Legislature(1993 - 1994)

09/10/1993 09:00 AM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                     HOUSE LABOR & COMMERCE                                    
                       STANDING COMMITTEE                                      
                       September 10, 1993                                      
                       Anchorage, Alaska                                       
                 Legislative Information Office                                
                            9:00 a.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Bill Hudson, Chairman                                         
  Representative Joe Green, Vice Chairman                                      
  Representative Brian Porter                                                  
  Representative Joe Sitton                                                    
  Representative Jerry Mackie                                                  
  Representative Eldon Mulder                                                  
  Representative Bill Williams (via teleconference)                            
                                                                               
  OTHER LEGISLATORS PRESENT                                                    
                                                                               
  Representative Fran Ulmer                                                    
  Representative Ed Willis                                                     
  Representative David Finkelstein                                             
  Representative Cliff Davidson                                                
  Representative Mike Navarre                                                  
  Representative Jim Nordlund                                                  
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  None                                                                         
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  HB 292:   An  Act  relating   to  civil   actions;                           
            amending Alaska Rules of Civil Procedure                           
            49  and   68;  and   providing  for   an                           
            effective date.                                                    
                                                                               
            HEARD AND HELD                                                     
                                                                               
  HB 300:   An Act  relating to civil  liability for                           
            commercial recreational activities;  and                           
            providing for an effective date.                                   
                                                                               
            NOT HEARD                                                          
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 292                                                                
  SHORT TITLE: CIVIL LIABILITY                                                 
  SPONSOR(S): LABOR & COMMERCE                                                 
                                                                               
  JRN-DATE     JRN-PG                 ACTION                                   
  04/23/93      1459    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/23/93      1459    (H)   L&C, JUDICIARY, FINANCE                          
  09/10/93              (H)   L&C AT 09:00 AM CAPITOL 17                       
                                                                               
  BILL:  HB 300                                                                
  SHORT TITLE: LIABILITY: COMMERCIAL RECREATION ACTIVITY                       
  SPONSOR(S): LABOR & COMMERCE                                                 
                                                                               
  JRN-DATE     JRN-PG                 ACTION                                   
  05/06/93      1665    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  05/06/93      1665    (H)   L&C, JUDICIARY, FINANCE                          
  09/10/93              (H)   L&C AT 09:00 AM CAPITOL 17                       
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Mike Ford, Attorney                                                          
  Legislative Legal Services                                                   
  Legislative Affairs Agency                                                   
  130 Seward Street                                                            
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Gave overview of HB 292                                 
                                                                               
  Sharon Anderson, Associate Executive Director                                
  Alaska State Hospital and Nursing                                            
     Home Association                                                          
  420 "L" Street, 5th Floor                                                    
  Anchorage, Alaska 99501                                                      
  276-1700                                                                     
  POSITION STATEMENT:  Supported HB 292                                        
                                                                               
  David A. McGuire                                                             
  Orthopedic Surgeon                                                           
  4048 Laurel                                                                  
  Anchorage, Alaska 99502                                                      
  562-4142                                                                     
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Jeff Feldman, President                                                      
  Alaska Academy of Trial                                                      
    Lawyers Association                                                        
  500 "L" Street, Suite 400                                                    
  Anchorage, Alaska 99501                                                      
  272-3538                                                                     
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Dan Hensley, Attorney                                                        
  Alaska Academy of Trial                                                      
   Lawyers Association                                                         
  1016 West Sixth Street, Suite 420                                            
  Anchorage, Alaska 99501                                                      
  274-6551                                                                     
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Mano Frey, President                                                         
  AFL-CIO                                                                      
  2501 Commercial Drive                                                        
  Anchorage, Alaska 99501                                                      
  272-4571                                                                     
  POSITION STATEMENT:  Testified against HB 292                                
                                                                               
  Laura Kelley, Vice President                                                 
  AFL-CIO                                                                      
  C/O Human Services                                                           
  University of Alaska Anchorage                                               
  3211 Providence Drive                                                        
  Anchorage, Alaska 99508                                                      
  786-1645                                                                     
  POSITION STATEMENT:  Testified against HB 292                                
                                                                               
  Steve Conn, Executive Director                                               
  Alaska Public Interest Research Group                                        
  P.O. Box 101093                                                              
  Anchorage, Alaska 99510                                                      
  278-3661                                                                     
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Frank Thomas-Mears                                                           
  State Insurance Administrator                                                
  Alaska Dental Society                                                        
  P.O. Box 112063                                                              
  Anchorage, Alaska 99511-2063                                                 
  345-7181                                                                     
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Eric Sanders                                                                 
  Address Unavailable                                                          
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
  Gorden Evans                                                                 
  Health Insurance Association                                                 
    of America                                                                 
  318 Fourth Street                                                            
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Testified on HB 292                                     
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-39, SIDE A                                                           
  Number 001                                                                   
                                                                               
  CHAIRMAN  HUDSON  convened  the  House  Labor  and  Commerce                 
  Committee  meeting  at  9:23  a.m.    Members  present  were                 
  Representatives Hudson,  Green, Porter and Mackie.   Members                 
  via teleconference were  Reps. Sitton  and Williams.   Other                 
  legislators present  were Reps. Brown,  Finkelstein, Willis,                 
  Ulmer, Davidson, Navarre, Mulder and Nordlund.                               
  HB  292 Relating to civil actions;  amending Alaska Rules of                 
  Civil Procedure  49,  68,  and  82;  and  providing  for  an                 
  effective date.                                                              
                                                                               
  CHAIRMAN HUDSON noted the members  present and announced the                 
  day's  agenda,  explaining  that   the  meeting  was   being                 
  teleconferenced.   The meeting was intended to set the stage                 
  and  to  get a  better understanding  of  the issue  of Tort                 
  Reform.                                                                      
                                                                               
  MIKE FORD, Attorney, Legislative Legal Services, Legislative                 
  Affairs Agency, began with a general overview.  He feels one                 
  of the  difficulties of this  area, from various  reports is                 
  that  tort  reform  involves a  number  of  fairly technical                 
  areas.    Tort reform  actually  is  a subset  of  our civil                 
  justice  system.    Civil  justice  is intended  to  provide                 
  revenues  to the  individual as  opposed to  (indiscernible)                 
  public.  A tort,  essentially is anything for which  you can                 
  receive compensation, something you can  obtain damages for.                 
  Tort  reform is contrasted to contractual actions.  It's not                 
  about a  breach of  contract, or a  crime, but some  type of                 
  civil  injury  that one  can  obtain  a recovery  for.   The                 
  purpose of the tort laws  is compensation.  The  involvement                 
  in this  area of the  law, over the  years, has  resulted in                 
  expansion of this  area.  At the beginning  of the tort era,                 
  there were very  narrow areas for  which you could obtain  a                 
  recovery.  Over  the last  50 - 60  years, particularly,  we                 
  have seen an enormous  expansion in the types of  things for                 
  which you  can take a recovery.  Some  of that has been done                 
  by case law and some has been done by legislators.   Between                 
  the two, we have seen a fairly large expansion in that area.                 
                                                                               
                                                                               
  There are  several kinds  of basic  areas in  which you  can                 
  obtain  a recovery.   There  are torts known  as intentional                 
  torts, of which the  most common area is negligence  in that                 
  someone has failed to do something  that a reasonable person                 
  would have  done.  There  is  some damage  caused  and  that                 
  triggers  the traditional lawsuit  of which is  an effort to                 
  recover compensation for that injury.                                        
                                                                               
  MR.  FORD explained the  whole system is  intended to obtain                 
  compensation for  someone and  the progression  of filing  a                 
  lawsuit to actual recovery can be a very quick one or it can                 
  be a very long one, depending on  the facts of the case.  It                 
  is  hard  to  talk about  the  typical  case,  they are  all                 
  different.  Some  involve years of litigation,  some involve                 
  very  small amounts of  money and are  settled very quickly.                 
  All cases  have an  impact on  the system.   Sometimes  they                 
  involve changes to the law, either  to the courts or changes                 
  to the law  implemented by  the legislature.   That gives  a                 
  certain basic understanding of tort reform.                                  
                                                                               
  MR.   FORD  told  committee  members  the  most  significant                 
  legislative changes occurred  in 1986.   At  that time,  the                 
  legislature looked at a number of proposals that changed the                 
  way  in which someone could recover damages in civil action.                 
   The result of that effort was passage of a bill that became                 
  an  act,  Chapter  17,  Title  9.    It  made  a  number  of                 
  significant changes  to the  way in  which someone  recovers                 
  damages in civil action.  The  adoption of that act resulted                 
  in,  most  significantly,  the change  in  which  the system                 
  operates in the  area of joint  and severability.  It  means                 
  when someone has  an injury, often  the injury is caused  by                 
  more than one person.    Before 1986, one could  recover all                 
  damages from any one  of the multiple defendants.   That was                 
  the rule of joint  and severability.   It is several in  the                 
  sense that each party is liable.   It is joint in the  sense                 
  that all  the parties  are liable  for all  of the  damages.                 
  That was the  original issue among all of the  states and in                 
  Alaska.  The legislature  decided to change that.   In 1986,                 
  what we changed to was a  modified version of that approach.                 
  The legislature decided to allow a recovery against a single                 
  defendant for more  than the  share of the  damages, but  it                 
  limited the amount you could recover.  In that sense, it was                 
  a modified  rule  of  joint and  severability.    The  other                 
  significant change in that area was  the cap on non economic                 
  damages.                                                                     
                                                                               
  MR. FORD  said in  1988, the  initiative was  passed by  the                 
  voters of the state of Alaska,  which made another change to                 
  the  rule  of  joint/severability.    The  rule  changed  by                 
  (indiscernible)   initiative   to   pure   severability,   a                 
  responsible party  was only  liable for their  share of  the                 
  damage.  If there  were three defendants, they would  all be                 
  equally liable.   They would only  be liable for their  one-                 
  third share of their liability.  That is the law today.  The                 
  initiative also made another change,  in which it eliminated                 
  the contribution chapter.                                                    
                                                                               
  CHAIRMAN HUDSON asked  Mr. Ford  to expand  on the  attorney                 
  fees,  and  asked   if  there  was  an   initiative,  public                 
  referendum, or public vote on the subject at that time.                      
  MR. FORD answered that he believed  there was and thought it                 
  was a proposal.  The only  two substantive provisions on the                 
  initiative ballot were  the issue of  joint/severability and                 
  the contribution  chapter.  He believed there  was an effort                 
  to do the Rule 82  provision on attorney fees and,  for some                 
  reason, it was not admitted to the ballot.  He was  not sure                 
  why.                                                                         
                                                                               
  Number 129                                                                   
                                                                               
  REPRESENTATIVE NAVARRE asked if the limit to attorney's fees                 
  was not allowed on the ballot.                                               
                                                                               
  MR. FORD stated it was not on the ballot.                                    
                                                                               
  Number 138                                                                   
                                                                               
  REPRESENTATIVE  GREEN asked  Mr. Ford  is  he may  have come                 
  across  a situation that  at the time  there seemed  to be a                 
  change from  getting someone  well to  getting someone  more                 
  than well.                                                                   
                                                                               
  MR. FORD felt that had always been an issue and the response                 
  of  the  legislature  was  to  put  the  cap  on  it.    The                 
  legislation passed in  1986 limited  the pain and  suffering                 
  damages   to  the   amount  of   $500,000.00   with  certain                 
  exceptions.                                                                  
                                                                               
  Number 154                                                                   
                                                                               
  CHAIRMAN HUDSON asked Mr. Ford to walk the committee through                 
  HB 292.                                                                      
                                                                               
  Number 202                                                                   
                                                                               
  MR.  FORD  began his  review  of  HB 292,  work  draft dated                 
  8/27/93.  He began with Section 1, FINDINGS AND PURPOSE.  He                 
  felt it  was self explanatory.  The only purpose of this was                 
  if the court was to find some ambiguity in one of  the other                 
  provisions.  It also serves the purpose to the public of the                 
  intent.  The only problem he  had was on page 3, (6),  which                 
  concerns  having   the  attorney  general   compile  certain                 
  information.  He didn't believe there to be a provision that                 
  actually requires the attorney general to do that.                           
                                                                               
  MR.  FORD  stated  that  if  the  intent was  to  leave  the                 
  paragraph in, he  would suggest that the  committee think of                 
  how  they  want   the  attorney   general  to  compile   the                 
  information, and what information.  At present, there is not                 
  a provision  that states the attorney general shall do this.                 
  He felt it  was an oversight.   He had no other  comments on                 
  Section. 1.                                                                  
                                                                               
  MR.  FORD  then brought  up Section  4,  stating it  was the                 
  existing  law  which provided  a  two year  period  to bring                 
  personal injury  lawsuits.   He explained  what was  done in                 
  Section 4, lines  1, 2, and 3,  was that they had  taken out                 
  the existing rule  and moved it to  Section 5.  It  was done                 
  because it makes it much clearer in that manner because they                 
  are also affecting other provisions of  the bill.  Section 4                 
  is simply  cleaning up  the provision,  moving the  existing                 
  rule, and placing it in Section 5.                                           
                                                                               
  Section 5,  is a  two  year period  to bring  a lawsuit  for                 
  personal injury death or  property damage.  It is  two years                 
  from the accrual  of the action.   Accrual  is a legal  term                 
  which basically  means  that time  that one  should know  or                 
  should have known that he/she could file the lawsuit.  It is                 
  in one  sense, a rolling period.  When does the clock start?                 
  When does the clock stop?  Sometimes it is hard to know that                 
  and sometimes it is very simple.  If someone slips and falls                 
  down the  stairs, it  is pretty  clear to  know that  he/she                 
  would have injuries.   That is  when the clock  starts.   If                 
  someone  has an operation, and  suffers an injury they don't                 
  know about - the  doctor leaves a sponge where  he shouldn't                 
  have left it -  one may not know  about it for a long,  long                 
  time.  That  is a more  latent type of  injury that may  not                 
  start until you know that you have that injury; two examples                 
  of the opposite extremes.                                                    
                                                                               
  There  are two provisions in Section  5, which are different                 
  in effect,  in each  type of civil  action.   On line  8, it                 
  states:  "Notwithstanding  AS 09.10.140."   That means  that                 
  the provisions of 09.10.140  do not apply.  AS  09.10.140 is                 
  an  exception to the general rule.  The general rule being a                 
  person has two  years to file  a lawsuit, except in  certain                 
  cases.   The cases  which are  being talked  about are  with                 
  people who are in prison, people who  are under age that are                 
  minors, or people who are incompetent.  Those are exceptions                 
  to  the  general  rule that  one  has two  years  to  file a                 
  lawsuit.                                                                     
                                                                               
  On lines  11 and 12,  it states  where this period  does not                 
  apply if there is a  shorter period under another  provision                 
  of law.  There are other provisions that may start the clock                 
  earlier, so one actually  has less than two years.   This is                 
  why there is subsection (b).                                                 
                                                                               
  Section 2 is a  provision that applies to a  particular type                 
  of civil action, particular type of torts.  It gives one six                 
  years to bring a lawsuit.  A point of significance: on  line                 
  13, there is still not included exceptions.  Notwithstanding                 
  AS  09.10.140,  those  exceptions are  not  going  to apply.                 
  Another point of significance, is that it is a flat six year                 
  period, not six  years from when  one knows, or should  have                 
  known.  It  is six years from  (1), (2) & (3) dates.   It is                 
  the earlier of those dates.  A person may have more than one                 
  of (1), (2) & (3) apply.  Look at number (1); six years from                 
  the date a  product is alleged  to have caused the  personal                 
  injury or property  damage was purchased.   For instance  if                 
  someone buys a can of hair spray, and it causes all of their                 
  hair to fall  out, the day that person  buys the hair spray,                 
  the  clock  starts   to  work.     Number  (2)  deals   with                 
  construction  type  cases,  substantial  conclusion  of  the                 
  construction that one alleges  caused their injuries, starts                 
  the clock.  Number (3)  is a generic provision for the  last                 
  act alleged to  have caused the  personal injury.  The  time                 
  one has to bring their personal injury is six years from one                 
  of those dates.  It may  be that the earlier provision  that                 
  was  discussed,  the  two year  provision,  would  not apply                 
  because this is a shorter period.  In that sense, the two do                 
  match.                                                                       
                                                                               
  For example, conceivably  five years down the  road, someone                 
  discovers a sponge in  their stomach.  The last  act alleged                 
  to have caused their personal injury  was the operation.  If                 
  it is  five years down the road, then  the person has a year                 
  to bring up  their action.   Whereas the other provision,  a                 
  person had two years.                                                        
                                                                               
                                                                               
  Number 328                                                                   
                                                                               
  REPRESENTATIVE NAVARRE stated that the  two years only apply                 
  as a  roll.  The rolling  factor only applies for  the first                 
  six years.                                                                   
                                                                               
  MR. FORD  believed that  was correct,  if in  fact that  the                 
  section applied to the person.                                               
                                                                               
  He  stated there  are exceptions, such  as in  subsection b,                 
  intentional injuries,  intentional concealment.   The doctor                 
  knew  about  the sponge  and didn't  tell  the person.   The                 
  emphasis here is to require one to bring the action within a                 
  period  of  time  after  the  injury  that  is the  shortest                 
  applicable under any of  the provisions that they have.   An                 
  example of the two year provision is:  One has the operation                 
  and knows it doesn't work correctly, something happened that                 
  was wrong.  The  person has two years to  bring the lawsuit,                 
  not six years.  A shorter period would apply in that type of                 
  case.                                                                        
                                                                               
  Number 335                                                                   
                                                                               
  REPRESENTATIVE BROWN referenced  page 5, line 10,  the words                 
  "of  the  accrual   of  the  action"   and  asked  for   the                 
  explanation.                                                                 
                                                                               
  MR. FORD  stated "accrual,"  was a  technical term,  meaning                 
  when one knows or when someone should have known.                            
                                                                               
  Number 340                                                                   
                                                                               
  REPRESENTATIVE GREEN asked if he was walking down the street                 
  and there was construction going on and a pressure vessel on                 
  a Cat blows  out which is seven years old, did it mean there                 
  is no compensation if someone suffered injuries.                             
                                                                               
  MR.  FORD  answered in  the negative.    He stated  that the                 
  company that  bought the  Cat  might be  out of  luck.   All                 
  depending  if they had contracts or if they had a tort suit.                 
  The owner of the Cat is liable.                                              
                                                                               
  Number 353                                                                   
                                                                               
  REPRESENTATIVE NAVARRE asked what if  the valve was supposed                 
  to last  for ten  years,  no warranty  but the  manufacturer                 
  stated it would  last for ten years.  If the valve failed in                 
  six  years,  would  the manufacturer  be  liable  under that                 
  situation,  or  if the  subcontractor  looked for  the major                 
  construction company  that owns the  Cat?   Where would  one                 
  recover?                                                                     
                                                                               
  MR. FORD answered it would be hard to tell who could recover                 
  exactly.   If it was an express warranty  - a piece of paper                 
  stating the  part would last  for ten  years.   If that  was                 
  done, then they would  be on the  hook for the damages  that                 
  result.  If the manufacturer just gave someone a product and                 
  the industry standard is  ten years, or one just  assumes it                 
  is going to be good for  ten years, but it doesn't, then  it                 
  really depends if there is negligence or not.                                
  REPRESENTATIVE NAVARRE added that if there was no negligence                 
  in that case, there would not be any recovery.                               
                                                                               
  MR. FORD stated  he was correct.  It  could be ordinary wear                 
  and tear.                                                                    
                                                                               
  Number 382                                                                   
                                                                               
  REPRESENTATIVE  BROWN  said if  there  was an  airplane that                 
  crashed that was  purchased by  Alaska Airlines seven  years                 
  ago,  and the  fault for  the crash  was determined to  be a                 
  defective part  in the  airplane and  not the  fault of  the                 
  Alaska Airlines  pilot,  ground crew,  weather, or  anything                 
  else.   The reason for  the crash was the  defective part in                 
  the airplane.   Would there be  any recovery for people  who                 
  were killed or injured  and who would the recovery  be from?                 
  To  what extent would Alaska Airlines,  itself, be liable in                 
  that situation?                                                              
                                                                               
  MR. FORD stated people spend  thousands of dollars to answer                 
  those  types of questions.   He could  only give guidelines.                 
  It is very hard  to predict liability precisely.   The rules                 
  that  apply under  this bill,  again one must  bring certain                 
  lawsuits within six  years.  If  there was  a part that  was                 
  defected, that was not known about, for seven years, he felt                 
  they lose the right to bring personal injury actions at some                 
  point.   If there  was  no negligence  in  the part  of  the                 
  airlines, that people  died as  the result of  the part,  he                 
  felt it  was hard  to believe.   If  it just  happened, then                 
  there is no recovery,  because there is no negligence.   The                 
  airline did not act unreasonable.                                            
                                                                               
  Number 442                                                                   
                                                                               
  REPRESENTATIVE  BROWN asked if that would  be because of the                 
  imposition of the  six years from  the date the product  was                 
  purchased by them.                                                           
                                                                               
  MR. FORD answered if the last act alleged to have caused the                 
  personal injury was the installation of the part, it was not                 
  done negligently.  The  reason the airplane crashed was  the                 
  part was defective.   The  last act alleged  to have  caused                 
  personal injury, in  his mind, was  the plane crash for  the                 
  people who died.  Alaska Airlines wouldn't be the one to sue                 
  the manufacturer, but the person who died might well be.                     
                                                                               
  REPRESENTATIVE NAVARRE asked about the severability law.                     
                                                                               
  MR. FORD stated that only applies  to who is responsible and                 
  how much one pays,  whether one can bring the  lawsuit under                 
  the terms of the statute of limitations.                                     
                                                                               
  REPRESENTATIVE NAVARRE stated that one could bring a lawsuit                 
  but if the part was 100 percent responsible for the cause of                 
  the  accident, one  would not  have any  recovery.   Someone                 
  could bring  a lawsuit,  say to  sue the  airlines, but  the                 
  airlines will say it was not their fault.                                    
                                                                               
  MR. FORD felt that was a good question which brought up what                 
  was the last act.                                                            
                                                                               
  REPRESENTATIVE  BROWN referenced page  3, subsection a, line                 
  13, stating a  person may not  bring an action for  personal                 
  injury, death, unless it is brought  within six years of the                 
  earlier of the  date.  (1) a product alleged  to have caused                 
  the  problem was  purchased.   The airlines  was flying  the                 
  plane  and the plane came down  because of a defect, that is                 
  going to be the date the  airlines purchased either the part                 
  or plane, or whatever was at fault.  Right?                                  
                                                                               
  MR. FORD stated that clearly the  airlines could not sue the                 
  manufacturer.                                                                
                                                                               
  REPRESENTATIVE BROWN asked  if the people that  were injured                 
  could sue the manufacturer.                                                  
                                                                               
  MR. FORD answered  in the  affirmative.  The  fact that  the                 
  airlines  purchased  it.   He  believed  number  "(3)" would                 
  apply.                                                                       
                                                                               
  CHAIRMAN HUDSON believed it was important that the  area was                 
  understood.  He  asked Mr.  Ford if he  could contrast  what                 
  would happen next.                                                           
                                                                               
  MR. FORD answered  that at present,  again it comes back  to                 
  the term "accrual,"  when you know or should have known.  If                 
  the defective part  is installed, and  one does not know  it                 
  for seven years, then when one knows  it, you have the right                 
  to  bring your lawsuit up.   Under the laws today, one could                 
  sue  the  manufacturer or  the  airlines, because  they know                 
  about it when the plane crashes.                                             
                                                                               
  Number 476                                                                   
                                                                               
  REPRESENTATIVE MACKIE referenced  the original question  and                 
  stated it  was not  clear in  his mind,  under the  proposed                 
  draft, what is being said.   The airlines would not be  able                 
  to sue the manufacturer because of  the six year limitation,                 
  but the victims'  families would  still be able  to bring  a                 
  lawsuit and expect recovery from the manufacturer under this                 
  scenario.                                                                    
                                                                               
  MR. FORD  answered  in the  affirmative, stating  it is  the                 
  earlier  date,  if  the  act  alleged  is the  part  of  the                 
  aircraft.                                                                    
                                                                               
  REPRESENTATIVE  DAVIDSON asked  what  is magical  about  six                 
  years and what happens in other states.  Is there a six year                 
  limitation  or  some  other length  of  time?    Did it  not                 
  encourage the state of Alaska to become some type of dumping                 
  ground  for  older  equipment because  people  would  not be                 
  responsible because the company that set the equipment up in                 
  the first place wouldn't have to worry about lawsuits?                       
                                                                               
  MR. FORD referenced there were a  number of states that have                 
  periods of time like this.  The  period of time that one has                 
  to bring a lawsuit varies.  The state of Colorado has a ten-                 
  year  provision,  which  is  applicable  to  architects  and                 
  engineers.   When he states  they have other provisions like                 
  this,  other  states  don't  necessarily  have  as  broad  a                 
  provision as this.  They have statute  provisions like this.                 
  The provision  that Colorado  has is  a ten-year  provision,                 
  which was upheld in a court challenge.                                       
                                                                               
  REPRESENTATIVE DAVIDSON asked if Colorado divided up between                 
  design and construction and other actual product purchases.                  
                                                                               
  MR. FORD stated that was correct.                                            
                                                                               
  Number 518                                                                   
                                                                               
  REPRESENTATIVE BROWN referenced back to the question whether                 
  (1)  governs,  or  (3)  governs  under  the  (indiscernible)                 
  medical about the  airplane crash.   She asked if it  states                 
  the earlier of (1) or (3),  if (1) was seven years ago,  and                 
  (3)  was today, wouldn't the person injured be excluded from                 
  suing under the language as it is written now.                               
                                                                               
  MR. FORD stated  that as  he reads number  (1), it  wouldn't                 
  apply to a person  who wasn't a purchaser.  If  a person who                 
  wasn't a purchaser was injured by  a product, purchased by a                 
  third party, in this case  Alaska Airlines, he wouldn't read                 
  it  that  way, because  the passenger  did not  purchase the                 
  product.                                                                     
                                                                               
  REPRESENTATIVE  FINKELSTEIN  referenced   the  same   point,                 
  stating that hypothetically what was  being spoken about was                 
  the  case where the fault  was entirely the  part.  The part                 
  was  defective,  there was  no  doubt  about it.    There is                 
  nothing in the draft  that states there is any  relationship                 
  to  whether  the  person filing  the  suit  is  the one  who                 
  purchased the product.   It only states, "a  product alleged                 
  to cause the injury," not purchased by the plaintiff, had to                 
  be brought within six years.                                                 
                                                                               
  MR. FORD said he understands what Representative Finkelstein                 
  was saying.   Clearly  the case,  as he  understood it,  the                 
  airlines could not sue the parts company, but a person could                 
  not either.   The product, that  alleged to have caused  the                 
  injury, was purchased  within six  years.  That  is what  is                 
  stated.  The record needs to be straightened out, it is very                 
  confusing.                                                                   
                                                                               
  REPRESENTATIVE FINKELSTEIN  agreed it  was complex  material                 
  and the clearer it could be made, the better.  A court could                 
  interpret  it that number (1) did apply.   He asked where it                 
  could be found  that the  connection to whether  or not  the                 
  plaintiff was the one who purchased it.   It didn't seem the                 
  words were in the draft.  The only words he found  were that                 
  the product, regardless of who purchased  it, was alleged to                 
  have caused the damage.                                                      
                                                                               
  MR. FORD asked what was a "product."   Is the part that goes                 
  in a  plane a product?   He was  assuming those facts.   The                 
  fact that it was purchased more than six years earlier.                      
                                                                               
  Number 594                                                                   
                                                                               
  REPRESENTATIVE GREEN stated that there have been statutes of                 
  repose  dealing  primarily  with  buildings.   Parts  within                 
  buildings  may  have  been  the  problem  which  caused  the                 
  ultimate damage.   How are those litigations handled?  Would                 
  it be the same as an airplane?                                               
                                                                               
  MR. FORD answered that there were similarities between those                 
  types of cases.  A large distinction is that with buildings,                 
  they  are  not  subject  to the  stresses  as  an  airplane.                 
  Buildings typically don't have  obvious defects, although  a                 
  defect may exist and may last  for 30 years before something                 
  happens.                                                                     
  REPRESENTATIVE GREEN  added there could  be exceptions  when                 
  one looks at an aftermath of  earthquake, for example.  They                 
  do fail primarily for either negligence or stress.                           
                                                                               
  MR. FORD stated in that sense, they are similar.                             
                                                                               
  Number 623                                                                   
                                                                               
  REPRESENTATIVE MACKIE felt the draft was not clear.  He felt                 
  it  needed to be clearly explained so there would not be any                 
  question for a judge to have to interrupt.                                   
                                                                               
  TAPE 93-39, SIDE B                                                           
  Number 001                                                                   
                                                                               
  CHAIRMAN HUDSON reiterated that some  the of questions would                 
  be posed to some of the witnesses following the testimony.                   
                                                                               
  Number 012                                                                   
                                                                               
  MR. FORD  brought up  Section 3  AS.09.10 stating  it was  a                 
  different limitation which  applies to  an action against  a                 
  health   care    provider.       The   exception    language                 
  "notwithstanding."  Moving to Section 2, again it is started                 
  with exceptions of  line 4, "Notwithstanding AS  09.10.140,"                 
  which  simply  means  there  are   exceptions  that  do  not                 
  presently apply to a lawsuit brought under this section.  If                 
  someone  were  to  bring  an  action based  on  professional                 
  negligence, there is  a definition of that.  If  one has two                 
  years  from the date  of the alleged  act.  There  is also a                 
  variation on that,  if one is  less than six  years of  age,                 
  then the action must  be brought before the person's  eighth                 
  birthday.    Those  two provisions  would  apply  to actions                 
  against health care providers.                                               
                                                                               
  MR. FORD explained there are  sections under subsection (b),                 
  again   the   fraud,   intentional   concealment   and   the                 
  undiscovered presence of  a foreign body is  an example like                 
  (a).  There is also an exception to this two year provision.                 
                                                                               
  Number 037                                                                   
                                                                               
  REPRESENTATIVE  MACKIE  referenced  the   health  provision,                 
  asking if it was a two year accrual.                                         
                                                                               
  MR. FORD answered that  it states, "two years from  the date                 
  of the alleged negligent  act or omission."  He  then stated                 
  it did not say "accrual," that it stated "two years from."                   
                                                                               
  CHAIRMAN HUDSON reiterated  it was  different from the  last                 
  section.                                                                     
                                                                               
  MR.  FORD  agreed  with  Chairman   Hudson,  adding  it  was                 
  different from the generic provision.                                        
                                                                               
  Number 041                                                                   
                                                                               
  REPRESENTATIVE MACKIE referenced number 2  "or if the person                 
  is less than six years  of age."  He felt it could have been                 
  something that occurred when the child was one year old, for                 
  example, had surgery prior to their sixth birthday, or prior                 
  to becoming eight  years of age.  The action  could still be                 
  brought up in that case of the infant or a small child.                      
  REPRESENTATIVE  NAVARRE stated  that  the argument  of child                 
  bearing, if there is a problem with the delivery, usually by                 
  the eighth birthday, it is  known if there is  developmental                 
  disability or other  harm which could  be attributed to  the                 
  birth.   What it  doesn't do  is if  someone had  corrective                 
  surgery done when they  are seven years old, they  only have                 
  until they are nine years old to bring up the case.  He felt                 
  it should be eight years from the time  of the procedure, in                 
  some cases.                                                                  
                                                                               
  Number 058                                                                   
                                                                               
  MR.  FORD  referenced Section  6,  stating there  were three                 
  changes.   On line 14, adding  "wrongful death" to a type of                 
  action  in  which  you  can  recover damages  from  personal                 
  injury.  This  change has already  been made by the  courts.                 
  Mr. Ford then referenced line 15, "BASED ON  NEGLIGENCE" and                 
  stated he  felt it meant  to simply  broaden so it  would no                 
  longer apply the non economic  damage limitations, simply to                 
  negligent actions.  What came  to mind were strict liability                 
  and intentional torts which would  amount to subject to  the                 
  provision, limiting non economic damages.                                    
                                                                               
  Number 071                                                                   
                                                                               
  REPRESENTATIVE   MACKIE   suggested   deleting   "based   on                 
  negligence."    He asked  if  he understands  correctly that                 
  negligence  no  longer  had to  be  proven  in  the case  of                 
  personal injury.                                                             
                                                                               
  MR. FORD answered in  the negative.  He explained  Section 6                 
  reads:  "In an action to recover damages for personal injury                 
  based on negligence."   He  then explained if  it was  taken                 
  out, it  would read:  "In  an action to recover  damages for                 
  personal  injury."   Damages  for  non economic  damages are                 
  limited.  He added that any action for personal injury would                 
  be limited by the provision.                                                 
                                                                               
  MR. FORD referred to the provision "limited compensation for                 
  pain  and suffering,"  and  said  in  order to  collect  non                 
  economic losses, described as pain and suffering, it limited                 
  the  following:   Pain,  suffering, inconvenience,  physical                 
  impairment,  disfigurement, loss  of  enjoyment of  life and                 
  other  nonpecuniary  damage.     He  added  that   "loss  of                 
  consortium" was added as well.                                               
                                                                               
  CHAIRMAN  HUDSON  asked   Mr.  Ford  to  explain   "loss  of                 
  consortium."                                                                 
                                                                               
  MR.  FORD explained  "loss  of consortium"  meant  someone's                 
  spouse.   If someone loses  their spouse, and  the enjoyment                 
  one received from  that companionship, they can  recover for                 
  the loss.                                                                    
                                                                               
  MR. FORD reiterated  that negligence actions are  limited in                 
  this manner.  By  taking the language out, it  would broaden                 
  the limitation.                                                              
                                                                               
  Number 100                                                                   
                                                                               
  MR. FORD brought the  attention of the committee  to Section                 
  7, stating  it was  the cap  on non-economic  damages.   The                 
  changes suggested were an effort to require the cap apply to                 
  single injuries  or death.  He was  not sure if the language                 
  would actually achieve its  goal.  Mr. Ford stated  that the                 
  existing  law  limited the  cap to  each  claim, based  on a                 
  separate incident or injury.  He  was not sure that limiting                 
  it to a single  injury or death  was very clear because  one                 
  could suffer multiple injuries in one incident.  He felt the                 
  committee  should  consider  looking  at  the language  very                 
  carefully, if  in fact, the  intent is  to limit the  cap to                 
  injuries that result from single incidents.                                  
                                                                               
  CHAIRMAN HUDSON suggested  the provision should  say "single                 
  incident" rather than "single injury."                                       
                                                                               
  REPRESENTATIVE  NAVARRE referenced line  20, "may not exceed                 
  $500,000  for  all claims,  including  a loss  of consortium                 
  claim," and said  he feels the language does  not need to be                 
  there.                                                                       
                                                                               
  MR. FORD agreed with Representative Navarre.                                 
                                                                               
  Number 124                                                                   
                                                                               
  MR. FORD  stated Section  8 was  a section  that requires  a                 
  certain  level of  evidence if  punitive damages were  to be                 
  awarded.  The draft  would add some new language  that would                 
  also  require evidence of a certain  thing.  Such as in line                 
  26, "malice  and conscious acts showing deliberate disregard                 
  of another  person  by the  person  from whom  the  punitive                 
  damages are sought."  It is being specific about the kind of                 
  evidence that is  wanted.  He  felt that typically what  one                 
  finds in cases that do award punitive  damages, is precisely                 
  this.  It could certainly be spelled out this way.                           
                                                                               
  Number 135                                                                   
                                                                               
  REPRESENTATIVE NORDLUND  asked Mr. Ford about  situations of                 
  recklessness or carelessness.                                                
                                                                               
  Number 138                                                                   
                                                                               
  MR. FORD did  not think carelessness  would fit.  He  stated                 
  they  were talking  degrees  of badness.    He didn't  think                 
  reckless would either.   Deliberate disregard does  not seem                 
  to be careless or  reckless.  They would have  the intent to                 
  do it.                                                                       
  MR. FORD  stated that  typically there  are negligent  acts,                 
  reckless  acts, and an intentional  acts, to put three broad                 
  categories on it.  He felt conscious acts showing deliberate                 
  disregard was actual reference to an intentional act.                        
                                                                               
  Number 151                                                                   
                                                                               
  REPRESENTATIVE MULDER asked Mr. Ford to  clarify what he was                 
  talking about  as when Ford had the  Pinto with the gas tank                 
  that  was  faulty.   Did  Ford  put  the  Pinto out  anyway,                 
  calculating  the fact that redesigning  the car was going to                 
  cost more than what computed damages were going to be.  That                 
  would be showing disregard, clear and convincing evidence of                 
  malice and conscious act?                                                    
                                                                               
  MR. FORD  agreed and explained that again a lot of the times                 
  it would be interpreted  by courts and juries.  To his mind,                 
  someone  manufacturing 200,000 vehicles  that they  know are                 
  defective would be a conscious act of deliberate disregard.                  
  REPRESENTATIVE MULDER  asked if it  was deliberate disregard                 
  in both drafts.                                                              
                                                                               
  MR. FORD answered in the affirmative.                                        
                                                                               
  Number 166                                                                   
                                                                               
  REPRESENTATIVE NAVARRE  asked how much,  after what punitive                 
  damage(indiscernible)  showing  by   clear  and   convincing                 
  evidence  which  is  already  the  standard, now  adding  an                 
  additional standard, which changes have occurred in awarding                 
  punitive damages since the 1986 change.  How many more would                 
  it reduce by putting in the additional language?                             
                                                                               
                                                                               
  MR.  FORD  answered  that  he  did  not have  any  facts  or                 
  statistics.   His  understanding  was  that  punitives  were                 
  awarded in  very few  cases.   The practical  effect of  the                 
  change would be very  little.  He did not have  any facts to                 
  support  it.   Someone could  check with  the court  system,                 
  which  might  have  some  actual  figures  on the  award  of                 
  punitive damages.                                                            
                                                                               
  Number 178                                                                   
                                                                               
  REPRESENTATIVE MACKIE referenced the  example Mr. Ford  used                 
  and  stated  that  if  a   car  manufacturer  built  200,000                 
  vehicles,  that  would be  considered  deliberate disregard.                 
  Did that mean that out of 200,000 cars, it came out that one                 
  car  was  defective  that  someone  bought  and  got  in  an                 
  accident, then there was clear  and convincing evidence that                 
  it was the  manufacturer's fault  for the defective  vehicle                 
  because it was  only one and not 200,000.  It would preclude                 
  anyone  from filing action  against the manufacturer because                 
  it was deliberate disregard but it was still their clear and                 
  convincing evidence that it was their fault.                                 
                                                                               
  MR. FORD  answered that  one would  have to  meet the  whole                 
  standard.   They  would have  to meet  clear and  convincing                 
  evidence  of malice  and conscious  acts  showing deliberate                 
  disregard.  Again, that would  be up to a jury to  determine                 
  what that was.  In the example he had used, he  was assuming                 
  all 200,000 vehicles  had the  defect, and the  manufacturer                 
  knew about it.   But they decided it was simpler to litigate                 
  than to go  back and  change the part,  which he  understood                 
  were the facts of the Pinto case.   He felt that one vehicle                 
  out of  200,000, it  would not  withstand.   He was  talking                 
  about the manufacturer, not installation.                                    
                                                                               
  REPRESENTATIVE MACKIE  referenced that as  he understood the                 
  complex issue, in the original  language, before the "malice                 
  and conscious acts  showing deliberate disregard,"  it would                 
  have to  be proven,  unless it  was supported  by clear  and                 
  convincing evidence  that it  was the manufacturer's  fault,                 
  for example.   Now in addition to  that, they would  have to                 
  prove that there was deliberate disregard of the whole works                 
  which if it was one vehicle that  is defective the day after                 
  it is driven off the lot, and it killed a family, they don't                 
  have the ability to recover damages  because it was only one                 
  vehicle  and  it  couldn't  be   proven  it  was  deliberate                 
  disregard.                                                                   
                                                                               
  MR.  FORD  answered it  was  just  punitive  damages he  was                 
  speaking  of.  Damages are  intended to punish someone above                 
  and  beyond what one would  give someone for their injuries.                 
  I am assuming  they would recover  all the damages they  are                 
  entitled to compensate them for their injuries.                              
                                                                               
  REPRESENTATIVE MACKIE stated he meant  a jury couldn't award                 
  punitive damages unless deliberate disregard was proven.                     
                                                                               
  MR. FORD answered  in the  affirmative.  One  would have  to                 
  meet the standards to award punitive damage.                                 
                                                                               
  REPRESENTATIVE MACKIE stated  it was, in effect,  the way to                 
  limit the size of the award.                                                 
                                                                               
  MR. FORD answered it would have  that practical effect.  But                 
  he did  not think punitive  damages are awarded  very often.                 
  For those cases that do, yes, it would eliminate those.                      
                                                                               
  Number 219                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN thought it  was usually in cases                 
  where it is a  big company and the economic  damages are not                 
  considered significant enough to have an  effect on it.  One                 
  is not  cheating the punitive  effect because the  amount of                 
  money   is  so   insignificant  from  the   actual  economic                 
  (indiscernible), you would have to get  their attention.  In                 
  those types of  cases, he did not know  where one could find                 
  malice.  For instance, the example  for the auto company, he                 
  did not see any malice.  Since it would have to be clear and                 
  convincing evidence of malice and  conscious act, he felt in                 
  the  example,  they  would never  suffer  punitive  damages.                 
  There was not malice involved.                                               
                                                                               
  Number 228                                                                   
                                                                               
  MR. FORD reiterated if one presumes it has to be directed to                 
  them personally,  then yes  it would  not have  malice.   He                 
  added that it could  also be interpreted as disdain  for the                 
  public in general.                                                           
                                                                               
  REPRESENTATIVE FINKELSTEIN added he did not think malice was                 
  just disdain.  He felt it  was way beyond that.  Disdain  is                 
  indifference and malice, is pretty  horrible intentions.  He                 
  referenced the auto company  and stated it might  be covered                 
  and it should  be recognized  that there is  no evidence  of                 
  malice involved in the case.                                                 
                                                                               
  Number 239                                                                   
                                                                               
  REPRESENTATIVE NAVARRE agreed  and added  that in the  Pinto                 
  case,  most would want to make sure  that it meant that Ford                 
  Motor Company  was going  to be  held for  punitive damages.                 
  But, in fact, he felt the definition of malice might be that                 
  if "or" was  put in,  it might work.   Certainly  "conscious                 
  acts showing deliberate  disregard" could cover it,  but not                 
  if there was  "malice and conscious  acts" because, in  that                 
  case, they did  not want anyone to get hurt.  They were just                 
  hoping nothing would happen.                                                 
                                                                               
  Number 252                                                                   
                                                                               
  MR. FORD referenced  Section 9,  stating it was  cap on  the                 
  amount someone could get for punitive  damages.  It is three                 
  times the amount of compensatory  damages for $200 thousand,                 
  whichever is greater.   He felt  the intent was  to avoid  a                 
  situation   where   someone   obtains   $50   thousand   for                 
  compensatory damages and $500 million in punitive damages.                   
                                                                               
  Number 261                                                                   
                                                                               
  REPRESENTATIVE  NAVARRE stated that  already with  the clear                 
  and convincing standard, and  adding the additional language                 
  that "malice and a conscious  acts with deliberate disregard                 
  of another person,"  and then limiting the amount  one could                 
  collect,  undermines the whole idea behind punitive damages.                 
  The reason was if Ford Motor Company, in the Pinto case, was                 
  charged with $200 thousand punitive damages, then they could                 
  have surely  made a  conscious  decision to  make sure  that                 
  every one of the Pintos got sold in Alaska because then they                 
  could afford it.  That is what it would mean.                                
                                                                               
  REPRESENTATIVE PORTER referenced the first  time he read the                 
  section,  he thought  $200 thousand  was  the maximum.   Two                 
  hundred thousand dollars was  not the maximum.  It  would be                 
  the maximum if  the compensation was less  than one-third of                 
  that - $66 thousand.                                                         
                                                                               
  MR. FORD agreed.                                                             
                                                                               
  REPRESENTATIVE PORTER added in the Pinto case, they have 200                 
  or 300  claims and  it was only  going to  total $5  million                 
  compensation, it could institute $15  million or three times                 
  for punitive damages.                                                        
                                                                               
  REPRESENTATIVE NAVARRE asked what  the punitive damages were                 
  in the Pinto case.                                                           
                                                                               
  MR. FORD answered he  remembered one case in which  the jury                 
  awarded $100 million.                                                        
                                                                               
  Number 286                                                                   
                                                                               
  CHAIRMAN HUDSON asked if a court could modify an application                 
  of three times the amount of  compensatory damages.  Did the                 
  court or the  judge have the authority to change  that or go                 
  above that?                                                                  
                                                                               
  MR. FORD answered in the negative.  The law would have to be                 
  rewritten.                                                                   
                                                                               
  Number 295                                                                   
                                                                               
  MR.  FORD  moved  to  Section  10,  stating,  "The  existing                 
  provision, added  in 1986,  was intended  to prohibit  those                 
  people  who  committed  crimes  from  recovering  for  their                 
  injuries.   The changes that would  be made, on line  5, the                 
  language being taken  out required someone being  engaged in                 
  commission  of  a  felony,  it  would  be  broadened  to  be                 
  `attempting  committing  on  fleeing  from.'"   Also  to  be                 
  eliminated is the  requirement that the person  be convicted                 
  of a felony.  Lastly, on line 8, being taken out is the word                 
  "felony" and substituting it with "action."   On lines 9 and                 
  10, delete "an  exception for  certain civil rights  actions                 
  under 42 U.S.C. 1983."                                                       
                                                                               
  REPRESENTATIVE MACKIE asked if it  was attempting to address                 
  the situation as the landmark case, referenced in the Juneau                 
  Empire, where a man was suing for his emotional suffering.                   
  MR. FORD stated it could apply  if the injuries in suffering                 
  resulted from his crime he committed.  He added one comment,                 
  stating  as  he  first  read the  section,  he  thought that                 
  fleeing from the commission of a felony intended to refer to                 
  the person  committing the felony,  and not to  someone who,                 
  for example, witnesses a bank robbery and runs out the door.                 
  He felt that  "attempting to commit or  committing" actually                 
  came from "fleeing from."                                                    
                                                                               
  REPRESENTATIVE NORDLUND asked who was  to prove that someone                 
  was attempting to commit a felony.                                           
                                                                               
  MR. FORD answered  that under the  existing law, the  person                 
  would have to be  convicted.  Under the provision,  it would                 
  be a battle in a civil suit.  There could  be a case where a                 
  person was actually acquitted, and they had criminal action,                 
  but was precluded  from recovering personal  injury damages.                 
  The  jury  would  find  that,   yes,  someone  was  actually                 
  attempting to commit a felony.                                               
                                                                               
  REPRESENTATIVE NORDLUND asked if in a civil  suit, one would                 
  bring in all kinds of evidence.                                              
                                                                               
  MR. FORD  answered in the  affirmative and added  there were                 
  different burdens.   Criminal action had a  different burden                 
  of proof than a civil action.  One can see that today in the                 
  DEI laws, there are  dual DEI provisions basically.   One is                 
  an  administrative  procedure  where  one  will  lose  their                 
  license and one is  a criminal action.  There  are occasions                 
  where someone is acquitted of a criminal action and yet they                 
  still lose their license in the administrative action.   The                 
  same thing happened here.                                                    
                                                                               
  REPRESENTATIVE  NORDLUND asked if  in some particular cases,                 
  would it be likely to create some new issues.                                
                                                                               
  MR. FORD answered in the affirmative.                                        
                                                                               
  REPRESENTATIVE  PORTER  added that  one  of the  things that                 
  would be  covered, is  an  individual who  is killed,  while                 
  attempting a felony, and is never  convicted.  But his heirs                 
  might take off after (indiscernible).                                        
                                                                               
  Number 349                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  did  not   understand  the  DEI                 
  example because  of looking at  the DEI, the way  the law is                 
  written, it did  not say in  the civil section that  someone                 
  was  involved  in  a  DEI  crime.    It  only  talked  about                 
  particular circumstances that might  fit it.  What was  done                 
  was referenced a criminal conclusion in  a civil action.  It                 
  did not seem like it was exactly  the same situation.  It is                 
  not  committing  an   action  that   involves  certain   and                 
  particular damages, it is saying, committing a felony, which                 
  is a  criminal conclusion.   He  still shared the  confusion                 
  Representative Nordlund had.   He did  not think it was  the                 
  same as a  DEI because  it is  referenced in  action, not  a                 
  separate  criminal  conclusion.    A  felony is  a  criminal                 
  conclusion, not an action.                                                   
                                                                               
  MR. FORD  stated a  felony was  a conclusion  in a  criminal                 
  prosecution, but they were speaking of a civil suit.                         
                                                                               
  REPRESENTATIVE MACKIE asked a question referencing a lawsuit                 
  in the newspaper, where  a man had gotten a DEI  was suing a                 
  liquor store for financial damages  the man suffered because                 
  he  got  his DEI,  because  the  liquor store  sold  him the                 
  liquor.  How does a case such as that apply to what is being                 
  spoken about?                                                                
                                                                               
  MR. FORD answered the man would  not be committing a felony.                 
  The existing law would not apply.                                            
                                                                               
  REPRESENTATIVE  PORTER  added that  he  felt it  would apply                 
  (indiscernible).                                                             
                                                                               
  MR. FORD referenced something to keep  in mind was there was                 
  a  comparable  negligent system.    Supposedly, when  one is                 
  negligent in causing one's own injuries, whatever that is or                 
  what percentage of recovery that is, that's (indiscernible).                 
                                                                               
  Number 398                                                                   
                                                                               
  REPRESENTATIVE  DAVIDSON referenced  Mr.  Ford's comment  on                 
  creating some new issues and felt  it seemed there were many                 
  new issues created throughout the legislation.  He asked  if                 
  it was not  true that the fact they were  creating these new                 
  issues   would  have  the  effect  of  expanding  prolonging                 
  litigation rather than expediting litigation.                                
                                                                               
  MR. FORD answered by saying that was a very hard question to                 
  answer.  In all  fairness to the sponsors  of the bill,  the                 
  system is constantly  changing.  The courts  change the law,                 
  this is enacted by the legislature to change the law, and it                 
  is  not  a static  fixed thing.    It often  changes through                 
  litigation.  The  best answer  he could give,  would be  the                 
  best job the legislature did to draft legislation would make                 
  that  easier.     It   would  make   the  litigation   less.                 
  Oftentimes, changes  the legislature  makes to  statutes, or                 
  creation  of  statutes, will  add  to a  litigation process.                 
  Maybe only in  the short running, maybe in  the long run, it                 
  depends on the perspective.   Maybe over a period  of twenty                 
  years, there  will  be less  litigation.   Often changes  to                 
  statutes result in challenges.                                               
                                                                               
  Number 424                                                                   
                                                                               
  MR.  FORD referenced Section 11, stating  it was a provision                 
  that requires  the  verdict to  be  itemized and  an  amount                 
  awarded for certain  types of damages  to be reduced by  any                 
  income  tax liability that may exist.   He felt it spoke for                 
  itself.                                                                      
                                                                               
  Number 443                                                                   
                                                                               
  REPRESENTATIVE PORTER stated that the  reason Section 11 was                 
  included, as  he  understood  it,  was the  awards  are  not                 
  taxable.  What one  ends up doing is paying  a person money,                 
  say for an  economic loss of wages  of $50 thousand  a year.                 
  He would  have had  to pay  taxes, resulting  in his  really                 
  receiving $30 thousand.   Since it is not a  taxable revenue                 
  for  the individual,  award for damages,  he is,  in effect,                 
  getting $20 thousand  more than he  would have in the  first                 
  place.                                                                       
                                                                               
  REPRESENTATIVE NAVARRE stated the bill works  in conjunction                 
  with  other  sections  of the  bill  and  if  it is  already                 
  limiting to a  set amount, one  further reduce that  amount,                 
  whatever it  comes up with  by the  amount that is  equal to                 
  taxes.                                                                       
                                                                               
  REPRESENTATIVE PORTER stated  they could certainly ask  that                 
  it be clarified.                                                             
                                                                               
  Number 463                                                                   
                                                                               
  MR. FORD moved  to Section  12, stating it  was a  provision                 
  that required a portion  of a judgement owed to  an attorney                 
  under a contingent fee agreement, reduced to a present value                 
  and paid in a lump sum.  He felt it spoke for itself.                        
                                                                               
  REPRESENTATIVE BROWN asked what public benefit, to be served                 
  by the provision, would be achieved.                                         
                                                                               
  Number 485                                                                   
                                                                               
  CHAIRMAN HUDSON  stated he  felt they  should hear from  the                 
  other people  wanting to testify on the  bill, as to some of                 
  the  reasons  why.    He  added  that  something  which  was                 
  mentioned  to  him  was  attorneys  quite  often  end  up in                 
  litigation  where  they  have  to  front  their  own  travel                 
  expenses  to go  and get  depositions and  their own  office                 
  expenses, etc.,  and the whole  thing is to  try to  get the                 
  money that they have already expended back into their hands.                 
  The apportionment  section is  where the  settlement to  the                 
  victim or  to the  plaintiff can  be dealt  with over  time.                 
  Again, to help  the victim  receive funds over  a period  of                 
  time rather than one time  and then be pounced upon by  your                 
  troop.                                                                       
                                                                               
  Number 495                                                                   
                                                                               
  REPRESENTATIVE  PORTER added  it was  his understanding  the                 
  presumption was that the monies due an attorney are for work                 
  done up to  time of trial  and award.   The attorney has  no                 
  further committal to work on the case afterwards.  The funds                 
  that  the  person  has  earned, should  be  paid  in today's                 
  dollars, whereas  the victim  is being  compensated for  the                 
  future  earnings  that  might  have  future  (indiscernible)                 
  considerations.  You shouldn't  pay an attorney inflationary                 
  rate  ten years  down the  road for work  that was  done ten                 
  years ago.                                                                   
                                                                               
  REPRESENTATIVE  BROWN  asked what  the  significance  was of                 
  deleting "an injured" on lines 26 and 27, as  it seemed like                 
  the way it was  before, if the  injured party wished to  get                 
  periodic  payments then  the  (indiscernible)  was going  to                 
  structure in that manner.   Now it is  being changed to  the                 
  person who is  paying the  payments and saying  that to  the                 
  maximum extent feasible, they are going  to be structured as                 
  periodic payments rather  than a lump  sum which might be  a                 
  more  beneficial (indiscernible).  She asked if that was the                 
  effect of  taking out  "an injured" on  lines 26 and  27, to                 
  give  that  option to  the person  that  was paying  out the                 
  money.                                                                       
                                                                               
  REPRESENTATIVE PORTER answered in the affirmative.  If it is                 
  a valid method of  paying out money, both the  plaintiff and                 
  the defendant should have the option (indiscernible).  If it                 
  is an  (indiscernible) way,  it was  a proposal  in 1986  or                 
  1988, "an injured party" was snuck in at the last minute.                    
  REPRESENTATIVE  BROWN  asked  what if  the  company  that is                 
  paying  the damages  out, over  time, goes  bankrupt or  the                 
  insurance company folds, didn't it put a lot of  risk on the                 
  person who is supposed to be recovering (indiscernible).                     
                                                                               
  REPRESENTATIVE PORTER answered that it  may be that there is                 
  a greater ability  for a company to pay the  kind of funding                 
  over a period of time than it  would be to come up with  one                 
  lump sum.  Either one of those might balance off  the other.                 
  There are no guarantees.                                                     
                                                                               
  Number 544                                                                   
                                                                               
  REPRESENTATIVE NAVARRE  stated he  was the  chairman of  the                 
  Labor and Commerce committee in 1986,  when the bill came up                 
  and  the provision  was not snuck  in.   It was put  in as a                 
  conscious decision by  the committee, the reason  being that                 
  the idea behind  tort law was to make the  victim whole, the                 
  injured party whole.  If the injured party  felt that it was                 
  in their  best interest, then  they could choose  a periodic                 
  payment.  The periodic payments are done, a lot of the time,                 
  at the request of the injured party or through  negotiations                 
  by their attorney, but forcing them to accept it, even if it                 
  may not be  in their best interest,  but in the interest  of                 
  the person paying, just didn't seem to make sense.                           
                                                                               
  REPRESENTATIVE  PORTER  responded  by  saying  his point  of                 
  supporting the provision,  is that making a person whole, in                 
  his mind, didn't mean giving that  person more money than he                 
  or she  would have  had prior  to the  injury.   In case  of                 
  (indiscernible),  if the  person is 20  years old  and would                 
  have earned $2 million  in their life time, giving  them two                 
  million dollars now, and the  financial benefit that amounts                 
  to, over and  above what they  would have had, isn't  making                 
  them whole.   That is  making them  rich and  it isn't  what                 
  compensation is designed to do.                                              
                                                                               
  Number 622                                                                   
                                                                               
  REPRESENTATIVE  NAVARRE felt  if there was  a limit  of $500                 
  thousand for  the total  claim, and  it was  reduced to  the                 
  present  value,  he  thought  if  they  were  going  to  put                 
  provisions like that in, the difference between the lump sum                 
  of   $500   thousand,   today   versus   periodic    payment                 
  (indiscernible) then it would probably  be $300 thousand, if                 
  you go over  20 years, you're  paying maybe  less.  "If  you                 
  have $500 thousand  and I  owe you $500  thousand, there  is                 
  $500 thousand at risk.   Now if I say, I'll pay that  to you                 
  at $10 thousand a year  for 50 years, then you'd  say 'b.s.,                 
  the volume of that is $500 thousand, I want my $500 thousand                 
  now.'   Well I'm going  to pay  you $500 thousand,  its just                 
  going to be in periodic payments."  That  needs to make sure                 
  we have that clarified because then  you have to pay $10,000                 
  for one hundred years.                                                       
                                                                               
  REPRESENTATIVE  MULDER   felt  the  whole  intent   was,  as                 
  Representative Porter pointed out, not to make somebody rich                 
  overnight.   It was to  be a reasonable alternative  to be a                 
  lump sum  at once.  To say, if  someone or their heir was to                 
  receive $500 thousand, it would  be reasonable for the court                 
  to work out  a ten  year payment period  whereby they  would                 
  receive an amount each year as  opposed to make Mike Navarre                 
  a millionaire overnight.                                                     
  REPRESENTATIVE NAVARRE used  another hypothetical  situation                 
  where  someone  winds up  a  quadriplegic  and there  is  no                 
  question about who was at fault, and they go to court anyway                 
  because they do that a lot, and they end up winning whatever                 
  the maximum is, and at that point...                                         
  (end of tape).                                                               
                                                                               
  TAPE 93-40, SIDE A                                                           
  Number 001                                                                   
                                                                               
  REPRESENTATIVE DAVIDSON agreed and stated  he felt they were                 
  "tweaking" the system so much that while they were stumbling                 
  over themselves to  prevent a victim  that had been  damaged                 
  severely, in  many instances, they  didn't want them  to get                 
  rich.  It seemed that they were tweaking the system so  much                 
  that they were  making it a  bonanza for wrongdoers.   Maybe                 
  what needed  to be  done was  to insure  that there will  be                 
  payment over the long term.  Maybe there is a bond mechanism                 
  that can be included  to insure that there will  be payment.                 
  There  are no  guarantees, we  all understand  that, but  it                 
  seemed  to be an effort that so many people are getting away                 
  with so much.   That's not how  I read the news  these days.                 
  We've already heard how punitive  damages are rarely awarded                 
  but I think we have to stay focused on who we are  trying to                 
  insure, at least  has an opportunity  to survive.  We  don't                 
  want to re-victimize people because we "tweaked" them out of                 
  the system of  financial well-being.  These victims  are the                 
  very  ones who  are going  to need  more  care, undoubtedly,                 
  because of the nature of their injuries or their losses.                     
                                                                               
  Number 016                                                                   
                                                                               
  CHAIRMAN HUDSON stated because of  timing, he wanted to move                 
  on through the bill, adding there  will be ample opportunity                 
  for the  philosophy and  for the  policy commissioners,  and                 
  who's harmed  who and what the value and  why, etc.  He then                 
  asked Mr. Ford to continue.                                                  
                                                                               
  Number 018                                                                   
                                                                               
  MR. FORD referenced Section  13, stating it was a  provision                 
  that  specified  when  one  is  entitled to  receive  future                 
  damages that they specify the  recipient, the dollar amount,                 
  the  payment and the amendment here  would also require that                 
  any future payment include increases for inflation.                          
                                                                               
  MR. FORD referenced Section 14,  stating it was a collateral                 
  benefits section that was basically the  existing collateral                 
  benefits  section that  they  have  for medical  malpractice                 
  actions.    At  present, there  are  two  slightly different                 
  systems.   There is a  collateral benefits provision  in the                 
  existing  law  that  is  repealed  and  reenacted  with  the                 
  provision.  A  collateral benefit  is simply, something  you                 
  receive, either from insurance or some kind of other source,                 
  private  or  public,  in addition  to  the  compensation you                 
  received in  your lawsuit.  The  idea of the section  was to                 
  prevent double recovery.                                                     
                                                                               
  REPRESENTATIVE NORDLUND referenced the exception for  social                 
  security  (indiscernible).   These  are provisions  from the                 
  federal government, and yet they don't  have any of the same                 
  provisions under the state  law.  In other words,  you can't                 
  segregate the  state benefits  under this  provision of  the                 
  bill, but you have to segregate the federal benefits.                        
                                                                               
  MR. FORD  answered that  one cannot  recover both  benefits.                 
  Sometimes there  are exceptions  in the  provision for  some                 
  benefits,  that  by  federal law,  you  are  not  allowed to                 
  segregate.    You are  not  allowed  to exclude  under  this                 
  provision,  one  of  which is  a  benefit  under the  social                 
  security act.                                                                
                                                                               
  MR.  FORD moved to Sections 15, 16 and 17, stating they were                 
  all like  a package,  resulting from  a suggestion  from his                 
  office.   In the enactment  of the  changes in 1986,  by the                 
  legislature, one of  the things the  legislature did was  to                 
  allow a person  who is released  from the lawsuit to  settle                 
  their  cases and get  out.  After  the adoption of  the 1986                 
  changes, the initiative, actually  adopted in 1988, repealed                 
  the entire chapter of  the law.  That  repeal resulted in  a                 
  cross  reference in the  1986 provisions that  was no longer                 
  accurate.  In  reference, the  provision no longer  existed.                 
  What is  being attempted, is  simply to provide  in statute,                 
  what happens when one, in  fact, releases someone, when  the                 
  lawsuit is settled.  This clears  out the glitch that is  on                 
  the books at present.                                                        
                                                                               
  Section 18 is  the provision that  is intended to  encourage                 
  people against  some of their  lawsuits.   The existing  law                 
  provides a penalty to someone who, in fact, refuses an offer                 
  of settlement that was made in good faith, and turned out to                 
  be a good  offer; or someone who refuses to  accept an offer                 
  from someone who  is being sued.   This changes the  penalty                 
  portion.  The existing penalty only affects the interest one                 
  receives  on  their  money.     The  new  penalty  provision                 
  substitutes actual costs and attorney  fees, as the penalty.                 
  Essentially, it is  intended to  encourage people to  settle                 
  their cases.  An example:  "If I am suing you, Mr. Chairman,                 
  and  I offered you $10 thousand  to settle our case, and you                 
  said, 'No!'  In fact, I recover $50 thousand from you,  then                 
  you would  be penalized.   I  would be foolish  to make  the                 
  offer, but....anyway  you  would be  penalized."   It is  an                 
  incentive  to  settle  your lawsuits,  it  just  changes the                 
  penalty that  applies if someone,  in fact, does  not settle                 
  their case when they should have.                                            
                                                                               
  Section  19 is  the  provision that  specifies  the rate  of                 
  interest on judgments.   Rather than  a flat 2 1/2  percent,                 
  which is existing law, they would actually float the rate at                 
  3 percent above the  federal reserve discount rate.    There                 
  would be a floating interest rate  on the judgments close to                 
  fixed 10 1/2 percent.                                                        
                                                                               
  Section 20 is the provision  that prohibits certain interest                 
  to  be  awarded.   The type  of  interest is  free judgement                 
  interest.  It is interest someone would get from the date of                 
  injury to the date  of judgement.  People will  no longer be                 
  able  to  get  prejudgment  interest  or  certain  kinds  of                 
  damages.    Future  economic  damages,  future  non-economic                 
  damages and  punitive damages, all  are getting  prejudgment                 
  interest for those items under this provision.                               
                                                                               
  Section 21 is  a technical reference because  the collateral                 
  benefits  section  was appealed  and moved.    It is  only a                 
  technical amendment.                                                         
                                                                               
  Section  22,  again  is  a  technical amendment  because  of                 
  Section 23.   Section 23 is  a limitation on the  amount one                 
  can receive  under a  lawful death  action, if  there is  no                 
  spouse, minor child, or dependent  who survives the deceased                 
  person.  Right  now wrongful death  is limited to  pecuniary                 
  losses if there are no survivors.   Under this provision, it                 
  is limited to $10  thousand, placing a cap on the amount you                 
  can get for pecuniary damages.                                               
                                                                               
  CHAIRMAN  HUDSON  asked  if  this  was  where  there  is  no                 
  immediate next of kin.                                                       
                                                                               
  MR.   FORD  agreed,   adding  no   father,   mother,  child,                 
  grandchild, sibling, spouse, or dependent.                                   
                                                                               
  REPRESENTATIVE PORTER  asked Mr. Ford  to explain  pecuniary                 
  damages.                                                                     
                                                                               
  MR. FORD  stated it was money losses.   It is what one would                 
  have  received  had  the  person   lived  through  a  normal                 
  lifetime.                                                                    
                                                                               
  REPRESENTATIVE BROWN  asked how it  would affect non-married                 
  partners,  homosexual  partners  that  are  not  technically                 
  spouses.                                                                     
                                                                               
  MR. FORD stated there was not a definition of spouse in  the                 
  provision,  but  assuming   the  traditional  definition  is                 
  accepted, they would probably not count.  He did not believe                 
  the court has held an unmarried partner as a spouse.                         
                                                                               
  Number 104                                                                   
                                                                               
  REPRESENTATIVE NAVARRE asked if a  parent lost a child, what                 
  was it worth.                                                                
                                                                               
  MR. FORD answered  it would not  apply in this case  because                 
  there would be a survivor.                                                   
                                                                               
  REPRESENTATIVE NAVARRE agreed there would  be a survivor but                 
  it wouldn't be a spouse, a minor child or a dependent.                       
                                                                               
  MR. FORD answered it would be a father or mother.                            
                                                                               
  REPRESENTATIVE  MACKIE  asked  under  "dependent,"  did  the                 
  definition allow for all of that.                                            
                                                                               
  MR. FORD answered in the affirmative.  If someone lost their                 
  child, this would not apply to them.                                         
                                                                               
  REPRESENTATIVE NAVARRE stated it did say  that.  It states a                 
  dependent  means  a  father, mother,  child,  grandchild  or                 
  sibling who was dependent  upon the deceased at the  time of                 
  death.  If  it is a single  child family and the  child gets                 
  killed, how are they dependent on them?                                      
                                                                               
  MR. FORD answered, assuming that is true, then correct.                      
                                                                               
  Number 127                                                                   
                                                                               
  MR.  FORD referenced  Section 24,  stating it  was rule  82,                 
  attorney fees provision.                                                     
                                                                               
  REPRESENTATIVE MACKIE referenced  the pecuniary  description                 
  was only meaning  a monetary value  that one could  actually                 
  put a value on that one  would have received from the person                 
  in the future.  How can one put a dollar figure on something                 
  like that?                                                                   
                                                                               
  MR. FORD answered that often it was very difficult.  He then                 
  moved to Section 24, stating it was the provision that would                 
  eliminate attorney  fees except  in certain  cases.   Unless                 
  there is  a  statute that  allows it  or unless  there is  a                 
  grievance to the  parties, that you do not  receive attorney                 
  fees  in  a civil  action  for  personal  injury,  death  or                 
  property damage.   This is different from  the existing law,                 
  in  that  now you  do get  attorney  fees for  certain civil                 
  cases.  This also  affects a court rule which we  have noted                 
  in the bill.                                                                 
                                                                               
  Section 25 applies to civil liability  of hospitals for non-                 
  employees.   It is actually brought  about by one particular                 
  case, Jackson versus Powers.  Under this provision, a health                 
  care provider who is not an employee of  the hospital, or an                 
  actual agent,  is in the hospital is  not going to be liable                 
  for the negligence.  Basically,  the hospital, itself, would                 
  not be liable.  The health care provider may be liable.                      
                                                                               
  Simply because the hospital allows its facilities to be used                 
  by a doctor,  they are  not going  to be held  liable.   The                 
  hospital is still responsible for their negligence.                          
                                                                               
  Section 26 is our repealers and I am not going to go through                 
  it except for  one.  There is  a provision in 09.17  that is                 
  repealed by the  bill that  relates to non-economic  damages                 
  (indiscernible).  It  is line 17.010(c) which  provides that                 
  our  limitation  on   (indiscernible)  does  not  apply   to                 
  disfigurement or severe physical impairment.  This provision                 
  was  repealed.   The  other provision,  040(c), is  simply a                 
  method  for awarding  future  damages.   You  might like  to                 
  examine  that.   The decision  made  in 1986  allowed future                 
  damages to the award of a certain method.  This will  repeal                 
  that method.  The last repealer deals with collateral source                 
  and we needed to  do that because we  have a new  collateral                 
  source rule.  We are simply eliminating the dual  provisions                 
  from  one  to one  provision  in  the bill.    The remaining                 
  provisions deal with  (indiscernible).  We did  have several                 
  (indiscernible) provision, we don't  like to do that  but we                 
  were persuaded to  do that.  (indiscernible)  section would,                 
  of course, limit  the applicability of the bill  to lawsuits                 
  filed after the effective date of the bill.                                  
  We do have an effective date of July 1, 1994.                                
                                                                               
  That concludes the bill.                                                     
                                                                               
  Number 165                                                                   
                                                                               
  CHAIRMAN HUDSON thanked Mr. Ford.  He stated  everyone could                 
  see it was a complex and intricate area.                                     
                                                                               
  MR. FORD added  one more remark.  He compared  the August 27                 
  version with the August 25  version and they are  identical.                 
  He thought it was  simply a matter of when they  ran off the                 
  copies.  They are the same version.                                          
  Number 180                                                                   
  CHAIRMAN HUDSON asked the guests if there was anyone who had                 
  come to  the meeting to testify specifically  on HB 300.  It                 
  appeared no one  was there to  testify on HB  300.  He  then                 
  pulled HB 300  off the calendar.   It will be brought  up at                 
  the next  hearing, as  it was  a more  directed and  pointed                 
  piece of specific legislation.                                               
  CHAIRMAN HUDSON then asked Sharon Anderson to testify.                       
  REPRESENTATIVE MACKIE asked Mr.  Ford if he was going  to be                 
  at the meeting throughout the day.                                           
                                                                               
  MR. FORD answered in the affirmative.                                        
                                                                               
  Number 192                                                                   
                                                                               
  SHARON  ANDERSON,  Associate   Executive  Director,   Alaska                 
  Regional Hospital,  Anchorage, stated  she was  representing                 
  the Alaska State  Hospital and Nursing Home  Association and                 
  speaking in support of HB  292, reforming Alaska's liability                 
  laws.    The   association  is  a  trade   and  professional                 
  association   representing    Alaska's   community    health                 
  facilities.                                                                  
                                                                               
  MS. ANDERSON said hospitals, as well as all health providers                 
  in Alaska and across the country, are committed to improving                 
  access to health care while maintaining  the high quality of                 
  health care.                                                                 
                                                                               
  Medical liability has a direct impact  on access to care for                 
  many Americans.  In addition,  the current medical liability                 
  system  contributes significantly  to  the  cost of  medical                 
  care.                                                                        
                                                                               
  MS. ANDERSON said HB 292  contains many provisions that have                 
  proven   successful  in  other   states  to  have  liability                 
  insurance available  to all  health providers  at affordable                 
  rates.                                                                       
                                                                               
  But, before touching  on the particulars  in HB 292, let  me                 
  review briefly the need for liability reform:                                
                                                                               
  The Issue                                                                    
                                                                               
  Those of us  who manage Alaska's  hospitals believe that  as                 
  the  debate  over health  reform  and health  care financing                 
  proceeds,   the   problems  caused   by   the  high   price,                 
  inefficiency, inequity and  glacial slowness of the  current                 
  medical  malpractice   and  adjudication   system  must   be                 
  addressed by the state legislature.                                          
                                                                               
  Persons  who  are negligently  injured  by medical  care are                 
  entitled to prompt and fair  compensation of their injuries.                 
  However, the current way that we seek to do this is anything                 
  but prompt and fair.                                                         
                                                                               
  Numerous  studies   over   the  past   twenty   years   have                 
  demonstrated that the present system for redressing injuries                 
  caused by medical care:                                                      
                                                                               
  1.   Costs far too much and works much too slowly.  The                      
       cost of claims  handling and litigation, including                      
       the cost  of both plaintiff and defense attorneys,                      
       consume over  half of  the professional  liability                      
       insurance dollars, meaning that  less than half of                      
       that dollar is returned to the injured patient.                         
  2.   The current system fails to  provide access to the                      
       legal  system for  many,  particularly those  with                      
       small claims.  Also, the  current system sometimes                      
       awards nothing  to  some  with  legitimate  claims                      
       while lavishing exorbitant amounts on others.                           
                                                                               
  3.   Numerous studies show that billions of dollars  of                      
       our  national  health  care  costs  are  spent  on                      
       defense  medicine.   Doctors are induced  to order                      
       more examinations, test, and procedures as a hedge                      
       against accusations of neglect or negligence.                           
                                                                               
  4.   Finally,  the  current system  seriously threatens                      
       access to  health care, particularly  to high risk                      
       services such  as obstetrical  care and  emergency                      
       room care and  to all types  of care in the  rural                      
       setting.                                                                
                                                                               
  It must be recognized that the major reform called for in HB
  292  may not  immediately reduce  overall medical  liability                 
  insurance costs, but it should result in quicker and  fairer                 
  settlement of claims.   The system will be more  predictable                 
  and will help patients, providers,  and underwriters and, in                 
  the long run,  will make  the delivery of  health care  less                 
  expensive and  the cost  of insurance  both predictable  and                 
  cheaper.                                                                     
                                                                               
  House Bill 292 contains the following provisions  (sections)                 
  which we  feel  are vital  to  medical liability  reform  in                 
  Alaska.  Most of the provisions have been reviewed:                          
                                                                               
  Statute of Limitations                                                       
  Cap on Non-Economic Damages                                                  
  Limits on Punitive Damages                                                   
  Periodic Payments                                                            
  Collateral Sources                                                           
                                                                               
  Liability  of  Hospitals  for  the   acts  or  omissions  of                 
  nonemployed personnel.  Section 24:                                          
                                                                               
  MS. ANDERSON said she would like  to touch on the importance                 
  of this section of HB 292, as it is of the utmost importance                 
  to Alaska's hospitals.                                                       
                                                                               
  The intent of Section 24 is to return Alaska law to where it                 
  was prior to  an October, 198,7 Alaska  Supreme Court ruling                 
  entitled Jackson versus Powers.   At that time, the  Supreme                 
  Court held that a general acute  hospital care in Alaska has                 
  a nondelegable duty to provide  emergency room services, and                 
  therefore, is vicariously  liable for  the negligence of  an                 
  emergency room  physician, regardless  if  the physician  is                 
  employed by the hospital.                                                    
                                                                               
  This   means  Alaska  hospitals   are  responsible  for  the                 
  negligence of a non-employed emergency room physician solely                 
  because  the  hospital  is  required,  by  law,  to  provide                 
  emergency room services, regardless if the hospital has been                 
  negligent.                                                                   
                                                                               
  This   decision  runs   counter  to   recent   trends,  when                 
  legislatures have attempted to protect the often named "deep                 
  pocket" defendants.   The language in  Section 24 of HB  292                 
  will protect Alaska's municipally owned and other  hospitals                 
  from being  named as  deep pocket  defendants in every  case                 
  involving physicians  negligence, even  though the  hospital                 
  was not negligent and has  done everything within its  power                 
  to comply with statutory and regulatory requirements.                        
                                                                               
  The hospital is and will continue to be liable for their own                 
  negligence  and  would  continue to  be  so  liable if  this                 
  section is adopted.                                                          
                                                                               
  MS. ANDERSON  said she  would like  to briefly address  this                 
  particular section and briefly address the current situation                 
  at the Alaska Regional Hospital pertinent to that.  There is                 
  a  statement  that will  be brought  up  later that  this is                 
  nothing but a legal (indiscernible) attempt of the hospitals                 
  to get out of liability for actions of non-employees and the                 
  hospital  could  escape  any   responsibility  for  what  an                 
  emergency room doctor does.  This  bill does not deprive any                 
  hospital patient  of  a cause  of  action against  the  non-                 
  employee who  may have  been negligent.   The hospital  will                 
  still be liable if it  negligently contracts with the person                 
  who is  unfit  to perform  health  care services,  and  that                 
  person subsequently injures  a patient.  At  Alaska Regional                 
  Hospital we do  require that all contract  positions provide                 
  proof of professional  liability coverage prior  to entering                 
  into any kind of  contractual arrangement that we  have with                 
  them.  It is  not the intent  to enter into any  contractual                 
  relationship without this requirement.                                       
                                                                               
  MS. ANDERSON said the Alaska State Hospital and Nursing Home                 
  Association would like to thank  the committee for beginning                 
  the  process  to thoroughly  review  the need  for liability                 
  reform in Alaska.   We know  today's hearing may raise  more                 
  questions than it answers,  so we stand ready to  provide to                 
  the committee additional information or data on the cost and                 
  access impact the threat of liability has on patient care in                 
  Alaska.                                                                      
                                                                               
  Number 278                                                                   
                                                                               
  CHAIRMAN HUDSON asked Ms. Anderson to  expand on the area of                 
  periodic payments that she  listed as one of the  provisions                 
  she felt was vital that Mr. Ford referenced as he  was going                 
  through the definition of the bill.                                          
                                                                               
  MS.  ANDERSON asked SUSAN  MASON, who had  been working with                 
  them  on  the review  of the  bill,  to respond  to Chairman                 
  Hudson.                                                                      
                                                                               
  CHAIRMAN HUDSON asked  Ms. Anderson to  send in any kind  of                 
  comments, critique,  examples, concerns or  support for  any                 
  provisions of the bill to him as he would see that it got to                 
  all of the members of the committee.                                         
                                                                               
  Number 295                                                                   
                                                                               
  REPRESENTATIVE MACKIE referenced since it was an educational                 
  process  for the committee,  he asked  that the  problem the                 
  hospitals  are  facing  was, should  an  outside  physician,                 
  private physician,  that may have  one of their  patients in                 
  one of the hospitals, which conducts surgery by the private,                 
  outside physician,  a non-employee  of the  hospital.   Your                 
  being named in all of the lawsuits that may be filed against                 
  the physician because it occurred in  the hospital, or is it                 
  only  directed toward  emergency room  care?   What  are you                 
  doing  as  far  as  having  your  own  personnel  administer                 
  emergency room care in  the liability problem?  I  am trying                 
  to understand  the  situation a  little  more whereas  if  a                 
  surgery,  malpractice  lawsuit was  filed against  a private                 
  physician, but  it occurred in  the hospital, are  you being                 
  named  in  those kinds  of actions,  and  is that  where the                 
  problem is at.  Could you define that a little more?                         
                                                                               
  Number 300                                                                   
                                                                               
  MS. ANDERSON stated it would be  helpful to the committee to                 
  know that all  physicians at  Alaska Regional Hospital,  and                 
  most  of   the  hospitals  in  the  state   of  Alaska,  are                 
  independent  practitioners.   They apply  for medical  staff                 
  privileges   for   various   (indiscernible)   or   surgical                 
  procedures  within  the walls  of the  hospital.   There are                 
  medical staff  rules, by-laws, that  they must  follow.   By                 
  doing so,  (indiscernible) process  that also goes  on.   As                 
  independent practitioners,  they are  the experts, they  are                 
  the ones who receive the education to know what tests should                 
  be ordered.  By going through that  application process, are                 
  granted privileges ultimately  by the  board of trustees  of                 
  the hospitals to perform those tests  and to treat and admit                 
  patients  within  the  hospital.    There  are  times,  with                 
  response  to  your question,  that a  hospital may  be named                 
  along  with a physician  that has been  a bad outcome.   The                 
  patient may then  file suit against the physician,  and then                 
  sometimes the hospital will be named.                                        
                                                                               
  MS. ANDERSON said  Section 24 is  an attempt to correct  the                 
  Jackson  versus  Powers  decision,  which  applied  only  to                 
  emergency room physicians.   There has been  discussion that                 
  this section  may be  interpreted in  a much  broader scope,                 
  bringing in other physicians, for example,  those who may be                 
  on  call  within   the  emergency   room  setting  or   just                 
  anesthesiologist  who  are  also independent  practitioners.                 
  The intent of Jackson versus Powers was limited in its scope                 
  to emergency room physicians.  So  that by having a contract                 
  with hospital based physicians, emergency room physicians or                 
  as radiologists, pathologists,  and anesthesiologists,  will                 
  enter  into  a  contractual  arrangement  with  a  group  of                 
  physicians  to  provide   that  care.     She  referred   to                 
  independent contractors  and said  we do  require that  they                 
  have  special  liability  insurance,  so   that  it  is  not                 
  releasing  the  physician from  having  coverage to  provide                 
  patients  with  a way  to  sue  the physicians.    Also, the                 
  hospital may  be continued to  be named  in a  suit such  as                 
  that.   Our hospital  did have  a lawsuit  filed against  it                 
  where the emergency room physicians were dropped as a result                 
  of the Jackson versus Powers' decision.   When the jury came                 
  back with the  fault assignment, 10 percent  was assigned to                 
  the patient, 10 percent was assigned to the hospital, and 80                 
  percent  was assigned  to  the physician.   But  because the                 
  physician was dropped  from the suit, the hospital  paid 100                 
  percent of the award that was  assigned by the jury in  that                 
  case.   What we are  seeking to  correct, is that  since the                 
  emergency room physician is an independent contractor,  then                 
  the hospital,  itself, has  no expertise  to determine  what                 
  care should be  rendered to  a patient.   The physician  has                 
  that, that the physician be held responsible for their acts.                 
  The hospital makes some business  decisions in entering into                 
  those contractual  relationships.  I  think that  it is  not                 
  unreasonable  to require that a hospital can choose to enter                 
  into  a contractual  relationship,  here required  to assure                 
  themselves as  well as  the patients  that the physician  is                 
  also covered.                                                                
                                                                               
  Number 359                                                                   
                                                                               
  REPRESENTATIVE MACKIE stated he was not clear as to what her                 
  position  was  on  that  particular  section  of  the  bill.                 
  Whether it was something you agreed with or disagreed with.                  
                                                                               
  MS. ANDERSON answered that they agreed with Section 24.                      
                                                                               
  Number 362                                                                   
                                                                               
  REPRESENTATIVE  MULDER stated  the  critics  would say  that                 
  Section 24 would simply result in hospitals contracting with                 
  all  employees.    If  they  have  no  employees,  they  are                 
  shielding  themselves  from  all liability.    What  is your                 
  response to that?                                                            
                                                                               
  MS.  ANDERSON  answered  she  did   not  think  that  was  a                 
  reasonable interpretation  of  the intent  of the  law.   It                 
  didn't make sense,  to her, to  not be held responsible  for                 
  acts  of your  employees.  On  the other  hand, if it  is an                 
  independent contractor, such as a physician, she felt it was                 
  unfair to ask  a hospital to  assume responsibility for  the                 
  acts  of  the  physicians.    Now  if  the  hospital  rented                 
  privileges  to a physician,  without doing proper procedure,                 
  that may be  that another  cause of action  that would  come                 
  about.                                                                       
                                                                               
  REPRESENTATIVE MULDER asked if this  were enacted in Section                 
  24, would  she see Alaska  Regional Hospital making  more of                 
  their employees contract employees  as opposed to  employees                 
  per se.                                                                      
                                                                               
  MS. ANDERSON answered in  the negative.  She stated  that in                 
  fact, Jackson versus Powers addressed physicians, it did not                 
  address nurses as independent contractors.  As an example to                 
  be shown  later, as  rent a nurse.   In  my mind  those will                 
  still be determined to be employees of the hospital.                         
                                                                               
  Number 385                                                                   
                                                                               
  REPRESENTATIVE NORDLUND thanked Ms. Anderson and  referenced                 
  the fear  was exactly  how it  was stated.   The  particular                 
  statute was  drawn  very  broadly.   It  didn't  talk  about                 
  physicians,  it  spoke  about health  care  providers, which                 
  could  be basically  anybody who  purchased (indiscernible).                 
  If your concern really is just  for physicians, would you be                 
  in favor  of (indiscernible) apply  position (indiscernible)                 
  nurses and basically anybody who works in the hospital?                      
                                                                               
  MS. ANDERSON stated that without speaking on behalf of other                 
  hospitals within the Hospital  Association, our hospital  is                 
  not opposed  to that.   Other  hospitals may have  different                 
  definitions of independent contractors.   In this particular                 
  field,  it  would  require  hospitals  to post,  within  the                 
  hospital as well as publishing in to newspapers, those  non-                 
  employees  that  they  have  entered  into  the  contractual                 
  arrangement with.  Again, the example of the (indiscernible)                 
  having to post  that (indiscernible).   I  don't think  that                 
  there would be opposition to limiting those (indiscernible).                 
                                                                               
  REPRESENTATIVE  NORDLUND  brought  up   a  different  point,                 
  stating  general  comments about  the  bill, he  thought Ms.                 
  Anderson was correct that definitely  they will see there is                 
  certainly  an  effort  to  reduce   the  amount  of  claims.                 
  However, her point about this  legislation needs more prompt                 
  litigation  and court  action.   I don't share  your opinion                 
  about that  as I think  there are provisions  instilled that                 
  are really  going to make the  process more drawn out.   You                 
  may take another look at the bill, in terms of just how fast                 
  actions  are going to be made, to be brought (indiscernible)                 
  the court result (indiscernible).                                            
                                                                               
  Number 400                                                                   
                                                                               
  CHAIRMAN HUDSON  stated the committee initially  had invited                 
  the  Department of  Law,  the court  system,  and others  to                 
  participate in this hearing.  A  lot of the questions, those                 
  nature,  would  likely  be answered  by  them.    It is  the                 
  understanding that  the next  hearing will try  to bring  in                 
  some of the  procedural and the implications and the effects                 
  on systems from those various entities.                                      
                                                                               
  Number 423                                                                   
                                                                               
  REPRESENTATIVE  BROWN  asked Ms.  Anderson  if she  would be                 
  opposed to adding  a requirement for professional  liability                 
  coverage for whatever health care providers or physicians or                 
  whoever is ultimately to be covered under this section.  She                 
  asked Ms. Anderson  if she thinks  it would be a  reasonable                 
  thing to require hospitals to do?                                            
                                                                               
  MS.  ANDERSON answered  that  was  correct.   It  was  their                 
  current practice  at the Alaska Regional Hospital.  She said                 
  she was representing  the Hospital Association today  and it                 
  was  not  one of  the items  the  association voted  on when                 
  reviewing the bill.   She said  she would  be happy to  take                 
  that back to the association.                                                
                                                                               
  Number 437                                                                   
                                                                               
  REPRESENTATIVE GREEN did not know  hospitals worked this way                 
  but his wife was  a practicing dental hygienist and  I think                 
  (indiscernible)  required  that   because  of  dentists  had                 
  authority over her actions, that she  could no longer act as                 
  a  contractor,  and,   in  fact,   became  an  employee   of                 
  (indiscernible).  Would nurses also fall into that category?                 
                                                                               
  MS. ANDERSON referenced what crossed her desk the day before                 
  which was a definition of what is  an independent contractor                 
  is, as well as an employee.  She referred to not contracting                 
  with  employees   and  if  you  have  control  of  the  work                 
  (indiscernible) or  schedules and  what they  are doing  and                 
  such as standards  of care  then the  definition would  fall                 
  into were they are employees rather than contractors.                        
                                                                               
  Number 450                                                                   
                                                                               
  REPRESENTATIVE  MACKIE  had two  concerns  in regard  to the                 
  concern Representative  Brown brought  up about  health care                 
  providers  instead  of stating  position  or something  like                 
  that.  The first concern  is, who else would have  access or                 
  would be in a  position to be an actual health care provider                 
  that  would  have  access  to  the  facility  and  could  be                 
  essentially in that situation.  I think probably, that would                 
  need to be a little more clearly spelled out, I  would agree                 
  with that.   When you are (indiscernible)  contracting these                 
  doctors as  independent contractor  providing they  have the                 
  insurance  and the other  things that are  necessary.  Would                 
  anybody  working  for them  also  (indiscernible)  that same                 
  contract?  Who else would follow that definition?                            
                                                                               
  MS. ANDERSON answered by stating by  virtue of the contract,                 
  anyone who  works for them  must be  (indiscernible) by  the                 
  same requirements as the contractor.                                         
                                                                               
  REPRESENTATIVE MACKIE added so they fall under his liability                 
  and his  direction and so  forth.   Then the other  thing, I                 
  would also agree that  if we are going to look  at releasing                 
  the liability, that we  should also require that there  is a                 
  certain standard  of liability insurance  being provided  by                 
  the physician or  something of that  nature so that  somehow                 
  somebody doesn't slip in under  the wire, unintentionally or                 
  anything  else,  without  any  kind  of  insurance  and  the                 
  hospital is resolved to that  responsibility.  The physician                 
  may or may not have that, then the person that  suffered the                 
  injury  won't have any recourse.  It may be best spelled out                 
  in statute.                                                                  
                                                                               
  Number 488                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  asked  Ms. Anderson  if  in the                 
  Alaska  Regional  Hospital  are  any  of the  physicians  in                 
  employee positions, or if they are all contract positions.                   
                                                                               
  MS.   ANDERSON   answered    they   were   all   independent                 
  practitioners and some of them were contract, but not all.                   
                                                                               
  MS. ANDERSON stated the intent of this section would be that                 
  if  the  hospital  chooses  to   enter  into  a  contractual                 
  relationship for a physician to provide care, such as in the                 
  emergency  room,  which  was the  intent  of  Jackson versus                 
  Powers, if it were  more broadly extended to those  where we                 
  have contracts.  For instance,  contracts with physicians to                 
  read EKG's or to do neurological studies  or radiologist who                 
  might perform a  test.   Those positions with  whom we  have                 
  contractual  arrangements,  that  they  be  required  to  be                 
  responsible for  their actions.   In our hospital,  to enter                 
  into  a  contractual arrangement,  they  must show  proof of                 
  professional liability insurance.                                            
                                                                               
  Number 542                                                                   
                                                                               
  REPRESENTATIVE FINKELSTEIN  referenced the way  Ms. Anderson                 
  envisioned what she would like to  see happen with the bill.                 
  The hospital would be liable for  some of the positions, the                 
  ones that were  directly working in the  emergency room, and                 
  not  liable  to others  that had  more of  a (indiscernible)                 
  basis,  they  are operating  independently.   Some  would be                 
  liable for some and not for others.  Is that what  you would                 
  see as where you would be liable for none of them?                           
                                                                               
  MS. ANDERSON stated  she felt  the goal of  the section  was                 
  that the hospital be held liable for its acts of omission or                 
  negligence and  that the physician  be held liable  to their                 
  acts of  omission or  negligence.   In some  instances, both                 
  parties might be named in a suit.                                            
                                                                               
  Number 550                                                                   
  REPRESENTATIVE FINKELSTEIN guessed the answer was that there                 
  would be not  a single  physician in the  facility that  the                 
  hospital be liable for in the way it's interpreted.  Is that                 
  what you are  saying?  I'm just  trying to see if  there are                 
  two  groups or  one  group.    Is  there  a  group  that  is                 
  independent that  the hospital is  still going to  be liable                 
  for?                                                                         
                                                                               
  REPRESENTATIVE MACKIE answered, your own employees, right.                   
                                                                               
  MS. ANDERSON answered correct.  But not for non-employees.                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  stated  there   would  be  some                 
  physicians that are still employees.                                         
                                                                               
  MS. ANDERSON answered that in their  facility, there are not                 
  any  who are  employees.   There  are facilities  within the                 
  state of Alaska who do employ  physicians and that would not                 
  take away their responsibility in this particular section as                 
  I read it.                                                                   
                                                                               
  REPRESENTATIVE    FINKELSTEIN    referenced     the    point                 
  Representative Mulder  discussed  and  asked  wouldn't  this                 
  section create an incentive for those hospitals that do have                 
  employees  who  are  physicians  to   convert  them  all  to                 
  contracts because they would reduce  their liability.  There                 
  is not much incentive to  have them as your employee  if you                 
  couldn't  sever liability.  Isn't  that the incentive we are                 
  creating?                                                                    
                                                                               
  MS.  ANDERSON  stated it  was a  tough  question for  her to                 
  answer because  from her hospital  practice that is  not the                 
  situation.  It is certainly a valid question to take back to                 
  the association.   I do not  believe that was the  intent to                 
  allow  hospitals  to  get  out  of  any  liability  for  the                 
  physicians to escape that (indiscernible).                                   
                                                                               
  Number 569                                                                   
                                                                               
  REPRESENTATIVE GREEN found  it a  difficult situation for  a                 
  reputable hospital  to authorize a physician to have been in                 
  the practice of  contracting a physician and  then drop them                 
  and  still  not  require  the  physician  to  have  adequate                 
  insurance.  It seems  to me that we're looking  for possible                 
  problems which means  you can ride  a bicycle.  We're  going                 
  way  too  far, I  think,  in  trying to  determine  what the                 
  possible  ramification  of  the  hospital  trying  to  avoid                 
  litigation by requiring  all the doctors, in  that hospital,                 
  to  be  independent  contractors.    As  long  as  they  are                 
  employees, the hospital  will be liable.   If they are  not,                 
  then they're  liable under their  own insurance program.   I                 
  don't see that that is any different than  going to a doctor                 
  who is not in a hospital.                                                    
                                                                               
  Number 591                                                                   
                                                                               
  REPRESENTATIVE FINKELSTEIN stated he was just trying to find                 
  out what  the categories are.   We did  find out  that their                 
  hospital  doesn't have  any but  other hospitals do.   There                 
  would  be some  incentive  for that  standard,  which I  was                 
  trying to say.                                                               
                                                                               
  CHAIRMAN HUDSON  added the  incentive could  be either  way.                 
  There certainly has  to be some  incentive to have your  own                 
  doctor attached to  the hospital and  perhaps this would  or                 
  would not have any effect upon that.                                         
                                                                               
  Number 600                                                                   
                                                                               
  REPRESENTATIVE  MACKIE understood  where the  hospitals were                 
  coming from.  It  is probably like any one of  us feel, that                 
  we are responsible for our own actions but something that is                 
  totally out of our control, it is a little bit harder  to be                 
  responsible  for.    There  are  other employees  and  other                 
  responsibilities of liability in which you would still have.                 
  You have cardiology, x-ray technicians,  nurses, a number of                 
  other hospital  staff  and employees  and  probably  on-duty                 
  emergency  room  doctors  and  physicians  that come  in  by                 
  ambulance and  people that  come in  by ambulance  and other                 
  things that the hospital would still... I don't look at this                 
  as an attempt to get out  of all liability.  I look at  this                 
  as an  attempt of not being able to  control the action of a                 
  physician.   That is  not an  employee, an actual  employee,                 
  under your supervision in the hospital, is that correct?                     
                                                                               
  MS. ANDERSON answered that was correct.  As she read it, the                 
  hospital would still  be liable  if we negligently  contract                 
  with a physician or  a group of physicians who are  unfit to                 
  perform the health care services.                                            
                                                                               
  REPRESENTATIVE  MACKIE  added  if  you  were   negligent  in                 
  allowing them to utilize the facility, why not.                              
                                                                               
  TAPE 93-40, SIDE B                                                           
  Number 001                                                                   
                                                                               
  REPRESENTATIVE  PORTER  agreed with  Representative Mackie's                 
  position.    My impression  of  this provision  is  to allow                 
  hospitals  to not be responsible for  positions when they do                 
  not exercise control, training, supervision and those  kinds                 
  of standard  definitions (indiscernible).   Those  hospitals                 
  which have doctors  in that capacity as  employees, there is                 
  some  reason that they do and I  don't see this as providing                 
  that great of an incentive because  as is required now, that                 
  insurance  has  got to  be  provided  by one  or  the other.                 
  (Indiscernible) equity and responsibility if the association                 
  can come up with any definition, for example, an independent                 
  contractor that might add the issue that we are discussing.                  
                                                                               
  REPRESENTATIVE  MACKIE  added, as  we  progress  through the                 
  subcommittee process with this bill, we are bringing out the                 
  points  that  we   need  further  clarification  on.     Not                 
  necessarily whether  we are supportive or  non-supportive of                 
  that particular issue, but at least  getting the bill into a                 
  position that can  be either  supported or non-supported  by                 
  members of the legislature.  I  think that is real important                 
  that we clarify  each one of  these types of  areas that  we                 
  debate.    I  look  at  that  for our  purpose  here  today,                 
  initially to identify this.                                                  
                                                                               
  Number 016                                                                   
                                                                               
  CHAIRMAN HUDSON stated that  was exactly what we are  trying                 
  to do here, is  to understand all the ramifications  of this                 
  very complex body  of policy  and cause and  then to try  to                 
  expand those areas where  we have some questions as  to what                 
  the application (indiscernible).                                             
  CHAIRMAN HUDSON added, that when this first came before him,                 
  personally, not  being in the  industry, he always  tries to                 
  look for the  reasons behind  these kinds of  justifications                 
  for  making  changes.   Since  you and  those  you represent                 
  obviously  believe  that  the  statute  of  limitations  and                 
  obviously section 24,  collateral sources, periodic payments                 
  and things of this  nature, are positive, that it  makes for                 
  improvements.   We've heard  the terms that we want to  make                 
  insurance  more  affordable,  we   want  to  streamline  the                 
  process, we want  to reduce  the time in  which the  injured                 
  party can  receive compensation  and the  settlement can  be                 
  taken off  the  books.   In  those areas,  any  suggestions,                 
  applications or problems, what you hope to be the  solutions                 
  through the various segments of the bill, we would sure like                 
  to have that  input with us so we  can all better understand                 
  it.                                                                          
                                                                               
  MS. ANDERSON answered, she would be happy to provide that.                   
                                                                               
  Number 033                                                                   
                                                                               
  REPRESENTATIVE NORDLUND, added  that as  far as the  request                 
  for  information, maybe  the  committee  could receive  some                 
  documentation  of  what (indiscernible).    How the  medical                 
  liability contributes to the cost, the operating cost.                       
                                                                               
  Number 058                                                                   
                                                                               
  BREAK FOR LUNCH                                                              
                                                                               
  Number 059                                                                   
                                                                               
  CHAIRMAN HUDSON asked Dr. McGuire to make his presentation.                  
                                                                               
  Number 068                                                                   
                                                                               
  DR.  DAVID  MCGUIRE,   Orthopedic  Surgeon,  practicing   in                 
  Anchorage for 20 years was next to testify.  I am associated                 
  with the Alaskan's for  Liability Reform and I speak  as one                 
  of their delegates today.  Mr. Tovanny  is here as well.  He                 
  has  expertise  in the  area  of structured  settlements and                 
  annuities.  There were some questions this morning about the                 
  effectiveness of those structured settlements and annuities.                 
  If we have a few minutes for him,  he may be able to explain                 
  how they can work.                                                           
                                                                               
  The issue, as noted by yourself  and others this morning, is                 
  a  complicated issue.   Therefore, it does  take sometime to                 
  study each and every  one of these points of the  bill.  But                 
  because it is a  complicated issue, shouldn't deter us  from                 
  looking carefully at this because the  fact is that the tort                 
  system affects us all,  and sometimes it affects us  in ways                 
  that  we may  not even know.   It  indicates that  there are                 
  changes   in  business   practices  that   there   are  lost                 
  opportunities, that  there  are businesses,  that no  longer                 
  carry on useful functions.   Largely, this can be  traced to                 
  the  detrimental  effect  of insurance  rates  that  are not                 
  affordable, risks that cannot be defined of an ever changing                 
  pattern of liability in  the tort law.   It is important,  I                 
  believe,  that  we  should  all  understand  that  with  the                 
  exception of the 1986 changes and  with the exception of the                 
  initiative, all of the laws were,  in fact, made by judicial                 
  interpretation.  Put in another way, it is not the case that                 
  these laws have arisen  as a result of the  legislative body                 
  deliberating, and in  due process, producing  a law that  we                 
  all  have to  live  by.   It  is the  fact  that these  laws                 
  continue to be interpreted by the judicial bodies, and it is                 
  our opinion that they have been detrimentally interpreted to                 
  the  point  that  these  liability  burdens  are  no  longer                 
  sustainable.  I think we seek that in many different avenues                 
  of life, and certainly it is not only medicine, this affects                 
  everyone across the board.  If we were to take one or two of                 
  the points and  use them as  examples, not to say  that they                 
  are  the only examples that  could be found,  that may be of                 
  use.  In  this morning's Anchorage   Daily News, we  have an                 
  editorial by the Daily News concerning the  lawsuit that was                 
  filed against  the liquor  store by  the driver  that was  a                 
  minor at the time, and killed someone when he  ran through a                 
  red  light.    It  is  the  case  that  the  idea  of  being                 
  compensated for injury is  a good one, but our  present tort                 
  system has leaned so far that  anybody can sue for anything,                 
  at any time, with some expectation of compensation.  What we                 
  are trying to do with the legislation proposed, is to define                 
  precisely  what those  limits ought  to be,  and under  what                 
  circumstances compensation should occur.  I think most of us                 
  feel that when  someone is  in the process  of committing  a                 
  crime, that  they should reasonably have known was likely to                 
  bring  injury to  someone else,  that it  is ludicrous  that                 
  someone else  should have  to pay  for their  injuries.   It                 
  doesn't seem reasonable  at all, it doesn't  seem productive                 
  in  any way to society.  Here is an example:  Now whether or                 
  not the individual  prevails in this (indiscernible)  is not                 
  even the entire point.  The fact of the matter is, society's                 
  resources are being consumed in the arguing  of the lawsuit,                 
  both in terms  of the judges  that have to sit,  the lawyers                 
  that  are  there,  the defense,  the  cost,  etc.   We  have                 
  proposed, in  this legislation, that  it should be  the case                 
  that if  you are in the  process of committing a  felony, or                 
  committed  a felony, you should be  precluded from a lawsuit                 
  to recover your damages.                                                     
                                                                               
  The second piece of paper that  I gave you was taken from  a                 
  brief that was  filed with the  Supreme Court, the state  of                 
  Alaska, as we speak.  You may recall that in 1988, there was                 
  an initiative developed  by the Citizens Coalition  for Tort                 
  Reform.   That initiative had to do  with a concept of joint                 
  and  severability.  If I  may, for a  minute, just visit the                 
  history of joint  and severability.   The law  of the  land,                 
  prior  to   judicial  interpretation   was   one  known   as                 
  contributory negligence.    It  held that  if  you,  as  the                 
  plaintiff, were  so little  as one  percent responsible  for                 
  your own injuries, that you were precluded from a lawsuit to                 
  recover damages.  I think rightly so, that was harsh, and it                 
  showed  to be  none of  comparative negligence, which  it is                 
  with the exception  that prior to 1988, the law  was that of                 
  joint and severability  also known as  the deep pocket  law,                 
  which  then whomever  the  defendants was  able to  pay, was                 
  required to  pay, whether  or not they  were principally  at                 
  fault.   So we sometimes  had the ridiculous situation where                 
  the  municipalities were  able  to be  held  liable for  the                 
  entire costs of  an injury that  occurred, when in fact,  it                 
  was very little of the municipality that was at  fault.  The                 
  citizens of  Alaska voted  with approximately  a 70  percent                 
  margin, to  change this  law so  that the fault  would be  a                 
  portion amongst the  guilty party.   So if there were  three                 
  parties who were said to be negligent one of whom was 10 and                 
  another of whom was 20 and one of whom was 70, we  felt that                 
  they should pay in proportion to their responsibility.  That                 
  seemed fairly straightforward until things got to court, and                 
  then the ploy  of only suing  the party that apparently  had                 
  any resources came into play.  If an attorney  knew that the                 
  individual or  the entity  who was  70 percent  responsible,                 
  probably didn't have any  money, then what you could  do was                 
  (indiscernible)  the  party  that  was   10  or  20  percent                 
  responsible, and when  you get  to court,  you preclude  the                 
  jury from  understanding that  there was  somebody else  out                 
  there who was  more responsible than the  present defendant.                 
  Therefore, all the damages are awarded against the defendant                 
  because the jury doesn't get a  chance to understand who and                 
  what  was at  fault.   This  has now  been  appealed to  the                 
  Supreme Court.  It  is our intention that what we  meant and                 
  what we advertised and what the citizens of Alaska voted on,                 
  was that  in fact, we  wanted the portion  allocated amongst                 
  the people who  were at  fault, regardless  of whether  they                 
  happen to be in the court room that day.  We don't know what                 
  the court  is going to  say but  it is illustrative  of what                 
  seems to be  a straight forward  proposition, because it  is                 
  then interpreted in  what I would prefer  to (indiscernible)                 
  argument  that leads to  a conclusion  opposite of  what was                 
  intended.                                                                    
                                                                               
  Earlier today we talked about the concept of economic verses                 
  non-economic damages.  We also talked about the idea of lump                 
  sum  payments  verses  annuities  or  prorated  settlements.                 
  There is an  example, which I  think is illustrative of  how                 
  the situation goes at  the present and why  I think that  in                 
  the event  of society,  and the  injured person,  this thing                 
  should be  changed.   If a  person who  is 35  years old  is                 
  injured and  can't work  anymore, we  would normally  expect                 
  that they would  work until age 65,  which is 30 years.   If                 
  they made $30  thousand. a year, then  the present situation                 
  multiplied by 30  years times $30,000.  which comes up  with                 
  $900 thousand. and this is how the  damages are awarded.  It                 
  would be as if you went to  your employer and said I think I                 
  am going  to work for you for 30 years,  I'd like you to pay                 
  me  today for  all the money  that I  am going to  earn over                 
  those 30 years.  I think  you can see that sum is  meant for                 
  future income, not for the present income.  The consequences                 
  are  certain.   It  is  enormously  more  expensive  to  the                 
  society,  at  large, to  repay  this  kind of  money  and we                 
  (indiscernible)  the insurance  companies,  and so  on,  but                 
  remember that  somewhere that  money came  from a  business,                 
  from a working  person from somewhere the insurance  got the                 
  premiums.  The  more the insurance  companies pay, the  more                 
  they are going to charge us.  We can debate that all day but                 
  they don't get  the money off trees.   The second thing that                 
  happens to the injured and innocent victim, is that they now                 
  have  a lump sum  of some $900  thousand.    It has been the                 
  case on more than one occasion,  that five or ten years down                 
  the road, the money is entirely gone, but  the injury is not                 
  gone.   Then the person has no  alternative but to return to                 
  the state or some other agency for support for the injury of                 
  which continues.   It is set up an annuity program, and this                 
  can be done,  as I said, very reliably.  I can speak of that                 
  even  in  the  case  of  the  executive  (indiscernible)  in                 
  California.  The people that were  on annuities, in the end,                 
  continue to  receive their annuities,  in spite of  the fact                 
  that the company went bankrupt.                                              
                                                                               
  We have proposed that it should be a  structured settlement,                 
  and the  structured settlement  should acknowledge  the fact                 
  that all of this money isn't earned today, that in fact that                 
  it is earned  over time, it should  be paid over time.   The                 
  same is true  with future non-economic damages,  future pain                 
  and  suffering.   If you pay  it in  a lump sum,  then it is                 
  available today,  but it  may not  be available  when it  is                 
  needed and we  would argue that  the same kind of  treatment                 
  should apply.   The damages should  be repaid in the  normal                 
  course of how  they would  have been earned  as proposed  to                 
  having  a lump sum  payment.  The cost  of providing such an                 
  annuity can be  as little as  one-third of the  cost of  the                 
  lump  sum  payment.   There is  an  enormous savings  to the                 
  system, and I keep saying the  system because it is in  fact                 
  the system, it is not just a single insurance company.  Each                 
  one of these examples in this legislation is the result of a                 
  interpretation by a judge  somewhere.  None of them  are the                 
  result of a deliberate body, such as yourself, sitting down,                 
  deciding what  it is would be the  best law of the  land.  I                 
  would suggest  that there  is absolutely  nothing wrong,  in                 
  fact  there are  many things  right,  with an  approach that                 
  leads us to  deciding what is  going to be most  reasonable,                 
  what is going to  benefit the largest number of  people, and                 
  what  is   going  to   make  this   system  affordable   and                 
  predictable.                                                                 
                                                                               
  If I may say  just a word about the statute  of limitations.                 
  The  problem  with the  statute  of limitations  is  that it                 
  essentially exists no longer.  If you do  something, whether                 
  you meant  to cause harm or  whether you knew  the event may                 
  have occurred; whether  you were  negligent, you don't  know                 
  when you  may be sued for  something that you've done.   For                 
  example, a pediatrician  who takes  care of a  child can  be                 
  sued up to 21 years later.  If the injury occurred at birth,                 
  when  the child  reaches  the  age  of  maturity,  they  are                 
  empowered under  the present statutes  to file a  lawsuit on                 
  their own behalf.  The problem with that is that there is no                 
  predictability.  When  there is no predictability,  there is                 
  no insurance,  so we  witnessed the development  of what  is                 
  known as claims made insurance.  It  used to be that when we                 
  thought  of insurance,  we thought of  occurrence insurance.                 
  That  is  if  something  we did,  eventually  resolved  in a                 
  lawsuit, then we  would be covered,  regardless of when  the                 
  claim was made.  That left the insurance companies with what                 
  they call,  "the long tail."  It  left them with an exposure                 
  of 20 years  or more  and they couldn't  predict what  their                 
  loss would be so they found a clever way of putting the loss                 
  back on the  individual or  business or the  person who  was                 
  insured.  Here is how they did it.  They said, O.K., we will                 
  only write claims  made insurance.  "Claims  Made Insurance"                 
  means that you must  be insured when the event  occurred and                 
  you must be insured when the claim  is made.  If you have an                 
  event  occur  in year  one but  you  aren't sued  until year                 
  three,  if  you are  not  insured  with the  same  insurance                 
  company  or  if you  haven't  bought a  very  expensive tail                 
  coverage,  you  won't  be  covered.    This  exact  scenario                 
  occurred to the  doctors in Cordova.  They  bought insurance                 
  for three years and  each year the insurance was  higher and                 
  higher and  higher and  in the  fourth year,  they could  no                 
  longer afford the premiums nor  could they afford the  tail,                 
  which was 1 1/2 times what the premiums would  have been for                 
  that  year.    They were  forced  to  quit  buying insurance                 
  altogether, and as  a result of that,  the insurance company                 
  kept all the  money and they  were uninsured for any  claims                 
  that were filed after the third  year, no matter if they had                 
  occurred  during  the  first  three  years  that  they  were                 
  insured.   Claims made insurance  is not unique to medicine.                 
  It is in many many areas of life where we have the situation                 
  of  claims made  insurance.   What in  effect has  happened,                 
  then,  is  the  insurance companies  have  responded  to the                 
  unpredictability of the affects of the statute of limitation                 
  and it does so in a  way that puts the ultimate burden  back                 
  on the person  who is  supposed to be  buying insurance  for                 
  events that were out of their  control.  Dick Cavanaugh, who                 
  is  the chairman for the Alaskans  for Liability Reform, has                 
  made this point.  Murder is the only crime that doesn't have                 
  a statute  of limitations.   If  you rob  a bank  or if  you                 
  embezzled,  or  if you  do  these  other things,  there  are                 
  statute of limitations in which an action can be brought.                    
                                                                               
  I had  a conversation this morning in which punitive actions                 
  are not now limited by a statute of limitations.  On the one                 
  hand, we have a criminal behavior that enjoys the statute of                 
  limitation,  but  on  the  other  hand,  you  have  ordinary                 
  business activities which do not.   It seems to be ludicrous                 
  that it should be that way.  With  a statute of limitations,                 
  there  is the  opportunity for  an insurance  to once  again                 
  become  an  occurrence  insurance instead  of  claims  made.                 
  There is the  opportunity for  individuals in businesses  to                 
  have some control over the future direction of the lives and                 
  their businesses.   As it  is now,  an architect  may be  20                 
  years  down the road, may be  out of business, may no longer                 
  be practicing,  and can still  be sued for  something he/she                 
  did while  in practice.   That doesn't  seem reasonable,  it                 
  doesn't  seem  productive.   Time moves  on.   I'm  happy to                 
  discuss any of these issues.   I think there is going to  be                 
  ample discussion as  the session goes  on and each of  these                 
  points will be (indiscernible).   The Alaskans for Liability                 
  Reform has  prepared a  graph paper  which I  think you  all                 
  have, which takes each of these points and tries to show the                 
  changes that is made in legal  terms, if you will, and then,                 
  in plain  English, tells you  our reasoning behind  each and                 
  every one of these.                                                          
                                                                               
  Perhaps a short word and then I would like to leave a little                 
  time for questions for Al.  There is one other controversial                 
  rule  of the court, known as Civil Rule 82.  If I might take                 
  just one moment to  say how that works.   In (indiscernible)                 
  the idea that the other person should pay your law  bills if                 
  they sue  you wrongly, is  a great idea.   It deters  people                 
  from frivolous lawsuits.  If you are vindicated and you win,                 
  you  get  your fees  from  the  lawyer back.    In practice,                 
  however, it has been anything but a  good idea.  The problem                 
  is that when  the defendants insurance company  or otherwise                 
  able to pay  the bill is at  fault, damages for Rule  82 are                 
  always assessed.   Prior to the 1986  legislation, there was                 
  even a schedule  contingent fee for non-contested  cases for                 
  Rule 82.   If,  at that time,  you agreed  that it  was your                 
  fault,  you agreed to  pay it, you would  still be forced to                 
  pay a  percentage of the  final settlement  even though  you                 
  didn't argue  the case.   That was changed  in 1986, but  we                 
  still have this  issue of Rule  82.  The Citizens  Coalition                 
  sued the attorney general for  an interpretation of the law.                 
  We felt that it would be proper to take as an initiative the                 
  subject of the  contingent fee.   The attorney general  said                 
  that  it was the  province of the  court and that  the court                 
  rules are (indiscernible)  to the  initiative process.   The                 
  trial bar asked  to be adjoined  in the suit.   We told  the                 
  judge that we  didn't want them to be adjoined  in the suit,                 
  we wanted the attorney general to render an opinion in court                 
  as to why this should be.  The judge, nevertheless, enjoying                 
  the trial bar,  the lawsuit, and  then found against us  and                 
  the rule 82 fee of $10 thousand.   The state, meanwhile, had                 
  only  $2 thousand for their Rule 82 fees.   We had to post a                 
  bond  of $10 thousand  in order to  appeal this case  to the                 
  Supreme Court.  The Supreme Court  ruled against us and said                 
  that the rules  of the court, including  attorney's fees are                 
  the proprietary (indiscernible) that  the courts prerogative                 
  that they are not addressable  in any way, shape or form  by                 
  the initiative process and they took our $10 thousand, thank                 
  you very much.   Rule  82, on  the other side,  there was  a                 
  worker who sued  an oil company, the big bad oil company, as                 
  you know,  and lost.  The  oil company then asked,  in turn,                 
  for their Rule 82 fees.  It amounted to a substantial amount                 
  of money.  The individual appealed to the Supreme Court, and                 
  the  Supreme Court  is coming  out with  a very  complicated                 
  formula of Rule 82 that says if  you make so much money, you                 
  only have to  pay a percentage.  But if you make more money,                 
  then you have to pay another percentage, - so on and  so on.                 
  You can get this opinion, of which I  think became in effect                 
  July 15  of  this year.   We  argue, that  if  Rule 82  were                 
  equally applied across  the board, if everybody  lived under                 
  the same rules,  then it  might, indeed, be  effective as  a                 
  deterrent to litigation.   But when it is unequally  applied                 
  the way it has  been, traditionally, and the way  we've been                 
  docking that, that it is unequally applied.  All  it does is                 
  add more  money to  the pot and  it doesn't  do anything  to                 
  deter  litigation.   I  am  certainly  happy  to answer  any                 
  questions.                                                                   
                                                                               
  Number 320                                                                   
                                                                               
  CHAIRMAN HUDSON thanked  Dr. McGuire, stating his  testimony                 
  was helpful.                                                                 
                                                                               
  Number 324                                                                   
                                                                               
  REPRESENTATIVE   FINKELSTEIN   appreciated   Dr.   McGuire's                 
  testimony.  On Rule 82, just talking about it, which section                 
  was talking about the bill.                                                  
                                                                               
  Number 330                                                                   
                                                                               
  DR. MCGUIRE stated that  Section 24 takes a bit  of study to                 
  understand how something seems  to be saying it one  way and                 
  it ends  up meaning another way.  We  can't just say Rule 82                 
  is appealed, we have to go around  it, saying you can't have                 
  an  agreement to have this, and  in effect, it ends being an                 
  appeal  of Rule 82.   In a  sense, it is  saying that unless                 
  specifically  authorized  by  statute agreement,  attorney's                 
  fees may  not be awarded  to a party  in a civil  action for                 
  personal injury,  death or  property damage,  related to  or                 
  arising out of fault.  I want to take time to point out that                 
  no one  has said that  Rule 82 doesn't  work in the  case of                 
  civil litigants who  are not suing under the  tort statutes.                 
  When  you  have  two  relatively   equal  parties,  say  two                 
  contractors and say  two individuals  suing each other,  and                 
  both have something  to lose,  then Rule 82  has a  salutary                 
  effect because  both parties know that if  they don't settle                 
  this thing, somebody is  going to be paying the  other guy's                 
  attorneys fees.  We were  careful to point out then,  that I                 
  believe this language says that now, that this is reading us                 
  of Rule  82, only  as it  relates to  court law  to personal                 
  injury property rising out of fault.                                         
  REPRESENTATIVE FINKELSTEIN  asked that on  Section 3,  there                 
  are arguments on both  sides on the issue of the  two years,                 
  and I am  certainly very  skeptical, myself.   The bill,  as                 
  explained to me,  in Section 13, if we're  going to say that                 
  no  matter  what, if  you're not  going  to bring  an action                 
  within two years, you can't pursue the actions.  What is it,                 
  in the nature of undiscovered foreign body, within a person,                 
  that makes that particular case so different from  a variety                 
  of other medical  malpractice cases.  Is there  something in                 
  that particular  category that  makes it  so different  that                 
  should be  (indiscernible).  One  of the only  exceptions to                 
  the (indiscernible).                                                         
                                                                               
  Number 368                                                                   
                                                                               
  DR.  MCGUIRE  stated  it  arose  from  the  fact  that  some                 
  individuals  felt  that  it  was  a  particularly  egregious                 
  offense that  if a doctor  or a  nurse or anybody  else left                 
  with  something  inside  someone's  body,  and  they  didn't                 
  discover  it until  sometime later,  it was  so obviously  a                 
  malpractice kind of thing that there should not be a statute                 
  of limitations.  This was felt  proliferously to be the case                 
  by anybody who  addressed the issue.  I think it is a matter                 
  of opinion and  a matter  of judgement.   I certainly  don't                 
  have any problem with the idea  that there can be exceptions                 
  in some  instances because I  think that, once  again, those                 
  are quantifiable exceptions.  I think that in this instance,                 
  it probably has the advantage that everybody doesn't have to                 
  run  down to  do  an  x-ray to  make  sure  they don't  have                 
  something  there.    I  wouldn't  debate  it with  you  very                 
  strongly.                                                                    
                                                                               
  Number 380                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  asked  if  there  was  anything                 
  medically more threatening than that  one particular type of                 
  malpractice, more so than some of the other types of things.                 
  It is just more quantifiable.                                                
                                                                               
  Number 386                                                                   
                                                                               
  DR. MCGUIRE answered that was his impression, yes.                           
                                                                               
  Number 388                                                                   
                                                                               
  REPRESENTATIVE  MACKIE  referenced  Dr.   McGuire's  earlier                 
  testimony where he  gave situations of doctors,  in Cordova,                 
  he  believed that insurance  costs rose and  sooner or later                 
  were unable to afford insurance.  You are suggesting some of                 
  these changes out of situations because  of that.  Where, in                 
  this legislation, or where  in the effort to reform  some of                 
  these problems affect  a lot of  citizens in Alaska, is  any                 
  kind of working commitment from insurance companies to lower                 
  their costs.                                                                 
                                                                               
  Number 397                                                                   
                                                                               
  DR.  MCGUIRE  said I  came  to  speak for  the  Alaskans for                 
  Liability Reform, and I didn't say that I came to speak  for                 
  the insurance  companies.  I  don't speak for  the insurance                 
  companies and I have my own separate problems with insurance                 
  companies at times.  This was  the subject of intense debate                 
  in 1986, and that is so if we do all of these laws, who says                 
  that the insurance  companies are going to be around anyway.                 
  We went  through (indiscernible), the  history of  insurance                 
  beginning with Lloyds of London, and the idea of reinsurance                 
  and the  idea of competitive  markets and so  on and  so on.                 
  Let  me try  to answer  the  question, if  I may,  this way.                 
  There was created, in 1975-76,  an organization called MICA,                 
  which was a  Medical Indemnity Corporation of  Alaska and it                 
  was an express  creation of  the legislature  to answer  the                 
  problem of no insurance in the medical malpractice area.  It                 
  was set up to be a mutual non-profit sort of company so that                 
  all the records would be available so that we could study in                 
  fact what happened  in the insurance mechanism.   It depends                 
  on whose opinion  you take as to whether MICA  was a success                 
  or not.  In the end, we learned a  very great deal about the                 
  actual cost  of insurance, about  where the money  went, and                 
  all of that history has been read into the record both  with                 
  Speaker  Cotten's  study  group  and   with  others  and  is                 
  certainly available.   MICA  has subsequently  been sold  to                 
  another  mutual insurance company  and that did  have a good                 
  effect in terms of moderating the race.   I can't argue that                 
  whether or not the whole insurance business ought to be that                 
  of mutual insurance companies or whether or not it should be                 
  that of  for profits.  But what I can tell you, is that when                 
  we had  the mutual  insurance company,  we,  as doctors,  we                 
  still faced the problem of not knowing of what the long tail                 
  was  going to  be  and therefore,  there still  had to  be a                 
  mechanism of reinsurance and that unpredictability makes for                 
  volatility of rates,  for one  year high and  the next  year                 
  low, and nobody knows where it is.   Let me remind you, that                 
  we  used to  have  statutes of  limitations.   It  is not  a                 
  foreign concept.  It isn't something that  we're dreaming up                 
  anew.   There used to be statutes  of limitations.  Even the                 
  IRS has  a statute  of limitations,  but  these statutes  of                 
  limitations were voided  by judicial decree.   They were not                 
  voided  by   legislative   action,  by   referendum  or   by                 
  initiative.  While they can be portrayed as being repugnant,                 
  in order that there is some predictability of affairs, it is                 
  important that there be  some.  If they were of  no good, we                 
  wouldn't have statutes of limitations for criminal offenses.                 
                                                                               
                                                                               
  Number 450                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  stated  that  Dr. McGuire  made                 
  mention of the issue of 'while  committing a crime,' part of                 
  it all and we had a long discussion, I think that you caught                 
  earlier   on,   the  whole   thing   has  some   very  scary                 
  implications.  I think a lot of us are not completely clear.                 
  An example that came to my mind that we are talking about is                 
  the recent  case with  (indiscernible) Hardware,  where some                 
  kids were out in some sort of felony or misdemeanor crime of                 
  theft, and  were shot.  I assume that  there has been a suit                 
  of trying to recover some of the things.  Are you suggesting                 
  in that  kind of  case that  they should  be precluded  from                 
  suing  because there was some involvement in what some might                 
  consider  to be  a felony  or a  crime, that they  should be                 
  precluded from any compensation?                                             
                                                                               
  Number 462                                                                   
                                                                               
  DR. MCGUIRE answered  the short  answer is "no."   The  long                 
  answer  is that the kids weren't doing  a felony and that is                 
  precisely why the language  says a felony.  I  am completely                 
  sympathetic  to the fact that kids, and sometimes adults, do                 
  things  that  are  not  exactly  within  the  law  but  they                 
  certainly mean  any terrible  harm to  come by  it and  some                 
  injury occurs.  Kids trespass all the time.  We did not have                 
  the intent of misdemeanors.                                                  
                                                                               
  REPRESENTATIVE  FINKELSTEIN understood  that,  but just  the                 
  (indiscernible) between  misdemeanor and felonies,  just the                 
  dollar  amount...    There  are   some  larcenies  that  are                 
  felonies, right?                                                             
                                                                               
  REPRESENTATIVE PORTER added  you are presuming that  in that                 
  case, there  would have  been a  (indiscernible) of  larceny                 
  which  included   intent  to  permanently  deprive  in  that                 
  scenario.  I don't believe that was the case.                                
                                                                               
  REPRESENTATIVE FINKELSTEIN  agreed it could  be argued  that                 
  they were just temporarily stealing the  item.  The key here                 
  is that  the standard would  be changed  in proving  whether                 
  they were  involved  with  that.    It  wouldn't  be  beyond                 
  reasonable doubt, it  would just  be a lower  standard in  a                 
  civil case as to whether they  were involved in a commission                 
  of some sort of larceny which are...  My only point, I'm not                 
  trying  to  get into  the  details  of that,  but  there are                 
  larcenies  that are  felonies, and  they were involved  in a                 
  larceny like act  and I just want  to bring it up  because I                 
  think there is examples  on the other side where  we've seen                 
  enough publicity that we realize that not everyone that fits                 
  these  cases  may   be  some  we   want  to  bar  from   any                 
  compensation.                                                                
                                                                               
  DR. MCGUIRE thought  he might want  to be careful that  your                 
  remarks are  meant to clarify and not  obfuscate because the                 
  (indiscernible) of civil justice of  criminal justice is one                 
  that has  evolved over  the years  and we,  as a  collective                 
  society, have decided that some actions  are more harmful to                 
  society,  as  a  whole, than  are  others.    We call  those                 
  felonies.  We take felonies pretty  seriously.  When you are                 
  charged  with a felony,  it is no  laughing matter.   At the                 
  same time, we recognize that  there are those elements which                 
  are not  so serious  to the  fabric of  society and we  call                 
  those misdemeanors.                                                          
                                                                               
  Number 525                                                                   
                                                                               
  REPRESENTATIVE  FINKELSTEIN  stated  he  was  aware  of  the                 
  differences.                                                                 
                                                                               
  DR. MCGUIRE wanted  to try to make the point that some of us                 
  believe that when you go out and do something that you  know                 
  or should  know, is  more likely  than not  to cause  others                 
  injuries, when you rob banks, when you drive drunk, when you                 
  run red lights, and as a result of that, you cause injury to                 
  other people, where in the world does it  come with any idea                 
  of fairness that you are the victim and that you ought to be                 
  compensated because you  are the criminal.  It  doesn't make                 
  any sense.   Regardless  of whether or  not it said  that it                 
  should be so,  the fact of the matter is from the Daily News                 
  editorial, that those law-suits are filed.   The fact of the                 
  matter is, we argue that they don't even belong  in court in                 
  the first place.                                                             
                                                                               
  REPRESENTATIVE FINKELSTEIN clarified, I  couldn't agree with                 
  you more in cases where there is conviction (indiscernible).                 
  The discussion we had earlier is  cases where the person was                 
  found innocent of a felony and then in the civil  case, they                 
  try using the lower standard.   Made to prove that they were                 
  involved  in  the felony  anyway.   That is  the case  I was                 
  trying to get  at, I agree with  you on a conviction,  it is                 
  just a different level.                                                      
                                                                               
  DR. MCGUIRE  responded, I  would say  to you,  alright, then                 
  let's use the same standards for  determining fault in civil                 
  action as  they  use in  criminal action.   The  point I  am                 
  trying to  make is we, as a  society, want protection of the                 
  individual, and so  from the arm  of government we demand  a                 
  standard of evidence  beyond reasonable doubt, for  criminal                 
  actions.  But  for civil  actions, the plaintiff  can use  a                 
  different standard and can prove a damage using a  different                 
  standard.  Our argument is that the jury who decides whether                 
  or not there should be civil damages ought to be able to use                 
  the same standard approved relative to  the felony as to the                 
  standard approved relative  to the  damages.  Therefore,  we                 
  want,  at  a  very least,  this  information  be mandatorily                 
  (indiscernible).   I will  say to you,  that I  have a great                 
  deal of faith  in the jury system.   What I don't  have much                 
  faith in, is what the jury gets to hear.   So many times the                 
  instructions to the jury are so restrictive that they  don't                 
  have all the facts of the case  and how can they come to any                 
  conclusion other  than the  one that  is (indiscernible)  or                 
  what  they want it  to be.   We argue  that this is  still a                 
  matter of the jury to decide but by having this law in front                 
  of the  jury, you make sure  that the jury,  who decides the                 
  damages,  gets  to also  decide  the appropriateness  of the                 
  conduct of the plaintiff during the injury.                                  
                                                                               
  CHAIRMAN   HUDSON   stated   he   must  cut   Representative                 
  Finkelstein and Dr. McGuire off to  go on with the scheduled                 
  meeting.                                                                     
                                                                               
  REPRESENTATIVE  FINKELSTEIN added  he  thought  it was  very                 
  helpful and helped  him understand that it is  two different                 
  levels.  The first situation, where you want to make sure it                 
  is before  the jury and the other is where they are actually                 
  precluded from any  compensation.   They are both  important                 
  but different.                                                               
                                                                               
  CHAIRMAN HUDSON stated it was  very good for the preliminary                 
  hearing  that  these kind  of  discussions come  out because                 
  these are clearly things that we can amplify and home-in on,                 
  on an individual basis.  I  appreciate Dr. McGuire for being                 
  at the meeting.                                                              
                                                                               
  CHAIRMAN HUDSON asked Jeff Feldman and/or Dan Hensley to the                 
  table.                                                                       
                                                                               
  Number 545                                                                   
                                                                               
  JEFF  FELDMAN,  PRESIDENT  OF THE  ALASKA  ACADEMY  OF TRIAL                 
  LAWYERS ASSOCIATION,  has lived  in the Anchorage  community                 
  for 18 years  and by way of  background, I would say  it has                 
  been  his   practice   represented   both   plaintiffs   and                 
  defendants.    I  have,  on  occasion,  represented  injured                 
  Alaskans.   I  have also represented  many of  Dr. McGuire's                 
  colleagues, some in malpractice actions.  I have represented                 
  engineers and contractors, who have sued, and I am currently                 
  representing  our  Attorney  General Cole,  and  other state                 
  officials  who  were sued  in the  state  action, in  a tort                 
  action presently pending in the courts.                                      
  MR. FELDMAN said I come this afternoon with a view that is a                 
  little bit broader than what you might expect from me as the                 
  president   of   the  Alaska   Academy   of  Trial   Lawyers                 
  Association.    I hope  that  we  would all  agree  that the                 
  citizens of this state, the people  that hire and that voted                 
  for you, deserve  a civil  justice system that  is fair  and                 
  protects  their   rights  and   their  cause   for  adequate                 
  compensation.  I don't think anyone would quarrel  with that                 
  overall  goal.   I understand  that  unspoken in  this room,                 
  today,  but very much present  in the minds  of those of you                 
  who have to make these decisions, is a generalized hostility                 
  towards the legal  system, and  perhaps, even a  generalized                 
  hostility  towards lawyers,  in particular.   I am  not here                 
  this afternoon as  an apologist  in the legal  system and  I                 
  have my own  concerns about the legal system,  as I do about                 
  the medical system and  the educational system, in  which my                 
  children currently attend school.  I will tell  you candidly                 
  that  the legislation that  is before you  this afternoon is                 
  not reformed legislation, it is a  misnomer to call it that.                 
  It  is  legislation  which  confers  immunity   and  special                 
  benefits  on  a  very  narrow group  of  society  on special                 
  interest groups.   It benefits,  simply speaking wrongdoers,                 
  people who do not  commit harm, do not commit  negligence on                 
  other parties,  are not  particularly benefited  by much  in                 
  this  legislation.   This  legislation benefits  those who's                 
  conduct injures and  kills your  constituents.  Injures  and                 
  kills  Alaskans.  It  benefits insurers, major corporations,                 
  those who produce  products that are  used in our state  and                 
  professionals, including myself who commit malpractice.   It                 
  lessons  the responsibility  and reduces  their exposure  to                 
  liability that is  clearly its intent.  so lets identify  it                 
  from what it is.                                                             
                                                                               
  TAPE 93-41, SIDE A                                                           
  Number 001                                                                   
                                                                               
  NOTE:  AT THIS POINT THE MINUTES WILL NO LONGER BE VERBATIM.                 
  MR. FELDMAN told the committee that HB 292 will, in the end,                 
  hurt  the  very constituents  the committee  represents, the                 
  victims who were unfortunate enough to be maimed or injured.                 
  Mr. Feldman noted that the hearing room was full of lawyers,                 
  doctors,  and  lobbyists,  but  none  of  the  victims  most                 
  affected by this bill.  The victims of catastrophic injuries                 
  brought  on  by someone  else's  negligence, the  widows and                 
  orphans  etc., these are  the people whose  rights are being                 
  changed with this bill.                                                      
                                                                               
  MR. FELDMAN stated that Dr. McGuire was simply wrong when he                 
  stated  that everything  in  the  bill  was the  product  of                 
  judicially  created  law.    The  statutes  of  limitations,                 
  interest  rates,   rules  by   which  certain   issues  were                 
  determined by the  jury, were set by  previous legislatures.                 
  HB 292 purports to undo what previous legislators have done.                 
                                                                               
  MR. FELDMAN pointed  out that the statute of limitations set                 
  at six years would be bad public policy for Alaskans as some                 
  defects won't show  until the  seventh  year.   The  section                 
  would confer immunity   to  manufacturers of products  whose                 
  defects may stay concealed for over six years.                               
                                                                               
  MR. FELDMAN stated that periodic payments puts the victim at                 
  risk  because  the  defendant, whether  it  be  an insurance                 
  company or individual, may not  be around at the end of  the                 
  payment schedule.   It's  also true  that the victims  needs                 
  very during their lifetime and should, therefore, be allowed                 
  to use the  money as the person  sees fit.  For  instance, a                 
  person who is rendered a quadriplegic  may find they need to                 
  build a special house, or move their family out of state  to                 
  be close to a facility  that can more properly take  care of                 
  his needs, etc.                                                              
                                                                               
  MR. FELDMAN concluded by saying HB  292 will make Alaska the                 
  most anti victim state in the nation.  It will not do any of                 
  the  things it is purported  to do and  should be called the                 
  "wrongdoers relief act".                                                     
                                                                               
  Number 146                                                                   
                                                                               
  DAN HENSLEY,  Attorney, reiterated Mr.  Feldman's testimony.                 
  He added that  the people who  promote tort reform state  as                 
  their reasons  for their support  that they  don't like  the                 
  civil liability system because it costs too much, because it                 
  takes  too  long,  because  frivolous  lawsuits  burden  the                 
  system, and because some people with legitimate claims don't                 
  have  access.  Mr. Hensley noted that he would like the same                 
  things but HB  292 does  not accomplish these  things.   For                 
  instance, in Section  2 of  the statute of  repose cuts  out                 
  claims for people who are injured  six years after a product                 
  has been manufactured or a building has been designed.                       
                                                                               
  MR. HENSLEY  explained  Section 3  limits malpractice  suits                 
  such as in the case of a   woman whose has a mammogram which                 
  clearly shows a small cancerous  lesion but the radiologists                 
  somehow becomes confused  and doesn't  tell the patient  and                 
  the cancer grows  and becomes deadly  three years after  the                 
  mammogram was taken the patient would not have a claim.                      
                                                                               
  MR. HENSLEY said language  in Sections 5 and 6  would exempt                 
  the  statute of  limitations provisions  in personal  injury                 
  cases from applying  to people who are  mentally incompetent                 
  or are children.                                                             
                                                                               
  MR. HENSLEY noted  that Sections  20 and 21  weaken the  pre                 
  judgement  interest part  of  our  civil  liability  system.                 
  Currently, if a insurance  company owes "X" amount of  money                 
  today and it knows it will have to eventually pay,  they can                 
  decide whether it's cheaper  of pay now or delay  and invest                 
  the money and pay the pre  judgement interest.   If the  pre                 
  judgement interest rate  is low, its incentive is  to delay.                 
  If it is high,  its incentive is to settle now.   Section 21                 
  reduces the rate of pre judgement  interest to a point where                 
  an insurance company will likely earn  more money on what it                 
  owes  than it would have to pay in prejudgment interest.                     
                                                                               
  MR. HENSLEY  said the Section  20 guts  most of the  kind of                 
  award in which prejudgment interest would have to be paid.                   
                                                                               
  MR.  HENSLEY  noted that  Section  11 would  necessitate the                 
  hiring  of an economist, by  the plaintiff, to calculate the                 
  taxes on future losses.                                                      
                                                                               
  MR. HENSLEY stated that Section 13 would create the need for                 
  the plaintiff  to hire insurance consultants to find out how                 
  periodic  payments would  work for  or against  them.   This                 
  again would increase the costs of the suit.                                  
                                                                               
  Frivolous lawsuits are by and large prevented by Rule 82 but                 
  HB  292,  as it  stands,  would cut  that  out of  the legal                 
  system.                                                                      
                                                                               
                                                                               
  MR. HENSLEY stated that for the  first time under this bill,                 
  the  jury is  allowed to   hear that a  plaintiff has health                 
  insurance In the past, the  jury was prohibited from hearing                 
  this.  The judge would hear this after the case was over and                 
  deduct the health insurance payments  from the juries award.                 
  Under HB  292,  the jury  will  hear about  the  plaintiff's                 
  health insurance but not the fact  that the defendant may or                 
  may not have liability insurance.   Mr. Hensley felt this is                 
  not fair as it gives the wealthy defendant an advantage over                 
  the victim.                                                                  
                                                                               
  Number 257                                                                   
                                                                               
  CHAIRMAN  HUDSON  thanked  the previous  speaker.    He said                 
  speaking for himself,  he has not approached this  bill with                 
  any preordained dislike for lawyers.   Chairman Hudson feels                 
  it  is  wrong to  enter  into  an important  debate  as this                 
  presuming there is a strong bias.                                            
                                                                               
  Number 278                                                                   
                                                                               
  MR.  FELDMAN  stated  he didn't  mean  to  suggest that  his                 
  comments were personnel  to any  one on the  committee.   He                 
  said he understands that there is frustration with the legal                 
  system, but sometimes the good intentions are misplaced.                     
                                                                               
  Number 285                                                                   
                                                                               
  REPRESENTATIVE MACKIE said he did not come to the table with                 
  any  preconceived notions  and  listened  to  Mr.  Feldman's                 
  presentation closely.   Representative Mackie perceived  the                 
  problem to be that business is getting priced out because of                 
  high costs of liability insurance in this state.                             
                                                                               
  Number 315                                                                   
                                                                               
  REPRESENTATIVE  PORTER  asked  if  given  the example  of  a                 
  product   or  building  causing   injury  after   the  sixth                 
  limitation  was imposed,  couldn't  an  attorney assert  the                 
  claim as gross negligence?                                                   
                                                                               
  Number 330                                                                   
                                                                               
  MR. FELDMAN  replied that  there were  no exceptions  in the                 
  statute of limitations  under HB  292 for gross  negligence.                 
  So even he, an attorney, could  prove gross negligence.  Mr.                 
  Feldman further  stated that  gross negligence  is a  higher                 
  standard of negligence then ordinary negligence.                             
                                                                               
  Number 347                                                                   
                                                                               
  MANO FREY, President, AFL-CIO, testified that his union does                 
  not have a general policy on tort reform.  He said he raised                 
  the  concern  that  some  have  alluded to  insurance  costs                 
  decreasing  if HB  292  is passed,  but  no one  can say  so                 
  definitively.                                                                
                                                                               
  MR. FREY stated he doesn't think there is a problem with the                 
  size of jury verdicts in this state.  Mr. Frey added that he                 
  hopes the bill would address the problems in a balanced way.                 
  Mr. Frey believes HB  292, as it is currently  drafted, will                 
  only hurt the victims.                                                       
                                                                               
                                                                               
  MR.  FREY stated  that when a   workers  compensation reform                 
  bill was  on the  agenda, one  of the popular  ideas was  to                 
  reduce the  amount of money  that attorneys received.   This                 
  ended up doing a great disservice  to people with legitimate                 
  claims as they couldn't find an attorney to  represent them.                 
  The amount of  work involved versus the possible  payoff was                 
  not high enough to make it worth most attorneys time.                        
                                                                               
  Number 510                                                                   
                                                                               
  LAURA  KELLY, Vice  President, AFL-CIO,  testified that  she                 
  could not see any  benefit to the  working men and women  of                 
  the state in this legislation.                                               
                                                                               
  MS.  KELLY cited several example of products that science is                 
  just now showing that  they can cause damage to  people well                 
  past the  six year  limitation  in HB  292.   Some of  those                 
  products,  for   example,  are  cellular   phones,  silicone                 
  implants,  and  the  radar  guns  the  police  use  to  trap                 
  speeders.                                                                    
                                                                               
  MS. KELLY stated she  has great confidence in the  people of                 
  this state that  make up  our juries and  would rather  have                 
  them  deciding  her case  than  having some  artificial caps                 
  imposed by this bill binding the jury.                                       
                                                                               
  MS. KELLY stated her concern is that HB 292 sets a lower cap                 
  for a person  in a wrongful  death action who was  childless                 
  then one with children.   Ms. Kelly felt that  was sending a                 
  clear message  to citizens  of Alaska  about there  relative                 
  worth.                                                                       
                                                                               
  TAPE 93-41, SIDE B                                                           
                                                                               
  MS. KELLY  stated she  was bothered  that HB  292 would,  in                 
  effect, give only $10 thousand for the loss of a child  to a                 
  parent.                                                                      
                                                                               
  MS. KELLY said she did not believe the state should have any                 
  interest in the area of punitive damages.  There could be no                 
  benefit to the state in capping punitive damages in the most                 
  outrageous and egregious cases.                                              
                                                                               
  Number 055                                                                   
                                                                               
  STEVE  CONN,  Executive  Director,  Alaska  Public  Interest                 
  Research Group, testified his group is bi-partisan and tries                 
  to represent the Alaskan  consumer.  Mr. Conn noted  that he                 
  used to be a professor in the university  system in the area                 
  of justice.  Mr. Conn gave a historical outline of torts.                    
                                                                               
  MR. CONN stated  he thinks it is  important to look  at past                 
  tort reforms to see  if they have achieved any  benefits for                 
  Alaskans.  Has it  lowered insurance premiums?  Has  it made                 
  the  system  more cost  efficient?   Have  the  injured been                 
  served?  Have  the medical profession  been served?  Are  we                 
  safer in terms of the products we use?                                       
                                                                               
  MR.  CONN  suggested that  the  legislature direct,  not the                 
  attorney general's  office, but the Alaska  Judicial Council                 
  to  study  past   tort  reforms  to  answer   the  questions                 
  previously asked.                                                            
                                                                               
                                                                               
  MR. CONN believes that at both the state and federal levels,                 
  the  insurance industry  has  misrepresented  the  facts  in                 
  regards to this bill.  Mr. Conn cited a report done  for the                 
  state of New  York that  contends that the  real problem  is                 
  that there is more malpractice in the health care field than                 
  the system  can  handle  and  that  there  aren't  too  many                 
  lawsuits filed, but too few.                                                 
                                                                               
  MR. CONN stated that of the  suits filed, the amounts of the                 
  awards were  not  disproportionately high  despite  the  few                 
  extreme cases that make the news.                                            
                                                                               
  MR.  CONN pointed  out that  overall nationally  malpractice                 
  insurance premiums  account for less  than 1 percent  of the                 
  total health care spending according to the studies.                         
                                                                               
  MR. CONN again asked the  committee to ascertain whether the                 
  promises made before the last  reform came true before  they                 
  tinker with the system again.                                                
                                                                               
  Number 297                                                                   
                                                                               
  CHAIRMAN HUDSON noted that HB 292,  like most bills that are                 
  introduced in the  legislature, serve  initially as a  forum                 
  for  putting the issue before  those in the legislature that                 
  have  to  make  public policy  decisions.    Chairman Hudson                 
  welcomed  the  input  from the  various  people,  throughout                 
  Alaska, to help fine tune HB 292.                                            
                                                                               
  Number 345                                                                   
                                                                               
  FRANK THOMAS-MEARS,   State Insurance  Administrator, Alaska                 
  Dental Society, said he  is one of the original  founders of                 
  the Alaska Citizens  Coalition for Tort Reform.  Mr. Thomas-                 
  Mears stated  that this  bill is  the first  attempt to  set                 
  forth limitations.  He said that the  citizens coalition has                 
  tried to interest  the trial attorneys,  since 1985, to  sit                 
  down and open  up discussions on  tort reform and the  reply                 
  was "no."   Furthermore the  trial attorneys have  indicated                 
  that if the reform passes they will fight it in the courts.                  
                                                                               
  MR. THOMAS-MEARS stated  that there are finite  resources to                 
  go  around  and  that  a  democracy  cannot  have  unlimited                 
  liability  to  everybody  for  everything  and  exist.    He                 
  asserted that law has been enacted through  case law without                 
  public participation.                                                        
                                                                               
  MR. THOMAS-MEARS stated  he believed our society  needs more                 
  methods of alternate  dispute resolution such  as mediation,                 
  arbitration and peer review.                                                 
                                                                               
  Number 568                                                                   
                                                                               
  REPRESENTATIVE MULDER asked  for an  explanation of the  $10                 
  thousand  figure  for the  death of  a  child that  has been                 
  brought up during some of the previous testimony.                            
                                                                               
  Number 575                                                                   
                                                                               
  MR. FORD responded that in a wrongful death action, sections                 
  20 through 23,   a $10 thousand figure would  apply assuming                 
  that the child had no dependents.                                            
                                                                               
                                                                               
  TAPE 93-42, SIDE A                                                           
  Number 001                                                                   
                                                                               
  There was continuation of  wrongful death discussion between                 
  Mr. Ford and Representative Mulder.                                          
                                                                               
  Number 045                                                                   
                                                                               
  ERIC SANDERS, Attorney, testified as to how  the present law                 
  reads versus the legislation before the committee.  He  said                 
  under present law, there are two kinds of clients.  There is                 
  one type  where there  are dependents.   There  is also  the                 
  wrongful death claim where there are  no dependents.  If you                 
  are married or are  a single person with children,  then you                 
  have dependents.  He  said if he were supporting  his mother                 
  because she  was disabled,  she would  also be a  dependent.                 
  Mr.  Sanders  said in  that  situation,  if a  dependent  is                 
  survived, then they have a claim  for their loss of support.                 
  They would also  have a claim for loss of companionship.  He                 
  said that is one set of claimants, those with dependents                     
                                                                               
  MR. SANDERS said there is a second group of those people who                 
  are not dependents  and have no  dependents.  He said  there                 
  could be  a minor  child, under  18 years old.   Under  that                 
  there would be a  pecuniarily loss.  The way it is currently                 
  done is it  is projected what  that child would have  earned                 
  during the  course of  their life  minus their  consumption.                 
  That is the pecuniarily loss.                                                
                                                                               
  MR. SANDERS said separate and  apart from the wrongful death                 
  statute there is also a law which provides that parents of a                 
  minor child have a claim for the loss of the relationship in                 
  their child.                                                                 
                                                                               
  MR.  SANDERS  said  then  you have  claimants  that  are  no                 
  dependents over the  age of 18.   If you're 18 years  plus 1                 
  day old, you are killed, you  have no dependents, under this                 
  law you're going to get the estate.                                          
                                                                               
  Number 078                                                                   
                                                                               
  REPRESENTATIVE PORTER asked Mr. Sanders  what a person could                 
  conceivably get under Section 6 of HB  292 for the loss of a                 
  child that is over 18 years of age.                                          
                                                                               
  Number 085                                                                   
                                                                               
  MR. SANDERS explained  that HB 292 is  limiting tort actions                 
  not expanding them.   He  added that under  current law  the                 
  estate of an 18 year old would be limited to pecuniary loss,                 
  the  estate  would   not  get  anything  for  the   loss  of                 
  companionship of the child.                                                  
                                                                               
  MR.  SANDERS  asserted  that  the  civil justice  system  is                 
  arbitrary in some regards and this is one example.                           
                                                                               
  MR. THOMAS-MEARS responded  that HB 292 is  arbitrary but he                 
  thinks its as fair as you can get given the framework.                       
                                                                               
  MR. THOMAS-MEARS added  that he  would rather set  arbitrary                 
  limits now with finite limits under rational circumstances.                  
  MR. SANDERS  stated that  if the  insurance companies  would                 
  commit, in writing, to lower premiums if this bill passes he                 
  didn't think there would be opposition to it.  He added that                 
  the  insurance  industry  is   standing  on  the   sidelines                 
  promoting the passage of tort reform limiting victims rights                 
  without committing to any reductions in premiums.                            
                                                                               
  Number 135                                                                   
                                                                               
  CHAIRMAN HUDSON commended  both sides and suggested  that it                 
  be reduced to  writing as there are some good  ideas for the                 
  future.                                                                      
                                                                               
  Number 138                                                                   
                                                                               
  REPRESENTATIVE MACKIE commented  that when tort  reform came                 
  up in 1988,  he understood insurance rates would  be lowered                 
  but it hasn't happened.                                                      
                                                                               
  Number 155                                                                   
                                                                               
  GORDEN  EVANS,  Health  Insurance  Association  of  America,                 
  testified  to their  position on  HB 292.   The  Association                 
  believes that the major focus should  be on the reduction of                 
  the  occurrence  of  malpractice.    This  may  involve  the                 
  relicensing  of the  medical profession,  periodically, with                 
  written  examinations  and  peer audits.    The  association                 
  believes in requiring hospitals and other medical facilities                 
  to  implement  effective  risk  management  practices  as  a                 
  requirement of licensure.  The association is also promoting                 
  the  accumulation  of  information  on  the  medical  field,                 
  including an analysis  of claims  or information of  license                 
  revocations, suspensions and disciplinary actions.  Finally,                 
  to empower the  State Medical  Board to  be able  to act  on                 
  these measures.                                                              
                                                                               
  MR. EVENS explained  that the  association is supportive  of                 
  alternative dispute resolution.  He added that if litigation                 
  is necessary, then every effort be made to make sure that as                 
  much of the award go to the claimant.                                        
                                                                               
  REPRESENTATIVE MACKIE  asked if the  insurance industry  was                 
  supportive  of lowering their rates if  some of these things                 
  in the bill pass.                                                            
                                                                               
  Number 234                                                                   
                                                                               
  MR. EVANS   stated that if  costs are cut  and limited to  a                 
  finite amount,  then it would  follow that.   Premiums would                 
  come down.                                                                   
                                                                               
  Number 255                                                                   
                                                                               
  REPRESENTATIVE  PORTER  asked  for  Mr.  Evans to  give  the                 
  committee an analysis of any  savings or reduction in growth                 
  in insurance premiums.                                                       
                                                                               
  Number 268                                                                   
                                                                               
  MR. EVANS replied that  he was not in  the position to  make                 
  any predictions in that regard.  He added that he would pass                 
  the request along to the association for a reply.                            
  REPRESENTATIVE   PORTER   responded   that   he  hoped   the                 
  association could come up with  some response before session                 
  started as he  knew the  question would come  up during  the                 
  legislature's debate on tort reform.                                         
                                                                               
  Number 276                                                                   
                                                                               
  REPRESENTATIVE GREEN asked Mr. Evans for an approximation of                 
  how much the payout is for all malpractice claims as opposed                 
  to non litigated coverage.                                                   
                                                                               
  Number 290                                                                   
                                                                               
  MR. EVANS replied that he did  not have that information but                 
  would  make  an effort  to  obtain  and provide  it  for the                 
  committee.                                                                   
                                                                               
  Number 300                                                                   
                                                                               
  CHAIRMAN  HUDSON stated that  any information  provided that                 
  would  help  the committee  expand  their knowledge  on this                 
  subject will be appreciated.                                                 
  CHAIRMAN HUDSON adjourned the meeting at 4:12 p.m.                           

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