Legislature(1993 - 1994)
02/03/1994 03:00 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE
STANDING COMMITTEE
February 3, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Bill Hudson, Chairman
Rep. Joe Green, Vice Chair
Rep. Brian Porter
Rep. Eldon Mulder
Rep. Joe Sitton
Rep. Bill Williams
Rep. Jerry Mackie
MEMBERS ABSENT
None
COMMITTEE CALENDAR
*HB 403: "An Act requiring that automobile liability
insurance include coverage for uninsured or
underinsured motor vehicles and an offer of policy
limits for that coverage equal to coverage
voluntarily purchased for bodily injury or death;
and providing for an effective date."
HEARD AND HELD IN COMMITTEE
*HB 394: "An Act relating to limited partnerships; and
providing for an effective date."
PASSED OUT OF COMMITTEE
HB 292: "An Act relating to civil actions; amending Alaska
Rules of Civil Procedure 49 and 68; and providing
for an effective date."
PASSED OUT OF COMMITTEE
* First public hearing.
WITNESS REGISTER
HOWARD JAEGAR
Shattuck and Grummett Insurance Agents
301 Seward St.
Juneau, Alaska 99801
789-2446
Position Statement: Supported HB 403
SEN. DAVE DONLEY
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-3892
Position Statement: Opposed HB 403
TIM BENINTENDI, Staff
Rep. Carl Moses
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-4451
Position Statement: Represented prime sponsor of HB 394
PREVIOUS ACTION
BILL: HB 403
SHORT TITLE: AUTOMOTIVE LIABILITY INSURANCE COVERAGE
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
01/26/94 2155 (H) READ THE FIRST TIME/REFERRAL(S)
01/26/94 2155 (H) LABOR & COMMERCE, STATE AFFAIRS
02/03/94 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 394
SHORT TITLE: UNIFORM LIMITED PARTNERSHIP ACT UPDATE
SPONSOR(S): REPRESENTATIVE(S) MOSES
JRN-DATE JRN-PG ACTION
01/21/94 2125 (H) READ THE FIRST TIME/REFERRAL(S)
01/21/94 2125 (H) LABOR & COMMERCE,STATE AFFAIRS,
FINANCE
02/03/94 (H) L&C AT 03:00 PM CAPITOL 17
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
01/27/94 (H) L&C AT 03:00 PM CAPITOL 17
01/27/94 (H) MINUTE(L&C)
02/01/94 (H) L&C AT 03:00 PM CAPITOL 17
02/01/94 (H) MINUTE(L&C)
02/03/94 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 94-8, SIDE A
Number 001
CHAIRMAN HUDSON convened the House Labor and Commerce
Committee at 3:10 p.m.
HB 403 - AUTOMOTIVE LIABILITY INSURANCE COVERAGE
Number 010
HOWARD JAEGAR, with Shattuck and Grummett Insurance Agency
and a spokesman for the legislative committee of the Alaska
Insurance Agents and Brokers, explained that the insurance
industry supports HB 403, as it will help the young and
impaired drivers in the state get insurance by opening new
markets and encouraging additional insurance companies to
come into the state.
Number 200
SEN. DAVE DONLEY stated he was opposed to HB 403 and
outlined the history of uninsured liability insurance to the
committee.
SEN. DONLEY stated that he assisted former Speaker Joe Hayes
in producing mandatory auto insurance law in the state. He
added that this legislation was the first time that
underinsured motorist coverage was ever put into statute in
Alaska. Up until then, the state had uninsured motorist
coverage.
SEN. DONLEY explained that it was not mandated in law that
an insurance company had to offer this underinsured
coverage. Consequently, no insurance company wanted to be
the first to offer this type of insurance, because to be the
first in the market means you get all the excess exposure.
After seeing this problem, the legislature passed a bill to
require all insurance companies to offer this insurance.
Because of this, every insurance company offered it and no
one had a greater amount of excess exposure and all could
write their rates appropriately and provide this option to
the people of Alaska.
SEN. DONLEY asserted that much of what occurs in the
insurance industry depends on public education. Current law
gives consumers the option of learning about this type of
insurance and availing themselves of this. Sen. Donley
contended that many people don't spend the time necessary to
research and learn about various options out there for
insurance.
SEN. DONLEY commented that when a person has not chosen this
option of purchasing underinsured protection and gets
injured in an accident with an underinsured driver, then
they may be faced with medical bills they can't pay. In
this scenario, everyone pays, as we as a state subsidize the
hospitals for those that can't pay.
SEN. DONLEY stated that Hawaii and North Carolina require
drivers to show proof of insurance before they can get
license or registration. The problem with this system is
that it involves a lot of paperwork and bureaucracy. In
acknowledgement of that, Alaska has not gone to that system.
Even though we haven't, Alaska has had great success and has
cut in at least half the number of uninsured drivers.
SEN. DONLEY reminded the committee that this is a voluntary
compliance system until someone is caught doing something
wrong. He believed this is all the more reason to give
consumers the option of buying this additional uninsured and
underinsured insurance to protect themselves from the
persons driving around without auto insurance at all.
SEN. DONLEY noted that the subsequent reminders required by
law to be given to consumers by the insurance companies was
written into the law as an education factor to force people
into making a conscious choice in the matter.
SEN. DONLEY stated that preferred drivers are not
significantly impacted by HB 403 other than the fact that
they will not have the option they did before. The people
in the minority that this will benefit are a small
percentage on nonpreferred drivers. This benefit is
speculative at best, and there may be some companies that
may come into this market to offer this nonpreferred
insurance to this smaller group of consumers that may cause
more competition.
SEN. DONLEY said he would like to hear from any insurance
companies that would be willing to state that if HB 403 is
passed they will come to Alaska and offer this insurance.
Until this happens, all the talk is just speculation.
SEN. DONLEY explained that one way to protect yourself is to
purchase an umbrella policy. If the consumer has a good
agent and utilizes this system, they could save hundreds of
dollars a year. Under HB 403 if you utilize an umbrella
policy you would no longer have the option of increasing
your underinsured and uninsured coverage.
Number 347
CHAIRMAN HUDSON stated he would postpone hearing HB 403
until a future date when the committee had more time.
HB 394 - UNIFORM LIMITED PARTNERSHIP ACT UPDATE
Number 373
TIM BENINTENDI, Staff, Rep. Carl Moses, Prime Sponsor of
HB 394, stated the bill is a reintroduction of HB 112 and
will complete the upgrade of Alaska's Uniform Limited
Partnership Act. He said HB 394 does not include the
amendment made by Senator Rieger. Mr. Benintendi reminded
the committee of HB 112's successful passage in Labor and
Commerce last year, its history in the Senate, and the
Governor's veto.
Number 403
REP. MACKIE moved HB 394 with individual recommendations.
No objections were heard; it was so ordered.
HB 292 - CIVIL LIABILITY
Number 416
CHAIRMAN HUDSON brought up HB 292 and stated that the work
draft now before the committee was dated 2/2/94.
Number 440
REP. GREEN moved CSHB 292(L&C) dated 2/2/94. No objections
were heard; it was so ordered.
Number 460
REP. PORTER stated there were a couple of areas of concern
brought up by Mike Ford that the committee needed to
discuss.
Number 480
MIKE FORD, Staff Attorney, Legal Services, raised three
points for the committee's consideration. Mr. Ford provided
the committee with a written detailed memo that appears
below.
1) By adding the phrase, "was discovered or should have been
discovered by the exercise of reasonable diligence" to Sec.
09.10.065(a)(1) in section 4, I believe the committee has
adopted existing law applicable to determining when the
clock starts for purposes of application of statutes of
limitation. In legal terms, this date is also known as the
date when a cause of action "accrues." The significance of
this relates to another section of the draft section 6. In
section 6, the current two-year statute of limitation for a
tort suit is reenacted as section 09.10.075. This two-year
limit that requires a tort suit should be brought two years
from the date of accrual, or two years from when a person
knows or should know that that the person has a claim. In
short, there are two almost identical provisions relating to
accrual of an action, one contained in section 4 and another
in section 6. This may lead to confusion and unnecessary
litigation over the enactment of similar provisions of law
applicable to the same lawsuit. One solution to this
situation is to change section 09.10.065 in a manner that
leaves sec. 0910.075 as the applicable statute of
limitation. This would create one two-year statute for all
tort suits, except when a shorter period is imposed under
another provision of law.
2) In section 4, section 09.10.065(a)(1) appears to allow
two years to bring a negligence action against a healthier
care provider. The key point is that the committee amended
this provision to allow a person two years from when the
injury is discovered or should have been discovered to bring
suit. It appears that this rolling two-year period would be
cut off by the provisions of section 3. Under section
09.10.052(a)(3), in section 3, a person has six years from
the date "of the last act alleged to have caused the person
injury, death, or property damage" to bring suit. Under
this provision, I believe that a person negligently injured
by a health care professional would have only six years from
the date of injury to bring a lawsuit, not two years from
the date the person discovers or should have discovered the
injury as contemplated in section 4. In short, if the
committee wishes to retain the rolling two-year discovery
limit for actions against a health care provider, then it is
necessary to amend section 09.10.052 in section 3 to ensure
this occurs.
3) In section 7(AS 09.17.010(c), section 9(AS 09.17.020(c),
and section 25 (AS 09.55.580(h), I have deleted the
requirement that a person be convicted of the offense and
substituted language regarding attempting, committing, or
fleeing the commission of the class A or unclassified
felony. Requiring that the person bringing the action be a
"victim of that offense" raises a question concerning a
person who was "fleeing" from the crime. It is unclear
whether a person injured by a person fleeing a class A or
unclassified felony would also qualify as an exception to
the cap on noneconomic damages. For example, assume that a
person commits a class A felony and then flees the crime by
car. While heading down G street the offender inures a
pedestrian. Was the pedestrian a "victim of the offense" as
required under this language? The problem is also
illustrated by looking at the language in AS 09.17.030 (in
section 10). If the language in section 10 were used, the
benefits of the law would apply to the pedestrian in the
example because the amended language requires that the act
of fleeing the class A felony relate to the pedestrian's
injury, not that the pedestrian be a victim of the class A
felony.
Number 570
REP. PORTER moved to delete in section 4 (a)(1) and
renumber. No objections were heard; it was so ordered.
Number 593
MR. FORD gave an example of the concern he outlined in
number two above: If a doctor is negligent in some way,
seven years go by before you know about it; none of the
exceptions apply; it wasn't intentional, wasn't gross
negligence, wasn't fraud, then you would lose that claim
under this language.
REP. PORTER replied that that is absolutely correct. He
added that is what a statute of repose is.
REP. PORTER was surprised to see that the current version of
HB 292 did not contain the exception to the statute of
repose that covered the instance: if a doctor performing
surgery leaves something inside of a person and the person
doesn't discover it for 20 years. Rep. Porter said he does
not remember that provision being deleted.
TAPE 94-8, SIDE B
Number 001
MR. FORD stated there was that provision at one time.
REP. MACKIE asked what action took that provision out.
Number 015
MR. FORD did not recall when that provision was taken out.
Number 025
REP. MACKIE stated for the record that he had specifically
brought this concern up before and felt comfortable that
this was taken care of.
Number 035
REP. PORTER stated that the wording as Mr. Ford mentioned,
the limitation imposed under (A) of this section which is
the six year statute of repose, is suspended until resolved.
"During any period in which there is fraud, intentional
concealment, etc., the undisclosed presence of a foreign
body, that has no therapeutic or diagnostic purpose or
effect, in the body of the injured person and the action is
based on the presence of the foreign body."
Number 040
MR. FORD said the langauge just stated does appear in the
original HB 292, but it appears in the section against
health care providers.
Number 048
DANIELLA LOPER, staff, Rep. Brian Porter, stated that "that
langauge was deleted because on the accrual date it was felt
that, according to the discovery rule, since you could
discover it any time, and the statute of repose was not in
question yet."
Number 050
MR. FORD agreed and added that it was felt at that time that
the langauge was duplicative, but if the committee wanted
that exception to remain, then they should reinsert the
langauge.
CHAIRMAN HUDSON stated that this was the intent of the
original bill and asked Mr. Ford to prepare an amendment to
reinsert the language.
Number 056
CHAIRMAN HUDSON asked Mr. Ford to prepare an amendment to
reinsert the language.
Number 065
MR. FORD explained his last concern by using the following
example: If a person has committed a crime, class A or
unclassified felony, they leave the scene and three blocks
away they hit and kill a pedestrian. Is the pedestrian a
person who is not subject to the cap on noneconomic damages?
MR. FORD asked if the committee intended that any resulting
injury from fleeing the crime would eliminate the cap or did
they intend to limit recovery to those victimized during the
commission or attempt to commit a crime?
Number 197
REP. PORTER suggested the committee delete the language "or
fleeing" on page 6, line 12, page 6, line 27, and page 13,
line 13. There were no objections; it was so ordered.
Number 205
REP. HUDSON raised a concern brought to his attention
regarding the deletion of the exception to limits on
noneconomic caps for disfigured or severely impaired
persons. Chairman Hudson explained that it was his
understanding that what had been accomplished with the
rewrite of the statute was that the committee had done no
"damage" to the concept.
Number 215
MR. FORD explained that under present law there is a cap for
recovery of noneconomic damages, but there is an exception
for disfigurement or severe physical impairment. The
version of HB 292 before the committee now eliminates that
exception.
Number 225
CHAIRMAN HUDSON asked if this was the committee's intent.
Number 254
REP. PORTER replied that it was the committee's intent to
delete this exception. Rep. Porter suggested this exception
has been used as a major loophole to bring large suits.
Rep. Porter cited the example of a broken figure that heals
crooked. Should a person be allowed to use the exception to
the $500,000 cap to sue for more?
REP. PORTER added that the terms in question are ambiguous.
CHAIRMAN HUDSON asked if the courts had defined these terms.
MR. FORD answered that he was sure the courts had dealt with
this issue, but he was not aware of any definition.
REP. SITTON stated that $500,000 would not be an appropriate
cap for someone who was severely brain damaged, and we have
to rely on the judgement of the jury in some cases. He
suggested that the committee tighten up the definition of
severe physical impairment.
Number 340
REP. HUDSON stated he thought the issue was important to
bring up, but if the exception were to be reinserted, the
definitions would have to be really tight.
Number 345
MR. FORD responded that the committee should remember that
in order for the exception to come into play in a lawsuit,
it would have to be a very serious injury. He doubted that
a minor disfigurement or impairment would be at issue.
Number 355
REP. MULDER surmised that a severely injured person would
most likely be going after damages in the economic and
punitive categories. Rep. Mulder supported the deletion of
the exceptions to the noneconomic cap.
Number 360
CHAIRMAN HUDSON added that one of the reasons he supported
the deletion was because the interpretation of the terms
used was unclear. Furthermore, the exception only applies
in a relatively few cases on an annual basis.
Number 400
REP. SITTON asked if doctors and hospitals were required to
carry malpractice insurance in Alaska.
Number 408
MR. FORD replied that there is no mandatory insurance law in
Alaska. As a practical matter, a doctor who works for a
hospital is required to have insurance.
Number 428
REP. MULDER wanted to clarify the point regarding the
relationship between a doctor on contract and the hospital
he works out of. What kind of recourse would a patient have
if something went wrong?
Number 440
REP. PORTER replied that a major focus of this legislation
is to make things fair and equitable for all. He stated
that he did not think it fair that a hospital be held liable
for the actions of a doctor on contract with them when they
neither train or supervise them. This is in contrast to the
doctors who are hired directly by the hospital; they are
employees and the hospital should be held liable for there
actions.
Number 460
CHAIRMAN HUDSON clarified that doctors who are hired by the
hospital are covered by the hospital, but doctors who are
independent contractors are not required to have insurance
and are not covered by the hospital. This is the intent of
this legislation.
Number 466
REP. WILLIAMS asked for further clarification on the
liability of hospitals and doctors.
Number 477
REP. PORTER reiterated his points on liability factors.
Only the independent health care workers are not covered by
the hospitals. Any employee of the hospital would be
covered by the hospital's liability insurance.
Number 491
REP. MACKIE hypothesized that a nurse employed by a hospital
but under the direction of a doctor could conceivably be
part of an operation gone awry. In this case, would the
hospital be a named defendant since they employ the nurse?
Number 536
REP. PORTER replied that it is the difference of between
criminal law and criminal evidence; it could be a violation
of the law, but whether you can prove it or not is the
question. He added that if the nurse had some degree of
responsibility and culpability, which is a matter of proof
that the jury would decide, then the hospital could be named
and held responsible.
Number 550
REP. SITTON stated that in 1989, with 800 doctors in the
state, there were only four or five malpractice suits. With
this in mind, he did not feel insurance rates will come down
since the insurance industry is fueled by competition and
the premiums obviously do not rely on these few cases.
REP. SITTON added that he has not heard from a single
insurance company that this legislation will result in
reduced rates.
Number 570
REP. PORTER replied that Dave Walsh, Director of the
Division of Insurance, and John George, lobbyist for the
insurance industry, have both testified that insurance rates
will come down if the legislation is passed and survives
court challenges.
TAPE 94-9, SIDE A
Number 001
REP. WILLIAMS added his concern with whether or not the
insurance rates will come down with passage of this
legislation.
Number 020
REP PORTER stated there is a provision in HB 292 that
requires the medical community to come up with a set of
standards of practice with the aim towards eliminating the
need of defensive medicine. In addition, HB 292 asks the
Division of Insurance to examine rates and report back to
the legislature.
Number 075
REP. SITTON stated that the testimony taken back in November
was that it's not the large awards that run up insurance
rates, but the host of small ones as stated by Mr. George.
Rep. Sitton asked, if this is true, then why do we have the
caps on the various damages?
Number 100
REP. PORTER answered that it was his recollection that Mr.
George testified that while the vast majority of claims are
in the smaller range, it's the potential and periodic large
claims that have the driving effect on rates.
Number 120
REP. MULDER added that it's the potential exposure that
drives the system.
Number 185
REP. WILLIAMS asked the committee to revisit the issue of
the deletion of the exceptions to the noneconomic caps.
Rep. Williams expressed his particular concern about a
person severely disfigured or impaired.
Number 207
REP. PORTER outlined the various options available to an
injured person, damages for economic loss, medical coverage,
punitive and noneconomic loss.
Number 245
CHAIRMAN HUDSON stated that deleting the exceptions is
definitely a policy call on the part of the legislature and
that the supporters of HB 292 believe its a significant one.
Number 288
REP. WILLIAMS stated he feels uncomfortable with the
deletion of the exceptions without more discussions.
Number 308
REP. MACKIE stated he is against the cap of $500,000 for
pain and suffering in severely impaired and disfigured
cases.
Number 350
REP. GREEN asked if Rep. Mackie thought there was an
appropriate limit or cap, $2,000,000 or $3,000,000 or so,
which the injured person should be satisfied with.
REP. MACKIE responded that he has a very good friend who is
in that very situation and maybe they should ask him. Rep.
Mackie added that he meant no disrespect, but some sort of
discussion should be attempted in order to tackle this
issue.
REP. MULDER stated that he was sensitive to this issue
because no amount of money could make a person physically
whole again, but the policy question is what level is fair.
Number 424
REP. PORTER stated that disfigurement and severely disabled
are two different terms. Rep. Porter contended that a bent
finger is disfigurement and therein lies the large loophole
that in reality negates the presence in present law of a cap
on noneconomic damages.
Number 430
REP. MACKIE agreed that losing a finger should not be
regarded as a severe disfigurement or impairment; but
someone who is confined to a wheelchair should not be
covered with a cap.
Number 454
CHAIRMAN HUDSON stated he did not want to sacrifice the bill
over this issue. He asked Rep. Porter if he felt his staff
or counsel could redefine the problem that has created the
change to begin with. Maybe we could come up with a plug
for the loophole and yet still accommodate the few cases a
year that may fall into the disfigured or severely impaired
situation, he said.
Number 470
MR. FORD suggested that the committee look at qualifying
disfigured, as impaired is qualified by "severely."
Number 480
REP. PORTER stated that it only qualifies the terms in the
eyes of the beholder.
Number 524
CHAIRMAN HUDSON summarized that the will of the committee
seems to be to address this issue, and since the bill goes
to Judiciary next, maybe Rep. Porter could suggest a
solution.
Number 529
REP. MACKIE suggested that this issue would be a major one
on the floor.
Number 540
REP. PORTER told the committee he would be willing to work
with staff and counsel to work up language that would define
severe physical disability and impairment.
CHAIRMAN HUDSON instructed staff to draft a letter of intent
to the Judiciary Committee that the Labor and Commerce
Committee wishes the Judiciary committee to address this
issue.
REP. WILLIAMS moved CSHB 292(L&C) with individual
recommendations. No objections were heard; it was so
ordered.
CHAIRMAN HUDSON adjourned the meeting at 5:00 p.m.
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