Legislature(1997 - 1998)

02/24/1998 01:42 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ 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              
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             
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            
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                  
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                 
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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