Legislature(1993 - 1994)
02/01/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE February 1, 1994 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chair Rep. Brian Porter Rep. Eldon Mulder Rep. Joe Sitton Rep. Jerry Mackie MEMBERS ABSENT Rep. Bill Williams 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 IN COMMITTEE *HB 325: "An Act relating to motorcycle safety and to use of helmets by operators of motorcycles." NOT HEARD (* First public hearing.) WITNESS REGISTER MICHAEL SCHNEIDER 880 N St., #202 Anchorage, Alaska 99501 277-9306 Position Statement: Opposed HB 292 (Spoke via teleconference) ROGER HOLMES Biss and Holmes Law Firm 705 Christensen Dr. Anchorage, Alaska 99501 Phone: 277-8564 Position Statement: Supported HB 292 (Spoke via teleconference) MIKE FORD, Attorney Division of Legal Services Legislative Affairs Agency 130 Seward St., Room 404 Juneau, Alaska 99801-2105 Phone: 465-2450 Position Statement: Commented on HB 292 KATJA KIRSH Alaska Environmental Lobby P.O. Box 22151 Juneau, Alaska 99802 463-3366 Position Statement: Opposed HB 292 SAM SKAGGS Skaggs and Ingalls, Inc. 709 Gold St. Juneau, Alaska 99801 463-4843 Position Statement: Supported HB 292 REGINA McCLELAND Chugiak Senior Center 222 - 424 N. Brickwood Chugiak, Alaska 99867 Position Statement: Opposed HB 292 (Spoke via teleconference) DARYL NELSON Chugiak Senior Center 222 - 424 N. Brickwood Chugiak, Alaska 99867 Position Statement: Opposed HB 292 (Spoke via teleconference) BONNIE NELSON Chugiak Senior Center 222 - 424 N. Brickwood Chugiak, Alaska 99867 Position Statement: Opposed HB 292 (Spoke via teleconference) RUTH CALLAN Chugiak Senior Center 222 - 424 N. Brickwood Chugiak, Alaska 99867 Position Statement: Opposed HB 292 (Spoke via teleconference) SHERRIE GOLL Alaska Women's Lobby P.O. Box 22156 Juneau, Alaska 99801 463-6744 Position Statement: Opposed HB 292 GLENDA STRAUBE 1318 N St. Anchorage, Alaska 99501 278-0840 Position Statement: Opposed HB 292 (Spoke via teleconference) DICK CATTANAGH 1318 N St. Anchorage, Alaska 99501 379-9568 Position Statement: Supported HB 292 (Spoke via teleconference) GRANT CALLOW 425 G St., Suite 610 Anchorage, Alaska 99501 276-1221 Position Statement: Opposed HB 292 (Spoke via teleconference) TIM DOOLEY 733 West 4th Ave. Anchorage, Alaska 99501 279-7327 Position Statement: Opposed HB 292 (Spoke via teleconference) JOHN SUDDOCK 604 W. 2nd Ave. Anchorage, Alaska 99501 274-0594 Position Statement: Opposed HB 292 (Spoke via teleconference) RUSS WINNER 900 W. 5th Ave., #700 Anchorage, Alaska 99501 Position Statement: Opposed HB 292 (Spoke via teleconference) ERIC SANDERS 500 L St., #400 Anchorage, Alaska 99501 272-3538 Position Statement: Opposed HB 292 (Spoke via teleconference) CHARLES McKEE 1508 W. 43rd. #7 Anchorage, Alaska 99504 Position Statement: Opposed HB 292 (Spoke via teleconference) 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 01/27/94 (H) L&C AT 03:00 PM CAPITOL 17 01/27/94 (H) MINUTE(L&C) 02/01/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 325 SHORT TITLE: MOTORCYCLE SAFETY SPONSOR(S): REPRESENTATIVE(S) BRICE JRN-DATE JRN-PG ACTION 01/03/94 2012 (H) PREFILE RELEASED 01/10/94 2012 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2012 (H) LABOR & COMMERCE, STATE AFFAIRS 02/01/94 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 94-5, SIDE A Number 001 CHAIRMAN HUDSON convened the meeting at 3:17 p.m. and explained the procedure to be used at this committee meeting. CSHB 292(L&C) - "An Act relating to civil actions; amending Alaska Rules of Civil Procedure 11, 49, 68, 82, and 95; and providing for an effective date." Number 230 REP. PORTER moved the adoption of the CS for HB 292(L&C) and brought it before the committee for their consideration. No objections were heard, it was so ordered. Number 240 MIKE SCHNEIDER, Attorney, testified via teleconference from Anchorage. Mr. Schneider stated he opposed Section 3, the statute of repose, because this section limits a victim's rights by stating that an action may not be brought more than six years past the first use of any product in the manner intended, or substantial completion or six years past the last act upon which a liability claim for injury or death may be based. He added that Section 3 is a radical change and basically places Alaskans in the position of being second class citizens compared to most of the rest of the United States. Number 365 ROGER HOLMES, Attorney, Biss and Holmes Law Firm, responded that if someone or some business intentionally commits some wrongful deed, then the six year statute of repose would not apply. Mr. Holmes stated that the current unlimited product liability statute limits the manufacture of new goods in this state. MR. HOLMES said that Mr. Schneider made some very valid points; life is a trade off and basically it is a political decision. Number 435 REP. MACKIE expressed concern over this section of the bill. He stated he has thought this particular problem had been taken care of and now he hears testimony on both sides of the issue. Number 441 REP. PORTER stated that adjustments were made in this section as a result of testimony taken. The adjustment changed the language from "date of manufacture" to the date the product was first used. REP. MULDER stated that the statute of repose is an arbitrary one. It all comes down to a policy question, or should we or shouldn't we have a statute of limitation. Number 539 REP. PORTER raised and answered the question of why we have a statute of repose. He stated that it helps create a healthy and fair climate in Alaska for business. Rep. Porter asserted that the cost of doing business is guided by the cost of insurance and that "life's a risk" and a "balancing act." Number 581 MIKE FORD, Attorney, Division of Legal Services, Legislative Affairs Agency, reiterated that in the case of an intentional act that causes damages, the clock does not stop. In the case of negligence, the clock stops after six years. TAPE 94-5, SIDE B Number 000 CHAIRMAN HUDSON offered Amendment 13 to CSHB 292, j version: on page 4, line 10, after "intentionally" insert "or resulted from gross negligence, fraud, fraudulent misrepresentation, or breach of an express warranty or guarantee." CHAIRMAN HUDSON asked for the committee's response to this proposed language. Number 015 REP. SITTON voiced his support for Amendment 13. Number 020 REP. MULDER asked Mr. Ford to define the difference between gross negligence and intentional activity. MR. FORD stated he thinks everyone knows what intentional means and the difference between that and gross negligence is a matter of degree. MR. FORD gave the example of simply not inserting a part in a product which ends up causing damage to being grossly negligent by acting outrageously. Number 040 CHAIRMAN HUDSON asked Mr. Ford if there had to be intent behind fraud as appears in Amendment 13. MR. FORD replied there is usually an intentional element to fraud. Number 050 REP. MACKIE asked if the committee knew if airliners had warranties. CHAIRMAN HUDSON viewed an airline ticket as an expressed warranty that you are going to land at the desired location. MR. FORD felt that the ticket was only an agreement between the passenger and the airline that they would perform to the standards that a reasonable person would in that situation. He said, for example, if we presume that they do everything correctly and a defective part causes the plane to crash, then the language in Amendment 13 may change the results. MR. FORD commented that the court would probably read into Amendment 13 the language it currently holds regarding express warranty or guarantee, but he felt it was important to leave it in the bill to make the committee's intention clear. Mr. Ford added that this language was taken from HB 160 passed by the House last year regarding architects and engineers. REP. GREEN moved Amendment 13. No objections were heard; it was so ordered. Number 120 KATJA KIRSH, Alaska Environmental Lobby, testified in opposition to HB 292. Ms. Kirsh stated that HB 292 in particular would close the courthouse doors to some pollution victims. She said HB 292 would prevent some victims of pollution from seeking compensation from polluters before the victims even know about the pollution or that they have been harmed. The bill would stop a person from bringing a lawsuit against a wrongdoer more than six years after the last act which caused personal injury, death, or property damage. MS. KIRSH remarked that HB 292 would have a harsh impact on victims of toxic pollution. Pollution can move very slowly. First, it may take years for groundwater or soils to become contaminated after a release of pollution uphill. Second, toxic pollution causes diseases such as cancer, which only show up years or even decades later. MS. KIRSH added some examples to her testimony and provided the committee with a written copy of her remarks that are on file with the committee. Number 187 SAM SKAGGS, Skaggs and Ingalls, Inc., testified in support of HB 292. Mr. Skaggs related his experience with the marketing of his product - the stroller pack. Mr. Skaggs stated that after introducing the product, a number of big name companies expressed interest, LL Bean and REI to name two. These companies required Skaggs and Ingalls to procure product liability insurance before they could sell the stroller pack to them. It took two years to obtain this insurance because 1) Skaggs and Ingalls were a start up company with little track record, and 2) because Alaska is viewed as having a hostile environment for manufacturing. Mr. Skaggs related that they finally got a $500,000 face policy costing $12,000. Mr. Skaggs explained that in order to pay $12,000, a company would have to produce and sell an incredible volume of stroller packs, and no way was that going to happen. Number 230 MR. SKAGGS summarized that HB 292 should pass as an effort to stimulate manufacturing in this state. Number 228 REGINA McCELLUM, Chugiak Senior Center, testified via teleconference from Anchorage. Ms. McCellum stated that there were two things in HB 292 that concerned her: 1) seniors that are retired and not currently working do not have a lost wage claim if injured, and 2) HB 292 allows professionals to be independent contractors and does not require them to be insured, thus allowing hospitals a way to avoid liability. Number 250 REP. PORTER replied that seniors who are not working would not have a claim for economic compensation for lost wages as there are none. But this does not preclude awards for noneconomic awards and certainly does not preclude awards for actual expenses. Number 300 DARYL NELSON, Chugiak Senior Center, via teleconference, expressed the same concerns as Ms. McCellum. CHAIRMAN HUDSON replied that those concerns were alleviated in Section 4. Number 315 BONNIE NELSON, Alaska Public Interest Group, testified in opposition to HB 292 via teleconference. She stated that the current jury system, while not perfect, is great and we should not be tinkering with people's civil rights. She dittoed Ms. McCellum's concerns regarding seniors and children regarding economic damages. Number 350 CHAIRMAN HUDSON replied that HB 292 does not discriminate against seniors in his estimation. He said HB 292 simply tries to take into account what the future lost earnings would be if a person was no longer able to work. If a senior is injured, there are no lost earnings, and therefore no award is made under that category. But that does not preclude a senior from being awarded money for the other areas covered in the law. Number 370 REP. PORTER recounted his theory that the whole idea of tort law is to make people whole, not rich. Number 407 RUTH CALLUM, Chugiak Senior Center, via teleconference, dittoed the concern that Regina McCellum had said that seniors were being discriminated against in HB 292 because they were not receiving a wage when the injury occurred. Number 425 REP. PORTER noted that the anecdote Ms. McCellum used was wrong and again stated that tort law is in place to make people whole again, not rich. Number 450 SHERRIE GOLL, Alaska Women's Lobby, testified in opposition to HB 292. Ms. Goll expressed her concern about those victims who have never seen a conviction in their case; victims whose perpetrators have never been convicted of a crime in any of the degrees excepted in the bill. For instance, a batterer who has perpetrated a series of misdemeanor assaults upon a person until that person becomes severely harmed, even incapacitated. She noted these persons are not covered by HB 292. Number 020 REP. PORTER responded that he would be offering an amendment that the cap on economic damages not be applied to those who are the victims of an attempt to commit a crime, the commission of a crime, or fleeing from a Class A or unclassified felony. This would expand the bill to alleviate the problem of a victim not being able to see redress through the courts because a person charged with a crime doesn't get convicted due to a technicality. Number 043 MS. GOLL expressed concern regarding the deletion of the exceptions to the cap of $500,000, the severely impaired and disfigured people. Ms. Goll stated that these victims may have lost their legs, been severely brain damaged, etc., and $500,000 may not be near enough to cover them. MS. GOLL suggested that "domestic partner" be used instead of "spouse" in Section 25 because it discriminates against unmarried people and those who may have been counting on the victim's income to help them financially; i.e., aging parents. Ms. Goll said she felt a $10,000 cap in any circumstance was too low currently and would certainly be too low 15 years from now if this bill passes. REP. PORTER stated that another way to look at this is that this provides $10,000 to someone who otherwise wouldn't be entitled to receive anything. A nondependent has no claim for an economic loss from someone's death. Rep. Porter added that consequently the person shouldn't receive an award for an economic loss, and HB 292 gives it to them anyway. REP. PORTER commented that HB 292 does not preclude persons from suing for noneconomic damages. Rep. Porter again reiterated that we are trying to make people whole, not rich. MS. GOLL stated that she had serious concern regarding the statute of repose. Ms. Goll cited the example of a child taking a prescribed drug at age 9, then at 14 research shows that it is possible the drug may cause infertility and at age 22 the child is indeed infertile that person has no recourse. Number 200 REP. PORTER replied that the statute of limitations is two years from the time of discovery, not injury, so the child/adult now 22 would have two years from age 22 to sue. REP. PORTER added that HB 292 calls for when the victim should have reasonably known about the problem. Number 289 MS. GOLL suggested that HB 292 should require that insurance rates go down by 30 percent and accessibility increased or the law be repealed. Number 310 REP. SITTON asked Ms. Goll, given our free market economy, didn't she feel that the insurance companies will charge whatever the market will bear? MS. GOLL agreed. CHAIRMAN HUDSON pointed out that he felt good about including the medical practice guidelines in HB 292 as a way of protecting not only the public but the medical community themselves. Number 335 REP. MACKIE questioned whether there is a net effect of HB 292 on insurance rates. Number 343 REP. PORTER replied that any kind of provision that would tie passage of this bill to some stipulation that insurance rates decrease by X amount is a "bill killer, period." REP. PORTER asserted that at a previous hearing in Juneau on HB 292 both John George, an insurance lobbyist, and Dave Walsh, director of insurance, testified that if HB 292 passes and does not lose the provisions it was based on, subsequent court challenges, insurance rates will come down. Number 401 GLENDA STRAUBE testified via teleconference in opposition to HB 292. Ms. Straube stated that she was morally and intellectually opposed to most of HB 292. Ms. Straube believes the legislature should be required to prove to the public in both quantitative and qualitative terms why there is any need for HB 292. MS. STRAUBE stated that for every study that shows that insurance rates would go down if HB 292 passes, she could show one that shows the opposite. MS. STRAUBE suggested that HB 292 merely protects persons and corporations from answering for their negligent acts. Ms. Straube believes the legislature is asserting itself as being tough on crime and lax on white collar crime. CHAIRMAN HUDSON responded that Ms. Straube made some very good points regarding the reporting mechanism to determine the effect of HB 292, but he added that this committee was not in this to "lawyer bash." Number 477 DICK CATTANAGH, contractor, testified that in his business there was no statute of limitation, he could be sued at any time. Mr. Cattanagh stated that in regards to insurance rates going down, he would refer the committee to the State Division of Insurance who have published information suggesting that, since the last tort reform, the rates have come down. Mr. Cattanagh also pointed to a Harvard study that indicates a decrease in insurance rates. REP. MACKIE inquired if the insurance industry has indicated that rates will go down. MR. CATTANAGH replied yes; the insurance companies have indicated they will weigh in with some figures when the bill gets closer to the end. Number 533 GRANT CALLOW testified from Anchorage against HB 292. He stated he is a commissioner on the Commission on Uniform Laws and, as such, was appointed to serve on the drafting committee of the model periodic payment of judgments act in 1987. Based on his work with this committee he has developed serious concerns regarding the same. Mr. Callow added that no states have adopted the model because of the controversy surrounding it. Number 550 MR. CALLOW suggested that at the very least periodic payments will not make the court system more effective; it will be just the opposite, it will delay the process. TAPE 94-6, SIDE B Number 001 MR. CALLOW stated he would like to see some evidence or assurance that insurance rates will indeed go down if HB 292 passes. Mr. Callow suggested a sunset clause to the bill. Number 068 TIM DOOLEY testified from Anchorage against the bill. Mr. Dooley stated he would like to see our free market system preserved. He believes punitive damages are the one check and balance we have on the forces of the free market. Number 207 JOHN SUDDOCK testified from Anchorage against HB 292. Mr. Suddock had particular concerns regarding the caps HB 292 places on noneconomic losses. He believes a tiny number of people would be affected by this, maybe 20 or so claims a year. Mr. Suddock stated that the claims are for people who are catastrophically hurt or maimed such that it affects the rest of their lives. It is common for lawyers to make a video of these victims of a typical day they endure. Mr. Suddock suggested that if the committee saw one of these films they would not be limiting these victims' rights to recover whatever a jury may award. MR. SUDDOCK commented that the $500,000 doesn't stretch nearly far enough in the case of a man who becomes a paraplegic with a wife and five children. He suggested that what happens in most cases is that the family breaks up and the money is thus divided into at least two households, thus the victim is generally left with much less then the original $500,000. Number 333 REP. PORTER stated that all the necessities needed to take care of the health of the victim are covered under award for economic damages. For example, any kind of rehabilitative equipment or anything to make the victim's home more hospitable, etc. Rep. Porter also suggested that the anecdote used showed the family to be insensitive. Number 345 MR. SUDDOCK added that he was just talking about anything that would add a little grace to the victim's life, maybe travel that would require an attendant. These are the areas that will be effected by the deletion of the exceptions to noneconomic caps. Mr. Suddock reiterated that this would apply to only 10 to 20 cases a year in Alaska. Mr. Suddock asserted that these are not the cases that drive the insurance industry. Number 350 REP. PORTER disagreed with Mr. Suddock and stated that it was these kinds of cases that drive the insurance rates up. Number 355 MR. SUDDOCK advised that the effect of these cases are dwarfed by the smaller claims. Number 369 RUSS WINNER testified via teleconference from Anchorage. Mr. Winner opposed Sections 16 and 17 and stated that HB 292 will not reduce attorney's fees, and if that's what the committee was after, then it should look to ways to speed trials. MR. WINNER also asked the committee to get some assurances from the insurance industry that rates will indeed come down. Number 484 ERIC SANDERS testified via teleconference from Anchorage in opposition to HB 292. He stated it was his understanding that HB 292 was written substantially by the Citizens for Tort Reform. Mr. Sander stated he does not understand why we are reaching out to victims in the criminal context by making laws harsher and then turning around and limiting rights of victims in the civil context. A clear example of this is in the provision in which there is a $10,000 cap to certain people in a wrongful death context. Number 555 CHARLES McKEE testified via teleconference from Anchorage in opposition of HB 292. Mr. McKee proposed some language to the findings and purpose section of the bill regarding the patenting of manufactured items. Number 580 CHAIRMAN HUDSON asked Mr. McKee to send his written testimony to the committee. Number 600 GABRIELL LEDOUX testified via teleconference from Kodiak regarding her personal experience with the civil justice system. Ms. LeDoux stated that one and one-half years ago her husband and nine year old son were lost in a horrendous automobile accident as a result of the egregiousness of a truck driver. MS. LEDOUX stated she opposed HB 292 because as it takes away the rights of the most vulnerable segment of the Alaskan population, those people who have been devastated by the negligent acts of others. MS. LEDOUX stated that two years ago she never expected to be in the position she is now. Ms. LeDoux expressed her feeling that for most of the committee this issue was probably a political, academic discussion. Ms. LeDoux knew that when she hears people say things like, "life's a risk, a balancing act" she can tell that they have never been confronted with a policeman stopping by to tell them that their entire family has been wiped out. TAPE 94-7, SIDE A Number 001 DONALD MURRAY testified from the Matsu regarding HB 292. Mr. Murray stated he had been injured in 1990 and is a paraplegic and is in much pain. Mr. Murray told the committee that if they think $500,000 is enough to compensate for the kind of pain he lives with constantly, they are wrong. MR. MURRAY stated that if HB 292 had been in effect when he got hurt the court house doors would have been shut. CHAIRMAN HUDSON stated he would hold HB 292 in the committee until the next committee meeting. CHAIRMAN HUDSON adjourned the meeting at 6:13 p.m. HB 325 was not heard today.