BILL ANALYSIS Ó AB 234 Page 1 ASSEMBLY THIRD READING AB 234 (Gatto) As Amended August 5, 2013 2/3 vote. Urgency APPROPRIATIONS 16-0 ----------------------------------------------------------------- |Ayes:|Gatto, Harkey, Bocanegra, | | | | |Bradford, Ian Calderon, | | | | |Campos, Donnelly, Eggman, | | | | |Gomez, Hall, Holden, | | | | |Linder, Pan, Quirk, | | | | |Wagner, Weber | | | | | | | | ----------------------------------------------------------------- SUMMARY : Appropriates $20.75 million General Fund (GF) to the Department of Justice (DOJ) to pay two settlements. Any funds appropriated in excess of the amounts required for payment of these claims revert to the GF. FISCAL EFFECT : One-time GF appropriation of $20.75 million to DOJ as follows: 1)$5.75 million to pay the settlement in Thomas v. State of California (CalFire), Alameda Superior Court. 2)$15 million to pay the settlement in Amethyst Kirwin, et al. v. Timothy McClelland, et al., San Bernardino Superior Court. COMMENTS : 1)Rationale . This bill is one of several bills carried by the chairs of the Appropriations Committees each year to provide appropriation authority for legal settlements approved by DOJ and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (DOJ). They are binding state obligations. 2)Case Background . a) Thomas v. State of California (Department of Public Health (DPH)), Alameda Superior Court. AB 234 Page 2 This personal injury settlement arises from a December 9, 2011, motorcycle/automobile collision. Plaintiff Eric Thomas was riding his motorcycle on Doolittle Drive in San Leandro, California when he collided with a car driven by DPH Inspector, Peter Yattaw. Mr. Yattaw was in the course and scope of his employment for DPH at the time of the collision. Mr. Thomas is paralyzed from the chest down as a result of the accident. Mr. Thomas initiated suit against the state. The parties entered mediation with the agreement that Mr. Thomas and Mr. Yattaw were equally at fault for the collision. The agreement was based on accident reconstruction analyses. The report of the San Leandro Police Department concluded Mr. Thomas was speeding and Mr. Yattaw failed to yield to an oncoming driver. At mediation, the parties presented reports from medical experts, life care planners and economists. After negotiations, the state, represented by the Office of the Attorney General, agreed to settle the lawsuit for $5.75 million with 40% ($2.3 million) to be used to purchase an annuity to provide monthly payments for the medical care of the plaintiff. b) Amethyst Kirwin, et al. v. Timothy McClelland, et al., San Bernardino Superior Court. On August 1, 2012, a three-car traffic accident occurred on the I-210 freeway in San Bernardino. CalFire Chief Timothy McClelland, who was driving a state vehicle within the course and scope of his employment, rear-ended Gregory Kirwin at 70 miles per hour (mph). Mr. Gregory Kirwin was fatally injured. Plaintiffs Amethyst and Belle Kirwin, Mr. Kirwin's children (ages four and seven at time of the accident), sued for wrongful death negligence. The state, on its own behalf and on behalf of Chief McClelland, settled this case for $15 million, most of which will be placed into a structured settlement and special needs trusts for the support of Mr. Kirwin's children. 3)The Motor Vehicle Insurance Account (MVIA) is essentially a state insurance fund into which state departments pay a premium, based on a five-year rolling average of the department's costs, to cover the costs of vehicle accident AB 234 Page 3 liability and settlements. For example, over the past three years, including 2013-14 as projected, the MVIA averaged $38 million per year in expenditures, and $45 million in revenue. Generally accident settlements involving a state vehicle would be paid from the MVIA. Due to the size of the two claims in this bill, and a $15.6 million claim passed and chaptered in SB 371 (De Leon) earlier this year, however, the Department of Finance recommended these claims be paid from the GF since the MVIA cannot bear the cost of these large settlements in one year, and the impact of the claims on the premiums of the affected departments - the Department of Public Health and CalFire - would require a GF increase to its budget to cover the drain on the MVIA. 4)Related legislation . a) SB 371 (De León), Chapter 9, Statutes of 2013, appropriated $15.6 million to pay for one settlement. b) SB 1558 (Kehoe), Chapter 20, Statutes of 2012, appropriated $2.6 million to pay for one settlement. c) SB 730 (Kehoe), Chapter 5, Statutes of 2012, appropriated $15.56 million to pay for six settlements. Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081 FN: 0001677