Legislature(1993 - 1994)
09/10/1993 09:00 AM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
REPRESENTATIVE MACKIE asked Mr. Ford if he was going to be
at the meeting throughout the day.
MR. FORD answered in the affirmative.
Number 192
SHARON ANDERSON, Associate Executive Director, Alaska
Regional Hospital, Anchorage, stated she was representing
the Alaska State Hospital and Nursing Home Association and
speaking in support of HB 292, reforming Alaska's liability
laws. The association is a trade and professional
association representing Alaska's community health
facilities.
MS. ANDERSON said hospitals, as well as all health providers
in Alaska and across the country, are committed to improving
access to health care while maintaining the high quality of
health care.
Medical liability has a direct impact on access to care for
many Americans. In addition, the current medical liability
system contributes significantly to the cost of medical
care.
MS. ANDERSON said HB 292 contains many provisions that have
proven successful in other states to have liability
insurance available to all health providers at affordable
rates.
But, before touching on the particulars in HB 292, let me
review briefly the need for liability reform:
The Issue
Those of us who manage Alaska's hospitals believe that as
the debate over health reform and health care financing
proceeds, the problems caused by the high price,
inefficiency, inequity and glacial slowness of the current
medical malpractice and adjudication system must be
addressed by the state legislature.
Persons who are negligently injured by medical care are
entitled to prompt and fair compensation of their injuries.
However, the current way that we seek to do this is anything
but prompt and fair.
Numerous studies over the past twenty years have
demonstrated that the present system for redressing injuries
caused by medical care:
1. Costs far too much and works much too slowly. The
cost of claims handling and litigation, including
the cost of both plaintiff and defense attorneys,
consume over half of the professional liability
insurance dollars, meaning that less than half of
that dollar is returned to the injured patient.
2. The current system fails to provide access to the
legal system for many, particularly those with
small claims. Also, the current system sometimes
awards nothing to some with legitimate claims
while lavishing exorbitant amounts on others.
3. Numerous studies show that billions of dollars of
our national health care costs are spent on
defense medicine. Doctors are induced to order
more examinations, test, and procedures as a hedge
against accusations of neglect or negligence.
4. Finally, the current system seriously threatens
access to health care, particularly to high risk
services such as obstetrical care and emergency
room care and to all types of care in the rural
setting.
It must be recognized that the major reform called for in HB
292 may not immediately reduce overall medical liability
insurance costs, but it should result in quicker and fairer
settlement of claims. The system will be more predictable
and will help patients, providers, and underwriters and, in
the long run, will make the delivery of health care less
expensive and the cost of insurance both predictable and
cheaper.
House Bill 292 contains the following provisions (sections)
which we feel are vital to medical liability reform in
Alaska. Most of the provisions have been reviewed:
Statute of Limitations
Cap on Non-Economic Damages
Limits on Punitive Damages
Periodic Payments
Collateral Sources
Liability of Hospitals for the acts or omissions of
nonemployed personnel. Section 24:
MS. ANDERSON said she would like to touch on the importance
of this section of HB 292, as it is of the utmost importance
to Alaska's hospitals.
The intent of Section 24 is to return Alaska law to where it
was prior to an October, 198,7 Alaska Supreme Court ruling
entitled Jackson versus Powers. At that time, the Supreme
Court held that a general acute hospital care in Alaska has
a nondelegable duty to provide emergency room services, and
therefore, is vicariously liable for the negligence of an
emergency room physician, regardless if the physician is
employed by the hospital.
This means Alaska hospitals are responsible for the
negligence of a non-employed emergency room physician solely
because the hospital is required, by law, to provide
emergency room services, regardless if the hospital has been
negligent.
This decision runs counter to recent trends, when
legislatures have attempted to protect the often named "deep
pocket" defendants. The language in Section 24 of HB 292
will protect Alaska's municipally owned and other hospitals
from being named as deep pocket defendants in every case
involving physicians negligence, even though the hospital
was not negligent and has done everything within its power
to comply with statutory and regulatory requirements.
The hospital is and will continue to be liable for their own
negligence and would continue to be so liable if this
section is adopted.
MS. ANDERSON said she would like to briefly address this
particular section and briefly address the current situation
at the Alaska Regional Hospital pertinent to that. There is
a statement that will be brought up later that this is
nothing but a legal (indiscernible) attempt of the hospitals
to get out of liability for actions of non-employees and the
hospital could escape any responsibility for what an
emergency room doctor does. This bill does not deprive any
hospital patient of a cause of action against the non-
employee who may have been negligent. The hospital will
still be liable if it negligently contracts with the person
who is unfit to perform health care services, and that
person subsequently injures a patient. At Alaska Regional
Hospital we do require that all contract positions provide
proof of professional liability coverage prior to entering
into any kind of contractual arrangement that we have with
them. It is not the intent to enter into any contractual
relationship without this requirement.
MS. ANDERSON said the Alaska State Hospital and Nursing Home
Association would like to thank the committee for beginning
the process to thoroughly review the need for liability
reform in Alaska. We know today's hearing may raise more
questions than it answers, so we stand ready to provide to
the committee additional information or data on the cost and
access impact the threat of liability has on patient care in
Alaska.
Number 278
CHAIRMAN HUDSON asked Ms. Anderson to expand on the area of
periodic payments that she listed as one of the provisions
she felt was vital that Mr. Ford referenced as he was going
through the definition of the bill.
MS. ANDERSON asked SUSAN MASON, who had been working with
them on the review of the bill, to respond to Chairman
Hudson.
CHAIRMAN HUDSON asked Ms. Anderson to send in any kind of
comments, critique, examples, concerns or support for any
provisions of the bill to him as he would see that it got to
all of the members of the committee.
Number 295
REPRESENTATIVE MACKIE referenced since it was an educational
process for the committee, he asked that the problem the
hospitals are facing was, should an outside physician,
private physician, that may have one of their patients in
one of the hospitals, which conducts surgery by the private,
outside physician, a non-employee of the hospital. Your
being named in all of the lawsuits that may be filed against
the physician because it occurred in the hospital, or is it
only directed toward emergency room care? What are you
doing as far as having your own personnel administer
emergency room care in the liability problem? I am trying
to understand the situation a little more whereas if a
surgery, malpractice lawsuit was filed against a private
physician, but it occurred in the hospital, are you being
named in those kinds of actions, and is that where the
problem is at. Could you define that a little more?
Number 300
MS. ANDERSON stated it would be helpful to the committee to
know that all physicians at Alaska Regional Hospital, and
most of the hospitals in the state of Alaska, are
independent practitioners. They apply for medical staff
privileges for various (indiscernible) or surgical
procedures within the walls of the hospital. There are
medical staff rules, by-laws, that they must follow. By
doing so, (indiscernible) process that also goes on. As
independent practitioners, they are the experts, they are
the ones who receive the education to know what tests should
be ordered. By going through that application process, are
granted privileges ultimately by the board of trustees of
the hospitals to perform those tests and to treat and admit
patients within the hospital. There are times, with
response to your question, that a hospital may be named
along with a physician that has been a bad outcome. The
patient may then file suit against the physician, and then
sometimes the hospital will be named.
MS. ANDERSON said Section 24 is an attempt to correct the
Jackson versus Powers decision, which applied only to
emergency room physicians. There has been discussion that
this section may be interpreted in a much broader scope,
bringing in other physicians, for example, those who may be
on call within the emergency room setting or just
anesthesiologist who are also independent practitioners.
The intent of Jackson versus Powers was limited in its scope
to emergency room physicians. So that by having a contract
with hospital based physicians, emergency room physicians or
as radiologists, pathologists, and anesthesiologists, will
enter into a contractual arrangement with a group of
physicians to provide that care. She referred to
independent contractors and said we do require that they
have special liability insurance, so that it is not
releasing the physician from having coverage to provide
patients with a way to sue the physicians. Also, the
hospital may be continued to be named in a suit such as
that. Our hospital did have a lawsuit filed against it
where the emergency room physicians were dropped as a result
of the Jackson versus Powers' decision. When the jury came
back with the fault assignment, 10 percent was assigned to
the patient, 10 percent was assigned to the hospital, and 80
percent was assigned to the physician. But because the
physician was dropped from the suit, the hospital paid 100
percent of the award that was assigned by the jury in that
case. What we are seeking to correct, is that since the
emergency room physician is an independent contractor, then
the hospital, itself, has no expertise to determine what
care should be rendered to a patient. The physician has
that, that the physician be held responsible for their acts.
The hospital makes some business decisions in entering into
those contractual relationships. I think that it is not
unreasonable to require that a hospital can choose to enter
into a contractual relationship, here required to assure
themselves as well as the patients that the physician is
also covered.
Number 359
REPRESENTATIVE MACKIE stated he was not clear as to what her
position was on that particular section of the bill.
Whether it was something you agreed with or disagreed with.
MS. ANDERSON answered that they agreed with Section 24.
Number 362
REPRESENTATIVE MULDER stated the critics would say that
Section 24 would simply result in hospitals contracting with
all employees. If they have no employees, they are
shielding themselves from all liability. What is your
response to that?
MS. ANDERSON answered she did not think that was a
reasonable interpretation of the intent of the law. It
didn't make sense, to her, to not be held responsible for
acts of your employees. On the other hand, if it is an
independent contractor, such as a physician, she felt it was
unfair to ask a hospital to assume responsibility for the
acts of the physicians. Now if the hospital rented
privileges to a physician, without doing proper procedure,
that may be that another cause of action that would come
about.
REPRESENTATIVE MULDER asked if this were enacted in Section
24, would she see Alaska Regional Hospital making more of
their employees contract employees as opposed to employees
per se.
MS. ANDERSON answered in the negative. She stated that in
fact, Jackson versus Powers addressed physicians, it did not
address nurses as independent contractors. As an example to
be shown later, as rent a nurse. In my mind those will
still be determined to be employees of the hospital.
Number 385
REPRESENTATIVE NORDLUND thanked Ms. Anderson and referenced
the fear was exactly how it was stated. The particular
statute was drawn very broadly. It didn't talk about
physicians, it spoke about health care providers, which
could be basically anybody who purchased (indiscernible).
If your concern really is just for physicians, would you be
in favor of (indiscernible) apply position (indiscernible)
nurses and basically anybody who works in the hospital?
MS. ANDERSON stated that without speaking on behalf of other
hospitals within the Hospital Association, our hospital is
not opposed to that. Other hospitals may have different
definitions of independent contractors. In this particular
field, it would require hospitals to post, within the
hospital as well as publishing in to newspapers, those non-
employees that they have entered into the contractual
arrangement with. Again, the example of the (indiscernible)
having to post that (indiscernible). I don't think that
there would be opposition to limiting those (indiscernible).
REPRESENTATIVE NORDLUND brought up a different point,
stating general comments about the bill, he thought Ms.
Anderson was correct that definitely they will see there is
certainly an effort to reduce the amount of claims.
However, her point about this legislation needs more prompt
litigation and court action. I don't share your opinion
about that as I think there are provisions instilled that
are really going to make the process more drawn out. You
may take another look at the bill, in terms of just how fast
actions are going to be made, to be brought (indiscernible)
the court result (indiscernible).
Number 400
CHAIRMAN HUDSON stated the committee initially had invited
the Department of Law, the court system, and others to
participate in this hearing. A lot of the questions, those
nature, would likely be answered by them. It is the
understanding that the next hearing will try to bring in
some of the procedural and the implications and the effects
on systems from those various entities.
Number 423
REPRESENTATIVE BROWN asked Ms. Anderson if she would be
opposed to adding a requirement for professional liability
coverage for whatever health care providers or physicians or
whoever is ultimately to be covered under this section. She
asked Ms. Anderson if she thinks it would be a reasonable
thing to require hospitals to do?
MS. ANDERSON answered that was correct. It was their
current practice at the Alaska Regional Hospital. She said
she was representing the Hospital Association today and it
was not one of the items the association voted on when
reviewing the bill. She said she would be happy to take
that back to the association.
Number 437
REPRESENTATIVE GREEN did not know hospitals worked this way
but his wife was a practicing dental hygienist and I think
(indiscernible) required that because of dentists had
authority over her actions, that she could no longer act as
a contractor, and, in fact, became an employee of
(indiscernible). Would nurses also fall into that category?
MS. ANDERSON referenced what crossed her desk the day before
which was a definition of what is an independent contractor
is, as well as an employee. She referred to not contracting
with employees and if you have control of the work
(indiscernible) or schedules and what they are doing and
such as standards of care then the definition would fall
into were they are employees rather than contractors.
Number 450
REPRESENTATIVE MACKIE had two concerns in regard to the
concern Representative Brown brought up about health care
providers instead of stating position or something like
that. The first concern is, who else would have access or
would be in a position to be an actual health care provider
that would have access to the facility and could be
essentially in that situation. I think probably, that would
need to be a little more clearly spelled out, I would agree
with that. When you are (indiscernible) contracting these
doctors as independent contractor providing they have the
insurance and the other things that are necessary. Would
anybody working for them also (indiscernible) that same
contract? Who else would follow that definition?
MS. ANDERSON answered by stating by virtue of the contract,
anyone who works for them must be (indiscernible) by the
same requirements as the contractor.
REPRESENTATIVE MACKIE added so they fall under his liability
and his direction and so forth. Then the other thing, I
would also agree that if we are going to look at releasing
the liability, that we should also require that there is a
certain standard of liability insurance being provided by
the physician or something of that nature so that somehow
somebody doesn't slip in under the wire, unintentionally or
anything else, without any kind of insurance and the
hospital is resolved to that responsibility. The physician
may or may not have that, then the person that suffered the
injury won't have any recourse. It may be best spelled out
in statute.
Number 488
REPRESENTATIVE FINKELSTEIN asked Ms. Anderson if in the
Alaska Regional Hospital are any of the physicians in
employee positions, or if they are all contract positions.
MS. ANDERSON answered they were all independent
practitioners and some of them were contract, but not all.
MS. ANDERSON stated the intent of this section would be that
if the hospital chooses to enter into a contractual
relationship for a physician to provide care, such as in the
emergency room, which was the intent of Jackson versus
Powers, if it were more broadly extended to those where we
have contracts. For instance, contracts with physicians to
read EKG's or to do neurological studies or radiologist who
might perform a test. Those positions with whom we have
contractual arrangements, that they be required to be
responsible for their actions. In our hospital, to enter
into a contractual arrangement, they must show proof of
professional liability insurance.
Number 542
REPRESENTATIVE FINKELSTEIN referenced the way Ms. Anderson
envisioned what she would like to see happen with the bill.
The hospital would be liable for some of the positions, the
ones that were directly working in the emergency room, and
not liable to others that had more of a (indiscernible)
basis, they are operating independently. Some would be
liable for some and not for others. Is that what you would
see as where you would be liable for none of them?
MS. ANDERSON stated she felt the goal of the section was
that the hospital be held liable for its acts of omission or
negligence and that the physician be held liable to their
acts of omission or negligence. In some instances, both
parties might be named in a suit.
Number 550
REPRESENTATIVE FINKELSTEIN guessed the answer was that there
would be not a single physician in the facility that the
hospital be liable for in the way it's interpreted. Is that
what you are saying? I'm just trying to see if there are
two groups or one group. Is there a group that is
independent that the hospital is still going to be liable
for?
REPRESENTATIVE MACKIE answered, your own employees, right.
MS. ANDERSON answered correct. But not for non-employees.
REPRESENTATIVE FINKELSTEIN stated there would be some
physicians that are still employees.
MS. ANDERSON answered that in their facility, there are not
any who are employees. There are facilities within the
state of Alaska who do employ physicians and that would not
take away their responsibility in this particular section as
I read it.
REPRESENTATIVE FINKELSTEIN referenced the point
Representative Mulder discussed and asked wouldn't this
section create an incentive for those hospitals that do have
employees who are physicians to convert them all to
contracts because they would reduce their liability. There
is not much incentive to have them as your employee if you
couldn't sever liability. Isn't that the incentive we are
creating?
MS. ANDERSON stated it was a tough question for her to
answer because from her hospital practice that is not the
situation. It is certainly a valid question to take back to
the association. I do not believe that was the intent to
allow hospitals to get out of any liability for the
physicians to escape that (indiscernible).
Number 569
REPRESENTATIVE GREEN found it a difficult situation for a
reputable hospital to authorize a physician to have been in
the practice of contracting a physician and then drop them
and still not require the physician to have adequate
insurance. It seems to me that we're looking for possible
problems which means you can ride a bicycle. We're going
way too far, I think, in trying to determine what the
possible ramification of the hospital trying to avoid
litigation by requiring all the doctors, in that hospital,
to be independent contractors. As long as they are
employees, the hospital will be liable. If they are not,
then they're liable under their own insurance program. I
don't see that that is any different than going to a doctor
who is not in a hospital.
Number 591
REPRESENTATIVE FINKELSTEIN stated he was just trying to find
out what the categories are. We did find out that their
hospital doesn't have any but other hospitals do. There
would be some incentive for that standard, which I was
trying to say.
CHAIRMAN HUDSON added the incentive could be either way.
There certainly has to be some incentive to have your own
doctor attached to the hospital and perhaps this would or
would not have any effect upon that.
Number 600
REPRESENTATIVE MACKIE understood where the hospitals were
coming from. It is probably like any one of us feel, that
we are responsible for our own actions but something that is
totally out of our control, it is a little bit harder to be
responsible for. There are other employees and other
responsibilities of liability in which you would still have.
You have cardiology, x-ray technicians, nurses, a number of
other hospital staff and employees and probably on-duty
emergency room doctors and physicians that come in by
ambulance and people that come in by ambulance and other
things that the hospital would still... I don't look at this
as an attempt to get out of all liability. I look at this
as an attempt of not being able to control the action of a
physician. That is not an employee, an actual employee,
under your supervision in the hospital, is that correct?
MS. ANDERSON answered that was correct. As she read it, the
hospital would still be liable if we negligently contract
with a physician or a group of physicians who are unfit to
perform the health care services.
REPRESENTATIVE MACKIE added if you were negligent in
allowing them to utilize the facility, why not.
TAPE 93-40, SIDE B
Number 001
REPRESENTATIVE PORTER agreed with Representative Mackie's
position. My impression of this provision is to allow
hospitals to not be responsible for positions when they do
not exercise control, training, supervision and those kinds
of standard definitions (indiscernible). Those hospitals
which have doctors in that capacity as employees, there is
some reason that they do and I don't see this as providing
that great of an incentive because as is required now, that
insurance has got to be provided by one or the other.
(Indiscernible) equity and responsibility if the association
can come up with any definition, for example, an independent
contractor that might add the issue that we are discussing.
REPRESENTATIVE MACKIE added, as we progress through the
subcommittee process with this bill, we are bringing out the
points that we need further clarification on. Not
necessarily whether we are supportive or non-supportive of
that particular issue, but at least getting the bill into a
position that can be either supported or non-supported by
members of the legislature. I think that is real important
that we clarify each one of these types of areas that we
debate. I look at that for our purpose here today,
initially to identify this.
Number 016
CHAIRMAN HUDSON stated that was exactly what we are trying
to do here, is to understand all the ramifications of this
very complex body of policy and cause and then to try to
expand those areas where we have some questions as to what
the application (indiscernible).
CHAIRMAN HUDSON added, that when this first came before him,
personally, not being in the industry, he always tries to
look for the reasons behind these kinds of justifications
for making changes. Since you and those you represent
obviously believe that the statute of limitations and
obviously section 24, collateral sources, periodic payments
and things of this nature, are positive, that it makes for
improvements. We've heard the terms that we want to make
insurance more affordable, we want to streamline the
process, we want to reduce the time in which the injured
party can receive compensation and the settlement can be
taken off the books. In those areas, any suggestions,
applications or problems, what you hope to be the solutions
through the various segments of the bill, we would sure like
to have that input with us so we can all better understand
it.
MS. ANDERSON answered, she would be happy to provide that.
Number 033
REPRESENTATIVE NORDLUND, added that as far as the request
for information, maybe the committee could receive some
documentation of what (indiscernible). How the medical
liability contributes to the cost, the operating cost.
Number 058
BREAK FOR LUNCH
Number 059
CHAIRMAN HUDSON asked Dr. McGuire to make his presentation.
Number 068
DR. DAVID MCGUIRE, Orthopedic Surgeon, practicing in
Anchorage for 20 years was next to testify. I am associated
with the Alaskan's for Liability Reform and I speak as one
of their delegates today. Mr. Tovanny is here as well. He
has expertise in the area of structured settlements and
annuities. There were some questions this morning about the
effectiveness of those structured settlements and annuities.
If we have a few minutes for him, he may be able to explain
how they can work.
The issue, as noted by yourself and others this morning, is
a complicated issue. Therefore, it does take sometime to
study each and every one of these points of the bill. But
because it is a complicated issue, shouldn't deter us from
looking carefully at this because the fact is that the tort
system affects us all, and sometimes it affects us in ways
that we may not even know. It indicates that there are
changes in business practices that there are lost
opportunities, that there are businesses, that no longer
carry on useful functions. Largely, this can be traced to
the detrimental effect of insurance rates that are not
affordable, risks that cannot be defined of an ever changing
pattern of liability in the tort law. It is important, I
believe, that we should all understand that with the
exception of the 1986 changes and with the exception of the
initiative, all of the laws were, in fact, made by judicial
interpretation. Put in another way, it is not the case that
these laws have arisen as a result of the legislative body
deliberating, and in due process, producing a law that we
all have to live by. It is the fact that these laws
continue to be interpreted by the judicial bodies, and it is
our opinion that they have been detrimentally interpreted to
the point that these liability burdens are no longer
sustainable. I think we seek that in many different avenues
of life, and certainly it is not only medicine, this affects
everyone across the board. If we were to take one or two of
the points and use them as examples, not to say that they
are the only examples that could be found, that may be of
use. In this morning's Anchorage Daily News, we have an
editorial by the Daily News concerning the lawsuit that was
filed against the liquor store by the driver that was a
minor at the time, and killed someone when he ran through a
red light. It is the case that the idea of being
compensated for injury is a good one, but our present tort
system has leaned so far that anybody can sue for anything,
at any time, with some expectation of compensation. What we
are trying to do with the legislation proposed, is to define
precisely what those limits ought to be, and under what
circumstances compensation should occur. I think most of us
feel that when someone is in the process of committing a
crime, that they should reasonably have known was likely to
bring injury to someone else, that it is ludicrous that
someone else should have to pay for their injuries. It
doesn't seem reasonable at all, it doesn't seem productive
in any way to society. Here is an example: Now whether or
not the individual prevails in this (indiscernible) is not
even the entire point. The fact of the matter is, society's
resources are being consumed in the arguing of the lawsuit,
both in terms of the judges that have to sit, the lawyers
that are there, the defense, the cost, etc. We have
proposed, in this legislation, that it should be the case
that if you are in the process of committing a felony, or
committed a felony, you should be precluded from a lawsuit
to recover your damages.
The second piece of paper that I gave you was taken from a
brief that was filed with the Supreme Court, the state of
Alaska, as we speak. You may recall that in 1988, there was
an initiative developed by the Citizens Coalition for Tort
Reform. That initiative had to do with a concept of joint
and severability. If I may, for a minute, just visit the
history of joint and severability. The law of the land,
prior to judicial interpretation was one known as
contributory negligence. It held that if you, as the
plaintiff, were so little as one percent responsible for
your own injuries, that you were precluded from a lawsuit to
recover damages. I think rightly so, that was harsh, and it
showed to be none of comparative negligence, which it is
with the exception that prior to 1988, the law was that of
joint and severability also known as the deep pocket law,
which then whomever the defendants was able to pay, was
required to pay, whether or not they were principally at
fault. So we sometimes had the ridiculous situation where
the municipalities were able to be held liable for the
entire costs of an injury that occurred, when in fact, it
was very little of the municipality that was at fault. The
citizens of Alaska voted with approximately a 70 percent
margin, to change this law so that the fault would be a
portion amongst the guilty party. So if there were three
parties who were said to be negligent one of whom was 10 and
another of whom was 20 and one of whom was 70, we felt that
they should pay in proportion to their responsibility. That
seemed fairly straightforward until things got to court, and
then the ploy of only suing the party that apparently had
any resources came into play. If an attorney knew that the
individual or the entity who was 70 percent responsible,
probably didn't have any money, then what you could do was
(indiscernible) the party that was 10 or 20 percent
responsible, and when you get to court, you preclude the
jury from understanding that there was somebody else out
there who was more responsible than the present defendant.
Therefore, all the damages are awarded against the defendant
because the jury doesn't get a chance to understand who and
what was at fault. This has now been appealed to the
Supreme Court. It is our intention that what we meant and
what we advertised and what the citizens of Alaska voted on,
was that in fact, we wanted the portion allocated amongst
the people who were at fault, regardless of whether they
happen to be in the court room that day. We don't know what
the court is going to say but it is illustrative of what
seems to be a straight forward proposition, because it is
then interpreted in what I would prefer to (indiscernible)
argument that leads to a conclusion opposite of what was
intended.
Earlier today we talked about the concept of economic verses
non-economic damages. We also talked about the idea of lump
sum payments verses annuities or prorated settlements.
There is an example, which I think is illustrative of how
the situation goes at the present and why I think that in
the event of society, and the injured person, this thing
should be changed. If a person who is 35 years old is
injured and can't work anymore, we would normally expect
that they would work until age 65, which is 30 years. If
they made $30 thousand. a year, then the present situation
multiplied by 30 years times $30,000. which comes up with
$900 thousand. and this is how the damages are awarded. It
would be as if you went to your employer and said I think I
am going to work for you for 30 years, I'd like you to pay
me today for all the money that I am going to earn over
those 30 years. I think you can see that sum is meant for
future income, not for the present income. The consequences
are certain. It is enormously more expensive to the
society, at large, to repay this kind of money and we
(indiscernible) the insurance companies, and so on, but
remember that somewhere that money came from a business,
from a working person from somewhere the insurance got the
premiums. The more the insurance companies pay, the more
they are going to charge us. We can debate that all day but
they don't get the money off trees. The second thing that
happens to the injured and innocent victim, is that they now
have a lump sum of some $900 thousand. It has been the
case on more than one occasion, that five or ten years down
the road, the money is entirely gone, but the injury is not
gone. Then the person has no alternative but to return to
the state or some other agency for support for the injury of
which continues. It is set up an annuity program, and this
can be done, as I said, very reliably. I can speak of that
even in the case of the executive (indiscernible) in
California. The people that were on annuities, in the end,
continue to receive their annuities, in spite of the fact
that the company went bankrupt.
We have proposed that it should be a structured settlement,
and the structured settlement should acknowledge the fact
that all of this money isn't earned today, that in fact that
it is earned over time, it should be paid over time. The
same is true with future non-economic damages, future pain
and suffering. If you pay it in a lump sum, then it is
available today, but it may not be available when it is
needed and we would argue that the same kind of treatment
should apply. The damages should be repaid in the normal
course of how they would have been earned as proposed to
having a lump sum payment. The cost of providing such an
annuity can be as little as one-third of the cost of the
lump sum payment. There is an enormous savings to the
system, and I keep saying the system because it is in fact
the system, it is not just a single insurance company. Each
one of these examples in this legislation is the result of a
interpretation by a judge somewhere. None of them are the
result of a deliberate body, such as yourself, sitting down,
deciding what it is would be the best law of the land. I
would suggest that there is absolutely nothing wrong, in
fact there are many things right, with an approach that
leads us to deciding what is going to be most reasonable,
what is going to benefit the largest number of people, and
what is going to make this system affordable and
predictable.
If I may say just a word about the statute of limitations.
The problem with the statute of limitations is that it
essentially exists no longer. If you do something, whether
you meant to cause harm or whether you knew the event may
have occurred; whether you were negligent, you don't know
when you may be sued for something that you've done. For
example, a pediatrician who takes care of a child can be
sued up to 21 years later. If the injury occurred at birth,
when the child reaches the age of maturity, they are
empowered under the present statutes to file a lawsuit on
their own behalf. The problem with that is that there is no
predictability. When there is no predictability, there is
no insurance, so we witnessed the development of what is
known as claims made insurance. It used to be that when we
thought of insurance, we thought of occurrence insurance.
That is if something we did, eventually resolved in a
lawsuit, then we would be covered, regardless of when the
claim was made. That left the insurance companies with what
they call, "the long tail." It left them with an exposure
of 20 years or more and they couldn't predict what their
loss would be so they found a clever way of putting the loss
back on the individual or business or the person who was
insured. Here is how they did it. They said, O.K., we will
only write claims made insurance. "Claims Made Insurance"
means that you must be insured when the event occurred and
you must be insured when the claim is made. If you have an
event occur in year one but you aren't sued until year
three, if you are not insured with the same insurance
company or if you haven't bought a very expensive tail
coverage, you won't be covered. This exact scenario
occurred to the doctors in Cordova. They bought insurance
for three years and each year the insurance was higher and
higher and higher and in the fourth year, they could no
longer afford the premiums nor could they afford the tail,
which was 1 1/2 times what the premiums would have been for
that year. They were forced to quit buying insurance
altogether, and as a result of that, the insurance company
kept all the money and they were uninsured for any claims
that were filed after the third year, no matter if they had
occurred during the first three years that they were
insured. Claims made insurance is not unique to medicine.
It is in many many areas of life where we have the situation
of claims made insurance. What in effect has happened,
then, is the insurance companies have responded to the
unpredictability of the affects of the statute of limitation
and it does so in a way that puts the ultimate burden back
on the person who is supposed to be buying insurance for
events that were out of their control. Dick Cavanaugh, who
is the chairman for the Alaskans for Liability Reform, has
made this point. Murder is the only crime that doesn't have
a statute of limitations. If you rob a bank or if you
embezzled, or if you do these other things, there are
statute of limitations in which an action can be brought.
I had a conversation this morning in which punitive actions
are not now limited by a statute of limitations. On the one
hand, we have a criminal behavior that enjoys the statute of
limitation, but on the other hand, you have ordinary
business activities which do not. It seems to be ludicrous
that it should be that way. With a statute of limitations,
there is the opportunity for an insurance to once again
become an occurrence insurance instead of claims made.
There is the opportunity for individuals in businesses to
have some control over the future direction of the lives and
their businesses. As it is now, an architect may be 20
years down the road, may be out of business, may no longer
be practicing, and can still be sued for something he/she
did while in practice. That doesn't seem reasonable, it
doesn't seem productive. Time moves on. I'm happy to
discuss any of these issues. I think there is going to be
ample discussion as the session goes on and each of these
points will be (indiscernible). The Alaskans for Liability
Reform has prepared a graph paper which I think you all
have, which takes each of these points and tries to show the
changes that is made in legal terms, if you will, and then,
in plain English, tells you our reasoning behind each and
every one of these.
Perhaps a short word and then I would like to leave a little
time for questions for Al. There is one other controversial
rule of the court, known as Civil Rule 82. If I might take
just one moment to say how that works. In (indiscernible)
the idea that the other person should pay your law bills if
they sue you wrongly, is a great idea. It deters people
from frivolous lawsuits. If you are vindicated and you win,
you get your fees from the lawyer back. In practice,
however, it has been anything but a good idea. The problem
is that when the defendants insurance company or otherwise
able to pay the bill is at fault, damages for Rule 82 are
always assessed. Prior to the 1986 legislation, there was
even a schedule contingent fee for non-contested cases for
Rule 82. If, at that time, you agreed that it was your
fault, you agreed to pay it, you would still be forced to
pay a percentage of the final settlement even though you
didn't argue the case. That was changed in 1986, but we
still have this issue of Rule 82. The Citizens Coalition
sued the attorney general for an interpretation of the law.
We felt that it would be proper to take as an initiative the
subject of the contingent fee. The attorney general said
that it was the province of the court and that the court
rules are (indiscernible) to the initiative process. The
trial bar asked to be adjoined in the suit. We told the
judge that we didn't want them to be adjoined in the suit,
we wanted the attorney general to render an opinion in court
as to why this should be. The judge, nevertheless, enjoying
the trial bar, the lawsuit, and then found against us and
the rule 82 fee of $10 thousand. The state, meanwhile, had
only $2 thousand for their Rule 82 fees. We had to post a
bond of $10 thousand in order to appeal this case to the
Supreme Court. The Supreme Court ruled against us and said
that the rules of the court, including attorney's fees are
the proprietary (indiscernible) that the courts prerogative
that they are not addressable in any way, shape or form by
the initiative process and they took our $10 thousand, thank
you very much. Rule 82, on the other side, there was a
worker who sued an oil company, the big bad oil company, as
you know, and lost. The oil company then asked, in turn,
for their Rule 82 fees. It amounted to a substantial amount
of money. The individual appealed to the Supreme Court, and
the Supreme Court is coming out with a very complicated
formula of Rule 82 that says if you make so much money, you
only have to pay a percentage. But if you make more money,
then you have to pay another percentage, - so on and so on.
You can get this opinion, of which I think became in effect
July 15 of this year. We argue, that if Rule 82 were
equally applied across the board, if everybody lived under
the same rules, then it might, indeed, be effective as a
deterrent to litigation. But when it is unequally applied
the way it has been, traditionally, and the way we've been
docking that, that it is unequally applied. All it does is
add more money to the pot and it doesn't do anything to
deter litigation. I am certainly happy to answer any
questions.
Number 320
CHAIRMAN HUDSON thanked Dr. McGuire, stating his testimony
was helpful.
Number 324
REPRESENTATIVE FINKELSTEIN appreciated Dr. McGuire's
testimony. On Rule 82, just talking about it, which section
was talking about the bill.
Number 330
DR. MCGUIRE stated that Section 24 takes a bit of study to
understand how something seems to be saying it one way and
it ends up meaning another way. We can't just say Rule 82
is appealed, we have to go around it, saying you can't have
an agreement to have this, and in effect, it ends being an
appeal of Rule 82. In a sense, it is saying that unless
specifically authorized by statute agreement, attorney's
fees may not be awarded to a party in a civil action for
personal injury, death or property damage, related to or
arising out of fault. I want to take time to point out that
no one has said that Rule 82 doesn't work in the case of
civil litigants who are not suing under the tort statutes.
When you have two relatively equal parties, say two
contractors and say two individuals suing each other, and
both have something to lose, then Rule 82 has a salutary
effect because both parties know that if they don't settle
this thing, somebody is going to be paying the other guy's
attorneys fees. We were careful to point out then, that I
believe this language says that now, that this is reading us
of Rule 82, only as it relates to court law to personal
injury property rising out of fault.
REPRESENTATIVE FINKELSTEIN asked that on Section 3, there
are arguments on both sides on the issue of the two years,
and I am certainly very skeptical, myself. The bill, as
explained to me, in Section 13, if we're going to say that
no matter what, if you're not going to bring an action
within two years, you can't pursue the actions. What is it,
in the nature of undiscovered foreign body, within a person,
that makes that particular case so different from a variety
of other medical malpractice cases. Is there something in
that particular category that makes it so different that
should be (indiscernible). One of the only exceptions to
the (indiscernible).
Number 368
DR. MCGUIRE stated it arose from the fact that some
individuals felt that it was a particularly egregious
offense that if a doctor or a nurse or anybody else left
with something inside someone's body, and they didn't
discover it until sometime later, it was so obviously a
malpractice kind of thing that there should not be a statute
of limitations. This was felt proliferously to be the case
by anybody who addressed the issue. I think it is a matter
of opinion and a matter of judgement. I certainly don't
have any problem with the idea that there can be exceptions
in some instances because I think that, once again, those
are quantifiable exceptions. I think that in this instance,
it probably has the advantage that everybody doesn't have to
run down to do an x-ray to make sure they don't have
something there. I wouldn't debate it with you very
strongly.
Number 380
REPRESENTATIVE FINKELSTEIN asked if there was anything
medically more threatening than that one particular type of
malpractice, more so than some of the other types of things.
It is just more quantifiable.
Number 386
DR. MCGUIRE answered that was his impression, yes.
Number 388
REPRESENTATIVE MACKIE referenced Dr. McGuire's earlier
testimony where he gave situations of doctors, in Cordova,
he believed that insurance costs rose and sooner or later
were unable to afford insurance. You are suggesting some of
these changes out of situations because of that. Where, in
this legislation, or where in the effort to reform some of
these problems affect a lot of citizens in Alaska, is any
kind of working commitment from insurance companies to lower
their costs.
Number 397
DR. MCGUIRE said I came to speak for the Alaskans for
Liability Reform, and I didn't say that I came to speak for
the insurance companies. I don't speak for the insurance
companies and I have my own separate problems with insurance
companies at times. This was the subject of intense debate
in 1986, and that is so if we do all of these laws, who says
that the insurance companies are going to be around anyway.
We went through (indiscernible), the history of insurance
beginning with Lloyds of London, and the idea of reinsurance
and the idea of competitive markets and so on and so on.
Let me try to answer the question, if I may, this way.
There was created, in 1975-76, an organization called MICA,
which was a Medical Indemnity Corporation of Alaska and it
was an express creation of the legislature to answer the
problem of no insurance in the medical malpractice area. It
was set up to be a mutual non-profit sort of company so that
all the records would be available so that we could study in
fact what happened in the insurance mechanism. It depends
on whose opinion you take as to whether MICA was a success
or not. In the end, we learned a very great deal about the
actual cost of insurance, about where the money went, and
all of that history has been read into the record both with
Speaker Cotten's study group and with others and is
certainly available. MICA has subsequently been sold to
another mutual insurance company and that did have a good
effect in terms of moderating the race. I can't argue that
whether or not the whole insurance business ought to be that
of mutual insurance companies or whether or not it should be
that of for profits. But what I can tell you, is that when
we had the mutual insurance company, we, as doctors, we
still faced the problem of not knowing of what the long tail
was going to be and therefore, there still had to be a
mechanism of reinsurance and that unpredictability makes for
volatility of rates, for one year high and the next year
low, and nobody knows where it is. Let me remind you, that
we used to have statutes of limitations. It is not a
foreign concept. It isn't something that we're dreaming up
anew. There used to be statutes of limitations. Even the
IRS has a statute of limitations, but these statutes of
limitations were voided by judicial decree. They were not
voided by legislative action, by referendum or by
initiative. While they can be portrayed as being repugnant,
in order that there is some predictability of affairs, it is
important that there be some. If they were of no good, we
wouldn't have statutes of limitations for criminal offenses.
Number 450
REPRESENTATIVE FINKELSTEIN stated that Dr. McGuire made
mention of the issue of 'while committing a crime,' part of
it all and we had a long discussion, I think that you caught
earlier on, the whole thing has some very scary
implications. I think a lot of us are not completely clear.
An example that came to my mind that we are talking about is
the recent case with (indiscernible) Hardware, where some
kids were out in some sort of felony or misdemeanor crime of
theft, and were shot. I assume that there has been a suit
of trying to recover some of the things. Are you suggesting
in that kind of case that they should be precluded from
suing because there was some involvement in what some might
consider to be a felony or a crime, that they should be
precluded from any compensation?
Number 462
DR. MCGUIRE answered the short answer is "no." The long
answer is that the kids weren't doing a felony and that is
precisely why the language says a felony. I am completely
sympathetic to the fact that kids, and sometimes adults, do
things that are not exactly within the law but they
certainly mean any terrible harm to come by it and some
injury occurs. Kids trespass all the time. We did not have
the intent of misdemeanors.
REPRESENTATIVE FINKELSTEIN understood that, but just the
(indiscernible) between misdemeanor and felonies, just the
dollar amount... There are some larcenies that are
felonies, right?
REPRESENTATIVE PORTER added you are presuming that in that
case, there would have been a (indiscernible) of larceny
which included intent to permanently deprive in that
scenario. I don't believe that was the case.
REPRESENTATIVE FINKELSTEIN agreed it could be argued that
they were just temporarily stealing the item. The key here
is that the standard would be changed in proving whether
they were involved with that. It wouldn't be beyond
reasonable doubt, it would just be a lower standard in a
civil case as to whether they were involved in a commission
of some sort of larceny which are... My only point, I'm not
trying to get into the details of that, but there are
larcenies that are felonies, and they were involved in a
larceny like act and I just want to bring it up because I
think there is examples on the other side where we've seen
enough publicity that we realize that not everyone that fits
these cases may be some we want to bar from any
compensation.
DR. MCGUIRE thought he might want to be careful that your
remarks are meant to clarify and not obfuscate because the
(indiscernible) of civil justice of criminal justice is one
that has evolved over the years and we, as a collective
society, have decided that some actions are more harmful to
society, as a whole, than are others. We call those
felonies. We take felonies pretty seriously. When you are
charged with a felony, it is no laughing matter. At the
same time, we recognize that there are those elements which
are not so serious to the fabric of society and we call
those misdemeanors.
Number 525
REPRESENTATIVE FINKELSTEIN stated he was aware of the
differences.
DR. MCGUIRE wanted to try to make the point that some of us
believe that when you go out and do something that you know
or should know, is more likely than not to cause others
injuries, when you rob banks, when you drive drunk, when you
run red lights, and as a result of that, you cause injury to
other people, where in the world does it come with any idea
of fairness that you are the victim and that you ought to be
compensated because you are the criminal. It doesn't make
any sense. Regardless of whether or not it said that it
should be so, the fact of the matter is from the Daily News
editorial, that those law-suits are filed. The fact of the
matter is, we argue that they don't even belong in court in
the first place.
REPRESENTATIVE FINKELSTEIN clarified, I couldn't agree with
you more in cases where there is conviction (indiscernible).
The discussion we had earlier is cases where the person was
found innocent of a felony and then in the civil case, they
try using the lower standard. Made to prove that they were
involved in the felony anyway. That is the case I was
trying to get at, I agree with you on a conviction, it is
just a different level.
DR. MCGUIRE responded, I would say to you, alright, then
let's use the same standards for determining fault in civil
action as they use in criminal action. The point I am
trying to make is we, as a society, want protection of the
individual, and so from the arm of government we demand a
standard of evidence beyond reasonable doubt, for criminal
actions. But for civil actions, the plaintiff can use a
different standard and can prove a damage using a different
standard. Our argument is that the jury who decides whether
or not there should be civil damages ought to be able to use
the same standard approved relative to the felony as to the
standard approved relative to the damages. Therefore, we
want, at a very least, this information be mandatorily
(indiscernible). I will say to you, that I have a great
deal of faith in the jury system. What I don't have much
faith in, is what the jury gets to hear. So many times the
instructions to the jury are so restrictive that they don't
have all the facts of the case and how can they come to any
conclusion other than the one that is (indiscernible) or
what they want it to be. We argue that this is still a
matter of the jury to decide but by having this law in front
of the jury, you make sure that the jury, who decides the
damages, gets to also decide the appropriateness of the
conduct of the plaintiff during the injury.
CHAIRMAN HUDSON stated he must cut Representative
Finkelstein and Dr. McGuire off to go on with the scheduled
meeting.
REPRESENTATIVE FINKELSTEIN added he thought it was very
helpful and helped him understand that it is two different
levels. The first situation, where you want to make sure it
is before the jury and the other is where they are actually
precluded from any compensation. They are both important
but different.
CHAIRMAN HUDSON stated it was very good for the preliminary
hearing that these kind of discussions come out because
these are clearly things that we can amplify and home-in on,
on an individual basis. I appreciate Dr. McGuire for being
at the meeting.
CHAIRMAN HUDSON asked Jeff Feldman and/or Dan Hensley to the
table.
Number 545
JEFF FELDMAN, PRESIDENT OF THE ALASKA ACADEMY OF TRIAL
LAWYERS ASSOCIATION, has lived in the Anchorage community
for 18 years and by way of background, I would say it has
been his practice represented both plaintiffs and
defendants. I have, on occasion, represented injured
Alaskans. I have also represented many of Dr. McGuire's
colleagues, some in malpractice actions. I have represented
engineers and contractors, who have sued, and I am currently
representing our Attorney General Cole, and other state
officials who were sued in the state action, in a tort
action presently pending in the courts.
MR. FELDMAN said I come this afternoon with a view that is a
little bit broader than what you might expect from me as the
president of the Alaska Academy of Trial Lawyers
Association. I hope that we would all agree that the
citizens of this state, the people that hire and that voted
for you, deserve a civil justice system that is fair and
protects their rights and their cause for adequate
compensation. I don't think anyone would quarrel with that
overall goal. I understand that unspoken in this room,
today, but very much present in the minds of those of you
who have to make these decisions, is a generalized hostility
towards the legal system, and perhaps, even a generalized
hostility towards lawyers, in particular. I am not here
this afternoon as an apologist in the legal system and I
have my own concerns about the legal system, as I do about
the medical system and the educational system, in which my
children currently attend school. I will tell you candidly
that the legislation that is before you this afternoon is
not reformed legislation, it is a misnomer to call it that.
It is legislation which confers immunity and special
benefits on a very narrow group of society on special
interest groups. It benefits, simply speaking wrongdoers,
people who do not commit harm, do not commit negligence on
other parties, are not particularly benefited by much in
this legislation. This legislation benefits those who's
conduct injures and kills your constituents. Injures and
kills Alaskans. It benefits insurers, major corporations,
those who produce products that are used in our state and
professionals, including myself who commit malpractice. It
lessons the responsibility and reduces their exposure to
liability that is clearly its intent. so lets identify it
from what it is.
TAPE 93-41, SIDE A
Number 001
NOTE: AT THIS POINT THE MINUTES WILL NO LONGER BE VERBATIM.
MR. FELDMAN told the committee that HB 292 will, in the end,
hurt the very constituents the committee represents, the
victims who were unfortunate enough to be maimed or injured.
Mr. Feldman noted that the hearing room was full of lawyers,
doctors, and lobbyists, but none of the victims most
affected by this bill. The victims of catastrophic injuries
brought on by someone else's negligence, the widows and
orphans etc., these are the people whose rights are being
changed with this bill.
MR. FELDMAN stated that Dr. McGuire was simply wrong when he
stated that everything in the bill was the product of
judicially created law. The statutes of limitations,
interest rates, rules by which certain issues were
determined by the jury, were set by previous legislatures.
HB 292 purports to undo what previous legislators have done.
MR. FELDMAN pointed out that the statute of limitations set
at six years would be bad public policy for Alaskans as some
defects won't show until the seventh year. The section
would confer immunity to manufacturers of products whose
defects may stay concealed for over six years.
MR. FELDMAN stated that periodic payments puts the victim at
risk because the defendant, whether it be an insurance
company or individual, may not be around at the end of the
payment schedule. It's also true that the victims needs
very during their lifetime and should, therefore, be allowed
to use the money as the person sees fit. For instance, a
person who is rendered a quadriplegic may find they need to
build a special house, or move their family out of state to
be close to a facility that can more properly take care of
his needs, etc.
MR. FELDMAN concluded by saying HB 292 will make Alaska the
most anti victim state in the nation. It will not do any of
the things it is purported to do and should be called the
"wrongdoers relief act".
Number 146
DAN HENSLEY, Attorney, reiterated Mr. Feldman's testimony.
He added that the people who promote tort reform state as
their reasons for their support that they don't like the
civil liability system because it costs too much, because it
takes too long, because frivolous lawsuits burden the
system, and because some people with legitimate claims don't
have access. Mr. Hensley noted that he would like the same
things but HB 292 does not accomplish these things. For
instance, in Section 2 of the statute of repose cuts out
claims for people who are injured six years after a product
has been manufactured or a building has been designed.
MR. HENSLEY explained Section 3 limits malpractice suits
such as in the case of a woman whose has a mammogram which
clearly shows a small cancerous lesion but the radiologists
somehow becomes confused and doesn't tell the patient and
the cancer grows and becomes deadly three years after the
mammogram was taken the patient would not have a claim.
MR. HENSLEY said language in Sections 5 and 6 would exempt
the statute of limitations provisions in personal injury
cases from applying to people who are mentally incompetent
or are children.
MR. HENSLEY noted that Sections 20 and 21 weaken the pre
judgement interest part of our civil liability system.
Currently, if a insurance company owes "X" amount of money
today and it knows it will have to eventually pay, they can
decide whether it's cheaper of pay now or delay and invest
the money and pay the pre judgement interest. If the pre
judgement interest rate is low, its incentive is to delay.
If it is high, its incentive is to settle now. Section 21
reduces the rate of pre judgement interest to a point where
an insurance company will likely earn more money on what it
owes than it would have to pay in prejudgment interest.
MR. HENSLEY said the Section 20 guts most of the kind of
award in which prejudgment interest would have to be paid.
MR. HENSLEY noted that Section 11 would necessitate the
hiring of an economist, by the plaintiff, to calculate the
taxes on future losses.
MR. HENSLEY stated that Section 13 would create the need for
the plaintiff to hire insurance consultants to find out how
periodic payments would work for or against them. This
again would increase the costs of the suit.
Frivolous lawsuits are by and large prevented by Rule 82 but
HB 292, as it stands, would cut that out of the legal
system.
MR. HENSLEY stated that for the first time under this bill,
the jury is allowed to hear that a plaintiff has health
insurance In the past, the jury was prohibited from hearing
this. The judge would hear this after the case was over and
deduct the health insurance payments from the juries award.
Under HB 292, the jury will hear about the plaintiff's
health insurance but not the fact that the defendant may or
may not have liability insurance. Mr. Hensley felt this is
not fair as it gives the wealthy defendant an advantage over
the victim.
Number 257
CHAIRMAN HUDSON thanked the previous speaker. He said
speaking for himself, he has not approached this bill with
any preordained dislike for lawyers. Chairman Hudson feels
it is wrong to enter into an important debate as this
presuming there is a strong bias.
Number 278
MR. FELDMAN stated he didn't mean to suggest that his
comments were personnel to any one on the committee. He
said he understands that there is frustration with the legal
system, but sometimes the good intentions are misplaced.
Number 285
REPRESENTATIVE MACKIE said he did not come to the table with
any preconceived notions and listened to Mr. Feldman's
presentation closely. Representative Mackie perceived the
problem to be that business is getting priced out because of
high costs of liability insurance in this state.
Number 315
REPRESENTATIVE PORTER asked if given the example of a
product or building causing injury after the sixth
limitation was imposed, couldn't an attorney assert the
claim as gross negligence?
Number 330
MR. FELDMAN replied that there were no exceptions in the
statute of limitations under HB 292 for gross negligence.
So even he, an attorney, could prove gross negligence. Mr.
Feldman further stated that gross negligence is a higher
standard of negligence then ordinary negligence.
Number 347
MANO FREY, President, AFL-CIO, testified that his union does
not have a general policy on tort reform. He said he raised
the concern that some have alluded to insurance costs
decreasing if HB 292 is passed, but no one can say so
definitively.
MR. FREY stated he doesn't think there is a problem with the
size of jury verdicts in this state. Mr. Frey added that he
hopes the bill would address the problems in a balanced way.
Mr. Frey believes HB 292, as it is currently drafted, will
only hurt the victims.
MR. FREY stated that when a workers compensation reform
bill was on the agenda, one of the popular ideas was to
reduce the amount of money that attorneys received. This
ended up doing a great disservice to people with legitimate
claims as they couldn't find an attorney to represent them.
The amount of work involved versus the possible payoff was
not high enough to make it worth most attorneys time.
Number 510
LAURA KELLY, Vice President, AFL-CIO, testified that she
could not see any benefit to the working men and women of
the state in this legislation.
MS. KELLY cited several example of products that science is
just now showing that they can cause damage to people well
past the six year limitation in HB 292. Some of those
products, for example, are cellular phones, silicone
implants, and the radar guns the police use to trap
speeders.
MS. KELLY stated she has great confidence in the people of
this state that make up our juries and would rather have
them deciding her case than having some artificial caps
imposed by this bill binding the jury.
MS. KELLY stated her concern is that HB 292 sets a lower cap
for a person in a wrongful death action who was childless
then one with children. Ms. Kelly felt that was sending a
clear message to citizens of Alaska about there relative
worth.
TAPE 93-41, SIDE B
MS. KELLY stated she was bothered that HB 292 would, in
effect, give only $10 thousand for the loss of a child to a
parent.
MS. KELLY said she did not believe the state should have any
interest in the area of punitive damages. There could be no
benefit to the state in capping punitive damages in the most
outrageous and egregious cases.
Number 055
STEVE CONN, Executive Director, Alaska Public Interest
Research Group, testified his group is bi-partisan and tries
to represent the Alaskan consumer. Mr. Conn noted that he
used to be a professor in the university system in the area
of justice. Mr. Conn gave a historical outline of torts.
MR. CONN stated he thinks it is important to look at past
tort reforms to see if they have achieved any benefits for
Alaskans. Has it lowered insurance premiums? Has it made
the system more cost efficient? Have the injured been
served? Have the medical profession been served? Are we
safer in terms of the products we use?
MR. CONN suggested that the legislature direct, not the
attorney general's office, but the Alaska Judicial Council
to study past tort reforms to answer the questions
previously asked.
MR. CONN believes that at both the state and federal levels,
the insurance industry has misrepresented the facts in
regards to this bill. Mr. Conn cited a report done for the
state of New York that contends that the real problem is
that there is more malpractice in the health care field than
the system can handle and that there aren't too many
lawsuits filed, but too few.
MR. CONN stated that of the suits filed, the amounts of the
awards were not disproportionately high despite the few
extreme cases that make the news.
MR. CONN pointed out that overall nationally malpractice
insurance premiums account for less than 1 percent of the
total health care spending according to the studies.
MR. CONN again asked the committee to ascertain whether the
promises made before the last reform came true before they
tinker with the system again.
Number 297
CHAIRMAN HUDSON noted that HB 292, like most bills that are
introduced in the legislature, serve initially as a forum
for putting the issue before those in the legislature that
have to make public policy decisions. Chairman Hudson
welcomed the input from the various people, throughout
Alaska, to help fine tune HB 292.
Number 345
FRANK THOMAS-MEARS, State Insurance Administrator, Alaska
Dental Society, said he is one of the original founders of
the Alaska Citizens Coalition for Tort Reform. Mr. Thomas-
Mears stated that this bill is the first attempt to set
forth limitations. He said that the citizens coalition has
tried to interest the trial attorneys, since 1985, to sit
down and open up discussions on tort reform and the reply
was "no." Furthermore the trial attorneys have indicated
that if the reform passes they will fight it in the courts.
MR. THOMAS-MEARS stated that there are finite resources to
go around and that a democracy cannot have unlimited
liability to everybody for everything and exist. He
asserted that law has been enacted through case law without
public participation.
MR. THOMAS-MEARS stated he believed our society needs more
methods of alternate dispute resolution such as mediation,
arbitration and peer review.
Number 568
REPRESENTATIVE MULDER asked for an explanation of the $10
thousand figure for the death of a child that has been
brought up during some of the previous testimony.
Number 575
MR. FORD responded that in a wrongful death action, sections
20 through 23, a $10 thousand figure would apply assuming
that the child had no dependents.
TAPE 93-42, SIDE A
Number 001
There was continuation of wrongful death discussion between
Mr. Ford and Representative Mulder.
Number 045
ERIC SANDERS, Attorney, testified as to how the present law
reads versus the legislation before the committee. He said
under present law, there are two kinds of clients. There is
one type where there are dependents. There is also the
wrongful death claim where there are no dependents. If you
are married or are a single person with children, then you
have dependents. He said if he were supporting his mother
because she was disabled, she would also be a dependent.
Mr. Sanders said in that situation, if a dependent is
survived, then they have a claim for their loss of support.
They would also have a claim for loss of companionship. He
said that is one set of claimants, those with dependents
MR. SANDERS said there is a second group of those people who
are not dependents and have no dependents. He said there
could be a minor child, under 18 years old. Under that
there would be a pecuniarily loss. The way it is currently
done is it is projected what that child would have earned
during the course of their life minus their consumption.
That is the pecuniarily loss.
MR. SANDERS said separate and apart from the wrongful death
statute there is also a law which provides that parents of a
minor child have a claim for the loss of the relationship in
their child.
MR. SANDERS said then you have claimants that are no
dependents over the age of 18. If you're 18 years plus 1
day old, you are killed, you have no dependents, under this
law you're going to get the estate.
Number 078
REPRESENTATIVE PORTER asked Mr. Sanders what a person could
conceivably get under Section 6 of HB 292 for the loss of a
child that is over 18 years of age.
Number 085
MR. SANDERS explained that HB 292 is limiting tort actions
not expanding them. He added that under current law the
estate of an 18 year old would be limited to pecuniary loss,
the estate would not get anything for the loss of
companionship of the child.
MR. SANDERS asserted that the civil justice system is
arbitrary in some regards and this is one example.
MR. THOMAS-MEARS responded that HB 292 is arbitrary but he
thinks its as fair as you can get given the framework.
MR. THOMAS-MEARS added that he would rather set arbitrary
limits now with finite limits under rational circumstances.
MR. SANDERS stated that if the insurance companies would
commit, in writing, to lower premiums if this bill passes he
didn't think there would be opposition to it. He added that
the insurance industry is standing on the sidelines
promoting the passage of tort reform limiting victims rights
without committing to any reductions in premiums.
Number 135
CHAIRMAN HUDSON commended both sides and suggested that it
be reduced to writing as there are some good ideas for the
future.
Number 138
REPRESENTATIVE MACKIE commented that when tort reform came
up in 1988, he understood insurance rates would be lowered
but it hasn't happened.
Number 155
GORDEN EVANS, Health Insurance Association of America,
testified to their position on HB 292. The Association
believes that the major focus should be on the reduction of
the occurrence of malpractice. This may involve the
relicensing of the medical profession, periodically, with
written examinations and peer audits. The association
believes in requiring hospitals and other medical facilities
to implement effective risk management practices as a
requirement of licensure. The association is also promoting
the accumulation of information on the medical field,
including an analysis of claims or information of license
revocations, suspensions and disciplinary actions. Finally,
to empower the State Medical Board to be able to act on
these measures.
MR. EVENS explained that the association is supportive of
alternative dispute resolution. He added that if litigation
is necessary, then every effort be made to make sure that as
much of the award go to the claimant.
REPRESENTATIVE MACKIE asked if the insurance industry was
supportive of lowering their rates if some of these things
in the bill pass.
Number 234
MR. EVANS stated that if costs are cut and limited to a
finite amount, then it would follow that. Premiums would
come down.
Number 255
REPRESENTATIVE PORTER asked for Mr. Evans to give the
committee an analysis of any savings or reduction in growth
in insurance premiums.
Number 268
MR. EVANS replied that he was not in the position to make
any predictions in that regard. He added that he would pass
the request along to the association for a reply.
REPRESENTATIVE PORTER responded that he hoped the
association could come up with some response before session
started as he knew the question would come up during the
legislature's debate on tort reform.
Number 276
REPRESENTATIVE GREEN asked Mr. Evans for an approximation of
how much the payout is for all malpractice claims as opposed
to non litigated coverage.
Number 290
MR. EVANS replied that he did not have that information but
would make an effort to obtain and provide it for the
committee.
Number 300
CHAIRMAN HUDSON stated that any information provided that
would help the committee expand their knowledge on this
subject will be appreciated.
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