Legislature(1995 - 1996)

03/15/1995 01:12 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HTRA - 03/15/95                                                               
 HB 161 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW                             
 Number 012                                                                    
 REPRESENTATIVE CON BUNDE, Sponsor, stated HB 161 should have been             
 titled a "recreational opportunity bill" due to the large amount of           
 people who have boats and planes.  He explained pilots and                    
 operators of watercraft enjoy accommodating their friends when they           
 are asked to take them for rides.  Unfortunately, the operator of             
 the boat or aircraft place their entire personal worth at stake               
 when they take passengers.  He indicated, with the way personal               
 injury suits operate now and the way juries operate, if there is an           
 accident, the operator is viewed as having "deep pockets" because             
 they have an airplane or boat.  He added anything the pilot has               
 accrued financially would be in jeopardy.  Representative Bunde               
 stated HB 161 was designed to protect pilots and boat operators               
 from being sued beyond the limit of their insurance.  Also, if the            
 pilot does not have insurance, then the passengers assume part of             
 the liability for taking part in the recreational activity or                 
 having the opportunity.                                                       
 REPRESENTATIVE BUNDE asked to clarify some points that were brought           
 up at the House Transportation Committee meeting last week, which             
 he was unable to attend.  He referred to page 1, line 13, of HB 161           
 and requested the addition of the word "negligence" so the                    
 statement would clarify some concerns the committee had last week             
 when hearing this bill.  He stated the section would then read,               
 "gross negligence, negligence, or reckless or intentional                     
 misconduct."  He stated this would relinquish any misunderstanding            
 of the terms gross negligence and negligence.  He stated the focus            
 of HB 161 is "an Act of God."  He presented a scenario of a person            
 paddling their canoe in a reasonably safe manner and a spruce tree            
 falls on top of the canoe injuring the passenger.  He questioned              
 the level of responsibility that the operator should have and how             
 much liability should the passenger assume for their own actions.             
 He mentioned that he had spoken with Representative Beverly Masek             
 prior to this meeting and presented a scenario of driving her dog             
 team with a passenger for recreational purposes and encountering a            
 moose on the trail injuring her dogs and passenger.  He asked how             
 much liability should be placed on Representative Masek for her               
 passenger's injuries and how much responsibility should be placed             
 on her passenger.  Representative Bunde stated if a person is going           
 to partake in many of the recreational activities in Alaska, the              
 passenger should assume a level of responsibility for the risks               
 they choose to accept.  He asked if there were questions from the             
 CHAIRMEN DAVIS asked for further questions and announced he would             
 take comments from teleconference.                                            
 Number 100                                                                    
 RAY BROWN, Attorney with Alaska's Academy of Trial Lawyers, said he           
 appreciated Representative Bunde's clarification and correction               
 with the addition of the word "negligence" under subsection (A) of            
 HB 161.  He stated HB 161 was to cover "Acts of God" then                     
 legislation already enacted covers a negligent act because to be              
 recoverable (indisc.) from acts that occur, a person has to be                
 negligent.  This implies a breach in a duty of care.  He indicated            
 in this particular circumstance, Representative Bunde described               
 "Acts of God" would not constitute negligent acts in the first                
 MR. BROWN continued to explain if that was the purpose of this                
 legislation, there is no need for the bill but, by adding the word            
 "negligent" on line 13, page 1, this would take care of a lot of              
 their concern on behalf of victims of negligent acts or other                 
 (indisc.) that would occur if the legislation had been passed out             
 of committee without the correction.  He stated his other concern             
 with respect to Representative Bunde was, as written, HB 161                  
 discourages people from obtaining insurance.  He stated the purpose           
 of obtaining liability insurance was to protect each other and more           
 importantly the protection of victims of negligent acts.  Another             
 problem with the bill was by not applying mandatory insurance,                
 which should also be read into the bill, a person operating an air            
 or watercraft should have mandatory liability insurance.  He                  
 pointed out there is mandatory insurance for automobiles.  He                 
 stated automobiles are less dangerous instrumentality than water or           
 aircraft.  He added the other problem is, by capping the exposure             
 of an insurance carrier for any act, a person is encouraging                  
 litigation.  He indicated he knew of people involved in similar               
 litigation who think lawyers are the main culprits, particularly              
 plaintiff lawyers.  Mr. Brown remarked this was not the case and              
 continued to explain if you cap exposure, there is no (indisc.)               
 pressure on insurance carriers to resolve litigation.  As it                  
 stands, if a legitimate bona fide offer to settle a case is made by           
 an injured party or victim of someone else's act, then the                    
 insurance carrier is obligated to act in good faith in resolving              
 settlement within policy limits.  He explained this legislation, as           
 written, offers no incentive to an insurance carrier to do so                 
 because they would have no bad base exposure.  In effect, they                
 could litigate or bankrupt a plaintiff to discourage them in                  
 pursuing a legitimate claim with absolutely no exposure on the                
 other end to encourage their settlement of the cases.                         
 Number 177                                                                    
 REPRESENTATIVE BUNDE stated HB 161 was a tort reform bill and he              
 acknowledged this would be a concern to trial lawyers who would               
 more than likely oppose the bill.  He disagreed with Mr. Brown's              
 statement concerning driving an automobile being less dangerous and           
 stated statistics show being injured in an automobile are far                 
 greater than being injured in a aircraft accident.  He explained              
 the notion that insurance is required for cars, cannot be compared.           
 He stated when living in an urban area, people are almost obligated           
 to have a car in order to function.  He reminded the committee that           
 he is talking about recreation, and stated no one has to go and               
 recreate.  This is a vastly different circumstance.  He said                  
 regarding insurance, at this point it is prohibitively expensive              
 for many people, and the insurance available has relatively low               
 REPRESENTATIVE BUNDE explained that juries on personal injury suits           
 tend to get into the McDonald's hot coffee idea.  He stated if a              
 person is insured for $100,000 or $200,000 or higher, the dollar              
 value of these suits can be unlimited.  He explained a cap was                
 designed to establish a limit of insurance.  He mentioned that                
 liability insurance is generally not purchased to protect the other           
 person, but to protect themselves and their own financial                     
 liability.  He said if some one chooses not to purchase insurance,            
 he did not feel this bill would encourage that.  He explained after           
 talking with many boat and aircraft owners, they choose not to                
 purchase insurance, especially when the insurance prices are high,            
 the limits are low, and there is no reason to assume that a lawsuit           
 would stop at the limits of that person's insurance.  He reiterated           
 if someone chooses not to purchase insurance and someone wanted to            
 go for a ride and were made fully aware of the fact the pilot did             
 not carry insurance, it would not be unreasonable to ask the                  
 passenger to assume some of the risk involved.  He indicated the              
 passenger is not obligated to go and has that option.                         
 CHAIRMAN DAVIS asked Mr. Brown if he cared to comment on                      
 Representative Bunde's statements.                                            
 MR. BROWN stated he did not.                                                  
 CHAIRMAN DAVIS introduced  Mike Panone.                                       
 MIKE PANONE, Former President and Current Member, Alaska Airmen's             
 Association, indicated the association represents the 10,000 pilots           
 in the state of Alaska.  He stated he supported HB 161 and                    
 supported a similar proposal last year.  He indicated, from a                 
 recreational standpoint, pilots enjoy giving passengers rides.  He            
 stated many of the pilots also fly for a living, but this is not              
 covered in HB 161.  He mentioned the organization and people he has           
 spoke with statewide, support the idea of HB 161 because it offers            
 a certain amount of protection as well as enhances the idea of                
 personal responsibility for all parties involved and not just the             
 person owning the aircraft.  He stated many of his friends would              
 ask to go sightseeing around Mt. McKinley or Mt. Susitna.  Mr.                
 Panone said it was difficult to turn these people down due to                 
 insurance limitations.  He added, if people ask to go for a ride he           
 warns them that they, the passenger, will accept a certain amount             
 of responsibility.                                                            
 MR. PANONE explained without HB 161, if something does go wrong,              
 the pilot would end up being the target for a lawsuit.  Mr. Panone            
 made reference to Mr. Brown's comments on the fact HB 161                     
 encourages no insurance.  He indicated from his experience in                 
 talking with recreational pilots about whether or not to carry                
 insurance, if a pilot carries insurance and something goes wrong,             
 whoever sues him will try to sue for the maximum amount possible              
 plus everything he owns.  If he does not have insurance, he could             
 be sued for everything he owns.  By not having insurance he would             
 save the premiums.  He disagreed with Mr. Brown's comment on                  
 discouraging the purchase of insurance and felt it was a matter of            
 personal choice.  Mr. Panone stated he personally has insurance,              
 but knows a lot of people who do not, and reiterated his support of           
 HB 161.                                                                       
 Number 279                                                                    
 CHAIRMAN DAVIS inquired as to the cost of the insurance and the               
 determining factors, such as the size of the plane and number of              
 MR. PANONE explained it was extremely variable.  He explained the             
 insurance rates are predominately based on the number of seats in             
 the aircraft, experience, number of hours the pilot has, his                  
 ratings, how much experience he has flying in Alaska, and if he has           
 an accident record.  He said he thinks it is similar to auto                  
 REPRESENTATIVE BUNDE added there are numerous companies that will             
 not write insurance in Alaska because aviation in Alaska is unique;           
 i.e., landing on lakes, rivers and sandbars.  He mentioned,                   
 normally when dealing with aviation insurance, it implies paved               
 airport to paved airport.                                                     
 REPRESENTATIVE EILEEN MACLEAN noted that currently the legislature            
 is pursuing a tort reform bill.  She asked Representative Bunde how           
 HB 161 impacts tort reform because it deals with insurance                    
 REPRESENTATIVE BUNDE stated that bill was still in progress.  He              
 said generally speaking, the bill places caps on personal suffering           
 and the noneconomic awards.  He stated HB 161 would not get                   
 involved in the pain and suffering cap.  It would be dependent on             
 whether the person had insurance and the limits of that insurance.            
 REPRESENTATIVE MACLEAN stated she was in disagreement with                    
 Representative Bunde's statement because, first a person would have           
 to have insurance coverage or if the person does not have                     
 insurance, then the person has the liability if there are guest               
 passengers on the plane.  She then asked if she could direct her              
 concern and question to Ms. Margot Knuth.                                     
 CHAIRMAN DAVIS stated that would be fine if Ms. Knuth felt                    
 comfortable addressing those concerns.  He gave her the option of             
 abstaining, since she was here to testify on the other bill.                  
 MARGOT KNUTH, Assistant Attorney General, Criminal Division,                  
 Department of Law, stated she would rather abstain on                         
 Representative MacLean's question at this time.  She stated she was           
 with the Criminal Division and acknowledged the Civil Division                
 would be more knowledgeable on this issue.                                    
 CHAIRMAN DAVIS announced for the record that Representative Eileen            
 MacLean arrived at 1:20 p.m.  He noted that Mr. John George, former           
 Director of the National Association of Independent Insurers was in           
 attendance and asked if he had a response to Representative                   
 MacLean's question.                                                           
 JOHN GEORGE, Representative, National Association of Independent              
 Insurers, addressed Representative MacLean's question regarding the           
 relation of HB 161 and the tort reform bill that was introduced by            
 Representative Brian Porter.  He stated the tort reform bill limits           
 the liability, placing caps on awards for pain and suffering,                 
 punitive damages and changes the statutes of limitation, the time             
 in which to file suits.  He stated HB 161 would apply to civil                
 liability, but only to the narrow application of where someone in             
 a personal aircraft or personal boat was carrying guest passengers.           
 He stated they are somewhat related but are not that directed to              
 each other.  He added the tort reform bill is more expansive and              
 complicated, whereas HB 161 was designed to be fairly simple.  Mr.            
 George stated if you are a passenger of a private aircraft or boat,           
 it would not be possible to sue someone unless they have acted in             
 a negligent manner.  He stated if the pilot has insurance, he can             
 only be sued for the amount of insurance.  He also indicated the              
 tort reform bill applies to commercial and charter operations as              
 well as private airlines.                                                     
 Number 356                                                                    
 REPRESENTATIVE MACLEAN asked why is HB 161 exclusive to air and               
 watercraft carriers and not designed to include railroad or land              
 REPRESENTATIVE BUNDE stated HB 161 was designed to target                     
 recreational use of air and watercraft.  He stated land carriers,             
 such as rail and truck, are covered by other liability                        
 REPRESENTATIVE MACLEAN said if HB 161 was designed for recreational           
 use, then shouldn't other modes of transportation be considered               
 REPRESENTATIVE JEANNETTE JAMES said she sees the problem which has            
 been described as an inherent risk of living.  The second part of             
 the problem is whether there is neglect or not, if an injured party           
 sues an operator of a boat or aircraft, and if there is no cause              
 for the suit, then they get a settlement out of court.  She asked             
 Representative Bunde if he felt that these two concerns are solved            
 by HB 161 and to what extent.                                                 
 REPRESENTATIVE BUNDE addressed Representative James's concern by              
 explaining that different people are going to have different points           
 of view, depending on how they will be impacted financially.  He              
 said having liability insurance may encourage suits because he has            
 heard information that an insurance company will settle for a soft            
 tissue injury, which is something that can neither be proven or               
 disproved, up to $50,000, because it was not worth the litigation             
 until a greater amount is involved.  Representative Bunde                     
 reiterated his comments that if a person wants to enjoy the                   
 outdoors there is a certain amount of risk involved.                          
 REPRESENTATIVE MACLEAN asked Representative Bunde for a definition            
 of "grossly negligent."                                                       
 REPRESENTATIVE BUNDE stated he had a legal definition of "grossly             
 negligent" with him.  He acknowledged that Mike Ford from                     
 Legislative Legal was present for the interpretation of "grossly              
 MIKE FORD, Attorney, Division of Legal Services, Legislative                  
 Affairs Agency, said he believes this was discussed at the last               
 meeting on the bill.  He said he believes he provided                         
 Representative Bunde's office with a copy of jury instructions that           
 are given whenever this issue arises in a civil lawsuit.  It                  
 discusses what negligence is.  He noted there are some cases that             
 have discussed gross negligence.  Simple negligence is where you              
 fail to do something you should have done that an ordinary and                
 reasonable person would have done in the same circumstances.  Gross           
 negligence is something beyond that.  Simple negligence is an                 
 aggravated form of misconduct.  Mr. Ford said it is a concept that            
 is really fact-dependent.  You have to supply facts to really                 
 understand whether that situation would or would not be gross                 
 negligence.  He explained an example he used previously was                   
 refueling your airplane.  If you refuel your airplane and you don't           
 secure the fuel cap, you take off and the fuel spills out, that               
 would be negligence.  If you filled the tank half way and then                
 switch to water, that is gross negligence, because obviously people           
 don't fly planes on water.                                                    
 CHAIRMAN DAVIS added that with the recommended inclusion of                   
 negligence up to reckless and intentional, everything is covered              
 other than "Acts of God."                                                     
 Number 420                                                                    
 REPRESENTATIVE BUNDE explained, a prudent person would not refuel             
 a plane with the passenger in the airplane or while smoking.  He              
 said if you refuel the airplane with a passenger inside and for               
 some reason you have a fire, that would be considered negligent or            
 even grossly negligent.  If you are refueling while you are                   
 smoking, this would definitely be considered grossly negligent.               
 Representative Bunde stated a person's acts or failure to act                 
 creates an unreasonable risk of harm to another person.                       
 CHAIRMAN DAVIS asked for questions.  He asked Representative Bunde,           
 with the inclusion of the word "negligence" in HB 161, it was                 
 stated by Mr. Brown, that then this is already covered somewhere in           
 statute or was it in just court and insurance or standard law                 
 REPRESENTATIVE BUNDE respectfully disagreed with Chairman Davis's             
 comment and referred to Mr. Ford's observation on the                         
 determinations of what is considered "negligent" and what is not              
 negligent is highly debatable, depending on the circumstance.                 
 Representative Bunde said he did not think it was covered in                  
 existing statute.                                                             
 Number 442                                                                    
 MR. FORD added HB 161 was fairly narrowly crafted and only applies            
 to negligent acts of someone operating an aircraft, and the person            
 filing suit is someone who is not paying for their ride and is a              
 guest passenger.  He said they started from that standpoint and by            
 adding the word "negligence" to this, it further narrows the                  
 intent.  He stated if he understood the amendment correctly, it               
 would only address acts that are not negligent, grossly negligent,            
 reckless or intentional misconduct.  He concluded the only acts HB
 161 would be applicable to are acts of strict liability and stated            
 he was not sure he knew what they would be.                                   
 REPRESENTATIVE MACLEAN stated for the record, she does not support            
 HB 161 on the grounds of its exclusive nature to water and                    
 aircraft, and that it should include all transportation modes if we           
 are going to have a bill like this.                                           
 Number 451                                                                    
 REPRESENTATIVE JERRY SANDERS stated he will not support HB 161, but           
 would be willing to support a cap on what people could recover or             
 he might be able to support a waiver of the passenger's rights when           
 in a airplane.  He stated from the way he sees it, if you have an             
 airplane and you are going to carry passengers, you have a                    
 responsibility to carry insurance or you just simply have the                 
 responsibility to tell people no, you won't carry then.  He stated            
 it was too dangerous, inherently, not to carry insurance and for              
 those reasons he could not agree with HB 161.                                 
 REPRESENTATIVE JAMES stated HB 161 would be acceptable to her, as             
 long as the passengers that do not pay for their ride know they are           
 not covered, because there is an inherent risk to living and no one           
 person should be responsible for the guarantee of everyone's                  
 recovery of a certain dollar amount for their behavior.  She                  
 emphasized this was recreational and the passenger has a choice as            
 to whether they choose to ride with the pilot or not.  She said               
 people need to understand that they should be held responsible for            
 their own actions because there are other circumstances that can              
 happen; for example a bird can fly into the windshield and                    
 everybody goes down.  She believed that we as people need to be               
 responsible for our own lives and not look around for deep pockets            
 to take care of us when we don't make a good decision.                        
 Representative James added, said would support HB 161.                        
 REPRESENTATIVE BUNDE addressed Representative Sanders' concern                
 regarding notification, by explaining a number of lawyers and a               
 number of people have tried to come up with an idea where, you have           
 a form that if someone wanted to go for a ride with you, they sign            
 a form, but you can't sign away someone else's rights.  He                    
 reiterated you can sign away your right to sue, but you can't sign            
 away your wife's, and your children's right to sue.  He added maybe           
 when you are an employer and have lost your services.  He said just           
 notification that there is no coverage or that you would be limited           
 to a certain insurance level of recovery will not protect a person.           
 Number 487                                                                    
 CHAIRMAN DAVIS asked if Representative Bunde would interpret that             
 the same if there was a requirement for the pilot or boat owner to            
 notify the passengers, or whether there was a sticker on the boat             
 or plane.  Chairman Davis asked if this would be the same                     
 interpretation, where that would not be legally binding.                      
 REPRESENTATIVE BUNDE stated it would not suborn someone else's                
 rights.  He explained if the pilot has a sticker displayed on his             
 aircraft and a passenger is hurt or killed, his family has the                
 right to sue the pilot regardless of whether the passenger signed             
 a waiver or not.                                                              
 REPRESENTATIVE WILLIAMS asked Representative Bunde if he would                
 consider adding the words "recreational vehicles" to HB 161.                  
 REPRESENTATIVE BUNDE stated he had not researched that idea and has           
 no aversion to the inclusion.  He added the only other vehicle this           
 would be applicable to are snow machines.  He explained it is                 
 prohibited for operators of all terrain vehicles (ATV) to carry               
 passengers.  He stated he would be willing to look into                       
 Representative Williams' suggestion.                                          
 CHAIRMAN DAVIS stated due to the fact he will have to draft a                 
 Committee Substitute for the recommended addition, if                         
 Representative Bunde so desired he may conduct further research on            
 HB 161.  Chairman Davis said he would consult with the drafter with           
 regards in addressing Representative MacLean's concerns on the                
 addition of other forms of recreational vehicles.                             
 Number 515                                                                    
 REPRESENTATIVE MACLEAN corrected the comment regarding the                    
 prohibition of passengers on an ATV.  She stated carrying                     
 passengers is allowed, particularly in rural areas when traveling             
 through the country to go out hunting, then that is recreational.             
 She reiterated it did include ATVs.                                           
 CHAIRMAN DAVIS questioned the fact there is not an insurance                  
 requirement anywhere in those areas as there is for automobiles,              
 boats and aircraft.                                                           
 REPRESENTATIVE MASEK inquired as to the inclusion of sled dog teams           
 in HB 161.                                                                    
 CHAIRMAN DAVIS stated this would be discussed.  He then asked for             
 a motion to amend HB 161 by the addition of the word "negligence"             
 as requested by the sponsor of the legislation.                               
 REPRESENTATIVE JAMES made a motion to add the word "negligence" on            
 page 1, line 13, after "gross negligence."                                    
 CHAIRMAN DAVIS asked for any objection.  Hearing none, he stated he           
 would draft a CS for HB 161 for the next meeting.                             
 REPRESENTATIVE JAMES expressed her concerns for other than water              
 and aircraft being included in the bill.  She felt there was some             
 merit in going over other issues and stated if we go too far, we              
 get into different circumstances that one blanket statement would             
 not fit.  She stated it would be safer to have this exclusive to              
 air and watercraft, and if there needs to be something to address             
 other recreational activities, then we might want to have a                   
 separate bill like we have for skiing and other recreational                  
 activities, where there is an inherent risk that is assumed when              
 participating in these activities.                                            
 Number 540                                                                    
 REPRESENTATIVE MACLEAN stated she disagreed with Representative               
 James and explained this would give special privilege to a                    
 particular group of people instead of all inclusive, then we are              
 being exclusive just to air and watercraft and said this is why she           
 opposed the bill.                                                             
 CHAIRMAN DAVIS added he will research the addition of the word                
 "negligence" and existing information on this subject to make sure            
 it is not legislation already covered elsewhere.  He stated he                
 would work up a CS for the next meeting.                                      

Document Name Date/Time Subjects