Legislature(1995 - 1996)
08/24/1995 09:00 AM 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
CSHB 158(FIN) am CIVIL LIABILITY
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 9:00 a.m. in the Anchorage Legislative Information Office
conference room. He explained the only action the committee would
be taking on the legislation would be the taking of testimony for
the record.
Number 025
TANYA PERRY of Anchorage, explained that she is currently in
litigation with her insurance carrier. She has always paid her
insurance premiums on time, however, the insurance carrier hasn't
done what she thought she was paying them for. As the result of
two car accidents that occurred two weeks apart, she is disabled,
unable to work and heavily in debt. She suggested the insurance
carriers need to quit treating people like numbers and be more
personable.
Number 078
JEFF FELDMAN, President, Alaska Trial Lawyers, said his view is
that HB 158 is driven principally by a desire of those who tend to
be on the defense side of cases, to avoid the burden of being
involved in litigation, which is an understandable sentiment, but
he thinks it comes at an enormous cost. He said the dialogue in
the bill has been, unfortunately, driven with a lot of antidotal
evidence and myths, rather than facts and science.
Mr. Feldman said the first myth is there is a litigation explosion,
but the rate of lawsuits has not increased for decades and is
actually on a downward trend -- it has fallen steadily since 1990.
The second myth is that there is a staggering problem with runaway
verdicts, but U.S. News & World Report characterizes this
suggestion as "exaggerated" -- the average personal award is
$48,000. In the past 14 years, there have only been 1,642 awards
in excess of $1 million. He said the data is not there to support
the characterization that our civil justice system is being plagued
by "runaway verdicts."
Another myth is that the system is burdened with outrageous
punitive damage awards. However, from 1965 to 1990, nationally,
there were only 353 punitive damage awards that were sustained
after appeal; the average of those awards was $135,000. Punitive
damage awards in medical malpractice cases are rare, so rare that
there has never been one in history of Alaska.
Another myth is that there is a medical malpractice crisis. In
Alaska, since statehood, there have been fewer than a dozen
verdicts rendered against doctors in malpractice cases.
Nationally, there are 80,000 deaths and several hundred thousand
individuals injured annually from medical negligence; only 10
percent of those cases ever result in a claim being lodged against
the doctor.
The next myth is that tort reform will cure all the supposed ills
in the civil justice system. U.S. News & World Report states that
"tort reform focuses on the tip of the iceberg and probably the
wrong iceberg at that." A report by the Insurance Services
Organization stated that tort reform has had "little or no impact."
Mr. Feldman asserted that HB 158 affects only catastrophically
injured Alaskans; it does nothing for nuisance suits, frivolous
suits, or anything very meaningful for small injury cases. In
doing so, it strips injured Alaskans of their historic right to
seek compensation as determined by a jury of their peers. It
seriously and dangerously usurps the power of a citizen jury to
render justice.
Mr. Feldman said HB 158 lessens accountability and responsibility
for negligent and reckless conduct, and it risks making Alaska one
of the most anti-victim states in the country. It does this in
three ways: it locks the court house doors; it strips juries of
their right and responsibility to decide cases based on the
evidence; and it provides windfall protection to wrongdoers and
creates an uneven playing field in the court room.
Number 265
KEITH BURKE, General Manager, Alaska Support Industry Alliance,
said the Alliance is working very hard with the industry, the
administration and the legislature to demonstrate to those with
investment dollars that Alaska is open for business. Tort reform,
in their opinion, is an essential element of that effort.
It is also the Alliance's opinion that civil liability laws of
Alaska need to be improved. It is obvious to the members of the
Alliance that the current process of litigation is dysfunctional.
This statement is supported by the fact that in 1992, 57 percent of
the damage awards went to the cost of litigation. Damage
litigation is intended to compensate those that have been injured
either physically or economically and the current process is not
achieving that goal. The Alliance believes that HB 158 is better
approach to damage litigation, and they would like to see it passed
into law early in the 1996 legislative session.
Number 296
SENATOR TAYLOR asked if there were any specific provisions in the
legislation that the Alliance either supports or doesn't support.
MR. BURKE responded that it needs to be focused more on the proof
of physical and economic loss for the damage litigation rather than
the excessive punitive damages.
Number 370
PAUL RICHARDS, Chairman, Alaska State Chamber of Commerce, said
last December their board of directors determined issues of
concern, which were finalized as officials resolutions, and one of
the top three resolutions that the board had concern with was to
support legislation that would set a standard for punitive damages.
He then read the resolution into the record. The State Chamber
believes that business within the state is jeopardized by the
present tort law, particularly in the area of punitive damages,
because the level of punitive damages penalty is not preset by law
which results in less than fair and equal treatment for all and
future inability to insure. The resolution urges the legislature
to reform tort law in the area of punitive damages to a preset
multiple of the actual damages and only assessed when malicious
intent or willful neglect is proven. The State Chamber suggests as
reasonable a three times multiple of actual damages, and also
suggests that all payments of punitive damages be made to the
state.
In closing, Mr. Richards urged passage of HB 158 in the upcoming
legislative session.
Number 475
SENATOR TAYLOR commented that if, in fact, egregious and outrageous
awards are occurring in our court system in Alaska, it is incumbent
upon this committee to do something about that. If that is
happening, that is the kind of information the committee needs to
have.
Number 530
GARY SWEET of Kirkland, Washington, related the story of his 10-
year-old son who is profoundly brain damaged. When the baby was 10
days old, they took him back to Providence Hospital because of an
infection at his circumcision site. He was kept in the hospital
and given antibiotics, however, the parents noticed he started
experiencing medical problems, and they expressed their concerns to
the nurses and doctors. Among other things, the baby experienced
a major seizure that lasted for 45 minutes and was put on life
support. The parents were told that their baby was going to die,
but he did pull through, although severely brain damaged.
Mr. Sweet said the only medical records the hospital retained were
some lab reports. Other records such as IV records and vital signs
charts are gone and no one even knows what kind of medication the
baby was receiving.
Mr. Sweet expressed how hard it is for a family to go against a
large corporation, as well as the frustrations in trying to get an
investigation into the circumstances surrounding his son's tragedy.
TAPE 95-40, SIDE B
Number 045
Mr. Sweet referred to the caps for noneconomic damages in the
legislation, and he questioned how any individual could get an
attorney to spend maybe years and thousands of dollars on a case.
He noted that in his case, one of the major defense attorneys made
more money than is being proposed in the legislation. He also
urged that there not be a two-year statute of limitations as
proposed in Section 4 because a lot of times brain damage won't
show up for several years.
Mr. Sweet said their case against the hospital and doctors went to
court, they lost and it is now in appeal.
Number 140
GRANT CALLOW, an Anchorage attorney, told of an 1984 auto accident
involving a friend of his who sustained a spinal cord injury and is
paralyzed from the chest down. Mr. Callow represented his friend
in a suit against the out-of-state construction company that was
responsible for the accident. He then made a video presentation
to illustrate to the committee what his friend's life is like since
his accident, as well as showing a video of a 19-year-old young man
who sustained a head injury in an auto accident, which resulted in
brain damage. Upon completion of his presentation, Mr. Callow
pointed out that the idea of a $500,000 cap on loss of enjoyment of
life and pain and suffering is not realistic for injuries such as
this, to say nothing of the disfigurement. He urged the committee
to change the bill to not take away the right of Alaskan juries to
see cases like this and to make a determination of what would be
fair and reasonable compensation for loss of enjoyment of life and
for pain and suffering.
Number 570
SENATOR MILLER said the sponsor's statement noted that an actuarial
firm said that roughly 43 percent of an award went to the damaged
victim and 57 percent went to litigation costs, and he asked if, in
Mr. Callow's experience, those figures hold fairly true for Alaska.
MR. CALLOW disagreed with those figures, saying he hadn't
experienced that at all. SENATOR MILLER then asked what can be
done to help on both sides in eliminating some of these costs so
that the victim receives a bigger percentage of the award. MR.
CALLOW responded that he doesn't believe there is anything that can
be done to change it that won't interfere with the free market in
allowing people their own choice of attorneys. He added that in
his experience, that 43 percent figure is much higher -- it is
more like 75 percent is ending up with the injured party. He
suggested that if the committee wants to make sure that these cases
settle quickly, then to consider doing something to increase the
hammer against insurance companies, to make it dangerous for them
to stonewall and to starve out people.
TAPE 95-41, SIDE A
Number 128
JEFF FELDMAN agreed with Mr. Callow's comment to increase the
hammer over insurance companies. If there was a provision that
said that the prevailing party in a lawsuit recovers his or her
actual attorneys fees incurred in prosecuting the claim, that would
add an additional incentive because the defendant or the insurance
company know they are going to be on the hook, not only for the
damages, but for the costs that are incurred as a result of driving
that litigation for two years. The cost of driving litigation in
that fashion is a cost born not just by injured Alaskans --
significantly, it is a cost that's born by the entire state because
the court system is geared up to process cases in a certain way.
SENATOR TAYLOR stated he would appreciate receiving affirmative
comment that could be made in this bill for methods by which we can
start reining in this huge cost of litigation.
Number 195
HENRY SPRINGER, Director, Associated General Contractors, stated
his organization, in general terms, supports the whole bill, and
they have specific interest in Section 2, the Statute or Repose.
He said he believes eight years is adequate, and he noted most
requirements for record keeping in the construction industry are
limited to seven years. He also said that there are sufficient
safeguards in the present procedures before a project can be
released.
Number 230
SUSAN MILLER, testifying from Juneau, stated the proposed changes
in the tort system would have catastrophic effects on people in
situations similar to hers.
Mrs. Miller told of how she started having back problems, making
several trips to the emergency room at Bartlett Memorial Hospital
where she was given pain medication and sent home, and going to see
an orthopedic surgeon. However, her condition continued to worsen
and she was eventually hospitalized at Bartlett Memorial Hospital
and then sent to Seattle on an emergency flight where she was
operated on by an orthopedic surgeon. However, due to the Juneau
orthopedic surgeon's failure to schedule her for a timely
appointment, Bartlett's emergency department's failure to do
adequate follow-up or to advise her to come in immediately, and due
to the admitting doctor's failure to recognize her condition, she
has been rendered a invalid for the rest of her life.
After three years of independent medical examinations, embarrassing
depositions and Mrs. Miller's expenditure of over $100,000 out-of-
pocket costs for expert witnesses and deposition trips, the
defending doctors finally agreed to settle the case after putting
her and her family through an expensive and humiliating litigation
process in an attempt to wear her down both economically and
emotionally.
Mrs. Miller referred to the $300,000 cap for noneconomic damages in
HB 158, and said given the extent of her injuries, such an award
for her permanent disfunction and disfigurement would have been a
travesty. She said the wrongdoers in this case only settled this
matter out of fear of how the jury would have valued the
consequences of their negligent acts.
Number 340
DAVID OTNESS, testifying from Juneau, said over the span of 25
years he has had three injuries to his neck, and each one has been
debilitating to the point where he has lost work time and had the
sad experience of having insurance companies dictate his life and
going out of their way to accuse him of being the neglectful party
when, in fact, each time he was injured by somebody elses
negligence.
Mr. Otness noted he faxed a copy of a letter to the committee which
he sent to Allstate Insurance Company regarding an automobile
accident he was involved in at Auke Bay on June 25, 1995. The
letter documents his condition and the lack of anywhere to turn as
a result of this accident. However, two months have passed and he
still has not had a response to that letter.
Mr. Otness read into the record another letter he had written that
morning to Allstate asking them why the delay in settling his claim
when, in fact, the party who is insured by Allstate has admitted
responsibility for the accident. Within five days of the accident,
he received $1,000 contingency money from Allstate, but nothing
since then. He is still unable to work as a result of the accident
and his medical bills, boat payments, moorage fees, etc., continue
to pile up.
In closing, Mr. Otness said the only tort reform we need is that in
favor of injured parties.
Number 450
DENISE BEACH, testifying from Homer, stated she is but one
representing the many women affected by breast implants. Documents
have been uncovered that prove that the companies knew that the
products they were manufacturing was and is harmful. She pointed
out that she considered and gathered information for eight years
prior to proceeding with the surgery. She said had the major
manufacturing companies made public the results of tests they
themselves conducted, women would not have gotten their implants.
She said most of the women who have been affected by the silicone
implants are no longer able to work due to their illness and this
has created a severe hardship in most cases, and placing a cap on
a settlement amount would drastically affect them.
Ms. Beach urged that HB 158 not be passed.
Number 525
DAVID GOLTER, an attorney testifying from the Mat-Su LIO and
addressing the punitive damages portion of the bill, said punitive
damages are one of the very few ways that an individual citizen can
exert leverage on insurance companies, large organizations, etc.
He believes that punitive damage awards are very rare, but, more
importantly, the threat of punitive damages makes a real difference
in the way that businesses conduct themselves. Insurance companies
understand that if they go too far, they face a bad faith claim and
they face large punitive damages. He doesn't believe that the
$300,000 cap on punitive damages is any kind of deterrent,
whatsoever, to one of these corporations who just figure that in as
the cost of doing business. He said there is a lot of talk these
days about limiting the role of government in the lives of
individuals, but, as we do that, the role of punitive damages
becomes even more important because it allows the individual to do
something when the large corporations do not act responsibly.
Mr. Golter said it is obvious that this legislation is taking away
the rights of citizens and that it should not pass.
Number 685
KIRSTEN TINGLUM, Chair, Alaska Action Trust, testifying in
Anchorage, said as an attorney she does personal injury work, and
one thing all of her person injury clients have in common is that
they come to her office embarrassed and humiliated because they are
not getting better, because they have reached the point where
nobody is believing them and because they have had to come and see
a lawyer.
TAPE 95-41, SIDE B
Number 007
Ms. Tinglum said she wanted to address a provision in the
legislation that will drastically affect the kind of client she is
talking about -- the ordinary middle class person who has been
injured in an accident and the system is not working for them.
Usually in the cases she takes the liability is clear; it was
clearly someone else's fault. These cases usually go for about two
years before they are settled. The people will be offered
something just before trial that basically covers their medical
expenses and an additional amount for their attorney. The proposed
Offers of Judgment Rule in Section 13 would make it impossible for
these people to go through this very simple basic process. It is
going to affect the middle class people who work for a living, who
own a home, who have something to lose. She urged that Section 13
be removed from the bill.
Number 120
BRADLEY PENN, representing Marathon Oil Co., submitted written
testimony in support of HB 158 for the committee file.
Number 130
BOB NESTEL, a former of insurance broker and former company
employee, testifying in Anchorage, referred to a publication
entitled "National Underwriter," which says insurers shall profit
for the first quarter of this year. One thing that he learned as
a insurance company employee and then as an insurance broker is
that insurance companies lie -- that what they say and the change
that they have got in their pockets are two different things. As
insurance company employees, they were taught to believe that what
the company said was right. He concluded that he could see no
reason for passing HB 158.
Number 176
RICK FRIEDMAN, an attorney practicing law in Anchorage, said he
primarily represents the average person who has been drawn into the
litigation process involuntarily.
In response to Senator Miller's question on what can be done to see
that more money gets to the right people, Mr. Friedman suggested
that pre-judgment rates could be raised so that there is not an
incentive for the defense to delay the case. A cap could be put
on the amount the defense is allowed to spend defending cases.
Referring to the caps on noneconomic damages, Mr. Friedman said if
the institutional defendant knows that there is a cap, the worst
that can happen by going to trial is "x" number of dollars, then
they have more incentive to roll the dice to see how it is going to
play its way out.
Mr. Friedman speaking to punitive damages, said he is convinced
that if those who are in favor of tort reform were to sit on the
juries in these cases, they would be convinced that more than
$300,000 was appropriate in punitive damages. He noted he
represented a woman who went through arbitration, which took two
years, and it cost her approximately $12,000 in attorneys fees to
recover $20,000 that she was due for her claim.
Mr. Friedman said these economic forces do not fear government
regulation, they do not fear the legislature, they do not fear
public opinion. What they fear is coming in front of 12 regular
fair-minded people and having their conduct exposed and having that
jury decide what a fair punishment is. What they want is a cap so
that the worst penalty they can suffer is $300,000.
Number 345
JOHN WHEATLEY, President & CEO, Willis Corroon Corporation, an
insurance brokerage firm in Anchorage, voiced his support for HB
158.
Mr. Wheatley stated that just as the penalty for every crime is
preestablished in criminal law, punitive damages should be based on
a preset multiple of actual damages. Since punitive damages are
intended as punishment, they should be assessed when malicious
intent or willful negligence is proven. The legislation allows
juries be told of awards already collected by the plaintiff and
previous awards will be deducted from any subsequent judgment.
Joint and several liability in the bill is modified so that each
defendant only pays based upon his proportionate share of liability
for injury or property damages.
Number 400
SENATOR TAYLOR asked why the wrongdoer should receive the benefit
of the collateral source by being able to deduct that from the
amount that is owed to the plaintiff. MR. WHEATLEY said he thinks
the intent is to allow the plaintiff to be made whole rather than
a more than wholeness. He added that perhaps the wording in the
collateral source section needs to be crafted a little better.
SENATOR TAYLOR asked if, in his experience, people have made more
money off of a claim than they are entitled to, that somehow there
is a doubling that occurs because of collateral source. MR.
WHEATLEY responded that he has had no such personal experience.
Number 495
DICK CATTANACH, Vice President, Unit Company, Anchorage, said Mr.
Friedman said that $300,000 was the limit for punitive damages, but
as he understands that section, $300,000 is the minimum. He
suggested that if that is not the way it comes across, then perhaps
that language should be clarified.
Mr. Cattanach stated he was testifying on behalf of Alaskans for
Liability Reform. They believe that the civil justice system is an
inefficient system that must be reformed if the residents of the
state are to become more efficient and effective. This means
getting more money to the injured party while reducing the total
cost involved in the case, and they believe HB 158 has presented
many suggestions that can help achieve that goal. They believe the
legislation is a reasonable compromise between opponents and
proponents of tort reform.
TAPE 95-42, SIDE A
Number 025
Mr. Cattanach read from a Supreme Court decision which reads:
"This court has held that punitive damages are a harsh remedy not
favored in law. They are allowed only with caution and within
narrow limits (that was in a State Farm case). This hesitance to
award punitive damages reflected in AS 09.17.020, which provides
that punitive damages may not be awarded in an action unless
supported by clear and convincing evidence. To support a claim for
punitive damages a plaintiff must prove by clear and convincing
evidence that the defendant's conduct was outrageous, such action
is done with malice, bad motive, or reckless indifference to the
interests of others."
SENATOR TAYLOR commented that he believes that is the current law
in Alaska and he doesn't see how that is any different from what's
in the punitive damages definitional provision within the bill. He
added that it may be that that definition wasn't tough enough and
the sponsor wants to make it tougher.
Mr. Cattanach said a 1993 study entitled "Examining the Work of
State Courts" shows that in the period from 1991 to 1993, the
number of tort filings decreased by six percent, which is
consistent with the statistics quoted earlier by Mr. Feldman.
However, in Alaska, it shows the percentage of growth in that
period was an increase of 12 percent. The study also shows that
the two biggest declines in the filings were in California and
Colorado, which was attributed to those states making changes in
their tort reform statutes.
Number 188
JANET OATES, representing Providence Health System, stated they
support HB 158 in principle because they have seen it as an issue
of access for health care in Alaska, the issue of physicians who
are not available to people especially in the rural areas. They
see tort reform as one of the elements, especially for physicians
in solving the dilemma of the health care delivery system in Alaska
and nationally.
Ms. Oates said HB 158 doesn't prevent those consumers who have
legitimate cases from receiving appropriate hearings and
compensation. It has been their experience at Providence that most
of these cases that come before them don't end up in court. She
said they see and understand the tragedies and the pain of the
Sweet family and all of the others.
Ms. Oates said that we are seeing a crisis in health care, and
physicians, as well as those in the hospital industry, are going to
have change the way they do business because of huge changes and
cuts that are being made. The bottom line is that there has got to
be a better way of handling the legitimate cases, there has got to
be a better way to make sure that the people who are at risk and in
need are taken care of.
Number 300
SENATOR TAYLOR questioned what the better way is to help people
who, like the Sweet family, believe they have legitimate cases but
have to spend huge amounts of money in fighting the big hospital
corporations and physicians. He said his concern is that there are
26 provisions in a bill that has already passed the House and is
now in front of the Senate Judiciary Committee, but he has yet to
have one person, under oath, tell the committee how this bill helps
the victims in Alaska. He knows how it helps the oil industry, the
insurance industry and the defense bar, but not one person has said
how it helps victims.
Number 360
SENATOR TAYLOR noted that Harlan Knudson of the Alaska State
Hospital & Nursing Home Association testified in Sitka that medical
malpractice premiums for the hospital association have gone down 25
percent, and he asked Ms. Oates if that was their experience as
well. MS. OATES responded that they have done a great deal in risk
management, which has made a difference, and their malpractice
premiums have gone down dramatically.
Number 610
SENATOR TAYLOR stated the committee would stand in recess until
2:00 p.m. for a lunch break.
Number 620
SENATOR TAYLOR called the meeting back to order and stated the
committee would continue to take testimony on HB 158.
Number 630
JANET CAMPBELL, representing the Alaska Public Interest Research
Group, stated their opposition to HB 158, primarily because it does
not protect consumer rights at all and it is blatantly in favor of
insurance companies and wealthier clients. They are especially
opposed to Section 2, 4 - 7, 13 and 14.
Ms. Campbell noted that an article in Consumer Reports states that
consumer products, not including automobiles, are responsible for
an estimated 29,000 deaths and 30 million injuries each year, yet
tort filings only represent nine percent of the court civil cases,
and only four percent of those are product liability cases. She
pointed out that in nearly 80 percent of product liability cases
that resulted in punitive damages, the manufacturers subsequently
took safety measures to prevent additional lawsuits. The only
point that has not been covered by previous testimony against HB
158 is that lawsuits are one way to ensure that products will be
made safer and, if the responsibility of corporations and insurance
companies is lowered for covering these defective products, then
there is no way forward in this area.
TAPE 95-42, SIDE B
Number 001
RODNEY PEDERSON, in-house counsel for the Arctic Slope Regional
Corporation, stated the corporation has had a self-insured program
covering the liability of their subsidiary since 1987, and they
have very important interest in the legislation because they
currently cover the first $1 million in liabilities incurred by
most of their subsidiaries. One of the important reasons that they
continue this self-insured program is the cost, and one reason for
the extremely high cost of insurance in Alaska is the relatively
small market and relatively few insurers to serve that market.
Mr. Pederson said they are not naive enough to think that tort
reform is going to drastically reduce the cost or increase the
availability of insurance, but it will have a positive effect on
self-insured companies like them. They believe that some type of
tort reform will benefit not only companies like theirs but will
also would assist other companies, including smaller companies who
have to rely on the open insurance market to cover any of their
potential liabilities.
Mr. Pederson outlined three areas that are of most concern to the
corporation and that they feel any tort reform legislation should
address: (1) they support the concept of finality and potential
liability in a cut off to any potential ongoing future liability;
(2) they support the goal of predictability and certainty of
damages contained in the bill; and (3) they support the concept
that a defendant should only be held responsible for that portion
of damages which are caused by that defendant's own fault.
Number 192
SENATOR TAYLOR commented that if this kind of major change is going
to made, then we are really going to have to revisit many of the
immunity statutes, and, if, in fact, someone is shielded by a
statute of repose so that they are no longer in the game, then
somebody is going to have to make a pretty tough call. MR.
PEDERSON agreed that a lot of tinkering, balancing and compromising
still needs to be done with the bill, but he added that a lot of
the basic broad goals they still support. SENATOR TAYLOR said he
would appreciate any ideas on how that balance could be drawn.
Number 260
COLIN MAYNARD, representing the Alaska Professional Design Council,
stated their support for tort reform in general and the statute of
repose provided in Section 2. He also stated support for some
insurance reform because the current system does not work for
either plaintiffs or defendants.
Number 325
SANDOR MANYOKY of Anchorage stated he was involved in a car in
accident in December 1994 and his family was involved in a car
accident in October 1994, and he can testify what they, as a
family, went through in dealing with the insurance companies.
Under the current system, it is difficult for people like himself
to assert their rights against multi-billion dollar insurance
companies.
Mr. Manyoky believes that there is absolutely nothing in HB 158
that would level the playing field between the plaintiffs and
defendants, in fact, it tilts the playing field towards the
insurance companies.
Mr. Manyoky said he had to take out a second mortgage on his house
to pay for his medical bills because the insurance company refused
to pay the coverage, and he believes the stonewalling by the
insurance companies is not worth the effort.
Mr. Manyoky said that we always hear about the greedy attorneys,
but the fact is that if wasn't for the attorneys, most of us would
have absolutely no chance to recover a dime from the insurance
companies.
Number 575
DON OBERG, representing NEA-Alaska, stated they do not support HB
158 as currently written for several reasons.
NEA believes that the 8-year repose in Section 2 is too limiting.
Specifically, they are concerned with how it might impact school
districts who have hired a construction firm to do work and after
eight years the district would be totally liable, although there
could be some attempt to get the money back through filing suit
against the construction company.
NEA believes Section 4 limits the right of children to bring action
against an abuser. As they understand it, the child would need to
file a claim while a minor, or the child would have to file a claim
within two years of the circumstance which caused it. Sometimes
the evidence for what the true impact of that injury is will not
occur within two years. There is also the concern about sexual and
physical abuse by a guardian or a parent to youngsters in their
teens because that child would still be under the guardianship of
that abuser and it is unlikely that the child would be able to
bring some kind of a suit while still a minor.
NEA also believes the cap on noneconomic damages in Section 5 is
too limiting. Factors such as psychological and loss of quality of
life are not economic, but they are important factors.
NEA is also concerned with Sections 11 and 12 because they think
they undermine the concept of fair play and do not provide good
legal protection for those who are accused.
In closing, Mr. Oberg stated NEA-Alaska does not believe the
current form of HB 158 is good public policy.
Number 675
AL TAMAGNI, SR. of Anchorage, directed attention to Section 5,
which is the noneconomic damages section of the bill, and said the
American Bar Association came out with a report that recommended
that pain and suffering should be limited to the most severe cases.
He believes that is what the legislation is trying to accomplish,
although all of the monetary amounts may not be accurate.
TAPE 95-43, SIDE A
Number 001
Mr. Tamagi suggested there should also be an index set on
inflation, which was also part of the report, and that those people
that elect to have periodic payments, whether by treasury bonds or
an annuity, can have those adjusted up annually based on the
national CPI whether they live in Anchorage, Bethel, Kotzebue, etc.
Mr. Tamagi spoke in support of Section 8 which provides that if a
judgment is not paid out as an annuity that the private sector
provide some security, although he is not sure that he agrees that
the state or self-insured municipality should be excluded from that
provision.
Mr. Tamagi said he does not agree with all of the language in
Section 10, relating to collateral benefits. One of the problems
he sees with collateral benefits is that all parties should know
who has been paid what by whom, and the current system doesn't work
that way.
Mr. Tamagi, speaking to Section 14, which relates to prejudgment
interest, said he believes that prejudgment interest should be paid
to everybody as a matter of right, not as a matter of whether the
individual has an attorney or not. He believes that if that were
to happen in all settlements, that more people would be adequately
compensated and all insurance carriers would play by the same
rules.
Mr. Tamagi also pointed out that the Supreme Court takes all of the
proposed rule changes and runs them by the Alaska Bar Association,
but there is never any public comment taken because they are exempt
from the Administrative Procedures Act, and he suggested that the
committee should take a look at that and provide the opportunity
for the public to comment on all civil rule changes.
Mr. Tamagi also suggested that the small claims limit should be
raised to $12,000, which would allow lay people who have small
claims and cannot afford to be represented by an attorney to go
into the small claims court to attempt to recover those smaller
claims themselves.
Number 373
DR. PAUL WORRELL of Anchorage said people testifying have talked
about the right to litigate, but no one has talked about the right
to medical care, which many people consider a right in our culture.
He said it reminded him of how the two rights are in conflict;
almost like on a balance scale one denies the other because there
is a limited amount of resources in our communities.
Dr. Worrell noted that an obstetrics doctor who moved to Anchorage
paid $12,000 for her insurance in Washington and is now paying
$60,000 in Anchorage, a cost which she has to pass on to the
patients, and he is finding that these people don't have the
resources to pay this extra cost and they are squeezing down their
medical care. He said denying care is becoming a reality, and he
believes that there can't be an infinite right to litigate.
Dr. Worrell stated he is basically in favor of passage of the
legislation before the committee or something similar because it is
a step in the right direction of rebalancing the financial
resources of the community.
Number 505
LES GARA, an Anchorage attorney and a board member of the Alaska
Public Interest Research Group, stated HB 158 is being sold to the
public as if it is going to close the courthouse doors on people
who would bring frivolous lawsuits. However, the public doesn't
realize that there currently are laws that punish very severely for
filing a frivolous lawsuit. He said the insurance industry does a
very good job of publicizing those cases where somebody, not really
done an injustice, has recovered a lot of money, but those cases
are extremely rare and there are means to deal with them.
Mr. Gara said there is provision in HB 158 that seeks to protect
people who with malice or reckless disregard for your rights have
caused you great injury, and he questioned why those people are
being protected. The legislation punishes people who have valid
lawsuits, who have been done an injustice, and have proven to a
jury that they have been done an injustice.
Mr. Gara said the roads to justice these days are getting narrower,
but there is still one outlet for people -- when they've been done
an injustice, they can still go to the courts. However, the
reality of today is that the vast majority of people who have been
done an injustice can't afford to go to court, so the courthouse
doors are already somewhat closed and HB 158 will close them even
more.
TAPE 95-43, SIDE B
Number 025
SENATOR TAYLOR asked Mr. Gara if he thought the definition of
punitive damages, as contained in a recent decision by the Supreme
Court, is a harsher or tougher definition than that which is
contained within this legislation. MR. GARA responded that the
Supreme Court standard for punitive damages is very similar in this
bill, but he does not think it is a wise use of the legislature's
resources until somebody can stand up and say why this is better
and why this will result in more justice than the punitive damage
measure that is very, very similar and exists right now.
SENATOR TAYLOR stated it has been his experience, as well as that
of other attorneys he knows, that there have been very few cases
that have had a punitive damage award. MR. GARA agreed that the
punitive damage awards in the state are few and far between.
Mr. Gara addressed several problematic provisions in the
legislation, including the offers of judgment provision, which, he
said, imposes fairly harsh penalties against a plaintiff who
rejects a settlement offer. He said currently the penalties for
rejecting a settlement offer are bad and this bill makes the stakes
for rejecting that offer even worse. He added that it is not right
for an individual who has no money to be given a choice to take
partial compensation for an injury that he knows he should get
fully compensated for. It is only right if the lawsuit is between
two big power houses.
In closing, Mr. Gara suggested that if the legislature wants to say
that they are doing something about frivolous lawsuits, let them do
something about frivolous lawsuits, not good lawsuits, which this
legislation does.
Number 340
A letter in support of HB 158 from John J. Smith, M.D., President
of the Alaska State Medical Association, was submitted to the
chairman for inclusion in the committee record.
A letter in opposition to HB 158 from Elaine M. Bales of Anchorage
was submitted to the chairman for inclusion in the committee
record.
Number 345
BILL COOK, an Anchorage attorney, stated that for the past 10 years
he has represented many Alaska women in the Dalcon Shield case, as
well as women who had silicone and/or saline breast implants. He
estimated that out of the 440,000 claimants who have registered
with the multi-district class action settlement in the northern
district of Alabama that at least three to five hundred Alaska
women have had breast implants. He noted that since these cases
are not in litigation, very few of those 440,000 registrants had a
lawsuit filed, and, if these Alaska women choose to exercise their
right under the settlement and under our laws and constitution to
enter litigation, he is afraid that many of these people will file
their lawsuit after this bill has become the law of the state of
Alaska. He questioned why the legislature isn't doing something
for these women who have been injured because of the deception of
these birth control methods and breast implants.
TAPE 95-44, SIDE A
Number 050
ERIC JENSEN, an attorney practicing law in Wasilla and testifying
in opposition to HB 158, said it is bad for the state of Alaska
and the people don't need it. He said out of all the problems with
this bill, the changes in allocation of fault that allows the
plaintiff to bring in all potential parties is the worst because it
literally makes it possible for a plaintiff to take a risk of
bringing a lawsuit.
Mr. Jensen said he agrees with Senator Taylor that the current
system is working, although it could possibly work better, but it
is a system that has developed over hundreds of years.
Mr. Jensen referred to Section 1, which is the purpose section of
the bill, and he said he cannot see how the purposes that are
listed are at all justified by the content of the balance of the
bill.
Mr. Jensen noted that several other people in Wasilla had wanted to
testify on HB 158, but they had to leave because of other
commitments, and they asked that he register their strong
opposition to the legislation.
Number 120
NORMAN DENNIS of Wasilla said he was injured in 1991, although he
personally is not have any problems with the insurance company.
However, he spoke in opposition to the punitive damages, collateral
benefit, the offers of judgment of sections of the bill. He said
in reading through the bill, he can't find even one thing that he
could possibly benefit from as a claimant.
Number 175
SENATOR TAYLOR agreed with Mr. Dennis, and he added that he has
read the preamble in the bill and he doesn't see how it does any of
the things it says in its preamble, but it certainly does do 26
different things that make it much more difficult for people like
Mr. Dennis to bring a suit, even though it says it is going to help
people like him.
Number 215
TIM DOOLEY, an Anchorage attorney, stated his opposition to HB 158,
particularly the punitive damages changes. He said some people
have testified that they want the punitive damages to be more
predictable, but he suggested that the very value of punitive
damages being assessed is their unpredictability. He questioned
why the defendant who has willfully, intentionally, or recklessly
disregarded the rights of others should be protected at all by a
cap on punitive damages. He added that he is unaware of any
insurance contract in Alaska that pays for punitive damages in any
case. He said he understands the insurance industry's concern in
trying to place a cap on punitive damages because then they can
have some predictability at trial. He believes some of the
motivation behind HB 158 is based on what may be happening in other
states.
Mr. Dooley said that as a lawyer, if he brings a lawsuit that is
frivolous, he is faced with Rule 11 sanctions, his client is faced
with Rule 82 attorneys fees, he and the client can be faced with a
lawsuit for abuse of process, etc. As an example, he played a one
minute taped voice mail message from a woman concerning a possible
lawsuit against Fruit of the Loom, and he said there was no way on
earth this woman has a valid suit, and there is no way on earth any
lawyer with any sense would have taken on such a suit because we
already have the protections in place to avoid this kind of
ridiculous lawsuit.
Number 355
There being no further witnesses to testify on HB 158, SENATOR
TAYLOR adjourned the meeting.
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