Legislature(1993 - 1994)
03/12/1994 10:00 AM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
ACTION NARRATIVE The House Judiciary Standing Committee was called to order at 10:12 a.m. on March 12, 1994. A quorum was present. Chairman Porter announced that the committee would continue its consideration of HB 292. TAPE 94-39, SIDE A Number 000 CHAIRMAN PORTER: "We are continuing with the consideration of HB 292, with the amendments being offered by Rep. Nordlund. For identification, Representative, I've started -- the next one that we would be on would be Amendment 28. I've just gone through your amendments sequentially from there, finishing with 38. REP. NORDLUND: "I may not offer all of them." CHAIRMAN PORTER: "Okay. We can renumber." REP. NORDLUND presented Amendment 28, which deals with the section on punitive damages. Rep. Nordlund stated that the amendment might be characterized "as a lower level standard, by which somebody could be awarded punitive damages; not only where it would be malicious or conscious acts, but also by `clear and convincing evidence of gross negligence or reckless misconduct.' The reason for that is that there are probably situations in which you would want to have punitive damages awarded, in which acts are not consciously done, but they are done with reckless disregard to public health or the welfare of individuals." Rep. Nordlund concluded that "...this would seek to make sure that we have that added protection for the public." Number 074 CHAIRMAN PORTER: "During the discussion on this section in the previous committee, as Rep. Green will remember, the original wording of this phrase was `evidence of malice and conscious acts showing deliberate disregard.' The concern there was that this was too high a standard, and the adjustment towards seeking a high standard, which one would expect in punitive damages, but not unreasonably restrictive, was to make it `or'. Malice or conscious deliberate acts, and that was amended to do that. I think I would not be in favor of the amendment to then say, `or clear and convincing evidence of gross or reckless misconduct,' because, to me, it would add too many qualifications, as to be confusing to the court as to which standard you're under. And, it would, if understood, reduce the level that punitive damages would be awarded." Number 108 REP. NORDLUND cited an example he had invoked at an earlier hearing, the crash of the EXXON VALDEZ, which "was not an act of malice or a conscious act, but was certainly negligent, probably grossly negligent; and I think that those are the kinds of situations in which you want to make sure that corporations and other businesses that operate in this state, make sure that they need to take reasonable care in the way they conduct their business. You want to be able to use punitive damages in a way to punish wrongdoing corporations and other businesses. Punitive damages are seldom awarded in this state. The whole section on punitive damages, in my opinion, is fixing something that isn't necessarily a problem." Referring to a memorandum from the Department of Law, REP. NORDLUND quoted, "`This section appears to limit to reckless indifference to the rights of others as a basis for punitive damages.' I am seeking to make sure that standard continues to apply." Number 137 CHAIRMAN PORTER: "I think `conscious acts showing deliberate disregard to another person' is certainly depicting that standard. I'm not familiar with the EXXON VALDEZ case, whether there was or was not punitive damages. It seems to me there was an awful lot of cost associated to that, that had to be paid, as we're still trying to decide how to distribute here in the legislature, but I don't think I have any concern that the EXXON VALDEZ situation met with appropriate compensation from the offender." Number 153 DANIELLA LOPER, Committee Counsel, House Judiciary Committee: "That language on the definition of punitive damages was taken directly out of the two latest state Supreme Court decisions." CHAIRMAN PORTER: "And, again, the compromise having already been made that, instead of saying, `malice and conscious acts,' malice or conscious acts." He requested that Rep. Nordlund proceed to offer the amendment. Number 160 REP. NORDLUND offered Amendment 28. CHAIRMAN PORTER objected to Amendment 28. CHAIRMAN PORTER: "We have, then, a motion and the objection on Amendment 28. Is there further discussion?" Number 170 REP. GREEN asked counsel to clarify the scope of the term `deliberate disregard.' He asked, "If my actions are such that I show deliberate disregard, would that cover a grossly negligent act?" Number 187 CHAIRMAN PORTER: "As regards for another? Because of my background I relate everything to criminal statutes. For example, in a criminal setting, if I say, `I am going to shoot you,' and go, BANG, then I have met the elements of first degree murder; I intentionally shot you. But if I come in here with an automatic weapon and go, BBRRRPPPTTT, it would be very difficult to establish that I intentionally killed someone who died as a result of that action - but it is well established that the natural, probable result of that action is such that it isn't necessary to prove [the intention], it's presumed. And when you show deliberate disregard for the safety of another person, that's gross negligence." REP. GREEN explored Chairman Porter's analogy and said, "I think your analogy is good. So, if this in effect does cover the concerns of Rep. Nordlund..." Number 216 MS. LOPER: "The standard is a little bit higher than gross negligence. It's going to include gross negligence, but it's a little bit higher." She offered an example of a person going into a theatre who screams "Fire!" and then injuries or deaths are sustained by people fleeing the building to illustrate her point. Number 267 REP. NORDLUND: "It's not hard to imagine situations in which a person could be negligent, or grossly negligent, which I guess it is up to a court to determine - that is not a conscious act. You can be negligent without consciously being negligent. In fact, negligence, to me, in some ways defines the fact that you were somewhat unaware that you are causing harm, but you should have taken reasonable care so as to prevent that harm from happening. I'm not an attorney. I wish I could better explain the difference between a `conscious act' and a `negligent act,' but I see them as two different things." Number 242 REP. JAMES: "I see them as two different things, too, and that's why I don't want it in here. I really like it better the way it is, because I think it does cover the intent of the law for punitive damages." Number 248 MS. LOPER: "The Alaska Supreme Court has always had a history of making sure that the punitive damages are extremely strict. It's a very strict standard as opposed to a lot of the states in the Lower `48. And so... this definition is taken directly out of the cases, because punitive damages... [are] held to the highest degree, and so the standard in Alaska is held to be very strict." Number 267 REP. NORDLUND: "One point on that point. This is a scaling back, at least the way I read it in the Department of Law's memo, it is a scaling back from the current standard; the current standard does take into account `reckless indifference to the rights of others,' and so you're limiting that possibility here by adopting `malice or conscious acts.' It's tightening the standard. Just so we know what we're doing here. I think that's the intent, and I disagree with the intent." CHAIRMAN PORTER called for a roll call vote on Amendment 28. Reps. Green, Kott and James and Porter voted "No"; Reps. Nordlund and Davidson voted "Yeah" and Rep. Phillips chose to pass. Amendment 28 therefore was not adopted by the committee. Number 288 REP. NORDLUND withdrew Amendment 29. He said, "My intent here was to deal with the long discussion we had yesterday about tightening down health care provider areas, and I think that the amendment we previously adopted did that, so I withdraw this amendment." Number 304 REP. NORDLUND reviewed Amendment 30, referring the committee to page 16, line 4, in the section requiring the Division of Insurance to compile a report. Amendment 30 would specifically require the Division of Insurance to report on the effects of HB 292 on insurance rates. He noted that the amendment had not been drafted as he wished it to read. As drafted, the amendment required information solely on reductions in insurance rates. Rep. Nordlund wished to know of any effect of the legislation on insurance rates. CHAIRMAN PORTER and REP. NORDLUND discussed the possibility of changing the wording of the amendment to read, "...and determine if the enactment of this Act has an effect on insurance rates in the state." Number 340 REP. JAMES: "Are we putting an emphasis on that, then? Or, are we going to be getting other information from the insurance that's important..." CHAIRMAN PORTER: "We'd be getting other information..." REP. JAMES: "Because [there is] other information that actually is even more important to me than the insurance rates." REP. NORDLUND: "I'm not eliminating the other information, just adding. I think that was probably what was implied here, that in this report you'd be looking at the effect on insurance rates, but I think we should directly ask the division to do that." REP. JAMES stated that her intent in supporting HB 292 was not primarily reduced insurance rates, but rather her hope for (a) an increase in availability of insurance; (b) a decrease in litigation; and (c) increased economic activity. She said, "So, the information that I would want to get would be all those kinds of things, not just necessarily reduction in insurance..." Number 356 REP. KOTT and other committee members discussed the language and placement of the amendment, "My understanding of this amendment is that we are going to tag on to the end of Amendment 2, which deleted lines 1 through 4, and added a new -- really, it reads somewhat clumsy." CHAIRMAN PORTER: "I would say, for the record, and most certainly, I could not imagine that their report would not try to reflect a response to that question and to the questions that Rep. James asked. Most certainly, one of the goals of this legislation is reduction of insurance rates..." Number 388 REP. NORDLUND: "I maintain my desire to offer the amendment because I think that, certainly, the driving force behind this legislation is that insurance rates are too high, supposedly, and this will help bring them down." CHAIRMAN PORTER: "I don't have any problem with it, it's just a matter of the form, of saying one thing and then not adding all the others..." Number 394 REP. PHILLIPS: "I realize that this whole issue is a major issue, but I also question, and I'd like some analysis, of other major issues that we put before the public, where we put a clause similar to this; whether the enactment of this Act has an effect on insurance rates. This is a major issue. But, in my recollection, this isn't normal - that we pass a piece of major legislation and then come back with a statement like this for response." Number 405 CHAIRMAN PORTER: "Well, rather than take up the time to try to rewrite the other amendment, I'll say on the record that this most certainly is one of the things that we're going to be expecting from the Division of Insurance, along with the things Rep. James stated - availability of insurance, effect on the economy, new businesses, those kinds of things." REP. DAVIDSON: "In light of our conversation yesterday, and the couple of amendments that we passed, I think it should be added that those expectations will not be known, probably, until the next millennium." CHAIRMAN PORTER remarked that that could be and then asked if there was further discussion on Amendment 30. REP. NORDLUND moved Amendment 30. Number 430 CHAIRMAN PORTER: "I'll object, for the reasons stated." Chairman Porter called for a roll call vote on Amendment 30. Reps. Davidson and Nordlund voted "Yeah"; Reps. Green, Kott, Phillips and Porter voted "No" and Rep. James did not vote. Amendment 30 was therefore not adopted by the committee. Number 437 REP. NORDLUND offered Amendment 31. CHAIRMAN PORTER objected "for purposes of discussion, at least until we figure out what it is." REP. NORDLUND: "This deals with the section of the bill I think is a good one, that allows for increases in inflation on periodic payments. I am simply helping the court decide how to determine what inflation is based on, the CPI. It's the standard language used throughout the statutes, when we try to compensate for inflationary effects." CHAIRMAN PORTER asked for clarification regarding the CPI. REP. NORDLUND responded that "there is really only one CPI available for the state of Alaska, and it's tied to Anchorage." Number 453 CHAIRMAN PORTER said he could not think of any other logical way of computing inflation rates and removed his objection to Amendment 31. There being no further discussion or objection, Amendment 31 was adopted by the committee. Number 468 REP. NORDLUND presented Amendment 32. He said, "This is the section that deals with periodic payments. It leaves it permissive for the court to order periodic payments. Instead of saying `the court shall, at the request of a party, order periodic payments,' `the court... may order periodic payments.' The intent here is that it may be the best judgment of the court that in some cases you don't want to have periodic payments just because one of the parties requests it. It gives the court that authority to decide. We've been over this a lot." Number 491 CHAIRMAN PORTER: "I would go along with you if it were the court's money that were being spent, but it's not the court's money, it's the defendant's money; and, as long as there's protection for the victim, or the plaintiff, I think fair's fair and either party should be able to have the choice, so I would maintain the objection." REP. JAMES: "This is the one that I have a problem with." CHAIRMAN PORTER: "Oh, we've labored hard over this." REP. JAMES: "We've labored hard." Number 500 CHAIRMAN PORTER: "Let me tell something else about periodic payments that didn't come up, as a matter of fact, that I just got from a guy who runs a business that does this sort of thing. According to him, and I have no reason to disbelieve him, but I admit readily that I don't have the study that he's repeating - in national and local [levels], in the period of two months to five years after the award of lump sum payment; at two months, two point five out of ten people have expended all of those funds; at five years, nine out of ten have expended all of those funds. We're not our brother's keeper, but... "Additionally, there's an advantage to a plaintiff to take periodic payments because of a tax break. The adjustment that we've just defined on being able to get an inflation built into your periodic payments, is not taxable. That increase comes at a time when it is at that rate the value of that money, so it is not taxable. If you get a lump sum payment, and put it in the bank, you immediately start paying taxes on the interest. So there's all kinds of good reasons, and we've debated it, and I don't know that I'm going to change Jeannette's mind, but..." REP. NORDLUND: "All kinds of good reasons to leave it up the court to decide." CHAIRMAN PORTER: "I'll maintain the objection. Could we have a roll call vote, please?" A roll call vote was taken. Reps. Davidson, Nordlund and James voted "Yeah" and Reps. Phillips, Green, Kott and Porter voted "No". Amendment 33 therefore was not adopted by the committee. Number 533 REP. NORDLUND withdrew Amendment 33, saying, "I have a very similar amendment that I could offer in its place right now, or, I think it's at the end of your pack, we could do it then." CHAIRMAN PORTER invited discussion on Amendment 34. REP. PHILLIPS: "We have Amendment 22, that follows damage, already adopted." REP. NORDLUND: "I'd like to offer Amendment 34, and I'll explain the difference." CHAIRMAN PORTER: "I'll object. Go ahead." Number 535 REP. NORDLUND presented Amendment 34, which increased the liability of design professionals beyond the strictures of intentional or reckless disregard and required these professionals `...to follow applicable design plans or specifications or building codes.' Under the terms of the amendment the statute of repose would not relieve design professionals of these obligations. Rep. Nordlund remarked, "I think that design professionals have an obligation to follow, you know, the plans, and codes and specifications on a project, and if they don't, I don't think they should be immune from liability after six years." Number 556 REP. PHILLIPS: "Basically, the only difference I see between the amendment we adopted and this, is the difference in the wording `intentional or reckless disregard' versus `failure to follow.' It seems to me like those would be pretty much the same, would mean pretty much the same thing." Number 563 CHAIRMAN PORTER: "Well, it's a different standard. The one that we passed is a standard of gross negligence, and the one that he is offering is simple negligence, which is just oversight, really. I would say, again, that the provision that we made was made with the spirit of recognition that some degree of compromises should be made; but there are, I believe, 40 states with statutes of repose that don't have these kinds of qualifications that we've already put on. I don't think this is an unusual situation." REP. PHILLIPS: "At some point in time a change order on a construction project could come in, changing the original design plan, and if something happened you could have -- the change order could be approved -- you could have somebody sue because they didn't follow the original plan." REP. NORDLUND: "It doesn't say `original', it says `applicable', and I think, if there has been a change order, that's applicable." Number 582 REP. JAMES: "My objection to the amendment is to just allow it to say `failure to follow'...because that brings in too many small things that I don't think might be applicable. I think that if the problem is sufficient enough to be implementing great damage, that it would fall under `intentional or reckless disregard.' `Failure to follow' could be something that was very insignificant, but if they found that, then they could have some damages. And I think it might not necessarily relate to the damages. So, I think that `failure to follow' is too loose, and I prefer the way it's been. I think that will take care of the problems." Number 596 REP. NORDLUND: "One more comment, and that is, that if there are damages, and somebody is going to have to pay, and if the architect or whatever didn't follow the plans, I think that should be the person who would have to pay. Now, without that, either the injured party has to pay, or somebody else gets sued, or the state has to pay, or somebody, but not the person who is responsible for not following the plans. That's the party who's most directly responsible for the failure of the billing, and that should be the person who pays." Number 603 REP. JAMES: "I guess the point I wanted to make is that there are a lot of things that could be not followed specifically according to the plan and or building codes, that was not a problem and didn't create the problem, that the problem was from something totally different. And, in knowing how it works when you have attorneys working on a case, they look until they can find some little deficiency, and they build their case on that deficiency. And I think they might be building their case on a deficiency which doesn't relate to the problem." Number 614 REP. DAVIDSON contested the implication that juries and courts would fail to challenge irrelevant accusations and he expressed greater faith in the judicial process. Number 622 REP. JAMES: "If the problem that caused the problem was sufficient to cause the problem then I think it would fall under intentional disregard. That's my point. In other words, if the flaw in the construction or the design or the building code was a flaw that was sufficient to cause this collapse or damage or whatever it is, then I think that that would fall under intentional or reckless disregard. I think that saying `failure to follow applicable design plans' opens up a whole new problem: that because something happened, and they found something like this, then they could say, `Well, it says right here, failure to follow - and they failed to follow.'" Rep. James concluded that the language already adopted by the committee in the prior version of the amendment was sufficient to "cover all of the damages." Number 639 REP. NORDLUND: "If you've designed a building, and you have a certain number of columns supporting a beam, for instance, and it wasn't adequate, and the roof fell in, it's going to be difficult to prove that that contractor or that architect did that intentionally. But it certainly didn't follow the code, or it may not have followed the building plans. I don't know how a court would determine that the architect did that intentionally, or recklessly." REP. JAMES: "You mean the contractor? Well, you would expect the contractor to follow what the design plan was, and if he didn't [indisc.]..." REP. NORDLUND: "But how do you prove that it was done intentionally? That's my question." Number 652 MS. LOPER and CHAIRMAN PORTER briefly reviewed the language in Amendment 22 and standards for gross negligence. Number 657 REP. GREEN: "Is what Rep. James was concerned about essentially the difference between the plethora of litigation that could come from simple negligence, is that kind of then set aside in a gross negligence case? Neither one is intent, but, I am trying to get at the fact that there are a number of people who objected to the use of gross negligence in favor of simple negligence. For my poor brain, can you kind of give an overview as to the degree of difference?" MS. LOPER: "I don't know a lot about the construction industry, but I can imagine it would go something like this: on the simple negligence - well, there's no such thing as simple negligence. On a negligence case..." REP. GREEN interjected a request for an example with which Ms. Loper was familiar. MS. LOPER: "All right. If the architect... puts together the design plan and then hands it to the construction industry or a construction agent, and then he's the one that goes through and builds the house; well, if the architect or the engineer said, `The door needs to go here' or `a pipe needs to go here' and the person who was building the house put it in the wrong place, did not follow the plans, that would be gross negligence." REP. GREEN: "And then simple negligence in that similar type situation would be...?" MS. LOPER: "Something that is less than reckless disregard of a specific [indisc.]" CHAIRMAN PORTER: "If there was a typographical error in the specs and he didn't catch it?" MS. LOPER: "Yes... it would be very, very..." CHAIRMAN PORTER: "That's negligent. Because he's a professional..." REP. GREEN: "But not simple negligence, right?" CHAIRMAN PORTER: "I don't know if there is simple negligence; there's negligence, gross negligence and intentional negligence." REP. GREEN: "Okay, thank you." CHAIRMAN PORTER called for a roll call vote on Amendment 34. A roll call vote was taken by the committee. Reps. Nordlund and Davidson voted "Yeah" and Reps. Kott, Phillips, Green, James and Porter voted "No". Amendment 34 was therefore not adopted by the committee. Number 699 REP. NORDLUND offered Amendment 35. CHAIRMAN PORTER objected to Amendment 35. REP. NORDLUND discussed Amendment 35. He noted that the absence of page or number noted on the amendment under discussion was because it pertained to another, previously adopted amendment. He said, "If I remember, there are certain exceptions that you allowed, in the previous amendment, to the $500,000 limit that goes up to $750,000 for situations where you have quadriplegics and serious injuries. I'm just making the policy call that the $750,000 is too low. I think it should be $1 million." CHAIRMAN PORTER: "Keeping in mind that the cap that we're establishing here is not the total compensation for a paraplegic or a quadriplegic or whatever. This is just for the noneconomic pain and suffering... Right now there are, I believe, 15 bills before the U.S. Congress dealing with this topic, and I'm told 13 of them have a cap on noneconomic damages in these kinds of cases of $250,000 with no exceptions. So, I don't think we're being too stiff by expanding the already in place $500,000 cap to $750,000." Number 730 REP. DAVIDSON asked if the figure would include loss of consortium. CHAIRMAN PORTER responded, "We may be providing something that they don't. Yes, this is loss of consortium." REP. DAVIDSON: "I mean, talking about, the bills you were talking about in Congress." CHAIRMAN PORTER: "I don't know. Loss of consortium, we're bringing in, I think, because of a court case, here." MS. LOPER: "It would be considered, yes, in noneconomic damages." REP. GREEN: "Your question was whether the other bills in Congress..." REP. DAVIDSON: "Right, and we don't know. So we don't know whether the loss of consortium is high or low in this instance." CHAIRMAN PORTER: "It may be that loss of consortium isn't even covered by those bills. We're specifically covering it." REP. DAVIDSON: "But why do we want to put a $750,000 cap on it?" [UNIDENTIFIED VOICE]: "It has to stop someplace." Number 740 CHAIRMAN PORTER: "So that there will be some finality to the assessment of how much it's going to provide insurance for these kinds of exposures." Number 744 REP. DAVIDSON: "I thought a long time about this, and if I were to lose my partner in life, the money really wouldn't mean that much, but the loss, with our three children, would mean a heck of a lot. And also, I don't think that this sum is in fact so great. If you think about what your wife is worth to you, you can't do it terms of money. But you can certainly search your soul to know that, if you're trying to deal with your children or your grandchildren... I'm going to support this change, because I think that compared to what we've talked about with these other states... I don't think $1 million is so great a sum for such a loss. It's an immeasurable loss." Number 761 REP. GREEN: "Well, we agonized over this, as you recall, certainly, in Labor & Commerce, to some degree... I sympathize with you, and I asked the question there, and I'll repeat it here: You indicated that that loss is immeasurable. And I agree. It truly is. If I were to lose my mate, there isn't any amount of money in the world that I would accept for that. Now, that sounds like a grandiose speech, but I truly mean that. But that's maybe because I'm not starving. Money doesn't mean as much as having her with me. "But would, given the fact that she were taken from me, or our children, would it be worth $250,000 more or $2-1/2 million more? Or $5 million more? There is some degree out there, perhaps, when somebody is just so overwhelmed by the amount of money that they may say, `Well, yeah, now I'll sell out for that much money.' I think, in the real world, that when we're talking about a large sum of money, a quarter of a million dollars, we've already upped it a quarter of a million dollars, and I think there would end up being a ratcheting that is going now beyond the loss, and it's going almost into the greed. `I am hurting, I won't hurt as much if I get a little bit more money.' I really fail to see that. After really coming from a position where you were, and I think the chairman can relate to this in my own moving, is that there comes a point where you just say, `Okay, we'll give some amount, but it's got to be a rational amount' because after that you're no longer serving the loss, you're serving the greed. I think somewhere in this range that we're between, $500,000 and $750,000, is probably the reasonable point." Number 788 REP. JAMES suggested that the measure of the cost of negligence should be more specifically a function of the actual liability of defendants and represent "the extent of their infraction." She added that everyone is affected by the size of caps imposed and noted that very large caps may create problems for more individuals than simply the defendants. REP. JAMES remarked, "I think there's some inherent risk in living," and reflected on the need to place outside limits on the costs imposed, not only on the defendant, but on society at large for a dereliction of duties; for, she said, referring to someone who has sustained the loss of a loved one, "there's absolutely no money, absolutely no money, that you can give that person to replace the death of a loved one. None." Number 811 REP. DAVIDSON responded to Rep. Green's remark concerning the `greed factor.' In those cases, he said, "I think we're not talking about human beings... we're talking about a different, lowly kind of life." In response to Rep. James' comments on dereliction of duty, REP. DAVIDSON cited a situation with which he was closely familiar wherein a mother of three had been so severely incapacitated by an injury that her family had been forced apart. "Her husband had to divorce her, because they could not afford the doctor bills. The legal case just didn't make it - there were some mistakes made. So you have a situation where the three children have now gone their separate ways, a couple of whom have been traumatized by what happened to their mother; the individual is living with her mother, because she is a ward of the state... the 80- plus years old mother is taking care of this person, and there is not sufficient money... available under that state's program to care for this person. I think it would be nice if that person could afford to go get some therapy, to see if maybe that 55 year old person could get out of diapers. And so, dereliction of duty?" Number 835 REP. GREEN observed that sometimes situations did not come out they way they should. He stated, "Inherent risk with life? It wasn't that individual's fault that she ended up like that. So I'm going to vote for $1 million, and I would hope that you guys could find it in your own hearts to do so, as well." Number 844 REP. NORDLUND: "This has been a really interesting discussion amongst us all. Nobody is intending, I don't think, intentionally to try to take away the just damages due to people. But this is exactly the kind of discussion that should take place in a jury, in a normal trial situation. Except that a jury is looking at the facts of a particular case: particular individuals, particular damages, and then should render a judgment. I raised this to $1 million because I think it's a mild improvement. "I basically don't really believe in the caps at all. For one thing, $1 million would rarely be awarded, given the evidence of the past history of the kinds of damages that are awarded." Furthermore, REP. NORDLUND said, for the legislature to speak arbitrarily concerning future cases would be "fundamentally wrong. We have to let our peers decide on the merits of a particular case and come up with what they think are the just damages." Number 858 REP. DAVIDSON: "If this bill were to become law, how long do we hold on to that $1 million cap? The next 20 years? 25 years? We don't make positive changes for individuals very easily around here. I say, leave it to the jury system, leave it to the courts, and let's stop trying to nit-pick our way through fantasy numbers that are supposed to, somehow, do justice. Because I don't think they do." CHAIRMAN PORTER: "I think there hasn't been one point of view spoken on this amendment that's incorrect. We're just going to have to make a policy decision, that's what it is. So, could we have a roll call vote please?" A roll call vote was taken by the committee on Amendment 35. Reps. Nordlund and Davidson voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". Amendment 35 was therefore not adopted by the committee. Number 875 REP. NORDLUND moved Amendment 36 and CHAIRMAN PORTER objected to this amendment. REP. NORDLUND reviewed Amendment 36. He stated, "This is the section of the bill that deals with reducing damages by future taxes that would be paid on those damages. What the amendment does is deletes, takes that automatic deduction out of the bill and replaces it with language that allows the jury to consider what the future taxes would be. Again, the Congress has decided that damage awards are not taxable, and I certainly believe that the intent of that was to allow that to go to the beneficiary or, in this case, the plaintiff, or the person who was injured. By adopting the language that we have in the bill, you're passing that benefit on to the wrongdoer. My amendment is basically a compromise..." [Abrupt end to tape; some text lost.] TAPE 94-39, SIDE B Number 000 REP. NORDLUND: "...But it just seems to me that the jury should just be made aware of the fact that they'll not be taxed on it. With that information in mind, they might decide to reduce the award. And that it shouldn't be automatically reduced. There's some real problems, too, incidentally, in trying to anticipate what the future tax liability is going to be of the individual, years down the road, and to set it statically at what the taxes are being paid at the time the judgment is made. I think it's cumbersome to try to do that, and I think that if you just allow the jury to take that into consideration, it's a neater way of handling it." Number 025 REP. GREEN: "I think, in effect, the way that it's worded now does take a compromise effect in that it says it will be the tax rates in effect on the date of the injury. Except for the recent - and I'm talking about under the Reagan - years, income taxes generally slide up. And so, future earnings would be taxed. In future years it would appear that they would be taxed higher than they would be if it happened now. So, in effect, that does go in a direction that you're talking about; that there is a compromise already built in to this." CHAIRMAN PORTER: "I'd like to think that taxes are going down, but I doubt it." Number 042 REP. NORDLUND: "It's not just the tax rates, though, but it's the individual taxpayer's liability with whatever their exemptions would be, their standard deductions... my taxes have changed every year, based on particular circumstances. It's not hard to imagine that in the future somebody's tax burden would go down for some reason, and yet they'd still be having these benefits taken out based on an earlier rate. It's just hard to anticipate what somebody's tax burden is going to be 25 years from now." Number 058 REP. JAMES: "This time I agree with Rep. Nordlund, and let me tell you why it is that I do that. And I agree that the fact that these awards are not taxable is an intent to be a benefit to the receiver of these funds are opposed to the person who is paying them. But there's other benefits. And just allowing them to consider it, in determining what the economic damages are, that it is indicated that your gross income is your benefit, even though some of it is taxable, there is payments off of your gross income that go for FICA and so forth that you do end up with getting some benefit for. Maybe some other state taxes that you may or may not get a benefit for. But to say that the economic damages will be reduced by the amount of federal and state income tax that would have been paid on those earnings, I think, according to what Rep. Nordlund..., I agree that there's no way to actually calculate that. I think it would be fair to let the jury consider that. And not say that `they shall reduce' the economic damages by that amount." Number 093 CHAIRMAN PORTER: "In putting this in the bill, it, to me, was an equity issue that I think makes sense. The idea is to make a person whole, not to make them rich. If you're giving them money that they would have had to pay in taxes, you'll be giving them something that they wouldn't have had in the first place. And, again, this is on the economic damages, not in the other kinds of areas that they could get compensation. Economic damages are supposed to replace, not enhance, the economic losses - in wages in this case - that you would have received. And I would agree with Rep. Green that, to me, wording it the way we worded it, is the best possible break for the plaintiff in terms of what his tax consequences would be. 25 years from now I don't know what to imagine, what we're going to be paying, but - I think that the table has shifted in the plaintiff's benefit and the way that we're saying that it should be done. I think it provides the court with some specificity instead of a big harangue about how they are going to establish this, make this decision, and seeks to make the person pay what is really due, and allow the plaintiff to receive what he has actually earned." Number 130 REP. JAMES: "This is some of the same argument that I had before on how much - the economic damages are - is to be paid by the person who created the infraction, and it depends on who he did the damage to, it would be a different amount of the same period of economic damages, and I understand that, but it just seems to me that the only reason that the federal government made this money be not taxable is to help the person who is in this situation, not necessarily to help the person that has to pay. And I think this does make it be helping the person who has to pay and not the person that is getting it. And I think it would be very difficult to figure out what that person's taxes would be, on that amount." Number 177 CHAIRMAN PORTER: "Well, I certainly don't know what the history of the federal determination was, but, I would like to think that it was made looking at the issue of from the point of view that I think I'm looking at, and that is, that we're not going to tax it, so it doesn't have to be paid, it doesn't have to be received, we're just going to take it out of this thing altogether. So, I don't know. Is there any further discussion?" REP. NORDLUND: "Again, this is just allowing the jury to take that into consideration. It's not necessarily giving a benefit to either the plaintiff or the defendant." REP. DAVIDSON: "Why are we trying to do so much of the jury's work here?" CHAIRMAN PORTER: "So we don't have to pay so much for the court budget. I'm not being facetious when I say that. One of the issues involved in this is the effect of all this on the court, when we set up a scenario that's going to cause an awful lot of extra litigation. I think we should try to avoid that. Could we have a roll call vote, please?" A roll call vote was taken on Amendment 36. Reps. Davidson, Nordlund and James voted "Yeah" and Reps. Green, Kott, Phillips and Porter voted "No". Amendment 36 was therefore not adopted by the committee. Number 194 REP. NORDLUND moved Amendment 37. CHAIRMAN PORTER objected. Number 200 REP. NORDLUND presented Amendment 37. He said, "The heart of the amendment deals with deleting materials, deleting Section 26, and everything else is a conforming to that. What Section 26 is, is the infamous Rule 82 section of the bill, and it just simply deletes the - as I understand it, this does not delete all of Rule 82, but just Rule 82 as it pertains to tort [indisc.]." Number 217 CHAIRMAN PORTER: "Rule 82 is being offered for being deleted because - we have in the bill, a section that deals with specious litigation. Rule 82 is the rule that originally provided just that attorney's fees would be awarded to the prevailing party of the suit. It was then messed with a little bit and now has a laundry list of things that can be considered when determining how much and who prevailed, to the extent that the past chief justice wrote an opinion that I totally agree with that said this is going to cause more litigation than it's going to stop. With all that in mind, and considering that we have in the bill something that gets at an inducement to avoid unnecessary litigation, I would support leaving the deletion of Rule 82 in." Number 247 REP. NORDLUND: "I would draw the committee's attention to a rare letter from the Supreme Court that was addressed to us on this issue of Rule 82. Very seldom, it says in the beginning of the letter, `Very seldom does the Supreme Court take a policy position on issues...' Actually, Mr. Christensen who wrote the letter is here, but I'll just say, just a few short words from the letter: `First, Rule 82 discourages unfounded lawsuits by plaintiffs. Second, Rule 82 gives plaintiffs a personal stake in a lawsuit. Third, Rule 82 makes it more likely that insurance companies will settle before the hiring of lawyers or the filing of lawsuits. Fourth, Rule 82 allows plaintiffs with small cases to bring them. Fifth, Rule 82 discourages marginal appeals by the losing party.' "Their final point is that `Rule 82 is simply a matter of fairness.' I would think that we would put great stock in a letter like this from the Supreme Court, when they rarely make recommendations. I think that they obviously feel that it works very well in our court system to have Rule 82. For the very reasons I mentioned, I would strongly encourage that we delete this section of the bill." Number 270 CHAIRMAN PORTER: "I don't disagree that that was the intent of Rule 82. I guess what I'm saying is that it has gone past that, and we have things in this bill that also provide, and I think with a better target than the shotgun of Rule 82, inducements to settle because of the offers that we've made, and, on the ability of the court to give an immediate hearing to someone who believes that they are being prosecuted maliciously or speciously, with unfounded litigation. The Supreme Court does not totally support that memo because, as I say, when Rule 82 was recently changed by the Supreme Court, there was a dissent by Justice Rabbinowitz to change. I guess it's kind of like any situation dealing with judges, or dealing with Supreme Court decisions, it's rare that you've got a five - zero reading, or, whatever, and when it comes down to it, it's a policy call." REP. NORDLUND: "I wonder, since Chris Christensen has been sitting through all these meetings, if you might ask him if he does have anything to say. If he doesn't, that's fine." CHAIRMAN PORTER invited Mr. Christensen to speak. Number 309 CHRIS CHRISTENSEN, General Counsel, Alaska Judicial Branch, briefly addressed the committee. He said, "If I were going to make remarks, it would be to restate the statements in the letter. I won't waste the committee's time by doing that. I guess I would like to say that the court is unanimous in its support of this letter. Justice Rabbinowitz' dissent was not to Rule 82 itself, it was just some amendments to Rule 82 that were made last year. Amendments which, essentially, have the effect of making the rule even fairer for defendants. Other than that, I would be happy to answer any questions. I realize that the intent of parts of the bill, as you indicated, are to match some of the perceived benefits which the court sees in Rule 82. I think that most of the benefits of Rule 82, while there are some benefits in the bill which attempt to deal with the same problems that Rule 82 does, I think that most of the benefits of Rule 82 are not met by the specific provisions of the legislation. I guess, just at a very basic level, the court believes that Rule 82 is about fairness. One person should be in a lawsuit, and the other person shouldn't. Someone wins and someone loses. Someone was right and somebody was wrong. And Rule 82 simply is about fairness. It says that the person who wins, the person who should not have been involved in this whole thing, should be getting some compensation for the amount that they were forced to pay out." Number 343 REP. DAVIDSON: "It seems somewhat - I was going to say, incredible, but I don't want to get sensational, here - but I don't understand how after we hear how unanimous Supreme Court feeling is about this, why we would want to second guess that august body? Because I'm sure that they know more about Rule 82 than I would ever want to know in my lifetime. So, I'm going to take that as a lead, and I'm going to support this amendment, because I think it makes sense to follow the recommendations of our state's highest court and its members." Number 366 CHAIRMAN PORTER: "I'll try to be nice when I say generically that to follow that logic, one would have to say that you agree with every majority decision that that august body has ever produced, and I'll just suffice it to say that I don't. Consequently, I'm not persuaded because they have a position to buy it." Number 370 REP. DAVIDSON: "I'm not asking you to buy every decision, or every recommendation, I'm only asking for this one." CHAIRMAN PORTER: "I see. Can we have a roll call vote, please?" A roll call vote was taken on Amendment 37. Reps. Nordlund and Davidson voted "Yeah" and Reps. Green, Kott, Phillips, James and Porter voted "No". Amendment 37 was therefore not adopted by the committee. Number 430 The committee took up discussion of Amendment 26, which had been on hold. CHAIRMAN PORTER: "Page 2, line 15. The discussion came down to Rep. Nordlund's position that there were a few limited circumstances where adequate compensation wasn't going to be paid, and my point of view was that that was not an appropriate thing to say because that isn't what we're implying. Any further discussion on Amendment 26? Can we have a roll call vote, please?" A roll call vote was taken on Amendment 26. Reps. Davidson and Nordlund voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". Amendment 26 was therefore not adopted by the committee. Number 441 The committee took up discussion of Amendment 24, which had also been on hold. CHAIRMAN PORTER: "Page 8, line 5. I believe Ms. Loper looked this up for us. Daniella?" Number 460 MS. LOPER: "The question on the amendment yesterday was about, what if the municipality becomes insolvent? What happens to the plaintiff? It sets out in Alaska Statute 29.06.050 and 29.06.520, that if something like that does happen, that the state will succeed and pay up upon this." CHAIRMAN PORTER: "This amendment was suggested by the Department of Law. Further discussion on 24?" Number 475 REP. JAMES: "This has nothing to do with this amendment, specifically, but it does have to do with this thing that comes in right after `or' on this amendment; an authorized insurer may not have required a security. And I'd like to have a definition of authorized insurer, as to why they're so special." CHAIRMAN PORTER requested that the committee conclude discussion of Amendment 24 and said that the committee would return to Rep. James' question. Number 488 REP. GREEN: "If this happens, and it could, certainly, that a municipality is unable to perform and excluded here without any security - the state comes in, as we just heard - is there any kind of a delay in that? Is this an automatic thing, that just takes up from where the clock started? Or is this stretched way out so that the plaintiff may be at jeopardy for some length of time before the state kicks in? And I certainly wouldn't want that to happen. I know there's no guarantee, but I'm just wondering what - has it happened, do we have any kind of a track record?" Number 507 CHAIRMAN PORTER: "I don't think that there's ever been a municipality that went bankrupt in the state of Alaska." Number 521 REP. GREEN: "Do we have any knowledge of - because there have been some municipalities in other parts of the country?" REP. JAMES: "There have been municipalities that have tried to disenfranchise their municipal standing." REP. GREEN: "In order to get away from an obligation?" REP. JAMES: "Either that, or to accept a different type of government [indisc.]." CHAIRMAN PORTER noted that statutes currently provided for an insurance pool among political entities such as municipalities. "And they have done so, and very successfully; there is an insurance pool for municipalities. Generally for the smaller ones. The Municipality of Anchorage is self-insured... most do. The pooling of the insurance available for the smaller communities is also - somewhat speaks to the ability to meet their obligations." Number 521 REP. GREEN: "And to that point, Mr. Chairman, the concern I have is that one of the first things that happens in an economically troubled entity, individual, whatever, is that payments to something like that generally are the first to go. If the insurance from this pool lapses, then is this municipality, that ends up being a litigant, excluded then, because of lack of payments? I may be making a mountain out of a molehill, but I'm just concerned that we don't require any kind of protection guaranteed from perhaps a shaky entity." Number 531 REP. JAMES: "Well, I guess that I share some of Rep. Green's concerns. The City of Fairbanks is not in my district, but the City of Fairbanks has been woefully close to having to file bankruptcy in the last few years. And their finances are not getting any better. I know that if they were to file a bankruptcy it probably would not be a liquidation, it would probably be some kind of plan to get out of their dilemmas. They also don't have a very good history of not getting themselves into lawsuits and problems with people. Particularly in employment and doing good employment practices. They've had a rash of these things, and a lot of those were pretty expensive. I guess that if I were injured and I were filing a suit against the City of Fairbanks and I was on periodic payments because the court said they had to do it that way, or because it says that we `shall' do this, I wouldn't feel very comfortable about getting periodic payments from the City of Fairbanks without some kind of a guarantee. And so, for that reason, and who knows... There's another thing, I think, and I don't mean to be a real pessimist in this issue, but we're facing an economic downturn in this state that is very, very real. And any time you come in to an economic downturn, even in your personal life, you find that reducing your spending is extremely difficult. And we don't even know what the circumstances that will be created or the results of that would be. So I don't feel real comfortable with having a municipality in here, and I don't see any reason why they shouldn't be able to either pay or put up security for a periodic payment. So, I guess, I would feel okay if the state was in there, but I feel uncomfortable about the municipality. I feel equally uncomfortable with authorized insurer. Because they can go bankrupt as well." Number 570 CHAIRMAN PORTER: "Would the, speaking to this amendment, would the committee be comfortable with the removing of `municipality'?" REP. JAMES: "Yes, I would." Number 570 REP. DAVIDSON: "I certainly concur in a large part of the remarks by Rep. James, although I tend to have more municipal confidence because we do have a sales tax in Kodiak, but, Mr. Chairman, the pooling that you talked about - are you talking about the Alaska Municipal League pooling?" CHAIRMAN PORTER said yes. REP. DAVIDSON: "Well, I have some entities in my own constituency, or my own district, that cannot afford to make those payments. And, of course, we're looking at a recommendation to cut revenue sharing and municipal assistance by a full 50 percent and the letters are coming in and that person or that entity that's not able to pay now, I think will be multiplied manyfold by the end of this fiscal year, if we continue in the path we're on. So, I would be most comfortable to take out `municipality'." CHAIRMAN PORTER: "I will look at a friendly amendment..." [UNIDENTIFIED VOICE - PHILLIPS?]: "So moved, Mr. Chairman, to remove municipality." There was no objection. CHAIRMAN PORTER: "We now have in front of us Amendment 24, as amended by the deletion of `a municipality.' Further discussion on Amendment 24? Is there objection?" There being no further discussion or objection, Amendment 24 as amended was adopted by the committee. Number 616 REP. NORDLUND moved Amendment 38. CHAIRMAN PORTER objected to Amendment 38. REP. NORDLUND: "This gets back to the hospital part of the bill again. If this legislation passes the way it recently reads, we will allow certain health care providers, primarily physicians - basically the hospitals will not be responsible for any malpractice that may be have been committed while they were operating in the hospital as long as they are acting as an independent contractor. I stated earlier that that does leave the public exposed in some cases because 25% of the doctors in this state do not have insurance. Rep. Phillips asked me to get some verification of that and I've gotten this from the Alaska State Medical Association. This is based on a survey that they did, I guess in 1990; these percentages might have changed. In any case, it does show you the size of the problem in Alaska. If we don't adopt this amendment and the bill passes the way it is, we will be in a situation in which neither the hospital nor the doctors will have malpractice insurance, and, other than going after the doctor's personal assets, there is no protection for a victim of malpractice. So, what my amendment does is simply require that physicians operating as health care providers - I'm not sure if the language is going to comport with what we have adopted - but, the intent, at least, is to require that they have a $1 million worth of malpractice insurance, so as to provide that protection to the public." REP. GREEN: "I wonder if the $1 million was arrived at prior to review of the proposal that we have now. What I'm getting at is, what would the maker of the amendment be amenable to? To a lesser amount of money because of the caps that we're imposing through tort reform? For example, half that amount?" REP. NORDLUND: "The $1 million is arbitrary, admittedly. However, the exposure could be much greater if you consider economic and noneconomic damages. All compensatory damages could be more than the $500,000 cap. When you add up the economic damages, it could go beyond that. And in certain limited instances, very limited instances, even punitive damages, so..." Number 657 REP. JAMES: "I think this is a given, probably to the fact of making the doctors have the insurance or they don't operate in the hospital. But it doesn't force the hospital to do that. I have a tendency to support this amendment, is the reason I am saying that. I would hope that this tort reform would make it so that doctors could be able to afford to have a $1 million worth of malpractice insurance, which currently they can't. So, if that's the intent of this tort reform, and we're passing this in tort reform, then we shouldn't be fearful about putting this particular amendment in, because it would say that they won't be able to operate at the hospital because, if they don't, the hospital kicks in. And so I think that that does cover a gap in where people may or may not be covered, and may not understand that they're covered. So, unless someone can give me some really good reasons why I shouldn't support this amendment, I guess I have a tendency to say, I think it is a good amendment." Number 675 CHAIRMAN PORTER: "Well, let me endeavor to do so. The adjustment that we're making in terms of coverage that addresses the Jackson B. Powers case is addressing the situation where the court in its infinite wisdom decided that emergency room physicians should be covered by the hospital. That's the only thing we're changing. Right now, doctors are not required, unless the hospital has that policy, to have insurance. If we said this we would be making a giant leap of insurance reform, or whatever you want to call it, which we really haven't had an awful lot of testimony on or consideration. The statistics, as Rep. James points out, very correctly, indicate a need for this bill. That's exactly one of the problems that we're trying to address. Especially, the 56 percent of Bush physicians that don't have insurance. As we've stated, the effect on insurance rates of this legislation is going to be several years out. And then, it's iffy on whether or not we've dotted all our i's and crossed all our t's. I think we would be doing a disservice to physicians, and especially to medical service in the Bush, if we put this in, and for the short term, created a situation that further exacerbates the ability of a physician to get insurance, or to afford insurance. So I would not support the amendment." Number 702 REP. NORDLUND: "As I understand it, and I am sorry I don't have any documentation of this, but, there are two hospitals in the entire country that do not require their physicians to have medical malpractice insurance: Alaska Regional and Providence Hospital in Anchorage. This would apply to those two hospitals. It would not affect anything else." Number 708 REP. JAMES: "Just as an example. I worked in a doctor's office for a couple of years when I was in Washington State. In order to be a member of the Washington Medical Association you had to have malpractice insurance. I don't know what the rules are now, that's more than 20 years ago, but I think that any professional - let's talk about the design professionals. What would happen if they didn't have insurance for the six year period - would the public be protected? I don't think so. So, I think there is a little glitch in what we've got right now, as to whether or not the general public is being protected. I would think that the malpractice insurance with this passing of this tort reform would be more reasonable and that doctor's could afford to do it." Number 725 REP. GREEN: "I concur. The fact [is] that we have taken a giant step, I think, in the right direction, to prevent the frivolous or the ridiculous lawsuits by the tort reform package. On the other hand, if that's at the expense of a loophole where there could be a certain number of physicians operating that aren't covered, and it would be to the detriment, unbeknownst to the person who was treated, that there was not a requirement from the hospital - I don't think this is an unreasonable request. The only concern I have is that if you make it too pricey, you haven't accomplished what you wanted to. And so, that's why I would like to offer to the maker of the amendment, a reduced amount, still adequate enough to protect, so..." CHAIRMAN PORTER: "We have a possible amendment we're working on here, so, let's see how we're doing." REP. GREEN: "This is an amendment to your amendment?" REP. NORDLUND: "Yes." CHAIRMAN PORTER: "In having this amendment previously, and doing some discussion, if the health care provider, were a health care provider by contract, and if the hospital had the ability to decide the level of coverage, my objections to this would be removed." [UNIDENTIFIED VOICE - JAMES?]: "Okay, so that the coverage would be by the hospital?" CHAIRMAN PORTER: "Yes." REP. JAMES: "How would you work that?" CHAIRMAN PORTER: "Scratch `of at least $1 million' and put in `decided by hospital' - `to be determined by the hospital'." An unidentified voice pointed out that the amount could be much bigger. Chairman Porter acknowledged this. Number 735 REP. NORDLUND: "The two parts of your amendment - the one you would say `the health care provider by contract' - the intent there is, are those, independent contractors? Okay, that would be fine. I would consider that a friendly amendment. I would not agree, however, to allowing the hospital to decide the level of coverage." CHAIRMAN PORTER: "One of the reasons that I think that would be appropriate is that there are different levels of insurance premiums based on different specialties within the field of medicine. One of the problems in the Bush that we're really trying to get at with this is the cost of insurance for obstetrics, for example. There are doctors in the Bush who are remaining in the Bush but just not performing that service because they can't afford that coverage." REP. JAMES: "Do they have hospitals there?" CHAIRMAN PORTER: "No, no, no, this is just their own malpractice for their clinics or their own offices." REP. JAMES: "This has only to do with hospitals." CHAIRMAN PORTER: "Well, I recognize that. But, I'm using that as an example to show that the same thing may be in a hospital where the doctor is involved in obstetrics as opposed to [indiscernible due to noise]." Number 762 REP. NORDLUND: "Let me tell you the practical and political problem with allowing the hospitals to decide. You're into the same problem right now - Fairbanks Memorial has been in battle with their own medical community up there, trying to get them to have - basically, finally forced the doctors to have to have insurance. What's happening in Anchorage is that you've got a large enough group of doctors who basically are very influential within the power structures in those two hospitals, that have been manipulating it to the point that hospitals aren't requiring them to have insurance. Those same political forces will be at play in deciding the level of coverage, and that level of coverage could come back as $1 or $3 or something ridiculous like that. I don't think that allowing the hospitals under that kind of a situation - allowing the hospitals to set the level of coverage affords enough protection." Number 793 REP. GREEN: "On that point, then, what would happen, Daniella, if a situation were to come up where the hospital required a very nominal amount, and the doctor is a new doctor that hasn't accumulated his fortune; would the hospital, then, because they are the ones who determine the rate, or the amount of coverage, would they in turn pick up the liability? Or is there a loophole, here, still?" CHAIRMAN PORTER: "We have provided that independent contractors are not within the scope of responsibility of the institution or facility." REP. GREEN: "That's true, but now there's a tie here, because now you're going back, and it seems to me there's a, thin though it may be, an umbilical cord because the amount of coverage I as a doctor might need has been determined by this institution." Number 805 MS. LOPER: "A health care provider is by contract, and obviously there are contracts that are established between the independent contractor that works for them, and this has been going for quite some time. I don't think I've ever seen a hospital ask a contractor to be covered by $3 insurance coverage. I imagine that in their contract they go in and explain exactly what kind of coverage. So, on just a legal issue, just because this is here, does not affect liability. That's decided completely on something else, and that is, by the bill, and Jackson B. Powers." Number 817 REP. JAMES: "Speaking to the `determined by the hospital,' I guess that I wouldn't be fearful that that would be too low. I might be fearful that it might be too high. And I would be more - if we don't like $1 million - I would rather change that to some other number. I'm not familiar with what the costs and what the ability is for physicians to get malpractice now. I know that it's been tough to get and the prices are very high and I don't know what those numbers are. I don't want to impose something on a physician that would make them not be able to be a physician if they're a new one, or whatever. So I might be willing to take a lesser amount. But I feel, that putting it in as the hospital making the decision, I guess the hospital could say, `You can't do it unless you have $2 million in insurance' or something like that, and I don't know that I would like to have that be subjected to the hospital. Now they could say, `You can't do it if you don't have some.' I think they could still do this, without us even putting it in here. The hospital could make that determination. If we don't put this in there, that's what's going to happen." CHAIRMAN PORTER: "No. We cannot tell a hospital that they can't make a policy to exceed what we've said is a minimum. They could not - if we, for example, said that you have to have at least a $1 million coverage, and we passed that into law, they could say, `You've got to have $5 million.' They couldn't say, `You only have to have $500,000.'" REP. JAMES: "I understand that. My point is, that if we don't put this amendment in there, the way it stands without it is, the hospital can say, `You can't operate here without $5 million worth of coverage.' CHAIRMAN PORTER: "As they can now." REP. JAMES: "And they still could, after we get this in here. What it does do is force the hospital to make them have some insurance, when we've already taken the hospital out of the responsibility of that." CHAIRMAN PORTER: "And that is precisely what I'm saying. Perhaps $1 million is not required. So what I'm saying is, that right now they have the ability to place any requirement they want. I'm saying we ought to leave it at that, and require it for contract doctors." Number 850 REP. GREEN: "And I think that's why the maker of the motion has made it. Because in at least the [examples] he cites, their determination has been zero. Is it in the public's best interest to have it that low? Where it is, I don't know, and that's why I suggest that maybe half - it ties to other portions of this tort reform bill, and I don't think prohibitive, $500,000 certainly shouldn't be prohibitive for a physician." CHAIRMAN PORTER: "If adding by contract to health care provider is a friendly amendment..." Number 862 REP. NORDLUND: "I have been rethinking that, now. I just want to make sure of the intent. If you are intending to - I want to get into a situation where we can require those physicians or whoever are on contract to have insurance. Setting aside the level, I want to make sure that this would require that. When you say `by contract' - you can't force people into a contract by the law. I want to make sure that this is not the effect of the amendment. We just can't do it. We can't say that `the hospital shall contract with a doctor for [malpractice] insurance.' But if you're trying to say that those people who are independent contractors shall have coverage, then I agree with it. I don't think it says it. In fact, health care provider has already been defined. So I don't think we need to say `by contact.' Health care provider is, by definition, those independent contractors through our circuitous definition." CHAIRMAN PORTER: "We would have to say `health care provider as defined in,' because we've got..." REP. NORDLUND: "Okay, `health care provider as defined in,' that would be fine, that would be better than by contract." REP. JAMES: "I believe that one of the things that we're trying to do in here is to not require..." [Cut off by end of tape.] TAPE 94-40, SIDE A Number 000 REP. NORDLUND: "...[W]e already know the hospitals are not going to be responsible, because of what we adopted here, so..." Number 005 CHAIRMAN PORTER: "What I'm saying is, that we're talking about institutions all over this state, and not just the two in our home town. And I don't want to say that the clinic in Bethel has to have nobody in it that doesn't have $1 million worth of insurance. I think that clinic should be able to say what they think they can afford. And if they can't afford any at all, maybe that's what they're going to allow. Because they are going to have to serve us. So I recognize the anomaly, really, in Anchorage, but, this is a state-wide policy, and I don't want to annihilate the Bush, or Homer, or anybody else, just because we're trying to get at two institutions in Anchorage. Let's put it this way. If we have `health care provider as defined in,' and we're talking about in the section..." REP. NORDLUND: "Then I would consider that a friendly amendment." CHAIRMAN PORTER: "And that is the independent contractor - doctor." REP. NORDLUND: "Right. The people that that hospital is [indisc. - not? now?] responsible for." Number 041 CHAIRMAN PORTER: "Okay. Let me suggest that I will offer an amendment to the amendment that would strike `of at least $1 million' and replace `to be determined by the.' What are we calling them? Medical facilities?" REP. JAMES interjected a request to pause "and see what 18.21.030 does. It says `hospital has the meaning given in AS 18.21.030'." CHAIRMAN PORTER: "I'm changing `hospital.' I'm not going to say hospital, I'm going to say whatever we're calling it -- No, it says hospitals here, doesn't it." [Assenting voices from committee.] Okay, so we can use `hospitals'." REP. JAMES: "I need to have that definition. Because I don't think that necessarily means clinics in the Bush." REP. PHILLIPS: "Before we do go on to passing this amendment, I want us to identify that section there." CHAIRMAN PORTER: "Okay. That would be page 14, lines 14- 15... health care providers was number 19." Number 101 REP. NORDLUND: "I've got the definition of hospital if you want me to read it." CHAIRMAN PORTER asked him to do so. REP. NORDLUND: "`Hospital means an institution or establishment, public or private, devoted permanently to providing diagnosis, treatment or care over a continuous period of 24 hours each day for two or more nonrelated individuals suffering from an illness, physical or mental disease, injury or deformity, or any other condition for which the medical or surgical services would be appropriate'." CHAIRMAN PORTER: "This wouldn't be a traditional clinic, but it would be any facility that has two or more people in it spending the night. And that's a lot of small facilities." REP. JAMES: "There are. There's even, up on the slope, we have some of those that meet that criteria, that have overnight." CHAIRMAN PORTER: "So we would be affecting an awful lot of small facilities." REP. GREEN: "But we're affecting the doctors, rather than the facility." CHAIRMAN PORTER: "No, we're affecting the ability of the facility to get a doctor to perform services there." REP. GREEN: "That's right. But it's not the facility that has to pay the premiums." CHAIRMAN PORTER: "But if we say that they have to demand a $1 million worth of insurance for a doctor to practice in their facility, they may not get any doctors." REP. JAMES: "I'll buy that." REP. GREEN: "And the [indisc.] is, they may have none, and so you still have this uninsured potential." CHAIRMAN PORTER: "So, in answer to `as defined in' will be..." REP. PHILLIPS: "Section 27 (c) (1)?" CHAIRMAN PORTER: "Well, 09.65.096. Section 27, paragraph (c), number (1), yes." REP. PHILLIPS repeated this information at the request of Ms. Loper, saying, "We need to identify in this amendment the section. So, it would be Section 27 (c) (1)." CHAIRMAN PORTER: "So, that's what we'd be defining. And I'm offering the amendment to the amendment which would replace `of at least $1 million' to read `coverage to be determined by the hospital'." REP. NORDLUND: "I object to the amendment to the amendment." CHAIRMAN PORTER: "Can we have a roll call vote on the amendment to the amendment?" A roll call vote was taken on the amendment to Amendment 38. Reps. Phillips, James and Porter voted "Yeah"; Reps. Nordlund, Green and Kott voted "No" and Rep. Davidson did not vote. The amendment to Amendment 38 was therefore not adopted by the committee. CHAIRMAN PORTER noted that they now had before them the amendment as amended by the friendly amendment. REP. JAMES: "Since that one didn't pass, I have a little problem now with the things that we've been talking about." REP. PHILLIPS: "Yes. You're not going to be able to put a $1 million policy on a clinic or facility in the Bush anywhere." REP. JAMES: "The insurance probably isn't even available." CHAIRMAN PORTER: "My recommendation to the committee would be to not support the amendment and leave it the way it is." REP. NORDLUND: "I would think it would be better to have your language in it as to have no amendment at all." REP. JAMES: "I agree with that." REP. NORDLUND: "If the whole amendment is going to go down, I would reconsider my vote on your amendment." Number 198 REP. GREEN: "Well, in order to overcome my concern that we've still got a loophole, could there be something in that portion where we're talking about at least $1 million per occurrence to reduce that to a more palatable amount, of something to the effect to read like this `of at least $500,000 or the maximum amount of insurance obtainable, whichever is less'." CHAIRMAN PORTER: "Rep. Green, we have had no information put before this committee about what is appropriate rates, appropriate coverage. I really feel ill-equipped to be making these kinds of decisions. This isn't an insurance reform bill, it's a tort reform bill." Number 213 REP. PHILLIPS: "We talk about the difference between urban and rural, but there are very great differences in the rural areas also. We could be looking at the hospital in Homer vs. the hospital in Seldovia, and you're talking about a tremendous amounts of differences between those two." REP. GREEN: "That's why I offered the latitude." REP. PHILLIPS: "Yes, but in Seldovia you would never find anybody that could - it's just the $500,000, even would be..." REP. GREEN: "Or the `maximum obtainable'." CHAIRMAN PORTER: "It may well be that an [indisc.] situation would not be able to be addressed because of this. We're talking about many, many areas that have one doctor." REP. NORDLUND: "Well, I'm not sure, Mr. Chairman, how to count the votes here." REP. PHILLIPS: "We could move to rescind our action, first, in failing to adopt." REP. NORDLUND moved to rescind the committee's action in failing to adopt the amendment to Amendment 38. CHAIRMAN PORTER: "We've got a motion to rescind our motion to reject the amendment to the amendment. Is there discussion? Is there objection? We have rescinded our motion. We have in front of us the amendment to the amendment, which, again, on Amendment 38, U59, would replace, on the second line of the verbiage `of at least $1 million' with `to be determined by the hospital'." Number 248 REP. JAMES offered a comment. "I think this is probably the most fair way to do it. And actually, what we're doing, by putting this `if' in here, previously we have said that the hospital is not going to cover these physicians that are independent contractors. And what we're putting in here, `if they have malpractice insurance as determined by the hospital,' which means that if they don't, then the hospital has to cover them. Is that correct? Isn't that the way this wording will do this?" CHAIRMAN PORTER replied in the negative. REP. JAMES: "Then I better read some more here." REP. GREEN: "If they decide you don't need any, this sentence says you don't need any." CHAIRMAN PORTER: "And that's exactly the latitude that I think we ought to be providing." REP. GREEN: "I think that's a mistake." Number 260 REP. JAMES: "Okay, but it says that you have to look at it. It says you have to make a conscious decision as to whether... In our bill here the hospital is not responsible for the liability of these people. That is established in this tort reform. And then we're saying that they're not responsible for these people if these people have malpractice insurance. If we put this in here, then that means the hospital is making a choice as to whether they want to cover them with their responsibility or whether the hospital..." CHAIRMAN PORTER: "No." REP. NORDLUND: "The level is all they're deciding. Isn't that correct, Mr. Chairman? They're deciding the level of the insurance, not whether or not they have to have it or not." Number 270 REP. JAMES: "I understand that. But if we don't pass this amendment, then there are some people that there's not a decision by the hospital. They're just not covering these doctors. If these doctors don't have any insurance the patients are just - out to lunch." Number 275 CHAIRMAN PORTER: "No... they have to post, in the facility, that these independent contractors are not covered by their insurance, so that there's notification, and the patient then knows that, if they are concerned about this, they better ask their doctor whether they have insurance. And if they're concerned about that, then get one that's got insurance." REP. JAMES: "Just don't be sick." CHAIRMAN PORTER: "No, that isn't it." REP. GREEN: "But that's what would happen if there was only one doctor in the Bush like you're talking about. [Indisc.] get another doctor, and he's not covered, so they take their risk. And I don't think that's right." CHAIRMAN PORTER: "Well, there's inherent risk in living, but I think I'd rather have an uninsured doctor than no doctor if I had a problem. In some areas of the Bush, that's exactly what they're facing." [Off the record discussion amongst members.] CHAIRMAN PORTER: "Okay, let's go back on the record. Rep. James?" Number 288 REP. JAMES: "Leaving out the `determined by the hospital,' leaving that completely out, just the first part of this amendment, which would fit into here, it says, `The hospital is not liable to civil damages as a result of an act or omission by a health care provider who is not an employee or actual agent of the hospital if the health care provider is insured under a policy of malpractice insurance in an amount to be determined by the hospital'." So, in other words, what this is saying - the main amendment here, what this main amendment is saying - is that the hospital is either going to cover them, or the doctors are going to cover themselves, at the request of the hospital." CHAIRMAN PORTER: "That is correct." REP. NORDLUND: "That is the intent." REP. JAMES: "So that the gap is closed." CHAIRMAN PORTER: "Unless the facility recognizes that a doctor doesn't have his own insurance and requires him to have none." REP. JAMES: "The way I read it, he has to have some, or else the hospital's liable." Number 363 CHAIRMAN PORTER: "I am going to step back and say this. I am really nervous about getting into this area at all. I am not aware of enough facts in this area to be writing law on it, to tell you the truth. And I know what the situation is now. And, while there's differences of opinion on whether it's good, bad or indifferent, I don't have enough, with the information that we've been receiving during testimony on this bill, to make a decision on how to change it. So I'm just going to, I just can't support the amendment at all." Number 378 REP. NORDLUND: "I recognize the difficulty in setting an amount at $1 million, or whatever. Not only because of the problems that it represents in rural Alaska, but because of the different exposure liability that the different specialties have, and a range of problems, that arbitrarily setting an amount at $1 million - I agree. I don't really know exactly if that's the right level or not. So if we allow the hospital to set that amount, as you suggested, while it doesn't offer a great deal of protection, at least it's better than not having this at all. I think this is, at least, if nothing else, a statement to the hospitals that they should consider - that everybody has to have some level of insurance, and if it's a big problem, they can set it so low as to be affordable for anybody, anywhere. But I think it's important to proceed with the amendment." REP. JAMES: "The way I understand the situation, and I agree with you that we're getting into an issue area of insurance we haven't had the testimony on... I don't really know. I have the same concerns that you do. But my biggest concern is, that the way I understand it now, is if a doctor is operating in a hospital, and that doctor doesn't have malpractice insurance, and then there is a problem, that the hospital's insurance could be held liable, or the hospital could be held liable for having a doctor operating without any ability to pay for his problems. Whether they have insurance or not. I believe that's the way it is now. And that what we're doing now is saying that the hospital is not responsible for these doctors that are independent contractors." Number 413 CHAIRMAN PORTER: "No, that's not my understanding. The case that we're - as I believe the law is now, is just the opposite of that. Independent contractors are recognized as independent contractors, with the single exception in the case that we're trying to deal with here, and that's the Jackson Powers case, which said that, one court said that, an emergency room doctor would be an employee rather than an independent contractor. So, we're not changing the ball field, here. We're just addressing one little area and trying to level it up, saying that an emergency room doctor is just the same as a doctor in surgery; a doctor is a doctor, and it's an independent contractor, and should be looked at that way. I am comfortable going that far. I am not comfortable getting into insurance areas and required insurance and all that kind of stuff. So, as I say, I would rather not, I would rather err by allowing status quo than I would by stepping on something that I don't know what I'm stepping on. So I am really going to back away from this amendment, totally." Number 430 REP. NORDLUND: "I understand Jackson Powers, and I understand the problem that's there, but the wording in this bill goes beyond that. You can read it, on page 13, line 27: `A hospital is not liable for civil damages as a result of an omission by these independent contractors.'" CHAIRMAN PORTER: "They're not now." REP. NORDLUND: "They're not now?" CHAIRMAN PORTER: "No. With the exception of Jackson Powers, which brought in the emergency room doctor - which, to me, should be up to the hospital. If they want to hire him as an employee, that's fine. They can do that and then he's covered by them. If they want to make him an independent contractor, that's fine. They've got to post it -- I mean, we're doing things in terms of notifying people, that aren't available now. But, to get, then, the other step, into the insurance..." REP. NORDLUND: "I see what I read here, and it says that hospitals aren't liable for those physicians, and that a lot of those physicians are going bare. I think we're doing one two-step here that's not in the best public interest." Number 452 CHAIRMAN PORTER: "Well, I'm going to withdraw my amendment to the amendment. If somebody else wants to make it, they can." Number 460 REP. JAMES: "I really would like to get some more information on this, and maybe you have it to provide to me. I was not of the opinion that hospitals could not be held liable for a doctor operating in their hospital without ability to pay, financial responsibility for their actions." Number 462 REP. PHILLIPS: "That's why some hospitals have made the policy, have made independent policies in their own hospitals; independent requirements, what they require of their doctors. That is up to the hospital facility." REP. JAMES: "I understand that. But we're putting it in law that they're not responsible for a certain amount of people that they're now responsible for if those people are not financially responsible." CHAIRMAN PORTER: "They're not now responsible." REP. PHILLIPS: "They're not now responsible." REP. JAMES: "Are you saying they are not now responsible?" CHAIRMAN PORTER "I am saying they are not now responsible." REP. JAMES: "So we're not changing this law in this tort law?" CHAIRMAN PORTER: "Only as it affects the emergency room doctor. And that's only if you think Jackson B. Powers is the law of the land." Number 472 REP. DAVIDSON: "I think we're on to a hot pistol here. We don't have the experts in this room to tell us, really, what it is that we should be thinking about on this bill. I would highly recommend that we hold this amendment until we get some expertise in here because seven laymen, trying to get into a situation between doctors, hospitals and lawyers, just doesn't cut it. I would ask that we either move on or finish up and try to get the people in here who know about this issue, so that we can at least, as the public policy- makers, make some kind of educated guess as to how this thing should work out. I am not comfortable, with all due respect to my beloved colleagues, I just don't think we have the information." REP. PHILLIPS: "Let's call for the question on the unamended amendment." REP. DAVIDSON: "Objection." CHAIRMAN PORTER: "Okay, the question has been called. We have in front of us Amendment 38." REP. DAVIDSON: "Again, I just ask, why can we not at least try to get the information before we send this bill off to the next committee of referral, so we at least understand it ourselves?" CHAIRMAN PORTER: "By not passing the amendment, which is what my advice to the committee is, we will be avoiding the area that we feel uncomfortable getting into." REP. DAVIDSON: "We're sitting here as a Judiciary Committee. This obviously has a lot to do with our jurisdiction as a committee. And yet, we're trying to avoid our task?" Number 507 CHAIRMAN PORTER: "I don't think we're avoiding anything, I think we're being very prudent. This is not a mandatory insurance bill. It's a tort reform bill. If somebody wants to take that one up next year, I'll be happy to give them all the support they need." REP. NORDLUND: "If members of the committee feel uncomfortable with the amendment, I can understand; then I feel uncomfortable with Section 27 altogether. And, since that is a change in the existing law, maybe we should not do the amendment and not do Section 27 and we're at the status quo." CHAIRMAN PORTER: "We have in front of us Amendment 38. Is there further discussion? There is objection. Roll call vote, please?" A roll call vote on Amendment 38 was taken. Reps. Davidson and Nordlund voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". Amendment 38 was therefore not adopted by the committee. REP. DAVIDSON: "In view of the fact that we're not getting the information we need, I would move to delete Section 27 from the bill. I offer that as an amendment." REP. PHILLIPS: "Objection." CHAIRMAN PORTER: "Discussion? Objection is maintained. May we have a roll call vote, please, on the unnumbered amendment to remove Section 27?" A roll call vote was taken on the unnumbered amendment [Amendment 39] to remove Section 27. Reps. Davidson and Nordlund voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". The unnumbered amendment [Amendment 39] to remove Section 27 was therefore not adopted by the committee. CHAIRMAN PORTER: "We have in front of us what we will call Amendment 40." Number 560 REP. NORDLUND: "I move Amendment 40 - that's U60." CHAIRMAN PORTER objected. REP. NORDLUND presented Amendment 40, regarding the number of years cited in the statute of repose. He said, "This goes back to the statute of repose. Simple change. Six is an arbitrary number, and 15 years, I guess, is an arbitrary number. After the AG's opinion came out, I feel that offering this amendment is like arranging deck chairs on the TITANIC, because I think the whole section is going to go down. The reason I stated 15 is because, as you know, HB 160, the statute of repose dealing exclusively with architects or design professionals, left the House at 10 years; it was amended in the Senate to 15; it's back to the House for a concurrence. There could be major problems in us passing one statute of repose that says 15 - which is about to pass, or maybe it will, I don't know, we'll see - and this bill, which establishes six. It's an inconsistency." Number 572 REP. PHILLIPS: "A clarification on Rep. Nordlund's statement. HB 160 is back to us for nonconcurrence, not concurrence." Number 580 REP. NORDLUND: "If it goes to conference, the choice is between 10 and 15. My point remains, that there will be an inconsistency between the six that's required in this law and the 15 or the 10 that's adopted on 160. Somewhere along the line this is going to have to be rectified and I am suggesting that we do it here. I'd be glad to change it to 10. In terms of the policy, I think six years is too short a time. I think that the constitutional problems that are pointed out in the AG's memo might be somewhat alleviated by extending it somewhat, by not making such a short period of time." Number 590 CHAIRMAN PORTER: "Do you remember the information provided in the back of the folder that showed what the other states are doing? Six really looks to me like an average of the other states. I won't get into the Alice in Wonderland decision, but I think it's been, it was obvious by its absence of consideration with the other 49 states, and the constitutionality, it obviously exists there. I would say that undoubtedly there will be some marrying of 160 and 292 at some point, but I don't think I want to do it here. So I would recommend against supporting Amendment 40." Number 601 REP. GREEN: "I would oppose Rep. Nordlund's 15 years, but if Rep. Nordlund would accept a friendly amendment to 10, I can see some merit, since it did pass the House in 160 at 10, a compromise. There may actually be some merit in this whole program. If we maintain six, as you said, Mr. Chairman, somewhere along the way, the same place 160 got changed, this may also be changed. But I certainly would oppose 15." Number 610 REP. JAMES: "If this was only relating to buildings, I think I might agree. But this relates to a lot more than buildings." CHAIRMAN PORTER: "That's a fact. Rep. Davidson, quickly." REP. DAVIDSON: "Well, okay, you're in a hurry. Go ahead." CHAIRMAN PORTER: "We had this bill before, and this committee has had a lot of discussion on this point." REP. DAVIDSON: "It's a tough bill. It has far reaching effects. So I'm not in a hurry." CHAIRMAN PORTER: "I don't think we've demonstrated a rush." REP. NORDLUND: "For the information of the committee, if Rep. Green or anybody else wants to amend it to 10, I would consider that a friendly amendment." REP. GREEN: "Oh, I'm not offering an amendment." REP. DAVIDSON moved to amend Amendment 40 by deleting the insertion of `15' and inserting `10.' REP. PHILLIPS objected and moved another amendment inserting `8' instead of `10.' CHAIRMAN PORTER: "I don't think we can do that. I think we've got to finish the `10.' Would the maker of the `10' consider `8' a friendly amendment?" REP. DAVIDSON: "Unfriendly." CHAIRMAN PORTER: "Okay. We're going to have a motion on the amendment to amend to `10.' Roll call vote, please?" A roll call vote was taken on the amendment to amend to `10' the statute of repose figure in Amendment 40. Reps. Green, Nordlund and Davidson voted "Yeah" and Reps. Kott, Phillips, James and Porter voted "No". The amendment to amend to `10' the statute of repose figure in Amendment 40 was therefore not adopted by the committee. A roll call vote was taken on Amendment 40. Reps. Nordlund and Davidson voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". Amendment 40 was therefore not adopted by the committee. REP. NORDLUND moved his final amendment, Amendment 41. CHAIRMAN PORTER offered objection. REP. NORDLUND: "This amendment deals with the section in which economic damages are limited to $10,000 for people who have died and do not have any dependants. I think that the section is drawn too narrowly in who it defines as dependants. What my amendment would do is simply state that that limitation would not apply if there are beneficiaries indicated in a will." REP. PHILLIPS: "Why did they use the word `devisee' instead of `designee'?" REP. NORDLUND: "I don't know." CHAIRMAN PORTER: "I don't know what a `devisee' is. Committee members discussed the term `devisee.' MS. LOPER explained that it referred to the drafter's choice, like `designee' and confirmed Rep. Nordlund's belief that it could mean `beneficiary.' CHAIRMAN PORTER: "If I understand the amendment, we're saying that economic damages should not go to a nondependant. We're saying that dependants are spouse, minor child or other dependant." REP. JAMES: "What about provision for a girlfriend or boyfriend?" CHAIRMAN PORTER: "I guess, you could have `girlfriend' or `boyfriend' if they were the designee in a will." Number 656 REP. NORDLUND: "Sure. Or anybody else. If the person was thoughtful enough to want to will something to them after they died, they would probably want this benefit to go to them just as much as they would to a dependant. I think the dependants here are too narrowly drawn. You wouldn't want to limit it exclusively to just dependants." Number 681 CHAIRMAN PORTER: "I would speak against the amendment. I think that's exactly what we're trying to do, is limit it exclusively to dependants, because otherwise there isn't any rationale for somebody to get money for something that they wouldn't have received anyway. That's the whole idea of this." Number 698 REP. DAVIDSON: "How about the situation where, say, a nephew or a niece would be living with an aunt or an uncle or somebody like that, where he wasn't a legal dependant, but -I suppose it would be too cold-hearted to maybe afford that person $10,000 if he were a minor." CHAIRMAN PORTER: "He would get $10,000. He has a claim on $10,000. We're saying we're not going to give him more, for economic losses. He can have noneconomic losses, he can have [inaud. - voices crossing over]." Number 710 REP. DAVIDSON: "We can sit here and make all the laws we want, but most of the laws will never consider all the perspectives that we're trying to cover. And there will always be exceptions that are very unfair from the work that we craft in the end. That's why I would support this amendment. I think there are extenuating circumstances. Humans get in the weirdest of situations. I think this is a little acknowledgment of that." CHAIRMAN PORTER: "I appreciate that, but I think we've got it covered by saying `dependants'." Number 717 REP. NORDLUND: "In most cases, the people designated in the will are going to be the very people you're talking about here. But in some cases, maybe not. Again, if that person thought that there should be benefit from their estate, even though they're not listed as a dependant, I think that these benefits should go, there shouldn't be the $10,000 limitation." CHAIRMAN PORTER: "Further discussion? Objection. Roll call vote, please." A roll call vote on Amendment 41 was taken. Reps. Nordlund, Davidson and James voted "Yeah" and Reps. Kott, Phillips, Green and Porter voted "No". Amendment 41 was therefore not adopted by the committee. Number 728 REP. PHILLIPS: "On this amendment, I'd like to state for the record, if we could send the message to drafting, particularly Mike Ford, that the word `devisee' means nothing to me. Absolutely nothing. And if he means `designee' it would be real nice if he used that word instead. It's a word that we all understand." Committee members further discussed word `devisee.' CHAIRMAN PORTER: "There is one more amendment. We will call that Amendment 42. It's a single page by Rep. Davidson. Rep. Davidson?" Number 755 REP. DAVIDSON: "This amendment, page 8, line 25, addresses the problem of choice. I know that if you have a job and you have insurance and you're pretty well taken care of, you probably don't have any need for this amendment. But it's, I think, significant that this is the last amendment that we're doing, because these are the people at the bottom of the ladder, generally. They are people who are either dependant on public health or just don't have the means even to access the system. So, all it does is attempt to level the playing field so that people do have a pretty decent chance of choosing their own future medical costs, if they get into a situation where that's necessary, and which involves, of course, the quality of care. A specific situation might be even where a child, getting hurt in a school, and the school district's insurance would be forced to pay for future medical costs - or, say, special education costs. By having this thing in here, then, that means that that person would not have the opportunity to go get maybe a private rehabilitation cost. So, that's the spirit in which I offer this amendment, and would ask for your support, and move the amendment..." REP. PHILLIPS: "Objection." Number 762 CHAIRMAN PORTER: "Amendment 42 is moved and objected. Rep. Davidson, as I understand the effect of this amendment, what we're saying in the collateral benefits is that, again, we want to consider that a plaintiff that gets an award, gets all of their award, but not all and again their award. And we're saying that they should be, from a total claim, they should deduct the collateral benefits. Things that they've already received or, in this case, what you want to remove, or that they reasonably expect to receive. If, for example, turning it around, I guess, and looking at somebody trying to be devious - if somebody were to, if this were not here, and somebody had an insurance policy that provided coverage and provided for medical expenses, you could double-dip from the extent of having that policy in place, that's going to be paying on into the future, and say that I'm going to have these costs, and so I should get that money now. Well, I think in the spirit of collateral benefits, you should consider what you've already received, and what you reasonably have an expectation of receiving." Number 780 REP. DAVIDSON: "I guess I don't see it quite that way, Mr. Chairman. Everybody should have the opportunity if it's possible to choose the absolute best medical care or rehabilitation experts that they can afford. And I see that happening by deleting this part of the bill. Otherwise, I think, saying to someone who can reasonably expect services from, say, the Indian Health Service, is going to be stuck with whatever level of quality of care that that particular organization has." Number 791 REP. NORDLUND: "When we're talking about reasonable probability of receiving, there's no guarantee, obviously, that those benefits will be received; and yet, the award could be less. I guess my problem is, what about in those situations where you probably will receive future benefits, what if those future benefits don't actually come in?" CHAIRMAN PORTER: "I would say that you probably would have an entree back to your judgment." REP. NORDLUND: "I would hope so, although I don't know that that's the case. There's no guarantee of that in this language." Number 799 There being no further discussion on Amendment 42, a roll call vote was taken by the committee. Reps. Davidson and Nordlund voted "Yeah" and Reps. Phillips, Green, Kott, James and Porter voted "No". Amendment 42 was therefore not adopted by the committee. CHAIRMAN PORTER: "I believe we have no more amendments. What is the wish of the committee?" REP. JAMES: "I would be willing to move this out of committee now except that we've made so many changes to it, I'd like to see the final draft, if we could do that without having a lot of discussion again." CHAIRMAN PORTER: "I would really like to move it, Rep. James. I think we will certainly have the ability to, because it is scheduled to go from here to Finance. I don't know if we're going to be required to go to Finance, or not, in all honesty, but I don't have any problems that what we've done is going to be adequately reflected in the CS." Number 822 REP. DAVIDSON: "I would concur with the concerns of Rep. James. We have made a lot of changes to a very, very important bill that affects a lot of people for a long time to come. I haven't made every single meeting on this bill, but I think probably 75 to 80 percent of them. I haven't had the level of expertise or exposure to that level of expertise that I am comfortable with in such a bill, but I, too, would like to see what the final product is. There is a companion bill in the other body. There are 60 days, almost, left, in this legislative session, so I think there's plenty of time. So, I don't know what the hurry is, but I would prefer to have at least one more look at it. I know oftentimes you get the final product after it's left your committee, and it's sometimes, a mistake has been made, and you wish that you had not let it go so quickly." Number 841 CHAIRMAN PORTER: "Speaking to that, there certainly will be the ability, if we... we will get the final product Monday or Tuesday, I presume. If that product contains anything that is not what we did, we most certainly will, I will seek to amend it on the floor, if that's what's required. But I do feel a sense of urgency considering the deadlines that we have on getting our bills and rules and those kinds of things." REP. JAMES: "Then I'll move the bill, out of committee, with individual recommendations." Number 850 REP. DAVIDSON: "There is not a rule that hasn't been broken in this area, or in this body, or in this whole process at one time or another. So I think that most time frames are just to encourage things, rather than say, `This is the way it is.' I know you haven't been through a final session of a legislature, but things can get whiz-bang very quickly around here, so, I would only offer these comments to allay your fears that time is short." CHAIRMAN PORTER: "I appreciate that, but I'm one of those guys that, if there's a rule, I try to meet it. Further discussion?" REP. PHILLIPS: "Do you think we'd have the final draft by Monday or Tuesday?" Number 860 CHAIRMAN PORTER: "I would guess Tuesday. This is Saturday. As I say, I will certainly, if any of you, which we will have adequate time to be looking at the CS, when it's determined whether it's going to Finance or not, or whatever; if there are any mistakes that we've made, I mean, that come out in that CS, compared to what we did, I'll either bring it back here, or whatever." REP. NORDLUND: "If we think the whole bill is a mistake, does that...?" CHAIRMAN PORTER: "Anything that we did." Number 870 REP. PHILLIPS: "On that point, if there are inconsistencies in the CS, I'd rather it come back to this committee before we send it to Finance." Number 873 CHAIRMAN PORTER: "We can do that. Further discussion? Is there objection to the motion?" There being objection, a roll call vote on the motion to move HB 292 out of the House Judiciary Committee was taken by the committee. Reps. Kott, Phillips, Green (as conditioned), James and Porter voted "Yeah" and Reps. Nordlund and Davidson voted "No". HB 292 as amended was therefore moved out of the House Judiciary Standing Committee. ADJOURNMENT The meeting of the House Judiciary Standing Committee was adjourned at 12:45 p.m.