Legislature(2003 - 2004)
04/29/2003 01:37 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 175-LIABILITY:RECREATIONAL ACTIVITY/BOATS CHAIR BUNDE announced SB 175 to be up for consideration. MR. BRAIN HOVE, staff to Senator Seekins, sponsor, said that Alaska has many recreational opportunities, but the high cost of liability insurance is a significant factor to existing enterprises that offer these types of activities. It also presents a substantial barrier to new businesses, as the vast majority of existing companies are small firms based in Alaska. SB 175 delineates the burden of responsibility for the commercial recreation business, as well as the person who elects to participate in that activity. CHAIR BUNDE asked if he could address the concerns of Mr. Richard Dow with Alaska Resorts and Ms. Tracy Knutson, an attorney. MR. HOVE replied that those concerns resulted in the current committee substitute (CS). SENATOR SEEKINS moved to adopt CSSB 175, version H, as the working document. There were no objections and it was so ordered. CHAIR BUNDE asked Mr. Hove if the CS adequately addressed the concerns of Tracy Knutson and Richard Dow. MR. HOVE replied that it does. MR. RON PECK, President, Alaska Travel Industry Association, said the industry has been working for 10 years to improve reform in recreational liability and supported SB 175. MR. CHRIS VONIMHOF, Alyeska Resort, said he had been with the Resort for 30 years and when the ski liability package passed, it was a tremendous help to their business. Safety is the key to so many sports and this bill protects both the client and the operator. MR. STEVE CONN, Alaska Public Interest Research Group (AkPIRG), said he is currently a resident of Seward, a community that depends on many of the activities covered in this bill, although he doesn't run a recreational activity personally. He said there seems to be a kind of fever running through the Legislature where favored persons or businesses are being immunized from all forms of civil liability. He hoped legislators were prepared to predict all situations, because they are going back in time and recreating, through the reintroduction of an old horse in tort law, contributory negligence, an absolute bar to lawsuits in all situations - ones involving foreign tourists, elderly tourists, ones involving less reputable operations that come and go. He said that currently, Alaska juries have a real disdain for what they view as a frivolous lawsuit. He thought a law like this would seriously harm the tourism industry and create very bad publicity for Alaska's burgeoning recreation industry. MR. JOHN GEORGE said he was representing himself today, not the insurance industry. He knows how difficult it is for the smaller operators or anyone who is doing anything that isn't absolutely mainstream to get insurance. He thought this bill would go a long way to easing that by providing relief for the insurance industry. MR. BOB DINDINGER, Chairman, Alaska Travel Industry Association, said he is also the President and CEO of Alaska Travel Adventures, the state's largest provider of guided recreational activities handling just under 100,000 clients per year. He said SB 175 would be very beneficial to this industry, particularly to the smaller businesses. He said it is always difficult to get insurance in this state and there has never been more than two or three underwriters for this type of service. At times there has been only one underwriter, which led to a 50 percent to 60 percent rate increase per year. If this bill passes, clients, many from out of state, would still be able to pursue frivolous lawsuits and they would still be expensive to defend. However, this legislation would help get those cases thrown out before companies have to undertake a great deal of expense. MR. DINDINGER explained that most of the suits are settled for the deductible of the operator. The insurance company never eats a dime, because it's very common to have deductibles of $5,000 to $10,000 per incident. The first thing an insurance company does is offer up the first $5,000 to $10,000. At that point, his company has to defend itself or agree to pay. This bill will solve a lot of those frivolous suits and he is hopeful that it encourages additional underwriters to enter the market. SENATOR STEVENS asked if frivolous lawsuits happen regularly. MR. DINDINGER replied about one dozen per year, but in 20 years of business his company has never had to hospitalize a client. He has had to pay $50,000 to $100,000 this year in defense of those types of claims. SENATOR STEVENS asked if this bill would affect the out-of-state lawsuits. MR. DINDINGER replied that it wouldn't. SENATOR FRENCH asked how this bill would not immunize his company from poorly trained employees. MR. DINDINGER replied that it's not mentioned specifically in the bill. To the extent employees make mistakes, the business is liable for those mistakes. Those are errors, not inherent risks. For example, with river rafting, his employees have to take 10 trips down a river under instruction before they can take a paid client. There is a check-out process as well, and those expenses would not be diminished by this bill. It is in his best interests to have very well trained employees and he did not think they would put attorneys out of business, but litigation will be reduced. He has defended a lot of rafting incidents and never lost a case. SENATOR FRENCH asked what the differences would be from the common laws that exist now. MR. DINDINGER replied that this legislation will add clarity and could be sent to clients in response to the first letter a company receives in which the client is threatening to file suit. The company could also send them a copy of the release they signed saying that they are in good condition and accept the inherent risks. SENATOR FRENCH asked if Ms. Knutson has had the opportunity to look at the CS. SENATOR SEEKINS said he wasn't sure. CHAIR BUNDE said that he knew that Mr. Vonimhof had reviewed the CS and his concerns had been taken care of. SENATOR SEEKINS noted that this bill goes to his committee, Judiciary, next and he was sure that Ms. Knutson would contact him if there were any concerns. CHAIR BUNDE noted that there was no fiscal note, but that he assumed one would be forthcoming. SENATOR SEEKINS said that is correct. He moved to pass CSSB 175(L&C), Version H, from committee with individual recommendations. SENATORS FRENCH, SEEKINS, STEVENS and BUNDE voted yea and it moved from committee.