BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                  AB 234
                                                                  Page  1

          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