Legislature(1993 - 1994)

02/18/1994 01:15 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  Number 805                                                                   
  CHAIRMAN PORTER announced the next order of business was HB
  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                     
  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                         
  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                       
  "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                      
  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                                                            
  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                          
  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                 
  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                   
  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                      
  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                           
  MS. LOPER interjected that a mediator would be present in                    
  structuring this settlement between the defendant and the                    
  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.                                                                 

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