Legislature(1995 - 1996)
01/11/1996 01:30 PM Senate L&C
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* first hearing in first committee of referral
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SENATE LABOR AND COMMERCE COMMITTEE
January 11, 1996
1:30 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice-Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 119
"An Act requiring conciliation panel review in a civil action
against an architect, engineer, or land surveyor; and providing for
an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 119 - No previous action to record.
WITNESS REGISTER
Senator Loren Leman
State Capitol Building
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 119
Richard Ritter
American Institute of Architects
800 Glacier Ave.
Juneau, AK 99801
POSITION STATEMENT: Supported SB 119
Chris Christensen
Alaska Court System
303 K Street
Anchorage, AK 99501-2084
POSITION STATEMENT: Supported concept of SB 119
Mike Tauriainen
P.O. Box 937
Soldotna, AK 99669
POSITION STATEMENT: Supported SB 119
Colin Maynard
1400 W. Benson, Suite 500
Anchorage, AK 99503
POSITION STATEMENT: Testified on SB 119
ACTION NARRATIVE
TAPE 96-2, SIDE A
Number 001
SB 119 MANDATORY MEDIATION/DESIGN PROF LAWSUITS
CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting
to order at 1:30 p.m. and announced SB 119 was up for
consideration. He noted all members were present, except Senator
Duncan, who arrived at 1:31 p.m.
SENATOR LEMAN, sponsor of SB 119, explained the measure
incorporates alternative dispute resolution into the process of
settling disputes. It does not remove the ability of the aggrieved
parties to seek judgment in court, but does allow the court to
appoint a three-member conciliation panel consisting of a member of
the design profession, an attorney, and a person involved in
alternative dispute resolution. The panel would hear the case,
through a more informal process, and render one of four judgments,
specified in SB 119. One of the judgments would determine whether
the case had merit, so that if it did not, it would be more likely
that a judgment would be found against a party bringing a frivolous
case to court. This concept is in place in seven states, and other
states are considering similar legislation, to reduce the court
system backlog, and to reduce costs associated with litigation.
Number 052
SENATOR SALO asked if the purpose of the panel would be to decide
whether the case merits court action or to actually recommend
solutions to the disagreement. SENATOR LEMAN reiterated there are
four conclusions the panel could reach, specified in SB 119. He
reviewed those conclusions. He added other states have found that
enactment of similar legislation has reduced the number of cases
that are litigated.
Number 088
SENATOR SALO questioned whether the panel would act as a legal
advisory panel, deciding whether or not a case has merit, or
whether it would have the latitude to determine whether reparative
work should be done. SENATOR LEMAN answered that would depend on
how the panel was set up. He explained it could make such a
determination informally.
Number 110
SENATOR KELLY clarified that if the parties do not agree to the
panel's recommendation, either party can litigate, and the panel's
decision would not be admissible in court, therefore the parties
would be starting over. SENATOR LEMAN explained the panel would
use a less formal procedure than what is required in a court case.
SENATOR KELLY stated it would set out each party's position which
would give the parties a better opportunity to determine the
outcome of litigation. The panel's recommendation could act as a
deterrent to further action by the unfavored party.
Number 130
SENATOR LEMAN cited a case he was previously involved in. The case
lacked merit from the onset, yet cost the parties hundreds of
thousands of dollars and a substantial amount of time, before the
jury determined the case lacked merit.
Number 142
SENATOR TORGERSON questioned the magnitude of the problem. SENATOR
LEMAN responded he did not have an actual number of claims being
brought in Alaska, but estimated the number to be small. SENATOR
TORGERSON asked if any other profession in the State of Alaska has
a panel similar to the one in SB 119. SENATOR LEMAN stated SB 119
is patterned after legislation in other states. He added the
medical profession may have a similar procedure, and both the
medical and legal professions in other states have such procedures.
Number 162
RICHARD RITTER, president of a Juneau architectural and design
firm, and a representative of the Alaska Chapter of the American
Institute of Architects, expressed his support of SB 119 for the
following reasons. SB 119 would reduce the number of frivolous
claims as well as reduce frivolous denial of liability by deterring
a patently liable party from attempting to defend itself in court.
The intent of the bill is to be fair to either potential.
Secondly, in his experience with three or four cases over the past
15 years, the cases have cost tens of thousands of dollars to
resolve, even though the cases never went to court. In one case
involving the University of Alaska, the University's engineer
determined his firm to be blameless, but the University's legal
counsel recommended his firm be sued. His firm settled out of
court to minimize legal costs. A conciliation panel would have
discredited the claim initially.
Number 206
MIKE TAURIAINEN, representing himself, testified in support of SB
119 because it provides a minimum encumbrance on the system with
the net result of encouraging settlement without litigation. He
added it should improve the professional liability insurance market
and indirectly reduce the cost of services to residents and
businesses.
Number 293
MR. TAURIAINEN recommended the following changes to SB 119. On
page 2, line 1, change the term "design professional" to "one
person who is a licensed member of the defendant's profession."
This change would allow, for example, a surveyor to make a decision
regarding a surveying issue. On page 2, line 19, add the following
sentence. "The decision shall include assignment of liability and
any appropriate award of damages." This would allow the panel to
set a definition of liability and appropriate damages. On page 3,
line 14, after the word "panel," insert "and legal costs of the
prevailing party".... That would require any party frivolously
denying responsibility to pay those costs. On page 3, lines 22-24,
a loophole exists for a design professional who is practicing
outside his licensed area. He did not have any alternative
language to offer. He added on page 3, line 27, the effective date
should be changed to 1996.
SENATOR SALO referred to Mr. Tauriainen's suggestion to give the
panel considerably more authority than what is currently included
in SB 119, and asked whether he foresees any downside to an
increase in authority. MR. TAURIAINEN replied that an increase in
authority would require more work of the panel, but could reduce
the workload of the court. He noted the Hawaii statute has similar
language.
Number 304
COLIN MAYNARD, representing the Legislative Liaison Committee of
the Alaska Professional Design Council, testified. He discussed
several examples of frivolous lawsuits, including one in which a
driver, with a blood alcohol content of twice the legal limit, ran
several detour signs and crashed, and then sued the engineers who
designed the detour. After five years, the driver settled for
$35,000, however the engineer's firm paid $200,000 in legal fees.
He stated SB 119 is based on the national model act. He was unsure
about whether Mr. Tauriainen's suggestion to give the panel more
authority would help the court system.
Number 361
CHRIS CHRISTENSEN, general counsel to the Alaska Court System,
stated the Court System supports the concept of alternative dispute
resolution, however finds SB 119 to be more complex and expensive
than necessary to achieve the desired result. He discussed the
state costs associated with the use of a conciliatory panel, which
could include per diem, court reporters, witness fees, record
procurement, and travel to sites. SB 119 would essentially create
a state-funded mini-trial which would add one additional lawyer to
the court process. He added that currently, 90-95 percent of all
civil cases are settled out of court.
MR. CHRISTENSEN discussed other options for alternative dispute
resolution which fall into three methods. The first requires the
plaintiff's attorney to consult with a design professional prior to
filing a lawsuit. The second method requires an affidavit from a
design professional to be filed with the lawsuit. The third method
establishes a dispute resolution screening panel similar to SB 119.
The first two methods would not cost the state any money, but would
require the plaintiff to hire an expert before filing a lawsuit.
MR. CHRISTENSEN continued. SB 119 is a modification of the model
act prepared by the American Consulting Engineers Council and is
based on the Hawaii law. Unlike SB 119, the Hawaii law is drafted
in a way that eliminates costs to the court system, and minimizes
costs to its Department of Commerce. The design panels are
appointed by the Hawaii Department of Commerce, the agency which
regulates those professions. The parties are required to go to a
panel before filing a lawsuit. The court system would prefer a
similar system because it would take the court system out of the
loop and perhaps eliminate cases before, as opposed to after, they
are filed.
MR. CHRISTENSEN referred to an analysis of the California law.
Since enactment of the law, fewer lawsuits have been filed, more
were dismissed, and costs have been insignificant. The California
law requires a plaintiff's attorney to consult with a design
professional prior to filing a lawsuit, and to file a certificate
with the court verifying the consultation. The court system would
prefer such a method to creating a state-funded advisory panel.
Number 438
SENATOR KELLY asked if the plaintiff would pay the cost of the
consultation with a design professional. MR. CHRISTENSEN replied
that most design professionals who serve as expert witnesses do
charge. SENATOR KELLY asked if such a system would develop a host
of design professional witnesses that get paid to say a case has
merit. MR. CHRISTENSEN responded there are professional witnesses
in every discipline. SENATOR KELLY asked how that problem is
avoided in California. MR. CHRISTENSEN stated that problem was not
addressed in the analysis, but if an honest independent answer is
provided by the consultant, a realistic evaluation of the case, and
its merits, can be made. He added that plaintiffs' attorneys
proceed on a contingency fee and would be unlikely to take a case
that lacks merit.
SENATOR KELLY stated that because of the number of significant
questions raised about the approach set out in SB 119, costs to the
state, and specific language recommendations, the bill would be
held over to enable staff to work with the sponsor of the measure
to draft a committee substitute.
There being no further business before the committee, the meeting
was adjourned at 2:04 p.m.
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