Legislature(2005 - 2006)BUTROVICH 205

03/17/2005 08:30 AM JUDICIARY


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09:05:31 AM Start
09:05:31 AM SB67
10:33:41 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 67 CLAIMS AGAINST HEALTH CARE PROVIDERS
Heard & Held
= SJR 10 SUPPORT FEDERAL MARRIAGE AMENDMENT
Scheduled But Not Heard
           SB 67-CLAIMS AGAINST HEALTH CARE PROVIDERS                                                                       
9:05:31 AM                                                                                                                    
CHAIR SEEKINS announced SB 67 as the first item of business                                                                     
before the committee. He introduced a committee substitute (CS),                                                                
which removes legislative findings.                                                                                             
                                                                                                                                
SENATOR GENE THERRIAULT joined the committee.                                                                                   
                                                                                                                                
SENATOR  THERRIAULT  moved  to  use Version  \G  as  the  working                                                               
document. Hearing no objections the motion carried.                                                                             
                                                                                                                                
9:07:50 AM                                                                                                                    
CHAIR  SEEKINS  reiterated  that  the  CS  removes  the  findings                                                               
section and shortens SB 67 to two pages.                                                                                        
                                                                                                                                
9:08:26 AM                                                                                                                    
MR.  MIKE  HOGAN,  executive   director,  Alaska  Physicians  and                                                               
Surgeons, testified  in support of  SB 67. He said  public access                                                               
to doctors  in Alaska  is predicated  on doctors  getting medical                                                               
malpractice insurance. Alaska  is now down to  only two carriers.                                                               
Insurers see Alaska  as an unfriendly environment in  which to do                                                               
business.  If the  state loses  another carrier,  present doctors                                                               
would have to retire, move, or cut out high-risk procedures.                                                                    
                                                                                                                                
9:10:24 AM                                                                                                                    
DR.  HOGAN said  society and  the Legislature  have to  recognize                                                               
what is  fair. In the  auto insurance industry there  are $50,000                                                               
minimum requirements  for coverage. In the  workers' compensation                                                               
system the most  a disabled worker can claim is  $800 a month. It                                                               
is  arguable  whether those  two  examples  are  fair, but  as  a                                                               
society we  have determined that  is what  we can afford.  As for                                                               
medical malpractice insurance,  $250,000 is a lot  of money since                                                               
lost wages and  punitive damages would still be  covered. The two                                                               
insurance carriers in  Alaska are California based.  They will do                                                               
constant evaluations  for risk  factors. It  is critical  to keep                                                               
them and attract new carriers.                                                                                                  
                                                                                                                                
9:12:40 AM                                                                                                                    
SENATOR FRENCH asked DR. HOGAN  whether the Alaska Physicians and                                                               
Surgeons have done  an analysis on what role fraud  might play in                                                               
the high price of insurance.                                                                                                    
                                                                                                                                
DR. HOGAN replied it has not.  Premiums are based on the doctors'                                                               
claims history. The ability to commit fraud is limited.                                                                         
                                                                                                                                
SENATOR FRENCH mentioned a news  report last week from California                                                               
about  a  group  of  physicians that  were  defrauding  insurance                                                               
companies.                                                                                                                      
                                                                                                                                
DR.   HOGAN  clarified   that  medical   insurance  and   medical                                                               
malpractice  insurance constitute  separate  claims. Fraud  would                                                               
not compute similarly.                                                                                                          
                                                                                                                                
CHAIR  SEEKINS  noted  medical malpractice  claims  are  normally                                                               
adjudicated.                                                                                                                    
                                                                                                                                
9:15:47 AM                                                                                                                    
CHAIR SEEKINS  added if  any fraud occurred  it would  be between                                                               
the parties settling the claim.                                                                                                 
                                                                                                                                
SENATOR GUESS joined the committee.                                                                                             
                                                                                                                                
SENATOR  FRENCH voiced  his concern  about lowering  the cap.  He                                                               
stated Alaska would  be taking away from the people  who are hurt                                                               
the most.                                                                                                                       
                                                                                                                                
DR. HOGAN  presented the flip side  and asked whether it  is fair                                                               
to all Alaskans to risk the healthcare system.                                                                                  
                                                                                                                                
9:18:57 AM                                                                                                                    
DR. HOGAN  further stated  there are  limits beyond  which people                                                               
can afford  to do business  and Alaska doctors have  reached that                                                               
limit.                                                                                                                          
                                                                                                                                
SENATOR HUGGINS  asked Dr.  Hogan to explain  how much  money the                                                               
representing attorney gets from the settlement.                                                                                 
                                                                                                                                
DR.  HOGAN informed  him the  injured  person generally  receives                                                               
less than fifty  percent. The rest of the settlement  is eaten up                                                               
by the system.                                                                                                                  
                                                                                                                                
9:20:36 AM                                                                                                                    
SENATOR GUESS  stated that  during previous  testimony, committee                                                               
members have heard that a  review panel process exists in statute                                                               
that occurs  prior to access  to the  court system. She  said the                                                               
solution  presented  seems to  pit  fairness  to victims  against                                                               
access  to  health  care  instead  of  trying  to  figure  out  a                                                               
different way to  do business. She asked Mr. Hogan  to comment on                                                               
the review  panel and why  it isn't used  prior to court,  or why                                                               
mediation isn't used often.                                                                                                     
                                                                                                                                
DR. HOGAN said  if a plaintiff does not get  the verdict it wants                                                               
of the  review panel, it ignores  that opinion and goes  to court                                                               
anyway. It  turns into another  expense insurance  companies have                                                               
to go through.                                                                                                                  
                                                                                                                                
9:22:40 AM                                                                                                                    
SENATOR GUESS noted for the  record that attorneys have testified                                                               
to the contrary. Previous testimony  suggests other solutions are                                                               
out there and the truth  is, the solution probably lies somewhere                                                               
in the middle.                                                                                                                  
                                                                                                                                
DR. HOGAN  said they  have talked  about systemic  changes beyond                                                               
the  scope of  the bill.  SB  67 is  critical and  will stop  the                                                               
bleeding. To  heal the whole  problem would require  big changes,                                                               
which  takes time.  If  SB 67  passes it  will  be challenged  in                                                               
court. The appeals  process takes between 3-6  years. During this                                                               
time  uncertainty will  remain for  the insurance  carriers. They                                                               
will  have  to decide  whether  to  continue  to do  business  in                                                               
Alaska. A long-term fix will require a great deal of study.                                                                     
                                                                                                                                
9:24:50 AM                                                                                                                    
SENATOR GUESS  asked Dr. Hogan  to present some ideas  in written                                                               
form.  She  asked whether  he  has  heard about  other  insurance                                                               
companies entering the market and driving down rates.                                                                           
                                                                                                                                
DR. HOGAN  responded the issue  is not  about rates. It  is about                                                               
access of insurance.                                                                                                            
                                                                                                                                
9:25:45 AM                                                                                                                    
SENATOR  THERRIAULT  said  he wanted  clarification  on  how  the                                                               
arbitration language works.                                                                                                     
                                                                                                                                
CHAIR SEEKINS  commented any contract could  have arbitration. It                                                               
is common in large ticket items.                                                                                                
                                                                                                                                
9:28:03 AM                                                                                                                    
CHAIR SEEKINS commented  that 22 other states have a  cap on non-                                                               
economic damages.                                                                                                               
                                                                                                                                
9:28:46 AM                                                                                                                    
MR. PAT  LUBY, advocacy director,  AARP, testified  the committee                                                               
should  realize  that  mistakes happen.  The  AARP  believes  the                                                               
Legislature  should  focus  on   preventing  mistakes  and  error                                                               
reduction,  not   on  damages.  The  current   system  encourages                                                               
providers  to cover  up mistakes  to avoid  lawsuits rather  than                                                               
report  errors.  He said  citizens  who  are  hurt by  a  medical                                                               
mistake  are  entitled to  fair  compensation.  Errors should  be                                                               
reported so  that others  can learn from  the mistakes.  The AARP                                                               
believes  $250,000  is  too low  for  non-economic  damages.  The                                                               
Institute of  Medicine has proposed  to the court  system testing                                                               
non-judicial no fault alternatives  for medical errors. If Alaska                                                               
would  adopt one  of the  IOM recommendations,  it would  provide                                                               
compensation and error reduction, which should be the real goal.                                                                
                                                                                                                                
9:30:47 AM                                                                                                                    
MR. LUBY added that providers  would be required to report errors                                                               
and make  prompt compensation payments. This  method would result                                                               
in fewer errors and overall costs would decline.                                                                                
                                                                                                                                
9:31:25 AM                                                                                                                    
CHAIR SEEKINS stated  SB 67 does not suggest  covering up medical                                                               
errors.                                                                                                                         
                                                                                                                                
9:31:41 AM                                                                                                                    
MS. DONNA  MCCREADY, member, Alaska  Action Trust,  addressed Mr.                                                               
Hogan's testimony regarding access to  medical care in Alaska and                                                               
said SB 67  denies Alaskans access to justice.  Economists do not                                                               
put a large amount of value on children and the aged.                                                                           
                                                                                                                                
9:33:54 AM                                                                                                                    
MS. MCCREADY stated  she is uncertain as to what  the problem is.                                                               
The number  of medical malpractice  cases and  payouts throughout                                                               
the  state has  been  steady.  Mr. Hogan  testified  there is  an                                                               
infinitesimal amount of  claims. She wondered why  Alaska has not                                                               
gone  back  to  the  Medical Indemnity  Corporation  Act  (MICA).                                                               
Alaska has always  had a dominant carrier. She  pointed out there                                                               
has been no testimony from the insurance companies.                                                                             
                                                                                                                                
9:36:04 AM                                                                                                                    
MS.  MCCREADY  said,  typically,  medical  malpractice  attorneys                                                               
charge up  to 33 percent  of recovery  plus costs because  of the                                                               
risks. Verdicts are generally in favor of the physicians.                                                                       
                                                                                                                                
9:37:57 AM                                                                                                                    
SENATOR  FRENCH  commented  22   percent  of  California  medical                                                               
malpractice trials resulted in favor  of the plaintiffs. He asked                                                               
Ms. McCready whether it is the same in Alaska.                                                                                  
                                                                                                                                
MS. MCCREADY  responded that a  smaller percentage comes  out for                                                               
the plaintiffs.  It is very risky  for a patient to  take a claim                                                               
to trial.                                                                                                                       
                                                                                                                                
9:39:30 AM                                                                                                                    
CHAIR  SEEKINS   asked  Ms.  McCready   the  number   of  medical                                                               
malpractice cases she has tried.                                                                                                
                                                                                                                                
MS. MCCREADY responded one.                                                                                                     
                                                                                                                                
CHAIR  SEEKINS   asked  Ms.  McCready   the  number   of  medical                                                               
malpractice claimants she has represented.                                                                                      
                                                                                                                                
MS.  MCCREADY responded  less than  100. She  added she  receives                                                               
many  calls  about  medical  malpractice   claims  and  takes  on                                                               
approximately  2  percent.  Even  if  a case  has  merit,  it  is                                                               
sometimes impossible to prove.                                                                                                  
                                                                                                                                
9:40:47 AM                                                                                                                    
MS. MCCREADY said she investigates 25  to 50 percent of the cases                                                               
she  takes on  and then  would dismiss  those she  has determined                                                               
cannot be won.                                                                                                                  
                                                                                                                                
9:42:51 AM                                                                                                                    
MS.  MCCREADY  advised the  committee  they  could reference  the                                                               
State Medical  Board to find  information on physicians  who have                                                               
performed surgeries recklessly.                                                                                                 
                                                                                                                                
9:44:56 AM                                                                                                                    
MR. MICHAEL SCHNEIDER stated in  the history of Alaska there have                                                               
been  only  15  verdicts  for plaintiffs  in  medical  negligence                                                               
cases. It is not a huge problem  in Alaska. He said SB 67 and the                                                               
goals of the  Legislature are a poor fit.  The insurance industry                                                               
accounts  for 10  percent  of the  gross  domestic product.  That                                                               
industry would be the sole benefactor of SB 67.                                                                                 
                                                                                                                                
9:47:40 AM                                                                                                                    
MR. SCHNEIDER  added that  SB 67  would give  away the  rights of                                                               
Alaska citizens to ask a jury  for a fair settlement. SB 67 would                                                               
give the farm  away to an unregulated industry.  The fix proposal                                                               
of forming an insurance pool is proven.                                                                                         
                                                                                                                                
9:49:53 AM                                                                                                                    
MR. SCHNEIDER added none of  the statistics support the ethics of                                                               
capped legislation. He claimed if  SB 67 passes, physicians would                                                               
face  the same  crisis  in  the future  because  it's a  cyclical                                                               
phenomenon  driven by  fluctuations in  the insurance  industry's                                                               
return on reserve income. It has  nothing to do with premiums and                                                               
claims.                                                                                                                         
                                                                                                                                
9:51:54 AM                                                                                                                    
SENATOR HUGGINS  asked Mr.  Schneider the  name of  the insurance                                                               
pool formed by the attorneys.                                                                                                   
                                                                                                                                
MR. SCHNEIDER answered the  Attorney Liability Protection Society                                                               
(ALPS).                                                                                                                         
                                                                                                                                
SENATOR HUGGINS questioned how many  suits were filed against him                                                               
in the last two years.                                                                                                          
                                                                                                                                
MR. SCHNEIDER responded  none and said, in fact, he  has had none                                                               
over the last 29 years and nine months.                                                                                         
                                                                                                                                
SENATOR  HUGGINS  suggested Mr.  Schneider  presented  a case  of                                                               
apples and  oranges. He said a  number of doctors have  had suits                                                               
brought against  them yet Mr.  Schneider should not  be concerned                                                               
about being sued.                                                                                                               
                                                                                                                                
MR.  SCHNEIDER respectfully  disagreed and  said Senator  Huggins                                                               
might completely  misunderstand the  playing field.  He explained                                                               
that  a  plaintiff's  attorney  must evaluate  a  case  from  the                                                               
standpoint of  what a jury  will think. He stated,  "Attorneys, I                                                               
am  sad to  report,  are up  there  with car  salesmen  and -  no                                                               
offense  -  politicians and  you  guys  have  all read  the  same                                                               
studies I have."                                                                                                                
                                                                                                                                
CHAIR SEEKINS  jested, "Mr. Schneider, this  is Chairman Seekins.                                                               
I am both a car salesman and a politician..."                                                                                   
                                                                                                                                
9:54:16 AM                                                                                                                    
MR.  SCHNEIDER  stated  attorney malpractice  claims  are  easier                                                               
cases than medical malpractice claims.                                                                                          
                                                                                                                                
9:55:19 AM                                                                                                                    
CHAIR SEEKINS  stated for the  record he  has looked at  the MICA                                                               
program and  has spoken with  Senator Robin Taylor at  length. He                                                               
has looked  at the structure  of both insurance  companies, which                                                               
are  both basically  insurance  pools. The  MICA  system has  not                                                               
escaped the view of the Legislature.                                                                                            
                                                                                                                                
9:57:59 AM                                                                                                                    
CHAIR SEEKINS  asked Mr.  Schneider to  explain the  problem with                                                               
capping.                                                                                                                        
                                                                                                                                
MR.  SCHNEIDER said  it denies  the most  seriously and  unfairly                                                               
injured  persons their  constitutional right  to have  a jury  of                                                               
their peers  review their claims. Denying  that essential freedom                                                               
would bring the state nothing in return.                                                                                        
                                                                                                                                
9:59:58 AM                                                                                                                    
CHAIR SEEKINS asked  Mr. Schneider what falls  under the category                                                               
entitled "costs."                                                                                                               
                                                                                                                                
MR. SCHNEIDER  informed the committee  that expert  testimony for                                                               
both parties is  required to debate the case.  Costs include fees                                                               
for the expert witnesses, copies  of documents, airplane tickets,                                                               
court recorders and  more. He said the amount  can be significant                                                               
and  noted  that  his  out-of-pocket   cost  for  one-half  of  a                                                               
deposition in one case cost $45,000.                                                                                            
                                                                                                                                
MR. SCHNEIDER explained  that if he has to retain  an expert that                                                               
would be  a cost. Document  copies are costs. Airplane  travel to                                                               
talk to a witness would be a cost.                                                                                              
                                                                                                                                
10:01:41 AM                                                                                                                   
CHAIR SEEKINS  asked whether costs include  everything other than                                                               
the direct legal expense.                                                                                                       
                                                                                                                                
MR. SCHNEIDER said the fee is for  the value of the time spent by                                                               
his staff, an expert, and his own time.                                                                                         
                                                                                                                                
10:02:33 AM                                                                                                                   
CHAIR  SEEKINS asked,  if Mr.  Schneider charged  $200 per  hour,                                                               
what that pays for.                                                                                                             
                                                                                                                                
MR.  SCHNEIDER said  on the  defense side,  people who  represent                                                               
doctors  that  are  sued charge  for  everybody.  Support  staff,                                                               
attorneys,  and  out-of-pocket expenses  are  billed  out of  the                                                               
rate. On  the plaintiff's side,  the client can't afford  to help                                                               
with many  of those costs  so the plaintiff's attorney  gets paid                                                               
for his time  and his overhead by the percentage  fee. His direct                                                               
litigation  costs associated  with  that file  are an  additional                                                               
cost. If he charges one-third  of the gross recovery, that covers                                                               
his fee, the cost of  his paralegal assistant, his secretary, and                                                               
his  overhead  cost.  If  he  has a  specific  expense,  such  as                                                               
obtaining an  expert witness that  would be an  additional amount                                                               
of  money taken  out  of his  client's gross  recovery  if he  is                                                               
successful.                                                                                                                     
                                                                                                                                
10:04:21 AM                                                                                                                   
CHAIR SEEKINS  said Mr. Schneider  mentioned a  $75,000 recovery,                                                               
and asked how much he took.                                                                                                     
                                                                                                                                
MR. SCHNEIDER said that was  an interesting case that illustrates                                                               
the problem.  The person he  represented was terminally  ill with                                                               
Alzheimer's  disease.   She suffered  severe burns  by an  act of                                                               
abject medical stupidity. He took  the case because the case made                                                               
him very angry.  He tried to settle the case  for $75,000 but the                                                               
other party would not settle. He  took the case to court and won.                                                               
His out-of-pocket  costs amounted  to $25,000.  In order  to give                                                               
the  family half  of  that,  he reduced  his  fee.  He said  that                                                               
illustrates  the problem  in  which one  can  see injustices  but                                                               
economically cannot make them fly.                                                                                              
                                                                                                                                
10:05:54 AM                                                                                                                   
MR.  MIKE  POWERS,  administrator, Fairbanks  Memorial  Hospital,                                                               
told members this  is an extremely difficult  issue. He cautioned                                                               
members that  it is  important to remember  this matter  does not                                                               
pertain to  gross negligence, incompetence, or  poor performance,                                                               
whose  victims surely  must be  compensated fairly.  He indicated                                                               
that  studies in  states with  a $250,000  cap show  the need  to                                                               
explore this  issue as well  as other systemic issues.  Voters in                                                               
Texas recently  enacted a $250,000  cap, which has resulted  in a                                                               
17% decrease  in rates. The  general sense is that  access issues                                                               
are  close  to  being  addressed  as  well.  In  California,  the                                                               
$250,000 cap has resulted in the  highest reported rate for an OB                                                               
GYN  being $89,953.  In Illinois  where the  state supreme  court                                                               
recently struck down caps, the highest rate was $230,000.                                                                       
                                                                                                                                
10:08:11 AM                                                                                                                   
MR.  POWERS noted  that physicians  in Nebraska  pay some  of the                                                               
lowest premiums in  the country. That state  credits tort reform,                                                               
which was enacted in the 1970s.                                                                                                 
                                                                                                                                
SENATOR  FRENCH  asked Mr.  Powers  if  Nebraska has  the  lowest                                                               
premiums in the nation.                                                                                                         
                                                                                                                                
MR.POWERS said that is correct.                                                                                                 
                                                                                                                                
SENATOR FRENCH asked whether Nebraska has caps.                                                                                 
                                                                                                                                
MR.POWERS said Nebraska does have caps.                                                                                         
                                                                                                                                
SENATOR  FRENCH noted  that the  January  2005 chart  distributed                                                               
earlier does not list Nebraska.                                                                                                 
                                                                                                                                
MR. POWERS  said that could  be correct  but he added  that other                                                               
tort reforms dating back to the 1970s have been important.                                                                      
                                                                                                                                
10:09:34 AM                                                                                                                   
MR.  POWERS said  in addition,  Pennsylvania,  with its  $250,000                                                               
cap, has  reduced losses and  defense costs  by 18%. He  said the                                                               
issue of  caps around the  country is very important  to creating                                                               
additional access  for physicians that is  conducive to practice.                                                               
Fairbanks  currently  has a  shortage  of  ten internal  medicine                                                               
physicians, four  psychiatrists, three OBGYNs,  two cardiologists                                                               
and two  ophthalmologists. Fairbanks is undergoing  an aggressive                                                               
recruiting  campaign but  it  has no  active  leads for  internal                                                               
medicine  physicians. He  pointed  out that  the Illinois  Senate                                                               
Judiciary Committee took  this same issue up two  weeks ago. That                                                               
committee's  objective was  to compute  the reduction  of medical                                                               
malpractice in loss expenses that  would result from capping non-                                                               
economic  damages.  Its   consultants  evaluated  reductions  for                                                               
physicians in hospitals.  They found that with  the $250,000 cap,                                                               
a reduction  in losses of 24  percent in New York,  17 percent in                                                               
Florida, 15 percent  in Wyoming, and 11  percent in Pennsylvania.                                                               
He offered to pass that study on to members.                                                                                    
                                                                                                                                
10:12:19 AM                                                                                                                   
MR. POWERS said regarding Senator  Guess's question about whether                                                               
this  is an  issue of  fairness  against creating  access, he  is                                                               
having a hard  time trying to get positions on  that question. He                                                               
asked members  to carefully consider  the study and  the $250,000                                                               
as an important part of a systemic fix.                                                                                         
                                                                                                                                
SENATOR GUESS said Mr. Hogan said  earlier that this is not about                                                               
rates but  about access, yet  a lot  of the statistics  have been                                                               
about rates going down rather  than access. She asked him whether                                                               
the recruitment problem is about rates and/or access.                                                                           
                                                                                                                                
MR. POWERS said it is  both. He noted Fairbanks Memorial Hospital                                                               
recruits  potential applicants  who are  concerned about  medical                                                               
malpractice  insurance. There  is  no single  solution. If  rates                                                               
dropped by 50 percent, there would not be a flood of applicants.                                                                
                                                                                                                                
10:14:26 AM                                                                                                                   
SENATOR GUESS  asked Mr. Powers  if he has had  any conversations                                                               
with  insurance  companies that  say  they  will do  business  in                                                               
Alaska  if it  caps damages.  She said  her concern  is that  the                                                               
Alaska market is just too small.                                                                                                
                                                                                                                                
MR. POWERS said he has not talked with them.                                                                                    
                                                                                                                                
SENATOR  THERRIAULT said  with regard  to attracting  doctors, he                                                               
asked what is happening as far  as the number of applicants going                                                               
through medical schools in the nation.                                                                                          
                                                                                                                                
10:15:45 AM                                                                                                                   
MR. POWERS said the number is  holding steady, but the concern is                                                               
that  lifestyle is  very important  to  younger physicians.  They                                                               
want a  work environment that  is conducive to  raising families.                                                               
He noted  that making  Alaska attractive to  those who  might not                                                               
first think of Alaska is very important in recruitment efforts.                                                                 
                                                                                                                                
SENATOR  THERRIAULT  said  in regard  to  rates,  information  in                                                               
members' packets speaks  to insurance rates during  the 1980s and                                                               
1990s.   Premiums  actually  went down  because  Alaska was  very                                                               
competitive.  New  entrants  to   the  market  were  pricing  the                                                               
insurance product below what was  reasonable. There was some talk                                                               
of a  shakeout in  the market  and that  rates would  become more                                                               
realistic.  He  asked what  kind  of  history Fairbanks  Memorial                                                               
Hospital has  with regard  to premiums paid  by the  hospital and                                                               
its doctors.                                                                                                                    
                                                                                                                                
10:17:51 AM                                                                                                                   
MR. POWERS said  the Fairbanks numbers indicate  a tremendous run                                                               
up in the late 1980s and  early 1990s, but the rates flattened in                                                               
the  mid-1990s   because  Fairbanks  was  self-insured   and  had                                                               
reserves.  During the  last 5  years,  malpractice insurance  has                                                               
increased about 276 percent.                                                                                                    
                                                                                                                                
SENATOR  FRENCH  asked about  the  effect  of inflation  and  its                                                               
upward  pressure on  costs. He  referred  to the  Rand study  and                                                               
asked him  to speak  to the effect  of inflation  on California's                                                               
$250,000 cap in the 1970s and  whether patients should be able to                                                               
index their claims for inflation.                                                                                               
                                                                                                                                
10:19:54 AM                                                                                                                   
MR. POWERS thought  allowing patients to do  so seems reasonable.                                                               
Michigan has  indexed premiums to inflation  and its non-economic                                                               
cap is now  over $350,000. The Michigan State  Medical Society is                                                               
very  concerned about  it  so  it is  looking  at expert  witness                                                               
standards and other  mechanisms. He said that to  create access a                                                               
reasonable cap level is necessary.  He also believes some type of                                                               
index is important.                                                                                                             
                                                                                                                                
CHAIR SEEKINS asked how long he has been with the hospital.                                                                     
                                                                                                                                
MR. POWERS replied 19 yrs in July.                                                                                              
                                                                                                                                
CHAIR  SEEKINS  asked   if  he  has  been   involved  in  medical                                                               
malpractice lawsuits.                                                                                                           
                                                                                                                                
MR.POWERS said yes.                                                                                                             
                                                                                                                                
CHAIR SEEKINS asked how many.                                                                                                   
                                                                                                                                
10:21:25 AM                                                                                                                   
MR. POWERS  said about  5-10 legal issues  arise each  year. More                                                               
recently, many of those cases  would be characterized as nuisance                                                               
cases.                                                                                                                          
                                                                                                                                
CHAIR SEEKINS asked how many of those have gone to court.                                                                       
                                                                                                                                
MR. POWERS said about 25%.                                                                                                      
                                                                                                                                
CHAIR SEEKINS asked  if the hospital usually tries  to settle the                                                               
cases out of court.                                                                                                             
                                                                                                                                
MR. POWERS said his opinion over  the last five years has been to                                                               
not settle because  the hospital has to draw a  line in the sand.                                                               
Somebody has to  say no and take a tougher  stand so the hospital                                                               
has absorbed some additional costs.                                                                                             
                                                                                                                                
CHAIR SEEKINS asked  if the ones the hospital takes  to court are                                                               
the ones that have no merit.                                                                                                    
                                                                                                                                
MR. POWERS said  that is correct. If a case  does have merit, the                                                               
hospital attempts to work with the individual.                                                                                  
                                                                                                                                
10:23:17 AM                                                                                                                   
SENATOR FRENCH asked  whether the cases go to  court because they                                                               
have no  merit or because the  hospital just can't come  to terms                                                               
to settle.                                                                                                                      
                                                                                                                                
MR. POWERS  said the answer  is not  black and white.  Some cases                                                               
have  absolutely no  merit. In  the past  year, the  hospital has                                                               
spent $35,000  defending something  with absolutely no  merit and                                                               
the decision was made in 15  minutes. He said the recent increase                                                               
in the level of nuisance lawsuits has been very noticeable.                                                                     
                                                                                                                                
SENATOR  FRENCH asked  his experience  with the  Fairbanks juries                                                               
and whether they typically shell out money against the hospital.                                                                
                                                                                                                                
MR.POWERS said the Fairbanks juries tend to be tough.                                                                           
                                                                                                                                
10:24:33 AM                                                                                                                   
SENATOR GUESS asked Mr. Powers  his opinion of the current review                                                               
panel and whether it works.                                                                                                     
                                                                                                                                
MR.POWERS said he did not have an opinion.                                                                                      
                                                                                                                                
CHAIR SEEKINS  said he noticed  a member  of the review  panel is                                                               
paid a maximum fee of up to $150  per day. He asked if any doctor                                                               
could be hired for $150 per day.                                                                                                
                                                                                                                                
MR. POWERS  said every hospital  in the state is  concerned about                                                               
what they are  doing to pay physicians for  sharing medical staff                                                               
departments, for  taking emergency  room calls and  other things.                                                               
The burden on  physicians is incredible. He  said many physicians                                                               
are  advising  their children  against  moving  into the  medical                                                               
field because  of the onerous regulatory  environment. Physicians                                                               
must be  in their practices taking  care of patients in  order to                                                               
earn a reasonable living.                                                                                                       
                                                                                                                                
10:26:09 AM                                                                                                                   
CHAIR  SEEKINS said  one wouldn't  find  a lot  of volunteers  to                                                               
review medical malpractice cases.                                                                                               
                                                                                                                                
MR.POWERS  said  it   would  be  very  difficult   to  find  such                                                               
volunteers.                                                                                                                     
                                                                                                                                
10:26:34 AM                                                                                                                   
MS. KATHY DALE, Anchorage, testified  in opposition to SB 67. She                                                               
was testifying on behalf of  her husband and other family members                                                               
who are victims  of medical malpractice. She said SB  67 will not                                                               
harm   her  family   but  it   will  harm   future  victims   and                                                               
constituents. She  said the only  reason she found out  about her                                                               
husband's permanent  brain damage and  the cause was  because she                                                               
was  found an  attorney  to take  her case.  She  found out  what                                                               
happened  to her  husband by  listening to  expert witnesses  and                                                               
testimony.  She cautioned  that  lowering the  cap would  protect                                                               
negligent  doctors.   SB  67  will   not  help   bring  qualified                                                               
physicians  into  the  state  and   it  will  not  lower  medical                                                               
malpractice premiums.  She reminded  members that  Alaska already                                                               
has a cap  of $400,000 on non-economic damages.  Lowering the cap                                                               
will prevent  lower income people  from being able to  file suit.                                                               
It  will  keep  Medicaid,  Medicare,  and  PERS  from  recovering                                                               
medical costs because suits will  never be brought. She said that                                                               
people  have  already told  members  how  much the  $250,000  cap                                                               
established in 1976  is worth in current dollars.  She noted that                                                               
although the  premiums have gone  down in California that  is due                                                               
to the voters and Proposition 103.                                                                                              
                                                                                                                                
10:29:43 AM                                                                                                                   
SENATOR THERRIAULT  asked CHAIR SEEKINS if  the existing $450,000                                                               
cap is  an absolute cap  or if the  amount could be  higher under                                                               
certain circumstances.                                                                                                          
                                                                                                                                
CHAIR SEEKINS said  the cap can be  up to 1 million  for a severe                                                               
injury, which was loosely defined  in a recent Supreme Court case                                                               
as something  that would  cause embarrassment.  He said  that is,                                                               
therefore, a soft cap. This would establish a hard cap.                                                                         
                                                                                                                                
SENATOR FRENCH asked for the citation of that decision.                                                                         
                                                                                                                                
CHAIR SEEKINS did not have it with  him but said the case was not                                                               
a medical malpractice  case but a tort case in  Western Alaska. A                                                               
woman slipped in a shower in  a community center. She is now bow-                                                               
legged in  one leg and reverse  bow-legged in the other  leg. The                                                               
court decided the word "severe" is  not defined in statute so the                                                               
court   loosely  defined   it  as   anything  that   would  cause                                                               
embarrassment.                                                                                                                  
                                                                                                                                
10:32:04 AM                                                                                                                   
CHAIR  SEEKINS apologized  for  the late  start  of the  meeting,                                                               
which prevented those wishing to  testify from doing so. He would                                                               
have staff contact those people about the next meeting.                                                                         
                                                                                                                                
SENATOR THERRIAULT  asked Chair  Seekins to distribute  copies of                                                               
the case  he cited for members  and for the study  about research                                                               
done in different states.                                                                                                       
                                                                                                                                
CHAIR   SEEKINS   said   he  would   investigate   getting   that                                                               
information.                                                                                                                    
                                                                                                                                
SB 67 was held in committee.                                                                                                    

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