Legislature(2003 - 2004)
03/19/2004 01:15 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 423 - TAXICAB DRIVER LIABILITY Number 0823 CHAIR McGUIRE announced that the next order of business would be HOUSE BILL NO. 423, "An Act relating to accidents involving the vehicle of a person under the influence of an alcoholic beverage; and providing for an effective date." Number 0830 REPRESENTATIVE ANDERSON, sponsor, paraphrased from the following prepared statement [original punctuation provided]: House Bill 423 is a "Good Samaritan" bill for taxicab operators who transport intoxicated persons or who drive an intoxicated person's motor vehicle to their home or another residential location. This legislation would create a deterrent for those who might otherwise drive impaired if unable to find an alternative method of transportation. It grants taxicab companies and the person or organization that participates in making arrangements for the transportation of the intoxicated person and his/her vehicle legal immunity in the event that an accident occurs, except in the case of recklessness, gross negligence, or intentional misconduct. There are times when Alaskans find themselves in an "end of evening" dilemma - they are over the .08 blood alcohol limit and shouldn't drive, but are worried and reluctant to leave their car unattended overnight. HB 423 resolves this dilemma by allowing a taxicab operator to drive an intoxicated person home while a second operator follows them home in their vehicle. While annual alcohol-related traffic fatalities have decreased by more than 33% over the past few decades, the latest statistics show a recent increase with more than 17,400 people killed and more than half a million others injured in alcohol-related crashes in 2002 in the United States. Alaska had 87 traffic deaths of which 35 were alcohol-related (40%) in 2002. The previous year there were 47 alcohol related deaths out of the 89 deaths (53%). In order for this program to be successful cab companies and liquor establishments must work and communicate closely. These establishments will implement the following strategies and policies: Place signs near pay phones, direct lines to cab companies and in other conspicuous areas of the establishment such as restrooms and near exits. Train the establishment staff on the availability of this program and how to inform patrons, and how to implement the process. Make public service announcements (PSA) at closing time to help influence patrons to use the program Pay a portion of the cab fare cost agreed upon by establishments and program officials Track program usage to assess effectiveness to promote and or improve the program This bill passed from the House State Affairs Committee with the understanding we would address the insurance liability issue prior to a hearing in the Judiciary committee. The sponsor worked with Representative Gruenberg and his staff and with Mr. Lessmeier, who represents State Farm Insurance and is in the audience today. You should a letter of support in your bill packet from the Property Casualty Insurers Association of America, submitted by John George. The committee should have a copy of the CS, version I in your bill packet. I'll be available to answer any questions you have, but I will defer any technical questions on the insurance liability issue to Mr. Lessmeier, who crafted the new language in the CS. Number 1059 REPRESENTATIVE GRUENBERG moved to adopt the proposed committee substitute (CS) for HB 423, Version 23-LS1600\I, Luckhaupt, 3/17/04, as the work draft. There being no objection, Version I was before the committee. Number 1102 MICHAEL L. LESSMEIER, Attorney at Law, Lessmeier & Winters; Lobbyist for State Farm Insurance Company ("State Farm"), stated that he was present to support this legislation. He explained that [State Farm] wasn't involved in the initiation of this concept, but became involved when concerns were raised in the House State Affairs Standing Committee regarding a [hypothetical] situation in which the driver delivering the vehicle home runs a red a light and hurts an innocent individual. After working with Representative Gruenberg and the sponsor, Mr. Lessmeier said, it was determined that the insurance on the vehicle would follow the vehicle. Therefore, the language in Section 1, subsection (a), was changed to read as it does in Version I. MR. LESSMEIER recalled that the second concern raised was in regard to the liability of an organization or a person who is participating in making arrangements for the transportation of the vehicle who might not hold a liquor license or might not be an agent or employee of "a person". For example, there was an issue raised with regard to what would happen to a municipality or an organization such as Mothers Against Drunk Driving (MADD) if it helped to arrange a program such as that proposed in HB 423. Therefore, the language in Section 1, subsection (b), was changed. He suggested that on page 2, line 12, after "A person", the language, "or entity" should be inserted. Therefore, it would be clear that anyone from any organization that makes arrangements for transportation of vehicle wouldn't be liable. MR. LESSMEIER pointed out that in Section 1, subsection (c)(2) makes it clear that whatever is being done with this legislation doesn't impact a person's ability to recover damages under any applicable uninsured or underinsured motorist coverage, which didn't seem to be clear in the original legislation. Mr. Lessmeier concluded by encouraging the committee to move the bill. Number 1277 JIM SHINE JR., Staff to Representative Anderson, Alaska State Legislature, assisted Representative Anderson, sponsor, by offering that basically this legislation allows an intoxicated bar patron and his or her vehicle to be transported home. The Cabaret Hotel Restaurant & Retailers Association (CHARR) started organizing this concept and it was introduced as HB 68 in the Twenty-First Alaska State Legislature, but ultimately was stalled in the Senate Judiciary Standing Committee at the end of session. He explained that CHARR has been able to obtain financial support from bars, taxi companies, and corporate sponsors in Anchorage in order to pay the $40 one-time flat fee to transport the bar patron and his or her vehicle home. The bar patron will be transported in the taxicab while the bar patron's vehicle will be driven by a second taxicab operator. As already mentioned, the insurance liability will stay with the bar patron's vehicle in the case of an uninsured or underinsured motorist. REPRESENTATIVE GARA asked what the liability is that people are concerned with under the current law. MR. SHINE answered the [concern] involves a vehicle owner who doesn't have insurance. Number 1362 REPRESENTATIVE GARA commented that he doesn't have a grasp of the circumstances which justify the need for this legislation. MR. LESSMEIER reminded the committee that he wasn't involved in putting together the program. However, he recalled that testimony in the House State Affairs Standing Committee relayed that the transportation companies couldn't procure the insurance to cover this kind of risk, and if they couldn't cover the risk under their own insurance policies, then they wouldn't provide this service. REPRESENTATIVE GARA asked if this legislation is requiring that the vehicle owner's policy be extended to the person who drives the vehicle in this circumstance. MR. LESSMEIER answered in the affirmative. In further response to Representative Gara, Mr. Lessmeier specified that the provision [extending the vehicle owner's policy to the person who drives the vehicle] is essentially in Section 1, subsection (a). The intent of Section 1, subsection (a), and [Version I] is that the [vehicle] owner's policy would follow the vehicle. REPRESENTATIVE GARA said he understood that to be the intent. However, the language [in Section 1, subsection (a)] merely says that the "taxicab driver isn't liable beyond the limits of the owner's car" rather than specifying that the owner's vehicle insurance would [follow the vehicle]. CHAIR McGUIRE opined that it says it by [inference]. She explained that [Section 1, subsection (a)] is specifying that one is liable, but not beyond the limits of the policyholder of the car. REPRESENTATIVE GARA pointed out that it merely refers to "any applicable insurance policy" and doesn't require that the insurance policy of the owner of the vehicle applies. He offered his understanding that the desire is to say that the vehicle owner's insurance policy should cover the taxicab driver. Number 1485 MR. LESSMEIER referred to Section 1, subsection (a)(4), and offered his belief that under most [automobile] insurance policies, as long as the driver is driving as a permissive user - driving with permission [from the owner] - then the coverage follows the vehicle. He opined that the language in [Section 1, subsection (a)(4)] accomplishes that for the taxicab driver. REPRESENTATIVE GARA pointed out that [using such language] is banking on the insurance policy having language in it that matches subsection (a)(4) of Version I. He said he would be more comfortable with language that specifies that the insurance coverage shall apply in the circumstance desired. If the desire is to allow the vehicle owner's policy to protect the victim, then that should be specified, rather than saying that the victim would be protected in the event that the policy of the insurance company has language matching the language in this legislation. MR. LESSMEIER commented that he isn't familiar with every policy sold. Mr. Lessmeier explained: The intent of what we were trying to do here is ... to put the person in no worse [a] situation than they would be in if the driver was actually driving. In other words, let's say this person that is having their car delivered got into that car and ... drove it home. We wanted, with this bill, to put ... the victim in the same position they would be in if that person were behind the wheel. No better. No worse. And ... through this bill, it was not the intent to put them in a better position. It was not the intent to put them in a worse position. It was the intent of these changes simply to address a situation in the original bill which made the taxicab driver immune from all liability. That's what we were trying to accomplish. We were not trying to create coverage where none exists, Representative Gara, and that would be the concern I would have about your proposal. We were simply trying to put them in the same position. And that's what we intended to accomplish and that's what, I think, we did accomplish. Number 1640 CHAIR McGUIRE recalled that Representative Rokeberg's 2002 legislation, HB 68, passed the House unanimously and provided 100 percent immunity [for taxicab drivers], rather than the change worked on by Representative Gruenberg and Mr. Lessmeier. MR. LESSMEIER indicated his agreement, and reiterated that the concern was brought up in the House State Affairs Standing Committee. This solution, he pointed out, was developed in conjunction with the sponsor and Representative Gruenberg's office. If the intent is to find a deeper a pocket than would've existed if the [intoxicated person] had actually gotten into the vehicle and driven home, then it's totally different legislation. REPRESENTATIVE GARA relayed that he wanted, and he understood Mr. Lessmeier to want, the taxicab driver to have the same coverage as the vehicle owner would have if he or she had driven the vehicle home. MR. LESSMEIER specified that the intent is to provide the same coverage on the person driving the vehicle home. There is no desire to create coverage where none otherwise existed. CHAIR McGUIRE interjected that Representative Gara and Mr. Lessmeier are saying the same thing. REPRESENTATIVE GARA agreed, but opined that the language of the legislation doesn't address it. Therefore, he surmised that [the intent] is that to the extent the owner of the vehicle had coverage, the taxicab driver should be protected by that coverage. If the owner of the vehicle didn't have coverage, then the taxicab driver wouldn't be given coverage that didn't exist. MR. LESSMEIER argued, "It's a little different. ... It's to the extent that the coverage ... would be in place on the driver of that vehicle." Number 1740 MR. LESSMEIER posed a situation in which the vehicle is a stolen vehicle. Under Representative Gara's notion, coverage would be created where it would not otherwise exist due to saying that the owner's coverage always follows the vehicle. CHAIR McGUIRE interjected, "The driver, not the car." REPRESENTATIVE GARA said, "The driver's coverage." MR. LESSMEIER noted that the vehicle owner's coverage "may" [provide coverage to the driver of the vehicle] under the terms of the policy. Coverage certainly would be applied to the permissive user of the vehicle under many of the circumstances being discussed. However, [State Farm] had concerns with regard to a person who wasn't a permissive user and there could be other issues. He reiterated that there is no desire to create coverage where it didn't otherwise exist. REPRESENTATIVE GARA surmised, then, that the intent is to ensure that the taxicab driver has the coverage that the person who would've driven the vehicle home would've had. However, he pointed out, the legislation doesn't make that policy held by the person who would've driven the vehicle home available to the taxicab driver. Representative Gara posed a situation in which an intoxicated individual drove home. In one circumstance the intoxicated individual has a policy that specifies that his coverage extends to anyone he authorizes to drive him home. In the aforementioned circumstance, this legislation [works] because the policy specifies that the [policy holder] is covered and so is the individual he provides with the authority to drive the vehicle home. REPRESENTATIVE GARA then posed a situation in which the intoxicated individual's policy says that the policy covers the [policy holder] but not those he gives the authority to drive his vehicle. In such a situation, this legislation doesn't require that the [policy holder's] insurance extend to the taxicab driver. Representative Gara stated that he wants to extend the [policy holder's] insurance to the taxicab driver as was stated by Representative Anderson and Mr. Lessmeier. It seems simple [that the legislation] would specify that the policy should follow the driver, he said. Number 1978 MR. LESSMEIER said that although he would have to review the statutes, he believes that permissive users are covered. Furthermore, he said he didn't know of any policy that doesn't cover [permissive users]. He offered to check into that. Mr. Lessmeier reiterated [State Farm's] opposition to mandating coverage where it doesn't exist. REPRESENTATIVE GARA remarked, "If we're only requiring coverage under coverage that exists but not under coverage that doesn't exist, we're not doing anything with this bill." MR. LESSMEIER disagreed. He explained that this legislation began by giving complete immunity to the driver, which isn't the case now. Now the legislation only provides immunity [up to] the coverage that exists, and furthermore [this legislation ensures] that this doesn't impact a person's ability to recover under his or her [underinsured or uninsured motorist] policy. REPRESENTATIVE GARA expressed the need not to inadvertently eliminate policy coverage that does exist. He posed a situation in which the person driving the vehicle home may have his or her own liability policy, an underinsured and uninsured motorist policy, and perhaps even a homeowner's policy. MR. LESSMEIER interjected that the person driving the vehicle home isn't going to have underinsured and uninsured motorist coverage that provides coverage to the injured person. The injured person would be the one with the underinsured and uninsured motorist coverage. He specified that he wasn't present to debate the philosophical reasons why this legislation was introduced. Mr. Lessmeier clarified that [State Farm] saw a problem [and is attempting to address] the possible situation in which an innocent person is left uncompensated. REPRESENTATIVE GARA suggested that apart from the owner's policy, which should follow the driver, the legislation should also include language specifying "or any other applicable policy." He said he didn't know why the legislation limits the policies that someone could use to obtain coverage. He specified that the circumstance being addressed is one in which the taxicab driver who is driving the [intoxicated individual's] car home does so poorly and kills someone. Therefore, the desire is to point out to the victim's family from whom it can seek compensation. He expressed the need to allow other policies, beyond the [vehicle] owner's policy, to apply. However, the legislation seems to say that the only policies that apply are uninsured and underinsured policies, even though there may be some liability policies that could apply as well. CHAIR McGUIRE announced that she would take public testimony today and then set HB 423 aside. She pointed out that [the legislation] has to create an incentive for a taxicab driver to drive an intoxicated person's home. She asked why the taxicab driver would risk having his/her insurance rates increasing due to something happening when the taxicab driver drives an intoxicated person's vehicle home. Number 2180 MR. LESSMEIER recalled that the testimony in the House State Affairs Standing Committee suggested that adding the language, "or any other applicable policy", would kill this program. Mr. Lessmeier said that [State Farm] wants to recognize, as a matter of policy, that this is a good program and that there is a narrow situation in which an innocent victim could be hurt. Therefore, [State Farm] wants to be sure that in the aforementioned situation, there would be coverage for that person. REPRESENTATIVE SAMUELS asked if Mr. Lessmeier would have problems with the following language: "The auto insurance that covers the driver [shall also] cover the taxicab driver that drives the car from the licensed premises to the home or directed location of the original driver." MR. LESSMEIER said he would want to think about that, reiterating that he doesn't want to create coverage where no coverage exists. REPRESENTATIVE SAMUELS asked, "Of the auto insurance that covers the driver?" MR. LESSMEIER replied in the affirmative and said that [State Farm] doesn't have any problem with the suggested language. Number 2266 LINDA WILSON, Deputy Director, Public Defender Agency (PDA), Department of Administration (DOA), testified in support of HB 423. She expressed pleasure with legislation that is trying to do something positive to prevent people from driving while intoxicated. Giving the taxicab driver the opportunity to drive an intoxicated individual's car is a positive step. She commented that it's nice to see legislation that isn't punitive and that addresses a problem. CHAIR McGUIRE, upon determining no one else wished to testify, closed public testimony. REPRESENTATIVE GARA asked if the intention is that the taxicab company's liability policy doesn't go into effect [in these situations]. MR. SHINE explained that this is a pilot program for the Anchorage area. Taxicab operators in Anchorage are independent contractors that have to take out their own insurance policies on a vehicle and it only stays with the vehicle. He recalled testimony in the House State Affairs Standing Committee from the transportation inspector, who specified that the insurance [held by the operators] would only be applicable to licensed taxicabs. REPRESENTATIVE GARA surmised that if the [taxicab driver] also had insurance that followed them, the [taxicab driver] wouldn't mind having that apply. MR. SHINE agreed. However, he said he found that taxicab operators have a difficult time obtaining insurance because [they] can charge a fee for the driving and there is an incentive to drive faster to obtain better tips and make more trips. He relayed that no insurance company in Alaska will insure taxicab operators. In fact, he said, the only insurance company that he could find that will insure taxicab operators is "Scottsdale." TAPE 04-42, SIDE B Number 2393 REPRESENTATIVE GARA clarified that he isn't saying that all other policies should apply; rather, he is merely asking if there is any reason why language specifying, "any other insurance policy that applies shall apply" wouldn't be acceptable. MR. SHINE highlighted that HB 423 aims to get drunk drivers off the road. He echoed the sponsor's earlier testimony that almost 40 percent of the traffic deaths in 2002 were alcohol related. In reviewing the issue of insurance, Mr. Shine informed the committee that taxicab drivers are supposed to be professional drivers because they have to go through licensing and drug testing, and thus the probability of a death or an accident while transporting a vehicle would be slim. He relayed that the House State Affairs Standing Committee discussed the slim chance of an accident occurring in comparison to taking drunk drivers off the road and saving lives. REPRESENTATIVE GARA offered his understanding that the point is not to hold the taxicab driver liable above the available insurance limits. However, the reality is that among professional drivers there is the pressure to drive fast and get more fares. He posed a scenario in which a taxicab driver runs a red light and kills a child or permanently injures someone. He noted that the reality is that most people carry inadequate insurance. The current legislation says that perhaps the policy of the person who would've driven the vehicle home would be in effect, and the legislation also covers uninsured and underinsured coverage. However, he maintained that there may be other insurance policies that also apply. Therefore, he reiterated his suggestion to include the following language: "or any other applicable insurance policy". Representative Gara specified that he didn't want to mandate that other insurance policies apply, but if they do already apply, then they do so in this situation as well. Representative Gara said that he had no problem immunizing the taxicab driver, which he viewed as the purpose of the legislation. Number 2260 REPRESENTATIVE SAMUELS pointed out that the sponsor statement and the memorandum requesting a hearing for HB 423 seem to suggest that this legislation immunizes the individual who drives the intoxicated individual home as well as the driver of the intoxicated individual's vehicle. He surmised that if this is true and the intoxicated individual is immunized, then every taxicab driver with an intoxicated rider is being immunized. He said he didn't see [such language] in the legislation. REPRESENTATIVE GRUENBERG clarified that HB 423 has nothing to do with the taxicab driver who transports an intoxicated individual home; this legislation only deals with the individual driving the [intoxicated] individual's vehicle. Number 2209 CHAIR McGUIRE announced that HB 423 would be set aside.