Legislature(1993 - 1994)
11/22/1993 11:00 AM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE
STANDING COMMITTEE
November 22, 1993
11:00 a.m.
MEMBERS PRESENT
Rep. Bill Hudson, Chairman
Rep. Joe Green, Vice Chairman
Rep. Brian Porter
MEMBERS ABSENT
Rep. Eldon Mulder
Rep. Bill Williams
Rep. Joe Sitton
Rep. Jerry Mackie
COMMITTEE CALENDAR
HB 292: "An Act relating to civil actions; amending Alaska
Rules of Civil Procedure 49 and 68; and providing
for an effective date."
HEARD AND HELD
WITNESS REGISTER
DR. DAVID JOHNSON
Alaska State Medical Association
4107 Laurel Street
Anchorage, Alaska 99508-5334
562-2662
Position Statement: Supported HB 292
(via teleconference from Ketchikan)
GLENDA STRAUBE
Alaska Women's Lobby
1318 N St.
Anchorage, Alaska 99502
278-0840
Position Statement: Opposed HB 292
(Spoke via teleconference)
BOB COWAN
Private Trial Lawyers
P.O. Box 1681
Kenai, Alaska 99611
283-7187
Position Statement: Opposed HB 292
(Spoke via teleconference)
CHUCK ROBINSON
Private Trial Lawyers
35401 Spur Highway
Soldotna, Alaska 99669
283-7187
Position Statement: Opposed HB 292
(Spoke via teleconference)
JOHN GEORGE, Lobbyist
State Farm, Allstate,
National Association of Independent Insurers
9515 Moraine Way
Juneau, Alaska 99801
789-0172
Position Statement: Supported HB 292
DAVE WALSH, Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
465-2515
Position Statement: Answered questions regarding HB 292
(Testified via offnet from Dallas, TX)
DICK CATTANACH
Alaskans for Liability Reform
1318 N St.
Anchorage, Alaska 99501
379-9568
Position Statement: Supported HB 292
(Spoke via teleconference)
MICHAEL SCHNEIDER
Alaska Academy of Trail Lawyers
880 N St. #207
Anchorage, Alaska 99501
277-9306
Position Statement: Opposed HB 292
(testified in Juneau)
MARK CHOATE
Juneau Attorney
175 South Franklin, Suite 308
Juneau, Alaska 99801
586-4490
Position Statement: Opposed HB 292
CHRIS CHRISTENSEN, Staff Attorney
Alaska Court System
303 K. Street
Anchorage, Alaska 99501
264-8228
Position Statement: Spoke on behalf of Court system
(Spoke via teleconference)
AL TAMAGNI
1205 E. International Airport Road, Suite 205
Anchorage, Alaska 99518
562-3938
Position Statement: Supported HB 292
(Spoke via teleconference)
HARLAN KNUDSEN
State Hospital and Nursing Home Association
319 Seward Street, #11
Juneau, Alaska 99801
586-1790
Position Statement: Supported HB 292
STEVE SCHROEDER, Engineer
Address and phone number not available
Anchorage, Alaska
Position Statement: Supported HB 292
(Spoke via teleconference)
THOMAS FINDLEY, Attorney
229 Highland Dr.
Juneau, Alaska 99801
586-4000
Position Statement: Opposed HB 292
HENRY SPRINGER
Associated General Contractors of Alaska
4041 B Street
Anchorage, Alaska 99503
561-5354
Position Statement: Supported HB 292
PREVIOUS ACTION
BILL: HB 292
SHORT TITLE: CIVIL LIABILITY
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
04/23/93 1459 (H) READ THE FIRST TIME/REFERRAL(S)
04/23/93 1459 (H) L&C, JUDICIARY, FINANCE
09/10/93 (H) L&C AT 09:00 AM CAPITOL 17
ACTION NARRATIVE
TAPE 93-43, SIDE A
Number 001
CHAIRMAN HUDSON called the meeting to order at 11:12 a.m.,
November 22, 1993. Members present were Reps. Hudson, Green
and Porter.
HB 292 - CIVIL LIABILITY
CHAIRMAN HUDSON stated that the bill before the committee is
a vehicle to educate the committee on this issue. Chairman
Hudson further stated that after doing considerable reading
he felt the opposing sides have clear differences and that
those differences of opinions were held nationwide.
Number 010
DR. DAVID JOHNSON, Alaska State Medical Association,
testified via teleconference from Ketchikan that the biggest
issue regarding tort reform was access to health care. Dr.
Johnson believes that the current liability situation
restricts Alaskans access to health care especially in rural
areas.
DR. JOHNSON went on to explain that doctors attending women
giving birth are putting their professional lives on the
line each time as they may be deemed at fault for a bad
outcome. Dr. Johnson believes that somehow we have to come
up with a system that fairly protects the medical community
and gives the very best care to those that are most
vulnerable; i.e., pregnant women and small children.
DR. JOHNSON testified that a second area of concern was in
complex injury cases where again the attending medical
personnel put their professional careers on the line.
DR. JOHNSON stated that physicians, particularly in small
communities, must decide between providing services at a
price that they think is fair and sustainable or being
insured and the two are not compatible.
DR. JOHNSON pointed out that approximately 2/3 of the
insurance premiums paid are consumed in the processing of a
claim, court costs, attorneys fees, etc., and only 1/3 is
recovered by the victim.
DR. JOHNSON stated that the reform has to inject some
predictability into the system, especially in the area of
noneconomic compensation. He said economic compensation for
medical costs, loss of wages and rehabilitation is
relatively simple to figure; noneconomic compensation is
wide open and subject to the eloquence or lack thereof of
the attorneys involved and the sympathy of the jury. The
resulting award of the jury varies widely. Dr. Johnson
believes a cap on damages is needed.
DR. JOHNSON stated that current law provides for a statute
of limitation that can stretch 20 years or longer after a
service or procedure has been rendered by a doctor.
Insurance coverage is only good for the period of time a
doctor is paying the premiums, so if a claim is made after a
doctor is retired, they are not protected. This type of
long term exposure is what is driving doctors away from
pediatric services.
CHAIRMAN HUDSON inquired about the history of increases in
medical malpractice premiums and what percentage of that is
included in the patient's bill.
Number 292
DR. JOHNSON answered that that would depend on the type of
service provided and the level of coverage purchased.
DR. JOHNSON added that obstetrics, neurosurgery and
orthopedic surgery are at the top end of the premium scale
and a general office practice would be at the bottom.
Prices range typically from $30,000 to $80,000 for one to
three million dollars in coverage. Dr. Johnson said that
the premiums have not grown significantly in the last two
years.
Number 322
REP. HUDSON asked if specialists are leaving the state due
to our present tort system and to what extent did Dr.
Johnson feel the present system had on the medical community
choosing what state they would work in.
Number 329
DR. JOHNSON answered that it is one factor in the decision
making process, primarily because Alaska is considered a pro
plaintiff state. Dr. Johnson noted an interesting trend in
doctors being hired as hospital employees so that they may
be covered under the hospital's insurance where the unit
cost would be lower per employee.
Number 342
REP. PORTER raised the concern that this problem also causes
duplicative or unnecessary testing.
Number 346
DR. JOHNSON agreed that there is a significant amount of
unnecessary testing that he calls defensive medicine. Dr.
Johnson suggested that it is very hard for a doctor not to
perform a test on someone who shows some indications of need
for the test and has insurance. Dr. Johnson stated that a
lawsuit could be filed if there is a bad outcome and the
test could have prevented it.
Number 390
REP. GREEN asked if there is an increase of awards which
prompts higher premiums and costs.
Number 402
DR. JOHNSON replied yes; that given ten similar cases, nine
being awarded $100,000 and the tenth $10 million, the $10
million case will cause enough fear to drive the system into
increased costs and premiums.
Number 418
DR. JOHNSON further noted that the noneconomic damages are
similar to the lottery system in that they currently vary
widely and this uncertainty drives up cost.
REP. HUDSON noted that in some states, specifically Maine,
they set explicit treatment guidelines for specific
conditions. Rep. Hudson inquired if Dr. Johnson thought
this direction was helpful.
Number 439
DR. JOHNSON answered that it was too early to tell because
that system still has to make its way through the courts.
Dr. Johnson noted that there is a very large question in
medicine as to what is science and what is an acceptable
course of treatment for any given set of circumstances. For
example, you can have two experts on the same subject differ
widely on their opinion of what course of treatment should
be taken in any given case.
Number 473
GLENDA STRAUBE, Alaska Women's Lobby, read a statement via
teleconference then answered questions. The statement read
as follows:
As you know, there was tort reform in 1986 and tort reform
again in 1988. I thought we already gave away the store,
yet once again we see before us even more so called tort
reform in 1993. The Alaska Women's Lobby believes that it
is simply not good public policy to make further onerous
changes, all of which are detrimental to your constituents,
without any quantitative or qualitative analysis of the
effects of existing tort reform laws.
From listening to the previous speaker for the Medical
Association, I would like to recommend that, before any
legislation be passed, that independent research be
undertaken to ascertain the following, at a minimum:
1) Whether medical tests are done merely for the self
protection of physicians. If so, to what extent.
2) Whether or not we have a doctor shortage in Alaska. If
we do, is it truly because of tort issues?
3) The previous speaker testified that awards are sometimes
based on who has the most eloquent attorney. So, let's find
out who has more money to hire the most expensive attorneys
and expert witnesses. And who are those so called eloquent
attorneys, anyway?
4) Let's survey jurors who have served on successful and
unsuccessful cases and determine the reasoning for their
decisions.
5) What percentage of physicians in Alaska have had
liability claims filed against them.
6) What percentage of tort cases filed have been settled,
lost and won. What was the amount of the awards and the
percentage and amount of those upheld on appeal. What
percentage of the awards went to attorneys fees, court
costs, expert witnesses, other costs not directly benefiting
attorney, and how much went to the victim?
7) What is the true effect of previous tort reform on
insurance rates? And is the high cost of insurance rates
really due to torts or greed of insurers?
I do agree with the saying that "if you've got a problem,
fix it." But the real question here is "do you really have
a problem" and if you think so, what are you basing it on?
Horror stories told by insurance companies and the medical
profession? And if you're introducing legislation based on
anecdotal stories, how about some from the victim's side?
Actually, I'm sure you would agree that passing legislation
based on anecdotes is bad public policy.
Look, I am not here today to take sides with or pick on
lawyers, doctors, corporations or others. But I am here to
take sides with your constituents and our constituents. And
I do not care to pussy foot around this issue.
You know, in order to get tort reform passed in Alaska years
ago, we heard over and over again how if we didn't do tort
reform then insurance costs would escalate unbelievably and
doctors wouldn't be able to practice. But neither tort
reform in Alaska nor in other states caused insurance costs
to decline. In fact, an industry study by the Insurance
Services Office determined that tort reforms did not affect
its rates.
Well, we listened when they cried "wolf" then, and it
appears that the legislature is still listening to those
crying "wolf" about the need for so called tort reform. By
the way, the word "reform" always sounds good, but let's
call it like it is: a desire to protect those with money
from having to answer for their negligent acts. This so
called reform is a crime against those, through no fault of
their own, who become quadriplegics, widowed, left
childless, or others left in horrible circumstances.
And more than anything else, this legislation is an insult
to anyone who has or who could possibly sit in the jury box
(and that means most all Alaskan adults). What you are
saying is that innocent victims cannot have their day in
court because you simply trust the judgement of insurance
companies, medical professionals, and yourselves over the
judgement of twelve independent and objective jurors who
have heard all of the facts.
I am not going to spend this committee's time picking apart
every disgusting piece of this anti-constituent legislation.
There are excellent reports that have been made available to
you which factually describe the onerous impact of this
legislation. Even some sources in the insurance industry,
independent insurance task forces and independent
researchers, have produced studies and reports which clearly
indicate that the provisions in this legislation are
unnecessary. Again, legislation such as this is not based
on any factual evaluation of the tort system operating in
Alaska now. It is, instead, based on anecdotes, myths and
misconceptions.
Even though I said I wouldn't pick it apart, there is one
part of the legislation which is, unbelievably, more
perplexing and stupefying than other parts. This bill would
preclude a claim of sexual abuse from a victim if it is not
filed within six years after the abuse occurred. Well, any
mental health professional can tell you that to survive the
abuse, victims place the memories out of reach in their
minds and only when they really feel safe do these memories
return. I know this for fact, because I was 40 years old
before all the horrible memories returned. So, you would
victimize me again by not allowing me to seek simple, legal
redress in civil court? Who are you to decide if I have my
day in court? Even if the legal system is overburdened, and
frankly less than 3% of all civil suits are actual tort
cases, you still do not have the right to take away my
access to justice, fairness and equity through my
constitutional access to the courts. And what does this
provision mean when the legislature has already passed other
legislation extending the amount of time that a sexual abuse
victim can file against the abuser?
I am offended that insurance companies and doctors are not
accused by legislators of trying to line their pockets or
keeping their pockets full of what they've already got, but
I have read and heard statements by legislators inferring
that we should not listen to attorneys because of their
vested monetary interests. Well, I think it should be all
or none. Either we agree that all vested parties have some
altruistic motives or none of them do!
And since when do we give special protection to one specific
profession: health care providers (but we really mean
doctors). Why are you willing to provide a special
provision allowing only two years to seek redress? I have
my own personal story. I will never forget being with my
mom in the hospital when she had serious back problems and
listening to the doctor ridiculing my mom for "daring" to
play doctor by telling him that she had a lump in her
breast. He ignored her, but she died several years later
from this cancer which started as a lump in her breast.
Oops! Too late, two years has gone by and tough luck.
Sorry, I thought she was just another hysterical woman.
Again, how dare you take away my right to redress in the
courts. Now, granted, I never tried to sue anyone over this
negligent act, but I certainly should have the right to do
so. And that doctor should have had to answer for his
outrageous action or lack of.
I know that the majority of the members of this committee
believe that we need tougher criminal laws and that there
should be stricter accountability of those in the criminal
arena. Most people don't care why a criminal does what he
or she does, whether they themselves were emotionally or
physically abused as children. We don't seem to care about
that. By God, regardless of original fault, we want them to
be held accountable for their actions.
Yet, why aren't you willing to demand white collar
accountability. Why shouldn't people or corporations who
ruin people's lives through negligence, through malpractice,
through careless and reckless conduct, have to answer for
their mistakes. Why aren't you willing to hold them
accountable? And why are you willing to make the innocent
victims suffer even more than they already do? This bill is
one of the most anti-consumer pieces of work perpetrated by
the legislators against their own constituents. And believe
me, if it was your daughter, wife or mother who lost her
life to cancer through a negligent act of another person...
if it was your child who was paralyzed from the neck down
because of a corporation's negligence... YOU WOULD WANT
ACCOUNTABILITY!!!
To sum it up, you have before you legislation not based on
any review of the existing system, but legislation based on
hype. Nevertheless, legislation which would punish your
innocent constituents. For those who want to pass this bill
out of committee, you should be ashamed for agreeing to deny
innocent victims their rights! I know some of you and I
consider you to be kind and caring persons. How could you
even consider creating an unfair, inequitable and extremely
biased system?
Please think carefully about what you are doing. Thank you
for your time.
TAPE 93-43, SIDE B
Number 001
REP. HUDSON clarified some of his feelings by saying that
there are problems and the dialogue has to begin somewhere.
Rep. Hudson added that it's with the testimony of the
doctors, lawyers and advocates of victims that the committee
can fine tune the bill.
REP. HUDSON stated that there were several issues that
caused him to introduce this bill as a committee bill. One
concern is that nationwide the victim only gets about 25% of
the actual award. Rep. Hudson believes the system should be
made more efficient and simpler so that the victim receives
more.
REP. HUDSON cited the example of a friend as another area of
concern. This doctor delivered his grandchild but had to
leave her high risk pregnancy practice shortly after because
the new premiums were up to $80,000 per year and her
practice couldn't sustain that big of an expense. Her
absence leaves no specialist in Juneau to care for other
women with high risk pregnancies, forcing them to leave town
to seek help.
Number 010
MS. STRAUBE responded that while she doesn't doubt the
example given above, she noted that only 1% of the actual
cost of health care can be attributed to medical liability
premiums.
Number 026
REP. PORTER asked Ms. Straube to cite her source of the
previous statement.
MS. STRAUBE gave the source as the 1989 publication of an
article titled "National Health Expenditures" in the
magazine called Health Care Financing Review.
Number 045
BOB COWAN, Trial Lawyers of Alaska, testified via
teleconference from Kenai. Mr. Cowan stated he represents
roughly 3,000 fishing clients. Mr. Cowan suggested that
this legislation should be called the "Exxon Relief Act"
since it would have protected Exxon from significant
punitive damages. The new standard of proof will shelter
most future wrongdoers.
MR. COWAN added that the fishing community is strongly
opposed to this legislation.
MR. COWAN stated that he feels Sections 6 and 7 of the bill
placing a cap on noneconomic damages could be grossly unfair
to a person, for example, who is severely burned to the
point that the outlook for the future includes no children,
no marriage, a lifetime of plastic surgery etc.
MR. COWAN opposes the cap on economic damages to two years
as it is unfair to the children and/or widow who may have
had to depend on the person's wages.
MR. COWAN stated he opposes the change the bill offers that
would give the option of choosing structured payment to the
wrongdoer. Mr. Cowan believes this would put the victim at
the mercy of a insurance company that may become insolvent.
MR. COWAN believes HB 292 would give relief to big business
and outside corporations and it shows no promise that the
change will reduce premiums. In short, no clear benefits to
Alaskans.
Number 102
REP. PORTER stated that he disagrees with Mr. Cowan's
assertion that the punitive damages wouldn't be enough to
deter a big corporation since the amount of damages awarded
could be up to three times the amount of compensatory
damages.
MR. COWAN replied that a large corporation like Exxon would
consider that just a cost of doing business, a light slap on
the wrist.
Number 119
CHUCK ROBINSON, attorney, testified from Soldotna against HB
292. Mr. Robinson stated that there seems to be a lot of
misinformation about the impact of personal injury cases on
the judicial system. Mr. Robinson said that of the 18
million civil suits filed in the United States each year,
only one million of them are actual personal injury cases
and the vast majority of them are settled out of court. Mr.
Robinson suggested that the fact that there are so many
settled out of court shows that there is much more agreement
between plaintiffs and defendants of the resolution of the
claims than disagreement.
MR. COWAN believes that the wrongdoers will benefit from
this legislation; the big losers will be the victims.
MR. COWAN added that HB 292 will not lower premiums, as
evidenced by previous tort reform bills in the past.
MR. COWAN questioned why HB 292 would treat awards in
personal injury suits as taxable income when the United
States Congress and the Internal Revenue Service does not.
MR. COWAN believes that the certainty that HB 292 hopes to
inject in the system actually will cause more cases to go to
court, not less; most certainly everyone will want to go for
the cap placed by this legislation.
Number 209
REP. HUDSON inquired as to the guidelines used to decide
which personal injury cases to take and which to turn down.
Rep. Hudson added that he has heard that many times someone
with a legitimate claim can't find an attorney to take the
case.
MR. ROBINSON replied that under the current system most
people have access to redress their personal injury.
REP. GREEN asked Mr. Robinson if he had some percentage in
mind as to the difference between what someone might settle
for out of court versus what they might get if they go to
trial.
Number 260
MR. ROBINSON replied that he did not have a percentage in
mind but the uncertainty and risk in the current system
promotes settlements. Mr. Robinson added that the number of
cases that actually go to trial will soar if this
legislation passes.
REP. GREEN clarified that it seems then that most cases
settled now out of court are for substantially more than the
caps proposed in this bill.
Number 299
JOHN GEORGE, National Organization of Independent Insurers,
testified that the insurance community wants predictability,
the ability to see forward. Mr. George explained that
insurers unfortunately have to set the premiums they charge
based on past experience.
MR. GEORGE stated that to the extent that HB 292 will reduce
the statute of limitations may not be fair to the injured
person but it makes it more predictable for the insurance
industry and therefore they can more finely tune the rate
they need to charge.
MR. GEORGE stated that insurers are criticized for not
writing certain types of insurance, for example, OB/GYN
practices. The fact is that there is a significant amount
of loss with this field which leads to higher premiums. Mr.
George added that there is no right or wrong answers in this
area. For example, if the increased premium was spread
amongst all doctors regardless of type of practice, that
could be called unfair to those doctors who are not in a
high risk practice.
MR. GEORGE emphasized that it is not the insurance
industry's job to make insurance affordable, they simply
charge the appropriate rate for the risk.
MR. GEORGE observed that the increased number of lawsuits
are a reflection of a changed society.
MR. GEORGE stated that it's not the larger awards that run
up premiums, it's the accumulation of small cases and
potential exposure. Mr. George gave as an example a case
where a doctor is sued for $10,000 and the doctor says there
was no negligence. The insurance company is then placed in
the position of balancing a $10,000 settlement vs. $100,000
to defend the claim with the outcome possibly being $500,000
in jury awards.
MR. GEORGE pointed out that the insurance industry is a
highly regulated industry. Insurance companies have to file
their rates, losses, submit its financial statements for
review, and is regulated for solvency. The industry is a
very complex system and Mr. George summarized that the
committee needs to look for a balance in the legislation
that would allow for the promotion of commerce and
development of medical care and yet not remove the award
from someone who is unjustly injured.
Number 513
CHAIRMAN HUDSON commented that in his overview of this issue
he'd always assumed that it was the threat of the high
payouts that drove the premiums up, but he understood him to
say that that was not true, that it was the smaller
settlements that drove the system.
Number 520
MR. GEORGE reiterated that it is the small to medium sized
settlements that greatly influence the premiums with the
larger payouts having some impact.
Number 565
CHAIRMAN HUDSON stated that he knew Mr. George had been in
the business many years and wondered from his observations
what had been the changes by tort reform as it impacts
medical liability and insurance costs.
TAPE 93-44, SIDE A
Number 001
MR. GEORGE observed that if you go back to 1976, medical
malpractice insurance in Alaska was essentially unavailable.
In 1976 the state created the Medical Indemnity Corporation
of Alaska, an insurance company that required mandatory
participation by the doctors. The doctors sued over the
mandatory clause and won. The state then was left with some
doctors covered and others not. At the same time insurers
were coming into the state offering to insure some of the
doctors but not the high risk ones.
Number 030
CHAIRMAN HUDSON asked what position the industry takes on
punitive damages and noneconomic caps.
Number 040
MR. GEORGE stated that if a punitive damage is designed to
punish the offending doctor and it's the insurance company
that pays the bill, it is not having the desired effect
intended. It may punish the doctor by raising his premium,
but it also raises everyone else's rates.
Number 098
CHAIRMAN HUDSON asked if the industry had analyzed how much,
if any, the rates would go down with the passage of HB 292.
Number 103
MR. GEORGE declined to speculate on how much the rates would
go down, citing the effect the courts would have on the
bill.
Number 130
REP. PORTER asked Mr. George that if this bill passes and
survives its challenges in court, would it not reduce
insurance costs?
Number 145
MR. GEORGE replied that if losses are reduced, then it
follows that rates will drop.
Number 152
REP. GREEN asked, as a follow up question to Rep. Porter's,
if the bill passes and is left alone, would the industry be
forced through regulation to lower rates or would it be out
of good will?
Number 165
MR. GEORGE replied that to the extent that a coverage falls
in a class that is regulated and done by an admitted carrier
as opposed to a nonadmitted carrier, the rates regulated by
the Division of Insurance should drop. In any case, the
rates should drop due to competition.
Number 200
CHAIRMAN HUDSON stated that he has read the suggestion that
there be different levels and procedures for redress for
different types of civil liability suits ranging from the
least serious to most egregious.
Number 228
MR. GEORGE observed that there are already alternative
systems in place to turn to; i.e., arbitration and
mediation.
MR. GEORGE commented that we may want to look at
compensating people for injuries regardless of who was at
fault. The question of negligence then would fall, in the
case of a doctor, to the medical board to determine whether
or not some action should be taken.
Number 265
CHAIRMAN HUDSON asked Mr. George if we could improve the
system to be more efficient, less costly and pro-victim.
Number 285
MR. GEORGE suggested that the committee look at the no fault
vs. fault system. He explained that this system would cut
out the adversarial nature of the system.
MR. GEORGE added that the arbitration and mediation system
are a more efficient method than going through the courts,
but this system would not work in every case.
Number 320
DAVE WALSH, Director, Division of Insurance, Department of
Commerce and Economic Development, testified via
teleconference from the Dallas airport. Mr. Walsh provided
an overview of the Division. There are 55 employees in the
Division evenly divided between the Division's two main
issues, making sure the insurance companies of the state are
solvent, and secondly doing market surveillance.
MR. WALSH explained that the first duty is to make sure that
the companies have a sufficient amount of capital to cover
claims. Secondly, the Division provides market surveillance
to determine on behalf of the insurance consumer's of Alaska
that they are getting the products they are paying for,
getting them at a fair price, and that covered claims are
being handled in a timely fashion.
MR. WALSH has not seen any statistics that would show the
effect tort reform would have on lowering premiums. He did
suggest a couple of general conclusions: any time costs are
lowered should have the effect of lowered premiums, and
similarly the workers compensation reform passed by the
legislature in the mid-1980's had the effect of lowering
rates.
MR. WALSH agreed with Mr. George's comment regarding using
nonadversarial methods as a way of lowering costs and
increasing efficiency.
MR. WALSH noted that the Division monitors changes intended
to benefit consumers and would most certainly monitor to
insure that any tort reform aimed at lowering cost would be
followed.
Number 408
CHAIRMAN HUDSON asked Mr. Walsh if he viewed the Division as
being the watch dog on cost efficiency of the whole system.
Number 415
MR. WALSH replied that in terms of insurance premiums the
Division of Insurance is the watchdog. They follow how
rates are made and premiums develop. The Division does not
follow how premiums are passed on to the consumer.
Number 425
REP. GREEN asked, if premiums go up to cover costs, then is
the reverse true -- if the costs come down will premiums
come down?
Number 430
MR. WALSH replied that in general principal 80% of the
premiums go to pay claims and 20% to costs. He added that
to the extent that any of the costs items go down the rates
should go down.
MR. WALSH noted that it is difficult to answer Rep. Green's
question with any certainty as rate making is a complicated
procedure and public policy changes take a while to take
effect.
MR. WALSH further noted that it is difficult to isolate the
public policy changes from all the other changes that affect
rates.
Number 465
CHAIRMAN HUDSON asked if there is any shortage or reluctance
of the insurance industry to participate in the full
spectrum of programs required by the current law in Alaska.
Number 467
MR. WALSH said he has not seen any reluctancy.
Number 478
CHAIRMAN HUDSON asked if the state had seen any kind of loss
to its consumers through failure of a company to be fully
solvent or bonded.
Number 482
MR. WALSH replied that there has been only one insolvency
since statehood. This case involved a company called PacMar
and had less to do with insolvency than the fact that the
owner took money out of the business and left the country.
Number 492
CHAIRMAN HUDSON asked Mr. Walsh to put in writing his
thoughts on what the public policy should be on noneconomic
and punitive damages.
Number 525
DICK CATTANACH testified via teleconference on behalf of the
Alaskans for Liability Reform. Mr. Cattanach's group
believes that the civil justice system must be reformed.
Mr. Cattanach believes that more money should be going to
the injured parties.
MR. CATTANACH illustrated his point by quoting from a study
done by a national consulting firm dealing primarily with
personal matters. The study showed the total amount of
premium dollars returned in the following four categories:
Tort - 50% of premium dollars to beneficiary
Workers' Compensation - 70% of premium dollars to
beneficiary
Health - 85% to beneficiary
SSI - 99% to beneficiary
MR. CATTANACH noted that his group believes there are many
misstatements about the bill by the trial lawyers.
MR. CATTANACH said that the statute of limitation and repose
should apply to all professions -- architects, lawyers,
accountants, engineers, etc., unless it can be clearly shown
that it would be in the public's best interest to have a
different time period. Alaskans for Liability Reform has
proposed six years as a reasonable time limit.
TAPE 93-44, SIDE B
Number 001
MR. CATTANACH explained that HB 292 provided for reduction
of economic damages awarded to a plaintive to replace lost
wages equal to the amount of income taxes normally taken
out.
MR. CATTANACH pointed out that HB 292 provides for periodic
payments rather than a lump sum to insure the party has the
money during the remainder of their projected life.
MR. CATTANACH stated that HB 292 proposes that the
initiative regarding joint and severed liability approved in
1988 by more than 70% of Alaskans be specifically set out in
statute.
MR. CATTANACH'S group proposes that the interest rate
fluctuate at 3% above the federal discount rate.
MR. CATTANACH stated that HB 292 would protect hospitals
from lawsuits against independent contractors using the
facility.
MR. CATTANACH pointed out that in HB 292 if either party
offers to settle and the offer is rejected and the final
settlement is less than the original offer the party who
refused the settlement should be responsible for the other
party's costs and attorney's fees incurred after the offer
was made. Mr. Cattanach believes this would encourage
settlement and reduce the number of cases going to court.
Number 046
CHAIRMAN HUDSON asked Mr. Cattanach to explain the reasoning
behind the provision for collateral benefits in HB 292.
Number 051
MR. CATTANACH responded that this provision would allow that
other settlements or awards received be taken into
consideration in subsequent lawsuits.
Number 068
CHAIRMAN HUDSON asked for the reasoning behind the six year
statute of limitation; why not four or ten?
Number 071
MR. CATTANACH responded that there were a number of reasons
for the six year limitation. One being that as the years go
by, a person's memory gets hazy and the case gets stale.
Number 090
CHAIRMAN HUDSON brought up the concern first expressed in
the hearing by Glenda Straube that the six year limitation
would preclude someone who was sexually assaulted as a child
to seek redress in the courts because the memory hadn't
returned within six years.
Number 108
MR. CATTANACH replied that the problem is addressed in
Section 2 of the bill where the limitation does not apply if
the injury was caused intentionally.
Number 123
MICHAEL SCHNEIDER, private attorney, testified via
teleconference from Anchorage. Mr. Schneider said he was
frustrated at what he had been hearing all morning, but he
would try to keep his comments to the broader issues.
MR. SCHNEIDER stated that there seems to be a broad public
policy issue over what the system is in place to do. If
efficiency and expediency; i.e., getting the most money to a
given group of people in a timely and efficient manner; was
the sole criteria, we wouldn't have a democratic form of
justice, we would be under some other form of government.
MR. SCHNEIDER commented that probably another form of
government could make our current system more expedient and
cost efficient. However, we have declined to follow those
paths, not because it's quick, easy, or pretty, but because
it delivers to those of us governed by it very important
fundamental values. Among those is life, liberty, pursuit
of happiness and the right to petition our government for
redress of grievances. These things we value above money.
MR. SCHNEIDER suggested that the committee ask itself each
time they look at the provisions of HB 292 if it will make
Alaska a better place or not. He reiterated Ms. Straube's
previous testimony that we've visited this area before and
we do have some data to help determine some of the effect of
this bill. Mr. Schneider pointed out that Ontario, Canada
had a system in place in the mid-1980's that was a tort
reformer's dream, but he suggested it also had the same
insurance industry problems we have, hard to get insurance
and extremely high prices. He reemphasized the point that
these changes the bill would provide are not related to
costs and availability. This was illustrated by the
negative reply Mr. George gave to the committee in answer to
the question of whether insurance costs would go down if HB
292 passed.
MR. SCHNEIDER stated that there have been less than 10
medical malpractice verdicts in the history of the state.
He added that the number 10 is very conservative; it may be
as low as six -- three against hospitals and three against
individual health care providers. There have been
settlements, but in the face of that kind of predictability,
knowing that when you go to trial you are going to win most
of the time, the insurance industry has what it needs to
make.
MR. SCHNEIDER stated that the medical community already
enjoyed a set of tort rules that do not cover any of the
other professions. He added, as a citizen of Alaska, not
as a trial attorney, that he was offended that one of the
most prominent and wealthy professions in this country would
want more than they currently enjoy.
MR. SCHNEIDER said that he doesn't feel the proposal is
fair, it's unreasonable and the committee would have a hard
time justifying their actions to their constituents.
MR. SCHNEIDER encouraged the committee to look beyond the
anecdotes and see the broader picture.
MR. SCHNEIDER stated that much was made by the prior speaker
that the trial lawyers were attempting to misrepresent the
implications of the proposed six year statute of repose.
Mr. Schneider said that this was simply not true. He
suggested that the prior speaker's comments illustrate the
accuracy of our report's account of HB 292.
MR. SCHNEIDER again brought up the issue of predictability.
He noted that the changes made in 1986 and 1988 to tort
reform had not lead to any kind of predictability the
insurance industry touted. The changes this bill would make
will make the current system even less predictable than they
are now. Furthermore, the system will remain unpredictable
for a long, long time.
MR. SCHNEIDER asked the committee to note that the trial
lawyers agreed there were costs and availability problems in
earlier tort reform movements. But he explained, the trial
lawyers asked the legislature to wait 18 months before they
passed any kind of reform to allow the insurance industry to
upright itself. The request was not granted; the
legislature "gave away the farm," and within 18 months the
insurance industry showed some signs of decreasing costs and
increased availability not attributable to the reform
measures but merely a business turnaround.
MR. SCHNEIDER stated that contrary to the testimony of Mr.
George and Mr. Walsh, the insurance industry makes its money
of its reserves and the favorable tax treatment that those
reserves receive. If they lose money on those reserves,
everybody suffers, and if they make money, the premiums go
down. Mr. Schneider indicated that nothing the legislature
did would change this situation.
MR. SCHNEIDER concluded by saying that our civil justice
system, while not perfect, accords each one of us the
dignity of being an individual in making our case. He
further stated that the arbitrator should not be a
compensation board, the legislature or some fraternalistic
organization that evaluates this, but by the citizens of the
state, a randomly selected group of people that form a jury.
He added that HB 292 is a slap in the face to the
constituency that elected the legislature.
Number 475
REP. PORTER commented that the trial attorney's have
expressed their concern that this legislation is taking away
from the jury system the ability to make a good judgement.
Rep. Porter then asked how can the trial attorneys complain
about collateral damages information going to a jury to be
understood before they make an award?
Number 500
MR. SCHNEIDER answered that there are three or four good
reasons for this that are historically well documented and
well developed in the law. Mr. Schneider added that
concepts of basic fairness also answer that question. It
has always been the rule in America that a jury not be
informed of a defendant's wealth and insurance. The reason
for that is to not prejudice the jury.
NOTE: MR. SCHNEIDER submitted a letter clarifying his
testimony regarding Section 14, collateral benefits. The
letter is dated November 30, 1993, and is on file.)
Number 520
CHAIRMAN HUDSON expressed concern over the value of awarding
punitive damages and open ended noneconomic damages. Rep.
Hudson believes the awards in these areas are retribution or
out of anger. Rep. Hudson stated that that should be
applied in the law, and if you find that a defendant has
done something punitive, then they ought to pay to the
public till. In the interest of trying to make a finite
amount of resources go to the greatest extent possible and
try to get the maximum amount of money to those people
legitimately injured, Rep. Hudson asked Mr. Schneider what
he and the trial lawyers offer to meet this end.
TAPE 93-45, SIDE A
Number 001
MR. SCHNEIDER responded that it's important to address the
issues separately. First, compensatory damages are not
there to punish, they are there to compensate for one's
loss, and the jury is there to put a value on the loss.
MR. SCHNEIDER quoted the Insurance Services Organization as
saying that even a cap as low as $250,000 would only effect
one in 10,000 claims. This harmonizes with Mr. George's
testimony.
MR. SCHNEIDER pointed out that no matter what cap you put on
compensatory damages, you are denying the victims their
chance at seeking compensation equivalent to the loss as
they perceive it and as the jury values it.
MR. SCHNEIDER noted that punitive damages are much
different. The Supreme Court often reverses punitive
damages. Also, it is a rare case where there are punitive
damages awarded or settled on before trial. These damages,
rarely awarded, are usually given in a case where there has
been outrageous conduct. Mr. Schneider went on to say that
a $200,000 award in punitive damages is a slap on the wrist
to a large corporation, even a million would probably not be
a deterrent. Punitive damages should be awarded in the
worst cases at a level where they will get the defendant's
attention.
MR. SCHNEIDER further noted that punitive damages are almost
exclusively excluded from insurance policies so the money
comes directly from the defendant.
MR SCHNEIDER addressed arbitration and alternative dispute
resolution as an alternative to litigation. He stated that
the committee would find agreement in the legal community
that plaintiff's are probably treated more fairly, receive
more money, and the system works more efficiently through
arbitration and alternative dispute resolution. However, he
believes the system could be co-opted and the people who
would most likely co-opt the system are the most wealthy and
best connected, not the average victim. He added that the
jury system is the ultimate equalizer.
Number 168
CHAIRMAN HUDSON asked if alternative resolution wouldn't be
useful to the majority of the cases that are less severe;
i.e., where a person may be out of work due to an injury for
six months, but not permanently maimed.
Number 172
MR. SCHNEIDER replied that having the option to choose
alternative resolution or a jury trial would be a practical
solution.
Number 178
MARK CHOATE, private attorney, testified against HB 292. He
expressed his feeling that HB 292 is part of a consistent
effort to deny Alaskans their right to a jury trial.
MR. CHOATE added that juries add the human element to awards
that tort reformers can't. He stated that juries listen to
real people talk about how injuries affect them. They use
their common sense and base their decisions on what they
hear and see.
Number 220
CHAIRMAN HUDSON asked Mr. Choate how many cases he's asked
to take and how many he actually takes.
Number 230
MR. CHOATE responded that he rejects about 93% of the cases
that he's asked to take. He stated the legal profession
does a tremendous amount of screening so as not to encourage
someone whose case may not be a winner at any level.
MR. CHOATE explained to the committee one reason that many
potential clients get turned away is because he can't afford
to take them. He stated that based on the uniform approach
the medical community takes, which is to fight every case,
he can't afford to take a case unless it is valued at
$100,000 or more. He concluded that there are a lot of
people with legitimate claims that can't find an attorney
because the institutional defense is so strong.
CHAIRMAN HUDSON asked if these types of cases wouldn't be
good for some type of alternative resolution.
Number 390
REP. GREEN asked if the reason so many cases are settled out
of court is due to expediency, and at what time does Mr.
Choate make the decision to recommend a settlement?
Number 398
MR. CHOATE responded that, given the small volume of
business in this state in small to mid-level claims, you
just won't find a "claims mill" like you would in a heavily
populated state like California. Furthermore, he feels
attorneys are highly professional in Alaska in wanting the
best for their clients.
Number 414
CHAIRMAN HUDSON asked Mr. Choate to go through the bill and
provide the committee some of his thoughts on it.
Especially in regard to streamlining the system to make it
more cost efficient.
Number 435
MR. CHOATE added that when these types of reforms go into
effect, we are reducing the amount of costs to insurance
companies in the reduction of risk and payouts. But it's
his contention that we end up putting more public dollars
into the process; i.e., state services to retrain injured
workers, etc.
MR. CHOATE noted that lawyers get sued much more
successfully than doctors.
Number 467
CHRIS CHRISTENSEN, General Council to the Judicial Branch,
testified via teleconference in regard to Civil Rule 82. He
stated that he has been instructed by the Supreme Court to
voice its opposition to this change. This rule allows the
prevailing party in a civil suit to recover a portion of its
attorney's fees from the losing party.
MR. CHRISTENSEN said the stated justification for repeal of
Rule 82 as laid out by the Alaskans for Liability Reform was
to reduce litigation costs and court time and streamline the
civil process for expediency and fairness. The Supreme
Court disagrees that this would be the result of the repeal
of Rule 82.
MR. CHRISTENSEN testified that Rule 82 and its predecessor
have been around since 1884. The rule has been continuously
revised over the years and the Supreme Court did a
substantial review of it, concluding this last July. The
latest revisions were intended to make the rule even more
efficient and fair.
MR. CHRISTENSEN stated that Rule 82 does make the system
more efficient as it discourages frivolous lawsuits against
a defendant if they know that they might end up paying
$5,000 to $15,000 in attorney's fees to the defendant. It
also gives the client a personal financial stake in the
lawsuit as a client is more likely to disclose the weak
parts of his case so that the attorney can more accurately
evaluate the merits of the case.
MR. CHRISTENSEN added that in the interest of fairness, Rule
82 provides partial compensation to the prevailing party.
MR. CHRISTENSEN pointed out that Rule 82 makes it more
likely that insurance companies will settle claims before
the hiring of lawyers or the filing of lawsuits. It gives
the companies incentive to evaluate the claims early and
fairly.
MR. CHRISTENSEN said it allows individuals with small claims
to bring action. It's reality that most attorneys won't
take contingent fee cases where the amount of work vs. the
potential payback makes it too great a risk. Clients with
small claims generally have to pay attorneys on an hourly
basis. The reality is that a victim will not file a claim
for $20,000 if he knows that he will end up giving most of
it to his lawyer. Rule 82 insures that if the plaintive
prevails he will get at least a portion of it's attorney's
fees.
MR. CHRISTENSEN stated that Rule 82 discourages marginal
appeals by the losing party.
MR. CHRISTENSEN said that at its most basic level Rule 82 is
important because it is fair.
MR. CHRISTENSEN stated that a fiscal note will be submitted
from the court system because HB 292 doesn't simplify or
make the court system more efficient, it just shifts the
costs around. He added that these changes will make the
tort system more costly to administer.
MR. CHRISTENSEN cited two reasons why it will be more
costly:
1) Presently a defendant has no right to pay civil
judgments periodically, the plaintiff does have this option
but rarely requests it as it is not in its best economic
interests. If Sections 12 and 13 of the work draft allow
defendants to make periodic payments to plaintiffs. The
courts will have to have many hearings to make a judgement
on the structure of the periodic payments.
2) Section 14 regarding collateral benefits will add to the
court system's workload for similar reasons as above. The
courts will have to hold additional hearings on the
complicated issues involving collateral benefits.
CHAIRMAN HUDSON asked Mr. Christensen to submit something in
writing outlining his testimony.
Number 570
AL TAMAGNI testified via teleconference from Anchorage in
support of HB 292. Mr. Tamagni read the following statement
into the record:
It is a pleasure to appear before you today and to support
the many aspects of HB 292, which are intended to reduce the
cost of litigation and get the largest amount of funds to
innocent victims and to rightfully protect those innocent
defendants in a fair and just manner for all parties.
Currently, as we know, the civil liability system is
unbalanced and unfair, both in many instances to innocent
victims and innocent defendants. One of the many questions
and topics that have been raised is what have the Tort
Reform Acts of 1986 and the Initiative in 1988 have done.
The most important thing that has been accomplished by these
acts is reflective in the report of tort reform legislation
general liability by Richard Z. Eckhauser and Kip Viscusi,
who are from the Harvard Kennedy School of Government, and
Department of Economics at Duke University in which they
state, "Insurance, like any other factory production, should
have a ready supply sold at a price to reflect its long run
cost."
TAPE 93-45, SIDE B
Number 001
The Liability Reform Acts of the mid-1980's did more than
constrain the spiraling costs of insurance. They stabilized
the insurance markets, and thereby fostered the sound
function of the economy, while at the same time saving
American consumers approximately 2.5 billion dollars in
future premium increases. We find this to be reflective
also in regards to the state of Alaska, particularly in the
areas of the modified joint and civil liability, which
affects approximately 53-55% of the premium dollars. The
limits on liability, which affect approximately 11-14% of
their premium dollars, and limits on economic damages, which
affect approximately 12-14% of the premium dollars and
structured periodic payments, which affects approximately
10-12% of the premium dollars.
We think these are positive accomplishments that need some
small refinement, and that we need to further efficienize
the operation and usage of the system so that a larger part
of the award gets to the victim in a more prompt, fair and
fashionable manner with the least amount of cost to the
consumers statewide to provide these services. We feel
there are substantial wrongs being committed in the civil
justice system, and that the criminal statutes should be
more adequately revised to reflect criminal prosecution
where the actual criminals are punished for the crimes that
they personally commit, and the cops are not the victims of
the system.
I would simply like to highlight a couple of the issues on
damages resulting from the commission of a crime, in which
the trial lawyers apparently support the position that the
criminal should be rewarded and the cop should be punished.
We feel like this is a total injustice. It's not supported
by 75% of Alaskans and should be supported as proposed.
We find that the proposal by the Trial Lawyers on Periodic
Payments is so far fetched as to render one to think and
question the credibility of its thought. With this type of
legal representation, no wonder our civil justice system is
in the state of disarray which is apparently being reviewed
and restructured on a federal basis and on a state basis.
We find that periodic payments are a very useful mechanism.
They provide long term tax free income to people who are
injured. We find that victims, when they are presented with
optional choices of settlement, and are properly informed of
their consequences, are readily acceptable to their use. We
find with the assignment of treasury certificates,
guarantees and guarantors of other life insurance companies,
that the market is substantially far safer than putting your
money into a certificate of deposit in a local bank, the
many of them who have gone broke in the last eight to 10
years. We find there are substantial guarantees from the
Insurance Guarantee Associations in the various states,
including that of Alaska. The IRS agrees and Congress
agrees these guarantees are beneficial safeguards to our
society as a whole.
We find that plaintiff attorneys, in most cases, do not
personally like structured settlements, as it requires a
little additional work on their part and it also requires
them to perform and give their client informed consent. We
see this as one of the major problems in the profession
today that victims are not given offers of judgement that
reflect periodic payments. They are not properly disclosed.
They are not properly presented, and in most cases are never
presented at all. We feel like this is an aspect that has
been an abusive practice by the trial lawyers and should be
rectified to allow any person or any entity to provide it as
an offer of judgement. We feel to restrict the hands of the
jury is improper and is not in the best interest of society
as a whole.
We feel that the offer of judgement for interest rates at 3%
above the federal discount rate is sufficient. It is
sufficient in two ways, that it adequately and fairly
compensates the victim for the funds they would have had and
invested at the time they would have received them and is
far in excess of what one could earn on certificates of
deposit.
It is probably more important to note that it is our
position that neither the defense nor the plaintiff should
dictate the scheduling of the trial and the progress of the
case. It is the responsibility of the third branch of
government; i.e., the court system that when a case is filed
to immediately put that on a fast track basis and to secure
justice in the quickest, fairest and most economical manner
for both sides; i.e., plaintiff and defense. Therefore, the
argument that the defendant capitalizes on the investment
earnings is not why we should be here today. The problem is
why isn't the court system prioritizing and fast tracking
these cases for a quick, cost efficient and fair resolution.
As you all know, we, the general public, have virtually no
input on a majority basis into either the Alaska Judicial
Council, the Alaska Bar Association, nor the Judicial
Conduct Commission. So, therefore, one should review the
operations of these entities and ensure more public
participation, perhaps by increasing and varying the size of
the various commissions, and required public hearings on all
rules, by-laws and operation changes.
We need to be concerned about the collateral source, and the
purpose of the collateral source is that jurors can offset
any awards or fees that have already been paid in regards to
the settlement. The purpose of this is to allow a more
efficient and fair operation in which a 50% legal
contractor's fee would be eliminated and a jury could offset
those costs before issuing the final judgement. This, of
course, gets the most amount of money to the victim with a
smaller percentage of the case to the attorney. It is fair.
Juries are fully capable of it and should be granted that
right.
This bill affects virtually every Alaskan, whether they buy
homeowner's insurance, automobile insurance, or any other
type of property and casualty liability insurance. Their
rates are affected by a number of ways, including that of
Alaska Rule 82, which has a surcharge built in for
homeowners insurance, automobile insurance and substantial
property and casualty additions for liability insurance.
Number 101
CHAIRMAN HUDSON asked Mr. Tamagni to send his testimony in
writing.
Number 109
HARLAN KNUDSEN, President and Chief Executive Officer, State
Hospital and Nursing Home Association, testified in support
of HB 292.
MR. KNUDSEN believes one of the most important issues to be
addressed through HB 292 is the lack of access to health
care in rural areas of Alaska due to liability problems.
MR. KNUDSEN noted that the London insurance market dropped
with the changes implemented in the 1988 tort reform
legislation.
MR. KNUDSEN suggested it is up to all to help bring down the
cost of health care coverage.
Number 204
STEVE SCHROEDER, Civil Engineer, testified via
teleconference from Anchorage. Mr. Schroeder stated that he
supports HB 292 in general and the statute of limitation and
the statute of repose in particular.
MR. SCHROEDER commented that he has difficulty remembering
what he had for breakfast today let alone trying to remember
why decisions were made five, ten or more years ago in
response to a claim. Finding the other parties involved is
equally as difficult.
MR. SCHROEDER believes that small businesses are the most
adversely impacted by the current lack of a statute of
repose.
Number 324
TOM FINDLEY, private attorney, testified against HB 292.
Mr. Findley commented that he has not heard any complaints
in Juneau about how the jury system works. He has heard
complaints about problems in Anchorage. Mr. Findley
believes there are not many complaints in Southeast because
the perception is that the system is fair and that the
juries do a good job.
MR. FINDLEY questioned what this legislation hopes to fix,
since the testimony seems to indicate that HB 292 won't
result in lower premiums. In fact, he pointed out, the top
nationwide automobile insurance companies would admit their
rates are not set by 500,000 people in this state, they're
going to be set by five million people in Los Angeles, the
secondary market.
MR. FINDLEY agreed that access to the system is important
and to that end the idea of having an optional alternate
dispute resolution procedure or arbitration panel is a good
idea.
MR. FINDLEY said that the last time the legislature passed
tort reform legislation there was an attempt to create dram
shop liability protections. Currently, if a person gets
drunk with a friend, rides as a passenger in a car with the
friend, and they get in an accident, the passenger can sue
the person who served him alcohol.
Number 343
HENRY SPRINGER, representing the Association of General
Contractors, testified in support of HB 292, specifically
the statute of limitation and statute of repose. He noted
that the contracting business involves a whole area of
people, engineers, architects, subcontractors, plumbers,
suppliers etc. At the time the project is finished and the
final payment is made, the bonding and insurance
requirements cease. If there is a problem after this point,
there is no logical and fair process to determine who is at
fault. The current tort system usually identifies the
contractor as the deep pocket and they are the ones sued.
In conclusion, Mr. Springer believes a six year limitation
is a fairer limit.
REP. PORTER stated that he takes exception to the testimony
given that the committee has not received testimony that
this bill would reduce costs, because it is not true.
Number 422
CHAIRMAN HUDSON adjourned the meeting at 4:20 p.m.
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