Legislature(1999 - 2000)
04/24/2000 07:20 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE CS FOR CS FOR SENATE BILL NO. 177(JUD)
An Act relating to insurance trade practices; and
providing for an effective date.
Co-Chair Therriault provided members with a proposed
committee substitute, work draft #1-LS0902\Z, Ford, dated
4/24/00. [Copy on File].
SENATOR DAVE DONLEY discussed the proposed committee
substitute, indicating that it would clarify the changes in
Section 9, Page 4. Senator Donley noted that there had been
concern that language would limit the director's powers in
other areas. The language would clarify that the director's
power were not being limited and that, additionally,
Amendment #1 would address that concern. He interjected
that Amendment #2 was not necessary and that he did not
support it.
BOB LOHR, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, DIVISION
OF INSURANCE, DEPARTMENT OF COMMUNITY AND ECONOMIC
DEVELOPMENT, offered to answer questions of the Committee.
Co-Chair Mulder MOVED to ADOPT the work draft, #1-LS0902\Z,
Ford, dated 4/24/00, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
Representative Grussendorf expressed that even with the
proposed changes made to the current draft, he continues to
have concerns. Senator Donley commented that a positive
change in the current version was that it would clarify that
the language only applies to AS 21.36.125, the Fair Claims
Practices Act. The enumeration of that statute clarifies
that the limits on the director's powers on single acts do
not apply to other parts of the insurance code.
Representative J. Davies MOVED to ADOPT Amendment #1.
Representative G. Davis OBJECTED for a comment by the
Department. Mr. Lohr noted that the Division would support
Amendment #1. Representative G. Davis WITHDREW his
OBJECTION. There being NO further OBJECTION, Amendment #1
was adopted.
Mr. Lohr spoke to concerns voiced by Representative
Grussendorf. He stated that the language in the "Z" version
did not address the issue of intent. A way to accomplish
the intent would be to have a process which works with the
Department of Law. If there was a burden on the person
accused to establish reasonable conduct and that they had
the burden of going forward to show that their actions were
not intentional, then the director would decide the
conclusion. He suggested that would be a manageable
approach.
Representative G. Davis commented that Amendment #2 would
accomplish the intent and would place the burden on the
person accused of the single act violation.
Co-Chair Mulder asked the difference of using
"unintentional" or "or". He believed that it would have the
same effect. Mr. Lohr believed that it would be a higher
standard of proof.
Representative G. Davis MOVED to ADOPT Amendment #2. Co-
Chair Mulder OBJECTED.
Representative G. Davis explained that the language of the
amendment would put the burden of proof on the accused.
Representative J. Davies did not believe that the amendment
would accomplish what was intended. Co-Chair Therriault
acknowledged that he too was confused by the amendment.
Representative Foster commented that the burden of proof
should be on the guilty. Mr. Lohr responded that in the
criminal standard, the burden of proof would rest on the
State given the case of a civil violation. It would not be
placed on a person for a single violation; it would be
different from the burden of proof and the burden of
persuasion. When the burden is shifted, it would require
that there was a statement that it was not intentional.
Representative Foster believed it would be easier to hire a
lawyer, otherwise a person would tend to incriminate
himself. Mr. Lohr replied that for criminal conduct, that
would be true, however, it is expected that there will be
cooperation with industry.
Representative Phillips pointed out that by including the
language "and is intentional" could transfer it to a
criminal act before a civil act. Mr. Lohr disagreed. He
stated that it would make the standard of proof very similar
to that of a criminal act, and that a single violation of
Section 125 would not be a criminal sanction.
Co-Chair Mulder questioned the language and use of the
"unintentional" route. The burden of proof is on the
person, guilty until proven otherwise. Mr. Lohr replied
that there is no criminal conduct involved; there is resting
no burden of proof what-so-ever. He recommended
consideration of amending Amendment #2 to indicate that the
only burden on a person accused of a violation, would be the
burden of moving forward. He pointed out that they were not
talking about a violation.
Representative Foster mentioned fines that he had received
from the Federal Aviation Agency (FAA). He noted that he
would never admit that the burden of innocence rested on
him.
Representative J. Davies did not follow what Mr. Lohr was
referring to. He noted that he did not know what the
"burden of going forward" was used in reference too. Mr.
Lohr explained that the "burden of persuasion" was an
analogue to the burden of proof in criminal matters. The
burden of proof beyond reasonable doubt is an extremely high
standard for anyone to meet. A lower standard would be the
burden of persuasion, which does establish who goes first to
a hearing officer. The accused person has to explain first
why it is that their conduct was not intentional. He did
not see it as a difficult burden to meet.
Senator Donley reiterated that he did not support Amendment
He reminded members what Section #9 would provide the
authority that the director needs to have to protect the
individual consumers from single acts. He emphasized that
there are lots of penalties for restitution. Senator Donley
noted that the most important elements were being preserved
and that the burden of proof creates a preponderance of
evidence. For the main issues that consumers care about
regarding single acts, the power already exists.
In response to Representative Grussendorf, Mr. Lohr stated
that the "or" takes the intent "off the table". It would
provide a lower standard than proposed in Amendment #2. He
added that "or" would place intent on the same level as loss
or harm. He stated that under the amendment, intent is a
higher standard than has to be met and would be preferable
to the Department.
A roll call vote was taken on the motion to adopt Amendment
IN FAVOR: G. Davis, Grussendorf, Phillips
OPPOSED: Williams, Austerman, Bunde, J. Davies,
Foster, Therriault, Mulder
Representative Moses was not present for the vote.
The MOTION FAILED (3-7).
Co-Chair Mulder MOVED to report HCS CS SB 177 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CS SB 177 (FIN) was reported out of Committee with a "no
recommendation" and with a zero fiscal note by the
Department of Community & Economic Development dated 3/1/00.
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