Legislature(2003 - 2004)
05/07/2003 01:32 PM Senate JUD
| 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
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
May 7, 2003
1:32 p.m.
MEMBERS PRESENT
Senator Ralph Seekins, Chair
Senator Scott Ogan, Vice Chair
Senator Gene Therriault
Senator Hollis French
MEMBERS ABSENT
Senator Johnny Ellis
COMMITTEE CALENDAR
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 86(JUD) am
"An Act relating to state permitted projects; and providing for
an effective date."
HEARD AND HELD
HOUSE BILL NO. 1
"An Act relating to stalking and to violating a protective
order; and amending Rules 4 and 65, Alaska Rules of Civil
Procedure, and Rule 9, Alaska Rules of Administration."
HEARD AND HELD
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 184(L&C) am
"An Act relating to individual deferred annuities; and providing
for an effective date."
MOVED SCS CSSSHB 184(L&C) am OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 49(JUD)
"An Act relating to the deoxyribonucleic acid (DNA)
identification registration system and testing; and providing
for an effective date."
SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
HB 86 - No previous action to consider.
HB 1 - See State Affairs minutes dated 4/24/03 and Judiciary
minutes dated 5/3/03.
HB 184 - See Labor and Commerce minutes dated 4/29/03 and
5/1/03.
WITNESS REGISTER
Mr. Jim Pound
Staff to Representative Fate
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 86 for the sponsor.
Mr. David Green, Executive Director
First Amendment Project
Oakland, CA
POSITION STATEMENT: Commented on HB 86.
Mr. Alvin Anders
217 Seward Street
Juneau, AK 99801
POSITION STATEMENT: Opposed HB 86.
Representative Cheryll Heinze
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 1.
Lieutenant Matt Leveque
State Troopers
Department of Public Safety
PO Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Opposed the proposed amendment to HB 1.
Ms. Mary Wells
c/o Representative Heinze
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Supported HB 1.
Ms. Laurie Hugonin
Alaska Network on Domestic Violence and Sexual Assault
Juneau, AK 99801
POSITION STATEMENT: Supported HB 1.
Representative Coghill
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 184.
Ms. Katie Campbell, Life and Health Actuary
Division of Insurance
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Commented on HB 184.
ACTION NARRATIVE
TAPE 03-39, SIDE A
HB 86-INJUNCTIONS AGAINST PERMITTED PROJECTS
CHAIR RALPH SEEKINS called the Senate Judiciary Standing
Committee meeting to order at 1:32 p.m. Present were Senators
Ogan and Therriault. The first order of business to come before
the committee was HB 86.
MR. JIM POUND, Staff to Representative Fate, sponsor of HB 86,
said it would provide a private remedy to permittees or owners
of state permitted projects who are the victims of frivolous or
obstructionist type litigation. In addition to any other penalty
or sanction otherwise currently provided by law, it will make a
person who initiates or maintains a malicious claim against a
state permitted project liable for damages by the lawsuit. It
specifies the type of damages the aggrieved person would be able
to seek. The cause of action is based on concepts established in
law for stating a claim for unlawful civil proceedings and abuse
of process. The benefits are that it avoids unfamiliar potential
ambiguous language and once adopted, the courts will be able to
draw up an existing case law from Alaska to help interpret and
apply the law. HB 86 only applies to egregious cases and will
not deter potential litigants from bringing legitimate
meritorious cases to court.
CHAIR SEEKINS stated they were considering CSSSHB 86(JUD) am,
version W.a.
SENATOR OGAN asked if there was a definition of malicious claim
in somewhere statute.
MR. POUND replied he didn't have a specific definition, but it
relates to various aspects of the word "malice."
Malicious, according to Black's Law, is characterized
by or involving malice, having or done with wicked or
evil, or mischievous intentions or motives, wrongful
or done intentionally without just cause or excuse or
as a result of ill will. That's according to the sixth
edition of Black's Law, 1990.
CHAIR SEEKINS said more than likely there was case law that
defined malice and asked if Senator Ogan was suggesting defining
"malice" for this section of the law.
MR. POUND noted that "malicious prosecution" has a lot of case
law behind it that could be part of the interpretation.
SENATOR FRENCH arrived at 1:40 p.m.
SENATOR FRENCH asked if frivolous could be malicious.
MR. POUND answered that a frivolous claim could be broader than
with malice. He thought the Supreme Court had actually defined
the term, but he didn't have a specific case to cite. He said
they are targeting mostly the types of lawsuits that are filed
after a permitted project has gone through the entire process.
These suits are often filed by professional non-profit law firms
and individuals who feel they didn't get a fair deal, even
though they were part of the entire process all the way through.
MR. DAVID GREEN, Executive Director, First Amendment Project,
said they are based in Oakland, California, and that Senator
French invited him to address the committee on the proposed
statute. The first amendment interest here is the right to
petition the government for redress of grievances. The U.S.
Supreme Court has spent a fair amount of time considering the
right to petition the government and has come up with a very
strong threshold requirement for someone to be immune from any
liability for petitioning the government. That includes filing
of a lawsuit or administrative action. They are immune unless
their petitioning activity was objectively baseless.
The main constitutional defect in the proposed statute is that
the Supreme Court has very clearly said regardless of what the
person's motive was in bringing the action, regardless of any
bad faith they may have had, if the action was not objectively
baseless, they are entitled to absolute immunity.
Objectively baseless usually means that no reasonable litigant
could realistically expect to secure favorable relief or that he
was lacking in any probable cause to institute the proceedings.
It's important that the test is objective, not subjective. One
of the reasons for this protection is to avoid any infection of
the person's subjective motives. This is in recognition that
once the discovery process is started, it has a very chilling
effect on a person exercising his first amendment rights.
The second part of the test is looking at improper purpose or
looking at whether the person bringing the lawsuit was seeking
genuine relief or just exploiting the process.
The third constitutional requirement was just affirmed by the
U.S. Supreme Court earlier this week in a telemarketing
decision. At any time you make provisions for an action that
might restrict one's first amendment rights, the burden of proof
is on the party bringing that action and it must be clear and
convincing.
MR. GREEN felt that the right to petition the government is
stronger is situations in which someone is suing the government
himself, because they do not believe the government is doing the
job it was supposed to do or has exceeded its authority or is
acting outside of its bounds. This proposed statute creates
potential liability for someone who was actually suing the
government. "I believe that the right to petition the government
should be protected more strongly than it is today in ordinary
civil litigation context."
1:55 p.m.
SENATOR FRENCH asked him if he was referring to the Professional
Real Estate Investors v. Columbia case.
MR. GREEN replied yes this is one of the leading cases in this
area.
SENATOR FRENCH asked if the Supreme Court rejected the
subjective inquiry and relied on objective analysis.
MR. GREEN replied yes. The Court was careful to say that not
only was the objective test required it was the threshold of
determination. You couldn't go further into the subjective
inquiry without making an objective finding first.
CHAIR SEEKINS asked if it was constitutional to award a certain
amount of damages to someone based on a frivolous claim, but not
on a malicious claim.
MR. GREEN replied that the Supreme Court said the lawsuit must
be objectively based and only if the litigation is objectively
meritless, can the Court examine the litigant's subjective
motivation.
The fact that it was malicious is not relevant until
you determine that it was baseless and that is
directly from the Supreme Court case. That indeed is
the argument that the Supreme Court rejected. The
question before them was - was the presence of bad
faith adequate and the Court said no.
CHAIR SEEKINS asked if it would be better to say a frivolous
"or" malicious case.
MR. GREEN replied that it would have to say "and", because it
requires both and added that he was not an authority on Rule 82.
MR. ALVIN ANDERS said he is representing himself and that he is
a member of the Libertarian party. He has the same problem with
the bill that other people bring up. He thought it would have a
chilling effect on small businesses and individuals who feel
they got a bad shake from the government. It sounds like they
are trying to outlaw thought crime and trying to fix a problem
that probably exists from having too much government already. He
said this would stop groups like the Institute for Justice, a
Libertarian group that fights eminent domain and things like
that.
SENATOR THERRIAULT asked if he would challenge the eminent
domain on the fact that the acreage is not needed or that an
improper price was being paid.
MR. ANDERS replied that the Institute for Justice is often
fighting eminent domain for a part of a larger effort that does
require some permits. Maybe the person does feel they got a bad
shake by having their property unlawfully taken and are using
their meager resources to try to stop the project until they
feel justice is done.
SENATOR FRENCH said when he was in law school, traffic stops
were used by police to sometimes harass a minority that they
thought might be breaking the law (by transporting cocaine), but
they didn't have any real good reason to pull them over. There
was a split in the Court of Appeals over whether or not you
would ever look inside a police officer's mind to see if he had
a bad reason for pulling someone over. The case got resolved
after years and years of fighting over it - in the Supreme Court
on a 9 - 0 vote. The Court said you don't look at the officer's
subjective intentions. This keeps you from having to
psychoanalyze the police officer about what he did in the field.
He didn't think you could penalize someone for having a terrible
reason for bringing a good lawsuit.
He felt that they needed to put "objectively baseless" in there
somewhere.
SENATORS Ogan and Therriault both said they needed more time
with this bill.
CHAIR SEEKINS said they would hold HB 86 for further discussion.
HB 1-STALKING & PROTECTIVE ORDERS
CHAIR SEEKINS announced HB 1 to be up for consideration. He said
there was a proposed amendment.
SENATOR THERRIAULT moved to adopt amendment, \H.3 for purposes
of discussion.
23-LS0005\H.3
Luckhaupt
12/11/03
A M E N D M E N T
OFFERED IN THE HOUSE BY REPRESENTATIVE HOLM
TO: CSHB 1(JUD)
Page 1, line 1:
Delete "stalking and to violating a protective order"
Insert "protective orders"
Page 2, line 17:
Delete "The registry"
Insert "Except as provided in (f) of this section, the
registry [THE REGISTRY]"
Page 2, following line 18:
Insert a new bill section to read:
"* Sec. 5. AS 18.65.540 is amended by adding a new
subsection to read:
(f) The Department of Public Safety shall remove from
the registry an
(1) an ex parte protective order issued under
AS 18.65.855 that
(A) is dissolved by the court; or
(B) expires without a protective order
under AS 18.65.850 being issued;
(2) an emergency protective order issued under
AS 18.65.855 that
(A) is dissolved by the court; or
(B) expires without an ex parte protective
order under AS 18.65.855 or a protective order under
AS 18.65.850 being issued;
(3) a protective order issued under AS 18.65.850
that is dissolved by the court before the expiration of the
order;
(4) an ex parte protective order issued under
AS 18.66.110 that
(A) is dissolved by the court; or
(B) expires without a protective order
under AS 18.66.100 being issued;
(5) an emergency protective order issued under
AS 18.66.110 that
(A) is dissolved by the court; or
(B) expires without an ex parte protective
order under AS 18.66.110 or a protective order under
AS 18.66.100 being issued; or
(6) a protective order issued under AS 18.66.100
that is dissolved by the court before the expiration of the
order."
Renumber the following bill sections accordingly.
Page 6, line 16:
Delete "sec. 5"
Insert "sec. 6"
Page 6, line 20:
Delete "sec. 5"
Insert "sec. 6"
SENATOR FRENCH objected.
REPRESENTATIVE HOLM, sponsor of the amendment, said there is a
20-day waiting period during which a person who is accused is
put in a registry and it isn't purged. One hundred and seventy
state agencies have access to that registry for the purpose of
ascertaining whether or not the person has a history of breaking
the law. He was concerned about protecting a basic tenet of law
that a person is innocent until proven guilty.
TAPE 03-39, SIDE B
SENATOR OGAN said he knew there was a process for a person to go
through to purge an arrest and asked if he knew about it.
REPRESENTATIVE HOLM said he didn't know of it, but he would be
interested in finding out how it is done.
MR. TODD LARKIN, Staff to Representative Holm, said he has read
the statute that creates the registry and discovered that there
is no mechanism so far to purge a name from the archived
registry. This is a section of the ALASKA PUBLIC SAFETY
INFORMATION NETWORK (APSIN) system and you can be purged from
the regular system (active orders that are in force now) except
from the moment the order is put in place, the statute instructs
the officers and officers of the court to put you in the archive
and there is no mechanism to purge a name from the archive. The
archive is only expired orders and the amendment only speaks to
those.
SENATOR THERRIAULT thought it applies to ex parte protective
orders that are ex parte as well as other regular protective
orders.
MR. LARKIN replied that it does deal with regular protective
orders in one case - if you missed your original hearing date
and petitioned the court to come back at a later date and
present evidence that proves the order was meritless, the court
can dissolve it.
LIEUTENANT MATT LEVEQUE, State Trooper, said:
The proposed amendment would affect not only
protective orders that would be granted under the
provisions of HB 1, but would also include domestic
violence (DV) protective orders that are currently
granted under Alaska state law. As a consequence, that
provision in the proposed amendment would dramatically
undo protections that exist for domestic violence
victims in Alaska and it would also reverse to a great
degree training that we have provided over the years
since the Alaska domestic violence laws were revised
in the mid-90s to peace officers and to the general
public victims, in particular. This amendment seems to
be based on the idea that an ex parte or an emergency
order that is not converted to a regular order is on
its face meritless or was applied for through some
sort of malicious intent. As police officers...we know
that there are dozens and dozens of very compelling
reasons that the victims of domestic violence and
potentially non domestic violence victims of stalking,
as envisioned in HB 1, would choose not to convert an
emergency order to an ex parte or regular order or
alternatively would choose not to convert an ex parte
order to a regular protective order.
LIEUTENANT LEVEQUE said there are currently three types of
orders: emergency orders, which would be applied for by a law
enforcement officer on behalf of a victim (they last three
days); ex parte orders, which are applied for by a victim
without the responding party present; and, protective orders.
The standard, which the judge makes a decision about
issuing protective orders if they're emergency or ex
parte, is that there be probable cause to believe that
the victim has been a victim of a crime involving
domestic violence. The standard that the judge applies
is higher when an actual regular protective order is
being considered. In the event the committee chose to
accept this proposed amendment, what happens is we're
telling law enforcement officers that many, if not
most, domestic violence victims are in fact not
telling the truth when they are filing their
petitions, because the amendment would say, 'Look, we
don't trust that you're serious about this event that
you allege, that we don't believe you unless you are
willing to come back and convert this into a regular
order. That's a dangerous message to send to victims
and to police officers that we've struggled to
reorient regarding what we know about victimology of
domestic violence victims.
This amendment would also remove a tremendously
important investigative tool that law enforcement
officers in this state are in fact required by law to
avail themselves of. Before a trooper or police
officer makes a decision regarding arrest in a
domestic violence case, they are required to consider
prior complaints. That's under AS 18.65.530. One of
the best methods for establishing whether there have
been prior complaints is to be able to check the
historical record within the registry to determine
whether in fact there have been prior complaints.
Taking that away means that police officers are kind
of punching around in the dark and victims don't
always think in a moment of crisis that, 'Oh yeah, I
had applied for an order six months or two years or
three years ago.'
There's also, I believe, some confusion with respect
to terminology. Respondents are what we call the
individuals who have protective orders filed against
them and sometimes we hear the expression that people
are charged with a protective order. Charging, and Ms.
Carpeneti can correct me if I'm mistaken, is a legal
term that describes the process whereby somebody has
formal criminal charges presented at the court either
through an arrest or a complaint process, indictment,
etc. The protective orders are civil orders that do
not show up in an individual's criminal history
records because there is no arrest; there is no charge
and consequently no conviction.
We know on another point of concern to law enforcement
statewide that domestic violence calls are among the
most dangerous that police officers and troopers
routinely respond to across the state. And the
inability, as an officer responding to a domestic
violence call, for a dispatcher to go ahead and check
a historical record about prior complaints involving
the victim and or the suspect as we're responding,
takes away a huge officer safety consideration. To a
certain degree, officers lined up walking into these
situations would be blinded if the committee chose to
adopt the amendment that's before it.
LIEUTENANT LEVEQUE explained the registry is a component in
APSIN.
The Alaska Public Safety Information Network has
information related to our drivers' licenses, vehicle
registrations, whether, when we were younger, our
parents reported us as a run away or a missing
individual - a whole gigantic volume of information
about us, none of which may be released except under
the most specific circumstances established in state
law and in policy. Of course, the consequences for
release of that information are dramatic. There are, I
believe, criminal penalties and at the least a member
could expect to lose his or her job. The records of
protective orders are in fact public records available
at the courthouse. If there was a protective order
against me in Anchorage, one of you could go to the
courthouse and get the complete record. So having this
record in the historical archive, if you will, within
APSIN, is actually not shielding an individual's
reputation in any manner because we can't release the
APSIN information to the general public, but the
general public can get that information regarding a
protective order from the court house.
I'd like to remind the committee that a protective
order is proof of no wrong doing whatsoever. It's only
an allegation, which a judge in his or her wisdom has
made an attempt to make a decision about. When I have
spoken with some individuals over the course of the
past couple of days about this amendment, I know there
are concerns that somehow or another police officers
will make decisions solely on the basis of the fact
that there's a prior history. It's a component in a
process whereby in subsequent investigations that
might involve domestic violence that we would access,
but otherwise, it is largely meaningless.
He concluded by saying that the department strongly opposes this
particular provision.
SENATOR OGAN said a police officer must consider prior
complaints before they make a decision on an arrest, but they
are required to make an arrest in a DV case and that troubles
him.
LIEUTENANT LEVEQUE replied that the law requires an arrest only
in cases where the officer determines probable cause exists that
a domestic violence crime has occurred. It's not just that they
respond to a domestic violence report and must arrest someone.
AS 18.65.530 says which person to arrest and number one on the
list is to consider prior complaints of domestic violence.
SENATOR OGAN said that answers his question, but he has talked
to troopers in the field who resent that sometimes their
judgment is circumvented by a mandatory arrest. He was also
concerned about an ex parte protective order because only one
side can argue and the other is denied due process and that
right can be abused by the APSIN. Some people in the capitol
building believe there have been abuses of the APSIN system in
the past that have been swept under the rug for political
reasons.
REPRESENTATIVE HEINZE said one of her concerns is that there
could be a loophole where a vindictive person could use this
against another person.
LIEUTENANT LEVEQUE replied yes. They know those abuses would
happen sometimes, but they would be few and far between. Someone
could fabricate a story and present a compelling argument to the
judge and get a protective order against him, for instance.
REPRESENTATIVE HEINZE asked if there was any way to mitigate
that in this bill.
LIEUTENANT LEVEQUE replied that he didn't know. He thought the
issue was balancing the safety and protection of domestic
violence victims and victims of stalkers against the possibility
that eventually, malicious people will attempt to obtain
protective orders against innocent people.
SENATOR OGAN said he has seen this happen the most in custody
disputes where someone tries to build a record against a spouse.
He wanted to err on the side of the stalking victims, but he
didn't know how to do that without trampling on constitutional
rights.
REPRESENTATIVE HOLM said that was the reason he brought this
issue forward.
SENATOR FRENCH asked if every APSIN inquiry comes with an
identifier so they could find out who was accessing the records.
LIEUTENANT LEVEQUE said he didn't know for sure, but he thought
that was the case. People who do have access probably keep
meticulous logs about who requested a particular check and for
what purpose.
CHAIR SEEKINS asked how a trooper responding to a DV situation
could be allowed to have that information within the time frame
necessary for him to make a determination of whether or not he
was entering a potentially violent situation.
LIEUTENANT LEVEQUE replied the dispatcher the trooper is in
contact with has access to the historical archive and he can get
that information at the speed of electrons and provide it to the
trooper.
CHAIR SEEKINS asked if the information is transmitted in a
confidential manner.
LIEUTENANT LEVEQUE replied that in most cases, police channels
are not encrypted.
CHAIR SEEKINS said in that case, this information could become
public with the speed of an electron.
MS. MARY WELLS, past stalking victim, said she went to the
courthouse the previous day and looked at the first 100 cases of
applicants applying for protective order and found that in
Anchorage, as of May 5 for 2003, there have already been 1,040
applications. Of the first 100 cases she accessed, 87 were
clearly defined as domestic violence, 13 of them fell into a
similar classification as hers (stalked by someone with no
direct relationship to her). Of the 100 applications, 75
children's names were added to the list for that protective
order; 35 were complaints of stalking and they included words
like "followed, hang around, and telephoning excessively."
Of the 100 applicants, 62 were denied a protective order. Of the
13 applications that didn't get protective orders and had the
same qualifications as she did, 12 children were added to that
list. Of the 13 applicants, 7 people were actually complaining
that they were stalked. Of the 13 people that had the same
qualifications as she did, three were almost identical in that
there were threats of violence, attempts to go into the home,
leaving sexual connotations on the phone, etc. On a lighter
note, she said of the 100 applications, one was a domestic
violence situation over a dog visitation.
SENATOR FRENCH thanked her for doing that research and said if
he had to guess what percentage of ex parte orders were denied,
he would have guessed a much lower percentage.
CHAIR SEEKINS noted that no one was against the bill, but they
don't want to make a victim out of the person who has a
complaint filed against them.
MS. LAURIE HUGONIN, Alaska Network on Domestic Violence and
Sexual Assault, said that this bill was introduced last year,
but didn't make it to the Senate floor before the end of
session.
Victims of stalking have been waiting for over a year
to try to get a way into civil courts to get some
protection. They hope concerns with domestic violence
orders don't outweigh the necessity for victims of
stalking to be able to get some protection this year.
She urged them to move the bill this year and questioned that
there may be the need for a title change if the amendment is
added. The bill is geared toward stalking, not domestic
violence. She said a Supreme Court committee on domestic
violence in Anchorage found that of all the petitions submitted
in Anchorage, only 40 percent were granted - despite the
perception that all you have to do is go to court and get one.
While it is true that ex parte protective order means only one
person has to be there in order for the judge to be able to make
a decision, it has to list on the petition any attempts made to
contact the respondent. There is a belief that there must be
some kind of effort if your safety is not at great risk to let
the respondent know that this is going to go forward. Also, if
you have been granted an ex-parte order, you get your copy, law
enforcement gets a copy, law enforcement serves it on the
respondent and that person has an opportunity to come before the
court and say they don't think it is right or whatever. With an
ex parte order, the court is required within three days or
sooner to actually have a hearing on the respondent's issues. If
the order is modified or dissolved, the court has the
responsibility to get that change to law enforcement and they,
then, have a responsibility to get that change into the registry
as soon as possible. Orders in the registry are supposed to be
current.
One of the helpful things about having ex parte orders in the
registry is that a person may accidentally leave the protective
order somewhere and the respondent is breaking the order. When
law enforcement responds and if she doesn't have the order on
her and if they don't have access to the registry, they won't be
able to act in an expeditious manner.
3:00
She was concerned with Representative Holm's amendment, because
it seems to imply that there is some connection between the
three types of orders.
It's very clear in the Domestic Violence and Victim's
Protection Act of 1996 that we meant to have three
distinct and separate borders. They are not linked
together; they're not supposed to be linked together.
If I need a 20-day order to keep me safe and that's
all I need, that's all I need. If I just want to go
for a regular order first, I can just go for that
regular order first. One isn't contingent upon the
other one and I think that's an important principal
and it's actually one that we litigated against the
court system after the passage of the Act in 1996,
because the court system had structured their forms in
such a way that... you had to apply for two at the
same time. That was not the intent of the legislature
and we actually won that litigation. There are three
separate and distinct orders. So, we're concerned with
this concept of somehow linking them together at this
point....
Also, if there is a concern that there are orders that
are meritless on their face being granted, the statute
provides ability for a judge or magistrate to go no
further with that hearing...
MS. HUGONIN repeated that the amendment should not get in the
way of victims of stalking, which is what HB 1 is about.
CHAIR SEEKINS said he would hold this bill for further work.
HB 184-INDIVIDUAL DEFERRED ANNUITIES
CHAIR SEEKINS announced HB 184 to be up for consideration.
REPRESENTATIVE COGHILL, sponsor of HB 184, said it deals with AS
21.45.305 - insurance and individual deferred annuities. Market
changes have put pressure on the need for an interest rate
change on the minimum deferred annuity rate, which was set in
statute in the 1970s at the current 3%. Then there was no
expectation that the market would be where it is today. The
Division of Insurance wanted to lower the floor to 1.5% with the
idea that the National Insurance Commissioners were going to
come up with a long-term fix. They did that and the long-term
fix is a model law and in section 2 sets a cap at 3 percent, a
floor at 1 percent and a floating average based on a constant
maturity rate...
TAPE 03-40, SIDE A
REPRESENTATIVE COGHILL said that section 2 allows the
flexibility for insurance companies to do a re-determination and
a transition period. This bill has the support of those who buy
annuities, those who sell them and our regulatory agency that
oversees them.
SENATOR THERRIAULT asked if they were getting into a turf battle
between the banking and insurance industries.
MS. KATIE CAMPBELL, Life and Health Actuary, Division of
Insurance, replied that she didn't know of any such battle. This
was brought to their attention at the national level when
interest rates started taking a dive and there were 3 percent
guarantees in the contracts. Companies were concerned about
solvency at that point and having to guarantee something they
couldn't earn on their monies. Annuities guarantee a return;
something comparable on the banking side would be a CD type of
instrument. These are longer term guaranteed contracts.
SENATOR FRENCH asked if this would change any existing annuity
contracts.
MS. CAMPBELL replied that the effective date provision was
designed so that it was very clear that it doesn't affect any
contract that is currently in place. It would only affect
contracts that were issued after the effective date.
SENATOR FRENCH asked why they have to change the law and why
couldn't the annuity folks recognize lower interest rates the
way the rest of us have and write lower interest rates into
their contracts from here on out.
MS. CAMPBELL replied that the minimum rate in the law is 3
percent and this bill provides flexibility for the rate to drop.
SENATOR FRENCH asked if the same problem would arise if interest
rates went to 0 percent.
MS. CAMPBELL replied that the model language in this bill still
guarantees a return at 1 percent.
CHAIR SEEKINS asked if the Division of Insurance thought these
changes were compatible with the best interest of the people of
the State of Alaska.
MS. CAMPBELL replied the division supports the bill.
SENATOR OGAN moved to pass SCS CSSSHB 184(L&C) from committee
with individual recommendations and accompanying fiscal notes
and asked for unanimous consent. There was no objection and it
was so ordered.
CHAIR SEEKINS adjourned the meeting at 3:17 p.m.
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