SB 319-CLAIMS AGAINST HEALTH CARE PROVIDERS  MR. BRIAN HOVE, staff to Senator Seekins, sponsor of SB 319, provided the following explanation of the measure. SB 319 amends AS 09.55.548 and .556. The proposed legislation intends to alleviate a growing crisis in Alaska's health care industry with respect to the availability of liability insurance. It places a hard cap on damage awards, clarifies informed consent language, and limits liability with respect to health care advice communicated through electronic means. The fact is Alaska's medical system is breaking down. Alaska ranks near the bottom in the number of physicians per capita. What's more, over half of Alaska's physicians exceed the age of 50. Many will be retiring within the next 10 years. Attracting and keeping adequate numbers of high quality physicians in Alaska is of utmost importance. The availability of liability insurance plays a critical role in solving this crisis. Half of the insurers have ceased doing business in Alaska in the last 12 months. Other professional liability insurance carriers have not shown an interest in doing business in the state, due to the volatile medical liability environment. This is a complex issue. However, one solution that has proven particularly effective in other states is capping non-economic damages. SB 319 intends to help establish a predictable risk assessment environment by placing a $250,000 cap on this type of award. It does not change awards for quantifiable economic damages, such as lost wages and past and future medical expenses. The bill also makes revisions, which limit liability in cases where a patient elects not to follow advice that was communicated by a health care provider through electronic means. Lastly, qualifying language is added relating to informed consent, along with a sprinkling of punctuation marks. But the bottom line is this - instituting a $250,000 cap on non- economic damages will help stabilize the professional medical liability insurance market here in Alaska, thereby reinforcing efforts to attract the next generation of doctors to replace those who are nearing retirement age. SENATOR OGAN asked whether the $250,000 damage award limit includes the attorney's fees. MR. HOVE said they would. SENATOR OGAN asked what the typical contingency cost is for tort attorneys. MR. HOVE said that is determined on a case-by-case basis but the amount is not insignificant. SENATOR OGAN noted if the attorney gets half, and the jury finds the doctor was negligent because he was drinking the night before and did irreparable harm, the patient would only get $125,000. MR. HOVE said a doctor who was drinking the night before would be in a different class and that case would not be subject to this legislation. CHAIR SEEKINS noted that doctor would be guilty of reckless behavior, not negligence, and the bill is not intended to cover any cap for reckless behavior. SENATOR FRENCH said since the committee last heard the bill, the committee has received a report entitled, "Physicians Practicing in Alaska," by the Legislative Research Agency. That report contains one point that runs contrary to Mr. Hove's statement that the system is breaking down; it says the number of physicians is steadily increasing in Alaska every few years. He asked Mr. Hove to reconcile the two statements. MR. HOVE replied, "What I see is state-licensed physicians and I don't know, somebody can tell me if I'm wrong but it seems that licensed is different from actually practicing." CHAIR SEEKINS said he asked whether there is a difference between practicing and licensed physicians in the Senate Labor and Commerce Committee. He noted that he noticed in a chart of physicians with awards against them that many of them had non- resident addresses and he intends to look into why that is. He asked Mr. Hove to find out how many of the physicians who are licensed in Alaska actually practice here. SENATOR FRENCH pointed out the report shows the number of active, state licensed physicians by year since 1985. That suggests to him that they are not retired. CHAIR SEEKINS agreed to follow up on that question and on Senator Ogan's question about whether Rule 82 applies on top of the damage award. SENATOR FRENCH commented that California adopted a $250,000 damage award limit in 1979. He questioned what that amount would be worth in 2004 if adjusted for inflation. He suggested that amount could be the current $400,000 cap in Alaska law now. CHAIR SEEKINS noted the $400,000 cap is a moveable cap with a multiplier effect - it is not a hard cap. He added that California has kept the amount at $250,000. He said he would accommodate one person who flew from Anchorage to testify today and called Mr. Rhyneer. DR. GEORGE RHYNEER, an Anchorage cardiologist, told members he has been practicing in Anchorage for over 30 years. He was instrumental in getting a cardiac program started in Alaska. He explained that the reason he is attending today's hearing is so that he can continue to practice cardiology in Alaska. A number of years ago, insurance companies were "beating down the door" to sell him medical malpractice insurance. Four years ago, only four companies were selling that insurance in Alaska. Last year, his insurance company cancelled his insurance because it was unable to make a go of it in Alaska anymore. That was a mutual insurance company based in Oregon, which is physician owned and passes on the cost of doing business to the physicians. The commercial insurance company, CNA, also left Alaska last year so it left him looking for new insurance and was able to find only one insurance company that could provide him with the insurance company he needed. He said one can anticipate, by looking South, what will happen to medicine in Alaska. He anticipates that things will continue to get worse in this regard as the insurance crises in the Lower 48 will move north to Alaska. Alaska does not have a medical malpractice insurance crisis right now. However, the same problems that led to the loss of insurance companies in Alaska will continue with the current legal atmosphere in the state. Physicians desperately fear they will lose the ability to buy malpractice insurance in the foreseeable future at all. If that does occur, he would be forced into involuntary retirement, as will probably 30 percent of the practicing physicians in Alaska. He cautioned that if suddenly there are minimal medical services, the state will have a real problem, and it could happen abruptly. DR. RHYNEER said that other solutions may be out there, but the legislature needs to come up with a solution because the problem is a legal one. SENATOR OGAN personally thanked Dr. Rhyneer and his crew for their good work. He then said that Alaska's small population is the size of a small city in the Lower 48 and that insurance is a problem in every sector of the economy. He noted that when the legislature last dealt with tort reform legislation, there was a lot of gnashing of teeth and yet those efforts did not stabilize the insurance industry in Alaska. He expressed concern that the problem may be the small market rather than exposure to lawsuits. DR. RHYNEER indicated the insurance companies have assured him that [limiting damage awards] is the single most effective attribute to malpractice legislation that makes a more predictable environment to do business in. He said the insurance companies cannot be forced to do business here. The state has to create a climate that is attractive to insurance companies. If it is not attractive, they will leave. CHAIR SEEKINS thanked Dr. Rhyneer and closed public testimony due to time constraints. He announced the committee would hear an introduction to SB 323 and then reschedule it.