Legislature(1995 - 1996)
03/15/1995 01:12 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HTRA - 03/15/95 HB 161 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW Number 012 REPRESENTATIVE CON BUNDE, Sponsor, stated HB 161 should have been titled a "recreational opportunity bill" due to the large amount of people who have boats and planes. He explained pilots and operators of watercraft enjoy accommodating their friends when they are asked to take them for rides. Unfortunately, the operator of the boat or aircraft place their entire personal worth at stake when they take passengers. He indicated, with the way personal injury suits operate now and the way juries operate, if there is an accident, the operator is viewed as having "deep pockets" because they have an airplane or boat. He added anything the pilot has accrued financially would be in jeopardy. Representative Bunde stated HB 161 was designed to protect pilots and boat operators from being sued beyond the limit of their insurance. Also, if the pilot does not have insurance, then the passengers assume part of the liability for taking part in the recreational activity or having the opportunity. REPRESENTATIVE BUNDE asked to clarify some points that were brought up at the House Transportation Committee meeting last week, which he was unable to attend. He referred to page 1, line 13, of HB 161 and requested the addition of the word "negligence" so the statement would clarify some concerns the committee had last week when hearing this bill. He stated the section would then read, "gross negligence, negligence, or reckless or intentional misconduct." He stated this would relinquish any misunderstanding of the terms gross negligence and negligence. He stated the focus of HB 161 is "an Act of God." He presented a scenario of a person paddling their canoe in a reasonably safe manner and a spruce tree falls on top of the canoe injuring the passenger. He questioned the level of responsibility that the operator should have and how much liability should the passenger assume for their own actions. He mentioned that he had spoken with Representative Beverly Masek prior to this meeting and presented a scenario of driving her dog team with a passenger for recreational purposes and encountering a moose on the trail injuring her dogs and passenger. He asked how much liability should be placed on Representative Masek for her passenger's injuries and how much responsibility should be placed on her passenger. Representative Bunde stated if a person is going to partake in many of the recreational activities in Alaska, the passenger should assume a level of responsibility for the risks they choose to accept. He asked if there were questions from the committee. CHAIRMEN DAVIS asked for further questions and announced he would take comments from teleconference. Number 100 RAY BROWN, Attorney with Alaska's Academy of Trial Lawyers, said he appreciated Representative Bunde's clarification and correction with the addition of the word "negligence" under subsection (A) of HB 161. He stated HB 161 was to cover "Acts of God" then legislation already enacted covers a negligent act because to be recoverable (indisc.) from acts that occur, a person has to be negligent. This implies a breach in a duty of care. He indicated in this particular circumstance, Representative Bunde described "Acts of God" would not constitute negligent acts in the first place. MR. BROWN continued to explain if that was the purpose of this legislation, there is no need for the bill but, by adding the word "negligent" on line 13, page 1, this would take care of a lot of their concern on behalf of victims of negligent acts or other (indisc.) that would occur if the legislation had been passed out of committee without the correction. He stated his other concern with respect to Representative Bunde was, as written, HB 161 discourages people from obtaining insurance. He stated the purpose of obtaining liability insurance was to protect each other and more importantly the protection of victims of negligent acts. Another problem with the bill was by not applying mandatory insurance, which should also be read into the bill, a person operating an air or watercraft should have mandatory liability insurance. He pointed out there is mandatory insurance for automobiles. He stated automobiles are less dangerous instrumentality than water or aircraft. He added the other problem is, by capping the exposure of an insurance carrier for any act, a person is encouraging litigation. He indicated he knew of people involved in similar litigation who think lawyers are the main culprits, particularly plaintiff lawyers. Mr. Brown remarked this was not the case and continued to explain if you cap exposure, there is no (indisc.) pressure on insurance carriers to resolve litigation. As it stands, if a legitimate bona fide offer to settle a case is made by an injured party or victim of someone else's act, then the insurance carrier is obligated to act in good faith in resolving settlement within policy limits. He explained this legislation, as written, offers no incentive to an insurance carrier to do so because they would have no bad base exposure. In effect, they could litigate or bankrupt a plaintiff to discourage them in pursuing a legitimate claim with absolutely no exposure on the other end to encourage their settlement of the cases. Number 177 REPRESENTATIVE BUNDE stated HB 161 was a tort reform bill and he acknowledged this would be a concern to trial lawyers who would more than likely oppose the bill. He disagreed with Mr. Brown's statement concerning driving an automobile being less dangerous and stated statistics show being injured in an automobile are far greater than being injured in a aircraft accident. He explained the notion that insurance is required for cars, cannot be compared. He stated when living in an urban area, people are almost obligated to have a car in order to function. He reminded the committee that he is talking about recreation, and stated no one has to go and recreate. This is a vastly different circumstance. He said regarding insurance, at this point it is prohibitively expensive for many people, and the insurance available has relatively low limits. REPRESENTATIVE BUNDE explained that juries on personal injury suits tend to get into the McDonald's hot coffee idea. He stated if a person is insured for $100,000 or $200,000 or higher, the dollar value of these suits can be unlimited. He explained a cap was designed to establish a limit of insurance. He mentioned that liability insurance is generally not purchased to protect the other person, but to protect themselves and their own financial liability. He said if some one chooses not to purchase insurance, he did not feel this bill would encourage that. He explained after talking with many boat and aircraft owners, they choose not to purchase insurance, especially when the insurance prices are high, the limits are low, and there is no reason to assume that a lawsuit would stop at the limits of that person's insurance. He reiterated if someone chooses not to purchase insurance and someone wanted to go for a ride and were made fully aware of the fact the pilot did not carry insurance, it would not be unreasonable to ask the passenger to assume some of the risk involved. He indicated the passenger is not obligated to go and has that option. CHAIRMAN DAVIS asked Mr. Brown if he cared to comment on Representative Bunde's statements. MR. BROWN stated he did not. CHAIRMAN DAVIS introduced Mike Panone. MIKE PANONE, Former President and Current Member, Alaska Airmen's Association, indicated the association represents the 10,000 pilots in the state of Alaska. He stated he supported HB 161 and supported a similar proposal last year. He indicated, from a recreational standpoint, pilots enjoy giving passengers rides. He stated many of the pilots also fly for a living, but this is not covered in HB 161. He mentioned the organization and people he has spoke with statewide, support the idea of HB 161 because it offers a certain amount of protection as well as enhances the idea of personal responsibility for all parties involved and not just the person owning the aircraft. He stated many of his friends would ask to go sightseeing around Mt. McKinley or Mt. Susitna. Mr. Panone said it was difficult to turn these people down due to insurance limitations. He added, if people ask to go for a ride he warns them that they, the passenger, will accept a certain amount of responsibility. MR. PANONE explained without HB 161, if something does go wrong, the pilot would end up being the target for a lawsuit. Mr. Panone made reference to Mr. Brown's comments on the fact HB 161 encourages no insurance. He indicated from his experience in talking with recreational pilots about whether or not to carry insurance, if a pilot carries insurance and something goes wrong, whoever sues him will try to sue for the maximum amount possible plus everything he owns. If he does not have insurance, he could be sued for everything he owns. By not having insurance he would save the premiums. He disagreed with Mr. Brown's comment on discouraging the purchase of insurance and felt it was a matter of personal choice. Mr. Panone stated he personally has insurance, but knows a lot of people who do not, and reiterated his support of HB 161. Number 279 CHAIRMAN DAVIS inquired as to the cost of the insurance and the determining factors, such as the size of the plane and number of seats. MR. PANONE explained it was extremely variable. He explained the insurance rates are predominately based on the number of seats in the aircraft, experience, number of hours the pilot has, his ratings, how much experience he has flying in Alaska, and if he has an accident record. He said he thinks it is similar to auto insurance. REPRESENTATIVE BUNDE added there are numerous companies that will not write insurance in Alaska because aviation in Alaska is unique; i.e., landing on lakes, rivers and sandbars. He mentioned, normally when dealing with aviation insurance, it implies paved airport to paved airport. REPRESENTATIVE EILEEN MACLEAN noted that currently the legislature is pursuing a tort reform bill. She asked Representative Bunde how HB 161 impacts tort reform because it deals with insurance coverage. REPRESENTATIVE BUNDE stated that bill was still in progress. He said generally speaking, the bill places caps on personal suffering and the noneconomic awards. He stated HB 161 would not get involved in the pain and suffering cap. It would be dependent on whether the person had insurance and the limits of that insurance. REPRESENTATIVE MACLEAN stated she was in disagreement with Representative Bunde's statement because, first a person would have to have insurance coverage or if the person does not have insurance, then the person has the liability if there are guest passengers on the plane. She then asked if she could direct her concern and question to Ms. Margot Knuth. CHAIRMAN DAVIS stated that would be fine if Ms. Knuth felt comfortable addressing those concerns. He gave her the option of abstaining, since she was here to testify on the other bill. MARGOT KNUTH, Assistant Attorney General, Criminal Division, Department of Law, stated she would rather abstain on Representative MacLean's question at this time. She stated she was with the Criminal Division and acknowledged the Civil Division would be more knowledgeable on this issue. CHAIRMAN DAVIS announced for the record that Representative Eileen MacLean arrived at 1:20 p.m. He noted that Mr. John George, former Director of the National Association of Independent Insurers was in attendance and asked if he had a response to Representative MacLean's question. JOHN GEORGE, Representative, National Association of Independent Insurers, addressed Representative MacLean's question regarding the relation of HB 161 and the tort reform bill that was introduced by Representative Brian Porter. He stated the tort reform bill limits the liability, placing caps on awards for pain and suffering, punitive damages and changes the statutes of limitation, the time in which to file suits. He stated HB 161 would apply to civil liability, but only to the narrow application of where someone in a personal aircraft or personal boat was carrying guest passengers. He stated they are somewhat related but are not that directed to each other. He added the tort reform bill is more expansive and complicated, whereas HB 161 was designed to be fairly simple. Mr. George stated if you are a passenger of a private aircraft or boat, it would not be possible to sue someone unless they have acted in a negligent manner. He stated if the pilot has insurance, he can only be sued for the amount of insurance. He also indicated the tort reform bill applies to commercial and charter operations as well as private airlines. Number 356 REPRESENTATIVE MACLEAN asked why is HB 161 exclusive to air and watercraft carriers and not designed to include railroad or land carriers. REPRESENTATIVE BUNDE stated HB 161 was designed to target recreational use of air and watercraft. He stated land carriers, such as rail and truck, are covered by other liability considerations. REPRESENTATIVE MACLEAN said if HB 161 was designed for recreational use, then shouldn't other modes of transportation be considered recreational. REPRESENTATIVE JEANNETTE JAMES said she sees the problem which has been described as an inherent risk of living. The second part of the problem is whether there is neglect or not, if an injured party sues an operator of a boat or aircraft, and if there is no cause for the suit, then they get a settlement out of court. She asked Representative Bunde if he felt that these two concerns are solved by HB 161 and to what extent. REPRESENTATIVE BUNDE addressed Representative James's concern by explaining that different people are going to have different points of view, depending on how they will be impacted financially. He said having liability insurance may encourage suits because he has heard information that an insurance company will settle for a soft tissue injury, which is something that can neither be proven or disproved, up to $50,000, because it was not worth the litigation until a greater amount is involved. Representative Bunde reiterated his comments that if a person wants to enjoy the outdoors there is a certain amount of risk involved. REPRESENTATIVE MACLEAN asked Representative Bunde for a definition of "grossly negligent." REPRESENTATIVE BUNDE stated he had a legal definition of "grossly negligent" with him. He acknowledged that Mike Ford from Legislative Legal was present for the interpretation of "grossly negligent." MIKE FORD, Attorney, Division of Legal Services, Legislative Affairs Agency, said he believes this was discussed at the last meeting on the bill. He said he believes he provided Representative Bunde's office with a copy of jury instructions that are given whenever this issue arises in a civil lawsuit. It discusses what negligence is. He noted there are some cases that have discussed gross negligence. Simple negligence is where you fail to do something you should have done that an ordinary and reasonable person would have done in the same circumstances. Gross negligence is something beyond that. Simple negligence is an aggravated form of misconduct. Mr. Ford said it is a concept that is really fact-dependent. You have to supply facts to really understand whether that situation would or would not be gross negligence. He explained an example he used previously was refueling your airplane. If you refuel your airplane and you don't secure the fuel cap, you take off and the fuel spills out, that would be negligence. If you filled the tank half way and then switch to water, that is gross negligence, because obviously people don't fly planes on water. CHAIRMAN DAVIS added that with the recommended inclusion of negligence up to reckless and intentional, everything is covered other than "Acts of God." Number 420 REPRESENTATIVE BUNDE explained, a prudent person would not refuel a plane with the passenger in the airplane or while smoking. He said if you refuel the airplane with a passenger inside and for some reason you have a fire, that would be considered negligent or even grossly negligent. If you are refueling while you are smoking, this would definitely be considered grossly negligent. Representative Bunde stated a person's acts or failure to act creates an unreasonable risk of harm to another person. CHAIRMAN DAVIS asked for questions. He asked Representative Bunde, with the inclusion of the word "negligence" in HB 161, it was stated by Mr. Brown, that then this is already covered somewhere in statute or was it in just court and insurance or standard law language. REPRESENTATIVE BUNDE respectfully disagreed with Chairman Davis's comment and referred to Mr. Ford's observation on the determinations of what is considered "negligent" and what is not negligent is highly debatable, depending on the circumstance. Representative Bunde said he did not think it was covered in existing statute. Number 442 MR. FORD added HB 161 was fairly narrowly crafted and only applies to negligent acts of someone operating an aircraft, and the person filing suit is someone who is not paying for their ride and is a guest passenger. He said they started from that standpoint and by adding the word "negligence" to this, it further narrows the intent. He stated if he understood the amendment correctly, it would only address acts that are not negligent, grossly negligent, reckless or intentional misconduct. He concluded the only acts HB 161 would be applicable to are acts of strict liability and stated he was not sure he knew what they would be. REPRESENTATIVE MACLEAN stated for the record, she does not support HB 161 on the grounds of its exclusive nature to water and aircraft, and that it should include all transportation modes if we are going to have a bill like this. Number 451 REPRESENTATIVE JERRY SANDERS stated he will not support HB 161, but would be willing to support a cap on what people could recover or he might be able to support a waiver of the passenger's rights when in a airplane. He stated from the way he sees it, if you have an airplane and you are going to carry passengers, you have a responsibility to carry insurance or you just simply have the responsibility to tell people no, you won't carry then. He stated it was too dangerous, inherently, not to carry insurance and for those reasons he could not agree with HB 161. REPRESENTATIVE JAMES stated HB 161 would be acceptable to her, as long as the passengers that do not pay for their ride know they are not covered, because there is an inherent risk to living and no one person should be responsible for the guarantee of everyone's recovery of a certain dollar amount for their behavior. She emphasized this was recreational and the passenger has a choice as to whether they choose to ride with the pilot or not. She said people need to understand that they should be held responsible for their own actions because there are other circumstances that can happen; for example a bird can fly into the windshield and everybody goes down. She believed that we as people need to be responsible for our own lives and not look around for deep pockets to take care of us when we don't make a good decision. Representative James added, said would support HB 161. REPRESENTATIVE BUNDE addressed Representative Sanders' concern regarding notification, by explaining a number of lawyers and a number of people have tried to come up with an idea where, you have a form that if someone wanted to go for a ride with you, they sign a form, but you can't sign away someone else's rights. He reiterated you can sign away your right to sue, but you can't sign away your wife's, and your children's right to sue. He added maybe when you are an employer and have lost your services. He said just notification that there is no coverage or that you would be limited to a certain insurance level of recovery will not protect a person. Number 487 CHAIRMAN DAVIS asked if Representative Bunde would interpret that the same if there was a requirement for the pilot or boat owner to notify the passengers, or whether there was a sticker on the boat or plane. Chairman Davis asked if this would be the same interpretation, where that would not be legally binding. REPRESENTATIVE BUNDE stated it would not suborn someone else's rights. He explained if the pilot has a sticker displayed on his aircraft and a passenger is hurt or killed, his family has the right to sue the pilot regardless of whether the passenger signed a waiver or not. REPRESENTATIVE WILLIAMS asked Representative Bunde if he would consider adding the words "recreational vehicles" to HB 161. REPRESENTATIVE BUNDE stated he had not researched that idea and has no aversion to the inclusion. He added the only other vehicle this would be applicable to are snow machines. He explained it is prohibited for operators of all terrain vehicles (ATV) to carry passengers. He stated he would be willing to look into Representative Williams' suggestion. CHAIRMAN DAVIS stated due to the fact he will have to draft a Committee Substitute for the recommended addition, if Representative Bunde so desired he may conduct further research on HB 161. Chairman Davis said he would consult with the drafter with regards in addressing Representative MacLean's concerns on the addition of other forms of recreational vehicles. Number 515 REPRESENTATIVE MACLEAN corrected the comment regarding the prohibition of passengers on an ATV. She stated carrying passengers is allowed, particularly in rural areas when traveling through the country to go out hunting, then that is recreational. She reiterated it did include ATVs. CHAIRMAN DAVIS questioned the fact there is not an insurance requirement anywhere in those areas as there is for automobiles, boats and aircraft. REPRESENTATIVE MASEK inquired as to the inclusion of sled dog teams in HB 161. CHAIRMAN DAVIS stated this would be discussed. He then asked for a motion to amend HB 161 by the addition of the word "negligence" as requested by the sponsor of the legislation. REPRESENTATIVE JAMES made a motion to add the word "negligence" on page 1, line 13, after "gross negligence." CHAIRMAN DAVIS asked for any objection. Hearing none, he stated he would draft a CS for HB 161 for the next meeting. REPRESENTATIVE JAMES expressed her concerns for other than water and aircraft being included in the bill. She felt there was some merit in going over other issues and stated if we go too far, we get into different circumstances that one blanket statement would not fit. She stated it would be safer to have this exclusive to air and watercraft, and if there needs to be something to address other recreational activities, then we might want to have a separate bill like we have for skiing and other recreational activities, where there is an inherent risk that is assumed when participating in these activities. Number 540 REPRESENTATIVE MACLEAN stated she disagreed with Representative James and explained this would give special privilege to a particular group of people instead of all inclusive, then we are being exclusive just to air and watercraft and said this is why she opposed the bill. CHAIRMAN DAVIS added he will research the addition of the word "negligence" and existing information on this subject to make sure it is not legislation already covered elsewhere. He stated he would work up a CS for the next meeting.