Legislature(1999 - 2000)
04/17/2000 01:26 PM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 17, 2000
1:26 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Joe Green
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 300
"An Act relating to the establishment and enforcement of medical
support orders for children; and providing for an effective
date."
- MOVED CSHB 300(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 425
"An Act relating to misrepresentation and false claims made
against the state or a municipality; and providing for an
effective date."
- MOVED CSHB 425(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 286(JUD)
"An Act relating to the duties and powers of the attorney
general."
- MOVED HCS CSSB 286(JUD) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 300
SHORT TITLE: MEDICAL SUPPORT ORDERS FOR CHILDREN
Jrn-Date Jrn-Page Action
1/21/00 1962 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1962 (H) HES, JUD, FIN
1/21/00 1962 (H) ZERO FISCAL NOTE (REV)
1/21/00 1962 (H) GOVERNOR'S TRANSMITTAL LETTER
2/24/00 (H) HES AT 3:00 PM CAPITOL 106
2/24/00 (H) Heard & Held
2/24/00 (H) MINUTE(HES)
3/23/00 (H) HES AT 3:00 PM CAPITOL 106
3/23/00 (H) Heard & Held
3/23/00 (H) MINUTE(HES)
4/11/00 (H) HES AT 3:00 PM CAPITOL 106
4/11/00 (H) Moved CSHB 300(HES) Out of Committee
4/11/00 (H) MINUTE(HES)
4/12/00 3091 (H) HES RPT CS(HES) NT 5NR 1AM
4/12/00 3092 (H) NR: GREEN, DYSON, KEMPLEN, BRICE,
4/12/00 3092 (H) WHITAKER; AM: COGHILL
4/12/00 3092 (H) ZERO FISCAL NOTE (REV) 1/21/00
4/15/00 (H) JUD AT 1:00 PM CAPITOL 120
4/15/00 (H) Scheduled But Not Heard
4/17/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 425
SHORT TITLE: FALSE CLAIMS AGAINST STATE OR MUNI.
Jrn-Date Jrn-Page Action
2/28/00 2334 (H) READ THE FIRST TIME - REFERRALS
2/28/00 2335 (H) CRA, JUD, FIN
2/28/00 2335 (H) INDETERMINATE FISCAL NOTE (LAW)
2/28/00 2335 (H) ZERO FISCAL NOTE (ADM/ALL DEPTS)
2/28/00 2335 (H) GOVERNOR'S TRANSMITTAL LETTER
3/07/00 (H) CRA AT 8:00 AM CAPITOL 124
3/07/00 (H) Moved CSHB 425(CRA) Out of Committee
3/07/00 (H) MINUTE(CRA)
3/15/00 2493 (H) CRA RPT CS(CRA) 1DP 5NR
3/15/00 2493 (H) DP: KOOKESH; NR: DYSON, HALCRO,
HARRIS,
3/15/00 2493 (H) MORGAN, JOULE
3/15/00 2493 (H) INDETERMINATE FISCAL NOTE (LAW)
2/28/00
3/15/00 2493 (H) ZERO FISCAL NOTE (ADM/ALL DEPTS)
2/28/00
4/05/00 (H) JUD AT 1:00 PM CAPITOL 120
4/05/00 (H) Scheduled But Not Heard
4/13/00 (H) JUD AT 1:00 PM CAPITOL 120
4/13/00 (H) Heard & Held
4/13/00 (H) MINUTE(JUD)
4/17/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: SB 286
SHORT TITLE: DUTIES AND POWERS OF ATTORNEY GENERAL
Jrn-Date Jrn-Page Action
2/28/00 2449 (S) READ THE FIRST TIME - REFERRALS
2/28/00 2449 (S) JUD
3/06/00 (S) JUD AT 1:30 PM BELTZ 211
3/06/00 (S) Heard & Held
3/06/00 (S) MINUTE(JUD)
3/22/00 (S) JUD AT 1:30 PM BELTZ 211
3/22/00 (S) Moved CS(Jud) Out of Committee
3/22/00 (S) MINUTE(JUD)
3/23/00 2707 (S) JUD RPT CS 3DP 1DNP SAME TITLE
3/23/00 2707 (S) DP: TAYLOR, HALFORD, DONLEY;
DNP: ELLIS
3/23/00 2707 (S) INDETERMINATE FISCAL NOTE (LAW)
4/03/00 (S) RLS AT 11:30 AM FAHRENKAMP 203
4/03/00 (S) MINUTE(RLS)
4/04/00 2856 (S) RLS TO CALENDAR 4/4/00
4/04/00 2859 (S) READ THE SECOND TIME
4/04/00 2859 (S) JUD CS ADOPTED UNAN CONSENT
4/04/00 2859 (S) ADVANCED TO 3RD RDG FAILED Y13
N5 E1 A1
4/04/00 2860 (S) ADVANCED TO THIRD READING 4/5
CALENDAR
4/05/00 2884 (S) READ THE THIRD TIME CSSB 286(JUD)
4/05/00 2884 (S) PASSED Y15 N5
4/05/00 2884 (S) ELLIS NOTICE OF RECONSIDERATION
4/06/00 2908 (S) RECONSIDERATION NOT TAKEN UP
4/06/00 2909 (S) TRANSMITTED TO (H)
4/07/00 2908 (H) READ THE FIRST TIME - REFERRALS
4/07/00 2908 (H) JUD, FIN
4/15/00 (H) JUD AT 1:00 PM CAPITOL 120
4/15/00 (H) Scheduled But Not Heard
4/17/00 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
BARBARA MIKLOS, Director
Child Support Enforcement Division
Department of Revenue
550 West 7th Avenue, Suite 310
Anchorage, Alaska 99501
POSITION STATEMENT: Reviewed the changes encompassed in CSHB
300(HES).
DIANE WENDLANDT, Assistant Attorney General
Collections and Support
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Reviewed CSED's recommended changes to CSHB
300(HES).
JON SHERWOOD
Division of Medical Assistance
Department of Health & Social Services
PO Box 110660
Juneau, Alaska 99811-0660
POSITION STATEMENT: Answered questions in regard to Denali
KidCare.
LESIL McGUIRE, Staff
to Representative Kott
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Provided clarification on conceptual
Amendment 2.
JAMES BALDWIN, Assistant Attorney General
Governmental Affairs Section
Civil Division (Juneau)
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Testified on HB 425; indicated the
department is satisfied with Version G. Testified on CSSB
286(JUD).
JIM POUND, Staff
to Senator Taylor
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Presented CSSB 286(JUD).
MARK JOHNSON, Attorney
13631 Windward Circle
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on CSSB 286(JUD).
DEAN GUANELI, Chief Assistant Attorney General
Criminal Division
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Discussed concerns with CSSB 286(JUD).
ACTION NARRATIVE
TAPE 00-66, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 1:26 p.m. Members present at the call to
order were Representatives Kott, Green, Rokeberg, James, Croft
and Kerttula. Representative Murkowski arrived as the meeting
was in progress.
HB 300 - MEDICAL SUPPORT ORDERS FOR CHILDREN
CHAIRMAN KOTT announced that the first order of business would be
HOUSE BILL NO. 300, "An Act relating to the establishment and
enforcement of medical support orders for children; and providing
for an effective date." [Before the committee is CSHB 300(HES).]
Number 0098
BARBARA MIKLOS, Director, Child Support Enforcement Division
(CSED), Department of Revenue, testified via teleconference from
Anchorage. She informed the committee that CSED requested the
introduction of HB 300 due to a problem. She explained that when
people go on medical assistance, CSED is required to establish a
medical support order. However, the current statute requires
that the division establish a financial order along with a
medical support order. Therefore, this legislation would change
the law such that only a medical support order may be established
in order to avoid having to establish a financial child support
order. This legislation would also amend the medical support
statute in order to provide that either parent, not solely the
obligor parent, may be required to provide health care coverage.
Furthermore, HB 300 would amend the law to require that a medical
support order be issued regardless of whether health care
coverage is currently available to either parent.
MS. MIKLOS pointed out that HB 300 was amended in the House
Health, Education & Social Services Committee (HHES). The HHES
amendments made it clear that CSED and the courts follow the same
procedure. Furthermore, those amendments clarified that CSED can
take enforcement action in order to ensure medical support
compliance with a medical support order, even in the absence of a
financial support order. The remainder of the bill largely
stayed the same.
MS. MIKLOS informed the committee that the division believes that
this legislation will help the obligee, the person who has the
child or custodial parent, as well as the noncustodial parent
because the division would not have to set up these financial
orders unless both parents desire such. Furthermore, the
division believes that the changes made in HHES are acceptable.
However, [the division] has one issue which is addressed in a
letter entitled, "Recommended Changes to CS for HB 300(HES)".
She requested that Diane Wendlandt be allowed to discuss that
issue.
Number 0310
DIANE WENDLANDT, Assistant Attorney General, Collections and
Support, Civil Division (Anchorage), Department of Law, testified
via teleconference from Anchorage. The recommended change
requests the removal of the language "government assistance" in
Section 7, page 7, line 12, of CSHB 300(HES). She explained that
currently the primary focus of medical support is to ensure that
there is insurance for the child. However, under Civil Rule 90.3
parents also have a responsibility to allocate the [health care]
expenses not covered by insurance. She explained that if a child
incurs medical expenses not covered by insurance, those costs are
split under the administrative or court order. As currently
drafted, the legislation adds the language "government
assistance" so that it says, "the parents will - before the
agency will allocate medical expenses that are not covered by
insurance or by government assistance." She explained the
interpretation of the existing law. If a child incurs medical
expenses, which are not covered by insurance, those are usually
covered by Medicaid. If Medicaid pays those expenses, then
Medicaid has the right to go after the parent for his/her share
of the uninsured expenses. By adding the language "government
assistance", there is the possibility that the legislation
eliminates that right. Therefore, the recommendation is to
remove the language "government assistance" in order to avoid
affecting that right.
Number 0448
REPRESENTATIVE ROKEBERG noted that he and Ms. Miklos have had
numerous discussions regarding this. He referred to a case which
he had discussed with Ms. Miklos last year and asked if, in that
case, "this would require that person, that obligor, to pay back
any Medicaid expenses even though he'd offered to pay for private
health insurance." Representative Rokeberg said that he wasn't
sure that he agreed with the suggested amendment.
MS. WENDLANDT clarified that the suggested amendment would leave
the door open, which is the case in existing law. She explained
that medical assistance is collected when someone has reasonable
health insurance available at a reasonable cost. Currently,
existing law would allow the collection of financial payments
which is something that HHES indicated to be of importance during
their discussions. She indicated that HHES felt that instead of
the state paying for the public assistance, if someone didn't
have (indisc.) health insurance perhaps because they were
wealthy, maybe that person could be required to pay for the care.
Although existing statute would allow that, it is not the
practice. Therefore, Ms. Wendlandt believes that if this
amendment is not changed, that door would be closed.
Number 0562
REPRESENTATIVE ROKEBERG informed the committee of a situation in
which CSED went after a husband, within 30 days of getting
divorced and having a signed property agreement, for increased
child support. He explained that the wife went on Medicaid,
which one cannot get off for six months. In this case, the wife
[began] a $25 per hour job within a few weeks of obtaining
Medicaid. The husband had a property settlement in which he
agreed to pay everything. However, it turned into complete
chaos. Representative Rokeberg said that [this suggested
amendment] would make this husband responsible for all the
things, such as dental work for the children, that his wife had
done while on Medicaid and working for $25-per-hour. Although
Representative Rokeberg believes some of the legislation is good,
he was not sure that the section under discussion is valid.
CHAIRMAN KOTT asked if there were any further comments on the
proposed amendment. There being none, he asked if anyone else
wished to testify in the room or via teleconference. He, then,
inquired as to the wishes of the committee.
Number 0711
REPRESENTATIVE JAMES requested clarification in regard to Ms.
Miklos' suggested amendment.
CHAIRMAN KOTT clarified that Ms. Miklos is suggesting the
deletion of the language "government assistance" on page 7, line
12.
REPRESENTATIVE ROKEBERG explained, in further response to
Representative James, that Ms. Miklos' proposed amendment would
allow the state to go after the obligor for payments made under a
state Medicaid or other program, such as Denali KidCare.
MS. MIKLOS stated, in response to the case brought up by
Representative Rokeberg, that this legislation was desired
because of a case such as the one mentioned by Representative
Rokeberg. She explained that in the aforementioned case an
agreement had been reached through a property settlement, but due
to state law [the division] had to tie financial assistance into
medical assistance. Therefore, this bill was introduced in an
attempt to help both parents, especially in such a case. In
regard to the amendment, Ms. Miklos believes that under existing
statute Medicaid could ask for someone to pay for costs even if
the person doesn't have health insurance. This was an important
issue in HHES as there were many people who believe that people
should be paying for the children's health care costs and not use
public money. [The division] believes that the language
"government assistance" would preclude the division from going
for things other than health insurance. Ms. Miklos commented
that this is a policy call. She pointed out that no one is
collecting on this now; [the division] is only going after health
care at a reasonable cost. That focus was chosen on the belief
that it is the most cost-effective. Still, [the division] would
prefer to have language in the law that wouldn't preclude CSED
from going after other things under any circumstance.
Number 0874
REPRESENTATIVE CROFT expressed confusion. He posed the following
situation in which the children are covered by Medicaid and that
part could not be allocated, which would allow Medicaid to come
after the noncustodial parent. He asked if that would be correct
under the current language.
MS. WENDLANDT said Representative Croft's assessment is correct.
REPRESENTATIVE ROKEBERG spoke in opposition to the adoption of
the suggested amendment because he believes that the programs and
care available under Medicaid is greater than almost anyone could
receive with a private insurance plan in Alaska. By and large,
one can receive better care with Medicaid because it doesn't have
the exclusions, caps or limits.
REPRESENTATIVE CROFT related his understanding that Ms. Miklos is
saying that [Representative Rokeberg] has a compelling example,
but he is coming to the wrong conclusion. He understood that Ms.
Miklos is trying to help the situation [described by
Representative Rokeberg].
REPRESENTATIVE ROKEBERG interjected that he agreed with the bill,
just not this is particular part [the suggested amendment to
Section 7].
REPRESENTATIVE KERTTULA related her understanding that this part
of the bill [, Section 7,] would allow [CSED] to turn to the
custodial or noncustodial parent in order to get reimbursed if
one is receiving government assistance.
MS. MIKLOS indicated that would be correct for uncovered
expenses. Therefore, [the suggested amendment] presumes those
expenses that are not covered by health insurance and would leave
the door open to go after those expenses. However, if the
language "government assistance" is left in Section 7, Ms. Miklos
was concerned that that door would be closed.
Number 1035
REPRESENTATIVE ROKEBERG posed the following situation in which
the obligor had a major medical plan, but didn't have dental
coverage and the children had dental work done under a Medicaid
program such as Denali KidCare. He asked if this would allow
[the division] the right to turn to the obligor for reimbursement
for the dental plan.
MS. MIKLOS agreed and noted that [the division] can do that under
the existing law. She remarked that some members of HHES felt
strongly that [the division] be able to do that.
REPRESENTATIVE ROKEBERG and JAMES commented that they didn't
believe it was fair.
REPRESENTATIVE KERTTULA related her understanding, "Even if the
government covered it, you'd [CSED] be able to go back against
the custodial/noncustodial parent."
MS. MIKLOS replied yes.
REPRESENTATIVE GREEN interjected that it would be for the
uncovered expenses.
REPRESENTATIVE JAMES pointed out that Denali KidCare has been
portrayed as an insurance policy for folks. She asked if people
who take that insurance policy can be held for the cost of it.
MS. MIKLOS informed the committee that it is possible for people
who have health insurance to receive Denali KidCare. However,
[the division] wants to up the stakes in order to receive the
reimbursement for that health insurance. She acknowledged that
it might not pay for the full cost of care because the Medicaid
insurance plan may have higher benefits than the private
insurance policy, as pointed out by Representative Rokeberg. She
clarified, "Whether you took that in or left it out, the
amendment that we suggested, it wouldn't affect the issue that
Representative James is talking about." She specified that the
issue [the division] is discussing is for the uncovered expenses,
which she interpreted to mean those expenses not covered by
private insurance that [the division] can already go after. By
leaving [the language "government assistance" in Section 7], it
doesn't preclude the division from [going after uncovered
expenses monetarily]. However, she clarified that the division
is not [being able to go after uncovered expenses monetarily],
and furthermore she was not sure the division would begin to do
so anytime soon. Still, if a wealthy person without health
insurance had a child on Medicaid, the state may want to consider
going after that person financially.
REPRESENTATIVE JAMES asked: If a person has an insurance policy
and Denali KidCare, which would be the primary?
MS. MIKLOS assumed that Denali KidCare would be the payor and
then seek reimbursement from the insurance policy. She noted
that Medicaid does that.
Number 1222
JON SHERWOOD, Division of Medical Assistance, Department of
Health & Social Services, explained that for a person with
insurance, the provider has to bill the private insurance first
for most types of services. Medicaid only pays for expenses
uncovered by the insurer. For some services that aren't commonly
paid for by insurance, the provider can bill Medicaid first. He
noted that "we" do try to go after the insurance company after
the fact.
REPRESENTATIVE JAMES commented that Denali KidCare was
established for those that are either under-insured or not
insured in order to cover children's medical expenses. However,
no where in the Denali KidCare information did she every see the
information that if one receives this benefit, he/she will have
to reimburse it.
MR. SHERWOOD stated that in most cases, the client would not pay
it back. He related his understanding of the proposed change.
He said, "In situations where there was a child support order in
place (indisc.) address medical support and specifically required
the noncustodial parent to pay for a portion of the health care
costs directly, then the noncustodial parent would be required to
pay something."
Number 1304
REPRESENTATIVE JAMES asked, then, why the custodial parent would
need Denali KidCare if the noncustodial parent had to pay.
Furthermore, she inquired as to why the [custodial parent] would
qualify.
MR. SHERWOOD related his belief that the medical support order,
in most cases, would be limited in regard to the amount of money
an individual would have to pay and they may still need Denali
KidCare to pay for things outside the coverage of the financial
ability of the two parents.
REPRESENTATIVE JAMES inquired as to who makes the application for
Denali KidCare, the obligor or the custodial parent. If the
custodial parent is not paying these and has an obligation to do
so from someone else, that parent shouldn't be able to apply for
Denali KidCare.
MR. SHERWOOD pointed out that the custodial parent generally
would make the application first for Denali KidCare.
REPRESENTATIVE JAMES remarked, "Sounds like a rip-off to me."
REPRESENTATIVE CROFT mentioned the following [possibilities] of
$10,000 covered by private insurance, $10,000 covered by Medicaid
and $10,000 uncovered. He said, "Under the bill as it stands,
you 'shall allocate equally between the parents the cost of
reasonable health care expenses not covered', that's $10,000 of
it. We split it $5,000 and $5,000 and we say noncustodial parent
you owe $5,000 for these noncovered medical expenses." He asked
if that was a correct characterization.
MR. SHERWOOD deferred to CSED.
MS. MIKLOS agreed that Representative Croft's understanding was
correct.
REPRESENTATIVE CROFT related his understanding that with Ms.
Miklos' suggested amendment it would result in $10,000 [for the
private insurance] and $10,000 for the Medicaid, which is a total
of $20,000. Therefore, that $20,000 would be split equally and
thus the noncustodial parent would receive a bill for $10,000.
When the custodial parent receives [the $10,000], he/she uses
$5,000 for the noncovered expenses and the other $5,000 is sent
back to Medicaid.
MS. MIKLOS replied, "I believe so."
REPRESENTATIVE CROFT indicated that it makes sense to charge the
noncustodial parent for government services, but not for private
insurance coverage. He said, "When it was just the uncovered, it
sort of made sense to me. Why should we distinguish between the
two and charge the noncustodial for paying back Medicaid?"
Number 1486
MS. WENDLANDT related her understanding that government
assistance is not supposed to be a substitute for the parental
responsibility in paying for these expenses. If government
assistance was not available, these expenses would have been paid
and allocated between the parents. The policy argument is that
government assistance should not act as a substitute and reduce
the liability of the noncustodial or obligor parent for these
expenses.
MS. MIKLOS turned to Representative James' remarks and explained
that when someone applies for Medicaid programs, including Denali
KidCare, that triggers [the division] to pursue a medical support
order. Then [the division] finds out whether [the payment] can
be reimbursed, which can occur from either parent not just the
obligor. She echoed Ms. Wendlandt's comments regarding the
intent for the parents to be responsible, if possible. Ms.
Miklos pointed out that [the division] is not doing that but
rather using insurance at a reasonable cost. However, there may
be a situation when the division or the court would believe that
the [noncustodial] parent could afford to help out with something
other than insurance. In such a case, the desire may be to
include that in the order. [The division] is concerned that this
would preclude that, although this is not commonly done by the
division nor the court. In reference to Representative Croft's
situation, the division does not ask noncustodial parents to pay
the $10,000 or $20,000 because it isn't reasonable.
REPRESENTATIVE ROKEBERG returned to the situation he mentioned
earlier. This man was divorced, and in the child support order
he agreed to pay half of [his children's] medical care. This man
didn't have an insurance policy. Therefore, when his ex-wife
received Medicaid coverage, it triggered the "dead-beat dad"
scenario, which took a year to get out from under.
Representative Rokeberg said, in his opinion, the use of the
Medicaid assistance for a protracted period was discretionary on
the part of the mother. He emphasized that there is no cost
containment in Medicaid.
Number 1646
REPRESENTATIVE JAMES related her belief that when parents
separate and there is an arrangement through the courts for child
support, [the support order] will say what the noncustodial
parent is to pay. If the noncustodial parent is to provide
insurance and pay the portion not covered by the insurance, then
it seems there would be a valid reason, under child support, to
go after that person because that was the agreement on the child
support issue.
REPRESENTATIVE JAMES posed another situation in which [the
noncustodial parent] is required to provide insurance while the
out-of-pocket or noncovered portion is to be covered by the
custodial parent. In such a case, she believed that [the
division] would have to go after the custodial parent. However,
if the custodial parent makes an application to Denali KidCare,
she didn't believe that custodial parent believes that [those
services] will have to be paid back. It seems that there is some
entrapment in that process. Furthermore, certain wage parameters
must be met in order to apply for Denali KidCare and thus if [the
division/court] is going to go after the custodial and
noncustodial parent, then both the wages for the custodial and
noncustodial parent should be included when applying for Denali
KidCare. Representative James said that "we" shouldn't be
putting something in law that would allow them to be entrapped in
this way.
MS. MIKLOS responded that most of these orders are developed
after people go into Denali KidCare. When people enter Denali
KidCare it is made clear that CSED will be going after a medical
support order. Therefore, she didn't believe it is entrapment.
She reiterated that [the division] doesn't go after the custodial
and noncustodial parent that can't afford to pay the uncovered
costs as it has to be "reasonable", which appears throughout the
statute. The only way CSED would attempt to collect is if the
custodial parent did have insurance and didn't disclose that or
had received the insurance after getting Denali KidCare. Ms.
Miklos emphasized that [the division] doesn't do things that it
hasn't warned the parents about. Although the noncustodial
parent doesn't necessarily know there will be an order, the
custodial parent does know that he/she has to cooperate with
child support.
REPRESENTATIVE JAMES acknowledged that Ms. Miklos' concern is
regarding child support and thus this particular case only
addresses those parents who are separated, which would result in
a custodial and a noncustodial parent. However, she wasn't sure
what would happen in a situation in which the folks are not
separated and have Denali KidCare. She understood that "we" are
treating people who are split up differently from those who are
not; she inquired as to why the two are being treated
differently.
MS. MIKLOS pointed out that [those who are separated versus those
who are not] are treated differently due to federal requirements.
Ms. Miklos said:
There's a reason behind it ... and that is that if they're
not split up, then I'm assuming that part ... of the Denali
KidCare would be to take both of those parents' ability to
have insurance or whether they have insurance would already
have been taken into consideration. So, it's only when the
parents are split-up, that people don't know if this other
parent could possibly get this (indisc.) health insurance.
Number 1871
REPRESENTATIVE JAMES asked if the parent has to notify CSED if
he/she comes into some money, receives a job or health insurance;
would he/she lose the ability to receive [Denali KidCare].
MS. MIKLOS deferred to Mr. Sherwood.
MR. SHERWOOD answered that if someone comes into insurance after
[admittance to] Denali KidCare, he/she is required to report it
to [DHSS]. At that point, the providers will have to begin
billing that insurance first. He noted that the parent may still
remain eligible for Denali KidCare and [DHSS] would pay for the
uncovered costs. Mr. Sherwood turned to Representative James'
earlier question regarding a situation in which there is not an
absent parent. He explained that [DHSS] does not pursue support
or recovery in such a situation; however, both parents' income is
taken into consideration when reviewing whether the child is
eligible. Under federal law, when there is an absent parent,
[DHSS] is required to disregard [the absent parent's] income and
financial resources for an eligibility determination. However,
there is a requirement to seek medical support for that child
from that absent parent, if available at reasonable cost.
REPRESENTATIVE ROKEBERG asked if seeking the medical support is a
federal mandate.
MR. SHERWOOD replied yes.
REPRESENTATIVE ROKEBERG posed a situation in which a person
qualifies for Medicaid or Denali KidCare under normal
circumstances, when there is an outstanding support order. He
inquired as to how long such a person would be enrolled in
Medicaid because in his experience, even those that find a job
remain on the rolls for some time.
MR. SHERWOOD stated that once a child is determined to be
eligible he/she is eligible for a minimum of six months. For
families receiving coverage from Family Medicaid who lose their
eligibility due to [excess] earnings, there is up to 12 months of
transitional coverage; that is a federal requirement. He
explained that [this transitional coverage] is considered a
support for those attempting to work their way out of poverty.
REPRESENTATIVE ROKEBERG surmised, then, that the situation he
mentioned earlier could be correct in that the mother, within
days of obtaining Medicaid, secured a $25 per hour job; however,
the children remained on Medicaid for six months. He remarked,
"That's a terrible defect in the law."
MR. SHERWOOD said that he believes that things [such as
transitional coverage] are utilized in order to encourage people
to obtain a job and work themselves out of poverty. Often, the
loss of health care benefits can be a large barrier to returning
to work.
REPRESENTATIVE CROFT posed a situation in which there is a family
that is in poverty or close to poverty and there is a
noncustodial parent who can pay, while the government steps in to
help. He asked, "Should they or shouldn't they pick up half of
that?" Representative Croft believes [the noncustodial parent
should pay for half]. He noted that Representative Rokeberg's
concerns are addressed by the language "reasonable" all the way
through [Section 7] because it allows CSED to determine whether
services rendered were reasonable.
REPRESENTATIVE ROKEBERG stated that he didn't disagree with
Representative Croft. However, his experience does not lend any
credibility to the use of the language "reasonable" in this
particular area. He noted that the complaints that he receives
regarding the "gestapo" tactics of this division seem to be the
norm. Therefore, he indicated disbelief in regard to the
credibility of the reasonableness standard. Representative
Rokeberg pointed out the need to differentiate between [covered]
and uncovered benefits because he believes therein lies the
abuse.
Number 2160
REPRESENTATIVE CROFT suggested inserting some language defining
"reasonable uncovered expenses."
REPRESENTATIVE ROKEBERG said that the uncovered expenses that
exceed $5,000 in a calendar year are similar to a large
deductible, and thus most other things could be excluded there.
Therefore, he indicated that perhaps his concerns could be
reviewed with that deductible. He reiterated his belief that it
is subject to abuse and that he knew of such a case. He also
expressed concern regarding the Governor's aggressiveness in
regard to expanding this.
REPRESENTATIVE MURKOWSKI asked if anything in statute would
arrive at what is "reasonable and covered expenses."
MS. MIKLOS informed the committee that CSED uses the federal
government's definition of "reasonable," which the feds define as
insurance provided by the employer at a reasonable [cost]. In
regard to Representative Rokeberg, Ms. Miklos stated that, for
the most part, [CSED] doesn't go after uncovered expenses.
REPRESENTATIVE ROKEBERG remarked that now CSED would be able to
go after uncovered expenses.
MS. MIKLOS clarified that under existing law, CSED has the
ability to go after uncovered expenses; however, the division has
chosen not to do so because it is not cost-effective.
Furthermore, it is not required by federal law. The concern is
that by leaving "government assistance" in this legislation, the
division and the courts would be precluded from doing so.
Number 2274
REPRESENTATIVE JAMES said that the uncovered expenses from the
examples seem to be beneficial to the custodial parent in these
cases because who else will pay the uncovered expenses. She
found it difficult to envision that they would be uncovered if
they have insurance and Denali KidCare. She asked:
Am I to understand that there likely is uncovered
[expenses], even after having the insurance and Denali
KidCare, and if that is something, then, that the custodial
parent would have to pay, and that if ... you took any
action on that, there would be no benefit to the state,
there would only be benefit to the custodial parent? That
may be the reason you never do it.
MS. MIKLOS answered that it is rare that CSED goes after either
parent for uncovered expenses. Furthermore, she didn't know [of
any case] when there has been health insurance. She believes
that the uncovered expenses are viewed more when neither party
has insurance and the costs of health insurance were split. She
pointed out that when the court does this, each parent's income
is weighed. In regard to a situation in which a custodial parent
receives Denali KidCare and is very close to poverty, and the
noncustodial parent is wealthy, there would be the opportunity to
go after the noncustodial parent. If the noncustodial parent was
poor, then no one would go after him/her.
REPRESENTATIVE JAMES asked if it is possible that the court order
establishing the child support would indicate whether the
noncustodial parent is supposed to keep insurance in effect as
well as pay the co-payment.
MS. MIKLOS explained that the court order reads that if the
parent has insurance at a reasonable cost, then it must be
provided for the children. She pointed out that most of the
program is geared to those that could have insurance but choose
not to cover their children. There is also a provision in the
court order that if there are uncovered costs, those could be
equally split between the parents, depending upon the
circumstances.
MS. WENDLANDT remarked that she had only seen that [provision]
used in a few cases. As a general rule, CSED enforces those
uncovered expenses only if the parents have gone to court
requesting that the court reduce those expenses to judgment. In
such a case, the courts would determine whether the expenses were
reasonable, whether the medical treatment was necessary and of
reasonable cost, as well as who should bear the burden of the
costs, given the financial status of each parent. Once the
courts have made those decisions and reduced an amount to
judgment, CSED will enforce that judgment. She clarified that
that is how it comes up now in the context of not having any
"government assistance."
REPRESENTATIVE JAMES noted that in her daughter's divorce 20
years ago, her daughter's husband was supposed to maintain the
insurance as well as maintain the co-payment. Perhaps that is no
longer the case.
MS. MIKLOS said that is certainly being done if [that parent has]
insurance available.
Number 2450
REPRESENTATIVE ROKEBERG referred to page 7, lines 2-6, and asked
if a property settlement approved by the court would take
precedence over that. He remarked that the [language] doesn't
seem to give any privity of contract.
MS. WENDLANDT specified that normally a property settlement would
be approved by the court and thus becomes...
TAPE 00-66, SIDE B
MS. WENDLANDT continued, "...and the court issues an order based
on that property settlement. That is what the court order is,
and that's what we would enforce."
REPRESENTATIVE ROKEBERG remarked that [the language in the bill]
provides for a formula that may be at odds with the agreement in
the court order/property agreement.
MS. WENDLANDT said that she wasn't entirely sure she understood
the question. However, she referred Representative Rokeberg to
the bold and underlined sentence beginning on page 6, line 31,
through page 7, line 2. She explained that if there is a
property settlement which resolved the [health insurance] issues
in another way, due to a specific reason for that different
allocation, she believes that there could be a good cause to
allocate the health insurance costs in an unequal manner. In
such a case, there would not be an increase or decrease as
provided on page 7, lines 2-9.
REPRESENTATIVE ROKEBERG explained that his problem is that every
day CSED [obligates] the (indisc.) contract and property
settlement by changing the amounts of custodial support payments
based on alleged increases in income.
Number 0071
REPRESENTATIVE CROFT moved that the committee adopt the following
amendment [Amendment 1]:
Page 7, line 12,
Delete, "or government assistance"
REPRESENTATIVES ROKEBERG AND JAMES objected.
Upon a roll call vote, Representatives Kerttula, Green,
Murkowski, Croft and Kott voted in favor of the adoption of
[Amendment 1] and Representatives Rokeberg and James voted
against the adoption of [Amendment 1]. Therefore, Amendment 1
was adopted by a vote of 5-2.
REPRESENTATIVE CROFT expressed concern with the word "shall" on
page 7, line 11. He said that two ideas seem to be melded
together. First, the court may order that the noncustodial
parent do this. Second, if there is a decision to order it, then
one "shall" make it equal unless there is a good reason not to.
He asked, "Does any of that make any sense on dividing the two
ideas into 'you may do it' and 'if you do it, you should presume
it's equal unless otherwise found.'"
MS. MIKLOS said that Representative Croft's thinking does make
sense. She noted that now she could see the question, and it was
not intended that the division should always do that.
REPRESENTATIVE KERTTULA remarked that there is another part to
this drafting problem. She referred to the bold and underlined
sentence beginning on page 7, lines 17-20. She believes that
language should be together with the other part of the section;
otherwise, there is confusion. She specified that three
different ideas are going on. One is to split the health
insurance costs, if reasonable, and another is to allocate [the
health insurance costs] equally unless there is a reason to do
otherwise. Representative Kerttula surmised, then, that the
reasonable costs should be determined and thus allocated equally
unless there is a good reason not to do so. She asked if that
would be the appropriate manner in which to put it together.
REPRESENTATIVE CROFT remarked that Representative Kerttula has a
point. He agreed that there are three ideas. First, "you can do
this if you decide to, but you don't have to." However, the
remaining two ideas are almost contradictory in the way they are
written because one [part of the provision] says that the [court
or agency] shall allocate [the costs of health insurance]
equally, while the other [part of the provision] is based on
financial circumstances. He questioned which should be followed.
Representative Croft said, "I guess the combination that all
works is: You may allocate this to the noncustodial parent if
you want. If you decide to, you shall allocate them equally
unless there's good cause, including the relative financial
circumstances of the parties to do otherwise." He further
clarified that if [the court or agency] decides to do it, then it
must be done equally unless there is a good reason not to do it
equally.
REPRESENTATIVE KERTTULA inquired as to which way Ms. Miklos
preferred.
MS. WENDLANDT related her belief that it would be simpler for the
agency if it started with the assumption that [the cost of health
insurance] would be allocated equally, rather than immediately
moving to the financial circumstances.
Number 0303
REPRESENTATIVE CROFT moved that the committee adopt a conceptual
amendment [Amendment 2]: on page 7, delete the sentence beginning
on line 9 and ending on line 13; delete the sentence beginning on
line 17 and ending on line 20. Replace those with [sentences]
that would say:
that the court may ... order the noncustodial parent to pay
the uncovered expenses exceeding $5,000, for reasonable
health care expenses. ... If they do make such an award, it
should be allocated equally between the parents unless there
is good cause, including the relative financial
circumstances of the parties, to allocate them unequally.
REPRESENTATIVE KERTTULA pointed out that the language needs to
start out with both [parties].
LESIL McGUIRE, Staff to Representative Kott, Alaska State
Legislature, clarified, then, that the language should begin by
referencing both parents.
CHAIRMAN KOTT asked if there was objection to Representative
Croft's conceptual amendment [Amendment 2]. There being none,
Representative Croft's conceptual amendment was adopted.
Number 0436
REPRESENTATIVE ROKEBERG expressed concern regarding the privity
of contract and the original property settlement agreement.
Therefore, he suggested the addition of subsection (d) in Section
7. He explained that conceptually he is attempting to get the
original property settlement agreement language to be
controlling. Therefore, the conceptual amendment would read as
follows: "For the purposes of this section, the original
property settlement agreement ratified by the court shall be
considered a good cause." He related his belief in the
possibility and eventuality that the department and division
would change these things with their extraordinary power, which
would defeat the privity contract.
MS. MIKLOS said, in response to Chairman Kott, that she and Ms.
Wendlandt think Representative Rokeberg's conceptual amendment is
fine.
REPRESENTATIVE CROFT remarked that [Ms. Miklos and Ms. Wendlandt]
know more about this area than he, and thus he would let it go.
However, he pointed out that generally child support is not
subject to negotiation for good policy reasons. Child support is
established by rule and based on certain percentages of income.
He noted, "You don't want this negotiated down because you're
worried in a lot of situations about, 'I won't fight you for
custody if you agree to take X or Y ....'" However,
Representative Croft surmised that such is not interfering with
Rule 90.3, which is the rate-setting, child-support-setting
power.
REPRESENTATIVE ROKEBERG stated that [his conceptual amendment]
speaks only to the section on cost.
MS. WENDLANDT related her understanding that Representative
Rokeberg's conceptual amendment would not make a property
settlement agreement controlling because it is not entirely
subject to negotiation of the parties. She understood the
conceptual amendment as something that could be considered when
making a good cause determination on the allocation of covered
expenses, which she didn't believe would violate Rule 90.3. She
noted that Rule 90.3 includes good cause exceptions and
guidelines.
CHAIRMAN KOTT announced that Representative Rokeberg's conceptual
amendment is Amendment 3. He then asked if there was objection
to Amendment 3. There being none, Amendment 3 was adopted.
Number 0599
REPRESENTATIVE ROKEBERG moved that the committee report [CSHB
300(HES)], as amended, out of committee with individual
recommendations and the attached zero fiscal note. There being
no objection, CSHB 300(JUD) was reported from the House Judiciary
Standing Committee.
HB 425 - FALSE CLAIMS AGAINST STATE OR MUNI.
Number 0677
CHAIRMAN KOTT turned to the next item of business, HOUSE BILL NO.
425, "An Act relating to misrepresentation and false claims made
against the state or a municipality; and providing for an
effective date." [James Baldwin had provided brief remarks at a
previous hearing. Before the committee was CSHB 425(CRA), but
there was a new work draft, Version G.]
Number 0683
JAMES BALDWIN, Assistant Attorney General, Governmental Affairs
Section, Civil Division (Juneau), Department of Law, came forward
to testify. He said he had reviewed this new draft committee
substitute (CS), and he believes the amendments that he and the
committee had discussed are reflected in it. He stated for the
record that he is satisfied with the draft CS [Version G].
Number 0780
REPRESENTATIVE ROKEBERG moved to adopt proposed CSHB 425, Version
G [1-GH2029\G, Bannister, 4/15/00] as the working document before
the committee. There being no objection, it was so ordered.
Number 0805
REPRESENTATIVE GREEN asked Mr. Baldwin whether the draft still
includes treble damages and [a $10,000 fine].
MR. BALDWIN said yes. He explained that none of the changes made
in the draft are substantive in nature from what the Office of
the Attorney General originally had asked the committee to adopt,
although the title has been made more descriptive of the
contents. There had been some language that would have led one
to believe that the Department of Law intended to change court
rules, which it did not, and that language was corrected. Also,
because the previous draft followed very closely the false claims
statute of another state, there was a way of describing things
that is not typical in Alaska statutes; that has also been fixed.
"But yes, it does contain treble damages and the $10,000 fine,
and that is one of the important aspects of the bill that we
would like to have as an enforcement tool," he concluded.
Number 0890
REPRESENTATIVE GREEN related his understanding:
You are asking [to] prosecute criminally on preponderance of
the evidence as you would a civil crime, and also have a
rather severe penalty for these cases against the state. Is
this preferential? You're not allowing this to happen to
someone else, a person who was wronged; it's just the state.
There's probably a rationale behind that.
Number 0928
MR. BALDWIN explained that the motive behind a bill like this is
to make it clear that when one is seeking a benefit or some kind
of a financial or proprietary right from the government, one must
do so honestly and in a straightforward manner. Therefore, the
mere act of being dishonest about it should carry with it a heavy
burden. The reason that the Department of Law would like to have
this kind of a statute is that these claims of misrepresentation
or defrauding the government can be difficult to prove in some
instances. Mr. Baldwin continued:
It is often easier to prove that someone was dishonest
than it is to prove how dishonest they were. The
threat of being able to assess a heavy damage for that
dishonesty is, in our view, particularly [useful] when
cases that we're focusing on are cases against large
financial institutions that either can bury you with
documents - to the extent that it is very difficult and
very expensive to prove how they may have defrauded you
or misrepresented things to you - or they have "cooked
their books" to such an extent that it's again very
expensive and very time-consuming to prove the extent
of their misrepresentation. The fear of being brought
in under a statute where you can assess treble damages
[may make] a settlement of the claim more than likely
than having to litigate it clear to the end point,
which is extremely expensive and poses a lot of risks
for both sides.
Number 1032
REPRESENTATIVE GREEN said he certainly could understand
that; it makes a lot of sense. He questioned whether
this makes it easier for a state that has a battery of
attorneys as opposed to an individual or a small
company that may not. He asked whether that same fear
would also reduce the chances that this same entity
would try to defraud a small company or individual.
"I'm just wondering why we are preferentially singling
out the state to allow this concept," he added.
Number 1070
MR. BALDWIN replied:
We [in the Office of the Attorney General] exist and do
our jobs as trustees of the public fisc, and it's in
that role that we are seeking these kinds of powers.
When we are acting in a fiduciary capacity, as a
protector of the public's property and assets, this
kind of a tool seems to me to be justified, as we are
protecting collectively the interests of all of the
people in not having to pay false claims or not having
to see the public's property suffered to loss through
fraud or misrepresentation. ... That would be one
distinguishing characteristic.
Number 1130
REPRESENTATIVE CROFT observed that there would be two options
when somebody presents a false claim. He gave an example:
So I say, "Here's the bill for shipping my car," [when]
I didn't really ship my car and I want to pocket that
$800 or $1,000. You could either, under the criminal
standards, hold me criminally guilty of fraud ... or
this gives you another tool that you can say, "All
right, it's hard to get into his mental state and the
burden of proof is high; we're just going to go after
the civil and get treble damages from you." This, in
effect, gives you another tool. And maybe you could
tell me some about what some of the difficulties would
be in just going the criminal route.
Number 1190
MR. BALDWIN replied, "If we go the criminal route and you plead
out to that, I can still go back and go after you civilly and
whatever you have admitted to. If there's been a conviction
entered against you, that becomes very strong evidence of your
civil liability as well." He indicated the legal options operate
not only independently but can operate concurrently.
REPRESENTATIVE CROFT asked whether this could be used as a
follow-up to criminal prosecution.
MR. BALDWIN said it would be possible to do that. "If you have
been convicted, it becomes evidence," he explained.
REPRESENTATIVE KERTTULA pointed out that provision is in Section
3.
Number 1286
MR. BALDWIN read from page 4, line 21:
A guilty verdict rendered in a criminal proceeding
charging false statements or fraud, whether upon a
verdict after trial or upon a plea of guilty or nolo
contendere, estop the defendant from denying the
essential elements of the offense in a civil action
....
He said that once a person has been convicted, the state's burden
of proof on the civil side is much lessened.
REPRESENTATIVE CROFT responded that it still would seem to him
that a treble damage provision would be most useful, in that it
might be an easier way to go than the criminal route.
Number 1340
MR. BALDWIN explained that regarding unclaimed property, it is a
misdemeanor when a financial institution fails to report its
unclaimed property to the state. "I don't know of a circumstance
where we have ever gone after anyone for a misdemeanor charge,"
he said. "But we would have that option. We could also go
civilly, as a separate action, to obtain treble damages." Mr.
Baldwin noted that in California, the prosecution of unclaimed
property has gone more toward false-claim-type enforcement than
it has toward the regular statutes that apply for collection of
unclaimed property, simply because the ability to claim treble
damages is such a strong enforcement tool that the companies are
brought to a settlement much sooner than if the state had to
proceed down the long administrative trail toward claiming
unclaimed property.
Number 1411
REPRESENTATIVE MURKOWSKI referred to Section 2(a)(8), concerning
the beneficiary of an inadvertent submission of a false claim who
finds out about the false claim, and then has to disclose it
within a reasonable time. She wondered what was considered a
reasonable time. She then called attention to subsection (c)
[also under Section 2], where it would appear that a person is
going to be held for treble damages unless that person can reduce
the amount somehow. She asked whether [paragraph (8) is saying]
that if she discovers that there has been a false claim and she
has been the beneficiary, then she has to report to somebody
within 30 days.
Number 1876
MR. BALDWIN said he thinks that is a reasonable interpretation.
He stated:
We are looking upon that paragraph (8) as being our
best chance of making this law applicable to a party
like [a bank] whose activity occurred before the
effective date of this Act. I think that it would be
hard to make an argument that all the other provisions
[except paragraph (8)] go back retroactively ....
He said the bank has some hard choices; they still can argue that
this law does not apply because of the retroactivity arguments,
but he believes that paragraph (8) then brings them in. He
added, "And then I think your interpretation is reasonable that
the 30 days which allows you to step down to double damages
rather than treble damages would be the test of reasonableness."
CHAIRMAN KOTT asked whether anyone else wished to testify. There
being no response, he closed public testimony on HB 425.
Number 1560
REPRESENTATIVE ROKEBERG moved to report CSHB 425 [Version G] out
of committee with individual recommendations and the accompanying
fiscal notes. There being no objection, it was so ordered and
CSHB 425(JUD) was reported from the House Judiciary Standing
Committee.
SB 286 - DUTIES AND POWERS OF ATTORNEY GENERAL
CHAIRMAN KOTT announced that the final order of business would be
COMMITTEE SUBSTITUTE for SENATE BILL 286(JUD), "An Act relating
to the duties and powers of the attorney general."
Number 1690
JIM POUND, Staff to Senator Taylor, Alaska State Legislature,
informed the committee that CSSB 286(JUD) primarily addresses the
duties of the attorney general. Specifically, the bill would
require the attorney general to defend the Alaska State
Constitution, clarify that the duties of the attorney general
would be placed in statute and that the legislative power to make
appropriations and enact the law restrains and limits the
attorney general's authority when settling cases. Mr. Pound
offered to entertain any questions.
Number 1752
MARK JOHNSON, Attorney, testified via teleconference from
Anchorage. He noted that he formerly worked for the legislature.
He informed the committee that this legislation grew out of a
subcommittee of the Commission on Privatization, which discovered
some disturbing things regarding settlement authority. The
subcommittee felt that there was a need to balance the statute so
that it reflected the extent to which the legislature can and
should extend, by statute, the powers of the attorney general to
act in certain areas. He noted that he is not an expert on the
first element, which was added by Senator Donley. He offered to
speak to his letter to Chairman Taylor, Chair of the Senate
Judiciary Committee. Mr. Johnson informed the committee that he
remains supportive of the legislation and he urged the committee
to pass it on.
CHAIRMAN KOTT requested that Mr. Johnson speak to the letter.
MR. JOHNSON referred the committee to page 2, lines 8-10, of CSSB
286(JUD). The portion that is deleted grew out of a disparity
that arose out of the [subcommittee's] research regarding an
opinion by the attorney general in connection with the settlement
of the Exxon Valdez litigation. The deleted language was
believed to be too open-ended and inappropriate for a
statutorially created attorney general. He indicated that if the
attorney general believes that there are powers essential to the
duties of the attorney general, then he/she could come before the
legislature and request specific statutory authority to undertake
those functions.
MR. JOHNSON turned to another change, which was further changed
in the Senate Judiciary Committee. He pointed out that
currently, there is no provision in statute that addresses the
attorney general's authority to settle cases, which is a broad
authority and tends to be commensurate with the power to initiate
litigation. That authority can include obligations, both
financial and otherwise, to the state. Therefore, the final
section of CSSB 286(JUD) is an attempt to place a limitation in
statute regarding the authority to settle cases.
Number 2086
DEAN GUANELI, Chief Assistant Attorney General, Criminal
Division, Department of Law, said that he was happy to hear Mr.
Pound say that the primary impetus for this legislation was to
include the change on page 1, line 5. However, the other two
provisions in the legislation are cause [of concern]. He
referred to page 2, lines 8-9, which seems to repeal fairly
innocuous language. The attorney general has a number of powers
under statute; however, legal actions sometimes get very
complicated. He pointed out that there are a number of
situations in which the attorney general must take action in
accordance with the public good, although it may not be
specifically provided in statute. Attorneys general across the
country find themselves in such a situation, which is not covered
in the statute but rather in the common law. He explained that
over the years the courts have developed a set of principles that
generally go along with the office of the attorney general as
that position is the government's primary legal advocate. The
attorney general has a responsibility to take certain actions on
the public's behalf.
MR. GUANELI provided the committee with the following four powers
[of the attorney general], which he felt may disappear if this
provision were repealed. He noted that three of the four powers
are from opinions from the Alaska Supreme Court and the Alaska
Court of Appeals. First, a number of years ago there was a
matter in which there was a question as to whether the attorney
general should prosecute a particular criminal case. The
attorney general felt it was appropriate to investigate and
prosecute this case. However, this person and their relationship
with the administration led the attorney general to feel that
there was a conflict in the Department of Law and thus outside
counsel was appointed to prosecute that case in the name of the
state. However, the defendant challenged the attorney general's
authority to [appoint outside counsel to represent the state].
The Alaska Court of Appeals decided that the attorney general
derived the authority to appoint [outside/special counsel] from
the language which this legislation proposes to repeal.
Number 2396
MR. GUANELI turned to the second example of a power of the
attorney general that may disappear. He explained that a number
of years ago the attorney general's office began a consumer
protection action against a land developer, who was engaged in
some "less than reputable" dealings. The trial court decided
that the consumer protection laws didn't cover that particular
conduct and thus the attorney general brought action under the
Uniform Land Sales Act. The court decided that [the Uniform Land
Sales Act] didn't cover the conduct either. Finally, the trial
court allowed the attorney general to bring a common law fraud
action, under the attorney general's common law authority, in
order to sue the [land developer] on behalf [of the state]. [Mr.
Guaneli's testimony was interrupted due to a tape change.]
TAPE 00-67, SIDE A
MR. GUANELI continued, "... certainly in here -- and there was no
provision in current law as it existed then that would've covered
that; and the Alaska Supreme Court had to decide, in a ...
written opinion, that this particular provision, which is going
to be repealed, allowed the attorney general to do that."
Number 0080
MR. GUANELI moved on to the third example of a power of the
attorney general that may disappear, which he indicated may be
surprising. He believed that everyone would probably agree that
the attorney general has the authority to decide to prosecute or
not prosecute criminal cases. However, there is nothing in state
law that specifies that authority but rather the current law says
that "The attorney general shall prosecute all cases involving
violation of state law, and file information and prosecute all
offenses against the revenue laws and other state laws where
there is no other provision for their prosecution;". That
language specifies a mandatory duty and thus the Alaska Supreme
Court had to hold that the attorney general does have the
discretion not to prosecute cases or when prosecuted, to dismiss
those cases. Again, that [authority] was found in the words that
this legislation proposes to repeal. In this particular case,
the attorney general had been ordered by a court to prosecute a
particular criminal case. This was taken all the way to the
[Alaska] Supreme Court in order for the attorney general to have
the ability not to prosecute a particular case. He noted that
[the ability to not prosecute a particular case] is a common law
authority of the attorney general.
MR. GUANELI turned to the fourth example of a power of the
attorney general that may disappear. He pointed out that there
are a number of situations involving cases filed by private
litigants or in the criminal arena, cases filed by
municipalities. In those cases, the validity of the state law
arises and thus the court notifies the state and allows the state
to file an amicus brief on behalf of the constitutionality or
validity of the state law. Mr. Guaneli said that he didn't see
anything in [the legislation] that would allow the attorney
general to file at the request of the court in another action in
which the state is not a party. This is used fairly regularly in
order to uphold the validity of state laws, which he didn't
believe is covered in this legislation.
Number 0312
MR. GUANELI indicated that these examples illustrate that this
legislation has unintended consequences. Furthermore, he
believes that as time passes there will be other instances in
which the authority of the attorney general is called into
question. Mr. Guaneli felt that in order to understand what this
proposed change does, a more complete explanation of what [this
legislation] does [is required]. Mr. Johnson's testimony does
not indicate that this was given much thought. Therefore, he
suggested that the Legislative Affairs Agency, or other
appropriate entity, should develop research on the committee's
behalf in order to determine what powers of the attorney general
are being given up and being prevented from use.
MR. GUANELI turned to the last part of the bill. He related his
belief that there is no particular objection to the notion that
what the attorney general does in settling agreements is subject
to the laws that the legislature enacts or its appropriation
power. However, he expressed concern with the last clause of
this legislation, which reads as follows: "...in which the
attorney general represents the state and in which the state is a
party." He explained that the language means that [the attorney
general] can only take those cases and act in those cases in
which the state is a party. However, there is a lot of
litigation that the attorney general undertakes in which the
State of Alaska is not a party. Mr. Guaneli believes that this
legislation leaves the attorney general to only represent the
state. He pointed out that many lawsuits make allegations
against state employees, as individuals. Under the federal civil
rights statute, 42 U.S.C. 1983, one can only sue someone as an
individual. Therefore, most of the actions in prison litigation
are federal civil rights actions under 42 U.S.C. 1983 and all of
the defendants are individual correctional officers or
superintendents who are alleged to have violated someone's
rights. Currently, the Office of the Attorney General represents
those people. If these provisions [in this legislation] go
through and the attorneys general common law is called into
question, the attorney general may not be able to represent those
individuals. Furthermore, he suspected that most union contracts
for state employees have a provision requiring the state to
defend and indemnify state employees who get sued in the course
of their employment. Mr. Guaneli specified that the changes
[encompassed in this legislation] would prevent the attorney
general's office from representing individual state employees and
thus force them to hire private counsel. Once those cases are
settled, the state would be presented with those bills as well as
a bill for attorney's fees. In such a case, there is also the
danger to point fingers at the employer, agency or supervisor
that forced [the action in question], which becomes a "field day"
for the plaintiffs because of the multiple litigation
possibilities. However, when the attorney general's office
handles the entire case the parties are kept more friendly in
order to avoid such a situation.
MR. GUANELI reiterated his belief that this legislation has some
serious unintended consequences that deserve more study. He
recommended leaving in the language on page 2, lines 8-9, and
deleting the language on page 2, lines 19-20. He also
recommended that Section 2(d) end with the word "section" on page
2, line 19. With those changes, he didn't believe that [the
Office of the Attorney General] would have any objection to the
legislation. Furthermore, those changes would avoid the
aforementioned consequences that could undergo further study.
Number 0751
REPRESENTATIVE KERTTULA surmised, from Mr. Johnson's information,
that this legislation could result in departments suing each
other, which occurs in other states. She asked if that could
happen with this legislation.
MR. GUANELI said that such a situation is possible; however, he
felt that such a situation is more likely with lawsuits against
employees versus agencies. He informed the committee that there
is case law in Alaska that says that employees of the state are
not arms of the state and thus the defenses that the state can
arise only apply to the state and not its employees. Therefore,
the split is probably between the state and its employees and
less likely between agencies.
REPRESENTATIVE KERTTULA remarked that although it is not that
clear in the language, it is of concern for her.
REPRESENTATIVE GREEN recalled Mr. Guaneli's reference to common
law. He asked if it is the case that often common law is
superseded with specific laws.
MR. GUANELI answered that in many states where the common law is
not clear, the trend has been to supersede the common law by
statute. He explained that often it is not that easy to define
the common law for the country as different states have different
common laws. Therefore, many legislatures pass statutes for
particular problems in order to be clear and avoid having to
review old court opinions. However, in the legal field when one
comes across something new or something that one hasn't
anticipated, then it helps to look to the common law in order to
determine how the courts have treated similar situations. If the
common law is completely excluded, then [everyone] would be
deprived of something that is valuable in those situations that
are not covered by statute, which would be unfortunate.
Number 1009
MR. JOHNSON expressed surprise that Mr. Guaneli would be
mentioning that the issue would need further study. In regard to
the Breeze case cited by Mr. Guaneli, Mr. Johnson pointed out
that the legislature has the ability to legislate in the fraud
area as was done in the circumstances presented by the Breeze
case. The same is also true of the land fraud case discussed by
Mr. Guaneli. In regard to Mr. Guaneli's third example involving
prosecutorial discretion, Mr. Johnson said, "I'm not sure how
actual that is." He stated that the power to bring cases
included the power not to bring cases. Therefore, he didn't
believe that a clarification to the statute would be difficult to
write in. Furthermore, the amicus briefs would also be equally
easy to frame within the statutes. He indicated that the
difference is a matter of perspective. Mr. Johnson said, "If you
want to maintain open-ended powers for the attorney general and
the Department of Law to shelf, you know, a couple hundred years
of legal history and through 51 jurisdictions through the common
law and proceed in that manner, I guess that's a matter for
legislative judgment."
MR. JOHNSON informed the committee that the subcommittee for the
Commission on Privatization was partially motivated by U.S.
Attorney General Cole's 1991 opinion regarding the attorney
general's settlement authority. That opinion suggested that the
legislature didn't have the power to limit the attorney general's
common law powers. The case that stood behind that statement
inaccurately represented the law of Maryland. He referred to the
Goldberg v. State case [Maryland Appellate Court, Decision 1987].
That case talked about the duties and powers of the state's
attorney, which ought to be derived from the constitution and
legislative enactments. Mr. Johnson felt that was central for
legislative consideration here. If one believes that there
should be limited and constitutionally based government, then
this open-ended provision in statute is inappropriate.
Furthermore, Mr. Johnson didn't believe that the solutions are as
difficult as Mr. Guaneli suggests.
CHAIRMAN KOTT asked if anyone else would like to testify. There
being no one, public testimony was closed.
Number 1214
REPRESENTATIVE MURKOWSKI remarked that she wasn't sure what is
being given up. She recalled Mr. Guaneli asking the question:
what are we eliminating and what common law powers of attorneys
general in other states would no longer be available? She noted
that question had not been answered. Representative Murkowski
indicated that she was not sure about giving up something when
she wasn't sure what she was giving up.
CHAIRMAN KOTT recalled that Mr. Johnson pointed out that the
attorney general's powers should be [and is] derived from the
constitution and legislative enactments.
REPRESENTATIVE GREEN referred to page 2, line 9, " ... IN A
STATE]" and asked if there is a possibility that there could be
conflicting laws due to 49 other attorneys general doing things
in their states. Does the picking and choosing create a possible
problem?
MR. GUANELI said:
The way that I would interpret this ... is not
necessarily that the attorney general could or that the
courts, who would ultimately rule on whether the
attorney general has this authority would be saying as
long as we can find one state that does it, that that's
enough. ...I think the clause here is the that all
hangs together as one is "OFFICE OF ATTORNEY GENERAL IN
A STATE".
MR. GUANELI said he believes that what we are looking for is
regarding the general American common law that usually pertains
to the office of a state attorney general. Under American
jurisprudence, the office of a state attorney general usually
comes with certain authority that revolves around taking
necessary and proper actions to preserve the public interest and
protect the public. He related his belief that the
aforementioned language really refers to a state attorney
general. He didn't believe it is proper to merely say that if
one state does it, that [Alaska] can do it. Rather, he believes
that this is a power that the courts in the country generally
recognize as usually pertaining to the office of a state attorney
general.
REPRESENTATIVE GREEN commented that [such an interpretation]
makes quite a difference.
MR. GUANELI acknowledged [that his interpretation makes quite a
difference]. He didn't believe that [the department] would have
any objection to changing the language to refer to the office of
a state attorney general.
REPRESENTATIVE CROFT said that the word "generally" would be more
appropriate than "USUALLY".
MR. GUANELI indicated that [the department] wouldn't object to
that.
CHAIRMAN KOTT asked if there has ever been a case that reached
the highest court in the state and overturned the duty of a
previous or existing attorney general.
Number 1468
JIM BALDWIN, Assistant Attorney General, Governmental Affairs
Section, Civil Division (Juneau), Department of Law, informed the
committee that there was an U.S. Supreme Court decision that by
dissent decree invalidated a statute in a federal case. The
Alaska Supreme Court ruled that [the department] didn't have the
power to do that.
CHAIRMAN KOTT recalled that there is an association of attorney
generals around the state. He asked if there is a document that
generically defines the powers and duties of the attorneys
general as they see it.
MR. GUANELI answered that there is a publication on the office of
the attorney general and that publication includes a chapter on
common law powers of the attorney general. He indicated that he
is reviewing that publication and it doesn't really set out, with
any completeness, what all the common law powers are. However,
he believes that some general principles can be derived from that
publication. Mr. Guaneli informed the committee that the tenor
of that publication, which is from the National Association of
Attorneys General, is that the common law is necessary in order
for attorneys general to perform their job. He noted that the
publication is not intended to be a definitive work on the
subject.
REPRESENTATIVE GREEN asked if, as the common law has unfolded,
different states have followed different paths relating to a
common law that may not relate to a state statute.
MR. GUANELI responded that Representative Green's question is
difficult to answer. He understood the question to be regarding
whether different states have come to different conclusions
regarding what the English common law holds. In response to the
question, Mr. Guaneli said that generally the states are
consistent, but probably differ in regard to a specific set of
facts. Therefore, some changes [to the legislation] might be
appropriate.
CHAIRMAN KOTT asked if there were further questions for Mr.
Guaneli. There being none, he asked if there was further
discussion.
REPRESENTATIVE GREEN moved that the committee adopt conceptual
Amendment 1, which would delete on page 2, line 9, "USUALLY
PERTAIN TO THE OFFICE OF ATTORNEY GENERAL IN A STATE]" and insert
"generally pertain to the office of other state attorneys
general". He explained that he is attempting to incorporate Mr.
Guaneli's concept of flexibility for the attorney general without
necessarily giving him/her authority to pick and choose specific
[duties] that only one state does.
CHAIRMAN KOTT interpreted the conceptual amendment to mean, then,
that Alaska would not allow its attorney general to do something
that is tailored to Alaska and not done elsewhere.
REPRESENTATIVE GREEN replied yes, at least generally because
there may be some instances where three states follow one path
and the other 46 follow another path. He expected our state to
go along with the [majority].
CHAIRMAN KOTT asked if there was objection to the conceptual
amendment, Amendment 1. There being none, Amendment 1 was
adopted.
Number 1793
REPRESENTATIVE MURKOWSKI referred to page 2, lines 19-20, and
recalled that it would appear that one wouldn't want to exclude
the attorney general's ability to take on the individuals.
Therefore, Representative Murkowski moved that the committee
adopt Amendment 2 which would delete, on page 2, all the language
after the word "section" on line 19. There being no objection,
Amendment 2 was adopted.
Number 1871
REPRESENTATIVE GREEN moved that the committee report CSSB
286(JUD), as amended, out of committee with individual
recommendations and an indeterminate fiscal note. There being no
objection, HCS CSSB 286(JUD), was reported from the House
Judiciary Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee adjourned at 3:32 p.m.
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