Legislature(1995 - 1996)
02/07/1996 03:13 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 7, 1996
3:13 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Beverly Masek
Representative Jerry Sanders
Representative Kim Elton
Representative Gene Kubina
MEMBERS ABSENT
Representative Brian Porter
COMMITTEE CALENDAR
SENATE BILL NO. 131
"An Act relating to investments by fiduciaries."
- PASSED OUT OF COMMITTEE
*HOUSE BILL NO. 414
"An Act requiring conciliation panel review in a civil action
against an architect, engineer, or land surveyor; and providing for
an effective date."
- HEARD AND HELD
*HOUSE BILL NO. 435
"An Act relating to employment contributions and to making the
state training and employment program a permanent state program;
and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 346
"An Act relating to regulation of telecommunications utilities."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 311
"An Act repealing the limitation on the hours a person may be
employed in a mine; and making a related technical amendment to
avoid changing the penalties for failing to make payments into an
employee benefit fund."
- SCHEDULED BUT NOT HEARD
(*First public hearing)
PREVIOUS ACTION
BILL: SB 131
SHORT TITLE: INVESTMENTS BY FIDUCIARIES
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
03/15/95 618 (S) READ THE FIRST TIME - REFERRAL(S)
03/15/95 618 (S) L&C, FIN
03/21/95 (S) L&C AT 01:30 PM FAHRENKAMP RM 203
03/21/95 (S) MINUTE(L&C)
03/22/95 746 (S) L&C RPT 1DP 4NR
03/22/95 746 (S) ZERO FISCAL NOTE (DCED)
04/11/95 (S) FIN AT 09:00 AM SENATE FINANCE 532
04/11/95 (S) FIN AT 02:30 PM SENATE FINANCE 532
04/12/95 (S) FIN AT 09:00 AM SENATE FINANCE 532
04/12/95 (S) FIN AT 02:30 PM SENATE FINANCE 532
04/13/95 (S) FIN AT 09:00 AM SENATE FINANCE 532
04/13/95 (S) FIN AT 02:30 PM SENATE FINANCE 532
04/19/95 (S) FIN AT 09:00 AM SENATE FINANCE 532
04/21/95 1137 (S) FIN RPT 1DP 5NR
04/21/95 1137 (S) PREVIOUS ZERO FN (DCED)
04/21/95 (S) MINUTE(FIN)
04/22/95 (S) RLS AT 02:30 PM FAHRENKAMP ROOM 203
04/22/95 (S) MINUTE(RLS)
04/26/95 1252 (S) RULES TO CALENDAR 4/26/96
04/26/95 1253 (S) READ THE SECOND TIME
04/26/95 1254 (S) ADVANCED TO THIRD READING UNAN CONSENT
04/26/95 1254 (S) READ THE THIRD TIME SB 131
04/26/95 1254 (S) PASSED Y20 N-
04/26/95 1260 (S) TRANSMITTED TO (H)
04/27/95 1566 (H) READ THE FIRST TIME - REFERRAL(S)
04/27/95 1566 (H) LABOR & COMMERCE, FINANCE
01/31/96 (H) L&C AT 03:00 PM CAPITOL 17
01/31/96 (H) MINUTE(L&C)
02/07/96 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 414
SHORT TITLE: MANDATORY MEDIATION/DESIGN PROF LAWSUITS
SPONSOR(S): REPRESENTATIVE(S) GREEN
JRN-DATE JRN-PG ACTION
01/12/96 2428 (H) READ THE FIRST TIME - REFERRAL(S)
01/12/96 2429 (H) LABOR & COMMERCE, JUDICIARY
01/29/96 (H) L&C AT 03:00 PM CAPITOL 17
01/29/96 (H) MINUTE(L&C)
01/31/96 (H) L&C AT 03:00 PM CAPITOL 17
01/31/96 (H) MINUTE(L&C)
02/07/96 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 435
SHORT TITLE: STATE TRAINING & EMPLOYMENT PROGRAM
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/19/96 2488 (H) READ THE FIRST TIME - REFERRAL(S)
01/19/96 2488 (H) LABOR & COMMERCE, HES, STA, FINANCE
01/19/96 2488 (H) 3 FISCAL NOTES (2-DCRA, LABOR)
01/19/96 2488 (H) GOVERNOR'S TRANSMITTAL LETTER
02/07/96 (H) L&C AT 03:00 PM CAPITOL 17
WITNESS REGISTER
WILLIS KIRKPATRICK, Director
Division of Banking, Securities and Corporations
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, Alaska 99811-0907
Telephone: (907) 465-2521
POSITION STATEMENT: Commented on SB 131.
VERN SAYLES, Executive Vice President
and Manager Key Trust Company of Alaska;
Alaska Bankers Association
P.O. Box 100910
Anchorage, Alaska 99501
Telephone: (907) 564-0403
POSITION STATEMENT: Testified on SB 131.
JEFF LOGAN, Legislative Staff
to Representative Joe Green
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-6547
POSITION STATEMENT: Gave sponsor statement for HB 414.
REPRESENTATIVE JOE GREEN
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-6547
POSITION STATEMENT: Answered questions on HB 414.
RUSS WINNER, Attorney
900 West Fifth Avenue, Number 700
Anchorage, Alaska 99501
Telephone: (907) 277-9522
POSITION STATEMENT: Testified on HB 414.
COLLIN MAYNARD, Chair
Legislative Liaison Committee
Alaska Public Design Council
1400 West Benson, Number 500
Anchorage, Alaska 99517
Telephone: (907) 274-3660
POSITION STATEMENT: Testified in support of HB 414.
TERESA WILLIAMS, Assistant Attorney General
Fair Business Practices Section
Civil Division
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1194
Telephone: (907) 269-5100
POSITION STATEMENT: Testified on HB 414.
MIKE TAURIAINEN
35186 Spur Highway
Soldotna, Alaska 99669
Telephone: (907) 262-4624
POSITION STATEMENT: Testified in favor of the concept of HB 414.
CATHERINE REARDON, Director
Central Office
Division of Occupational Licensing
P.O. Box 110806
Juneau, Alaska 99811
Telephone: (907) 465-2538
POSITION STATEMENT: Answered questions on HB 414.
SHARON MACKLIN, Lobbyist
Alaska Professional Design Council
315 Fifth Street, Number 8
Juneau, Alaska 99801
Telephone: (907) 586-9518
POSITION STATEMENT: Testified on HB 414.
DAVID DEAN
500 First Avenue, Suite 3
Fairbanks, Alaska 99701
Telephone: (907) 456-5189
POSITION STATEMENT: Testified in support of HB 435.
REBECCA NANCE, Director
Central Office
Division of Employment Security
Department of Labor
P.O. Box 25509
Juneau, Alaska 99802-5509
POSITION STATEMENT: Testified in support of HB 435.
ACTION NARRATIVE
TAPE 96-6, SIDE A
Number 001
The House Labor and Commerce Standing Committee was called to order
by Chairman Pete Kott at 3:13 p.m. Members present at the call to
order were Representatives Kott, Masek, Elton, Sanders and Kubina.
Representatives Porter and Rokeberg were absent.
SB 131 - INVESTMENTS BY FIDUCIARIES
Number 025
CHAIRMAN PETE KOTT announced the first order of business would be
SB 131, "An Act relating to investments by fiduciaries." He asked
if there was anybody present from the Senate Labor and Commerce
Committee to present the bill. Chairman Kott didn't get a response
to his question. He noted there is a sponsor statement in each of
the committee member's file. Chairman Kott asked Mr. Kirkpatrick
to come forward and give his perspective on SB 131.
Number 240
WILLIS KIRKPATRICK, Director, Division of Banking, Securities and
Corporations, Department of Commerce and Economic Development,
explained SB 131 has been considered in prior years and may have
been included in the Eighteenth Legislature. He said the bill
would assist trust companies operating in Alaska, specifically the
larger trust companies, by giving them a little more latitude to do
their business with affiliates outside the state. It also provides
for an investment that is called an investment of the trust
companies called proprietary investment of the press company's
parents or affiliates that may be used in a common trust situation.
Mr. Kirkpatrick said SB 131 is almost verbatim of a Washington
State law. He informed the committee that over the past couple of
years, he has been in contact with Washington's trust company
concerning this type of legislation and how they administer it in
that state. They have informed him they have had no particular
problems with this bill. They very closely examine the trust
company's activities. He said in Alaska, they examine the only
trust company which is Key Trust of Alaska. It is over two billion
in size and is a substantial company. Mr. Kirkpatrick said he
would be happy to answer questions.
Number 396
CHAIRMAN KOTT asked if the bill would permit trust funds to be
invested in mutual funds. MR. KIRKPATRICK said it would, but it's
defined as to what the mutual fund can have as its portfolio which
are governments or better. So a bank's proprietary fund
investment, which may be an investment company registered under the
1940 Securities and Exchange Commission Act, which is commonly
known as a mutual fund, has as its portfolio specific defined
investments. In that connotation, under SB 131, those investments
of that mutual fund or that investment company would have to meet
certain investment criteria. That is what is generally called
governments or better. The common trust would probably be made up
of those things that are extremely liquid and risk free.
REPRESENTATIVE NORMAN ROKEBERG referred to Mr. Kirkpatrick saying
that there was only one trust company in Alaska and asked if this
would affect the trust departments of national charter banks in the
state of Alaska. MR. KIRKPATRICK clarified there is one trust
company in Alaska under his regulation. He answered in the
affirmative to the question.
Number 545
VERN SAYLES, Executive Vice President and Manager Key Trust Company
of Alaska, said he was would testify on behalf of the Alaska
Bankers Association via teleconference from Anchorage. The
following is Mr. Sayles testimony:
"As Mr. Kirkpatrick has outlined the purpose of the bill is really
twofold to provide, in our minds, more investment opportunities for
the Alaska consumer. We feel that these opportunities will include
a better opportunity for diversification of the consumer's
portfolios, to provide lower costs, also by doing that it will
lower the potential risk of the individual investor, provides for
better (indisc.). We feel the bill addresses this opportunity in
two ways. One is to expand the current state statutes in reference
to common funds to include the word `affiliate,' and second, to add
specific language for the use of mutual funds. Most of us, I
believe, are familiar with mutual funds in the concept of basically
investing pools of money that have been accepted and created from
individuals and institutional investors. These types of
investments are normally sold across state lines, subject to
federal regulation.
"Common funds, on the other hand, are not always available across
state lines unless specific reference to affiliates are included.
By incorporating that reference, it would be able then to offer to
our customers here in the state of Alaska those types of
investments that are now being offered in states such as
Washington, Oregon, specifically Utah and the West. We feel these
changes will definitely enhance the ability of the consumer to
receive a good investment product. At this point in time, I would
certainly entertain any question that you may have as well."
Number 689
REPRESENTATIVE ROKEBERG referred to trust departments of banks and
said in terms of their investments for their clients, they cannot
invest in mutual funds presently.
MR. SAYLES said there is no specific reference in the state
statutes that allows for it. It doesn't disallow for it obviously,
but they feel it would be a necessary addition to the statute to
specifically include that as a reference.
Number 780
REPRESENTATIVE JERRY SANDERS asked Mr. Sayles if he or any of the
banks currently invest in any other instruments, other than mutual
funds, that aren't specifically in the statute. MR. SAYLES
responded that he isn't aware of any. The statute is fairly
general but it usually refers to individual stocks, bonds, those
types of real estate investments. He noted that most of the
investments in the state that he is familiar with would certainly
fall in those categories as do the mutual funds. It is a matter
that those funds are not clearly defined. The underlying
investments with the pools within the pools would probably meet the
state statute requirements. The statute allows for investment in
common stocks, but not specifically the fund approach.
Representative Sanders asked that if this is put into statute, it
wouldn't in any way make the state of Alaska responsible for any
problems that may occur. MR. SAYLES said, "Absolutely not."
Number 878
There being no further testimony, REPRESENTATIVE KIM ELTON made a
motion to move SB 131 out of committee with the attached zero
fiscal note and individual recommendations. Hearing no objection,
SB 131 moved out of the House Labor and Commerce Committee.
HB 414 - MANDATORY MEDIATION/DESIGN PROF LAWSUITS
Number 1124
CHAIRMAN KOTT announced the next order of business would be HB 414,
"An Act requiring conciliation panel review in a civil action
against an architect, engineer, or land surveyor; and providing for
an effective date."
JEFF LOGAN, Legislative Staff to Representative Joe Green, Alaska
State Legislature, came forward to give the sponsor statement. He
read his statement into the record:
"The bill before you establishes a dispute mediation process
for claims against design professionals. The goal of the new
process is to determine if a claim has merit, and if so, to
facilitate a settlement, before going to court. The goal of
the bill is to keep these cases out of the court system.
"Under the terms of the bill, the Department of Commerce will
impanel a three-member volunteer, but compensated board to
review the claim. Following an informal hearing the board
will issue a written finding of liability, or `certificate of
merit' that can be used in the settlement process. The cost
of the proceedings is borne by the parties. Either party can
settle at any stage of the process.
"Similar Legislation has been enacted in Arizona, California,
Colorado, Georgia, Hawaii, Kansas and New Jersey. And it has
been successful.
"A study to determine the effectiveness of a similar law in
California has found that fewer lawsuits are filed, and more
malpractice suits are settled before they reach the jury. So,
again, the point of the bill is to keep these cases out of
court.
"The bill is an attempt to keep frivolous lawsuits out of the
court system. In several other states, the mediation process
has provided a low-cost alternative to litigation and we
believe it can work here in Alaska as well."
MR. LOGAN said he would like to review the bill.
CHAIRMAN KOTT noted there is a proposed committee substitute (CS),
Version K.
Number 1249
REPRESENTATIVE GENE KUBINA moved to adopt the proposed CSHB
414(L&C), Version K, 2/6/96. Hearing no objection, it was so
ordered.
MR. LOGAN explained the reason Version K is before the committee
instead of the original bill is because he has been working with
the court system and the design professionals. They have been
working with trial attorneys. He said he thinks Version K is a
better "mouse trap."
MR. LOGAN referred to Section 2 and said the bill really starts
there. On line 9, a person who has a claim against the design
professional shall file claim. On page 2, line 18, Section 710, it
says, "The claimant shall set out facts upon which the claim is
based,". Mr. Logan said in order to file, you first go the
department and put in writing what your claim is against the design
professional. He said within 10 days after receiving the claim,
the department notices the design professional. Then at least 10
but not more than 20 days from that date the design professional
responds. Mr. Logan noted the committee members have a flow chart
in their files to show the flow, in the initial stages, to get up
to the panel of how the bill works. In order to file a claim, you
must put down a $750 deposit. When the design professional
responds to the claim, he or she also submits $750. The $1,500 is
the seed money to start the preceding.
MR. LOGAN referred to page 3, line 5, and said not more than 15
days after the date of receiving the response, the department forms
a panel. The panel is made up of 20 attorneys in which you only
pick one, 20 design professionals which you pick one, and a
professional mediator. The department picks a chairman. Panel
members are compensated at $300 per claim, plus per diem and
travel. He noted it is the same per diem and travel authorized for
other state employees. The Department of Commerce, along with
keeping the lists, supplies the office and meeting space, the
office equipment and office supplies for the panel. The
department's only involvement is to keep a list of people, which
they have a lot of those people anyway, and then to supply a place
to meet. He noted there are conference rooms in Anchorage, Juneau
and the Frontier Building in Fairbanks.
Number 1414
MR. LOGAN referred to page 4, line 2, and said within five business
days after the panel if formed, the panel gives notice of the
meeting by certified mail. At this point Mr. Logan said, "So we've
got the claim, we've got the response by the design professional,
the department has put together three people to hear the claim and
those three people are now sending out notices telling everybody
there is going to be a hearing. That hearing is going to be at
least 15, but not more than 30 days. There is a couple of weeks to
put everything together."
MR. LOGAN referred to line 12 of page 4, and said that is the first
outlet valve. He read, "At any time, by mutual consent of the
parties involved, the department, before the appointment of the
chair, or the chair after the chair's appointment, may terminate
the proceedings and the claimant may proceed in the appropriate
court." Mr. Logan said if they get this far and they decide this
thing just isn't working, everybody can throw their hands in the
air and the claimant proceeds to court. He noted he doesn't claim
it is fool proof, but it is an improvement.
MR. LOGAN stated the hearings are not open to the public. He
referred to page 4, line 15, "A person, other than the panel,
witnesses, consultants called by the panel, and the persons listed
in AS 09.55.740, may not be present at a panel hearing..." Mr.
Logan referred to line 20 and said the panel shall be informal. He
continued to read from the bill, "The panel may designate who,
among the parties, shall have the burden of going forward with the
evidence..." Mr. Logan said the panel is also empowered to issue
subpoenas and a member of the panel or the commissioner may sign
the subpoenas. Once they are before the panel, the parties may not
conduct discovery.
MR. LOGAN explained there is a second release valve on page 5, line
24. He said at any time, the panel may encourage the parties to
voluntarily settle or otherwise dispose of the case.
MR. LOGAN referred to page 6, line 3, and said within 15 days after
the completion of a hearing, the panel issues a written advisory
decision and the decision must be one of four conclusions that are
on 12 of page 6. He read from the bill, "(1) the evidence does not
indicate that the design professional failed to comply with the
applicable standard of care;". Mr. Logan said, "Number 2, is if
the design professional failed to comply with the applicable
standard of care." Mr. Logan noted he is looking at line 17 of
page 6 and said, "Number 3 is the evidence indicate that maybe the
design professional did fail to comply but it wasn't the cause of
the problem. And 4, is that there is a material issue of fact not
requiring an expert opinion, bearing on liability that should be
considered by a court."
MR. LOGAN referred to line 25, and said this gets back to Section
1. Mr. Logan said, "Before filing the opinion, the advisory
decision rather, the panel shall determine if sufficient funds have
been deposited. So, we have inserted a mechanism in the bill to
ensure that the costs of the proceedings are not borne by the
state. If the $1,500, deposited at the beginning of the
proceeding, aren't enough to cover the costs of proceeding, the
panel says to one of the parties or potentially both of the
parties, `annie up.' Referring back to Section 1, we have a hammer
that says if the design professional doesn't pay the board, that's
the AELS Board, may suspend, refuse to renew or revoke the
certificate. So If you try to get around it, don't pay, they're
gonna play with your license. And the panel decision may not be
released until the department has - they're sure that all the
expenses are covered."
MR. LOGAN referred to the top of page 7 and said it is set out how
the additional costs are allocated. He continued, "If the panel
finds, under (b)(1) and that was that the design professional did
not do anything wrong, then the claimant pays the additional
expenses, and that would be - I guess we could say a frivolous
case, and the penalty for bringing a frivolous to the panel is that
you pay. If the design professional is found to have done
something wrong, the design professional pays any costs above and
beyond the initial $1,500 deposit, which is made up of $750 from
each party. And if the panel finds Number 3 or Number 4, that the
evidence indicates the design professional failed to comply but it
wasn't their problem, or that the thing is just too complex for us
to render a decision, they split the additional costs."
Number 1699
MR. LOGAN referred to page 7, Section 09.55.760, SUBSEQUENT
LITIGATIONS; EXCLUDED EVIDENCE, and said this is an important
component of the bill, but one that will probably get more
consideration in the Judiciary Committee.
MR. LOGAN read from page 7, line 17, "A statement made in the
course of the hearing of the panel is admissible in a subsequent
civil action." However, the decision, conclusion, finding, or
recommendation of the panel may not be admitted. The point of this
is still to settle out of court. Mr. Logan said you get the
decision of the panel and if the design professional has been found
to not have a problem, the design professional says to the
claimant, "Hey, look, they found I didn't really do anything wrong,
the court is probably going to find that, let's just settle it out
here." He said a member of the panel is not liable for civil
damages. Mr. Logan explained the rest of the bill is definitions,
effective dates. He referred to Section 3 and said there is a
court rule change. Mr. Logan said this concludes his review of the
bill.
Number 1793
REPRESENTATIVE ROKEBERG questioned the wording of a mandatory
situation. He asked if there isn't a choice or an election at the
beginning. MR. LOGAN explained it is before you go to court with
a claim against a design professional, you must go through this
process. Representative Rokeberg said if there is an
extraordinarily major cause of action, it would seem that this
particular process should be able to be avoided in its entirety.
Mr. Logan said if there is a big lawsuit, one side is going to want
to settle. One side is going to have to potentially pay that, so
they're going to want to settle and they're going to be motivated
through this process and settle before they go to court. For the
big cases, it's a quicker process to go through this because the
courts will not be entangled with all the little cases that will be
filtered out in this process.
REPRESENTATIVE ROKEBERG said he is conceptually in favor any kind
of dispute resolution methodology that can alleviate the crowding
in the courts and also lead to a quicker resolution of difficulties
and conflict. He asked Mr. Logan to describe why there was a
decision made on the part of the sponsor of the bill or the people
involved in drafting regarding avoiding that election at the
beginning. MR. LOGAN said that was at the request of the design
professionals, after working with the trial attorneys, they
requested that the provision be included in the legislation.
Number 1945
REPRESENTATIVE JOE GREEN said there may be an issue that this just
acts as another impediment to somebody who wants to go to
litigation. The bill says you have to go through this extra
hurdle.
Number 1969
REPRESENTATIVE ELTON said he thinks he understands that if somebody
doesn't like this process, they can throw up their hands and go
back to court. He said the way he reads the statement in the
sectional analysis is it allows the claimant to proceed to the
appropriate court at any time, but only by mutual consent with the
other parts. Representative Elton said it seems to him that if he
is a claimant, he can't throw up his hands and say, "This process
isn't working for me," and go to court unless the defendant or the
design firm agrees to let him go to court. He said there doesn't
seem to be much an out for the claimant.
MR. LOGAN said the point is to stay out of court. Unless there are
some restrictions to stay within the confines of this process, it
breaks down.
REPRESENTATIVE ELTON said there doesn't seem to be an lot of
latitude. The plaintiff is required to go through this process.
The plaintiff is required to stay in the process unless the person
they have a problem with lets them out. He said he thinks that is
substantially different than characterizing this as a mutual
(indisc.) process.
REPRESENTATIVE ELTON referred to the compensation rate being set at
$300 and attorneys are required to participate in this process. He
questioned what kind of attorneys there would be if they're
involved in a process that might take 30 days. He said he isn't
sure he is comfortable with an attorney or an arbitrator serving
for $300 for 30 days. Representative Elton asked how the $300
figure was arrived at.
MR. LOGAN explained the $300 figure is a figure that came from the
"model legislation." It is a number that has been used on other
states. A number of professionals, including attorneys, do what is
known as "pro bono" work, often in these types of cases.
REPRESENTATIVE ELTON said he is also interested in why the hearings
are to be closed to the public. He said they don't close the
courtroom doors to the public.
MR. LOGAN said it is to protect the design professional in the
event that he/she has found not to have done anything wrong. If
they are found to have done something wrong, the public will know
about it in the court proceedings, which are open. If they haven't
done anything wrong, it is to protect their name, license and
reputation. REPRESENTATIVE ELTON stated he objects to that when it
happens with judges and would object to that when it happens with
design professionals. The public deserves to know.
REPRESENTATIVE ELTON referred to the deciding of damages and said
this panel can't decide damages. He said he is assuming that if in
fact the claimant, for example, is dissatisfied, they're going to
go on to court. He said if the design professional is found at
fault, he is assuming they would have to go to court anyway to
establish a damages figure.
MR. LOGAN said he hopes to the contrary. They would both get a
copy of the panel's decision and one lawyer would call the other
lawyer and say, "Hey, they found this and this is about what we
think you owe us, lets sit down and talk about it." He said he is
hoping this would keep the suit out of the court system and it
would help the settlement process before they got to court.
REPRESENTATIVE ELTON said he is interested in discussion about why
this process proceeds without discovery or before discovery can
occur. He said it seems to him that puts the claimant at some
disadvantage.
MR. LOGAN said the committee will hear more about that from people
who have actually gone through this. This has proved to be a
useful model in other states.
REPRESENTATIVE ELTON referred to an article he remembers reading in
the Wall Street Journal that talked about the enforced mediation
process that you go through if you're suing your stock broker. He
said one thing that stuck in his mind was that it was skewed it
towards the stock broker, and in this case, somebody may say you've
skewed it to the design professionals by having a three member
panel, two of whom are or should be disinterested, the attorney and
the mediator, and another who may be having drinks after work with
the person that has been sued. He questioned why the design
professional is in on the panel.
MR. LOGAN explained it is so the panel has some expertise in these
matters. They can also call in other design professionals who have
technical experience and expertise in the matters that they
consider. It is to balance it out so there is somebody speaking
from the group.
REPRESENTATIVE ELTON said we don't expect a design professional to
serve on the jury or a judge to have design professional
experience.
Number 2310
REPRESENTATIVE GREEN pointed out that this adds some degree of
knowledge to the process, more than tending to skew it. There is
always the final appeal through a court. He urged the committee to
remember that this is not to replace the court. This is only to
try to get settlement before you get to court. The issues of
discovery and the hearing being open to the public is more of a
court nature. Representative Green said, "It's trying to get you
and I to agree on, O.K., I either have done you wrong, or I haven't
done you wrong, and if I have lets see if we can't come to a
compromise and we're out of here. We didn't ever have to go to
court. I can't satisfy you. You're not satisfied. Do you still
want to go to court?" He said they still have that prerogative.
He explained that he is trying to minimize the amount of litigation
that is going to end up in court. In other states that have
adopted such a policy, it has worked very satisfactorily.
REPRESENTATIVE ELTON said he agrees with Representative Green in
that if we can mediate before we have to litigate, we're much
better off. He stated he is somewhat concerned about the
structure.
Number 2369
CHAIRMAN KOTT referred to the time parameters levied in various
areas within the bill and said he has concerned with issuing of the
advisory opinion by the panel, within 15 days. He referred to what
the elements the advisory opinion must contain. He asked how the
time line was arrived at and if it was enough time.
MR. LOGAN said the time line was arrived at by talking with people
who have actually gone through the process. That seemed to be a
number that was quick enough to not drag it out, but allowed them
enough time to do their work.
REPRESENTATIVE GREEN indicated the numbers are arbitrary and they
seem to be reasonable enough to get the process moving, but not
unreasonable enough to allow adequate introduction of material.
Number 2459
RUSS WINNER, Attorney, testified via teleconference from Anchorage.
He explained his practice is a broad range practice and he
represents plaintiffs and defendants in a wide variety of
litigation. Prior to opening his practice, he taught law school.
[End of Tape....]
TAPE 96-6, SIDE B
Number 001
MR. WINNER said he believes nobody, including the trial lawyers,
favors frivolous litigation. He said he believes there is less
frivolous litigation filed (indisc.) some members of the panel.
Nonetheless, he said that is something to be avoided. Mr. Winner
said the bill, as drafted, is not well crafted to serve that
purpose given the specific and unique circumstances in Alaska.
MR. WINNER said to him, the bill appears to be special interest
legislation. It is designed to establish a procedure for design
professionals and to try to minimize suits filed against them. It
seems to maximize settlement of suits filed against them. He
questioned why the bill only includes design professionals. Mr.
Winner asked why they should be given special privileged treatment
among all other professionals. He questioned why it shouldn't
include teachers, realtors, business persons, air taxi operators or
attorneys. He asked what is so special about design professionals.
MR. WINNER informed the committee he believes not enough money is
being provided, in terms of compensation, to the panel members.
The response he heard is that it would be in the nature of pro bono
work. Perhaps some attorneys would be willing to volunteer their
time pro bono, but he doesn't believe that the class of attorneys
that is contemplated in the bill would be readily available to
serve in that function. He referred to pro bono work that
attorneys do and said it is usually attorneys that have recently
passed the Bar and don't have a whole lot of experience. They want
to expose themselves to people in other areas. He noted seasoned
trial lawyers tend to be busy and he doesn't believe there will be
a great number of them who are willing to volunteer the time. The
same could be said of other panel members such as mediation
specialists for design professionals. If you want to get somebody
who is good, you've got to pay them. If you're not going to pay
them and if you're asking for volunteer services, you're going to
an area of uneven quality or you're going to have difficulty
finding people to agree to do the job and then do the job as a
(indisc.). He said he thinks there are problems with sufficient
funding to get the job done.
MR. WINNER said it seems to him that the procedure that is
contemplated is too cumbersome. It is really a mini trial as
you're talking about testimony, depositions, exhibits, possibility
of discovery, etc., all before a lawsuit is filed. Mr. Winner said
if there is going to be mediation, it can occur more expeditiously
than that. He said he settles most of the cases he is involved
with and often, it's (indisc.) of mediation. It doesn't require
this kind of cumbersome procedure. It can often happen just by
(indisc.) letters and a mediator reads the letters and tries to
elicit the strengths (indisc.) from each side as he shuttles back
and forth between the sides. He said he has found that to be
effective in the cases he has worked on and he doesn't see why
there is a need to establish a mini trial procedure prior to filing
a suit. Mr. Winner said he realizes that an advantage is that this
will be private and the reputation of the design professional won't
be (indisc.) by a lawsuit being filed. He said he doesn't know
that you need to have a mini trial as part of the process.
MR. WINNER said he believes that the composition of the panel is
biased in favor of the design professionals. What is involved is
a mediator who apparently will be neutral and an attorney. Mr.
Winner said attorneys, in general, are not pro plaintiff.
Plaintiff's attorneys are pro plaintiff. Defense lawyers tend to
be pro defense. The fact that there is "an attorney on the panel"
does not indicate to him that the attorney is going to be (indisc.)
in favor of one side or the other. He said he would look at the
attorney as essentially a neutral position as the mediator. Mr.
Winner referred to the design professional and said that person
will probably will be (indisc.) towards the defendant. He referred
to the consultant and said he would imagine in some cases a
consultant would be brought in. The consultant is only going to be
paid per diem if he is from out of town. He said he has a question
about whether you're going to find a consultant willing to do the
job for free, and if he is, he would question whether he is
unbiased. The composition of the panel as contemplated is stacked
a little against the plaintiff and is in favor of the design
professional.
MR. WINNER said he thinks that what is contemplated in the bill is
too early in the process. The Alaska Court System, just revised
the rules of civil procedure. Under civil rule 26, there is
immediate mandatory exchange of information between the plaintiff
and the panel if a lawsuit is filed. That is supposed to take
place within the first month or two of the lawsuit being filed.
The very first thing that happens, you've got to exchange relevant
documents. Rather than force the plaintiff, who has perfect
information about liability, to go through a mini trial before
filing a lawsuit. It might be better to file the lawsuit. Allow
the parties to exchange their documents and, at that point, have a
mediation - maybe a streamlined mediation and see if there is an
opportunity for the parties to settle the case at that point.
MR. WINNER said he thinks that the procedure suggested in the bill
is cumbersome and not well tailored to the situation in Alaska.
Mr. Winner said he would submit that is one thing which unique
about Alaska is civil rule 82 is it allows for the prevailing party
to receive an award of partial attorney fees against the other
party. He said he believes that is a deterrent to frivolous
lawsuits being filed. In fact, a lot of other states are looking
at Alaska and are considering adopting something like rule 82 as a
way of trying to prevent frivolous lawsuits from being filed. The
other deterrent of frivolous lawsuits is Alaska's civil rule 11.
If a frivolous lawsuit is filed, then the court can award sanctions
against the plaintiff's attorney and the plaintiff for filing a
frivolous lawsuit. So, in Alaska, there are deterrents to
frivolous lawsuits being filed. The thanked the committee for
listening to him.
Number 402
REPRESENTATIVE ROKEBERG referred to lawsuits being settled by
mediator and asked if this is where there is mutual voluntary
arbitration or mediation. MR. WINNER said usually what happens is
you file the suit, do discovery and if there is any basis for
summary judgement to be entered then the parties file their
pleadings and get ruling to record on summary judgement. He
referred to the court trial and said the party knows (indisc.) will
be. They go in and often both sides agree (indisc.) mediator. The
mediator can either be a superior court judge who is not the judge
assigned to the case, or increasingly, you can go to a mediator,
who is often a retired judge, who will for a fee, sit as a mediator
and shuttle back and forth between parties. If it is a retired
judge who is serving as a mediator this is often a business he
does. He noted Judge Ripley and Judge Hansen are serving as
mediators. The plaintiff and defendant share the costs of the
mediator. The mediator process usually takes no more than a day.
The parties submit written material to the mediator before going
in. It is not a trial, but the judge has a good understanding of
what would happen if there was a trial and he is not afraid to
offer his recommendations and opinions to each side. The
defendants usually want to have the plaintiffs sit in mediation to
hear from the mediator whether or not there is a good case. Mr.
Winner said the plaintiff's council would like to have the
defendant, or somebody who has got authority for the defendant to
participate in the mediation along with the defendants lawyer. He
noted that in his experience, that is often something that is done
fairly close to the trial date. Mr. Winner said with his practice,
he tries to arrive at settlement or mediation discussions earlier
in the litigation. He said it may not be inappropriate to adjust
the mediation to occur after the exchange of documents but before
formal deposition, etc. Mr. Winner noted the one disadvantage to
his suggestion is that the lawsuit is filed and becomes public
knowledge.
Number 563
REPRESENTATIVE KUBINA referred to the process Mr. Winner described
in settling some of his suits and asked if this is something that
is currently done with design professionals. He also asked if it
takes a change in statute to do so or is it something that could
also be done by court rule.
MR. WINNER explained it is something that could be done by court
rule. The courts could adopt a court rule requiring mediation
after the exchange of discovery. That is certainly something that
could happen regarding lawsuits against design professionals.
REPRESENTATIVE KUBINA questioned why the bill is only specifically
for design professionals and not the greater field that was
mentioned before. He also asked if the greater field is using this
type of mediation more than the design profession is.
Number 627
COLLIN MAYNARD, Chair, Legislative Liaison Committee, Alaska Public
Design Council (APDC), testified via teleconference from Anchorage.
He noted the APDC is a consortium of professional society
representing architects, engineers, land surveyors and building
code officials. He said the legislation is designed to limit
frivolous lawsuits and has been adopted in seven other states for
design professionals. Over 30 states, including Alaska at one
point, have review panels for medical professionals. Mr. Maynard
referred to the Georgia case and said that was a law which was
geared for medical professionals, however, they didn't push medical
professionals in the statute. They just said professionals. The
Georgia supreme court said it was all professionals. He said the
APDC doesn't see any reason why this couldn't apply to any other
licensed professional. This is something that has been adopted in
other states for design professionals. If other professionals
would like to do this as well, his organization sees no reason they
shouldn't. Mr. Maynard said the APDC supports the bill because it
would reduce the number of frivolous suits. The number of suits in
California went down by about 25 percent. It will result in cases
being settled earlier by encouraging dropping of the suits deemed
frivolous and encouraging defendants to settle out on claims. He
said the panel system was (indisc.) shotgun approach to lawsuits by
forcing claimants to go after the people really at fault. Part of
the problem with construction and design officials is you have a
design team of four or five different firms and if the mechanical
system fails, they sue just the mechanical engineer, they sue just
the mechanical engineer, they sue the (indisc.) engineer, the
constructional engineer, the (indisc.) engineer, the contractor,
everybody who ever set foot anywhere near the construction site
gets sued. In that trap, you get a lot of people who had nothing
to do with the cause of the problem. What the bill will do is get
rid of those people and make the case open on the people who are
really at fault. It should result in fewer (indisc.) would provide
a lead to the over (indisc.) court system.
MR. MAYNARD referred to the election to bypass the (indisc.) panel,
and said in Hawaii they have a provision that says, "Under
circumstances, and they list what they are, the size of the lawsuit
or claim, if one of those things applies and you didn't have to go
through the panel." He said between 1985 and 1991, there were 132
claims (indisc.). Basically, the panel doesn't do anything. If
you sue for enough money, you don't have to go through the panel.
It makes the frivolous lawsuits go to the panel. Mr. Maynard
referred to the privacy issue and said he isn't so sure that is as
much of a concern. The closed meeting is to make so you have just
the parties involved. He said he would talk to writers of the
model law to find out why that provision is included and get back
to the committee regarding that matter. Mr. Maynard said the APDC
would not have a problem with immediate mandatory discovery, but
they don't want drag out discovery and depositions going back and
forth. It takes forever and costs thousands of dollars, then they
can determine you didn't have anything to do with this in the first
place and shouldn't have been there.
MR. MAYNARD said he doesn't think a design professional would be
biased on the panel. He stated he knows a lot of design
professionals. He said he believes the people who would be
volunteering for this would have enough ethics to make sure that if
they knew about something involved in the suit, they would excuse
themselves.
Number 909
REPRESENTATIVE ROKEBERG referred to Mr. Maynard discussing the size
of a claim in Hawaii and asked if it would allow a bypass right to
court and avoid the mediation because they've set a limit on the
amount the prayer in complaint stipulated.
MR. MAYNARD explained in Hawaii they set seven or eight different
criteria which could get you out from the panel process. One of
them is the size of the lawsuit and the size of the claim. If you
sue for a lot of money, you don't have to go through the panel
process.
Number 965
REPRESENTATIVE ELTON said if Mr. Maynard is suggesting a design
professional wouldn't be swayed one way or the other, why not have
a member of the public on the panel. He asked why there is
instance on having an assigned professional as a member of the
panel.
MR. MAYNARD said he thinks the make up of the panel is to have the
attorney there to be able to talk about legal questions and the
design professional has the experience on how the construction
works so that you don't have bring in a whole stream of expert
witnesses to talk about how construction works, what the process is
and the nitty gritty of it. He said what you'd be doing is
bringing in consultants for particular issues and the design
professional on the panel is a special engineer. The real issue of
fact in this suit is a mechanical engineering technical question.
So you bring in the mechanical engineer to answer that particular
technical question, then when the panel goes off for deliberations
and the question comes up about how something works, they have the
ability to explain to the other two people on the panel. This
would be just like the lawyer being able to explain how the law
works to the other two people.
Number 1056
REPRESENTATIVE ROKEBERG referred to the provisions of establishing
the panel and said the bill indicates that there will be a list of
20 or more design professionals. He pointed out that he has worked
in the real estate development business in Alaska for over the last
30 years and he knows the community of architects is relatively
small. Those who are in the engineering professions are members of
other societies and other associations of their profession. There
could be various conflicting personalities, biases and competitive
situations where if there was one peer judging another, and they're
within the same profession, there may be a potential of some bias.
He asked Mr. Maynard if he would consider a stipulation in the
selection of a panel member to select somebody from another
discipline or someone who holds a different license than the person
who is before the panel.
MR. MAYNARD said he isn't sure that would be necessary because if
a mechanical engineer is being sued, you'd probably want a
mechanical engineer on the panel. He suggested adding a provision
that would say that the party would have the right to object to any
of the members of the panel. There would probably have to be a
limit on that. Mr. Maynard said he wouldn't have a problem with
something along those lines.
Number 1180
TERESA WILLIAMS, Assistant Attorney General, Fair Business
Practices Section, Civil Division, Department of Law, said one of
the issues is whether or not design professionals should be
segregated out for different treatment than other kinds of persons
who are defendants in lawsuits especially when land surveyors are
included as design professionals. She said we've got a special
category for design professionals and then land surveyors are being
added to that groups. Ms. Williams said there are questions about
why should that particular group of (indisc.) professions be
treated differently. She referred to page 2, line 12, Section
09.55.700, (b), and said the design professional can waive this
whole process. That would be an equal protection due process issue
as to why the design professional didn't have to go through this
process, but the claimant did.
MS. WILLIAMS referred to page 3 and said there isn't a real clear
definition of who the chair person will be. It says, "A person
experienced in court claims settlement process." From a legal
point, that would need to be clarified.
MS. WILLIAMS referred to page 4, Section 09.55.730, (a) and (b),
and said the bill seems to go two different ways. If it is
mediation, then it is appropriate to have it closed and to have the
ability to exclude a party. If it is not mediation and is a mini
adjudication, then the due process requirements are not met because
the person doesn't have the right to call witnesses. The panel
may, in its discretion, permit you to call witnesses. She said
there seems to be a mixing of apples and oranges. If it is meant
to be a mediation process it needs to go one way and if it is meant
to be a mini adjudication, it needs to go the other way. Ms.
Williams explained under (a) it says that it is a closed hearing,
"The panel may, in its discretion, conduct and inquiry of a party,
witness, or consultant without the presence of a party." She
referred to wording on line 21, "the record may not be made
available to the parties" and said that is an issue. If a
statement is an issue against a person, why is that no recording
can be obtained of that statement. That doesn't make sense in why
the recording would not be available. Ms. Williams referred to
page 4, lines 25 through 26, "The panel may, in its discretion,
permit a party or counsel for a party to question other parties,
witnesses, or consultants." She said these sections go two
different ways. One would be more appropriate in mediation and the
other would be inappropriate in a committee on adjudication as this
is supposed to be.
Number 1415
MS. WILLIAMS referred to page 5, line 7, "The panel shall attempt
to secure the voluntary appearance, testimony, and cooperation of
parties, witnesses, and consultants without coercion. She said
that would raise an issue of whether or not the panel had to go
through a process of calling the witness and having the witness not
show up before it could issue a saphena, which would certainly slow
the process down if was required to go through a preliminary
process before it could issue a saphena.
MS. WILLIAMS referred to wording on page 5, line 25, "the panel may
encourage the parties to voluntarily settle" and said if this is
supposed to be a settlement process, it seems to be inconsistent to
make that discretionary. She referred to line 27 and said it
provides for the exclusion of parties.
MS. WILLIAMS referred page 7, line 25, "PANEL MEMBER IMMUNITY." and
said she has a question of whether or not a person would have
immunity from liability if there is intentional wrong doing by a
panel member, for example, accepting a bribe.
MS. WILLIAMS referred to the tolling of the statute of limitations,
which starts on page 7 and goes over to page 8, and said there
doesn't seem to come to a completion of this idea. The statute of
limitations is tolled for six months and you cannot bring an action
within that six months. She said there is no window of opportunity
after the six months is up before to follow your action before the
statute of limitations begins to run again. So having the statute
of limitations start on that day, and that day being the first day
that you could file an action, doesn't seem to allow enough room in
the window of time to file the action.
MS. WILLIAMS said there are lots of policy issues that other
parties can address, but the one she mentioned are legal issues she
perceives.
Number 1563
CHAIRMAN KOTT asked Ms. Williams if she thinks an attorney would
risk settling until after discovery is complete. MS. WILLIAMS
said, as an attorney, she could tell the committee that settlement
happens at all stages.
Number 1601
MIKE TAURIAINEN was next to testify via teleconference from
Soldotna. He informed the committee he is a consulting civil
engineer and is also on the AELS board, however, he is testifying
as an individual and not as a member of the board. Mr. Tauriainen
said his intention was to testify in favor of HB 414, based on the
earlier draft which is similar to SB 119. He said he is in favor
of the concept, however, he just received the new work draft which
seems to be more cumbersome than SB 119. It is more wordy and that
may bias his initial evaluation of the bill. Mr. Tauriainen said
there needs to be some sort of streamed of (indisc.) to eliminate
frivolous claims. He said we need to keep in mind that frivolous
claims is what we're trying to eliminate. The process needs to be
streamlined so that it encourages the elimination of those
frivolous claims. The advantage of this bill or similar bills is
that it should reduce the loads on the court system, reduce the
cost of professional liability insurance to professionals and
reduce the amount of time professionals have to spend defending
themselves against frivolous claims. He stated a concern of his is
that if a claim is frivolous and the panel so determines, it still
doesn't seem to discourage a plaintiff from continuing on to
litigation. If they're going to file a frivolous claim, he is not
sure how to best deal with that, except by enabling the assessment
of the costs to the party filing a frivolous suit or costs filed
against the professional. Mr. Tauriainen said the deposit should
be increased to around $3,500 which is limit for small claims.
That way the frivolous filer would have to pay not only the panel
costs but also the legal costs of the design professional, and
likewise, if it is determined that the design professional is
responsible they should pay for panel costs and the legal costs of
the plaintiff. He said he would be reluctant to bring in
consultants and expert witnesses into the process. That seems to
complicate the process. The design professional should be somewhat
in the same profession as the charged professional to facilitate
the panel's work. Mr. Tauriainen said if they do elect to
encourage that, there should be no payment of panel costs by the
parties. He said he would send the committee written comments.
Number 1929
CHAIRMAN KOTT asked Mr. Tauriainen if he has any hard data on the
numbers of frivolous claims against design professionals in Alaska.
MR. TAURIAINEN indicated he didn't have that answer. He said he
would like to point out a loophole regarding a definition on page
8, line 28, "`professional negligence' means a negligent act or
omission by a design professional in providing professional
services;". He then referred to line 30 and said, "limits
professional services to those provided by the design professional
as licensed." Some cases could legitimately arise and may be more
likely to rise for the design professional practicing outside his
legitimate scope of licensure. Mr. Tauriainen said definition (7)
should be modified to not give the design professional that
loophole
Number 2027
CATHERINE REARDON, Director, Central Office, Division of
Occupational Licensing, came before the committee to address HB
414. She said according to the bill, it would be the Division of
Occupational Licensing that selects the panel. Teresa Williams,
Department of Law, spoke on behalf of the Administration regarding
legal issues and the policy. She said she would review some of the
management details. Ms. Reardon said a few of the questions she
has are, "Are you going to want a way for a claimant who is
indigent to file a law suit? Are you going to want us to have a
mechanism where if someone says `I don't have $750 but I want a
file a lawsuit' for us to excuse the person and if not, I'm
wondering if we're gonna get any feedback from the court about
having served as a block to people's access." Ms. Reardon said
most of the other issues have been discussed or asked about by
members of the committee. She said she'll do her best to find
panel members who will be willing to take on the task for the $300.
Ms. Reardon noted she hasn't had experience with this and doesn't
know whether she will have difficulties in finding attorneys who
will take on this task. The is a concern because if she fails in
that task within the 15 or 30 days, she is curious what the
implications will be for the parties. Ms. Reardon said what if the
panel doesn't successfully follow all the time lines and
instructions in the statute, will that be anything that the
legislature is looking at her division to assist the panel in
reminding them that the time deadline is being missed. She asked
if the parties will be looking in her direction of the panel messes
up. Ms. Reardon said as she understands it, she is pretty much
leaving them to follow through on their own and just provide the
office space for them to function in. She said she is not staff
support.
Number 2281
REPRESENTATIVE GREEN asked what they currently do with indigent
people who want to file through a court.
MS. REARDON said, "I am not very knowledgeable about that, but I
believe there is. I think court filing costs are $100, although
I'm certainly not an expert in this topic, and I believe they have
to provide some kind of alternative although it probably very
rarely be legitimately exercised in this particular case. I just
thought of the possibility that someone is gonna say, `No, I don't
want to pay $750, I don't have it, I just want to sue this
person.'"
Number 2342
REPRESENTATIVE ELTON referred to deadlines listed in the bill such
as the 15 day deadline and said he is assuming those are not
working day deadlines otherwise they would say so. If there is a
15 day deadline, that may mean there is 11 days to accomplish your
work.
REPRESENTATIVE GREEN said it would be his understanding that it
would be working days. Most of the time it is generally working
days unless it specified to be calendar days.
REPRESENTATIVE ROKEBERG asked Ms. Reardon if there is any other
mediation processes or something similar to that the division if
involved in. MS. REARDON said they are not involved in anything
like this. The court system handels the medical review panel that
is fairly similar to this.
TAPE 96-7, SIDE A
Number 000
CHAIRMAN KOTT asked what the per diem rate is. He said it seems
like the parties will asked to "pony up" almost on every occasion.
MR. LOGAN said that is true. He said they were trying to keep the
fees as low a possible. There was full expectation that, in most
cases, there will be additional funds required.
Number 097
REPRESENTATIVE ROKEBERG referred to the zero fiscal note from
Division of Occupational Licensing and asked if all of the
bookkeeping, etc., is going to come out of the gross proceeds. MS.
REARDON explained the fiscal note was based on the original bill
which didn't involve her division. She said she would expect a
modest fiscal note.
REPRESENTATIVE SANDERS noted he isn't prepared to move the bill out
of committee.
CHAIRMAN KOTT indicated there will be a new fiscal note. He
referred to there being other issues and said he thinks the bill
should be held over. He also said the indigent issue should be
reviewed along with some of the definitions. Chairman Kott said it
is his intent to hold the bill to work with the sponsor on a new
committee substitute.
Number 338
SHARON MACKLIN, Lobbyist, Alaska Professional Design Council,
referred to the issue of having a design professional on the panel
and whether that was inappropriate or appropriate. She said as an
example, she though she would mention the fee arbitration panel
system that the Alaska Bar Association has. She noted she is a
member of the panel as a lay person. On their panel people can
bring complaints to the fee arbitration panel about being charged
too much or not enough. That panel is made up of two attorneys and
one lay person. When she got on that panel she thought this is
going to be a fixed deal. The panel will always decide in the
favor of the attorney - that he/she did not charge too much. Ms.
Macklin said she has been on the fee arbitration panel for about
four years and do maybe two a year. She stated she has been very
surprised that lawyers don't automatically protect lawyers just
because of their professional camaraderie. They really do look at
the issues and put a lot of thought in it. In her experience of
working with design professionals for almost ten years, they also
would put a lot of thought into it and not automatically protect or
support a fellow design professional.
MS. MACKLIN referred to the time frames and said on fee arbitration
panels, that usually takes them from three to five hours. She
referred to the question of how many court cases there have been in
which design professionals were involved and said APDC set out a
questionnaire to all of the owner companies in the state. Very
very few cases ever go to court. She said 95 percent of civil
cases never go to court. What the APDC is concerned about is these
cases that end up costing the design professionals $5,000, $10,000
up to $15,000 in legal fees that never go anywhere. Ms. Macklin
explained most of the companies she works with have a deductible of
$20,000 to $25,000 on their liability insurance. She said in the
future she could give the committee some examples of cases.
Number 623
REPRESENTATIVE GREEN said a professional is rather reluctant to
decide in favor of another professional if there is any question of
doubt to its absolute legitimacy because it reflects back on his
professional standing. Representative Green discussed a situation
regarding a car accident he was in several years ago where his bill
was exorbitant. He applied to Orange County Medical Association
and they said it was exorbitant. The physician ended up
significantly reducing his bill.
REPRESENTATIVE GREEN referred to Chairman Kott's statement that
there will be a CS, and said that is very likely. However, he
would like to review questions in the committee minutes. He said
there may or may not be a CS.
CHAIRMAN KOTT said there is one area that should probably be
clarified regarding the 15 day working period. It should probably
be clarified with the wording "working days," if that is what we're
shooting for. Chairman Kott said his office will work with
Representative Green regarding a CS. He also noted there would be
a new fiscal note.
HB 435 - STATE TRAINING & EMPLOYMENT PROGRAM
Number 862
CHAIRMAN KOTT announced the next order of business would be HB 435,
"An Act relating to employment contributions and to making the
state training and employment program a permanent state program;
and providing for an effective date."
Number 903
DAVID DEAN testified via teleconference from Fairbanks. He said he
is fairly familiar with the state training employment program since
he works with an office that administers the pilot program that has
been in existence for several years. He said he is also familiar
with the benefits it has provided to residents throughout the
state. Of all the of the employment training programs available to
Alaskans, none compare to the flexibility and benefits this program
has offered. Many unemployed workers have obtained funding for
short duration training and immediately obtain a job after
completing their training. Without the benefit of the (indisc.)
funding, there would have been no alternatives except to continue
on unemployment or some of the social welfare programs that
currently exist. Mr. Dean pointed out that it is important to
remember that the Step Program doesn't supplant the existing
programs, it greatly enhances them. On the surface this program
sounds too good to be true. Residents obtain job related skill
training, unemployment insurance payments are reduced, non resident
workers don't take Alaskan jobs and there is no cost to the state.
Funding is obtained from working Alaskan's contributions to the
unemployment insurance trust fund in a perpetual process almost
assuring the fund is replenished by those who are working. The
program allows the work force to take advantage of technological
improvements in the workplace as they develop and not after someone
from the Lower 48 arrives in Alaska to take another Alaskan's job.
Mr. Dean urged passage of HB 435.
CHAIRMAN KOTT referred to Mr. Dean's comments regarding non-
residents don't take Alaskan jobs.
MR. DEAN explained through technological advances, if the work
forces isn't trained locally, there will be non-residents coming
into the state to take those jobs that Alaskans now hold because
they're not advancing in the state of art training. The bill funds
training and keeps it current. A lot of that training currently is
offered in the Lower 48. People get the experience or
qualifications and then they move to Alaska where the jobs are.
Mr. Dean said he thinks the Step Program prevents some of that
because it allows for the training of our own work force.
Number 1035
CHAIRMAN KOTT referred to the Department of Labor's most recent
annual report regarding non Alaskans work in the state of Alaska in
1984, and said there are 77,000 non-residents working in Alaska.
We must do something to ensure Alaskans work in Alaska. He added
that the unemployment rate during that same period ranged from
5,000 to 17,000.
Number 1140
REBECCA NANCE, Director, Central Office, Division of Employment
Security, Department of Labor, came before the committee to testify
on HB 435. She said she believes the committee members have
received a brief program overview, the 1995 Executive Summary and
the sectional analysis of the bill. She noted David Stone of Echo
Bay had to leave the meeting, but said she would submit written
testimony from him.
MS. NANCE referred to Section 1 and said it is the legislative
findings. It sets up the goals of the program which is basically
to train Alaskans for jobs and to reduce claims on the Unemployment
Insurance Program.
MS. NANCE referred to Section 2 and said it simply codifies the old
temporary program and sets up a new chapter, Chapter 23. Within
that chapter there would be eight sections. Section 010 would
create the program as a permanent program using primarily the
original language. This is essentially the same bill that has been
in the pilot phase.
MS. NANCE said Section 020 establishes the employment assistance
and training account in the general fund. She said this isn't
general fund money, it is money that has been earmarked and then
the legislature appropriates the funds so they can be spent on this
program.
MS. NANCE referred to Section 030 and said it provides the funding
mechanism for the program. She said 1/10 of 1 percent of employee
wages go into this program and are earmarked. The legislature
approve and appropriate those funds for this use. The maximum
amount any individual would pay into this program as part of their
tax contribution would be $24 and some change, per employee, if
they max out on their wages. She said she believes $24,200 is the
amount they pay of the 1/10 of 1 percent.
Number 1280
MS. NANCE referred to Section 040 and explained it targets the
population for the program. She said she believes this is the part
of the Step Program that allows the flexibility that Mr. Dean spoke
to. There are a lot of other federal programs such as dislocated
worker programs and the JTPA. The guidelines and rules for the
JTPA Program are very very rigid. The Step Program simply trains
Alaskans for Alaskan jobs. The intended target group are past,
future or current recipients of unemployment insurance.
MS. NANCE referred to Section 050 and said it defines the services
that must be provided. Not all of these services must be provided
by a grantee, one or more of some sort of combination of services
listed must be provided by the grantee.
Number 1318
MS. NANCE said Section 060 defines the duties of the department in
terms awarding grants to the Alaska Human Resource Investment
Council. The council was established by the legislature last year.
It consolidated four councils into one council. So, instead of
having four councils with 40 people, it consolidated into one
council with 26 people. Those people will be working under a
subcommittee structure. This supersedes the sunsetted Alaska Job
Training Council (AJTC) that used to get the grant awards. Ms.
Nance said the council, as in the pilot program, may administer its
own employment and training programs or it may awards grants to
other entities as long as the target lists are adhered to and,
again, as long as the grantee provides one or more of the services
in Section 050.
MS. NANCE explained Section 070 sets out the duties of the Alaska
Human Resource Investment Council in awarding step grants. Again,
the flexibility really comes into play here. She said Step isn't
interested in displacing current training programs in Alaska. They
just want to fill the void where no training exists.
MS. NANCE referred to Section 900 defines terms.
MS. NANCE explained Section 3 simply provides an effective date of
July 1, 1996.
MS. NANCE informed the committee members the program has been a
very flexible program, it's Alaska specific, it is paid for and
utilized by Alaskan workers, it stabilizes employment and it keeps
Alaskans trained and ready to work in Alaska. She urged support
for the bill.
Number 1430
REPRESENTATIVE ROKEBERG asked Ms. Nance to explain the 1/10 of 1
percent, the impact, the fund raising aspects and the cost to
Alaskan workers.
MS. NANCE said the 1/10 of 1 percent is the employee wage
contribution. The employer does not pay for this, the employees
do. There is a ceiling on the amount they can pay in and 1/10 of
1 percent is $24.20. The employee rate is 1/2 of a percent of
their wages to the $24,000 figure. This year there is about $3.5
million in the Step program that is employee contributions.
REPRESENTATIVE ROKEBERG questioned whether any collections will be
changed. MS. NANCE said it is identical to pilot that has been in
effect for the last six years. The only significant change is that
we're moving to the Human Resource Investment Council instead of
the Job Training Council.
REPRESENTATIVE ROKEBERG asked if there is an employer contribution.
MS. Nance said no.
Number 1530
CHAIRMAN KOTT asked how much is the percentage that employees are
currently paying. MS. NANCE said employees pay 1/2 of 1 percent of
their wages up to $24,200 into the unemployment insurance trust
fund. She pointed out Alaska is only one of four states that has
employees paying into it at all.
CHAIRMAN KOTT asked Ms. Nancy if she is paying into it. MS. NANCE
indicated she is not. Chairman Kott asked if he is paying into it.
Ms. Nance said she is not aware of Chairman Kott's businesses
outside of the legislature.
REPRESENTATIVE SANDERS said he is paying into it and he believes it
is a great idea. CHAIRMAN KOTT asked if it is reflected on his
earnings. Representative Sanders indicated it is reflected on his
earnings.
MS. NANCE pointed out that if this isn't made permanent, the Step
program will go away, it sunsets.
Number 1660
CHAIRMAN KOTT noted the committee didn't have a quorum present so
action couldn't be taken on the bill. He announced the bill would
be held over until the next Labor and Commerce Committee hearing.
REPRESENTATIVE ROKEBERG noted the bill has a number of committee
referrals. CHAIRMAN KOTT said there are four committees of
referral. He also said his understanding is that there is no
fiscal impact.
MS. NANCE said there is no fiscal impact, it is basically a wash,
and anything that is not spent goes back to the unemployment trust
fund. There is no impact.
Number 1774
REPRESENTATIVE ROKEBERG referred to an employees paycheck and asked
if this shows up as a separate line item. MS. NANCE said it is
included in the unemployment insurance contribution.
ADJOURNMENT
Number 1773
There being no further business to come before the House Labor and
Commerce Committee, CHAIRMAN KOTT adjourned the meeting at 5:15
p.m.
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