Legislature(2003 - 2004)
04/27/2004 01:32 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 549-UNSOLICITED COMMUNICATION:AIRCRAFT CRASH
CHAIR CON BUNDE announced HB 549 to be up for consideration.
2:29 - 2:30 - at ease
MS. VANESSA TONDINI, staff to Representative Lesil McGuire,
sponsor, said this bill regulates "ambulance chasing lawyers."
Normally, those lawyers are governed by the Alaska Rules of
Professional Conduct. This particular issue deals with Rule 7.3,
which states, "An attorney shall not solicit by in person or
live telephone contact professional employment from a
perspective client with whom the lawyer has no family or prior
professional relationship without a significant motive for the
lawyer's doing." The reason is because an overwhelmed client
might find it difficult to fully evaluate all the alternatives
after an event has just happened. Even though this rule exists,
it hasn't controlled the problem that is taking place in Alaska,
especially after aviation accidents.
The federal government recognized the vulnerability of aviation
accident victims and their families in 1996 when it passed the
Aviation Disaster Family Assistance Act. It mandates that air
carrier provide specific support for family members of those who
were injured or killed in an accident. It also prohibited
unsolicited contact by attorneys for 30 days. In 2000, the law
was amended to expand the scope of unsolicited contact to
include any associate, agent, employee or other representative
of the attorney and expanded the time from 30 to 45 days.
The enforcement of this law requires action by the Civil
Aeronautics Board and the U.S. Attorney General; the penalty for
violation is a $1,000 fine. However, the law is hardly enforced
and there is legal debate about whether or not the federal law
is enforceable against attorneys who violate it in Alaskan
aviation accidents that happen entirely within the state. It is
especially prevalent in rural Alaska where support services are
hard to get. She explained:
We don't want them to be preyed upon by not good
lawyers, in other words, until they, themselves decide
that it's time to initiate that process.
HB 549 was based on the federal law and we felt this
law was necessary because it needs to apply to flights
that take place within Alaska. Like the federal law,
it doesn't interfere with the performance of the
family support function provided for in the Family
Assistance Act by the air carriers. Also, in our bill
we made it clear that we don't want any attorneys to
contact these people, so we added the reference to the
air carrier's attorney, as well.
Regarding the sanctions against attorneys, we felt
that a civil financial penalty is inadequate because
the financial incentive of representing an aircraft
accident victim could be so great that they would
almost be willing to take the financial fee of $1,000
if they're getting a multimillion dollar payment out
of this. We felt a criminal sanction would be the best
deterrent.
SENATOR SEEKINS moved to adopt SCS HB 549(L&C), version I, as
the working document. There were no objections and it was so
ordered.
MS. TONDINI thanked the committee for bringing the blank CS
forward as last minute floor amendments and other changes were
needed. She explained that language on page 1, lines 12 - 15,
was added on the floor of the House to clarify that during the
45-day period following an aircraft accident, neither an agent
nor a representative or the air carrier or its insurer may not
initiate contact for the purpose of offering a final settlement.
The sponsor did not object to that.
MS. TONDINI explained that air carriers might have obligations,
such as providing short-term financial assistance and page 2,
subsection (c), clarifies that the prohibitions do not apply to
those activities.
The other area of the bill that was amended in the House was the
removal of the penalty section in subsection (d), page 2, lines
8 - 12. The bill originally read $10,000 for the first offense
and $100,000 for a second offense, but that language was
removed. The problem when a fine is not specifically mentioned
is that it would allow a judge to impose a term of imprisonment,
which was never the intent of the sponsor. The sponsor felt
comfortable with making it a class A misdemeanor with a fine of
$100,000 or the fee the attorney would have received through the
violation of this act. Some people felt that contact needed to
be defined in section (e).
CHAIR BUNDE asked if the amount of the fine would be accepted by
the courts as just, based on the severity of the crime.
MS. TONDINI hoped so and noted that AS 12.55.035 sets out
maximum fines for each level of crime. Ordinarily, the maximum
fine for a class A misdemeanor is $10,000, but another provision
allows the legislature to establish otherwise.
CHAIR BUNDE said he thought it was a good idea to protect people
who are in a state of stress, but asked why this is limited to
aircraft accidents.
MS. TONDINI replied that she thought this should be a policy for
all situations and added that it applies in situations that the
Alaska Rules of Professional Conduct govern.
CHAIR BUNDE asked if the recovery from an aircraft accident is
potentially much larger than for an average automobile accident.
MS. TONDINI replied that is correct.
SENATOR SEEKINS asked why she didn't insert "whichever is
greater" after the penalty and if the sponsor wanted the court
to have that discretion.
MS. TONDINI replied that language on page 2, line 9, attempts to
say that it shall be the greater of the two.
SENATOR FRENCH said he had a hard time differentiating between
someone who was in the World Trade Center and someone who was on
the plane that crashed into it. He didn't know which family was
more grievously wounded or incapable of making a decision. He
was concerned that the bill focuses on air carriers. He is also
concerned about the penalty for lawyers who break the
professional rules, because, "A lawyer's ticket to practice law
is immensely valuable. You can't put a value on it. If you lose
your ticket to practice, you have to go find another line of
work...." He also thought lawyers must have made some serious
violations against plane crash victims and he wanted to hear
about those.
MS. TONDINI agreed with his first point and said this bill
doesn't try to give more weight to one side or the other, but
tries to focus on an attorney's bad conduct.
SENATOR SEEKINS moved to delete section (e) from the CS the
committee just adopted. There were no objections and it was so
ordered.
MR. BRUCE MCGLASSON, President, Grant Aviation, asked for some
protection for the air carriers. He said that the professional
rules are routinely ignored with impunity in western Alaska. He
has found that victims who have truly been injured will
immediately contact an attorney, but attorneys are routinely
contacting other people who were on planes, but didn't have
specific injuries.
The attorneys are racing to them immediately after the
accidents to sign them, because if they go home and
think it over for a few days, they are unharmed.... I
would like just a cooling off period to protect us
from that kind of behavior.
MR. MCGLASSON said that airlines are unable to buy insurance
coverage that is adequate for someone who has truly suffered
horrific damages, like an untimely death or a permanent
disability.
Insurance companies are terrified of this onslaught of
small suits that can only be described as extorted.
They have a client that has no damages that they can
point to, but they have signed up immediately after
and within a week of the accident, we'll get a letter
from the attorney offering to settle this case of
$50,000 or $100,000, because they know our insurers
will look at the cost of defense and probably opt to
settle rather than go to trial. The consequences are
horrible for us. Our insurance rates have more than
doubled in the last five or six years or tripled in
some cases. Our available coverage has been dropped in
some cases. In some cases, we've been able to insure
our seats for $500,000 a seat. It was $1 million a few
years ago and now it's not even an option at any
price. Many carriers in the state are looking at
limitations of $300,000, because the insurance
companies are afraid of the onslaught of suits that
[are] presented to them.
CHAIR BUNDE asked if he had actual situations that he could
share with the committee.
MR. MCGLASSON replied yes; in one instance an attorney actually
went to the hospital in Bethel and waited for the people who
were in the airplane to walk out the door. "That type of
immediate contact - it's almost guaranteed to generate a client
for him."
MR. MCGLASSON related that another incident happened a couple of
weeks before Christmas when attorneys sent letters to every
person in the village where the accident occurred.
MR. ROBERT JACOBSON, President, Wings of Alaska, said he is also
a member of the Alaska Air Carrier's Association Board of
Directors and has its approval to speak on its behalf. He
supported HB 549 and agreed with Mr. McGlasson's testimony.
Rates have tripled for many carriers throughout the
state, limits have come down. Some of us that used to
enjoy $10 million and $20 million smooth coverage are
now being offered a half million dollars a seat. For
those of you that have been involved with any aviation
incidents over the year, a half a million dollars
truly isn't enough to take care of the people who are
truly deserving in an accident like that.
To address Senator French's concern whether it was
people inside the Towers or on the airplane - in a
situation like this, the Aviation Disaster Family
Assistance Act addresses them altogether.... Aviation
accidents, because of the calamity of it, even if it's
one or two people in an air taxi accident like there
would be in an automobile accident, the settlements
and the awards are usually 10 times what they are in
an automobile accident. As a result, our rates have to
be commensurate.
Because we depend so much on aviation in Alaska - it's
a taxi service, it's a bus service for so many people
up here. We air carriers are struggling to provide the
service and provide good service. At the same time,
we're getting beat up and we're getting affected - in
this case, by some people who aren't acting honorably
in their profession....
SENATOR FRENCH asked Mr. McGlasson if he filed a bar complaint
against the individual who waited at the hospital to drive the
victims home.
MR. MCGLASSON said he hadn't, but it was a recent occurrence and
he didn't realize he could do that.
SENATOR FRENCH asked if it happened within the last six months
and if he knew of any other incidents.
MR. MCGLASSON replied that it had happened within the last six
months and in a small community like Bethel, he couldn't tell
which attorneys had relationships with the people or not. In the
accidents he had been involved in, the people had been contacted
immediately in almost every case. "It is the rule rather than
the exception."
SENATOR FRENCH advised him to take the options that are open to
him and to use the least force possible.
MR. JACOBSON said that most people involved in an aircraft
accident don't understand what is possible.
When they are contacted by a plaintiff attorney who
says, 'I can get $100,000 for you because you now have
a fear of flying - and that's happened to us. We had
an accident in 1998 where nobody was injured, people
got a little wet from their hips down. We took them to
the hospital as we do in every case and they were
checked out and released. There was no physical or
admitted injuries, but one of the four, we took care
of her hospital bills and offered her $2,500 to move
on. She said fine. The others retained a plaintiff
attorney and they were promised big amounts because
they now have a fear of flying.
SENATOR FRENCH asked him if they were contacted by attorneys or
the other way around.
MR. JACOBSON admitted he didn't know. His point was that the
people ended up with less, because the plaintiff's attorney took
30 percent plus expenses. "In a situation like that, we're going
to defend those as strong as we can and the victims end up with
less and that's a shame, but that's what is happening, too."
SENATOR SEEKINS said it seems to him that since this is already
covered in a code of ethics, there is no problem with those who
follow their code of ethics. If some attorneys are not following
their code of ethics, the legislature can put some statutory
teeth behind it.
SENATOR SEEKINS moved to pass SCS CSHB 549(L&C) from committee
with attached fiscal note and individual recommendations.
SENATOR FRENCH objected saying he wanted to hear from at least
one person who had been badgered by a lawyer after a traumatic
injury or accident.
That's what I thought the heart of this bill was about
- not so much fixing insurance rates, but sort of
keeping a protective aura around a person who has been
through a tragedy. We didn't hear that. So, I guess
I'm a little bit on the fence about what the object of
the bill is....
The way I read this bill now is if I bump my head in
an airplane accident and have to have two stitches,
I've been injured, and 44 days later a lawyer sends a
letter to me saying maybe you need some
representation, that person is guilty of a misdemeanor
and shall be sentenced to pay a fine of $100,000. I
share your concerns, Mr. Chairman, that someone is
going to challenge that and it's going to get booted
out and you're going to be left with no direction
whatsoever about what to do. I think this bill needs a
little bit more fine-tuning.
CHAIR BUNDE asked for a roll call vote. Senators Ralph Seekins,
Gary Stevens and Chair Con Bunde voted yea; Senator Hollis
French voted nay; and SCS CSHB 549(L&C) moved from committee.
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