HB 146 - LIABILITY FOR COMMERCIAL REC ACTIVITIES CHAIRMAN KOTT announced the next order of business is HB 146, "An Act relating to civil liability for commercial recreational activities; and providing for an effective date." CHAIRMAN KOTT indicated that CSHB 146(L&C) [1-LS0701\D] is before the committee and called on Ms. Kelly Sullivan to present the sponsor statement. Number 0618 KELLY SULLIVAN, Legislative Secretary for Representative Pete Kott, Alaska State Legislature, came before the committee and presented the sponsor statement. In Alaska, a lot of recreational activities are offered for tourists as well as locals. She cited sport fishing, hunting, and hiking as examples. The bill establishes the responsibilities of the commercial recreational businesses, as well as the responsibilities of those who choose to participate in such activities. The bill addresses the specific guidelines that operators and participants need to follow to minimize the possibilities of accidents, and should an accident occur it helps to define who is to be held liable. The bill helps to avoid the unfair and unreasonable claims hurting the small operators in Alaska which are making it difficult for them to stay in business. Number 0720 CHAIRMAN KOTT stated this is the third time a bill like this has tried to make it through the legislature. A similar bill has passed the House before, but met its fate in the Senate Judiciary Standing Committee. He noted that this bill has been worked over. It clearly defines responsibilities for both the operators and those who seek to participate in various commercial recreational activities. CHAIRMAN KOTT opened the meeting up to public testimony. Number 0760 MIKE WINDRED, Vice President, Marketing and Sales, Alaska Travel Adventures, came before the committee to testify in support of HB 146. This bill has come up three different times in recent years because of the support from the recreational providers. At present, there is industry-wide support. He cited the Alaska Visitors Association and the Alaska Wilderness Recreation and Tourism Association as examples of organizations that support this bill, which totals 95 percent of the recreational providers. There is very good backing behind the bill, and it is well written. MR. WINDRED further stated that the basic premise is for the participants to assume some inherent risks and for the operators to perform a better standard that is not required today. In other words, an operator would have to explain to the participants the inherent risks for a particular activity. In addition, the operator would also need to train its employees in CPR [cardiopulmonary resuscitation] and first aid, use maintained equipment only, and act in a reasonably safe and competent manner. This has been decided in litigation, but setting it forth in legislation makes it more defined and simple. He believes the bill would help his company and many other businesses like it by reducing nuisance suits that are presently settled out of court. Alaska Travel Adventures has a fairly large deductible that seems to rise as there are more and more small suits. He explained a small suit is typically a customer who trips or falls out of a raft or does something that could have been completely caused by their own actions and not by fault of the operator. An attorney will typically determine the deductible, which usually ends up being the amount that the case is settled for. This bill would definitely put money back into his pocket for those types of "frivolous" lawsuits. It would also ultimately reduce the insurance rates. MR. WINDRED further stated, in response to the position paper from the Alaska Action Trust [dated April 12, 1999], it doesn't surprise him that they have come out against this legislation because it would take money out of trial lawyers' pockets. It would not inhibit litigation if a consumer wants to sue. The large cases would go to court. In further response, the purpose of the bill is covered in statute, but not enough. It would help fight the nuisance claims before going to litigation thereby reducing claims. In further response, this legislation would not be contradictory to ski areas already in statute. In further response, several small businesses have been closed because of these claims. He cited a small rafting operation in the North and Southeast that have been closed because the profits were lower than the risks - the deductible. In further response, no operator would market contributory negligence. It wouldn't be a stigma for Alaska. It hasn't stopped anybody from traveling to Mexico or Europe where a person wouldn't even think of entering into a lawsuit if that person was hurt there. In further response, the responsibilities of participants need to be in the bill to make it strong. In further response, if an operated used faulty equipment or failed to explain the inherent risks, that operator would be apt to lose in a litigation at that point. Number 1203 REPRESENTATIVE GREEN asked Mr. Windred whether this would be any kind of hardship for an operator. MR. WINDRED replied he doesn't think so. If anything, it would be good for the industry. It would hold it to a higher standard, which could be used to make tourists feel safer. Number 1241 REPRESENTATIVE CROFT stated the ski liability statute sets the consequences for both operators and participants. This bill doesn't say what would happen if an operator doesn't "do it." In comparison to the ski statute, a ski operator or other person who violates a requirement of the chapter is negligent and civilly liable to the extend a violation causes injury to a person or damage to property. He asked Mr. Windred whether he has any objection to including that language. MR. WINDRED replied he is not familiar with the ski area statute, other than it is specific to an activity. The idea is to bring all the different types of commercial recreational activities under one bill. Number 1349 REPRESENTATIVE CROFT said it is a legitimate concern. The language in the bill is more broad. The responsibilities of operators of commercial recreational activities are broad as well. He asked Mr. Windred whether there can be duties and consequences for both parties. MR. WINDRED replied, as an operator, he doesn't see why not. Number 1431 REPRESENTATIVE MURKOWSKI asked Mr. Windred what his company has paid on average for nuisance suits. MR. WINDRED replied Alaska Outdoor Adventures sees between $10,000 and $25,000 a year in nuisance suits. That can be from either one case or several small cases. He cited the suits are from stumbling, falling off a chair, or something that an operator could not have prevented. In most of those cases, his company ends up paying the bills. He doesn't have a problem with that; he has a problem with the "pain and suffering" suits. Number 1544 REPRESENTATIVE MURKOWSKI asked Mr. Windred whether the majority of the frivolous suits are settled prior to litigation within the courts. MR. WINDRED replied correct. Number 1564 REPRESENTATIVE KERTTULA asked Mr. Windred whether he actually has had somebody sue his company for stumbling over a rock. MR. WINDRED replied yes. REPRESENTATIVE KERTTULA asked Mr. Windred what happened with the case. MR. WINDRED replied the process is either the attorney or client will contact his company directly and ask for the insurance company. He usually responds to them directly. At the point the dollar figure is determined, his company either decides to turn it over to the insurance company or decides to fight it. Number 1608 REPRESENTATIVE KERTTULA asked Mr. Windred whether his company settled that case or just moved to dismiss it. MR. WINDRED replied in most of those types of cases his company ends up paying for the hospital fees, transportation fees and damages to any equipment, such as a camera. The case is usually settled for a couple hundred dollars or so more, which is well worth it compared to going to litigation. Nevertheless, it is generous considering that they stumbled over their own feet. Number 1680 REPRESENTATIVE ROKEBERG asked whether anybody knows who is the Alaska Action Trust. REPRESENTATIVE MURKOWSKI replied Jan Bouch is the executive director of the Academy of Trial Lawyers Association. Her guess is that Alaska Action Trust is a lobbying arm of that association. Number 1780 REPRESENTATIVE ROKEBERG said he is concerned about who is defining the "inherent risk of commercial recreational activity." In other words, how would an operator explain to a participant the inherent risks of a particular activity? Every activity has a different type of risk. Number 1798 MR. WINDRED replied his staff is trained in the safety requirements for each activity. They are different for each activity, but it falls upon an operator to determine what are the standard inherent risks. That is pretty standard for the industry as it sits now. Number 1869 REPRESENTATIVE ROKEBERG said if a person is going bungee jumping that person should probably sign a release. He asked Mr. Windred whether that is the direction the bill is going. MR. WINDRED replied if an operator doesn't have a signed release for bungee jumping that operator is looking for trouble. There are some areas where signed releases work well. There are some areas where requiring a signed release does not work well. He cited his salmon bake where several hundred people attend a day and Binkley's river tour in Fairbanks as examples. The tour in Fairbanks still has to follow coast guard protocol in terms of orienting passengers to the safety aids. Number 1949 REPRESENTATIVE ROKEBERG noted that the bill is restricted to commercial outdoor activities when there are two new ice rinks being developed in Anchorage that probably will have some sort of outdoor rink adjacent to them. He is concerned about the rink rats. Number 2004 REPRESENTATIVE KERTTULA asked Mr. Windred whether he would include his salmon bake in the definition of "recreational activity." MR. WINDRED replied he would include it because it is sold as a tour; it is not sold as a restaurant. Number 2041 REPRESENTATIVE JAMES stated she is pleased to see this type of legislation. In her lifetime, she can remember when there wasn't insurance, there weren't so many trial lawyers, and when a person fell down and hurt himself it was his own fault. She is not saying that, if somebody gets hurt at somebody else's expense, that person should get off free. She doesn't care if other legislation comes around for each type of commercial activity because the litigious side of this issue is chilling for people willing to invest money for recreational activities, even when it creates jobs because the inherent liability is so overwhelming. Number 2248 CHAIRMAN KOTT stated that the inherent risk in downhill skiing is different than other outdoor recreational activities such as bird watching. He mentioned the types of risks associated with downhill skiing such as a broken bone. Number 2340 BOB ENGELBRECHT, Owner, North Star Trekking, came before the committee to testify in favor of HB 146. He is also on the board of directors for the Alaska Visitors Association. He has been in the tourism industry in Alaska for about 16 years, primarily in the adventure side of it. Tourism in Alaska has been evolving and changing over the past few years. It's not just tourists arriving on cruise ships, but more and more people are wanting to experience Alaska in the back country. In most cases, they don't have an appreciation of what they are getting into. TAPE 99-35, SIDE A Number 0001 MR. ENGELBRECHT continued. He runs a tour of taking people on the Mendenhall Glacier. The inherent risk of that tour is walking on the ice. There is no way around it. His insurance broker wanted to put AstroTurf on the glacier where the people walk around. The point of the bill is to not absolve operators of negligence or to put the participants in an activity in an unrealistic position so that they aren't covered by insurance. The point of the bill is to make sure that the participants are aware of what they are getting into, and to make sure the operators are using good equipment, etc. And, if there is a health or physical ability issue, to find out about it before hand and to decide to opt out of a particular physical activity. At least people would go into an activity with their eyes open and knowing what they are doing. MR. ENGELBRECHT further stated, in reference to the ski area statute, it is a very specific activity in a confined area. This bill talks about a variety of activities in large areas where all different kinds of conditions exist. He has a permit for the Juneau Ice Field which is 1,500 square miles. He runs into all kinds of different conditions. While the idea is similar in terms of taking on an inherent risk, the other recreational activities are more diverse and the infrastructure is not in place, just the natural environment. MR. ENGELBRECHT further stated that he informs clients in a number of ways about the risks. They are given a briefing to make sure that they understand what they are getting into. A surprising number of people do not have a clue about what they are getting into. Most say, "Well, it's not what I thought I was going , but I want it anyway." They make that choice to go ahead. Once on the glacier, the guides will give a thorough briefing on the equipment, the area, and the inherent risks involved, and what they need to cooperate based on the conditions. Number 0379 CHAIRMAN KOTT asked Mr. Engelbrecht to comment on the concern of a lack of consequence of an operator that does not provide the requirements of the bill. MR. ENGELBRECHT replied for the most part this bill is aimed at the more frivolous suits or claims. The bill says the inherent risks are those that are apparent to an ordinarily prudent person. There is nothing in the bill that would prevent litigation or an operator being taken to court. If an operator has done an inadequate job, it would come out in court. Number 0482 REPRESENTATIVE MURKOWSKI referred to page 2, line 2, of the bill - "Contributory negligence" - and commented on getting hit in the head with a paddle while white water rafting causing a concussion. The other inherent risks had been discussed, such as falling out of the raft, hypothermia, etc. She is concerned because all of the inherent risks cannot be defined. She wondered how the bill can be as broad by accepting the inherent risks of all these types of commercial outdoor activities. Number 0621 MR. ENGELBRECHT stated, not being an attorney, he doesn't have a great response. The general point is, it is difficult to define all the inherent risks. If a person is hiking and a limb falls from a tree and hits that person, was that an inherent risk the person was made aware of? It was an act of God. Was there anything that the operator could have done? Was the operator responsible? It's a gray area, and if it's a significant issue it probably would go to court. Number 0714 REPRESENTATIVE MURKOWSKI asked Mr. Engelbrecht how many nuisance claims does his business average annually. MR. ENGELBRECHT replied he just started his company last year. He has one season under his belt. He had one minor injury from a person tripping over his crampons and fell. Prior to starting his company, he worked for 18 years with a larger company that carried between 30,000 to 40,000 people onto the glacier. Out of that number, there might have been a dozen slips, falls, and bruises. The most serious injury would have been a broken wrist from tripping and breaking a fall. He can only think of one that went to litigation. The rest were settled by the insurance companies. It's easier to give away a deductible than to spend tens of thousands of dollars in litigation. He knows of one case that settled for a couple hundred thousand dollars for tripping over his own two feet. These claims come back to the operator. Very few go to trial, but a lot of them happen and a lot of them get settled by insurance companies every year. Number 0848 CHAIRMAN KOTT asked Mr. Engelbrecht whether it's true that there are industry standards that are accepted and considered inherent risks, and anything beyond that is in the gray area. MR. ENGELBRECHT replied, for the most part, it is fairly obvious if somebody is not following prudent industry standards for the type of activity going on. He doesn't see this bill as having any effect on the other things that could happen such as negligence. That's a whole different realm. Number 0956 REPRESENTATIVE KERTTULA said Mr. Engelbrecht's company is not part of the problem; it's willing to live up to the standards. She asked Mr. Engelbrecht whether he has a problem with an operator facing regular court liability for not living up to the standards and not being able to claim the shield that the bill provides. MR. ENGELBRECHT replied, not being an attorney, he's not sure how he can technically answer the question. Practically, if somebody gets hurt on a trail and bleeds to death and the guide didn't have basic first aid training, it's obvious that there is some negligence. At that point, the operator is not shielded by this bill. The bill actually provides an extra tool for somebody who has been hurt if an operator doesn't follow good prudent standards. But, if an operator is doing everything reasonable that it can, and the experience is inherently in a natural environment that hasn't been sanitized and safety-proofed...He continued by stating that he could put a guard railing and AstroTurf on the glacier and no one would slip and fall, but it would be a pretty lousy experience. REPRESENTATIVE CROFT asked Mr. Engelbrecht for a brochure. MR. ENGELBRECHT gave Representative Croft a brochure. He noted that in the brochure there is a list of equipment given for safety. He cited ice axes, crampons, and safety harnesses as examples. Number 1136 CHAIRMAN KOTT closed the meeting to public testimony. Number 1146 REPRESENTATIVE CROFT stated it is appropriate in ski areas and in general to define the inherent risks of the participants and the fundamental responsibilities of the operators. The bill says clearly, that if a participant doesn't meet his or her responsibilities, it "is" a contributory negligence. He has an amendment using the exact language from the ski area statute that puts everything on an even keel for both the operator and participant. Number 1227 REPRESENTATIVE CROFT made a motion to adopt Amendment 1. It reads as follows: Page 3, line 9 Insert Sec. 05.50.060. "A person who operates a business that offers a commercial recreational activity and violates a requirement of this chapter is negligent and civilly liable to the extent the violation causes injury to a person or damage to property." CHAIRMAN KOTT objected. He called on Mr. Mike Ford, drafter of the bill, and asked him whether there are others in statute that are narrowly constructed like the ski statute. Number 1265 MIKE FORD, Attorney, Legislative Legal Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, came before the committee to answer questions. The ski area statute is the only one of its kind. There are other statutes that deal with recreational activities, but they mostly refer to licensing and safety requirements. He cited boating as an example. The ski area statute deals with a very specific activity, while this bill deals with commercial recreational activities that could include a number of different things. Number 1318 REPRESENTATIVE ROKEBERG said he is concerned about aviation activities. He asked Mr. Ford whether the bill includes the use of aircrafts. MR. FORD replied it would cover an aviation club that took people up as a business. It meets the definitions of "commercial recreational activity" and "recreational activity" in the bill. Number 1360 REPRESENTATIVE ROKEBERG said he finds that troubling. REPRESENTATIVE CROFT asked Representative Rokeberg whether he wants to exempt them. REPRESENTATIVE ROKEBERG replied, "I think so." REPRESENTATIVE CROFT suggested that Representative Rokeberg write up some language. REPRESENTATIVE ROKEBERG further stated he is also concerned about the outdoor rink rats. REPRESENTATIVE MURKOWSKI stated, "Don't forget those rock climbing walls." Most of them are indoor. Number 1388 MR. FORD pointed out there was legislation that dealt with skateboarding rinks and municipalities that operate them last year as an example of another activity that was thought to need protection. REPRESENTATIVE ROKEBERG asked Mr. Ford whether the bill passed. MR. FORD replied, he believes, it passed the House. REPRESENTATIVE ROKEBERG asked Mr. Ford whether this bill would deal with skateboarding as well. MR. FORD replied only if it's an outdoor activity. CHAIRMAN KOTT noted only if it's a commercial outdoor activity. MR. FORD noted that the bill last year targeted indoor facilities. But, an outdoor facility might fit the definitions, if it's commercial. Number 1446 REPRESENTATIVE MURKOWSKI asked Mr. Ford whether he has seen Representative Croft's amendment. MR. FORD replied no. Number 1470 CHAIRMAN KOTT called for an at-ease at 3:15 p.m. and called the meeting back to order at 3:20 p.m. Number 1476 CHAIRMAN KOTT withdrew his objection. There being no further objection, Amendment 1 was so adopted. Number 1487 REPRESENTATIVE CROFT said, in regards to aviation activities, an argument could go either way. There should be a standard care for persons jumping out of an aircraft. There could be advantages to the operators being in, but all of the implications haven't been thought through since it wasn't foremost on everybody's mind when drafting the bill. Number 1549 CHAIRMAN KOTT asked Mr. Ford whether flight seeing is part of the bill. MR. FORD replied he doesn't see a reason to exclude flight seeing from the application of the bill. He doesn't see how it could be argued that they are not included because everyone understands that people fly for recreation. He can go to the Juneau International Airport where there is a flight service to learn how to fly which costs money. It certainly is a commercial and recreational activity, and somebody who suffers harm would be included. Number 1591 CHAIRMAN KOTT asked Mr. Ford whether there is a difference between the inherent risks and negligence for aviation activities. MR. FORD replied the inherent risks change for each activity. Certainly, getting into an airplane is different than getting into a raft or going to a salmon bake. Number 1621 CHAIRMAN KOTT stated the only other issue is the definition of the term "recreational activity." He asked Mr. Engelbrecht, as a representative of the industry, whether there is any merit in including indoor activities. He cited indoor ice skating rinks and climbing walls as examples. Number 1655 MR. ENGELBRECHT replied the climbing wall is the immediate thing that comes to his mind. He noted that the environment is controlled more for indoor activities compared to the unimproved outdoor type of activities. Number 1690 CHAIRMAN KOTT said he was thinking along those lines as well. The definition provides for a hobby which could be a whole host of things such as painting. It's a whole new "ball of wax" that he's not willing to get into. Number 1729 REPRESENTATIVE CROFT made a motion to move CSHB 146(L&C), as amended, from the committee with individual recommendations and the attached fiscal note(s). There being no objection, CSHB 146(JUD) was so moved from the House Judiciary Standing Committee. CHAIRMAN KOTT opened the meeting to public testimony again to accommodate a witness he overlooked. Number 1822 RUSSELL L. WINNER, Alaska Academy of Trial Lawyers, testified via teleconference from Anchorage. The academy is the lobbying arm of the Alaska Action Trust. He wrote the position paper for the trust. In his twenty years of practice, he hasn't had one case that dealt with this issue. It's an area that is not heavily litigated. The trial lawyers are not interested in this bill to line their pockets, but instead to ensure that people who are insurable are (indisc.). And, if they are, then they should receive a fair compensation. The bill raises more legal questions than answers. Who defines inherent risk? He replied, the operators or the courts. How is it defined? If it's defined specifically, what if an injury is different? If it's defined in general terms, is it feasible and valid? If the inherent risk of white water rafting is drowning, then just about anybody who falls in the water and drowns without cause would be subject to (indisc.) inherent risk. He's not sure that is the intent, but a general definition might fall into that category. The same is true for air taxis. An inherent risk of flying in an air taxi is crashing. Is the net effect of the legislation to exempt air taxis from liability when a pilot flies into a mountain or is negligent for not avoiding bad weather, for example. The bill says that participating in a commercial recreational activity a person is contributorily negligent. He wonders whether that is a wise way to promote outdoor recreational activities for the state. He also wonders whether any other state has enacted a bill like this. Information like this can be widely spread to the public. It might be counterproductive to the industry. If a bill was placed before the committee exempting law suits in other areas, the testimony would be similar. He cited car rental agencies as an example. The common law in Alaska has been developed by the courts and juries articulating liability and responsibilities. It has worked well and if the legislature starts to enact this type of reform there will be a piecemeal and confusing process. It is better to trust juries with these matters based on general principles of the common law than to try to articulate the specific rules for each industry in the state. Number 2088 REPRESENTATIVE CROFT asked Mr. Winner whether, even with the amendment, he thinks that the bill should not pass. MR. WINNER replied he hasn't seen the amendment, but from what he gathered listening to the conversation it is an improvement. He still thinks that this is (indisc.) legislation. It opens the door to other groups to come forward and ask for immunity. He reiterated that the common law system and juries are better able to decide on a case-by-case basis. This legislation asks whether or not to stay with a common law system or to move towards a common (indisc.) of the laws of tort. He thinks that the state should stay on the common law side of that line.