Legislature(2003 - 2004)

03/03/2004 01:58 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 472 - CLAIMS AGAINST HEALTH CARE PROVIDERS                                                                                 
Number 1670                                                                                                                     
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE  BILL NO.  472, "An  Act  relating to  claims for  personal                                                               
injury  or  wrongful death  against  health  care providers;  and                                                               
providing for an effective date."                                                                                               
Number 1720                                                                                                                     
ROLAND GOWER, M.D., said that issues surrounding medical                                                                        
liability reform are very important issues for the state of                                                                     
Alaska and consumers of health care.  He went on to say:                                                                        
     My history  in Alaska  goes back to  1975, when  I came                                                                    
     here in  the military, and  that was about the  time of                                                                    
     the last  liability medical  insurance crises  when the                                                                    
     state  formed MICA  [Medical  Indemnity Corporation  of                                                                    
     Alaska].   I  never purchased  insurance from  MICA; at                                                                    
     that time I  was moonlighting in the  emergency room as                                                                    
     a contract  physician and my malpractice  was furnished                                                                    
     by  a group  out  of California.   But  I  did go  into                                                                    
     private practice in  Anchorage in the fall  of 1977, at                                                                    
     which time there was  insurance available through MICA.                                                                    
     ...  [But]  I  elected   not  to  purchase  malpractice                                                                    
     insurance  ...  and  essentially went  without  medical                                                                    
     liability insurance for four  or five years until after                                                                    
     incorporating my  practice and  being advised  over and                                                                    
     over again by  my attorney ... that  this was something                                                                    
     that I needed to do.                                                                                                       
     And  when  I  married  and started  a  family  and  had                                                                    
     children and  [had] assets to  lose, it  became obvious                                                                    
     that I needed to purchase  insurance.  I have only been                                                                    
     with  one  insurance company  ...  since  1982 ...  and                                                                    
     that's  with   MIEC  [Medical  Insurance   Exchange  of                                                                    
     California] ....   My initial  policy, [which]  was for                                                                    
     relatively  low  limits,  was markedly  inexpensive  in                                                                    
     view  of  today's cost  -  somewhere  in the  range  of                                                                    
     [$3,000 or $4,000] - but  slowly, over a period of five                                                                    
     to  six years  to the  late '80s,  my premiums  rose to                                                                    
     nearly $100,000  ....  Those  were grim days  in Alaska                                                                    
     as far  as medical  liability insurance  was concerned.                                                                    
     And  then, whatever  drives  forces  like this,  things                                                                    
     have changed  over the last  number of years  to where,                                                                    
     up to  three years ago,  my premiums had dropped  for a                                                                    
     policy that was double what it  was in the late '80s in                                                                    
     coverage, to in the range of $20,000.                                                                                      
Number 1861                                                                                                                     
     Over the  last three  years my rates  have gone  up 108                                                                    
     percent,  and  there's  every indication  that  they're                                                                    
     going to continue  to go up - they had  doubled in that                                                                    
     period of  time - and this  can be looked at  as a cost                                                                    
     of  doing business.  ... Any  physician practicing  ...                                                                    
     could  absorb  this  cost,   but  ...  what  frequently                                                                    
     happens  ... is  [that]  it  can be  passed  on to  the                                                                    
     consumer,  which  sets up  a  new  set of  problems  of                                                                    
     increasing the  cost of medical  care.  I'm  not saying                                                                    
     that that's what  will happen in this  instance, but it                                                                    
     certainly is a  solution for the physicians.   But what                                                                    
     also is going to happen, as  I see, if we follow what's                                                                    
     going  on in  the rest  of  the United  States and  the                                                                    
     crises that  are developing in  other [states],  is the                                                                    
     availability of the insurance.                                                                                             
DR. GOWER continued:                                                                                                            
     And  once  it  becomes  not  available,  it  becomes  a                                                                    
     personal problem for me, especially  at [this] stage of                                                                    
     my  career; there  was  a  point in  time  where I  was                                                                    
     willing to  go bare,  [I] didn't have  much to  lose, I                                                                    
     was in  my early 30s and  could recover if I  did lose,                                                                    
     but nowadays - with  the situation of medical liability                                                                    
     and personal assets  on the line, a family  that I need                                                                    
     to think  about, kids  that expect me  to send  them to                                                                    
     college - I probably  would quit practicing medicine or                                                                    
     at least modify what I do.   There are certain areas of                                                                    
     practice  of general  surgery that  are extremely  high                                                                    
     exposure in  liability, and one is  treatment of breast                                                                    
     And  I'm one  the physicians  in the  state who  treats                                                                    
     breast cancer  - anywhere from  40 to 60 cases  a year,                                                                    
     probably in  the range  of a quarter  of the  ones that                                                                    
     [are] treated  in ... Alaska -  and it would be  a real                                                                    
     risk  for me  to  do that  without liability  insurance                                                                    
     because  the  statistically  most likely  area  that  I                                                                    
     would  get  sued in  would  be  treating breast  cancer                                                                    
     patients  and  failure  to  diagnose.    So,  the  non-                                                                    
     availability  issue is  a very  personal issue  for me,                                                                    
     and  it would  make ...  me face  a decision  whether I                                                                    
     could continue  to practice medicine  or not.   I think                                                                    
     that there are a lot  of physicians in ... Alaska right                                                                    
     now  -  where  we  already have,  in  some  areas,  ...                                                                    
     availability problems of specialists  or whatever - ...                                                                    
     who would  make similar  decisions; I cannot  speak for                                                                    
     them, but I think that there's  a lot of people in that                                                                    
Number 1959                                                                                                                     
     Statistics say that over half  of the physicians in ...                                                                    
     Alaska are over 50, and ...  there would be, I think, a                                                                    
     certain amount  of manpower  ... that's  providing care                                                                    
     now ...  [that] would probably  not be willing  to risk                                                                    
     our  life's work  and our  personal assets  without the                                                                    
     availability   of    malpractice   insurance.       The                                                                    
     doctor:patient ratio  in Alaska  ... [is] in  the lower                                                                    
     quarter of  the United States  as far as the  number of                                                                    
     doctors who  practice here; at  one time we had  a very                                                                    
     young population  [and so] that  didn't seem  to matter                                                                    
     so much, but our population  is aging, which means more                                                                    
     health problems  and actually a  greater need  for more                                                                    
     With the unavailability of insurance  in Alaska and the                                                                    
     malpractice climate  that is not favorable,  it is hard                                                                    
     to  recruit  and attract  people  here.   And  I  would                                                                    
     maintain that if this legislative  body could find some                                                                    
     solutions to  the medical  liability crisis  in Alaska,                                                                    
     then we  might be  able to solve  some of  our problems                                                                    
     with recruiting young physicians;  if it was attractive                                                                    
     to come here  and practice in a place  that looked like                                                                    
     it was  going to  be stable  in this  area, I  think it                                                                    
     would  be  easier for  us  to  bring young  doctors  to                                                                    
     Alaska that are specialty  trained and also who provide                                                                    
     primary care.                                                                                                              
DR. GOWER added:                                                                                                                
     ... As  a general surgeon  I started off doing  lots of                                                                    
     things  including vascular  surgery,  which  is a  very                                                                    
     high  liability area.   It  was an  area that  I didn't                                                                    
     have as  much interest in  as say breast cancer,  and a                                                                    
     lot of  us in general surgery  - and this [is]  true in                                                                    
     cardiology and  whatever - have  not only been  able to                                                                    
     specialize but  to ultra-specialize.   And  so somebody                                                                    
     who treats 50  to 100 cases of breast cancer  a year is                                                                    
     going to be a lot  better than the general practitioner                                                                    
     who has the opportunity to  treat only five or ten, and                                                                    
     that   is   something   that  might   change   in   the                                                                    
     demographics  of  the  physicians   in  Alaska  if  ...                                                                    
     there's not a solution reached to this problem.                                                                            
Number 2068                                                                                                                     
     Doctors are  consumers of  medical care  also.   One of                                                                    
     the   things  that   will  happen   to  you   and  your                                                                    
     constituents, and  to physicians in this  state, is the                                                                    
     availability  of certain  specialty care  and high-risk                                                                    
     care if  something is  not resolved  or done  about the                                                                    
     availability   of   malpractice   insurance   and   the                                                                    
     affordability.   I  am very  acquainted with  a surgeon                                                                    
     who recently  has been unable  to get a  procedure that                                                                    
     is  a   high-risk  procedure  involving   injection  of                                                                    
     steroids around the spinal column because of a "nerve-                                                                     
     root  disk"  problem  that  he  has.    He'd  had  four                                                                    
     previous injections  over the last eight  years without                                                                    
     having surgery to  his back; they work  if they're done                                                                    
     and put in the proper space by skilled people.                                                                             
     The  skilled  physicians  who ...  do  this  have  just                                                                    
     recently  lost  their  medical  liability  coverage  to                                                                    
     perform  this procedure  because of  its high  risk and                                                                    
     because  of  the  experience  with  this  procedure  in                                                                    
     Alaska  over the  last 10  years:   there have  been at                                                                    
     least five  [cases] that have  settled for  $1 million-                                                                    
     plus for  mal-occurrences or injuries or  whatever that                                                                    
     occur  [with]  this  procedure.   It's  probably  still                                                                    
     safer than surgery, it works,  but in order to get that                                                                    
     treatment  now there  is maybe  one  other doctor  left                                                                    
     doing it in  Anchorage who has been there  a very short                                                                    
     period of  time.  This  physician would have  to travel                                                                    
     out of  state, to Seattle, to  get it.  So  not only is                                                                    
     it  affecting your  constituents, our  fellow Alaskans,                                                                    
     and  perhaps some  of you  eventually,  it affects  the                                                                    
     medical community too.                                                                                                     
DR. GOWER concluded:                                                                                                            
     So I  think that there  is a crisis looming  in Alaska.                                                                    
     As  you  are aware,  all  but  two companies  that  are                                                                    
     writing  medical malpractice  insurance  have left  the                                                                    
     state; both of these  are mutual doctor-owned companies                                                                    
     ... [and],  at the present  time, they are  limiting in                                                                    
     some  areas  the  specialties  that  they  are  writing                                                                    
     insurance for  and also the  limits of the  policies of                                                                    
     which they are writing.  So  I don't think that we have                                                                    
     a  full-blown crisis  today,  but  every indication  is                                                                    
     that Alaska is heading in  the direction of states like                                                                    
     New York, Ohio, Florida, et cetera.                                                                                        
     So I  would appeal to you  that this is a  problem that                                                                    
     faces all  Alaskans, not only  ... raising the  cost of                                                                    
     medical care  the consumer  will have  to pay,  but ...                                                                    
     the availability  of medical care.   And I  think there                                                                    
     are some things  that we have been used  to, of getting                                                                    
     quality care in Alaska, that  are ... going to go away;                                                                    
     there are  just not  going to  be specialists  here who                                                                    
     are willing to give it.                                                                                                    
Number 2197                                                                                                                     
REPRESENTATIVE  GARA said  that  he  recognizes that  malpractice                                                               
insurance is  high, that there  are only two carriers  in Alaska,                                                               
and  that Alaska  only  trains  about eight  new  doctors a  year                                                               
through the  Washington, Wyoming, Alaska, Montana,  Idaho Medical                                                               
Education (WWAMI) Program.   He asked Dr. Gower  whether he could                                                               
think  of any  other  options that  could be  used  to bring  new                                                               
physicians  to  Alaska  besides cutting  the  amount  of  damages                                                               
people can receive if they are harmed.                                                                                          
DR. GOWER replied:                                                                                                              
     I think  to expect Alaska  ... [to] train  more doctors                                                                    
     ...  is not  realistic. ...  We are  a small  community                                                                    
     when you look  at places like Seattle  and Portland ...                                                                    
     where there  are large medical  schools. ...  There are                                                                    
     never  going  to be  a  lot  of physicians  trained  in                                                                    
     Alaska, ... there  is just not the  ... population base                                                                    
     here to  do that - we  don't have a medical  school and                                                                    
     we never will have one  - it's just not an economically                                                                    
     feasible  thing.   So I  think ...  the more  realistic                                                                    
     thing is to  attract people to come  here and practice,                                                                    
     ... but the  solution is not to train  more people here                                                                    
     in  Alaska,  because  you'll  never  train  specialists                                                                    
     here; even  if you  train primary-care  doctors, you're                                                                    
     not going  to train cardiologists and  you're not going                                                                    
     to  train  surgeons  and  you're  not  going  to  train                                                                    
     neurosurgeons.  It's never going to happen.                                                                                
     So something needs to be  done to stabilize the climate                                                                    
     that makes it attractive for  somebody to come here and                                                                    
     practice.  Alaska  has been one of  the most attractive                                                                    
     places for the  last eight [to] ten years,  I think, as                                                                    
     far  as medical  liability goes  and also  as far  as a                                                                    
     place  to practice  without  interference from  [health                                                                    
     maintenance organizations  (HMOs)] et cetera.   But the                                                                    
     medical liability issue ...,  I'm predicting it's going                                                                    
     to get  a lot worse,  and what  we have we're  going to                                                                    
     lose plus not have the ability to attract anybody new.                                                                     
Number 2297                                                                                                                     
     The  other  part of  your  question  that maybe  you're                                                                    
     referring  to ...,  there are  other  ways to  approach                                                                    
     medical  liability insurance  and  stabilize the  cost.                                                                    
     ... I  don't have the  wherewithal to say  whether it's                                                                    
     exactly the  right thing  to limit  noneconomic damages                                                                    
     or not, it appears to  be something that works in other                                                                    
     states in stabilizing the availability  and the cost of                                                                    
     medical liability  insurance, but I can  tell you, some                                                                    
     of the other solutions are  going to be very expensive.                                                                    
     It is  my understanding  that Ohio,  in the  last week,                                                                    
     has  just  established  a state-run  insurance  company                                                                    
     because they have the concern  that the underwriters of                                                                    
     ...   medical  malpractice   insurance  are   going  to                                                                    
     withdraw. ...                                                                                                              
DR. GOWER concluded:                                                                                                            
     It hasn't happened, nor has  it happened in Alaska, but                                                                    
     there are some indications  that that could happen, and                                                                    
     that is going to be [an]  immediate crisis.  So, ... if                                                                    
     we can't stabilize  the insurance - [if it  is] not the                                                                    
     wisdom of this  body to help with  this problem, either                                                                    
     with  noneconomic damages  or  many  other things  that                                                                    
     could  be  done  -  then maybe  there  should  be  some                                                                    
     consideration  to set  up a  failsafe program,  that if                                                                    
     medical  malpractice  insurance  goes  away,  that  the                                                                    
     state's going  to have  to go  back into  the insurance                                                                    
     business, because  there are  going to be  a lot  of us                                                                    
     that will  not risk  our life's  work and  our personal                                                                    
     assets to practice bare.                                                                                                   
REPRESENTATIVE GARA said:                                                                                                       
     One  of  the  reasons  I'm  skeptical  is,  we  already                                                                    
     limited noneconomic  damages in 1997.   We limited them                                                                    
     to $400,000 - except if  it's a very serious injury, $1                                                                    
     million.   And those numbers  can go up ...  for people                                                                    
     with very long life  expectancies, and [in] those cases                                                                    
     they can go  up ... to $2 million, but  the general cap                                                                    
     is $400,000 and $1 million.   But you testified that in                                                                    
     the  last few  years your  insurance rates  skyrocketed                                                                    
DR. GOWER interjected to say:  "I testified that my insurance                                                                   
[rates were the lowest that they have been] in '97 and '98 and                                                                  
'99."   [The  previously  bracketed portion  was  taken from  the                                                               
Gavel to Gavel recording on the Internet.]                                                                                      
TAPE 04-33, SIDE B                                                                                                            
Number 2393                                                                                                                     
DR.  GOWER went  on to  say:   "It's '99  that they  have started                                                               
going back up,  and ... it's the last three  years that they have                                                               
been stable up  through I guess 2000. ... [So]  the lowest I ever                                                               
paid was in 1999."                                                                                                              
REPRESENTATIVE GARA remarked:  "But  even with these damage caps,                                                               
you  said  they've  skyrocketed  in the  last  couple  of  years,                                                               
though, right?"                                                                                                                 
DR. GOWER replied:                                                                                                              
     Well, you know,  $1 million is a  significant amount of                                                                    
     money, and there are multiple  claims that have been in                                                                    
     multimillion-dollar  settlements,  I  think,  over  the                                                                    
     last  several  years.   These  probably  are  questions                                                                    
     better for the insurance company  than for me, but I do                                                                    
     know that  the overall  number of  claims have  more or                                                                    
     less  stabilized if  not [gone]  down,  but the  awards                                                                    
     have   gone  significantly   higher.      That  is   my                                                                    
     understanding  from my  insurance company  that they're                                                                    
     paying  much larger  awards in  the last  four or  five                                                                    
     years, and  that's what  drives the  claims experience.                                                                    
     I think  there's a lot  of difference  between $250,000                                                                    
     and  $1  million,  and  actually ...  I  think  if  you                                                                    
     calculate it  out from  a baby injured  at birth  and a                                                                    
     severe  injury/disfigurement,  I  think it  can  be  $2                                                                    
     million if they live to be 60 years old.                                                                                   
REPRESENTATIVE GARA offered, "Yeah, that's what I meant to say.                                                                 
REPRESENTATIVE  HOLM  asked  Dr.  Gower whether  he  has  seen  a                                                               
significant difference  in his  "liability" since  [the terrorist                                                               
attacks of September 11, 2001 ("9/11")].                                                                                        
DR. GOWER  replied:   "Well, yes; I  mean my  liability insurance                                                               
has doubled  since year 2000, so  that's since 9/11, but  I don't                                                               
know  whether  those   are  cause  and  effect.     They  may  be                                                               
coincidences, and I think they  probably are because what has ...                                                               
driven it is the increased awards ...."                                                                                         
REPRESENTATIVE  HOLM mentioned  that all  of his  insurance rates                                                               
have  gone up,  and  remarked  that perhaps  rates  have gone  up                                                               
because  the  insurance  companies  are  trying  to  "spread  the                                                               
wealth"  so that  they can  manage  what they're  having to  pay,                                                               
instead of rate  increases being a function  of liability limits.                                                               
He added, "Just  as an observation it seems to  me like [they're]                                                               
spreading  it  over  a  lot  of  industries  that  have  no  real                                                               
liability, but they can spread that cost."                                                                                      
Number 2241                                                                                                                     
DR. GOWER noted  that the companies that  offer medical liability                                                               
insurance  in Alaska  are "exclusive  medical liability  coverage                                                               
companies" and are "not-for-profit."   In response to comments by                                                               
Representative  Ogg,  Dr.  Gower   indicated  that  primary  care                                                               
physicians  in family  practice residencies  could be  trained in                                                               
Alaska, but  mentioned that demographics  suggest that  Alaska is                                                               
short over 200 primary care  physicians.  He remarked that Alaska                                                               
is  ranked  the  12th  worst  in the  nation  with  regard  to  a                                                               
physician:patient ratio,  even though the  trend now seems  to be                                                               
that more physicians are going  into family practice, rather than                                                               
the specialty areas of medicine.                                                                                                
REPRESENTATIVE OGG  suggested that  higher insurance  rates might                                                               
simply be a result of  insurance companies investing in the stock                                                               
market and  then attempting to  recover their losses  via premium                                                               
rate increases.                                                                                                                 
DR. GOWER  opined that because  the two insurance  companies that                                                               
provide  medical  malpractice  insurance  are  "mutual  no-stock-                                                               
holder" companies,  it is  the claims  experience that  drives up                                                               
medical malpractice insurance rates.   In response to a question,                                                               
he offered  his belief  that those  companies do  have to  have a                                                               
certain amount of funds in reserve.                                                                                             
REPRESENTATIVE GARA remarked that  historically, Alaska has never                                                               
had  enough  doctors, even  though  according  to a  report  from                                                               
Legislative   Legal  and   Research  Services,   the  number   of                                                               
"nonfederal"  physicians in  Alaska has  more than  doubled since                                                               
1990.   "We still  don't have a  great doctor:patient  ratio," he                                                               
remarked, adding that  in 1990 it was 1.88:1,000 and  today it is                                                               
3.24:1,000.  He went on to say:                                                                                                 
     I  was left  with  the impression  the  other day  that                                                                    
     doctors were fleeing the state,  and what struck me was                                                                    
     actually it's  going the other  way around.   And there                                                                    
     was also a  newspaper article that said  Alaska has one                                                                    
     of the  four highest [increases]  in doctors-per-capita                                                                    
     rates in  the country at this  point.  And ...  I guess                                                                    
     if that's  the case,  I'm ...  just wondering  what the                                                                    
     relevance  of  Alaska's malpractice  [insurance]  rates                                                                    
     are  to the  doctor:patient ratio  in this  state.   It                                                                    
     just  seems to  suggest  to me  that there's  something                                                                    
     different going on, but it's not rates.                                                                                    
Number 1848                                                                                                                     
PHILIP R. HINDERBERGER, Senior Vice  President & General Counsel,                                                               
Assistant  Corporate Secretary,  NORCAL Mutual  Insurance Company                                                               
("NORCAL"), relayed that  NORCAL is the successor  to MICA, which                                                               
was  the  company  established   by  the  legislature  after  the                                                               
"malpractice crisis"  in 1975.   Since  1991, NORCAL  has ensured                                                               
literally hundreds  of physicians  and, during that  time, NORCAL                                                               
has  seen several  efforts to  reform Alaska's  medical liability                                                               
laws in an  attempt to bring them into parity  with other states.                                                               
Unfortunately,  these efforts  have not  had the  desired effect.                                                               
He said it  is the belief of  NORCAL that HB 472  is necessary to                                                               
accomplish what  other efforts  have failed  to do,  for example,                                                               
"the 1997 effort to limit  noneconomic damages."  He relayed that                                                               
NORCAL has  been settling claims  and going to court  since 1991;                                                               
in 1996 and  1997, NORCAL's average indemnity payment  was in the                                                               
range of  $60,000, and  "right after  this legislation  passed it                                                               
jumped up to $380,000 and in 1999 it went to $588,000."                                                                         
MR. HINDERBERGER noted that NORCAL  underwrites less than half of                                                               
Alaska's physicians,  and opined  that Alaska is  now one  of the                                                               
costliest states to  do business in.  He offered  his belief that                                                               
Alaska's expensive  medical liability premiums are  the result of                                                               
high jury awards and settlements.   The average medical liability                                                               
payment in Alaska in 2001  was $308,476, and this average payment                                                               
is  the  14th  highest  in  the   country.    He  noted  that  in                                                               
comparison, California's average payment  was $178,000.  Alaska's                                                               
physicians pay an  average $30,627 per year, and this  is the 8th                                                               
highest  average  medical  malpractice   insurance  cost  in  the                                                               
country.   In comparison, California's physicians  pay an average                                                               
of $14,564 per year.                                                                                                            
MR.   HINDERBERGER  said   that  over   the  years,   Alaska  has                                                               
experienced some  of the most  dramatic increases in the  cost of                                                               
medical  liability  insurance  in  the country,  and  only  seven                                                               
states have  had higher  increases.   Numerous studies  have been                                                               
conducted to  determine the cause  of higher  insurance premiums,                                                               
larger awards, and more dramatic  year-to-year increases; he said                                                               
that  the studies  have informally  found that  medical liability                                                               
reform  is  the  single  most  important  factor  in  controlling                                                               
medical liability premiums and loses.   For example, California's                                                               
Medical Injury Compensation  Reform Act (MICRA), which  has a cap                                                               
of  $250,000  on noneconomic  damages,  has  been identified,  he                                                               
relayed, as  the best  of the efforts  undertaken to  control the                                                               
cost of  medical liability insurance.   He said, "We  believe the                                                               
$250,000 cap on  noneconomic damages contained in  House Bill 472                                                               
will  go  a long  way  towards  bringing  the costs  of  Alaska's                                                               
medical liability insurance in line with national averages."                                                                    
Number 1604                                                                                                                     
MR. HINDERBERGER,  in response to  questions, offered  his belief                                                               
that the standard of medical  practice in Alaska is comparable to                                                               
that   in   California;  therefore,   there   seems   to  be   no                                                               
ascertainable  reason,   relating  to  medicine,  for   the  vast                                                               
difference, between  California and  Alaska, in the  average size                                                               
of  award.   Alaskan  juries  are very  generous  with regard  to                                                               
awarding noneconomic  damages, he  opined.   He also  offered his                                                               
observation  that  the  doctors  at the  medical  clinic  in  the                                                               
Aleutian Islands can get a patient  off a fishing boat and onto a                                                               
jet  and down  to the  Lower  48 in  the  same time  it can  take                                                               
doctors  in  California  to   transport  patients;  an  extensive                                                               
patient transfer  system in  Alaska sometimes  take the  place of                                                               
"high  tech"  medical  facilities and  on-site  specialists  when                                                               
those facilities and specialists are not available.                                                                             
MR.  HINDERBERGER, in  response  to a  further question,  relayed                                                               
that MICRA  was enacted in  1975 but was  held up in  court until                                                               
1986.   A couple  of years after  that, once  California's judges                                                               
and  lawyers   became  "comfortable"  with   MICRA's  provisions,                                                               
"losses plummeted,"  he remarked.   He offered an example  of the                                                               
difference in  insurance premium costs  between now and  the mid-                                                               
'80s, adding his  belief that MICRA has  dramatically changed the                                                               
claims' environment without taking  any "economic dollars" out of                                                               
the  pocket of  plaintiffs.    He also  opined  that "these  soft                                                               
dollars that  are capped  off" are resulting  in "the  big, high-                                                               
dollar verdicts that  drive companies out of business."   He went                                                               
on to say,  "$250,000 of noneconomic damages added  to a $500,000                                                               
economic-damage award is  still a big verdict, and  $250,000 is a                                                               
lot of money;  it's not an onerous limitation, I  don't think, on                                                               
the process."                                                                                                                   
CHAIR McGUIRE agreed that $250,000 is a lot of money.                                                                           
REPRESENTATIVE  GARA noted  that although  MICRA passed  in 1975,                                                               
insurance  rates  skyrocketed between  1975  and  1986, and  were                                                               
still rising  in 1987 even  after the  court case over  MICRA was                                                               
settled.   He  suggested that  the reduction  in insurance  rates                                                               
that began to  occur after 1987 was due not  to MICRA but instead                                                               
to  the fact  that in  1988, California  voters got  fed up  with                                                               
increasing insurance rates  and so they put an  initiative on the                                                               
ballot  - Proposition  103 -  that gave  the state  the right  to                                                               
reduce and limit insurance rates.                                                                                               
Number 1190                                                                                                                     
MR. HINDERBERGER pointed  out, however, that like  MICRA, it took                                                               
several  years for  California's  courts  to approve  Proposition                                                               
103, and  offered his belief  that the proposition had  no impact                                                               
on  NORCAL's pricing  of  insurance.   Instead,  he offered,  the                                                               
reduction in  insurance rates was due  to the fact that  in 1991,                                                               
NORCAL  and a  few  other physician  owned [insurance]  companies                                                               
went to "the  commissioner" and said, "Look, we  are seeing huge,                                                               
huge savings in our loses  and we're returning this money whether                                                               
Prop  103  is  upheld  or  not,  and what  we'd  like  to  do  is                                                               
voluntarily  settle up  our obligations  under Prop  103, and  we                                                               
will  characterize  these  payments  that  we're  making  as  our                                                               
rollback   obligation,"  and   this   was  agreed   to  by   "the                                                               
MR. HINDERBERGER  went on to say,  "We paid about $30  million, I                                                               
think, in  1991 in dividends  to our policy holders,  [and] about                                                               
$28  million  of  it  was  characterized  as  our  rate  rollback                                                               
obligation; the  commissioner never  asked us  to roll  our rates                                                               
back,  and during  that  period  of time  our  rates were  pretty                                                               
stable  anyway."   Over that  period, he  relayed, "we  paid back                                                               
about  $250 million  in dividends  to  our policy  holders."   In                                                               
response to a  question he explained that "after  the rebates, we                                                               
actually credit the  dividend against the premiums  that are due,                                                               
so the  numbers that we're  giving you  are the net  premiums for                                                               
the actual doctor payments."   In response to a further question,                                                               
he  said that  it is  his  experience that  since 1991,  NORCAL's                                                               
premiums in Alaska  have gone up at a higher  rate than they have                                                               
in California.                                                                                                                  
REPRESENTATIVE  OGG asked  how many  actual  court judgments  are                                                               
included in the amount of payments made in Alaska.                                                                              
MR.  HINDERBERGER  said  he didn't  have  those  numbers  readily                                                               
available,  but  relayed that  members  could  get more  detailed                                                               
statistics from the "national practitioner databank" web site.                                                                  
REPRESENTATIVE GARA said he wonders  whether the number of annual                                                               
claims a company  experiences can be statistically  relevant.  He                                                               
asked Mr. Hinderberger  what the average number  of claims NORCAL                                                               
has paid out in the last five years is.                                                                                         
MR.   HINDERBERGER   said   that  NORCAL   typically   pays   out                                                               
approximately 20  cases a  year.   In response  to a  request for                                                               
more  statistical information,  he again  suggested that  members                                                               
could find such information on the aforementioned web site.                                                                     
Number 0871                                                                                                                     
EMILY NENON,  Alaska Advocacy  Director, American  Cancer Society                                                               
(ACS), said  that the  ACS does  not have a  position on  HB 472.                                                               
However, she went on to say:                                                                                                    
     What I  wanted to bring forward  to you all was  just a                                                                    
     few questions. ...  [I'm] sorry Representative Anderson                                                                    
     is not  here to hear  me ...  compliment him on  what I                                                                    
     believe is the intent of the  bill, which is to make it                                                                    
     easier  for doctors  to  practice  medicine in  Alaska.                                                                    
     That is certainly something that  the [ACS] supports in                                                                    
     terms of ... access to and  quality of health care.  So                                                                    
     with that, I just have  three questions I want to raise                                                                    
     before  the committee  for  your  consideration as  you                                                                    
     move forward.  One ...  of the questions that was asked                                                                    
     - and I'd like some  information and follow-up - of Mr.                                                                    
     Hinderberger:  Will this  bill actually reduce premiums                                                                    
     for  malpractice insurance?   Is  this really  going to                                                                    
     get  at part  of  what's the  problem with  malpractice                                                                    
     insurance rates in Alaska?                                                                                                 
     He referenced some independent studies  on this issue -                                                                    
     I  would  certainly  be   interested  in  getting  more                                                                    
     information on  that.  As  I said before,  we certainly                                                                    
     have an interest in seeing  that people are able to get                                                                    
     access to  health care and  [that] doctors are  able to                                                                    
     practice  in Alaska.   The  other question  I have  is,                                                                    
     with the limit  proposed in this legislation,  I have a                                                                    
     question about  patients who may  be moving  forward on                                                                    
     malpractice cases [but]  who may not have  the money up                                                                    
     front to pay  an attorney and have to  hire an attorney                                                                    
     on  contingency.  ...  Some question  has  been  raised                                                                    
     about a decrease  in the interest of  attorneys to take                                                                    
     on these  cases if they  know they  may not be  able to                                                                    
     recoup their costs in the  end for taking these all the                                                                    
     way through.                                                                                                               
CHAIR McGUIRE interjected to say:   "Their costs or their profit?                                                               
They clearly recoup their costs at 40 percent."                                                                                 
REPRESENTATIVE GARA offered:  "Often,  [Chair] McGuire, and often                                                               
they lose their shirts."                                                                                                        
MS. NENON  said that the  real question  she has is,  "Would this                                                               
legislation have  any effect of  foreclosing access to  the court                                                               
CHAIR McGUIRE said, "Good question."                                                                                            
Number 0697                                                                                                                     
MS. NENON said that the final  question she has is, "What exactly                                                               
falls under noneconomic damages."   She concluded, "Those are the                                                               
three questions I  have, both in terms of  protecting our doctors                                                               
and  their ability  to practice  in Alaska  [and] protecting  our                                                               
patients, and then  just some final clarification  about what the                                                               
bill actually does."                                                                                                            
CHAIR McGUIRE  indicated that she  would pass those  questions on                                                               
to Representative Anderson, and  offered that noneconomic damages                                                               
are  defined   in  statute  and   involve  items  that   are  not                                                               
compensatory such  as loss of  wages, medical bills,  "and things                                                               
like that."   Noneconomic  damages can  also include  things like                                                               
loss of consortium.                                                                                                             
REPRESENTATIVE  GARA  added  that noneconomic  damages  can  also                                                               
include  pain  and  suffering  and loss  of  enjoyment  of  life;                                                               
basically, the  changes in someone's life  that don't necessarily                                                               
have an easy  dollar value.  For example, how  does one put value                                                               
on an inability to walk or an inability to carry a child.                                                                       
CHAIR  McGUIRE  offered  that another  category  of  damages  are                                                               
punitive, which are meant to  punish.  She relayed that according                                                               
to the sponsor's testimony, one  of the reasons he introduced the                                                               
bill is  because the Alaska  State Medical Association  and other                                                               
entities came  to him and  told him  that Alaska has  a potential                                                               
looming  crisis.    She  offered  her  understanding  that  other                                                               
testimony has  indicated that  if HB  472 passes,  although there                                                               
may not actually  be a reduction in rates, it  might increase the                                                               
availability of  medical malpractice insurance in  Alaska without                                                               
Alaska  having  to  revert  back  to a  MICA-like  system.    She                                                               
acknowledged that there has also  been testimony that passage may                                                               
affect  whether attorneys  will  be willing  to  take on  medical                                                               
malpractice cases, but noted that the legislature will have to                                                                  
weigh this issue with the issue of whether doctors will continue                                                                
to have access to medical malpractice insurance.                                                                                
Number 0338                                                                                                                     
CARMEN  E. CLARK,  after noting  that she  is a  criminal defense                                                               
lawyer in  Anchorage, indicated that  HB 472 will have  an impact                                                               
on those people  who are hurt by the mistakes  that doctors make.                                                               
She went on to say:                                                                                                             
     The most important  thing that I've learned  is to have                                                                    
     confidence [in]  our judicial system.   And what you're                                                                    
     essentially  doing, if  you pass  this bill,  is saying                                                                    
     you don't  believe in the  jury system, that  you don't                                                                    
     think that people who take an  oath to listen to a case                                                                    
     and decide  it fairly can  come up with a  fair result.                                                                    
     ... You took an oath  to uphold the constitution, and I                                                                    
     did when I was a prosecutor,  and the right to trial by                                                                    
     jury is  such an important  right, and I see  this bill                                                                    
     as truly gutting  that.  And then you  can't imagine, I                                                                    
     don't think  any of  us can,  all the  situations where                                                                    
     people might  be injured  by doctors.   I  don't think,                                                                    
     before it  happened, that anyone imagined  that someone                                                                    
     like  Doctor  Ake  (ph),  who  sexually  assaulted  his                                                                    
     patients, (indisc.  - coughing)  happen to her,  but it                                                                    
     did.  And this $250,000  limit hurts the people who ...                                                                    
     actually have  a worse injury,  and I think  that there                                                                    
     should  be more  flexibility  for people,  particularly                                                                    
     juries,  to determine  who's really  injured and  who's                                                                    
     really not.                                                                                                                
     ...  I heard  the  [representative]  from the  American                                                                    
     Cancer Society ask what are  these things we're talking                                                                    
     about.     And   essentially  they're   quality-of-life                                                                    
     issues,  and when  we  talk about  putting  a limit  on                                                                    
     them, I think  everyone should say:  "How  much would I                                                                    
     sell my eye  for?  How much money would  it take for me                                                                    
     to be willing  to wear a colostomy bag for  the rest my                                                                    
     life?   How  much money  would it  be worth  for me  to                                                                    
     never be able to enjoy sex  again?"  Those are the type                                                                    
     of  damages  that  people bring  into  court.  ...  The                                                                    
     question here is  about what's fair, ...  and if you're                                                                    
     going to set  a cap, then I'd like you  to be realistic                                                                    
     about it.                                                                                                                  
Number 0161                                                                                                                     
     From my perspective $400,000 is  too low, but it should                                                                    
     at least  remain there. ...  And these are  the reasons                                                                    
     why.  First, the people  who are injured, they're going                                                                    
     to pay  their lawyers,  (indisc.) contingency  fee, and                                                                    
     whether  you agree  with that  as a  system or  not, it                                                                    
     does  allow some  people to  get  into court.   But  in                                                                    
     order   to  successfully   follow  up   on  a   medical                                                                    
     malpractice case  usually you  have to hire  an expert,                                                                    
     and this  ... legislative body can't  do anything about                                                                    
     how much that costs, but  these people are paying their                                                                    
     experts, who often charge ...  [$50,000] or $60,000, to                                                                    
     come  and (indisc.)  on  the record.    They pay  those                                                                    
     experts out of  this money that they  recover, not from                                                                    
     their  compensatory  damages  because  they're  already                                                                    
     paying those to doctors who gave them follow up care.                                                                      
MS. CLARK added:                                                                                                                
     ... [Although] $250,000 ... [is]  more than many people                                                                    
     make in  a year, [it] isn't  a lot of money  spent over                                                                    
     someone's  lifetime and  it's  significantly less  than                                                                    
     most doctors make  in six months. ...  The other reason                                                                    
     that  I think  is really  important is,  if any  of you                                                                    
     there  have  ever  tried  to   buy  life  insurance  or                                                                    
     insurance of  any type, the  amount of  difference that                                                                    
     you pay for  a premium that's $400,000  - from $250,000                                                                    
     - is about  $300 a year.   So for $300 a  year we ought                                                                    
     to be  able to provide  enough protection to  people to                                                                    
     get $400,000.  So we're  not taking about being able to                                                                    
     reduce insurance  rates by any significant  amount, but                                                                    
     we are talking about reducing  the amount of money that                                                                    
     someone can  get -  for being  blinded or  having their                                                                    
     baby die  - by almost  half.  Now  I want to  make some                                                                    
     comments  about  the things  I  heard.   First  is  the                                                                    
     question  of will  this [affect  our insurance  rates.]                                                                    
     [The  previous  and  following  bracketed  portion  was                                                                    
     taken  from  the  Gavel  to   Gavel  recording  on  the                                                                    
TAPE 04-34, SIDE A                                                                                                            
Number 0001                                                                                                                     
MS. CLARK continued:                                                                                                            
     [There's]  no  reason to  believe  that.   Ohio  passed                                                                    
     this,  and  the doctor  who  testified  earlier made  a                                                                    
     point  about  Ohio set  up  it's  own insurance  board.                                                                    
     They did,  after they made  up their own review  of how                                                                    
     insurance rates  were expanding in  ... Ohio,  and they                                                                    
     found that there was no  connection between damage caps                                                                    
     and insurance  premiums.  What  they found  instead was                                                                    
     that  there   was  a  significant   connection  between                                                                    
     insurance  rates  and  how  much  money  the  insurance                                                                    
     companies  lost  in the  stock  market.   So  they  did                                                                    
     create their  own Ohio insurance board  [that] provides                                                                    
     the insurance  for doctors,  but they  did so,  so that                                                                    
     the doctors  would not  be at the  mercy of  the profit                                                                    
     demand of CEOs of insurance companies.                                                                                     
     And you  can find  that study [not  on tape,  but taken                                                                    
     from  the Gavel  to  Gavel recording  on the  Internet,                                                                    
     was:  online,  and I strongly advocate  that you should                                                                    
     read that.  In the bottom,  there was no change, and in                                                                    
     fact,  if   you  go   to  the   doctors'  web   site  -                                                                    
     wwwdoctorsno.us (ph) - you will  find on the very front                                                                    
     page that  they say  they're (indisc.)  cap to  try and                                                                    
     change  the insurance  premiums for  doctors has  been,                                                                    
     quote,  "colossal failure."    And here  we've seen  no                                                                    
     connection between this $400,000  cap that we've put in                                                                    
     place  and] insurance  premiums at  all.   In fact,  as                                                                    
     both  the  doctor  and the  insurance  [representative]                                                                    
     testified, instead they'd gone up.                                                                                         
     So (indisc.)  I heard  the doctor testify  earlier that                                                                    
     his  insurance rates  went up  in 1999.   That  kind of                                                                    
     surprised  me because  [in] 1999,  he  paid a  $250,000                                                                    
     settlement for  the alleged negligent transection  of a                                                                    
     [common] bile duct;  in 1992, he also  paid $15,000 for                                                                    
     alleged  negligence   of  laparoscopic  cholecystectomy                                                                    
     ....  The point  I want to make is that  if you want to                                                                    
     know how (indisc.) juries are  in Alaska, you can go to                                                                    
     the [Alaska  State] Medical Board [and]  they will give                                                                    
     you  a  16-page  printout   of  every  single  reported                                                                    
     settlement  that a  doctor has  made.   And in  fact, I                                                                    
     have it  in front  of me  ....   The high  2001 average                                                                    
     that  we  have  is  completely related  to  a  $572,798                                                                    
     settlement against  Dr. Peter Hansen for  the negligent                                                                    
     prescription of medication.                                                                                                
Number 0200                                                                                                                     
MS. CLARK relayed:                                                                                                              
     That's what's  (indisc.) our record  up, it's  that one                                                                    
     bad doctor.   But  what I'd  like you  to know  is that                                                                    
     wasn't  following a  jury trial;  he settled  that case                                                                    
     prior to even  a compliant being filed.   His insurance                                                                    
     company had  to pay it, but  it wasn't the result  of a                                                                    
     jury.   And the other big  myth that you all  have been                                                                    
     told  here   is  that  there   are  multimillion-dollar                                                                    
     lawsuits  handed out  by juries  in Alaska.   It's  not                                                                    
     true.  Or,  if it is true, they're  not being (indisc.)                                                                    
     to the medical  board, because I have them  in front of                                                                    
     me.   There are  only five  settlements ...  since 1982                                                                    
     greater than $700,000.                                                                                                     
     And this  is what  they are:   in  1988, Dr.  Owen Bell                                                                    
     paid  out $750,000  for failure  to treat  sepsis in  a                                                                    
     pregnant  woman  who later  died  -  he paid  that  out                                                                    
     [with]  no jury  trial;  in 1999,  $800,000 [from]  Dr.                                                                    
     John  Muffoletto  for  negligent hernia  repair  -  was                                                                    
     there  a trial,  no,  a jury  didn't  [award] ...  that                                                                    
     money; in  1995, $725,000 [from]  Dr. Duane  Odland for                                                                    
     failure to monitor anticoagulant  in a heart valve that                                                                    
     resulted in  a significant  heart attack -  jury trial,                                                                    
     no; in  1986, $800,000 payout  by Dr. James  Scully for                                                                    
     surgery errors that resulted in  the death of a patient                                                                    
     - trail, no; $750,000 in  1994 for brain damages caused                                                                    
     by negligent  treatment by Dr.  Stephens -  jury trial,                                                                    
     So it is absolutely false  if people have come in front                                                                    
     of  you and  said that  there [are]  these multimillion                                                                    
     dollar   settlements  that   are  driving   up  medical                                                                    
     malpractice  [insurance rates]  in ...  Alaska, because                                                                    
     there haven't been  any.  Or, if  [there] have, doctors                                                                    
     haven't reported them as they  are required to do so by                                                                    
     law.   So, what  I think  that you  should see  here is                                                                    
     that no state  that has done a significant  look at the                                                                    
     relationship  between   insurance  premiums   and  jury                                                                    
     awards  ...  [has found]  that  jury  awards were  what                                                                    
     drives  insurance premiums.    But even  if there  were                                                                    
     such a connection, there isn't in ... Alaska.                                                                              
Number 0349                                                                                                                     
MS. CLARK concluded:                                                                                                            
     The report that I have goes  back to 1982, and it shows                                                                    
     that  from 1982  until now,  there have  only been  280                                                                    
     lawsuits  filed   against  doctors.     That's   not  a                                                                    
     significant number,  that is  not a  significant payout                                                                    
     that insurance companies have been  doing, and for then                                                                    
     to  be raising  the rates  for doctors  by this  amount                                                                    
     that they're talking about here  - 1,000 times - cannot                                                                    
     possibly be  related to the  amount of money  that they                                                                    
     are  paying out  by the  state of  Alaska.   So, in  my                                                                    
     final point, what  I'd like to say is,  caps don't seem                                                                    
     to  be  fair, they  don't  seem  to be  trustworthy  to                                                                    
     juries.  [And]  ... at the same ...  [time], it doesn't                                                                    
     appear that there  is a crises of money  being paid out                                                                    
     by  insurance   companies  that  ought  to   have  this                                                                    
     legislative body pass a law  to take the (indisc.) from                                                                    
     the person  who does it,  onto the innocent  person who                                                                    
     goes to them for treatment.                                                                                                
     That is  fundamentally unfair, and thus  I'm asking you                                                                    
     to table  the debate,  look at  these web  sites, [and]                                                                    
     ...  see whether  or not  the  information you've  been                                                                    
     given  by  doctors  and   insurance  agents  is  really                                                                    
     correct, because I think you'll  find that the $400,000                                                                    
     cap (indisc.)  fair, but ...  there hasn't  been enough                                                                    
     of a  connection for  people to  be going  and reducing                                                                    
     that to  $250,000 - particularly  not when the  cost of                                                                    
     buying  a $400,000  policy, as  opposed  to a  $250,000                                                                    
     policy, is practically nothing.                                                                                            
CHAIR  McGUIRE  asked  about the  possibility  of  paying  expert                                                               
witnesses  out  of  the  fees   being  paid  to  the  plaintiff's                                                               
MS. CLARK  said that no  one knows what it  will cost to  hire an                                                               
expert witness  ahead of time,  and that  to do as  Chair McGuire                                                               
suggests would create a conflict of interest for the doctor.                                                                    
REPRESENTATIVE GARA  said that it  would be illegal for  a lawyer                                                               
to tell  a client that he/she  is paying for the  expert witness,                                                               
because doing  so would be  interpreted as enticing a  client, by                                                               
paying the client, to let the lawyer take a case.                                                                               
CHAIR McGUIRE asked why, if  plaintiffs' lawyers purportedly care                                                               
so  much  about  their  clients, don't  they  just  reduce  their                                                               
contingency fees in such cases.                                                                                                 
MS. CLARK replied:                                                                                                              
     Two  reasons:    one,  there   are  extreme  costs  and                                                                    
     overhead associated  with practicing law -  we have our                                                                    
     own ...  malpractice premiums  to pay  - but  the other                                                                    
     thing is ...,  if everyone claims to care  so much, why                                                                    
     aren't doctors  doing the initial  work for free.   The                                                                    
     fact of the  matter is, everybody expects to  be paid a                                                                    
     fair  wage for  what  they do,  and  that includes  the                                                                    
     experts.   Many doctors  who ... find  themselves being                                                                    
     pariahs  for   testifying  against  other   doctors  in                                                                    
     medical malpractice [suits] raise those fees.                                                                              
Number 0659                                                                                                                     
MS.  CLARK,  in response  to  further  questions, said  that  her                                                               
yearly  income  is  significantly  less  than  the  amount  being                                                               
proposed  as  a cap,  and  then  provided information  about  the                                                               
Alaska State Medical  Board's report and agreed to fax  it to the                                                               
REPRESENTATIVE SAMUELS  posited that  one of  the reasons  for an                                                               
increase in insurance payments, for  all industries, is that many                                                               
cases are simply  settled out of court; rarely  do cases actually                                                               
go to trial.                                                                                                                    
MS. CLARK  said she agrees that  few cases actually go  to trial.                                                               
She remarked,  however, that many times  when medical malpractice                                                               
cases are  settled out of court  it is because there  is actually                                                               
medical evidence  showing that  a mistake has  been made,  and so                                                               
the amounts  being paid out are  not deemed to be  excessive when                                                               
considering the  type of problems  that are resulting  because of                                                               
those  mistakes.   She  offered her  belief  that when  insurance                                                               
companies  get involved  in  these claims,  they  are capable  of                                                               
determining  what would  be considered  a fair  settlement.   She                                                               
noted that when she sees her  employee health care payments go up                                                               
600 percent  a year she  doesn't think  that increase is  tied to                                                               
giant  lawsuits  either.    "I  think that's  just  the  way  the                                                               
insurance [industry]  works, and if  we want  to be able  to have                                                               
good  insurance  as  well as  reasonably  priced  insurance,  the                                                               
answer is  to regulate  the insurance [industry],  not to  ... to                                                               
take away  the right of  other people  to decide how  much damage                                                               
has really occurred," she concluded."                                                                                           
REPRESENTATIVE SAMUELS mentioned  insurance availability as being                                                               
a problem.                                                                                                                      
REPRESENTATIVE  HOLM noted  that some  of the  settlement amounts                                                               
Ms. Clark referred to were above the current $400,000 cap.                                                                      
MS. CLARK replied:                                                                                                              
     The  damage cap  you're talking  about for  noneconomic                                                                    
     stuff  is $250,000,  [whereas] the  settlements that  I                                                                    
     were talking  about include those (indisc.)  as well as                                                                    
     future medical costs [and] actual  medical costs.  It's                                                                    
     a complete  settlement, it covers everything,  not just                                                                    
     the  quality of  life issues  that we're  talking about                                                                    
     with this cap.                                                                                                             
REPRESENTATIVE HOLM offered his  belief that in other industries,                                                               
insurance companies simply  look at their exposure  risk and then                                                               
from that decide to  "just pay it off."  He  indicated that he is                                                               
not  convinced that  caps  are  linked with  either  the cost  of                                                               
insurance premiums or the amount of insurance payouts.                                                                          
Number 1212                                                                                                                     
LES SYREN  mentioned that he  is a plaintiffs' attorney  and that                                                               
he likes  doctors even though they  make mistakes.  He  said that                                                               
philosophically, his problem with caps  is the idea of prejudging                                                               
a case.  He elaborated:                                                                                                         
     Imagine  if   ...  you  went   into  court   with  your                                                                    
     particular  case and  one  of the  people  on the  jury                                                                    
     said:  "You  know what?  I haven't heard  a single fact                                                                    
     about  your   case,  haven't  looked  at   any  of  the                                                                    
     evidence, but there's one thing  I sure know - it could                                                                    
     never be worth more than  $250,000."  I think that kind                                                                    
     of  ... person  would never  be allowed  to serve  on a                                                                    
     jury, and  that ... just  kind of strikes me  as little                                                                    
     bit  unfair   that  we're  going   to  institutionalize                                                                    
     prejudging a case.                                                                                                         
     The second  point I'd like to  make is, ... I  like the                                                                    
     idea  of individual  responsibility; ...  we need  more                                                                    
     responsibility  ...   and  I  think  that   applies  to                                                                    
     everybody - doctors  too.  If you  break something, you                                                                    
     pay for  it.  If  you walk into  a store and  you knock                                                                    
     something over, you break it  you bought it.  It's just                                                                    
     kind  of  that   simple  it  seems  to   me.  ...  It's                                                                    
     irresponsible for  a doctor  ... to  cut off  the wrong                                                                    
     foot, and just say, "Well, don't look at me."                                                                              
     So we  have four groups, it  seems to me, here.   First                                                                    
     we  have the  insurance companies;  they want  profits,                                                                    
     ...  they  don't  particularly   care  to  pay  claims,                                                                    
     they're  just   interested  in  profits.     We've  got                                                                    
     doctors,  and they  want profits  too, like  Dr. Gower,                                                                    
     ...  and  ...  there's  nothing wrong  with  that.  ...                                                                    
     There's  nothing   sinful  about  profits  in   and  of                                                                    
     themselves,  and  I'm  sure Dr.  Gower  wants  to  help                                                                    
     people. ... We've  got attorneys on both  sides - those                                                                    
     who  defend  the doctors  and  ...  those who  sue  the                                                                    
     doctors  - and  they  want profits  too,  and like  the                                                                    
     doctors they want profits but  they want to help people                                                                    
     as well.   And  then we  have my clients.   Mrs.  "X" -                                                                    
     I'll  call her  -  and  Mrs. "Y,"  and  these are  real                                                                    
     Mrs.  X had  some sort  of stomach  surgery and  it was                                                                    
     supposed to  fix things,  and ...  about two  weeks ...                                                                    
     after the surgery  she really started to  have some ...                                                                    
     exquisite pain  in her  abdomen.  So  she goes  back to                                                                    
     ... the  same doctor that  did the initial  surgery; he                                                                    
     looks at her and takes  some x-rays and says, "Well, we                                                                    
     need to  do surgery right  now."  She didn't  even have                                                                    
     time  to call  her husband,  she was  (indisc.) surgery                                                                    
     immediately.   After  the surgery's  over, he  comes in                                                                    
     and has a  little chit chat and says, "Oh,  by the way,                                                                    
     we had  to take a  sponge out  of your abdomen  that we                                                                    
     left there two weeks ago." ...                                                                                             
Number 1421                                                                                                                     
     Now we  have Mrs. Y.   She  goes to the  doctor because                                                                    
     she has fibroids  on her uterus, a kind  of ... scaring                                                                    
     that occurs,  and the  doctor takes a  look at  her and                                                                    
     says,   "Okay,   well,   ...  why   don't   we   do   a                                                                    
     hysterectomy?"   And he makes the  initial incision and                                                                    
     notes in  his medical records  that the uterus  was ...                                                                    
     larger  than normal  and boggy,  and  that should  have                                                                    
     tipped  him off  that  she  was pregnant.    And as  it                                                                    
     turned out, she  was pregnant.  There  was a hemoglobin                                                                    
     blood  test that  he could  have [given]  her, that  he                                                                    
     didn't, and so they didn't  catch the fact that she was                                                                    
     pregnant.  And she was there for fibroids.                                                                                 
MR. SYREN concluded:                                                                                                            
     Ironically, one of the best  treatments for fibroids is                                                                    
     to have  a child.   So this  woman will never  hear the                                                                    
     words,  "Mommy, can  I  go outside  to  play?"   She'll                                                                    
     never hear the  words, "Mom, I heard  from the college;                                                                    
     I got  accepted."  She'll  never hear the  words, "Mom,                                                                    
     we're   having   a  baby;   you're   going   to  be   a                                                                    
     grandmother."    So out  of  these  four groups  -  the                                                                    
     insurance  companies,  the  doctors, the  lawyers,  and                                                                    
     client X  and client  Y - who  should bear  the burden?                                                                    
     Thank you.                                                                                                                 
CHAIR  McGUIRE noted  that she's  heard similar  arguments before                                                               
and does  not think  them to  be unfounded.   There is  still the                                                               
issue,  however,   of  trying  to  make   sure  that  malpractice                                                               
insurance remains available  to doctors in Alaska.   She remarked                                                               
that she would hate  to be the one to have  to decide what amount                                                               
is enough in the two aforementioned examples.                                                                                   
REPRESENTATIVE GRUENBERG  said, "It  sounds to  me like  Ohio did                                                               
something  that might  be worth  looking at,  regardless of  what                                                               
[we] do  with this bill."   He asked for  clarification regarding                                                               
what Ohio did.                                                                                                                  
MS. CLARK  said that  Ohio created  a special  committee to  do a                                                               
study,  and  ultimately decided  that  the  choices were  to  cap                                                               
damages, cap  premiums, or create "their  own insurance company."                                                               
The latter is essentially what Ohio did.                                                                                        
REPRESENTATIVE GRUENBERG  suggested that perhaps a  similar study                                                               
should be done in Alaska.                                                                                                       
Number 1684                                                                                                                     
JAMES   JORDAN,   Executive   Director,  Alaska   State   Medical                                                               
Association  (ASMA), said  that according  to his  understanding,                                                               
Ohio  "began a  joint underwriting  association, and  that was  a                                                               
residual  market   mechanism  ...  that  provided   coverage  for                                                               
physicians  that could  not get  coverage ...  in other  elements                                                               
[for  example]  if  there  wasn't   availability."    That  joint                                                               
underwriting  association  ceased  doing  business  in  1981,  he                                                               
relayed, "but still had liability  attached."  What then occurred                                                               
in the  early 1990s  was that  $40 million  was extracted  by the                                                               
Ohio legislature  and put  into the general  fund; this  left the                                                               
joint  underwriting association  with about  $12 million  to take                                                               
care  of the  remaining existing  claims.   The  recent issue  of                                                               
insurance  availability in  Ohio  has brought  forth, again,  the                                                               
idea of a joint underwriting association.                                                                                       
REPRESENTATIVE  GRUENBERG  asked  Mr.  Jordan  whether  the  ASMA                                                               
thinks it  would be worthwhile  for the legislature to  look into                                                               
"creative, out-of-the-box  solutions" such as the  possibility of                                                               
establishing a joint underwriting association.                                                                                  
MR. JORDAN  said that such  would certainly be a  noble endeavor.                                                               
He  relayed  that  the  state  medical  association  in  Ohio  is                                                               
recommending  that at  least $50  million be  added to  the joint                                                               
underwriting  association.   He mentioned  that according  to his                                                               
understanding,   the  problem   Ohio  faces   today  is   one  of                                                               
affordability rather than availability.                                                                                         
REPRESENTATIVE GRUENBERG replied, "Cutting  to the chase, though,                                                               
what say we look at it and see what we can come up with."                                                                       
CHAIR McGUIRE told  Mr. Jordan that anything he  could provide on                                                               
the  subject would  be helpful.   She  remarked that  one of  the                                                               
biggest problems  with the  Ohio approach,  in terms  of applying                                                               
something similar in Alaska, is that it requires state money.                                                                   
REPRESENTATIVE GRUENBERG  pointed out  that establishing  a joint                                                               
underwriting association  is simply one possibility,  and what he                                                               
is proposing  is to take a  look to see what  other possibilities                                                               
they could come up with.                                                                                                        
CHAIR  McGUIRE, after  ascertaining that  no one  else wished  to                                                               
testify, closed public testimony on HB  472.  She then noted that                                                               
some  amendments  had  been provided  earlier  by  Representative                                                               
REPRESENTATIVE  GARA   offered  his   belief  that  one   of  the                                                               
aforementioned amendments  proposes a significant change  in "the                                                               
law of noneconomic damages," adding  that he would like some time                                                               
to do some research regarding what  current law is.  He mentioned                                                               
that his staff has provided  members with an additional packet of                                                               
information   that   includes   information   about   MICRA   and                                                               
Proposition 103,  a copy of the  aforementioned Legislative Legal                                                               
and Research  Services report, various newspaper  articles, and a                                                               
comparison study between  states with caps -  and their insurance                                                               
premiums -  and states  without caps  - and  their premiums.   He                                                               
offered that this comparison study  indicates that imposing a cap                                                               
doesn't necessarily result in a reduction in insurance premiums.                                                                
Number 1988                                                                                                                     
CHAIR  McGUIRE  noted  that the  packet  Representative  Gara  is                                                               
referring  to has  as  its  first page  an  Anchorage Daily  News                                                             
article from the Internet titled,  "Patient Power."  She observed                                                               
that Representative  Gara has made  some really good  points, but                                                               
suggested that the question is  whether Alaska can expect to keep                                                               
the insurance providers and doctors  that it already has and what                                                               
the state can do to attract  new providers and doctors.  She went                                                               
on  to list  some  of  the issues  raised,  in  this and  earlier                                                               
hearings, regarding  the factors  that influence  whether someone                                                               
will come to Alaska to practice medicine.                                                                                       
REPRESENTATIVE GARA mentioned that at  the bill's next hearing he                                                               
would like  to offer  an amendment that  would establish  "a two-                                                               
tiered hard-cap system,"  with $250,000 being the low  cap.  Such                                                               
a system would  allow people with grievous injuries  - people who                                                               
have been permanently and severely  injured - to recover at least                                                               
a fair  amount of  partial compensation  for pain  and suffering,                                                               
and would  also recognize that  the legislature wants to  adopt a                                                               
policy wherein  "you don't get very  much money, in ...  terms of                                                               
pain  and suffering,  if you  don't have  a serious  injury.   He                                                               
opined that this  might address the issue  of insurance premiums,                                                               
and  mentioned that  he  would  be amenable  to  either a  sunset                                                               
provision that would put some  pressure on the insurance industry                                                               
to actually lower rates, or a  clause which says that a cap won't                                                               
go into effect  without a commitment from  the insurance industry                                                               
that it will lower rates.   "I'm not comfortable giving insurance                                                               
companies this blank check, which  is, 'Here, we'll increase your                                                               
profits and  you don't have to  do anything in return';  I'm just                                                               
not comfortable with that," he concluded.                                                                                       
REPRESENTATIVE GRUENBERG  mentioned that  he might look  into the                                                               
possibility  of  offering  a   conceptual  amendment  that  would                                                               
establish some  sort of group that  could look at all  the issues                                                               
raised and  that would submit a  report, at the beginning  of the                                                               
next   legislative   session,   suggesting   possible   long-term                                                               
Number 2292                                                                                                                     
REPRESENTATIVE  ANDERSON  made a  motion  to  adopt Amendment  1,                                                               
which read [original punctuation provided]:                                                                                     
     Page 2, Line 11-16 Delete all language                                                                                     
          (c) In an action to recover damages for personal                                                                      
       injury or wrongful death based upon the provision                                                                        
          of services by a health care provider, damages                                                                        
          shall include both economic and non economic                                                                          
          damages.  Damage claims for non economic losses                                                                       
           shall be limited to compensation for pain,                                                                           
          suffering, inconvenience, physical impairment,                                                                        
          mental anguish, disfigurement, loss of enjoyment                                                                      
          of life, loss of society and companionship, loss                                                                      
          of consortium, injury to reputation, and other                                                                        
          non pecuniary damage.                                                                                                 
     Page 4, Line4, after "*Sec.6." insert:                                                                                     
          AS 09.55.560 is amended by adding a new                                                                               
          subsection to read:                                                                                                   
          (6) "Economic damages" means objectively                                                                              
          verifiable monetary losses incurred as a result                                                                       
          of the provision of, use of or payment for (or                                                                        
          failure to provide, use or pay for) health care                                                                       
          services or medical products, such as past and                                                                        
          future medical expenses, loss of past and future                                                                      
          earnings, cost of obtaining domestic services,                                                                        
          loss of employment, and loss of business or                                                                           
          employment opportunities.  All other damages are                                                                      
          "non economic" damages.                                                                                               
     Renumber language in old Section 6 accordingly.                                                                            
Number 2297                                                                                                                     
REPRESENTATIVE GRUENBERG objected.                                                                                              
REPRESENTATIVE  ANDERSON said  that Amendment  1 is  necessary to                                                               
clearly establish legislative policy  with regard to defining the                                                               
terms "economic" and  "noneconomic" as they pertain  to the bill.                                                               
It has  been the experience  in other states that  confusion with                                                               
regard  to these  terms  in  judicial proceedings  has  led to  a                                                               
gradual erosion of legislative intent, he opined.                                                                               
MR. JORDAN said  it's his understanding that  currently, there is                                                               
no  statutory definition  of "economic  damages".   Therefore, it                                                               
seems logical to put a definition  in statute.  He noted that the                                                               
language in Amendment  1 comes from federal  legislation that was                                                               
passed by the House of Representatives this year.                                                                               
REPRESENTATIVE GARA said:                                                                                                       
     There are very  well-accepted pattern jury instructions                                                                    
     in  Alaska that  define what  noneconomic damages  are,                                                                    
     that define what economic damages  are, what the burden                                                                    
     of proof  is, how much  proof has  to be offered.   And                                                                    
     I've  never  heard  anybody  complain  ...  about  them                                                                    
TAPE 04-34, SIDE B                                                                                                            
Number 2384                                                                                                                     
REPRESENTATIVE GARA  said he  didn't know why  they should  add a                                                               
statutory definition  when the current pattern  jury instructions                                                               
aren't being objected to.   He suggested that perhaps Amendment 1                                                               
fixes a problem that doesn't exist.                                                                                             
REPRESENTATIVE  GRUENBERG  asked  that [Amendment  1]  be  tabled                                                               
until the bill's next hearing.                                                                                                  
The committee took an at-ease from 4:20 p.m. to 4:30 p.m.                                                                       
Number 2361                                                                                                                     
REPRESENTATIVE  ANDERSON withdrew  Amendment  1,  adding that  he                                                               
would offer it again at the bill's next hearing.                                                                                
REPRESENTATIVE OGG  asked whether  other states have  adopted the                                                               
definitions proposed  in Amendment 1.   He posited  that everyone                                                               
wants a little  certainty, and offered his  interpretation of the                                                               
comments made and issues raised thus far.   He said that he has a                                                               
sense that  a reasonable  cap would be  higher than  the proposed                                                               
cap of $250,000.                                                                                                                
CHAIR  McGUIRE  asked  members to  have  proposed  amendments  in                                                               
writing by the bill's next hearing.                                                                                             
REPRESENTATIVE OGG offered  his belief that a cap  will not cause                                                               
insurance rates  to go down,  adding that  such would be  hard to                                                               
prove anyway.                                                                                                                   
REPRESENTATIVE ANDERSON reiterated his  intent behind offering HB
CHAIR McGUIRE announced that HB 472 would be held over.                                                                         

Document Name Date/Time Subjects