Legislature(1999 - 2000)
03/15/1999 01:32 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 57 - STATE & MUNI IMMUNITY FOR Y2K
Number 1260
CHAIRMAN KOTT announced the next order of business is HB 57, "An
Act relating to immunity for certain claims against the state, a
municipality, or agents, officers, or employees of either, arising
out of or in connection with the year 2000 date change; and
providing for an effective date."
CHAIRMAN KOTT opened the meeting up to the teleconference network.
Number 1285
GAIL VOIGTLANDER, Assistant Attorney General, Special Litigation
Section, Civil Division, Department of Law, testified via
teleconference from Anchorage. She stated the department is
proposing an amendment to clarify the definition of "state" in the
bill. There is some concern because the organizations that fall
within the state are not automatically thought of as the "state".
The amendment flushes that out and ensures that public authorities
such as the Alaska Industrial Development and Export Authority
(AIDEA) are clearly within the ambit of the bill. The amendment
reads as follows:
Page 3, following line 19:
Insert a new paragraph to read:
"(3) "state" includes a department, institution, board,
commission, division authority, public corporation,
council, committee, or other instrumentality of the state
including the University of Alaska;"
Page 3, line 20:
Delete "(3)"
Insert "(4)"
Number 1385
REPRESENTATIVE GREEN made a motion to adopt Amendment 1. There
being no objection, it was so adopted.
Number 1478
BOB POE, Commissioner-designee, Department of Administration,
stated HB 57 intends to address a big problem of potential
litigation related to the year 2000 (Y2K). There are three
alarming statistics involved: the national cost to clean up Y2K is
expected to be about $300 billion to $400 billion, the cost of
litigation is expected to be about $1 trillion, and 300 national
law firms have already opened up Y2K practices. In addition, the
state doesn't have a cap on what it can be sued for. He further
stated that the bill intends to try to mitigate the liability
issues. There are lawsuits now in the courts where somebody has
tried to do the right thing, but were sued because they were a deep
pocket. The state is a likely candidate for those types of suits.
He deferred to Brad Thompson from the department.
Number 1585
BRAD THOMPSON, Director, Division of Risk Management, Department of
Administration, stated the division offers the state's property
casualty insurance protection. The division anticipates a
significant cost to be realized should the state not be provided
the protection afforded in HB 57 as proposed. Twenty states, at
the moment, are actively considering similar legislation to protect
both the state and local municipal governments. Five state have
already enacted a law. Thirty-two states have already limited the
type or value of claim that can be brought against them and/or the
local municipalities. The state of Alaska has no such protection.
He reiterated the bill provides for limited protection just for the
Y2K exposure. It does nothing to remove or vacate the state's
responsibility for people to provide a benefit or perform a duty to
the public.
Number 1668
REPRESENTATIVE CROFT asked whether the bill requires due diligence
from the state in protecting people from the effects of the Y2K
change.
MR. THOMPSON replied the state is performing exhaustive efforts
with the available funding, personnel and time. He doesn't believe
that there is a condition preceding the protection provided by
this.
Number 1714
MS. VOIGTLANDER stated the bill does not have due diligence as a
requirement for immunity. The state has been undertaking quite an
effort on Y2K remediations. Each agency has had to access mission
critical programs and come up with remediation and contingency
plans. The bill really accompanies the efforts that
Commissioner-designee Poe has been leading.
Number 1759
REPRESENTATIVE CROFT asked Ms. Voigtlander whether there is
anything in the bill that requires an effort to get this immunity.
In other words, if one state agency does absolutely nothing and
another state agency makes substantial efforts, are both immune?
MS. VOIGTLANDER replied yes. The bill in its present form does not
have a standard of performance attached for immunity. It does
address the efforts being made for remediation.
Number 1821
REPRESENTATIVE ROKEBERG stated that he is concerned about the
definition of "year 2000 date change" in the bill. Does it mean
January 1, 2000 or does it mean January 1, 2001? It is debatable.
He announced he has an amendment to specify the years.
Number 1860
COMMISSIONER-DESIGNEE POE stated the definition in the bill is a
similar definition that has been used in lots of other things that
describe Y2K. He understands Representative Rokeberg's point, that
being when does the actual millennium occur - 2000 or 2001. In
testing systems, there is a range of dates that fall under the Y2K
moniker, such as a date projected four months in advance.
Number 1895
REPRESENTATIVE ROKEBERG announced he has an amendment that provides
for an 18-month window at which time the millennium bug will have
come out of its cocoon.
Number 1922
REPRESENTATIVE GREEN asked whether there would be any other
immunity drawn into this alleviating the obligation of the state.
MS. VOIGTLANDER stated the bill intends to cover only acts or
omissions for damages caused directly or indirectly by the failure
of an electronic computing device. She said, "If I understand the
question which I presume is in the nature of what if there's just
some very tangential link to a year 2K issue, would this--is this
intended to immunize for that? I don't see the bill as doing that
because what it--the act or omission is immunized through this bill
for damages that are caused by a failure of an electronic computing
device. So I think that if--it would have to circle back to that
for it to fall within the gambit of (indisc.--coughing)."
Number 2038
REPRESENTATIVE MURKOWSKI referred to the definition of "physical
apparatus that is not primarily used as a computer". She noted it
includes medical equipment and asked whether the state would still
have immunity if that equipment failed to work and killed somebody,
especially if there hadn't been an upgrade and it was not Y2K
compliant.
COMMISSIONER-DESIGNEE POE stated medical devices are in mission
critical areas. They have been checked out. In addition, they
have to be covered with a contingency plan. It is covered under
the state's due diligence effort.
MR. THOMPSON stated he is not so sure that the state or its
agencies are directly involved with that type of medical care.
There may be some, but as Ms. Voigtlander said it would have to be
directly or indirectly caused by the Y2K date change. He said,
"But, I don't think there's a disincentive that members may be
concerned about of the state's efforts to be prepared and to do
what it can to prevent any fallout for Y2K. We are doing the best
we can. I don't think this bill would have any effect to that
effort."
Number 2165
REPRESENTATIVE MURKOWSKI asked whether the Administration looked at
a carve-out in the event of death caused by a medical malfunction.
COMMISSIONER-DESIGNEE POE stated he didn't look at it specifically.
MS. VOIGTLANDER stated she doesn't recall it as being an issue
probably because that is not the type of medical care the state
renders. She said, "Usually, if you're going to be rendering
medical care with that type of equipment, then people have been
moved out of the state system, so to speak, and are receiving
medical care through private medical sources. Either they've been
transferred to an emergency room or another hospital, or there are
physicians that are not state employees who are brought in to see
people and to use the particular equipment. But, I don't recall
seeing something specifically other than some--I have a somewhat
vague recollection that one of the Eastern states maybe had a bill
that had to do with medical devices. Unfortunately, I can't put my
hands right on that right away."
Number 2252
REPRESENTATIVE MURKOWSKI explained she was referring to legislation
from the state of Montana which says, "...the state's immunity does
not apply to a health care facility if death or bodily injury
results from failure or malfunction..."
Number 2277
REPRESENTATIVE KERTTULA asked whether a situation like Juneau where
the municipality owns the hospital is the concern.
COMMISSIONER-DESIGNEE POE stated that sounds right. There is also
the Alaska Psychiatric Institute (API) and the pioneers' homes. So
far, it hasn't been found that biomedical devices are causing a
problem. On the same token, Providence Alaska Medical Center in
Anchorage and Fairbanks Memorial Hospital are finding devices that
have Y2K problems. He referred to Senator Bob Bennet's Year 2000
report addressing health care issues and stated that a lot of the
issues focus on doctor's offices. But, they aren't paying that
much attention to this because they don't have that much in their
offices that really affect life and death situations on a Y2K
basis, whereas hospitals do.
Number 2344
REPRESENTATIVE CROFT asked Commissioner-designee Poe how the state
has been paying for the Y2K efforts.
COMMISSIONER-DESIGNEE POE replied the state has been paying for it
out of the Risk Management Fund. The state has used about $2.1
million to $2.2 million to date.
REPRESENTATIVE CROFT asked Commissioner-designee Poe whether using
money from the Risk Management Fund was appropriate because of the
potential liability risk.
COMMISSIONER-DESIGNEE POE replied right. The state would be
exposed to more suits without taking a due diligent effort. The
Risk Management Fund is used to settle suits and it also made sense
to use it to avoid suits.
CHAIRMAN KOTT stated it was a good business decision.
CHAIRMAN KOTT indicated that the bill would be held over for
further consideration.
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