Automobile Insurance SubrogationAutomobile Total Loss ThresholdsDeductible ReimbursementDiminution of ValueFirst Come, First Served: Subrogating Multiple Claims in Excess of Policy LimitsFuneral Procession Traffic LawsImputing Contributory Negligence of Driver to Vehicle OwnerLaws Regarding Using Cell Phones/Headphones/Texting While DrivingLoss Of UseMed Pay/PIP SubrogationNo Pay, No Play LawsOwner Liability For Stolen VehiclesPayment of Sales Tax After Vehicle Total LossPedestrian and Crosswalk LawsRental Car Company Physical Damage and Loss of Use ClaimsRental Car Company’s Liability Insurance Primary or ExcessSlower Traffic Keep RightSudden Medical Emergencies While DrivingSuspension of Drivers’ LicensesUse of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Federal , State, and Local Governmental EntitiesMunicipal/County/Local Government Immunity and Tort LiabilityState Sovereign Immunity And Tort Liability
General Tort Laws/StatutesAnti-Indemnity StatutesContribution ActionsContributory Negligence/Comparative FaultDog Bite LawsEconomic Loss DoctrineParental ResponsibilitySpoliationStatute of LimitationsStatute of Limitations Exceptions
Health Insurance SubrogationHealth and Disability Insurance
InvestigationAdmissibility of Expert TestimonyPre-Suit Disclosure of Liability Policy Limits in Third-Party ClaimsRecording Conversations
Product Liability SubrogationProduct Liability Law
Property Subrogation“Matching Regulations” And Laws Affecting Homeowners Property ClaimsCondominium/Co-Op Waiver of Subrogation LawsDamage to Property Without Market ValueGeneral Contractor Overhead And Profit Payments In First-Party ACV Property Damage ClaimsLandlord/Tenant Subrogation
Subrogation GenerallyAnti-Subrogation RuleCriminal RestitutionExculpatory Agreements And Liability WaiversMade Whole DoctrineMedical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Workers’ CompensationEmployee Leasing LawsHospital Lien LawsOCIP/CCIP Subrogation In Workers’ Compensation Construction CasesRecovery Of Increased Workers’ Compensation Premiums By EmployerWhich Workers’ Compensation “Benefits” Can Be Subrogated?Workers’ Compensation Subrogation Waiver EndorsementsWorkers’ CompensationWorkers’ Compensation Claims by Undocumented Employees
Automobile Insurance Subrogation
Automobile Total Loss Thresholds
Total Loss Formula (TLF). A vehicle is a total loss when the ACV is equal to or less than the cost of repairs plus the salvage value.
Cost of repairing damage to the vehicle exceeds vehicle’s worth or insured value. No statutory definition of “salvage vehicle.” Vehicle is “wrecked vehicle” when so disabled that can’t be used for primary function without substantial repair or reconstruction. Insurance company which “totals” vehicle must mark the word “junk” on the title and surrender the title to the state. This is true for either an “actual total loss” or a “constructive total loss.” Duty of insurance company obtaining title to unrepairable vehicle. Alaska Stat § 92.170.
Automobile: Pro-Rata. Alaska Admin. Code tit. 3, § 26.080. “Any person…must include first-party claimant’s deductible, if any, in subrogation demand unless first-party claimant requests that it not be included or unless deductible has been otherwise recovered by first-party claimant; no deduction for expenses may be made from any deductible recovered unless an outside attorney or other outside expert witnesses have been retained and any deduction is no more than pro-rata share of their cost less any attorney’s fees and costs recovered; any recovery of pre-judgment or post-judgment interest shall be shared pro-rata.”
Deductible must be included in any subrogation demand.
Property: Pro-Rata. Alaska Admin. Code tit. 3, § 26.090. “(a) Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a first-party property claim shall: (3) include the first-party claimant’s deductible, if any, in a subrogation demand unless the first-party claimant requests that it not be included or unless the deductible has been otherwise recovered by the first-party claimant; no deduction for expense may be made from any deductible recovered unless an outside attorney or other outside expert witnesses have been retained and deduction may be for no more than a pro-rata share of their cost less attorney fees and costs recovered; any recovery of pre-judgment or post-judgment interest shall be shared pro-rata.”
Deductible must be included in any subrogation demand.
Diminution of Value
First Party: Courts use diminution in value in establishing the amount owed in a condemnation proceeding, but currently no Alaska cases are available that deal with a claim for the loss of value of an auto repair by an insurer. Jackovich Revocable Trust v. State, Dep’t of Transp., 54 P.3d 294 (Alaska 2002).
Third Party: A residual diminished value claim is for the difference between the pre-accident value of a vehicle and its value after repairs. In Willett v. State of Alaska, 826 P.2d 1142 (1992), a criminal mischief case, the court acknowledged that Restatement (Second) of Torts § 928 has interpreted such that where repairs have not restored damaged property to its original value, recovery has been allowed for both cost of repairs and the difference in market value before the damage and after the repair. While it does not directly authorize diminution in value damages in Alaska, it does recognize the claim in other jurisdictions.
First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits
There does not appear to be any case law dealing with the responsibility of a liability carrier when faced with multiple claimants and limited policy limits. However, Alaska’s Administrative Code provides:
(b) A person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a third-party claim may not make any statement that indicates that the rights of a third-party claimant may be impaired if a form, compromise, release, or similar document is not completed within a given period of time, unless the statement is given for the purpose of notifying the third-party claimant of an applicable statute of limitation.
(c) Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim may not continue negotiations for settlement of the claim directly with any claimant who is neither an attorney nor represented by an attorney to a time when the claimant’s rights might be affected by a statute of limitation, coverage provision, or other time limit, unless written notice is given to the claimant clearly stating the time limit that might be expiring and its effect upon the claim; such a written notice shall be given at least 60 calendar days before the date on which the time limit might expire. Alaska Admin. Code tit. 3, § 26.070.
Funeral Procession Traffic Laws
Section 497 of the Public Safety title of the Alaska Administrative Code forbids a driver from traveling between any vehicles in a funeral procession. However, this regulation does not apply at intersections with traffic signals. Vehicles traveling in a funeral procession must drive as near to the right side of the road as possible and follow the car in front of them as close as is practicable and safe. Alaska Admin. Code tit. 13, § 02.497.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: No case law.
This is likely because Alaska became a state in 1959, long after the Imputed Contributory Negligence Doctrine had been abandoned in all the other states.
Vicarious Liability/Family Purpose Doctrine: No Vicarious Liability Statute.
Family Purpose Doctrine: Owner of vehicle purchased and maintained for use of owner’s family is liable for injuries and damage while it is being used by a family member. Burns v. Main, 87 F.Supp. 705 (D. Alaska 1950).
Sponsor Liability for Minor’s Driving: Alaska Stat. § 28.15.071: Parents, guardian, or responsible adult who signed for minor to receive drivers’ license will be liable for negligence or willful misconduct of minor while driving a motor vehicle.
Laws Regarding Using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: No person of any age may send, receive, or write text messages while operating a motor vehicle, except if it is in an emergency vehicle or if the information on the device is believed to relate to health, safety, or a criminal matter. Alaska Stat. § 28.35.161
No applicable state law on cell phone use.
Other Prohibitions: No driver may wear headsets, headphones, or other headgear used for receiving sound or transmitting it to a driver. Exceptions include headgear for law enforcement purposes, communication between a motorcyclist and passenger, or hearing aids. Alaska Stat. § 13.04.260
Comments: Driver’s may not wear a headset, headphones or other headgear designed for receiving sound and transmitting sound to the driver. Exceptions include hearing aid devices, and headgear used for safety or law enforcement processes. Angoon, Alaska Code of Ordinances § 10.15.150.
Driver of a motor vehicle may not wear a headset, headphones, or other headgear for receiving sound and transmitting sound to driver. Exceptions include headgear for safety, law enforcement purposes, or for helping improve hearing ability. Juneau, Alaska Code of Ordinances § 72.04.260.
Loss Of Use
Loss of Use: Yes. Loss of use damages are recoverable for the reasonable period of time required to make repairs to the damaged vehicle. No distinction between cases in which the property is totally destroyed or repairable. Burgess Const. Co. v. Hancock, 514 P.2d 236 (Alaska 1973). Rental value of the damaged vehicle is a permissible standard to measure loss of use, if applicable. Id. No case law information regarding whether a rental vehicle must actually be rented in order to use a rental value as a loss of use calculation. Loss of use is also recoverable when the vehicle is destroyed and is not able to be repaired – this is calculated by a reasonable view of the time it takes to replace the destroyed vehicle. Alaska Const. Equip., Inc. v. Star Trucking, Inc., 128 P.3d 164, 169 (Alaska 2006).
Lost Profits: Possibly. Alaska courts have noted informally that there are four methods of measuring loss of use (lost profit, cost of renting substitute chattel, rental value of the plaintiff’s own chattel, or interest) and any of them may be used in order to most accurately compensate the plaintiff. Alaska Const. Equip., Inc. v. Star Trucking, Inc., supra.
Med Pay/PIP Subrogation
Med Pay: Insurer has right of reimbursement. Maynard v. State Farm, 902 P.2d 1328 (Alaska 1995).
PIP: Coverage not applicable.
Made Whole: Possible application to equitable subrogation only. McCarter v. Alaska National Ins. Co., 83 P.2d 525 (Alaska 1984).
Statute of Limitations: The statute of limitations is two (2) years from date of insured’s accident. Alaska Stat. § 09.10.070. Providence Wash. Ins. v. DeHavilland Aircraft, 699 P.2d 355 (Alaska 1985).
No Pay, No Play Laws
Rule: A person who suffers personal injury or death may not recover non-economic damages if the injury or death occurred while the person was driving uninsured. However, this does not apply if the uninsured driver was injured by a liable driver who was under the influence, acted recklessly or with intent, or fled the scene.
Authority: Alaska Stat. § 09.65.320
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: 13 AAC 02.480.
Common Law Rule: Where a thief takes a car, in the absence of special circumstances, there is no liability. Bennett v. Arctic Insulation, Inc., 253 F.2d 652 (9th Cir. 1958) (Applying Alaska Law).
Payment of Sales Tax After Vehicle Total Loss
First-Party Claims: No state sales tax in Alaska. When the insurance policy provides for the adjustment and settlement of first-party auto total loss on the basis of ACV or replacement with another of like kind and quality, the insurer must offer a comparable replacement vehicle with all applicable taxes, license fees, and other fees paid. Alaska. Admin. Code § 26.080.
If insured wants to retain the salvage following a total loss and seeks to settle on an ACV basis, the correct calculation for the total loss is based on the actual cost to purchase a comparable vehicle, including all applicable taxes, license fees, destination or delivery charges, and other fees incident to transfer of ownership. This calculation is not contingent on salvage, nor does the calculation of ACV change if the insured seeks to keep the salvage rather than have the salvage turned over to the insurer for disposition. Bulletin 93-8, 1993 WL 13563685 (AK INS BUL), 2.
Third-Party Claims: No applicable statute, case law, or regulation governing recovery of sales tax.
Pedestrian and Crosswalk Laws
Rental Car Company Physical Damage and Loss of Use Claims
Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers not regulated. However, where CDW excluded driving while intoxicated, court held contract to be one of adhesion. Lauvetz v. Alaska Sales and Service d/b/a/ National Car Rental, 828 P.2d 162 (Alaska 1991).
Recovery From Third-Party: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers not regulated. However, where CDW excluded driving while intoxicated, court held contract to be one of adhesion. Lauvetz v. Alaska Sales and Service d/b/a/ National Car Rental, 828 P.2d 162 (Alaska 1991).
Rental Car Company’s Liability Insurance Primary or Excess
Summary: No case or statutory law requiring a car rental company’s policy to be primary. Terms of rental agreement and renter’s liability policy should be compared to determine which is primary. Usually, the owner’s insurance provisions will be compared with the driver’s insurance provisions and both will be responsible for a policy limits pro rata share of the limits when conflicting excess clauses are involved, as opposed to equal shares. Columbia Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 905 P.2d 474 (Alaska 1995).
Slower Traffic Keep Right
Statute: 13 Alaska ADC § 02.050(b) and Alaska Stat. § 28.35.140
Summary: Motorists must travel in the right lane, except when overtaking and passing another vehicle proceeding in the same direction; when the roadway is divided into three marked lanes for traffic; or when the roadway is restricted to one-way traffic. A person may not purposely obstruct or block traffic on any roadway by any means. A vehicle proceeding slower than the maximum authorized speed of traffic must be driven in the right-hand lane or as close as practicable to the right-hand curb or edge of the roadway.
Sudden Medical Emergencies While Driving
Sudden Emergency Defense Not Recognized. With or without an emergency, the standard of care is still that of a reasonable person given the circumstances. Lyons v. Midnight Sun Transp. Servs., Inc., 928 P.2d 1202 (Alaska 1996).
The sudden emergency defense has been recognized as a defense to a claim of negligence per se. However, no examples of this exception being applied to sudden illnesses. Getchell v. Lodge, 65 P.3d 50, 54 (Alaska 2003).
Suspension of Drivers’ Licenses
Administrative Suspension: In the event of an accident causing any personal injury, death, or property damage exceeding $501, proof of insurance must be shown by all involved parties. Alaska Stat. §§ 28.20.050(a) and 28.22.021. The at-fault person’s license will be suspended after a hearing regarding reasonable possibility of a judgment being rendered against the at-fault party. Alaska Stat. § 28.20.050(d).
Judgment: A payment of a judgment equal to the maximum amount required for deposit under Chapter 20 releases the judgment debtor from the liability evidenced by the judgment. Alaska Stat. § 28.20.130. The judgment suspension will continue for ten (10) years from the judgment date, or until the judgment is satisfied and the person gives proof of financial responsibility. Ala. Stat. § 32-7-15.
Contact Information: State of Alaska, Division of Motor Vehicles, Dept. of Driver Licensing, P.O. Box 110221, Juneau, AK 99811-0221, (907) 465-4361, http://www.alaska.gov/dmv.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: Alaska Stat. § 45.45.190.
Summary: Alaska requires repair shops to provide every customer, at the time the customer retakes possession of the motor vehicle, with a copy of a dated invoice detailing the costs of all parts and labor involved in the repair, and identifying all part replacements as being either new, used, rebuilt, or reconditioned.
Federal , State, and Local Governmental Entities
Municipal/County/Local Government Immunity and Tort Liability
Actions, Immunities, Defenses, and Duties.
Qualified Immunity: No action can be maintained against a municipality, unless exception. Alaska Stat. § 09.65.070(a).
Notice Deadlines: No Notice Requirements. In Johnson v. City of Fairbanks, 583 P.2d 181 (Alaska 1978), the court announced notice of claims provisions in city charters (Fairbanks city charter required 120 days’ notice) are impliedly prohibited because they impede implementation of statutes which seek to further a specific statewide policy with reference to the time within which suits may be filed.
Claims/Actions Allowed: Section 09.65.070 does not shield municipalities from “operational negligence.” Municipality is liable for negligently performing particular operations to implement the broad policy decision (e.g., operating motor vehicle or negligent damage to storm or sewer). City of Seward v. Afognak Logging, 31 P.3d 780 (Alaska 2001). “Planning decision” involves policy formulation (immune). “Operational decision” involves policy execution or implementation (not immune). Regner v. N. Star Volunteer Fire Dep’t, Inc., 323 P.3d 16 (Alaska 2014).
Discretionary Function Official Immunity: Municipality or its employees may not be sued if claim is based on performance/failure to perform discretionary function, even if the discretion is abused. Alaska Stat. § 09.65.070(d)(2). Discretionary acts are acts “that require personal deliberation, decision, and judgment.” Planning functions (immune). Operational functions (not immune). Samaniego v. City of Kodiak, 2 P.3d 78 (Alaska 2000). Under the Planning/Operational Test for Discretionary Function Immunity, liability is the rule, immunity is the exception.
Damage Caps: No Damage Caps.
State Sovereign Immunity And Tort Liability
Tort Claims Act: Actions Where State Is a Party. Alaska Stat. §§ 09.50.250-.300 (1962).
Abolished sovereign immunity and made State liable for its torts, with limited exceptions, including discretionary functions.
Notice Deadlines: “The legislature shall establish procedures for suits against the State.” Article II, § 21 of Alaska Constitution. Claims against peace officers shall be made within two years after the cause of action. Alaska Stat. § 09.10.070.
Claims/Actions Allowed: The doctrine of sovereign immunity allows any person or corporation having a tort claim to bring action against the State. Alaska Stat. § 09.50.250. Failure to remove natural accumulation of ice and snow on state highways. State v. Abbott, 498 P.2d 712 (Alaska 1972). Operating motor vehicle. Rutherford v. State, 605 P.2d 16 (Alaska 1979). Failure to provide sign warning bicyclists of hazardous railroad crossing. Guerrero ex rel. Guerrero v. Alaska Hous. Fin. Corp., 123 P.3d 966 (Alaska 2005).
Comments/Exceptions: A tort claim may not be brought when the claim is an action for a tort based upon an act or omission of a State employee in the execution of a statute or regulation or performance or failure to perform a discretionary function or duty. Alaska Stat. § 09.50.250. Discretionary acts or functions for which State has immunity from tort liability are only those acts or functions occurring at planning level, as opposed to operational level; planning decision is one that involves policy formation, whereas operational decision involves policy execution or implementation. State, Dep’t of Transp. & Pub. Facilities v. Sanders, 944 P.2d 453 (Alaska 1997). See Alaska Stat. § 09.50.250 for other exceptions.
Damage Caps: Damages awarded by a court for all claims arising out of a single injury or death may not exceed $400,000. Alaska Stat. § 09.17.010. No punitive damages against the State. Alaska Stat. § 09.50.280.
General Tort Laws/Statutes
Prohibits Broad Indemnity. Applies to Construction Contracts. Alaska Stat. § 45.45.900.
Does not apply to the handling, containment, or cleanup of oil or hazardous substances.
Pure Several Liability. Alaska has a system of pure comparative negligence with several liability. Plaintiff is only allowed to recover from each defendant their particular share of the liability. Alaska Stat. § 09.17.080; Alaska Stat. §§ 09.16.10 to 09.16.60 (repealed 1989); McLaughlin v. Lougee, 137 P.3d 267 (Alaska 2006).
Alaska repealed its Uniform Contribution Act when it eliminated joint and several liability. This doesn’t mean that Alaska’s pro-rata statutory contribution system is no longer in effect. The repeal does not imply rejection of the principle of contribution based on proportional fault. Common law contribution is still available. They call it “Equitable Apportionment.” McLaughlin v. Lougee, 137 P.3d 267 (Alaska 2006). A liable defendant may obtain contribution, (equitable apportionment) by an independent action against non-party persons who may be responsible for plaintiff’s damages or through joinder under Rule 14(c) in the original suit initiated by plaintiff.
The statute of limitations is two (2) years from the time the right of action for contribution accrues (ordinarily by payment). Alaska Gen. Alarm v. Grinnell, 1 P.3d 98 (Alaska 2000).
Contributory Negligence/Comparative Fault
Pure Comparative Fault. Damaged parties can recover even if 99% at fault. Plaintiff’s share of the fault will offset his total damages. Alaska Stat. §§ 09.17.060 and 09.17.080.
Dog Bite Laws
No Dog Bite Statute. However, owner will often be found liable in the presence of negligence or strictly liable if the owner knew of the dog’s dangerous propensities. Sinclair v. Okata, 874 F. Supp. 1051 (D. Alaska, Oct. 12, 1994); Reliance on Restatement (Second) of Torts.
Economic Loss Doctrine
Intermediate Rule. When a defective product creates a situation potentially dangerous to persons or other properties, and loss occurs as a result of that danger, strict liability in tort is an appropriate theory of recovery, even though the damage is confined to the product itself. In order to recover on such a theory plaintiff must show (1) that the loss was a proximate result of the dangerous defect and (2) that the loss occurred under the kind of circumstances that made the product a basis for strict liability. Northern Power & Eng’g Corp. v. Caterpillar Tractor Co., 623 P.2d 324 (Alaska 1981). A “dangerous situation” may provide an exception to the ELD in Alaska. Pratt & Whitney Can., Inc. v. Sheehan, 852 P.2d 1173 (Alaska 1993); St. Denis v. Dep’t of Hous. & Urban Dev., 900 F. Supp. 1194 (D. Alaska 1995).
Real or Personal Property. Liability is imposed on the parents for a child’s willful or malicious damage to real or personal property. Alaska Stat. § 09.65.255.
Minor Driving. Parents, guardian, or responsible adult who signed for minor to receive drivers’ license will be liable for negligence or willful misconduct of minor while driving a motor vehicle. Alaska Stat § 28.15.071.
Child must be under 18-years-old. Parent’s liability is limited to $15,000. If parents are insured, liability is limited to $25,000.
First-Party Intentional Tort: In Hazen v. Anchorage, 71 P.2d 456 (Alaska 1986), the plaintiff was permitted to allege spoliation against a municipal prosecutor, who was not a party to the underlying civil suit, but was an agent of the municipality (Anchorage). Furthermore, in Nichols v. State Farm & Cas. Co., 6 P.3d 300 (Alaska 2000), the court implied that spoliation of evidence by a party’s agent creates a claim for first-party spoliation. Additionally, the Hazen court permitted the plaintiff to bring a claim against the individual police officers involved in her arrest (third-party spoliation).
Third-Party Intentional Tort: In Nichols, the Alaska Supreme Court explicitly recognized intentional third-party spoliation of evidence as a tort. These previous holdings were relied on by the Alaska Supreme Court in Hibbits v. Sides, 34 P.3d 327 (Alaska 2001). In Hibbits, the Court held that when alleging third-party spoliation, a plaintiff must plead and prove that the defendant intended to interfere in his civil suit.
Statute of Limitations
Personal Property2 YearsAlaska Stat. § 09.10.050, .070(a)
Personal Injury/Death2 YearsAlaska Stat. § 09.10.070(a)
Breach of Contract/Written3 YearsAlaska Stat. § 09.10.53
Breach of Contract/Oral3 YearsAlaska Stat. § 09.10.53
Breach of Contract/U.C.C./Goods4 YearsAlaska Stat. § 45.02.725
Statute of Repose/ProductsN/AN/A
Statute of Repose/Real Property10 YearsAlaska Stat. § 09.10.055*
Breach of Warranty/U.C.C.4 YearsAlaska Stat. § 45.02.725; Armour v. Alaska Power Auth., 765 P.2d 1372, 1375 (Alaska 1988).
Workers’ Comp Third Party Case2 YearsAlaska Stat. § 23.30.015
Strict Product Liability2 YearsAlaska Stat. § 09.10.070(a)
Statute of Limitations Exceptions
*10 Years from substantial completion of construction or 10 Years from last act that allegedly caused injury, death, or property damage. This section specifically excludes defective products. Alaska Stat. § 09.10.055 (2005).
Health Insurance Subrogation
Health and Disability Insurance
Statute of Limitations: 2 Years. Alaska Stat. § 09.10.070(a).
Subrogation of Medical and Disability Benefits are allowed. Ruggles ex rel. Estate of Mayer v. Grow, 984 P.2d 509, 512 (Alaska 1999). Made-Whole does not apply. O’Donnell v. Johnson, 209 P.3d 128, 135 (Alaska 2009). Common Fund applies. Sidney v. Allstate Ins. Co., 187 P.3d 443 (Alaska 2008).
Admissibility of Expert Testimony
Admissibility Standards: Daubert
Case/Statutory Law: State v. Coon, 974 P.2d 386 (Alaska 1999).
Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims
Duty To Disclose: No.
Failure To Disclose A Basis For Bad Faith: Alaska recognizes a common law bad faith cause of action. Alaska courts have held that there is a fiduciary duty inherent in every insurance contract which gives rise to an implied covenant of good faith and fair dealing. O.K. Lumber Co. Inc. v. Providence Wash. Ins. Co., 759 P.2d 523 (Alaska 1988). Thus, an insurer has an obligation to investigate claims and to inform the insured of all settlement offers and the possibility of excess recovery by the injured claimant. Id. However, mere negligence in denying coverage is not enough to support a tort claim for bad faith. Alaska Pac. Assur. Co. v. Collins, 794 P.2d 936 (Alaska 1990).
One-Party Consent: Alaska law prohibits the use of an electronic device to hear or records private conversations without the consent of at least one party to the conversation. Alaska’s highest court has held that the eavesdropping statute was intended to prohibit third-party inception of communications only; does not apply to participants in a conversation. Alaska Stat. Ann. § 42.20.300(a); Alaska Stat. Ann. § 42.20.310(a)(1); Palmer v. Alaska, 604 P.2d 1106 (Alaska 1979).
Product Liability Subrogation
Product Liability Law
Statute of Limitations/Repose: 2 years for personal injury and wrongful death. Alaska Stat. § 09.10.070. Discovery Rule applies. 10 years Statute of Repose. Alaska Stat. § 09.10.055 (2005).
Liability Standards: Negligence, Strict Liability, Consumer Expectation, Warranty.
Fault Allocations: Pure Comparative. Alaska Stat. § 09.17.080.
Non-Economic Caps/Limits On Actual Damages: Non-Economic Cap.
Punitive Y/N and Limits: Yes (Limits).
Heeding Presumption?: No. Ellis v. Coleman Co., 2000 WL 1131893, at *2 (9th Cir. 2000).
Innocent Seller Statute: No.
Joint and Several Liability: No.
Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Seatbelts; State of Art; Alcohol/Drugs.
Restatement 2nd or 3rd?: Both.
“Matching Regulations” And Laws Affecting Homeowners Property Claims
Statute/Regulation: If replacement parts do not match, insurer must replace all such property required to create a uniform appearance. Insured is not responsible for any costs besides applicable deductible. Alaska Admin. Code, tit. 3, § 26.090(l).
Comments: “Any person adjusting, negotiating, or settling a property claim on the basis of replacement cost. ..for a loss that requires replacement of property, and if the replacement property does not match in quality, color or size, shall replace the property in the area to provide for a reasonably uniform appearance.”
Condominium/Co-Op Waiver of Subrogation Laws
Associations must maintain property and liability insurance, but the insurance policy must waive subrogation against a unit owner or member of the household of a unit owner. Alaska Stat. § 34.08.440(d)(2).
Damage to Property Without Market Value
Service Value: “…if no market exists, the amount that could be obtained in the usual course of finding a purchaser or hirer of similar property or services.” Landers v. Municipality of Anchorage, 915 P.2d 614 (Alaska 1996) (citing Restatement Second of Torts § 911 (1979)).
Intrinsic Value: “[W]e recognized that the value to the owner, rather than the fair market value, is the proper measure of damages where the destroyed or lost property has no real market value or where the value of the property to the owner is greater than the market value.” Mitchell v. Heinrichs, 27 P.3d 309 (Alaska 2001).
Sentimental Value: “We thus decline to adopt the minority view which allows damages for loss of items of personal property to be based on sentimental and emotional value.” Landers v. Municipality of Anchorage, 915 P.2d 614 (Alaska 1996).
General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims
Payment and Depreciation of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.
A fire insurer is not entitled, as subrogee, to bring an action against a tenant to recover for amounts paid to landlord for fire damage to rental premises caused by the tenant’s negligence in absence of an express agreement between the landlord and tenant to the contrary. This is because the landlord and tenant are considered co-insureds under our fire policy. Alaska Ins. Co. v. RCA Alaska Communications, Inc., 623 P.2d 1216, 1218 (Alaska 1981). However, later case law indicates that the tenant is a co-insured under the lease only if the lease expressly provides for same. Great American Ins. Co. v. Bar Club, Inc., 921 P.2d 626 (Alaska 1996). However, in that case, the tenant’s insurer was suing the landlord for causing the fire and the Court held that since the policy was purchased by the tenant and named only the tenant as insured, equitable principles underlying “Implied Insured Doctrine” did not apply.
An insurer cannot recover by means of subrogation against its own insured. Graham v. Rockman, 504 P.2d 1351 (Alaska 1972). An insurer may not recover its losses from a negligent third party if the negligent third party is an additional insured under the applicable policy. Id. An insurer can seek reimbursement for medical expenses paid to its insured under his policy when it also insures the tortfeasor and the insured brings an action against the tortfeasor seeking damages for the same medical expenses. Maynard v. State Farm Mut. Auto. Ins. Co., 902 P.2d 1328 (Alaska 1995). A subcontractor’s immunity for liability to the insurer is not limited to the amount of damages to the subcontractor’s own property, rather a builders’ risk policy includes losses caused by negligence of any insured, and the insurer cannot shift those losses to an insured. Baugh-Belarde Const. Co. v. College Utilities Corp., 561 P.2d 1211 (Alaska 1977). If an insurer insures both the tortfeasor and victim in an auto accident, after the insurer pays the victim for their medical expenses, the injured party can be barred from suing the tortfeasor for those same medical expenses if the insurer asks the injured party not to sue for those expenses. Ruggles ex rel. Estate of Mayer v. Grow, 984 P.2d 509 (Alaska 1999). In Ruggles ex rel. Estate of Mayer, the insurer covered both the plaintiff and tortfeasor under separate policies. The court permitted the insurer to avoid a double recovery by a Med Pay insured by requiring her not to include the medical expense benefits paid to her under the Med Pay coverage in the tort action. Better reasoning holds that an insurer contemplating subrogation against its own insured “must state such intent in clear and unequivocal language in the policy.” This is in contrast with some other states that require the policy to state such an intention in clear and unequivocal language (e.g., AGIP Petroleum Co., Inc. v. Gulf Island Fabrication, Inc., 920 F. Supp. 1318 (S.D. Tex. 1996). In Maynard, Maynard was involved in auto accident with Madison and both were separately insured under policies issued by State Farm. After recovering his medical expenses under his own policy, Maynard brought an action to recover the same damages under Madison’s liability policy. The question that came up before the Alaska Supreme Court was whether State Farm would be entitled to reimbursement if Maynard recovered the same medical expenses under Madison’s liability coverage. One section of the medical expense provisions of Maynard’s policy provided generally that State Farm need not pay any medical expenses for which Madison had already been compensated elsewhere and a second section provided that State Farm would be entitled to reimbursement from any third-party recovery of medical expenses paid to Madison under his own policy. The court permitted subrogation, noting that there was an absence of any policy language suggesting that these two provisions did not apply when the carrier insured both parties under separate policies.
Alaska statute allows for a “victim” to recover damages in restitution from a criminal defendant. A court has the ability to “order the defendant to make restitution” under the statute, including “restitution to the victim or other person injured by the offense… or as otherwise authorized by law.” Alaska Stat. § 12.55.045 (West).
Applicable case law in Alaska has determined that an insurance company qualifies as a “victim” for purposes of awarding criminal restitution, as the appropriate statute had defined a “victim” as “[a]ny person whom the court determines has suffered a direct or indirect pecuniary damage as a result of the defendant’s criminal activities.” Lonis v. State, 988 P.2d 441 (Alaska Ct. App. 2000).
Exculpatory Agreements And Liability Waivers
Exculpatory Agreements: Valid if it reflects “conspicuous and unequivocally expressed” intent to release a party from liability. Kissick v. Schmierer, 816 P.2d 188 (Alaska 1991).
Statute: Alaska Stat. § 05.45.120 (Skiing)
Drafting Guidelines: (1) Risk clearly set forth (2) using the word “negligence”; (3) clear simple words and capital letters; (4) doesn’t violate public policy; (5) must state if seeking to release for negligence unrelated to inherent risks; and (6) can’t suggest standards of safety. Donahue v. Ledgends, Inc., 331 P.3d 342 (Alaska 2014).
Comments: Ambiguities are strictly construed against the party seeking immunity. Ledgends, Inc. v. Kerr, 91 P.3d 960 (Alaska 2004). In Kissick, plaintiff was not barred from bringing a wrongful death claim since the term “injuries” was ambiguous regarding whether it included death. Further, in Moore v. Hartley Motors, Inc., plaintiff’s claim was not barred because the scope of the exculpatory agreement only covered the inherent dangers of riding an ATV and not the dangers of an unnecessarily dangerous course. Moore v. Hartley Motors, Inc., 36 P.3d 628 (Alaska 2001).
Made Whole Doctrine
Alaska law has been sparse with regard to application of the Made Whole Doctrine to auto insurance subrogation. However, Alaska law appears to support the proposition that mere equitable subrogation will not be allowed unless an insured has been fully compensated for its loss. McCarter v. Alaska National Ins. Co., 83 P.2d 986 (Alaska 1984). Interestingly, the concept of “made whole” was first and only discussed with regard to workers’ compensation subrogation which, unlike auto insurance subrogation, is statutory in nature.
In 2009, the Alaska Supreme Court stated that the Made Whole Doctrine becomes involved in situations in which a defendant’s policy would be exhausted and the injured party would be left without being fully compensated for her own loss if her insurer collected the subrogation lien before she was herself compensated for her separate damages. O’Donnell v. Johnson, 209 P.3d 128 (Alaska 2009).
The Alaska Supreme Court has recently said that where two parties explicitly state that their settlement does not include the insurer’s subrogation claim, that insurer cannot collect its claim from the settlement. Id. It does appear that the Made Whole Doctrine is more readily applied in equitable subrogation cases than it perhaps is in those involving contractual subrogation. Alaska courts generally do not allow equitable subrogation until the insured has been fully compensated for its loss. McCarter, supra.
Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Collateral Source Rule: Alaska recognizes the CSR. Beaulieu v. Elliott, 434 P.2d 665 (Alaska 1967). Plaintiff’s damages not reduced by “collateral source.” No evidence of collateral source allowed because it would affect jury’s judgment unfavorably to plaintiff on both liability and damages. Tolan v. ERA Helicopters, Inc., 699 P.2d 1265 (Alaska 1985); Loncar v. Gray, 28 P.3d 928 (Alaska 2001) (involved evidence of Medicaid coverage).
Recovery of Medical Expenses Rule: An Alaska statute modifies the CSR. After jury has rendered verdict and court has awarded costs and attorney’s fees, Alaska statute allows defendant to introduce collateral source payments that are not subject to subrogation. Defendant may not introduce evidence of federal benefits, life insurance, and gratuitous benefits. If defendant introduces evidence of collateral sources, plaintiff may show that his attorneys’ fees exceeded those awarded by court and the amounts he paid to secure the insurance benefits. If amount of collateral benefits exceeds plaintiff’s attorneys’ fees and cost of insurance, the court deducts the excess from the jury award. This statute does not apply to medical malpractice actions. Alaska Stat. § 9.17.070.
Related Law/Comments: The amount to which a medical bill is lowered (“negotiated rate”) is part of the value of that collateral benefit and should not accrue to the defendant. Alaska follows “reasonable value” approach in which the plaintiff is allowed to introduce the full, undiscounted medical bills into evidence at trial. However, both the actual amounts paid and any amounts the provider wrote off are relevant to the medical services’ reasonable value. Defendants must adhere to the CSR but are free to cross-examine any witnesses that a plaintiff might call to establish reasonableness, and the defense is also free to call its own witnesses to testify that the billed amounts do not reflect the reasonable value of the services.” Such evidence may include, for example, testimony about the range of charges the provider has for the same services or what other providers in the relevant area charge for the same services. Lastly, to the extent the negotiated rate differential represents a collateral benefit for which the collateral source has no “right of subrogation by law or contract,” it is subject to the post-verdict procedure set out in § 09.17.070. Weston v. AKHappytime, LLC, 2019 WL 3519685 (Alaska, 2019) (case involving Medicare payments but applied to all “negotiated rates.”)
Employee Leasing Laws
There is very little precedence and no statutory guidance given to us in Alaska. However, one case leads us to believe that both the general and special employers will be afforded protection under the Exclusive Remedy Rule. Ruble v. Arctic Gen., Inc., 598 P.2d 95 (Alaska 1979).
Hospital Lien Laws
Statute: Alaska St. Art. §§ 34.35.450 – 482 Hospital, Physician, and Nurse Liens.
Perfecting Lien: To perfect a lien in Alaska, a hospital, physician, or nurse must:
(1) Before or within 90 days after discharge of the injured party, file a notice of the lien in the form prescribed in § 34.35.465. It must contain a general description of the services rendered and a statement of the amount claimed. It must be filed with a recorder’s office. § 34.35.460.
(2) After the 90-day period, but before the date of judgment, settlement, or compromise, serve a copy of the notice of line via certified mail to last known address of alleged responsible party and upon their insurer, if known. § 34.35.460.
Comments: §34.35.465 gives a specific form that must be utilized. Treatment must have occurred within 20 days of the date of the injury. § 34.35.455. Costs and attorneys’ fees are recoverable for the enforcement of the lien. § 34.35.480. If the injured party’s claim is resolved, the hospital has only 180 days to bring its cause of action against the injured party or their insurer. § 34.35.475.
OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases
OCIP Law: No statute or case law specifically dealing with effect of OCIP/CCIP. OCIPs and CCIPs are allowed only in property and casualty insurance. OCIPs are limited to only “major construction projects” approved by the Director of the Division of Insurance. Alaska Stat. § 21.36.475.
Statutory Employer Law: An owner or contractor is liable for workers’ compensation benefits to the employee of the general contractor, and the general contractor is liable for benefits to employees of subcontractors, unless the actual employer secures the payments of benefits as a result of a work-related injury. Alaska Stat. § 23.30.045. Alaska courts appear to have made up a name to describe this type of statute: “contractor-under.” It is found nowhere else in the industry. See Miller v. Northside Danzi Constr. Co., 629 P.2d 1389 (Alaska 1981).
Comments: Must generally look to terms of the wrap-up program documents. If an owner or contractor pays benefits, the owner or contractor may still be sued as a third party and is not immune from suit under the Exclusive Remedy Rule. Miller v. Northside Danzi Constr. Co., 629 P.2d 1389 (Alaska 1981). The owner or contractor will have the right of indemnification against an uninsured contractor and will also be able to set-off from any third-party award the amount of compensation benefits previously paid to the subcontractor’s employee. Alaska Stat. § 23.30.015(g). Statute limiting OCIPs to “major construction projects” does not apply to non-construction projects, such as transporting crude oil through the Trans–Alaska Pipeline System. State, Dept. of Commerce, Community & Economic Development, Div. of Ins. v. Alyeska Pipeline Service Co., 262 P.3d 593 (Alaska 2011).
Recovery Of Increased Workers’ Compensation Premiums By Employer
Recovery For Increased Premiums? Undecided.
Statute/Case Law: None.
Rule Summary: There is no authority or precedent allowing or prohibiting the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.
Which Workers’ Compensation “Benefits” Can Be Subrogated?
Section 23.30.015 provides that the carrier is entitled to reimbursement of:
(A) the expenses incurred by the employer with respect to the action or compromise, including a reasonable attorney fee determined by the board;
(B) the cost of all benefits actually furnished by the employer under this chapter;
(C) all amounts paid as compensation and second-injury fund payments, and if the employer is self-insured or uninsured, all service fees paid under Alaska Stat. § 23.05.067;
Medical care is defined to include physicians’ fees, nurses’ charges, hospital services, hospital supplies, medical and prosthetic devices, physical rehabilitation, and transportation charges. Alaska Stat. § 23.30.095.
However, the Alaska Administrative Code defines a “claim” for workers’ compensation “benefits” as follows:
A claim is a written request for benefits, including compensation, attorney’s fees, costs, interest, reemployment or rehabilitation benefits, rehabilitation specialist provider fees, or medical benefits under the Act, that meets the requirements of (4) of this subsection. The board has a form that may be used to file a claim. In this chapter, an application is a written claim. Alaska Admin. Code tit. 8, § 45.050.
Arguably, each of those elements could therefore be considered included within the definition of “benefits.”
Workers’ Compensation Subrogation Waiver Endorsements
Subrogation Statute: Alaska Stat. § 23.30.015
Waiver Allowed? Nothing in the Alaska Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.
Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.
Other Applicable Law: None.
Statute of Limitations: 2 Years. Alaska Stat. § 23.30.015.
Can Carrier Sue Third Party Directly: Yes, after 1 year.
Right to Intervene: Yes.
Recovery from UM/UIM Benefits: Undecided.
Subrogation Against Medical Malpractice: Undecided.
Subrogation Against Legal Malpractice: Yes.
Recovery Allocation/Equitable Limitations: (1) Litigation Costs; (2) Employer Reimbursed; and (3) Balance to Plaintiff.
Employer Contribution/Negligence: No, employer reimbursement is reduced by the percentage of fault.
Attorney’s Fees/Costs: Cooper Rule. Pro-Rata. Past and Future. Active vs. Passive. English Rule.
Future Credit: Yes, it is reduced by the employer’s negligence.
Auto No-Fault: No.
Workers’ Compensation Claims by Undocumented Employees
Statute: The statute is silent on “illegal aliens” as employees. Alaska Stat. § 23.30.395(19).
Case Law: Undecided