CSHB 158(FIN) am CIVIL LIABILITY  CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 9:00 a.m. in the Anchorage Legislative Information Office conference room. He explained the only action the committee would be taking on the legislation would be the taking of testimony for the record. Number 025 TANYA PERRY of Anchorage, explained that she is currently in litigation with her insurance carrier. She has always paid her insurance premiums on time, however, the insurance carrier hasn't done what she thought she was paying them for. As the result of two car accidents that occurred two weeks apart, she is disabled, unable to work and heavily in debt. She suggested the insurance carriers need to quit treating people like numbers and be more personable. Number 078 JEFF FELDMAN, President, Alaska Trial Lawyers, said his view is that HB 158 is driven principally by a desire of those who tend to be on the defense side of cases, to avoid the burden of being involved in litigation, which is an understandable sentiment, but he thinks it comes at an enormous cost. He said the dialogue in the bill has been, unfortunately, driven with a lot of antidotal evidence and myths, rather than facts and science. Mr. Feldman said the first myth is there is a litigation explosion, but the rate of lawsuits has not increased for decades and is actually on a downward trend -- it has fallen steadily since 1990. The second myth is that there is a staggering problem with runaway verdicts, but U.S. News & World Report characterizes this suggestion as "exaggerated" -- the average personal award is $48,000. In the past 14 years, there have only been 1,642 awards in excess of $1 million. He said the data is not there to support the characterization that our civil justice system is being plagued by "runaway verdicts." Another myth is that the system is burdened with outrageous punitive damage awards. However, from 1965 to 1990, nationally, there were only 353 punitive damage awards that were sustained after appeal; the average of those awards was $135,000. Punitive damage awards in medical malpractice cases are rare, so rare that there has never been one in history of Alaska. Another myth is that there is a medical malpractice crisis. In Alaska, since statehood, there have been fewer than a dozen verdicts rendered against doctors in malpractice cases. Nationally, there are 80,000 deaths and several hundred thousand individuals injured annually from medical negligence; only 10 percent of those cases ever result in a claim being lodged against the doctor. The next myth is that tort reform will cure all the supposed ills in the civil justice system. U.S. News & World Report states that "tort reform focuses on the tip of the iceberg and probably the wrong iceberg at that." A report by the Insurance Services Organization stated that tort reform has had "little or no impact." Mr. Feldman asserted that HB 158 affects only catastrophically injured Alaskans; it does nothing for nuisance suits, frivolous suits, or anything very meaningful for small injury cases. In doing so, it strips injured Alaskans of their historic right to seek compensation as determined by a jury of their peers. It seriously and dangerously usurps the power of a citizen jury to render justice. Mr. Feldman said HB 158 lessens accountability and responsibility for negligent and reckless conduct, and it risks making Alaska one of the most anti-victim states in the country. It does this in three ways: it locks the court house doors; it strips juries of their right and responsibility to decide cases based on the evidence; and it provides windfall protection to wrongdoers and creates an uneven playing field in the court room. Number 265 KEITH BURKE, General Manager, Alaska Support Industry Alliance, said the Alliance is working very hard with the industry, the administration and the legislature to demonstrate to those with investment dollars that Alaska is open for business. Tort reform, in their opinion, is an essential element of that effort. It is also the Alliance's opinion that civil liability laws of Alaska need to be improved. It is obvious to the members of the Alliance that the current process of litigation is dysfunctional. This statement is supported by the fact that in 1992, 57 percent of the damage awards went to the cost of litigation. Damage litigation is intended to compensate those that have been injured either physically or economically and the current process is not achieving that goal. The Alliance believes that HB 158 is better approach to damage litigation, and they would like to see it passed into law early in the 1996 legislative session. Number 296 SENATOR TAYLOR asked if there were any specific provisions in the legislation that the Alliance either supports or doesn't support. MR. BURKE responded that it needs to be focused more on the proof of physical and economic loss for the damage litigation rather than the excessive punitive damages. Number 370 PAUL RICHARDS, Chairman, Alaska State Chamber of Commerce, said last December their board of directors determined issues of concern, which were finalized as officials resolutions, and one of the top three resolutions that the board had concern with was to support legislation that would set a standard for punitive damages. He then read the resolution into the record. The State Chamber believes that business within the state is jeopardized by the present tort law, particularly in the area of punitive damages, because the level of punitive damages penalty is not preset by law which results in less than fair and equal treatment for all and future inability to insure. The resolution urges the legislature to reform tort law in the area of punitive damages to a preset multiple of the actual damages and only assessed when malicious intent or willful neglect is proven. The State Chamber suggests as reasonable a three times multiple of actual damages, and also suggests that all payments of punitive damages be made to the state. In closing, Mr. Richards urged passage of HB 158 in the upcoming legislative session. Number 475 SENATOR TAYLOR commented that if, in fact, egregious and outrageous awards are occurring in our court system in Alaska, it is incumbent upon this committee to do something about that. If that is happening, that is the kind of information the committee needs to have. Number 530 GARY SWEET of Kirkland, Washington, related the story of his 10- year-old son who is profoundly brain damaged. When the baby was 10 days old, they took him back to Providence Hospital because of an infection at his circumcision site. He was kept in the hospital and given antibiotics, however, the parents noticed he started experiencing medical problems, and they expressed their concerns to the nurses and doctors. Among other things, the baby experienced a major seizure that lasted for 45 minutes and was put on life support. The parents were told that their baby was going to die, but he did pull through, although severely brain damaged. Mr. Sweet said the only medical records the hospital retained were some lab reports. Other records such as IV records and vital signs charts are gone and no one even knows what kind of medication the baby was receiving. Mr. Sweet expressed how hard it is for a family to go against a large corporation, as well as the frustrations in trying to get an investigation into the circumstances surrounding his son's tragedy. TAPE 95-40, SIDE B Number 045 Mr. Sweet referred to the caps for noneconomic damages in the legislation, and he questioned how any individual could get an attorney to spend maybe years and thousands of dollars on a case. He noted that in his case, one of the major defense attorneys made more money than is being proposed in the legislation. He also urged that there not be a two-year statute of limitations as proposed in Section 4 because a lot of times brain damage won't show up for several years. Mr. Sweet said their case against the hospital and doctors went to court, they lost and it is now in appeal. Number 140 GRANT CALLOW, an Anchorage attorney, told of an 1984 auto accident involving a friend of his who sustained a spinal cord injury and is paralyzed from the chest down. Mr. Callow represented his friend in a suit against the out-of-state construction company that was responsible for the accident. He then made a video presentation to illustrate to the committee what his friend's life is like since his accident, as well as showing a video of a 19-year-old young man who sustained a head injury in an auto accident, which resulted in brain damage. Upon completion of his presentation, Mr. Callow pointed out that the idea of a $500,000 cap on loss of enjoyment of life and pain and suffering is not realistic for injuries such as this, to say nothing of the disfigurement. He urged the committee to change the bill to not take away the right of Alaskan juries to see cases like this and to make a determination of what would be fair and reasonable compensation for loss of enjoyment of life and for pain and suffering. Number 570 SENATOR MILLER said the sponsor's statement noted that an actuarial firm said that roughly 43 percent of an award went to the damaged victim and 57 percent went to litigation costs, and he asked if, in Mr. Callow's experience, those figures hold fairly true for Alaska. MR. CALLOW disagreed with those figures, saying he hadn't experienced that at all. SENATOR MILLER then asked what can be done to help on both sides in eliminating some of these costs so that the victim receives a bigger percentage of the award. MR. CALLOW responded that he doesn't believe there is anything that can be done to change it that won't interfere with the free market in allowing people their own choice of attorneys. He added that in his experience, that 43 percent figure is much higher -- it is more like 75 percent is ending up with the injured party. He suggested that if the committee wants to make sure that these cases settle quickly, then to consider doing something to increase the hammer against insurance companies, to make it dangerous for them to stonewall and to starve out people. TAPE 95-41, SIDE A Number 128 JEFF FELDMAN agreed with Mr. Callow's comment to increase the hammer over insurance companies. If there was a provision that said that the prevailing party in a lawsuit recovers his or her actual attorneys fees incurred in prosecuting the claim, that would add an additional incentive because the defendant or the insurance company know they are going to be on the hook, not only for the damages, but for the costs that are incurred as a result of driving that litigation for two years. The cost of driving litigation in that fashion is a cost born not just by injured Alaskans -- significantly, it is a cost that's born by the entire state because the court system is geared up to process cases in a certain way. SENATOR TAYLOR stated he would appreciate receiving affirmative comment that could be made in this bill for methods by which we can start reining in this huge cost of litigation. Number 195 HENRY SPRINGER, Director, Associated General Contractors, stated his organization, in general terms, supports the whole bill, and they have specific interest in Section 2, the Statute or Repose. He said he believes eight years is adequate, and he noted most requirements for record keeping in the construction industry are limited to seven years. He also said that there are sufficient safeguards in the present procedures before a project can be released. Number 230 SUSAN MILLER, testifying from Juneau, stated the proposed changes in the tort system would have catastrophic effects on people in situations similar to hers. Mrs. Miller told of how she started having back problems, making several trips to the emergency room at Bartlett Memorial Hospital where she was given pain medication and sent home, and going to see an orthopedic surgeon. However, her condition continued to worsen and she was eventually hospitalized at Bartlett Memorial Hospital and then sent to Seattle on an emergency flight where she was operated on by an orthopedic surgeon. However, due to the Juneau orthopedic surgeon's failure to schedule her for a timely appointment, Bartlett's emergency department's failure to do adequate follow-up or to advise her to come in immediately, and due to the admitting doctor's failure to recognize her condition, she has been rendered a invalid for the rest of her life. After three years of independent medical examinations, embarrassing depositions and Mrs. Miller's expenditure of over $100,000 out-of- pocket costs for expert witnesses and deposition trips, the defending doctors finally agreed to settle the case after putting her and her family through an expensive and humiliating litigation process in an attempt to wear her down both economically and emotionally. Mrs. Miller referred to the $300,000 cap for noneconomic damages in HB 158, and said given the extent of her injuries, such an award for her permanent disfunction and disfigurement would have been a travesty. She said the wrongdoers in this case only settled this matter out of fear of how the jury would have valued the consequences of their negligent acts. Number 340 DAVID OTNESS, testifying from Juneau, said over the span of 25 years he has had three injuries to his neck, and each one has been debilitating to the point where he has lost work time and had the sad experience of having insurance companies dictate his life and going out of their way to accuse him of being the neglectful party when, in fact, each time he was injured by somebody elses negligence. Mr. Otness noted he faxed a copy of a letter to the committee which he sent to Allstate Insurance Company regarding an automobile accident he was involved in at Auke Bay on June 25, 1995. The letter documents his condition and the lack of anywhere to turn as a result of this accident. However, two months have passed and he still has not had a response to that letter. Mr. Otness read into the record another letter he had written that morning to Allstate asking them why the delay in settling his claim when, in fact, the party who is insured by Allstate has admitted responsibility for the accident. Within five days of the accident, he received $1,000 contingency money from Allstate, but nothing since then. He is still unable to work as a result of the accident and his medical bills, boat payments, moorage fees, etc., continue to pile up. In closing, Mr. Otness said the only tort reform we need is that in favor of injured parties. Number 450 DENISE BEACH, testifying from Homer, stated she is but one representing the many women affected by breast implants. Documents have been uncovered that prove that the companies knew that the products they were manufacturing was and is harmful. She pointed out that she considered and gathered information for eight years prior to proceeding with the surgery. She said had the major manufacturing companies made public the results of tests they themselves conducted, women would not have gotten their implants. She said most of the women who have been affected by the silicone implants are no longer able to work due to their illness and this has created a severe hardship in most cases, and placing a cap on a settlement amount would drastically affect them. Ms. Beach urged that HB 158 not be passed. Number 525 DAVID GOLTER, an attorney testifying from the Mat-Su LIO and addressing the punitive damages portion of the bill, said punitive damages are one of the very few ways that an individual citizen can exert leverage on insurance companies, large organizations, etc. He believes that punitive damage awards are very rare, but, more importantly, the threat of punitive damages makes a real difference in the way that businesses conduct themselves. Insurance companies understand that if they go too far, they face a bad faith claim and they face large punitive damages. He doesn't believe that the $300,000 cap on punitive damages is any kind of deterrent, whatsoever, to one of these corporations who just figure that in as the cost of doing business. He said there is a lot of talk these days about limiting the role of government in the lives of individuals, but, as we do that, the role of punitive damages becomes even more important because it allows the individual to do something when the large corporations do not act responsibly. Mr. Golter said it is obvious that this legislation is taking away the rights of citizens and that it should not pass. Number 685 KIRSTEN TINGLUM, Chair, Alaska Action Trust, testifying in Anchorage, said as an attorney she does personal injury work, and one thing all of her person injury clients have in common is that they come to her office embarrassed and humiliated because they are not getting better, because they have reached the point where nobody is believing them and because they have had to come and see a lawyer. TAPE 95-41, SIDE B Number 007 Ms. Tinglum said she wanted to address a provision in the legislation that will drastically affect the kind of client she is talking about -- the ordinary middle class person who has been injured in an accident and the system is not working for them. Usually in the cases she takes the liability is clear; it was clearly someone else's fault. These cases usually go for about two years before they are settled. The people will be offered something just before trial that basically covers their medical expenses and an additional amount for their attorney. The proposed Offers of Judgment Rule in Section 13 would make it impossible for these people to go through this very simple basic process. It is going to affect the middle class people who work for a living, who own a home, who have something to lose. She urged that Section 13 be removed from the bill. Number 120 BRADLEY PENN, representing Marathon Oil Co., submitted written testimony in support of HB 158 for the committee file. Number 130 BOB NESTEL, a former of insurance broker and former company employee, testifying in Anchorage, referred to a publication entitled "National Underwriter," which says insurers shall profit for the first quarter of this year. One thing that he learned as a insurance company employee and then as an insurance broker is that insurance companies lie -- that what they say and the change that they have got in their pockets are two different things. As insurance company employees, they were taught to believe that what the company said was right. He concluded that he could see no reason for passing HB 158. Number 176 RICK FRIEDMAN, an attorney practicing law in Anchorage, said he primarily represents the average person who has been drawn into the litigation process involuntarily. In response to Senator Miller's question on what can be done to see that more money gets to the right people, Mr. Friedman suggested that pre-judgment rates could be raised so that there is not an incentive for the defense to delay the case. A cap could be put on the amount the defense is allowed to spend defending cases. Referring to the caps on noneconomic damages, Mr. Friedman said if the institutional defendant knows that there is a cap, the worst that can happen by going to trial is "x" number of dollars, then they have more incentive to roll the dice to see how it is going to play its way out. Mr. Friedman speaking to punitive damages, said he is convinced that if those who are in favor of tort reform were to sit on the juries in these cases, they would be convinced that more than $300,000 was appropriate in punitive damages. He noted he represented a woman who went through arbitration, which took two years, and it cost her approximately $12,000 in attorneys fees to recover $20,000 that she was due for her claim. Mr. Friedman said these economic forces do not fear government regulation, they do not fear the legislature, they do not fear public opinion. What they fear is coming in front of 12 regular fair-minded people and having their conduct exposed and having that jury decide what a fair punishment is. What they want is a cap so that the worst penalty they can suffer is $300,000. Number 345 JOHN WHEATLEY, President & CEO, Willis Corroon Corporation, an insurance brokerage firm in Anchorage, voiced his support for HB 158. Mr. Wheatley stated that just as the penalty for every crime is preestablished in criminal law, punitive damages should be based on a preset multiple of actual damages. Since punitive damages are intended as punishment, they should be assessed when malicious intent or willful negligence is proven. The legislation allows juries be told of awards already collected by the plaintiff and previous awards will be deducted from any subsequent judgment. Joint and several liability in the bill is modified so that each defendant only pays based upon his proportionate share of liability for injury or property damages. Number 400 SENATOR TAYLOR asked why the wrongdoer should receive the benefit of the collateral source by being able to deduct that from the amount that is owed to the plaintiff. MR. WHEATLEY said he thinks the intent is to allow the plaintiff to be made whole rather than a more than wholeness. He added that perhaps the wording in the collateral source section needs to be crafted a little better. SENATOR TAYLOR asked if, in his experience, people have made more money off of a claim than they are entitled to, that somehow there is a doubling that occurs because of collateral source. MR. WHEATLEY responded that he has had no such personal experience. Number 495 DICK CATTANACH, Vice President, Unit Company, Anchorage, said Mr. Friedman said that $300,000 was the limit for punitive damages, but as he understands that section, $300,000 is the minimum. He suggested that if that is not the way it comes across, then perhaps that language should be clarified. Mr. Cattanach stated he was testifying on behalf of Alaskans for Liability Reform. They believe that the civil justice system is an inefficient system that must be reformed if the residents of the state are to become more efficient and effective. This means getting more money to the injured party while reducing the total cost involved in the case, and they believe HB 158 has presented many suggestions that can help achieve that goal. They believe the legislation is a reasonable compromise between opponents and proponents of tort reform. TAPE 95-42, SIDE A Number 025 Mr. Cattanach read from a Supreme Court decision which reads: "This court has held that punitive damages are a harsh remedy not favored in law. They are allowed only with caution and within narrow limits (that was in a State Farm case). This hesitance to award punitive damages reflected in AS 09.17.020, which provides that punitive damages may not be awarded in an action unless supported by clear and convincing evidence. To support a claim for punitive damages a plaintiff must prove by clear and convincing evidence that the defendant's conduct was outrageous, such action is done with malice, bad motive, or reckless indifference to the interests of others." SENATOR TAYLOR commented that he believes that is the current law in Alaska and he doesn't see how that is any different from what's in the punitive damages definitional provision within the bill. He added that it may be that that definition wasn't tough enough and the sponsor wants to make it tougher. Mr. Cattanach said a 1993 study entitled "Examining the Work of State Courts" shows that in the period from 1991 to 1993, the number of tort filings decreased by six percent, which is consistent with the statistics quoted earlier by Mr. Feldman. However, in Alaska, it shows the percentage of growth in that period was an increase of 12 percent. The study also shows that the two biggest declines in the filings were in California and Colorado, which was attributed to those states making changes in their tort reform statutes. Number 188 JANET OATES, representing Providence Health System, stated they support HB 158 in principle because they have seen it as an issue of access for health care in Alaska, the issue of physicians who are not available to people especially in the rural areas. They see tort reform as one of the elements, especially for physicians in solving the dilemma of the health care delivery system in Alaska and nationally. Ms. Oates said HB 158 doesn't prevent those consumers who have legitimate cases from receiving appropriate hearings and compensation. It has been their experience at Providence that most of these cases that come before them don't end up in court. She said they see and understand the tragedies and the pain of the Sweet family and all of the others. Ms. Oates said that we are seeing a crisis in health care, and physicians, as well as those in the hospital industry, are going to have change the way they do business because of huge changes and cuts that are being made. The bottom line is that there has got to be a better way of handling the legitimate cases, there has got to be a better way to make sure that the people who are at risk and in need are taken care of. Number 300 SENATOR TAYLOR questioned what the better way is to help people who, like the Sweet family, believe they have legitimate cases but have to spend huge amounts of money in fighting the big hospital corporations and physicians. He said his concern is that there are 26 provisions in a bill that has already passed the House and is now in front of the Senate Judiciary Committee, but he has yet to have one person, under oath, tell the committee how this bill helps the victims in Alaska. He knows how it helps the oil industry, the insurance industry and the defense bar, but not one person has said how it helps victims. Number 360 SENATOR TAYLOR noted that Harlan Knudson of the Alaska State Hospital & Nursing Home Association testified in Sitka that medical malpractice premiums for the hospital association have gone down 25 percent, and he asked Ms. Oates if that was their experience as well. MS. OATES responded that they have done a great deal in risk management, which has made a difference, and their malpractice premiums have gone down dramatically. Number 610 SENATOR TAYLOR stated the committee would stand in recess until 2:00 p.m. for a lunch break. Number 620 SENATOR TAYLOR called the meeting back to order and stated the committee would continue to take testimony on HB 158. Number 630 JANET CAMPBELL, representing the Alaska Public Interest Research Group, stated their opposition to HB 158, primarily because it does not protect consumer rights at all and it is blatantly in favor of insurance companies and wealthier clients. They are especially opposed to Section 2, 4 - 7, 13 and 14. Ms. Campbell noted that an article in Consumer Reports states that consumer products, not including automobiles, are responsible for an estimated 29,000 deaths and 30 million injuries each year, yet tort filings only represent nine percent of the court civil cases, and only four percent of those are product liability cases. She pointed out that in nearly 80 percent of product liability cases that resulted in punitive damages, the manufacturers subsequently took safety measures to prevent additional lawsuits. The only point that has not been covered by previous testimony against HB 158 is that lawsuits are one way to ensure that products will be made safer and, if the responsibility of corporations and insurance companies is lowered for covering these defective products, then there is no way forward in this area. TAPE 95-42, SIDE B Number 001 RODNEY PEDERSON, in-house counsel for the Arctic Slope Regional Corporation, stated the corporation has had a self-insured program covering the liability of their subsidiary since 1987, and they have very important interest in the legislation because they currently cover the first $1 million in liabilities incurred by most of their subsidiaries. One of the important reasons that they continue this self-insured program is the cost, and one reason for the extremely high cost of insurance in Alaska is the relatively small market and relatively few insurers to serve that market. Mr. Pederson said they are not naive enough to think that tort reform is going to drastically reduce the cost or increase the availability of insurance, but it will have a positive effect on self-insured companies like them. They believe that some type of tort reform will benefit not only companies like theirs but will also would assist other companies, including smaller companies who have to rely on the open insurance market to cover any of their potential liabilities. Mr. Pederson outlined three areas that are of most concern to the corporation and that they feel any tort reform legislation should address: (1) they support the concept of finality and potential liability in a cut off to any potential ongoing future liability; (2) they support the goal of predictability and certainty of damages contained in the bill; and (3) they support the concept that a defendant should only be held responsible for that portion of damages which are caused by that defendant's own fault. Number 192 SENATOR TAYLOR commented that if this kind of major change is going to made, then we are really going to have to revisit many of the immunity statutes, and, if, in fact, someone is shielded by a statute of repose so that they are no longer in the game, then somebody is going to have to make a pretty tough call. MR. PEDERSON agreed that a lot of tinkering, balancing and compromising still needs to be done with the bill, but he added that a lot of the basic broad goals they still support. SENATOR TAYLOR said he would appreciate any ideas on how that balance could be drawn. Number 260 COLIN MAYNARD, representing the Alaska Professional Design Council, stated their support for tort reform in general and the statute of repose provided in Section 2. He also stated support for some insurance reform because the current system does not work for either plaintiffs or defendants. Number 325 SANDOR MANYOKY of Anchorage stated he was involved in a car in accident in December 1994 and his family was involved in a car accident in October 1994, and he can testify what they, as a family, went through in dealing with the insurance companies. Under the current system, it is difficult for people like himself to assert their rights against multi-billion dollar insurance companies. Mr. Manyoky believes that there is absolutely nothing in HB 158 that would level the playing field between the plaintiffs and defendants, in fact, it tilts the playing field towards the insurance companies. Mr. Manyoky said he had to take out a second mortgage on his house to pay for his medical bills because the insurance company refused to pay the coverage, and he believes the stonewalling by the insurance companies is not worth the effort. Mr. Manyoky said that we always hear about the greedy attorneys, but the fact is that if wasn't for the attorneys, most of us would have absolutely no chance to recover a dime from the insurance companies. Number 575 DON OBERG, representing NEA-Alaska, stated they do not support HB 158 as currently written for several reasons. NEA believes that the 8-year repose in Section 2 is too limiting. Specifically, they are concerned with how it might impact school districts who have hired a construction firm to do work and after eight years the district would be totally liable, although there could be some attempt to get the money back through filing suit against the construction company. NEA believes Section 4 limits the right of children to bring action against an abuser. As they understand it, the child would need to file a claim while a minor, or the child would have to file a claim within two years of the circumstance which caused it. Sometimes the evidence for what the true impact of that injury is will not occur within two years. There is also the concern about sexual and physical abuse by a guardian or a parent to youngsters in their teens because that child would still be under the guardianship of that abuser and it is unlikely that the child would be able to bring some kind of a suit while still a minor. NEA also believes the cap on noneconomic damages in Section 5 is too limiting. Factors such as psychological and loss of quality of life are not economic, but they are important factors. NEA is also concerned with Sections 11 and 12 because they think they undermine the concept of fair play and do not provide good legal protection for those who are accused. In closing, Mr. Oberg stated NEA-Alaska does not believe the current form of HB 158 is good public policy. Number 675 AL TAMAGNI, SR. of Anchorage, directed attention to Section 5, which is the noneconomic damages section of the bill, and said the American Bar Association came out with a report that recommended that pain and suffering should be limited to the most severe cases. He believes that is what the legislation is trying to accomplish, although all of the monetary amounts may not be accurate. TAPE 95-43, SIDE A Number 001 Mr. Tamagi suggested there should also be an index set on inflation, which was also part of the report, and that those people that elect to have periodic payments, whether by treasury bonds or an annuity, can have those adjusted up annually based on the national CPI whether they live in Anchorage, Bethel, Kotzebue, etc. Mr. Tamagi spoke in support of Section 8 which provides that if a judgment is not paid out as an annuity that the private sector provide some security, although he is not sure that he agrees that the state or self-insured municipality should be excluded from that provision. Mr. Tamagi said he does not agree with all of the language in Section 10, relating to collateral benefits. One of the problems he sees with collateral benefits is that all parties should know who has been paid what by whom, and the current system doesn't work that way. Mr. Tamagi, speaking to Section 14, which relates to prejudgment interest, said he believes that prejudgment interest should be paid to everybody as a matter of right, not as a matter of whether the individual has an attorney or not. He believes that if that were to happen in all settlements, that more people would be adequately compensated and all insurance carriers would play by the same rules. Mr. Tamagi also pointed out that the Supreme Court takes all of the proposed rule changes and runs them by the Alaska Bar Association, but there is never any public comment taken because they are exempt from the Administrative Procedures Act, and he suggested that the committee should take a look at that and provide the opportunity for the public to comment on all civil rule changes. Mr. Tamagi also suggested that the small claims limit should be raised to $12,000, which would allow lay people who have small claims and cannot afford to be represented by an attorney to go into the small claims court to attempt to recover those smaller claims themselves. Number 373 DR. PAUL WORRELL of Anchorage said people testifying have talked about the right to litigate, but no one has talked about the right to medical care, which many people consider a right in our culture. He said it reminded him of how the two rights are in conflict; almost like on a balance scale one denies the other because there is a limited amount of resources in our communities. Dr. Worrell noted that an obstetrics doctor who moved to Anchorage paid $12,000 for her insurance in Washington and is now paying $60,000 in Anchorage, a cost which she has to pass on to the patients, and he is finding that these people don't have the resources to pay this extra cost and they are squeezing down their medical care. He said denying care is becoming a reality, and he believes that there can't be an infinite right to litigate. Dr. Worrell stated he is basically in favor of passage of the legislation before the committee or something similar because it is a step in the right direction of rebalancing the financial resources of the community. Number 505 LES GARA, an Anchorage attorney and a board member of the Alaska Public Interest Research Group, stated HB 158 is being sold to the public as if it is going to close the courthouse doors on people who would bring frivolous lawsuits. However, the public doesn't realize that there currently are laws that punish very severely for filing a frivolous lawsuit. He said the insurance industry does a very good job of publicizing those cases where somebody, not really done an injustice, has recovered a lot of money, but those cases are extremely rare and there are means to deal with them. Mr. Gara said there is provision in HB 158 that seeks to protect people who with malice or reckless disregard for your rights have caused you great injury, and he questioned why those people are being protected. The legislation punishes people who have valid lawsuits, who have been done an injustice, and have proven to a jury that they have been done an injustice. Mr. Gara said the roads to justice these days are getting narrower, but there is still one outlet for people -- when they've been done an injustice, they can still go to the courts. However, the reality of today is that the vast majority of people who have been done an injustice can't afford to go to court, so the courthouse doors are already somewhat closed and HB 158 will close them even more. TAPE 95-43, SIDE B Number 025 SENATOR TAYLOR asked Mr. Gara if he thought the definition of punitive damages, as contained in a recent decision by the Supreme Court, is a harsher or tougher definition than that which is contained within this legislation. MR. GARA responded that the Supreme Court standard for punitive damages is very similar in this bill, but he does not think it is a wise use of the legislature's resources until somebody can stand up and say why this is better and why this will result in more justice than the punitive damage measure that is very, very similar and exists right now. SENATOR TAYLOR stated it has been his experience, as well as that of other attorneys he knows, that there have been very few cases that have had a punitive damage award. MR. GARA agreed that the punitive damage awards in the state are few and far between. Mr. Gara addressed several problematic provisions in the legislation, including the offers of judgment provision, which, he said, imposes fairly harsh penalties against a plaintiff who rejects a settlement offer. He said currently the penalties for rejecting a settlement offer are bad and this bill makes the stakes for rejecting that offer even worse. He added that it is not right for an individual who has no money to be given a choice to take partial compensation for an injury that he knows he should get fully compensated for. It is only right if the lawsuit is between two big power houses. In closing, Mr. Gara suggested that if the legislature wants to say that they are doing something about frivolous lawsuits, let them do something about frivolous lawsuits, not good lawsuits, which this legislation does. Number 340 A letter in support of HB 158 from John J. Smith, M.D., President of the Alaska State Medical Association, was submitted to the chairman for inclusion in the committee record. A letter in opposition to HB 158 from Elaine M. Bales of Anchorage was submitted to the chairman for inclusion in the committee record. Number 345 BILL COOK, an Anchorage attorney, stated that for the past 10 years he has represented many Alaska women in the Dalcon Shield case, as well as women who had silicone and/or saline breast implants. He estimated that out of the 440,000 claimants who have registered with the multi-district class action settlement in the northern district of Alabama that at least three to five hundred Alaska women have had breast implants. He noted that since these cases are not in litigation, very few of those 440,000 registrants had a lawsuit filed, and, if these Alaska women choose to exercise their right under the settlement and under our laws and constitution to enter litigation, he is afraid that many of these people will file their lawsuit after this bill has become the law of the state of Alaska. He questioned why the legislature isn't doing something for these women who have been injured because of the deception of these birth control methods and breast implants. TAPE 95-44, SIDE A Number 050 ERIC JENSEN, an attorney practicing law in Wasilla and testifying in opposition to HB 158, said it is bad for the state of Alaska and the people don't need it. He said out of all the problems with this bill, the changes in allocation of fault that allows the plaintiff to bring in all potential parties is the worst because it literally makes it possible for a plaintiff to take a risk of bringing a lawsuit. Mr. Jensen said he agrees with Senator Taylor that the current system is working, although it could possibly work better, but it is a system that has developed over hundreds of years. Mr. Jensen referred to Section 1, which is the purpose section of the bill, and he said he cannot see how the purposes that are listed are at all justified by the content of the balance of the bill. Mr. Jensen noted that several other people in Wasilla had wanted to testify on HB 158, but they had to leave because of other commitments, and they asked that he register their strong opposition to the legislation. Number 120 NORMAN DENNIS of Wasilla said he was injured in 1991, although he personally is not have any problems with the insurance company. However, he spoke in opposition to the punitive damages, collateral benefit, the offers of judgment of sections of the bill. He said in reading through the bill, he can't find even one thing that he could possibly benefit from as a claimant. Number 175 SENATOR TAYLOR agreed with Mr. Dennis, and he added that he has read the preamble in the bill and he doesn't see how it does any of the things it says in its preamble, but it certainly does do 26 different things that make it much more difficult for people like Mr. Dennis to bring a suit, even though it says it is going to help people like him. Number 215 TIM DOOLEY, an Anchorage attorney, stated his opposition to HB 158, particularly the punitive damages changes. He said some people have testified that they want the punitive damages to be more predictable, but he suggested that the very value of punitive damages being assessed is their unpredictability. He questioned why the defendant who has willfully, intentionally, or recklessly disregarded the rights of others should be protected at all by a cap on punitive damages. He added that he is unaware of any insurance contract in Alaska that pays for punitive damages in any case. He said he understands the insurance industry's concern in trying to place a cap on punitive damages because then they can have some predictability at trial. He believes some of the motivation behind HB 158 is based on what may be happening in other states. Mr. Dooley said that as a lawyer, if he brings a lawsuit that is frivolous, he is faced with Rule 11 sanctions, his client is faced with Rule 82 attorneys fees, he and the client can be faced with a lawsuit for abuse of process, etc. As an example, he played a one minute taped voice mail message from a woman concerning a possible lawsuit against Fruit of the Loom, and he said there was no way on earth this woman has a valid suit, and there is no way on earth any lawyer with any sense would have taken on such a suit because we already have the protections in place to avoid this kind of ridiculous lawsuit. Number 355 There being no further witnesses to testify on HB 158, SENATOR TAYLOR adjourned the meeting.