Legislature(1995 - 1996)
02/09/1996 01:30 PM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 158 CIVIL LIABILITY
CHAIRMAN ROBIN TAYLOR called the Senate Judiciary Committee meeting
to order at 1:30 p.m. All members were present. The committee
took up CSHB 158(FIN) am(ct. rls pfld)(efd fld).
REPRESENTATIVE BRIAN PORTER, prime sponsor of HB 158, responded to
four amendments proposed by committee members. Senator Ellis'
amendment would relieve a hospital from indemnification against
contract employees if those employees do not have a minimum of $5
million in liability coverage. To his knowledge, hospitals
already require such coverage, the amount of coverage required is
something that will work itself out among professionals.
SENATOR TAYLOR commented that several hospital administrators are
supportive of the amendment because of the Jackson v. Powers case.
There is no current established policy requiring independent
contracting doctors to carry a specified level of malpractice
coverage and in some hospitals independent contracting doctors have
no coverage. Without the amendment, the bill would grant immunity
to hospitals but does not require independent contracting doctors
to maintain liability coverage.
Number 080
REPRESENTATIVE PORTER explained that when this issue was considered
earlier, it was concluded that most doctors have their own
discipline and are not subject to the supervision of a hospital
unless the hospital actually employs them. It would be difficult
to hold somebody accountable for something they did not have the
supervisory right to dictate policy to.
SENATOR TAYLOR stated the other alternative is to address whether
hospitals should be granting privileges. Most hospital
administrators want to retain that ability.
REPRESENTATIVE PORTER felt it is appropriate for hospitals to be
responsible for providing reasonable care and granting privileges,
which is required in the bill.
REPRESENTATIVE PORTER addressed Senator Taylor's amendment
requiring mandatory arbitration in certain circumstances. He stated
that concept was considered earlier in the process with no
objection. The idea was dismissed only to keep the bill manageable
in length and complexity.
REPRESENTATIVE PORTER explained that Senator Adams' first amendment
would allow the court to consider allocating a portion of the fault
to a person not named as a party to the suit. If that person was
outside of the statute of repose, the apportionment of fault would
be allocated among other parties.
SENATOR TAYLOR stated he refers to it as the "empty chair."
REPRESENTATIVE PORTER felt it does not need to be empty since the
plaintiff has the opportunity to sue whomever he or she chooses.
SENATOR TAYLOR said that is true unless the plaintiff is banned
from doing so by law. This bill will dramatically change the law
on the subject of architects and engineers. He explained that if
a party is 80 percent liable, but outside of the statute of repose,
the plaintiff could only recover 20 percent of the damages.
Whenever possible, the defendants will blame the "empty chair."
Number 147
REPRESENTATIVE PORTER discussed the review of this provision last
year. The possibility that the design fault would be noticed after
eight years, making no recovery possible, was considered unlikely.
After eight years, maintenance completed by the owner would be the
responsibility of the owner, as well as any damages that occur.
SENATOR TAYLOR disagreed unless this amendment is adopted, because
the owner will try to put the responsibility on the designer.
REPRESENTATIVE PORTER felt the amendment would make the intent of
the original draft clear.
REPRESENTATIVE PORTER took issue with the last amendment, which
contains an effective date requiring a ten percent reduction in
insurance rates. He felt such a goal to be unreasonable because
the ongoing cases will affect insurance rates for years to come.
Additionally, many of the provisions in the bill would be
challenged for constitutionality while the ongoing cases are
resolved. No insurance company would substantially reduce rates
without resolution of the legal questions.
Number 178
SENATOR ADAMS, sponsor of the rate reduction amendment, stated the
intent of the amendment is to assure a reduction in insurance rates
by providing a timeline to review whether the bill does what it was
designed to do.
SENATOR TAYLOR commented that this bill has been advertised,
especially to small businesses statewide, as a way to reduce rates.
Because this bill makes major changes to help the small business
owners obtain affordable insurance, this amendment would hold the
insurance industry accountable. Regarding Representative Porter's
argument that ongoing cases will affect the rates during this time
period, the insurance industry is a claims-made industry. The
amendment would only affect claims made after the effective date of
this Act. The insurance companies have already calculated
actuarially how much money each one of the provisions in this Act
will save them. That computation should be reflected immediately
in claims made in the future. Ongoing cases have already been
reserved for under existing law.
Number 207
SENATOR MILLER disagreed because the ten percent discount would
take effect four years before the Act takes effect. If the rates
could be discounted ten percent without the Act in effect, there
would be no need for the Act.
SENATOR ADAMS explained the amendment would ensure the Act would
only take effect if the rates have decreased ten percent. SENATOR
MILLER felt if enactment of the Act is the catalyst for rate
reductions, it must take effect before rates can decrease. The
amendment requires a rate decrease under the existing system before
the Act can take effect.
Number 229
REPRESENTATIVE PORTER noted the cost of litigation for unsettled
cases will still need to be borne by the insurance companies,
therefore they will have future costs associated with unsettled
claims. Future claims would be affected if the industry were
assured that all of the provisions of the bill would remain in
place, and not be legally challenged and successfully dropped.
That concern could limit their ability to reduce rates.
SENATOR TAYLOR asked if there is any percentage rate reduction
Representative Porter would be comfortable with. REPRESENTATIVE
PORTER was opposed to any required rate decrease for the following
reason. Over an eight year period, California adopted a
comprehensive tort reform bill. The insurance rates in that state,
during that period, increased 80 percent. Insurance rates across
the rest of the United States increased 200 per cent. In Alaska,
the increase was closer to 500 percent. Although there was not a
reduction in rates in California, there was an overall reduction in
the percentage increase.
Number 273
TERESA WILLIAMS, representing the Department of Law, summarized
CSHB 158 (FIN)am from a legal perspective. Sections 2 and 4 remove
tolling from minors, but not for mentally disabled persons, in
personal injury or death cases, both from the statute of repose and
statute of limitations. Tolling is a procedure that allows minors
and incompetent persons an additional period of time to go to court
when the condition, which prohibits them from going to court,
passes. Removing the tolling provision for minors but not for
mentally disabled persons raises a due process issue.
SENATOR TAYLOR asked Ms. Williams if she thought that provision
would violate the Constitution. She thought it raises an issue
because minors will not have access to the courts, except through
their parents or legal guardians. Whether those rights can be
taken away from the minor is questionable, as well as the rights of
children in state custody. For children in state custody, there
could be a case against the state for having failed to file a
personal injury action on behalf of the minor. The tolling
provision only applies to personal injury torts, not to economic
torts. The economic tort could be brought against the state for
the personal injury case not brought by the state. There is also
an equal protection argument because persons who are disabled as a
result of mental incapacity are protected, but not minors.
MS. WILLIAMS stated another concern with Section 2 is with the
statute of repose. She questioned whether due process would be
violated if a person was barred from bringing an action before the
action accrued, or before the injury happened. She explained if a
roof collapsed ten years after it was built, the action could not
have been brought before it occurred.
SENATOR MILLER asked how other states address that problem. MS.
WILLIAMS was not aware of how other states have dealt with the due
process question under the statute of repose.
Number 329
SENATOR GREEN asked for an example of the problem. MS. WILLIAMS
explained that if a roof collapsed ten years after it was built,
and was designed to last 20 years, no action could be brought
against the designer because the action was not brought before the
statute of repose expired, within eight years.
SENATOR MILLER noted a 15 year statute of repose passed the
legislature two years ago. MS. WILLIAMS stated an earlier statute
of repose was found unconstitutional. The law that passed two
years ago has not been tested yet.
SENATOR TAYLOR asked what the difference is between the two
statutes. MS. WILLIAMS was unsure. SENATOR TAYLOR stated if the
only difference was the length of the time limit, whether Ms.
Williams was basing her opinion on the question of whether any
statute of repose in that field would be found unconstitutional.
MS. WILLIAMS replied the Turner Construction Case deals
specifically with that question, and addresses the concern of a
loss without a remedy. A second case, [indisc.] Helicopters found
it profoundly unfair to the litigant of his right to bring a
lawsuit before he has had any reasonable opportunity to do so. For
those reasons, it is likely the Alaska Supreme Court would have
serious concerns about the statute of repose provision.
Number 370
SENATOR ADAMS asked Ms. Williams for her opinion of his amendment
requiring a decrease in insurance rates. MS. WILLIAMS responded
that she does not perceive any problems with that amendment.
MS. WILLIAMS continued with her analysis of Section 2. Regarding
subsection (d), the definition of "substantial completion" of
construction implies that when the owner occupies the structure,
even though a particular part of the construction may not have
begun, the structure is substantially complete. She questioned how
that definition would affect long term projects, and whether
continuing improvements would fall under the statute of repose.
SENATOR TAYLOR discussed the effect that definition would have on
a facility like the Ketchikan Pulp Mill which is constantly
undergoing major repair and remodelling jobs. He asked if the
statute of repose would apply from the time a new piece of
construction is completed upon the building, since each
construction project might be completed under a separate contract.
MS. WILLIAMS explained because the definition contains an "or"
clause it means if the area can be occupied, it is considered to be
substantially completed.
SENATOR TAYLOR commented that definition is too vague to cover
either situation, and needs to be clarified. He discussed the
problem of providing coverage for canneries, which are often
completely rebuilt over a number of years, and may not apply under
this definition.
Number 435
SENATOR GREEN asked if under this measure, gross negligence, fraud,
deceit, and defective products are excepted from the statute of
repose. MS. WILLIAMS replied they are, but most tort cases are
based on negligence, rather than intentional misconduct. Defective
products are not included as this provision only applies to
facilities. Gross conduct is not limited by the statute of repose.
MS. WILLIAMS questioned why Sections 3 and 4 have been separated.
Additionally, the division of the torts between the two sections is
not a clean division. There are economic torts are both sides, and
there are certain intentional torts on both sides. The phrasing
used in the two sections is different, which implies they are meant
to have a different application or effect. She recommended that
the sections be combined, or the phrasing be standardized.
MS. WILLIAMS stated the Civil Rule 58 amendments in Sections 8 and
9 did not pass the House floor. Had those sections passed, the
statute would conflict with the civil rule.
Number 480
SENATOR MILLER discussed the balance of power question when the
court determines a policy which is the function of the legislature.
MS. WILLIAMS replied the Department of Law recommends that the
citizens should be able to read a statute and presume that statute
governs, for the sake of consistency.
SENATOR TAYLOR clarified that the passage of a law, in direct
conflict with a civil rule, creates a constitutional confrontation
between the legislative and judicial branches. If the separation
of powers question needs to be resolved, it can only be resolved by
a constitutional confrontation.
SENATOR MILLER commented civil rules are based on law, therefore if
those laws are changed, the Supreme Court should be changing the
civil rules to reflect new laws. SENATOR TAYLOR noted that if the
legislature chooses to change the statute, it is inviting a
constitutional challenge.
Number 515
MS. WILLIAMS reviewed Section 10, regarding collateral benefits.
She felt the section needs to be rewritten to be understandable and
gave the following example to illustrate the mechanism created in
Section 10. Under current law, if a person fell while in Green
Grocers, his health insurance company would reimburse him 80
percent of his $10,000 medical expenses. He then sues Green
Grocers, and is awarded over $10,000. His health insurance company
would be repaid its 80 percent. Under this bill, the jury would be
told the health insurance company paid the victim $8,000. The jury
could only award the victim $2,000 to pay the balance of medical
expenses. The health insurance company would be precluded from
being reimbursed, the victim would receive an amount to cover the
20 percent portion of medical expenses only, and Green Grocers will
not have paid anything for the injury. Many health insurance
companies operate with contracts that allow them to be reimbursed
for expenses from jury awards, therefore constitutional problems
would occur if existing contracts are impaired. Also, the fact
that the victim has insurance will be admissible before the jury;
the fact that Green Grocers has insurance will not be admissible,
which may raise due process or equal protection issues regarding
admissible evidence.
MS. WILLIAMS informed committee members Section 13 contains a civil
rule which will conflict with the statute.
MS. WILLIAMS last comment was on Section 17, the medical expert
witness qualification provision. This provision only governs when
a medical practitioner is sued for malpractice, and limits who
could testify in such a proceeding. The criteria set out in
Section 13 is too restrictive for any witness to meet. Some
subspecialists do not have boards of certification, so that if a
general practitioner, for example, was sued, only a board-certified
general practitioner could testify in the case. There are no board
certifications for general practitioners therefore no one could
meet both requirements. More importantly, if a nurse were sued,
the person testifying against that nurse would have to be a board-
certified nurse, certified by a board approved by the state medical
board. There are not many board certifications in the field of
nursing. This requirement covers many specialty fields without
board certifications for example audiologists, acupuncturists,
dentistry, etc. This section also raises the question of whether
a person educated in one school of training for physicians could
testify against a person schooled in the other (O.D.s and M.D.s).
SENATOR GREEN asked if Ms. Williams was referring to different
specialties or different degree types. MS. WILLIAMS clarified she
is referring to degree types.
TAPE 96-7, SIDE B
Number 000
SENATOR ELLIS asked Ms. Williams if she could comment on the
Jackson v. Powers case in relation to his amendment requiring
hospitals to ensure subcontractors carry liability coverage. MS.
WILLIAMS was not sure whether the amendment would totally shift
liability, but she did not see any problem with the amendment.
Number 571
JEFF BUSH, Deputy Commissioner of the Department of Commerce and
Economic Development, stated he would be following the policy
aspect of the legislation for the Administration. At present the
Administration has taken a neutral position. He offered his
assistance to the committee regarding specific questions.
SENATOR TAYLOR stated his intent is to discuss the amendments today
and take action on them, if the committee desires. The process will
be similar at the next hearing, amendments will be distributed so
that people have time to address them, and the bill will be marked
up.
SENATOR ADAMS asked MR. BUSH if the Administration has any
amendments or recommendations to bring before the committee at this
time. MR. BUSH replied not other than what Ms. Williams' testimony
reflected. The Administration does feel the legal questions and
ambiguities need to be minimized as a starting point.
SENATOR TAYLOR commented his intention is to invite any interested
party to submit proposed amendments to the committee before the
next meeting for review and discussion.
Number 547
GRANT CALLOW, a Uniform Law Commissioner, stated the proposed
amendments are good, but do not fix what is fundamentally wrong
with the bill in terms of what it does for certain special
interests, the effect it has on the denial of rights of children,
and how it penalizes those who buy health insurance. People who
buy health insurance will be penalized because their health
insurers will not be able to get fair compensation from the injured
party. He agreed with Ms. Williams' testimony. He believes
Senator Adams' amendment, mandating a rate rollback, to be one of
common sense. Because the bill creates so much relief for the
insurance industry, the people of Alaska should get something in
return. The amendment would require the insurance industry to have
a track record on rate rollbacks, before the bill would take
effect. Regarding Ms. Williams' testimony about minors, he shared
her concern about equal protection and due process. The bill, as
drafted, makes a distinction between incompetence and children, and
children, by their very nature, are considered unable to make their
own decisions. In a circumstance where parents might not be aware
of causes of action, or are incapacitated, it is conceivable that
a child might bring a cause against the parents for not bringing a
cause of action on the child's behalf.
MR. CALLOW discussed the statute of repose. The theory behind that
statute is that design problems should be obvious within eight
years of construction. He questioned how many homeowners would
know whether there is a structural problem when it is hidden from
view, or how to consider snow loads when assessing whether a design
was negligent. The statutes of repose that have been in place for
long periods of time start the clock from the time a person finds
out about a faulty design or should have known there was a problem.
It is more fundamentally fair to provide a time limit for bringing
a suit from the time of discovery. He reiterated the fact that he
does not support the bill, and although he supports the amendments,
they do not fix the bill.
PAM LABOLLE, President of the Alaska State Chamber of Commerce,
testified in support of CSHB 158 (FIN)am, a top priority of the
State Chamber of Commerce. In a recent survey of 500 randomly
selected Alaska voters, 78 percent believed tort reform would
benefit small businesses the most, and negatively affect people
filing frivolous lawsuits and personal injury trial lawyers.
Fourteen survey questions were directed toward court rule changes,
nine changes are addressed in the bill. The majority of responses
were in favor of the nine changes in the bill. The other five were
also favored, one of which was Senator Taylor's amendment requiring
arbitration under certain conditions (supported by 73 percent).
Businesses are suffering under the current system because of the
cost of insurance as well as the cost of legal defense. The State
Chamber is in the process of collecting data on cases settled out
of court. She discussed a small business bankruptcy case occurring
in Senator Taylor's district.
Number 396
SENATOR TAYLOR disagreed with Ms. LaBolle's assessment of the
bankruptcy case, and felt the question of why bars are uninsured
for third party liability needs to be addressed. He discussed the
cost of such insurance and how several frivolous lawsuits were
effectively handled by the court system. He asked that the
committee be provided with evidence of a case filed in which civil
damages were being sought for an injury occurring while the
plaintiff was in the process of committing a felony. He did not
believe such cases were being filed in Alaska.
MS. LABOLLE felt the perception of the business community is that
the high cost of liability insurance is the result of businesses
having to defend themselves in frivolous lawsuits. They believe
people are encouraged to sue for anything and everything and that
the costs are driven by the system.
Number 311
SENATOR ADAMS asked if the survey contained a question that
directly asked whether full compensation should be prevented from
being awarded for an injury. MS. LABOLLE replied that any poll can
be considered slanted, if one does not agree. The State Chamber
hired a nationally respected company to conduct the poll because it
conducted polls on tort reform in other states. The company
recommended certain questions be excluded because they would bias
the survey.
SENATOR ADAMS repeated his question as to whether respondents were
directly asked whether they would support a bill that would reduce
full compensation for an injury. MS. LABOLLE questioned why the
State Chamber would suggest that should be in the bill. SENATOR
ADAMS replied the bill limits compensation for injuries. MS.
LABOLLE stated she did not agree with that assessment.
Number 275
SENATOR TAYLOR asked MS. LABOLLE to provide committee members with
a letter and resolution from the State Chamber of Commerce passed
last year. He stated that he does not question the validity of the
poll referred to by Ms. LaBolle, however it is the function of the
Judiciary Committee to review technicalities. He noted his concern
with polls, in general, on a subject as complex as tort reform, is
that they can be used by lawmakers to decide whether to change a
person's rights. They can also reflect mob hysteria at a given
time. He stated he believes he could draft a poll that would
elicit opposite responses to the one cited by Ms. LaBolle.
MS. LABOLLE responded that in regard to the problem of mob
hysteria, the first question on the poll asked respondents their
opinion of the overall business climate in Alaska. Most
respondents felt the climate to be good. The second question asked
whether they believe there to be problems in the legal system and
asked what the problems are. The primary concern was that too much
money is being rewarded, the second concern was that new laws are
necessary, and the third concern was that it is too easy to file
lawsuits. Most respondents had not been exposed to recent
information that would influence their responses.
Number 209
SENATOR TAYLOR requested Ms. LaBolle to ask the State Chamber's
members to provide the Committee with examples of the outrageous
settlements alluded to in its resolution, when they are repolled.
He stated if, in fact, outrageous settlements are occurring, he
would like specific information about those cases, especially by
district, because the committee should be reviewing how and why
those settlements are justified. With only rhetoric to go on, and
without such information, the committee has little basis with which
to make changes to the tort reform system.
SENATOR TAYLOR commented the provision in the bill on non-economic
damages would allow for an Exxon-Valdez bailout in the Cordova
District Fishermen's Union case. He did not believe that provision
was the intent of the bill's supporters yet he has not found a way
to prevent that from occurring while maintaining some of the
original intent of the bill. To date he has not found a way to
draft a provision that is not violative of constitutional
provisions.
MS. LABOLLE responded the Exxon-Valdez fishing issue was under the
control of federal law, therefore the bill would not impact such a
case. SENATOR TAYLOR explained there were state lawsuits filed at
the same time by Alaskan citizens. The Cordova Fishermen's Union
raised the question of the elimination of non-economic damages
contained in this bill. Attorneys on both sides of that suit agree
that this bill would eliminate that compensation.
Number 112
MS. LABOLLE assured committee members she would provide them with
a list of examples of outrageous settlements. SENATOR ELLIS also
requested Ms. LaBolle to poll her membership about support for the
rate rollback provision. He believes most businesses are assuming
rates will decrease if tort reform occurs.
DR. DAVID JOHNSON, representing the Alaska Medical Association,
gave the following testimony. He believes the purposes set forth
in CSHB 158 (FIN)am are incongruent with the provisions contained
within the bill. Two insurance carriers that cover the bulk of
physician policies in Alaska are not-for-profit, physician-owned,
mutual companies based in California (MIAC and NORCAL). Both
companies use the same actuarial staff. The rates paid by
California physicians are approximately one-half the rates paid by
Alaska physicians. The lower California rate is the result of the
Medical Insurance Reform Act of 1973 (MICRA). That legislation was
passed in response to a crisis in California. The heart of that
legislation is a limitation to non-economic damages. The problem
with jury awards is the intersection of the litigation system and
the insurance system. Insurance is a shared risk. Where the scope
of a loss is not known, any insurance company is statutorily
required to maintain reserves to cover an eventuality. If an
insurance company has ten judgments in one year, nine for $100,000
and one for $10 million, the prudent director will have to set
rates accordingly. To require that insurance rates decrease
starting at or before day one is unrealistic given the court
system, because the MICRA legislation started making a difference
in California about ten years after passage, only after MICRA had
been appealed through the court system and the appeal was finally
denied by the U.S. Supreme Court. At that point in time, rates
were affected.
DR. JOHNSON stated in regard to the arbitrariness of the dollar
amounts determined for pain and suffering, that arbitrariness is
part of living in an orderly society, and is the price we pay for
having insurance available. On the question of the limitation of
the rights of minors, he believed those who care for children have
a lot more confidence in parents, school personnel, and neighbors.
Regarding the statute of repose for childbirth injuries, those
injuries are detected before age eight.
DR. JOHNSON discussed the complexity of emergency room issues.
Physicians who work in emergency rooms, and hospitals that maintain
emergency rooms, are mandated to provide services. The potential
for litigation in that setting is enormous. Emergency room charges
must account for patients who do not pay, and for programs that pay
less than the full bill. The present tort system requires every
patient in Alaska to be an involuntary participant in a lottery
which adds costs. He repeated his concern that if arguments with
the purposes stated in the legislation exist, they must be
reviewed. He applauded the committee's effort to look at the
specifics of the legislation and the unintended consequences. The
environment for practicing medicine in Alaska has a reputation for
being an unfriendly place in respect to professional liability.
The Alaska Medical Association is looking for legislation that will
accomplish the purposes, help people be more responsible, and
compensate individuals.
Number 120
SENATOR MILLER asked Dr. Johnson's view of Senator Ellis'
amendment, regarding hospital liability, and asked the average
amount of liability coverage carried by a doctor. DR. JOHNSON
responded some specialists practicing high risk specialties, such
as neurosurgery, may carry a limit of $5 million. He did not think
most doctors in smaller communities carry policies that large.
SENATOR TAYLOR stated everyone wishes to address the Jackson v.
Powers situation. He asked if hospitals are going to be granted
immunity, is it reasonable to require them to carry some level of
minimum coverage for the negligent acts of subcontracting
physicians. DR. JOHNSON replied that is a public policy question.
SENATOR TAYLOR asked whether Dr. Johnson believed there should be
an amount, and if so, how much. DR. JOHNSON replied if the
legislature were to require individual physicians to be insured
with rates as high as they are, the majority of those providing
obstetric services without insurance would leave the state.
SENATOR TAYLOR asked why they would leave when the hospital, or
someone else, is picking up the tab for them now. DR. JOHNSON
stated it would affect a physician without a hospital practice.
SENATOR TAYLOR replied that physician would not have a Jackson v.
Powers problem. The physician would not be practicing at a
hospital therefore would not be jeopardizing a hospital. He
explained this amendment would allow a hospital to claim immunity
under Jackson v. Powers if it showed a policy in force in that
amount on file, from the physician. DR. JOHNSON reiterated that is
a public policy question which is currently being answered
throughout the state in different ways by different hospitals.
Some hospitals do require professional liability insurance of their
physicians, some do not. SENATOR TAYLOR repeated the question of
whether $5 million is too high of an amount to require. DR.
JOHNSON replied $5 million would be substantially higher than most
hospitals outside of Anchorage carry.
Number 165
SENATOR TAYLOR commented that at present, hospitals may require a
physician to have a policy, yet the hospital is still liable,
therefore two policies are in effect. One may be subrogated to
another, but they both share the responsibility. This bill would
remove responsibility from the hospital and place the
responsibility entirely on the doctor. He explained that is why it
is difficult to determine a fair amount of coverage. DR. JOHNSON
suggested that given the peculiar nature of emergency rooms, which
are mandated to provide care, the workers compensation program
could provide a public policy analogy, since employers are mandated
to provide workers compensation coverage at a certain level.
Because emergency rooms are mandated to provide care by a public
policy decision, it would be logical to make a public policy
decision to restrict their liability for providing that care.
SENATOR TAYLOR stated the amendment creates a policy which totally
eliminates the hospital from liability for any acts, whether it be
emergency room care or not. It also removes responsibility from
the hospital for who it hires.
Number 250
DR. JOHNSON commented when requirements other than competence are
added, such as liability insurance, that action will force some
physicians to leave the state. SENATOR TAYLOR agreed that in
general, hospitals seem to favor the amendment, but are concerned
about losing physicians. The legislature does not want to set the
amount of liability insurance so high as to drive independent
physicians out of the state, so that only hospital-employed
physicians can remain.
Number 285
SENATOR ELLIS requested committee staff to survey doctors to find
out what amount is reasonable. SENATOR TAYLOR suggested working
through the Alaska Medical Association to poll its members as to
the type and level of coverage they carry, as well as hospitals.
DR. JOHNSON felt it would be hard to get a number from physicians,
except in an aggregate sense. Reviewing rate structures will
reveal what is available. He added the premium for a $5 million
liability policy would exceed his annual salary substantially.
SENATOR TAYLOR asked if premiums have changed dramatically in the
last year. DR. JOHNSON replied they have remained fairly stable
for the past four years. SENATOR TAYLOR stated it was his
understanding from testimony by the insurance commissioner that
medical malpractice premiums had decreased by 25 percent in the
previous five years. DR. JOHNSON noted the problem lies in that
there are 15 or 20 different bands of premiums. The premiums for
the same amount of coverage for a neurosurgeon and a doctor who
practices outpatient general psychiatry are enormously different.
Therefore a small change in a large premium will make the aggregate
number change, but in terms of individual lines of insurance, they
have not decreased by 25 percent across the board.
Number 320
SENATOR ELLIS asked Dr. Johnson if he believes that most emergency
room patients do not differentiate between subcontractors and staff
physicians. He stated most people expect a hospital to have
reasonable coverage. DR. JOHNSON stated that it has only been in
the last few years that there have been hospital-employed
physicians in Ketchikan. Until six years ago, hospital-based
physicians, such as anesthesiologists and radiologists, existed;
all other physicians were in private practice, and the general
public was aware of that. The distinction is beginning to blur.
SENATOR ELLIS stated if a person was taken to an emergency room due
to an accident, the distinction would be very confusing. The state
licenses these facilities, the doctors have privileges there,
therefore it is completely reasonable public policy to expect that
everyone associated with the hospital in providing patient care
carry a reasonable amount of liability insurance. DR. JOHNSON
stated the other side of that argument is that emergency room
medicine is defensive medicine of necessity. Everything imaginable
must be documented which drives costs much higher. To cut costs,
a public policy call could be made granting emergency rooms
absolute immunity since they are mandated to provide care. The
level of care would remain the same, the amount of unnecessary
defensive medical practices would drop substantially.
Number 377
SENATOR ELLIS stated he would need to be convinced the standard of
care would remain the same. He asked if it would not be
advantageous to a for-profit hospital corporation to bring in less
competent doctors. DR. JOHNSON replied the opposite is true. The
more services a hospital can order in an emergency room, the more
money it makes. SENATOR ELLIS asked if Dr. Johnson was arguing
that his amendment was unreasonable. DR. JOHNSON replied that if
the legislature is looking at ways to provide care efficiently as
a public policy matter, given that there is a requirement to
provide the care, absolute immunity might be in order because of
the mandate. SENATOR ELLIS asked if physicians resent the fact
that they are mandated to deliver care to people who cannot pay.
DR. JOHNSON answered the mandate is federal, and doctors do not
resent that mandate. The problem lies in the fact that about two-
thirds of emergency room bills are paid, therefore rates must be
higher to compensate for the one-third who cannot pay.
Number 395
SENATOR ELLIS asked Dr. Johnson to clarify his statement about the
legislative purposes stated in the legislation. DR. JOHNSON stated
he believes if the legislature agrees with the purpose statements,
then it needs to look to ways to accomplish those purposes. The
title of the bill has been changed considerably, so that to
whatever extent it is getting away from the original purposes, it
is important that it be brought back to those purposes. SENATOR
ELLIS stated there are other higher public purposes. DR. JOHNSON
suggested the place to start with revisions in the bill is with
changing the purposes.
SENATOR TAYLOR thanked Dr. Johnson for his testimony and asked him
to provide information regarding the amounts of liability policies
carried by medical professionals in the state to the committee. He
adjourned the meeting at 3:35 p.m.
| Document Name | Date/Time | Subjects |
|---|