CS FOR HOUSE BILL NO. 468(FIN) am An Act making supplemental appropriations for the expenses of state government and making and amending appropriations; ratifying certain state expenditures; and providing for an effective date. Co-chairman Frank directed that the FY 96 supplemental budget be brought on for discussion and asked that representatives of the administration speak to department requests. Dept. of Law BARBARA RITCHIE, Deputy Attorney General, Civil Division, Dept. of Law, came before committee. She explained that the $369.3 request under Sec. 9(a) would fund various judgments and claims against the state that accumulated over the year. NANCY SLAGLE, Director of Budget Review, Office of Management and Budget, noted that the $369.3 includes $144.0 in judgments plus $225.3 for a settlement from the international airport revenue fund, relating to safety officers at the Anchorage International Airport. Mrs. Ritchie next described the class action against the City of Kodiak and the state over conditions at the Kodiak Jail--a community jail under contract to the state. This case, which has been ongoing over five years, involves complicated questions of confinement. Additional questions related to state liability for a city-operated jail under contract to hold state prisoners. The state won a partial summary judgment clarifying that the Cleary case does not apply to community jails. In the settlement, the state paid 25 percent of awarded attorney fees of $104.0 and $2.0. The City of Kodiak paid the remaining 75 percent. Senator Sharp asked if Alaska Legal Services was funded by the state. Mrs. Ritchie explained that it is primarily funded by federal appropriations. However, it has historically received some state funding via grants through community and regional affairs. Senator Sharp suggested that the $27.0 award for attorney fees be removed from the supplemental. Mrs. Ritchie explained that the State v. Meyer case involved a sexual discrimination appeal filed against the Alaska Dept. of Fish and Game and the Alaska Human Rights Commission in March of 1987. Both the superior and supreme courts ruled in favor of Ms. Meyer and ordered that court costs and attorney fees of $1,148.25 be paid by the state. LAURIE OTTO, Deputy Attorney General, Criminal Division, Dept. of Law, explained that Durham v. Kincheloe relates to Cleary. The plaintiff sued saying it was unconstitutional under a U.S. Supreme Court case to require that the inmate take psychotropic medication. The state argued that Cleary provisions were controlling. The court disagreed and found that state procedures for administering psychotropic medicines against an inmate's will did not comply with the U.S. Supreme Court mandate. The state voluntarily rewrote its policies and procedures to comply. It was, however, required to pay the plaintiff's attorney fees for litigating the issue. Discussion followed regarding the function of the disability law center. Ms. Otto noted that in the Durham case the inmate had a severe mental illness. Senator Randy Phillips asked that the department determine whether the center receives state appropriations. Senator Rieger voiced his understanding that the Cleary settlement was in conflict with the U.S. Constitution. He then asked if the department has the ability to revise the settlement without a separate court order. Ms. Otto said the final order in Cleary spells out a procedure for administering psychotropic medicines against an inmate's will. The U.S. Supreme Court issued an opinion which conflicts with Cleary. The U.S. Constitution always controls over an order of a lower court. It is possible to litigate whether or not certain provisions of the Cleary final order are unconstitutional. It is more difficult to re-litigate other portions of it, although re-litigation is possible. The fact that a portion of the settlement is found to be deficient does not negate the remainder. In response to a question from Senator Sharp, Ms. Otto explained that an employee of the Dept. of Corrections (Kincheloe) was sued in his official capacity as the superintendent of the institution where the drugs were administered. The original request for attorney fees was $65.0. The department was able to negotiate a reduction to $45.0. The fees will accrue to the disability law center. Attorney fees in the amount of $1,219.0 in CSED v. Allsop reflect an Alaska Supreme Court award. Mrs. Ritchie explained that as a result of statutory changes, these types of cases will disappear. The instant case involved CSED's role in dis-establishment of paternity. Statutory revisions now allow the division to dis-establish paternity administratively. Discussion of particulars of the case followed. Senator Rieger noted indications that attorney fees had been reduced by 80 percent and asked who would bear that portion of the cost. Mrs. Ritchie replied that it would have to be paid by Mr. Allsop. Senator Rieger stated his concern that it appears the defendant will be made to bear the cost of setting the record straight. Mrs. Ritchie stressed that one reason the case was pursued was to clarify CSED's role in these cases and obtain a definitive ruling. The law has since been corrected. Co-chairman Halford concurred that the individual should not be made to pay the cost of "an impossible case where the state was wrong." Mrs. Ritchie explained that in the case of City of Fairbanks v. State Dept. of Labor (Workers' Compensation) the $2,838.62 in attorney fees and costs of $525.17 would be paid to the office of the city attorney in Fairbanks. The case involves the Workers' Compensation Board denial of the city's application for self-insurance. When the city appealed, the superior court reversed the board decision. The city moved for full attorney fees and was granted half by the court. The Dept. of Law has subsequently worked with the Workers' Compensation Board regarding different regulatory requirements, between public and private entities, for determining eligibility requirements for self- insurance. The $42,855.00 payable to Trustees for Alaska in the suit against the Dept. of Natural Resources involves a challenge to state best interest findings for a particular oil and gas lease sale on behalf of the trustees, the city of Kaktovik, and numerous environmental organizations. The supreme court remanded best interest findings to DNR for further findings. As the prevailing party, the trustees were granted attorney fees in both the superior court case and the supreme court appeal. Fees in the appeal have been paid. This claim is for superior court fees. The trustees charged that DNR did not give adequate consideration to the environmental risks of transporting oil from the off-shore lease area to market. Litigation has helped clarify the scope of best interest findings and the required depth of analysis to support findings in future lease sales. The state prevailed on all issues before the superior court. The trustees prevailed on two issues upon appeal. The state objected to attorney fees and costs at both court levels, arguing that fees should be reduced to reflect only work on the two issues on which the trustees ultimately prevailed. Both courts awarded the trustees substantially all of the fees they requested. Senator Sharp suggested that deductions be made in the court budget to cover the awarded fees. The $11,829.76 payable to the disability law center in Weiss v. State represents interim costs and fees following the 1985 supreme court decision in the mental health trust lands case. The court found that the state breached the trust by redesignating trust lands. On remand the court awarded these interim costs and fees to the plaintiff. Co-chairman Frank asked for a breakdown of all attorney fees paid in the case and who the payments were to. Senator Sharp asked if the state expects continuing expenses from the case. Mrs. Ritchie noted that the merits case on the mental health trust appeal is pending before the supreme court. A briefing schedule was recently issued. Briefing will occur through summer and into fall. There are 180 points on appeal. Mrs. Ritchie said she would provided a memorandum updating the status of litigation. Senator Rieger inquired concerning particulars of the $261.00 payable in CSED v. Bond. Mrs. Ritchie explained that the award of attorney fees stems from a paternity suit which questioned whether Rule 82 fees should apply to CSED paternity cases. The court ruled affirmatively and limited the fees to the Rule 82 amount. The defendant sought full fees. Senator Rieger noted that a review of judgment awards indicates that private individuals who sue the state "get pennies" compared to agencies in the business of suing the state. The pattern in award of attorney fees appears backward. Mrs. Ritchie suggested that greater fees indicate greater complexity and substantially more attorney time. CSED cases tend to be single issue. Mrs. Ritchie stressed that awards depend upon a number of factors. The department consistently attempts to reduce awards as much as possible and requires opposing parties to justify attorney fees. Senator Zharoff inquired regarding the effect of not paying judgments. Mrs. Ritchie said she was not aware of any judgments against the state that have not been paid. Referencing the judgment for Alaska Legal Services, Mrs. Ritchie explained that the agency could be awarded attorney fees just as any private lawyer or law firm. That is a separate matter from the Dept. of Community and Regional Affairs grant to the agency. Ms. Otto suggested that failure to pay court judgments would trigger more litigation, place the state in contempt, and lead to additional liability for attorney fees for litigation of non-payment of fees, plus interest. Senator Randy Phillips asked if the court has the power to force the Legislature to appropriate funding. Does the court have the power of appropriation? Ms. Otto said the issue has been researched within the context of Cleary fines. She declined to answer the question "in this setting." Co-chairman Halford remarked that the question represents a constitutional standoff. He cited incidences wherein courts have used mandamus to force appropriations. The other side of the coin is the fact that the Legislature has the court's budget. He noted that whether justified or not, judgments against the state have eventually been paid. He remarked that the one that "stands out as a little bit ridicules is the fine . . . to the general fund of the state for the Cleary case because it's an absolute circle." Senator Zharoff asked the department to provide information on original requests versus the amount of each negotiated judgment. Referencing the $1,285,000.00 for Toksook Bay v. State, Co- chairman Halford explained that the request from last year totals approximately the same as this year. However, last year, the feeling was that the state was walking into a precedent that would hold the state liable under strict liability for things it had no control over and that occurred under both federal ownership and state ownership. That was not the intent of strict liability law. The Legislature decided to deal with the issue only if there was a solution to the strict liability question. Co-chairman Halford said he would support the request if a House amendment to SB 69 becomes law, because new language would limit strict liability as it applies to the state. Co-chairman Frank next referenced the $225.0 judgment against the Dept. of Transportation and Public Facilities for wrongful termination at the Anchorage International Airport. END: SFC-96, #51, Side 1 BEGIN: SFC-96, #51, Side 2 Mrs. Ritchie explained that the Alaska Police Standards Council denied certification to two long-term airport safety officers when new legislation required that the officers have certification. The superior court found that the council abused its discretion in denying certification and directed that the officers be certified. In the interim, DOTPF terminated the employees because they lacked certification. The judgment compensates the two officers for lost pay. The case involved application of new standards to existing long-term employees. The court held it was unfair to terminate employees who had proven their ability to do the job. The case also involved a dispute between the council, which regulates and certifies certain state employees, and the department that employs them. DOTPF had no alternative but to terminate the officers when the council denied certification, even if the department disagreed with the denial. Co-chairman Frank asked why the council was not sued and the officers allowed to keep their jobs pending outcome of the case. He voiced frustration over repeated instances in which employees have been terminated and the state must provide back pay for the time cases progress through the courts. He suggested that employees be kept on the job pending a determination. Ms. Otto stressed that the statute contains "an absolute prohibition on being employed in that capacity unless you are certified by the Alaska Police Standards Council." Once certification was denied, DOTPF would have been breaking the law in continuing to employ the officers. Co-chairman Frank noted that the officers' individual rights were violated by wrongful termination. Ms. Otto noted that future problems could be avoided if legislation effecting new standards contains grandfathering provisions. That was discussed when the new standards legislation was pending, but the Legislature chose not to include the provision. Further discussion of vision requirements giving rise to denial of certification followed. The court reached the conclusion that because the officers had been employed and carried weapons for many years, the regulation, as it applied to them, was not valid. Further discussion of regulatory standards of the council followed. Co-chairman Frank asked that the Dept. of Law determine the number of employees terminated each year, how many terminations are appealed through the grievance process, and how many go to court. Mrs. Ritchie remarked that the numbers are significant, and she agreed to provide statistics. RECESS At this time, Co-chairman Frank announced that he would recess review of supplemental requests until 8:00 a.m., Friday, March 29, 1996, at which time discussion would commence with Berger v. State. The meeting was recessed at 9:05 a.m. RECONVENE Co-chairman Halford reconvened the meeting at approximately 9:13 a.m. and announced that the committee would consider legislation in the order listed on the agenda.