Legislature(1995 - 1996)
02/22/1995 08:05 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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. 6 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 7 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. 8 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 9 accompanying fiscal notes.