CSSSHB 58(FIN) am CIVIL ACTIONS/ATTY FEES/INSURANCE CHAIRMAN KELLY called the Senate Rules Committee meeting to order at 8:08 a.m., and noted the presence of Senators Leman, Duncan and Kelly. CHAIRMAN KELLY brought HB 58 before the committee and directed attention to a draft SCS CSSSHB 58(RLS) version "Z." He noted that Representative Porter worked on the draft committee substitute, and over the past several days has been in contact with many of players involved, both those that support tort reform and those that oppose tort reform. He then requested that testimony be limited to the differences between the Senate Finance Committee version and the Senate Rules Committee version. Number 040 REPRESENTATIVE PORTER related that discussions have been going on with representatives from the Executive Branch in trying to reach, at least as much as possible, a consensus on this legislation. While a consensus has not been reached yet, he thinks the Rules SCS represents many of the things that were tentatively agreed upon within that process and in the major items is as close as he thinks they can get. Number 075 CHAIRMAN KELLY asked Representative Porter to explain the differences between the previous day's draft, version "X" and the draft before the committee, version "Z." REPRESENTATIVE PORTER directed attention to Section 9 on page 5, which relates to noneconomic damages. He explained that on line 31, within the specific definitions of injuries that could result in a higher level of noneconomic damage recovery, the words "or totally deaf" have been added. REPRESENTATIVE PORTER presented the following comparison of sections in the Finance version and the Senate version. Section 1 provides the legislative intent of the bill. The Finance version added a provision which makes it unequivocal the fact that it is not the intent of this bill to have any effect on existing litigation; specifically, it does not have any effect on the Exxon Valdez case nor any other federal maritime action now or in the future. Many provisions of the bill, both in the Finance version and in the Rules version, are verbatim from the Governor's Task Force. Section 2 is identical in the Finance version and the Rules version, and it is a conforming amendment so as to not amend the Banking Code. Section 3, relating to certain property actions to be brought in six years, is identical in both versions and is verbatim from the report of the Governor's Task Force. It removes the existing six- year statute of limitations for recovery of, or damages to, personal property, and reduces it to 2 years in Section 7. Section 4, relating to contract actions to be brought in three years, is identical in both versions and is verbatim from the report of the Governor's Task Force. It adds a new section which imposes a three-year statute of limitations on contract actions, thereby reducing it from the existing six-year statute of limitations. Section 5 is the statute of repose. It has been altered slightly from the Finance version to take into consideration additional coverage or protection for children. On page 4, line 14, whereas as an exception to the statute of repose the facts would give notice of a potential cause of action of a minor are not discoverable in the exercise of reasonable care by the minor or the minor's parent or guardian. The Rules version changes the statute of repose from 8 years, as provided in the Finance version, to 10 years. Section 6 is identical in the Finance version and the Senate version, and is the standard two-year statute of limitations Section 7 is a conforming amendment. Section 8, relating to disabilities of minority and incompetency, gives the other half of the protection for children, and it basically provides that the two-year statute of limitations is tolled completely during the period of a child's life from 0 to 8, which, in effect, provides the opportunity for a child or their parent or guardian to file a suit for any instance that occurs and isn't discovered up until the child is 10 years of age. Section 9 relates to noneconomic damages. Both versions put a finite cap on noneconomic damages. The Finance version caps noneconomic damages at $300,000 per occurrence, and the Rules version changes that figure to $500,000, or the $10,000 per year of life expectancy, which, in a long period of years, would even exceed $500,000. In the Rules version, for severe injuries the cap would be $1.5 million or $30,000 per year of life expectancy. Section 10 relates to punitive damages. The language that defines the court procedures and the elements that are necessary to find punitive damage and then the items that the jury should consider when determining the level of punitive damages are verbatim out of the task force report. Representative Porter noted that they stayed with the process of the Finance version for the exception to this cap, making a firm cap rather than a variable cap like the task force recommended. In the Rules version, the caps are raised very substantially to the greater of four times compensatory damages or $3,000,000. As in previous versions of the bill, 50 percent of the award of punitive damages goes to the state. Section 11 relates to apportionment of fault. Representative Porter noted concessions have been made moderating the position previously held in the apportionment of fault area. The concession in the Rules version recognizes that if it is known that there may be another person that is responsible and that person or entity is available to be joined, they are reasonably locatable and within the jurisdiction of the court, the defendant then would have to join that person or entity, otherwise fault would be apportioned as indicated to each and every person that was responsible. Section 12, relating to apportionment of damages, is a conforming amendment with that apportionment of fault. Section 13, relating to apportionment of damages; workers' compensation lien, provides that if fault is apportioned to a person not present at trial, they can't be held liable for that and they would have to be sued in a separate action. Section 14 relates to the definition of intentional torts. It is taken verbatim from the task force report and amends AS 09.17.900 to clarify its application to intentional acts. Number 290 CHAIRMAN KELLY interjected that the comparison of the Finance version and the Rules version notes that Sections 12, 13, 14, 15 and 16 of the Finance version have been deleted from the Rules version. REPRESENTATIVE PORTER acknowledged that in trying to seek agreement on this legislation, three contentious sections, Sections 12, 13 and 14, were deleted. Section 15, relating to expert witness qualification, is slightly different in the Rules version from the Finance version only to the extent that it is a rendition of what was in last year's bill. Section 16, relating to offers of judgment, has also been altered. In the Finance version, the offer of judgment provision basically follows the task force report's process. The Rules version makes it a little more of an incentive than what was in the task force report by providing that the offer must be within 5 percent if there is one defendant and 10 percent if there is more than one defendant. Also, in the Finance version, the percentage of attorney fees awarded was 100 percent, 75 percent and 50 percent. The Rules version reduces these percentages to 75 percent, 50 percent and 30 percent. Section 17, relating to offers of judgment, provides that if the offer of judgment recovery exceeds Rule 82 recoveries, which is the existing court rule about prevailing party and attorney fees, then the offer of judgment provision would take precedence over the Rule 82 provision. Conversely, if Rule 82 provision provided actually more recovery than the offer of judgment provision, then the Rule 82 provision would take precedence, but in no case could a party get both. Section 18, relating to interest on judgments; prejudgment interest, takes the fixed rate of prejudgment interest to a floating rate, so as to better tract the cost of money. Section 19, relating to prejudgment interest, conforms with the Supreme Court decision on prejudgment interest, and precludes prejudgment interest from being awarded for future economic and future noneconomic damages, as well as for punitive damage awards. Section 20, relating to judgment for plaintiff; punitive damages, is a conforming section. Section 21, relating to interest in condemnation proceedings, conforms to the flexible rate. Both Section 2 and Section 21 leaves the interest rate in condemnation proceedings unchanged at 10.5 percent, notwithstanding the interest rate change in Section 19. Section 22, relating to medical advisory panels, is verbatim from the report of the Governor's Task Force. It amends AS 09.55.536(a) by making expert advisory panels available to state health care providers. Section 23, relating to expert advisory panel; panel questions, is verbatim from the report of the Governor's Task Force. The proposed changes are intended to clarify that omissions as well as commissions are within the purview of the questions to be answered by the medical advisory panel. Section 24, relating to expert advisory panel; discovery, is verbatim from the report of the Governor's Task Force. The changes allows discovery to proceed within 60 days after the selection of a panel, irrespective of whether the panel has rendered its report. Section 25, relating to expert advisory panel; public sector provider, is verbatim from the report of the Governor's Task Force. The provision makes clear the access of government health care providers to the expert medical advisory panel. Section 26, relating to definitions; health care provider, adds to the definition of "health care provider" some of the more newly developed types of health care activity. Section 27, relating to definitions; professional negligence and professional services, adds new subsections to define professional negligence and professional services in the health care area. Section 28, relating to contingent fee agreements, provides that the 50 percent of punitive damage awards to the state would be taken before contingent fee subtractions would be made. Section 29, relating to civil liability of electric utility, is the same as in the Finance version, and confirms that electric utility activity is a service and not a product so as not to be held a strict liability. Section 30, relating to civil liability of hospitals for certain physicians, is the same as the Finance version. It allows hospitals to have independent contractor physicians in the emergency room, but provides the requirement that the individual physician have liability coverage of $500,000 per incident, and $1,500,000 for all incidents in a year. Section 31, relating to damages resulting from commission of a felony, or while under the influence of alcohol or drugs, is the same as recommended by the Governor's Task Force except for adding the inability of someone who was driving the vehicle under the influence of alcohol and/or drugs from filing a tort claim if that conduct substantially contributed to the injury or to the death that would result from that case. This section requires clear and convincing evidence that the claimant's conduct substantially contributed to the personal injury or death. Section 32, relating to collection of settlement information, is responding to the recognition that was also recognized at the time that the task force met. It amends AS 09.68 by adding a new section which requires civil litigants who settle, or otherwise dispose of a case, to file information about the settlements or judgments, including the amounts received by the attorneys on both sides. This provides that the Alaska Judicial Council, in cooperation with the court, will receive this information on settlements, document it without identifying the parties, and be able to maintain the information that will be useful in fine tuning subsequent legislation in this area. [DUE TO A RECORDING ERROR, THE TESTIMONY ON SECTIONS 33 - 40 WAS LOST AND HAS BEEN RECONSTRUCTED FROM NOTES AND A COMPARISON MEMO PROVIDED BY REPRESENTATIVE PORTER'S OFFICE.] Section 33, relating to insurance reports, is identical in the Finance version and the Rules version. This section is intended to require insurance companies to report information necessary to evaluate the impact of tort reform. Section 34, relating to appointment of independent counsel; conflicts of interest, is identical in the Finance version and the Rules version. This section makes an insurer responsible only for the costs and attorney fees incurred by an independent counsel defending against claims for which the insurer has either accepted coverage or reserved its right to deny coverage. The insurer is not responsible for costs and attorney fees incurred in defending against claims for which the insurer has denied coverage. Section 35 is also identical in the Finance version and the Rules version. In the context of an insured represented by independent counsel, this section allows an insurer to settle directly with a plaintiff as to claims for which the insurer has either accepted coverage or reserved its right to deny coverage, even though the claims for which the insurer denied coverage are not settled. Section 36, relating to workers' compensation lien is identical in the Finance version and the Rules version. This section is a consistency change to the workers' compensation statutes required by the change in Section 19 of this Act. The employer's workers' compensation lien is reduced by the amount of fault attributed to the employer in the third-party action. Section 37, relating to claims against the state for medical claims, is identical in the Finance version and the Rules version. This section is amended for purposes of effecting a consistency change in connection with the reduction of the statute of limitations for contract claims from 6 years to 3 years at the time AS 09.10.053 was split off from AS 09.10.050. Section 38, relating to motion to set trial and certificate, is identical in the Finance version and the Rules version. This section is taken verbatim from the report of the Governor's Task Force. It is intended to improve upon existing Superior Court fast track procedures by providing for a meeting of the parties and a pretrial conference. Section 39, relating to Alaska Rule of Civil Procedure 16.1(n), is identical in the Finance version and the Rules version. This section is verbatim from the report of the Governor's Task Force, and it replaces the pretrial order section of the existing fast track rule with a meeting of parties requirement. Section 40, relating to limited discovery; expedited calendaring, is a new section in the Rules version. It expedites Superior court cases by requiring that in cases involving less than $100,000 the parties take only two depositions, and then try the case quickly. SENATOR LEMAN asked if the Alaska Court System concurred with the new Section 40. CHRIS CHRISTENSEN, Staff Counsel, Alaska Court System, expressed concern that this section was a significant amendment that would result in a tremendous increase in the trial rate and the court system's workload. He said cases under the $100,000 amount are approximately 90 percent of their caseload. TAPE 97-4, SIDE B REPRESENTATIVE PORTER pointed out that there are provisions in the bill that work as very good incentives to settle and not go to trial. A provision requiring the court, like in a criminal case, to calendar and hear that case within 30 and 90 days has been removed. In Section 46 it indicates that the trial shall be set as soon as practicable. He said he thinks that would provide an extension of time so that the offers of judgment and other things that play into this, from this bill's perspective, would reduce considerably the amount of trials that would actually result. It would also reduce the amount of cost during that process. MR. CHRISTENSEN agreed there may be some disincentives in the legislation to trial, but he thinks by reducing the amount of money a person might collect, it is also reducing some of the risks of going to trial, so disincentives to go to trial are to some extent compensated by that. He also pointed out that this change probably affects 15 percent of the retort cases. He said this is not a tort reform provision, this is a major change to the whole civil justice system. SENATOR KELLY asked if the language in Section 40 was from the Governor's Task Force. REPRESENTATIVE PORTER replied that it was from the task force to the extent that it takes the limited provision of cases at $100,000 or less and throws them into a category that is an expedited process, but it doesn't include other provisions within that same area. SENATOR KELLY said the committee would come back to that provision later in the meeting. Section 41, relating to settlement information, is identical in the Rules version with Section 47 of the Finance version and is verbatim from the report of the Governor's Task Force. This section applies the District Court streamlined provisions found in Section 45 and 46 of this bill to Superior Court personal injury and property damage cases involving $100,000 in claims or less. Section 42, relating to medical advisory panel; discovery, is identical in the Rules version with Section 48 of the Finance version and is verbatim from the report of the Governor's Task Force. It amends Civil Rule 72.1(g) by allowing discovery to proceed after 60 days after the selection of the panel in order to expedite obtaining panel reports. Section 43, relating to sanctions for rule violations, is similar in the Rules version to Section 49 of the Finance version in assessing fines against lawyers. It permits fines of up to $50,00 against attorneys, increased from $1,000 under the existing rule. The Finance version permitted fines of up to $10,000. Section 44, relating to sanctions for rules violations, is consistent with the Finance version, and it is a provision that allows the court, the trier of fact, to find against a party who it is determined has lied during the presentation of a case. Section 45, relating to District Court; deposition limitation, is a new section in the Rules version. It requires that in District Court personal injury and property damage cases, depositions be limited to two for each side, unless the parties otherwise agree, or the court for good cause otherwise directs. Section 46, relating to District Court; expedited trials, is new in the Rules version. It requires that all parties must file a memorandum to set the case for trial within six months after service of the complaint, and that the court shall set the case for trail "as soon as practicable" after confirming that all parties have exchanged the discovery materials required by Rule 26(a). Section 47, relating to settlement information, is consistent with the Finance version and is taken verbatim from the report of the Governor's Task Force. It changes Appellate Rule 511 to require the gathering of settlement information at the appellate level. Sections 48 through 54 are conforming court rules. Section 55, relating to alternative dispute resolution, differs from the task force report only to the extent that it proposed a pilot program in the Third Judicial District on arbitration. The Rules version provides that the existing alternative dispute resolution programs that are in existence in other jurisdictions and in the federal system be looked at by the Alaska Judicial Council as they might apply to the caseload in the Alaska Court System, as well as making a recommendation to the Legislature by the beginning of next session on what would be the most efficient form of alternative dispute resolution. SENATOR LEMAN asked why language in Section 55 ties in the cost of the work to be done to a March 17, 1997 Alaska Court System fiscal note. REPRESENTATIVE PORTER clarified that the fiscal note is in the amount of $19,400, and the language in the bill is merely seeking to define the scope of the activity. REPRESENTATIVE PORTER stated that concluded in comparison on the Finance version and Rules version of the legislation. CHAIRMAN KELLY stated HB 58 would be set aside until 5:00 p.m., at which time testimony would be taken and would be limited to the changes between the Senate Finance Committee version and the Senate Rules Committee version. CHAIRMAN KELLY announced the continuation of the hearing on HB 58, and stated the committee would deal with the proposed amendments to the Rules SCS before taking testimony on the legislation. REPRESENTATIVE PORTER explained Amendment No. 1 resulted from a discussion with the Department of Law earlier in the day. In that discussion they found areas that they felt could be improved and be made more clear. He also noted that the amendment makes no substantive changes. JEFF BUSH, Deputy Commissioner, Department of Commerce & Economic Development, said he only question relates to the change on page 10, lines 14 - 16, relating to the fact that the provisions do not apply if the state has not recognized a board that could certify the witness in the particular field or matter at issue. He said the problem is that this state does not do board certification. The boards that exist are occupational licensing boards and are the only kind of boards that he is aware of that might qualify here, and those are boards are not in the position to do certifications, so to speak, on particular expertise. He said if it is the desire to have people certified in various areas of expertise, the department would have to attach a fiscal note to it because it will be an expensive proposition in trying to figure out how to certify people. CHAIRMAN KELLY stated the committee would take a 5-minute recess. Following the 5-minute recess and a discussion with Mr. Bush, REPRESENTATIVE PORTER announced they arrived at wording they could both agree on. It would read in part "if the state has not recognized a board that has certified the witness in the particular field..." SENATOR LEMAN moved adoption of Amendment No. 1 to SCS CSSSHB 58(RLS). Hearing no objection, the following amendment was adopted. Amendment No. 1 Page 4, line 4: Delete "fraudulent" Page 4, line 15: Delete "the minor or" Page 8, line 29: Following "responsible person" insert ", the person is not a person protected from a civil action under AS 09.10.055." Page 8, line 31, through page 9, line 1: Delete "is not a person protected from a civil action under AS 09.10.055 and" Page 10, lines 14 - 16: Delete all material and insert: "(b) The provisions of (a) of this section do not apply if the state has not recognized a board that has certified the witness in the particular field or mater at issue." Page 18, line 10: Delete "defending" and insert "or owed by all" Page 25, line 32: Delete "a pilot" and insert "an" CHAIRMAN KELLY brought Amendment No. 2 before the committee, and he explained it addresses a concern raised earlier in the hearing by Mr. Christensen of the Alaska Court System with Section 40, which relates to expedited calendaring. The amendment provides that this section will only apply to tort cases and not civil action in total. TAPE 97-5, SIDE A CHRIS CHRISTENSEN, Alaska Court System, acknowledged that Section 40 will increase the trial rate, but the amendment will make the increase a much smaller number of trials. Mr. Christensen, speaking to Sections 45 and 46, which he said are two of the three sections that this amendment affects, directed attention to the language on line 11 and 17. He said he has spoken with the court rules attorney and with several judges, and they would be much more comfortable with the potential ramifications of this if the phrase "in exceptional cases" were removed on lines 11 and 17. This would still require good cause to be shown in order to waive these discovery requirements, but it still gives judges in cases a little bit more leeway to change discovery requirements. CHAIRMAN KELLY stated the additional change suggested by Mr. Christensen would be set aside until later in the meeting. He then requested a motion on Amendment No. 2 SENATOR LEMAN moved adoption of Amendment No. 2 to SCS CSSSHB 58(RLS). Hearing no objection, the following amendment was adopted. Amendment No. 2 Page 23, line 2: Delete "cases" and insert "a civil action for personal injury or property damage" Page 23, line 31: Following "action insert "involving personal injury or property damage" Page 24, line 10: Following "However," insert "in a civil action for personal injury or property damage." Page 24, line 17: Delete "Unless" and insert "In a civil action for personal injury or property damage, unless" CHAIRMAN KELLY brought Amendment No. 3 before the committee. REPRESENTATIVE PORTER directed attention to language in Section 11 on page 8, and said the way it was worded it could mean that if there were multiple claimants, that the only person that could be found responsible would be someone who had damaged each claimant. The fact of the situation may be that this one defendant or person damaged one claimant and not another, so it eliminates that situation by eliminating the words "to each claimant." The amendment also deletes the word "or" on page 9, line 4, and replaces it with "and." SENATOR LEMAN moved adoption of Amendment No. 3 to SCS CSSSHB 58(RLS). Hearing no objection, the following amendment was adopted. Amendment No. 3 Page 8, line 28: Delete "to each claimant" Page 9, line 4: Delete "or" and insert "and" CHAIRMAN KELLY asked Senator Duncan if he was ready to offer his proposed amendments. SENATOR DUNCAN responded that he wanted to wait until he heard further testimony from the Administration and others. MIKE SCHNEIDER, Chair, Alaska Action Trust, stated, in his view, the legislation is an ill considered 11th hour effort, and while it has the appearance of some improvements and compromise, it is bill that is crafted by primarily by State Farm Insurance Company's attorney, Mr. Lessmaier. After outlining concerns with specific sections of the legislation, Mr. Schneider said the sponsor's memo on the legislation suggests that many provisions are not controversial, but he believes that virtually the entire bill is controversial. He asserted there is little factual support or any need for any of the changes in the bill. In his closing comments, Mr. Schneider said the Alaska Action Trust group has offered to engage in an audible process of debate, discussion and compromise, but they think that effort has been abandoned in the terms of the bill before the committee. He said neither the Administration or his group agreed to any of it or had input on it, and the bill bears no relationship to either the task force compromise bill or other compromise discussions that took place over the last number of days. SENATOR DUNCAN requested that Mr. Schneider forward a copy of his comments on the legislation to his office. JEFF BUSH, Deputy Commissioner, Department of Commerce & Economic Development, said he thinks the committee needs to remember when working with this bill that a lot of work has been done, there has been a lot of negotiations going on and these negotiations continue to go on, but he feels a little frustrated with the process. He expressed the importance of both the Administration and the Legislature to remember the need to protect the interests of all Alaskans when looking at this particular legislation. Mr. Bush stated the most significant controversial section from the position of the Administration right now is the section relating to punitive damages. The first problem relates to how one gets through the gate into the caps. First of all, it is limited to situations where the party was involved in a prior incident involving personal injury or death. By its very description that eliminates property damage cases from the higher cap. The other kinds of cases that are excluded from the higher cap are bad faith insurance claims. The other part of the higher cap issue which is of some concern is the one free death case, which Mr. Bush believes is a mistake from a policy perspective. He said that by enacting this section with a higher cap limit as an option, we must be saying they are serious incidents that deserve a higher cap, and he believes that particular behavior should not require that someone be hurt before you should be able to punish that particular behavior if you are determining that that behavior is serious enough to warrant the higher caps anyway. Speaking to emergency room doctor liability insurance requirements, Mr. Bush related that he did some research to find out the difference between the numbers proposed in the legislation, $500,000 per incident and $1,500,000 per year, and the numbers that are currently required by the Anchorage hospitals for their doctors, $1,000,000 per incident and $2,000,00 per year, and he found that the difference is 18 percent. He asserted an 18 percent difference in rates is not sufficiently large enough to justify the risk. Directing attention to Section 9 and the "laundry list" on the bottom of page 5, Mr. Bush said it very difficult to define, in the abstract, what particular kinds of cases warrant higher damages than other kinds of cases. As an example, he noted that none of the exceptions include severe disfigurement, but he said if someone was severely disfigured in their face, they may deserve higher noneconomic damages. He said in our judicial system we have traditionally trusted juries to determine a relative scale of severity of injury. He suggested it would be better to remove the specific exemptions and put in some specific language that indicates that in cases of severe disfigurements, severe physical injuries, the higher limits would be more appropriate. SENATOR TORGERSON requested that Mr. Bush provide a comparison of rates for emergency room liability insurance for hospitals in rural areas as opposed to rates for Anchorage hospitals. MR. BUSH responded that he was told that there is, in fact, no difference in rates, that there is one rate for Alaska for emergency room doctors. He added there is only one company that offers rates at the prices set forth in the bill. Most companies offer it at the $1,000,000/$2,000,000 amounts. SENATOR DUNCAN asked Mr. Bush if he had input on the legislation before the committee, or had that process broken down. MR. BUSH said the Administration did not have any direct influence on the legislation before the committee other than their involvement in the amendments adopted earlier by the committee. However, they have been involved in a lot of the negotiations relating to the smaller issues. SENATOR KELLY asked if the two majors issues addressed by Mr. Bush were incorporated in the Senate Finance committee substitute. MR. BUSH answered that these issues were in the Finance version but, from their perspective, they are actually better in the Rules version. SENATOR KELLY pointed out that the issues were nothing new, but there has been an attempt to alleviate some of his concerns, although not all of them. MICHAEL LESSMEIER, an attorney representing State Farm Insurance, stated that they did not draft the bill, but they have been involved in the process. He said it is a bill that was generated as a result of concern on the part of many Alaska businesses and many people throughout Alaska; it is a compromise piece of legislation where many changes have been made in order to accommodate some of the concerns that were expressed by literally everyone. Mr. Lessmeier outlined some of the changes made in the legislation, but he said that most of the provisions in the Finance version and the Rules version are the same. He said there were some changes made which are significant and substantial, and they were made to find some middle ground. In his closing comments, Mr. Lessmeier said the Rules version is a compromise piece of legislation, and he urged the committee's support for it. TAPE 97-5, SIDE B SENATOR DUNCAN asked Mr. Lessmeier if he viewed this piece of legislation as something that evolved through the ongoing negotiation process that was started by Senator Miller and brought the parties together. MR. LESSMEIER responded that he thought it was fair to say that it was a result of that, although it certainly isn't something that is agreed upon by both sides, but many of the provisions were changed in an effort to reflect concerns. CHAIRMAN KELLY interjected that from his point of view, the negotiations broke down because the Alaska Trial Attorneys don't want a bill, that they would not agree to a compromise version. SENATOR DUNCAN said from information he had, the trial attorneys signed off on an agreement, and he believes it was the other side that backed out. REPRESENTATIVE PORTER said there have been endeavors to reach a compromise piece of legislation over the last three or four years. In the last few weeks, those efforts have continued with the Administration and with the trial attorneys. Everyone was very clear that no one was empowered to make a binding resolution, that anything would be a proposal. He said he was very upfront about the fact that there had to be ratification on the legislative side so as to make sure that the legislation represented comprehensive tort reform. However, the proposal that Mr. Feldman and Mr. Holmes reached did not, and he said it is obvious to him that they will not consider moving to a point in the process that would allow the Legislature to consider a proposal that would still result in meaningful comprehensive tort reform. SENATOR DUNCAN said he heard on the news that an initiative petition had been resubmitted to the Lieutenant Governor's Office on tort reform, and he asked if this legislation passes and becomes law, is this the end of it, or does the initiative still get circulated and there could be a ballot question in 1998 that goes much further on tort reform than this piece of legislation does. REPRESENTATIVE PORTER responded that it is his understanding that if this bill passes and becomes law, that there is no desire to go forward with an initiative. SENATOR DUNCAN offered and moved adoption of the following Amendment No. 4 to SCS CSSSHB 58(RLS): Amendment No. 4 Page 7, lines 18 - 27: Delete all material and insert: "(g) If the fact finder finds that the conduct proven under (b) of this section was motivated by financial gain and the average annual net income earned by the defendant for the five years before the date the trial began exceeded $1,000,000 per year, it may award an amount of punitive damages not to exceed the greatest of (1) the amount calculated under the limitation in (f) of this section; (2) the average net annual income earned by the defendant for the five years before the date the trial began; or (3) two times the amount of financial gain that the defendant received or expected to receive as a result of the defendant's misconduct." CHAIRMAN KELLY objected to the adoption of Amendment No. 4. The roll was taken with the following result: Senator Duncan voted "Yea" and Senators Leman, Torgerson and Kelly voted "Nay." The Chairman stated the motion failed on a 1-3 vote SENATOR DUNCAN offered and moved adoption of the following Amendment No. 5 to SCS CSSSHB 58(RLS): Amendment No. 5 Page 7, line 21: Delete "(1)" Page 7, line 22: Delete ", and" and insert "." Page 7, lines 23 - 27: Delete all material CHAIRMAN KELLY objected to the adoption of Amendment No. 5. The roll was taken with the following result: Senator Duncan voted "Yea" and Senators Torgerson, Leman and Kelly voted "Nay." The Chairman stated the motion failed on a 1-3 vote. SENATOR DUNCAN offered and moved adoption of the following Amendment No. 6 to SCS CSSSHB 58(RLS): Amendment No. 6 Page 8, line 1: Following "(1)" delete "$50,000" and insert "$200,000"; and following "less than" delete "15" and insert "100" Page 8, lines 2 - 3: Delete all material Page 8, line 4: Delete "(3)" and insert "(2)" Page 8, line 6: Delete "(4)" and insert "(3)" Page 8, line 8: Delete "(5)" and insert "(4)" SENATOR TORGERSON objected to the adoption of Amendment No. 6. The roll was taken with the following result: Senator Duncan voted "Yea" and Senators Leman, Torgerson and Kelly voted "Nay." The Chairman stated the motion failed on a 1-3 vote. SENATOR DUNCAN offered and moved adoption of the following Amendment No. 7 to SCS CSSSHB 58(RLS): Amendment No. 7 Page 5, line 24: Delete "injured" Page 5, lines 25 - 31: Delete all material and insert "damages are awarded for severe permanent physical impairment or severe disfigurement." SENATOR TORGERSON objected to the adoption of Amendment No. 7. The roll was taken with the following result: Senator Duncan voted "Yea" and Senators Torgerson, Leman and Kelly voted "Nay." The Chairman stated the motion failed on a 1-3 vote. SENATOR DUNCAN offered and moved adoption of the following Amendment No. 8 to SCS CSSSHB 58(RLS): Amendment No. 8 Page 16, line 8: Delete "$500,000" and insert "$1,000,000"; and delete "$1,500,000" and insert "$2,000,000" SENATOR TORGERSON objected to the adoption of Amendment No. 8. The roll was taken with the following result: Senator Duncan voted "Yea" and Senators Leman, Torgerson and Kelly voted "Nay." The Chairman stated the motion failed on a 1-3 vote. There being no further amendments, CHAIRMAN KELLY requested a motion to adopt the Rules SCS. SENATOR LEMAN moved the adoption of SCS CSSSHB 58(RLS), as amended. Hearing no objection, it was so ordered. SENATOR LEMAN commented that based on what he has seen, in all cases and with the amendments that have been added to either the Finance version or the Rules version of the bill, the movement has been toward compromise. He said that although he doesn't agree with all of the changes, he wouldn't want the record to show that there hasn't been an attempt by the parties to achieve some level of compromise. CHAIRMAN KELLY stated he's not too happy with a lot of the changes, which he thinks have gone too far towards trying to reach a position that the Governor could at least accept. He added that he has given up on trying to reach a position that the Alaska Trial Attorneys might consider, because he thinks the distance between the Alaska Trial Attorneys and the majority of both sides of this Legislature is too vast to reach an agreement on. However, he expressed his hope that the Governor would separate himself just a bit from that crowd and would look at the Senate Rules CS in the spirit to which it was offered as reaching out to his position to try to enact some meaningful tort reform. SENATOR LEMAN moved SCS CSSSHB 58(RLS) be approved for calendaring as the discretion of the Chair. SENATOR DUNCAN objected. The roll was taken with the following result: Senators Torgerson, Leman and Kelly voted "Yea" and Senator Duncan voted "Nay." The Chairman stated the motion carried on a 3-1 vote. There being no further business to come before the committee, the meeting was adjourned at 6:50 p.m.