Legislature(2003 - 2004)
03/17/2004 08:02 AM Senate JUD
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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.
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