S.B. 227 Punitive Damages Amendments: transcript

Well, thank you for having me. Uh, this bill is, uh, I've learned a lot on it. I'm not an attorney, so I've been being schooled and we have worked back and forth with, uh, four different parties for the last, what, five weeks. And, uh, I thought we were in a good place. And I had a, a fifth one show up the other night and would like to make some changes. But you're gonna get presented the bill that I passed out of the Senate with and just know that there might be a sub coming for the house if we can come to terms. But right now, the bill that you have in front of you is the second sub 2 22 or 27. And this bill just clarifies the punitive damages that they cannot be insured and prevents the insurers from raising the premiums based on punitive damage exposure. And it keeps the, the punishment where it belongs on the person who did the wrongdoing. It, it helps keep the insurance premiums fair. And because insurance companies shouldn't increase costs based on what if scenarios, uh, this one maintains a high legal standard, p damages still remain, uh, valuable and, and available in serious cases. So we're not trying to punish the employer, but the bad actors if we have an employee or something like that, that's what this bill does, is tries to accomplish and draw the lines. That's still there. We, we actually, uh, one of the drafts, we capped it and we've come and we've taken that completely off. So this is defining the lines of where they can go.

Yes, it does. Thank you. Okay.

I just got the language at noon today and still talking to drafting attorney. It's not gonna make any really, it's gonna be another definition of our interpretation probably to go, uh, under number three there at the back of the bill. Uh, the second sub came as a result of having the Attorney general review this and also had the state risk management, uh, Rachel Terry weigh in on this and, and she included some language and Nick Meekum from the Department of Government Ops. So that's where the second sub came to. We got to that point. Uh, we'll see what the language they want. They just wanted to more definitions and I don't know that's gonna change the bill at all.

Thanks, Mr. Chair. Real quick, I just wanna make sure I understand this. So, so, uh, you, you've got on lines, uh, 73 and four and then again on down on 80 to 82, uh, limits. I think you're looking at the wrong bill. 'cause I only have 50. So you took away the limits. I'm, I only have 55 lines on the paper I'm looking at. Okay. So my, my, no, we're on sub two, but I'm asking then, Senator,

did you take away the limits? Yes, In They're gone.

Okay. That's what's gone. The difference between, uh, one And two. Okay. That was a little problematic for me, so thank you. Alright. Thank you Mr. Chair.

Settings. It could be applied across the board.

It came as a result of, of, um, out in the basin, we have a lot of trucking companies, and over the last 18 months, most of the smaller trucking companies can't find insurance. Can't find somebody to write insurance for. And, and when they did, it was almost double what they were accustomed to. And, and so it was kind of, how do we prevent that? And then they were talking about the punitive damages are, are being assessed. They wanted that touch, but I've learned that, no, I'm not gonna touch that. And, and if this can drive the insurance companies that they can't raise rates because of maybe the risk or your safety rating, something like that. That's how they justify when, when some of these companies had excellent safety ratings and yet they couldn't get insurance. So that's what started this off. And then after that, um, we, we've gone around, but, uh, there were, we're not trying to target any particular industry, trying to, to save our residents some money when it comes to insurance,

It has. Uh, I didn't bring that with me. I think there's eight states that have this right now, and it has helped their residents.

Thank you, Mr. Chair. Do we need to make an amendment then?

No. Uh, you be on the floor. You guys will probably see, see it, but I, I don't, like I say, I don't know what it's gonna be for sure.

Alright. Yeah. Let's, I'll be happy to make the motion that we pass out Senate bill 2 77, second substitute with a favorable recommendation.

I'll waive. I appreciate your time.

Yeah. We'll, we'll push it. I think I have Representative Jack that will have this in the house, so it'll be in his name if we get it done.

I thought this was a simple bill. There's no simple bills. This is a second bill. This session that I'm learning from the attempt is, is that, um, I've got a lot of, uh, people in in the basin that make their living with trucking and they're small operators and their insurances have gone sky high. They're trying to survive out there. And, uh, this was an attempt to try to help them. And I know that I'm not there. I know that I'm learning on this process and, and so, uh, we've defined very small. We're trying to limit the p damages that, uh, are being assessed. Uh, and conversations today, tell me, I'm, I'm in the wrong area, but I want to hear from, from some of those that have showed up today to see and give me directions to further this bill. So with that, I'm open to questions or we could go to public comment. Yes, Sir.

Thank you, Mr. Chair. I'm Rick k Clasby, the executive director of the Utah Trucking Association. We very much appreciate, uh, Senator Winterton and his efforts on this matter. Um, I can tell you that over the last several years, the American um, transportation Research Institute has done a study across the nation, uh, primarily or with motor carriers. And one of the top industry concerns each of those years has been lawsuit and, and the, um, the expansion or the, the amount of damages that we're having to, uh, pay or the insurance premiums. Uh, this last year, this issue ended up being the number two issue on that study, it closely followed by number three, which was insurance premiums. Um, so from a trucking perspective, we are, we are highly supportive of, of lawsuit predictability, the ability to maintain, um, reasonable costs. Uh, we want to make sure that, that we're treating folks fair and we see that this is an opportunity to do all of those things. So, Senator Winterton, we, we support your effort and, and appreciate what you're doing here.

Uh, Mr Chair, members of the committee. My name is Jake Lee. I am the chair of the legislative committee for the Utah Association for Justice. And I wanna focus briefly on three points. First, punitive damages cannot be paid by insurance in the State of Utah. Section 31, a dash 20 dash 1 0 1 specifically prohibits insuring against punitive damages and insurance policies uniformly exclude them. Um, punitive damages are not a cost that gets spread across policy holders, and so they are paid personally by the bad actor, and that's by design. The cap proposed in this bill does not protect premiums or insurers. It protects reckless individuals from consequences of their own conduct. Secondly, Utah already has a very specific and carefully balanced punitive damages statute under Utah Code 78 B dash eight dash 2 0 1. Any punitive damages award over $50,000 are split evenly between the injured person and the state of Utah. That means punitive damages don't just benefit a private plaintiff. They directly benefit the public because of that structure. A cap on punitive damages provides no benefit to the public. The only people who benefit are the wealthiest wrongdoers. Those whose conduct is so egregious that punitive damages are even at issue and punitive damages are very rare. It's so rare in fact that this bill carries no fiscal note related to the state's collection of punitive damages. Third, and perhaps most importantly, from a practical standpoint, the attorney fee cap will dramatically reduce the number of punitive damages cases that ever make it to trial. Punitive damages are never resolved through negotiation. They require a full trial, extensive discovery, expert testimony, and significant out-of-pocket expenses and hundreds of hours of work by an attorney. When punitive damages over 50,000 are already split between the state and attorney fees are capped, very few lawyers will be able to take these cases all the way through to trial. The result is not fewer bad acts, it's fewer consequences for bad actors. Now, having said that, my understanding about this is that the primary concern is driving up insurance premiums. So we've had an opportunity to talk with Senator Winterton and explain to him that because the statute prohibits, um, insurers from insuring punitive damages, it wouldn't make any sense for them to be able to drive up premiums or use punitive damages as a reason to increase premiums. So we've come up with a solution and we think what the solution is, is to amend the statute that deals with that. So it specifically says that punitive damages can't be used as a reason to increase premiums. Um, we think that solution will solve the problem that everybody's concerned about, which is rising costs of insurance. And if, um, if that change were be were to be made, we would be in support of this bill instead of opposed to it. Thank you.

Thank you Mr. Chair. Mike Sontag. I represent, um, American Property and Casualty Insurance Company. Uh, thank you for your time. So, punitive damages are not paid by insurance companies. However, one of the problems we have in the area of insuring truck, especially in finite areas like the basin, is unpredictable costs. And while punitive damages aren't paid by insurance, the extreme exposure of driving in these enclosed areas, insurance costs become less predictable and it drives it up. We feel like putting some predictability and parameters around punitive damages will also trickle down into putting some predictability in the insurance area too. Costs are going up. We, uh, there's lots of legislation this year being pro proposed by the Senate to grab hold of some of those costs that are driving insurance premiums really high. And this is just one small step to corral an area where our members are clients are purchasing insurance and predicting punitive costs associated with accidents that may arise. But underlying all that are insurance costs. So we urge you to support this bill and, and we may need to do some structuring and refiguring, but Okay, thank you.

So my question is, if we are trying to bring predictability to the payouts for punitive damages, and we are saying that in punitive damage, this wouldn't solve that problem, how would we solve that problem? Would it be to increase the fines for nefarious characters? I mean, where is this money coming from and how do we actually target where this money needs to be spent? Because you're saying that people that are insurance, the cars shouldn't have higher premiums to pay out the punitive damages. And then we're saying that even if we do raise the costs, we're not getting at the root of where the punitive damages is coming from. So how do you increase that fund to pay out for punitive damages if we're not going to increase premiums? That's the crux of this bill. So this doesn't answer the question that you're asking us to answer. Right? I realize that now. Okay. So do we need to increase the fines for Senator Winterton? Okay, thank you. Go ahead. Well, There's some good points that's been brought up, but if the state is enjoying revenue from, from these cases, why isn't it showed shown here? And why don't we have, because the physical note on this is zero. And and so do we have some escape revenue that we're not tracking or not getting reported and, and then they've offered some language to, to try to get to the core of this, which, uh, I haven't seen the language. I know that we've kind of got a consensus of where we're headed with this, but until I actually see the language, I'm not gonna prepare the draft. And so I'm just kind of here. I I appreciate those being at the table and trying to help me work through what is the crutch of this. Okay,

Thank you Mr. Chair. Steve Sullivan. I'm with the Utah Association for Justice as well. I think it's important to, um, understand of course, the difference between punitive damages and compensatory damages. Um, medical bills, lost wages, those are economic losses suffered by the injured person. Um, general damages including pain and suffering type losses. Also, those are designed or meant to compensate the injured person. Now, punitive damages are not designed to compensate the injured person, but instead to, to deter conduct to frankly penalize the wrongdoer. And for that reason, punitive damages are only allowed. They're reserved only for cases where the wrong doer's conduct is terribly egregious. Um, you must show a reckless disregard for the safety of others that, or intentional conduct, it has to rise to that kind of level before punitive damages would be available. So it's a very specialized tool to try to deal with folks who have unfortunately generated terrible or egregious conduct. And specifically in the auto accident arena, of course we're talking about drunk drivers. Uh, we're talking about people who are driving impaired from drugs. We're talking about folks who are through road rage incidents, um, you know, causing horrible injuries to, uh, Utahans and, and families. Uh, we're talking about those people that are because of being drunk, they drive down the wrong side of the road as we've seen in the last two months. Uh, it's that kind of, uh, conduct we are trying to deter. Um, by putting a cap on punitive damages. The thing we're accomplishing is simply providing some get out of free type cards for those who are well off. That is in order for punitive damages to work, they have to staying the wrong door. It's, they're not covered by insurance. And so the wrongdoer has to understand that his, his or her conduct must be de mu is will be deterred by the punitive damage award. So the assets of the wrongdoer come into play, no doubt about it. Under Utah law, uh, person's assets are not given to the jury until a, uh, punitive damage award is provided by the jury in the initial trial. So it's a post-trial evidentiary hearing where punitive damages are even discussed. So to modify this tool to cap this tool, we are not providing good public policy, in my opinion. Instead, we're simply providing folks who are driving irresponsibly with, uh, a little bit of a tempered ability to continue that kind of conduct. Um, we believe punitive damages are very important to public policy. We do not see a reason to cap them because they are not going to achieve the goal of changing or limiting insurance premiums. And therefore the language that, uh, has been brought out here this afternoon, we believe is a more pragmatic way to attack the problem of insurance premiums.

Thank you Mr. Chair. I I have a, a question based on, uh, some of the public testimony. Um, well, first of all, let me, let me preface the question. And that is that it seems that the, uh, bill was to address, uh, something with, and I'm not sure if I'm saying this right, apportioned vehicles or commercial vehicles, maybe not commercial trucks. Commercial trucks. But the problem for me is that it would impact all cars and all, um, accidents and all, you know, problems. And, um, and I think that's a whole different thing. Uh, I do have a concern about, uh, people who, um, have, you know, drive reckless, um, and, and hurt people or, or DUIs right. And hurt people. And, uh, this I think, um, puts put some caps on there that may not, um, make sense for that population. So my question, Mr. Chair, is, uh, whether or not we can, um, be very specific in this space and, and can it be carved out, um, the, the two Senator Winterton I'm learning and yes, it, it seems like there is a way, and I appreciate Mr. Sullivan's, uh, remarks because he he's exactly right and, and we need to punish and keep that there. But the real concern is, is that you own one or two vehicles in a commercial operation, you have a safety rating. The more trucks, more equipment you're on the road, the higher your risk is. Now you may have the best drivers in the world, and yet if they're in an accident that dings a safety record, you get too many of them. And all of a sudden they say, you guys are a risk. And, and so the insurance rates continue to increase. It's making it impossible for an operator of one, two, up to 10 trucks to stay in business because again, they're, they're about safety and they can't control somebody coming at 'em. And when, when attorneys go after that, well, I've always been told big trucks big bucks and they're at fault and they're the ones that are paying for this and we've gotta stop that. Or we're not gonna have our livelihoods in the basin. I mean, we probably have somewhere around the neighborhood of about seven thou, 7,000 trucks out there that is their livelihoods. And when people can't get insurance, then what are we gonna do? We need to fix the problem. And this was the first attempt. I'm not an attorney, and if I was, I wouldn't be running this bill because people would say that that's self-serving. But I'm not, I think that I can put this in a good place for everybody to see. We have a problem. We need to address it. We need to keep costs at an affordable rate, whether that's the insurance companies and they're, they're saying, oh, it's this guy, or, or the attorney's saying something else somewhere. We're gonna be at the table and we're gonna figure this out. That's my commitment because I, I realize after putting this out there, this is the only way you're gonna get 'em to come to the table and talk. And there's a lot of things that's been brought out today that I think we've gotta address them. Yeah. Thank you Senator Ipson. Thank you.

Oh, things that, that we're not thinking about is how runaway juries hand these judgements out. And that's juries scare me. 'cause they don't know, they, they perceive a trucking company, for example, has large assets. So the punitive damage may or may not be true and you're depending on that jury to decide. And I think somehow I, I applaud Senator Winterton for trying to corral this because juries need to be, sometimes they really overreact. Thank you, Senator Winterton.

Well, I have two thoughts. That's one I'd like to correct it before it gets to the floor, but I don't want people walking away from the discussion. And if I hold it, then they think, whew, We've got it off. I, I would make a motion that we approve this with the, with a commitment for myself that I'll keep 'em there and we'll come to a resolution on this because it's not something that we can just wave off another time. I mean, I've seen what basin trucking companies have gone through this last year to 18 months and they're just hanging on. And so I, I'm committed to try to figure out what we can do to help 'em out. So I would make a motion that we forward this to the Senate floor with a commitment that we will have a, a substitution coming at that time. Okay.

Uh, thank you Mr. Chair. So my understanding is that punitive damages should not be reflected in our premiums 'cause this is hurting our truckers. Yeah. But if you were the person that got hurt and your family got hurt, you would want to have some kind of benefit from your insurance. So that's the question we're trying to answer. I I respect that we should not be overly burdening our premiums for truckers, but, um, maybe we have to look at the safety rating and dealing with that. Uh, maybe it's not in where we're capping our punitive damages, but how we're doing our safety ratings that would bring our premiums into align with the activities. Uh, I don't think this is just affecting you into basin. No, I think this is affecting many areas, but to your point, uh, the answer's not here, but I'm not really sure where the answer would be right now. So, um, yeah. Thanks. That's my thank you

Thank you Mr. Chair for letting me, uh, ask another question here. I'm confused by the formula that's in here. Um, damages may not exceed an amount equal to the greater of the sum of two times the amount, um, an amount equal to 750,000 for non-economic damages or 200,000. Could you explain that a little bit more for me?

The idea was let, let's cap what can be awarded and what is the baseline, because you're right, I mean, they should be getting something, but if we say, well, you can't prove it, but you are awarded something that, that is my understanding is that that would be the minimum.

A follow up, so just, just so that I can figure this out, is the top the cap two times the amount of economic damages or 750,000 or 200,000?

The way I look at it is the base is 200,000 with a seven 50 cap. And, and economic wise, you're gonna have to have prove to the jury or the judge, here's the damages economically, okay? If, if a person's outta work or you know, can't, or say, you took my truck out and I can't provide a living. Now, what are those economic, that is why that formula's in there is at a reasonable time. What is that two times what you've lost or not. It, this is the first attempt to try to wrangle this issue in.

Thank you. And thank you for the explanation. And, uh, thank you Mr. Chair. I am still thinking about, you know, the family who may have lost a family member because of really bad behavior, um, you know, A-A-D-U-I or road rage. And, you know, if we're looking at somebody who, a punitive damage is supposed to really sting somebody, if we have somebody who makes a lot of money, I mean, is 750,000 going to do it for the life of, of a person? I mean, that is a lot of money for most of us, but for some gazillionaires, which we do have in Utah, and I'm not saying that they're bad people, uh, I'm saying that perhaps the the cap, uh, may constrain, uh, a judge from, um, uh, making a punitive damage, uh, that would really make a difference for, for that person who really, you know, harmed or again, um, the loss of a, of a person. So I I, I appreciate the work that, uh, the good senator has does and has done on this. Um, it's, I think, um, really needs, we really need to think about and continue to talk about how we can separate what he, what he wants to do from, um, the issues that, uh, are on, you know, any, any person driving, not just with the commercial, uh, truckers and to really talk about and really figure out how we do that. I think that is a valid issue that we need to figure it out. But I would really like to slow the process down and allow, um, Senator Winterton to work on that. And I, I do respect what he's saying is, uh, this puts a little urgency on on the stakeholders. I, I get that. But, uh, anyways, that's, that's, uh, I, I'm gonna oppose the motion because of that and not because I don't think it's a good bill. I mean, a good issue. Thank

and, uh, I started in a space I didn't know anything about, but it's been back and forth. Uh, I need to move, uh, the second substitute and also the amendment.

Yes. And that is amendment number one? Yes. What that does is refer us back to a code that the division of, uh, government ops and also our state risk manager wanted in there just to reference. And they were good with the bill after we did that.

You. I appreciate the, the sponsor's, um, work on this. Um, wondering if he'll yield to a a, a nice question. Senator. Will, will you Yield? I opened it up. I I'm just wondering what, what stakeholders you know, have, has he been working with on the sub and the amendment? Senator

Worked with the trial li lawyers to the insurance, uh, attorneys, the insurance, uh, side of it. And then, um, I had the trucking association that was worried about this. I also had the DE State risk manager and the Department of Government ops on it.

I'll wa and call the question.

Senator Ipson Spry Lein Bramer bus Comore es Camilla Fillmore Aye. Grover Aye. Harper. Aye. Hankins. Ipson Aye. Johnson. Aye. Juab McKay. Mikel Milner Musselman Aye. Owens Aye. Pitcher. Lum Rebi Sandal Stevenson Stratton. Yes. Vickers Weiler Aye. Wilson Winterton, president Adams

Thank Commissioner President Pro tempt, uh, motion to encircle. Which bill number? Uh, Well do you need that? Would that help That? Sorry about that. That's very helpful. Yes, it is Senate bill two 40. First substitute The motion to UNC circle first substitute Senate bill two 40 higher education institutional governance.

Senator Wilson. Thank

risks when setting policies, uh, and the prices and then it limits the employer or say the bosses or principles, uh, that they can be hit with something, with something that their employees did. So you have to prove that they knew about it and that's the extent of it. It should be one that, uh, be simple enough to, to execute.

You. I appreciate the, the sponsor's, um, work on this. Um, wondering if he'll yield to a a, a nice question. Senator. Will, will you Yield? I opened it up. I I'm just wondering what, what stakeholders you know, have, has he been working with on the sub and the amendment? Senator

Winterton, I Worked with the trial li lawyers to the insurance, uh, attorneys, the insurance, uh, side of it. And then, um, I had the trucking association that was worried about this. I also had the DE State risk manager and the Department of Government ops on it.

I'll wa and call the question.

Thank Commissioner President Pro tempt, uh, motion to encircle.

very helpful. Yes, it is Senate bill two 40. First substitute The motion to UNC circle first substitute Senate bill two 40 higher education institutional governance.

It, um, helps tell insurers what they can and can't do when they're, they're factoring in your rates. It limits their unity damages and it also protects the employers, uh, that, uh, to a certain degree they can't be held liable for what their employees do as long as the employees acted on their own. And that's the gist of this Bill. Thank you. Seeing no discussion of the bill, I'm gonna go to you for action.

Thank you Mr. President. Uh, we talked yesterday about this bill. This bill is an answer to the audit that was just performed on Utah State University. Um, trying to work on some of the issues that they found at Utah State. We've been working with the Attorney General's office with the higher ed commissioner and the board, um, and also President Mortenson. Basically it just helps strengthen and refines the roles and responsibility of the board of trustees that have the independent staff to staff the board of trustees. It also designates the board as the internal audit committee and notify the board about the president's expenditures. So that's what the bill does. And happy to answer any questions Mr.

Thank you Mr. Speaker Pro Tem, I would like to move the adoption of the fourth sub of SB 2 27.

Yes. Thank you. What, what this does, and I'll talk about the bill in a moment. Uh, but, uh, as we negotiated this bill with the insurance companies, uh, they wanted us to include a term management man, managing agent, which wasn't actually yet in code. So we've added the term managing agent and found its use in court cases. And so we've added that definition into code and added managing agent to the bill.

I'll waive

Okay, now talking to the full bill, including managing agents. But, uh, what this does is it clarifies when an insurance company is assessing insurance premiums on a business, particularly small businesses, uh, that they should not be, uh, factoring in things like punitive damages. And so, uh, not, not to the company. And so because that is making insurance unattainable for a lot of small businesses where they're saying, well, worst case, you know, if you're a trucking company, worst case you have an accident or something besides the actual damages, there could be punitive damages, which could be who knows how much. Uh, so therefore you can't be insured. This says don't include punitive damages to the company. It does, however, still allow punitive damages to be assessed, but not against the company unless the company is shown to have, uh, allowed the behavior known about the behavior, condoned the behavior. And that's where we added in, uh, the managing agent. Whether the owner or the managing agent is, uh, is dealing with anything the willful, malicious, reckless disregard. So then the employee who caused that, uh, problem, they could be held for that, but then the company or its managing agent would only be held liable for that if they in fact allowed it, condoned it or let it happen. Um, so that would make, uh, insuring company, uh, small companies, uh, more affordable. And, uh, with that Mr. Speaker Pro Tim, I would yield back to last three and a half, uh, the last six and a half minutes.

Thank you. I'll waive Summation has been waived.

Thank you Mr. Speaker. I'd like to make a motion to encircle third substitute Senate Bill 1 22.

Yes. Thank you. What, what this does, and I'll talk about the bill in a moment. Uh, but, uh, as we negotiated this bill with the insurance companies, uh, they wanted us to include a term management man, managing agent, which wasn't actually yet in code. So we've added the term managing agent and found its use in court cases. And so we've added that definition into code and added managing agent to the bill.

I'll waive

Okay, now talking to the full bill, including managing agents. But, uh, what this does is it clarifies when an insurance company is assessing insurance premiums on a business, particularly small businesses, uh, that they should not be, uh, factoring in things like punitive damages. And so, uh, not, not to the company. And so because that is making insurance unattainable for a lot of small businesses where they're saying, well, worst case, you know, if you're a trucking company, worst case you have an accident or something besides the actual damages, there could be punitive damages, which could be who knows how much. Uh, so therefore you can't be insured. This says don't include punitive damages to the company. It does, however, still allow punitive damages to be assessed, but not against the company unless the company is shown to have, uh, allowed the behavior known about the behavior, condoned the behavior. And that's where we added in, uh, the managing agent. Whether the owner or the managing agent is, uh, is dealing with anything the willful, malicious, reckless disregard. So then the employee who caused that, uh, problem, they could be held for that, but then the company or its managing agent would only be held liable for that if they in fact allowed it, condoned it or let it happen. Um, so that would make, uh, insuring company, uh, small companies, uh, more affordable. And, uh, with that Mr. Speaker Pro Tim, I would yield back to last three and a half, uh, the last six and a half minutes.

Thank you. I'll waive Summation has been waived.

Sure. Uh, when I presented to the house standing committee on this, after that, uh, I indicated there might be changes. There was another party that wanted to change or add a definition in, in that. So we made a substitute and they adopted over there. That's what we're doing. Here is concurring with that substitute.