SB 338-CLAIMS AGAINST STATE EMPLOYEES  MS. GAIL VOIGHTLANDER, Assistant Attorney General, Department of Law (DOL), told members that she is the supervising attorney for the tort and workers' compensation section of DOL and is therefore familiar with the litigation that arises in tort lawsuits filed against the state and state employees. SB 338 provides the ability, at the commencement of a lawsuit, to dismiss individually named state employees and substitute in the state as the defendant. The federal government handles claims against individually sued employees in that way under the Federal Tort Claim Act. MS. VOIGHTLANDER walked members through an example of a typical case in which several state employees, including a nurse, who work at the Anchorage jail, are sued for negligence in providing medical care to the inmates. Under existing law, the plaintiff can name whomever he wants to name as a defendant in the action. Typically, up to five state employees may be individually named in lawsuits filed by inmates. Under SB 338, if the state employees named in the action were acting within the course of their employment, the attorney general would certify that to be the case. Those defendants would be dismissed and the state would be substituted in as the defendant. MS. VOIGHTLANDER said the implications of dismissal from a lawsuit for an employee are that the employee no longer has to worry about the lawsuit, the amount of time the employee has to work on the case is diminished, and employees no longer have to disclose that they are a party in litigation on loan applications. In certain cases in the past, employees have had mortgage loans at least slowed up because of that disclosure. More importantly, the public will be well served by SB 338. The individually sued state employees who are no longer defendants are less distracted from giving the public their full attention. She said at any given point in time, DOL is defending in excess of 100 individually named state employees in lawsuits. These include correctional officers, Department of Transportation heavy equipment operators, medical staff in correctional facilities, social workers, managers, and division directors up to commissioners. Lawsuits can also involve retired state employees or employees who have left state service for other employment. When those people are sued, they must take time off from other jobs to defend in the action. MS. VOIGHTLANDER maintained that SB 338 will make efficient use of the state's time and resources by converting a claim against any number of state employees into one against the state. Typically, the state is already named in the lawsuit, primarily for the reason of vicarious liability for the actions of its employees. She noted that in her experience defending these cases for the state since 1987, being individually sued is a big distraction for employees. In addition, her workload is increased by the fact that she has to keep the individual employees informed of the progress of the case, get their input on major strategy decisions and involve them in responding to discovery requests. SB 338 will create a more efficient use of both employees' and attorneys' time. She said given the choice, she believes most employees would prefer to be dismissed from a case. SENATOR OGAN asked Ms. Voightlander to respond to the argument that dismissing employees from such lawsuits will essentially grant them immunity and minimize any motivation to be more careful. He maintained that some people are motivated by greed when they file such lawsuits but others have legitimate cases. He pointed out that at one time, some of the employees at the Pioneers Homes were irresponsible. MS. VOIGHTLANDER had a number of responses to that concern. She said first, any state employee who is not performing on the job is subject to discipline. That is always a route to correct a state employee who is not properly charging his or her duties. Second, in terms of litigation as a corrective process, under the collective bargaining agreement, employees are defended and indemnified by the state for negligent acts. SB 338 will not change the economic picture against the employee; it only changes the employee's involvement in the lawsuit. Therefore, lawsuits alleging negligence are defended by the state. She added that the attorney general would not certify an individual employee and dismiss that employee from the lawsuit under SB 338 if the employee was not acting in his or her course of employment. In addition, the bill does not cover actions for violation of federally protected constitutional rights. This parallels the federal provision, which does not involve the certification process for those types of claims. A violation of civil rights claims requires more than mere negligence, in terms of the conduct that is alleged to be in violation of a person's constitutional rights. In addition, the state cannot be a defendant in 1983 actions so for those state employees who allegedly violated a person's federal constitutional rights, this certification process does not apply. She concluded that in her years of defending these cases, when a legitimate claim of negligence is found, the problem is often systemic or due to the way business was conducted and so one employee was not accountable. SENATOR OGAN said it is his opinion that disciplining classified state employees is almost impossible because of the collective bargaining agreement, which also indemnifies them. He felt that setup discourages the good workers by covering for the bad ones and lowers the common denominator. CHAIR SEEKINS asked if the common practice, when a suit against a state department is brought, is that the suit usually names the commissioner, perhaps the regional director and a lot of people who have no knowledge of the transaction. MS. VOIGHTLANDER said that is exactly her experience. Often the litany of defendants in the action includes the commissioner and director and then line employees, who most often had no knowledge of the transaction at issue. She has defended lawsuits filed against individual state employees by inmates who alleged that a certain corrections officer did something at a certain facility when she was able to determine that officer wasn't even employed at that facility during that time period. CHAIR SEEKINS asked if not all people who are sued are covered under the collective bargaining agreement. MS. VOIGHTLANDER said that is correct. Many employees are varying levels of state service are not subject to collective bargaining. Some collective bargaining agreements do not even address defense and indemnity. CHAIR SEEKINS asked Ms. Voightlander to address the chart in members' packets entitled, SB 338 - HOW IT WORKS, which says when the claim for damages comes up, the attorney general will decide whether to insert itself in place of the employees. MS. VOIGHTLANDER explained that when a lawsuit is filed in the court and served upon the defendants, the individually sued state employees would notify DOL. The attorney general would review the allegations and the complaint, and interview people to determine whether the employees were acting within the scope of his or her employment. If the attorney general certifies that an employee was acting within the scope of employment, that employee is dismissed as a defendant in the action and the state is substituted. If the attorney general determines that an employee was not acting within the scope of his or her employment, no certification would occur and the state employee would remain as an individual defendant in the action. However, SB 338 contains the mechanism used by the federal government so that the state employee may challenge the attorney general's decision to not certify by petitioning to the Superior Court. If the Superior Court determines the state employee was acting within the scope of employment, the employee is dismissed from the lawsuit and the state is substituted in. If the court affirms the attorney general's decision, the employee remains a defendant in the action. CHAIR SEEKINS indicated that the explanation makes him feel more comfortable with the process but in his industry, when a customer is dissatisfied with the product, the customer would sue him, the dealership and the Ford Motor Company, which goes through a process to determine whether or not Ford Motor Company would want to assume the defense for the dealership and any of its employees. The determination is based on whether the problem was product related or performance related on the part of the dealership. He thought that is a common procedure within the franchise world. Additionally, it is fairly common practice for attorneys to name as many people as they can in trying to find "as many pockets as they can to raid in a situation like this." He felt SB 338 presents a reasonable procedure. SENATOR FRENCH noted Ms. Voightlander mentioned that Section 1983 claims would not be covered by this bill. He asked if she was referring to claims that allege a violation of the U.S. Constitution by a state employee and, if so, for an example of such a claim. MS. VOIGHTLANDER said most commonly, DOL sees lawsuits filed on the basis of Section 1983 law, a federal law that may be enforced either in state or federal court against Department of Corrections' employees and Alaska State Troopers. The cases usually arise out of searches, arrest procedures, the initiation of investigation, and prosecution and they are randomly filed against judges, although judges have absolute immunity for judicial acts. She concluded, "So the areas we most frequently have Section 1983 allegations, numerically at least, would probably be pro se inmates filings against correctional staff, whether correctional officers or the medical providers. SENATOR FRENCH said it is his understanding that some types of claims an individual can sue a state employee for would be lost in this bill. Those claims could not be maintained once the state substitutes itself in. He asked her to list those types of claims, should SB 338 be enacted. MS. VOIGHTLANDER cited the excluded claims under AS 09.50.250, which is the sovereign immunity statute for the state: · Claims having to do with discretionary decisions or policy decisions · Damages caused by imposition or establishment of a quarantine by the state · Claims that arise out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, liable, slander, misrepresentation, deceit, or interference with contract rights. MS. VOIGHTLANDER pointed out that if a state employee under the definitional section was not acting within the course of employment, such as with intentional misconduct, no certification would occur and the individual employee would remain a defendant in the action. The claim could be made against the employee, but not against the state. SENATOR FRENCH encapsulated that a state employee cannot commit assault, battery, abuse, slander, or deceit without falling outside the scope of his or her employment. MS. VOIGHTLANDER said it depends on the nature of the facts and whether the requirement of those specific torts would take them outside the definition of course and scope. She said she believes there are some fact patterns that would not do so and that the attorney general does not base his or her decision on the mere allegation. He said although someone may allege an assault by a state trooper, it may be determined that no tort was committed because the trooper was authorized to use reasonable force. CHAIR SEEKINS pointed out that an undercover narcotics officer would be authorized to use deceit; otherwise he could not perform his job duties. SENATOR FRENCH asked how SB 338 might affect lawsuits about hiring decisions if a state employee feels he or she has been hired or fired inappropriately. MS. VOIGHTLANDER responded that Senator French's question falls under the area of labor relations, an area in which she has less expertise. If the employee is subject to collective bargaining, that issue would be grieved rather than filed as a lawsuit. The type of tort that is alleged in an instance where an ex-state employee is suing the state for wrongful discharge is not in the list of exemptions. The Alaska case law that has interpreted what is a discretionary act by the state looks to the formulation of policy or the allocation of resources as the germane issue. She indicated those cases are always very fact intensive and she does not believe that is an area that is dismissed as a matter of law because of the discretionary policy call under AS 09.52.050. SENATOR FRENCH said he was looking for assurance that a state employee will not lose his or her ability to sue the state for wrongful discharge. He clarified that the employee will continue to be able to maintain the claim against the state but not against the individual supervisor. MS. VOIGHTLANDER replied that Jan DeYoung was available to answer questions in that area. MS. JAN DEYOUNG, Assistant Attorney General, told members she works in the employment area and defends the state against lawsuits filed by individual employees. MR. SCOTT NORDSTRAND, Deputy Attorney General, Civil Division, told members he could answer the question as he worked in employment law for several years before taking his current position. He maintained that the kinds of claims that are asserted by employees are almost exclusively contract claims. He continued: It's the very rare case where you wind up with tort claims. I've seen cases where you could sue a third party for say, intentional interference with contractual relationship, you know, an attempt to say somehow my supervisor interfered with my contract of employment with the state or any employer. It doesn't really work. So I think in terms of tort claims, you rarely see - or in terms of employment, you rarely see anything other than contract claims, for example for the breach of a specific contract for a term or more commonly the ever popular breach of the covenant to good faith and fair dealing. Those kinds of things are the kinds of claims you would see - and you wouldn't, in employment cases, generally see claims against individuals because the claim is against the employer. The employer is generally not a supervisor, per se. There are attorneys that do that on occasion and try to find torts that they can allege but it's very rare so I don't think it would really be affected by this bill in any meaningful way. Thank you. CHAIR SEEKINS said as a state employee, he would feel much more comfortable about his relationship with his employer knowing the employer, if relatively certain that he was working within the scope of his employment, would come to his aid in defense. SENATOR FRENCH agreed and noted that many district attorneys have been sued over the years for things that happened in court. Those cases are difficult and drag out, and take a lot of time away from the district attorneys' work. He feels SB 338 is a good reform in general. SENATOR THERRIAULT moved SB 338 from committee with individual recommendations and its attached zero fiscal note. CHAIR SEEKINS announced that without objection, the motion carried. The committee took a short recess.