Legislature(2003 - 2004)

03/17/2004 08:02 AM Senate JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                         March 17, 2004                                                                                         
                           8:02 a.m.                                                                                            
                                                                                                                                
TAPE(S) 04-21                                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Ralph Seekins, Chair                                                                                                    
Senator Scott Ogan, Vice Chair                                                                                                  
Senator Gene Therriault                                                                                                         
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Johnny Ellis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 344                                                                                                             
"An  Act  relating  to  the  Uniform  Probate  Code  and  trusts,                                                               
including  pleadings,  orders,   nonprobate  assets,  estates  of                                                               
decedents,  minors,  protected  persons,  incapacitated  persons,                                                               
guardians, conservators, trustees,  foreign trusts, principal and                                                               
income, and  transfer restrictions; relating to  corporate voting                                                               
trusts; and providing for an effective date."                                                                                   
                                                                                                                                
     MOVED SB 344 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE BILL NO. 319                                                                                                             
"An Act relating to claims  for personal injury or wrongful death                                                               
against  health care  providers; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 323                                                                                                             
"An  Act relating  to a  project owner's  liability for  workers'                                                               
compensation  and the  exclusiveness  of  liability for  workers'                                                               
compensation."                                                                                                                  
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 309                                                                                                             
"An Act relating  to testing the blood of prisoners  and those in                                                               
custody for bloodborne pathogens."                                                                                              
                                                                                                                                
     MOVED CSSB 309(JUD) OUT OF COMMITTEE                                                                                       
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 344                                                                                                                  
SHORT TITLE: TRUSTS/ESTATES/PROPERTY TRANSFERS                                                                                  
SPONSOR(s): SENATOR(s) SEEKINS                                                                                                  
                                                                                                                                
02/16/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/04       (S)       L&C, JUD                                                                                               
03/11/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/11/04       (S)       Moved SB 344 Out of Committee                                                                          
03/11/04       (S)       MINUTE(L&C)                                                                                            
03/12/04       (S)       L&C RPT 3DP 1NR                                                                                        
03/12/04       (S)       DP: BUNDE, DAVIS, SEEKINS; NR: FRENCH                                                                  
03/17/04       (S)       JUD AT 8:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 319                                                                                                                  
SHORT TITLE: CLAIMS AGAINST HEALTH CARE PROVIDERS                                                                               
SPONSOR(s): SENATOR(s) SEEKINS                                                                                                  
                                                                                                                                
02/11/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/11/04       (S)       L&C, JUD                                                                                               
03/02/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/02/04       (S)       Heard & Held                                                                                           
03/02/04       (S)       MINUTE(L&C)                                                                                            
03/11/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/11/04       (S)       Moved  SB 319 Out of Committee                                                                         
03/11/04       (S)       MINUTE(L&C)                                                                                            
03/12/04       (S)       L&C RPT   2DNP 3NR                                                                                     
03/12/04       (S)       NR: BUNDE, SEEKINS, STEVENS G;                                                                         
03/12/04       (S)       DNP: FRENCH, DAVIS                                                                                     
03/17/04       (S)       JUD AT 8:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 323                                                                                                                  
SHORT TITLE: WORKERS COMPENSATION AND CONTRACTORS                                                                               
SPONSOR(s): SENATOR(s) SEEKINS                                                                                                  
                                                                                                                                
02/13/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/04       (S)       L&C, JUD                                                                                               
03/04/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/04/04       (S)       Heard & Held                                                                                           
03/04/04       (S)       MINUTE(L&C)                                                                                            
03/09/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/09/04       (S)       Moved SB 323 Out of Committee                                                                          
03/09/04       (S)       MINUTE(L&C)                                                                                            
03/10/04       (S)       L&C RPT 2DP 2NR 1AM                                                                                    
03/10/04       (S)       DP: BUNDE, SEEKINS; NR: DAVIS,                                                                         
03/10/04       (S)       STEVENS G; AM: FRENCH                                                                                  
03/17/04       (S)       JUD AT 8:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 309                                                                                                                  
SHORT TITLE: BLOOD PATHOGENS TESTING OF PRISONERS                                                                               
SPONSOR(s): SENATOR(s) WAGONER                                                                                                  
                                                                                                                                
02/09/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/09/04       (S)       STA, JUD                                                                                               
03/04/04       (S)       STA AT 3:30 PM BELTZ 211                                                                               
03/04/04       (S)       Moved SB 309 Out of Committee                                                                          
03/04/04       (S)       MINUTE(STA)                                                                                            
03/05/04       (S)       STA RPT 3DP                                                                                            
03/05/04       (S)       DP: STEVENS G, COWDERY, STEDMAN                                                                        
03/17/04       (S)       JUD AT 8:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Brian Hove                                                                                                                  
Staff to Senator Seekins                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Presented SB 344, SB 323 and SB 319 for the                                                               
sponsor                                                                                                                         
                                                                                                                                
Mr. Doug Blattmacher                                                                                                            
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 344                                                                                          
                                                                                                                                
Mr. Steve Greer                                                                                                                 
Box 242903                                                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 344                                                                                          
                                                                                                                                
Ms. Beth Chapman                                                                                                                
Faulkner Banfield                                                                                                               
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Supports SB 344 and answered questions                                                                   
                                                                                                                                
Mr. Kurt Olson                                                                                                                  
Staff to Senator Wagoner                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Presented SB 309 for the sponsor                                                                          
                                                                                                                                
Ms. Portia Parker                                                                                                               
Deputy Commissioner                                                                                                             
Department of Corrections                                                                                                       
431 N. Franklin, Suite 400                                                                                                      
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Answered questions about SB 309                                                                         
                                                                                                                              
Dr. George Rhyneer                                                                                                              
3340 Providence Dr.                                                                                                             
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Supports SB 319                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-21, SIDE A                                                                                                            
                                                                                                                                
CHAIR  RALPH   SEEKINS  called  the  Senate   Judiciary  Standing                                                             
Committee meeting  to order  at 8:02  a.m. Senators  French, Ogan                                                               
and Chair Seekins were present.  Chair Seekins announced that due                                                               
to  a commitment  to the  Governor on  financial issues,  members                                                               
would be  attending Senate Finance  hearing at 9:00 a.m.,  so the                                                               
Judiciary Committee  would not have  a substantive  discussion on                                                               
SB 323 and SB 309 today. The committee took up SB 344.                                                                          
                                                                                                                                
                                                                                                                                
               TRUSTS/ESTATES/PROPERTY TRANSFERS                                                                            
                                                                                                                                
MR.  BRIAN HOVE,  staff to  Senator Seekins,  sponsor of  SB 344,                                                               
read the following sponsor statement.                                                                                           
                                                                                                                                
     A vital characteristic of  our highly developed economy                                                                    
     is the  ease with  which financial resources  flow from                                                                    
     one  market   to  another.  In  fact   the  magnet-like                                                                    
     attraction between and the market  that offers the most                                                                    
     advantageous  terms  is,   perhaps,  best  demonstrated                                                                    
     within the financial services industry itself.                                                                             
                                                                                                                                
     Over  the  years  the   Alaskan  banking  industry  has                                                                    
     attracted  funds  to  our  state as  the  result  of  a                                                                    
     particular niche  we have successfully developed  in an                                                                    
     obscure  corner  of the  industry  known  as trust  and                                                                    
     estate   services.  Much   of  this   success  can   be                                                                    
     attributed to the foresight  demonstrated by the Alaska                                                                    
     State Legislature.                                                                                                         
                                                                                                                                
     Since 1997,  the legislature has passed  numerous bills                                                                    
     effectively  making Alaska  a premier  jurisdiction for                                                                    
     this  financial  specialty.  Just   last  year,  SB  87                                                                    
     adopted a more recent  version of the Uniform Principal                                                                    
     &  Income Act.  And HB  212 updated  other portions  of                                                                    
     Alaska's  trust laws.  Both were  signed into  law last                                                                    
     summer.                                                                                                                    
                                                                                                                                
     While  SB   344  may  not   be  as  far   reaching,  it                                                                    
     accomplishes the  same purpose. It does  this by making                                                                    
     a  host   of  small  technical  revisions   to  current                                                                    
     statutes.  It updates  provisions  relating to  virtual                                                                    
     representation.  It clarifies  when  a  trustee can  be                                                                    
     relieved  of its  liability.  And  it adds  provisions,                                                                    
     which other jurisdictions have already adopted.                                                                            
                                                                                                                                
     Keeping  our trust  statutes current  has had  a direct                                                                    
     positive  impact  on  our  state's  economy.  Over  the                                                                    
     years, these  periodic revisions  have helped  to bring                                                                    
     hundreds of  millions of dollars  of trust  assets into                                                                    
     the  state and  added tens  of millions  of dollars  to                                                                    
     local  bank  deposits.  Furthermore, it  has  increased                                                                    
     business  activity  for  attorneys,  accountants,  life                                                                    
     insurance agents  and brokerage  firms. This,  in turn,                                                                    
     creates jobs.                                                                                                              
                                                                                                                                
     Necessity,   ingenuity   and    routine   advances   in                                                                    
     technology  collaborate on  a daily  basis to  reinvent                                                                    
     the world of financial  products and services. To date,                                                                    
     Alaska  has successfully  staked  out a  place in  this                                                                    
     world through our contemporary set  of trust and estate                                                                    
     laws. SB  344 seeks  to preserve  our position  in what                                                                    
     amounts to  a highly fluid marketplace  unrestricted by                                                                    
     geographical  boundaries. It  seems reasonable  to keep                                                                    
     that money flowing this direction.                                                                                         
                                                                                                                                
He noted that Beth Chapman and Doug Blattmacher were available                                                                  
to speak to the technical portions of the bill.                                                                                 
                                                                                                                                
SENATOR  FRENCH commented  that legislators  have been  told that                                                               
the growth of this industry has  had a net positive effect on the                                                               
general fund.  He asked  if the Department  of Revenue  (DOR) has                                                               
any documentation to back that up.                                                                                              
                                                                                                                                
MR. HOVE said he has not seen any documentation but believes it                                                                 
is reasonable that bringing that money to this jurisdiction                                                                     
would have a net positive impact on Alaska's economy.                                                                           
                                                                                                                                
CHAIR  SEEKINS  pointed  out that  last  year,  when  considering                                                               
another trust bill, he saw  that premium taxes alone on insurance                                                               
policies were significant.                                                                                                      
                                                                                                                                
MR. DOUG BLATTMACHER added:                                                                                                     
                                                                                                                                
     We know that from the  insurance premiums that we had -                                                                    
     of the premium  payments that we had  made, we estimate                                                                    
     that we've  spent about  a million  and a  half dollars                                                                    
     additional  premium taxes  in the  state over  the last                                                                    
     couple of years and that  continues to - we continue to                                                                    
     get  these  large  insurance policies,  which  generate                                                                    
     additional premium dollars in the state.                                                                                   
                                                                                                                                
MR. STEVE  GREER, an estate-planning attorney  in Anchorage, said                                                               
he  and  a   group  of  other  estate   planning  attorneys  have                                                               
approached the legislature each  year with legislation to improve                                                               
existing  legislation.   He  noted  that  Ms.   Chapman  was  the                                                               
principal drafter of SB 344.                                                                                                    
                                                                                                                                
MS.  BETH  CHAPMAN,  an attorney  with  Faulkner  Banfield,  told                                                               
members she  has practiced  primarily in the  area of  trusts and                                                               
estates for the  past 16 years. She stated support  for SB 344 as                                                               
it will  update Alaska law so  that Alaska will continue  to have                                                               
prominence  as  the  state  in which  individuals  will  want  to                                                               
deposit their  trust assets and  a place where residents  want to                                                               
retain their assets.   She explained SB 344 has  four main parts.                                                               
The  first part  contains  technical corrections  to the  Uniform                                                               
Income Act,  which was  adopted last year.  The second  part adds                                                               
additional trusts  to the  types of  trusts recognized  under the                                                               
spendthrift  provisions.  These  trusts  are  commonly  used  and                                                               
recognized  under  the  Internal  Revenue Code.  The  third  part                                                               
expands  the Doctrine  of Subsequent  Notice found  under current                                                               
Alaska law so  that trustees and trust  beneficiaries have easier                                                               
access  to  the  courts.  Last,   it  establishes  a  statute  of                                                               
limitations for claims against trustees.  Current law contains no                                                               
statute  of  limitations  against   a  trustee  until  the  trust                                                               
relationship  is  terminated.  Alaska law  now  allows  perpetual                                                               
trusts, so that relationship could last  for a very long time and                                                               
stale  claims  could  be  brought  at any  time  in  the  future.                                                               
Enacting  a  statute  of  limitations will  allow  claims  to  be                                                               
brought when necessary soon after they  occur or when notice of a                                                               
claim  has been  made  known to  a beneficiary.  It  also adds  a                                                               
provision  to notify  beneficiaries of  their limitation  period,                                                               
which she believes  will be more helpful to  beneficiaries. If no                                                               
notification occurs, the statute of limitation will not run.                                                                    
                                                                                                                                
SENATOR THERRIAULT asked how long the statute of limitations is.                                                                
                                                                                                                                
MS.  CHAPMAN told  members under  current  law, a  claim must  be                                                               
brought within six months after  the final account. The six month                                                               
period will continue to be used,  but it will run from any report                                                               
that  discloses  the   nature  of  the  claim  so   long  as  the                                                               
beneficiary is notified of the six-month time limit.                                                                            
                                                                                                                                
SENATOR  FRENCH referred  to page  2 of  the sectional  analysis,                                                               
which addresses changing the trust  situs to Alaska. He asked how                                                               
one  locates a  trust in  Alaska and  whether the  money must  be                                                               
physically present in an Alaska bank.                                                                                           
                                                                                                                                
MS.  CHAPMAN said  some  of the  funds do  have  to be  deposited                                                               
within the  state of Alaska  in an  Alaska bank. Also,  the trust                                                               
must  have an  Alaska trustee  and the  trust must  be registered                                                               
with the Alaska Court System.                                                                                                   
                                                                                                                                
SENATOR  FRENCH asked  how small  of a  sum would  qualify for  a                                                               
deposit.                                                                                                                        
                                                                                                                                
MS. CHAPMAN  thought the  amount is not  defined in  the statute.                                                               
She noted,  however, in  her experience deposits  have been  of a                                                               
significant amount.                                                                                                             
                                                                                                                                
SENATOR THERRIAULT  stated, for  the record, that  his wife  is a                                                               
trust attorney and  participates in the Alaska  Trust Council. He                                                               
then moved SB 344 from  committee with individual recommendations                                                               
and the attached zero fiscal notes.                                                                                             
                                                                                                                                
CHAIR  SEEKINS  announced  that  without  objection,  the  motion                                                               
carried.                                                                                                                        
                                                                                                                                
                                                                                                                                
          SB 309-BLOOD PATHOGENS TESTING OF PRISONERS                                                                       
                                                                                                                                
MR. KURT OLSON, staff to Senator  Tom Wagoner, sponsor of SB 309,                                                               
told  members  that  Alaska  law   currently  allows  testing  of                                                               
prisoners  for  blood borne  pathogens  at  the request  of  rape                                                               
victims.  SB 309 would  allow correctional officers who have been                                                               
exposed  to blood  or other  bodily  fluids to  request that  the                                                               
prisoner responsible  for the potential contamination  be tested.                                                               
He  explained  that Alaska  statute  18.15  would be  amended  to                                                               
include five new provisions.                                                                                                    
                                                                                                                                
   · AS 18.15.400 authorizes the testing process                                                                                
   · AS 18.15.410 provides consent provisions                                                                                   
   · AS 18.15.420 addresses situations for which testing occurs                                                                 
     without consent                                                                                                            
   · AS 18.15.440 addresses confidentiality issues and provides                                                                 
     penalties for disclosure                                                                                                   
   · AS 18.15.450 contains definitions                                                                                          
                                                                                                                                
MR.  OLSON informed  members that  41 correctional  officers were                                                               
potentially  exposed to  blood borne  pathogens last  year. Those                                                               
pathogens can  be HIV, Hepatitis  B, or  Hepatitis C. In  most of                                                               
the cases,  the exposure was  intentional. Current  treatment for                                                               
exposure consists  of a  daily treatment for  about two  weeks of                                                               
what  is  called a  "cocktail."  The  cocktail contains  numerous                                                               
drugs to  counteract several  diseases. The  side effects  can be                                                               
severe,  and prevents  most correctional  officers from  working.                                                               
The Department  of Corrections  (DOC) supports SB  309 and  he is                                                               
aware of no opposition to the bill.                                                                                             
                                                                                                                                
SENATOR OGAN said he is  aware that correctional officers are not                                                               
allowed  to  discuss their  medical  histories  and exposures  to                                                               
blood borne pathogens. He asked,  if the exposure is intentional,                                                               
the  carrier  could  be  charged  with  assault  if  the  officer                                                               
contracted  an infectious  disease, and  whether anyone  has ever                                                               
been charged.                                                                                                                   
                                                                                                                                
MR. OLSON deferred to Ms. Parker for an answer.                                                                                 
                                                                                                                                
DEPUTY COMMISSIONER  PORTIA PARKER,  DOC, said  she was  not sure                                                               
how  many assault  charges have  been filed.  She explained  that                                                               
DOC's  standard procedure,  when an  officer is  assaulted by  an                                                               
inmate, whether  any blood is  exchanged or  not, is to  call the                                                               
Alaska State  Troopers (AST). She  added that very  few instances                                                               
have occurred.                                                                                                                  
                                                                                                                                
SENATOR FRENCH asked if blood  borne pathogens can be transmitted                                                               
by spitting.                                                                                                                    
                                                                                                                                
SENATOR OGAN nodded affirmatively.                                                                                              
                                                                                                                                
MR. OLSON  thought hepatitis can  be transmitted by  spitting, as                                                               
well as biting.                                                                                                                 
                                                                                                                                
SENATOR FRENCH asked if a fluid-to-fluid transfer must occur.                                                                   
                                                                                                                                
MR.  OLSON  replied,  "I  believe  it  can  be  fluid  to  mucous                                                               
membranes - eyes."                                                                                                              
                                                                                                                                
SENATOR FRENCH  referred to the  language that begins on  line 30                                                               
of page  4 and remarked that  paragraph (2) on page  5 should not                                                               
be included in the list of things the court finds.                                                                              
                                                                                                                                
SENATOR  OGAN  asked, excluding  paragraph  (2),  if the  sponsor                                                               
intends that paragraphs (1), (3), and (4) all be met.                                                                           
                                                                                                                                
MR.  OLSON said  it is  Senator Wagoner's  intent that  all three                                                               
criteria be met  and that it also  must be at the  request of the                                                               
potentially infected correctional officer.                                                                                      
                                                                                                                                
SENATOR FRENCH  commented that  SB 309 is  well crafted  and well                                                               
balanced.                                                                                                                       
                                                                                                                                
CHAIR SEEKINS announced a recess  at 8:25 a.m. and reconvened the                                                               
meeting at  8:30 a.m.  He then announced  that he  consulted with                                                               
the sponsor,  who would like  to amend  SB 309 to  make paragraph                                                               
(2) on page 5, subsection  (d), rename the current subsection (d)                                                               
subsection (e), and rename paragraphs (3)  and (4) to (2) and (3)                                                               
[Amendment 1].                                                                                                                  
                                                                                                                                
SENATOR OGAN so moved.                                                                                                          
                                                                                                                                
CHAIR  SEEKINS  announced  that  without  objection,  the  motion                                                               
carried.                                                                                                                        
                                                                                                                                
SENATOR OGAN asked why Hepatitis A  was not included on page 6 as                                                               
it is  easily transmittable, and suggested  saying "including but                                                               
not limited to."                                                                                                                
                                                                                                                                
SENATOR  THERRIAULT thought  the current  wording does  not limit                                                               
the blood borne pathogens to those listed.                                                                                      
                                                                                                                                
CHAIR SEEKINS  suggested clarifying  that section by  saying "not                                                               
limited to."                                                                                                                    
                                                                                                                                
SENATOR OGAN moved  to insert ", but are not  limited to" on page                                                               
6, line 1 [Amendment 2].                                                                                                        
                                                                                                                                
CHAIR SEEKINS  announced that without objection,  Amendment 2 was                                                               
adopted.  He  then  closed  public   testimony  due  to  lack  of                                                               
participants.                                                                                                                   
                                                                                                                                
SENATOR OGAN moved CSSB 309(JUD) from committee with individual                                                                 
recommendations and its attached fiscal note. Without objection,                                                                
the motion carried.                                                                                                             
                                                                                                                                
The committee took an at-ease.                                                                                                  
                                                                                                                                
                                                                                                                                
          SB 319-CLAIMS AGAINST HEALTH CARE PROVIDERS                                                                       
                                                                                                                                
MR. BRIAN HOVE, staff to Senator Seekins, sponsor of SB 319,                                                                    
provided the following explanation of the measure.                                                                              
                                                                                                                                
     SB  319  amends AS  09.55.548  and  .556. The  proposed                                                                    
     legislation intends  to alleviate  a growing  crisis in                                                                    
     Alaska's  health  care  industry with  respect  to  the                                                                    
     availability of  liability insurance. It places  a hard                                                                    
     cap  on  damage   awards,  clarifies  informed  consent                                                                    
     language, and  limits liability with respect  to health                                                                    
     care advice communicated through electronic means.                                                                         
                                                                                                                                
     The fact  is Alaska's medical system  is breaking down.                                                                    
     Alaska  ranks   near  the  bottom  in   the  number  of                                                                    
     physicians  per  capita.  What's  more,  over  half  of                                                                    
     Alaska's physicians exceed the age  of 50. Many will be                                                                    
     retiring  within  the  next 10  years.  Attracting  and                                                                    
     keeping adequate numbers of  high quality physicians in                                                                    
     Alaska  is of  utmost importance.  The availability  of                                                                    
     liability insurance  plays a  critical role  in solving                                                                    
     this  crisis. Half  of the  insurers have  ceased doing                                                                    
     business  in  Alaska  in  the  last  12  months.  Other                                                                    
     professional  liability  insurance  carriers  have  not                                                                    
     shown an interest  in doing business in  the state, due                                                                    
     to the volatile medical liability environment.                                                                             
                                                                                                                                
     This  is a  complex issue.  However, one  solution that                                                                    
     has proven  particularly effective  in other  states is                                                                    
     capping non-economic  damages. SB  319 intends  to help                                                                    
     establish a predictable  risk assessment environment by                                                                    
     placing a $250,000  cap on this type of  award. It does                                                                    
     not  change awards  for quantifiable  economic damages,                                                                    
     such  as  lost  wages   and  past  and  future  medical                                                                    
     expenses. The  bill also  makes revisions,  which limit                                                                    
     liability  in  cases  where a  patient  elects  not  to                                                                    
     follow advice  that was communicated  by a  health care                                                                    
     provider through  electronic means.  Lastly, qualifying                                                                    
     language is added relating to informed consent, along                                                                      
     with a sprinkling of punctuation marks. But the bottom                                                                     
        line is this - instituting a $250,000 cap on non-                                                                       
     economic damages  will help stabilize  the professional                                                                    
     medical  liability  insurance  market here  in  Alaska,                                                                    
     thereby  reinforcing   efforts  to  attract   the  next                                                                    
     generation of doctors to replace  those who are nearing                                                                    
     retirement age.                                                                                                            
                                                                                                                                
SENATOR  OGAN  asked  whether the  $250,000  damage  award  limit                                                               
includes the attorney's fees.                                                                                                   
                                                                                                                                
MR. HOVE said they would.                                                                                                       
                                                                                                                                
SENATOR OGAN asked what the  typical contingency cost is for tort                                                               
attorneys.                                                                                                                      
                                                                                                                                
MR. HOVE said that is determined  on a case-by-case basis but the                                                               
amount is not insignificant.                                                                                                    
                                                                                                                                
SENATOR OGAN noted if the attorney  gets half, and the jury finds                                                               
the  doctor  was negligent  because  he  was drinking  the  night                                                               
before  and did  irreparable  harm, the  patient  would only  get                                                               
$125,000.                                                                                                                       
                                                                                                                                
MR. HOVE  said a doctor who  was drinking the night  before would                                                               
be in  a different class  and that case  would not be  subject to                                                               
this legislation.                                                                                                               
                                                                                                                                
CHAIR  SEEKINS noted  that  doctor would  be  guilty of  reckless                                                               
behavior, not negligence,  and the bill is not  intended to cover                                                               
any cap for reckless behavior.                                                                                                  
                                                                                                                                
SENATOR FRENCH said since the  committee last heard the bill, the                                                               
committee has received a  report entitled, "Physicians Practicing                                                               
in  Alaska,"  by the  Legislative  Research  Agency. That  report                                                               
contains one  point that  runs contrary  to Mr.  Hove's statement                                                               
that  the  system  is  breaking  down;  it  says  the  number  of                                                               
physicians is steadily  increasing in Alaska every  few years. He                                                               
asked Mr. Hove to reconcile the two statements.                                                                                 
                                                                                                                                
MR. HOVE replied, "What I  see is state-licensed physicians and I                                                               
don't know, somebody  can tell me if I'm wrong  but it seems that                                                               
licensed is different from actually practicing."                                                                                
                                                                                                                                
CHAIR  SEEKINS  said  he  asked whether  there  is  a  difference                                                               
between practicing  and licensed  physicians in the  Senate Labor                                                               
and Commerce  Committee. He noted that  he noticed in a  chart of                                                               
physicians with  awards against them  that many of them  had non-                                                               
resident addresses  and he intends to  look into why that  is. He                                                               
asked Mr.  Hove to find  out how many  of the physicians  who are                                                               
licensed in Alaska actually practice here.                                                                                      
                                                                                                                                
SENATOR  FRENCH  pointed  out  the report  shows  the  number  of                                                               
active,  state  licensed  physicians  by year  since  1985.  That                                                               
suggests to him that they are not retired.                                                                                      
                                                                                                                                
CHAIR  SEEKINS  agreed to  follow  up  on  that question  and  on                                                               
Senator Ogan's question  about whether Rule 82 applies  on top of                                                               
the damage award.                                                                                                               
                                                                                                                                
SENATOR  FRENCH  commented  that California  adopted  a  $250,000                                                               
damage award limit in 1979.  He questioned what that amount would                                                               
be worth  in 2004  if adjusted for  inflation. He  suggested that                                                               
amount could be the current $400,000 cap in Alaska law now.                                                                     
                                                                                                                                
CHAIR SEEKINS  noted the $400,000  cap is  a moveable cap  with a                                                               
multiplier  effect  -  it  is  not a  hard  cap.  He  added  that                                                               
California  has kept  the amount  at $250,000.  He said  he would                                                               
accommodate one person  who flew from Anchorage  to testify today                                                               
and called Mr. Rhyneer.                                                                                                         
                                                                                                                                
DR. GEORGE  RHYNEER, an Anchorage  cardiologist, told  members he                                                               
has  been practicing  in  Anchorage  for over  30  years. He  was                                                               
instrumental in getting  a cardiac program started  in Alaska. He                                                               
explained that the  reason he is attending today's  hearing is so                                                               
that he can  continue to practice cardiology in  Alaska. A number                                                               
of years  ago, insurance companies  were "beating down  the door"                                                               
to sell him  medical malpractice insurance. Four  years ago, only                                                               
four companies were selling that  insurance in Alaska. Last year,                                                               
his  insurance company  cancelled  his insurance  because it  was                                                               
unable to make  a go of it  in Alaska anymore. That  was a mutual                                                               
insurance company based  in Oregon, which is  physician owned and                                                               
passes  on the  cost of  doing  business to  the physicians.  The                                                               
commercial insurance company, CNA, also  left Alaska last year so                                                               
it left him  looking for new insurance and was  able to find only                                                               
one insurance company  that could provide him  with the insurance                                                               
company he needed. He said  one can anticipate, by looking South,                                                               
what  will happen  to  medicine in  Alaska.  He anticipates  that                                                               
things  will  continue  to  get  worse  in  this  regard  as  the                                                               
insurance  crises in  the Lower  48  will move  north to  Alaska.                                                               
Alaska  does  not have  a  medical  malpractice insurance  crisis                                                               
right now.  However, the same  problems that  led to the  loss of                                                               
insurance  companies in  Alaska  will continue  with the  current                                                               
legal atmosphere  in the state. Physicians  desperately fear they                                                               
will  lose  the  ability  to buy  malpractice  insurance  in  the                                                               
foreseeable  future at  all.  If  that does  occur,  he would  be                                                               
forced into  involuntary retirement, as will  probably 30 percent                                                               
of  the practicing  physicians in  Alaska. He  cautioned that  if                                                               
suddenly there are minimal medical  services, the state will have                                                               
a real problem, and it could happen abruptly.                                                                                   
                                                                                                                                
DR. RHYNEER said  that other solutions may be out  there, but the                                                               
legislature needs to come up  with a solution because the problem                                                               
is a legal one.                                                                                                                 
                                                                                                                                
SENATOR  OGAN personally  thanked Dr.  Rhyneer and  his crew  for                                                               
their good work.  He then said that Alaska's  small population is                                                               
the size of a small city in the  Lower 48 and that insurance is a                                                               
problem in  every sector of the  economy. He noted that  when the                                                               
legislature last dealt with tort  reform legislation, there was a                                                               
lot of gnashing of teeth and  yet those efforts did not stabilize                                                               
the insurance industry  in Alaska. He expressed  concern that the                                                               
problem  may  be  the  small   market  rather  than  exposure  to                                                               
lawsuits.                                                                                                                       
                                                                                                                                
DR. RHYNEER  indicated the insurance  companies have  assured him                                                               
that  [limiting  damage  awards]  is the  single  most  effective                                                               
attribute   to  malpractice   legislation  that   makes  a   more                                                               
predictable environment to do business  in. He said the insurance                                                               
companies cannot be forced to do  business here. The state has to                                                               
create a  climate that is  attractive to insurance  companies. If                                                               
it is not attractive, they will leave.                                                                                          
                                                                                                                                
CHAIR  SEEKINS thanked  Dr. Rhyneer  and closed  public testimony                                                               
due to  time constraints. He  announced the committee  would hear                                                               
an introduction to SB 323 and then reschedule it.                                                                               
                                                                                                                                
                                                                                                                                
          SB 323-WORKERS COMPENSATION AND CONTRACTORS                                                                       
                                                                                                                                
MR. BRIAN HOVE, staff to  Senator Seekins, sponsor, presented the                                                               
following description of SB 323.                                                                                                
                                                                                                                                
     SB  323 revises  the  Workers' Compensation  Act as  it                                                                    
     applies  to  contractors  and subcontractors.  The  two                                                                    
     principal   modifications   are  as   follows.   First,                                                                    
     responsibility for payment  of workers' compensation is                                                                    
     extended up  the chain of contracts  to include project                                                                    
     owners.  Secondly,   injured  parties  in   receipt  of                                                                    
     benefits under  the Workers' Compensation Act  would be                                                                    
     barred  from  'double  dipping' via  a  tort  liability                                                                    
     claim.                                                                                                                     
                                                                                                                                
     Under  AS 23.30.045(a),  an injured  employee only  has                                                                    
     recourse  for  workers' compensation  benefits  against                                                                    
     his  immediate  employer  and  if  the  employer  is  a                                                                    
     subcontractor against  the contractor who  retained the                                                                    
     subcontractor.   The    proposed   legislation   allows                                                                    
     recourse  for  the  payment  of  compensation  benefits                                                                    
     against  project owners,  as  well  as contractors  and                                                                    
     subcontractors.                                                                                                            
                                                                                                                                
     This extension  of the rights  of injured  employees is                                                                    
     sensible  inasmuch   as  the   project  owner   is  the                                                                    
     beneficial user  of the work  performed by  the injured                                                                    
     employee. It should be noted  that a project owner does                                                                    
     not include  individuals who have engaged  the services                                                                    
     of  contractors  to  build or  renovate  a  residential                                                                    
     home.                                                                                                                      
                                                                                                                                
     Finally,   the   proposed   legislation   extends   the                                                                    
     exclusivity  protection set  forth in  AS 23.30.055  to                                                                    
     all  parties in  the  contracting chain  relating to  a                                                                    
     project.  This includes  the  employer  of the  injured                                                                    
     employee, and those parties, which  are upstream in the                                                                    
     chain  of contracts  from the  employer of  the injured                                                                    
     employee.                                                                                                                  
                                                                                                                                
     In  other words,  if an  injured employee  works for  a                                                                    
     subcontractor, then  the subcontractor,  the contractor                                                                    
     and the project  owner would be free  of tort liability                                                                    
     so long as the injured employee...[END OF SIDE A]                                                                          
                                                                                                                                
TAPE 04-21, SIDE B                                                                                                            
                                                                                                                                
     ...receives  the  benefits  set  forth  in  the  Alaska                                                                    
     Workers' Compensation Act.                                                                                                 
                                                                                                                                
     SB 323  will encourage  all parties participating  in a                                                                    
     project   to  identify   and   enforce  strict   safety                                                                    
     standards for  the benefit of  all workers  rather than                                                                    
     deflecting responsibility through  the use of indemnity                                                                    
     agreements,  as is  common practice  currently. At  the                                                                    
     same  time,  it  ensures   that  injured  workers  will                                                                    
       receive all benefits available under the Workers'                                                                        
     Compensation Act.                                                                                                          
                                                                                                                                
CHAIR SEEKINS announced that he would hold SB 323 for a further                                                                 
hearing and adjourned the meeting at 8:57 p.m.                                                                                  

Document Name Date/Time Subjects