Legislature(2003 - 2004)

04/27/2004 01:32 PM L&C

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

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