Legislature(2003 - 2004)

04/29/2003 01:37 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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.                                                                                          

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