Legislature(1993 - 1994)
02/19/1993 01:41 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATOR TAYLOR presented SB 64 (IMMUNITY FOR SAFETY INSPECTIONS) sponsored by the Senate Labor and Commerce Committee, and he introduced the participants in Anchorage on the teleconference network. For the first witness, SENATOR TAYLOR called on KENT SWISHER, Executive Director for the Alaska Municipal League, to testify. Number 568 MR. SWISHER expressed the support of the members in the Alaska Municipal League for the concept of SB 64 and to ask for an extension to cover a situation affecting local governments. He described a league sponsored group called the Joint Insurance Association, which provides joint self- insurance to about 70 municipalities. MR. SWISHER stated the core of the insurance program was on site safety inspections for their members, and he explained how it was not always possible to be aware of all possible risks in an inspection. He thought the safety inspectors made a good faith effort to locate risks to employees, to bring those risks to the attention of management, and to suggest corrections. MR. SWISHER said they should have protection for those things they cannot possibly know. MR. SWISHER asked for an expansion of the bill to include a self-insured employer, or a self-insurance association. SENATOR TAYLOR discussed with MR. SWISHER the possible changes in the language on page 1, line 7, after the word, "employer," to insert the words, "a self-insured employer or a joint self-insurance association." TAPE 93-14, SIDE B Number 001 MR. SWISHER said the words would also have to be inserted on line 9 after "association's," to cover their insurance association. There was some discussion on a couple of committee substitutes, and SENATOR DONLEY asked if MR. SWISHER if he thought the legislation would apply to local governments, also. MR. SWISHER didn't think it would in its present form, but he thought the amendments would cover their association, which is a corporation separate and distinct from the Alaska Municipal League. He gave some expanded history on the self-insurance pool. SENATOR TAYLOR clarified MR. SWISHER'S proposed amendment, and asked if he thought it would work for pools created for schools. MR. SWISHER presumed it would - if they organize as did the league insurance pool. SENATOR DONLEY asked MR. SWISHER how the phrase, "intentional act" applied to the liability of his safety program, and whether his pool should be held to some degree of competence in their safety inspections. MR. SWISHER responded they were not depriving the injured worker of coverage. He explained they were dealing with the question of whether the individual, or the firm that preformed the inspection, was liable to the employer, whose premises were inspected. He used his 26 years of safety work to claim that every single hazard could not be identified, and he expanded on all sorts of possible situations. Number 037 SENATOR DONLEY and MR. SWISHER held a lengthy discussion on the misconduct, the appropriate rule of reason, gross negligence, standards, intentional conduct, and relieving the inspector of liability to the municipality, if the inspector fails to find the danger. MR. SWISHER said insurance was a wager on the law of large numbers, and he gave some examples. He also gave some options used to minimize risks and make it better than a wager. SENATOR DONLEY expressed concerns the legislation would make things worse than they are now, and he used "reckless inspections" as a high standard of care. He thought the safety problem was being made worse. MR. SWISHER claimed his amendment would encourage the conduct of inspections of all, as opposed to not making the inspection in the first place. SENATOR DONLEY questioned MR. SWISHER about possible problems, and he testified the insurance pool hadn't gotten burned yet. SENATOR TAYLOR said it was very possible to get burned. Number 106 SENATOR DONLEY asked MR. SWISHER if there had been an increase in accidents, in rates, and cases filed. SENATOR TAYLOR clarified the question, and MR. SWISHER said they had never been sued as the result of an inspection by the league's insurance association. SENATOR DONLEY said that was part of the answer he was seeking. SENATOR DONLEY questioned MR. SWISHER about the workers compensation, keeping people safe in the work place, and whether he was aware of places where the safety inspections were stopped. MR. SWISHER wanted to be sure everyone understood the service he represented was for 70 of the smaller municipalities, who were not conducting inspections of their own before they became involved with the league's insurance pool. He said they did 20 inspections a year in a 2.5 year cycle, and he said that sooner or later, the problem would arise. Number 153 SENATOR TAYLOR switched to the teleconference in Anchorage, where DEBORAH GRAVO said she was just there to observe. Next he called on KEVIN DOUGHERTY to testify. MR. DOUGHERTY explained he was general counsel for the Alaska Labor's Union and for eleven years a member of the Board of Compensation ad hoc Committee, which has been involved in much of the legislation for the last decade. He though there was more protection now for the injured worker, but the rates for the employers for the past 5 years had gone down 19.2%. He explained how they had been able to avert a crisis in the worker's compensation. MR. DOUGHERTY said SB 64 originated from a 1991 bill, SB 219, and he explained SB 64 leaves the injured worker out of the workers' compensation system. He brought the 1989 Van Biene v. ERA Helicopters, Inc. decision before the committee, to stress the injured workers could not be left behind. He reviewed some of the history of the worker's compensation act where injured workers gave up the right to sue in trade for being supplanted by the worker's compensation system for benefits. MR. DOUGHERTY explained the impact of the Van Biene case on the insurance industry, and he suggested another publication on the same issue. He finished by explaining problems with the worker's compensation system, and suggested JAMES PFEIFER could verify prior legislation. MR. DOUGHERTY agreed with SENATOR TAYLOR'S comment as to the need for more study on the legislation. SENATOR TAYLOR, in addressing MR. DOUGHERTY'S concerns, said they were in a separate bill. He narrowed his focus to the safety of inspections, only. SENATOR TAYLOR asked the participants in Anchorage if they had received copies of the proposed committee substitutes, and he explained the latter of the two committee substitutes places this legislation back in Title 23, which should avoid some of the concerns raised by MIKE SCHNEIDER in the last hearing. MR. SCHNEIDER had received a copy of the bill. He said the bill provides a broad immunity beyond reason, and does not narrowly limit it to claims by injured workers, whose claims are immunized under current law. He said there was no dual capacity doctrine in the State of Alaska, thus, prohibiting an injured worker from suing the employer as a safety inspector. MR. SCHNEIDER continued to express his concerns over the bill, and he suggested the committee was being asked to immunize stupidity to the detriment of injurer workers. He said the bill as drafted protects wrong doers from claims, which he listed. MR. SCHNEIDER concluded by saying the committee shouldn't immunize wrongful conduct. Number 291 SENATOR TAYLOR said he had three drafts of SB 64, which were drafted to answer the issues MR. SCHNEIDER had raised in the previous hearing, and he reviewed the proposals. He asked MR. SCHNEIDER for his preference, if any. MR SCHNEIDER said as long as it immunizes the inspectors from negligent conduct, all of the legislation has the same problems. SENATOR TAYLOR next called on ERIC SANDERS in Anchorage to testify. Number 340 MR. SANDERS introduced himself as a plaintiff's personal injury attorney, and gave examples for opposing the legislation. (The teleconference site was closed down before the conclusion of testimony from MR. SANDERS in Anchorage.) SENATOR TAYLOR explained he planned to reply to MR. SANDER'S concerns, as well as those expressed by others. He drew attention to page 1, line 9, which says, "The worker's compensation carrier is not liable for civil damages for an injury to an employee of that employer." He said it did not immunize that carrier or employer from the damages caused by their employee. SENATOR TAYLOR next invited JAMES PFEIFER, President of Alaska National Insurance Company, to testify. Number 420 MR. PFEIFER responded to testimony made before the Labor and Commerce Committee in a prior meeting, included comments on the Van Biene case, safety inspections, expanding the scope to third party lawsuits, and placement in Title 21 instead of Title 23. He pointed to previous testimony indicating the situation as it is today in Alaska, generally prevails throughout the country. MR. PFEIFER denied that was the case, and he rebutted their testimonies to the satisfaction of SENATOR TAYLOR. MR. PFEIFER made a few more supportive remarks and urged the passage of the bill. Number 480 SENATOR TAYLOR reviewed the purpose of the legislation and the latest committee substitute. He asked if safety inspections had been curtailed, and MR. PFEIFER said they had curtailed theirs, but continued some safety inspections, although not to the extent as prior to the Van Biene case. MR. PFEIFER said if SENATOR DONLEY were still in committee, he would let him know they have been sued similar to Van Biene, and settled out of court at a high cost. He thought there were potentially other cases out there, - with a high dollar cost. Number 509 SENATOR TAYLOR and MR. PFEIFER continued to discuss the issues, allegations, and compensation in the Van Biene case. TAPE 93-15, SIDE A Number 001 SENATOR TAYLOR welcomed PAUL ARNOLDT, Director of the Division of Workers' Compensation in the Department of Labor, who had come to testify on SB 64. MR. ARNOLDT pointed out the sequence of bills suggested the impression the legislation would limit the liability of the individual who was doing the inspection. SENATOR TAYLOR asked him to work off the committee substitute, Ford, dated 2/19/93. MR. ARNOLDT read aloud the first sentence of the committee substitute, and opined it sounded as if it was what the legislation was trying to prevent. SENATOR TAYLOR read another portion which seemed to contradict MR. ARNOLDT'S opinion, and he rebutted it with the citation of 23.30.090. There was some discussion on his rebuttal. Number 048 SENATOR TAYLOR asked MR. FORD to address the opinion, and MR. FORD was not sure there was coverage if the independent person was acting as the agent of the insurer. MR. FORD suggested some alternate language, but he was not convinced there was a problem. SENATOR TAYLOR directed him to check to see if an amendment would be necessary. MR. ARNOLDT didn't think it was a workers' compensation issue, in terms of the division. SENATOR TAYLOR asked if the division had a position on SB 64, and MR. ARNOLDT quoted the Department of Labor as supporting the types of inspections that are contemplated in the bill. He also quoted the department as seeing the legislation as a vehicle to prevent the individuals conducting the inspection, from being held to a liability that was never intended. MR. ARNOLDT said if that was corrected, the legislation would be satisfactory to the Department of Labor. SENATOR TAYLOR affirmed that was his intent, as well as that of the sponsor. SENATOR TAYLOR asked MR. FORD for a summary on the most recent committee substitute for the legislation. Number 112 MR. FORD said it was unfortunate that all of the parties didn't have the latest draft, since he thought it solved many of the problems that were discussed. He said the final draft was the result of several evolvements, and now focused on the narrow issue of "injury to an employee, the employer, and the employee's option to sue for the damages." MR. FORD recommended a word change in the latest draft to "carrier" instead of "insurer," since carrier is defined in workers' comp. He addressed the municipal insurance pool, and said he discussed it with a person from that office, who agreed the legislation took care of his problem. Both SENATOR TAYLOR and SENATOR HALFORD wanted to know why the legislation was back under Title 23, and whether that was a better place. MR. FORD thought the discussion on where to place the legislation was misleading, since, he said, placement is not as important as substance, and he explained the reasoning. He said the ultimate decision would be made by the revisor of statutes. SENATOR TAYLOR asked MR. FORD if he had heard the testimony from the participants in Anchorage, and did he think they were looking at the same bill? MR. FORD did not think they had the latest version, and thought it would have affected their comments on the scope of the immunity. Number 170 There was a final discussion with MR. FORD using possible examples. MR. FORD said it was correct that under common law, you would be able to sue the inspector, if that person was negligent. He said it was up to Senate Judiciary to decide if, in fact, that is good policy, and he quoted some of the testimony as being a trade-off. SENATOR TAYLOR pushed for an answer to his example, and MR. FORD explained under what circumstances a person would have immunity. They discussed third party negligence. There was no one else wishing to testify. SENATOR TAYLOR said he planned to move the bill on Monday, February 22.
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