New Informed Consent Bill Adds Insurance Requirement, Removes Gross Negligence Standard

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A proposed compromise on New Mexico’s informed consent law provides limited liability protections to spacecraft manufacturers, suppliers and operators while adding an $1 million insurance coverage requirement and altering one of the three conditions under which injured parties can sue. Only spacecraft operators such as Virgin Galactic are covered under the current law.

One of the most significant changes in the proposed law involves the removal of gross negligence as one of the conditions that would void legal protections for manufacturers, suppliers and operators. The law currently states that a spacecraft operator would be liable if it

commits an act or omission that constitutes gross negligence or willful, wanton disregard for the safety of the participant and that act or omission proximately causes injury, damage or death to the participant. [Emphasis mine]

The proposed law would remove gross negligence and replace it with reckless disregard:

commits an act or omission that constitutes willful, wanton or reckless disregard for the safety of the participant and that act or omission proximately causes injury, damage or death to the participant. [Emphasis mine]

The law leaves unchanged two other provisions under which injured passengers and their heirs could sue:

has actual knowledge or reasonably should have known of a dangerous condition on the land or in the facilities or equipment used in the space flight activities and the danger proximately causes injury, damage or death to the participant; or

intentionally injures the participant.

An earlier version of the bill introduced in the Senate and House deleted the first condition under which a company could be sued if it had “actual knowledge or reasonably should have known of a dangerous condition.”

The new law would require that spaceflight entities carry insurance coverage.

A space flight entity shall present to and file with the spaceport authority a certificate of insurance coverage in the amount of at least one million dollars ($1,000,000) that covers liability by the space flight entity for all space flight activities. No space flight entity that fails to satisfy the requirements of this section shall receive any of the protections afforded by the Space Flight Informed Consent Act.

Virgin Galactic — the anchor and lone tenant at Spaceport America — is already required to maintain insurance as an spacecraft operator as part of its lease with the New Mexico Spaceport Authority. [Emphasis mine]

Virgin will procure and maintain comprehensive aviation liability policies of insurance, including Aircraft liability, passenger liability, Airport/Spaceport premises liability, contractual liability and products/completed operations of no less than Two Hundred Million and No/100s Dollars ($200,000,000.00) combined single limit per occurrence and in the aggregate as respects Products. Virgin will also procure and maintain policies of insurance for vehicle liability insurance for all vehicles used in its operation at the Spaceport in amounts not less than One Million and No/100s Dollars ($1,000,000.00) per occurrence and no less than Five Million and No/100s Dollars ($5,000,000.00) in the aggregate single limit liability for bodily injury, including death, and property damage.

The proposed measure would delay the repeal of the liability protections from July 1, 2018 to July 1, 2021. Virgin Galactic is running significantly behind schedule and has not yet flown from Spaceport America.

The compromise — worked out between Virgin Galactic, legislators, and trial lawyers –  is designed to keep Sir Richard Branson’s space tourism company from pulling out of its 20-year lease at the $209 million, taxpayer funded Spaceport America facility in southern New Mexico.

The company operates and manufactures its own space vehicles and carrier aircraft, and it wants other tenants to locate to the spaceport in order to defray operating costs. Virgin Galactic and New Mexico officials have said companies are reluctant to operate in the state without the added protections.

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