Legislature(1993 - 1994)
02/04/1993 01:40 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
February 4, 1993
1:40 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Steve Rieger, Vice-Chairman
Senator Drue Pearce
Senator Georgianna Lincoln
Senator Judy Salo
OTHERS PRESENT
Senator Bert Sharp
COMMITTEE CALENDAR
SENATE BILL NO. 52
"An Act relating to liability insurance and bond
requirements for guide-outfitters or marine mammal
guide-outfitters."
SENATE BILL NO. 64
"An Act relating to civil liability for workplace safety
inspections; and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 52 - NONE
SB 64 - NONE
WITNESS REGISTER
Karl Luck, Director
Division of Occupational Licensing
Department of Commerce & Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT:
Chuck Gray
311 Slater Street
Fairbanks, Alaska 99701
POSITION STATEMENT: Supports SB 52.
Sandy Jamieson
3 1/2 Mile Old Nenana
Fairbanks, Alaska 99725
POSITION STATEMENT: Supports SB 52.
David Morris
P.O. Box 81572
Fairbanks, Alaska 99708
POSITION STATEMENT: Supports SB 52.
Kim Daniels, Executive Director
Alaska Air Carriers Association
1117 E. 35, #102
Anchorage, Alaska 99508
POSITION STATEMENT: Opposed SB 52.
David P. Hutchens
Alaska Rural Electric Cooperative Assn.
703 West Tudor Road #200
Anchorage, Alaska 99503
POSITION STATEMENT: Supported SB 52.
James E. Pfeifer, President
Alaska National Insurance Company
7001 Jewel Lake
Anchorage, Alaska 99502
POSITION STATEMENT: Supported SB 52.
ACTION NARRATIVE
TAPE 93-8, SIDE A
Number 001
CHAIRMAN TIM KELLY called the Labor and Commerce Committee
meeting to order at 1:40 p.m.
SENATOR KELLY introduced SB 52 (GUIDE-OUTFITTER AIRCRAFT
INSURANCE) and invited the prime sponsor, SENATOR BERT
SHARP, to testify. Before SENATOR SHARP'S testimony,
SENATOR KELLY distributed a committee substitute which would
drop out the old first Section 1 of the bill.
SENATOR SHARP explained SB 52 would limit the requirement
for liability insurance for registered guides doing their
own flying, who guide 5 or less hunts a year and transport
clients by aircraft less than thirty hours a year. He also
explained the current insurance requirements are costly, and
overly burdensome, for small guide outfitters, particularly
those who conduct just a few hunts a year in the family
airplane.
SENATOR SHARP asked consideration for the adoption of the
committee substitute.
SENATOR KELLY called on KARL LUCK, director of the Division
of Occupational Licensing to testify.
Number 073
MR. LUCK limited his comments to Section 2 of the bill
citing eighteen guide-outfitters who would fall into the
category as determined by the bill. He said it would be a
limited problem for the state to track and follow the flight
time, but might present some liability for the state. He
expressed concern over the message to the prospective hunter
to let them know they would not covered.
SENATOR RIEGER asked for additional information on tracking
some details.
MR. LUCK explained how his department would be tasked by
various responsibilities to follow the application of the
legislation to a guides's contract, performance, or record.
SENATOR KELLY opened the teleconference and asked CHUCK GRAY
of Fairbanks to testify.
Number 120
MR. GRAY testified in support of the bill and mentioned the
department's problem with record keeping could be solved by
accepting the hunt records from the guide-outfitter. He
said the camp and aircraft insurance has raised the overhead
expenses to the cost of the revenue from one hunt. MR. GRAY
claimed the small guide-outfitters offer the highest quality
hunts, and that he had hunted for 35 years without
insurance. He said he was going to give up hunting this
year if the insurance requirements remained in effect.
Also from Fairbanks was SANDY JAMIESON, who testified, as a
20 year guide, didn't get insurance until it was required.
He described being in a crunch with insurance, fees,
reallocation of guide areas, and the strict limitation on
the number of hunts. He asked for the flexibility of doing
without insurance.
Number 186
SENATOR RIEGER asked the guides who just testified from
Fairbanks about the insurance disclaimer being buried in the
fine print of the contract, and asked if they had any
problem of having it prominently displayed. MR. JAMIESON
suggested having it in bold print on the hunt record. He
said most of his clients were European, provide their own
insurance, and prefer not to pay for other client's
insurance.
DAVID MORRIS from Fairbanks also supported the bill. He
described how the increased restrictions and overhead costs
had limited his profits. He thought, if the guides had
gotten along without any restrictions for years, why they
needed them now. MR. MORRIS wanted to eliminate both the
aircraft and the camp insurance.
Number 225
SENATOR KELLY called on KIM DANIELS, Executive Director for
the Alaska Air Carriers Association, from Anchorage. MS
DANIELS testified on behalf of the association membership in
strong opposition to SB 52, and gave some history about the
need for continued liability insurance by all carriers. She
referred to the testimony from MR. GRAY, who indicated a
willingness to take chances without carrying insurance, and
said the association members felt an obligation to see that
all passengers traveling in Alaska are given the necessary
insurance protection.
MS DANIELS thought Section 2 would give an unfair
competitive advantage to the guides and outfitters exempted
from the insurance requirements.
SENATOR RIEGER moved to amend SB 52, and he suggested on
page 1, line 14 "prominently displayed" should be inserted
before the word statement. On the second page, line 3,
after subsection he moved to add the words for purposes of
the subsection, prominently displayed means, in bolder face
type than the other type used in the main text of the
contract on the front page of the contract. Without
objections, it was placed in the new committee substitute.
SENATOR KELLY asked for the adoption of the amended
committee substitute.
Number 259
SENATOR RIEGER moved to adopt CS FOR SENATE BILL NO. 52(L&C)
as amended. Without objections, so ordered.
SENATOR PEARCE indicated her lack of support for the bill,
and SENATOR RIEGER wanted to review the testimony. SENATOR
KELLY said the bill would be held for the next committee
meeting on 2/9/93.
SENATOR PEARCE asked the staff to work with the sponsor and
the air carriers to determine the actual costs of liability
insurance in the $100 thousand per seat range. She
expressed concern about allowing any aviation transportation
for pay to happen without liability coverage. SENATOR KELLY
asked MR. FINK to work on the request.
Number 311
SENATOR KELLY moved on to SB 64 (INSURER IMMUNITY FOR SAFETY
INSPECTIONS), sponsored by the Senate Labor and Commerce
Committee, and gave some history on this legislative intent
in previous years.
Number 311
SENATOR KELLY invited DAVID HUTCHENS, representing the
Alaska Rural Electric Cooperative Association, to testify.
MR. HUTCHENS explained he also managed the ARECA Insurance
Exchange, which writes insurance for most of the larger
utilities in the state. He reviewed the decision in the Van
Biene v. ERA Helicopter, Inc. case in which it was concluded
that insurance companies doing safety inspections on the
work site for the employer could be sued for alleged
negligent work site safety inspections.
MR. HUTCHENS described the effect on those doing work site
inspections for the employers, which was to quit doing them,
because his board could not accept the unlimited liability
that would come from doing the work site safety inspections.
Since the responsibility for the inspections had fallen back
on the employers, he thought some were doing a good job in
policing themselves, but others were not able to do an
effective job. As a result, MR. HUTCHENS was fearful that
the work site in Alaska is not nearly as safe as it was
before the case in 1989, but the bill would restore the law
to what everyone thought it was before the Van Biene case in
1989.
Number 337
SENATOR KELLY asked for some perspective on the legislation
in relation to workers' compensation insurance as a trade
off. He paraphrased the decision where someone could get
beyond that arrangement and sue an insurer, who performed
the safety inspection, if the safety inspection was faulty.
MR. HUTCHENS agreed that was the problem, and he elaborated
on the level of previous safety services most of the
insurance companies have provided in the past. He
discussed, with the committee, the danger in insuring
without performing a safety inspection, and MR. HUTCHENS'
termed it a "crap shoot."
Number 369
Testifying from Seattle, Washington, JAMES PFEIFER,
president of Alaska National Insurance Company, read the
following letter, portions of which are included in the
minutes:
"This legislation (with the deletion of one key phrase) will
help restore the workers' compensation system to its
original intent -- i.e. a no fault system.
As you know the workers' compensation system covers employee
injuries whether or not the employee is at fault. Even
gross negligence on the part of the employee does not free
the employer of liability. In return, the employer and its
insurance carrier are entitled to exclusive remedy. That
is, the employer or carrier should not be subject to any
liability beyond what is provided under the workers'
compensation act.
If, in fact, an insurance carrier makes a mistake
(intentional or otherwise) in a safety inspection, the
employee is taken care of under the workers' compensation
system. No need exists, nor should there be any incentive,
for an employee to reap windfall benefits.
If an insurance carrier displays a pattern of poor
inspection practices, remedies are available for the
Director of the Division of Insurance to address the matter.
From a practical standpoint, however, the market place will
quickly come into play and employers (or the insured) will
go elsewhere for coverage and safety services.
I strongly urge your committee to delete the language
relative to "intentional misconduct." As currently written,
this language may appear to embrace "motherhood" and "apple
pie" but I assure you that such a belief is erroneous.
First, as I have already pointed out, this additional club
is not needed. The important consideration is that the
employee is already taken care of.
Second, this type of language invites frivolous causes of
action for which the principal beneficiaries are plaintiffs
and defense attorneys.
The problem is that such words as "intentional" or
"misconduct" are issues of fact and, therefore, ultimately
would have to be decided by a judge or jury. I know I am
being repetitious here but the workers' compensation system
was not designed to be adversarial in determining fault.
Fault is not supposed to be an issue. Thus, I suggest that
this language is inappropriate and respectfully request that
it be removed.
I appreciate the fact that this overall issue is being
addressed this year and urge that this corrective
legislation be passed." MR. PFEIFER offered to answer
questions.
Number 402
SENATOR RIEGER asked if the intent was to remove lines 9 and
10 on page 1. MR. PFEIFER didn't have a copy of the bill,
but explained it would be the removal of "intentional
misconduct," which, he said, would be the original intent of
the workers' compensation system.
SENATOR RIEGER reviewed the supreme court ruling report and
asked what would happen if an insurance carrier
intentionally did not pay what was due under the workers'
compensation statutes. He was not comfortable with denying
an employee the right to at least sue for actual damages.
MR. PFEIFER said there were avenues to be used for the
protection of the employee.
Number 429
SENATOR LINCOLN, in reference to the position paper from the
Department of Commerce and Economic Development, wondered
how they could have a neutral position and specific
objections to the same bill. She read portions of the
position paper to MR. PFEIFER to sustain her argument.
SENATOR KELLY assured SENATOR LINCOLN the bill would be held
over because the committee must adjourn to attend a caucus
meeting. He referred her to a position paper from the
Legislative Council on the following page, in answer to her
objection.
MR. PFEIFER, in response to SENATOR RIEGER, said "if in fact
an experienced carrier did not handle a claim properly, an
employee could go before the board and the board could award
as much as a 25% penalty against a carrier."
There being no further business to come before the
committee, the meeting was adjourned at 2:10 p.m.
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