Legislature(1995 - 1996)
03/12/1996 01:35 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Surveyors 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 carried. 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 should. 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 substitute. 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.