CS FOR HOUSE BILL NO. 158(FIN) am(ct rls pfld)(efd fld) An Act relating to civil actions; amending Alaska Rule of Civil Procedure 95. Co-chairman Halford directed that SCS CSHB 158 (Jud) be brought back before committee for continued review of amendments. Senator Rieger referenced Amendment No. 7, relating to apportionment of fault, and reiterated comments at a previous meeting which, he explained, led him to decide not to offer the amendment. Senator Rieger directed attention to Amendment No. 8 and explained that the issue of award of attorney fees is often raised in the offer of judgment process. He noted that if the ultimate award is less than the offer of judgment, award of attorney fees is against the plaintiff. If the award is greater than the offer, award is against the defendant. Complications occur surrounding application of interest when there is a substantial time span between the offer and final judgment. Amendment No. 8 would require comparison of the offer to the judgment "at a like time." The court would thus disregard accrual of prejudgment interest after the time the offer is made. Senator Rieger MOVED for adoption of the amendment. No objection having been raised, Amendment No. 8 was ADOPTED. Senator Rieger explained that Amendment No. 9 relates to situations in which there are two or more defendants, and one defendant offers to settle but the other or others do not. As written, the bill excludes ability for one defendant to settle, even if his or her offer is reasonable. The amendment would delete that provision. DANIELLA LOPER, aide to Representative Porter, came before committee. She said the sponsor did not concur in addition of problematic language by Senate Judiciary. She concurred in removal per Amendment No. 9. Senator Rieger MOVED for adoption. No objection having been raised, Amendment No. 9 was ADOPTED. Senator Rieger explained that language at Page 7, line 10, allows parties to enter into a written agreement to submit to arbitration. Present wording speaks to agreement "before the action." He said he saw no reason why agreement could not be entered "after" commencing the action. Amendment No. 10 adds that option. Senator Rieger MOVED for adoption. No objection having been raised, Amendment No. 10 was ADOPTED. Senator Rieger noted that Amendment No. 11 also relates to arbitration. Under the proposed bill a list of attorneys with at least five years of civil practice experience would be eligible to serve as arbitrators. It is not clear whether attorneys with that experience might, for other reasons, not be qualified. Language in the proposed amendment would allow the court to flesh out the qualifications for those who agree to serve as arbitrators. Co-chairman Halford called for objections. No objection having been raised, Amendment No. 11 was ADOPTED. Senator Rieger questioned the sentence at Page 8, line 7. It refers to documents that would be "presumptively admissible." Amendment No. 12 says that the foregoing language may not be construed to require that the arbitrator use or rely on documents when there is reason to doubt the authenticity or accuracy of the documents. Co-chairman Halford called for objections. No objection having been raised, Amendment No. 12 was ADOPTED. Senator Rieger said that while Amendment No. 13 appears lengthy, it is not. He directed attention to Page 18, lines 26 and 27, and noted language specifying that a claim subject to arbitration is not subject to offer of judgment provisions. He suggested that while it should not be subject to the portion of those provisions within AS 09.30.065(b), other portions of the provisions could apply. Amendment No. 13 thus divides 09.30.065 into part (a) and part (b). Daniella Loper directed attention to the last sentence of subsection (b) and suggested that language relating to two or more defendants be deleted. Senator Rieger concurred, saying the language was incorporated within an earlier adopted amendment. Co-chairman Halford advised that deletion would be considered a technical amendment to Amendment No. 13 and would be adopted without objection. Senator Rieger MOVED for adoption of Amendment No. 13, as amended. No objection having been raised, Amendment No. 13 was ADOPTED as amended. Senator Rieger next directed attention to Amendment No. 14. He pointed to Page 9, line 22, as well as several instances on Page 10 and noted reference to "non-employees." Language within the bill speaks to "staff" and does not read well. Amendment No. 14 deletes language that makes a contractor a member of the hospital staff. No objection having been raised, Amendment No. 14 was ADOPTED. Senator Rieger directed attention to Amendment No. 15. He further referenced language at Page 12, lines 12 through 18, requiring that rates decrease by 10 percent by December 31, 1999. The amendment would delete that provision. Co- chairman Halford called for objections. Co-chairman Frank OBJECTED and asked if the rationale was a reluctance to dictate pricing in a piece of legislation. Senator Rieger acknowledged that to be the case, saying the provision was contrary to free market principles. Co-chairman Frank removed his objection. In the absence of further objection, Amendment No. 15 was ADOPTED. Senator Rieger directed attention to Page 7, line 8, and referenced testimony from court system counsel that language relating to mandatory arbitration might eliminate ability to "go to small claims court." The Senator suggested that the following language be added at Page 7, line 8 (after $100,000 and before the semicolon): or is eligible for small claims court CHRIS CHRISTENSEN, General Counsel, Alaska Court System, came before committee voicing his belief that the proposed language "would work." As an alternative, a new subsection (H) could be added at Page 7, line 19, to say: "is a small claim under AS 22.15.040." Senator Rieger MOVED for adoption of the language he proposed, above, as Amendment No. 16. No objection having been raised, Amendment No. 16 was ADOPTED. Co-chairman Frank referenced a $867.0 fiscal note associated with arbitration provisions within the bill and asked if there would be an offsetting reduction in litigation. Mr. Christensen said that the bulk of the fiscal note reflects the cost of providing arbitration services for litigants who are legally indigent. At the present time, 95 percent of all tort cases settle without going to trial. These cases are not costly to the system. Mr. Christensen further commented on effective use of arbitration in contract and family law cases. The court system does not believe it is effective in a typical tort case. Parties can presently engage in arbitration if they wish to. Virtually none of them do. END: SFC-96, #70, Side 1 BEGIN: SFC-96, #70, Side 2 In response to a question from Co-chairman Halford asking if the state is required to provide counsel to indigent individuals in both criminal and civil cases, Mr. Christensen explained that if the law says an individual cannot exercise his or her right to bring a case before a judge and a jury until "they go to arbitration," the state would have the duty to pay for arbitration if a person could not afford it. Co-chairman Halford questioned whether mandatory arbitration was worth the $867.0. Co-chairman Frank noted that Senator Taylor included the provision when the bill was before Senate Judiciary. Senator Rieger voiced his understanding that when the court system is budgetarily squeezed, the civil liability system suffers. Part of the fiscal note probably represents "allowing people to get their cases heard that, right now, are languishing without ever getting to court," because of time delays in getting them on the docket. Discussion of alternatives to mandatory arbitration followed among the Co-chairmen and Mr. Christensen. Additional comments followed by Mr. Christensen concerning how fiscal note numbers were developed and the share of arbitration costs to be paid by the state on behalf of indigent individuals. Senator Rieger noted that fiscal note funding would make the court system more accessible. He suggested that is a different issue than paying for free counsel. Co-chairman Halford directed attention to mandatory arbitration language at page 7, line 5, and suggested that addition of "if requested by one of the parties" following the word "arbitration" would lessen impact. Mr. Christensen advised that he could not say what percentage of plaintiffs or defendants would request arbitration. If the judge were given the discretion to decide whether or not arbitration would be valuable, the impact on the state would be relatively minimal compared to the proposed bill. Judges would likely not order it in cases where the parties could not afford the process. Mr. Christensen told members that arbitrators in Anchorage have indicated that the form of arbitration contained within the bill is "about as expensive as arbitration can get." A retired judge or attorney is needed to draft discovery orders and findings of fact and statements of law at the end of the process. Co-chairman Halford voiced a preference for removing mandatory arbitration from the bill. Co-chairman Frank concurred. Senator Rieger expressed a preference for retaining the provision but preventing the most expensive form. Senator Rieger MOVED for passage of SCS CSHB 158 (Fin) with individual recommendation and accompanying fiscal notes. No objection having been raised, SCS CSHB 158 (Fin) was REPORTED OUT of committee with a $0.8 fiscal note from the Dept. of Commerce and Economic Development; and zero notes from the Dept. of Law, Dept. of Administration, and the Court System. (The Court System note indicated a $862.0 cost commencing in 2001.) All members present signed the committee report with a "do pass" recommendation.