Legislature(1993 - 1994)

02/21/1994 01:15 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  ACTION NARRATIVE                                                             
  TAPE 94-26, SIDE A                                                           
  Number 000                                                                   
  The House Judiciary Standing Committee was called to order                   
  at 1:28 p.m. on February 21, 1994.  A quorum was present.                    
  Chairman Porter announced that the committee would continue                  
  the hearing on HB 292 and invited testimony from individuals                 
  on the invited participants list.  Chairman Porter indicated                 
  that the list was representative of different sides of the                   
  Number 146                                                                   
  DICK CATTANACH, Contractor, Alaska Liability Reform,                         
  presented testimony via teleconference in support of HB 292.                 
  He expressed belief in an urgent need for tort reform in the                 
  state of Alaska and averred that HB 292 would address                        
  current unfairnesses in the liability laws of the state.                     
  MR. CATTANACH noted that in Alaska "only murderers and                       
  contractors" suffered lifelong liability and asserted the                    
  six-year statute of repose incorporated in HB 292 could                      
  provide a fair and just limit for civil liability actions.                   
  MR. CATTANACH maintained that HB 292 would (a) close current                 
  loopholes in civil liability laws; (b) impose needed limits;                 
  (c) reduce litigation expenses; (d) increase the percentage                  
  of claim dollars going directly to victims (whereas the                      
  percentage of award monies absorbed by litigation and other                  
  costs is currently as high as 50% in civil actions); and (e)                 
  clarify liability law for all parties.                                       
  Number 345                                                                   
  REP. NORDLUND asked why a six-year statute of repose was                     
  selected especially for buildings when the useful life of                    
  the building may extend beyond six years and defects in a                    
  building might not be discovered until the seventh year.  He                 
  asked what was magical about the six-year date, especially                   
  in terms of construction, and also how many other states                     
  have a six-year statute of repose for structures.                            
  Number 336                                                                   
  MR. CATTANACH detailed the process of constructing a                         
  building and explained the accountability of the parties                     
  involved.  He noted the obligation of architects and                         
  engineers to be licensed by the state and pointed out the                    
  construction industry employs professionals whose work is                    
  continually subject to the review of state inspectors.  MR.                  
  CATTANACH asserted that problems which manifested themselves                 
  after a lapse of six years were likely to be a result of                     
  poor or insufficient maintenance.                                            
  Number 419                                                                   
  REP. NORDLUND posed a question concerning possible design                    
  flaws, asking if it was true that if, [in] the seventh                       
  year... a building roof was to collapse, and it could be                     
  determined that it was definitely the fault of the                           
  architect, that there was a design flaw, and the architect                   
  said it was 100% at fault, an injured party could not bring                  
  suit against the architect?                                                  
  Number 430                                                                   
  MR. CATTANACH replied that if it was a design flaw, and it                   
  did not meet specifications, he believed that suit could be                  
  REP. NORDLUND asked how this could be so.                                    
  MR. CATTANACH responded that the owner, having given                         
  specifications -- if the architect did not follow those                      
  specifications, and was aware of that, then the statute of                   
  repose would not protect him.                                                
  Number 440                                                                   
  REP. NORDLUND commented, "You said that the bill limits the,                 
  makes a change to the percentage of dollars that would go to                 
  an injured party.  I don't see that in the bill.  I see that                 
  there's a limitation on the overall amount that an injured                   
  party could collect.  I don't see that there's any change in                 
  the percentage of dollars that the injured party would                       
  collect.  What section is that in?"                                          
  Number 446                                                                   
  MR. CATTANACH replied that these percentages were not dealt                  
  with specifically in a section.  He said the intent of the                   
  bill was to add certainty to the system.  MR. CATTANACH                      
  said, "If an insurance company knows that they're going to                   
  have to pay out an amount, that's certain, then it does them                 
  no good to contest that.  And if they don't contest it, then                 
  the legal profession doesn't get involved... then the                        
  injured party is not going to have 1/3 or 40 percent of                      
  their claim, of their payment, going for legal fees.  They                   
  will get basically what they've got coming because the                       
  insurance company is going to pay direct.  So that we                        
  increase the amount that will be going to the injured party.                 
  Not only that, the injured party will be getting that money                  
  Number 474                                                                   
  JEFF FELDMAN, an Attorney and President of the Alaska                        
  Academy of Trial Lawyers, testified via teleconference                       
  against the HB 292.  MR. FELDMAN stated that HB 292 would                    
  affect every single Alaskan citizen and declared that this                   
  bill would drastically damage the rights of Alaskans to                      
  obtain justice in the court system.  He asserted that HB 292                 
  principally benefits insurers and out-of-state manufacturers                 
  and corporations and severely limits the rights of                           
  individuals to pursue legal remedies for their damages.  MR.                 
  FELDMAN expressed concern over the timing of the hearing and                 
  opined it prevented in-depth analysis of HB 292's complexity                 
  and precluded a larger attendance by citizens.                               
  Number 316                                                                   
  CHAIRMAN PORTER responded that the purpose of the committee                  
  hearing was to bring committee members up to speed on the                    
  bill and said that six previous public hearings on the bill                  
  been held and noted that MR. FELDMAN had previously                          
  testified at several of these hearings.  CHAIRMAN PORTER                     
  refuted the inference that the hearing was designed to                       
  eliminate participation by the public.                                       
  Number 524                                                                   
  MR. FELDMAN asserted that the eighteen amendments had not                    
  been brought forward previously as a subject for discussion.                 
  He testified concerning the sections on wrongful death and                   
  noneconomic damages and stated that he believed these two                    
  sections "effectively strip Alaskan juries of their right to                 
  decide significant issues that are presented for court                       
  cases" and deny Alaskans the possibility of a jury trial on                  
  these issues.  MR. FELDMAN detailed his objections to HB 292                 
  at some length.  He asserted that this bill "strips Alaska                   
  victims of their sacred right to seek justice in court."                     
  MR. FELDMAN urged that the bill be defeated.                                 
  Number 673                                                                   
  MICHAEL LESSMEIR, Attorney, presented testimony on behalf of                 
  State Farm Insurance in support of HB 292.  MR. LESSMEIR                     
  noted that State Farm was not a participant in the                           
  introduction of HB 292 but wished to express belief that the                 
  legislation "will do good things for Alaska."  He asserted                   
  that the purpose for legislation of this kind "is to make                    
  the system better for everybody.  It is to take the lottery                  
  aspect out of the system.  What we have now is a system                      
  where one is fortunate or unfortunate.  So if you are                        
  unfortunate enough to be injured by someone but yet                          
  fortunate enough that they have a level of insurance that's                  
  high enough to compensate them, that's the lottery aspect of                 
  it, and that's the luck aspect of it.  I think the purpose                   
  of this kind of legislation is that you allow more people to                 
  be compensated; in other words, people who wouldn't                          
  otherwise be compensated.  If you take windfalls out of the                  
  existing system, what you do is you go further to                            
  guaranteeing a level of recovery that's fair for everybody.                  
  And that, to us, is really what you ought to look at in                      
  terms of this legislation."  He specifically addressed and                   
  analyzed a number of provisions of the bill as being very                    
  good for Alaska.                                                             
  Number 812                                                                   
  REP. NORDLUND asked how placing limits on the time that                      
  somebody can recover damages, as well as placing limits on                   
  the amount they can recover for damages, opens up the                        
  process for more people to have access to the tort system.                   
  Number 819                                                                   
  MR. LESSMEIR responded by saying that everyone would have                    
  access to the tort system regardless of changes made by this                 
  bill.  He said that "the effect of these changes is whether                  
  the person that you happen to sue has money or has been able                 
  to afford insurance to insure them against the loss.  And                    
  the effect of these changes is to reduce the cost of                         
  obtaining that coverage by making the litigation                             
  predictable, by making insurance more affordable, by making                  
  it more available.  The idea is that if you do that your                     
  chances of being one of these, an unfortunate person that is                 
  injured, by perhaps that is not covered by insurance or less                 
  -- that's the philosophy."                                                   
  Number 831                                                                   
  REP. NORDLUND commented that he felt it was debatable                        
  whether the bill would have any effect on insurance rates.                   
  Number 837                                                                   
  MR. LESSMEIR asserted that the bill would have an effect on                  
  insurance rates, but the question was when, because the true                 
  effect of the bill would not be experienced until 1996 or                    
  beyond when the statute of limitations for certain extant                    
  cases had run out.  He added that the true effect would not                  
  be seen until the provisions had been litigated and applied                  
  by the courts.                                                               
  REP. DAVIDSON questioned MR. LESSMEIR'S comment that                         
  "$500,000 is better than nothing" in view of the reality of                  
  the lives of severely disabled victims.                                      
  Number 866                                                                   
  MR. LESSMEIR replied that the bill would help minimize the                   
  risk that "the person who is injured will be hurt by someone                 
  that is not covered by insurance."                                           
  TAPE 94-26, SIDE B                                                           
  Number 000                                                                   
  REP. DAVIDSON requested clarification.                                       
  Number 007                                                                   
  MR. LESSMEIR stated that passing certain levels of                           
  limitations would make insurance more affordable at those                    
  levels, and more people would be covered, and there would be                 
  fewer persons injured by uninsured parties.  He asserted                     
  that this is the justification for a cap.                                    
  REP. DAVIDSON challenged this assertion and expressed a                      
  belief that a victim's compensation should not be                            
  automatically limited in this way, but should rather be                      
  commensurate with his needs.  He did not see how a                           
  generalized cap on award amounts could logically be                          
  reconciled with an individual's real needs.                                  
  Number 038                                                                   
  JOHN DEISCHER, Vocational Rehabilitation Specialist,                         
  Vocational Management, presented testimony via                               
  teleconference in opposition to HB 292 and asserted that                     
  damages should be awarded based on injury and not statutory                  
  provisions.  [Portions of this testimony was inaudible.]  He                 
  recounted how his professional and personal experiences had                  
  caused him to arrive at the conclusion that awards need to                   
  be made on a case by case basis.  MR. DEISCHER also                          
  expressed concern that the legislation contained no                          
  provisions for the prevention of injuries.                                   
  Number 250                                                                   
  ROGER HOLMES, Attorney, Bliss & Holmes, presented testimony                  
  via teleconference in support of HB 292.  He drew a                          
  correlation between malpractice costs and insurance premiums                 
  and asserted a need for tort reforms to reduce overall                       
  inflationary trends of health care costs.  MR. HOLMES noted                  
  that malpractice premiums had risen at a rate 20 times                       
  greater than the state of California, which had instituted                   
  tort reform laws.  He expressed optimism that HB 292,                        
  patterned after the California legislation, would prove                      
  effective in reducing litigation costs.  He also suggested                   
  it would take time for the full effect of changes to be                      
  Number 442                                                                   
  TIM DOOLEY, Attorney, Alaska Academy of Trial Lawyers,                       
  testified via teleconference against HB 292.  He analyzed                    
  the low proportionate cost in real terms of litigation in                    
  the context of gross revenues of corporate entities and                      
  concluded that these costs were proportionately too low to                   
  justify the proposed caps on awards.  MR. DOOLEY drew                        
  attention to the need to protect the existing legal                          
  mechanisms which address and challenge outrageous or abusive                 
  behaviors.  He counseled caution in removing from society                    
  the leverage to maintain higher standards of behavior                        
  imposed by the existence of punitive damages awards.                         
  Number 603                                                                   
  LINDA HALL, President of Alaska Independent Insurance Agents                 
  & Brokers, testified via teleconference in support of HB
  292.  She expressed the belief that punitive damages awards                  
  were jeopardizing the availability of insurance.  She cited                  
  a need to expand market availability and encourage more                      
  insurance companies to do business in Alaska.  MS. HALL                      
  asserted Alaskans' need for access to a greater pool of                      
  insurance carriers and the presence of healthy competition.                  
  Number 645                                                                   
  BILL ASHTON, Executive Director of the Alaska Health Project                 
  in Anchorage, which provides information on environmental                    
  and occupational health for Alaskans, presented testimony                    
  via teleconference against HB 292.  He requested that the                    
  committee consider to what degree the bill would actually                    
  reduce malpractice and litigation costs and whether it would                 
  allow for reasonable compensation.  He asserted that the                     
  high level of worker safety in the United States relative to                 
  other nations is a result of checks and balances in the                      
  system which recognizes the needs of individuals to be                       
  protected.  MR. ASHTON emphatically recommended a strong                     
  emphasis on prevention as well as protection.  He expressed                  
  concern that HB 292 did not address sufficiently the                         
  importance of prevention and advised caution in promulgating                 
  any tort reform legislation which might affect the needs of                  
  Number 704                                                                   
  PHIL HINDELBERGER, General Counsel for Norcal Insurance                      
  Company, testified from an offnet site in support of HB 292.                 
  He shared his experiences of tort reform in California and                   
  asserted that similar reforms in Alaska would result in                      
  similar benefits, including the lowering of medical                          
  malpractice costs.  MR. HINDELBERGER asserted that tort                      
  reform would reduce insurance costs.  He invoked examples of                 
  states which have not undergone tort reform and noted their                  
  spiraling litigation associated costs.  Mr. HINDELBERGER                     
  provided supporting literature, including a legislator's                     
  guide to medical malpractice published in California which                   
  details the history and results of tort reform measures in                   
  that state.   He reminded legislators that the full effects                  
  of reform would not be realized for some years.                              
  Number 791                                                                   
  REP. DAVIDSON asked in what year Norcal had purchased Micah,                 
  and inquired whether Norcal had so achieved a species of                     
  insurance monopoly.  REP. DAVIDSON asked if, subsequent to                   
  this acquisition of Micah, Norcal had issued any dividends                   
  to stockholders in Alaska.                                                   
  MR. HINDELBERGER responded that dividends had been paid.  He                 
  denied that Norcal was a monopoly and made reference to                      
  other insurance companies in Norcal's field.                                 
  Number 803                                                                   
  REP. DAVIDSON requested further clarification concerning                     
  Norcal's purchase of Micah, "a company that was put together                 
  through the legislature."  Subsequent to purchase, he asked,                 
  "...[Y]ou did collect enough in dividends for your members                   
  that you could return a, could I say, sizeable dividend to                   
  those people?  Does that mean, then, that there were not                     
  that many cases you had to pay out?  And thereby, you could                  
  afford to pay a sizeable dividend?"                                          
  Number 810                                                                   
  MR. HINDELBERGER replied, "I don't think I used the word                     
  sizeable, I think that's strictly your word.  Dividends                      
  could be paid... in the amounts of several hundred dollars."                 
  He cited efforts made with local divisions and hospitals                     
  which had rendered further stability to the claims picture.                  
  Number 820                                                                   
  PAULA JACOBSON, Alaska Academy of Trial Lawyers and a                        
  registered nurse, testified via teleconference against HB
  292.  She stated that her experiences as a health care                       
  professional and as an attorney enabled her to bring a broad                 
  understanding of all sides of the legal issues involved in                   
  HB 292.  She asserted that HB 292 does not constitute a                      
  "doctor vs. lawyer" issue.  MS. JACOBSON stated that the                     
  bill "is of particular significance to those Alaskans who                    
  seek health care services. In other words, just about all of                 
  us."  She identified  27 on the civil liability of hospitals                 
  as a particular cause for concern and noted that it revoked                  
  the accountability of hospitals with regard, for example, to                 
  hired contractors of an institution.  MS. JACOBSON stated                    
  that the "proposal has terrible and far-reaching                             
  consequences;" most significantly, in absolving hospitals of                 
  responsibilities which need to be undertaken on behalf of                    
  TAPE 94-27, SIDE A                                                           
  Number 000                                                                   
  MS. JACOBSON cautioned against significant insurance                         
  inequities which were likely to arise as a result of the                     
  bill.  She urged the committee to consider the ramifications                 
  of a measure which could eradicate means of remedy for                       
  injuries sustained by Alaskans.                                              
  Number 082                                                                   
  ROBERT LOISELLE, President, Klukwan, Inc, testified in                       
  Juneau in favor of HB 292.  He stated, "Tort reform is an                    
  important issue to our corporation.  We pay over $1,000,000                  
  in insurance premiums each year and the premiums keep rising                 
  from year to year.  We believe that victims need fair and                    
  adequate compensation, but we also believe that the                          
  situation has gotten out of hand in recent years, driven by                  
  aggressive and sometimes greedy attorneys.  Corporations are                 
  particularly at risk since they are often viewed as being                    
  able to afford large settlements.  I can assure you that our                 
  shareholders do not agree with this statement.  The current                  
  situation also encourages litigation where other methods of                  
  dispute resolution would be quicker and less costly.  Our                    
  society wastes a tremendous amount of resources on needless                  
  litigation each year.  Anything that we can do to curb this                  
  trend will have real benefits for our society.  Again, we                    
  urge you to support HB 292, a positive step towards reform                   
  of our legal system, and we sincerely appreciate your                        
  consideration of our comments."                                              
  Number 127                                                                   
  DR. DONALD LEHMANN, President, Alaska State Medical                          
  Association (ASMA), testified via teleconference in support                  
  of the HB 292.  He condemned the present tort system as                      
  being unfair and unjust and urged reform.  DR. LEHMANN noted                 
  that he practices rural family medicine, is board certified                  
  and has never been sued, and yet his malpractice premiums                    
  are approximately $30,000 per year; significantly higher                     
  than, for example, the premiums borne by a plastic surgeon                   
  in Anchorage.  Dr. Lehmann maintained that "we should be                     
  able to do better than having the tort system resemble the                   
  Publishers' Clearinghouse Sweepstakes."   He asserted the                    
  number of rural hospitals and the extent of their services                   
  had been reduced due to high costs of malpractice insurance                  
  and that independent practitioners were being forced to go                   
  uninsured and/or to reduce their services due to the                         
  enormous costs of premiums.  He pronounced HB 292 "a good                    
  bill, comprehensive and fair" and urged its speedy passage.                  
  Number 200                                                                   
  MICHAEL SCHNEIDER, Alaska Academy of Trial Lawyers,                          
  testified via teleconference in opposition to HB 292.  He                    
  specifically addressed  3 of the statute of repose provision                 
  and asked that the record "be very clear that we think it's                  
  unfair, it's unreasonable, it's bad law for Alaska, it's bad                 
  law for Alaskans."  He clarified the distinction between a                   
  statute of repose and a statute of limitations.  He asserted                 
  that the provision would "allow professionals to engage in                   
  wrongful acts, the horror of which is later visited upon                     
  Alaskans; only by then, Alaskans' rights will have                           
  disappeared completely."  MR. SCHNEIDER analyzed and                         
  detailed the perceived flaws of the proposal and presented                   
  hypothetical examples of how the flaws might affect                          
  Number 395                                                                   
  DAVID HIGGINS, Attorney, Brobeck & Phleger, testified in                     
  favor of HB 292 from in Los Angeles.  He identified himself                  
  as a tax lawyer by trade and said that he had drafted the                    
  provisions of the internal revenue code that makes periodic                  
  payments exempt from tax when they are paid for personal                     
  injury.  He stated that he had acted as an advisor to the                    
  committee which drafted the Uniform Periodic Payments                        
  Judgment [tax?] on which the Alaska bill is based.  He                       
  stated that this law, containing a periodic payment                          
  provision, or bills like it, are now law in 37 states, and                   
  it constitutes part of the present health care reform and                    
  legislation.  Attorney Higgins discussed the role and the                    
  positive ramifications of periodic payments in tort reform                   
  Number 495                                                                   
  STEVE BORRELL, Executive Director, Alaska Miners                             
  Association, Inc., testified via teleconference in support                   
  of HB 292 on behalf of the association.  He maintained that                  
  the time "had come for comprehensive reform in Alaska and                    
  this bill will accomplish what is needed."  He expressed                     
  belief that the bill would reduce insurance costs to                         
  businesses in Alaska.  MR. BORRELL stated that the "Alaska                   
  Miners Association supports fair compensation for injured                    
  persons, but we do not support the current system that                       
  encourages the use of civil liability laws as a profit                       
  Number 553                                                                   
  BRAD THOMPSON, Director, Division of Risk Management, State                  
  of Alaska Department of Administration (the self-insurance                   
  providers for the state and its agencies), testified in                      
  Juneau in support of HB 292.  He noted that, unlike 33 other                 
  states, Alaska has no cap of compensatory damages awarded                    
  against the state, leaving the state and private industries                  
  in the state open to liability judgments and exposures                       
  against state agencies.  MR. THOMPSON said, "We see that                     
  this Bill 292 will reduce future loss and future claims                      
  expense.  Several liability is the strongest section that --                 
   frankly, when the '88 initiative passed, I thought we did                   
  have certainty that we would no longer be paying for                         
  obligations of others.  And as previous speakers have                        
  mentioned, it's been five years, and we're still arguing it.                 
  "Prejudgment interest rate -- this is again part of another                  
  bill that the governor has submitted to peg the interest                     
  rate at a prevailing rate, not at some predetermined rate                    
  that will be inequitable, either too high or too low.                        
  "Reduction of future wages -- there should be consideration                  
  for income taxes.  I think that's just a fair method to                      
  calculate future wage loss.  Likewise, the restriction of                    
  prejudgment interest on future damages.                                      
  "It must be remembered that probably 90 - 95% of tort                        
  actions are settled -- they don't go to judgment.  So when                   
  you sit down and weigh and calculate what are the exposures,                 
  what is your liability risk, and then you also try to                        
  calculate and pencil out the total amount of damages that                    
  could be brought against you, you have to weigh in and add                   
  in all of these add-ons, and they're significant.  The state                 
  has, on average -- I looked at the last nine years -- we                     
  spend, or incur, losses of about $7-10 million a year in                     
  liability claims against state agencies.  We have unfunded                   
  liabilities now projected by a casualty actual of $80+                       
  million.  That's out there.  And those need and will be                      
  resolved in future years.  If this legislation passes the                    
  future claims... will be limited in magnitude...."                           
  Number 601                                                                   
  REP. NORDLUND requested clarification of the collateral                      
  benefits section of the bill and the subrogation clause,                     
  saying, "I am trying to understand, if a person is damaged,                  
  and if a judgment has been rendered, and under the                           
  provisions of this bill, and the person has disability                       
  insurance [through] the state of Alaska, under the                           
  provisions of this bill, all money will be collected first                   
  from the state, and that amount would offset the damages                     
  that were owed by the wrongdoer.  Is that correct?"                          
  Number 611                                                                   
  MR. THOMPSON replied, "I think, Mr. Chairman, the answer to                  
  the question relies on whether that program has the right of                 
  subrogation by law or by contract.  And I believe the                        
  current version of the bill allows and considers those                       
  claims --  should the plaintiff be responsible to pay those                  
  back, they can be considered....  There is no right of                       
  subrogation, then they should not be brought forward.  The                   
  state's disability program through PERS, I believe, does not                 
  have a right of subrogation.  Some disability insurance                      
  programs have no such right."                                                
  Number 625                                                                   
  REP. NORDLUND explained his criticism of the subrogation                     
  section of the bill, saying, "Mr. Chairman.  I think that if                 
  a person has the foresight to provide disability insurance,                  
  which is basically kind of a gamble, they've been paying                     
  premiums all along, and they undergo an unfortunate injury,                  
  they should be allowed to collect those damages, and collect                 
  that benefit.  And the collection of that benefit shouldn't                  
  relieve the wrongdoer of their responsibility to pay those                   
  Number 634                                                                   
  CHAIRMAN PORTER interjected the point that one of the                        
  amendments of HB 292 touches on this issue.  He thanked                      
  participants in the hearing for appearing and suggested                      
  options for the remainder of the hearing.  He said, "We've                   
  got some amendments we could take up now, or we could wait                   
  and take them all up at one meeting."                                        
  CHAIRMAN PORTER explained his idea of the provision under                    
  discussion.  He said, "It is definitely -- that issue is a                   
  policy call, in terms of restricting the rights of                           
  subrogation other than what federal law requires.  And                       
  basically, it's a policy call that, in effect, kind of                       
  establishes in this area of insurance coverage, a form of                    
  no-fault insurance.  What it says, basically, is in the                      
  typical example of -- I'm in a traffic accident in which I                   
  am not at fault, and I have medical injuries, and I've got                   
  insurance, and my medical injuries.  I sue the person that's                 
  [injured] me and in effect I'm suing his insurance company.                  
  And we go to court.  And under this provision, I am not                      
  allowed to receive compensation that would take the place of                 
  what I've already received from my own insurance company.                    
  Nor can my insurance company go after, if I receive more                     
  money, which I might.... what money I received nor sue the                   
  insurance company of the defendant that provided the balance                 
  of that.  The idea being that I've got an insurance company,                 
  this guy's got an insurance company.  If I've paid for my                    
  premiums, then I am entitled to that.  I can, as a matter of                 
  fact, ask the court, and they can consider, and generally                    
  do, I can ask the court's consideration to make up the                       
  difference of what I paid into that policy, my premiums, and                 
  if I had a substantial depletion -- in other words, I've got                 
  a maximum for life of $100,000 coverage, or something -- and                 
  they just paid me $50,000, I can ask the court to consider                   
  that I just lost that value in that policy, also.  But all                   
  we're really doing -- and it is a policy call -- when we say                 
  that my insurance can subrogate against his insurance, is                    
  guaranteeing another court trial where the two insurance                     
  companies fight it out.  And Chris is sitting back there                     
  saying, we don't want more court trials, so -- that's what                   
  that whole thing is aimed at.  It's a policy call."                          
  Number 686                                                                   
  REP. NORDLUND reiterated the role of insurance companies in                  
  promoting safety in the workplace; the fact of liability                     
  exposure encourages insurance companies "to take measures to                 
  make sure that the company or whomever they are insuring are                 
  going to do a better job.  But if they don't, ultimately,                    
  have to pay, in a situation like you described, then I think                 
  they lose that incentive."                                                   
  Number 693                                                                   
  CHAIRMAN PORTER pointed out that insurance companies may                     
  insure both plaintiffs and defendants; therefore, achieving                  
  a balance is in their best interests.  He said, "That's the                  
  whole idea of no-fault insurance.  Statistically, over time,                 
  payments will average out among companies.... if there is an                 
  award, both companies should be inspired to enhance safety.                  
  Is that fair?"                                                               
  Number 706                                                                   
  MR. THOMPSON concurred with Chairman Porter's comments and                   
  offered further clarification regarding workers'                             
  compensation, "truly a non-fault system."  He noted that                     
  prior claims experience affected premium calculations.  He                   
  said, "If you as a private contractor, general contractor,                   
  have a good loss record, with very little or no claims                       
  experience, and you are actively involved in maintaining                     
  that low loss record, you will have a lesser premium in                      
  future years than someone with a prior loss experience."                     
  CHAIRMAN PORTER announced that discussion would be continued                 
  in the next meeting with discussion of the amendments.  He                   
  again thanked participants and expressed belief that a good                  
  balance of testimony and exposure to the issues had been                     
  REP. NORDLUND asked if an overall explanation of HB 292                      
  would be forthcoming in addition to discussion of individual                 
  amendments, since the committee had not gone through the                     
  bill section by section.                                                     
  CHAIRMAN PORTER agreed that this was fair and said that the                  
  next meeting would begin with such a presentation.                           
  The committee meeting was adjourned at 3:45 p.m.                             

Document Name Date/Time Subjects