Legislature(1993 - 1994)
02/18/1994 01:15 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
Number 805 CHAIRMAN PORTER announced the next order of business was HB 292. HB 292 - CIVIL LIABILITY CSHB 292(JUD): "An Act relating to civil actions; amending Alaska Rules of Civil Procedure 16.1, 26, 49, 68, and 82; and providing for an effective date." Number 805 CHAIRMAN PORTER announced the next order of business was HB 292, relating to civil court reform. He noted that legal counsel to the committee was prepared to review numbered amendments and that all members should have these numbered amendments. He said considerable public testimony was given in the Labor and Commerce Committee. He suggested bringing the committee up to speed by going through amendments adopted by the Labor and Commerce Committee. Chairman Porter introduced Daniella Loper. Number 807 DANIELLA LOPER, Legal Counsel, House Judiciary Committee, began with Amendment 1. She stated the intent behind Amendment 1 concerned a case from 1990, Lake v. Construction Machinery, which involved an employee injured in the course of his employment who brought damages against several third parties. These third parties asserted as a partial defense that the plaintiff's employer was negligent. TAPE 94-24, SIDE B Number 000 DANIELLA LOPER continued her discussion of Amendment 1: Amendment 1 codifies intent so that "basically we are going to go by, on a percentage of fault basis; and so, tortfeasors should not be held responsible for the negligence of an employer, and to this extent this act is intended to overrule the case of Lake v. Construction Machinery." She referred to page 10, line 6, of the bill which refers to 16 regarding where the percentage at fault should be allocated and noted that after "other persons" the phrase "including an employer" was put in to clarify the point. Number 038 CHAIRMAN PORTER cited a 1988 initiative which was passed that indicated that as a result of the process of our initiative, responsibility should be apportioned for tort liability, proportionately. In other words, if there were four people who contributed to the responsibility of a liability for an injury or property damage or something similar, the court should apportion by whatever percentage they determine is correct the responsibility among these four people. The wording of the initiative was such that it said "parties to the suit" instead of "all parties responsible." Consequently, what was discovered was that if you named three out of the four people in this hypothetical situation, then that's all there would be to apportion the responsibility between... because you didn't name this other person and, consequently, he wasn't a party to the suit. The specific wording of the initiative was such that there was a loophole. This is one of the things that is being used to close the loophole. CHAIRMAN PORTER entertained a motion on Amendment 1. Number 086 REP. PHILLIPS moved Amendment 1. CHAIRMAN PORTER welcomed discussion. Number 108 REP. NORDLUND inquired about the case cited and asked if it was a Supreme Court decision. Number 112 MS. LOPER replied that it was. REP. NORDLUND asked for confirmation that the committee was not making a decision on this specific resolution involving the facts of the particular case. He noted that he was unfamiliar with the case and was uncomfortable voting on an amendment involving a case where the facts and circumstances were unknown to him. MS. LOPER requested clarification of Rep. Nordlund's wish -- an explanation of the case. MS. LOPER explained that copies of the brief were in the packet. She explained the employee injury case further. She said an employee was hurt on the job and was compensated by workman's compensation by the employer and wanted to pursue litigation against the machinery's manufacturer, Construction Machinery. She named several third parties in the suit. Ms. Loper referred to the third parties and said that the employer had a certain percentage of fault. She asked, "Why should the rest of us pay 100% when the employer has a percentage of fault?" MS. LOPER continued, "And so... the trial judge ruled that the employer's fault should be taken into consideration, along with the rest of the third parties. They appealed. It went up to the Supreme Court, and the Supreme Court took a look at the statute, at 91780, which was part of the initiative, and what the voters had voted on, which was a percentage of fault basis. But the court system is sort of strict on the way they look at it. Half of the court views this statute as still joint and several liability. The other half view it as a percentage at fault. And because they say that the intent of this legislation is not very clear, and they didn't want to override the Workers' Compensation Act, and so basically what they have done is said, `We're not going to take a look at the employer's fault in this.' And so, since we are clarifying that in HB 292, and clarifying exactly what the initiative was about, and what the voters have voted on, and that was a percentage of fault basis, we are saying that, now we're making this legislation clear, with clear intent. And so, therefore, if an employer was at fault, we're going to bring it in. Because the rest of the third parties shouldn't be held accountable for that percentage... And so that is why in this amendment we are saying that we're going to overrule the case of Lake v. Construction Machinery; we are making it clear that this is a percentage of fault basis." REP. NORDLUND asked for clarification of effect on damaged individuals in this particular case upon adopting the amendment. He was told there would be none. Number 188 REPRESENTATIVE PHILLIPS inquired, "Mr. Chairman, in view of the fact that this is a paragraph in the findings, is the other portion of the amendment that's made on page 10... that one phrase then, clarifies?" She was told, "Yes, it would clarify how the law needed to be changed." Number 196 Amendment 1 was adopted with no objection. Number 243 CHAIRMAN PORTER raised discussion of Amendment 2. Number 252 MS. LOPER explained Amendment 2. "Again, we're taking... a look at the findings and purposes section that is on page 3, line 4. This particular section deals with asking the Division of Insurance to compile useful information and report back to the legislature exactly how HB 292 is going to affect the civil justice system and the insurance system." MS. LOPER continued, "And so, therefore, we deleted the phrase `[victims and where the disproportionate amount of compensation dollars is absorbed by the system]' and deleted health care, as well, because we're looking at the general overall scope of the insurance systems, not just the health care industry. And so we looked at the language compensation dollars as absorbed by the system. We felt that the language was very ambiguous and reflected -- and we wanted to reflect a much more precise language and simply just put residents of the state. So it would be reading, basically, `accumulate additional information concerning the cost to society of the civil justice system as it is presently constituted by having the Division of Insurance compile useful information and present a report to the legislature. This information is necessary to determine whether the civil justice and insurance systems as they are presently constituted are fairly serving the residents of the state.' Which is much more to clarify... "And then, in order to reflect the same issue, we looked at page 15, just to clean up shop on line 31, and as you can see, the word `report'... and it's mentioned in another issue, and that is the medical practice parameters report, and that was just to clarify -- it's the civil justice report. "And, basically, what 35 does is, it just simply implements this issue that we're stating in the findings and facts. We clearly state it in the bill now that the Division of Insurance shall compile information. And then, as you can see on the third, basically the fourth issue on this amendment... to determine if the Civil Justice System and the Insurance System in the state are fairly serving the residents of the state... our findings and intent are going to mirror exactly what we want to implement in the bill." Number 283 REP. PHILLIPS moved that Amendment 2 be adopted. CHAIRMAN PORTER stated that Amendment 2 had been moved and asked for discussion. An inquiry followed concerning whether the Division of Insurance would be asked to provide information at the conclusion of the process concerning the effect on rates. MS. LOPER responded that this issue makes the bill constitutional. She said, "The courts have always looked at this and seen the state's interest in maintaining reasonable liability insurance... This is economic legislation... They try and take a look at the equal protection... and the due process challenges. And this is basically what makes the cap on damages constitutional. Because the state is legitimately interested in lowering insurance rates, that connects it all." CHAIRMAN PORTER asked if there was any objection to Amendment 2. There being none, the amendment was adopted. Number 307 MS. LOPER discussed Amendment 3 concerning medical practice parameters. She said, "They've completely removed the language that is in the bill on page 3, and as you can see, we've proposed new language. For some background information, we would be one of the only three states in the Union to implement practice parameters. This clearly will be very significant in lowering insurance rates." Number 334 REP. PHILLIPS requested a legal definition of "practice parameters." Number 339 MS. LOPER responded that practice parameters defines a physician's medical treatment in certain instances. The State Medical Board will develop blanket practice parameters, minimum standards physicians must follow. This will decrease malpractice suits. Number 355 CHAIRMAN PORTER added that the section that was had in the bill was a little presumptuous. He said rather than be presumptuous, maybe we ought to make sure that the medical profession says that this is going to do what we think it's going to do. The presumption is that medical practice parameters will reduce defensive medicine. Defensive medicine is something that's come to pass because of malpractice exposure where doctors feel required to give tests so as to preclude somebody coming back to them saying that they failed to... omitted a test that could have resulted in saving a life. That has driven up the cost of medical insurance and health care costs. Chairman Porter said the presumption is that practice parameters establishing what tests should be given under certain circumstances or symptoms will reduce the requirement for defensive practice. Numbers 392 - 413 REP. NORDLUND, CHAIRMAN PORTER, REP. JAMES and REP. GREEN discussed the medical parameters and the way the medical community would respond to them. CHAIRMAN PORTER stated that the medical community was a little happier with the newer version of the bill containing the parameters. There was further general discussion concerning the possible "stickiness" of establishing guidelines or practice parameters. REP. GREEN expressed support for the amendment. Possible problems concerning language and numbering were discussed. Number 433 MS. LOPER directed questions to bill drafters. CHAIRMAN PORTER suggested that the amendment be passed and have the drafter appropriately number it. CHAIRMAN PORTER moved that Amendment 3 be adopted. There being no objections, Amendment 3 was adopted. Number 460 MS. LOPER discussed Amendment 4. She explained Amendment 4 clarified the Statute of Limitations on health care providers did not conflict with the time period in the Statute of Repose. Number 477 REP. PHILLIPS moved Amendment 4. There being no objection, Amendment 4 was adopted. Number 481 MS. LOPER discussed Amendment 5. She said the intent of the amendment was to refer to injury or death as an accident. She continued discussion and explanation of the amendment. Number 483 CHAIRMAN PORTER remarked that Amendment 5 covers a loophole. Number 541 Amendment 5 was moved by REP. JAMES. There being no objection, Amendment 5 was adopted. Number 553 MS. LOPER began to discuss Amendment 6. Discussion and clarification amongst the representatives followed. CHAIRMAN PORTER explained that "in the existing law, there is a $500,000 cap on noneconomic damages. There is an exception to that that says you can exceed it if there is disfigurement or severe physical impairment. This is the loophole in the $500,000 cap... With the idea of having reasonable caps, we have taken the $500,000, left that in place, and said, `Okay, we'll recognize that there's something over and above that, we'll cap it at $750,000, and we'll define what severe physical impairment is.' And that's what this does...." He noted that though such a measure might be viewed as "draconian," it was a far more generous cap than others being tendered in other tort reform bills across the country. Number 728 REP. NORDLUND moved that Amendment 6 be adopted. Amendment 6 was adopted with the understanding that necessary clerical and numerical modifications would be made in the text of the amendment. Number 735 MS. LOPER presented Amendment 7. She said a victim of any felony, not just a Class A or unclassified felony, shall be exempt from any caps on damages. She said the law, as presently constituted, holds a $500,000 cap on noneconomic damages. Number 745 CHAIRMAN PORTER stated that by adopting the amendment, it will allow victims of felonies to not have the caps on their potential recovery. Number 766 REP. JAMES moved that Amendment 7 be adopted. Number 779 REP. NORDLUND raised the issue of parity, asking for insight on the rationale behind the section. He said, "From the standpoint of an injured party, if you sustain noneconomic damages, what difference does it make if you sustained the damages by a person who committed a felony or a person who didn't commit a felony? He said he didn't see why additional awards would be made to somebody just because it was done in a crime situation." CHAIRMAN PORTER replied, "I think it recognizes the notion that in many cases, accidents are just that. While there is somebody responsible for them, it is not through an intentional act -- no one ever considered that they would be in a position of having injured someone. In most felony cases, or all felony cases, there is an intent to commit the crime and there is an inherent recognition that there is a potential for harming someone." Number 813 After general discussion, Amendment 7 was adopted. Number 815 MS. LOPER presented Amendment 8, dealing with periodic payments. She said the bill would allow either party to choose the periodic payment schedule by merely placing a threshold of $50,000 before a party can opt to go on a periodic payment schedule. Number 829 There being no objection, Amendment 8 was adopted. Number 831 MS. LOPER presented Amendment 9. She said the parties shall submit to the court a proposal containing the periodic payment schedule in order to be included in the court's judgement. CHAIRMAN PORTER clarified that this section was suggested by the court system to cut down on the court time. The bill provides that either the defendant or the plaintiff can elect periodic payments. TAPE 94-25, SIDE A Number 000 - 196 CHAIRMAN PORTER presented an explanation of the amendment's language and rationale. He explained it is protection for the injured party. It is there to guarantee these payments. Number 220 - 316 CHAIRMAN PORTER suggested the committee address Amendment 9 at greater length on the following Monday. Discussion continued, with REP. NORDLUND expressing both support for the intent of the bill but concern that the settlements would be structured out of the court and the plaintiff would not be able to participate in that structure. MS. LOPER interjected that a mediator would be present in structuring this settlement between the defendant and the plaintiff. Number 317 CHAIRMAN PORTER proposed that the committee hear testimony the following Monday and continue reviewing the amendments. This was acceptable to committee members. There being no further business, the meeting was adjourned at 3:45 p.m.