Legislature(1995 - 1996)

02/22/1995 08:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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.                                      
  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                 
  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                 
  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                 
  for employees their indemnification by the Municipality.                     
  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.                                                    
  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.                               
  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.                                                  
  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.                                            
  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                 
  accompanying fiscal notes.                                                   

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