MINUTES SENATE FINANCE COMMITTEE February 21, 2000 8:59 AM TAPES SFC-00 # 33, Side A and Side B CALL TO ORDER Co-Chair Sean Parnell convened the meeting at approximately 8:59 AM. PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Dave Donley, Senator Gary Wilken, Senator Phillips and Senator Green. Also Attending: BARBARA RITCHIE, Deputy Attorney General, Civil Division, Office of the Attorney General, Department of Law; DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law; KATHRYN DAUGHHETTE, Director, Administrative Services Division, Department of Law SUMMARY INFORMATION SB 250-APPROPRIATIONS: CAPITAL/SUPP/REAPPROP The Committee heard from the Department of Law on judgements and claims requiring a supplemental appropriation. The bill was held. SENATE BILL NO. 250 "An Act making and amending capital, supplemental, and other appropriations and reappropriations; making a reappropriation under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; making appropriations to capitalize funds; ratifying certain expenditures; and providing for an effective date." DEPARTMENT OF LAW BARBARA RITCHIE, Deputy Attorney General, Civil Division, Office of the Attorney General, Department of Law began the presentation. AT EASE 9:01 AM / 9:02 AM Stephen Kilpper v. State Of Alaska, Department of Revenue, Child Support Enforcement Division Dennis P. James, Esquire Ms. Ritchie told the Committee this case went to the Alaska Supreme Court and the total amount of attorney fees and costs is $765.30. Interest on this amount by June 30, 2000 will bring the total to $845.44. She noted the intent is to pay all of the claims before June 30 and avoid some of the interest costs. Ms. Ritchie explained this cost is a standard award of attorney's fees of $500 as awarded by the Alaska Supreme Court. The $245 balance, she said, is "costs". Ms. Ritchie gave complete details of the case and shared that it was a paternity disestablishment case that addressed two primary issues. One issue is whether Mr. Kilpper was liable arrears that predated the disestablishment of paternity. She said the Supreme Court ruled in favor of CSED's argument that biological parenthood is not the only basis on which a court can impose a duty of support. She stated that the acknowledgment of parenthood made him legally bound to support the child up to the point of the DNA test precluded his duty of support. The second issue is whether the trial court should have held a hearing before granting CSED motion to reduce the arrears to judgement. Ms. Ritchie said the CSED did not prevail with the court ruling that a hearing should have been held. She said this involved an interpretation of statutes. Ms. Ritchie assured the Committee that in the future the division would not oppose the hearing and would remind the court of the necessity for such a hearing. Ms. Ritchie said the Department of Law included with the request, a recommendation to the Committee suggesting clarification of the two pertaining statutes to make them consistent with the civil rules. Co-Chair Parnell asked if the Department of Law had taken action to encourage the governor or legislature to introduce legislation to address this matter. Ms. Ritchie answered this recommendation is the only action taken. Timothy P. DuFresne v. State Of Alaska, Department of Revenue, Child Support Enforcement Division Hughes Thorness Gantz Powell Huddleston and Bauman Ms. Ritchie stated that is also a disestablishment of paternity case. The judgement represents $3,060 of the attorney fees and $3000 prejudgment issue. With interest calculated to June 30, 2000 the total is $6459.12. Ms. Ritchie told the Committee that this case also involves the interpretation of statutes, but they are different statutes than the previous case. Ms. Ritchie said the original claim was for the full $15,000 of incurred attorney fees but that the court ruled the plaintiff is only entitled to 20 percent under civil rules. Ms. Ritchie gave complete details of the case that involved a paternity by estoppel argument and a paternity by laches argument noting that a different Supreme Court decision affected the outcome of disestablishment of paternity. Ms. Ritchie noted that the plaintiff was refunded the child support payments collected from him, which were stored in escrow. Ms. Ritchie stated that the Department of Law again recommends the statutes be clarified to avoid similar inconsistency in the future. Co-Chair Parnell explained the supplemental budget process for the benefit of visitors in the audience. Ms. Ritchie noted that Child support enforcement cases are the most complex issues because they affect people's lives. Co-Chair Parnell noted the change in procedure to obtain funding from the legislature. Through the efforts of Senator Donley, a new questionnaire was written that, when completed by the Department of Law, provides detail on the settlement. DEAN GUANELI, Chief Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law presented the next two criminal cases. Cleary v. Smith Perkins Coie Mr. Guaneli said this is the last portion of the attorney fees for the women plaintiffs of the lawsuit. He explained that the females were treated separately in this lawsuit because their complaints were somewhat different. Mr. Guaneli told the Committee that the Department of Corrections converted the Highland Mountain facility into an all-female prison and this took care of the issues involved in the woman's portion of the lawsuit. Mr. Guaneli stated that the $12,528.84 attorney's fee was a modest cost for monitoring the department's efforts to comply with the court order for a year. Hines v. Cooper; Hines v. Armstrong; Hines v. Kincheloe; Hines v. Massey; Hines v. Brew United States District Court, District of Alaska on behalf of John J. Hines Mr. Guaneli explained this is an unusual situation where the plaintiff, who is a state inmate, has filed multiple lawsuits. This payment settles five lawsuits at once. Mr. Guaneli told of the repercussions the plaintiff suffered as a result of turning fellow inmates in for various offences despite the department's efforts to protect him. Mr. Guaneli stated that the plaintiff is currently housed in a private facility out of state and is scheduled for release soon. Mr. Guaneli said the state, in this case, agreed to pay the plaintiff's filing fees for the lawsuits filed against his different attackers. Senator Donley asked why question five of the questionnaire was not completed, "Any recommendations concerning cases of this type in the future?" Mr. Guaneli responded that this is such an unusual circumstance where the plaintiff informed on other prisoners in every facility he was housed. He said the Department of Corrections is confident that it protects inmates who inform on other inmates in all other circumstances. Native Village of Venetie IRA Council et al. v. State of Alaska Alaska Legal Services Corporation Ms. Ritchie told the Committee that this case has a long history and the settlement represents attorney's fees and costs of trial work done in federal district court relating to a tribal adoption case. The total amount is $407,546.13. After June 30, 2000, the interest accrued will bring the amount up to $450,539.83. Ms. Ritchie detailed the case, which had a co-plaintiff of Fort Yukon. She said it involved a birth certificate that the state refused to issue because the Village of Fort Yukon already issued a birth certificate. She spoke of "The List" issued by the federal government identifying recognized Native villages. Ms. Ritchie gave details on the correlation to the Venetie tax case, which has become known as the Indian Country case. She told of how the two cases were combined for much of the process. She noted that the state prevailed in the tax case but lost the adoption case. Ms. Ritchie stated that the sum of the fee would be paid to the Alaska Legal Services Corporation (ALSC), who represented in the adoption case. She said the state is not paying any costs associated with the tax portion of the case. Co-Chair Torgerson asked if the ruling would have been different without the Fort Yukon present on "the list". Ms. Ritchie answered it would have been. Senator Adams noted that in the previous year, a supplemental appropriation was given to fund the Venetie case and asked why this amount wasn't included in that bill. Ms. Ritchie responded this portion of the settlement was not decided by that time. She spoke of the time involved in reaching this settlement. Senator Donley referred to federal legislation governing ALSC's fees. He asked why this claim was made to recover ALSC fees from the state. Ms. Ritchie replied these costs were incurred before the federal legislation was implemented and therefore, the state was liable. She noted another case in the supplemental request also falls under the same provision but that there should be no more in the future. Senator Wilken referred to page four of the backup and wanted to know how the state could be held liable for violation of civil rights on a matter related to birth certificates. Ms. Ritchie responded that by the state not recognizing the tribal adoption, the court held that the violation of that law constituted as a violation of constitutional rights. She agreed it is a difficult issue with regards to civil rights. Senator Donley found it more ironic that the state originally funded the ALSC who filed the lawsuit and that the state was again required to pay the ALSC. Senator Adams commented about the supplemental funds appropriated to the Department of Law to fight the Village of Venetie on tax issue. Senator Phillips wanted to know who was the "state" in this situation, the Department of Law or the CSED. He referred to the Court's statement ".the state should determine on adoption.". Ms. Ritchie said it is the Bureau of Vital Statistics under advice from the Department of Law. There was further discussion between Senator Phillips and Ms. Ritchie on the quality of advice given by the Department of Law on this case. Tape: SFC - 00 #33, Side B 9:47 AM Senator Green wanted to know if the department was satisfied with the accounting as stipulated in question number four, "Did we challenge plaintiff's request for costs and fees or in other ways seek to reduce the costs to the state? If so, describe to what extent we were successful." Ms. Ritchie replied she was satisfied because she knew the effort put into the case. Senator Green wanted to make sure the claim did not include extra costs or costs associated with the tax portion of the case. Ms. Ritchie assured her it did not. Larry Coffman v. State Of Alaska Clifford, Lyons and Garde Ms. Ritchie explained this was a whistle blower law case that the state settled. She said Mr. Coffman alleged the state did not hire him as an electrical engineer because he was a whistle blower at Alyeska Pipeline. She noted there was a great deal of findings involved in this case. Ms. Ritchie stated the $155,000 settlement is inclusive of attorney's fees and costs and represents one year of back pay and $60,000 for attorney's fees. She talked about the judge assigned to the case and his recommendation of a settlement. Senator Donley asked what state employee made the decision not to hire Mr. Coffman and if the employee is still employed by the state. Ms. Ritchie said she did not know and that the matter should probably not be discussed in an open meeting forum. Co-Chair Parnell asked if the matter needed to be addressed in an executive session because it is a personnel matter. He asked if the witness knew whether the employee was still employed. Ms. Ritchie did not and she also did not know who that employee was. She talked about the decision to hire based on the qualifications. Senator Donley felt that the plaintiff must have had good cause since the judge recommended settlement close to the amount of the original request of $200,000. He wanted to know who was the state employee. Ms. Ritchie spoke of efforts to educate the Department of Labor and Workforce Development on federal whistle blower laws and hiring procedures. Senator Donley felt that was a good step but he believed the employee needs to be held accountable. He wanted to know if the individual has received any sanctions. Co-Chair Parnell asked whether the settlement was subject to appropriation. Ms. Ritchie said it is based on appropriation. Co-Chair Parnell asked the status of the case and if any summary motions had been filed. Ms. Ritchie responded that motions had been filed but not decided before the settlement was reached. She referred to the Newton case from the previous year saying this is a similar case. Senator Donley wanted accountability from the Department of Law and understood the necessity of going into an executive session to deal with the personnel matter. Co-Chair Parnell requested more detailed information on the status of the state employee responsible for the decision not to hire the plaintiff. Ms. Ritchie agreed and it was determined that some of the information could be provided since it is already part of public record. Senator Wilken was not as interested in names as much as procedure. He wanted detailed information with names blacked out. He wanted to know if the individual had done this before, if any action was taken against him or her, etc. Senator Donley said that would be acceptable to him. He stated he wanted to be assured that reasonable action was taken to prevent a similar situation in the future. Senator Green asked when the hiring event occurred. Ms. Ritchie did not know. Timothy Wrightson v. State Of Alaska, Department of Revenue, Child Support Enforcement Division Ken Kirk Ms. Ritchie said this was a child support enforcement case, resulting from an administrative appeal, with the state owning $880.25, or with interest, $952.96. She stated that the court awarded $750 in attorney fees, which was half of the original request plus costs to Mr. Wrightson's employer. She explained the Child Support Enforcement Division (CSED) calculated the plaintiff's child support obligations based on his earnings over the last five years. The plaintiff challenged that, arguing that only his current earnings, which had decreased over time, should be considered, according to Ms. Ritchie. She said the plaintiff also argued that the hearing examiner should have considered the issues relating to different child custody laws in the State of Kansas where the child resides, even if the plaintiff did not raise those concerns during the hearing. The court agreed that the hearing examiner should have made those considerations and that the division should have calculated child support under the exceptional circumstance guidelines. Ms. Ritchie told the Committee that the Department of Law is working with the CSED to ensure hearing examiners "bend over backwards" for pro se litigants. She believed that the hearing examiner in this case did not know about Mr. Wrightson's defenses. Ms. Ritchie spoke about the offer Mr. Wrightson had made to the State of Kansas that was rejected and the length of time the State of Kansas took to bring the paternity action and action for child support. State Of Alaska, Department of Revenue, Permanent Fund Dividend Division v. Joan Hale and Joan Hale v. State of Alaska, Department of Revenue, Permanent Fund Dividend Division Ms. Ritchie explained this item is the automatic award of $1000 by the Supreme Court for attorney's fees plus $105 in costs and $2,276.88 in attorney's fees and costs at the superior court level. With interest, the total of both cases equals $4,349.16. Ms. Ritchie stated that this was a case of whether the plaintiff should be allowed a permanent fund dividend while out of state because of her spouse's military service. Ms. Ritchie said two Superior Court rulings, one on the Zyler case and the other being this Hale case were inconsistent in their determination. At the time, she said, the Department of Revenue followed the Zyler decision, which ruled that spouses could no longer piggyback on allowable absences of their spouse. Ms. Ritchie noted that since the time of these cases, the legislature amended the statute to specifically allow the piggyback. Therefore, she said this question should not come up again. Co-Chair Torgerson asked the interest rates on the last three claims. He noted that some were 10.5 percent and others 7.5 percent. KATHRYN DAUGHHETTE, Director, Administrative Services Division, Department of Law responded that the Wrightson case is 7.5 percent and the Hale is 10.5 percent. Fair Business Practices Ms. Daughhette spoke to the request in Section 11 of SB 250. She told the Committee that the Department of Law received $180,000 in statutory designated program receipts for FY00. Ms. Daughhette stated the department has been working on the Carrs/Safeway merger and that the stores are refunding the department for costs incurred. She noted the reimbursement amount would exceed the amount of statutory designated program receipts appropriated because the department anticipates expanding efforts in this area using the same fund source. She detailed the costs incurred in the Carrs/Safeway merger for the economist total approximately $100,000. She said the supplemental request is for $40,000. Ms. Daughhette next addressed Section 11 (b) of SB 250, lapse date extensions, noting that the Department of Law will withdraw that request because both the House and Senate finance committees will include those appropriation in the FY01 operating budget. Senator Adams asked how much would lapse. Ms. Daughhette answered approximately $156,000 in medical procedures will lapse. She was unable to predict how much of the tort reform amount would lapse, but said it would be insignificant. Senator Donley asked if the Department of Law was handling the settlement by the University of Alaska for claims associated with the climbing accident. Ms. Ritchie said the department was not involved and the University would be making a separate presentation on their supplemental request. Co-Chair Parnell referred to Senator Donley's comment about the state funding organizations that file litigation against the state and then the state being charged again for the suit costs. He spoke of a case he saw in private practice. He wanted to know if the Department of Law had looked at the big picture. Ms. Ritchie said the department had not and she clarified that the entities the legislature funds has no interest to the Department of Law. Senator Donley asked Ms. Ritchie to find out specific information relating to the University of Alaska climbing accident case. Senator Donley asked if the cases brought before the Committee today and included in the supplemental were the only ones. Ms. Ritchie said she learned of three more that just happened. She said one addressed a Department of Natural Resources land sale, another addressed an employment case and the third is a child support enforcement case. She predicted that the total of those cases would be $280,000 plus interest. Senator Phillips told of an incident in Eagle River between the state and the Municipality of Anchorage where he had to tell the Department of Law that it would cost more if the matter were taken to court than it would cost to fix. He said he called the Department of Law and threatened that he would not vote for the appropriation to fight the case. He asked the witness what is the internal process for determining which cases are feasible to pursue. Ms. Ritchie responded that there is a lot of ongoing litigation handled by the Department of Law. She stressed that professional staff is making those decisions all the time. She detailed the considerations given to each situation. Senator Wilken revisited the Venetie case stressing that he is trying to understand how the state violated any civil rights or committed a willful act. "I'm looking for the 'harm' that came to the plaintiff that would cause the state, some ten years later, to be asked to pay the attorney's fees." He believed all parties went into this with "eyes wide open" and that there was a legitimate legal question to be determined. He thought if the children were harmed it was because parents chose to have a village birth certificate rather than one issued by the State Of Alaska. Ms. Ritchie gave details of the birth certificate and tribal adoption process. Ms. Ritchie suggested providing the Committee with the court decisions that explain why the court made its finding and also to prepare a summary for Senator Wilken's benefit. She said the basis for the ruling was that children have rights under the Child Indian Act. Senator Wilken stated that all he is looking for is "who was harmed." Co-Chair Parnell requested that the witness prepare the summary and provide the court decisions. ADJOURNED Senator Parnell adjourned the meeting at 10:28 AM. SFC-00 (12) 02/21/00