The legislation indemnifies public employees who
are acting within the scope of their employment, from normal
acts and/or omissions from civil tort suit. He asserted
that the legislation will provide security for individuals
who could be named in a civil suit based on their position
or line of authority. He observed that an individual's
credit rating is effected by a lack of indemnification.
Representative Porter pointed out that the legislation
precludes any requirement for the government to protect an
employee against punitive damages. The legislation does not
require protection of a person who has committed gross
negligence or an intentional reckless act.
Representative Porter observed that most represented
employees receive these protections through labor contracts.
He noted that the legislation does not cover school
district, University of Alaska, and REAA employees since
they are already covered in another statute.
In response to a question by Representative Mulder,
Representative Porter clarified that probation and
correctional officers are not currently protected by labor
contract. They would be covered by the legislation.
Representative Brown asked if legislators and legislative
employees would be covered by the legislation.
Representative Ported stated that it is his understanding
that all public employees, not currently covered, would be
covered under the provisions of HB 120.
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Representative Brown presented members with Amendment 1
9LS0502\C.1 (Attachment 5). Amendment 1 inserts after
"state" on page 5, line 5, "including the executive,
legislative, and judicial branches of state government."
Representative Brown expressed concern that the injured
third party would not receive recovery in acts of gross
negligence. Representative Porter stated that it would not
be good public policy to provide total protection to someone
who commits gross negligence or intentional wrongful acts.
He observed that the injured third party can sue the
responsible party. In addition, the state is not precluded
from providing coverage on a case by case basis.
Representative Brown noted that the employer is also
excluded from the requirement to provide defence or
indemnification when the case involves a disciplinary,
administrative or criminal matter brought against the
employee or when the employee has been convicted of a
criminal offense or terminated from employment because of
the conduct. Representative Porter clarified that the state
would not be required to provide indemnification for the
defense, unless provided by a labor contract, in a case
brought by the state against an employee. The state would
be responsible for indemnification if the act led to a civil
suit.
Representative Brown referred to the Greenfield versus State
case. Representative Porter observed that the case involved
an Alaska Psychiatric Institute (API) employee who allegedly
was forced to quit their employment. The court agreed with
the employee and awarded punitive damages. He noted that
the legislation would not effect the awarding of punitive
damages. He observed that any case that can now be brought
to court would still be allowed after the passage of the
legislation. The legislation only provides a statutory
guarantee in simple negligent cases that the state or
municipal entity protect their employee by defense and by
indemnification.
DON OTIS, ALASKA PEACE OFFICERS ASSOCIATION (APOA) testified
via the teleconference network from Haines. He noted that
the APOA strongly supports HB 120. He note that APOA listed
indemnification as one of its highest priority issues in
1992. He read a position paper by APOA in support of HB 102
(Attachment 6).
MARY HUGHES, MUNICIPAL ATTORNEY, ANCHORAGE testified via the
teleconference network from Anchorage. She noted that the
Municipality of Anchorage has adopted the policies outlined
by HB 102. She noted that passage of HB 102 would clarify
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for employees their indemnification by the Municipality.
DUANE UDLAND, ALASKA ASSOCIATION OF CHIEFS OF POLICE
testified via the teleconference network from Anchorage. He
expressed support for HB 102. He pointed out that public
employees who are not indemnified may have difficulty
obtaining personal loans.
BRUCE LUDWIG, BUSINESS MANAGER, ALASKA PUBLIC EMPLOYEES
ASSOCIATION referred to the provisions of AS 39.55.010
(b)(3). He expressed concern that an employer may think
that they can escape a liability through the termination of
an employee. He noted that if the termination was incorrect
the employer would have to pay attorney fees and the
employee's back wages.
Mr. Ludwig maintained that if an employee acts intentionally
within the scope of their employment and punitive damages
are found against them then the employer should pay the
consequences. He asserted that if the employee acts within
the scope and course of their employment all their acts and
consequences should be covered by the employer. He
recommended that the language "or terminated from employment
by the public employer" be deleted in AS 39.55.010 (b)(3).
He suggested that AS 39.55.010 (d) be deleted.
KEVIN RICHIE, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL LEAGUE
stated that the AML supports HB 102. He emphasized the
positive effect the legislation would have on small
communities. He asserted that the legislation is good for
both employer and employee.
SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
responded to questions raised by the Committee. She
clarified that the state covers the legislative branch when
personal injuries occur in the course and scope of the
legislator's business. She indicated that an amendment to
clarify that all three branches of state government would
not be objectionable.
Ms. Cox pointed out that the state does not want to give
public employees a blank check or encourage employees not to
be careful and cautious. A third party injured by the gross
negligence of a public employee can sue the public employee
directly. The allegation of gross negligence in the
complaint will not deny the employee defense by the state.
She noted that most cases are brought against both the
employee and employer. In most cases the employer settles
both claims against the employee and employer. She noted
that the language regarding "gross negligence" and
"intentional willful misconduct" is taken from existing
collective bargaining agreements.
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Ms. Cox did not think that the provisions of AS 39.55.010
(b)(3) would provide incentive to the employer to terminate
an employee. She pointed out that the employer is
vicariously liable for the action of the employee. If the
employee is found to be grossly negligent or committed
intentional misconduct the employer would not be
responsible. She discussed cases of employee gross
negligence. She noted that (f) stated that whether or not
the state provides defense or indemnification of an employee
"does not constitute a waiver, limitation, or expansion of
sovereign immunity or of other immunity." The legislation
does not change anyone's rights in terms of suing the state
or the state's immunity. The third party's right to sue the
employer is not altered by HB 102.
Ms. Cox addressed AS 39.55.010 (b)(2).
(Tape Change, HFC 95-28, Side 1)
Ms. Cox discussed the Greenfield case. She noted that the
way the state handled the defense and indemnification of the
individual would not have been changed by the legislation.
She noted that the Superior Court determined that the state
could be held liable for punitive damages under the whistle
blower law. The court concluded that the legislature
intended to waive the state's immunity from punitive damage
liability in whistle blower actions.
Representative Brown summarized that the state does not have
to pay a judgement against the employee in cases where the
employee is grossly negligent. Ms. Cox agreed with
Representative Brown's conclusion.
Representative Martin express concern that citizen's ability
to receive justice would be inhibited. Ms. Cox pointed out
that the public employee the injured third party wishes to
sue will be backed by the employer's funding. She
reiterated that state policy will not be changed by the
legislation. The legislation codifies current policy.
Representative Brown MOVED to adopt Amendment 1, 9-
LS0502\C.1. She stressed that the amendment would clarify
that "state" does include all the branches of government.
There being NO OBJECTION, it was so ordered.
Ms. Cox confirmed that the employees of the University of
Alaska, a municipal school district, or a Rural Educational
Attendance Area, excluded on page 5, are already covered.
Representative Mulder MOVED to report CSHB 120 (FIN) out of
Committee with individual recommendations and with the
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accompanying fiscal notes.
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