Legislature(1995 - 1996)

03/08/1995 01:35 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HTRA - 03/08/95                                                               
 HB 161 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW                            
                                                                               
 Number 019                                                                    
                                                                               
 PATTY SWENSON, Legislative Assistant to Representative Con Bunde,             
 stated she was here to testify on HB 161.  She explained HB 161 was           
 designed to limit the liability of an owner or operator of an                 
 aircraft or watercraft for injuries to passengers when the owner or           
 operator is not compensated for transportation.  She explained when           
 the owner of a boat or plane is accompanied by a friend or                    
 acquaintance on trips, the owner of that craft assumes liability.             
 She stated the risks should be shared by all participants.  She               
 said HB 161 does not expect passengers of an air or watercraft to             
 give up their right to expect safe operation.  Ms. Swenson                    
 explained that when a pilot or boat driver behaves in a grossly               
 negligent manner, they are fully liable for injuries regardless of            
 the passing of HB 161.  Ms. Swenson said according to Patty                   
 Madison, who is the Accident Prevention Program Manager for the               
 Federal Aviation Administration (FAA), there are several thousand             
 private aircraft pilots currently operating in Alaska with only 130           
 accidents last year.  Ms. Swenson added that all accidents are not            
 considered crashes.  If a small plane is taxiing and hits a runway            
 light this is considered an accident.  However, a plane in flight             
 that loses an engine is not necessarily considered an accident.               
 She indicated her point is, there are comparatively few accidents             
 in Alaska when considering the amount of flying that is done.  She            
 listed other states with similar legislation; Oregon, New Mexico,             
 Ohio, South Carolina, South Dakota, Montana, California, Georgia,             
 Alabama, Idaho, Illinois, Indiana, Massachusetts, Nebraska,                   
 Virginia and West Virginia.  She explained these states have                  
 significantly lower flying hours compared to the pilots of Alaska.            
 She noted according to FAA statistics, the medium hours for a                 
 private pilot in the Lower 48 are 10-12 hours, and for Alaska the             
 hours are over 100.  Ms. Swenson indicated in other states where              
 pilots have lower flying hours, they are able to afford the type of           
 protection HB 161 would provide.  Alaskan pilots who fly more                 
 frequently, should be protected unless they act in a grossly                  
 negligent manner.  She explained that currently aircraft insurance            
 is not mandatory.  Ms. Swenson explained aircraft insurance may be            
 purchased two ways; insurance with passenger liability, or without.           
                                                                               
 MS. SWENSON pointed out if an aircraft owner chooses to purchase              
 insurance covering the occupants of the aircraft, then everyone in            
 and out of the plane would be covered in the event of an accident.            
 However, if the pilot elects not to purchase insurance for his                
 occupants, then only the people outside of the plane are covered in           
 the event of an accident.  She indicated if an owner does not have            
 insurance and the occupants are injured in any way in an accident             
 that is not due to the owner's gross negligence, the family of the            
 guest passenger can sue the pilot, leaving the pilot, owner and               
 family with nothing.  She indicated if HB 161 passes, it would                
 prevent the family of a pilot from losses due to anything other               
 than gross negligence.                                                        
                                                                               
 Number 083                                                                    
                                                                               
 REPRESENTATIVE BEVERLY MASEK expressed her approval of HB 161.                
                                                                               
 REPRESENTATIVE JERRY SANDERS asked for clarification on the                   
 difference from the intent of HB 161 and obtaining auto insurance.            
                                                                               
 MS. SWENSON explained when HB 161 was presented last year, the same           
 question was asked.  She stated it was her belief that "aircraft in           
 Alaska is not as necessary as a car is."  She explained a car will            
 transport a person to places closer, or not accessible by plane;              
 "places too far to walk, to close to fly to."  She reiterated a car           
 is a more necessary mode of transportation.  Ms. Swenson                      
 acknowledged Mr. John George who would inform the committee on the            
 details of the bill as well as presenting testimony on HB 161.                
                                                                               
 Number 108                                                                    
                                                                               
 JOHN GEORGE stated he represented the National Association of                 
 Independent Insurers.  He explained he was here at the request of             
 Representative Con Bunde, prime sponsor of HB 161.  Mr. George                
 stated he was a former director of Insurance for the state of                 
 Alaska and a former risk manager for the state.  He pointed out               
 that his background would be beneficial to his testimony.  He                 
 addressed Representative Sanders' question dealing with auto                  
 insurance and how it differs from what HB 161 proposes.  He                   
 explained that an automobile insurance policy automatically covers            
 passengers; however, aircraft insurance can be purchased with seat            
 liability or without. If purchased without the seat liability, the            
 passenger is not covered.  He added without the seat liability, the           
 cost of coverage is much cheaper.  He mentioned there was a dilemma           
 when a person owns an aircraft and has purchased the lesser                   
 expensive liability coverage that covers anyone hit by the plane in           
 the event of a crash and a friend says, "let's go fishing" and the            
 pilot explains he does not have insurance to cover his friend.  Mr.           
 George explained the pilot would have to purchase extra liability             
 insurance in order to take his friend fishing.  He explained if the           
 guest passenger, the person wanting to go fishing says he will pay            
 for the extra insurance, then the pilot is essentially chartering             
 his aircraft and could inevitably lose his pilots license.  Mr.               
 George explained there was an additional cost to the owner of the             
 airplane to provide the required insurance needed to transport                
 people in his aircraft.  Mr. George added if the pilot decides to             
 "chance it," the pilot and his family are liable and can be sued.             
 Mr. George mentioned this scenario can also be applied to                     
 watercraft.  He exemplified someone using a Lund skiff or other               
 small boat; if the people using this skiff are renters and do not             
 have a home owners policy covering their liability for small boats            
 and a person wants to go fishing with them, the same scenario                 
 applies.  The boat operators do not have specific insurance and               
 feel they would not do a lot of damage to a third party, so they              
 elect not to purchase third party liability insurance.  Mr. George            
 explained if people are injured on their boat, the owners can be              
 sued.  He indicated HB 161 provides an opportunity for operators of           
 water and aircraft who want to take passengers, but do not want to            
 incur additional expenses, to do so.  He added if insurance is                
 purchased, then the coverage extends to the passengers on the                 
 airplane; however, if the pilot elects not to purchase the                    
 insurance covering their passengers, then unless the pilot is found           
 to be grossly negligent; i.e., drunk or commit an intentional act,            
 the pilot cannot be sued.                                                     
                                                                               
 Number 160                                                                    
                                                                               
 REPRESENTATIVE MASEK asked if the insurance can be extended out to            
 sled dog team owners as well.                                                 
                                                                               
 MR. GEORGE said "anything is possible."  It could be added to HB              
 161.  He indicated he was not aware of anyone who has sled dog                
 liability insurance, unless it is covered under their home owners             
 policy.  He felt the more rural lifestyle a person lives, the less            
 likely that person is to have a home owners policy.                           
                                                                               
 CHAIRMAN DAVIS asked for confirmation on the availability of                  
 aircraft liability insurance for passengers, and whether or not it            
 was cost prohibitive.                                                         
                                                                               
 MR. GEORGE indicated that cost prohibitive was "all relative."  He            
 stated it was an additional and fairly expensive cost only covering           
 the pilots' passengers.                                                       
                                                                               
 CHAIRMAN DAVIS proposed a scenario where a pilot already had the              
 insurance and crashed injuring his passengers and the crash was               
 caused by circumstances beyond the pilot's control, such as a                 
 propeller falling off or some other form of mechanical failure.  He           
 asked if this happened directly after the plane was released from             
 an annual inspection, how would the insurance apply to a case such            
 as this?                                                                      
                                                                               
 MR. GEORGE explained if the pilot or owner was negligent, then his            
 insurance would pay.  However, if it was just released from its               
 annual inspection and a third party had completed the maintenance             
 and neglected to check all the nuts and bolts on the propeller,               
 that person would be liable as well.                                          
                                                                               
 CHAIRMAN DAVIS asked if the intent of HB 161 is to insert                     
 information assumed in statute regarding whether or not the pilot             
 was negligent.                                                                
                                                                               
 MR. GEORGE affirmed Chairman Davis' example.  He added there are              
 cases where the pilot does not have passenger liability insurance             
 and they go out and attempt a landing on a dirt strip and they hit            
 a pothole and lose the landing gear and someone gets injured, the             
 pilot can be sued.                                                            
                                                                               
 CHAIRMAN DAVIS called attention to the definitions of negligence              
 from Alaska Statutes enclosed in the bill packet.  He asked for               
 clarification when determining whether a person is negligent or               
 not.                                                                          
                                                                               
 Number 218                                                                    
                                                                               
 MR. GEORGE explained that with commercial aircraft there is what is           
 called "admitted liability."  Mr. George depicted a scenario                  
 whereby a person flies with Alaska Airlines and the plane crashes             
 and that passenger sues Alaska Airlines and their insurance company           
 will respond.  He explained whether Alaska Airlines was negligent             
 or not is not as important as the "high expectations" that a                  
 passenger assumes when they board the aircraft.  He continued in              
 the event of an accident or mishap, then the airlines' insurance              
 assumes responsibilities.  Mr. George differentiated the negligence           
 situation with commercial airlines and with private pilots.                   
                                                                               
 Number 226                                                                    
                                                                               
 REPRESENTATIVE SANDERS stated that his expectations are the same              
 regardless of the airline.  He inquired as to the possibility of a            
 passenger signing a waiver stating they are aware of the risks in             
 flying with an uninsured pilot.                                               
                                                                               
 MR. GEORGE explained a waiver can be signed by a passenger, and               
 demanded by the pilot.  However, it is uncertain as to whether or             
 not the waiver will hold up in court.  He noted there are numerous            
 incidents where due to a misunderstanding on the passenger's part             
 of the implications of the waiver, they will not hold up in court.            
 He noted the waivers can be helpful, but not definitive.                      
                                                                               
 REPRESENTATIVE SANDERS inquired if HB 161 passes, how will people             
 know whether or not the pilot has insurance.  He suggested a                  
 sticker placed on the door indicating whether or not the pilot has            
 insurance might be beneficial.  Representative Sanders stated he              
 was under the assumption all pilots had insurance.                            
                                                                               
 MR. GEORGE explained that the lack of proof of insurance could be             
 a shortcoming of the bill and the pilot needs to indicate whether             
 or not he has insurance for passengers.  Mr. George proposed the              
 signing of a waiver along with the change in the Alaska Statute               
 would make it more obvious to the passenger than a sticker or some            
 sort of indication would be beneficial.  He stated he has no                  
 problem with people having notice as to the extent of coverage the            
 pilot has.                                                                    
                                                                               
 CHAIRMAN DAVIS said Representative Sanders concern is commonly                
 known as inherent risk and analogized that when a person is running           
 up someone's snow covered steps, there is inherent risk that the              
 person doing the running is liable and responsible for their                  
 actions.  He explained if you're going to get into an airplane with           
 anyone, whether they are fully insured or not, it should be                   
 inherently known that a certain amount of risk exists.  Chairman              
 Davis cautioned anyone of the complications that arise when a                 
 person makes assumptions.                                                     
                                                                               
 MR. GEORGE indicated he was familiar with the scenario where a                
 pilot has made it clear that he does not have liability insurance.            
 He stated this does not automatically protect the pilot.  Mr.                 
 George theorized if the pilot accurately explained his insurance              
 status, he would not be sued by the passenger or their family.                
                                                                               
 Number 298                                                                    
                                                                               
 REPRESENTATIVE SANDERS reiterated his question as to the                      
 possibility of a system similar to auto insurance and would it be             
 financially impossible for the pilot to afford.                               
                                                                               
 MR. GEORGE explained it would be a significant additional expense.            
 He added with aircraft insurance, the pilot or owner buys seat                
 liability insurance.  He explained if a plane has six seats, a                
 pilot or owner can buy insurance for one or as many seats as he               
 desires.  He further explained if the pilot feels he does not need            
 to insure all six seats and only buys coverage for two people and             
 then takes a third person, he does run the risk of being sued by              
 that third passenger.  He indicated that the insurance for pilots             
 has traditionally been a separate coverage and not an automatic               
 coverage policy.                                                              
                                                                               
 REPRESENTATIVE SANDERS reiterated that there are inherent                     
 responsibilities when operating an aircraft.  He stated if the                
 pilots are not responsible for their passengers, then what is the             
 difference in their responsibility of driving people around in                
 cars.                                                                         
                                                                               
 MR. GEORGE stated he could not address that question directly, but            
 if he was in a situation where he had an airplane, he would elect             
 not to buy the seat liability insurance and not take a passenger              
 in his aircraft.  He added it is a dilemma when a friend wants to             
 go and the pilot states he does not have the insurance.  Mr. George           
 depicted a scenario where if it was a matter of life or death that            
 a person had to be transported by a pilot without the proper                  
 insurance, the pilot can elect not to take the person.                        
                                                                               
 CHAIRMAN DAVIS thanked Mr. George and introduced Ms. Patty Swenson.           
 He asked Ms. Swenson if Representative Sanders point about the                
 possibility of some notice to passengers of insurance or the lack             
 of, was brought up in a previous debate.                                      
                                                                               
 MS. SWENSON indicated there was a decision not to apply pilot                 
 insurance as car insurance mostly due to the notion that people               
 assume a certain amount of risk equal to being a passenger in a               
 vehicle or boat.  She indicated that the passenger has a choice as            
 to whether they want to get in the vehicle or not.  She mentioned             
 the possibility of signing a waiver.  Ms. Swenson informed the                
 committee she had previously spoken with Larry Strollie, Regional             
 Manager for EMPCO, and was informed by him that a court case did              
 exist involving a passenger in a rented plane from Elmendorf                  
 Aeroclub; this person had signed a bodily damage waiver prior to              
 flying.  She mentioned the plane crashed and the passenger died.              
 The family successfully sued the pilot because the passenger did              
 not sign a waiver that included the possibility of death.  She said           
 when a situation arises where there are thousands of planes in                
 Alaska, not all the pilots are going to pick up a standard waiver             
 or have a lawyer on hand to draft up a waiver before the pilots               
 carry passengers in their aircraft.                                           
                                                                               
 REPRESENTATIVE SANDERS asked if the person killed in the Elmendorf            
 plane was the pilot.                                                          
                                                                               
 MS. SWENSON stated it was the passenger that died and the family of           
 the passenger successfully sued the pilot.  She reiterated the                
 bodily damage waiver did not cover deaths.                                    
                                                                               
 CHAIRMAN DAVIS explained that a lot of the legal questions                    
 pertaining to HB 161 will be addressed through the House Judiciary            
 Committee.  He stated if HB 161 does become law, people who                   
 currently have insurance and pay into this will not be buying the             
 added insurance.  He indicated there would be the possibility of              
 additional risk.  He said this would apply only if this situation             
 was the case.  He added most cases only include negligence.                   
                                                                               
 REPRESENTATIVE SANDERS noted that the appropriate term was gross              
 negligence.                                                                   
                                                                               
 CHAIRMAN DAVIS read the definitions of gross negligence and                   
 negligence as defined by Alaska Statute.  He asked for                        
 clarification on gross negligence and negligence.                             
                                                                               
 MS. SWENSON said the bill drafter should address those issues.                
                                                                               
 CHAIRMAN DAVIS announced for the record that Representatives                  
 MacLean and Brice arrived at 1:55 p.m.                                        
                                                                               
 REPRESENTATIVE EILEEN MACLEAN asked why HB 161 was exclusive to air           
 and watercraft.  She expressed concern as to the inclusion of other           
 areas of transportation.                                                      
                                                                               
 Number 408                                                                    
                                                                               
 MIKE FORD, attorney with the Division of Legal Services, commented            
 on the distinctions between negligence and gross negligence and               
 stated it was "a matter of degree."  He stated HB 161 addresses               
 negligent acts and a pilot would be protected from acts of                    
 negligence, but not be protected from gross negligence or reckless            
 and intentional acts.  He stated it is sometimes difficult to                 
 articulate the difference.  He stated HB 161 is narrowly crafted              
 and the intentions were designed only for aircraft and watercraft             
 guest passengers.  However, he noted the legislature will make the            
 final decision and substance of any exceptions to HB 161.                     
                                                                               
 REPRESENTATIVE MACLEAN asked if HB 161 would exempt air and                   
 watercraft operators from being liable for their passengers'                  
 deaths.                                                                       
                                                                               
 MR. FORD explained HB 161 provides immunity to the operator or                
 owner of an aircraft or boat.  He indicated in the event of an                
 accident where a guest passenger dies under present law a guest               
 passenger might recover from the pilot for injuries.  He implied if           
 HB 161 becomes law, they would not be able to recover due to the              
 pilot's negligence and assuming this scenario occurs, this would be           
 the distinction of a before and after consequence of the bill.  He            
 explained HB 161 does have provisions if the pilot has insurance              
 then they are not immune, if the pilot does carry insurance, a                
 guest passenger or family can recover up to the amount of the                 
 insurance.                                                                    
                                                                               
 REPRESENTATIVE MACLEAN stated she opposed HB 161 due to Mr. Fords             
 explanation.                                                                  
                                                                               
 Number 441                                                                    
                                                                               
 REPRESENTATIVE TOM BRICE asked for clarification on Mr. Fords                 
 statement regarding the pilots not being immune if they are acting            
 in a professional manner and are insured.  Representative Brice               
 reiterated the fact the pilot would be immune if they do not have             
 insurance.                                                                    
                                                                               
 MR. FORD stated there is an immunity created by HB 161.  However,             
 the immunity does not apply if the pilot has a guest passenger, the           
 plane crashes and the guest passenger is injured.  He said then the           
 pilot would be considered negligent.  He explained the guest                  
 passenger could still recover if the pilot has insurance.                     
                                                                               
 REPRESENTATIVE BRICE asked for clarification on the fact that the             
 guest passenger could not recover if the pilot was not insured.               
                                                                               
 MR. FORD stated Representative Brice's comment was correct.  He               
 further explained if the pilot is not insured, then there is the              
 potential of no recovery.  He explained this is assuming there is             
 no one else at fault.                                                         
                                                                               
 REPRESENTATIVE BILL WILLIAMS asked for clarification on the type of           
 standardized insurance required for pilots.  He inquired as to                
 assuming the pilot does have insurance and the pilot was found to             
 be grossly negligent, would he be covered?                                    
                                                                               
 MR. FORD stated that was correct.                                             
                                                                               
 REPRESENTATIVE MACLEAN asked for clarification on implications of             
 the definition of negligence stating, "it immunizes the gross                 
 negligent acts of the pilots of watercraft or air."                           
                                                                               
 MR. FORD indicated no, the act would only immunize negligent acts.            
                                                                               
 REPRESENTATIVE MACLEAN asked if this covered gross negligence as              
 well.                                                                         
                                                                               
 MR. FORD explained it would not cover gross negligence.  If someone           
 had committed a grossly negligent act, then there would not be                
 immunity granted under HB 161.  He stated the arguments between               
 gross and just negligent are a difference of standards.  He                   
 exemplified by stating if a person actually committed a grossly               
 negligent act, then there would not be immunity under HB 161.  He             
 stated a person involved in an accident could recover.                        
                                                                               
 Number 460                                                                    
                                                                               
 REPRESENTATIVE MACLEAN asked for clarification on the term                    
 reasonable care.                                                              
                                                                               
 MR. FORD explained the term indicates care that a reasonable person           
 would exercise in a given situation.  He explained for defining               
 negligence, courts have created a fictional person they believe               
 would and have set standards on how a reasonable person would act.            
                                                                               
 CHAIRMAN DAVIS directed his comments on the intent of HB 161 to Ms.           
 Swenson regarding Representative Bunde's intent with the inclusion            
 of the terms gross negligence and intent to make negligence immune.           
                                                                               
 MS. SWENSON stated her belief was that Representative Bunde's                 
 intentions were to protect families of the operators and owners of            
 air and watercraft from significant losses.  She explained the                
 intent is to cover the operators in the event of an accident                  
 beyond the pilots of a boat or aircraft control; i.e., an Act of              
 God.                                                                          
                                                                               
 CHAIRMAN DAVIS confirmed Mr. Fords comment that an act of a                   
 reasonable person is designed to set a standard; outside of these             
 standards would then be regarded as negligence.  Chairman Davis               
 requested an example in the distinctions between negligence and               
 gross negligence.                                                             
                                                                               
 MR. FORD presented a scenario where a plane crashes because it ran            
 out of fuel.  The fact the pilot did not check the fuel level would           
 make him negligent.  However, if the pilot knowingly mixed water              
 with the gas intending to stretch the mixture, that action would be           
 considered gross negligence.  He stated it is dependent on the act            
 involved.                                                                     
                                                                               
 REPRESENTATIVE BRICE presented a scenario in order to clarify the             
 intent of HB 161.  He implied that he was from the Interior and               
 enjoyed jet boats as do other people in the Interior.  He                     
 exemplified taking a boat up the Salcha River and hitting a sandbar           
 going 70 miles per hour, killing his passenger.  Barring any                  
 alcohol or other impairment, would he be exempt from the intent of            
 HB 161.                                                                       
                                                                               
 MR. FORD stated if this situation went to trial, the jury would               
 have to be asked, would a reasonable person have acted in the same            
 manner.  He postulated, what would a reasonable person have done.             
 For example, would they have slowed down or paid more attention to            
 the river or would a reasonable person have acted in the same                 
 manner.                                                                       
                                                                               
 REPRESENTATIVE BRICE asked what would the case be if alcohol was              
 involved.                                                                     
                                                                               
 MR. FORD indicated it would make a difference.  He eluded to the              
 possibility of the jury finding the person negligent.                         
                                                                               
 REPRESENTATIVE MACLEAN stated in her opinion, HB 161 was exclusive            
 to water and aircraft carriers and explained it should be all                 
 inclusive to other entities such as truck drivers and railroad                
 carriers.                                                                     
                                                                               
 CHAIRMAN DAVIS indicated this was a question that was brought up              
 previously and it was indicated that these mentioned types of                 
 insurance are designed to be specific with regard to purchasing               
 specific insurance.  He added auto and truck are inclusive in their           
 respected policies.                                                           
                                                                               
 REPRESENTATIVE MACLEAN stated "this would be a benefit to the                 
 insurance companies and not for Alaskans."                                    
                                                                               
 REPRESENTATIVE BRICE added it might not benefit the insurance                 
 companies.  He explained in order to be eligible for the immunity,            
 HB 161 assumes a person cannot be previously covered.  But if a               
 person carries insurance, they are eligible.                                  
                                                                               
 Number 549                                                                    
                                                                               
 CHAIRMAN DAVIS directed his comments to Ms. Swenson and expressed             
 his desire to obtain some degree of understanding of the context of           
 negligence and gross negligence.  He felt the sponsor of the bill             
 should be present and elected to hold HB 161.                                 
                                                                               
 CHAIRMAN DAVIS asked if there were any objections.  Hearing none,             
 HB 161 was held over.                                                         
                                                                               

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