MINUTES OF THE MEETING
ADVISORY COMMITTEE TO THE LEGISLATIVE COMMISSION=S SUBCOMMITTEE CONCERNING THE STATUTORY LIMITATION ON DAMAGES THAT MAY BE AWARDED TO A PERSON IN A TORT ACTION AGAINST THE STATE OF NEVADA, ITS POLITICAL SUBDIVISIONS OR CERTAIN OTHER PERSONS
(Assembly Concurrent Resolution No. 46, File No. 140, Statutes of Nevada 1999)
February 16, 2000
Carson City, Nevada
The second meeting of the Advisory Committee to the Legislative Commission=s Subcommittee Concerning the Statutory Limitation on Damages that may be Awarded to a Person in a Tort Action Against the State of Nevada, Its Political Subdivisions or Certain Other Persons (Assembly Concurrent Resolution No. 46, File No. 140, Statutes of Nevada 1999) for the 1999‑2000 interim was held on Wednesday, February 16, 2000, at 10 a.m., at the Legislative Building, 401 South Carson Street, Room 3138, Carson City, Nevada. The meeting was video conferenced to the Grant Sawyer State Office Building, 555 East Washington Avenue, Room 4401, Las Vegas, Nevada. Pages 3 and 4 contain the AMeeting Notice and Agenda@ for this meeting.
ADVISORY COMMITTEE MEMBERS PRESENT IN CARSON CITY:
Bill Bradley, Co-Chairman, Representing the Nevada Trial Lawyers Association
Bill Isaeff, Co-Chairman, Representing the Nevada League of Cities
J.R. Crockett, Jr., Representing the Nevada Trial Lawyers Association
Mike Davidson, Representing the Nevada Association of Counties
P. Mark Ghan, Representing the Office of Attorney General
Madelyn Shipman, Representing the Nevada Association of Counties
ADVISORY COMMITTEE MEMBERS PRESENT IN LAS VEGAS:
Bill Hoffman, Representing the Nevada Association of School Boards
Shauna Hughes, Representing the Nevada League of Cities
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Scott Young, Principal Research Analyst
R. Rene Yeckley, Deputy Legislative Counsel
Roxanne Duer, Senior Research Secretary
MEETING NOTICE AND AGENDA
Name of Organization: Advisory Committee of the Legislative Commission=s Subcommittee to Study the Statutory Limitation on Damages that may be Awarded to a Person in a Tort Action Against the State of Nevada, its Political Subdivisions or Certain Other Persons (A.C.R. 46)
Date and Time of Meeting: Wednesday, February 16, 2000
Place of Meeting: Legislative Building
401 South Carson Street
Carson City, Nevada
Note: Some members of the committee may be attending the meeting and other persons may observe the meeting and provide testimony, through a simultaneous video conference conducted at the following location:
Grant Sawyer State Office Building
555 East Washington Avenue
Las Vegas, Nevada
If you cannot attend the meeting, you can listen to it live over the Internet. The address for the legislative web site is http://www.leg.state.nv.us. For audio broadcasts, click on the link AListen to Meetings Live on the Internet.@
I. Opening Remarks and Introductions
Bill Bradley and Bill Isaeff, Co-Chairs
*II. Approval of Minutes for the Advisory Meeting on January 10, 2000, in Carson City, Nevada
*III. Round Table Discussion Among Advisory Committee Members and Possible Action on Recommendations Concerning Statutory Limitation on Damages that may be Awarded to a Person in a Tort Action Against the State of Nevada, its Political Subdivisions or Certain Other Persons
IV. Public Testimony
*Denotes items on which the Advisory Committee may take action.
Note: We are pleased to make reasonable accommodations for members of the public who are disabled and wish to attend the meeting. If special arrangements for the meeting are necessary, please notify the Research Division of the Legislative Counsel Bureau, in writing, at the Legislative Building, 401 South Carson Street, Carson City, Nevada 89701-4747, or call Roxanne Duer, at 775/684-6825, as soon as possible.
Notice of this meeting was posted in the following Carson City, Nevada, locations: Blasdel Building, 209 East Musser Street; Capitol Press Corps, Basement, Capitol Building; City Hall, 201 North Carson Street; Legislative Building, 401 South Carson Street; and Nevada State Library, 100 Stewart Street. Notice of this meeting was faxed for posting to the following Las Vegas, Nevada, locations: Grant Sawyer State Office Building, 555 East Washington Avenue; and Clark County Office, 500 South Grand Central Parkway.
OPENING REMARKS AND INTRODUCTIONS
Co-Chairman Bill Bradley, representing the Nevada Trial Lawyers Association (NTLA), called the meeting to order and roll was called. Co-Chairman Bill Isaeff, representing the Nevada League of Cities, thanked all the government entities for responding to Chairman Anderson=s letter by providing the requested claims history data for the time period 1994 through 1998. Co‑Chairman Bradley asked if additional data was pending. Scott Young, Principal Research Analyst, Research Division, Legislative Counsel Bureau, responded he had just received information from the Office of the District Attorney for Clark County (please refer to Exhibit A). Co-Chairman Isaeff noted that with the arrival of Clark County=s material, all entities have responded. Co-Chairman Bradley reiterated that actuarial material is subject to interpretation; therefore, an actuarial review of the claims history data has been requested. This information should be compiled in time for the April 19, 2000, A.C.R. 46 Subcommittee meeting.
APPROVAL OF MINUTES FOR THE ADVISORY MEETING
ON JANUARY 10, 2000, IN CARSON CITY, NEVADA
Co-Chairman Bradley requested the following changes be reflected in the minutes. On page 17 beginning with the text AThere can be any number of cases (medical malpractice for example) that the Attorney General=s Office would decline to take . . .@ to reflect, A. . . there can be any number of cases that an attorney would decline to take . . . .@ On page 25, ACo-Chairman Bradley agreed that in the context of medical malpractice there may be more cases if the cap is raised because right now if a case involves a county hospital and a $50,000 claim the lawyers may handle the case.@ It should read, A. . . may handle the case based upon the cost of prosecuting and defending the medical malpractice claim.@
MS. SHIPMAN MOVED FOR APPROVAL OF THE MINUTES OF THE JANUARY 10, 2000, MEETING OF THE ADVISORY COMMITTEE OF THE LEGISLATIVE COMMISSION=S SUBCOMMITTEE TO STUDY THE STATUTORY LIMITATION ON DAMAGES THAT MAY BE AWARDED TO A PERSON IN A TORT ACTION AGAINST THE STATE OF NEVADA, ITS POLITICAL SUBDIVISIONS OR CERTAIN OTHER PERSONS IN CARSON CITY, NEVADA. MR. CROCKETT SECONDED THE MOTION WHICH PASSED UNANIMOUSLY.
ROUND TABLE DISCUSSION
AMONG ADVISORY COMMITTEE MEMBERS
AND POSSIBLE ACTION ON RECOMMENDATIONS CONCERNING
STATUTORY LIMITATION ON DAMAGES THAT MAY BE AWARDED
TO A PERSON IN A TORT ACTION AGAINST THE STATE OF NEVADA,
ITS POLITICAL SUBDIVISIONS OR CERTAIN OTHER PERSONS
Referring to Chairman Anderson=s correspondence dated January 20, 2000, directed to governmental entities (please refer to Exhibit B), Co-Chairman Bradley explained it requests:
$ Data regarding the number of state tort claims and lawsuits, excluding constitutional claims, closed by judgment or settlement for the years 1994 through 1998;
$ Out of judgments or settlements that exceed $40,000, and identify whether these files involved a single claimant who asserted multiple causes of action versus multiple claimants who asserted single or multiple causes of action; and
$ A copy of the entity=s most recent actuarial report relating to loss reserves and funding recommendations for liability claims.
Bill Hoffman, representing the Nevada Association of School Boards, indicated the Clark County School District (CCSD) submitted a breakdown of the number of cases exceeding $40,000, but due to the unavailability of data could not provide the various causes of action. Analysis of the actuarial data submitted indicated there were 12 to 15 cases per year reported by government entities that involve the $50,000 cap. In light of this information, Mr. Hoffman suggested the Subcommittee focus primarily on catastrophic cases.
Co-Chairman Bradley indicated the Attorney General=s report reflects more claims in which the $50,000 limit is exceeded and noted a small proportion of cases exceed the cap. He was of the opinion if the cap was increased, the fiscal impact should be minimal due to the small number of claims that appear to exist. A relevant piece of information missing from the historical data is the number of multiple causes of action sought by a single individual, he stated.
Upon review of the actuarial history, Co-Chairman Isaeff reiterated Mr. Hoffman=s thoughts and concluded there is no need to increase the cap at this time; however, it may be necessary to address what type of case constitutes serious injury or loss. Mr. Hoffman then noted the majority of the $40,000 and above cap cases in the CCSD are single claims; only a small percentage of cases constitute multiple cap cases.
Although the cap has not increased, wage loss and medical components have increased dramatically Co-Chairman Bradley stated. The three elements of damages consist of medical bills, wage loss, and physical and mental pain and suffering. Two of those elements have been affected by inflation which leaves little room for the pain and suffering component.
J.R. Crockett, Jr.
J.R. Crockett, representing the Nevada Trial Lawyers Association, addressed the definition of Acatastrophic@ loss. He questioned how Acatastrophic@ can be defined employing language in a way which does not create constitutional ramifications involving invidious discrimination and is practical for judges administering the law. He opined if claims that exceed $50,000 are statistically a small percentage, the simplest method would be to raise the cap for all claims. Thus, claims under $50,000 would not be jeopardized and recognition would be awarded to those cases deserving greater consideration. He noted some of the claims data includes federal civil rights suits which adds to the overall cost of the historical information. Mr. Crockett suggested raising the limit with a sunset provision to determine the effects of the increase.
P. Mark Ghan
Mark Ghan, representing the Office of Attorney General, indicated that although the total number of claims submitted against the state that are impacted by the cap is probably less than 5 percent, they represent approximately 60 percent of all monies paid at the state level. The claims are based on the $50,000 cap and pertain to state law claims, not federal claims.
Madelyn Shipman, discussed the previous legislative history regarding establishment of the tort cap and indicated it is not possible to determine the original intent underlying the amount of the cap because the determination was arbitrary. She also focused her comments on the types of cases which would be considered catastrophic and suggested establishing certain subjective factors rather than defining what is a catastrophic case or what is substantial bodily harm or injury. In Ms. Shipman=s opinion, the tort cap should not be increased; however she emphasized the Advisory Committee should concentrate on the 5 percent of the cases that would be considered catastrophic.
Co-Chairman Bradley stated the vast majority of claims range from $2,000 to $15,000 and questioned the affect an increase would have on such cases. In response, Mr. Hoffman replied there would not be a significant impact with the $2,000 and $4,000 claims because the cap would not come Ainto play.@ In his opinion, if a plaintiff accrued $12,000 in medical expenses and the cap were increased to $100,000, the incentive for pursuing the increased financial benefit would lie with the plaintiff=s counsel. Thus, elevating the cap could create additional arbitration and burden the courts.
Responding to Ms. Shipman=s testimony, Mr. Crockett explained:
$ The cap or the amount of insurance coverage involved in a case is not a settlement factor; therefore, it is erroneous to suggest the cap determines the value of a case.
$ It is a misconception that Asome lawyers will run up bills to increase the value of a case.@ Insurance companies are familiar with this practice and are trained to deal with such a situation.
Mike Davidson, representing the Nevada Association of Counties, stated he had some comments regarding previous testimony:
$ In contingent fee agreements it is disclosed that the client will be responsible for any costs that occur as a result of litigation. Those costs are deducted from the gross recovery. Very few lawyers recover costs of litigation from a net recovery.
$ When the Legislature waived sovereign immunity, it was not intended to be a determinant of the value of a case, but a balance between absolute immunity and the concept that, to some extent, people would be fairly compensated for injuries.
$ If the cap is raised to $100,000, settlements would probably be in the $70,000 or $80,000 range. He expressed concern that the rural counties, hospitals, and school districts could not absorb the additional expense.
Co-Chairman Bradley opined that there has not been a malpractice verdict in a rural county other than Elko County in the history of the state. Rural verdicts are very conservative whether the cap is $50,000 or $150,000.
Mr. Crockett was of the opinion that fairness is a consideration and noted there would never be absolute parity of recovery with private enterprise and private citizens. He addressed inflationary concerns about the cap since there has not been an increase in 22 years and asked if the Advisory Committee could reach consensus to adjust the cap in line with today=s standard of living. Mr. Davidson pointed out that many rural Nevada counties= ability to pay has not increased commensurately with inflation but may, in fact, have decreased. The members should consider fairness to some extent, but the overriding concern should be an entity=s ability to pay.
Co-Chairman Isaeff remarked he was troubled by the suggestion the cap be increased based on the speculation juries in the rural areas are conservative. Once the cap is increased, the potential is there and those effected entities must prepare for that possibility. Many rural areas maintain jails and have had cases in which large numbers of claims have emanated from serious abuses committed against people in those facilities. The risk is there no matter how small the county, city, or town might be.
General discussion continued regarding possible recommendations about the tort cap. Consensus could not be reached among the members and Ms. Shipman suggested the Advisory Committee compile a list of options for presentation to the A.C.R. 46 Subcommittee at its February 23, 2000, meeting. The following options were discussed and added to the list:
$ No change in the current cap;
$ No increase but implement cost of living increases (COLA) from this day forward;
$ Increase the cap;
$ Raise the cap and phase-in a COLA over a period of time;
$ Random selection of a new cap amount;
$ Increase the cap but limit multiple causes of action;
$ Raise the cap in counties or municipalities with a population greater than a certain number;
$ Raise the cap with a sunset provision to determine the effects of the increase;
$ No increase in the cap, but create an exemption from the cap for medical malpractice cases in county funded facilities; and
$ Create a state-funded reserve for major injury and death cases.
Co-Chairman Bradley addressed the issue of insurance fraud and focused his comments on the $1 million medical malpractice insurance purchased by state medical facilities. He indicated in the event of a serious injury involving an employee of a governmental entity, the $50,000 cap would be employed rather than the medical malpractice insurance. He opined this is considered taxpayer fraud since premiums are ultimately paid by the citizens of Nevada. Co‑Chairman Bradley proposed the cap be set at the level of insurance coverage and requested this proposal be included on the list of options.
Co-Chairman Isaeff commented that Mr. Young indicated this concept was discussed at the A.C.R. Subcommittee=s first meeting on October 20, 1999, when he presented a briefing on the laws of other states. Mr. Young noted other states have implemented a similar process to what Co‑Chairman Bradley has suggested. Co‑Chairman Isaeff requested the proposal be included on the list of potential options.
Shauna Hughes, representing the Nevada League of Cities, responded to Mr. Young=s request for clarification on the medical malpractice proposal. She stated her understanding of previous discussions was if medical malpractice coverage of $1 million is provided for physicians in county hospitals, there should be some type of recognition of that coverage. Perhaps a complete lifting of the cap in those limited medical situations involving county hospitals with a corresponding requirement and funding identification relative to insurance may be helpful. Co-Chairman Bradley asked if the exemption would cover medical negligence occurring in a county hospital. She replied in the affirmative. Co-Chairman Bradley stated he did not envision removing the cap from county hospitals and indicated the concept was discussed strictly in accordance with increasing the cap to a number that is higher than it presently is. Further, Mr. Davidson indicated effective dates should be clarified. He suggested whatever adjustment is made become effective only for claims made after the effective date of the statute.
Stephen C. Balkenbush
Stephen Balkenbush, General Counsel for the Liability Cooperative of Nevada (LiCON), indicated the Nevada Public Agency Insurance Pool (POOL) disagreed with previous discussion regarding joint and several liability issues and the assumption that cases are evaluated based upon a cap. Continuing, he addressed the net operating losses for seven of Nevada=s rural hospitals as reported in an article from the Reno Gazette-Journal titled ANevada=s Largest Hospitals Profitable,@ December 1999 (please refer to Exhibit C).
Co-Chairman Bradley asked if a portion of the loss component includes pay outs. In response, Mr. Balkenbush stated part of a hospital=s operating fund is to provide protection against tort claims. A premium, which is structured on an entity=s claims experience, is paid to LiCON. Thus, some losses are attributable to the amount allocated for protection predicated on claims experience. As an example, Washoe County is insured for $1 million and self-funded through LiCON for the first $500,000.
Co-Chairman Bradley asked if any of the county hospitals had to expend more than their contribution to cover tort claims and, if so, would that be reflected in those losses. Mr. Balkenbush was of the opinion in some instances there were uncovered losses which were paid directly. He stated information could be compiled depicting the amount of money expended above LiCON=s contribution.
Mr. Balkenbush then focused his comments on the issue of insurance fraud with respect to medical malpractice premiums. He indicated if the cap were raised to a specific insurance level it would affect the POOL and LiCON=s self-insurance levels of $150,000 and $500,000 respectively. More importantly, numerous claims against entities are filed simply because they are political subdivisions of the State of Nevada, many of which include Constitutional claims. Federal claims are not capped, there is no punitive damage protection, and no limit for compensatory damages. The insurance level is intended to protect against uncapped claims at the federal level. Further, there is a false assumption of fraud taking place in the rural hospitals because protection is purchased when there is a an existing cap of $50,000 for state tort claims. These entities are exposed on a daily basis to federal claims that can exceed the tort limitation. Additionally, there is no funding mechanism for rural hospitals if the cap is modified.
Jeff Blanck, District Counsel, Washoe County School District, requested the list of options also include a funding mechanism for the rural hospitals and school districts to prevent a direct budget impact. Additionally, he recommended it would be a benefit to report to the A.C.R. 46 Subcommittee that the Advisory Committee agreed that the list constitutes factual scenarios that exist; however, a solution could not be reached. This would eliminate revisiting the same arguments during the 2001 Legislative Session.
Wayne E. Carlson
Wayne Carlson, Executive Director, Nevada Public Agency Insurance Pool and Public Agency Compensation Trust, discussed the topic of Aeffective date.@ During previous testimony, he noted the language used was Aclaims made after a certain date if there is a change in the cap.@ That would be problematic because an accident can occur prior to the effective date and a claim may not be made for two years. To address the issue more precisely, he suggested the wording Aclaims that occurred after a certain date.@
Upon completion of public testimony, it was agreed that Co-Chairmen Bill Bradley and Bill Isaeff and Ms. Shipman would jointly draft a list of options to submit to the A.C.R. 46 Subcommittee at the February 23, 2000, meeting. A meeting date of February 18, 2000, was chosen to compile the list of options.
Exhibit D is the AAttendance Record@ for this meeting.
There being no further business, the meeting adjourned at 12:10 p.m.
Senior Research Secretary
Principal Research Analyst
Approved By: Approved By:
Bill Bradley, Co-Chairman Bill Isaeff, Co-Chairman
Date:__________________________ Date: ________________________
LIST OF EXHIBITS
Exhibit A is the compilation of an actuarial report for Clark County as of June 30, 1997, and a loss report for Clark County dated February 1, 2000, submitted by Mike Davidson, A.C.R. 46 Advisory member representing the Nevada Association of Counties.
Exhibit B is a copy of the correspondence dated January 20, 2000, addressed to governmental entities and the Nevada Public Agency Insurance Pool requesting claims history data for the five-year period 1994 through 1998 as referred to by A.C.R. 46 Advisory Committee Co-Chairman Bill Bradley.
Exhibit C is a newspaper article from the Reno Gazette-Journal submitted by Stephen C. Balkenbush, General Counsel for the Liability Cooperative of Nevada, titled AHealth Nevada=s Largest Hospitals Profitable,@ dated December 15, 1999.
Exhibit D is the AAttendance Record@ for this meeting.
Copies of the materials distributed during the meeting are on file in the Research Library of the Legislative Counsel Bureau, Carson City, Nevada. You may contact the library at (775) 684‑6827.