Legislature(1995 - 1996)
08/25/1995 09:00 AM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSHB 158 CIVIL LIABILITY(FIN) am
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee meeting
to order in the Fairbanks Legislative Information Office conference
room at 9:00 a.m. He explained that because the legislature is in
between sessions, the only action that could be taken on HB 158 was
the taking of public testimony for the record, but that it is his
intention to hold additional hearings in January when the
legislature is back in session.
Number 020
DR. HUGH FATE, representing the Fairbanks Chamber of Commerce,
stated their support for HB 158.
Dr. Fate said that under the present system, where tremendous
awards are granted in punitive damage cases, the cost to the small
businessman and the cost to the health profession is escalating.
If the state of Alaska is to have any kind of a health plan, it
will have to deal with this issue, and the cost of this issue,
relative to punitive damages, will escalate until either the third-
party insurers, or the state of Alaska, or even the public just
simply will not be able to afford it.
Number 040
SENATOR TAYLOR asked how punitive damages can become a cost to the
state or the insurance industry when it is uninsurable. DR. FATE
responded that if the state has to take on some type of health
plan, such as the federal government has advocated, the cost of
health care, whatever kind of a plan it is, basically, it's an
insurance plan. So the cost of that plan escalates regardless of
who sponsors the plan, who supports the plan and who administers
the plan, and the cost keeps going up if punitive damages are left
the way they are. He added that the way it works isn't the
punitive damage coverage; it's the health insurance coverage. His
own insurance health insurance has gone from approximately $3,600
to $7,200 because of this very reason. If the awards are so
exorbitant, the people who supply the insurance spread this across
the board among those people who have not had these problems as far
punitive damages or placing the blame. He also pointed out that
this comes at a time when the state can ill afford to escalate its
cost.
SENATOR TAYLOR noted the only point he was trying to make is that
as concerns what might be termed "excessive awards" or
"compensatory or noneconomic damages," both of which are covered in
this legislation, but as concerns punitive damages itself, and from
the testimony the committee has had in the last several days on
Section 6, it appears to be almost identical language to what the
Supreme Court came down with recently in a case involving a bad
faith claim of an insurance company. DR. TATE questioned if the
Supreme Court decisions, even though they form a legal precedent,
would codify that precedent in such a manner that there would be no
question as to what punitive damages would be in the future.
SENATOR TAYLOR responded that he thought so, and he noted that the
legislation goes further by placing a cap upon what amount of
punitive damages can be awarded.
Number 130
BILL ROBERTSON, President, Fairbanks Chamber of Commerce, read into
the record Resolution 95-081 passed recently by the Fairbanks
Chamber of Commerce in support of HB 158.
Number 160
SENATOR TAYLOR referred to the collateral benefits section of the
bill on page 7, and, as a hypothetical, said that if an employee
who is covered under a businesses health care program is severely
injured by a drunk driver and all of his medical bills and other
compensation are paid by the employer's carrier, when he sues the
drunk driver and it goes to court, under this provision the drunk
driver gets to deduct those medical bills and other compensation
from the amount he owes the employee. He questioned why anyone
would want a provision that would help out the wrongdoer and give
them the advantage of the employer's carrier, and he pointed out
that he hasn't found anybody who has an answer to that question and
that is why these hearings are being held.
Number 250
NELSON PARRISH, a Fairbanks attorney practicing personal injury law
for approximately 25 years, said he believes the problem with HB
158 is that it once again assumes that the present civil justice
system needs fixing, based on the assumption that injury victims
are receiving outrageous awards over and above what is due them.
However, he does not believe there is any basis to say that with
respect to what is going on in Alaska. He said there just seems to
be a perennial rush by special interest groups to limit the right
of injured people to be fairly compensated for injuries inflicted
by the negligence of another. The medical profession doesn't want
the government to have anything to do with regulating its business,
limiting its fees, etc., but on the other hand, every year they
heavily support bills like this that will regulate the right of
injured people to seek fair compensation for what has happened to
them. He believes the real purpose of the legislation is simply to
frustrate legitimate claims.
Number 305
SENATOR TAYLOR asked Mr. Parrish of all the people who come through
his door seeking his assistance on a personal injury type claim,
out of 10 people that come through the door, how many does he
normally take under the current system. MR. PARRISH responded that
in medical negligence, the medical profession would be astounded as
to the amount of people that are displeased with the service that
they receive, although most of them don't have a legitimate claim.
He added that in the medical negligence arena, it is probably close
to one in one hundred that he would take. In other arenas, it is
probably closer to one in ten to twenty. He said from his
experience over the years, the claims that have been brought up and
have actually received compensation have been pretty justified, and
Alaska's Supreme Court has not been reluctant to slash awards.
Referring to the noneconomic damages section of the bill, MR.
PARRISH said the limitation on noneconomic damages is totally
nonsensical and unreasonable. Also, in referring to the punitive
damages section of the bill, from his experience, there haven't
been very many punitive damage awards, and what punitive damage
awards there have been have been severely restricted by the Supreme
Court.
MR. PARRISH also commented that there has been tort reform in one
form or another since 1986, and if somebody in the room has seen
their rates go down as a result of it, he'd like to hear about it
because his rates just keep going up. SENATOR TAYLOR responded
that Harlan Knudson, on behalf of the Alaska Hospital Association,
testified in Sitka that hospital medical malpractice rates have
gone down by more than 25 percent since 1991. When looking into
it, it was found that NORCAL, a company that bought out MICA's
assets, had been gouging and ripping off our hospitals and doctors
at such a rate that another company came in and started
underselling them and they then went back down to the lower
company's rates. He pointed out that these same things are
happening in the air carrier industry, to bar owners, etc.
Number 631
SENATOR TAYLOR asked Mr. Parrish if he could think of anything that
could be put into the bill that would make the system work and that
would create a more equitable distribution of the cost of the
injury, or would ensure adequate and appropriate compensation for
persons injured. He added that has been asking this question
during these tort reform hearings and, so far, he hasn't had
anybody come forward with an answer to that. Most people have
responded that this bill does exactly the opposite of that.
TAPE 95-45, SIDE B
Number 050
VIRGIL HORNSBY of Fairbanks said he was recently in a building fire
and sustained a substantial amount of back injuries. However, he
is not finding any recourse against insurance companies, against
the juveniles that started the fire and against other things. He
said he a teamster, but he may not be able to drive trucks again or
operate heavy equipment, which means he may have to train for a
different field and that is something he cannot afford right now.
He voiced his concern with the insurance companies, the lawyers,
the doctors and the whole system, and he said it seems to him that
if this bill passes, it's going to protect all those areas while
leaving the people that are in need of assistance without any.
Number 170
JOHN ROSIE, an attorney practicing in Fairbanks since 1972, said he
participated in the discussions on tort reform in 1986 and 1988,
and he finds that nine years later we haven't received any greater
access to insurance markets, there isn't an entry of new companies
into Alaska that issue insurance policies, and every aspect of his
insurance portfolio has gone up. He said he is being told that
because our insurance industry is so tied into a mutual retention
system that what affects the market in Florida from hurricanes,
from the midwest in floods, etc., that all these destructions go
across a mutual system so there is national rating and the premiums
go up in Alaska even though we've had none of those disasters. He
questioned what the purpose of this legislation is when the problem
has nothing to do with individuals in Alaska causing the problem.
Mr. Rosie spoke to specific cases he has represented where people
have been severely injured and how grossly unfair the noneconomic
damages caps are for those types of cases. He also pointed out
that subsection (f) of the noneconomic damages sections provides
that multiple injuries sustained as a result of a single incident
shall be treated as a single injury which would mean that even if
there was more than one individual injured in an accident, the
total paid would still be $300,000, or $500,000 if there was a
death.
Number 297
SENATOR TAYLOR said it was his understanding that for a juvenile,
especially the younger child that has no work experience, there is
not an economic loss other than a projected possible work life. He
asked Mr. Rosie if he could clarify what this legislation would do
under that circumstance. MR. ROSIE responded that he didn't know,
but in his experience when he has represented children that have
either been killed or have been severely injured, you try to get a
projection of what they may or may not earn. However, it is
subject to all kinds of holes and ridicule, because he gets his
economist and the other side gets their economist, and they deal
with national averages and never have any consensus on any kind of
experience.
Number 350
MR. ROSIE also spoke to some other cases and the effect the
noneconomic damages section would have on them.
Number 480
SENATOR TAYLOR noted that there is a provision in the bill that
speaks to who shall be qualified to testify as an expert in a
medical case in Alaska, and he pointed out that it is only those
people licensed in Alaska that are qualified. MR. ROSIE said he
has had two medical negligence cases that were submitted to medical
review panels that are required by statute and the medical review
panel never met on them.
Number 590
VALERIE THERRIEN, an attorney in private practice in Fairbanks, as
well as a member of the North Star Borough Assembly, stated her
opposition to HB 158. She also stated she is a member of the
Fairbanks Chamber of Commerce, and she does not think they always
represent all of their membership.
Ms. Therrien said over the course of the years she has been
involved in many personal injury cases and that she made the
unfortunate mistake of spending over a year in a medical
malpractice case. Her client had to have corrective surgeries for
an earlier procedure he had done which had caused serious problems.
It ended up that they had to dismiss the case because the insurance
company and their attorney had scared the client and his wife so
bad that they were afraid they would lose what little assets they
had if they proceeded with the case. She said it is a good example
of how they never even got to the board to review the case and they
couldn't even find a panel of doctors that was willing to say they
were unbiased in this situation.
Ms. Therrien said if this bill is intended to actually help people,
it's not, and she suggested that a way to help the system would be
to reform workers compensation.
TAPE 95-46, SIDE A
Number 001
Ms. Therrien stated that since the workers comp law was reformed,
there are no incentives in it and there aren't any attorneys in
town who are willing to take workers comp cases,
Ms. Therrien, speaking to the collateral benefits section of the
bill, pointed out that a lot of the time one of the only ways that
an attorney can really get his or her costs incurred and his or her
attorneys fees is to subrogate the insurance interest, and if that
is taken away for the attorneys, there is no way they can go ahead
and work on the cases.
Ms. Therrien also noted she was involved in a wrongful death case
against the University of Alaska and she was amazed at the costs
that the attorney charged the university to try to get them to just
settle. She believes that unless there are some incentives put in
for limiting the amount of defense attorneys' costs and fees, that
the system will never be remedied.
Ms. Therrien said she has some personal experience with clients, as
well as herself, where, after filing a claim, they get dumped and
then cant get house insurance, liability insurance or medical
insurance. She suggested another way to try reform the system is
to make sure that in instances like this where an individual's
insurance is cancelled because of another's negligence, that there
be some type of pool of other insurance available for those people.
SENATOR TAYLOR commented that the cancelling of an individual's
insurance because of another individual's negligence is a complaint
that he has heard over and over again from constituents since he
has been in the House and Senate.
Ms. Therrien also spoke in opposition to the statute of limitations
in the legislation, especially as it relates to children, as well
as the caps for noneconomic damages.
Number 315
ROBERT BRUCE STEVENSON of Fairbanks said injuries he received in
and accident and the award that resulted fall within the
limitations proposed in the legislation. However, his award was
not the result of the jury system, but, rather, a settlement that
was reached.
He then spoke to the injuries he sustained on the job in an
accident approximately 7 1/2 years prior as the result of a propane
explosion at Eielson Air Force Base. Discovery showed that the
propane tank had been mishandled in the past by employees, and that
the propane company was aware of this mishandling. He told of the
lengthy and extremely painful treatment he underwent in the
hospital for burns to over 40 percent of his body and the long-term
effects the accident has had on himself and his family.
Mr. Stevenson said there was discussion earlier on state workers
compensation, but there is another whole side of this issue that
rarely gets talked about and that is federal workers compensation,
which is a bigger nightmare than state workers compensation. After
returning to work at a different job at Eielson that was not
working out for him, he requested a transfer, which was denied by
federal workers comp. Only after enduring several months of
harassment by the feds, and, only after he had contacted a
specialist in burn psychiatry, did they begin to accept the
possibility that maybe he should be transferred, however, they
never helped him get another job. He suggested a way to make
things better in the system would be to have some type of
organization that would help injured individuals, even in the
hospital, to start to recognize their limitations and talk about
doing something else. It took him four years to settle this
matter, and he feels it could have been done quicker with less cost
to everybody.
Number 686
MICHAEL LAWSON of Fairbanks said he received injuries in 1991 that
are somewhere between workers comp and medical malpractice.
TAPE 95-46, SIDE B
Number 001
Mr. Lawson stated that in his case alone, the insurance company has
spent $50,000 to fight his case against them. He has been unable
to work for four years and has seen over 40 doctors in and out of
Alaska. He said the reason he has been off work so long is because
he has had to fight the insurance companies, and he noted his
attorney is one of the few lawyers that will take a workers
compensation case. It's been four years and his case still is not
settled. He said his point is that the legislature tried to
streamline workers comp and it didn't work, and he does not believe
that the caps in this legislation are going to work.
Number 118
KARL KIRCHNER, an Alaska commercial fisherman who was involved in
the Exxon Valdez litigation and testifying from the Soldotna
Legislation Information Office, said he believes tort reform should
be about fairness, not scale, and that punitive damages are meant
to be a deterrent. He said tort reform should not be about scale
because that makes it more unfair on the size of your business;
larger companies would get away a little easier and smaller
companies would have it a little harder.
SENATOR TAYLOR said the question has been asked in other hearings
whether or not the overall damages provision as a multiplier would
take care of situations such as the Exxon Valdez incident, and the
answer given was that since environmental damages have never
quantified in a uniform way throughout out the country by courts,
the value of a dead duck or an oil beach is a value, more often
than not, of ambiance or a value of scene or a value of some
recreational value. The attorneys on behalf of Exxon Valdez
plaintiffs that he has talked with indicate they felt they could
quantify that very well and that there were objective standards for
that, but other attorneys have been equally forceful in their
arguments indicating that it's a generic sort of thing, and that
that type of damage would definitely fall within the noneconomic
limiter. If that were the case, then the noneconomic limiter, in
this instance, under this law, would be $300,000. For the economic
damages, whatever those are, you could get to three times that
economic damage factor, he said.
Number 175
PHIL SQUIRES, a commercial fisherman and a small contractor in
Kenai, stated his opposition to HB 158. As a small businessman he
is well aware of the exposure that he has to civil litigation, and
he is in favor of tort form, but he does not view HB 158 as being
in his best interest or in the best interest of most of the other
people of the community. He said he agrees with Mr. Kirchner's
comments that it is a matter of scale, and, from his perspective,
from his finances, the limits that are in the bill are no limits at
all. He said he could be taken to court and financially ruined,
while the same amount of money for a large corporation is simply a
cost of doing business. Also, he has a problem with the
disempowering of the jury by placing the limits on the damages that
they can award.
There being no further witnesses to testify on HB 158, SENATOR
TAYLOR thanked all the participants and adjourned the meeting at
approximately 11:45 a.m.
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