Legislature(2003 - 2004)
04/27/2004 01:32 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 549-UNSOLICITED COMMUNICATION:AIRCRAFT CRASH CHAIR CON BUNDE announced HB 549 to be up for consideration. 2:29 - 2:30 - at ease MS. VANESSA TONDINI, staff to Representative Lesil McGuire, sponsor, said this bill regulates "ambulance chasing lawyers." Normally, those lawyers are governed by the Alaska Rules of Professional Conduct. This particular issue deals with Rule 7.3, which states, "An attorney shall not solicit by in person or live telephone contact professional employment from a perspective client with whom the lawyer has no family or prior professional relationship without a significant motive for the lawyer's doing." The reason is because an overwhelmed client might find it difficult to fully evaluate all the alternatives after an event has just happened. Even though this rule exists, it hasn't controlled the problem that is taking place in Alaska, especially after aviation accidents. The federal government recognized the vulnerability of aviation accident victims and their families in 1996 when it passed the Aviation Disaster Family Assistance Act. It mandates that air carrier provide specific support for family members of those who were injured or killed in an accident. It also prohibited unsolicited contact by attorneys for 30 days. In 2000, the law was amended to expand the scope of unsolicited contact to include any associate, agent, employee or other representative of the attorney and expanded the time from 30 to 45 days. The enforcement of this law requires action by the Civil Aeronautics Board and the U.S. Attorney General; the penalty for violation is a $1,000 fine. However, the law is hardly enforced and there is legal debate about whether or not the federal law is enforceable against attorneys who violate it in Alaskan aviation accidents that happen entirely within the state. It is especially prevalent in rural Alaska where support services are hard to get. She explained: We don't want them to be preyed upon by not good lawyers, in other words, until they, themselves decide that it's time to initiate that process. HB 549 was based on the federal law and we felt this law was necessary because it needs to apply to flights that take place within Alaska. Like the federal law, it doesn't interfere with the performance of the family support function provided for in the Family Assistance Act by the air carriers. Also, in our bill we made it clear that we don't want any attorneys to contact these people, so we added the reference to the air carrier's attorney, as well. Regarding the sanctions against attorneys, we felt that a civil financial penalty is inadequate because the financial incentive of representing an aircraft accident victim could be so great that they would almost be willing to take the financial fee of $1,000 if they're getting a multimillion dollar payment out of this. We felt a criminal sanction would be the best deterrent. SENATOR SEEKINS moved to adopt SCS HB 549(L&C), version I, as the working document. There were no objections and it was so ordered. MS. TONDINI thanked the committee for bringing the blank CS forward as last minute floor amendments and other changes were needed. She explained that language on page 1, lines 12 - 15, was added on the floor of the House to clarify that during the 45-day period following an aircraft accident, neither an agent nor a representative or the air carrier or its insurer may not initiate contact for the purpose of offering a final settlement. The sponsor did not object to that. MS. TONDINI explained that air carriers might have obligations, such as providing short-term financial assistance and page 2, subsection (c), clarifies that the prohibitions do not apply to those activities. The other area of the bill that was amended in the House was the removal of the penalty section in subsection (d), page 2, lines 8 - 12. The bill originally read $10,000 for the first offense and $100,000 for a second offense, but that language was removed. The problem when a fine is not specifically mentioned is that it would allow a judge to impose a term of imprisonment, which was never the intent of the sponsor. The sponsor felt comfortable with making it a class A misdemeanor with a fine of $100,000 or the fee the attorney would have received through the violation of this act. Some people felt that contact needed to be defined in section (e). CHAIR BUNDE asked if the amount of the fine would be accepted by the courts as just, based on the severity of the crime. MS. TONDINI hoped so and noted that AS 12.55.035 sets out maximum fines for each level of crime. Ordinarily, the maximum fine for a class A misdemeanor is $10,000, but another provision allows the legislature to establish otherwise. CHAIR BUNDE said he thought it was a good idea to protect people who are in a state of stress, but asked why this is limited to aircraft accidents. MS. TONDINI replied that she thought this should be a policy for all situations and added that it applies in situations that the Alaska Rules of Professional Conduct govern. CHAIR BUNDE asked if the recovery from an aircraft accident is potentially much larger than for an average automobile accident. MS. TONDINI replied that is correct. SENATOR SEEKINS asked why she didn't insert "whichever is greater" after the penalty and if the sponsor wanted the court to have that discretion. MS. TONDINI replied that language on page 2, line 9, attempts to say that it shall be the greater of the two. SENATOR FRENCH said he had a hard time differentiating between someone who was in the World Trade Center and someone who was on the plane that crashed into it. He didn't know which family was more grievously wounded or incapable of making a decision. He was concerned that the bill focuses on air carriers. He is also concerned about the penalty for lawyers who break the professional rules, because, "A lawyer's ticket to practice law is immensely valuable. You can't put a value on it. If you lose your ticket to practice, you have to go find another line of work...." He also thought lawyers must have made some serious violations against plane crash victims and he wanted to hear about those. MS. TONDINI agreed with his first point and said this bill doesn't try to give more weight to one side or the other, but tries to focus on an attorney's bad conduct. SENATOR SEEKINS moved to delete section (e) from the CS the committee just adopted. There were no objections and it was so ordered. MR. BRUCE MCGLASSON, President, Grant Aviation, asked for some protection for the air carriers. He said that the professional rules are routinely ignored with impunity in western Alaska. He has found that victims who have truly been injured will immediately contact an attorney, but attorneys are routinely contacting other people who were on planes, but didn't have specific injuries. The attorneys are racing to them immediately after the accidents to sign them, because if they go home and think it over for a few days, they are unharmed.... I would like just a cooling off period to protect us from that kind of behavior. MR. MCGLASSON said that airlines are unable to buy insurance coverage that is adequate for someone who has truly suffered horrific damages, like an untimely death or a permanent disability. Insurance companies are terrified of this onslaught of small suits that can only be described as extorted. They have a client that has no damages that they can point to, but they have signed up immediately after and within a week of the accident, we'll get a letter from the attorney offering to settle this case of $50,000 or $100,000, because they know our insurers will look at the cost of defense and probably opt to settle rather than go to trial. The consequences are horrible for us. Our insurance rates have more than doubled in the last five or six years or tripled in some cases. Our available coverage has been dropped in some cases. In some cases, we've been able to insure our seats for $500,000 a seat. It was $1 million a few years ago and now it's not even an option at any price. Many carriers in the state are looking at limitations of $300,000, because the insurance companies are afraid of the onslaught of suits that [are] presented to them. CHAIR BUNDE asked if he had actual situations that he could share with the committee. MR. MCGLASSON replied yes; in one instance an attorney actually went to the hospital in Bethel and waited for the people who were in the airplane to walk out the door. "That type of immediate contact - it's almost guaranteed to generate a client for him." MR. MCGLASSON related that another incident happened a couple of weeks before Christmas when attorneys sent letters to every person in the village where the accident occurred. MR. ROBERT JACOBSON, President, Wings of Alaska, said he is also a member of the Alaska Air Carrier's Association Board of Directors and has its approval to speak on its behalf. He supported HB 549 and agreed with Mr. McGlasson's testimony. Rates have tripled for many carriers throughout the state, limits have come down. Some of us that used to enjoy $10 million and $20 million smooth coverage are now being offered a half million dollars a seat. For those of you that have been involved with any aviation incidents over the year, a half a million dollars truly isn't enough to take care of the people who are truly deserving in an accident like that. To address Senator French's concern whether it was people inside the Towers or on the airplane - in a situation like this, the Aviation Disaster Family Assistance Act addresses them altogether.... Aviation accidents, because of the calamity of it, even if it's one or two people in an air taxi accident like there would be in an automobile accident, the settlements and the awards are usually 10 times what they are in an automobile accident. As a result, our rates have to be commensurate. Because we depend so much on aviation in Alaska - it's a taxi service, it's a bus service for so many people up here. We air carriers are struggling to provide the service and provide good service. At the same time, we're getting beat up and we're getting affected - in this case, by some people who aren't acting honorably in their profession.... SENATOR FRENCH asked Mr. McGlasson if he filed a bar complaint against the individual who waited at the hospital to drive the victims home. MR. MCGLASSON said he hadn't, but it was a recent occurrence and he didn't realize he could do that. SENATOR FRENCH asked if it happened within the last six months and if he knew of any other incidents. MR. MCGLASSON replied that it had happened within the last six months and in a small community like Bethel, he couldn't tell which attorneys had relationships with the people or not. In the accidents he had been involved in, the people had been contacted immediately in almost every case. "It is the rule rather than the exception." SENATOR FRENCH advised him to take the options that are open to him and to use the least force possible. MR. JACOBSON said that most people involved in an aircraft accident don't understand what is possible. When they are contacted by a plaintiff attorney who says, 'I can get $100,000 for you because you now have a fear of flying - and that's happened to us. We had an accident in 1998 where nobody was injured, people got a little wet from their hips down. We took them to the hospital as we do in every case and they were checked out and released. There was no physical or admitted injuries, but one of the four, we took care of her hospital bills and offered her $2,500 to move on. She said fine. The others retained a plaintiff attorney and they were promised big amounts because they now have a fear of flying. SENATOR FRENCH asked him if they were contacted by attorneys or the other way around. MR. JACOBSON admitted he didn't know. His point was that the people ended up with less, because the plaintiff's attorney took 30 percent plus expenses. "In a situation like that, we're going to defend those as strong as we can and the victims end up with less and that's a shame, but that's what is happening, too." SENATOR SEEKINS said it seems to him that since this is already covered in a code of ethics, there is no problem with those who follow their code of ethics. If some attorneys are not following their code of ethics, the legislature can put some statutory teeth behind it. SENATOR SEEKINS moved to pass SCS CSHB 549(L&C) from committee with attached fiscal note and individual recommendations. SENATOR FRENCH objected saying he wanted to hear from at least one person who had been badgered by a lawyer after a traumatic injury or accident. That's what I thought the heart of this bill was about - not so much fixing insurance rates, but sort of keeping a protective aura around a person who has been through a tragedy. We didn't hear that. So, I guess I'm a little bit on the fence about what the object of the bill is.... The way I read this bill now is if I bump my head in an airplane accident and have to have two stitches, I've been injured, and 44 days later a lawyer sends a letter to me saying maybe you need some representation, that person is guilty of a misdemeanor and shall be sentenced to pay a fine of $100,000. I share your concerns, Mr. Chairman, that someone is going to challenge that and it's going to get booted out and you're going to be left with no direction whatsoever about what to do. I think this bill needs a little bit more fine-tuning. CHAIR BUNDE asked for a roll call vote. Senators Ralph Seekins, Gary Stevens and Chair Con Bunde voted yea; Senator Hollis French voted nay; and SCS CSHB 549(L&C) moved from committee.