Legislature(1997 - 1998)
02/24/1998 01:42 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 283 - AUTOMOBILE CIVIL LIABILITY
CHAIRMAN LEMAN announced SB 283 to be up for consideration.
Mr. JOHN GEORGE, National Association of Independent Insurers,
supported SB 283 because it represents public fairness. When he
was the Director of the Division of Insurance, and before that, a
lot of people would complain about uninsured drivers that have
accidents and sue you, if you run into them; but if they run into
you, you don't get anything. It's been a real problem, and this
bill really addresses the personal responsibility issue. There is
a law that says you must have insurance and this bill rewards those
people who do have insurance. While there is a penalty for people
without insurance, if they are involved in an accident where they
are not at fault, they can still get their car fixed and their
medical bills paid, but they won't have the opportunity to go after
the noneconomic awards. The real crux of this bill should go to
reduce the number of uninsured motorists with additional incentive
to become insured.
The Insurance Commissioner in the state of California, when
California passed an initiative which did essentially the same
thing, said they have had at least a five percent reduction in
automobile insurance premiums since its passage. Some of the
member companies in the NAII believe it's many times that. They
see a significant reduction in uninsured motorists' claims being
filed and it could be because there is no need to file a lawsuit,
because the medical bills and the repairs to the car are fairly
straight-forward costs. Pain and suffering, noneconomic awards,
are more difficult to put a number on and, therefore, that's where
most of the litigation would come from.
SENATOR KELLY asked if this was ever part of tort reform packages
in the past.
MR. GEORGE answered that he wasn't the person to answer that,
although it does have some aspects of tort reform.
SENATOR KELLY asked if it was an initiative on its own in
California or was it a package.
MR. GEORGE said it was an initiative on its own.
CHAIRMAN LEMAN said he thought it was linked with commission of a
felony.
MR. GEORGE agreed and added that they also had a retroactive
provision which has been upheld on appeal in California, that says
after 60 days, you could not bring suit. This bill would not do
that. He noted that our tort reform package had already addressed
people in commission of a felony.
SENATOR KELLY said he is concerned that, as written, this might
include any passengers involved in an accident through no knowledge
of their own in an uninsured car. He proposed adding language to
subsection (a) saying "does not apply to a person unless the person
is an owner or operator of a vehicle involved in the accident," so
that any innocent passengers would be able to have the same rights
as the guilty person.
MR. GEORGE said he thought as it's currently worded, only the
driver or an owner of the vehicle who failed to buy the insurance
would be affected. He thought the language Senator Kelly suggests
further clarifies that. However, he understands this is not the
case in California. If you are a passenger in an uninsured
vehicle, you are not entitled to sue for noneconomic awards.
Number 560
CHAIRMAN LEMAN asked if he was uninsured and driving a vehicle and
his wife is riding with him and is a co-owner of the vehicle, he
assumed that she, too, could not place that claim. But what if
they have one of their children with them, can they as passengers
bring that suit or would they be excluded as minor children of the
owners.
MR. GEORGE thought they should ask attorneys, but his opinion is if
a child is not an owner of the vehicle, they would be entitled to
recover. The spouse who is a co-owner would be excluded from
recovery of noneconomic awards. The spouse would have the equal
obligation to have insurance on an owned vehicle.
SENATOR KELLY said he didn't see this as a case where they are
rewarding the uninsured parent. Rather you're protecting the child
whose not responsible for their parent who didn't have insurance.
MR. JEFF BUSH, Deputy Commissioner, Department of Commerce and
Economic Development, said that the Administration has some
concerns about this bill. Driving under the influence sections of
this bill are inconsistent with the tort reform measure that was
passed last year that says if you are drunk while operating a
vehicle that is involved in an accident, if your state of
inebriation was a significant cause to the accident, you are denied
recovery. That was the way the discussions related to drunk
driving went last year. This particular bill appears to not
necessarily be in conflict with that, but to extend it one step
further to the case where if you are operating a vehicle while
drunk and are totally innocent in the accident, you would be denied
a claim. You would already be denied, if being drunk had anything
to do with the accident in the first place.
TAPE 98-8, SIDE B
His second point is that this proposal as it relates to the
uninsured motorist may conflict with financial responsibility laws
in AS 28.20. As explained to him by DMV, they are required to take
administrative action against a license while that person cannot
get compensated for noneconomic damages.
The third point is that this is a tort reform bill and the
Administration spent a lot of time last year dealing with tort
reform. This particular proposal should have been brought to the
table at that time. He said the Administration opposes any more
tort reform and for that reason they oppose this bill.
CHAIRMAN LEMAN said his first point was somewhat convincing, the
second point has been resolved by Ms. Juanita Hensley, and the
third point he finds unconvincing.
SENATOR MACKIE said he would like to hear from the Administration
about how they could make this work.
MR. BUSH responded that the arguments are things they have heard
over and over again. This bill will set up a system where a person
who is perfectly innocent in an accident, although they may not be
innocent in their private behavior in a sense that they are not
insured or may be drunk and driving and those facts do not have any
impact on the accident that results in their being injured, will be
denied recovery because of that. The Administration believes that
people who are innocent should not be denied recovery simply
because of some other behavior they've engaged in.
SENATOR MACKIE asked what happens to someone who is uninsured in
that a situation like he just described. They may be innocent, but
uninsured.
MR. BUSH said he understands if someone is in that situation, they
take administrative action against the license, even if the person
is innocent in terms of the accident, itself. It comes to their
attention that a State law is being violated.
CHAIRMAN LEMAN said they would work with Mr. Bush and the drafters
to address some of his concerns.
MR. MICHAEL LESSMEIER, State Farm, supported SB 283. He thought
that a quote from a Supreme Court Justice in California summarized
his feeling, "Tax paying law abiding citizens will no longer need
to support those who choose to break the law." He said people who
do follow the law and buy liability insurance end up supporting
those who choose not to. This bill, the intent of which is to
decrease the number of uninsured drivers, is a good and fair bill.
He didn't think it was anyone's intent that innocent passengers be
precluded from recovering. He thought that should be clarified.
There is a difference in how an intoxicated driver is treated in
last year's discussions.
Number 481
SENATOR KELLY commented that his concern remains about passengers.
He wanted staff to find out the relationship between what they did
last year and this bill on the noneconomic damages. He didn't want
to go backwards from last year on tort reform legislation.
MR. BUSH responded that this bill does not go back; it adds another
step. If a person is intoxicated and substantially contributes to
an accident, that person is denied recovery of any damages. This
bill says in those cases where the intoxication did not
substantially contribute to the accident, they can't recover
noneconomic damages. They would be able to recover medical
expenses and lost wages.
SENATOR KELLY asked if drunk driving was one element and uninsured
is the second element.
MR. BUSH answered that is correct and this bill deals with both
situations in the same way.
SENATOR KELLY asked about a scenario where a couple of people go
to a party, the owner drives and has three drinks, throws the keys
to his buddy and says, "you be the driver." They take off and
somebody hits them from behind and the owner of the vehicle, who's
legally intoxicated, gets hurt. What's the status under this
legislation?
MR. BUSH answered, assuming the buddy was not legally drunk at the
time and, therefore, driving legally, and assuming there was
insurance for their vehicle, this legislation wouldn't affect the
case at all. If the driver was legally drunk, this legislation
would affect it or if the owner had not insured his vehicle, this
legislation would affect it.
SENATOR KELLY said the intoxication part might be a little too
complicated.
CHAIRMAN LEMAN said he would like to work on that issue, also.
SENATOR KELLY said he thought they should use the word passenger
somewhere as opposed to owner or operator.
CHAIRMAN LEMAN said they would work further on the bill and
adjourned the meeting at 3:05 p.m.
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