The Committee on Judiciary was called to order at 8:00 a.m., on Friday, March 5, 1999. Chairman Bernie Anderson presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Bernie Anderson, Chairman

Mr. Mark Manendo, Vice Chairman

Ms. Sharron Angle

Mr. Greg Brower

Ms. Barbara Buckley

Mr. John Carpenter

Mr. Jerry Claborn

Mr. Tom Collins

Mr. Don Gustavson

Mrs. Ellen Koivisto

Ms. Sheila Leslie

Ms. Kathy McClain

Mr. Dennis Nolan

Ms. Genie Ohrenschall

COMMITTEE MEMBERS ABSENT:

Mr. Tom Collins (excused)

GUEST LEGISLATORS PRESENT:

Assemblywoman Barbara Buckley, Assembly District 8, Clark County

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Scott Jordan, Family Court Judge, Second Judicial District Court,

Washoe County

Bill Hoffman, General Counsel, Clark County School District

Chairman Anderson called the meeting to order and introduced Bill Draft Request (BDR) 43-1259, which was requested by the Committee on Judiciary.

• BDR 43-1259 - Require evaluation of every DUI offender to determine whether offender is abuser of alcohol or other drugs. (A.B. 407)

Chairman Anderson summarized the BDR by explaining it made various changes concerning punishment for first violation within 7 years of driving under influence of alcohol or controlled substance.

Assemblywoman Barbara Buckley District 8, Clark County, explained A.B. 154 had previously been presented to the committee and some discussion was held on the bill. With the Chair’s permission it was agreed to repost it to allow an opportunity for more dialog.

Ms. Buckley, District 8, Clark County, opened her presentation on A.B. 154 by explaining the bill proposed to cover three areas relating to family law. The first section dealt with one family, one judge which was why the family court was created, and so there would be consistency and stability in the courts. She noted it allowed one judge to get to know one family and to reduce the opportunity for judges to overrule each other. Some judges did not even know there had been a previous order thus allowing for testimony to be reargued.

Ms. Buckley informed the committee there were many ports of entry into the system, as an example the master system, and different judges within the family court were making different decisions involving the same family. She introduced Judge Steel who had an exhibit illustrating the system.

Dianne Steel, District Judge, Eighth Judicial District, testified there were several methods to enter family court and it was conceivable there could be nine different judges hearing the same plaintiff, the same defendant, and their offspring or adopted children. As an example, she explained there could be guardianship cases, adoption cases, neglect cases, and custody cases, all sent into the court in different colored folders and assigned to different judges. She stated it could lead to form shopping and judge shopping because each case filed was given a number and with each number there was a different judge involved and could lead to conflicting decisions. She contended that was the situation in Clark County. She was not familiar with how Washoe County handled their case filings.

Tom Leeds, Hearing Master, Eighth Judicial District Court, testifying from Las Vegas, stated he supported A.B. 154 and was available for assistance and deferred to Judge Steel.

Ms. Buckley called attention to two amendments proposed for the first section of the bill (Exhibit C). They clarified if parties were involved in both an abuse and a neglect proceeding, and a civil domestic lawsuit also existed, the judge presiding over the abuse and neglect matter would temporarily take jurisdiction over all matters until a determination had been made regarding the children.

Mr. Buckley called attention to the second of the two suggested amendments that clarified the court clerk would do a name search upon the filing of an action to ascertain whether other matters existed and should be consolidated under one monitoring judge.

Ms. Buckley referred to the third proposed amendment (Exhibit C) pertaining to offers of judgment in family law matters. She informed the committee the concept was, in civil law matters there was a court rule and a statute which allowed a party to make an offer of judgment. She explained an offer of judgment was one party offered to settle the case and if the other party refused the offer but did not recover more than was in the offer, that individual could be charged with fees and costs. It was a mechanism used to promote settlements, to keep the fees down, and try to keep one party from litigating for the sake of litigating.

Ms. Buckley pointed out there was a Supreme Court case that stated family law was not allowed to do offers of judgment. Since then several changes had been made in the area of child support. She reported she had been approached with the idea of presenting the concept of using offers of judgment in family law matters. She noted she had sent letters to a number of family law attorneys throughout the state asking their opinion about the issue of offers of judgment in family law matters. Their responses were found in Exhibit D. She indicated every attorney contacted felt the idea had merit because there were too many cases with lengthy litigation.

Ms. Buckley suggested the committee adopt the offer of judgment as set forth in section 10 and proposed an amendment (Exhibit C) that clarified the fees to be taxed shall be calculated only from the time of the failure to award and onward. She explained the existing language was unclear because it stated fees to be taxed would go back to the date litigation commenced.

Ms. Buckley stated it was worth trying to promote the ideas of timely settlement and reduce unnecessary litigation. After the family law practitioners had the opportunity to study the proposed language changes they felt the changes would create more trouble, she conceded she would withdraw A.B. 154 on the senate side or further amend it.

Ms. Buckley continued by referring to her last proposed amendment (Exhibit C) which was the issue of contempt proceedings in family court. She pointed out it was an issue to which Judge Gloria Sanchez, Eighth District Court in Clark County had called attention in a letter she had sent to Ms. Buckley prior to the first hearing of the bill on February 12, 1999. She noted in Nevada Revised Statute (NRS) 22.030 it stated if a contempt action was brought, the party could request another judge to hear it. In civil cases it was usually requested because a person was going to jail, but in family law cases it was usually requested because of circumstances like not seeing the children at Christmas or why child support was not being paid. Because it would decimate the "one family, one judge" rule if the practice of requesting another judge in contempt cases in family law matters was allowed, Ms. Buckley suggested the committee accept Judge Sanchez’s recommendation to review the issue. Ms. Buckley suggested it should be added to A.B. 154; family law matters would be exempted from NRS 22.030.

Assemblyman Brower commented the offer of judgment issue was a difficult one in the context of family law. He mentioned he dealt with offers of judgment every day and they were easier to administer in a typical civil case. He said there was a Supreme Court case that stated offers of judgment did not apply to family cases and the committee was being asked to overturn it and have offers of judgment apply in family law matters. He also mentioned a 1920 Supreme Court case that stated in civil cases it was the sound discretion of the trial judge to determine whether a particular party was the prevailing party. In addressing Judge Steel Mr. Brower commented if litigants were given the option of the offer of judgment in family law cases, it was the sitting judge and the other family court judges who would decide who prevailed. He questioned if it could be determined easily enough to make it a workable concept in their courts.

Judge Steel responded it would be a difficult task to put the parameters of an offer of judgment together. She believed there could be some parameters fashioned that a judge could use to determine whether or not one party was unreasonably making everyone move forward into litigation over their assets and liabilities. She questioned if anything had been mentioned about the Sargent Vs. Sargent case where if one party did not have money the other party paid the attorney’s fees. She wondered if that layer of complexity fell within the offer of judgment.

Mr. Brower suggested nobody on the committee was interested in offering parameters in the statute, but assuming they gave it to the family court judges and said it was up to them who prevailed, would that be the option the judges would want.

Judge Steel thought it would be a good option for a judge to have because a judge would not have to find one way or another, they could find there was no proof according to what standard or level of proof a judge would want.

Assemblyman Carpenter expressed his concern regarding an offer of judgment and gave an example where a couple was married for many years and then the husband divorced the wife. The husband hired a strong lawyer and because the wife was devastated and not well versed in the law and did not take the proper steps to protect herself, she was left in a very precarious position. He thought as the bill was written, it could be very damaging in the type of case he used as his example.

Ms. Buckley conceded that could happen because the offer of judgment was to promote reasonable settlement and if the wife was not emotionally ready to be reasonable it could harm her. In family court there were many cases where the wife could get hurt because the husband had the resources to litigate. Hypothetically the husband hired the high powered attorney and would not do a settlement until she was so desperate she broke and settled for less than she was worth. She noted offers of judgment helped in those cases where both parties wanted the divorce, but they were "litigating it to death." She stressed an offer of judgment only said there was the reasonable offer and if a person was going to be unreasonable, the judge could charge that person the attorney’s fees from the time of the offer forward.

Mr. Carpenter referred to section 10, subsection 4, regarding not accepting an offer of judgment, pointing out that was the situation with which he was concerned in his previous questions.

Assemblywoman Koivisto asked who determined if it was a reasonable offer, and Ms. Buckley responded it was the judge.

Scott Jordan, Family Court Judge, Second Judicial District Court, Washoe County, explained he was speaking in behalf of himself and his two colleagues, Judge Charles McGee and Judge Deborah Schumacher, who signed the letter he used for his testimony regarding A.B. 154 (Exhibit E). He opened his testimony by apologizing to the committee because he did not know the bill had already been heard by the committee. He noted he wanted to remain neutral on the bill, but referred to the letter to summarize his opinion. On the issue of one family, one court they were in favor of that concept and were currently practicing it. He quoted the local rule by which they abided in Exhibit E.

Judge Jordan expressed his concern about the provisions of the bill because his court utilized a master system with four full-time masters to work with the three judges and the bill would prohibit them from managing their court in the most cost effective and efficient manner. He suggested an agreement could be reached so the courts would have the discretion to use masters in an appropriate manner so long as there was communication so orders were consistent.

Judge Jordan referred to the letter (Exhibit E) regarding offers of judgment and listed concerns regarding how to determine if a resolution in the case was favorable or unfavorable in relation to the offer of judgment. They also gave examples of offers of judgment in family matters.

Judge Jordan observed the issue of unrepresented litigants. He pointed out both litigants were unrepresented by counsel in 40 percent of divorce cases in Washoe County and in 20 percent of divorce cases, 1 litigant was not represented by counsel. He mentioned one thing that came to mind while listening to the previous discussions regarding offers of judgment was, if an offer was made and rejected, that would be a factor the court could take into account in weighing all the issues regarding who should receive attorney’s fees. He stressed the courts already had that power, but if the committee felt it should be stated, it would strengthen their position without tying them into impossible situations like Mr. Carpenter had discussed.

On the issue of contempt, Judge Jordan was very much in favor of the bill. He referred to the current section of Chapter 22 that allowed a litigant to have the matter heard by a different judge but did not set forth any procedure on how it could be done or set any timetable. He noted shrewd attorneys whose clients were being charged with contempt were arriving the morning of the hearing and making the request for a new judge, which was an automatic continuance of the hearing. As written, parties represented by good lawyers were receiving automatic continuances on their hearings and it was a great disadvantage to the other party, particularly if it was an issue of visitation or support.

Assemblywoman Leslie reflected her concern about page 2 of Exhibit E regarding the change being proposed in the bill might reduce the level of service currently being provided. She asked if he had a specific suggestion that would cover Washoe County.

Judge Jordan responded he did not have wording for a specific amendment, but suggested language that stated family divisions in the Second and Eighth Judicial District Courts shall be able to use their court resources in the most efficient manner in keeping with the goal of one family, one court. If a family was involved in one case involving a master and another case before a district judge, those judicial officers must meet and confer with each other to assure orders were consistent and justice was done.

Judge Jordan called attention to the issue of offers of judgment again and thought Ms. Buckley’s goal in presenting the issue was to have cases settled more quickly and he favored that. What they were able to do in Washoe County because of the smaller size was to conduct settlement conferences in every domestic relations case. Those were set within 30 days from the time the answer was filed. He noted they settled approximately 95% of their cases and felt that was an effective additional tool for settling cases. He indicated there were resource problems in Clark County that made it difficult for them to use that practice.

In responding to Ms. Leslie’s question and Judge Jordan’s answer, Ms. Buckley referred to section 1 stating it did not propose to touch the master system. It tried to get at the problem in Clark County where certain masters had certain presiding judges assigned to them so the presiding judge might end up being four different judges. She suggested she should do further work on the bill and meet with Judge Jordan to make sure she understood his concerns and consider further amendments to be addressed in a work session.

Chairman Anderson agreed it was a complicated issue and he did not want to rush to judgment if they were going to look at a different avenue to clear court cases and bring equity to people. He offered to amend some sections of the bill and rerefer the rest back to committee.

Ms. Buckley preferred to wait a few days to have the opportunity to speak with the judges and then if the committee wanted to rerefer they could.

Chairman Anderson asked Ms. Buckley to have a document prepared for a work session.

Chairman Anderson closed the hearing on A.B. 154.

Chairman Anderson opened the hearing on A.B. 119.

Bill Bradley, Nevada Trial Lawyers Association, opened his testimony by stating the association perceived there was an injustice happening in the State of Nevada in regard to victims of negligent conduct by government employees. He explained the concept in the law was called sovereign immunity. The law originated in England in the 1400’s and was very clear, "you can’t sue the King." Nevada evolved from that absolute prohibition against holding our "monarchs" responsible to governments could be held responsible in a limited sense, for injuries to victims of negligent conduct, which was currently $50,000 in Nevada. He pointed out the association did not think government agencies were bad, malicious, or out of control. Everybody was capable of making a mistake, but when a mistake was made that seriously injured one of the citizens of Nevada, and the legislature made a policy decision to limit the amount to $50,000, they were deciding what could be awarded to the victim. That amount was irrespective of the medical bills, the damages, how the quality of life was affected, and irrespective of the fact the person would never work again.

Mr. Bradley indicated the issue was first considered by the legislature in 1965 and allowed government agencies to have actions filed against them and put the limit at $25,000. In 1977 the legislature increased the amount to $35,000 and in 1979 it was increased to $50,000. Since 1979 the cap had been $50,000. When his association started seeing the injustice, they felt it was time to bring the issue to the attention of the legislature because there had not been an increase for 20 years. Mr. Bradley noted in the original Bill Draft Request (BDR) they had contemplated the concept of abolishment of any cap, because the principal of individual responsibility and personal accountability should apply to the government as well as everybody else. He noted if a nongovernment person made a mistake, that person was held accountable for all damages. When they first studied the bill and discussed abolishing sovereign immunity in the State of Nevada as some other states had done, there was a budget crisis in the state and noted the people who would be testifying on the bill were opposed because of budget issues. He realized budget was a factor, so the Nevada Trial Lawyers Association was not asking to have the cap abolished but would like to see the limit raised. He had an accountant figure out what $50,000 in 1979 was worth today and the answer was $20,800. He indicated if Nevada Revised Statute (NRS) 41.035 had an inflation fighting figure in it, and the limit was raised as inflation increased, the figure today would be $123,500. He noted medical expenses, car repair, and wages had gone up, but the limit had remained the same. Consequently, the association would request the limit be raised to a figure that accurately reflected the inflationary rise since 1979.

Mr. Bradley testified one of the problems was caps in general. When there was a cap the philosophy from the defense was "well maybe the $50,000 was owed, but that was the worst we could lose." They had the opinion if they got lucky with a judge who did not like the plaintiff, or if something went wrong in the trial, the defense might get a break. His point was when there was a cap, if that was the most they could lose, sometimes they lost the incentive to settle.

Mr. Bradley remarked several states had different laws on sovereign immunity. He noted California did not have a limit, some had a $250,000 cap, some had $400,000, and there were two states that did not allow any kind of lawsuit.

Mr. Bradley called attention to examples of where he had seen the injustice. The first one took place in Las Vegas where Anthony Brazil was killed by a car driven by a Metropolitan Police Department officer. Mr. Brazil was employed at Caesar’s Palace Hotel as a magician and was considered to be the "next David Copperfield." He was driving his motorcycle lawfully in his lane of traffic on Industrial Road when, at the same time a metro officer who had been involved in another stop received a call about a domestic dispute that was 7 to 10 miles away. He pointed out the policeman had some problems in the past and was a "Rambo" type officer, so he elected to go to the scene of the domestic dispute driving in excess of 70 miles per hour. The officer, in attempting to shorten an S turn on Industrial Road, cut through the turn and impacted Mr. Brazil in his lane of traffic and killed him instantly. He left a 27 year-old widow and the case had a $50,000 cap.

Mr. Bradley proceeded to his next example involving a 7 year-old boy in Las Vegas who was walking home from school. He did not know several months before a negligent motorist had knocked over a light pole. The city of Las Vegas repaired the light pole, but the repairman did not realize the light pole needed to be grounded so when the boy stepped on the plate that covered the electrical box, he was electrocuted and died instantly.

Mr. Bradley testified the most egregious examples they saw were sexual assaults on children by "out of control" teachers. He called attention to an incident in Northern Nevada where a teacher gave children the assignment of cleaning under the teacher’s desk and then sexually assaulted them. He noted each one of the children would need $200,000 to $300,000 worth of counseling over the next 10 to 15 years to help them deal with the trauma. Those cases were limited to $50,000 as well.

Another case Mr. Bradley described was one in which his office was involved. A Reed High School honor student, captain of the football team, was driving back from Pyramid Lake with a friend when a Washoe County Sheriff received a complaint of an erratic driver on the road. He observed the car weaving down the road, pulled the car over and found two drunk individuals in the car with cases of beer on the floor of the car. He started to take them into custody when he received another call about a minor issue taking place on the road and told the two individuals in the car to stay there. He left them behind with the keys in the car and the beer in the car and drove off. The two waited for the sheriff to drive around the corner then left the scene in their car, drove about 2 miles, crossed the center line and collided head-on with the car in which the Reed High School student was a passenger and he was killed instantly. There was a $50,000 cap on that case also.

Mr. Bradley called attention to rural hospitals in Nevada where a well meaning hospital technician accidentally unhooked a ventilator and allowed somebody to go without oxygen for an extended period of time. That person’s bills were several hundred thousand and again the cap applied. He noted the complicating issue throughout the State of Nevada was the numerous government agencies did not have any one sense of insurance. Some were self-insured, some purchased insurance, others pooled their risks with other small counties, so it was a complicated issue.

Mr. Bradley addressed another issue that applied more in Clark County than in Washoe County because Clark County had a county hospital. Hypothetically one of the committee members was on their way back to Carson City after a long weekend in Las Vegas and fell at the airport and hit their head. If that committee member was taken by ambulance to University Medical Center in Las Vegas, and was negligently treated because they did not notice a hemorrhage on the brain causing brain damage, there was a limitation of $50,000. He noted if the ambulance took the person to Humana Hospital with the same injury, and the person was treated negligently, there was no limit. He stressed county hospitals were entitled to the same protections as the other county agencies and that was usually the rule throughout the small county hospitals.

Mr. Bradley indicated the solutions were very difficult. His association believed it was time, based on inflation, the figure should be increased to reflect what the legislature intended in 1979 to be a fair figure considering all of the policy interests. However, considering all of the governmental agencies and how they insured and how they spread the risk, they realized it was a very complicated issue. He explained they were talking with other parties interested in A.B. 119 to see if there could be a solution that would make sense. He noted it could take a significant amount of study to accomplish it, but there may be a way to save money, give better protection to the citizens, and accomplish some significant public policy.

Chairman Anderson introduced a letter in support of A.B. 119 from Edward M. Bernstein (Exhibit F) which explained how he had represented the family of Anthony Brazil who was killed in the motorcycle accident mentioned in prior testimony.

Bill Hoffman, General Counsel, Clark County School District, commenced his testimony by stating the Clark County School District was viewed as having "deep pockets" by plaintiff’s counsel. He noted the district received service of a lawsuit against them at least once a week. There were over 200 school facilities, 1000 school buses, 20,000 employees, and over 200,000 children attending school in Clark County and all of those combined resulted in numerous lawsuits. He felt removing the $50,000 cap would have a significant impact on the school district and wanted to address three issues in regard to the proposed legislation. The first issue was the need to purchase additional insurance to replace the cap. The second issue would be a fiscal impact as to the retention cost of purchasing the insurance, and the third issue was anticipating a substantial increase in litigation costs.

Mr. Hoffman referred to earlier testimony regarding raising the cap to $123,000 which would equate back to the old $50,000 cap set in 1979 stating he felt it was reasonable. He had the brokers at the school district examine what the cost would be to purchase insurance and replicate the $50,000 cap. The answer was it was a prohibitive number, but if insurance was purchased with a $150,000 deductible it would cost the district approximately $600,000. He addressed the impact of dealing with $150,000 when they formerly dealt with $50,000. He stated they looked at their statistics over the last 5 years and discovered approximately 15 times the $50,000 cap was reached when they had judgments against them in that amount. He noted another 35 cases were in the $40,000 range and felt they would have been higher had there not been a $50,000 cap. Mr. Hoffman indicated they had 50 cases in the last 5 years, or 10 cases a year, that implicated the $50,000 cap. If they increased the insurance or the cap to $150,000 as they would under his suggested insurance level, he questioned how much more would it cost the school district for those 10 cases a year. And if the $50,000 cases became $100,000, times 10, it would be half a million or more. He stressed the insurance was important and they would be required to insure against catastrophic loss, otherwise it would be fiscally irresponsible for the district to have unlimited exposure. Mr. Hoffman pointed out if there was not a cap it would negatively impact the school district’s ability to market some of the school construction funds.

Mr. Hoffman opined with the proposed legislation it would become more difficult to settle cases, litigation costs would rise, and the number of cases that went to court would increase. He noted plaintiff’s counsel would ask him what the cap was and when he told them, he was told that was what the case was worth. He mentioned if the $50,000 cap became a $100,000 cap it would become harder to settle the smaller cases. He pointed out the court annexed arbitration system set a limit at $40,000, so if the damages were less than that amount the case would be sent into arbitration. His experience had been since the $40,000 limit sent cases to arbitration, and the cap was $50,000, most of the time the plaintiff’s attorney were willing to arbitrate and accept the results because if they de novo the case they could only go after an additional $10,000. He related because of the $50,000 cap, the great majority of the cases were resolved in arbitration and outside the court system.

Chairman Anderson questioned how many cases settled out of court and Mr. Hoffman responded 98 to 99 percent were settled out of court.

Assemblywoman Koivisto pondered the comment the school district would need to purchase insurance and wondered if they presently had insurance. Mr. Hoffman replied the Clark County School District was self-insured and relied on the $50,000 cap because it had the effect of creating an insurance policy of $50,000 for them.

Assemblywoman Ohrenschall asked if the district had provisions to handle cases where gross negligence was proven separate from ordinary negligence, and Mr. Hoffman responded the legal standard was the same for gross negligence and negligence, but there were circumstances for punitive damages in some cases.

Jeffrey Blanck, House Counsel, Washoe County School District, opened his testimony by concurring with Mr. Hoffman’s comments. He informed the committee there were 6,000 employees in the Washoe County School District and approximately 52,000 students. He noted because the district was self-insured and smaller in size than Clark County, they had a minimal number of cases go to trial due to the $50,000 cap. He stated the process was handled by their risk manager without the assistance of his legal counsel or outside counsel and reiterated Mr. Hoffman’s statement that most claims did not involve other attorneys because it was not financially feasible for them to get involved if it was $50,000. He felt with the lower cap cases were settled more quickly and because attorneys were not involved the full amount went to the injured party.

Mr. Blanck called attention to the fact if there was no cap, extra curricular programs that were not mandated would have to be examined and withdrawn because the risk involved would be too great. He noted outside entities like ski resorts offering programs for students required the school district to indemnify them and they could be indemnified to the statutory limit, which was $50,000. They would have to look at purchasing insurance, but their funding was very tight and he was not sure they could afford to purchase it.

Mr. Blanck referred to earlier testimony regarding teachers harming children and under current law could only receive a maximum of $50,000. He felt that was not correct, because the student could bring charges against the teacher for the act. He pointed out the school had been drawn into outside cases involving individuals who saw "deep pockets" in the school district and they looked at the cap to help the district keep functioning and within budget.

Again referring to earlier testimony, Mr. Blanck agreed California did not have a cap, but there was a tremendous amount of litigation for personal injury and they had a very large number of statutes on governmental immunities.

Mr. Blanck concluded his testimony by reiterating he concurred with Mr. Hoffman the elimination of the cap would directly impact the students and he was happy to hear there was an offer to raise the cap in lieu of removing it.

Assemblywoman McClain referred to section 2, subsection 2 of A.B. 119 which mandated insurance must be purchased for the school districts and wanted to know how many cases the district had in the last year and what would be the cost of the insurance.

Mr. Blanck responded his school district did not have any cases in the last year that had gone to court, but had claims with settlements between $180,000 and $200,000. In regard to procuring insurance, he did not have the information because his risk manager was unable to attend the hearing.

Chairman Anderson commented it would be a relative cost commensurate with the size of the school district.

Mark Ghan, Solicitor General, Attorney General’s Office, read from a letter he had sent to the Committee on Judiciary (Exhibit G), which stated their opposition to A.B. 119 and focused on the impact it would have on the State of Nevada.

John Hansen, Tort Claims Administrator, Attorney General’s Office, indicated he wanted to clear up a misconception he heard in prior testimony regarding sexual assault by teachers. He noted it was not a case of the most a child could recover was $50,000 and called attention to a recent case in which the state was involved where the payment was $525,000. He noted another case where the payment was $190,000. He also called attention to another misconception, if a person was involved in an automobile accident the most a person could collect was $50,000. He referred to a case in Washoe County where the state paid $154,000 and a single case in Clark County where the family was paid $214,233 as a result of the death of one person. He reiterated it was not true if a person had been injured, the most he or she could collect was $50,000.

Mr. Carpenter asked for clarification in a situation where a person was injured in an accident and had a long hospital stay and rehabilitation, was the state’s liability limited to $50,000.

Mr. Ghan responded it could be limited to that amount; however as an example, there could be an additional claim for emotional distress which could provide recovery up to another $50,000, and noted it was all circumstantial.

Ms. McClain repeated the earlier question she had asked other witnesses, which was how many cases the Attorney General’s Office handled in the last year that either went to court, were settled out of court, or went to arbitration.

Mr. Ghan responded in the 1997-98 fiscal year they had approximately 12 cases where the cap was the factor and about one half were paid out.

Chairman Anderson requested the Attorney General’s Office provide the committee the most recent statistical information relative to the total number of cases, the number settled through arbitration, and the number that exceeded the cap.

Stephen C. Balkenbush, General Counsel, Liability Insurance Cooperative of Nevada and the Nevada Public Agency Insurance Pool, explained, in the mid 1980’s liability insurance for municipalities was difficult to locate or was too expensive, so all of the counties in the state except Washoe and Clark Counties formed an insurance pool and enjoined their resources to self-insure and defend against lawsuits. He pointed out all of those entities were listed in a document he distributed to the committee (Exhibit H). He continued to refer to the document throughout his testimony that explained why they were opposed to A.B. 119. He called special attention to a comparison the group had made between the cost of indemnity expenses and defense expenses and what they would be in an uncapped venue versus a capped venue. The details were contained in Exhibit H. He stressed the $50,000 was not really a cap because it was a cap that could be multiplied up depending upon the number of claims. He called attention to the death of Anthony Brazil, of which he was unaware until he heard about it in the hearing, and stated the Metropolitan Police could have been sued for different theories such as negligent supervision, negligent training, and negligence in driving. Additionally it was a death case so the heirs could recover also. When all those issue were considered, the number rose dramatically.

Brent Kolvet, General Counsel, Liability Insurance Cooperative of Nevada and the Nevada Public Agency Insurance Pool, informed the committee he represented the smaller counties in the State of Nevada. He felt the impact a raise of the cap would have on services in those counties had not been recognized. He was currently working on a special prosecution for Pershing County involving three murder cases. He stressed if the normal cost of doing business was multiplied, plus additional costs of insuring, litigation, and indemnity on those cases the rural counties would suffer tremendously. He also noted inflation was lower in the rural counties.

Robert S. Hadfield, Executive Director, Nevada Association of Counties, addressed the impact of inflation adding not only was inflation an impact on costs, but the tremendous growth in the state was also a factor. He felt it was a mistake to focus just on inflation because their exposure went up with population.

Mr. Hadfield called attention to a number of situations in the state that adversely impacted the ability of local governments to survive and pay for what they had as an obligation now. He noted there were five counties with a $3.64 tax cap, which meant they were unable to increase their property taxes to receive more revenue. Those counties were under pressure from various industries who were saying they would like their assessments changed, which if they were successful with their proposals could result in the further reduction of the assessed valuation of many of the counties. He thought six of them were already experiencing a decrease in assessed value.

Mr. Hadfield pronounced there were a number of different economic and fiscal policy issues floating around the legislature that needed to be considered when the committee looked at A.B. 119. He understood the committee was concerned about the human and fiscal impact, but pointed out when the State of Nevada was short of money the small counties had even less money because they had less of a revenue base. He concluded by stating local governments had a financial interest in the bill because they did not have the capacity to absorb increased costs.

Thomas J. Grady, Executive Director, Nevada League of Cities, distributed letters and other informational documents from the cities of Henderson, Sparks, North Las Vegas, Mesquite, Carlin, Wells, Ely, Fallon, Yerington, and Elko (Exhibit I) answering some of the concerns of the committee.

Joanne Rennie, Risk Manager, city of Reno, opened her testimony by expressing empathy for any victim of an accident, but it was important to balance the interest of the individual with the rights of the larger community.

Ms. Rennie informed the committee, in 1986 the courts were clogged with suits which a few years before would have been ignored. Many of those suits could be attributed to judgments based on victim sympathy rather than fact or law. She noted somebody had to be held responsible for the victim and even though the public agency was not responsible it was perceived they had the ability to pay for the damages. She observed at the same time the insurance companies, fearing responsibility for large judgments, stopped writing insurance for public entities across the United States, which caused them to cut back on some of their services or actually close down to reduce the possibility of lawsuits. She noted in most areas it remained that way today.

Pointing out today it was not that way in Nevada, Ms. Rennie stated the tort cap enabled the state to purchase insurance, negotiate fairly, and settle meritorious cases, as well as provide services that benefited the community. If the cap was eliminated insurance and defense costs would greatly increase, which would increase the cost of public services. She stressed government was required to provide public safety regardless of the cost or the risk and either the taxpayer bore the burden or services had to be eliminated. Ms. Rennie indicated Reno’s priority had been to invest in their youth to stem the tide of gang membership and violence, but parks, teen clubs, swimming pools, ski programs, latch key programs, and other youth related recreational services were inherently risky. Those services, along with building inspections and other services not mandated by law would need to be reevaluated if there was not a tort cap.

William P. Henry, Senior Litigation Counsel, Office of the City Attorney, city of Las Vegas, explained he was responsible for the city attorneys who defended lawsuits and also the outside counsel the city needed to hire to defend lawsuits. He referred to a memorandum addressed to the 1999 Nevada Legislature (Exhibit J) that stated their opposition to A.B. 119 and pointed out the serious financial impact eliminating the city’s $50,000 cap would have on tort liability.

Assemblyman Claborn asked if the state industrial insurance came under the $50,000 cap. Mr. Henry responded no because the theory was a person could not sue the employer including a government employer for work related injury.

Carole Vilardo, President, Nevada Taxpayers Association, spoke in opposition to the bill. She questioned, if it was a mandate on local government, why the bill did not carry a provision stating the provisions of NRS 354.599 did not apply in the case of A.B. 119. She noted that was the language the voters approved in 1994 which stated if there was a mandate on local government the state would pay for it. She said A.B. 119 was obviously a mandate and without a cap the bill was extending the "deep pockets theory" to the taxpayer. Additionally, she referred to the $3.64 cap in the smaller counties and cities. She called attention to a bill from an interim study that would provide property tax relief to those entities so they could better provide services the taxpayers expected and would allow them to exceed the $3.64 cap.

Chairman Anderson asked some of the witnesses who testified during the hearing if they would participate in a long-term study of the problem of sovereign immunity. He asked Bill Bradley, Tom Grady, Stephen Balkenbush, and Robert Hadfield to participate in the study because it was obvious the $50,000 question would come up again in the legislature. For various reasons they all agreed to participate and it was also suggested asking Mark Ghan from the Attorney General’s Office to be part of the study group and he agreed to participate.

Chairman Anderson formally suggested to the committee an interim study on the sovereign immunity cap which included the participation of the Attorney General’s Office, the individuals he had just named, and certain legislators. He also mentioned including two representatives from the Nevada Trial Lawyers Association from rural Nevada and from Southern Nevada. He indicated he wanted bill drafting to balance the study group between private and government participants and also wanted the insurance commissioner involved.

Chairman Anderson adjourned the meeting at 10:40 a.m.

RESPECTFULLY SUBMITTED:

Chris Casey,

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

DATE: