Legislature(1995 - 1996)

03/12/1996 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE LABOR AND COMMERCE COMMITTEE                              
                         March 12, 1996                                        
                           1:35 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator Tim Kelly, Chair                                                      
 Senator John Torgerson, Vice Chair                                            
 Senator Judy Salo                                                             
 Senator Jim Duncan                                                            
  MEMBERS ABSENT                                                               
 Senator Mike Miller                                                           
  COMMITTEE CALENDAR                                                           
 CONFIRMATION HEARINGS:                                                        
 Alaska State Board of Public Accountancy                                      
  Dean W. Nelson and Joanne Stoots                                             
 Alcoholic Beverage Control Board                                              
  Evelyn Beeter, Bert L. Cottle, Ellen Ganley, Robert J. Klein,                
  Joseph J. Thomas, Jr.                                                        
 State Board of Registration for Architects, Engineers, and Land               
  Byron Haynes, Jr. and Ernie Siemoneit                                        
 Board of Clinical Social Work Examiners                                       
  Beverly Haywood                                                              
 Board of Dispensing Opticians                                                 
  Mary C. Seutter                                                              
 Alaska Labor Relations Agency                                                 
  Raymond P. Smith                                                             
 Board of Marital and Family Therapy                                           
  Mercy Dennis, Dixie Hood, Sandra Samaniego                                   
 Board of Certified Direct-Entry Midwives                                      
  Marilyn Holmes                                                               
 Board of Nursing                                                              
  Josephine Malemute                                                           
 Occupational Safety and Health Review Board                                   
  Timothy Sharp                                                                
 Board of Pharmacy                                                             
  Chris Coursey                                                                
 State Physical Therapy and Occupational Therapy Board                         
  Leslie F. Schwartz                                                           
 Board of Psychologist and Psychological Associate Examiners                   
  Gail Shortell                                                                
 Real Estate Commission                                                        
  Ruth Blackwell, Linda Freed, Eleanor Oakley, Clair Ramsey,                   
  Larry Spencer                                                                
 Alaska Public Utilities Commission                                            
  Sam Cotten and G. Nanette Thompson                                           
 Alaska Workers' Compensation Board                                            
  Harriet Lawlor, Nancy Ridgley, James Williams, Dorothy                       
  Bradshaw, Philip Ulmer                                                       
 SENATE BILL NO. 186                                                           
 "An Act relating to partnerships; amending Alaska Rules of Civil              
 Procedure 20 and 24; and providing for an effective date."                    
 SENATE CS FOR CS FOR HOUSE BILL NO. 158(JUD)                                  
 "An Act relating to civil actions; amending Rules 68, 82(b), and              
 95, Alaska Rules of Civil Procedure, repealing Rule 72.1, Alaska              
 Rules of Civil Procedure, and amending Rule 601, Alaska Rules of              
 Evidence; and providing for an effective date."                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 186 - See Labor and Commerce minutes dated 2/8/96, 2/29/96,                
       and 3/7/96.                                                             
 HB 158 - See Judiciary minutes dated 5/3/95, 8/21/95, 8/23/95,                
          8/24/95, 8/25/95, 2/9/96, 2/19/96 and 2/28/96.                       
 WITNESS REGISTER                                                              
 Sherman Ernouf                                                                
 Senate Labor & Commerce Committee Aide                                        
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Commented on SB 186.                                   
 Peter Denn                                                                    
 Alaska Society of CPAs                                                        
 %Belloit and Touche                                                           
 550 W. 7th, Ste. 1500                                                         
 Anchorage, AK 99501                                                           
  POSITION STATEMENT:   Commented on SB 186.                                   
 Daniella Loper                                                                
 Legislative Aide to Representative Porter                                     
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Commented on HB 158.                                   
 Chuck Achberger                                                               
 Senate Judiciary Committee Aide                                               
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:   Commented on HB 158.                                   
 ACTION NARRATIVE                                                              
 TAPE 96-18, SIDE A                                                            
 Number 000                                                                    
 CHAIRMAN TIM KELLY called the Senate Labor and Commerce Committee             
 to order at 1:35 p.m. and announced the committee would take up the           
 confirmations as the first order of business.                                 
 SHERMAN ERNOUF read the list of confirmation nominees to committee            
 members.  SENATOR KELLY asked if the committee has received any               
 questions about the nominees.  MR. ERNOUF replied it had not.                 
 SENATOR KELLY noted the names had been posted for the past week.              
 There being no questions from committee members, SENATOR TORGERSON            
 moved to adopt a letter from the committee in support of the                  
 nominees for confirmation.  There being no objection, the motion              
             SB 186 LIMITED LIABILITY PARTNERSHIPS                            
 SENATOR KELLY announced  SB 186  to be up for consideration and               
 informed the committee a committee substitute had been prepared.              
 MR. ERNOUF explained the proposed committee substitute contains the           
 suggested amendments from the Division of Banking.  The amendments            
 are administrative to keep filing procedures consistent with the              
 procedures for corporations, limited liability partnerships, and              
 limited liability companies.  One additional technical change                 
 needed to be made, but otherwise, all interested parties agreed               
 with the changes made.                                                        
 PETER DENN stated on page 8, lines 13 and 14, of the work draft,              
 the phrase, "unless the context indicates otherwise" was not                  
 removed from the bill, as was the intent expressed at the committee           
 meeting with members of the banking industry and CPAs.                        
 SENATOR SALO asked if it should read, "partnership includes a                 
 registered limited liability partnership;."  MR. DENN replied it              
 SENATOR TORGERSON moved the committee adopt CSSB 186(L&C).  There             
 being no objection, the motion carried.                                       
 SENATOR KELLY asked if there was any opposition to CSSB 186(L&C).             
 MR. ERNOUF believed former problems were corrected in the committee           
 SENATOR KELLY clarified that the removal of line 14 was                       
 incorporated into the committee substitute as an amendment.                   
 SENATOR TORGERSON moved CSSB 186(L&C) as amended out of committee             
 with individual recommendations.  There being no objection, the               
 motion carried.                                                               
         SB 253 INSURANCE FOR PROSTATE CANCER TESTING                        
 SENATOR SALO moved SB 253 out of committee with individual                    
 recommendations.  There being no objection, the motion carried.               
                    HB 158 CIVIL LIABILITY                                    
 DANIELLA LOPER, staff to Representative Porter, prime sponsor of HB
 158, gave a sectional analysis of the House version.  Section 2               
 creates a time limit for any civil action to 8 years, under the               
 statute of repose.  Section 3 clarifies existing law, which sets              
 statutory liabilities to two years for particular actions.  Section           
 4 deals with limitations on actions involving injury to personal              
 property, and is based on an accrual method.  Section 5 limits non-           
 economic damages to $300,000 and for other specified injuries,                
 $500,000.  Claims for wrongful death are also included in Section             
 5.  Section 6 addresses punitive damages and was taken from the               
 latest Alaska Supreme Court case and defines that decision in                 
 statute.  Section 7 contains a formula for the award of punitive              
 damages, which is three times the amount of non-economic plus                 
 economic damages.  There is no ceiling on the amount that can be              
 awarded for economic damages.  Section 8 exempts the state, self-             
 insured municipalities, and authorized insurers from posting                  
 security for periodic payments.                                               
 Number 199                                                                    
 MS. LOPER continued saying that section 9 deals with inflation                
 adjustments for periodic payments and provides for a floating                 
 interest rate.  Section 10 requires the jury be informed of                   
 compensation the plaintiff has received, for example medical                  
 benefits.  This requirement does not apply to federally funded                
 programs which must seek repayment or death benefits under a life             
 insurance policy or workers' compensation.  The apportionment of              
 fault provision in Section 10 was taken from a Supreme Court Case             
 called the Brenner Case, and apportions fault to every person                 
 responsible for the party's injuries rather than just those named             
 in the lawsuit.  Section 10 was included to prevent the deep pocket           
 syndrome for entities that carry large policies.   Section 11 is              
 based on the premise that offers of judgment inhibit the filing of            
 cases and clog up the court system.  This section expands the offer           
 of judgment provision so that if an offer made is within five                 
 percent of the judgment rendered by the jury, then the person who             
 denied the offer will have to pay the other party's costs and                 
 attorney's fees.  Section 12 sets prejudgment interest at three               
 percent above the 12th Federal Reserve District discount rate in              
 effect on January 2.  Interest may not be awarded on future                   
 economic, non-economic, or punitive damages.  The section (19) on             
 civil liability of hospitals for non-employees requires those                 
 employees to post notice of whether they carry insurance.                     
 Number 249                                                                    
 MS. LOPER continued saying section 20 prohibits a felon from                  
 recovering damages from civil litigation if those damages resulted            
 from the commission of the felony.  Section 21 pertains to signing            
 of pleadings, motions, and sanctions, and was not deleted from the            
 Senate Judiciary Committee version.  It provides for sanctions                
 against the plaintiff's attorney or the person who signed the                 
 pleadings or motions if in summary judgment the case is found to be           
 frivolous.  Section 16 of the House version provides for                      
 arbitration but does not mandate it.  Section 17 applies to medical           
 expert witness qualifications to ensure that any person testifying            
 against a health care provider be licensed.  The House version does           
 not contain a mandatory rate rollback, and the act takes effect               
 upon passage.  Representative Porter does not support a mandatory             
 rate rollback because of the numerous court cases in California               
 resulting from tort reform legislation.  The House version                    
 definitions of professional negligence, services, and malpractice             
 actions are directly related to health care providers.                        
 Number 292                                                                    
 CHUCK ACHBERGER, Senator Judiciary Committee aide, explained the              
 Senate Judiciary Committee version of HB 158.  The statute of                 
 repose was increased to 15 years to bring it in line with existing            
 rules in the court system.  The statute of repose covers not only             
 physicians, but contractors, architects, and engineers.  Because              
 bank loans are usually for 20 to 30 years on a building, the eight            
 year statute of repose was not long enough to provide for bank                
 confidence when making loans.  Certain statutory liabilities remain           
 the same, as well as limitations on actions.  Section 5,                      
 noneconomic damages, was deleted from the Senate Judiciary version            
 because it was difficult to adjust for environmental damages in the           
 bill.  Fishing groups involved in the Exxon Valdez cleanup                    
 questioned whether that section would limit environmental damages             
 to $300,000.  Because there was no way to resolve that problem, the           
 section was deleted.                                                          
 MR. ACHBERGER noted an additional change to the statute of repose             
 on page 3, lines 27 and 28, was the removal of the words                      
 "undiscovered presence" and "that has no therapeutic or diagnostic            
 purpose or effect...."                                                        
 MR. ACHBERGER said the award for punitive damages sections in both            
 versions of the bill is the same, as well as the definition of                
 punitive damages.  Regarding the section that exempted the state,             
 municipalities  , and insurance companies from posting security, that         
 provision was deleted because the plaintiff would have no                     
 protection if one of those entities filed for bankruptcy.                     
 Additional language in that section did not require payments to be            
 made when due was also deleted.  Inflation adjustments were not               
 changed in the Senate Judiciary version.  The collateral benefits             
 section was deleted from the Senate Judiciary  version because                
 medical bills and other expenses paid by the injured party or                 
 his/her family during recovery would be subtracted from the amount            
 of the settlement.                                                            
 Number 365                                                                    
 MR. ACHBERGER discussed the apportionment of fault provision.  In             
 the Senate version, fault can only be apportioned to those people             
 within the court's jurisdiction.  The offer of judgment provision             
 requires all defendants to join in an offer, otherwise no offer can           
 be made.  Prejudgment interest is pegged to five year treasury                
 notes to be more representative of conditions in the marketplace at           
 the time of the incident.  In Section 15, doctors who are not                 
 employed by a hospital must carry $2,500,000 per incident in                  
 liability coverage, otherwise the hospital is responsible for                 
 liability coverage.  The amount, per incident was originally set at           
 $5,000,000, but after taking testimony, was reduced to $2,500,000.            
 The section covering damages resulting during the commission of a             
 crime is the same as the House version.  Section 17, on pleadings,            
 motions and sanctions, is also the same as the House version.                 
 MR. ACHBERGER explained that the section requiring mandatory                  
 arbitration, in the Senate version, for cases under $100,000 should           
 accommodate 90 percent of all tort cases, according to research               
 statistics and should lower costs and expedite efforts.  The expert           
 witness qualification provision was broadened to apply to all                 
 professionals, not just medical professionals.  This would require            
 an expert testifying against a professional in any field.  The                
 mandatory rate rollback provision is Senator Adams' amendment.  The           
 amount of ten percent has been debated; the intent is to ensure               
 that insurance companies reduce rates.  The definition of                     
 professional negligence was changed to pertain to all professional            
 services, not just medical services.                                          
 Number 380                                                                    
 SENATOR KELLY asked if the House version offer of judgment                    
 provision is designed to prevent a party from holding out on a                
 settlement to get a larger amount.                                            
 MS. LOPER replied that too often the defendant will try to settle             
 with the plaintiff, and will make an offer, but the offer will be             
 declined while the plaintiff holds out for more.   Also, a wealthy            
 defendant might refuse to make an offer and continue to pursue                
 litigation to exhaust the other party.  This section would require            
 the plaintiff to pay for the defendant's attorney's fees if the               
 jury award is within five percent of the offer.                               
 MR. ACHBERGER noted the Senate version removed the multiple offers            
 of judgment so that the group would have to agree among themselves            
 as to the settlement before making the offer.                                 
 SENATOR KELLY asked if the word "judgment" implies that the judge             
 or jury has made a finding of x number of dollars, but the                    
 plaintiff will not accept that amount of money and chooses to                 
 continue the case.                                                            
 MS. LOPER stated that is correct.                                             
 MR. ACHBERGER believed it is in a pretrial situation, where one               
 party wants to settle beforehand to avoid a trial.                            
 SENATOR KELLY clarified that is when the judgment is determined,              
 and if the judgment is within five percent of the offer, one party            
 pays the other's attorney fees.                                               
 SENATOR SALO asked how "frivolous" would be determined under the              
 signings and pleadings section.                                               
 MS. LOPER responded the definition of "frivolous"  and                        
 "unwarranted" is in the court rules.                                          
 SENATOR KELLY announced the bill will be brought up again on                  
 Thursday, in order to move it out, and that the bill has further              
 referrals to the Senate Finance and Senate Rules Committees.  He              
 adjourned the meeting at 2:07 p.m.                                            

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