Legislature(1993 - 1994)

01/27/1994 01:45 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SENATOR KELLY introduced SB 254 (CIVIL LIABILITY) and invited the             
 sponsor, SENATOR DRUE PEARCE, to review the bill.                             
 SENATOR PEARCE explained there was a companion bill, HB 292, going            
 through the committee process, also.                                          
 SENATOR PEARCE reviewed her Sponsor Statement by quoting, "This               
 bill embodies a generally accepted fact that a person who has been            
 injured or suffered damages as a result of negligence on the part             
 of another has the right to be made whole.  The bill ensures the              
 victims maintain the right to compensation; however, in today's               
 court system, we sometimes perceive the system as being capricious            
 and arbitrary.  Occasionally, victims receive less compensation or            
 the negligent are required to reimburse more than common sense                
 dictates.  This bill attempts to assure that those situations                 
 become unusual."                                                              
 SENATOR PEARCE listed the suggested changes to the Alaska Civil               
  (1) "Legal actions involving personal injury, death, or                      
 property damage must be brought within six years ......... The six            
 year limitations would not apply if the injury, death, or property            
 damage was caused by an intentional act or if there was an                    
 intentional concealment of the facts.                                         
  (2) Limits the time within a person can bring an action for                  
 professional negligence against a health care provider to two                 
 years, unless that person is less than six years old on the date of           
 injury, in which case the person has until their eighth birthday.             
  (3) Limits the time within which a person can bring an action                
 for personal injury, death, or property damage to two years after             
 the date the claimant could reasonably believe they had a claim.              
  (4) Extends the definition for non-economic loss to include                  
 claims for wrongful death.  Non-economic loss is further defined to           
 include the loss of consortium.                                               
  (5) Prevents someone from filing multiple claims over the                    
 same incident to claim multiple awards over a single incident.                
  (6) Defines the standard a plaintiff must show to establish                  
 "clear and convincing evidence" when trying to secure punitive                
 Number 051                                                                    
 SENATOR PEARCE continued:                                                     
  (7) "Defines damages to be three times the amount of                         
 compensatory damages awarded or $200 thousand, whichever is                   
  (8) Prohibits a person from recovering damages if the person                 
 suffers the damages while committing a felony.                                
  (9) Subtracts from the award the amount of state and federal                 
 taxes that would have been owed if the person had suffered no                 
 damage.  The victim is restored his or her original state, not                
 overcompensated. ......                                                       
  (10) Allows either party in the suit to require future damages               
 to be paid by periodic payment instead of a lump sum.  Attorney               
 contingency would be reduced to present value and paid in a lump              
 sum.  Periodic payments would include increases for anticipated               
  (11) In the bill juries are made aware of any other awards and               
 collateral payments made to plaintiffs.  The damages awarded have             
 collateral payments deducted. .....                                           
  (12) Provides for the reduction of the claim against other                   
 parties when one person in a multiparty suit settles. ......                  
  (13) Provides financial motivations for pretrial settlements.                
  (14) Ties the interest rate charged on judgements and decrees                
 to 3% above the federal discount rate.                                        
  (15) Stipulates that an award for economic loss is limited to                
 $10,000 when the deceased is not survived by a spouse, children, or           
 other dependents.                                                             
  (16) Prohibits the award of attorney fees in a civil action                  
 for personal injury, death, or property damage.                               
 and (17) Limits the civil liability of a hospital for an act or               
 omission of a health care provider who is not an employee of the              
 hospital when the claim is only based on the actions of the health            
 care provider and the hospital publishes which health care                    
 providers are independent contractors."                                       
 SENATOR PEARCE noted the attached list of organizations that to               
 date are supporting the tort reform measure before the legislature            
 this year.  She suggested other organizations would join the list             
 as information is spread about the bill.                                      
 SENATOR PEARCE explained the technical work on the bill would be              
 done by others.                                                               
 SENATOR KELLY introduced ROGER HOLMES, the lead attorney in support           
 of the bill, testifying on teleconference from Anchorage, and the             
 lead attorney in opposition, ERIC SANDERS, who will be testifying             
 from Juneau.                                                                  
 MR. HOMES said, unless there were technical questions about the               
 bill, he would prefer to be a resource person and let others from             
 the organization, Alaskans for Liability Reform, testify.                     
 Number 102                                                                    
 Next, SENATOR KELLY called on AL TAMAGUI, to testify in Anchorage.            
 MR. TAMAGUI testified in support of SB 254, praised the research,             
 and noted the number of organizations working with the committee on           
 the bill.  He asked that the bill be moved from committee.                    
 ERIC SANDERS, an attorney from Anchorage testifying in Juneau,                
 reminded SENATOR PEARCE of her involvement in civil justice and               
 civil rights, and her activity in the legislation that was passed             
 in 1986.  He recalled a meeting at the end of the session of that             
 year when there was a conference committee on the tort reform bill            
 in which she called all of the players together for a commitment              
 that everyone was satisfied with the compromise that had been                 
 MR. SANDERS had a clear recollection that not only the people that            
 were appearing on behalf of the potential victims of the state, but           
 also the Citizens Coalition for Tort Reform made a commitment to              
 SENATOR PEARCE that they were satisfied with the compromise.  In              
 view of that, MR. SANDERS expressed surprise at the language in the           
 introductory part of her presentation that the legislation of 1986            
 fell short of accomplishing the goals of the legislature.  He said            
 the problems of 1986 still exist in 1993.                                     
 MR. SANDERS returned the committee to what was happening in 1986.             
 There was an alleged crisis, a position taken by the Citizens                 
 Coalition for Tort Reform that required immediate attention by the            
 legislature because insurance rates were sky-rocketing, businesses            
 were closing, and people couldn't get insurance or do business in             
 the state.  MR. SANDERS described the solution sought by the group            
 was to limit victim's rights.  He said there was no crisis at the             
 time, but legislation was passed irregardless.                                
 Number 157                                                                    
 MR. SANDERS said he doesn't hear anyone claiming any sort of                  
 insurance crisis, and he declared it was a bill to inhibit, limit,            
 restrict, and get rid of more victim's rights.  He wondered what              
 would be lost in exchange for giving up their rights and suggested            
 the citizens in Alaska would be giving up their civil rights.                 
 MR. SANDERS quoted MR. TAMAGUI as saying it is a fair bill, and he            
 asked, "Fair to whom."  The wrong doer or the victim?  MR. SANDERS            
 agreed it was fair to the wrong doer, but he preferred to discuss             
 what was in the best interests of the citizens of the State and the           
 MR. SANDERS quoted the introduction to the bill, given by SENATOR             
 PEARCE, that the goals and purpose of SB 254 was to create a more             
 equitable distribution of the cost and risk of injury, reduce costs           
 associated with civil justice, while assuring adequate compensation           
 for injured people.  He strongly disagreed with her introduction to           
 the bill, and he proposed to go through the bill to describe the              
 destruction of the rights of citizens to be compensated fairly for            
 their injuries as the result of negligence.                                   
 Number 200                                                                    
 MR. SANDERS denied there was anything in SB 254 that created rights           
 for victims or enables them to recover easier than now.  He labeled           
 it anti-victim legislation and directed attention to Section 23 on            
 page 11.  He said Section 23 was the $10 thousand cap on pecuniary            
 loss or death, and he claimed it was unique for Alaska to put the             
 price of $10 thousand on one of its citizens, possibly a child.  He           
 discussed the possible justification for this section saying it               
 sends the wrong message.                                                      
 MR. SANDERS said the present law allows people to recover their               
 future economic earnings minus their consumption, and he didn't               
 agree that people end up with some type of outrageous windfall.               
 MR. SANDERS next directed attention to Section 2, actions that must           
 be brought in six years, and he gave the example of someone injured           
 in a crash of a plane.  The plane was over six years old, and no              
 one in Alaska could recover damages.  He said if the six year old             
 plane crashed in the State of Washington, the victims could recover           
 damages.  He claimed Alaska would be protecting the manufacturer of           
 a defective product, such as cars manufactured before the 6 years.            
 Number 258                                                                    
 MR. SANDERS gave the example of women who had taken DES in the                
 1950's and 60's to prevent miscarriages, but it turned out to cause           
 cancer in their daughters.  Under SB 254, he said these claims                
 would not be viable, since the defect in the product was not                  
 apparent until after six years.                                               
 MR. SANDERS then noted Sections 12 and 13 deals with mandatory                
 periodic payments, and he said these provisions had been discussed            
 in 1986.  He said the change made in the bill would preclude an               
 injured party from making the decision to receive payments in the             
 future; it would now be at the discretion of the defendants.  He              
 touched on the lump sum payment, medical costs, and lost income and           
 explained how these would be controlled by the person who caused              
 the injury.                                                                   
 Number 313                                                                    
 MR. SANDERS projected problems with a tort feasor, who stops                  
 payments before the plaintiff is paid, and he gave the example of             
 the State's litigation with Executive Life Insurance Company, the             
 major broker of structured settlements in 1986.  He explained he              
 had placed clients in Executive Life Insurance Company who are not            
 now being compensated as expected under the contract.  He claimed             
 the bill would make the victim take the risk the company is going             
 to be there when the payments are to be made in the future.                   
 MR. SANDERS explained there was a twist which says there shall be             
 increases for anticipated inflation, and he suggested this could              
 spawn a multitude of hearings on inflation rates after the verdict.           
 He listed a series of possible disputes in deciding these rates,              
 and he claimed it would cause havoc in the court system.                      
 Number 374                                                                    
 MR. SANDERS outlined problems about the tax consequences of                   
 structured settlements and suggested the legislation be checked               
 from a tax standpoint.                                                        
 MR. SANDERS drew attention to Section 14, collateral benefits, and            
 suggested this section would work adversely to a victim, to assure            
 the victim is not justly compensated.  As an example, he explained            
 under current law, workers compensation benefits, and third party             
 claims, and how the legislation would benefit the wrong doer at the           
 expense of the innocent party, who would not be compensated fully.            
 Number 399                                                                    
 Next, MR. SANDERS turned to Section 15, which would allow fault               
 apportioned to any person, whether or not that party could be named           
 as a party to the action.  He reviewed joint and several liability            
 which was modified by the 1986 Legislature, again changed in 1988,            
 and proposed for a fourth change in SB 254, which he explained                
 would be unfair to the victims.                                               
 MR. SANDERS said there were situations where the State is going to            
 be immune, and gave road design as an example.  He described                  
 phantom defendants which lead to inequities in how claims are                 
 MR. SANDERS concluded by stressing the legislation is ill-conceived           
 and recommended a careful look at the anti-constituent provisions.            
 SENATOR RIEGER referred to the argument on structured settlements             
 and suggested it was all ready in law, and he read the bill as an             
 additional protection for the plaintiff rather than the defendant.            
 He also spoke in favor of the process of anticipated inflation and            
 thought there might be some standardized language that addresses              
 inflation, such as indexes.  He questioned MR. SANDERS on some                
 aspects of existing law concerning judgements.                                
 MR. SANDERS addressed his second point on structured settlements,             
 and he quoted the federal law as being tax free if the victim                 
 doesn't take constructive receipt of the settlement money.  He                
 described, in an example, the implication of various settlements in           
 relation to taxes.  He explained the language on structured                   
 settlements is very complicated, so there are seminars given on how           
 to draft a structured settlement agreement to avoid any tax                   
 consequences on the settlement.                                               
 SENATOR RIEGER and MR. SANDERS continued to discuss the intricacies           
 of structured settlements, taxes, constructive receipts, and the              
 IRS.  MR. SANDERS repeated his charge the legislation would enable            
 the defendant to decide on the payment rather than the victim.  He            
 voiced his opposition to allowing the defendant to define the terms           
 under which the victim is paid.                                               
 Number 499                                                                    
 SENATOR LINCOLN asked MR. SANDERS for a summary of his opposition             
 to the legislation, and he provided a written summary to the                  
 committee members.  He explained the summary was somewhat out of              
 date because the legislation had changed since the summary was                
 introduced.  SENATOR KELLY said the summary would be included in              
 the bill packets.                                                             
 MR. SANDERS didn't see anything in the legislation for victims and            
 asked for provisions he might have missed.                                    
 SENATOR LINCOLN questioned the six year limitation on legal action,           
 and SENATOR KELLY said he would ask an attorney testifying in                 
 support of the bill in Anchorage, ROGER HOLMES.                               
 MR. SANDERS agreed to meet with SENATOR LINCOLN at her convenience            
 to explain his side of the legislation.                                       
 SENATOR KELLY then went to Sitka, to hear from DR. D.R. LEHMAN, who           
 was testifying, not only as a doctor, but as President-Elect of the           
 Alaska State Medical Association.                                             
 DR. LEHMAN introduced himself as being in practice since 1976 and             
 strongly urged support for the passage of SB 254.  He declared the            
 present tort system is neither fair nor just and has become little            
 more than a lottery to wring thousands or millions of dollars with            
 an injury.                                                                    
 DR. LEHMAN explained he was board certified and has never been                
 sued, but his malpractice premiums are approximately $30 thousand             
 per year, which he said was considerably higher than if he was a              
 plastic surgeon in Anchorage.  He stated his premiums were high,              
 primarily because of the malpractice risk associated with                     
 delivering babies.  He explained he could be sued over one of the             
 babies until the child reaches the age of majority, plus three                
 years, and he gave what he called a bizarre example.                          
 DR. LEHMAN blamed the current court system for the problems, and he           
 listed the hospitals throughout the state that have closed because            
 of the cost of malpractice insurance.  He said doctors have quit              
 practicing in Alaska because of the unavailability of affordable              
 malpractice insurance.  He described the additional tests and                 
 procedures prescribed by doctors to "cover their ass," out of fear            
 of litigation.                                                                
 DR. LEHMAN said tort reform had worked in other states, and he                
 urged speedy passage of SB 254.                                               
 Number 519                                                                    
 Next, SENATOR KELLY invited BONNIE NELSON to testify OFFNET from              
 Chugiak, and he asked the remainder of those testifying to limit              
 their testimony to three minutes.                                             
 MS. NELSON explained she has been involved in health reform for               
 fourteen years, and she complained there should be health coverage            
 for all people before there is tort reform.  She thought there                
 should be data collected how much the doctors make to determine the           
 cost effectiveness of tort reform.   She explained she was offended           
 when people claim there is not a health crisis.                               
 Number 552                                                                    
 SENATOR KELLY said health care reform was a separate issue, and he            
 predicted the legislature would do something on health care reform            
 this session.                                                                 
 SENATOR KELLY returned to Anchorage to call on STEPHANIE GALBRAITH            
 to testify.                                                                   
 STEPHANIE GALBRAITH-MOORE identified herself with the Municipality            
 of Anchorage Law Department and deferred to HARRY SJOBERG, who is             
 in charge of Risk Management for Anchorage.                                   
 MR. SJOBERG explained he has been involved in risk management since           
 1962 and in Anchorage since 1967.  He expressed general support for           
 SB 254 but suggested there were items that needed to researched.              
 He referred to Section 7 and praised the cap on non-economic awards           
 as an important item for the city.  In Section 10, MR. SJOBERG said           
 they supported the new language as protection for the police.                 
 MR. SJOBERG noted in Section 15, the city was supportive of the               
 clarification of fault, and he reviewed some of points in the tort            
 reforms of 1986 and 1988 which helped to reduce the claims of the             
 old deep pocket system .......                                                
 TAPE 93-4, SIDE B                                                             
 Number 001                                                                    
 MR. SJOBERG credits SB 254 with reducing legal fees, lawsuits from            
 public entities, but he would like to see punitive relief for                 
 public entity employees.                                                      
 MR. SJOBERG spoke in rebuttal to MR. SANDERS saying the rules, as             
 far as insurance, have really changed.  He explained many people              
 join insurance pools now and have large self-insured deductibles,             
 but he thought without tort reform, there could be a crisis again.            
 He reiterated the support from the Municipality of Anchorage for              
 tort reform, and he gave his reasons why he thought plaintiffs                
 lawyers, like MR. SANDERS, liked the present system.                          
 STEPHEN CONN, from Anchorage, testified as the Executive Director             
 of the Alaska Public Interest Research Group, (AKPIRG) representing           
 about 4,000 consumers.  MR. CONN said he is a retired professor of            
 justice at the University of Alaska, has taught legal history, and            
 is familiar with the history of torts over the years.                         
 MR. CONN explained he had sought the advice of a number of other              
 people, who have had direct experience with both the medical and              
 legal process - both positive and negative - in order to direct the           
 action of AKPIRG.  He discussed both health care reform and tort              
 reform and agreed with BONNIE NELSON, that it appears there is an             
 effort to coerce tort reform as a precondition to health care                 
 reform.  MR. CONN said this information had been in the newspapers            
 and articles from medical practitioners, who were blunt about the             
 MR. CONN said there is a crisis of uninsured Alaskans, who are in             
 desperate need of medical care, and he suggested a realignment of             
 priorities.  He claimed the legislation for tort reform was based             
 on a crisis that does not exist and is premised on values to the              
 civil law system, that has yet to be determined.                              
 MR. CONN referred to Paragraph 6 of Section 1 which, he said,                 
 suggests a study by the attorney general that was used in previous            
 tort reform legislation, and he claimed tort reform did not need to           
 be fixed, since it wasn't broken.                                             
 Number 050                                                                    
 MR. CONN accused the legislation as being skewed in a very specific           
 way against justice in the civil offenses not only to the victims,            
 but in the case of punitive damages. He said they were the only way           
 to police the market place against defective products and other               
 malicious acts by large corporations, which can well afford to pay            
 minuscule judgements.  He accused the drafters of SB 254 of                   
 representing special interests who believe this is a legislature              
 that is prepared to buy-in to their special pleading.                         
 MR. CONN said that AKPIRG is vigorously opposed to SB 254, and                
 believes it to be the most narrow piece of legislation that has               
 "come down the pike in Alaska."  He said AKPIRG plans to work                 
 strongly to encourage public participation of persons other than              
 those who stand to benefit.                                                   
 MARK WILKERSON, an attorney in Anchorage, explained he practiced              
 primarily defense law, as well as plaintiff's work and was probably           
 speaking against his own self interest by supporting SB 254.  He              
 described the crisis of insurance companies not being able to make            
 periodic payments and going out of business.                                  
 MR. WILKERSON referred to Section 12, saying the section does not             
 deal with structured settlements that occur before a judgement, so            
 it doesn't deal with cash receipts, cash repayment, but deals with            
 the judgement.  He explained some of the ramifications of the lump            
 sum in relation to taxes and suggested it was fair to the victims.            
 MR. WILKERSON referred to Section 18, which he thought spoke to the           
 lawyers who try to get results for people on both sides of the                
 issue.  He thought the section created a level playing field, and             
 he explained how it helps both sides of the lawsuit by forcing                
 Number 133                                                                    
 SENATOR KELLY questioned, in a case where an offer is made from an            
 attorney to an attorney, is it incumbent upon an attorney to inform           
 his client of the offer.  MR. WILKERSON explained how that lawyer             
 could get in trouble both ethically and legally if the client was             
 not informed of the offer.                                                    
 SENATOR LINCOLN relayed a concern from constituents in Bush Alaska            
 concerning Section 2 on page 3 to MR. WILKERSON about the six year            
 limitation on legal claims, and whether the small aircraft flown in           
 the Bush, which are usually older than six years, preclude claims             
 in the event of a crash.                                                      
 Number 167                                                                    
 MR. HOLMES explained SB 254, as written, would preclude a suit                
 against the aircraft manufacturer if the plane was more than six              
 years old; however, the operator, or maintenance personal, could be           
 sued.  He also explained that manufacturers of those old aircraft             
 are no longer in the business because of their product liability              
 clause, and the planes are no longer for sale.                                
 Additionally, SENATOR LINCOLN expressed concern for buildings in              
 the Bush, where it can take a number of years to complete the                 
 building, and she asked about the liability.  MR. HOLMES said, in             
 that case, the six years would begin with the date of the                     
 certificate of occupancy.                                                     
 SENATOR LINCOLN relayed another question in reference to page 6,              
 lines 10 and 11, to consider substituting convicted of instead of           
 attempting to commit on line 11.                                            
 MR. HOLMES said the substitution would push it back to the present            
 wording, and the new wording was precipitated by an incident in               
 Barrow, in which someone had a gun, the police came to the scene,             
 the police were fired upon, the police returned the fire, and the             
 assailant was killed.  The Municipality of Bethel attempted to                
 invoke this statute for immunity, but immunity was denied because             
 the assailant was killed before he could be convicted, so this                
 change was patterned after an Arizona provision that would provide            
 immunity to the municipality.                                                 
 SENATOR LINCOLN thought this erred on the other side as well and              
 said there should be some middle ground.                                      
 Number 215                                                                    
 SENATOR KELLY announced there would be about six more minutes of              
 testimony on this legislation before a recess, and he called on               
 BREWSTER JAMIESON, an attorney in Anchorage.                                  
 MR. JAMIESON said he practiced primarily defense law and is in                
 favor of the bill, but not because it might be in his self                    
 interest.  He pointed to Sections 19 and 20 as being important.  He           
 began a  discussion of prejudgment interest in Section 20, and he             
 gave an example of its importance in changing current law on future           
 non-economic damages.                                                         
 MR. JAMIESON answered a previous question as to what was in it for            
 the victims, saying it was just and fair compensation for injuries            
 that are caused by the wrong doing of others.  He said it would not           
 burden someone beyond their degree of fault and would take the                
 lottery out of the present system.                                            
 Number 271                                                                    
 In Juneau, SENATOR KELLY called on SHARON MACKLIN, representing the           
 Alaska Professional Design Council, a coalition of architects,                
 engineers, and land surveyors from across the State.                          
 MS. MACKLIN referred to Section 2, that certain actions must be               
 brought in six years, to discuss some of the statements from                  
 earlier testimony from MR. SANDERS, about an architect moving from            
 California to design a roof of a school which, after six years,               
 caved in because the snow loads were not factored into the                    
 MS. MACKLIN explained an architect from California could move to              
 Alaska to design a structure only after they have passed the Alaska           
 licensing law and registered in Alaska.  Within the law, there is             
 a requirement that they take an arctic engineering course to become           
 aware of things like snow loads and other Alaskan problems.                   
 MS. MACKLIN explained it would be a structural engineer who would             
 be required to comply with the codes on a State and local level in            
 designing a roof in the arctic.  She gave an extensive description            
 of the process and the liability.                                             
 Number 304                                                                    
 SENATOR KELLY closed the meeting for a five minute break.                     
 SENATOR KELLY returned SB 254 (CIVIL LIABILITY) to committee and              
 asked for a motion to move the bill.                                          
 SENATOR SHARP moved to pass SENATE BILL NO. 254 from committee with           
 individual recommendations.  Without objections, so ordered.                  

Document Name Date/Time Subjects