Legislature(1993 - 1994)

03/10/1994 03:00 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
           HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES                         
                       STANDING COMMITTEE                                      
                         March 10, 1994                                        
                            3:00 p.m.                                          
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Rep. Cynthia Toohey, Co-Chair                                                
  Rep. Con Bunde, Co-Chair                                                     
  Rep. Al Vezey                                                                
  Rep. Pete Kott                                                               
  Rep. Harley Olberg                                                           
  Rep. Irene Nicholia                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Rep. Gary Davis                                                              
  Rep. Bettye Davis                                                            
  Rep. Tom Brice                                                               
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  *HB 492:  "An Act relating to medical malpractice actions;                   
            relating to sanctions against certain health care                  
            providers; amending Alaska Rules of Civil                          
            Procedure 8 and 83; repealing Alaska Rule of Civil                 
            Procedure 72.1 and providing for an effective                      
            date."                                                             
                                                                               
            HEARD AND HELD                                                     
                                                                               
  *HB 493:  "An Act relating to health care providers and                      
            establishing the Medical Insurance Corporation;                    
            and providing for an effective date."                              
                                                                               
            HEARD AND HELD                                                     
                                                                               
  (* First public hearing.)                                                    
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  ARTHUR SNOWDEN, Administrative Director                                      
  Judicial Branch                                                              
  303 K St.                                                                    
  Anchorage, Alaska 99501-2084                                                 
  Phone:  (907) 264-0547                                                       
  Position Statement:  Testified on HB 492 and HB 493                          
                                                                               
  DAN HENSLEY, Lawyer                                                          
  1016 W. 6th Ave., Ste. 420                                                   
  Anchorage, Alaska 99501                                                      
  Phone:  (907) 274-6551                                                       
  Position Statement:  Testified in support of HB 492 and                      
                       HB 493                                                  
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 492                                                                
  SHORT TITLE: CIVIL LIABILITY: MEDICAL MALPRACTICE                            
  SPONSOR(S): HEALTH, EDUCATION AND SOCIAL SERVICES BY REQUEST                 
  JRN-DATE    JRN-PG                     ACTION                                
  02/14/94      2380    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2380    (H)   HES, JUDICIARY, FINANCE                          
  03/10/94              (H)   HES AT 03:00 PM CAPITOL 106                      
                                                                               
  BILL:  HB 493                                                                
  SHORT TITLE: MEDICAL LIABILITY INSURANCE CORPORATION                         
  SPONSOR(S): HEALTH, EDUCATION AND SOCIAL SERVICES BY REQUEST                 
  JRN-DATE    JRN-PG                     ACTION                                
  02/14/94      2380    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2380    (H)   HES, JUDICIARY, FINANCE                          
  03/10/94              (H)   HES AT 03:00 PM CAPITOL 106                      
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 94-43, SIDE A                                                           
  Number 000                                                                   
                                                                               
  CHAIR BUNDE called the meeting to order at 3:13 p.m., noted                  
  members present and announced the calendar.  He brought HB
  492 to the table.                                                            
                                                                               
  HB 492 - CIVIL LIABILITY:  MEDICAL MALPRACTICE                               
                                                                               
  Number 036                                                                   
                                                                               
  ARTHUR SNOWDEN, Administrative Director, Judicial Branch,                    
  testified on HB 492.  He stated that he only wanted to                       
  comment on Section 5, which provides for mandatory                           
  arbitration.  He said the court system has a problem with                    
  the provision for a number of reasons.  He asserted that                     
  there was no provisions for indigents who enter into                         
  arbitration and asked who would pay for them.  He said if                    
  the court system is supposed to pay then it needs to be                      
  specified so an appropriate fiscal note can be attached.  He                 
  then said "...nothing can really happen, if you read this                    
  arbitration section, after the answers filed, until somebody                 
  goes before an arbitrator, which happens to happen within                    
  120 days.  However, these arbitrators are not allowed to                     
  do... are not allowed to the discovery that's going to take                  
  place.  So, I can't see any gain to have a voluntary, I mean                 
  mandatory, yet nonbinding arbitration.  It adds one more                     
  step for the people, one more cost for the people.  I would                  
  much more prefer to have voluntary binding arbitration, so                   
  we don't the case."                                                          
                                                                               
  MR. SNOWDEN felt that as the bill is written the arbitrator                  
  will not have a lot of information because much of the work                  
  will not have been done.  He said he was unsure of how                       
  people can talk settlement if they haven't done all their                    
  discovery work.  He then said, "That arbitrator is going to                  
  be called into court, has to be the first witness, which                     
  means he'll be deemed as a friend of the court, which means,                 
  first of all, an extra witness that has to be called in on                   
  the case.  And, what are the parties going to do?  The                       
  arbitrator is going to say I had to do this hearing in two                   
  days according to this legislation.  I have limited answers                  
  and resources because of the numbers of interrogatories and                  
  so on and so forth.  So, his value or her value is going to                  
  be very very limited because of a lot will have been                         
  extrapolated after that time."                                               
                                                                               
  MR. SNOWDEN then stated that the courts are changing their                   
  discovery rules and there has been a change in federal                       
  procedure.  He said it is the courts' intent to speed up the                 
  trial process.  He said there would be a requirement that                    
  attorneys must turn over depositions and pertinent                           
  information automatically without having to request it from                  
  the court.  He felt that when both sides have all the                        
  material, they can intellectually discuss settlement.  He                    
  asserted that the legislation would add cost and time to the                 
  proceedings and that it would have little benefit to the                     
  overall product.                                                             
                                                                               
  Number 143                                                                   
                                                                               
  REP. VEZEY asked if the bill calls for mandatory arbitration                 
  that can be appealed.                                                        
                                                                               
  MR. SNOWDEN replied yes and it is nonbinding.                                
                                                                               
  REP. VEZEY said that nonbinding arbitration is another step                  
  in the adjudication process.  He questioned if it would be                   
  practical for health care providers to put an arbitration                    
  clause in their health service contract.                                     
                                                                               
  MR. SNOWDEN said that stock and bond companies practice                      
  that.  He saw no reason why a health care provider could not                 
  provide a form that says a person must agree to binding                      
  arbitration.                                                                 
                                                                               
  REP. VEZEY asked if there is a law against that.                             
                                                                               
  MR. SNOWDEN said he was unaware of any.                                      
                                                                               
  Number 212                                                                   
                                                                               
  CHAIR BUNDE asked Mr. Snowden if there should be a fiscal                    
  note from the court system that allows for indigents who                     
  enter arbitration.                                                           
                                                                               
  MR. SNOWDEN responded that a fiscal note would be submitted                  
  if, indeed, financial provisions are drafted for indigents.                  
  He also said, "The problem I see with the note is we don't                   
  breakdown these types of cases.  So, we'd have to look at                    
  torts as a category.  Say a percentage of the torts are                      
  these types of cases and then ascribed another arbitrary                     
  percentage to people who are indigent.  I'm willing to do                    
  that, I don't like putting speculative fiscal notes on                       
  bills."  He said with or without a fiscal note the                           
  legislation still adds to the court process and the time it                  
  takes to have cases decided.  He further stated that the                     
  Supreme Court may put into effect by June 1, 1994, a ruling                  
  that speeds up the process by using new discovery rules.                     
                                                                               
  Number 270                                                                   
                                                                               
  CHAIR BUNDE asked if the bill would be strengthened by the                   
  inclusion of binding arbitration.                                            
                                                                               
  MR. SNOWDEN said he has no problems with binding                             
  arbitration.  He said mandatory binding arbitration cannot                   
  be put in a bill.  Voluntary arbitration can be put in a                     
  bill.  He felt that anyone who goes into voluntary binding                   
  arbitration is going to settle the suit.  He indicated that                  
  he is working with the Better Business Bureau, the Chamber                   
  of Commerce in Anchorage, and small businesses to encourage                  
  them to urge their members to agree to arbitrate disputes                    
  before going into court.                                                     
                                                                               
  Number 304                                                                   
                                                                               
  REP. VEZEY asked if an arbitrator has more discretion than a                 
  court of law.                                                                
                                                                               
  MR. SNOWDEN said yes, within certain confines the arbitrator                 
  can have the discretion agreed to by the parties before                      
  arbitration.  He said for arbitration the rules of evidence                  
  can be relaxed and discussions are a lot more informal.  He                  
  said there is much more flexibility in arbitration than in a                 
  court of law.                                                                
                                                                               
  REP. VEZEY said that he has trouble with nonbinding                          
  arbitration.  For an arbitrator to do a good job, they have                  
  to take into account things which would all be subject to                    
  court appeals because they don't follow the rigid structure                  
  of the courts and they are not bound to the same rules.  He                  
  said, "We would be harnessing the arbitration process with                   
  the same overhead burdens that the court system has.  And,                   
  there would soon cease to be any advantage to arbitration."                  
  He said he would strongly support a provision that would                     
  provide for voluntary arbitration or even a clause that                      
  would allow health care providers to stipulate arbitration                   
  as a settlement vehicle within their contracts.                              
                                                                               
  Number 370                                                                   
                                                                               
  CHAIR BUNDE asked for further testimony from Dan Hensley.                    
  Number 372                                                                   
                                                                               
  DAN HENSLEY, Member, Trial Lawyers, testified in support of                  
  HB 492 and HB 493.  He stated that HB 492 and HB 493 were                    
  introduced as a courtesy to the trial lawyers organization                   
  and thanked the committee for hearing the testimony.  He                     
  gave a brief history of the legislation and indicated that                   
  it might lend perspective to the issue of arbitration.  He                   
  said critics of the liability system focus on access to the                  
  court system, limiting access altogether, or reducing the                    
  amount of compensation an individual can recover.  He said                   
  the legislation could address the problem areas.  He                         
  addressed arbitration and said at times the process is too                   
  expensive and it takes too much time.  He explained that                     
  people with small legitimate claims never get into the                       
  system because it is too costly to prosecute a case.  He                     
  indicated that a study done on the New York malpractice                      
  system by Harvard reports that only one out of every eight                   
  people who are injured by "bad medicine" ever files a claim.                 
  Only half of those who do claim ever recover anything.  He                   
  also said the more cost and expenses to litigation, the less                 
  the injured individual can recover.  He further stated that                  
  Section 5 of HB 492 only applies to cases that values                        
  $200,000 or less.                                                            
                                                                               
  MR. HENSLEY said the reason for the proposal was to provide                  
  some type of forum for those individuals who have small                      
  claims.  He explained that the purpose for the arbitration                   
  was not to supplant the entire liability litigation but to                   
  apply those smaller cases.  He felt that both the federal                    
  and state courts have made great strides in the last 1-1/2                   
  years in changing the rules to speed up the process and to                   
  make it more efficient.                                                      
                                                                               
  Number 575                                                                   
                                                                               
  CHAIR BUNDE asked Mr. Hensley if he had any suggestions                      
  regarding how indigents will be afforded the option of                       
  arbitration.                                                                 
                                                                               
  MR. HENSLEY responded by saying that he felt parties should                  
  have to pay for the arbitration, not the court system.  It                   
  is still cheaper for the person with a small claim to pay                    
  for arbitration than it is to pay for a case from the                        
  beginning to a "full blown jury trial."                                      
                                                                               
  CHAIR BUNDE asked about the indigent that insists on being                   
  able to use the arbitration system.                                          
                                                                               
  MR. HENSLEY said in a civil case the indigent person cannot                  
  insist on anything.                                                          
                                                                               
  CHAIR BUNDE said, "You're not anticipating growth in the                     
  public defender kind of...?"                                                 
                                                                               
  MR. HENSLEY interjected and said there is no law or                          
  precedence that requires that a person who is indigent be                    
  provided with arbitration.                                                   
                                                                               
  Number 607                                                                   
                                                                               
  REP. VEZEY asked if Mr. Hensley believed in nonbinding                       
  arbitration.                                                                 
                                                                               
  MR. HENSLEY said yes.                                                        
                                                                               
  REP. VEZEY asked if Mr. Hensley believed that clients and                    
  providers have a right to enter into a contract that would                   
  call for arbitration for dispute resolution.                                 
                                                                               
  MR. HENSLEY said currently a provider can request but not                    
  demand that a patient enter into voluntary arbitration.                      
                                                                               
  REP. VEZEY indicated that within in a contract it is no                      
  longer voluntary.                                                            
                                                                               
  MR. HENSLEY said there is a provision for voluntary                          
  arbitration.                                                                 
                                                                               
  REP. VEZEY said once the person enters into the voluntary                    
  contract, it's no longer a voluntary procedure.                              
                                                                               
  MR. HENSLEY stated that "conditioning my right or the right                  
  of any citizen to obtain medical care, on that citizen's                     
  giving up his or her right to a jury trial..."                               
                                                                               
  REP. VEZEY asserted that Americans still have a choice as to                 
  which medical provider they would like to see, and said it                   
  is a free market in that regard.  He said that as long as                    
  there is choice, it's a free competition system.                             
                                                                               
  MR. HENSLEY pointed out that the reason there is only one                    
  hospital in Fairbanks is because under the Certificate of                    
  Need Program it specifies that it must be evidenced that                     
  there is a need to have a second hospital before a                           
  competitor would even be allowed in Fairbanks.                               
                                                                               
  REP. VEZEY maintained that a large number of people go to                    
  Seattle and Minneapolis for their health care and that their                 
  travel expenses can be justified because treatment is                        
  considerably less costly.  He further stated that the cost                   
  of arbitration is split evenly among the parties involved.                   
  The arbitrator can mandate that the party that does not                      
  prevail must pay the full cost.  He said the arbitrator is a                 
  contractor.                                                                  
                                                                               
  (Chair Bunde indicated for the record that Rep. Nicholia                     
  arrived at 3:32 p.m.)                                                        
                                                                               
  CHAIR BUNDE asked if Mr. Hensley preferred voluntary and                     
  opposed binding arbitration.                                                 
                                                                               
  MR. HENSLEY said he outright opposes binding arbitration                     
  because it would be difficult to uphold a statute which                      
  conditions people's rights to go to any physician or                         
  hospital and that it would be giving up a person's right to                  
  a jury trial.                                                                
                                                                               
  CHAIR BUNDE asked if there were any questions for Mr.                        
  Hensley pertaining to arbitration.  There were none.  He                     
  then asked Mr. Hensley to continue with his testimony.                       
                                                                               
  Number 712                                                                   
                                                                               
  MR. HENSLEY stated that another criticism of the liability                   
  system relates to defensive medicine that implies that                       
  doctors are looking over their shoulders because they are                    
  afraid they will be sued and subsequently they order more                    
  unnecessary medical tests to protect themselves from                         
  litigation.  He asserted that all the blame should not rest                  
  on the liability system and indicated that there is ample                    
  studies that show that doctors who own their own X-ray                       
  machines order four times more X-rays than physicians who                    
  don't.  He said that is just one of the many reasons that                    
  doctors request unnecessary tests.  He further maintained                    
  that HB 492 and HB 493 would protect doctors from having to                  
  look over their shoulders.  He also said the legislation                     
  provides for mandatory insurance for physicians and                          
  restricts an injured person from recovering anything beyond                  
  that which is available as insurance.                                        
                                                                               
  MR. HENSLEY indicated that the liability system is also                      
  criticized because it currently contains no real deterrent                   
  for filing frivolous lawsuits.  He referred to page 6 of HB
  492 and explained that it is required that a lawyer must                     
  include with their malpractice filing a certificate from a                   
  qualified physician who is practicing in that area and is a                  
  subject of the lawsuit.  He said the provision ensures that                  
  the lawyers do their homework before going to court.                         
                                                                               
  Number 730                                                                   
                                                                               
  MR. HENSLEY cited another significant criticism of the                       
  liability system is that there are some doctors (i.e.,                       
  OB/GYN) that are not practicing or choosing not to do some                   
  high risk procedures because they can't afford the liability                 
  insurance.  He questioned again whether the liability system                 
  is responsible.  He mentioned that a Wall Street Journal                     
  article cited that the United States is graduating more                      
  doctors from medical school than ever before and referred it                 
  as a glut.  He indicated that those graduating are                           
  specialists, not general practitioners that go to rural                      
  communities.   Mr. Hensley stated that traditional tort                      
  reforms do not address the problem and the advocates of                      
  traditional tort reform suggest that those changes in the                    
  law might reduce liability insurance rates, but research                     
  indicates otherwise.  He said a 10% reduction in insurance                   
  rates could not guarantee that there would be another doctor                 
  in Haines, Cordova or Valdez.                                                
                                                                               
  MR. HENSLEY stated that the legislation requires mandatory                   
  insurance for all physicians and is similar to the Medical                   
  Indemnity Corporation of Alaska (MICA) organization which                    
  allows physicians to shop and pool and to have access to                     
  other insurance buying arrangements.  Also, it would provide                 
  insurance at low rates in areas where there is no                            
  availability because of lack of insurance.  He said no other                 
  tort reform addresses these concerns.                                        
                                                                               
  MR. HENSLEY asserted that it was the goal of both proposals                  
  to address the criticisms of the liability system.  He then                  
  suggested that he could give a section by section analysis                   
  of both HB 492 and HB 493 to underline what the provisions                   
  will accomplish.                                                             
                                                                               
  Number 875                                                                   
                                                                               
  CHAIR BUNDE said it was not his intention to move the bills                  
  out of committee as the HESS Co-Chair, Rep. Toohey, who was                  
  instrumental in having the bills drafted, was not yet                        
  present.  He thanked Mr. Hensley for being proactive and                     
  part of the solution.  He asked for a sectional analysis.                    
                                                                               
  MR. HENSLEY stated that it would help his presentation to                    
  address HB 493 first.                                                        
                                                                               
  HB 493 - MEDICAL LIABILITY INSURANCE CORPORATION                             
                                                                               
  Number 895                                                                   
                                                                               
  MR. HENSLEY indicated that Section 2 of HB 493 requires                      
  health care providers to have liability insurance.  Section                  
  3 establishes a state medical insurance corporation.  He                     
  stated that the corporation is not a government agency, but                  
  is similar to the MICA agency and would ensure that the                      
  provisions of Section 2 are fulfilled.                                       
                                                                               
  Number 925                                                                   
                                                                               
  CHAIR BUNDE indicated there was no fiscal note and suggested                 
  that the agency would be a quasi-state agency, nonprofit                     
  organization, that does not involve general funds.                           
                                                                               
  MR. HENSLEY stated that funds may be needed to establish the                 
  agency.  He said the idea is that it will not be continually                 
  funded by the state.                                                         
                                                                               
  MR. HENSLEY further stated that the medical insurance                        
  corporation would have the authority to mandate that all                     
  health care providers carry insurance and would provide the                  
  insurance through the corporation through pooling                            
  arrangements, self-insurance, competitive bids, and other                    
  plans that would allow for the lowest possible rates.  He                    
  also stated that within Section 3, subsection 6, there is a                  
  mechanism that provides insurance to those in limited areas                  
  where needed services are not being provided because of the                  
  lack of availability of insurance.                                           
                                                                               
  (Chair Bunde indicated for the record that Rep. Toohey                       
  arrived at 3:45 p.m.)                                                        
                                                                               
  CHAIR BUNDE explained to Rep. Toohey that the committee was                  
  hearing the sectional analysis from Mr. Hensley on HB 492                    
  and HB 493.  He indicated that the focus of discussion was                   
  on page 4, subsection 6.  He then noted that someone from                    
  the Department of Commerce and Economic Development was                      
  supposed to be at the meeting, but for whatever reason they                  
  did not attend.                                                              
                                                                               
  Number 995                                                                   
                                                                               
  MR. HENSLEY stated that Section 3 also establishes the                       
  maximum liability under mandatory insurance would be $5                      
  million, and the amount includes catastrophic cases.  He                     
  said regardless of the extent of the damages, $5 million                     
  would be the maximum that anyone person could recover.                       
                                                                               
  CHAIR BUNDE asked Mr. Hensley how the establishment of those                 
  guidelines will mesh with the current insurance system and                   
  insurance rates and if it will save money, cost money, or be                 
  a wash.                                                                      
                                                                               
  MR. HENSLEY said he did not know the answer.  He indicated                   
  that there are some aspects of the legislation that save                     
  money, citing the reduction of overlap in coverage and the                   
  increase of size in insurance pools that will subsequently                   
  increase bargaining power.  He felt those aspects would work                 
  in favor of reducing costs.                                                  
                                                                               
  CHAIR BUNDE stated that the proposal includes not only                       
  physicians but all health care providers.                                    
                                                                               
  MR. HENSLEY said the health care providers are defined in HB
  492.  He said HB 493 essentially establishes the                             
  organization and HB 492 allows for change in the liability                   
  system.                                                                      
                                                                               
  MR. HENSLEY then began a sectional analysis on HB 492 and                    
  said he would skip the introductory section and start on                     
  page 4, subsection 4.  He indicated that the section                         
  requires that a person cannot recover damages against a                      
  health care provider in excess of the insurance coverage.                    
                                                                               
  CHAIR BUNDE asked about the constitutionality of the state                   
  setting limits on what a person can recover.                                 
                                                                               
  MR. HENSLEY explained that there have been Supreme Court                     
  cases around the country where caps on recovery have been                    
  litigated.  He said some of the caps were upheld and some                    
  were thrown out.  He said the lower the cap the more likely                  
  it will be thrown out, hence taking the decision-making                      
  function from the jury.  He felt a $5 million cap has a                      
  substantially greater chance of passing muster than                          
  $500,000.  He also said that a noneconomic cap of $500,000                   
  is different from an overall cap on all recovery of $5                       
  million.  He said there are very few cases where there would                 
  be damages in excess of the overall cap.  In some cases the                  
  economic loss -- lost wages -- might be the significant                      
  portion of the case, or the amount of medical care required                  
  over a lifetime of an injured infant.                                        
                                                                               
  MR. HENSLEY further stated that Section 5 addresses                          
  mandatory arbitration.                                                       
                                                                               
  Number 128                                                                   
                                                                               
  CHAIR BUNDE noted that the arbitration within Section 5 is                   
  "mandatory nonbinding."                                                      
                                                                               
  REP. OLBERG said he assumed that mandatory arbitration is                    
  tied to the medical insurance corporation.  A claim against                  
  a person insured by the medical insurance corporation is                     
  mandatorily arbitrated if it's less than $200,000.                           
                                                                               
  MR. HENSLEY said yes.                                                        
                                                                               
                                                                               
  TAPE 94-43, SIDE B                                                           
  Number 000                                                                   
                                                                               
  REP. OLBERG said the language says "an action against a                      
  health care provider..."                                                     
                                                                               
  MR. HENSLEY asserted that the defense of the health care                     
  provider and the insurance coverage for the provider is                      
  provided by the medical insurance corporation.                               
                                                                               
  REP. OLBERG said, "...the mandatory arbitration, now, makes                  
  a little bit of sense."                                                      
                                                                               
  MR. HENSLEY stated that there is criticism of the                            
  arbitration provision that alleges that the process is not                   
  very thorough, citing that claims would not be resolved and                  
  there would be an increase in cost and delays.  He explained                 
  that the purpose of the arbitration is to allow for smaller                  
  claims, less than $200,000, to be heard.                                     
                                                                               
  Number 063                                                                   
                                                                               
  REP. TOOHEY stated for the record that she has heard the                     
  testimony before and she would review the tapes of the                       
  meeting at a later date.                                                     
                                                                               
  MR. HENSLEY continued with his analysis.  He indicated that                  
  Section 6 would offer measures that would decrease the                       
  amount of frivolous lawsuits.  The provision requires a                      
  lawyer to attach a certificate of merit from a qualified                     
  health care provider to the lawsuit that says the case has                   
  merit.                                                                       
                                                                               
  CHAIR BUNDE stated that Mr. Hensley had previously indicated                 
  that most all proficient lawyers currently practice that                     
  procedure and asked if it would serve any purpose to have                    
  two health care providers sign the certificate of merit.  He                 
  supposed that a certificate of merit factory could be set                    
  up.                                                                          
                                                                               
  MR. HENSLEY said that most medical malpractice lawyers are                   
  prepared before they file a lawsuit resulting from                           
  consultation from an expert.  The intent of the provision is                 
  for the certificate of merit to encourage those lawyers who                  
  are not prepared to get prepared before they go to the court                 
  house.                                                                       
                                                                               
  Number 162                                                                   
                                                                               
  CHAIR BUNDE said he was unsure as to how the provision would                 
  unclog the courts or would make recovery more efficient.                     
                                                                               
  MR. HENSLEY indicated that the provision was included to                     
  address the criticism that there are too many frivolous                      
  lawsuits.                                                                    
                                                                               
  MR. HENSLEY further stated that another criticism of the                     
  liability system relates to an Alaskan Supreme Court case                    
  called Jackson vs. Power, which is a case where the Alaska                   
  Supreme Court held that if a hospital is required by law to                  
  have an emergency room, then the hospital should be                          
  responsible for negligence in the emergency room regardless                  
  of whether the services of the emergency room are contracted                 
  out.  He related the scenario of a case where he represented                 
  the plaintiff in a case where there was negligence in the                    
  emergency room of the Fairbanks hospital.  The patient was                   
  severely injured and lost both kidneys.  When the patient                    
  went to seek compensation, he was told that it was not the                   
  hospital's responsibility, it was the emergency room's                       
  responsibility.  He said the emergency room was known as                     
  Emergency Room, Incorporated and they did not have enough                    
  insurance coverage to pay for the medical coverage for the                   
  18 year old boy.  The Alaska Supreme Court then ruled that                   
  full service hospitals are required to have emergency rooms                  
  and that they should be responsible for any negligence in                    
  the emergency rooms.  He further stated that one of the                      
  criticisms of that rule is that there is overlapping                         
  coverage, citing that the hospital has coverage and the                      
  contracted doctors in the emergency room have their own                      
  coverage.  He pointed out that with the universally required                 
  insurance, there would be no overlap of insurance.                           
                                                                               
  Number 250                                                                   
                                                                               
  REP. TOOHEY asked if there is a contract between a hospital                  
  and the contracted emergency room that requires the                          
  emergency room to have a specific amount of liability.                       
                                                                               
  MR. HENSLEY responded that as a business practice the                        
  hospital can require anything they want but do require that                  
  the emergency room have insurance.  He said the question is                  
  whether they require enough insurance.                                       
                                                                               
  REP. TOOHEY said that is the problem.                                        
                                                                               
  MR. HENSLEY suggested that the problem could be solved                       
  commercially by providing emergency room coverage through                    
  the hospital policy rather than having double coverage.  He                  
  said he thought there may be other solutions than                            
  legislatively reversing a unanimous Alaska Supreme Court                     
  decision.                                                                    
                                                                               
  REP. TOOHEY thanked Mr. Hensley for his answer.                              
                                                                               
  MR. HENSLEY thanked the committee for granting him the                       
  courtesy of introducing the legislation that is intended to                  
  be a proactive response to problems within the liability                     
  system.                                                                      
                                                                               
  Number 314                                                                   
                                                                               
  CHAIR BUNDE indicated that the sweeping changes provided for                 
  in the proposals would necessitate continued discussion.  He                 
  said he hoped to hear from the medical and insurance                         
  communities, as well as the Department of Commerce and                       
  Economic Development and the Division of Insurance.  He said                 
  that he would appreciate their interpretation of the                         
  legislation.                                                                 
                                                                               
  MR. HENSLEY thanked the committee again.                                     
                                                                               
  CHAIR BUNDE thanked Mr. Hensley for striving to be part of                   
  the solution.                                                                
                                                                               
  Number 343                                                                   
                                                                               
  Seeing no further business before the committee, CHAIR BUNDE                 
  ADJOURNED the meeting at 4:04 p.m.                                           

Document Name Date/Time Subjects