Legislature(1995 - 1996)
03/08/1995 01:35 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HTRA - 03/08/95 HB 161 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW Number 019 PATTY SWENSON, Legislative Assistant to Representative Con Bunde, stated she was here to testify on HB 161. She explained HB 161 was designed to limit the liability of an owner or operator of an aircraft or watercraft for injuries to passengers when the owner or operator is not compensated for transportation. She explained when the owner of a boat or plane is accompanied by a friend or acquaintance on trips, the owner of that craft assumes liability. She stated the risks should be shared by all participants. She said HB 161 does not expect passengers of an air or watercraft to give up their right to expect safe operation. Ms. Swenson explained that when a pilot or boat driver behaves in a grossly negligent manner, they are fully liable for injuries regardless of the passing of HB 161. Ms. Swenson said according to Patty Madison, who is the Accident Prevention Program Manager for the Federal Aviation Administration (FAA), there are several thousand private aircraft pilots currently operating in Alaska with only 130 accidents last year. Ms. Swenson added that all accidents are not considered crashes. If a small plane is taxiing and hits a runway light this is considered an accident. However, a plane in flight that loses an engine is not necessarily considered an accident. She indicated her point is, there are comparatively few accidents in Alaska when considering the amount of flying that is done. She listed other states with similar legislation; Oregon, New Mexico, Ohio, South Carolina, South Dakota, Montana, California, Georgia, Alabama, Idaho, Illinois, Indiana, Massachusetts, Nebraska, Virginia and West Virginia. She explained these states have significantly lower flying hours compared to the pilots of Alaska. She noted according to FAA statistics, the medium hours for a private pilot in the Lower 48 are 10-12 hours, and for Alaska the hours are over 100. Ms. Swenson indicated in other states where pilots have lower flying hours, they are able to afford the type of protection HB 161 would provide. Alaskan pilots who fly more frequently, should be protected unless they act in a grossly negligent manner. She explained that currently aircraft insurance is not mandatory. Ms. Swenson explained aircraft insurance may be purchased two ways; insurance with passenger liability, or without. MS. SWENSON pointed out if an aircraft owner chooses to purchase insurance covering the occupants of the aircraft, then everyone in and out of the plane would be covered in the event of an accident. However, if the pilot elects not to purchase insurance for his occupants, then only the people outside of the plane are covered in the event of an accident. She indicated if an owner does not have insurance and the occupants are injured in any way in an accident that is not due to the owner's gross negligence, the family of the guest passenger can sue the pilot, leaving the pilot, owner and family with nothing. She indicated if HB 161 passes, it would prevent the family of a pilot from losses due to anything other than gross negligence. Number 083 REPRESENTATIVE BEVERLY MASEK expressed her approval of HB 161. REPRESENTATIVE JERRY SANDERS asked for clarification on the difference from the intent of HB 161 and obtaining auto insurance. MS. SWENSON explained when HB 161 was presented last year, the same question was asked. She stated it was her belief that "aircraft in Alaska is not as necessary as a car is." She explained a car will transport a person to places closer, or not accessible by plane; "places too far to walk, to close to fly to." She reiterated a car is a more necessary mode of transportation. Ms. Swenson acknowledged Mr. John George who would inform the committee on the details of the bill as well as presenting testimony on HB 161. Number 108 JOHN GEORGE stated he represented the National Association of Independent Insurers. He explained he was here at the request of Representative Con Bunde, prime sponsor of HB 161. Mr. George stated he was a former director of Insurance for the state of Alaska and a former risk manager for the state. He pointed out that his background would be beneficial to his testimony. He addressed Representative Sanders' question dealing with auto insurance and how it differs from what HB 161 proposes. He explained that an automobile insurance policy automatically covers passengers; however, aircraft insurance can be purchased with seat liability or without. If purchased without the seat liability, the passenger is not covered. He added without the seat liability, the cost of coverage is much cheaper. He mentioned there was a dilemma when a person owns an aircraft and has purchased the lesser expensive liability coverage that covers anyone hit by the plane in the event of a crash and a friend says, "let's go fishing" and the pilot explains he does not have insurance to cover his friend. Mr. George explained the pilot would have to purchase extra liability insurance in order to take his friend fishing. He explained if the guest passenger, the person wanting to go fishing says he will pay for the extra insurance, then the pilot is essentially chartering his aircraft and could inevitably lose his pilots license. Mr. George explained there was an additional cost to the owner of the airplane to provide the required insurance needed to transport people in his aircraft. Mr. George added if the pilot decides to "chance it," the pilot and his family are liable and can be sued. Mr. George mentioned this scenario can also be applied to watercraft. He exemplified someone using a Lund skiff or other small boat; if the people using this skiff are renters and do not have a home owners policy covering their liability for small boats and a person wants to go fishing with them, the same scenario applies. The boat operators do not have specific insurance and feel they would not do a lot of damage to a third party, so they elect not to purchase third party liability insurance. Mr. George explained if people are injured on their boat, the owners can be sued. He indicated HB 161 provides an opportunity for operators of water and aircraft who want to take passengers, but do not want to incur additional expenses, to do so. He added if insurance is purchased, then the coverage extends to the passengers on the airplane; however, if the pilot elects not to purchase the insurance covering their passengers, then unless the pilot is found to be grossly negligent; i.e., drunk or commit an intentional act, the pilot cannot be sued. Number 160 REPRESENTATIVE MASEK asked if the insurance can be extended out to sled dog team owners as well. MR. GEORGE said "anything is possible." It could be added to HB 161. He indicated he was not aware of anyone who has sled dog liability insurance, unless it is covered under their home owners policy. He felt the more rural lifestyle a person lives, the less likely that person is to have a home owners policy. CHAIRMAN DAVIS asked for confirmation on the availability of aircraft liability insurance for passengers, and whether or not it was cost prohibitive. MR. GEORGE indicated that cost prohibitive was "all relative." He stated it was an additional and fairly expensive cost only covering the pilots' passengers. CHAIRMAN DAVIS proposed a scenario where a pilot already had the insurance and crashed injuring his passengers and the crash was caused by circumstances beyond the pilot's control, such as a propeller falling off or some other form of mechanical failure. He asked if this happened directly after the plane was released from an annual inspection, how would the insurance apply to a case such as this? MR. GEORGE explained if the pilot or owner was negligent, then his insurance would pay. However, if it was just released from its annual inspection and a third party had completed the maintenance and neglected to check all the nuts and bolts on the propeller, that person would be liable as well. CHAIRMAN DAVIS asked if the intent of HB 161 is to insert information assumed in statute regarding whether or not the pilot was negligent. MR. GEORGE affirmed Chairman Davis' example. He added there are cases where the pilot does not have passenger liability insurance and they go out and attempt a landing on a dirt strip and they hit a pothole and lose the landing gear and someone gets injured, the pilot can be sued. CHAIRMAN DAVIS called attention to the definitions of negligence from Alaska Statutes enclosed in the bill packet. He asked for clarification when determining whether a person is negligent or not. Number 218 MR. GEORGE explained that with commercial aircraft there is what is called "admitted liability." Mr. George depicted a scenario whereby a person flies with Alaska Airlines and the plane crashes and that passenger sues Alaska Airlines and their insurance company will respond. He explained whether Alaska Airlines was negligent or not is not as important as the "high expectations" that a passenger assumes when they board the aircraft. He continued in the event of an accident or mishap, then the airlines' insurance assumes responsibilities. Mr. George differentiated the negligence situation with commercial airlines and with private pilots. Number 226 REPRESENTATIVE SANDERS stated that his expectations are the same regardless of the airline. He inquired as to the possibility of a passenger signing a waiver stating they are aware of the risks in flying with an uninsured pilot. MR. GEORGE explained a waiver can be signed by a passenger, and demanded by the pilot. However, it is uncertain as to whether or not the waiver will hold up in court. He noted there are numerous incidents where due to a misunderstanding on the passenger's part of the implications of the waiver, they will not hold up in court. He noted the waivers can be helpful, but not definitive. REPRESENTATIVE SANDERS inquired if HB 161 passes, how will people know whether or not the pilot has insurance. He suggested a sticker placed on the door indicating whether or not the pilot has insurance might be beneficial. Representative Sanders stated he was under the assumption all pilots had insurance. MR. GEORGE explained that the lack of proof of insurance could be a shortcoming of the bill and the pilot needs to indicate whether or not he has insurance for passengers. Mr. George proposed the signing of a waiver along with the change in the Alaska Statute would make it more obvious to the passenger than a sticker or some sort of indication would be beneficial. He stated he has no problem with people having notice as to the extent of coverage the pilot has. CHAIRMAN DAVIS said Representative Sanders concern is commonly known as inherent risk and analogized that when a person is running up someone's snow covered steps, there is inherent risk that the person doing the running is liable and responsible for their actions. He explained if you're going to get into an airplane with anyone, whether they are fully insured or not, it should be inherently known that a certain amount of risk exists. Chairman Davis cautioned anyone of the complications that arise when a person makes assumptions. MR. GEORGE indicated he was familiar with the scenario where a pilot has made it clear that he does not have liability insurance. He stated this does not automatically protect the pilot. Mr. George theorized if the pilot accurately explained his insurance status, he would not be sued by the passenger or their family. Number 298 REPRESENTATIVE SANDERS reiterated his question as to the possibility of a system similar to auto insurance and would it be financially impossible for the pilot to afford. MR. GEORGE explained it would be a significant additional expense. He added with aircraft insurance, the pilot or owner buys seat liability insurance. He explained if a plane has six seats, a pilot or owner can buy insurance for one or as many seats as he desires. He further explained if the pilot feels he does not need to insure all six seats and only buys coverage for two people and then takes a third person, he does run the risk of being sued by that third passenger. He indicated that the insurance for pilots has traditionally been a separate coverage and not an automatic coverage policy. REPRESENTATIVE SANDERS reiterated that there are inherent responsibilities when operating an aircraft. He stated if the pilots are not responsible for their passengers, then what is the difference in their responsibility of driving people around in cars. MR. GEORGE stated he could not address that question directly, but if he was in a situation where he had an airplane, he would elect not to buy the seat liability insurance and not take a passenger in his aircraft. He added it is a dilemma when a friend wants to go and the pilot states he does not have the insurance. Mr. George depicted a scenario where if it was a matter of life or death that a person had to be transported by a pilot without the proper insurance, the pilot can elect not to take the person. CHAIRMAN DAVIS thanked Mr. George and introduced Ms. Patty Swenson. He asked Ms. Swenson if Representative Sanders point about the possibility of some notice to passengers of insurance or the lack of, was brought up in a previous debate. MS. SWENSON indicated there was a decision not to apply pilot insurance as car insurance mostly due to the notion that people assume a certain amount of risk equal to being a passenger in a vehicle or boat. She indicated that the passenger has a choice as to whether they want to get in the vehicle or not. She mentioned the possibility of signing a waiver. Ms. Swenson informed the committee she had previously spoken with Larry Strollie, Regional Manager for EMPCO, and was informed by him that a court case did exist involving a passenger in a rented plane from Elmendorf Aeroclub; this person had signed a bodily damage waiver prior to flying. She mentioned the plane crashed and the passenger died. The family successfully sued the pilot because the passenger did not sign a waiver that included the possibility of death. She said when a situation arises where there are thousands of planes in Alaska, not all the pilots are going to pick up a standard waiver or have a lawyer on hand to draft up a waiver before the pilots carry passengers in their aircraft. REPRESENTATIVE SANDERS asked if the person killed in the Elmendorf plane was the pilot. MS. SWENSON stated it was the passenger that died and the family of the passenger successfully sued the pilot. She reiterated the bodily damage waiver did not cover deaths. CHAIRMAN DAVIS explained that a lot of the legal questions pertaining to HB 161 will be addressed through the House Judiciary Committee. He stated if HB 161 does become law, people who currently have insurance and pay into this will not be buying the added insurance. He indicated there would be the possibility of additional risk. He said this would apply only if this situation was the case. He added most cases only include negligence. REPRESENTATIVE SANDERS noted that the appropriate term was gross negligence. CHAIRMAN DAVIS read the definitions of gross negligence and negligence as defined by Alaska Statute. He asked for clarification on gross negligence and negligence. MS. SWENSON said the bill drafter should address those issues. CHAIRMAN DAVIS announced for the record that Representatives MacLean and Brice arrived at 1:55 p.m. REPRESENTATIVE EILEEN MACLEAN asked why HB 161 was exclusive to air and watercraft. She expressed concern as to the inclusion of other areas of transportation. Number 408 MIKE FORD, attorney with the Division of Legal Services, commented on the distinctions between negligence and gross negligence and stated it was "a matter of degree." He stated HB 161 addresses negligent acts and a pilot would be protected from acts of negligence, but not be protected from gross negligence or reckless and intentional acts. He stated it is sometimes difficult to articulate the difference. He stated HB 161 is narrowly crafted and the intentions were designed only for aircraft and watercraft guest passengers. However, he noted the legislature will make the final decision and substance of any exceptions to HB 161. REPRESENTATIVE MACLEAN asked if HB 161 would exempt air and watercraft operators from being liable for their passengers' deaths. MR. FORD explained HB 161 provides immunity to the operator or owner of an aircraft or boat. He indicated in the event of an accident where a guest passenger dies under present law a guest passenger might recover from the pilot for injuries. He implied if HB 161 becomes law, they would not be able to recover due to the pilot's negligence and assuming this scenario occurs, this would be the distinction of a before and after consequence of the bill. He explained HB 161 does have provisions if the pilot has insurance then they are not immune, if the pilot does carry insurance, a guest passenger or family can recover up to the amount of the insurance. REPRESENTATIVE MACLEAN stated she opposed HB 161 due to Mr. Fords explanation. Number 441 REPRESENTATIVE TOM BRICE asked for clarification on Mr. Fords statement regarding the pilots not being immune if they are acting in a professional manner and are insured. Representative Brice reiterated the fact the pilot would be immune if they do not have insurance. MR. FORD stated there is an immunity created by HB 161. However, the immunity does not apply if the pilot has a guest passenger, the plane crashes and the guest passenger is injured. He said then the pilot would be considered negligent. He explained the guest passenger could still recover if the pilot has insurance. REPRESENTATIVE BRICE asked for clarification on the fact that the guest passenger could not recover if the pilot was not insured. MR. FORD stated Representative Brice's comment was correct. He further explained if the pilot is not insured, then there is the potential of no recovery. He explained this is assuming there is no one else at fault. REPRESENTATIVE BILL WILLIAMS asked for clarification on the type of standardized insurance required for pilots. He inquired as to assuming the pilot does have insurance and the pilot was found to be grossly negligent, would he be covered? MR. FORD stated that was correct. REPRESENTATIVE MACLEAN asked for clarification on implications of the definition of negligence stating, "it immunizes the gross negligent acts of the pilots of watercraft or air." MR. FORD indicated no, the act would only immunize negligent acts. REPRESENTATIVE MACLEAN asked if this covered gross negligence as well. MR. FORD explained it would not cover gross negligence. If someone had committed a grossly negligent act, then there would not be immunity granted under HB 161. He stated the arguments between gross and just negligent are a difference of standards. He exemplified by stating if a person actually committed a grossly negligent act, then there would not be immunity under HB 161. He stated a person involved in an accident could recover. Number 460 REPRESENTATIVE MACLEAN asked for clarification on the term reasonable care. MR. FORD explained the term indicates care that a reasonable person would exercise in a given situation. He explained for defining negligence, courts have created a fictional person they believe would and have set standards on how a reasonable person would act. CHAIRMAN DAVIS directed his comments on the intent of HB 161 to Ms. Swenson regarding Representative Bunde's intent with the inclusion of the terms gross negligence and intent to make negligence immune. MS. SWENSON stated her belief was that Representative Bunde's intentions were to protect families of the operators and owners of air and watercraft from significant losses. She explained the intent is to cover the operators in the event of an accident beyond the pilots of a boat or aircraft control; i.e., an Act of God. CHAIRMAN DAVIS confirmed Mr. Fords comment that an act of a reasonable person is designed to set a standard; outside of these standards would then be regarded as negligence. Chairman Davis requested an example in the distinctions between negligence and gross negligence. MR. FORD presented a scenario where a plane crashes because it ran out of fuel. The fact the pilot did not check the fuel level would make him negligent. However, if the pilot knowingly mixed water with the gas intending to stretch the mixture, that action would be considered gross negligence. He stated it is dependent on the act involved. REPRESENTATIVE BRICE presented a scenario in order to clarify the intent of HB 161. He implied that he was from the Interior and enjoyed jet boats as do other people in the Interior. He exemplified taking a boat up the Salcha River and hitting a sandbar going 70 miles per hour, killing his passenger. Barring any alcohol or other impairment, would he be exempt from the intent of HB 161. MR. FORD stated if this situation went to trial, the jury would have to be asked, would a reasonable person have acted in the same manner. He postulated, what would a reasonable person have done. For example, would they have slowed down or paid more attention to the river or would a reasonable person have acted in the same manner. REPRESENTATIVE BRICE asked what would the case be if alcohol was involved. MR. FORD indicated it would make a difference. He eluded to the possibility of the jury finding the person negligent. REPRESENTATIVE MACLEAN stated in her opinion, HB 161 was exclusive to water and aircraft carriers and explained it should be all inclusive to other entities such as truck drivers and railroad carriers. CHAIRMAN DAVIS indicated this was a question that was brought up previously and it was indicated that these mentioned types of insurance are designed to be specific with regard to purchasing specific insurance. He added auto and truck are inclusive in their respected policies. REPRESENTATIVE MACLEAN stated "this would be a benefit to the insurance companies and not for Alaskans." REPRESENTATIVE BRICE added it might not benefit the insurance companies. He explained in order to be eligible for the immunity, HB 161 assumes a person cannot be previously covered. But if a person carries insurance, they are eligible. Number 549 CHAIRMAN DAVIS directed his comments to Ms. Swenson and expressed his desire to obtain some degree of understanding of the context of negligence and gross negligence. He felt the sponsor of the bill should be present and elected to hold HB 161. CHAIRMAN DAVIS asked if there were any objections. Hearing none, HB 161 was held over.