Legislature(1995 - 1996)
05/03/1995 01:43 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE May 3, 1995 1:43 p.m. MEMBERS PRESENT Senator Robin Taylor, Chairman Senator Lyda Green, Vice-Chairman Senator Mike Miller MEMBERS ABSENT Senator Al Adams Senator Johnny Ellis COMMITTEE CALENDAR Confirmation Hearings: Commission on Judicial Conduct; Patrick Brown, Joann Holmes, Arthur Peterson CS FOR HOUSE BILL NO. 38(JUD) am "An Act relating to criminal sentencing; relating to good time credit; relating to the availability for good time credit for offenders convicted of certain first degree murders; relating to definite sentences, parole, good time credit, pardon, commutation of sentence, modification or reduction of sentence, reprieve, furlough, and service of sentence at a correctional restitution center for offenders with at least three serious felony convictions; and amending Alaska Rule of Criminal Procedure 35." CS FOR HOUSE BILL NO. 274(JUD) "An Act relating to the state's tuberculosis control program; and providing for an effective date." CS FOR HOUSE BILL NO. 120(FIN) "An Act relating to public employers defending and indemnifying public employees and former public employees with respect to claims arising out of conduct that is within the scope of employment." CS FOR HOUSE BILL NO. 158(FIN) am(ct rls pfld)(efd fld) "An Act relating to civil actions; amending Alaska Rule of Civil Procedure 95." PREVIOUS SENATE COMMITTEE ACTION HB 38 - No previous Senate action to report. HB 274 - No previous Senate action to report. HB 120 - No previous Senate action to report. HB 158 - No previous Senate action to report. WITNESS REGISTER Patrick Brown, Commissioner-designee 711 Gaffney Rd. Fairbanks, AK 99701 Joanna Holmes, Commissioner-designee Judicial Conduct Commission 310 K St., Room 301 Anchorage, AK 99501-2064 Art Peterson, Commissioner-designee 350 N. Franklin St. Juneau, Alaska 99801 Patty Swenson Legislative Aide Alaska State Capitol Juneau, Alaska 99811-1182 POSITION STATEMENT: Testified for sponsor of HB 38 Barbara Brink Public Defender Agency Dept. of Administration 900 W. 5th Ave., Suite 200 Anchorage, AK 99501-2090 POSITION STATEMENT: Testified in opposition to HB 38 Brant McGee Office of Public Advocacy Dept. of Administration 900 W. 5th Ave., Suite 525 Anchorage, AK 99501-2090 POSITION STATEMENT: Testified in opposition to HB 38 Representative Con Bunde Alaska State Capitol Juneau, Alaska 99811-1182 POSITION STATEMENT: Sponsor of HB 38 Margot Knuth Assistant Attorney General P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: Testified on HB 38 Margaret Berck Alaska Civil Liberties Union 227 7th St. Juneau, Alaska 99801 POSITION STATEMENT: Testified in opposition to HB 38 Jerry Shriner Special Assistant Department of Corrections 240 Main St. Suite 700 Juneau, AK 99801 POSITION STATEMENT: Testified on HB 38 Gail Voigtlander Assistant Attorney General 1031 W. 4th Ave., Suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT: Testified on HB 120 Stephanie Galbraith Brad Thompson Division of Risk Management P.O. Box 110218 Juneau, AK 99811-0218 POSITION STATEMENT: Answered questions on HB 120 Kevin Ritchie Alaska Municipal League 217 Second St., Suite 200 Juneau, Alaska 99801 POSITION STATEMENT: Testified in support of HB 120 Elmer Lindstrom Special Assistant Department of Health & Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 POSITION STATEMENT: Testified in support of HB 274 Dick Cattenaugh POSITION STATEMENT: Testified in support of HB 158 Daniella Loper Legislative Aide Alaska State Capitol Juneau, Alaska 99811-1182 POSITION STATEMENT: Gave a sectional analysis of HB 158 ACTION NARRATIVE TAPE 95-29, SIDE A Number 001 CHAIRMAN ROBIN TAYLOR noted a quorum was not present, however testimony would be taken and absent committee members would be referred to the record. PATRICK BROWN, Commissioner-designee to the Commission on Judicial Conduct, discussed his background. He has been a practicing attorney in Fairbanks for 20 1/2 years, and is seeking reappointment to his present seat on the Commission. He has served on the Commission for eight years, and feels qualified to continue to serve. SENATOR TAYLOR commented he is aware of Mr. Brown's professional record. He thanked Mr. Brown for his willingness to serve. SENATOR GREEN asked what the function of the Alaska Commission on Judicial Conduct is. MR. BROWN replied the Commission was established as part of the Alaska Constitution to review complaints from the public and attorneys concerning sitting judges at the supreme, superior, and district court levels. The Commission cannot hear complaints regarding magistrates or tribal judges. The Commission investigates violations of the Judicial Conduct Code and can also initiate investigations. JOANNA HOLMES, Commissioner-designee, has been involved in bush justice since the early 1970's as an employee of the Alaska Federation of Natives. At that time she served as a member of a Governor's Task Force on Children. In 1989-93 she served as a member of the Alaska Sentencing Commission. She believes her experience working in rural areas in both criminal and civil justice will enable her to do a good job. Number 105 SENATOR TAYLOR thanked Ms. Holmes for her testimony. ART PETERSON, Commissioner-designee, highlighted his background. His experience as a legislative attorney, assistant attorney, and private practice attorney has given him a variety of perspectives on the Alaska government and court system. He believes the Commission is important, and he has always been committed to the idea of the independence and integrity of the judicial system. When the public perceives wrongdoing, it is essential to have a body to investigate the situation and make recommendations to the Supreme Court. SENATOR GREEN commented serving on the Commission must be extremely difficult. MR. PETERSON responded at times there are very difficult issues that come before the Commission, however the majority of complaints are handled by staff. Number 147 SENATOR TAYLOR stated a large percentage of the cases appearing before the Commission are filed by disgruntled litigants who are trying to find an excuse for the reason they lost a case. For the disgruntled litigants with valid causes, however, it is incumbent upon the Commission to investigate and use a great deal of discretion in the manner in which the task is approached. He stated he is somewhat suspect of a star chamber established primarily to act as both prosecutor and tryer of fact. Because that responsibility is so huge, it is a tremendous commendation that Commission members have always comported themselves very professionally. He added the same system is used on the legislative level with the establishment of the Legislative Ethics Committee. SENATOR TAYLOR thanked all of the participants for testifying. HB 38 SENTENCING;3RD SERIOUS FELONY OFFENDER PATTY SWENSON, staff to Rep. Bunde, sponsor of the measure, described HB 38. The bill provides a 40-99 year prison sentence for third-time class A felons. Discretionary parole and good time sentence reductions would not be available to those offenders, however they could request, from the court, a reduction in sentence after they have served the greater of one-half of their definite term or 30 years. HB 38 gives the prosecutors some discretion in the decision to pursue third-strike sentencing to avoid unjust results in certain cases where the evidence may be weak. The bill also allows prosecutors some flexibility to proceed with normal presumptive sentencing provisions when necessary. The legislation is crafted to keep costs to a minimum. Number 225 BARBARA BRINK, Deputy Public Defender, offered the following insight into the impact of HB 38 on the Public Defender Agency. HB 38 creates a class of defendants that can be subjected to a 40- 99 year mandatory term. Because it is without the possibility of parole, or a good-time provision, the bill creates the most severe penalty available in the states. Increased litigation will result, increasing costs to the Public Defender Agency in the following three ways. First, a person charged with a third-strike felony will want to go to trial. Unlike the Department of Corrections, which anticipates a fiscal impact down the road, the Public Defender Agency will be severely impacted immediately. Second, because of the consequences, these trials will involve extended investigations, lengthy trials, and expert witnesses. These cases will require the most skilled and experienced litigators and therefore the most expensive attorneys. Before a case can go to trial, the Public Defender Agency will have to do a collateral attack: it will have to scrutinize the prior strikes of the defendant to ensure constitutional validity. That will require review of volumes of material from previous cases. If any of the prior convictions were out-of-state, travel will be required, as well as contractual expenses, and appearances in court in other states if court action is necessary there. For the prior strike to count, the felony would have to have been committed in Alaska, there must have been a plea or constitutionally valid trial, and there must have been competent counsel. Third, more felony convictions will end up in trial, since nobody will want a first strike on their record: increased litigation will also arise in the first and second strikes. MS. BRINK continued. Currently 94 percent of all felony cases result in retrial. Even a single trial is an extreme drain on resources. For the District Attorney's Office, law enforcement, courts, judges, clerks, bailiffs, juries, etc., a single trial can consume weeks of time. The system is not capable of allowing every single criminal defendant to go to trial. With the three-strike law, the system would collapse upon itself. Plea bargaining results in convicts serving long jail sentences without the need for a trial. Three-strikes legislation has been used in other states without success. In California, the legislation has been on the books for one year and is straining the criminal justice system to the point of deadlock. It is clogging court calendars and forcing fewer prosecutions of other crimes. Previously in California, 90 percent of all felony cases were plea-bargained; now the number is less than 14 percent. The California three-strike law is broader than HB 38, the third strike can be any felony offense, however the California experience illustrates that the policy makers that passed the legislation consistently underestimated the impact the legislation would have. The expansion of HB 38, from 40-99 years, means that more cases will be filed than anticipated. Prosecutors tend to save 99 year sentences for the worst cases. Under HB 38, the prosecutor has to decide by arraignment in Superior Court whether it is a three-strike case. With violent crime rates lower, and little or no growth in the overall crime rate over the past two decades, the impetus for HB 38 needs to be examined. The largest number of inmates are 18-24 year old males, without high school diplomas, and unemployed. Education and prevention methods need to be discussed as alternatives. Number 353 SENATOR TAYLOR announced the committee would move the calendar back to confirmations, since Senator Miller arrived. SENATOR GREEN moved the Senate Judiciary confirmation report be sent out of committee with individual recommendations. There being no objection, the motion carried. Number 370 BRANT McGEE, director of the Office of Public Advocacy, concurred with Ms. Brink's testimony. He reiterated that each case will go to a lengthy trial and will not be subject to charge or plea bargaining. Prior convictions will be attacked by the defense in an attempt to eliminate a prior felony conviction. The financial impact on the Office of Public Advocacy will be substantial since it is likely the Public Defender Agency will be representing many of these people. SENATOR TAYLOR asked if the Public Defender Agency will have the choice of whether to make a collateral attack, if issues are available on previous convictions, or to plea bargain instead. MR. McGEE answered under Title 18 and the Rules of Professional Conduct, the Public Defender Agency is required to represent zealously any defendant whose case it is given by the court system. The Public Defender Agency must do what is best for the client, and a collateral attack will be one of the only ways to relieve the burden of the punishment. Frivolous attacks will not be pursued, but to determine whether a collateral attack is frivolous would require an exhaustive review of the prior felony case. Number 410 SENATOR TAYLOR stated he wanted, for the record, an explanation of the options available under this legislation, from people working in the field. He expressed concern that people who complain the Public Defender Agency is clogging up the courts assume the Agency has a choice in how to represent the defendant. MR. McGEE clarified the Public Defender Agency attorneys do not have any choices if they want to continue to practice law in Alaska. They have a constitutional and ethical responsibility to do whatever they can for their client. SENATOR TAYLOR asked if an attorney would be disbarred for not doing whatever he/she could. MR. McGEE replied a second lawyer would be hired to attack the first lawyer's performance, the costs skyrocket, and the courts are tied up even longer. Number 442 REPRESENTATIVE CON BUNDE provided the following testimony. HB 38 will cost money, but those costs are to protect citizens. The preference of the Public Defender Agency to plea bargain serious offenses, and allow those people back out on the streets, has created the revolving door problem. HB 38 allows for prosecutorial discretion, and will only be used in the most serious of cases. He discussed the discrepancy in the projected number of cases by different agencies, and in the fiscal notes. Supporters of the issue are willing to pay the price to keep the most violent felons off the street. They are not capable of being rehabilitated, and have been in the system twice already for five to fifteen years. As existing laws apply, they would go to jail for another 12 1/2 years for a third conviction. As the Department of Corrections' fiscal note indicates, there would be no fiscal impact for that time period since those offenders would be in jail during that time anyway. About 250 people are in jail for third felony convictions, and about 150 are in jail for subsequent felony convictions. He questioned the expense of letting these people back into society. Habitual criminals take a substantial amount of money out of the public coffer, at the expense of the public. That expense does not include the human tragedy they cause. Number 486 SENATOR TAYLOR commented his concern is that the legal systems in California and Washington State are breaking down because of this legislation. The result may be that fewer people would be prosecuted because of a lack of district attorneys. Prison overcrowding is already problematic. REPRESENTATIVE BUNDE reminded Senator Taylor that HB 38 is very different from the California and Washington laws. SENATOR TAYLOR noted the bill limits the provisions to class A felons, and has a ten year time limit, which are commendable provisions. However, he indicated professionals in the criminal justice system have no choice in the matter, since it removes discretion from the prosecutor and defender in the ability to bargain. Number 509 REPRESENTATIVE BUNDE responded the bill does allow for prosecutorial discretion, in that prosecutors are allowed to pick and choose the cases that are appropriate. SENATOR TAYLOR asked if there would be significant restrictions placed on prosecutors when choosing. REPRESENTATIVE BUNDE stated he believes the discretion would lie solely with the prosecutor as to whether the evidence and severity of the case warrants this charge. The prosecutor is limited by the type of crime when applying this sanction. After reviewing the case, the prosecutor would notify the court the habitual offender option was being sought. Number 526 SENATOR TAYLOR applauded Rep. Bunde for introducing the legislation, as it is a necessary tool, although he is concerned the ramifications of the bill are not yet understood. He added the idea is not new, most Western states had a habitual criminal law on the books for years and almost all of those states rejected that law. Many of the reasons for rejection were corrected in HB 38. Number 536 MARGOT KNUTH, Assistant Attorney General, stated the Department of Law favors the concept of treating repeat offenders more harshly, however the fiscal consequences of HB 38 are considerable. Section 15 removes the good time provision. The Department of Law believes there are two advantages to "good time." First, it motivates good behavior; its elimination will be a disincentive to cooperative behavior. Second, the amount of time accumulated under good time upon release, is time the person is under supervision by the Department of Corrections. This supervision cannot exist unless there has been some credited time. The supervision is a good way to reintroduce a parolee into society. For those reasons, the Department of Law would propose that Section 15 not be adopted. Number 566 SENATOR TAYLOR asked Ms. Knuth if she found anything in Ms. Brink's or Mr. McGee's testimony she would disagree with, from her experience. MS. KNUTH answered she did not; and agreed HB 38 will prompt more defendants to go to trial because he/she would have nothing to lose by doing so, and that it will require collateral attacks on prior felonies. Number 586 SENATOR TAYLOR asked Ms. Knuth to describe how an attorney would attack a conviction that had been established and firm for five years. MS. KNUTH stated the attorney would file a special pleading that initiates a new case, the purpose of which is to review the case for constitutional violations that may have occurred in the course of the prosecution. If any violations did exist, there would be a basis for vacating that conviction. A bill introduced by the Governor puts some restraints on repeat re-examinations of what the public considers to be final convictions. SENATOR TAYLOR gave the following example. A defendant pleads guilty to a second felony offense, and after serving the sentence, is picked up on another felony charge seven years later. The current attorney notes the defendant is Mexican, does not speak English very well, and was held in jail for three days. The attorney will challenge the prior conviction based on the defendant's Miranda rights. TAPE 95-29, SIDE B SENATOR GREEN asked if the Department of Law is assuming the "good time" provision would provide an incentive for good behavior for a third time felon. MS. KNUTH commented it is true that even a third time offender with a 50 year sentence believes that "good time" behavior will lessen the sentence by one-third. SENATOR TAYLOR stated he disagrees with the "good time" concept as it was invented to free up prison space. At a sentencing course at a judges' college he attended, with international participants, sentencing procedures were compared. In Australia a 20 year sentence means the prisoner will serve 20 years; if prisoners misbehave, their sentences are extended. In Alaska, prisoners are unpunished by early release, for crimes they already committed. Number 557 REP. BUNDE agreed with Senator Taylor's assessment of the "good time" provision, and noted that a person convicted of sexual abuse of a minor could serve as little as five years and be out on "good time." The notion that the parole system is successful is a misperception. These people are psychopaths and need to be isolated from the general population so that more people are not victimized. SENATOR TAYLOR asked for an estimate of the difference between current sentences for third time class A felons, and the sentence that would be received under HB 38. REP. BUNDE affirmed the average sentence for a third time serious felon is 12 1/2 years. Under HB 38, the convict would serve at least one-half, or 30 years, of the 40 - 99 year sentence. MS. KNUTH added the 12 1/2 year sentence is correct if a person is convicted of a single class A felony offense which has a maximum term of 20 years. Usually these defendants have committed multiple offenses with a series of consecutive sentences. The group most likely to fit within the parameters of HB 38 are serving 30 or more years already through consecutive sentencing on multiple convictions. SENATOR TAYLOR asked if that is why the fiscal note from the Dept. of Corrections is as low as it is. MS. KNUTH replied affirmatively. SENATOR TAYLOR asked if HB 38 would only apply to prospective felons. REP. BUNDE answered HB 38 has a ten year retroactive clause. Number 522 SENATOR GREEN asked on which conviction for those convicts currently serving long sentences, the sentence was imposed (the third or greater than third). MS. KNUTH explained it is on several convictions entered at the same time for a third time offender. There may be multiple victims, typically a sex offender commits several offenses before they are apprehended and charged. If convicted on all charges, part of the sentences are consecutive. SENATOR GREEN clarified it may be the person's first appearance in court but that person has been accused of several crimes. SENATOR TAYLOR referred to the retroactive clause on page 8 and clarified it only is retroactive for 10 years. REP. BUNDE added it only applies to three separate class A felony convictions, therefore it would not apply to a person convicted of raping three people as one charge. He stated a person convicted at the age of 25 would be free at age 45, under current law, yet research shows a person in their 60's is less inclined to violence. Number 482 SENATOR TAYLOR discussed a case in Florida in which a 17 year old youth plea bargained and received a 44 year sentence for a first offense. He was one of the people who shot the German tourists. The choice was to plea bargain and serve 44 years, or be prosecuted under the felony murder rule and face the death penalty. Number 464 MARGARET BERCK, representing the American Civil Liberties Union (ACLU), gave the following testimony. The ACLU is opposed to HB 38 for several reasons. This approach would be costly and is not the best use of limited expenditures in the criminal justice system. In response to comments made by previous witnesses, regarding a potential increase in the number of trials, she noted a previous client she represented chose to go to trial last December to prevent a "strike" in anticipation that HB 38 might pass. ACLU believes judges should have independence in judging individuals that come before them, to allow judges to take into account individual qualities when fashioning a sentence. HB 38 will cause greater resources to be applied to a smaller group of people. Aside from the increase in the number of trials, plea bargaining may be used to obtain an offense that would not be considered a "strike." She discussed another client who had prior felony convictions, although not class A felonies, who was sentenced to 61 years, with 20 years suspended. She commented HB 38 essentially sets up a very specific category of offenders and suggests mandatory sentencing ranges for those individuals, and may allow defense attorneys to argue for lesser sentences for other serious offenders. HB 38 may apply to other bodies of case law in unforeseen ways. She discussed the provision which prevents sentence modification unless one-half or 30 years of the term is served. She discussed a case of a terminally ill prisoner and explained HB 38 would preclude a judge from allowing relief in such a case. Number 357 SENATOR TAYLOR noted that provision is in Section 6, and commented the result of deleting that section would be the deletion of the one-half or 30 year provision, therefore a language change would be necessary. The intent would be to allow the court to make a discretionary choice for extraordinary circumstances. MS. BERCK stated she made her motions under Alaska Criminal Rule 35B. SENATOR TAYLOR asked Ms. Berck her opinion of the "good time" provision. MS. BERCK stated she would support providing inmates with motivation to comply with rules and regulations within the correctional setting, however she hoped a judge would take into account the "good time" allowance when determining the length of a sentence, or consecutive sentences. Number 296 SENATOR GREEN questioned the solution to repeat offenders who continue to commit serious crimes, if the three strikes approach is not used. MS. BERCK noted this approach spends a large amount of money on a small segment of offenders, albeit serious offenders. The increase in crime is caused by the young male population, and she feels tougher sentences initially, for crimes of a less serious nature, might be a successful alternative. Number 248 JERRY SHRINER, Special Assistant with the Dept. of Corrections, discussed the department's zero fiscal note. He pointed out that given the best of circumstances, if offenders were able to be released at the end of 30 years, the population covered by this bill would reach 450 people in 30 years. That number is higher than current prison capacity in the state. Under current sentencing practices, the same number of people will be in prison in 12 1/2 years, as that number tends to remain constant. The increase under HB 38 to 450 inmates in 30 years would be in addition to other increases in the prison population that may occur. A 450-bed medium to maximum security prison would cost at least $80 million in current dollars to construct, and $10-$12 million per year in operating costs. MR. SHRINER continued. Mandatory sentencing law studies have been conducted in several states and have yielded the following conclusions. In Delaware, with respect to drug and violent crimes, incarcerating repeat offenders has had no effect on the rise in the crime rate. Other factors are fueling the increase in crime. The Pennsylvania Commission on Correctional Planning has recommended all mandatory laws be repealed in favor of sentencing guidelines, to give more flexibility to judges to consider individual characteristics. In Oregon, a plan was adopted that recommended that any new programs focus on probation, parole, and intermediate sanctions. The Campaign for an Effective Crime Policy, a national organization comprised of 750 justice and correctional experts, concluded the streets are not any safer as a result of mandatory sentencing, and that the cost-effectiveness of incarcerating repeat offenders, from any perspective, is questionable. In states that have studied their mandatory sentencing laws, they have studied them from the standpoint of rising crime rates despite the incarceration of more habitual criminals. They also extended the studies to determine to what extent those sentences act as a deterrent to committing a crime. While 65 percent of offenders noted they were well aware of mandatory sentencing prior to their offense, only 25 percent actually considered it when making the decision to commit the crime. Number 157 SENATOR TAYLOR asked Mr. Shriner to contact John Rees, of the Corrections Corporation of America. That corporation owns the correctional facility in Arizona that Alaska has contracted with. The 500 bed facility took 5 1/2 months to complete at a cost of $14 million. He stated it would make no sense to build a prison in Alaska for $80 million. He asked Mr. Shriner what the cost of housing inmates at Spring Creek is. MR. SHRINER replied it cost in excess of $100 per day, per prisoner. He pointed out state facilities in Arizona cost $43 per day, and private facilities cost $59 per day. SENATOR TAYLOR moved the adoption of a conceptual amendment that would allow for judicial discretion to release prisoners under unusual circumstances (as proposed by Ms. Berck), in Section 6, page 3. There was objection to the amendment. The motion failed with Senators Green, and Miller voting "nay," and Senator Taylor voting "yea." SENATOR TAYLOR moved a second amendment suggested by MS. KNUTH, to delete Section 15. SENATOR GREEN objected to the motion. The motion failed with Senators Green and Miller voting "nay," and Senator Taylor voting "yea." SENATOR MILLER moved CSHB 38 (JUD)am out of committee with individual recommendations. There being no objection, the motion carried. HB 120 INDEMNIFICATION OF PUBLIC EMPLOYEES DANIELLA LOPER, staff to Representative Porter, sponsor of the measure, gave the following testimony. HB 120 requires the state or a municipality to provide legal defense for their employees in actions that occur during the scope of their employment. Employers would not be responsible for indemnifying acts of gross negligence or intentional or willful misconduct. Additionally, the employer would also be excused from indemnification when the case involves disciplinary, administrative or criminal matters brought against the employee. The implementation of HB 120 is already common practice, and most municipalities now indemnify their employees. Teachers are indemnified under AS 14.12.090. HB 120 is supported by the Department of Law, and many other organizations. A similar house bill died in the Senate Rules Committee last year. TAPE 95-30, SIDE A GAIL VOIGTLANDER, assistant attorney general, testified from Anchorage. She stated HB 120 is clear, and details scenarios when employees would be covered. SENATOR TAYLOR asked if HB 120 sets up a new civil cause of action on behalf of employees against employers. MS. LOPER noted that section was removed last year. She explained page 3, line 3 outlines how the employee would seek legal defense, and page 4, line 8, describes how an employee would handle denial of indemnification. SENATOR TAYLOR asked for clarification. MS. LOPER replied the employee would file for declaratory relief. There are no guidelines at this time, which is costing the state money. Number 065 SENATOR TAYLOR asked how HB 120 will save the state money since there is a letter agreement in place now. MS. LOPER stated that is common practice in most cases, but several witnesses testifying before the House Judiciary Committee commented the state is spending a lot of money because nothing is outlined. SENATOR TAYLOR asked whether the state is being charged money to defend employees it should not defend, or if the state is being charged for litigation when employees sue for failure to defend. MS. LOPER was unsure, but repeated if nothing is outlined, there could be claims made against the employer by the employee. MS. VOIGTLANDER commented the bill does not create a new cause of action, it merely sets forth, in statute, the public employers'/public employees' responsibilities. SENATOR TAYLOR questioned the need to put in statute, what has been common practice for years. He stated various labor unions have negotiated various deals with the state, and there is now a hold harmless provision in the bill that says if the labor negotiators negotiated a better deal, that would supersede the requirements in the bill. Number 203 STEPHANIE GALBRAITH, assistant attorney general, testified in support of HB 120. It clarifies the obligations between public employers and public employees. As litigation increases, more employees are being individually named in lawsuits. SENATOR TAYLOR asked Ms. Galbraith if she has an indemnification letter from her employer. MS. GALBRAITH answered no. [The remainder of Ms. Galbraith's testimony was indiscernible.] BRAD THOMPSON, director of the Division of Risk Management, explained the Division funds a self-insurance program for defending and indemnifying state employees, both those in the collective bargaining unit, and others without such contractual protections. Among those in the collective bargaining unit, there are several contracts with differing provisions. HB 120 codifies existing policies and procedures that the state does, and has provided, and is more explicit in employee participation. He described the state's policy regarding the scope of responsibility toward employees. Number 272 SENATOR TAYLOR asked how HB 120 will save the state money if it only codifies current practice. MR. THOMPSON did not believe there would be a significant savings, however it might help avoid the expense of a second counsel to resolve legal conflicts between the defense and counsel. SENATOR GREEN asked if this would be similar to errors and omissions coverage in other settings. MR. THOMPSON stated a professional practitioner may purchase a commercial E&O policy that contains similar terms and conditions. SENATOR GREEN asked if private employees would be likely to have such coverage. MR. THOMPSON replied the private employer, to protect his/her interests, most likely has procured a form of liability insurance. SENATOR GREEN asked about self-insurance. MR. THOMPSON noted the state self insures for the first $5 million. In prior years the state self-insured for differing amounts. SENATOR TAYLOR asked Mr. Thompson how long he has been with the Division of Risk Management. Mr. Thompson replied since January of 1981. SENATOR TAYLOR asked why the state is self-insured. Mr. Thompson stated it is more cost effective to do so. SENATOR TAYLOR commented that anyone who has the money runs away from that industry as quickly as possible and self insures. MR. THOMPSON added the state procures significant catastrophe insurance. Number 336 SENATOR GREEN asked if this bill was driven by labor negotiations. MR. THOMPSON believed the bill was conceived to address those employees named individually in civil litigation, as public employees, especially those without a labor agreement that addresses the defense practices provided to them. SENATOR GREEN asked if the original practice of an employer covering an employee resulted from a labor agreement. MR. THOMPSON replied it is normal for the employer to be liable for the act of the employee. SENATOR TAYLOR stated that his main concern is categorizing, and attempting to guess, all of the different ramifications that may occur in the employee/employer relationship. He repeated his concern that codifying something that has been in practice, with no benefit to each side, or cost saving, could create unforeseen problems. MR. THOMPSON explained the vast majority of states have specific legislation providing similar protections to their employees. Many states extend those protections down to the municipal government structure. He did not believe HB 120 would increase the exposure for public employers; it provides security for the employee. The state has operated a sophisticated self insurance program for years, however municipalities have not. A civil action against a municipal employee is rare, and is alarming when it occurs. SENATOR TAYLOR discussed three lawsuits against employees of his community in the past year. In each case, the insurance carriers had written letters of reservation against each of those employees and the city, reserving the right to make a claim against them. The insurance company then selected the attorney and decided when and if the cases would be settled. He did not see how HB 120 would be beneficial to his community. KEVIN RITCHIE, representing the Alaska Municipal League, testified in favor of HB 120. The bill reinforces the concept that if an employee was not involved in any wrongdoing, the employer will defend him/her. The way it can save time and money is by reassuring peace officers, and other people who have to make very important decisions, that they will be defended. In the case of insurance in small communities, the employee who does not have the assurance of coverage may hire his/her own attorney. That creates an additional legal expense for the employee, and in some cases pits the employee against the employer. He added the Alaska Municipal League provides an insurance pool for small communities. SENATOR GREEN asked about the University of Alaska. MR. THOMPSON noted it is self insured to a lesser level than the state. Number 430 SENATOR MILLER moved HB 120 out of committee with individual recommendations. SENATOR TAYLOR objected. The motion failed with Senators Adams, Taylor, and Green voting "nay," and Senator Miller voting "yea." HB 274 TUBERCULOSIS CONTROL The next item on the agenda was CSHB 274 (JUD). ELMER LINDSTROM, special assistant to Commissioner Purdue in the Dept. of Health & Social Services (DHSS), testified. HB 274 was introduced at the request of the Governor, as the result of several incidents this past year relating to the recent outbreak of tuberculosis in Alaska. In these incidents, highly contagious individuals were unable, or unwilling, to take their medication. Under existing statute, DHSS sought to require those individuals to take the medication. The existing statute does provide for quarantine. In one instance, DHSS was taken to court on the premise the existing law is deficient and does not provide the necessary due process guarantees for an individual subject to quarantine. At the advice of the Department of Law, HB 274 was drafted to establish due process rights, and allow DHSS to quarantine people in rare instances where people are unable or unwilling to take medication. An identical bill was introduced in the Senate (SB 138), and was heard in the Senate HESS committee. Identical committee changes were made to both versions. The two changes by the House Judiciary committee were to eliminate any reference to criminal penalties for individuals subject to quarantine. Second, an individual subject to these proceedings would be allowed to seek that any court proceedings be closed door proceedings. SENATOR TAYLOR felt CSHB 274 (JUD) to be a fine piece of legislation, but expressed concern that people can be put in jail for tuberculosis, but not for intentionally infecting others with AIDS. SENATOR GREEN moved CSHB 274 (JUD) out of committee with individual recommendations. There being no objection, the motion carried. HB 158 CIVIL LIABILITY SENATOR TAYLOR announced he would take testimony on the six court rule changes, requested by Senator Adams. He first took teleconference testimony. Number 521 DICK CATTENAUGH testified via teleconference from Anchorage. He stated HB 158 is supported by many organizations statewide. He discussed ways in which the current law hurts small businesses. Punitive damages are not covered by insurance policies, and can potentially destroy a firm and the individual owners of a firm. This can cause small firms to settle rather than fight a case, to minimize costs. In a case his firm was involved in, members did not want to put their personal net worths in jeopardy to prove they did no wrong. Number 565 DANIELLA LOPER, staff to Representative Porter, sponsor of HB 158, provided the highlights of HB 158. HB 158 creates a more equitable distribution of the cost and risk of injury and will reduce costs associated with the civil justice system in that it will eliminate duplicate recoveries for injured plaintiffs. It will establish thresholds for damage awards in order to allow predictability of liability exposure. It will also stabilize the rapidly escalating costs of health care associated with civil liability. It will require one-half of punitive damages awarded by a court be deposited to the general fund since punitive damages were never established to compensate the injured plaintiff, but rather to punish the wrongdoer. The Municipality of Anchorage supports HB 158. MS. LOPER gave the following sectional analysis. Section 2 deals with the statute of repose which prevents a lawsuit from being filed after eight years. Most states offer a statute of repose between four and six years. Exclusions to the statute of repose are as follows: product liability; hazardous substances; defective products; intentional acts of gross negligence; fraud or fraudulent misrepresentation; intentionally concealed acts; or undiscovered presence of a foreign body that has no therapeutic or diagnostic purpose. Number 595 SENATOR TAYLOR commented he was contacted by a woman representing 300 breast implant recipients. They are very concerned about potential health hazards resulting from those implants. He asked MS. LOPER how she would respond to those concerns, since many of those women received the implants more than eight years ago. MS. LOPER assumed breast implants would be considered a defective product. SENATOR TAYLOR noted the problems could also be caused by medical malpractice. TAPE 95-30, SIDE B MS. LOPER believed the defective product exclusion under the statute of repose would give that group an unlimited time in which to file a lawsuit. MS. LOPER explained Section 3 makes a technical change suggested by the Division of Legal Services. Section 4 provides for two years of accrual, the time from which an injury is discovered. Number 586 SENATOR TAYLOR asked if that provision would apply to women who had Dalkon Shields. MS. LOPER was unsure, but replied those products would be considered defective products under the statute of repose, therefore would be excluded. SENATOR GREEN clarified the person would have two years from the time symptoms appeared and the problem was discovered to file the suit, not two years from the time the Dalkon Shield was inserted. SENATOR TAYLOR noted he had a client who had a Dalkon Shield inserted ten years prior, and had given birth to two children, and had six miscarriages. She had been misdiagnosed for ten full years by 12 different physicians. The problem was discovered after surgery. MS. LOPER asked how the case turned out. SENATOR TAYLOR replied she found a contingency attorney to represent her against some very large insurance companies. MS. LOPER noted she was allowed to file the claim, and HB 158 would not change that ability. MS. LOPER explained Section 5 limits the non-economic cap on damages to $500,000 unless there is disfigurement. In most states, the limitations on non-economic damages range anywhere from $250,000 to $400,000. HB 158 has a two-tier system: there is a $300,000 cap on non-economic damages for pain and suffering, and if the injury is substantially more serious (defined in the bill), the cap would be $500,000 on non-economic damages. An amendment adopted on the House floor allows each child and the spouse in a family to file a claim for that amount. SENATOR TAYLOR questioned page 5, line 11, which allows the $500,000 amount for a person who has third degree burns over one- half or more of his/her body. If the burns do not cover at least one-half of a body, the limit would be $300,000. He noted he had third degree burns over 35 percent of his body 25 years ago, which was an extremely painful experience. MS. LOPER stated Senator Taylor's experience was unfortunate, however many quadriplegics and paraplegics support HB 158. She stated there must be some predictability to the system, and that non-economic damages should not be treated as a lottery ticket. A jury does not have anything substantial upon which to base the judgment, whether it is $300,000 or $500,000. In most cases in the state of Alaska, it is rare for non-economic damage awards to be above $200,000. She estimated in the past five years there have probably been less than five awards of $500,000. Number 508 SENATOR TAYLOR asked what the purpose of Section 5 is, in light of that fact. MS. LOPER responded the purpose is to offer predictability to the system. SENATOR TAYLOR questioned if the five awards she referred to were a reaction to passion on the part of the jury, rather than a meaningful decision. MS. LOPER stated that unlike economic damages, where there is a paper trail, and include economic, medical, and wage costs, there is unpredictability. SENATOR TAYLOR asked how Section 5 provides any certainty. MS. LOPER replied that would occur by the limit of $500,000 for non- economic damages. SENATOR TAYLOR ascertained the predictability would be in the fact that the plaintiff would not get an award from the jury commensurate with the damages the jury should award. He asked if the five awards of $500,000 made by juries that went "nuts" over the past five years is the unpredictability HB 158 attempts to curtail. MS. LOPER explained that any case that is filed in which an injury occurred is open to the lottery ticket of non-economic damages. SENATOR TAYLOR disagreed. Number 475 MS. LOPER described Section 6, dealing with punitive damages. Section 6 codifies punitive damages as defined by the Alaska Supreme Court: outrageous conduct, including acts done with malice or bad motives, or reckless indifference to the interest of another person. SENATOR TAYLOR asked, if that was the same standard of law to which Mr. Cattenaugh and his firm were to be held, so that when he made his decision about whether or not the firm was at risk for a punitive damage award, his attorneys would have advised him that the Alaska Supreme Court has determined it was outrageous conduct, including acts done with malice or bad motives, or reckless indifference to the interest of another person. He stated Section 6 does not change anything for Mr. Cattenaugh's firm concerning punitive damages. MS. LOPER stated that is correct, to the best of her knowledge. She stated there is no cap on punitive damages, but a formula is offered. MS. LOPER explained the formula for punitive damages in Section 6 is three times the compensatory damages (the economic damages plus non-economic damages), or $300,000, whichever is greater. SENATOR TAYLOR asked if a person had $1,000,000 in economic damages and $300,000 in non-economic damages, how much he/she could collect in punitive damages. MS. LOPER calculated the punitive damages could be $3.9 million. If the injured person was awarded no economic or non-economic damages, the amount could be $300,000. She explained of the $3.9 million punitive award, one-half would go to the state, the other one-half would go to the injured party. Number 439 SENATOR TAYLOR questioned the incentive for an injured party to request punitive damages, if one-half is given to the state. He asked if the state would pay for one-half of the attorney fees to get the punitive damage award. MS. LOPER replied the state has absolutely no standing, as stated in the bill, because punitive damages were never established to compensate the injured party, but to punish the wrongdoer. SENATOR TAYLOR asked who would pay for the attorney. MS. LOPER answered the attorney would base the contingency fee on the full amount before it is divided. Number 428 SENATOR TAYLOR discussed the following scenario. If the punitive damage award is $300,000 and the attorney takes the contingency fee (50 percent) off of the full amount, the attorney would receive $150,000. The injured party would then get $75,000, or one-half of the remaining award. MS. LOPER agreed, and repeated the reason is that punitive damages were not established to compensate the injured party; they were established to punish the wrongdoer. SENATOR TAYLOR stated under HB 158, the attorney would receive twice as much as the victim. MS. LOPER agreed, and noted an amendment on the House floor failed, but would have based the attorney's contingency fee on a percentage of the injured party's one-half portion. Number 408 SENATOR TAYLOR asked how many punitive damage awards have been awarded in the past five years in Alaska. MS. LOPER estimated the number was under ten, because the state of Alaska has one of the toughest standards for punitive damage awards. SENATOR TAYLOR asked if the punitive damage provision in HB 158 would apply to a case similar to the Exxon Valdez case. MS. LOPER replied that case was covered by federal law. SENATOR TAYLOR noted the state also filed suit. MS. LOPER believed any state suits filed would fall under the provisions of HB 158, if passed. SENATOR TAYLOR commented if a tanker spilled oil around Southeast, the damages would not be economic. MS. LOPER indicated economic damages were awarded in the Exxon Valdez case. SENATOR TAYLOR stated there were also punitive and non-economic damages, to cover the loss of environmental things, such as the ambiance. MS. LOPER noted, under maritime law, awards for non-economic damages cannot be made. SENATOR TAYLOR clarified that under maritime law there is a sailing to suitor's clause, which allows the injured party to bring the suit to either state or federal court. If the case is tried in state court, state laws apply, therefore, the injured party would be allowed to sue for non-economic damages. Under maritime law, there is a limitation on liability which is the value of the ship. MS. LOPER informed Senator Taylor that a bill passed the House in Congress and is working its way through the Senate, that limits non-economic damages to $250,000, and uses the same formula for punitive damages. SENATOR TAYLOR ascertained the state received $50 million from the Exxon Valdez case, for "restitution." MS. LOPER stated those punitive damages will be going to the injured parties, not to the state. SENATOR TAYLOR noted a company owning a leaky oil tanker would support the bill in Congress. Number 359 MS. LOPER explained Section 8 clarifies the plaintiff is the only party that can choose to take periodic payments. Security should be posted, and self-insured municipalities would be excluded. SENATOR TAYLOR asked for the definition of an "authorized insurer." MS. LOPER assumed it would be an insurance company that could offer enough money not to cause the court any problems for any kind of security to be posted. SENATOR TAYLOR stated it means people who are authorized to sell insurance in the state of Alaska. MS. LOPER offered to obtain the statutory definition. MS. LOPER discussed Section 9 which offers inflation adjustments for periodic payments, so that the court will specify the percentage or method for increases of future periodic payments to cover inflation. She added it will prevent future litigation for adjustment of the original award. SENATOR TAYLOR asked Ms. Loper if she had any money invested between 1976 and 1980. He remarked that had the best experts been hired in 1975 to determine an inflation rate for an award, they would have been wrong. MS. LOPER commented there was not even a provision in current law that adjusted future payments by anticipated inflation, so this section was added for the benefit of the injured plaintiff. She guessed the plaintiff could request the periodic payment schedule be amended if inflation rates changed radically. MS. LOPER described the collateral benefits section (Section 10). Most of the section is current law, except for the fact that plaintiffs would not be able to recover duplicate amounts received from collateral sources. It provides exceptions for certain collateral sources that are subrogated to the claimant, and for death benefits and worker compensation benefits. It allows a person defending a defendant to introduce evidence of amounts received from certain collateral sources and prohibits a person who provides a collateral benefit that is introduced into evidence from recovering that amount from the claimant or being subrogated the rights of the claimant. SENATOR TAYLOR asked how that would apply to a construction worker who was badly injured on the job due to an improperly manufactured DA cap. The worker begins to receive worker compensation payments and brings suit against the third party for negligence. MS. LOPER stated workers compensation benefits cannot be introduced as a collateral benefit (lines 25-29, page 7). SENATOR TAYLOR noted that is convenient for the insurance company defending because that way the jury would not hear about how much money was paid by workers compensation to keep the worker alive before the suit was settled. MS. LOPER noted it is similar to Civil Rule 411. If the workers compensation benefit was $100,000, and the third party's damages for negligence amounted to $200,000, the workers compensation award could not be introduced as a collateral source. If the workers compensation award was for $300,000, he/she would have to pay the employer $100,000 for the workers compensation, and would keep $200,000. SENATOR TAYLOR asserted the jury would not know the worker owed the $100,000 bill that would have to be paid. He asked what other sources the jury could be informed of. MS. LOPER replied medical benefit payments could be disclosed. SENATOR TAYLOR answered if a person is responsible enough to purchase an insurance policy to cover his/her own injuries, even though the other party was negligent, they could claim they did not owe the claimant that amount. MS. LOPER gave the following example. An employee is covered by health insurance by the employer, and is involved in an accident (not job related) and breaks a leg. The hospital bill is $50,000. Her medical insurance covers 80 percent of the $50,000. The jury awards $100,000. Even though the medical benefit was paid for by the insurance company, the employee would pocket that money. SENATOR TAYLOR asked what kind of policy would allow that since the carrier would sue for payment. Under state health care coverage, if the state covers medical bills, the injured party is required to sue the negligent party or the state can terminate health care coverage. The state does not pay attorney's fees for the law suit. Most insurance carriers have a similar provision in their contracts. SENATOR TAYLOR clarified under Section 10, the jury would be informed that the injured party received $50,000 from the employer, to prevent the injured party from receiving a judgement of $100,000. MS. LOPER stated plaintiffs are overcompensated all of the time; they are not repaying the insurance company. SENATOR TAYLOR asked MS. LOPER if she had any evidence to cite. She stated she did it herself. SENATOR TAYLOR noted if she was reimbursed for $100,000, the negligent party would essentially get credit for the $50,000 paid by the employer. MS. LOPER asserted collateral benefits are not designed to punish the wrongdoer, that would be paid under punitive damages. SENATOR TAYLOR remarked that if the award was for $100,000, and the jury was informed the insurance company paid $50,000 in medical bills, the difference would be $50,000 paid to the injured party, and the wrongdoer would essentially be rewarded by not having to pay the medical costs. Number 076 MS. LOPER responded everyone bears the cost in the increase of insurance rates. An injured party could punish a drunk driver under punitive damages, collateral benefits were never designed to offer duplicate recoveries to the injured party. SENATOR TAYLOR believed the employer has the right to be reimbursed for the cost of medical expenses paid by the employer, which will keep rates down. MS. LOPER replied it basically sets up a no-fault state. The intent of the section is to stop the overcompensation of plaintiffs. TAPE 95-31, SIDE A SENATOR TAYLOR argued that punitive damages cannot be relied on, since they are very rarely awarded, and one-half would have to be paid to the state under HB 158. Also, punitive damages are not covered by an insurance policy. He repeated that if Aetna paid $50,000 in medical bills, and the injured party sues, Aetna would be entitled to repayment. If the judgement was $100,000, Aetna would be repaid $50,000, and the attorney's contingency fee of 30 percent would amount to $30,000. The remainder of $20,000 would go to the injured party. SENATOR TAYLOR explained that under HB 158, under the collateral rule, the amount of the award would be $50,000, of which 30 percent would be paid to the attorney ($17,000) but $50,000 would still be owed to Aetna. Number 295 SENATOR TAYLOR commented he did not understand why the sponsor would want to deprive the insurance carrier who did no wrong, from being able to seek subrogation and restitution. He noted this provision would work well for a millionaire since one's own money is not considered a collateral source. MS. LOPER said an indigent person would collect the same amount as the millionaire. SENATOR TAYLOR asked how the working class person would be affected by the collateral source provision. MS. LOPER answered if the person was insured, there would be no subrogation, and the person would have to show that some compensation had been made, and that the injured party did not pay the hospital bill out of pocket. SENATOR TAYLOR repeated his concern that the collateral source provision allows the "bad" guy to take credit for the "good" guys coverage. MS. LOPER replied she views the situation from the standpoint of returning the injured party to where they were prior to the accident. From that perspective, she believes the collateral benefits section in current law overcompensates the injured party. SENATOR TAYLOR asked for data on the amounts of overcompensation awards. MS. LOPER explained Section 11. It deals with the apportionment of fault by bringing in all parties responsible for the accident. It does away with joint, civil liability. In Section 11 the phrase "party to person" is removed and the clause, "or other person responsible for the damages to each claimant regardless of whether the other person, including the employer, is or could have been named as a party to the action" is added. That would stop the practice of going after the person with the deep pocket by naming each person responsible for the accident as a party to the action, including the employer. This section would reverse the Lake v Construction decision. Section 12 further delineates the apportionment of fault. MS. LOPER stated when the injured party brings a claim to court, all parties that have a percentage of fault must be named, instead of just naming one that is insured for the largest amount. SENATOR TAYLOR asked if this provision would result in multiple litigation which would increase costs, as opposed to suing the two most liable parties. MS. LOPER replied all people responsible for the act would be sued. SENATOR TAYLOR stated the defendant has always had the right to name and bring into the suit all parties involved. He added if a person was hit by two cars and the accident resulted in a pileup, the injured party would have to sue all cars involved, and the state for poor road maintenance, rather than the two drivers who were primarily responsible for the accident. He questioned the increased amount of court time the provision would create. MS. LOPER stated she believes it is fair and just to name all those responsible for the accident, rather than allow those who have no insurance to walk away from a case. SENATOR TAYLOR claimed the defendant would bring in other responsible parties, rather than taking sole responsibility. MS. LOPER believed the issue to be a policy call and that Senator Taylor is saying the defendant should take full responsibility, even though he/she is only 10 percent at fault, but has the most insurance coverage. SENATOR TAYLOR clarified that under current law, a wealthy contractor who is being sued, but is only responsible for 10 percent of the damages, would have his attorneys bring the other defendants into court. He stated Section 12 forces the injured victim to figure out who all of the actors were, down to the smallest percentile of liability. MS. LOPER reiterated Section 12 is designed to prevent the plaintiff from suing one party only because that party has the most money. MS. LOPER explained Section 13 allows either party to make an offer to settle a claim up to 10 days before a trial begins. The offer must be accepted within 10 days and recorded by the clerk of the court. Section 14 deals with prejudgment interest and changes the interest rate from the fixed amount of 10.5 percent, to a floating rate, three percent above the Federal Reserve District discount rate. SENATOR TAYLOR asked if the prejudgment interest is determined on the date the process is served, rather than the date of injury. MIKE LESSMEIER, State Farm Insurance, clarified it would be determined on the date of written notification by the claimant, which could be the date of injury. Section 15 disallows the payment of prejudgment interest for future economic damages, future non-economic damages, or for punitive damages. MS. LOPER stated Section 16 makes a technical change to current law and includes all of the provisions in HB 158 in the Uniform Arbitration Act. Section 17 requires medical expert witnesses to meet certain standards. SENATOR TAYLOR asked if a general practitioner would be unable to testify to previous malpractice by a specialist, since that practitioner was not trained in that particular discipline. MR. LESSMEIER noted the general practitioner would be allowed to testify. SENATOR TAYLOR asked for evidence of cases in which the court has allowed a doctor, not familiar with a specific discipline, to testify on that discipline. MS. LOPER stated Section 18 defines the terms "professional negligence" and "professional services" as used in HB 158. She noted at one time there was a specific statute of limitations and repose for health care providers, but that section was eliminated in the House Finance Committee. SENATOR TAYLOR added AS 09.55.560 contains a definition of health care providers by listing each. MS. LOPER described Section 19 as providing clarification of circumstances in which hospitals are held directly liable for the actions of a health care provider not employed by the hospital. Current law permits a claimant to sue only the hospital, rather than the doctor as an independent contractor, who may have less ability to pay. SENATOR TAYLOR asked if current law only permits the claimant to sue the hospital. MS. LOPER replied under current law the claimant can sue both the doctor and the hospital. She added the state of Alaska does not require doctors to carry insurance. SENATOR TAYLOR stated that resulted from the first tort reform movement. Doctors complained they could not purchase insurance at a reasonable rate, so MICA was created which doctors had to join. The state was sued by doctors who were able to find less expensive insurance, so they did not have to be covered under MICA. Since that time, the state has not been able to require doctors to have malpractice coverage. SENATOR TAYLOR commented line 29 defines when a doctor is an independent contractor. MS. LOPER noted the definition is on page 11, line 19. SENATOR TAYLOR believed the definition classifies an independent contractor as a welcome trespasser. MS. LOPER noted the definition is further defined by the list of "health care providers" on line 14, and the hospital will always be liable for the hiring of an independent contractor if it was negligent in its hiring practices. Section 19 also requires the independent contractor to give notice of limited liability, posted in all admissions areas and in area newspapers annually. TAPE 95-31, SIDE B SENATOR TAYLOR asked what that notice will mean to a patient. MS. LOPER replied the only control a hospital administrator has over a physician is in the hiring process. SENATOR TAYLOR stated as a hospital attorney, he got rid of five doctors, and had their licenses pulled. He stated a good hospital board and administrator will regularly engage in peer review and will not cover for incompetent doctors. He noted if the hospital in Tampa, where several tragedies have recently occurred, had hired those doctors as independent contractors, the hospital would have no liability to any of the victims. MS. LOPER replied the hospital would not be liable if it believed the doctors were competent when they were hired. SENATOR TAYLOR asked how the hospital board would know if the doctor was incompetent until he/she did an incompetent act. MS. LOPER believed the hospital board would investigate a doctor's background, and added if the hospital was negligent in hiring a doctor, it would be liable. SENATOR TAYLOR stated mistakes are considered negligence, and if a good surgeon makes a mistake, the hospital would not share the liability. He discussed the heart surgeon in Portland, Oregon who made fatal errors in two heart transplant operations in one year, and how a notice of limited liability would be of little help to the families of those victims. MS. LOPER stated Section 20 prevents a person from suing if the accident occurred while in the act of committing a felony. SENATOR TAYLOR stated this section resulted from testimony in the House Finance Committee about several young men who were attempting to paint numbers on the roof of a high school as a prank, and one of the men fell through a skylight and was disabled for life. He was awarded several hundred thousand dollars because the skylight was painted black and was difficult to see. He asked if this provision was originally written to include any crime. MS. LOPER replied the crime must be a felony. SENATOR TAYLOR clarified the section has been tightened since it now includes a person who attempts to convict a felony and not only a person convicted of committing a felony. MS. LOPER explained Section 21 is fashioned after Civil Rule 11. It is an attempt to stop frivolous lawsuits from being filed. If there is a violation, monetary sanctions of up to $10,000 shall be imposed. SENATOR TAYLOR questioned whether a similar provision exists in the rules of court. MS. LOPER stated affirmatively, but noted there are no monetary sanctions. SENATOR TAYLOR stated it is his understanding there are no limits, either. He asked what the purpose of placing this provision in statute is. MS. LOPER repeated the court rule does not specify monetary sanctions against the attorney. SENATOR TAYLOR stated this provision caps the amount the attorney can be charged. MR. LESSMEIER commented Rule 37 allows sanctions. MS. LOPER added Section 21 provides one option, a larger sanction could be obtained using Rule 37. MS. LOPER stated Alaska Rule of Civil Procedure 95 was amended in Section 21. SENATOR TAYLOR noted that instead of changing the Rule which would require a two-thirds majority vote, the statute is changed, which has the effect of changing the rule. SENATOR TAYLOR asked Ms. Loper to provide the requested information as soon as possible, and adjourned the meeting at 6:26 p.m.