Legislature(1993 - 1994)
03/02/1994 01:15 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
HOUSE JUDICIARY STANDING COMMITTEE
March 2, 1994
1:15 p.m.
MEMBERS PRESENT
Rep. Brian Porter, Chairman
Rep. Pete Kott
Rep. Gail Phillips
Rep. Joe Green
Rep. Cliff Davidson
Rep. Jim Nordlund
MEMBERS ABSENT
Rep. Jeannette James, Vice-Chair
COMMITTEE CALENDAR
HB 292: "An Act relating to civil actions; amending Alaska
Rules of Civil Procedure 49 and 68; and providing
for an effective date."
HEARD AND HELD FOR FURTHER CONSIDERATION AND
ACTION
WITNESS REGISTER
SUSAN COX
Assistant Attorney General
Civil Division
Department of Law
Room 200 - Fuller Building
4th & Harris Streets
Juneau, AK 99801
Phone: 465-3603
POSITION STATEMENT: Informational testimony regarding
HB 292
MICHAEL FORD
Legislative Legal Counsel
Division of Legal Services
Legislative Affairs Agency
Goldstein Building, Room 404
130 Seward Street
Juneau, AK 99801
Phone: 465-2450
POSITION STATEMENT: Informational testimony regarding
HB 292
DANIELLA LOPER
Committee Counsel
House Judiciary Standing Committee
Alaska State Legislature
Capitol Building, Room 118
Juneau, AK 99811
Phone: 465-6841
POSITION STATEMENT: Informational testimony regarding
HB 292
PREVIOUS ACTION
BILL: HB 292
SHORT TITLE: CIVIL LIABILITY
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
04/23/93 1459 (H) READ THE FIRST TIME/REFERRAL(S)
04/23/93 1459 (H) L&C, JUDICIARY, FINANCE
09/10/93 (H) L&C AT 09:00 AM CAPITOL 17
11/22/93 (H) MINUTE(L&C)
01/27/94 (H) L&C AT 03:00 PM CAPITOL 17
01/27/94 (H) MINUTE(L&C)
02/01/94 (H) L&C AT 03:00 PM CAPITOL 17
02/01/94 (H) MINUTE(L&C)
02/03/94 (H) L&C AT 03:00 PM CAPITOL 17
02/03/94 (H) MINUTE(L&C)
02/07/94 2280 (H) L&C RPT CS(L&C) NEW TITLE 3DP
4NR
02/07/94 2280 (H) DP: HUDSON, MULDER, PORTER
02/07/94 2280 (H) NR: GREEN, WILLIAMS, SITTON,
MACKIE
02/07/94 2280 (H) LETTER OF INTENT WITH L&C
REPORT
02/07/94 2280 (H) -ZERO FISCAL NOTE (LAW) 2/7/94
02/16/94 (H) JUD AT 01:15 PM CAPITOL 120
02/18/94 (H) JUD AT 01:15 PM CAPITOL 120
02/18/94 (H) MINUTE(JUD)
02/21/94 (H) JUD AT 01:15 PM CAPITOL 120
02/21/94 (H) MINUTE(JUD)
03/02/94 (H) JUD AT 01:15 PM CAPITOL 120
ACTION NARRATIVE
TAPE 94-30, SIDE A
Number 000
The House Judiciary Standing Committee was called to order
at 1:30 p.m. on March 2, 1994. A quorum was present.
Chairman Porter announced that the committee would continue
its review of HB 292.
HB 292 - CIVIL LIABILITY
Number 012
CHAIRMAN PORTER announced that SUSAN COX of the Department
of Law would conduct a brief overview of all sections of HB
292 as per committee member requests. He requested that
comments be held until the close of her presentation.
REP. NORDLUND noted that MIKE FORD, the drafter of the bill,
was also present.
Number 080
SUSAN COX introduced herself to the committee, stating: "My
name is Susan Cox. I am an Assistant Attorney General,
Supervising Attorney, for the section in the Attorney
General's Office that handles personal injury defense
involving cases with State of Alaska and state agencies and
employees as defendants. I am here today at your request to
generally cover what is in HB 292, referring to the Labor &
Commerce CS that's before you."
MS. COX prefaced her discussion by noting she had not
studied the amendments specifically before the committee
members, but rather would focus on the Labor and Commerce
committee substitute in making her comments. She said, "I
am also trying to tell you what the bill does and how it
compares with the current law without espousing a position
one way or the other. I have looked at the bill and tried
to group it, not necessarily in going through section by
section, but trying to group some of the concepts that the
bill approaches...."
CHAIRMAN PORTER approved this approach.
MS. COX identified for review Sections 4, 5 and 6 of HB 292,
pertaining to statutes of limitations and changes in these
statutes; and Section 3, regarding the statute of repose.
She said, "Section 3, the statute of repose, proposes to add
a new statute to the Alaska statutes in AS 9.10.052 that
would put a six-year time limit for bringing a suit for
personal injury, death or property damage that relates to a
product or construction. The six years runs from the time
the product is first used for its intended purpose or six
years from the substantial completion of construction. This
differs from a statute of limitation in that it doesn't
matter when an injury may occur. A person may be injured
within that six years or after that six years. With the
statute of limitation you usually have two years from the
time you were injured to bring some kind of action if it's a
tort situation. With this statute of repose, the six years,
in general terms, would just run from the date the product
is used or the building is completed, rather than relate to
the time of injury. So, if a building roof collapsed ten
years after it was completed, the statute of repose, in
broad terms, would prohibit you from bringing suit even if
you brought it the very day after your injury. That is the
general concept. There are exceptions within the statute of
repose, to personal injury, death or property damage caused
intentionally or that results from gross negligence, fraud,
breach of warranty or guarantee or if there's a shorter
period of time allowed by law, and several other provisions
in Section 3....
"That's the basic concept with the statute of repose. The
only other note I would make without editorializing is that
there has been a statute of repose in Alaska law before now,
and it was found constitutionally invalid by the Alaska
Supreme Court in 1988. This statute here differs in some
respects from the version that has been invalidated by the
Alaska Supreme Court. I cannot refer you line by line to
the differences between this proposed statute and the one
that the court threw out. The findings and purposes
section, one, of this bill, in number seven, states that one
of its purposes is to enact a statute of repose that meets
the test set out in that Alaska Supreme Court case...
"Section 4 would create a particularized statute of
limitation for, essentially, medical malpractice actions
involving children. If the injured person is less than six
years old when the professional negligence allegedly occurs,
that child has until their eighth birthday to bring a
lawsuit. That's the general rule in (a) of Section 4. The
exception is that if a longer period of time will be allowed
under what is Section 6 of this bill... then the longer
period of time applies. Essentially, what this does is
eliminate the situation we have now where a minor, a child,
someone under the age of eighteen, has until two years after
they become an adult to file an action relating to things
that occurred to them as a child. This would eliminate that
tolling effect. If they're under, as I said, under six,
they have until their eighth birthday to bring an action, or
someone on their behalf, actually.
"Section 5 amends AS 9.10.070, which is our general tort
statute of limitations, a two-year statute of limitations
that applies to tort actions in the state. Section 5
eliminates some language that says, `You have two years to
bring an action for any injury not specifically provided
otherwise.' I think I understand -- the reason for
eliminating that language in that statute is because we were
creating in Section 6 a very particular and specific tort
statute of limitations, in a new section. That is why the
change in Section 5.
"In Section 6 we now have a new tort statute of limitations
two years from the accrual of an action. This term
`accrual' does not just mean that you have two years from
the date you were hurt in which to file suit. It includes a
concept that the Alaska Supreme Court has recognized called
the discovery rule. In other words, you have two years from
the date you discover or reasonably should have discovered
the existence of all the elements of your claim. So if, for
instance, you reasonably did not know that you had been
injured or that you had suffered some loss -- say, in a
legal malpractice situation where the effects of some
malpractice don't actually hit you until some years later --
the time limit for bringing suit is tolled until you
reasonably should have known. That discovery concept is
built into the use of this term, `accrual of the action' in
Section 6."
MS. COX reiterated that this eliminated tolling of a minor's
or juvenile's ability to wait until two years after they
turn 18 to bring suit. She said, "It basically says you
have two years to bring suit. So, if, for instance, a child
was in a car accident, they would have two years from the
time of the car accident -- assuming they knew they were in
a car accident and there were injuries at that point in time
-- to bring the action, and they cannot wait until their
20th birthday to do so. So those are what I have lumped
together as statute of limitation changes."
REP. NORDLUND: "So the effect of these changes is to get
rid of the two-year discovery rule, is that right?"
MS. COX: "No. The discovery rule is, as I understand it,
built into the use of the term `accrual of the action' in AS
9.10.075, Section 6."
REP. NORDLUND: "But it has to be within that six-year
period, doesn't it? After six years, even if you
discover... "
MS. COX: "We have two different things happening here. The
statute of repose in Section 3, with respect to construction
and products that cause injury, that six-year, if the
statute of repose applies, it doesn't matter when the injury
occurred. In other words, you could be injured in the
fourth year, or you could be injured fifteen years later,
and if it's after the six-year statute of repose, if that
statute of repose applies, then you will be prevented from
filing any action.
"The other three statutes of limitations change the other
tort situations where -- it has nothing to do with whether
we're dealing with a defective building or a defective
product. We're talking about any kind of injury; a car
accident, medical malpractice, any kind of tort suit. The
general rule would be, you have two years to file suit --
which is generally true now -- from the time you reasonably
should have discovered that you have a cause of action. And
that will be the same. The changes will be that children's
actions will be affected. The time limit will not be tolled
until they're 18, and then start running."
REP. NORDLUND: "In the sixth year, day one, in which you
discovered, you felt, that you had a medical malpractice
case. Could you bring suit?"
MS. COX: "We're still mixing things up. If you have a
medical malpractice situation, the general rule is, you have
two years to file suit from the date you were injured.
Again, the discovery rule applies. So if there is a
surgical tool left in your stomach and you don't know it for
years, then your cause of action hasn't accrued until you
reasonably should know."
REP. NORDLUND: "But what if you had some sort of surgery
and you didn't know, and nobody could have known -- even the
doctor didn't know -- that there was a problem with it until
the sixth year?"
MS. COX: "The sixth year doesn't apply. The six-year
statute of repose only applies to defective products and
defective buildings. It doesn't apply to medical
malpractice itself. It's in Section 3."
REP. NORDLUND: "...[I]n paragraph three, where it says `the
last act alleged to have caused the personal injury, death
or property damage,' that certainly could have been an act
of malpractice, could it not?"
MS. COX: "This section also says that `it does not apply if
there is a shorter period of time under another provision of
law.' And so, what we have under a normal statute of
limitations is only two years."
REP. NORDLUND pursued the question of medical malpractice
situations which could elude discovery until the two-year
statute had run.
MS. COX directed him to Section 6 which grants two years
from the date "you discover the elements of your cause of
action to file suit, and you will always have that, if
that's the longer period of time; your two years will run
from the date of discovery or when you reasonably should
have discovered [the elements of the cause of action]."
Number 337
MIKE FORD, Attorney, Division of Legal Services, Legislative
Affairs Agency, commented on the discussion of HB 292. "I
think that what we are seeing here is an illustration of the
complexity of the bill. This is a very complex area of the
law. The provisions of this bill are intended to mesh
together, and at times it's very difficult to weave through
all the provisions and see exactly where you wind up in a
particular situation.
"The way I would interpret Section 3 of the bill, is that if
in fact you have a claim, as Mr. Nordlund has suggested for
medical negligence, that this (a) (3) provision could well
cut off your claim. I don't see how you could read it any
other way. The fact that you have a shorter period of time
under another provision of law wouldn't apply because that
in fact is not a shorter period, it is a longer period, if
your accrual period were to apply. So I think that the six-
year statute cuts off claims at six years... if you don't
have gross negligence, fraud, or intentional concealment of
some injury..." Other potentially qualifying circumstances
were discussed.
REP. NORDLUND observed a need for caution, saying, "There
are situations in which you can be a victim of some medical
malpractice, or of some environmental catastrophe, [the
effects of] which you are not going to find out until well
after six years. Asbestosis is a great example of that.
But, beyond those kind of more environmental considerations,
simply in medical malpractice, there are situations in which
you are not going to know there was anything wrong with you,
even the doctor is not going to know there was something
wrong, until after the sixth year. And the way I read this
bill is that the absolute six-year limitations applies in
that situation."
CHAIRMAN PORTER agreed with this interpretation.
MR. FORD: "I think that was the intent of the Labor &
Commerce Committee when it adopted it and that's the way I
would read those two provisions. Actually, Section 3 and
Section 6, the way they would mesh together. Section 6
gives you a two-year accrual period presuming that Section 3
doesn't apply."
Number 392
CHAIRMAN PORTER: "There are three categories of events, if
you will, but are brought within, in my reading of Section
3, the statute of repose, the six-year statute of repose.
One is product liability, which is on line 1 of page 1; the
second is the building construction kind of liability; and
third is personal injury. And personal injury is the
element of malpractice."
CHAIRMAN PORTER, REP. NORDLUND, MR. FORD and MS. COX
continued discussion of circumstances pertaining to the six-
year statute.
CHAIRMAN PORTER: "Exceptions to the six-year statute of
repose for these three areas are, `Any act that was
intentional or resulted from gross negligence, fraud,
fraudulent misrepresentation, or breach of an expressed
warranty or guarantee.' In other words, under product
liability or on the, let's say the construction liability,
if a building owner and contractor want to have an expressed
warranty that the building lasts for ten years, then that
prevails over the six years. [Another exception is]
intentionally concealing facts that would give rise to
knowing that, in the six years, you had a claim. And,
finally, as this is something that's often used in medical
malpractice cases, the exception of, during surgery, leaving
a foreign body in a body."
REP. NORDLUND: "I think we're clear then that it does
apply, the six-year limitation does apply to malpractice."
MS. COX: "I am sorry I misconstrued the question. I think
the discovery rule then would allow you to bring suit within
two years of being injured, but, as you pointed out, the
six-year statute of repose would be the outer limit."
REP. NORDLUND: "In other words, if, at year five and a
half, you discover that there is something wrong with you
that is a result of medical malpractice, you have six months
to bring suit..."
MS. COX: "...instead of two years." Ms. Cox continued with
a discussion of medical issues. "We have four sections that
I would clump together:
"One being, Section 2, the new section AS 8.64.125, which
would establish medical practice parameters through the
medical board. That section is pretty self-explanatory.
"Section 4, which we've already discussed, would create the
new statute of limitations for children's actions in the
medical malpractice area.
"Section 27 relates to hospital liability for nonemployees
as long as notice is provided that a health care provider is
an independent contractor, and it specifies the type of
notice that need be provided in order to kick in.
"In Section 22 we have a couple of things. There is some
housekeeping on amendments with respect to the uniform
arbitration act. The reason that is being changed is
because AS 09.55.548 is being repealed, and that pertains to
expert advisory panels in medical malpractice cases.
"So, those are particular medical malpractice related
sections within this bill. Then there is a whole set of
sections that seek to amend or in some way modify -- in some
instances even repeal and reenact -- portions of previous
tort reform efforts that we do have in the Alaska Statutes
now. And those would be pretty much Sections 7 through 18
of this bill. In particular, I will try to walk through
what these do and how they compare with the current statute,
although it will be somewhat evident in some of these
sections because you'll see if there's just an amendment,
you'll see what the new language is, and what is being
deleted. Some of these sections are being repealed and
reenacted and you don't see what it is being discarded.
"Section 7 clarifies the section in Alaska Statutes on
noneconomic damages in a couple of ways. One is that it
makes it clear that it applies to wrongful death cases as
well as personal injury actions. The Alaska Supreme Court
has construed another section in Title IX, Chapter 17, to
cover wrongful death as well as personal injury, and this
will just make this expressly clear. In 9.17.010 it also
states that loss of consortium is one of the types of
noneconomic damages that a party may be able to recover.
"Subsection (b) is the cap that we have now on noneconomic
damages. Those are -- when I refer to noneconomic damages
we're talking about pain and suffering... disfigurement,
loss of enjoyment of life, and so on. We're not talking
about the economic damages that someone may suffer as a
result of personal injury, which could be medical bills,
lost wages, and so on. There's a distinction. This is
limited to the noneconomic damages. We have a $500,000 cap
by virtue of previous tort reform law that applies to
noneconomic damages. This change proposed here would make
it clear that the $500,000 cap applies to all claims arising
out of a single injury or death. The previous language said
each claim based on a separate incident or injury, and there
was some debate. For instance, if a child died and each
parent had a loss of consortium claim, did they each get a
$500,000 limit on their noneconomic damages, or were they
jointly limited to the $500,000? This would make the latter
apply. It says all claims arising out of a single injury or
death are capped at $500,000 for noneconomic damages.
"Two things are done in (c) of Section 7. One is to
eliminate what was an exception to that $500,000 cap for
disfigurement or severe physical impairment. That exception
did exist, it does exist, today, in the law, but those terms
were not defined and have not been construed yet to my
knowledge by the Alaska Supreme Court. This (c) would
eliminate that as an exception to the $500,000 cap, and
instead create a different exception, which applies where
the defendant is a person who committed or attempted to
commit a Class A or unclassified felony. The plaintiff, the
person bringing the action, was a victim of that offense;
and the action the plaintiff was bringing is based on that
offense. That is a new exception to the cap. So
essentially, if you've got a scenario where someone is
injured while someone is committing a felony, Class A or
unclassified felony, then the victim is not limited to
recovering $500,000 in noneconomic damages from that
defendant."
REP. NORDLUND: "So then, Susan, in Section 7, `wrongful
death' is added to those kinds of things that come under the
cap? Under current law there is no cap for wrongful death?"
Number 558
MS. COX: "Under current law, it's a question mark, I guess,
is the best way to say it, about whether this cap, this
$500,000 cap applies in wrongful death situations. The
Alaska Supreme Court has construed another section, I think
it was AS 9.17.040... essentially, the Alaska Supreme Court
in a similar section didn't say `wrongful death,' it just
said `personal injury;' they construed it to include
wrongful death even though it wasn't expressly stated. So
there is certainly an argument the court would do the same
thing with this section today, but this section hasn't been
decided by the court, and it's not explicitly stated now.
It will be explicitly stated if this is passed.
"Sections 8 and 9 both pertain to punitive damages. Section
8 would just add the standard for awarding punitive damages.
We already have in law the statement that they may not be
awarded unless supported by clear and convincing evidence.
However, we don't have a standard evidence of what in the
statute. This bill would provide the standard. It is
`malice or conscious acts showing deliberate disregard of
another person' by the defendant. This test is quite
similar but not exactly the same as the test the courts
apply now judicially. It differs in that this would require
`malice or conscious acts showing deliberate disregard of
another. ' The courts talk about `malice' or `outrageous
acts' and then give as an example of that standard...
`reckless indifference to the rights of others.' This
requires conscious acts showing deliberate disregard and
that may be a step slightly above the existing judicial
standard."
REP. PHILLIPS: "Is that wording tight enough there, then,
if the courts are going to be applying even a stricter
definition? How does the wording we have in there right now
compare to what, maybe, we should be including?"
Number 589
MS. COX: "Well, all I can comment on that, is that, this
is, to me, a slightly stricter -- if there was a continuum,
it would be another step up on the continuum, it would
narrow, slightly narrow the field in which punitive damages
could be potentially awarded -- that would be more
interpretation, although reasonable minds could differ. I
think it's a little bit more than just semantics. The
difference in the words being used, I think, does have some
meaning."
Number 600
REP. NORDLUND: "So, Susan, when Joe Hazlewood ran the EXXON
VALDEZ up on Bligh Reef, that was not a malicious act, it
was not even a conscious act. I would say it was a reckless
act. It was a grossly negligent act. But, under the
provisions of this bill, not only could you not sue for
three times -- which is the limit established in this bill -
- but you can't sue, period. You can't assess punitive
damages on Exxon Corporation for their recklessness in the
EXXON VALDEZ spill. That's what the effect of this would
be, isn't that correct?"
MS. COX: "That's a tough one. Unless you can show a
conscious act showing deliberate disregard."
REP. NORDLUND: "As much as we know the situation there, he
didn't intentionally drive the tanker into the rocks. It
wasn't a malicious act and it wasn't a conscious act."
MS. COX: "`Malicious' does embrace a field -- and I don't
have a case here to use as a litany of what the Supreme
Court uses as a test -- but, I think, it is most likely that
it eliminates `recklessness' as a standard for punitive
damages. But I have to say that the courts do apply a very
high test in the first place for awarding or allowing
punitive damages should it even be considered by a jury.
And they do say they are disfavored in law, and all kinds of
good language..."
REP. NORDLUND: "So there already are tight standards, and
[punitive damages] are not awarded that often?"
MS. COX: "Not in my experience, no. They do happen."
REP. NORDLUND: "I do not know what the problem is, Mr.
Chairman, or why we even have this section in the bill if
[punitive damages aren't] used that much anyway. There are
a few instances when we want to have punitive damages, and
assess them high enough that they are truly punitive for a
large corporation."
MS. COX: "One thing that Section 8 would do, and I want to
make it absolutely clear, it would change from the current
law, is the fact that it would put in statute the test for
punitive damages rather than moving it to judicial decision,
which is where we've been up until now.
"Section 9, of course, is new. It creates a new section in
the punitive damages statute that would limit punitive
damages to three times the amount of compensatory damages
awarded or $200,000, whichever amount is greater. That's
pretty self-explanatory. We don't have any such limit in
case law or statute generally applicable to tort cases. The
Alaska Supreme Court has in fact expressly declined to
approve or pick a bright line test for punitives that
applies a formula or ratio between compensatory damages and
punitive damages. So this would be new.
"Subsection (c) under Section 9 provides an exception to the
punitive damages cap similar to the one I mentioned above on
the noneconomic damages cap. If you've got a person who
committed or attempted to commit a Class A or unclassified
felony, and that was the basis... and punitive damages were
sought, the cap would not apply. And that, obviously, would
also be new."
REP. NORDLUND requested a legal definition of the word
"victim" but none was available.
MS. COX: "Section 10 would amend a statute that is already
on the book relating to damages resulting from the
commission of a crime.... This is a situation where the so-
called `criminal' is the one who is trying to bring an
action for damages related to injuries or death that
occurred to that person while they themselves were
committing or attempting to commit a felony or fleeing from
the commission of a felony. We do have a statute on the
subject in the tort reform law already. This changes the
phrase `engaged in the commission of a felony' to
`committing or attempting to commit a felony or fleeing
from' to broaden the coverage. It also dilutes the
requirement that the person against whom this is being used
has been convicted of the felony. I think you can see just
from reading this... it's obvious what the changes are. The
one thing this does eliminate is the last sentence of the
existing statute that says it `does not affect a right of
action under 42 U.S.C. 1983.' I do not know why. But it
would propose to take that sentence out of our current
statute."
REP. NORDLUND: "Just to be clear, then... so, what if a
person was fleeing from a felony that they were charged with
that they were totally innocent of?"
MS. COX: "It raises a good question. They may not be
convicted for this to apply. But, of course, we're talking
about a situation where that person got injured, then, in
fleeing, and they're the ones bringing the suit, then the
question is whether they were barred from bringing a suit
altogether because of this section. Then the question
arises, well, were they, I mean, the factual issue is, were
they committing or attempting to commit a felony or fleeing
from the commission of a felony? And that would be a
factual issue in their suit. And, the one thing that this
doesn't specify, is whether that person trying to raise this
bar would have to prove that standard -- the commission or
attempt at fleeing by a criminal standard, which would be
reasonable doubt, or by the civil standard of burden of
proof and evidence."
Number 698
CHAIRMAN PORTER: "Just for clarification, there is going to
be an amendment produced for this to cover that, that it
will be the civil standard that we're asking that it has to
be established by since this is a civil court. And, you're
right, if a person is innocent, they would not be precluded
under this. They would have to establish that, by a
preponderance of the evidence, that that person was
committing or fleeing from a felony. [The reason] we
eliminated the conviction was that some people get off
felony charges by technicalities and everybody knows that he
did it, but because O'Connell was in the wrong place with
the search warrant, he escaped. We just don't think that it
is appropriate that the person should be protected. They
will have to establish, by a preponderance of the evidence,
that they were involved in a felony."
Number 722
MS. COX: "The other thing, too, that it applies, is if
you've got someone who actually dies and can't be convicted,
of course, that would address that situation. If the estate
wanted to bring an action, then the defense says, `Well,
that person died in the commission of a felony.' Up until
now, of course, the defendant would not be able to raise
that because the deceased had not been convicted of the
crime. So this would make it applicable -- the difference,
or a difference.
"There are several sections in here that amend AS 9.17.040,
which has many subsections. The first one, in Section 11,
amends (a) which talks about the type of damages awarded by
the court or a jury, and here we've got, expressly, death
actions included as well as personal injury actions.... The
major difference in Section 11 is the addition of paragraph
two there, which would say that you would reduce the amount
of damages awarded for past or future gross earnings by the
amount of taxes that would have been paid on the earnings.
And the way you reduce it is you use the tax rate in effect
on the date of the injury or death. This is obviously new
to the statute. It would also be new law, because,
currently, economic damages awarded for past gross earnings
are reduced by taxes because the tax rates are readily
ascertainable. You know what someone would have paid in
taxes, and because the IRS does not tax personal injury
recoveries, the courts will allow reductions for taxes on
past earnings. However, for future earnings, the courts
have declined to reduce earnings damages by the speculative
amount of taxes because it would be speculative. They don't
know the tax rates that would apply into the future, and so
the courts are declining to do that, and they do not deduct
taxes on future gross earnings. This bill would require
that to be done and uses the tax rates in effect on the date
of injury or death. That's the change there.
"Sections 12, 13 and 14, I believe, all pertain to periodic
payments. I think you've probably heard something about
this already -- at least, I know, other hearings have taken
this up. The major change in Section 12 to AS 9.17.040 (d)
is that damages either party in a case could request that
future damages be paid out on a periodic payment basis.
Current tort reform law that we have says that only the
injured party can request that future damages be paid in
periodic payments. So, essentially, plaintiffs can ask that
they have their future damages paid out on some kind of
schedule. This would change it so that the defendant could
ask to do that. The additional sentence that's added to (d)
on page 7, lines 29-41, says that if an attorney is to get a
contingent fee arrangement, that portion of their judgment
is reduced to present value and paid in a lump sum to the
attorney so that their percentage of the total recovery is
not paid out in periodic payments as well as the amount that
the plaintiff is to receive."
Number 769
REP. NORDLUND: "I know that it's in the existing law, but,
what is meant by `to the maximum extent feasible'? Does
that mean that the judgments will be strung out into the
future to the maximum extent feasible? Or that the
payments, individual payments, are to the maximum extent
feasible?"
Number 781
MS. COX: "That's a good question. Rep. Nordlund, I have
not had to grapple with this, and I don't know that many
courts have, because it is there for the benefit of
plaintiffs if they want to use it, and I've never
encountered a situation where a plaintiff wanted to do so."
REP. NORDLUND: "If this passes, they're going to have to
grapple with it now. It's not clear what that means, to me,
in any event."
MS. COX: "Subsection (d), again, pertains to periodic
payments and changes the option that the court now has to
require that security be posted for periodic payments. It
makes it mandatory that the court require security to be
posted, rather than just discretionary. Although, it need
not be posted if an authorized insurer as defined in the AS
21.90.900 acknowledges its obligation to discharge the
judgment.
"And then, finally, in the periodic payment package here in
Section 14, we have the requirement that the court, in
ordering periodic payments of future damages, also specify
any increases in future payments for anticipating inflation.
The reason a court might want to consider that is that
future damages are by law now reduced to present value. If
the plaintiff is not going to receive them now, but instead,
over a period of time into the future, then conceivably the
court may want to build in inflation.
"Section 15 has been repealed and reenacted, or would be
under this bill. You can't see what the current law is.
The section is a bit complicated. I'll do my best to get
through it. As it's drafted now, a plaintiff who receives
benefits from a collateral source -- such as health
insurance, workers' comp, whatever -- cannot recover from a
defendant for those benefits unless the source of those
collateral benefits expects to recover those benefits back
[because] it has a right of subrogation. So, essentially,
if there is a collateral source, it's a federally funded
program that by law seeks subrogation, [such as] Medicaid,
for example, or when a collateral source has a right of
subrogation by law or contract -- for instance, workers'
comp liens; an employer's lien on an employee's recovery
against a third party who caused the employee injury; health
insurance... [an insurance company] may have the right by
contract to subrogate and get the medical bills paid back if
there are recoveries by a third party; and then, finally,
except for death benefits paid under life insurance.
"So we've got a situation where if there is a right of
subrogation by law or contract or federal law or if we're
talking about death benefits, then the plaintiff will not be
limited to recovery only over and above those things. Where
there is subrogation, the plaintiff will be able to seek
recovery for those things and the party who has the
subrogation rights will still be able to collect that. But,
for collateral benefits that a plaintiff is not expected by
law or contract to repay to someone under subrogation, they
will not be able to recover for those amounts that they have
received. I hope I have explained that well enough.
"Subsections (b) and (c) go into what is admissible in
court, and at what point in time. Whether before a jury
makes its findings or after."
Number 830
REP. NORDLUND: "Would an example of that be... the state
SBS Disability Program -- if a state employee elects to
choose disability and pays for it over time and ends up
getting injured -- they can't collect that disability
payment as well as whatever judgment they received from the
defendant?"
MS. COX: "It's going to depend on what the contract is. I
can't speak to SBS in particular, but... let's just keep it
simple and say if I was in a car accident and it had nothing
to do with work, I was going to Eagle Crest on Saturday and
I got in a car accident and I submitted all my medical bills
to AETNA and they paid for all the surgery and so on, and
then I decided to sue the car that hit me. AETNA has a
right of subrogation by contract with the state of Alaska to
get their money back from my medical bills if I ever get a
dime from the person who hit me. And that would still be
the case under the bill that you're looking at today. Now,
I know there have been a lot of different amendments and it
wouldn't necessarily be the case under some of the
amendments that I've heard about, but that's the way it
would be today.
"Now, interestingly, in (b) it says `the defendant' -- say
the person I sued after my car accident -- can introduce
into evidence [the] amount paid to me as a result of social
security, disability, workers' comp, health insurance,
etcetera, and that that's admissible. But then, in the next
sentence, it says, `however, evidence of a collateral source
that has a right of subrogation under law or contract may
not be introduced.' So, if AETNA paid my medical bills and
did not have a right of subrogation, then the defendant
could bring that into trial and say, `Susan doesn't really
have $50,000 in medical bills that she's going to have to
pay AETNA back, so she shouldn't recover that.' The
defendant shouldn't have to pay me that. But if I do have
to pay AETNA back, if they have the right of subrogation,
then it is not admissible. That's what those two sentences
do.
"So, essentially, if there's a right of subrogation, it's
not admissible, as I read this. If AETNA does not expect to
get the money back, there's no right of subrogation, then
the defendant can admit it and presumably it would not be
something for which I would be allowed to recover, because
it would be a double recovery... So, the point is to
prevent me from recovering my medical bills from the
defendant when somebody else has paid them and I didn't.
"Subsection (c) says that if there is some other kind of
collateral source other than these listed types of insurance
that have been introduced into evidence under (b), then, if
they're admissible at all, they're admissible after the fact
finder has rendered an award. And the court can make
adjustments if, for instance, as a result of all this, there
is a $1 million limit on my lifetime benefits from AETNA.
And if I get darn close to exhausting that, or something,
the court can take that into consideration. So even if I
didn't have to pay AETNA back, the fact that I'm coming
close to exhausting my coverage with AETNA is something that
the court could consider under (c), and presumably,
reimburse me or compensate me in some way for that.
"Finally, (d) says that if a collateral benefit is
admissible in evidence -- in others, if the jury or the
court gets to hear about it -- then we assume that I don't
get to recover for it, because it's admissible, it's not
something I get to collect. Then the source that paid me
that money, if it was AETNA without a right of subrogation,
they can't then after I've already..."
TAPE 94-30, SIDE B
Number 000
MS. COX continued her explanation of subsection (d):
"...then they cannot come in and double-ding me,
essentially. That benefit can't be reduced from my recovery
at court and then also have me having to pay it back, is
what (d) does. It's very difficult to explain, but, the
only thing I can say about this version versus what is in
existing law is that existing law does not have anything
being admissible before a jury renders an award. And to the
extent that collateral benefits are admissible, it is done
after the jury has rendered an award, with the court."
Number 015
REP. NORDLUND: "I'm not sure I really fully understand this
yet, but that's OK, I'll try to work my way through it. Let
me just ask this question, though. Is there ever a
situation in which the wrongdoer would be relieved of their
obligation to pay because the injured party had some
benefit? In other words, if the injured party was lucky
enough to have insurance, disability insurance, whatever
kind, and the wrongdoer was lucky enough to injure that
person, would that wrongdoer ever be relieved of having to
pay the full damages because that person has some other sort
of coverage?"
Number 030
MS. COX: "Under this section, what you call the wrongdoer,
the defendant, would not have to pay for benefits that the
injured person has received where the collateral source that
paid those benefits has no right of subrogation. So, in the
event, for instance, we're in a car accident, and I have
AETNA health insurance, and AETNA doesn't expect me to pay
them back, and I have $50,000 in medical bills that AETNA
has paid, I can't recover that from the person who hit me."
Number 044
CHAIRMAN PORTER: "So, in fairness, under existing law, the
court could do that very same thing after the award?"
MS. COX: "I can't say for sure. I have not focused on the
existing collateral benefits section because I am confused
by this one, and so, I have not tried to sort out what the
existing -- I could look it up..."
CHAIRMAN PORTER: "It's my understanding that that is
exactly the way it would work, whether it was a jury taking
into consideration a collateral source and reducing the
award they would give, or the court doing it later, the
`wrongdoer' as you say, would still have his total exposure
reduced by the collateral source."
Number 080
REP. NORDLUND: "I don`t think necessarily that a victim
should collect double. But I also don't think that the
wrongdoer should be relieved of paying the full damages just
because that person happened to be covered by insurance.
The public policy question is, `Who pays here?' The person
who caused the injury, or the insurance company, who, we all
pay the rates for.... My reason for raising these questions
is to make sure that if there is truly a wrongdoer, and
damages have been determined, and assessed, that that person
should be the first to pay."
CHAIRMAN PORTER: "Perhaps one way to look at it -- and I'm
not saying it's the last word on it, we'll let Susan finish,
but just to finish up this point -- the idea, I think, as
you say, is to make the person whole that has been injured.
Whether that's done with partly a collateral source and
partly the defendant is insignificant to the plaintiff as
long as he's made whole."
REP. NORDLUND: "I agree."
CHAIRMAN PORTER: "What you're saying, really, is kind of
retributive to the defendant. `He's the guy who caused this
and he ought to pay for it.' But that's kind of in the area
of punitive damages, not compensation."
REP. NORDLUND: "It's just a public policy choice. I agree,
that under my scenario, that the plaintiff receives, is made
whole. But, who pays? What's a good public policy choice?
Who should have to pay for that?"
[Several voices responded, "The wrongdoer." It was not
clear whose voices were heard.]
Number 284
MS. COX: "Mr. Chairman, to make the record better than it
was five minutes ago -- looking at, I have AS 9.17.070 here,
the current collateral benefits law, and the Chairman
characterized it. Now the introduction of any evidence
about collateral sources, as I said, occurs after the fact
finders rendered an award. But it's only amounts that are
from sources that don't have a right of subrogation by law.
So in your scenario, if there was no subrogation from that
collateral source, then the court can, in fact, reduce the
award after the jury has rendered it under the current law,
if that source did not expect to recover it back.
"Sections 16 and 17 amend AS 9.17.080 (a) and (c), and they
definitely resolved -- I mean, it's a policy question how to
resolve it -- but they resolved a current split in authority
among judges in both the state and the federal court here in
Alaska about how to construe this section. The present 080
says that, essentially, the finder of fact is to allocate
fault among the parties to an action, and includes third-
party defendants, people who have been released, who have
settled out of the case, and so on. The problem that arises
from this, and this tort reform law that enacted this
statute was based on a principle of several liability, the
idea that no defendant would pay more than their own
percentage of the fault, rather than joint and several
liability, which we'd had prior to tort reform -- the
problem [has been that] when a plaintiff chooses to sue only
those parties from whom they will actually recover money,
and leaves out other possible defendants for whatever
reason, how do we get to the proper several liability
situation if we can't consider the fault of people who
haven't been made parties?
"There are a couple of ways to look at it. Either the
people who have been sued can bring in other defendants,
third-party defendants, if you will, to be there when the
jury figures out how much everybody was at fault, or you can
say that the defendant can raise the issue of other absent
parties' fault and have the jury allocate fault to people
who haven't even been made parties to the case at all.
Those are two possible solutions, and frankly the courts
have gone in both directions.
"The current law, AS 9.17.080 (a), says that the allocation
of fault refers to fault of more than one party to the
action. So, some courts have felt that they can only
allocate fault to entities that have actually been made
parties to the case, who have actively been sued and named
and participated in the case. So, that being their
interpretation, they have said that defendants could feel
that not all of their tortfeasors, or the wrongdoers, as you
put it, are there, [and the?] third party and the rest of
the gang, so that the jury can have the proper range of
people to allocate the fault. Other courts have construed
this phrase `party to the action' to include people who
aren't technically parties or haven't been actually named
and sued, but whom anyone in the case wants to point a
finger at. And so the question becomes, at the end of the
case when you have a jury verdict forum, and they have to
say how much percent was the plaintiff at fault, and each of
the defendants, then the question is, do you then list on
anybody else that was raised as a potential tortfeasor and
have the jury consider whether their fault should be
considered?
"This bill would amend the statute to take the approach that
you can have the jury allocate fault to entities that aren't
actively parties to the case. So we could, what we call,
point at the empty chair, and say the absent defendant can
be considered for purposes of allocating the fault. That's
what the amendment in Section 16 at line 26 does. Paragraph
two also makes it clear that the allocation of fault in
lines 4 through 6 can include other persons responsible for
the damages regardless of whether they are or could have
been named as a party to the case. This follows an approach
currently taken by some of the judges in both the state and
federal court. The question of whether that approach is
appropriate under the current law is, as I understand it,
before the Alaska Supreme Court right now. The last I heard
there was still no resolution of that issue from our Supreme
Court.
"Section 17 would just continue with that thought. If you
have somebody who is not a party to the case who has been
found some percentage at fault, that percentage of fault
only works in the case in which the jury rendered that
verdict. And if they are not present, if they are not a
party, they are not dinged for some percentage of the
damages. So, for instance, if there were three parties to a
case, but yet a fourth was pointed out as a potential
tortfeasor, and the jury put 20% of the blame on the
nonparty, that 20% is nonrecoverable. The plaintiff cannot
recover it from that nonparty, and that 20% assessment of
fault against that nonparty is not binding on any other
case. So if the plaintiffs sought to go after that
nonparty, the one that wasn't in the first case, the fact
that one jury had found them 20% at fault is not at all
binding, and is not even evidence in the second action. And
that's what Section 17 would do."
Number 284
REP. NORDLUND: "I am sympathetic to what is trying to be
done with Sections 16 and 17, but I feel it is a messy way
to be doing it -- the whole empty chair concept. Is there a
chance that there could be any due process possible
violations against being assessed with fault when you're not
even there to defend yourself? Even though I know it can't
be used as evidence in a further case, it still could
perhaps sully the reputation of somebody, or of a business,
or something, to be assessed with fault, [they'd have] no
chance of defending themselves. Even though they aren't
actually paying any sort of compensatory damages."
Number 289
MS. COX: "Rep. Nordlund, I don't know that there would be a
due process problem. It certainly raises a practical
problem that -- I don't know that it rises to a
constitutional level, it certainly raises a policy question.
Frankly, there are a couple of possible ways this could play
out. Depending on the case, the plaintiff, if they perceive
that a defendant may be pointing at an empty chair, someone
who is not there, in order to reduce that defendant's share
of the blame, they may elect to sue the person in the first
instance so that they are there and you can have, hopefully,
a fair assessment of what that absent party, or would-be
absent parties, blame would really be. It's hard to say how
this will work out in the future. Right now there is no
incentive for a plaintiff to sue anyone who is judgment-
proof because there is nothing there to recover -- and the
fewer defendants the better among people who have money. If
that is an incentive, that won't exist if the empty chair is
a possibility."
Number 317
REP. NORDLUND: "So there is no way of bringing those people
in, there's no way a court can force those people into the
courtroom.?"
Number 321
MS. COX: "There are a couple of things that can happen.
Right now, about half the courts who have considered this
question under the current law have said, yes, in order to
even talk about the fault of someone else, they have to be
made a party. That's the approach that's been taken by some
of the courts under our current law. Now, the other half
say, you can talk about empty chairs. We've got that split
in authority. But, if you talk about their percentage of
fault, you have to make them a third-party defendant. Then
other questions arise about whether the defendant in a case
who wants to bring in this other defendant now is
responsible for attorney's fees; if they don't succeed in
proving some fault by their codefendant, the third-party
defendant, there's a whole bunch of practical questions that
arise in that line of cases as well. There is nothing,
however, to prevent anyone from making these absent parties,
these empty chairs, witnesses, and participating in trial,
as long as they can be subpoenaed and evidence about their
presumable fault or alleged fault can be part of the case.
Obviously, you've got to try to prove it in order to
convince the jury to tag them with some percentage of the
blame. They just wouldn't have to pay, they wouldn't have
any liability, they wouldn't have to pay any percentage of
the ultimate damages. But they could be there. I mean, the
plaintiff may want them there to say, `I have no fault
whatsoever,' so that the defendants with money who are
initially named share more of the blame. It's hard to
tell."
Number 352
CHAIRMAN PORTER: "Just so that it's clear, the
establishment of some liability, percentage of liability, by
a person who was not named as a party of the suit, for
whatever reason, that judgment isn't binding on them, nor
can they use, drop this case into another court. There is
nothing that precludes that plaintiff from suing that person
in a subsequent case."
Number 365
MS. COX: "Right, but they'd have to start from square one,
and the statute of limitations may be an issue. Normally
you have a two-year statute of limitations, and the first
case may well be going to trial well after two years from
the date of injury. But we run into problems right now with
trying to interpret the current law, anyway, in terms of
whether we have to third-party in other defendants in order
to get the blame appropriately spread around -- I am
speaking from the defense perspective here obviously -- or
whether we can point at empty chairs. And there is the
question of what is the statute of limitations if you need
to third-party in other defendants. If you get served after
or on the day the two-year statute of limitations runs out,
and you're a defendant, what's the statute of limitations
where you're bringing other third-party defendants in. I
mean, there are a lot of practical considerations -- the
previous tort reform law has raised lots of issues that
aren't resolved."
CHAIRMAN PORTER: "The previous tort reform law that dealt
with joint and several liability was an initiative, was it
not?"
MS. COX: "Well, we had two. We had one in '86 and then the
initiative in '87 that went into effect in '89. The second
one went to a pure several liability approach, [while] the
first one said if you are less than 50% at fault you have to
pay twice your own percentage."
"Section 18 discusses what the effect of a release is when
you've got several potential defendants, and one of them
settles a case or executes -- here it talks about a covenant
not to sue, or not to enforce judgment, or a release -- a
couple of things that it does make clear is it says, and
this is a new section, so it would all be new law, it says
that the release of the settling party wouldn't discharge
any of the other defendants or possibly liable parties
unless the agreement provided that. And it does discharge
the person who is settling from all liability for a
contribution to any other person. In other words, another
defendant can't come after someone who settled and say, "You
underpaid your share, now I want you to pay me back
something." The idea here, as I understand it, would be,
that if you signed a release, you are fully released from
liability, and no one can come back after you over those
events -- but you're not, unless you explicitly say so,
you're not settling on behalf of anyone else, either, and
the plaintiff can proceed against the others who may be at
fault.
"The problem with this -- and I am afraid I may not be
getting this -- but in Section 18, line 24, it says that a
release `reduces the claim against the other possible
tortfeasors to the extent of any amounts stipulated' or
whatever was paid for it, whatever the greater amount is.
So, in other words, if a party settles out for $100,000,
then that, theoretically, under this, reduces the claim
against the other potential tortfeasors. That's the
language used here. And yet in the allocation of fault up
in Sections 16 and 17, we already have these settling
parties' fault being considered by a jury. All I can say is
that I am not clear how this provision, of reducing the
claim by the amount of the settlement, jibes with also
considering the percentage of fault of the settling party.
And maybe somebody else can explain it better than I, or
perhaps someone who understands it can suggest a little less
ambiguous language. But to say that it reduces the claim
means that you reduce the overall damages of the claim, and
so if you take $100,000, the settlement, out of the $300,000
verdict, okay, you've done that step, and then the person
who settles 20 percent at fault, do you then consider the 80
percent of the other folks after you've done the
subtraction, or before you do the subtraction, or...?
"This definitely confuses me, and perhaps someone else can
better speak to what they are trying to do. Sorry, it's not
totally clear to me. What is clear is, in Sections 16 and
17, when you allocate fault, you are to consider people who
have been released from liability under the statute that
Section 18 would enact. And so you've got a reduction for
the settlement amount and consideration of the settling
parties' percentage of fault. I'm not sure that I
understand the intended interplay between those two things.
"There are a number of other provisions in the bill that are
kind of general litigation, civil litigation issues.
Section 19 would amend the statute regarding offers of
judgment. You can see the changes made on page 11, starting
at line 10. Currently, if you make an offer of judgment,
and the other side doesn't do better than that when they go
to trial, then the interest rates involved could be
effective, and if I made an offer and the plaintiff didn't
beat that offer, then their interest rate could be reduced -
- whatever they were awarded, could be reduced by five
percent a year. That's what the current law is. If the
plaintiff made an offer to me and I didn't accept it and
they did better than that at trial, their interest rate
could then be augmented by five percent a year. Now we have
a statutory ten and a half percent interest rate so you
could either see the interest rate going down to five and a
half percent or up to as much as fifteen and a half percent,
depending on how offers of judgment are used. Section 19
would eliminate the alteration of interest rates altogether
and offers of judgment would not affect the interest rates
paid on prejudgment interest. The one thing, though, that
it would do, is that if the person to whom the offer is made
doesn't do better than that at trial, then that person will
have to pay the actual costs and attorney's fees incurred by
the person making the offer from the date the offer is made.
So that would be the change in AS 9.30.065."
Number 500
REP. NORDLUND: "Would it be accurate to say that Section 19
originally was an inducement to settle, and it's still an
inducement to settle, it's just exchanging -- it's dealing
with interest rate for paying attorney's fees?"
Number 505
MS. COX: "And the attorney's fees -- this should be
considered in conjunction with Rule of Civil Procedure 68
[which] also pertains to offers of judgment. We also have
Rule 82, with which you're probably familiar, which provides
that a prevailing party can recover attorney's fees. This
bill would eliminate Rule 82 at least as it respects
personal injury, death and property damage cases, so
essentially what you'd end up having is, the only way in a
tort case that you would see attorney's fees awarded, is
under this provision right here. And they would only be
from the date the offer is made, rather than for all of the
work involved in the case."
REP. NORDLUND: "So who knows if it would be more or less
money, when it gets down to it? What's your experience with
this? Would this be a greater inducement to settle?"
MS. COX: "I think, frankly, the one thing I think it's fair
to say, if we see Rule 82 eliminated in the personal injury
tort context, then I think perhaps you will see an increase
in the use of offers of judgment, because it will be the
only way that either side will be looking at recovering any
attorney's fees. I would expect, anyway, to see that offers
of judgment would be used more often now as a means of at
least triggering in a possible future recovery of attorney's
fees.
"Section 20 would amend the prejudgment interest rate.
That's pretty self-explanatory. We have a ten and a half
percent statutory rate, and this would be a variable rate
that is tied to three percent above a federal reserve
discount rate. There are other bills, at least, an other
bill that I know of floating around the legislature
somewhere that proposes to do the same thing. 9.30.070
would make a change for -- the Section 21 change would say
that -- you can't get prejudgment interest on future
economic damages, future noneconomic damages, or punitive
damages. This would be, as I understand it, a departure in
some sense from the current case law. We don't have a
statute on this point. Certainly these would be new
provisions in statute.
"It's my understanding that the courts do not imply that
prejudgment interest should not be awarded on punitive
damages. The whole concept of prejudgment interest is that
you should be made whole... if you're injured on a given
date, then you don't have the use of your money from that
day forward, and so prejudgment interest goes back to
whatever date in which you were deprived of the use of your
money. Now that concept has been modified somewhat because
we have a statute that says you're only entitled to
prejudgment interest from the date you give written notice
of your claim. So we've slightly altered that rule by
statute before now, and now we're going one step further and
saying, for future damages, you would not get prejudgment
interest -- I guess, that concept being, you're not being
deprived of the use of the money you're going to get in the
future anyway, or would have been getting in the future."
REP. NORDLUND: "Susan, do you think that this is going to
have the effect of having defendants delay proceeding with
litigation, going to trial, whatever, more than they are
right now?"
Number 570
MS. COX: "That would be hard for me to say. I think, right
now, certainly with the ten and a half percent interest
rate, that's a pretty substantial penalty for delaying.
Obviously, under this we would have a floating interest
rate. Making it clear that you can't get prejudgment
interest on future damages would certainly affect the total
damage picture in terms of how much money you were looking
at. If you've got a past loss of a minimum time off work
and some medical bills and it's only been six months and so
you've only got a little bit of pain and suffering, but
you're looking at a 20 year old person who's got a lifetime
of living with a particular injury ahead of them, whether or
not you get prejudgment interest on those future damages
would certainly make a difference.
"Of course, we've got other concepts in here, built into the
future damages. The cap on noneconomic damages and so on.
There's a lot of things at play, so I really couldn't say
whether this will affect the timing of how fast a case is
litigated. I don't want to editorialize.
"You've got a couple more general provisions that pertain to
civil litigation, or, kind of, general provisions. The 26th
I've already alluded to, that's the section that would amend
AS 9.60.010 and essentially prohibit that Alaska Supreme
Court from adopting a rule to allow attorney's fees to a
prevailing party in a personal injury, death or property
damage case, unless the statute -- or -- that parties agreed
otherwise. That would be a dramatic difference from the
current law.
"There are a couple of other kind of housekeeping things....
Section 28 would add a new section, 9.65.125, regarding the
signing of pleadings. This essentially codifies provisions
that are found in Rules of Civil Procedure 11 and 95, I
believe. The one thing it would do is require an immediate
hearing if the court determined that something was signed in
violation of this rule. That would be new. The current
rule in civil procedure doesn't require immediate hearing as
this statute would, but otherwise it's very similar to
current civil rules.
"The last little category of items is amendments to the
wrongful death statute. That would be Sections 23, 24 and
25. In Section 23, the only change in the AS 9.55.580 (a)
would change the term `pecuniary' to `economic' and I
imagine that is to make it consistent with what we've got in
Title IX, Chapter 17, referring to noneconomic and economic
-- I don't see that as a dramatic change."
REP. NORDLUND: "What is the difference between pecuniary
and economic?"
MS. COX: "I don't know that there is one. The drafter may
have something to say about it. I think this is just to
keep the terms consistent in both... that would be my
understanding."
CHAIRMAN PORTER: "Pecuniary basically means monetary,
money, and one could stretch the definition of pecuniary to
include funds received for noneconomic damages. We wanted
to make sure that it was clear that this was for economic
damages."
MS. COX: "Section 24 essentially is, again, doing the
`pecuniary' to `economic' change and then makes some
housekeeping changes relating to the change earlier in AS
9.17.010, another section, and then alludes to (g), which is
the meat of it here in Section 25, which provides -- well,
it's two new sections, actually, (g) and (h). [Section (g)
provides that] a court `cannot award economic damages in
excess of $10,000 if the deceased in a wrongful death action
is not survived by a spouse, minor, child or dependant' and
it gives a definition of `dependant.' Section (h) provides
that that $10,000 cap does not apply. Again, we're back
where the defendant committed or attempted to commit a Class
A or unclassified felony, and the deceased was a victim and
the action is based on that offense. Those are certainly
new provisions that do not exist in current law."
Number 660
CHAIRMAN PORTER: Since that wasn't in order I haven't been
keeping track. Does that conclude the... "
MS. COX: "That's it except that there are a number of
Sections 30-39, of course, pertain to, make clear that they
amend court rules and provide for effective dates and so
forth."
CHAIRMAN PORTER: "Susan, thank you for much. I apologize
that two of our members had to be called off. For the time
remaining, what I'd like to do is continue with the
amendments that the committee had and go through there as
far as we can until we run out of people. If we can get
into the ones that you have today, Jim, fine; if not, we'll
continue it over for the next one.
"So, if you would, please turn in your books to the
amendments that we had, I believe -- did we stop at number
nine?
[inaudible response]
Number 675
REP. PHILLIPS moved that the committee rescind its actions
in adopting Amendments 5 and 6.
There being no objections, Chairman Porter pronounced the
previous meeting's actions on Amendments 5 and 6 of HB 292
rescinded. He then began discussion of Amendment 5.5 and
invited DANIELLA LOPER to speak.
Number 686
DANIELLA LOPER, House Judicial Committee Counsel: "5.5 is a
combination of exactly what you voted on in Amendment 5 and
Amendment 6. It just makes the steps a little bit more
clear. There basically are no language changes. This
simply makes [for] continuity [in] the bill."
CHAIRMAN PORTER requested that Ms. Loper go over the
amendment.
MS. LOPER: "Amendment 5.5 basically goes into limiting the
noneconomic damages to $500,000. It wants to clarify
exactly what multiple injuries are all about, so it says
`multiple injuries sustained as a result of a single
incident shall be treated as a single injury for purposes of
this section.' That was simply to clarify that if [for
example] a bullet would go through your arm into your body,
it wouldn't be two separate $500,000 claims. It would just
be one.
"Then, as we move on further, in subsection (c), it
basically describes the definition of -- it gives the
exception to the $500,000 cap on noneconomic damages and
talks, basically, about severe disabilities and defining it.
And, so as you can see, that is the definition. The
exception to the $500,000 is $750,000 on the disabilities."
CHAIRMAN PORTER asked if there were any questions.
Number 711
REP. PHILLIPS: "In section (a), `pamaplegic,' is that maybe
`one'?
CHAIRMAN PORTER: "No, that is one hemisphere, left side or
right side."
MS. LOPER added, "That is paralyzed."
REP. PHILLIPS moved Amendment 5.5. Chairman Porter asked if
there was further discussion.
Number 715
REP. NORDLUND: "I just wanted to make sure, the way the
amendment was constructed, that the $750,000 applies to both
(a) and (b)."
CHAIRMAN PORTER: "It is certainly the intent. Is there
objection?"
Number 722
REP. DAVIDSON: "How do we arrive at $750,000?"
CHAIRMAN PORTER: "It's a policy question, obviously. It's
half again $500,000."
Number 725
MS. LOPER: "Most other states have used a $200,000 increase
in their noneconomic damages. So it is basically looking at
the other states and the way they have done it. Usually
it's $200,000 more than the minimum cap."
REP. DAVIDSON: "When you say other states -- you're talking
Mississippi, Alabama? Or are you talking California, New
York...?"
MS. LOPER: "I believe that the state here is Michigan."
CHAIRMAN PORTER: "No further discussion. Is there an
objection to 5.5?" There being no objections, Amendment 5.5
of HB 292 was adopted by the committee. Chairman Porter
then referred the committee to Amendment 9 and Ms. Loper
continued her discussion.
Number 744
MS. LOPER: "This is exactly where we left off. Amendment 9
basically talks about how they are going to construe
periodic payments in the court system. Periodic payments
have already been instituted in the state of California in
their court system. Basically how it works is something
like this: they go through the award, and they are taken
out of the courtroom -- there is no trial time -- and they
get together with basically a structured settlement person.
The plaintiff and defendant basically go at it and the
structured settlement person basically derives a plan. This
is what this amendment is talking about. This amendment
basically is trying to say that `the party requesting that
judgment be paid by periodic payments shall submit to the
court a proposal that contains the periodic payment elements
required to be included in the judgment of the court.' And
so what they do is they go back into the courtroom, and they
say, `Here it is, this is what we've got.' And so the judge
says, `Just for the record, blah, blah, blah, blah," and
it's over.
"So, in order to save court time, we've put this provision
in here saying, if it is up to, if it is the defendant who
requests this periodic payment, that of course [parties
shall] get the whole entire schedule; the party that is
requesting the periodic payment should be taking care of
everything."
Number 770
REP. NORDLUND: "I support what the intent of the amendment
is -- to have this worked out outside the court. I do
think, though, that you need to say something in this
amendment, and I have an amendment to the amendment to
propose to help reach this, that there be an assurance that
both parties, the plaintiff and the defendant, agree that
`this is the periodic schedule that we want, the structured
settlement that we want.' Which is what you're saying is
what they do in California. They have some intermediary
come in and they work it out and they take it into court and
they say, `This is what we want.' But it doesn't say that
in this amendment."
Number 778
CHAIRMAN PORTER: "If I may respond. That isn't what we're
saying. What we're saying is that it would be in the best
interests of the defendant to consult with the plaintiff
when he prepares the schedule of periodic payments that he
is going to present to the court. But to say that the
plaintiff has to agree to this or it may not be presented --
it just null and voids the idea that both parties get to
use periodic payments. Because, as history has told us,
most plaintiffs, if not all, want a lump sum payment. They
will not agree to the periodic schedule and they will null
and void its occurrence. So, I would speak against the
amendment to the amendment."
REP. NORDLUND: "I understand -- and that's not my intent,
to nullify the effect -- just that, if it is a fact there is
going to be a periodic payment schedule, and there is
nothing the plaintiff has to say about that, then it seems
to me the plaintiff [background coughing, inaud.] should
still have some say in..."
CHAIRMAN PORTER: "You might use the term `consult' perhaps;
I can see that, but not `agree'."
Number 799
REP. PHILLIPS: "If we add this insertion, we're still going
to keep the sentence following, aren't we?"
REP. NORDLUND: "Yes, this doesn't delete anything."
REP. JAMES: "I need to say that I do not feel, and it has
nothing to do with this amendment, because we've already
passed that part in the previous amendment -- in that
statement that, you are absolutely right, the intent here is
for a defendant to put periodic payments onto a plaintiff
whether they want it or not -- [well], I have a problem with
that, [because that is] what this legislation does when it
changes `and' to `a'. That's exactly what that does, it
makes the plaintiff have to take periodic payments if the
defendant wants to pay them that way. I have a problem with
that whole theory.
"Just to follow up, I understand that one of the main
reasons why a defendant might want to pay in periodic
payments, as opposed to in lump sum, is because of the value
of the money they can get over a period of time; and also,
then, there is the argument that it may be that the
plaintiff -- and historically, it's been found that many
times large settlements are gone in a few years, and then
the plaintiff has nothing to lean on, but -- I think that's
the plaintiff's problem, and I really do have a problem with
imposing people to handle things the way you want them to
and not the way they want for themselves."
Number 819
CHAIRMAN PORTER: "Well, I would throw in with your
position, Rep. James, if it were not for the fact that it
isn't just the plaintiff's problem when that happens, it's
the state's problem, because we have [in] many cases
seriously injured people who are not able to sustain their
own livelihood, who don't have any money, and that becomes a
public assistance problem. And that is what has happened in
a number of cases."
REP. JAMES: "I [indisc.] disagree."
Number 825
CHAIRMAN PORTER: "Do we have any further discussion on this
amendment which seeks to establish that the party requesting
periodic payments establish a schedule for this and present
it to the court?"
REP. JAMES [?]: "I don't have any problem with that
statement in that context."
REP. NORDLUND: "Would this be a time to offer my amendment
to the amendment?"
CHAIRMAN PORTER: "Certainly."
REP. NORDLUND: "On the second line after `the proposal
agreed to by the adverse party'... "
CHAIRMAN PORTER: "It would be between `proposal' and `that'
in the second line, interjecting `agreed to'... "
REP. NORDLUND: "...`agreed to by the adverse party'. I
think that's the best term."
CHAIRMAN PORTER: "So the amendment to Amendment 9 would
place the phrase `agreed to by the adverse party' between
the words `proposal' and `that'.
REP. NORDLUND: "Could I ask Mike for his opinion on that,
for what the wording would be?"
CHAIRMAN PORTER: "To the extent that it does what it is you
expect we're trying to do?"
REP. NORDLUND: "Exactly."
Number 843
MR. FORD: "I might just pose the question of what happens
if they don't, or can't, agree?"
Number 849
REP. NORDLUND: "Well, in order to stick with the spirit of
the original amendment, I would hope that -- well, then, in
that situation, the court would impose the periodic payment
schedule. Again, it's not meant to nullify the effect of
this. It would just be that -- you know, they can either
agree to it outside the court or the court will impose it on
them. That's my intent."
Number 873
MR. FORD: "I think the whole point of this is to avoid the
court's involvement. If you add this language I think that
you add an additional element that the parties are required
to go through an additional hoop. They are now required to
get together and try to work on an agreement. If they
don't, then we're back where we've started, which is the
court is going to have to come up with this statement. To
that extent you may have increased the complexity and length
of litigation without achieving anything. I understand what
you're trying to do, you're trying to get some agreement
between parties, but in fact you may never get that
agreement. You could ask them to -- I don't like the word
`consult' either, but -- you could have them both submit
their proposals to the court, if you think there's a
difference."
MS. LOPER: "That would take up even more court time, if
both parties had to submit... "
REP. NORDLUND: "Unless it was an arbitration type
situation."
CHAIRMAN PORTER: "Well, we have an amendment to the
amendment as defined. Is there any further discussion on
that? Is there objection? Can we have a roll call vote?"
TAPE 94-31, SIDE A
Number 000
REP. JAMES: [Some text apparently missing.] "I think I
understand what Rep. Nordlund is trying to do. I have a
problem agreeing that this amendment does what he's
intending to do... [and] I have already stated how I feel
about the periodic payments arrangement. But I don't think
this accomplishes [what Rep. Nordlund is trying to do], so I
am going to vote `no' on the amendment to the amendment."
CHAIRMAN PORTER: "Can we have a roll call, please?"
REPS. Nordlund and Davidson voted "Yes" and Reps. Phillips,
James and Porter voted "No." The amendment to Amendment 9
thus failed to be adopted.
CHAIRMAN PORTER: "We have before us Amendment 9."
REP. PHILLIPS: "Mr. Chairman, I move Amendment 9."
CHAIRMAN PORTER: "Amendment 9 has been moved. Is there
further discussion? Objection?" Objections were noted and
a roll call vote was taken on Amendment 9. Reps. Phillips
and Porter voted "Yes" and Reps. Nordlund, Davidson and
James voted "No". Amendment 9 thus failed to be adopted.
Number 058
MS. LOPER: "The next amendment is actually Amendment 10.5.
It replaces Amendment 10."
CHAIRMAN PORTER: "We just went over 10, and we'll make this
10."
MS. LOPER: "This has to deal with the right of subrogation.
Basically, in complying with the ERISA standards as well as
workers' compensation benefits. As you can see in Section
15, under the collateral benefits section, we have basically
limited the rights of subrogation to simply include whatever
the federal law provides and also, as well, workers'
compensation benefits."
REP. NORDLUND: "What is the effect of this?"
MS. LOPER: "The effect basically is this -- on workers'
compensation benefits, the right of subrogation would be
allowed. On any federal law program, especially ERISA,
which we have to abide by, it's a federal law, that includes
that as well. On private health insurances it does not
include it."
CHAIRMAN PORTER: "Further discussion on Amendment 10?"
REP. PHILLIPS: "Mr. Chairman, I move Amendment 10."
CHAIRMAN PORTER asked if there were any objections to
Amendment 10. Rep. Nordlund objected and a roll call vote
was taken. Reps. Davidson and Nordlund voted "No" and Reps.
Phillips, James and Porter voted "Yes". Amendment 10 was
therefore adopted by the committee. Amendment 11 was then
addressed by Ms. Loper.
Number 129
MS. LOPER explained that Amendment 11 deals with collateral
benefits. She said, "When this particular section was
reviewed, there was nothing in there that said that `the
claimant shall disclose these benefits.' There was
[discussion of] the benefits, and what's allowed, and what's
not allowed, but there was nothing specific in this section
to say, `Look, claimant, you shall disclose these benefits.'
And that's basically what this is all about -- clarifying
and saying, `A claimant shall disclose the benefits
described in this subsection to the person defending the
claim.'"
Number 147
REP. NORDLUND: "That's different, Mr. Chairman, than the
benefits being admissible?"
CHAIRMAN PORTER: "In a word, yes. What this seeks to do is
[to clarify] what, heretofore, has been presumed, that a
plaintiff would not try to conceal a collateral source.
What we're saying is, `Let's makes sure.' So you are
required to inform the court of a collateral source."
REP. NORDLUND: "Unless it can be subrogated [indisc.] these
other... "
CHAIRMAN PORTER: "In any event. Any discussion?"
Brief discussion ensued.
REP. PHILLIPS moved Amendment 11.
There being an objection by Rep. Nordlund a roll call vote
was taken. Rep. Nordlund voted "No" and Reps. Phillips,
Davidson, James and Porter voted "Yes." Amendment 11 was
therefore adopted by the committee.
The meeting of the House Judiciary Standing Committee
adjourned at 3:20 p.m.
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