Legislature(1995 - 1996)
03/19/1995 01:20 PM 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. 158
"An Act relating to civil actions; amending Alaska
Rules of Civil Procedure 49, 68, and 95; amending
Alaska Rule of Evidence 702; and providing for an
effective date."
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Representative Brown WITHDREW Amendment 20 (copy on file).
Representative Navarre MOVED to RESCIND the Committee's
action in adopting Amendment 19 (copy on file). Amendment
19 would allow the defendant to bring evidence into the case
in order to allocate a portion of the fault to a third
party, in defense of themselves. He questioned if
previously made statements in regards to the "empty chair"
were correct. He observed that the argument was made that
plaintiffs wait until the last moment, in regards to the
statue of limitations, to file a lawsuit. In which case,
other potential defendants would be exempt from liability.
He maintained that the argument is incorrect and that the
statutes would be tolled.
MIKE LEESMEIER, ATTORNEY, STATE FARM ATTORNEY described a
case in which he was involved. He observed that the
plaintiffs in the case knew about another potential
responsible party. The court ruled that the defendant would
be responsible for the negligence of the third party unless
they were brought into the case. He maintained that it is
an open question as to whether the statute of limitations
tolls. The plaintiffs agreed that they did not have a
direct claim against the third party. The third party was
only involved in order to establish a percentage of fault.
They were ultimately dismissed out of the case.
Representative Navarre asked if the plaintiff would have the
right to a civil claim against a defendant that was left out
of the suit. Mr. Lessmeier referred to the case in which he
was involved. He noted that the third party was joined
solely for purpose of establishing an allocation of fault.
The judgement was that the defendant would not be
responsible for the third party fault if they were joined
and the plaintiff did not have a direct action against them.
Representative Navarre suggested that court rules be
clarified to ensure that everyone can get into the court
room without creating an imbalanced playing field. He
suggested that section 14 would warrant a veto. He
acknowledged that there are some plaintiffs that wait until
the statute of limitations has almost run out before filing
a claim. He maintained that defendants and their attorneys
often "stonewall" and will not provide ample information to
the plaintiff until a suit has been initiated. He asserted
that plaintiffs may not have access to the information they
need to ascertain an accurate claim before filing a suit.
Representative Porter observed that the Attorney General's
Office stated that this provision, as contained in
legislation during the past Legislature, was needed to
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clarify the law.
Representative Navarre suggested that the Alaska Court
System, as the third branch of government, may have better
expertise and knowledge of the subject. He suggested that
the court should address the issue.
Representative Therriault summarized that the plaintiff's
initial filing tolls the statute of limitations, so that
after the fact, third parties can be brought into the case
even though they are past the statute of limitations.
Mr. Lessmeier stressed that the question has not been
resolved under the law. If the plaintiff chooses not to sue
someone that they knew or should have known to investigate
and sue, then in his estimation, they would have a statute
of limitations problem. He noted that if the statute of
limitations are allowed to toll then potential defendants
loose the protection of a two year statute of limitation.
Representative Navarre stressed that the potential
defendant's attorney or insurance company do not always
admit that they are willing to accept some liability. He
noted the difficulty of obtaining documentation from
potential defendants. Mr. Lessmeier asserted that
plaintiffs sue the party that has money. Representative
Navarre disagreed with Mr. Lessmeier's assessment. He
stressed that plaintiffs often do not know who should be
sued or who has money or insurance.
A roll call vote was taken on the MOTION to RESCIND the
Committee's action in failing to adopt Amendment 19.
IN FAVOR: Brown, Navarre, Therriault
OPPOSED: Kelly, Martin, Mulder, Parnell, Foster, Hanley
Representatives Grussendorf and Kohring were absent for the
vote.
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt Amendment 5A (copy on
file). Amendment 5A would delete "hazardous waste" and
insert "hazardous substance" and add a definition of
hazardous substance (copy on file). Representative Ported
stated that he did not object to the amendment.
Representative Martin OBJECTED. He expressed concern that
the definition is too broad.
Representative Mulder suggested that the definition in
Amendment 5a be amended. He MOVED to delete from the
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definition, "or to fish, animals, vegetation, or any part of
the natural habitat in which fish, animals, or wildlife may
be found." There being NO OBJECTION, it was so ordered.
Representative Martin reiterated his concern with the
substitution of "substance".
Representative Brown noted that the definition of "hazardous
substance", contained in Amendment 5A, is similar to that
used in AS 46.08.900.
A roll call vote was taken on the MOTION to adopt Amendment
5A.
IN FAVOR: Brown, Navarre, Kelly, Mulder, Parnell,
Therriault, Hanley
OPPOSED: Martin, Foster
Representatives Grussendorf and Kohring were absent from the
vote.
Representative Brown provided members with Amendment 21A
(copy on file). Amendment 21A changes the interest on
judgments from 10 and one half percent to a floating rate
that is 3 percent above the federal reserve discount rate.
She maintained that the current provision is an attempt by
insurance companies to secure a windfall at the expense of
injured persons who are forced to litigate in order to be
compensated. She observed that a prudent investor can earn
substantially more on an investment than 3 percent above the
federal discount rate. She stated that the provision would
give insurance companies an incentive to delay litigation
and to delay paying valid claims. She noted that the state
of Alaska receives a rate of 5 percent above the federal
reserve rate or 11 percent, whichever is higher. She
alleged that the amendment would be less fair than the
status quo, but better than provisions in HB 158.
Representative Mulder noted that a floating rate will be in
real dollar terms of the time. Co-Chair Hanley noted that
the interest rate could be less than the federal interest
rate. He suggested that the 10.5 percent floor be deleted.
He explained that under the provisions of HB 158 if the
federal interest rate went to 15 percent the prejudgment
interest would be 16 percent. Under the amendment the
interest would remain at 10.5 percent.
Representative Brown MOVED to delete "or 10.5 percent,
whichever is less." There being NO OBJECTION, it was so
ordered.
A roll call vote was taken on the MOTION to adopt Amendment
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21A.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
Representative Kohring was absent for the vote.
The MOTION FAILED (3-7).
Representative Navarre MOVED to adopt Amendment 22 (copy on
file). Representative Hanley OBJECTED for purpose of
discussion. Amendment 22 would delete sections 19 and 30
regarding prejudgment interest. Representative Navarre
maintained that without the amendment most of the claim
would be shown as future economic or non-economic loss. He
expressed concern that there would be no prejudgment
interest.
In response to a question by Representative Mulder, Mr.
Lessmeier explained that prejudgment interest runs from the
time that written notice of the claim is sent to the
defendant. The interest runs at 10 and a half percent. The
court recently ruled that there is no longer prejudgment
interest on future economic loss. Prejudgment interest is
paid on all damages from the time written notice is given
until the time of trial. Prejudgment interest can also be
collected on future pain and suffering.
Representative Mulder spoke against the amendment.
Representative Navarre demonstrated that in a case of
extreme disfigurement involving a 22 year old that there
would be no penalty for a delay of the case in terms of
prejudgment interest. Mr. Lessmeier pointed out that
prejudgment interest will continue for past losses.
Representative Navarre stressed that insurance companies
want to settle on their terms. He maintained that if a
plaintiff is not willing to settle that the threat remains
that the case can continue indefinitely. He acknowledged
that both sides abuse the system, but maintained that the
legislation is weighted to the side of the defense.
Representative Brown noted that prior to 1986, prejudgment
interest was calculated from the day of injury. Under
current law the interest is calculated from the time there
is written notice of the claim.
Representative Brown spoke in support of the amendment. She
expressed concern that there would not be an incentive for
insurance companies or defendants to settle under the
provisions of HB 158.
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Representative Porter clarified that prejudgment interest
will accrue and be paid from the date of the notice until
the time of the disposition of the case.
Representative Parnell questioned the policy of including
punitive damages. Representative Porter stated that there
is no prejudgment interest on punitive damages.
Representative Navarre stressed that the jury system
reflects what the public deems to be the best judgment. Mr.
Lessmeier explained how juries currently derive the portion
of past judgement on intangible damages.
(Tape Change, HFC 95-55, Side 2)
A roll call vote was taken on the MOTION to adopt Amendment
22.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
Representative Kohring was absent for the vote.
The MOTION FAILED ( 3-7).
Representative Brown amended Amendment 23 to delete lines
3,4 and 5 (copy on file). Representative Brown MOVED to
adopt Amendment 23. Representative Mulder OBJECTED.
Amendment 23 would delete references to AS 09.55.553, Medial
Expert Witnesses.
Representative Brown suggested that provisions of HB 158
would limit the pool of people available to testify as an
expert witness. Witnesses would have to be of the same
specialty, certified and recognized by the State Medical
Board and be in active practice within one year. She
suggested that the court should be left to decide who is
qualified.
Representative Porter stated that the section proposed for
deletion attempts to address a concern within the medical
community that there are hired guns that can be obtained to
provide expert testimony on a point of view. He stressed
that the provision provides that the medical expert's
information will be current and meet the standards for
medical qualifications in the state of Alaska.
Representative Porter noted that the provision does not
preclude outside expert medical witnesses.
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Representative Navarre asked if the determination of expert
witnesses should be decided by the Legislature or the Alaska
Supreme Court. Representative Porter stated that the best
qualified source for deciding medical expert testimony is
the State Medical Board.
In response to a question by Representative Therriault,
Representative Porter stated that the qualifications of
outside medical experts would be accepted by the State
Medical Board.
In response to a question by Representative Grussendorf, Mr.
Lessmeier stated that a retired family physician would be
allowed to testified through his connection to the case. He
maintained that the provision states that expert witnesses
ought to be recognized by the National Board, in active
practice and of the same specialty.
In response to a question by Representative Mulder, Mr.
Lessmeier clarified that the amount of compensation given to
an expert witness is admissible in court.
Representative Porter explained page 14, lines 4 - 6
addresses the possibility of contingency fees to protect
objectivity.
Representative Mulder summarized that the provision prevents
people who are outside medical experts and don't have a
related interest to the field to which the case is being
tried from providing testimony.
Representative Brown referred to page 14, lines 4 - 6 ,(b).
She read from a sectional analysis prepared by the Alaska
Action Trust (copy on file). She read: "Paragraph (b) is
problematic. When read literally, it would preclude law
firms or sole practitioners from associating with other law
firms in medical malpractice cases. For example, if a law
firm associated with a sole practitioner engaged in a split
contingency fee and provided a medical expert as part of
that agreement, the defense could challenge the
admissibility of such testimony under this statutory
framework. Even more troubling, it could be read to
preclude any law firm from taking a malpractice case on a
contingency because, by necessity, lawyers have to contract
with an expert to render testimony. Lawyers are the third
party and have a contingency agreement. As such, the
statute may prohibit attorney participation. On the other
hand, if the statute is only meant to prohibit contracting
with outside (or within the state) organizations whose sole
business is arranging medical expert witnesses, it would be
unethical to enter into a contingency agreement with such a
nonlawyer entity in the first place. There are
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organizations (including those headed up by licensed
attorneys) whose sole practice is limited to reviewing
medical legal cases and obtaining viable expert witnesses."
Representative Porter responded that it is not the intent of
(b) on page 14, to indicate that the third party is the law
firm that is involved in the case. The provision is
directed toward brokers for medical testimony.
Mr. Lessmeier stated that contingency fees could be utilized
by either side. He acknowledged that they may be more
common on the plaintiffs' side. Representative Navarre
observed that plaintiffs may not have money to pay for
expert witnesses unless there is a contingency arrangement.
Representative Porter conceded that problems concerning
"hired guns" as medical experts are more common in other
states. He emphasized that the provision would be
preventative.
(Tape Change, HFC 95-56, Side 1)
Representative Brown read from the sectional analysis
prepared by the Alaska Action Trust: "By redefining
professional negligence this provision appears to
statutorily define duty of care. For any number of reasons
this is extremely problematic and an attempt to limit
plaintiff's litigants from access to potential medical
defendants. That is, it limits professional negligence to
"rendering" professional services. It would effectively
eliminate medical professionals who fail to render any
services at all or were used as consultants rather than
actively participating in the health care delivered to the
patient... On the other hand, if this is an attempt to
codify the common law definition of medical negligence it is
woefully inadequate. Professional services definitionally
would insulate hospitals from the negligent acts of their
employees if they were done outside the scope of licensing
provisions. Moreover, it would insulate doctors form a
negligence claim if they operate outside the scope of their
licensing requirements. Literally then, a doctor who is a
G.P. who renders service as an orthopedist could be
insulated. More troubling, how is a patient to know? This
section would effectively allow the licensing provisions of
the individual or institution to dictate medical
negligence."
Representative Porter replied that a doctor operating
outside his scope would be rendering unprofessional
services. He emphasized that the provision tries to define
what services are covered by the normal everyday occurrence
of a doctor performing their occupation. He added that
professional negligence means a negligent act or omission by
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a health care provider in rendering professional services.
Representative Mulder suggested that the third party should
be identified to clarify that it is not the plaintiff's
attorney. Members discussed alternative language. Co-Chair
Hanley suggested the addition of "with a third party other
than the plaintiff or defense attorney." Representative
Porter suggested that "an attorney representing a party in
the case" be added.
A roll call vote was taken on the MOTION to adopt Amendment
23.
IN FAVOR: Brown, Grussendorf, Navarre, Foster
OPPOSED: Therriault, Kelly, Martin, Mulder, Hanley
Representatives Parnell, and Kohring were absent from the
vote.
The MOTION FAILED (4-5).
Representative Brown MOVED adopt a conceptional amendment,
to insert on line 7, after "third party", "with a third
party other than an attorney representing a party in the
case." There being NO OBJECTION, it was so ordered.
Representative Brown MOVED to adopt Amendment 25 (copy on
file). She explained that the amendment would tie the Act's
effective date to a 20 percent deduction in liability
insurance rates. She spoke in support of the amendment.
Representative Porter stated that the intent language does
not suggest that the bill will have a specific impact on
reducing insurance rates within a specific time. He
indicated that the amendment is not reasonably
accomplishable. He stressed that the general trend is that
rates are positively affected in terms of a reduction in the
rate of increase.
A roll call vote was taken on the MOTION to adopt Amendment
25.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Parnell, Therriault, Foster, Hanley
Representatives Mulder and Kohring were absent from the
vote.
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt Amendment 26 (copy on
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file). Co-Chair Hanley OBJECTED for purpose of discussion.
Amendment 26 would delete page 11, lines 17 - 27. She
maintained that the drafting language is confusing. She
stated that the language could be interpreted to mean that a
partial settlement is deducted from the jury award and that
the remaining defendant's percentage of fault is then
applied to the reduced number. Under this interpretation it
would be mathematically impossible for the plaintiff to
fully recover unless the jury finds the remaining defendant
100 percent of fault. She noted that the section would
discourage pretrial settlements.
Representative Porter disagreed with her interpretation. He
maintained that the provision sets out that if there are
multiple defendants and one defendant settles that the
settlement does not discharge the other parties from their
determination of fault by the jury.
Mr. Lessmeier stated that the provision is designed to
ensure that there is no double recovery.
Representative Porter stated that he did not object to the
amendment since case law has established the intent of the
provision. There being NO OBJECTION, Amendment 26 was
adopted.
Representative Brown WITHDREW Amendment 27 (copy on file).
Representative Brown MOVED to adopt Amendment 28 (copy on
file). She stated that the amendment would set the cap on
punitive damages at $5.0 billion dollars. She questioned if
the intent of HB 158 is to remove the deterrent effect of
punitive damage law.
Representative Martin spoke against the amendment.
Representative Brown suggested that the court be allowed to
decide awards for punitive damages. She argued in support
of the amendment. She maintained that there would be no
punitive deterrent for large, international, multi-national
corporations.
A roll call vote was taken on the MOTION to adopt Amendment
28.
IN FAVOR: Brown, Grussendorf
OPPOSED: Kelly, Martin, Mulder, Navarre, Parnell,
Therriault, Hanley
Representatives Kohring and Foster were absent from the
vote.
The MOTION FAILED (2-9).
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Representative Brown MOVED to adopt Amendment 20 (copy on
file). Co-Chair Hanley OBJECTED. Representative Brown
explained that the amendment would remove the offer of
judgment provision. She asserted that the provision would
make it difficult for people to guess the allocation of
fault or recovery. She stated that the provision would
increase the cost of misjudging the allocation of fault or
recovery, to an intolerable level, full cost of attorney
fees to the person making the offer. She read from a report
prepared by John Suddock, President, The Alaska Academy of
Trial Lawyers (copy on file). "This provision is
breathtaking in its scope and ferocity. Not only will the
victim who loses at trial pay the defendant's entire
attorney fee and all costs. Also, the victim who wins at
trial, but guesses wrong about the size of the verdict, will
pay just as if he had lost. The victim pays if he loses;
the victim pays if he wins." She continued to give examples
from Mr. Suddock's report. She concluded: "Victims would
choose between accepting a low offer and the risk of
financial ruin." She asserted that this section gives
excessive leverage to insurance companies to under-
compensate injured Alaskans.
Representative Porter maintained that the section is a
disincentive to "low ball" an offer. He observed that if
the offer of judgment is not accepted and the award is
greater, then whoever made the offer is penalized. Current
law provides that offers of judgments should be considered
seriously. He stressed that a penalty exists under current
law. He observed that the provision would increase the
penalty in order to inspire settlement.
A roll call vote was taken on the MOTION to adopt Amendment
20.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
Representative Kohring was absent from the meeting.
The MOTION FAILED (3-7).
Representative Brown provided members with Amendment 29
(copy on file). Amendment 29 amends section 2, Statute of
Repose. She explained that the amendment would limit the
section to birth related injury or death and require
commencement within eight years. The statue of repose
regarding building construction would remain at 15 years.
The statute of repose in regards to personal injury would
remain at two years from the time the injury was known.
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Representative Porter suggested that the amendment would
nullify the statute of repose except for cases involving
injury.
A roll call vote was taken on the MOTION Amendment 29.
IN FAVOR: Brown, Grussendorf, Navarre, Foster
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault, Hanley
Representative Kohring was absent for the vote.
The MOTION FAILED (4-6).
Representative Navarre MOVED to delete "adequate and
appropriate" on page 3, line 12. He maintained that the
language is not necessary.
Representative Porter spoke against the amendment.
A roll call vote was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
Representative Kohring was absent for the vote.
The MOTION FAILED (3-7).
Representative Navarre referred to page 3, line 25 (g),
"reduce the ultimate costs to the state and to local
governments of providing medical services to those who
cannot otherwise afford those services." He questioned how
the bill accomplishes subsection (g).
Representative Porter observed that there are medical
services provided by state and local governments to people
who cannot afford services. He stressed that if the
overall costs of health services decrease then costs to the
state will also be reduced.
Representative Navarre MOVED to delete page 3, line 25 - 26.
He asserted that there is no evidence that health care costs
will be reduced.
Representative Brown suggested that victims who are not
adequately compensated will end up costing the state money.
A roll call vote was taken on the MOTION.
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IN FAVOR: Brown, Grussendorf, Navarre
OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
Representative Kohring was absent for the vote.
The MOTION FAILED (3-7).
Representative Brown referred to section 33. Representative
Porter stated that rule 95 deals with the ability of the
court to sanction attorneys that have filed frivolous
lawsuits. The provision allows the court to impose fines up
to $10.0 thousand dollars, for frivolous suits.
Representative Mulder MOVED to report CSHB 158 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Navarre OBJECTED.
Representative Navarre referenced section 25, Damages
Resulting From the Commission of a Crime. He noted that
current law requires a conviction to show that there was a
crime or attempted crime.
Representative Porter noted that someone fleeing from the
commission of a crime may be killed. In which case, a
conviction cannot ensue. Representative Porter discussed
situations which may pertain to section 25.
(Tape Change, HFC 95-56, Side 2)
Representative Navarre asked if there is any information
indicating that a change is necessary in section 25.
Representative Porter stated that the current law requires
that there is a conviction. He noted that a conviction
cannot be obtained if the defendant is deceased.
A roll call vote was taken on the MOTION to move CSHB 158
(FIN) out of Committee.
IN FAVOR: Kelly, Martin, Mulder, Parnell, Therriault,
Foster, Hanley
OPPOSED: Brown, Grussendorf, Navarre
Representative Kohring was absent from the meeting.
The MOTION PASSED (7-3).
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