Legislature(1995 - 1996)
03/01/1995 01:12 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HJUD - 03/01/95 HB 158 - CIVIL LIABILITY Number 120 CHUCK ACHBERGER, Director, Juneau Chamber of Commerce, said they support this bill which would help them keep their costs in line. A lot of people do not realize that when you hear about large settlements, it actually impacts their bottom line for business quite hard. He also supported the bill for personal reasons. He is part of an environmental assessment company, and it is expensive to obtain insurance. Number 145 CHAIRMAN BRIAN PORTER asked people wishing to testify to limit their testimony to a maximum of three minutes. EARL WILLIAMS testified via teleconference. He was concerned about the eight year statute of repose and putting a cap on non-economic damages and on punitive damages. He described how his injury, as a worker on the Swanson River Oil Field four years ago, caused him continuing victimization by insurance companies. His insurance adjuster refused to pay him compensation for his work related disability. He did get the Veteran's Administration to pay his medical costs. Through this damaging ordeal, he used all of his savings to survive. Number 247 CHAIRMAN PORTER explained to Mr. Williams that HB 158 would probably not be applicable to his situation, because an on the job injury would fall under the workers' compensation statutes. Further testimony will confirm if this is correct. Number 260 ROBERT COWAN spoke via teleconference on behalf of the Plaintiffs' Executive Committee of the Exxon oil spill case. He noted this committee was appointed by Judge Holland. He was concerned that this legislation would leave big companies like Exxon with little fear of consequences for their actions. These provisions would allow Exxon to say it was not their fault, but that it was the captain who was responsible. He said they had spoken with many members of the United Fishermen's Association (UFA) who had expressed the same concerns. Number 300 REPRESENTATIVE DAVID FINKELSTEIN asked Mr. Cowan when the jury is considering the size of an award, if the size of the company's or individual's assets is one of the things considered. If so, in that context, what portion of Exxon's net worth did the punitive damages amount to? MR. COWAN answered yes, the jury is allowed to consider the company's assets in determining the award. He thought Exxon's assets were somewhere between $90 million and $100 million dollars, in 1989. He did know the yearly profits were about 5 million, which is what the jury assessed. This equaled about one year's worth of profits. REPRESENTATIVE FINKELSTEIN thanked Mr. Cowan, but thought perhaps, he meant billions of dollars. CHAIRMAN PORTER mentioned that case took place in federal court and this bill would only effect Alaska's state courts. MEGAN RUSH, who testified via teleconference, objected to Section 6, which puts a cap on non-economic damages. She had suffered a serious head injury in 1984, and had previously been a commercial pilot. The cap was too limiting, and would not cover future medical costs. She is not able to obtain medical insurance from a vendor. She felt the $500,000 cap should be deleted, or else substantially increased for victims of catastrophic injuries. CHAIRMAN PORTER asked Ms. Rush to consider the fact that future medical costs fall under the category of economic damages, and there is no cap on economic damages under this bill. Number 435 ROBERT CUNNINGHAM testified via teleconference. He has suffered a work injury in his ear, which could possibly eliminate him from the capability of continuing in his profession as an air traffic controller. The federal code cuts off all of his benefits, so he, among other people, are almost required to sue in order to receive some sort of compensation. He was opposed to the cap on damages. Number 490 RICHARD CATTANACH, Vice President, Union Company, testified via teleconference, on behalf of Alaskans for Liability Reform. He felt the civil justice system to be inefficient and in need of adjustments. This bill will help achieve the goal. They believe in giving more of the award to the injured party, and less money to the attorney. The rural areas of Alaska are suffering from lack of adequate medical provisions, due to the high cost of medical malpractice insurance. This deters doctors from wanting to work in these areas. Number 610 PHIL HENDINBURGER, General Counsel, representing NORCAL Insurance Company, testified via teleconference. They have insured half of this country's physicians for the past several years. He felt tort reform would generate a real savings for the people. Specifically, the state of California's tort reform has had a dramatic impact on the cost of malpractice premiums for physicians and hospitals. Insurance has become more affordable, as compared to other states who have not enacted similar reform. Over the 17 years that the California tort reform package has been in effect, they have allowed the costs to increase only 83 percent, while the U.S. costs, excluding California, have increased by 413 percent. Alaska experience shows that premiums have increased by 1620 percent over the same 17 year period. That is an increase of 26 percent per year, which is twice the national average (11 percent). In California, an Obstetrician/Gynecologist (OB/GYN), will pay $30,000 a year for medical malpractice insurance. A comparable OB/GYN in Alaska will pay $65,000 per year for the same insurance. They were in support of this tort reform legislation. CHAIRMAN PORTER asked Mr. Hendinburger if he thought the insurance rates in Alaska would decrease if this bill passed. MR. HENDINBURGER felt that they would. Number 745 ERNESTA BALLARD, President, Ketchikan Chamber of Commerce, testified via teleconference as a private citizen. She also faxed in her testimony which reads: "I have been an advocate of tort reform for many years. The provisions of HB 158 are well thought through, and reasonable. The bill structures injury claims fairly. Injured parties are protected from financial ruin and will still have access to just compensation for economic damages and medical expenses. Defendants will be held accountable for their share of obligation to injured parties. "Beyond this basic equity in compensation and accountability, HB 158 takes big and important steps towards reducing the opportunism and greed which sadly characterize much personal injury litigation. It bars damage suits by people who received their injuries in the course of committing a felony; it allows juries to know if a defendant has already collected an award for the same injury; it limits the use of punitive damages to cases which are proven to be deliberately malicious; it allows for a payment schedule, including interest for large awards. These are common sense provisions. HB 158 also provides for monetary sanctions against attorneys for filing frivolous pleadings. This is not only common sense, it is long overdue. "As citizens of a free country, we protect our rights aggressively. I believe the time has come for us also to accept the responsibility that accompanies citizenship. HB 158 is a small step toward putting those rights in the greater context of the greater good. Reasonable control over the cost of damages will reduce the cost of insurance and the cost of doing business, and increase access to the free enterprise system for all." Number 775 DAVID JOHNSON, Pediatrician, speaking for the Alaska State Medical Association, testified via teleconference. He said a concern among pediatricians is the issue of the ongoing statute of limitations. Something he does today, and may not come to litigation until two years following discovery, could crop up 20 years from now. When this situation comes up after you are gone, or after your insurance is gone, this creates problems. This bill would take the potential lottery out of the system, and provide some type of predictability. The element of unpredictability is what allows all of us to be victimized by insurance premiums. LINDA HALL, Past President of Insurance Agents Association, testified via teleconference. She felt there ought to be clear and convincing evidence of malicious intent in order to award compensation. The intent of punitive damage is to deter future negative behavior. Part of this award money should go to the state and not to the plaintiff. She urged support of the bill. TAPE 95-19, SIDE B Number 000 CONSTANCE ROSEBROCK testified via teleconference regarding punitive damages. She was a victim of sexual assault at work. Since her employer would not do anything about it, she was forced to take the defendant to court. Punitive damage awards are meant to deter wrongful actions. Number 080 JIM FORBES, Assistant Attorney General, Fair Business Practices Section, Department of Law, testified via teleconference, speaking on behalf of the Administration. Overall, the Governor recognizes that there are ways the current system could be improved; however, he does not want to change the system to one that would deny ordinary citizens access to the system. REPRESENTATIVE TOOHEY asked for an example. MR. FORBES replied that contingency fee arrangements are the only way middle class citizens can access the current tort system. For example, in a case involving complex causes of injury, the lack of ability to pay an expert witness could play into the amount of the award. Number 230 DOCTOR DON LEHMANN, President of the Alaska State Medical Association, via teleconference, described the current tort system as being a lottery, with awards based on chance and emotion, rather than on true injury and reason. All too often, injured parties will claim victim status, seeking recompense beyond reason. The current system is broken, and he is strongly in support of HB 158. As a physician, from a liability standpoint alone, this is a good bill. The single most important measure this bill would provide is the cap on non-economic losses. REPRESENTATIVE JOE GREEN asked Dr. Lehmann if he felt the lowering of insurance premium rates would trickle down to a savings for the doctors' patients. DR. LEHMANN felt those cost savings would be passed on to the consumer. Number 415 TROY REINHART, Employee Relations and Public Affairs Manager, Ketchikan Pulp Company, spoke in favor of the bill. The limit on non-economic damages is important. Also, establishing guidelines for the use of expert witnesses is important. The monetary sanctions in the bill against attorneys in civil cases who file frivolous lawsuits is very important. The last resort for their company is to go to court, and it should be that way for any good business; but all too often they find they are being dragged into court cases which are frivolous. These cases are a waste of the court's time, the company's time, and the government's time, as well as to the individuals involved. Number 445 KIRSTEN TINGLUM, Attorney, Alaska Association of Trial Lawyers, wanted the committee to reconsider economic caps. She gave the example of a child whose mother is killed in a car accident. If the mother did not work, the future monetary loss of that mother is zero. If the child's mother was an attorney, the child will get big bucks. That is not fair. All the poor child is left with is pain and suffering. She worried that some aspects of this bill would block ordinary people from utilizing the system. Number 560 BRAD THOMPSON, Director, Division of Risk Management, Department of Administration, testified in favor of HB 158. He explained that Risk Management acts as the state's self insurance or liability insurer, protecting all state agencies, managing problems arising from their activities and operations. Overall, HB 158 will reduce amounts paid currently by the state in settling, or in judgments arising from tort actions filed against the state; and will also reduce future costs incurred in the defense of the actions filed against the state. The fiscal note is zero. In years to come, future administrative costs of the program would actually decrease. Number 640 BRUCE HEATH expressed his disappointment, via teleconference, with a situation he has been involved in. After an injury, his lack of finances and location of residence make it difficult for him to receive adequate medical care. He has been refused education to train for a different vocation. His insurance adjuster has lied to him and refused to pay his medical costs, telling Workers' Compensation something different than what they are telling him. They told him to go to the Veteran's Administration (VA). Number 690 CHRISTY TENGS-FOWLER testified via teleconference. She is a small business owner with a bar and restaurant which has been in her family for 43 years. They are losing their incentive to be in business because of an incident where someone used fake identification to buy alcohol from their liquor store. A few hours later, he totalled his pick-up and died in a crash. It did not matter that he had been carded by eight different employees, nor that he had been carded that night, nor that he had been drinking alcohol in the presence of his parent in her establishment and in other establishments. The family turned around and sued them. They spent two years going through a horrible lawsuit, and everything they had saved for her father's retirement was spent on attorney fees and settlement costs. They have since been sued by another family for the same reason, but the judge ruled in her favor. The point is they live in fear of being sued just by being in this business. It took an emotional toll on the whole town. She would like to see this bill passed. Number 740 RUSS WINNER, Trial Attorney, testified via teleconference against the bill. He disagreed with the statute of repose. He felt this provision to be unfair, unconstitutional, and discriminatory. The non-economic provision is fundamentally anti-Native, because if someone is injured who lives in a city, he has economic damages and can be compensated for them. If someone lives in a village with a subsistence lifestyle, he does not have economic damages, and cannot recover costs; he can only recover non-economic damages, which would have a cap. Number 830 MAURI LONG, Attorney, testified via teleconference. She felt this bill would harm a lot of regular people, and did not feel most people would want to give up some of these provisions. It provides different standards of expert witnesses for medical experts than for those in other fields. She felt the bill was not very well thought out. TAPE 95-20, SIDE A Number 000 MS. LONG continued to say that Section 22 is an unnecessary provision and is trying to solve something that is not a problem in the first place. Number 045 MIKE SCHNEIDER testified via teleconference. He expressed concerns about the examples given of ordinary people being harmed by this legislation. He felt the agenda of the bill was to truly disenfranchise injured people. He was also concerned that the legislature was trying to decide what fairness was. That should be left up to the jury. Number 125 LYNN RODDA, Risk Manager, Providence Hospital, testified via teleconference, describing a recent litigation involving the hospital. There was a costly case that should not have even gone to trial. They were able to settle prior to trial, after several attempts. Their liability insurance premium for 1994, was over $900,000. Number 150 LES GARA testified via teleconference. He disagreed that a fiscal note could be zero on this. The statute of repose would spell disaster for the state. He expressed concerns about situations like contaminated drinking water that is not discovered within a short period of time, because of the date of sale of the property. Another situation would be where a fire was caused by faulty wiring. He felt the person installing the wiring should be held liable, even after the statute of repose. Number 400 PATTY RIZER testified via teleconference. She disagreed with the cap on non-economic damages, feeling that would encourage more wrong doing. Her 11 year old son, Bart, was killed at Alyeska Ski Resort while skiing. For her personal tragedy, this cap would not cover economic damages for costs associated with this accident. Most people do not have enough money to pay an attorney by the hour. This bill will not promote safety. Number 510 TOM DOOLEY spoke, via teleconference, against the punitive damage section. If the Supreme Court is going to say they can only find punitive damages against companies who have malice or conscious disregard for another person, he had no objection to that. He represents people up against corrupt unions, and against mafia controlled businesses. Why on earth would you want to protect these kinds of criminals? You have already determined there is malice and conscious disregard for their acts; why would you not want to bankrupt them and pull them out of their business? He did not understand why we would want to protect that class of people. Number 590 LLOYD MILLER, Attorney, testified via teleconference. He was appointed to represent victims of the oil spill. He opposed the bill and felt that Section 7 is too restrictive. You have to remember that when punitive damages are set, the plaintiff's economic damages have already been determined separately. Punitive damages are not designed to compensate the plaintiff, and have to do with the outrageous conduct of the defendant. Number 650 CHARLES COE, Attorney, testified via teleconference. He felt that setting this non-economic portion of the bill would be inconsistent with what Northwest Jury Verdicts are doing in other areas of the state of Alaska. Anyone who is realistic about the system will realize that in an auto accident, juries tend to award minimal if anything for non-economic damages. He felt that putting a cap on non-economic damages would be out of line, unrealistic and unreasonable. He did not feel the statute of repose would be a problem. CHAIRMAN PORTER announced the end of the public testimony for HB 158.
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