Legislature(2005 - 2006)CAPITOL 120

04/19/2005 01:00 PM JUDICIARY


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 67 CLAIMS AGAINST HEALTH CARE PROVIDERS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
= HB 92 UNIVERSITY OF ALASKA AND CORPORATIONS
Heard & Held
SB 67 - CLAIMS AGAINST HEALTH CARE PROVIDERS                                                                                  
                                                                                                                                
1:48:18 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE  announced that the  final order of  business would                                                               
be CS FOR  SENATE BILL NO. 67(JUD)(efd fld), "An  Act relating to                                                               
claims for personal injury or  wrongful death against health care                                                               
providers."                                                                                                                     
                                                                                                                                
1:48:47 PM                                                                                                                    
                                                                                                                                
MICHAEL   HAUGEN,  Executive   Director,   Alaska  Physicians   &                                                               
Surgeons, Inc. (APS),  said that the APS is in  strong support of                                                               
SB 67.   He referred to a statewide poll  conducted March 8-10 by                                                               
a coalition  calling itself Alaskans  for Access to  Health Care,                                                               
of which  the APS is a  member, and said that  the poll indicated                                                               
that with regard to the  question of medical liability reform, 64                                                               
percent  of Alaskan  "voters" were  aware of  the ongoing  debate                                                               
about medical malpractice liability  reform and the corresponding                                                               
increases  in cost  to physicians  to obtain  medical malpractice                                                               
insurance.  He  said that the poll also  initially indicated that                                                               
approximately 60  percent of Alaskans  are in favor of  placing a                                                               
cap  on  non-economic damages  in  medical  liability cases,  but                                                               
after the poll  then offered people six "facts"  about the "state                                                               
of affairs" in Alaska, the number increased to 67 percent.                                                                      
                                                                                                                                
MR. HAUGEN offered his interpretation  that those statistics mean                                                               
that "there  is strong support  for this proposition."   The poll                                                               
also  indicated that  72 percent  of Alaskan  "voters" feel  that                                                               
health care providers are doing  a good job in preventing medical                                                               
errors and  promoting public  safety; that  58 percent  feel that                                                               
many  or  some  physicians  are performing  additional  tests  or                                                               
procedures  that  are  not  necessary but  are  done  to  protect                                                               
physicians from  "frivolous" lawsuits; that 48  percent feel that                                                               
some   physicians  have   stopped  providing   high-risk  medical                                                               
services,  or  are  refusing  to   treat  patients  with  serious                                                               
illnesses,  in order  to protect  themselves from  lawsuits.   He                                                               
offered his  understanding that  those polled  predominately said                                                               
that  that they  fear the  medical malpractice  insurance problem                                                               
will  directly  affect them  in  the  form of  higher  healthcare                                                               
costs.                                                                                                                          
                                                                                                                                
MR.  HAUGEN offered  that the  poll  has also  indicated that  86                                                               
percent of  those asked  were "very  or somewhat"  concerned that                                                               
they will have to pay more  for healthcare costs; that 72 percent                                                               
fear not  being able  to find  a specialist  when they  need one;                                                               
that 66  percent fear not being  able to find a  doctor when they                                                               
need one;  and that approximately  80 percent are  concerned that                                                               
they may not be able to  afford healthcare insurance.  He offered                                                               
his  understanding that  others will  testify that  Alaska has  a                                                               
shortage  of physicians  and  ranks  46th in  the  nation in  the                                                               
number of doctors  per capita, and relayed his  belief that those                                                               
states  that  have  enacted  what  he  termed  "meaningful"  non-                                                               
economic damage caps  have seen, on average, "about  a 12 percent                                                               
greater per capita number of  doctors than those states that have                                                               
not."  He concluded by urging the committee to support SB 67.                                                                   
                                                                                                                                
1:52:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said he  would not  be making  any decisions                                                               
based on a poll, but rather  would be attempting to determine the                                                               
validity  of the  poll.   He  asked whether  the  poll posed  the                                                               
question of  whether one would  be in favor  of placing a  cap on                                                               
non-economic damages.                                                                                                           
                                                                                                                                
MR.  HAUGEN said  the poll  "started off  with a  series of  more                                                               
general  questions," but  then asked  whether one  would favor  a                                                               
cap.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  GARA asked  whether  those taking  the poll  were                                                               
told that there already is a cap in place.                                                                                      
                                                                                                                                
MR. HAUGEN  said that those  taking the  poll were not  told that                                                               
fact.    In response  to  further  questions, he  indicated  that                                                               
members' packets  contain a  copy of the  questions asked  by the                                                               
poll,  and reiterated  when the  poll was  conducted, who  he was                                                               
speaking on behalf of, and his position with that organization.                                                                 
                                                                                                                                
1:55:42 PM                                                                                                                    
                                                                                                                                
ROD  BETIT, President,  Alaska State  Hospital  and Nursing  Home                                                               
Association (ASHNHA),  said that the  ASHNHA supports SB  67, and                                                               
noted  that  the  ASHNHA's  written   comments  are  included  in                                                               
members' packets.  He said  that the ASHNHA's membership supports                                                               
SB  67 primarily  because of  access issues;  there is  a growing                                                               
concern  that more  and more  difficulties are  being experienced                                                               
throughout  the state  in terms  of  physicians being  available,                                                               
particularly for  those that  need specialists.   "We  think that                                                               
this bill  will better balance  the non-economic  damage interest                                                               
entitlement of  an individual with  the larger  community concern                                                               
of having  enough physicians to meet  everybody's medical needs,"                                                               
he  added, opining  that  the  bill will  move  Alaska closer  to                                                               
having  a medical  liability "law"  that would  make "that"  more                                                               
reasonable  and fair.   He  offered his  belief that  SB 67  does                                                               
nothing to reduce  economic damages or punitive  damages that may                                                               
be awarded.                                                                                                                     
                                                                                                                                
MR. BETIT said that the ASHNHA  believes that Alaska needs to act                                                               
now because it feels that the  literature regarding the lack of a                                                               
non-economic  damages cap  being  linked  with insurance  premium                                                               
increases,  and  thus physician  shortages,  is  compelling.   In                                                               
addition to  Alaska being  46th in  the nation  in the  number of                                                               
doctors per capita,  more and more physicians  are limiting their                                                               
practice and  the services  they offer,  he remarked,  and opined                                                               
that such is due to malpractice  liability as well as the cost of                                                               
providing "those  other services."   He offered  an example  of a                                                               
physician in Soldotna  who limited his practice,  and offered his                                                               
belief that this such is happening throughout the state.                                                                        
                                                                                                                                
MR.  BETIT said  that  physicians are  handicapped  in that  they                                                               
cannot  simply  increase  their   fees  to  offset  costs,  since                                                               
Medicare  and Medicaid,  which make  up about  50 percent  of the                                                               
"total healthcare system," will not  recognize, and thus not pay,                                                               
such increases; additionally, some  people cannot pay for medical                                                               
services  at all,  and are  thus being  provided with  healthcare                                                               
services  as   a  charity   by  physicians.     He   offered  his                                                               
understanding   that   the   uninsured   rate   for   Alaska   is                                                               
approximately  20   percent.     Also  of  concern   is  Alaska's                                                               
population in comparison with the  projected growth of physicians                                                               
in Alaska; he relayed that  the ASHNHA's written comments contain                                                               
statistics  detailing  those percentages,  read  a  few of  those                                                               
statistics  for the  committee,  and surmised  that they  reflect                                                               
that  Alaska's  population will  be  requiring  more services  by                                                               
specialty physicians.                                                                                                           
                                                                                                                                
MR.  BETIT  characterized  the  statistics  the  ASHNHA  provided                                                               
regarding Alaska's  projected physician growth rate,  as compared                                                               
to the rate  projected for the entire nation, into  the year 2006                                                               
as  worrisome,  and  read  some   of  those  statistics  for  the                                                               
committee.  He stated, "We need  more physicians and we need more                                                               
in   certain  specialties,"   and  predicted   that  should   the                                                               
statistics prove  correct, Alaska's  needs will not  be met.   He                                                               
summarized by saying:                                                                                                           
                                                                                                                                
     We  know we  have a  problem now.   We  know that  it's                                                                    
     going to get  worse because the population  is going to                                                                    
     put  increasing pressure  on  the physician  community.                                                                    
     We  know that  two-thirds  of the  public spending  ...                                                                    
     [on]  Medicare/Medicaid   is  [for]  services   to  the                                                                    
     elderly, that  Medicare/Medicaid together  represent 50                                                                    
     percent of total  spending in this country  - with very                                                                    
     little ability  to recover any  increased reimbursement                                                                    
     through those programs  - yet these are  the people who                                                                    
     are going  to have very serious  prolonged illnesses in                                                                    
     those   programs  that   require  a   strong  physician                                                                    
     community  to treat  [them].   So  we  think that  this                                                                    
     increase  in  specialty  physicians  in  those  various                                                                    
     fields needs  to be  addressed, and  that the  only way                                                                    
     we're going to  do that is [to] keep  our physicians in                                                                    
     practice as  long as  possible -  not having  a medical                                                                    
     school in this state or  ... large residency programs -                                                                    
     and by  creating a  fair medical  liability environment                                                                    
     to attract new physicians from  outside the state.  For                                                                    
     those  reasons, ...  our  membership strongly  supports                                                                    
     this  measure  and encourages  your  support  of it  as                                                                    
     well.                                                                                                                      
                                                                                                                                
2:03:54 PM                                                                                                                    
                                                                                                                                
MR. BETIT, in  response to a question,  offered his understanding                                                               
that  "Region  X"  encompasses  Washington,  Idaho,  Oregon,  and                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GARA asked whether  the statistics provided in the                                                               
ASHNHA's written comments were gathered before 1996.                                                                            
                                                                                                                                
MR. BETIT said yes.                                                                                                             
                                                                                                                                
REPRESENTATIVE GARA  noted that he'd asked  Legislative Legal and                                                               
Research  Services to  get  him  information regarding  physician                                                               
growth  in  Alaska, and  provided  members  with  a copy  of  the                                                               
resulting  legislative   research  report.     He   relayed  that                                                               
according  to  that  information,  between  1996  and  2004,  not                                                               
including  "federal  physicians,"  there  has been  nearly  a  50                                                               
percent  increase in  the  number of  physicians  in Alaska,  and                                                               
surmised that this indicates that  the statistics provided in the                                                               
ASHNHA's written  comments are wrong.   The  legislative research                                                               
report indicates  that in  2004, there  were 3.54  physicians for                                                               
every  1,000 Alaskans,  whereas  in 1996,  there  were only  2.63                                                               
physicians for every 1,000 Alaskans.                                                                                            
                                                                                                                                
MR. BETIT suggested that perhaps  the legislative research report                                                               
includes all physicians  that are licensed to  practice in Alaska                                                               
but  doesn't indicate  how many  of them  are actually  providing                                                               
services, whereas  the information  the ASHNHA  provided reflects                                                               
only those physicians that are "employed."                                                                                      
                                                                                                                                
REPRESENTATIVE  GARA  countered  that  the  legislative  research                                                               
report statistic includes only active state-licensed physicians.                                                                
                                                                                                                                
2:07:22 PM                                                                                                                    
                                                                                                                                
CATHY  GIESSEL,   M.S.,  FNP-CS  (family  nurse   practitioner  -                                                               
clinical  specialist),  Alaska   Nurse  Practitioner  Association                                                               
(ANPA),   after  relaying   that   she  is   an  advanced   nurse                                                               
practitioner (ANP), said that the ANPA  supports SB 67.  She said                                                               
that  the bill  is important  to nurse  practitioners -  of which                                                               
there  are over  500 in  Alaska, delivering  primary health  care                                                               
services and providing Alaskans with  access to care - because of                                                               
the  impact that  liability insurance  rates have  on physicians.                                                               
More  that 50  percent of  nurse practitioners  live and  work in                                                               
rural  Alaska,   and  malpractice   insurance  rates   for  nurse                                                               
practitioners  have increased  30-50  percent  annually over  the                                                               
last two  to three years and  some premiums tripled for  the year                                                               
2005.                                                                                                                           
                                                                                                                                
MS.  GIESSEL   said  that  the   insurance  carriers   for  nurse                                                               
practitioners  have warned  that  this trend  will continue  even                                                               
though a databank maintained in  part by the Department of Health                                                               
and Human Services (DHHS) -  the National Practitioner Data Bank-                                                               
Healthcare  Integrity and  Protection  Data  Bank (NPDB-HIPDB)  -                                                               
reflects that over  the last 15 years there have  only been three                                                               
"license actions" in  Alaska.  Thus, nurse  practitioners are not                                                               
making errors, are  not being found liable  in malpractice suits.                                                               
She  posited  that the  increase  in  insurance rates  for  nurse                                                               
practitioners  is  a  ripple  effect of  what  is  happening  for                                                               
physicians' insurance  rates, and  so tort reform  regarding this                                                               
issue is very important to  nurse practitioners because they want                                                               
to continue offering  their services to Alaskans.   She concluded                                                               
by reiterating that the ANPA supports SB 67.                                                                                    
                                                                                                                                
2:10:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA   said  he   is  skeptical   that  insurance                                                               
companies are going to either  reduce or stop increasing premiums                                                               
if the  legislature further limits  the amount of  damages people                                                               
are  allowed to  recover  when they  are harmed.    He asked  Ms.                                                               
Giessel if  the liability judgments for  nurse practitioners have                                                               
increased and  are thus  being used  to justify  increasing their                                                               
insurance  rates.    If  the  answer  is  no,  why,  then,  would                                                               
affecting  someone's   ability  to  recover  damages   result  in                                                               
insurance companies not increasing rates.                                                                                       
                                                                                                                                
MS. GIESSEL said  she did not think that SB  67 alone will result                                                               
in [a  decrease] in  malpractice insurance  rates; instead  it is                                                               
merely a piece  of the solution to the  increasing of malpractice                                                               
insurance rates  as well as a  piece of the solution  to the cost                                                               
of  and  access to  healthcare  in  Alaska.    She said  she  has                                                               
information   from  the   American   Medical  Association   (AMA)                                                               
indicating that once  a cap on malpractice  claims was instituted                                                               
in  Texas,  it resulted  in  there  being 14  insurance  carriers                                                               
providing insurance in that state instead  of just the 2 that did                                                               
so before  the cap was instituted;  additionally, insurance rates                                                               
dropped 12  percent after the  first year, followed by  another 5                                                               
percent decrease.  She also said:                                                                                               
                                                                                                                                
     We know  that California's  rates are 40  percent lower                                                                    
     than  Alaska's   malpractice  [insurance]  rates.     I                                                                    
     believe  that  part  of  the answer  will  be  to  hold                                                                    
     insurance companies accountable,  after the institution                                                                    
     of a  more rigid  cap, to  reduce those  rates, because                                                                    
     they'll no  longer have the validity  for causing these                                                                    
     continuing increases.   I don't  feel that this  is the                                                                    
     total  answer, but  it's a  piece of  the answer.   And                                                                    
     doing  nothing will  certainly ensure  that rates  will                                                                    
     continue to climb.                                                                                                         
                                                                                                                                
2:12:19 PM                                                                                                                    
                                                                                                                                
DOUGLAS  G. JOHNSON,  Attorney, Alaska  Academy Of  Trial Lawyers                                                               
(AATA), relayed  that he would  be speaking  on the issue  of the                                                               
appropriateness of the proposed cap  on non-economic damages.  He                                                               
said he  is often called to  speak to youth groups  about how and                                                               
why  laws are  made,  and so  he speaks  to  them about  personal                                                               
responsibility  and  about  justice and  fairness  for  everyone.                                                               
Therefore, he remarked, "I cannot  harmonize this bill with those                                                               
principles."  He went on to say:                                                                                                
                                                                                                                                
     You can't  harmonize a bill that  restricts the damages                                                                    
     that  a person  is  entitled  to receive,  artificially                                                                    
     based  on evidence  that  has nothing  to  do with  the                                                                    
     facts  of the  specific  case, and  yet  call it  fair.                                                                    
     Personal  responsibility   means  that  if   you  break                                                                    
     something, you  fix it, and  it doesn't matter  if it's                                                                    
     something that's less expensive  or more expensive, you                                                                    
     take  care of  what you've  done -  you make  it right.                                                                    
     This  bill  artificially  shields people  for  creating                                                                    
     greater harm;  it takes  away their  responsibility for                                                                    
     harm created.                                                                                                              
                                                                                                                                
     This  bill  disproportionately  affects people  in  our                                                                    
     state who have little to  say in their representation -                                                                    
     the  very  young, children,  [and]  the  very old,  our                                                                    
     elders - [and] it  disproportionately affects those who                                                                    
     have a subsistence lifestyle, because  what it says is,                                                                    
     the  only   people  who  are   entitled  to   be  fully                                                                    
     compensated  are those  who  have  damages of  economic                                                                    
     losses,  but  people  who  can't  show  large  economic                                                                    
     losses are  not entitled  to full compensation  for the                                                                    
     losses which  they suffer.   That is not fair  and it's                                                                    
     not  just and  it  is not  appropriate to  discriminate                                                                    
     against those folks.                                                                                                       
                                                                                                                                
     This  bill  violates  the  right   to  trial  by  jury;                                                                    
     somehow, if passed,  we would be saying that  we do not                                                                    
     trust  the  citizens  of this  state  to  make  correct                                                                    
     decisions on placing values on  damages or harm done to                                                                    
     people  through   other  people's  mistakes.     Now  I                                                                    
     recognize that folks  who are working on  this bill are                                                                    
     trying to  do good things  - they have good  purposes -                                                                    
     but  I  think  they  are  severely  mistaken  in  their                                                                    
     foundations upon  which they  base what  they're trying                                                                    
     to do here.                                                                                                                
                                                                                                                                
MR. JOHNSON referred  to material provided by  the [Alaska Action                                                               
Trust (AAT)],  and noted that  statistically, whenever  there has                                                               
been reform  of the laws  affecting the damages that  someone can                                                               
receive,  it  is often  heralded  as  something that's  going  to                                                               
reduce insurance  premiums.   However, until  a few  moments ago,                                                               
when he'd heard  about the information pertaining  to Texas, he'd                                                               
not  heard of  any instances  in which  a cap  has ever  actually                                                               
resulted in lower rates, he remarked,  and added that he would be                                                               
researching the  information pertaining  to Texas further  to see                                                               
if the  cap truly  did result  in lower rates.   In  other states                                                               
that have adopted  a cap similar to what is  being proposed in SB
67, insurance premiums have not gone down.                                                                                      
                                                                                                                                
MR. JOHNSON added:                                                                                                              
                                                                                                                                
     There's been talk about the  number of claims here, and                                                                    
     yet, statistically,  by the Alaska State  Medical Board                                                                    
     information, ...  the amount paid out  in total damages                                                                    
     ...   between  1993   and  2003,   when  adjusted   for                                                                    
     inflation, has  stayed exactly the  same.  And  this is                                                                    
     for total  damages.   There has  been no  change, there                                                                    
     has  been no  rise, or  dramatic rise,  as we've  heard                                                                    
     talk  about.    Basically,  Madame  [Chair],  I  cannot                                                                    
     harmonize this  bill with the  principles that  I think                                                                    
     we all espouse  as being just and  appropriate and part                                                                    
     of what we are supposed to be about here.  Thank you.                                                                      
                                                                                                                                
2:17:10 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE surmised that there  are two different perspectives                                                               
on  the issues  being raised  by the  bill.   With regard  to the                                                               
issue of  fairness, she  said that  she also has  to look  at the                                                               
fact that  some people in  smaller communities - such  as elderly                                                               
men  with  heart  problems,  young  adults  suffering  from  head                                                               
injuries,  and young  women -  don't have  access to  specialists                                                               
such as  cardiologists or neurosurgeons or  those physicians that                                                               
specialize in obstetrics and gynecology (OB/GYN).                                                                               
                                                                                                                                
MR. JOHNSON offered his belief that  those with the need for such                                                               
specialists are the very people  that the legislature ought to be                                                               
looking out for,  that many of those types of  people will suffer                                                               
disproportionately  under the  bill  because they  don't have  an                                                               
earnings history and  so won't be justly  compensated should they                                                               
be harmed as  a result of a physician's error.   Such people will                                                               
suffer throughout  the rest of  their entire lives, but  will not                                                               
be able to claim compensation for  lost wages and will be limited                                                               
to only $250,000 for non-economic damages.   He opined that it is                                                               
not appropriate  to say that  if harm happens within  the medical                                                               
field   that   there  should   not   be   appropriate  and   just                                                               
compensation.   With regard to  the issue of OB/GYNs,  he offered                                                               
his understanding that  the number of such  specialists in Alaska                                                               
has actually increased in the last two years.                                                                                   
                                                                                                                                
MR.  JOHNSON  opined that  reducing  the  amount of  awards  that                                                               
injured people  can receive for  full and just  compensation will                                                               
do  nothing to  affect  the  number of  doctors  who practice  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
CHAIR  McGUIRE surmised  that everyone  has  a responsibility  to                                                               
address "the  problem," and offered  her understanding  that once                                                               
the contingency  fees charged by  the trial  lawyers representing                                                               
those  with  medical malpractice  claims  are  deducted from  the                                                               
awards, plaintiffs  can end up  being left  with as little  as 50                                                               
percent of such  awards.  She asked whether the  trial lawyers in                                                               
such cases bear any responsibility.                                                                                             
                                                                                                                                
MR. JOHNSON opined  that the [trial lawyer]  profession bears the                                                               
responsibility  of doing  everything  it can  to  try to  protect                                                               
injured people,  noting that in order  to do that, there  have to                                                               
be trial lawyers who are willing  to invest two or three years in                                                               
actively pursuing something for which  there is a 50-50 chance or                                                               
less  that  they   will  ever  have  any   compensation  for  it,                                                               
whatsoever, while at  the same time investing their  own funds to                                                               
make it happen.  He added:                                                                                                      
                                                                                                                                
     I   think   that   absolutely  the   profession   bears                                                                    
     responsibility  to   make  sure  that   these  innocent                                                                    
     victims  are not  left out  -  those who  don't have  a                                                                    
     voice right now, those who  don't have many, many, many                                                                    
     dollars backing  their activities here in  Juneau.  And                                                                    
     so,   yes,  absolutely,   I  agree   ...   we  have   a                                                                    
     responsibility  to protect  them,  equally, along  with                                                                    
     the rest of the citizens of the state.                                                                                     
                                                                                                                                
CHAIR McGUIRE  clarified that her  question is whether  the trial                                                               
lawyer  profession bears  any responsibility  for  looking for  a                                                               
solution to  the "crises we  have right now, which  is escalating                                                               
healthcare  costs,  escalating  medical  malpractice  [insurance]                                                               
rates, decreasing  number of specialists -  particularly in areas                                                               
where we need them - and an escalating population base."                                                                        
                                                                                                                                
2:23:06 PM                                                                                                                    
                                                                                                                                
MR. JOHNSON,  in response,  offered that  when someone  calls him                                                               
because he/she  has been  seriously injured as  a result  of some                                                               
sort  of medical  negligence, it  has been  difficult to  find an                                                               
attorney in this  state to which that person can  be referred to,                                                               
because  of  the  incredible difficulty  of  bringing  a  medical                                                               
malpractice  claim.   He  predicted that  if  such attorneys  had                                                               
their fees capped at a certain  amount, then the only people that                                                               
would have  access to appropriate  legal representation  would be                                                               
those that could  pay by some means other  than contingency fees.                                                               
In response to  another question, he said that he  is troubled by                                                               
the  tremendous  cost  of  pursuing  such  claims,  adding,  "The                                                               
defenses arrayed  against those claims  are huge, and  the amount                                                               
of funds that  they have to bring to bear  to fight against those                                                               
claims is enormous and almost without bounds."                                                                                  
                                                                                                                                
2:25:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA offered  his belief that the  amount that has                                                               
been paid for malpractice settlements  and judgments is about the                                                               
same now  as it was in  1993.  However, insurance  rates continue                                                               
to rise, he remarked, even though  he doesn't think that there is                                                               
any evidence of escalating liability.                                                                                           
                                                                                                                                
MR.  JOHNSON, in  response  to a  question,  mentioned that  non-                                                               
economic damages generally include things  like the fact that one                                                               
has been severely  disfigured, for example, or will  live in pain                                                               
for  the rest  of his/her  life.   Non-economic damages  can also                                                               
include the loss  of one's ability to hug one's  spouse, or enjoy                                                               
being with  one's children, or  hold a grandchild, or  go hunting                                                               
and  fishing -  either  for  enjoyment or  to  provide for  one's                                                               
family; non-economic damages are  supposed to compensate a person                                                               
if those abilities are taken away.                                                                                              
                                                                                                                                
2:28:25 PM                                                                                                                    
                                                                                                                                
MR. JOHNSON offered the analogy of  owning a painting that was of                                                               
great worth to  a person individually but  was perhaps originally                                                               
bought  at  a very  low  price.   If  that  painting  were to  be                                                               
[destroyed], the recovery  of the loss of  that painting wouldn't                                                               
be  just the  cost of  the  glass that  covered it  or the  frame                                                               
around it.  In order to be  fair and just the recovery would have                                                               
to include  the value the painting  had to the owner.   The award                                                               
of non-economic damages  is an attempt to put a  dollar figure on                                                               
the  suffering  that  people  have  incurred  but  for  which  an                                                               
economist can't testify regarding worth.                                                                                        
                                                                                                                                
CHAIR  McGUIRE pointed  out, however,  that  in such  situations,                                                               
where a  person is severely disfigured  or must live in  pain for                                                               
the rest  of his/her life, no  amount of money in  the world will                                                               
make it right.                                                                                                                  
                                                                                                                                
MR. JOHNSON concurred,  but noted that under  the current system,                                                               
"under our constitution," money has to  be put up to try and make                                                               
it right.   "To say that it's  tough to figure out  how much that                                                               
is and so  we aren't going to  do it anymore is  not correct," he                                                               
concluded.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  ANDERSON  offered  his belief  that  everyone  is                                                               
trying to find  some common ground and a solution  to "this."  He                                                               
asked Mr. Johnson whether he thinks  the current caps are fair or                                                               
whether he would prefer to have even higher caps.                                                                               
                                                                                                                                
MR. JOHNSON said his preference would  be to leave it to the jury                                                               
to decide  what a  person's injuries and  losses are,  adding, "I                                                               
trust the citizens  of this state, wherever they may  be, to make                                                               
those decisions in  their various communities, more  than what we                                                               
can do here without any of  the specific facts of a specific case                                                               
in front of us."                                                                                                                
                                                                                                                                
REPRESENTATIVE  ANDERSON   suggested  that  another  part   of  a                                                               
possible solution might be instituting a cap on attorney fees.                                                                  
                                                                                                                                
2:32:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON  asked Mr.  Johnson what he  thinks would                                                               
serve as a solution.                                                                                                            
                                                                                                                                
MR. JOHNSON  clarified that he did  not say he agrees  that there                                                               
is a  problem; rather, he'd  said he  thinks that there  are good                                                               
folks working  on what they have  perceived to be a  problem, but                                                               
he himself  considers the basis  for the opinions  espousing that                                                               
there  is a  problem  to be  false  and that  such  can be  shown                                                               
statistically.                                                                                                                  
                                                                                                                                
2:33:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether  "hedonistic damages" is a                                                               
term of art.                                                                                                                    
                                                                                                                                
MR. JOHNSON relayed that he wouldn't  be able to comment on that,                                                               
but said he would research the issue further.                                                                                   
                                                                                                                                
REPRESENTATIVE   GARA  said   he  would   provide  Representative                                                               
Anderson  with a  memorandum by  Legislative  Legal and  Research                                                               
Services  which indicates  that  Alaska used  to  have a  medical                                                               
insurance pool.  He elaborated:                                                                                                 
                                                                                                                                
     The last time there was  a medical liability problem in                                                                    
     the state and there  weren't enough insurers, the state                                                                    
     said, "Okay,  we'll create a  pool also."   And roughly                                                                    
     half the physicians in the  state bought into the state                                                                    
     pool, which actually made money  for the state.  It was                                                                    
     profitable enough  that at some point  it was purchased                                                                    
     by   [NORCAL  Mutual   Insurance  Company   ("NORCAL"),                                                                    
     though] there  was another problem  with it the  way it                                                                    
     was set up  - there was a tax issue  that you'd have to                                                                    
     work on.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA offered  his belief  that a  wise way  to go                                                               
would be  to form a working  group that would recreate  a pool so                                                               
that doctors  could buy  liability insurance if,  in the  ebb and                                                               
flow  of private  insurers in  this state,  there were  to be  "a                                                               
bottoming out at some point."   He offered his understanding that                                                               
the aforementioned pool lasted 10-15 years.                                                                                     
                                                                                                                                
2:35:42 PM                                                                                                                    
                                                                                                                                
CHAIR   McGUIRE,  in   response  to   Representative  Gruenberg's                                                               
question, relayed  that Black's  Law Dictionary  defines "hedonic                                                               
damages" as:                                                                                                                    
                                                                                                                                
     Damages that attempt to compensate  for the loss of the                                                                    
     pleasure of being alive.   Such damages are not allowed                                                                    
     in  most  jurisdictions.    Also  termed  (erroneously)                                                                    
     "hedonistic damages."                                                                                                      
                                                                                                                                
2:36:29 PM                                                                                                                    
                                                                                                                                
DONNA  J. McCREADY,  Attorney, Alaska  Action Trust  (AAT), after                                                               
noting that she  is also a member of the  Alaska Academy of Trial                                                               
Lawyers (AATL)  and that she  has represented plaintiffs  in some                                                               
medical  malpractice cases,  indicated that  she agrees  with Mr.                                                               
Johnson's   comments,  particularly   with  regard   to  personal                                                               
responsibility and  justice.   She noted  that there  already are                                                               
non-economic  damages  caps in  Alaska:    $400,000 for  physical                                                               
injuries, and  $1 million for "permanent,  severe physical injury                                                               
or severe  disfigurement."   She said she  is mystified  over the                                                               
amount of  energy, money,  and resources  being spent  to further                                                               
lower Alaska's existing caps on non-economic damages.                                                                           
                                                                                                                                
MS.  McCREADY offered  her belief  that  the bill  will not  only                                                               
lower those caps for a citizen  that is able to prove that he/she                                                               
has been  seriously harmed by  a physician's negligence,  it will                                                               
also  completely deny  access to  justice for  certain groups  of                                                               
people  such  as  children,  "stay-at-home  moms,"  the  elderly,                                                               
people  who  are  retired  or are  near  retirement,  and  Alaska                                                               
Natives living  a subsistence  lifestyle.   This is  because such                                                               
people are either not high wage  earners or earn no wages at all.                                                               
Under the bill,  regardless of how bad a  physician's conduct is,                                                               
such groups  of people are  essentially cut off from  the justice                                                               
system even if the physician  is grossly negligent or reckless or                                                               
intentionally harms a patient.                                                                                                  
                                                                                                                                
MS. McCREADY  explained that it  is very difficult  and expensive                                                               
to prove  that a physician  was grossly negligent or  reckless or                                                               
intentionally harmed  a patient.   A  plaintiff must  hire expert                                                               
witnesses in  the form of  competent physicians -  generally from                                                               
the Lower 48 - who practice in  the same field of medicine, and a                                                               
plaintiff can't  bring a  case unless  such witnesses  agree that                                                               
the  standard of  care under  the circumstances  of a  particular                                                               
case has been  breached; the plaintiff must then  prove that that                                                               
breach  actually caused  the harm,  which must  be serious  harm.                                                               
She  offered her  belief that  the public  would agree  that such                                                               
should be the case, that a  plaintiff should have to prove that a                                                               
physician's  conduct  was  bad  enough to  cause  harm,  that  it                                                               
shouldn't be  easy to  bring a malpractice  case, that  it should                                                               
involve  some risk.   The  risk currently  faced in  Alaska by  a                                                               
plaintiff is  that if he/she  is not the prevailing  party, there                                                               
could be judgment against him/her,  and he/she could end up owing                                                               
costs and [attorney fees] to the prevailing party.                                                                              
                                                                                                                                
MS.  McCREADY   relayed  that  according  to   information  she'd                                                               
compiled  for the  legislature  last year,  doctors  are not  shy                                                               
about  getting judgments  against  their patients  who have  sued                                                               
them but not prevailed.  Reiterating  that there is a lot of risk                                                               
involved in  bringing a  medical malpractice  case to  court, she                                                               
offered  her  belief  that  this  is the  reason  that  very  few                                                               
attorneys  are willing  to represent  plaintiffs  in such  cases.                                                               
She said that if the cap proposed  in SB 67 passes, there will be                                                               
a number  of people that  she simply could not  represent because                                                               
it  wouldn't make  any sense,  economically, for  them to  pursue                                                               
their cases.                                                                                                                    
                                                                                                                                
MS. McCREADY,  on the  issue of attorney  fees, she  relayed that                                                               
those  that  come  to  her  [with  a  medical  malpractice  suit]                                                               
generally don't  have a  lot of economic  resources, and  so when                                                               
she  takes  on  that  type  of  case, it  ends  up  being  a  big                                                               
investment,   monetarily    and   time-wise,   for    her   firm.                                                               
Additionally, she  might spend a lot  of her own money  on a case                                                               
and then realize  that she can't continue it  because either they                                                               
won't prevail or  the client finally decides  that he/she doesn't                                                               
want to  take on the risk;  she would then be  out whatever money                                                               
and time she had spent.   She relayed that her fee agreements are                                                               
generally  one-third  [of an  award]  plus  costs, but  that  she                                                               
compromises her  fee in certain circumstances  because she really                                                               
is interested in  doing what is fair; at the  same time, however,                                                               
given the amount  of time and money she puts  into such cases, it                                                               
is not unfair for her to be compensated for the work she does.                                                                  
                                                                                                                                
MS. McCREADY added:                                                                                                             
                                                                                                                                
     I'm really  operating as a  private attorney  general -                                                                    
     people  come to  me ...  [but] I  can't afford  to just                                                                    
     take cases  just because ...  somebody thinks  they ...                                                                    
     [are] good.  They really  have to be cases where people                                                                    
     are  really seriously  injured and  the conduct  on the                                                                    
     part  of  the  medical  professional  is  really  quite                                                                    
     serious.    So I  view  myself  as a  private  attorney                                                                    
     general.   I think  that if  doctors realized  how much                                                                    
     time  I spend  explaining to  people who  think they've                                                                    
     been  harmed  by  negligence  that  maybe  they  really                                                                    
     weren't, they  might be surprised  by that.  I  spend a                                                                    
     lot  of  time  educating  the  population,  [explaining                                                                    
     that]  it's   really  not   appropriate  to   sue  your                                                                    
     physician just because you think  that you were harmed,                                                                    
     [that]  you  really have  to  prove  that somebody  did                                                                    
     something wrong, [that] it's not  good enough to have a                                                                    
     bad outcome.                                                                                                               
                                                                                                                                
2:43:49 PM                                                                                                                    
                                                                                                                                
MS. McCREADY  also pointed  out that  just like  doctors, lawyers                                                               
also have to  deal with insurance companies and  the rising costs                                                               
of premiums,  and opined that  there is absolutely  no connection                                                               
between  payouts in  malpractice  cases  and healthcare  provider                                                               
insurance  premiums.    The  insurance  industry  is  subject  to                                                               
cycles, and the big increases  in premiums that every industry is                                                               
presently  being  subjected to  are  a  result of  the  insurance                                                               
industry  attempting  to   recoup  its  losses  due   to  bad  or                                                               
unfruitful investments in the [stock]  market.  Referring to some                                                               
of Representative Gara's  comments, she added that  in the 1970s,                                                               
the Medical  Indemnity Corporation of Alaska  (MICA), by allowing                                                               
physicians to self  insure, successfully served as  a solution to                                                               
the  problem  of   a  lack  of  insurance   carriers  willing  to                                                               
underwrite  medical   malpractice  insurance  in  Alaska.     She                                                               
suggested that  something similar  could be  used to  address the                                                               
issue of rising insurance premiums.                                                                                             
                                                                                                                                
MS. McCREADY predicted  that under SB 67, large  groups of people                                                               
are not  going to have access  to the court system  no matter how                                                               
badly  they are  harmed  by the  conduct of  a  physician and  no                                                               
matter how  bad the conduct of  the physician is.   She asked the                                                               
committee to  consider who will  benefit from the adoption  of SB
67.   It  will not  be healthcare  providers and  it will  not be                                                               
Alaskan  citizens;  the  only  ones who  will  benefit  from  the                                                               
passage of SB 67 will be the insurance companies.                                                                               
                                                                                                                                
REPRESENTATIVE  GRUENBERG  mentioned  that   in  the  past,  were                                                               
someone  to  bring   a  lawsuit  but  lose,   he/she  could  file                                                               
bankruptcy to  escape having to  pay the award of  attorney fees;                                                               
as  a result  of the  new bankruptcy  law, however,  this can  no                                                               
longer be  done as easily.   He asked Ms. McCready  to comment on                                                               
this issue.                                                                                                                     
                                                                                                                                
[Chair   McGuire  turned   the  gavel   over  to   Representative                                                               
Anderson.]                                                                                                                      
                                                                                                                                
MS. McCREADY  offered her understanding  that the  new bankruptcy                                                               
law radically changes the existing  bankruptcy system, and so the                                                               
discharging  of certain  debts will  no longer  be allowed.   She                                                               
opined that if frivolous medical  malpractice lawsuits really are                                                               
being  filed, then  they  probably are  not  being filed  through                                                               
attorneys  with experience  doing  medical malpractice  lawsuits.                                                               
She  posited that  if such  lawsuits  are being  filed, they  are                                                               
probably being brought pro se;  such lawsuits won't stay in court                                                               
for very long  and those filing the lawsuits,  because they don't                                                               
have an attorney and thus have  no one giving them accurate legal                                                               
advice, probably  won't know  that they are  subject to  the fees                                                               
provided for in Rule 82 of the Alaska Rules of Civil Procedure.                                                                 
                                                                                                                                
MS. McCREADY  suggested that under  the new bankruptcy  law, many                                                               
people will  be so  chilled by  Rule 82 that  they won't  bring a                                                               
suit  to trial  because  of the  fear that  they  will lose  what                                                               
little  resources they  have.   She pointed  out that  people who                                                               
come  to her  for help  in medical  malpractice suits  aren't the                                                               
type of people  that would rely on being able  to file bankruptcy                                                               
should a  judgment go against  them - bankruptcy  isn't something                                                               
they would take on lightly.                                                                                                     
                                                                                                                                
2:50:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG, on  the issue  of plaintiff  attorneys                                                               
acting  as little  attorneys general,  offered his  understanding                                                               
that  if  a   physician  has  a  number   of  successful  medical                                                               
malpractice suits  brought against him/her,  such can be  used as                                                               
evidence before the Alaska State Medical  Board when it is in the                                                               
process  of  determining  whether  to  take  disciplinary  action                                                               
against  a physician's  medical  license.   He  posited that  the                                                               
compilation   of  such   evidence   can  then   save  the   state                                                               
considerable money in the board's investigatory process.                                                                        
                                                                                                                                
MS. McCREADY confirmed that point,  but noted that when a lawsuit                                                               
is brought against a physician,  that one lawsuit by itself won't                                                               
directly affect  that physician's  license.  However,  because of                                                               
the resources spent in investigating  a particular claim, certain                                                               
practices of that healthcare  provider and/or his/her institution                                                               
that ought  to be examined  may be brought  to light, and  so the                                                               
results of that investigation can  certainly save the state money                                                               
and provide it important information.                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked whether  doctors are  required to                                                               
carry medical malpractice insurance.                                                                                            
                                                                                                                                
MS. McCREADY said no.                                                                                                           
                                                                                                                                
2:53:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  opined that  if the  insurance industry                                                               
"did a little policing," it could solve the problem.                                                                            
                                                                                                                                
2:53:46 PM                                                                                                                    
                                                                                                                                
[Representative Anderson returned the gavel to Chair McGuire.]                                                                  
                                                                                                                                
PAUL L. DILLON, Attorney, Dillon  & Findley, PC, relayed that his                                                               
firm does medical malpractice litigation  in its Anchorage office                                                               
and  across  the  state,  and its  attorneys  [specialize  in]  a                                                               
variety of  practices; he, for example,  specializes in insurance                                                               
litigation and  represents insureds against  insurance companies.                                                               
With regard  to the  question of  whether there  is a  crisis, he                                                               
noted  that according  to material  put  out by  the Division  Of                                                               
Insurance,  it doesn't  think  that  there is  a  crises at  this                                                               
point.   For the last three  years the Division of  Insurance has                                                               
studied, as  part of  the tort  reform Act,  the effects  of tort                                                               
reform with the  caps at $400,000.  Those  yearly reports clearly                                                               
indicate  that  at  least  as   far  as  insurance  carriers  are                                                               
concerned, there isn't  a problem.  Alaska is a  small market and                                                               
therefore  has  problems similar  to  some  other western  states                                                               
[with small populations].                                                                                                       
                                                                                                                                
MR.  DILLON predicted  that  in  so far  as  the availability  of                                                               
insurance  and  the  affordability  of  it,  should  any  of  the                                                               
physicians that  come before the  committee be asked,  they would                                                               
testify that  insurance is  available to them  and that  they can                                                               
afford it, given their practice.  He went on to say:                                                                            
                                                                                                                                
     Let's set the  stage here, folks.   We're talking about                                                                    
     physicians who  are making six  to seven  figures every                                                                    
     year.  ...   That  means  hundreds  of   thousands  [of                                                                    
     dollars] or potentially a million  [dollars] or more in                                                                    
     this state.   Now what we're also talking  about on the                                                                    
     other end of this equation,  in terms of ... who you're                                                                    
     affecting by  this bill, you're  talking:   kids, moms,                                                                    
     and  the  elderly.   Now  I'm  sorry  if you've  got  a                                                                    
     problem  with [the  fees charged  by] lawyers  or trial                                                                    
     lawyers, but  kids, moms, and the  elderly aren't going                                                                    
     to  come and  testify before  you.   So who's  going to                                                                    
     protect them if you don't.                                                                                                 
                                                                                                                                
MR. DILLON, on the issue of caps for non-economic damages,                                                                      
offered:                                                                                                                        
                                                                                                                                
     There is  no linkage  in the  question of  premiums and                                                                    
     caps. ... We  heard from the nurses  today indicating a                                                                    
     study in Texas; I can  show you the latest information,                                                                    
     ... that  came out  March 10 from  the state  of Texas,                                                                    
     wherein  they analyzed  their tort  reform efforts  and                                                                    
     found  that  there  is  no  linkage  between  caps  and                                                                    
     premiums. ...  In an equal and  interesting report from                                                                    
     the state of Washington, in  March, they also have done                                                                    
     a  review  of  the   question  of  premiums  and  caps.                                                                    
     Interestingly enough,  what that produced was  a rebate                                                                    
     of millions  of dollars,  by the insurance  company, to                                                                    
     ... the  doctors because  the insurance  companies were                                                                    
     overcharging in  the state of Washington  for premiums.                                                                    
     [It] might be  interesting to take a look  at that, but                                                                    
     you don't  need to  go out  of this  state; you  have a                                                                    
     very effective  Division of  Insurance, in  the context                                                                    
     of  the  production of  the  data  and the  information                                                                    
     that's available  to you, and  I would  hope, strongly,                                                                    
     that you would  take the opportunity to take  a look at                                                                    
     it.                                                                                                                        
                                                                                                                                
     And ... certainly  don't rely on me ... -  call in your                                                                    
     Division  of Insurance,  call in  the people  that have                                                                    
     the statistics  and the information that  set the stage                                                                    
     and maybe  even provide  an answer or  two to  you. ...                                                                    
     The chair  asked about, what  is a solution.   The MICA                                                                    
     situation  is one  that this  state studied;  it was  a                                                                    
     model, it  was successful,  and indeed  it was  sold to                                                                    
     NORCAL, ... [which has] essentially  80 percent of your                                                                    
     insurance   market   for    the   medical   malpractice                                                                    
     situation.  So,  from the perspective of  caps, I don't                                                                    
     think that  there's going to  be an issue  between caps                                                                    
     and premiums.   That isn't to  say that there is  not a                                                                    
     problem, Madame  Chairman.  Insurance is  a problem and                                                                    
     you  are  wrestling with  it  in  [regard to]  workers'                                                                    
     compensation,  [and]  you  are  wrestling  with  it  in                                                                    
     [regard   to]   doctors,   ...   lawyers,   architects,                                                                    
     engineers;  you are  in a  small  market situation  and                                                                    
     that is a very tough market.                                                                                               
                                                                                                                                
     The facts of life are  that ... 600,000 people does not                                                                    
     make a  lot of  money for the  "majors" -  majors being                                                                    
     the major insurance companies.   So that's a fact - ...                                                                    
     they could  go to  Cleveland and  make more  money than                                                                    
     they make in the state of  Alaska.  Although I want you                                                                    
     to know  that your  Division of Insurance  is reporting                                                                    
     that the insurance companies are  making a lot of money                                                                    
     here,  and  that's  reported;  I  can  show  you  those                                                                    
     volumes ... and you should  just take a minute to thumb                                                                    
     through [them]  because ... in  10 minutes you  can see                                                                    
     what their profits  are and ... what  kind of insurance                                                                    
     their offering.   And  it's broken  out by  segments in                                                                    
     the insurance  industry, and one  of those  segments is                                                                    
     medical malpractice.                                                                                                       
                                                                                                                                
3:00:13 PM                                                                                                                    
                                                                                                                                
MR. DILLON,  on the issue of  whether there is a  crises in terms                                                               
of [the  number of doctors  practicing], offered his  belief that                                                               
there is  a national  crisis brewing,  that according  to reports                                                               
regarding decisions  made in  the 1980s, it  looks like  there is                                                               
going to  be a national doctor  shortage because of the  way that                                                               
medical schools "pushed  out the doctors, or didn't  push out the                                                               
doctors in  the '80s."   He opined that  doctors, if they  want a                                                               
big practice,  will look at  working in places like  Houston, Los                                                               
Angeles, and  the big  medical centers where  "they can  tie onto                                                               
their   careers  and   become  the   next  leading   [surgeons]."                                                               
Therefore, one of  the factors to keep in mind  is that the state                                                               
of Alaska has  a small population and so it  will be difficult to                                                               
attract  professionals  whether  they  be  doctors,  lawyers,  or                                                               
engineers and architects.                                                                                                       
                                                                                                                                
MR.  DILLON  opined  that although  Alaska  has  fine  physicians                                                               
practicing  in  the state,  the  lack  of neurosurgeons  in  some                                                               
Alaskan communities  - for example,  Juneau -  is just a  fact of                                                               
life for  those who  live here,  that passage of  SB 67  will not                                                               
result  in a  neurosurgeon setting  up  practice in  Juneau.   He                                                               
strongly suggested  that the  committee consider  alternatives to                                                               
the bill,  such as perhaps  creating an insurance company,  or at                                                               
least  studying the  feasibility of  it, before  putting Alaska's                                                               
doctors against Alaska's victims.                                                                                               
                                                                                                                                
MR. DILLON relayed  that according to information  he is familiar                                                               
with,  doctors  themselves   have  testified  that  approximately                                                               
98,000  people a  year die  as a  result of  medical malpractice,                                                               
that one out three doctors say  they or their family members have                                                               
been  the  victims of  preventable  malpractice  error, and  that                                                               
approximately  10  percent  had  some relationship  to  a  family                                                               
member who  died.  "Why would  this legislature want to  pit good                                                               
doctors, who  are trying to  earn a living  - albeit a  very rich                                                               
living  -  against  the  people  who are  the  subject  of  their                                                               
errors," he  asked, and opined  that there is not  a professional                                                               
in Alaska,  be it  a doctor or  a lawyer, that  once an  error is                                                               
made, won't  own up to a  mistake and make amends  to the subject                                                               
of that mistake.                                                                                                                
                                                                                                                                
3:04:55 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE  relayed that when  she was recently  in Washington                                                               
D.C., U.S.  Senator Lisa Murkowski spoke  to her of a  woman from                                                               
Alaska who  is finishing  up her medical  residency and  who told                                                               
the Senator  that she and her  husband want to go  home to Alaska                                                               
and set up practices but won't  because of the liability issue in                                                               
Alaska.  Chair  McGuire relayed that the committee  has looked at                                                               
various surveys  that indicate that medical  students are looking                                                               
at such issues when deciding where they want to set up practice.                                                                
                                                                                                                                
3:06:50 PM                                                                                                                    
                                                                                                                                
MR. DILLON, noting  that Alaska already has  caps on non-economic                                                               
damage awards,  opined that they  don't affect liability  one way                                                               
or the  other.  The  bill will simply  make it impossible,  for a                                                               
select number  of Alaskans, to  get any  form of recovery  at all                                                               
from the insurance industry because  those Alaskans won't be able                                                               
to afford [pursuing a claim].   With regard to the aforementioned                                                               
soon-to-be  physician that  Chair McGuire  said she'd  heard U.S.                                                               
Senator Lisa  Murkowski speak of,  he remarked, "The  bottom line                                                               
is, if  she thinks  that the  liability here is  going to  be any                                                               
different,  in  terms of  the  rules  of  evidence or  the  court                                                               
procedure, she's wrong - flat wrong."                                                                                           
                                                                                                                                
3:07:34 PM                                                                                                                    
                                                                                                                                
MR. DILLON, in  response to a question, clarified  that after the                                                               
director of  Washington's Division of Insurance  had the division                                                               
review  the   "medical  malpractice   issue"  in  the   state  of                                                               
Washington, insurance  companies were required to  issue a rebate                                                               
to  doctors  because they'd  been  overcharging  the doctors  for                                                               
insurance  coverage.    He  offered   his  belief  that  Alaska's                                                               
Division of Insurance has the authority to do something similar.                                                                
                                                                                                                                
REPRESENTATIVE GARA  asked Mr. Dillon  to submit  any information                                                               
he has  from the Division  of Insurance  that he thinks  might be                                                               
helpful to the committee.                                                                                                       
                                                                                                                                
MR.  DILLON agreed  to do  so, and  suggested that  the committee                                                               
could also ask the Division of Insurance to testify.                                                                            
                                                                                                                                
REPRESENTATIVE  GARA noted  that  Alaska  doesn't have  [medical]                                                               
residencies to the  same extent that states  with medical schools                                                               
do, and  that a  fair number  of doctors  tend to  practice where                                                               
they do  their residencies or  where they attend  medical school.                                                               
He offered his  belief that in addition to  creating an insurance                                                               
pool,  the  legislature  should  fund  the  Washington,  Wyoming,                                                               
Alaska, Montana, Idaho Medical  Education Program (WWAMI) program                                                               
more  and do  anything  else it  can to  increase  the number  of                                                               
residencies available in Alaska.                                                                                                
                                                                                                                                
3:10:42 PM                                                                                                                    
                                                                                                                                
MR. DILLON pointed out that  the aspect of competitiveness in the                                                               
medical  field is  another issue  to  consider; there  will be  a                                                               
limit to the  number of physicians that  small population centers                                                               
can support,  since the economic pie  can only be sliced  just so                                                               
thin.                                                                                                                           
                                                                                                                                
REPRESENTATIVE ANDERSON again  raised the issue of  placing a cap                                                               
on attorney fees.                                                                                                               
                                                                                                                                
MR.  DILLON opined  that  doing  so would  at  least present  the                                                               
legislature  with a  clear target,  adding,  "If you  want to  go                                                               
after the lawyers,  go after the lawyers, but don't  go after the                                                               
kids and  the moms and the  elderly."  In response  to a comment,                                                               
he said:                                                                                                                        
                                                                                                                                
     I'm  not going  after  bad physicians  here.   I'm  not                                                                    
     going  after bad  insurance companies.   Everybody  has                                                                    
     their   place  here.      Everybody's  pursuing   their                                                                    
     occupation  in  their  chosen  profession.    What  I'm                                                                    
     talking about is the effect  of what this body is doing                                                                    
     on Alaskans.                                                                                                               
                                                                                                                                
MR.  DILLON,  in response  to  a  question  of whether  he  would                                                               
support a cap  on attorney fees, noted that that  debate has been                                                               
going on  for about  15 years, and  suggested that  under certain                                                               
circumstances, the  issue of contingency fees  is definitely open                                                               
for debate.  But  that is not the issue that  SB 67 addresses, he                                                               
pointed out.                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE noted  that sometimes  when  legislation is  being                                                               
discussed, other  issues are  discussed as well  in an  effort to                                                               
arrive at a possible solution.                                                                                                  
                                                                                                                                
3:14:22 PM                                                                                                                    
                                                                                                                                
PATRICK  LUBY, Advocacy  Director,  AARP Alaska,  started off  by                                                               
saying  that  the AARP  is  sure  that  none of  Alaska's  health                                                               
professionals  get up  in  the morning  thinking  about how  many                                                               
people they want  to hurt that day.   However, [medical] mistakes                                                               
do happen,  even by  the most skilled  health professional.   For                                                               
this reason, the AARP believes  that the legislature should focus                                                               
on  preventing future  mistakes, that  it should  focus on  error                                                               
reduction rather than a reduction  on [non-economic] damage caps.                                                               
The tort  system, he opined,  encourages healthcare  providers to                                                               
cover up mistakes to avoid  lawsuits, and does not encourage them                                                               
to report errors and learn how to prevent them.                                                                                 
                                                                                                                                
MR. LUBY  opined that someone who  is hurt by a  medical error is                                                               
entitled  to fair  compensation,  but emphasized  that it's  more                                                               
important to ensure that errors  are reported in order to prevent                                                               
future errors.   He noted  that older people with  limited income                                                               
potential based on life expectancy  will receive less in economic                                                               
damages  than younger  victims, and  informed the  committee that                                                               
the  AARP believes  $250,000 is  too low  a cap  for non-economic                                                               
damages.   He also informed  the committee that the  Institute of                                                               
Medicine  (IOM)  has   proposed  testing  non-judicial,  no-fault                                                               
alternatives to  the tort system  for medical errors.   If Alaska                                                               
adopts one  of the IOM's recommended  alternatives, he predicted,                                                               
it  would foster  fair compensation  and  error reduction,  which                                                               
should be the real goal  of both consumer-oriented reform and the                                                               
bill.                                                                                                                           
                                                                                                                                
MR.  LUBY explained  that under  the  IOM approach,  compensation                                                               
would  be  based  on  "avoidability" of  errors  rather  than  on                                                               
negligence,   and   there   would   be   preset   schedules   for                                                               
compensation,  with reasonable  limits, that  may help  stabilize                                                               
malpractice  premiums.   He relayed  that the  IOM believes  that                                                               
mandating  the  reporting  of errors  and  providing  for  prompt                                                               
compensation  payments   would  help  experts   find  system-wide                                                               
[solutions] and improve  patient safety.  With  fewer errors, the                                                               
cost  of compensating  injured people  would  decline, and  there                                                               
would be  fair and speedy  compensation.  He concluded  by saying                                                               
that the AARP believes that everyone would benefit from such.                                                                   
                                                                                                                                
3:16:59 PM                                                                                                                    
                                                                                                                                
KATHY  DALE relayed  that she,  her husband,  and her  family are                                                               
victims of  medical malpractice.   On May 18, 2000,  her husband,                                                               
who at that time  was 56 years of age, went  to have rotator cuff                                                               
surgery, but came  out of what was supposed to  have been routine                                                               
surgery  with  a   complex,  severe  brain  injury   due  to  the                                                               
recklessness of  a nurse anesthesiologist.   As a result  if this                                                               
brain  injury,  her  husband  lost his  short  term  memory,  his                                                               
cognitive  abilities,   his  personality,  and  his   ability  to                                                               
interact  with people;  in  short,  she lost  her  husband of  38                                                               
years, her  children lost  their father,  and her  grandsons lost                                                               
their grandfather.                                                                                                              
                                                                                                                                
MS.  DALE  noted  that  she  is  a  certified  public  accountant                                                               
licensed by  the State of Alaska,  and as such she  would address                                                               
several  aspects of  the bill.   She  said that  the increase  in                                                               
medical malpractice premiums  that physicians experienced several                                                               
years  ago was  the  result of  the steep  drop  in stock  market                                                               
values.   Insurance carriers invest  a portion of  their reserves                                                               
in the stock market, so when  the value of these investments drop                                                               
below the  actuarially determined  reserve requirement,  the only                                                               
way  to  make  up  this  shortfall  is  by  increasing  insurance                                                               
premiums.    Everyone  feels  the  brunt  of  this  practice  via                                                               
increases   in   homeowners'   insurance   policies,   automobile                                                               
insurance  policies,  and  liability  insurance  policies.    The                                                               
market  has  now  recovered  some  of  the  value  it  lost,  and                                                               
insurance  carriers' profits  have increased;  however, according                                                               
to  testimony  from  doctors,  it   appears  that  the  insurance                                                               
carriers  have not  yet reduced  their premiums  to reflect  this                                                               
change in market value.                                                                                                         
                                                                                                                                
MS. DALE explained that an  insurance carrier can assess its risk                                                               
pool with the exiting $400,000 cap  just as easily as it can with                                                               
the proposed $250,000 cap.  She  noted that based on the Consumer                                                               
Price  Index (CPI)  increase, the  $250,000  cap that  California                                                               
adopted in 1976 is worth at  least $820,000 in 2005 dollars.  She                                                               
went on to say:                                                                                                                 
                                                                                                                                
     There  have been  many  changes in  our  lives, and  we                                                                    
     assumed many  risks when  we filed the  suit.   When my                                                                    
     husband  had rotator  cuff surgery,  we had  planned to                                                                    
     retire in three years.   My retirement has been put off                                                                    
     because  of  our  uncertain  financial  situation.    I                                                                    
     haven't heard ... any doctors  say they were putting of                                                                    
     their retirement  because of insurance premiums.   Just                                                                    
     the contrary, they plan to  retire earlier.  My husband                                                                    
     was 56 on  the date of his surgery; we  had savings and                                                                    
     we  owned  our  home.     When  we  filed  our  medical                                                                    
     malpractice  suit, we  took a  substantial risk  due to                                                                    
     Rule 82 [of the Alaska Rules of Civil Procedure].                                                                          
                                                                                                                                
     But we  moved forward.  When  we filed the suit  we did                                                                    
     not know  what had happened to  Gene.  We just  knew it                                                                    
     was  devastating.    Through the  use  of  depositions,                                                                    
     expert  witnesses,   and  neurologists  at   the  [Mayo                                                                    
     Foundation  for Medical  Education and  Research ("Mayo                                                                    
     Clinic")], we were able to  get a clear picture of what                                                                    
     occurred.  With a $250,000  cap, we would not have been                                                                    
     able  to  move  forward  with  a suit.    The  cost  of                                                                    
     developing  the  case  would have  been  too  great  to                                                                    
     afford us  any benefit  even if  we were  successful at                                                                    
     getting a settlement at the  cap.  Don't forget, we had                                                                    
     to  repay our  health  insurance  carriers the  medical                                                                    
     payments  made  on Gene's  behalf  for  his care  after                                                                    
     surgery; these were the subrogation claims.                                                                                
                                                                                                                                
     There  [are] ...  existing [caps]  of  $400,000 and  $1                                                                    
     million on non-economic damages.   At my husband's age,                                                                    
     non-economic damages  were the only kind  of damages we                                                                    
     could claim.   If you pass this  proposed $250,000 cap,                                                                    
     you are robbing the citizens  of Alaska of their day in                                                                    
     court.   Your constituents  will not  be able  to press                                                                    
     forward with suits due to  the costs of securing expert                                                                    
     testimony  and help.   Texas  and California  both have                                                                    
     $250,000  caps.    The  statistics  coming  from  those                                                                    
     states ...  don't bear out what  the insurance carriers                                                                    
     and  the   medical  professionals  would  like   us  to                                                                    
     believe.                                                                                                                   
                                                                                                                                
MS. DALE,  in conclusion, offered  to provide the  committee with                                                               
those  statistics,  and asked  the  committee  not to  lower  the                                                               
current  caps any  further, adding  that she  wishes she  had the                                                               
words  to describe  the daily  emotional  pain that  she and  her                                                               
husband suffer as a result of what occurred.                                                                                    
                                                                                                                                
3:21:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA asked what the depositions revealed.                                                                        
                                                                                                                                
MS. DALE explained  that the depositions revealed  that the nurse                                                               
anesthetist  had lowered  her  husband's  blood pressure  further                                                               
than it should  have been lowered by  using different medications                                                               
that  had  the  synergetic  effect  of  lowering  blood  pressure                                                               
further  than  either  would  have  done  if  used  singly.    In                                                               
addition, the  nurse anesthetist used  too large a dose  of those                                                               
medications,  and then  stopped  monitoring  her husband's  blood                                                               
pressure.                                                                                                                       
                                                                                                                                
3:22:18 PM                                                                                                                    
                                                                                                                                
GEORGE D. RHYNEER,  M.D., relayed that he had  just returned from                                                               
an  American College  of  Cardiology (ACC)  meeting  at which  he                                                               
represented Alaska  as a governor  and at  which one of  the main                                                               
topics was the  difficulty patients in some states  are having in                                                               
finding  a physician.   Also  discussed at  that meeting  was the                                                               
difficulty  some physicians  are  having  in finding  malpractice                                                               
coverage in the  states in which they practice.   He said that in                                                               
Alaska, he  and his colleagues  have been very fortunate  in that                                                               
they have  been able to  buy medical malpractice insurance  at an                                                               
affordable rate.   Both of  the companies that  offer malpractice                                                               
insurance  in Alaska  are physician  owned and  thus the  cost of                                                               
premiums exactly  offsets the cost  of doing business  in Alaska;                                                               
for example, any losses have been made up via premium increases.                                                                
                                                                                                                                
DR. RHYNEER  offered his  understanding that  insurance companies                                                               
are  required by  law to  keep "X  number of  million dollars  in                                                               
reserve for  perceived losses in  the future," and this  money is                                                               
usually invested  in the  stock and/or bond  market.   He offered                                                               
his believe  that although malpractice insurance  rates are high,                                                               
particularly for  some medical specialties, physicians  in Alaska                                                               
can still afford to pay the premiums.   He noted that a couple of                                                               
years  ago,  there were  two  other  insurance carriers  offering                                                               
medical  malpractice insurance  in  Alaska,  but those  companies                                                               
have since stopped doing business in Alaska.                                                                                    
                                                                                                                                
DR. RHYNEER  relayed that he and  his colleagues feel that  it is                                                               
important to  carry [medical malpractice] insurance  so that they                                                               
can "make  do, and make  up for,  and recompense any  damage that                                                               
might occur  under our hands."   He added, "We feel  like we have                                                               
to carry a  large amount of insurance; we carry  [$5 million] and                                                               
$7 million  worth of insurance  because accidents which  occur to                                                               
our  patients generally  are catastrophic,  and we  want to  make                                                               
sure that  they have things done  right for them."   He mentioned                                                               
that of the two  insurance companies offering medical malpractice                                                               
insurance in  Alaska, only one is  able to provide his  firm with                                                               
the quantity of  insurance coverage it wants.  This  has left him                                                               
in  the  position  of  not   knowing  whether,  should  that  one                                                               
insurance company stop doing business  in Alaska, he can continue                                                               
his practice.                                                                                                                   
                                                                                                                                
DR. RHYNEER mentioned  that a similar situation  did occur around                                                               
the time  that MICA  was formed, and  he had to  send all  of his                                                               
patients  that required  heart surgery  to Seattle;  he predicted                                                               
that such  a situation could  happen again.   He opined  that the                                                               
legislature has control  over the problem [purported  by those in                                                               
favor of the legislation] and can fix it.  He elaborated:                                                                       
                                                                                                                                
     We need  to have a situation  where insurance companies                                                                    
     are  happy  to do  business  here.    We need  to  have                                                                    
     insurance  so that  physicians are  happy  and want  to                                                                    
     come  here despite  all  the  other disincentives  that                                                                    
     you've  already heard  about.   We  are in  competition                                                                    
     with  areas all  over  the country  for physicians  ...                                                                    
     despite the data that  [Representative] Gara alluded to                                                                    
     and  brought  out,  which is  actually  the  number  of                                                                    
     licensed physicians in  the state - that  is the number                                                                    
     who have active licenses.                                                                                                  
                                                                                                                                
     And  actually,  many of  those  don't  practice in  the                                                                    
     state but rather come up  here temporarily and work for                                                                    
     a short  period of time and  then leave, or once  had a                                                                    
     license here,  and then  keep it up.   If  you actually                                                                    
     look at that  list, you'll see that many  of the active                                                                    
     license holders have addresses which  are out of state,                                                                    
     and ...  a lot  of those  which are  in state  [are] no                                                                    
     longer  actively  practicing.   So  the  number of  ...                                                                    
     actively practicing physicians is  probably one half of                                                                    
     that number, and  that number is much  easier to obtain                                                                    
     from  the Alaska  State Medical  Association's [ASMA's]                                                                    
     executive director,  Jim Jordan,  who can give  you the                                                                    
     number  of people  he actually  has on  a mailing  list                                                                    
     ....                                                                                                                       
                                                                                                                                
DR. RHYNEER suggested  that one way of figuring out  if there are                                                               
enough  physicians in  Alaska  would be  for  legislators to  ask                                                               
their friends how easy it is to  find a doctor, when was the last                                                               
time  they  tried,  and  how  long   they  had  to  wait  for  an                                                               
appointment.  He  said that it is not easy  to get an appointment                                                               
in  his office,  and  that he  spends  a lot  of  time trying  to                                                               
recruit  new physicians.   He  opined that  there is  need for  a                                                               
legislative solution, and  noted that daily his  patients ask him                                                               
not to retire, though he would be forced to do so if he could no                                                                
longer get insurance.  He went on to say:                                                                                       
                                                                                                                                
     So we're  talking here about  the better of  two goods,                                                                    
     if you like.   We think it's good to  have insurance to                                                                    
     take care  of our patients  in case there's  an injury.                                                                    
     We want to  have the ability to take care  of them.  We                                                                    
     also  think  it's absolutely  100  percent  fair for  a                                                                    
     person  who's been  injured and  who has  some sort  of                                                                    
     horrible  misery to  face for  the rest  of their  life                                                                    
     [to] ...  have no limit,  whatsoever, on the  amount of                                                                    
     non-economic  damages  that  they should  receive.    I                                                                    
     mean,  I couldn't  even begin,  and  neither could  you                                                                    
     folks  begin,  to put  a  value  on  the loss  of  your                                                                    
     parents, even, or the loss  of a limb, or the inability                                                                    
     to hold a  grandson, or you name it -  you can think of                                                                    
     a  million  things  for   which  money  can't  possibly                                                                    
     recompense. ...                                                                                                            
                                                                                                                                
     So we think that is a  good that should be available to                                                                    
     all,  and  we,  I   personally  and  all  my  physician                                                                    
     associates,  would dearly  love to  be able  to provide                                                                    
     that  kind of  recompense for  [an] injured  person who                                                                    
     had  severe  non-economic damages.    But  by the  same                                                                    
     token,  we have  to  have a  legal  environment, and  a                                                                    
     business environment,  that allows  insurance companies                                                                    
     to continue  to provide insurance  for us to buy.   And                                                                    
     ...  other  states  which  have  gone  this  route  and                                                                    
     produced a $250,000 limit  on non-economic damages have                                                                    
     seen  success in  this particular  endeavor.   I  don't                                                                    
     think  this  is a  panacea,  this  is not  a  long-term                                                                    
     solution,  but this  is a  short-term solution,  and we                                                                    
     have  a  short-term problem,  and  I  think we  need  a                                                                    
     solution, and you folks can provide it.                                                                                    
                                                                                                                                
3:34:03 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE relayed that her father and many other physicians                                                                 
in Alaska spend a lot of time attempting to recruit new                                                                         
physicians to set up practice in Alaska.                                                                                        
                                                                                                                                
DR. RHYNEER, in response to a question, reiterated that the ASMA                                                                
keeps a list of the physicians who actually have an office, who                                                                 
are actually practicing, [in Alaska].                                                                                           
                                                                                                                                
REPRESENTATIVE   GARA  asked   Dr.   Rhyneer   to  provide   that                                                               
information  to  the  committee  with  an  affidavit  as  to  its                                                               
validity.                                                                                                                       
                                                                                                                                
DR. RHYNEER agreed to do so.                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA said  he would  be  providing the  committee                                                               
with a  report that indicates  that there  are between 12  and 24                                                               
insurance companies underwriting  [medical] malpractice insurance                                                               
in Alaska.   He asked Dr. Rhyneer if he'd  researched whether any                                                               
of  those companies  would provide  him with  medical malpractice                                                               
insurance.                                                                                                                      
                                                                                                                                
DR. RHYNEER said  his firm has only been able  to find NORCAL and                                                               
a  company  called  Medical   Insurance  Exchange  of  California                                                               
(MIEC), both  operating out  of California,  who were  willing to                                                               
underwrite  [medical malpractice]  insurance  for his  firm.   He                                                               
offered his  belief that there  is also  what he called  a "stock                                                               
company" that underwrites insurance  for one physicians' group in                                                               
Juneau, and that  there was another "fairly  large" stock company                                                               
that  underwrote  insurance  primarily  in  Fairbanks,  but  that                                                               
company has since  stopped doing business in Alaska.   He offered                                                               
his  understanding that  the Division  of  Insurance maintains  a                                                               
list  of insurance  companies  that have  the  authority to  sell                                                               
insurance in  Alaska; however, although those  companies may have                                                               
the authority  to sell  insurance in Alaska,  they are  not doing                                                               
so.   In response  to another question,  he reiterated  that only                                                               
NORCAL was able  to provide his firm with the  amount of [medical                                                               
malpractice insurance it needed.                                                                                                
                                                                                                                                
REPRESENTATIVE GARA offered that  another course of action, aside                                                               
from  adopting SB  67, would  be  to discuss  the possibility  of                                                               
creating a  medical liability insurance  pool, and said  he would                                                               
be happy to work on such  a project because although it might not                                                               
be  simple to  accomplish, it  could offer  physicians the  extra                                                               
protection of  having an alternative  to the  companies currently                                                               
offering insurance in Alaska.                                                                                                   
                                                                                                                                
DR.  RHYNEER offered  his  belief that  physician  would have  no                                                               
problem with that.   He relayed that his business  partner sat on                                                               
the MICA board [of directors] and  he sat on the NORCAL board [of                                                               
directors], and  so he was  privy to the financial  operations of                                                               
those two companies and to the  people that ran MICA until it was                                                               
sold to NORCAL.   Everyone heaved a sigh of  relief, he remarked,                                                               
when MICA  was sold to NORCAL,  because it would then  be able to                                                               
defend "defensible cases."   He explained that  when a physician-                                                               
owned insurance  company looks  at the  merits of  a case,  if it                                                               
thinks that  the standard  of care  was not  met, it  settles the                                                               
case,  period;  however,  if  a  physician-owned  company,  after                                                               
reviewing the case,  thinks that the standard of care  was met or                                                               
thinks that there is still a  question of whether the standard of                                                               
care was  met, it  will defend  the case.   This is  quite unlike                                                               
what  stock companies  did in  that  that they  tended to  settle                                                               
suits of  either a small value  or a large value  if they thought                                                               
that  there was  any  risk  of losing.    He  surmised that  this                                                               
practice by the stock companies resulted  in a lot of suits being                                                               
"won,"  but only  because the  companies were  loath to  risk any                                                               
money pursuing those cases.                                                                                                     
                                                                                                                                
3:42:50 PM                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE  surmised,  then,   that  with  a  physician-owned                                                               
insurance company,  those that make  the decision to  settle will                                                               
ultimately bear the cost of doing so.                                                                                           
                                                                                                                                
DR. RHYNEER  concurred, but  added that that  cost ends  up being                                                               
small to  them but  large to  the medical  community or,  in some                                                               
cases, the  entire country.   In response  to a comment,  he said                                                               
that physicians  now have a greater  incentive not to give  in on                                                               
suits when they don't think they  did anything wrong in the case.                                                               
This is  because a physician who  either loses or settles  a case                                                               
will get  reported to the  State Medical Board and  the [National                                                               
Practitioner Data  Bank-Healthcare Integrity and  Protection Data                                                               
Bank (NPDB-HIPDB)];  if enough such  reports are filed,  then the                                                               
State Medical Board  investigates that physician.   He noted that                                                               
the  Alaska State  Medical Board  is responsible  for maintaining                                                               
the quality of physicians and medical care in the state.                                                                        
                                                                                                                                
3:44:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  relayed that in the  one medical malpractice                                                               
case he  took on,  the local doctors  refused to  testify against                                                               
the  physician named  in  the suit,  and  although the  insurance                                                               
company  was  willing  to  settle  the  case  because  there  was                                                               
malpractice, it was offering an  insulting amount.  Therefore, he                                                               
remarked,  he is  not confident  that an  insurance company  will                                                               
always settle a case when it should.  He went on to say:                                                                        
                                                                                                                                
     The  other  problem  is that  in  many  Alaska  medical                                                                    
     malpractice liability policies, one  of the things that                                                                    
     ends  up  costing the  system  so  much is  [that]  the                                                                    
     doctor  has  the  right  to veto.    So  the  insurance                                                                    
     company  will say,  "You know,  we think  you committed                                                                    
     malpractice; you  should pay up," [but]  the doctor has                                                                    
     the right to say "No,"  because ... they don't want the                                                                    
     mark of a malpractice  settlement on their professional                                                                    
     integrity.  So in my own  experience, and I'll go to my                                                                    
     grave  believing   this,  in  a  case   of  really  bad                                                                    
     malpractice, there wasn't that  easy sort of settlement                                                                    
     offer  from the  insurance  company  when there  should                                                                    
     have been. ... The whole  idea that the [State] Medical                                                                    
     Board will protect  us - maybe we don't  fund them very                                                                    
     well, I  don't why - but  ... I brought [this  case] to                                                                    
     the  [State] Medical  Board,  [and  the State]  Medical                                                                    
     Board  said they  didn't see  anything wrong  with what                                                                    
     the doctor did.  And I'm  angry about that to this day;                                                                    
     ... I, frankly, don't think they do that great a job.                                                                      
                                                                                                                                
DR.  RHYNEER said  that generally  suits  arise when  there is  a                                                               
difference of opinion, and  so it is the job of  a jury to arrive                                                               
at a conclusion.                                                                                                                
                                                                                                                                
3:46:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KOTT  asked   whether  there   are  technologies                                                               
available that would assist in the prevention of errors.                                                                        
                                                                                                                                
DR. RHYNEER  said that there  are, adding  that there has  been a                                                               
tremendous push lately to develop such technology.                                                                              
                                                                                                                                
REPRESENTATIVE KOTT  also asked  whether physicians  are required                                                               
to carry medical malpractice insurance.                                                                                         
                                                                                                                                
DR. RHYNEER  said no, and  offered an  example of a  physician in                                                               
Seldovia  that   doesn't  carry  medical   malpractice  insurance                                                               
because his client  base is not sufficient for him  to be able to                                                               
afford  it.   He mentioned  that when  the state  formed its  own                                                               
insurance company,  physicians were required to  purchase medical                                                               
malpractice  insurance  from  that  company in  order  to  get  a                                                               
license to  practice in Alaska,  but "that caused a  revolt among                                                               
the physicians."   He  also mentioned  that sometimes  the larger                                                               
hospitals  require their  doctors  to  carry medical  malpractice                                                               
insurance, and  that sometimes a  hospital will assist  with that                                                               
cost because  the physicians  can't afford to  carry it  on their                                                               
own.                                                                                                                            
                                                                                                                                
REPRESENTATIVE KOTT  pointed out, however, that  Dr. Rhyneer said                                                               
in his opening remarks that  affordable insurance is available in                                                               
Alaska.                                                                                                                         
                                                                                                                                
DR. RHYNEER  clarified that when  he used the  term "affordable,"                                                               
he  meant  that insurance  was  affordable  for the  majority  of                                                               
physicians but not for those  who are "subsistence" physicians or                                                               
those who practice in small communities.                                                                                        
                                                                                                                                
REPRESENTATIVE KOTT  asked whether  the Division of  Insurance is                                                               
involved in the rate setting of medical malpractice premiums.                                                                   
                                                                                                                                
DR. RHYNEER offered his belief that it is.                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT  referred to  Mr. Luby's  testimony regarding                                                               
the IOM and preset schedules, and asked Dr. Rhyneer to comment.                                                                 
                                                                                                                                
DR. RHYNEER characterized  the IOM as a national  think tank that                                                               
published  what he  termed "highly  suspect"  data.   The IOM  is                                                               
attempting to  standardize methods  and techniques with  the goal                                                               
of  reducing errors,  but its  ideas  and techniques  are as  yet                                                               
untested, so it is not yet known  how they will work.  He offered                                                               
his understanding that a lot  of "schemes" meant to reduce errors                                                               
have  been  tried  but  have  been found  to  have  very  severe,                                                               
negative, unintended consequences.  He elaborated:                                                                              
                                                                                                                                
     For instance, in  New York City, about  five years ago,                                                                    
     they started to have a  report card for heart surgeons.                                                                    
     They thought:   ...  "Every year we'll  put up  ... the                                                                    
     doctor's name,  how many heart ...  surgeries [he] did,                                                                    
     and  how many  deaths [and  complications he]  had. ...                                                                    
     This  will really  ...  shake things  up;  from now  on                                                                    
     these surgeons  will do  a really good  job."   Well no                                                                    
     one really  understood the fact  of the matter  is that                                                                    
     [a] heart surgeon can "dial  in" his complication rate.                                                                    
     It's really easy, because if  you take patients who are                                                                    
     in good shape  [and] ... have simple  problems ..., you                                                                    
     can have a complication rate and a death rate of zero.                                                                     
                                                                                                                                
     However, if you  want to take on people who  ... have a                                                                    
     50  percent chance  of  dying, ...  [you]  can turn  up                                                                    
     having  a  very  high  mortality rate  ...  [in]  those                                                                    
     report cards.   Well,  the New  York City  surgeons ...                                                                    
     could  see the  writing on  the wall  and they  weren't                                                                    
     about to  be the lowest guy  on the totem pole.   So in                                                                    
     the  subsequent   years,  the  referral  rate   to  the                                                                    
     "Cleveland  clinic," from  New  York City,  went up  30                                                                    
     percent.  ...  So you  can  see  you  have to  be  very                                                                    
     careful,  when you  decide  to  develop techniques  and                                                                    
     schemes  and devices  to  improve  quality, how  that's                                                                    
     going to affect [things]. ...                                                                                              
                                                                                                                                
     And this  is where the IOM's  recommendation comes into                                                                    
     play;  they recommended  having mandatory  reporting of                                                                    
     errors.  Well, in the  hospitals, we do that, but right                                                                    
     now that's protected  in the state statute.   So we can                                                                    
     sit around ... [and]  educate ourselves ... without the                                                                    
     fear  that  every  single one  of  those  things  which                                                                    
     didn't  turn out  right ...  [is] going  to wind  up in                                                                    
     court.   So  mandatory reporting  of errors  is one  of                                                                    
     those things which may  have huge, negative, unintended                                                                    
     consequences, and that has not yet been tested.                                                                            
                                                                                                                                
[CSSB 67(JUD)(EFD FLD) was held over.]                                                                                          

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