Legislature(1995 - 1996)
02/27/1995 01:05 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HJUD - 02/27/95 HB 158 - CIVIL LIABILITY Number 360 CHAIRMAN PORTER, sponsor of the bill, stated he would explain it, section by section. He explained that a tort is a private or civil wrong. It occurs as a result of an act or omission for which a civil suit can be brought. It involves almost everything, except crimes. He informed the committee members they were free to stop him to ask questions. He described what is in the Sectional Summary, beginning with Section 2: "GENERAL STATUTE OF REPOSE: A law that prevents suits from being brought after a certain period of time, regardless of whether or not the statute of limitations has expired. Statutes of repose begin running when a product is sold or a procedure is performed, instead of at the time an injury is discovered. "The purpose of this section is to make it clear that legal actions involving personal injury, death, or property damage must be brought within a fair and reasonable time. All crimes have a statute of limitations in our legal code. The same standard of fairness should also apply to civil lawsuits. "This section is considered a statute of repose, prescribing an eight year period within which any civil action involving injury, death, or property damage must be filed with the courts. The time period is measured from the date the construction was completed or the last act that allegedly caused the harm. "The eight year period would not apply if the injury, death, property damage was caused by an intentional act or if there was intentional concealment of facts that resulted in a delay of over eight years before the basis for legal action was known. This section does apply if a shorter period of time for bringing a particular legal action imposed under another provision of law applies. The terms for completed construction are defined and clarified so as not to be misinterpreted by litigants or courts." Number 550 REPRESENTATIVE TOOHEY asked about DES, a fertility drug given to mothers in the 1950s. CHAIRMAN PORTER said the statute of repose previously addressed product liability. There is some specific language that was in the bill last year regarding product liability which we have taken out. There was also, under Section 2, "The last act alleged to have caused the personal injury, death, or property damage..." could allude to a general statement on product liability, and that is not our intent. The amendment he would offer later on will take that out. This applies to construction and medical cases, but not to product liability. Number 575 REPRESENTATIVE FINKELSTEIN asked about a situation under Section 2, where, perhaps a building is constructed over four years, and the act alleged to have caused personal injury is the faulty pouring of the concrete. It sounds like Section 1 applies to a building, does Section 2 apply as well? In this case, it would not be eight years from completion of the building, it would be only five years from completion of the building. CHAIRMAN PORTER answered that the substantial completion of the construction would be the specific qualification for the time that would start any construction claim; not when the subcontractor has done things prior to the substantial completion. CHAIRMAN PORTER continued, "Section 3, LIMITATION ON ACTIONS AGAINST HEALTH CARE PROVIDERS: A law that requires lawsuits to begin within a specified time period from when the plaintiffs knew they were injured. When the statute of limitations has expired, the lawsuit can no longer be brought. "Under current law, in medical malpractice claims, one may file a claim within two years upon discovering the injury. This section states that the two-year limitation does not apply to minors under the age of six. Minors must bring legal actions within two years or before their eighth birthday - whichever is longer. Tolling of the time limitation provides additional protection for minors. The clock stops, if fraud by a parent, guardian, insurer, or health provider, is the reason action was not taken. Time is also extended for minors if there was an intentional concealment of facts, or the undiscovered presence of a foreign body with no therapeutic or diagnostic purpose, provided this specification applies to the legal action being brought. "The third part of this amendment defines terms to ensure that the statute is understood and applied fairly." CHAIRMAN PORTER then went on to explain that the eight years statute of repose would apply to a situation where a foreign body, such as a forceps, is left inside of a person's rib cage during surgery. He continued, "Section 4, CERTAIN STATUTORY LIABILITIES TO BE BROUGHT IN TWO YEARS: This section removes unclear and conflicting language from the statute. The existing two-year limit for actions involving libel, slander, assault, battery, seduction, or false imprisonment remains the same. "Section 5, GENERAL STATUTE OF LIMITATIONS: This section places a two-year limit on actions involving injury, death, or property damage after the date claimants could reasonably believe they had a claim. "It requires that a person commence a civil action for personal injury, death, or property damage within two years of the time the person knows or should have known of the injury, death or damage. It provides that this section does not apply if a shorter period of time is required under another provision of law." Number 675 REPRESENTATIVE FINKELSTEIN asked what the definition for "accrual of action" was. CHAIRMAN PORTER answered "accrual of action" is a common legal term, that is defined in statute. Number 685 ANNE CARPENETI, Committee Aide, said it is defined in Title 9. CHAIRMAN PORTER said "Section 6, NONECONOMIC DAMAGES: Money awarded that does not compensate the injured person for monetary loss, but rather, for example, for pain and suffering. "Economic damages: Money awarded to an injured person to compensate for his or her actual monetary loss. For example, economic damages compensate for medical costs and lost wages. "This section extends the definition for noneconomic losses to include claims for wrongful death as well as personal injury. The definition is clarified by removing "negligence" which is difficult to establish or disprove. The change further defines noneconomic losses to include loss of consortium, (i.e., the right to a husband's or wife's fellowship). "This section provides that damages for noneconomic losses are limited to certain types of injuries, such as pain and suffering; limits damages for noneconomic losses to $300,000, except that damages are limited to $500,000 for certain specified injuries; provides an exception for damages awarded against a person committing or attempting to commit a felony; provides that multiple injuries sustained as a result of a single incident shall be treated as a single injury for the purpose of this section." Number 765 CHAIRMAN PORTER continued, "Section 7, PUNITIVE DAMAGES: Sometimes called exemplary damages, punitive damages are awarded in to punish a defendant for a malicious, intentional act rather than one that is merely negligent. "The current statute allows punitive damages to be awarded when there is `clear and convincing evidence,' but, does not explain evidence in what actions. This section requires that punitive damages may not be awarded unless malice or conscious acts showing deliberate disregard of another person by the person from whom the punitive damages are sought is shown. "Section 8, LIMIT OF PUNITIVE DAMAGE AWARD: Any awards for punitive damages will be at most $300,000 or up to three times the amount of compensatory damages awarded. Further, one-half of the award will be deposited into the general fund of the state. "Section 9, DAMAGE CALCULATION: The term `death' is added so that the statute applies to damages awarded for legal actions involving both personal injury and death. "The added text states that after past and future economic and noneconomic losses have been calculated by the court, the amount of state and federal taxes that would have been paid is subtracted from the award. The amount of tax should be calculated using the state and federal tax rate at the time of the injury or death. "IRS code 104(A)(2) allows income from awards involving personal injury or death to be exempt. Under current statutes, awards are calculated as the gross loss to the claimant. Therefore, the prevailing party is awarded their actual past and projected loss, plus the amount they would have paid in taxes under normal circumstances. Claimants are being compensated as if future earnings were tax exempt. "This section ensures that the prevailing party is fairly compensated for actual after-tax losses. Specifying how the tax rates should be calculated removes the need to speculate how much future taxes will be and prevents future litigation for award adjustments." TAPE 95-18, SIDE A Number 000 CHAIRMAN PORTER said, "Section 10, PERIODIC PAYMENTS: Under a periodic payment system, lawsuit awards are paid to the plaintiff throughout his or her lifetime, for the period of disability or for any other set period, instead of a lump sum. "This section changes the phrase `an injured party' to `a party.' This allows anyone involved in the suit, rather than just the claimant, to request periodic payments for amounts awarded for future damages. "Requires that future economic and noneconomic damages that exceed $100,000 be paid periodically whether or not it is requested by a party. Provides that a portion of a judgment owed to an attorney under a contingent fee agreement, must be reduced to present value and paid in a lump sum." Number 070 REPRESENTATIVE GREEN asked about the possible scenario where there is going to be $100,001 payment over a three year period, and the attorney's fee is one-third. If you discount the second and third year to the present, it is conceivable that the awardee would be out for almost his first year's compensation. Because a third of that is brought forward to the second and third year, according to the way this is written. CHAIRMAN PORTER said the attorney's fee is taken out of the award, reduced to present value, and given to the attorney. Still you are right. If, for example, there were a three-year award of $50,000 each, that would be $150,000 due the plaintiff. If the contingent fee was 50 percent, which is quite high, but if it were, that would reduce it to $75,000, and that is what would be spread out over three years. The $75,000 would be given to the attorney in a lump sum, while the remaining $75,000 would be spread out over a three year period to the plaintiff. Number 175 CHAIRMAN PORTER explained "Section 11, SECURITY FOR PERIODIC PAYMENTS: Requires that the court require security be posted for periodic payments, except when the obligation is recognized by the state or an insurer. Requires that the judgment include increases for future anticipated inflation. Provides to the judgment creditor damages caused by the failure to make periodic payments, including costs and attorney fees. "Section 12, INFLATION ADJUSTMENTS FOR PERIODIC PAYMENTS: The words `for personal injury or death' are added to the statute. This section clarifies what types of damage awards are being regulated by this statute. "Courts must specify the percentage or the method for increases by future periodic payments will increase to cover inflation. "By specifying the amount or method allowed for inflation, the amendment prevents future litigation for an adjustment of the original award. Number 300 "Section 13, COLLATERAL BENEFITS: A trial where the jury is not told that the injured person has received money for their injury from other sources, such as an insurance policy or another defendant. "This prevents unjust enrichment from claimants who collect multiple awards for the same loss. "Prohibits a claimant from recovering damages that duplicate amounts received from collateral sources. Provides exceptions for certain collateral sources that are subrogated to the claimant, and for death benefits and workers' compensation benefits. Allows a person defending a claim to introduce evidence of amounts received from certain collateral sources. Prohibits a person who provides a collateral benefit that is introduced into evidence from recovering that amount from the claimant or being subrogated the rights of the claimant. Number 360 "Section 14, APPORTIONMENT OF FAULT: Provides that the court shall determine each party's equitable share of the obligation to each claimant. Provides that assessment may only be used to measure percentages of fault and not to subject a person to civil liability. "The word `party' creates a loophole that restricts apportionment of fault to those named in the legal action. By considering all persons or entities which contributed to a loss, each is fairly apportioned a degree of fault based on their own actions. "Thus, this section provides that the court shall determine each party's equitable share of the obligation to each claimant. Provides that an assessment may only be used to measure percentages of fault and not to subject a person to civil liability. "Section 15, APPORTIONMENT OF FAULT: Changes the statute number to conform with revised law and clarifies the rules so that all parties that contributed to injury or death are fairly considered when assessing the percentage of fault. "Section 16, EFFECT OF RELEASE: Provides that a release given in good faith does not discharge another person from liability, but does reduce the total amount awarded by the jury or court by the amount stipulated in the release or the consideration paid for it, whichever is greater. Number 450 "Section 17, OFFERS OF JUDGMENT: The existing statute says that prior to 10 days before trial begins, either party can make an offer to settle a claim, plus accrued costs. This must be accepted within 10 days and correctly recorded by the clerk. "If the court's judgment is less favorable to the recipient of the offer, the person who refused the offer must pay the offerer's costs and attorney fees incurred since the date when the higher offer to settle was made." Number 520 REPRESENTATIVE FINKELSTEIN felt this provision would cover unreasonable offers as well as reasonable offers. REPRESENTATIVE VEZEY agreed the wording was vague. CHAIRMAN PORTER continued, "Section 18, PREJUDGMENT INTEREST: The section changes the interest rates on judgments and decrees from a set 10.5 percent a year to a floating rate of 3 percent above the federal discount rate in effect January 2nd of the year of the judgment. This rate is not used if a different rate has previously been agreed to by contract. "Federal discount rates have been as low as 1 percent (1942) and as high as 14 percent (1981). Allowing annual adjustments for prejudgment interest brings charges in line with the current market and prevents unfairly high or low rates. "Provides that the rate of interest on judgments and decrees, including prejudgment interest, is equal to prejudgment interest for certain future damages or punitive damages. "Section 19, PREJUDGMENT INTEREST: The purpose for the prejudgment interest is to allow claimants reimbursement of funds that would normally have been in their possession plus any interest that amount could have earned prior to the trial. This is not the case in damages awarded for future losses and these sums can be invested and interest earned on the funds. "Prejudgment interest is subject to federal income tax and attorney fees commission. "Section 20, UNIFORM ARBITRATION ACT: Amends the section on application of the Uniform Arbitration Act so that it applies to the statutes as listed after adoption of House Bill 158. "Section 21, MEDICAL EXPERT WITNESS QUALIFICATION: This section establishes qualifications for an expert witness to testify on issues relating to appropriate medical standard of care unless the witness is a health care provider. "MEDICAL BOARD OVERSIGHT OF MEDICAL EXPERT WITNESSES: Establishes guidelines for the court as to when to allow a medical expert witness to testify in cross-examination. "Section 22, DEFINITIONS: Provides definitions for professional negligence and professional services. "Section 23, CONTINGENT ATTORNEY FEE AGREEMENTS: Provides that if an attorney collects a contingency fee in connection with an award of punitive damages, the contingent fee due the attorney shall be calculated after that portion of punitive damages due the state has been deducted from the total award of damages. Number 530 "Section 24, CIVIL LIABILITY OF HOSPITALS FOR NON EMPLOYEES: The purpose of this section is to clarify the circumstances in which hospitals are held directly liable for the actions of health care providers not employed by the hospital. Current law permits claimants to sue only the hospital rather than the independent contractor who may have less ability to pay. "Provides that a hospital is not liable for civil damages resulting from an act or omission by a health care provider who is not an employee or actual agent of the hospital. However, the hospital must provide notice that the health care provider is an independent contractor and a notice of limited liability must be posted in all admissions areas and published in area newspapers annually. "The hospitals must also use caution and prudence in granting privileges to independent health care providers, have a review proceeding to monitor independent contractors, and be prepared to revoke or restrict privileges when needed. "Hospitals are liable for civil damages if the hospital or its employees were negligent or acted with intentional misconduct. "The final section defines health care providers and hospitals as the terms are used in this statute. Number 610 "Section 25, DAMAGES RESULTING FROM COMMISSION OF A CRIME: Provides that a person committing, attempting to commit, or fleeing from the commission of a felony whose action substantially contributed to the person's injury or death, is prohibited from recovering damages from personal injury or death. "Section 26, SIGNING OF PLEADINGS, MOTIONS, AND OTHER PAPERS; SANCTIONS: Sanctions for failure to sign a pleading or filing a frivolous lawsuit is a matter in the discretion of the trial court. This section imposes monetary sanctions against any attorney in civil cases from filing frivolous, unnecessary and legally deficient pleadings. "If it is alleged or appears that a pleading, motion, or other paper is signed in violation of this section, the court, upon motion or upon its own initiative, may set the matter for hearing. If the court determines that the motion is in violation, monetary sanctions will be implemented. Number 640 "Section 27, Repealing AS 09.55.548. "Section 28 through 33, Technical sections relating to amending Alaska Rule of Civil Procedure 49.68.702 and 95. "Section 34, Severability. "Section 35, This Act applies to all causes of action accruing on or after the effective date of this Act. "Section 36, This Act takes effect July 1, 1995." Number 650 CHAIRMAN PORTER stated the work session on HB 158 was over, and on Wednesday, March 1, the bill would be open to public testimony.
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