02/19/2001 01:15 PM House JUD
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
February 19, 2001
1:15 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative Scott Ogan, Vice Chair
Representative Jeannette James
Representative John Coghill
Representative Kevin Meyer
Representative Ethan Berkowitz
Representative Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 97
"An Act relating to court approval of the purchase of structured
settlements."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 102
"An Act relating to the theft of propelled vehicles."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 97
SHORT TITLE:PURCHASE OF STRUCTURED SETTLEMENTS
SPONSOR(S): REPRESENTATIVE(S)FOSTER
Jrn-Date Jrn-Page Action
01/31/01 0211 (H) READ THE FIRST TIME -
REFERRALS
01/31/01 0211 (H) JUD
01/31/01 0211 (H) REFERRED TO JUDICIARY
02/19/01 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 102
SHORT TITLE:THEFT OF PROPELLED VEHICLES
SPONSOR(S): REPRESENTATIVE(S)KOTT
Jrn-Date Jrn-Page Action
02/02/01 0225 (H) READ THE FIRST TIME -
REFERRALS
02/02/01 0225 (H) JUD
02/02/01 0225 (H) REFERRED TO JUDICIARY
02/19/01 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE RICHARD FOSTER
Alaska State Legislature
Capitol Building, Room 410
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of HB 97.
LARRY LaBOLLE, Staff
to Representative Richard Foster
Alaska State Legislature
Capitol Building, Room 410
Juneau, Alaska 99801
POSITION STATEMENT: Assisted with presentation of HB 97 and
answered questions.
WILLIAM G. AZAR, Attorney at Law
800 East Dimond Boulevard, Suite 3-440
Anchorage, Alaska 99515
POSITION STATEMENT: Testified in support of HB 97.
RANDY DYER, Executive Vice President
National Structured Settlement Association
(Address not provided)
Washington, D.C.
POSITION STATEMENT: Testified in support of HB 97.
AL TAMAGNI
(Address not provided)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 97.
SHELDON E. WINTERS, Attorney at Law
Lessmeier & Winters
Lobbyist for State Farm Insurance Company
431 North Franklin Street, Suite 400
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 97 and
recommended an amendment.
JOHN L. GEORGE, Lobbyist
for American Council of Life Insurance (ACLI)and
National Association of Independent Insurers (NAII)
3328 Fritz Cove Road
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 97.
JERRY LUCKHAUPT, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Alaska State Legislature
Terry Miller Building, Room 329
Juneau, Alaska 99801-1182
POSITION STATEMENT: Provided legal opinions and answered
questions on HB 97 and HB 102.
ROGER WORTMAN, Staff
to Representative Pete Kott
Alaska State Legislature
Capitol Building, Room 204
Juneau, Alaska 99801
POSITION STATEMENT: Presented HB 102 on behalf of
Representative Kott and answered questions.
ROBERT BUTTCANE, Legislative & Administrative Liaison
Division of Juvenile Justice
Department of Health & and Social Services
PO Box 110635
Juneau, Alaska 99811-0635
POSITION STATEMENT: Provided department's position on HB 102
and answered questions.
STEVE DUNNAGAN, Lieutenant
Division of Alaska State Troopers
Department of Public Safety
5700 East Tudor Road
Anchorage, Alaska 99507-1225
POSITION STATEMENT: Provided department's position on HB 102,
answered questions, and recommended an amendment.
HEATHER M. NOBREGA, Staff
to Representative Norman Rokeberg
House Judiciary Standing Committee
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Provided comments on HB 102.
ACTION NARRATIVE
TAPE 01-19, SIDE A
Number 0001
CHAIR NORMAN ROKEBERG called the House Judiciary Standing
Committee meeting to order at 1:15 p.m. Representatives
Rokeberg, Ogan, Coghill, Meyer, Berkowitz, and Kookesh were
present at the call to order. Representative James arrived as
the meeting was in progress.
HB 97 - PURCHASE OF STRUCTURED SETTLEMENTS
Number 0075
CHAIR ROKEBERG announced that the first order of business would
be HOUSE BILL NO. 97, "An Act relating to court approval of the
purchase of structured settlements."
REPRESENTATIVE RICHARD FOSTER, Alaska State Legislature,
sponsor, said that his intention was to address a concern
brought forward by some of the trial lawyers in the state.
Apparently, firms have been contacting recipients of structured
settlements and offering to buy those settlements for a small
portion of their value. When a person living in a village is
contacted, that person might not fully understand the
implications of the purchase or realize what he or she is giving
up in terms of long-term benefits versus a quick cash payoff.
Passage of HB 97 would allow the reassignment of a structured
settlement only after approval by a superior court.
Additionally, HB 97 outlines the considerations that must be
made before such a transfer is approved.
Number 0226
LARRY LaBOLLE, Staff to Representative Richard Foster, Alaska
State Legislature, defined a structured settlement as a
circumstance in which a court required that a given amount of
money be paid out over a period of time. Often it is for
protection of a minor or when a person's competence to handle a
large payment is in question. For example, if a minor child's
parents were killed in a car accident, the insurance settlement
could be paid to the child over a period of time in the form of
a monthly or annual stipend. Other examples include payments
for injuries or losses. Typically, the courts have some
compelling reason for setting up this type of settlement instead
of allowing for a lump-sum payment.
Number 0481
WILLIAM G. AZAR, Attorney at Law, testified via teleconference
in favor of HB 97. He said he had been practicing personal
injury law since May, 1973, and had seen an abuse primarily of
Native people by companies that offered a cash settlement for a
structured settlement. The person(s) involved had originally
agreed to a structured settlement but then another company
offered a lump sum in place of the monthly payments. He
recalled four cases in which the new lump-sum payment agreement
was not in the best interest of the payee. In those cases the
payee was unable to properly manage finances and was now in dire
financial straits. He believed that any prospective assignment
should go before a court for scrutiny to ensure it is in the
best interest of the payee.
MR. AZAR pointed out that the federal government has allowed
some structured settlements to be tax-free, and in instances
where the settlement is converted into a lump-sum payment, this
benefit, as well as others, is lost. He believed that
statistics prove most people cannot handle a lump-sum payment.
He expressed the opinion that HB 97 was absolutely necessary for
Alaska and fit the population with regard to the circumstances
he has seen.
Number 0819
REPRESENTATIVE KOOKESH questioned how a structured settlement
that belongs to a private individual could be brought under the
jurisdiction of the state without a compelling state interest.
MR. AZAR said he had not researched that question and felt it
would be better directed toward insurance companies that had
experience creating structured settlements. To further his
point that abuse is occurring, he described an incident in which
an individual in his area, who had been caught making usurious
loans, had asked [Mr. Azar] to reveal his list of structured
settlement clients. He said structured settlements were
designed to be in the payee's best interest; any further
agreement the payee enters into should also be in the payee's
best interest. Mr. Azar presented anecdotal examples that
affirmed his belief in the benefits of HB 97.
Number 1078
REPRESENTATIVE BERKOWITZ asked if HB 97 had been modeled on
legislation enacted in other states, and if so, which states.
CHAIR ROKEBERG suggested deferring that question to Mr. Dyer,
who would testify later.
MR. AZAR, at the request of Representative Berkowitz, stated
that Gene Johnson (ph), of Johnson Investments, was someone who
bought structured settlements at a discount. Mr. Azar did not
have any other specific names but said that there were numerous
companies that do this, including some that advertise on
national television. He provided anecdotal examples of some of
his own clients that had been approached by this type of
company. He believed that the practice of buying structured
settlements at a discount should be stopped because so many of
his clients could not handle a lump-sum payment.
Number 1269
REPRESENTATIVE OGAN asked if Mr. Azar could advise his clients
to set up their structured settlements in irrevocable trusts.
Representative Ogan said he had the impression that the
legislature was being asked to outlaw stupidity. He recognized
that some people who receive large amounts of money don't spend
it wisely, but questioned where the state should draw the line
in terms of interfering with a person's financial judgment.
MR. AZAR responded that up until about 30 years ago, structured
settlements did not exist; instead, clients were given a lump
sum, which often disappeared quickly. He felt it was simplistic
to say HB 97 would be interfering in people's lives. He did not
see how HB 97 would harm the public; instead, it would deter
certain types of companies from taking advantage of the public.
He noted that while irrevocable trust-type structures could be
set up for minors, it was very hard to have a structure remain
irrevocable for an adult who was not incompetent. He also
explained that some structured settlements are set up for
individuals and their children, and when the adult accepts the
lump-sum payment, the children often lose out on the benefits of
the structure. He believed that HB 97 was a much simpler way to
ensure that the recipients of structured settlements were not
taken advantage of.
Number 1556
REPRESENTATIVE KOOKESH said he believed the intentions behind HB
97 were good, but he still had legal questions that he wanted
answered before HB 97 moved from committee. He went back to the
point that a structured settlement was a property right of
somebody. If the structured settlement did not include court
oversight as part of it, he did not see how a state court would
get jurisdiction.
CHAIR ROKEBERG asked Mr. Azar if attempting to set up
[irrevocable] trusts for all structured settlements would be
overdoing it.
MR. AZAR agreed with that point. He said he could only do it in
cases where he foresaw a problem, which was not possible in all
cases. He gave a example of an instance in which he had been
told that the structured settlement was considered irrevocable,
but the settlement was invaded anyway. He said that to try to
set up irrevocable trusts in every case would be unreasonable
but HB 97 would cover all situations. He expressed the belief
that the state should intervene and pass HB 97.
MR. AZAR said he was unable to provide specific examples of how
much a discount was typically offered during these types of
transactions, but he believed it was much lower than the actual
worth. He also said companies that created and funded
structured settlements were opposed to having the settlements
cashed in.
Number 1900
RANDY DYER, Executive Vice President, National Structured
Settlement Association, testified via teleconference. He said
that the issue brought forth in HB 97 was national in scope.
Thus far, similar legislation had been enacted in 18 states, and
was being considered in another dozen states. He proceeded with
the following hypothetical case:
Let's assume, Mr. Chairman, that you had been injured,
and that as a result of your injuries, you were
receiving monthly payments to compensate you for lost
wages. Just to use round numbers, let's assume you
were receiving $2,000 each month, tax-free.
Now, I'm the factoring company. ... I come to you,
and my goal is to get your payments away from you and
give you the least possible for those payments. Now,
here's how I do it. First of all, I offer to buy from
you $500 of your $2,000. Now, when you did your
original structured settlement, you agreed, as is the
case in all structured settlements, that you would not
sell your payments. That is a requirement of all
structured settlements, required by Congress when
Congress created structured settlements back in 1983
and provided the tax benefits. So, you have agreed
upfront that you would not sell your payments.
Number 1990
... I come to you and say here's how we're going to do
it. Since the annuity company that's making the
payments to you knows that you've made this agreement,
we're going to fool them. You're going to send them a
change-of-address form, and your change-of-address
form is going to say, "Please send my payment to (this
certain address,)" and it is an address that I
control. So your check will come to me and, as part
of the contract that you and I have signed, I'll take
your $2,000 check, I'll cash it, I'll take my $500,
and I'll send you your $1,500. Now, for that, I will
give you the best deal you'll ever get - because I
know, if you're talking to me, you're probably talking
to other factoring companies as well. And if I can
determine that, I can get some idea of how much I can
get from you.
But let's say I take the value of your payments and
the present value of your future stream of payments,
and I give you 75 percent of its worth. So I've given
you, in terms of factoring deals, a pretty good deal -
a 25 percent discount. Now, you're used to getting
your check on the first of the month; now I'm getting
it on the first of the month. I cash it and I send
you the money, but maybe I don't send it to you 'til
the fifth, maybe the tenth, maybe the fifteenth. With
each delay, I'm putting economic pressure on you. You
have bills to pay, and I'm not sending you the money
that you need to pay those bills.
Number 2040
Eventually, when the economic pressure gets high
enough, I say to you, "Listen, let me buy another $500
of your payments." Now, as part of the contract
you've signed with me, I've taken the right of first
refusal against you selling your payments to anyone
else. Further, I control your check, and no other
factoring company is going to do business with you as
long as I control your check. So you have to do
business with me.
Now, I buy the second $500 a month in payments, only
this time, I give you half what it's worth. I can
give you whatever I want because you've got to sell to
me. And with each turn of the wheel, I take more and
more of your payments at a lower and lower rate.
Number 2090
MR. DYER said he had seen an instance of five discounts - five
deals done, where the last discount was 87 percent; the person
got 13 percent of the present value of the future stream of
payments. He asserted that these situations were occurring all
over the country. He referred to the January 1998 issue of U.S.
News and World Report, and gave details about five cases listed
in an article on this subject. He added that even though it was
against the laws of all 50 states to buy a person's workers'
compensation settlement, factoring companies do it anyway.
Number 2177
MR. DYER addressed the concern about property issues. He
explained that in 1983 Congress established structured
settlements by offering a tax incentive for people to accept
their money over time. Congress saw an increase in large
settlements during the 1960s and 1970s, and realized that though
these settlements were intended to last people the rest of their
lives, people were dissipating the money. In an attempt to
encourage people to take structured settlements, Congress began
treating every payment received as a capital payment, which
would be tax-free. Further, Congress set up a series of tax
treatments for casualty companies, annuity companies, and all
parties involved in the structured settlement, so that everyone
received neutral tax treatment. However, to accomplish this,
the liability for the payment had to be assigned to a third
party, which owns the annuity. Thus the injured individual does
not own the annuity; instead, that person own the right to
receive each payment, and that is all.
MR. DYER further explained that if it were simply a case of the
individual doing something foolish with the money after that
person received it, then there would be no reason to interfere.
But instead, the factoring companies are attempting to reach
through the individual to the source of the payments. He said
this was equivalent to a bank garnishing a person's wages to
satisfy a standard mortgage loan.
Number 2289
MR. DYER referred back to his prior example and said:
At each stage along the way, Mr. Chairman, you have,
always, an option. And the option is (remember that
this whole thing hinges on you diverting the payments
to me, the factoring company), at any point you could
go back to the annuity company and say, "I want you to
send the payments back to me." Now, you may fully
intend to receive your $2,000 payment and then - as we
all do when we get our money, we sit down and we write
a check to whomever we owe money to - ... you may
fully intend to send me my $500. But in my contract,
I've covered myself for that eventuality, and should
you divert the check back to you, I've got you. ...
Now, each of the companies does this a little
differently, but one of them - the largest of these -
uses a confession of judgment. ... You've agreed in
the contract that if anything goes wrong with this
contract, you've confessed upfront that I can take
judgment against you in my home court.
Number 2324
Now, let's assume my home court is Philadelphia. So
you've diverted the payments back to yourself; I go
into court in Philadelphia and take a judgment against
you. Now, you're not going to fly from Alaska to
Philadelphia to defend yourself, so you go
unrepresented. I bring in the confession of judgment,
I represent that you've defaulted on a contract, and I
take a judgment against you for the total undiscounted
amount of the payments that I bought from you - each
$500 payment over 10 years .... Then I surface; I go
to the annuity company, I say, "I have a judgment
against this guy, and I want his whole $2,000, every
month, until my judgment is satisfied."
So, I've accelerated the amount of time it takes me to
get my money back. Now, some of the companies do it a
little differently. Some of them simply take the
right to represent you in court, so they say, "if
there's any dispute, I'll pay your lawyer." Well,
then, all I do is go into my local court, bring a
lawyer with me, and say he represents the payee ...
and then he simply agrees with everything I say. The
result is the same.
Number 2364
Now, confession of judgment is illegal in Alaska, it's
illegal in all 50 states, it's illegal in Pennsylvania
in consumer transactions, but not in commercial
transactions. But as part of my contract, you and I
have agreed that what we're doing is not a consumer
transaction.
MR. DYER added that the factoring companies have become very
slippery in how they do business. The factoring companies are
increasingly using loans and charging incredible interest rates
against people. He said these types of transactions are a
problem of national scope.
Number 2397
REPRESENTATIVE BERKOWITZ noted that, touching as they are, the
anecdotal stories were rejected by the [legislative] majority
during the tort reform debate. He wanted to know how pervasive
the problem was in Alaska, how many structured settlement cases
there were in Alaska, and what percentage of those were
considered by Mr. Dyer to be an abuse of the structured
settlement.
MR. DYER clarified that the factoring transactions, not the
structured settlements, were the abuse. He added that because
factoring companies and transactions were unregulated, there was
not a way to determine how many transactions occurred. He said
he would research how many structured settlements there were in
Alaska and provide that information to the committee.
Number 2442
REPRESENTATIVE BERKOWITZ said that though he appreciated the
intentions of HB 97, he believed it contained structural
problems. He returned to the point raised by Representative
Kookesh, that of the superior court's ability to participate in
the situation. Representative Berkowitz used the analogy of a
person who wanted to buy a car, but first wanted the court to
ensure that it was a fair deal. He stressed that the courts can
only address matters before them. He suggested that the
committee take the intention of HB 97 and try to accommodate it
outside of the committee process, perhaps through a
subcommittee.
MR. DYER responded that the original legislation in Illinois
which dated back to 1997, required court oversight as well. And
though hundreds of cases have passed through the Illinois
courts, those cases were dealt with quite easily. He added that
Kentucky, Virginia, and Connecticut also had a great deal of
experience [with these types of cases], and their courts had not
had any problems dealing with [these types of cases]. He
believed that the reason for a lack of problems was simple ....
[Tape changed sides mid-sentence.]
TAPE 01-19, SIDE B
Number 2515
MR. DYER went on to say that the holder of a structured
settlement could explain that he or she had a good reason for
engaging in the transfer. The original attorney could look at
the contract and advise the client against signing a contract
that contained a confession of judgment or any other consumer
tricks. The attorney could negotiate a fair contract for the
client. Also, if the factoring company knew it had to bring the
contract before a judge, the company would offer a fair
contract.
REPRESENTATIVE BERKOWITZ wanted to know how the court retained
jurisdiction. Once a settlement was done, the court's
jurisdiction ended. He wanted to know if HB 97 was based on
Illinois legislation, and if so, whether it is now Illinois
statute.
MR. DYER responded that [the language] was not Illinois statute
but an expansion of Illinois statute; [the language] came from
the same model that was used for HB 97.
Number 2447
REPRESENTATIVE JAMES said it appeared to her that if Alaska had
a law on the books whereby a structured settlement transfer was
required to be approved in court, then a person wronged by an
unapproved transfer could have a case in court to recover [the
loss]. She wondered what required anybody to go through the
court process if he or she did not want to; she recognized that
just because a law is on the books, does not mean a person would
abide by it.
MR. DYER answered that a factoring company would not conclude a
transaction without going before a court if it were state law,
because should the payee feel aggrieved later, the company would
lose in court. He added that there are legitimate factoring
companies that provide fair transactions, and they have spoken
in favor of [this type of legislation]. In conclusion, he said
that he would provide the committee with the most recent model
of the legislation that HB 97 was based on.
Number 2312
AL TAMAGNI testified via teleconference. He said that he was a
structured settlement broker and had settled approximately 350
structured settlement cases since 1984. He supported HB 97 as
well as the model structured settlement Act created by the
National Structured Settlement Trade Association. He viewed HB
97 as consumer protection. He said he had seen several cases
similar to the examples given by Mr. Azar, and in a couple of
those cases, Mr. Tamagni had used his professional expertise to
break down what the numbers truly were. In those instances,
once the clients saw how the cost factors related to the
purchase price, they decided not to pursue the transaction. He
made the point that it takes expertise to provide people with
the information needed for an informed decision. He said he had
represented clients on both sides of the issue and he thought
that HB 97 was an excellent bill. He noted that the tort reform
Act of 1997 did not address the structured settlement issue at
the level of detail and complexity that HB 97 did. He said that
the legislature should move forward on HB 97 because it was a
consumer protection bill, not just for people in the Bush but
for people all over Alaska. Mr. Tamagni clarified for Chair
Rokeberg that, as a structured settlement broker, he was an
insurance broker.
Number 2205
REPRESENTATIVE BERKOWITZ agreed that HB 97 would be good
consumer protection if it were done well. He expressed his
concern that although he had heard mention of Illinois
legislation and the National Structured Settlement Act, he still
did not know what this particular piece of legislation was based
on. He wanted to know where [HB 97] came from, who wrote it,
and what had been the experience of other jurisdictions that had
used it. He believed [HB 97] still contained unresolved
questions.
CHAIR ROKEBERG asked that a copy of the national model Act be
sent to the committee along with information about where it came
from and who drafted it.
MR. TAMAGNI said he would fax a copy of the model Act to the
committee.
Number 2130
MR. DYER added that the model Act was co-authored by the
National Structured Settlement Association and the National
Association of Settlement Purchasers, which is an association of
factoring companies who are interested in creating a sound,
protected consumer regime.
Number 2067
MR. TAMAGNI, in response to questions from Representative Meyer,
said that he was aware of approximately ten cases in which a
payee of a structured settlement had transferred his settlement
to an unscrupulous company. On another point, he said as far as
he knew, there had not been a constitutional challenge to this
type of legislation at either the state or federal level. He
also said the abuse that occurred in the structured settlement
arena paralleled the abuse that had occurred with the Permanent
Fund Dividend. He noted that with the Permanent Fund Dividend,
the abuse became so severe that it was stopped. He said he
thought that society in general had an inherent right to ensure
fair and open disclosure to people [receiving structured
settlements] from an unbiased third party in order that a
rational decision regarding a transfer could be made.
REPRESENTATIVE COGHILL asked how many consumer protection laws
were decided by a court before a law was broken.
MR. TAMAGNI responded that, to his understanding, there had to
be a test case before constitutionality could be determined.
Number 1887
SHELDON E. WINTERS, Attorney at Law, Lessmeier & Winters,
Lobbyist for State Farm Insurance Company ("State Farm"), said
that generally State Farm supported HB 97 but had also asked him
to present an amendment for consideration by the committee. He
referred to the notice provision, currently written as 20 days,
and asked that it be changed to 30 days. This request was for
logistical reasons: typically, the notice had to get to the
right person at the annuity issuer, files had to be pulled from
storage, the decision whether to give a response had to be made,
and if a response was required, then an attorney had to be
retained to prepare and review the file.
REPRESENTATIVE BERKOWITZ asked if Mr. Winters had any objection
to striking language from page 5, line 6, regarding the
structured settlement obligor under the definition of interested
parties.
MR. WINTER responded that his client would prefer to remain in
the loop as an interested party.
Number 1709
JOHN L. GEORGE, Lobbyist for American Council of Life Insurance
(ACLI) and National Association of Independent Insurers (NAII),
said that both his clients supported HB 97. He added that HB 97
addressed a consumer protection issue. He mentioned that the
selling of limited-entry permits was another area that needed
oversight. He acknowledged that there were legitimate reasons
why a person would want to change a stream of payments into a
cash settlement. Nevertheless, he thought that it was
appropriate to have a conversion supervised so that a lifetime
asset would not be squandered for a short-term benefit.
REPRESENTATIVE JAMES, returning to a previous point, asked if
there were any situations in which the original obligor of the
structured settlement made a larger cash payment at a discount
if the funds were needed by the payee. If so, she thought that
would be another reason to include the obligor in the notice
provision.
MR. DYER answered that the reason the structured settlement
obligor was included as an interested party was because, as the
annuity company making the payments, the obligor ran a severe
risk of being held liable for unscrupulous transactions.
Including the structured settlement obligor in the notice
provision language would allow the obligor the opportunity to
contribute necessary information.
Number 1503
REPRESENTATIVE BERKOWITZ expressed the concern that listing both
the annuity issuer and the structured settlement obligor under
the notice provision was redundant.
MR. DYER clarified that one was an assignment company and the
other was the issuer of the annuity.
MR. GEORGE concluded by stressing that factoring companies, not
insurance companies, were the ones engaged in unscrupulous
transactions.
Number 1424
JERRY LUCKHAUPT, Attorney, Legislative Legal Counsel,
Legislative Legal and Research Services, Legislative Affairs
Agency, Alaska State Legislature, explained that HB 97 was an
amalgam of the Minnesota statute and the California statute. He
had attempted to remove what he perceived to be problematic
portions of each state's statute. California's version had the
required notification process initiated by the factoring company
that was buying the settlement. Minnesota's version followed
the model legislation referred to earlier but did not conform to
Alaska's statutory language style. While melding the two, he
had also removed duplicative aspects. He noted that Illinois
had taken a limited approach by using one sentence which
required that assignments of structured settlements received
court approval. This appeared to him to be just a simple
approval process whereby all parties involved were informed of
the details of the transfer.
Number 1311
MR. LUCKHAUPT said that the only potential constitutional
problem he foresaw was if the courts had to find that the
transfer was in the best interest of the payee and the payee's
dependents. If a competent payee made the choice to give up
money for 30 cents on the dollar, then [the courts] might not be
able to prevent it. He added that as far as he could see [from
his research of other states], when the courts did become
involved, they did not pursue the concept of "best interest"
very far; instead, the courts focused on making sure the payee
had received independent financial advice and understood the
ramifications of the transfer.
MR. LUCKHAUPT went on to say that he had not yet seen the new
model legislation that had been spoken of. On another point, he
said that courts retained jurisdiction over their judgments and
orders. If there was a problem with the enforcement of a court
order or judgment, the plaintiff could go back to the original
court because it still retained jurisdiction. He noted,
however, that HB 97 included cases that could potentially have
been filed in Alaska, and he felt that it was reasonable to say
that the court could have jurisdiction over those cases even
though they had not yet gone to court. The legislature could
say that if the actions giving rise to the structured settlement
could have been filed as a civil action in Alaska, then the
courts did have jurisdiction to approve any agreement. In
addition, if the payee is currently domiciled in Alaska, then
the courts have personal jurisdiction of the payee. He said he
could see a potential for disputes to arise between states if
the structured settlement was entered into in another state but
the payee resided in Alaska. He added that he had not, however,
actually seen that sort of dispute while researching HB 97.
Number 0947
REPRESENTATIVE OGAN wanted to know what circumstances caused any
particular settlement to become a structured settlement.
MR. LUCKHAUPT responded that it was primarily a decision
negotiated between the insurance company and the plaintiff.
Often the goal was to have the money retain some economic value.
He said that usually a structured settlement only occurred when
very large sums of money were involved.
REPRESENTATIVE KOOKESH raised the point that if a payee was
competent, then the state could be told that it did not have any
business interfering in the transaction.
MR. LUCKHAUPT agreed; when the payee is competent and there are
not any dependents, the state could not interfere. He said the
recourse for the state was to require that the payee become
informed of the consequences of the transaction.
Number 0607
CHAIR ROKEBERG announced that HB 97 would be held over and
assigned to a subcommittee. He expected to have HB 97 back
before the committee in two weeks or sooner. He assigned
Representatives Meyer, Berkowitz, and Coghill to the
subcommittee. [HB 97 was held over.]
HB 102 - THEFT OF PROPELLED VEHICLES
Number 0522
CHAIR ROKEBERG announced that the next order of business would
be HOUSE BILL NO. 102, "An Act relating to the theft of
propelled vehicles."
Number 0488
ROGER WORTMAN, Staff to Representative Pete Kott, Alaska State
Legislature, presented HB 102 on behalf of Representative Kott,
Sponsor. He explained that HB 102 focused on the crime of
vehicle theft, with equal penalties associated with the taking
of a propelled vehicle. All-terrain vehicles (ATVs) and snow
machines were used in many parts of the state of Alaska as the
sole means of preferred transportation for some Alaskans, and,
therefore, were more than merely recreational vehicles for those
owners. Equal protection under the law demanded that the theft
of such vehicles be accorded the same treatment as provided for
the principal transportation vehicles [of] other Alaskans. He
went on to say that HB 102 provided a new element in the
commission [of the crime] of taking the propelled vehicle of
another when the owner was deprived of the use of that vehicle
for a specific period of time and had incurred expenses as a
result of the loss of the vehicle. It amended the definition
for "all-terrain vehicles" as well as the definition for
"watercraft".
Number 0338
MR. WORTMAN specified for Chair Rokeberg that HB 102 was
introduced because of a concern brought forth regarding the
inequities between the [levels of crimes of] theft of an ATV, a
snow machine, a water ski, and a personal water craft. A
personal water craft is currently defined under "watercraft",
and the theft of a watercraft is a class C felony. The theft of
an ATV (if damage to it is under $500 and it is not a
police/emergency vehicle) is a class A misdemeanor. He felt HB
102 would provide equal protection under the law, regardless of
the season, for people who relied on these types of vehicles as
their sole means of transportation.
REPRESENTATIVE OGAN pointed out that some personal water craft,
referred to in Section 3, were very expensive and he wondered
why they were exempted.
Number 0188
ROBERT BUTTCANE, Legislative & Administrative Liaison, Division
of Juvenile Justice, Department of Health & and Social Services,
said that he came in support of HB 102. He said that HB 102
accomplishes two significant objectives of interest to the
Division of Juvenile Justice, in particular. One, it gives
deference to victims by addressing the disparity in the current
vehicle theft statute. Some Alaskans depend on the use of their
snow machines and ATVs in much the same way that urban Alaskans
might depend on their truck or car as a primary means of
transportation. Under the current statutes, theft of an ATV or
snow machine constitutes a class A misdemeanor, while theft of a
vehicle constitutes a class C felony. Yet the impact on victims
in some cases is really quite the same. In HB 102, the
threshold by which severity of impact could be determined is the
provision regarding a seven-day loss of a vehicle. The theft of
an ATV would not automatically be classified as a felony; [the
theft] only did so after a certain period of impact and
inconvenience. In a restorative justice system that strives to
make victims whole, HB 102 gives deference to victims and
recognizes the severity of that [criminal] behavior. Second, by
classifying that [criminal] behavior as a felony, it assists the
Division of Juvenile Justice in holding young offenders
accountable for offenses that are viewed as serious with regard
to impact on victims.
TAPE 01-20, SIDE A
Number 0001
MR. BUTTCANE, in response to Representative Ogan, explained that
the division did not anticipate any increased cost for
incarceration. [The division] already received these cases as
misdemeanors; the change proposed by HB 102 would reclassify
some of the existing referrals as felonies, some of which would
be petitioned into superior court at a slightly higher rate. He
again offered the reasons he had listed earlier as significant
motivation to change current statute. He added that although
more young offenders might not be detained, HB 102 would give
the division the ability to impose "additional intrusive
responses" for felony offenses, such as additional hours of
community work service, additional dollars of restitution, and
additional periods of controlled supervision.
Number 0270
STEVE DUNNAGAN, Lieutenant, Division of Alaska State Troopers,
Department of Public Safety, testified via teleconference in
support of HB 102. He said equalized protection for vehicles of
people who lived in rural Alaska was viewed as a good thing by
the department. He added that the department did not anticipate
any fiscal impact because current enforcement efforts would
absorb the changes wrought by HB 102. He expressed, however, a
concern about the language regarding personal water craft being
excluded from the category of watercraft. He pointed out that
statutory definitions of these items were infrequently placed,
and [the department] did not want any terminology, or lack of
definition, to carry from one statute to another. He pointed
out that driving while intoxicated specifically covered
operating a motor vehicle, aircraft, or watercraft while
intoxicated. He warned that the exception in [HB 102] might
allow a person, arrested for intoxication while operating a
personal water craft, a loophole if he or she claimed it was not
a watercraft by definition.
Number 0493
CHAIR ROKEBERG asked Mr. Dunagan if he believed [the theft of] a
jet ski should be considered in the same realm of offense as
[the theft of] an ATV or snow machine.
MR. DUNAGAN replied that he did not. Further, he believed the
sponsor's intent was that a personal water craft would not
necessarily be considered a primary source of transportation for
somebody living in rural Alaska. He said he thought [a jet ski]
could be excluded from that principal type of vehicle or
transportation. He suggested adding an amendment which
specified that the definition regarding the personal water craft
exception only applied to AS 11.46 and did not affect any other
statute.
REPRESENTATIVE BERKOWITZ observed that all-terrain vehicle was
defined in Section 2 but not mentioned at all in the text of
Section 1.
Number 0618
HEATHER M. NOBREGA, Staff to Representative Norman Rokeberg,
House Judiciary Standing Committee, Alaska State Legislature,
clarified that [AS 11.81.900] already included ATV under the
definition of a propelled vehicle. She agreed with
Representative Berkowitz that perhaps the Revisor [of Statutes]
should be notified so that the definition [in HB 102] could be
moved to the definitional section of [AS 11.81].
Number 0680
JERRY LUCKHAUPT, Attorney, Legislative Legal Counsel,
Legislative Legal and Research Services, Legislative Affairs
Agency, Alaska State Legislature, explained that the intent of
Section 2 was to further define an ATV for the purposes of HB
102 only, so that other types of propelled vehicles, such as
"hummers" and 4-wheel-drive vehicles would not be included. He
added that because the only place where that particular
definition of all-terrain vehicle applied was in HB 102, the
definition needed to be kept as Section 2 of HB 102. Everywhere
else in Title 11, that specific definition of all-terrain
vehicle was not relevant to the definition of propelled vehicle.
The goal was to prevent the theft of such a vehicle from
automatically becoming a felony, unless any of the provisions of
Section 1, subsection (a), paragraph (2), applied.
Number 0847
CHAIR ROKEBERG noted that the concerns about the definition of
"personal water craft" being separated from the term
"watercraft" warranted another look at HB 102. He asked Mr.
Wortman, Mr. Luckhaupt, and Ms. Nobrega to work on this issue
and bring [a proposed CS] back to the committee.
Number 0927
MR. LUCKHAUPT commented that the language in HB 102 specified
that the definition of watercraft only applied to that section;
therefore, it did not apply to the definition in Title 28, which
has its own definition under "operate a watercraft" [AS
28.35.030].
[HB 102 was held over.]
ADJOURNMENT
Number 1024
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:05 p.m.
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