CONFERENCE COMMITTEE ON SB 297B

August 22, 2003 Hearing Room 357

8:00 a.m. Tapes 1 - 2

MEMBERS PRESENT: Sen. John Minnis, Chair

Rep. Gordon Anderson

Sen. Charlie Ringo

Rep. Jeff Barker

Rep. Max Williams

STAFF PRESENT: Craig Prins, Counsel

Patsy Wood, Office Coordinator

MEASURE/ISSUES HEARD: SB 297B Work Session

These minutes are in compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speaker’s exact words. For complete contents, please refer to the tapes.

TAPE/#	Speaker	Comments
TAPE 1, A
008	Chair Minnis	Calls the meeting to order at 8:15 a.m. and opens a work session on SB 297B.
SB 297B WORK SESSION
012	Rep. Max Williams	Describes the procedures taken by the House Judiciary Committee to arrive at the current version of SB 297B.
026	Craig Prins	Committee Counsel. Explains SB 297B which requires insurer to pay all sums covered by general liability insurance policy unaffected by other insurance that may provide coverage for same environmental claim. Describes the B22 amendments submitted by Rep. Ackerman (EXHIBIT A).
041	Keith Leavitt	Port of Portland. Discusses the two reasons for the B27 amendments (EXHIBIT B): 1) allocation issue and 2) distinction between defense and indemnity.
076	Leavitt	Describes why the definition of “uninsured” in these amendments dates back to 1971.
101	Leavitt	Discusses the distinction between defense costs and indemnity. Says there is nothing in the bill that shifts liability from the policy holder to the insurance company.
122	Rep. Barker	Expresses his concerns about using the 1971 date for the availability of insurance.
128	Leavitt	Reiterates why the 1971 date was chosen.
151	John DiLorenzo	ICN Pharmaceuticals. Speaks to the B29 amendments (EXHIBIT C). Notes these amendments will work with or without the B27 amendments. Gives background on numerous lawsuits which have lead to these amendments.
217	Sen. Ringo	Questions the “re-allocation provision” of the legislation; wonders why it makes sense to create a system where you can settle with one party preventing another party from seeking contribution from the first settling party.
227	DiLorenzo	Speaks to the issue of contribution rights in this type of case and defense from further lawsuits.
262	Sen. Ringo	Explains the B28 amendments which reflect the original concept of the bill which was designed to help consumers who were being denied their right to a jury trial (EXHIBIT D).
300	Rep. Barker	Wonders if waiving his right to a jury trial would affect the price of an insurance policy.
307	Sen. Ringo	Responds with examples of disputes that could be affected by mandatory arbitration clauses.
336	Rep. Barker	Agrees there can be problems when buying insurance, but thinks waiving the right to a jury trial in a large policy could cut the cost of the policy.
345	Sen. Ringo	Says this amendment is focused on any consumer contract - not just insurance policies.
351	Rep. Williams	Speaks to the effectiveness of mandatory binding arbitration in some instances.
405	Sen. Ringo	Responds with his experience with arbitration citing some can lead to reduced access to justice.
435	Rep. Anderson	Comments on his experience with arbitration saying, though fair, he would much rather go through a jury trial.
TAPE 2, A
017	Sen. Ringo	MOTION: Moves to ADOPT SB 297B-28 amendments dated 08/21/03.
019	Rep. Barker	Asks for clarification on the amendment.
021	Sen. Ringo	Explains these amendments would relate to small-dollar, consumer action and would not impact large lawsuits.
032		VOTE: 2-3 AYE: 2 - Sen. Minnis, Ringo NAY: 3 - Rep. Anderson, Barker, Williams
036	Chair Minnis	The motion Fails.
044	Jack Munro	The American Insurance Association. Discusses the B27 amendments regarding allocation and contribution (Exhibit B). Feels the effect of these amendments says that nobody would be uninsured.
103	Chair Minnis	Doesn’t share the same understanding regarding being “uninsured” and asks for further clarification.
124	Munro	Refers to lines 17 through 19 of the B27 amendments which leads back to the determination of uninsured.
158	John Powell	North Pacific Insurance Company, American International Group and State Farm Insurance Companies. Uses the chalkboard to describe a timeline for determining when a party is uninsured for the purpose of allocation.
178	Chair Minnis	Asks if the uninsured time is limited to the total amount of liability expressed in the policy.
185	Powell	Says, no, with a qualifier. Explains the insurer is liable for the indemnity limit of the policy plus unlimited defense costs.
217	Chair Minnis	Questions the defense costs.
218	Powell	Responds that defense costs would accrue under this legislation.
229	Munro	Discusses other problems with the definition of “uninsured” in the B27 amendments.
254	Chair Minnis	Asks why an insurer wouldn’t settle for the amount of the policy rather than incur defense costs in a lawsuit.
260	Greg Baird	Attorney, Gordon & Polscer, LLP. States that no insured would accept that figure if they had defense cost claims far exceeding that figure.
266	Chair Minnis	Still questions why an insurer wouldn’t just pay the initial amount of the policy to avoid litigation costs.
270	Baird	Responds that the insured will recognize defense costs are unlimited under the policy.
274	Chair Minnis	Asks if a policy which actually covered unlimited defense costs is a contract.
280	Baird	Responds that the issue is who takes care of the defense costs when the litigation covers multiple loss over multiple years. Says courts and insurers have allocated defense costs among the various periods during which the contamination has taken place.
289	Munro	Says commercial general liability policies were written with pollution exclusions, but the courts interpreted those exclusions differently. Says the Oregon State Bar’s PLF policy is the only policy in Oregon that limits the defense cost obligation by contract. Discusses the problem with “reasonable commercial terms” (line 15 of the B27 amendments) as being an undefined phrase.
331	Chair Minnis	Goes back to the timeline and asks what happened between 1971 and 2003.
333	Munro	Indicates the limitations of this proposed legislation.
351	Baird	Explains why the date 1985 should be added to the timeline.
382	Munro	Comments on the B29 amendments (Exhibit C) saying they appear more open-ended than what Mr. DiLorenzo intended.
TAPE 1, B
007	Tom Gallagher	Schnitzer Steel Industries. Discusses how they are willing to modify the “all sums” piece of the policy for a share of the defense costs.
045	Chair Minnis	Wonders about the definition of “an Oregon insurance company” on line 15 of the B27 amendments.
047	Gallagher	Isn’t sure if it means an insurance company licensed to do business in Oregon or domiciled in Oregon.
051	Chair Minnis	Alleges it is an insurance company licensed to do business in Oregon.
052	Gallagher	Agrees. Continues his discussion of actions for remedial investigation.
078	DiLorenzo	Rebuts. States under which circumstances the B29 amendment will apply.
101	Chair Minnis	Notes that the conferees are not in agreement about which amendments to adopt.
105	Rep. Williams	Says he will prepare a memorandum to the Speaker of the House to consider discharging the House conferees.
111	Chair Minnis	Closes the work session on SB 297B and adjourns the meeting at 9:15 a.m.

EXHIBIT SUMMARY

A – SB 297B, -B22 amendments dated 8/4/03, submitted by Rep. Bob Ackerman, 1 pg

B – SB 297B, -B27 amendments dated 8/19/03, submitted by staff, 2 pgs

C – SB 297B, -B29 amendments dated 8/21/03, submitted by staff, 1 pg

D – SB 297B, -B28 amendments dated 8/21/03, submitted by Sen. Charlie Ringo, 3 pgs