BILL ANALYSIS                                                                                                                                                                                                    Ó

                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair

          AB 234 (Gatto) - Claims against the state: payment.
          Amended: August 5, 2013         Policy Vote: N/A
          Urgency: Yes                    Mandate: No
          Hearing Date: August 26, 2013                           
          Consultant: Brendan McCarthy    
          Pursuant to the committee's rules, the Suspense File rule does  
          not apply to the provisions of this bill as claims are  
          considered valid obligations of the state.  Additionally, claims  
          may have time sensitivity.  

          Bill Summary: AB 234 would appropriate $20.75 million from the  
          General Fund to pay two settlements against the state. Any funds  
          appropriated in excess of the amounts required for payment of  
          these claims would revert to the General Fund.

          Fiscal Impact: One-time appropriation of $20.75 million to the  
          Department of Justice from the General Fund.

          Background: This bill is one of several annual bills carried by  
          the chairs of the Appropriations Committees to provide  
          appropriation authority for legal settlements approved by  
          Department of Justice and the Department of Finance. These  
          settlements were entered into lawfully by the state upon advice  
          of the Department of Justice. They are binding state  

          The Motor Vehicle Insurance Account 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 liability and settlements.  
          Over the past three years, the Motor Vehicle Insurance Account  
          averaged $38 million per year in expenditures and $45 million in  

          Generally accident settlements involving a state vehicle would  
          be paid from the Motor Vehicle Insurance Account. 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, Statutes of 2013)  
          earlier this year, however, the Department of Finance  


          AB 234 (Gatto)
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          recommended these claims be paid from the General Fund. The  
          Motor Vehicle Insurance Account 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 General Fund  
          increase to its budget to cover the drain on the Motor Vehicle  
          Insurance Account.

          Proposed Law: AB 234 would appropriate $20.75 million from the  
          General Fund to pay two settlements against the state. Any funds  
          appropriated in excess of the amounts required for payment of  
          these claims would revert to the General Fund.

          This bill is an urgency measure.

          The settlements to be funded by the bill are:

          Thomas v. State of California (Department of Public Health),  
          Alameda Superior Court. 

          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, when he  
          collided with a car driven by Department of Public Health  
          Inspector, Peter Yattaw. Mr. Yattaw was in the course and scope  
          of his employment for the Department of Public Health 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 $5,750,000  
          with 40% ($2,300,000) to be used to purchase an annuity to  
          provide monthly payments for the medical care of the plaintiff.   

          Amethyst Kirwin, et al. v. Timothy McClelland, et al., San  


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          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  
          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.

          Related Legislation: 
              SB 371 (de León, Statutes of 2013) appropriated $15.6  
              million to pay for one settlement.
              SB 369 (de León) would appropriate $414,054.01 from the  
              General Fund and various special funds to pay state claims.  
              The claims are for 155 stale dated warrants. That bill is on  
              the Senate Floor.