MINUTES OF MEETING
ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS
Sixty-seventh Session
February 16, 1993
The Assembly Committee on Government Affairs was called to order by Chairman Val Z. Garner at 8:10 a.m., February 16, 1993, in Room 101/102 of the Cashman Field Center, Las Vegas, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Val Z. Garner, Chairman
Mr. Rick C. Bennett, Vice Chairman
Mrs. Kathy M. Augustine
Mr. Douglas A. Bache
Mrs. Marcia de Braga
Mr. Pete Ernaut
Mr. Lynn Hettrick
Mrs. Erin Kenny
Mrs. Joan A. Lambert
Mr. James W. McGaughey
Mr. Roy Neighbors
Mrs. Gene W. Segerblom
Mr. Wendell P. Williams
COMMITTEE MEMBERS ABSENT:
Mrs. Vivian L. Freeman (Excused)
GUEST LEGISLATORS PRESENT:
Mr. Scott Scherer, Assembly District 2
STAFF MEMBERS PRESENT:
Ms. Dana Bennett, Senior Research Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Robert Pike and Tim Terry, Attorney General representatives; Scott Young, SIIS; Victoria Riley and George McNally, Nevada Trial Lawyers Association; Pam Mackay, Dept. of Insurance; Virginia Valentine, CCRFCD; Jim Jeppson, SIIS Administrator; Mark Smith; Dave Owen, Clark Co. School District; Kathleen Maglaras, St. Viators Catholic Schools
ASSEMBLY BILL 149 - Requires Attorney General to establish fraud control unit for industrial insurance.
Assemblyman Scherer of District 2 introduced AB 149 and stated the purpose of the bill was to create one central location responsible for fraud in State Industrial Insurance System compensation claims and as well as for self insureds. The appropriate location would be the Attorney General's office. Two things this bill would not do was create a hotline for reporting fraud and would not increase penalties for fraud. These additions to the bill would not be objectionable.
Mr. Ernaut commented it was his understanding the cost of the bill would be approximately $2.1 or $2.2 million. Mr. Scherer stated he had not seen the fiscal note and had no figures but thought the figure was high.
Mr. Ernaut asked what would become of the four investigators currently with SIIS. Mr. Scherer responded they would be subject to review by the Attorney General.
Mr. Tim Terry, Attorney General's Office, head of Medicaid Fraud Control Unit and Mr. Robert Pike, Chief of Investigations Division of Attorney General's Office, explained the fiscal note attached hereto as Exhibit C. Mr. Pike then expressed the Attorney General should be pursuing fraud cases but complete independence was needed in order to do this effectively. Currently the Attorney General's office could not absorb the fraud unit into the existing structure. They will have to create positions as listed in Exhibit C. The Attorney General's office saw this as a three-prong venture: (1) Employer Fraud; (2) Provider Fraud; (3) Employee fraud. There would be criminal investigations only, not abuse investigations.
Mr. McGaughey questioned the priorities of (1) Employer Fraud; (2) Provider Fraud; (3) Employee fraud. Mr. Pike stated these were not listed in any order of priority. Further discussion followed regarding the order of importance of the three segments.
Mr. Scott Young, SIIS General Counsel, and Mark Smith, Chairman SIIS Board of Directors came forward to testify. Mr. Young indicated support of anti-fraud prosecutions. Mr. Young explained SIIS has had an investigative unit since 1989, however, they did not have a prosecution attorney on staff, therefore, cases must be turned over to the District Attorney's office. Most cases never came to trial because the District Attorney had more severe matters to prosecute. SIIS did feel the District Attorney had done a good job. Mr. Young expressed concern over the entire process being transferred to the Attorney General. He felt there was the possibility of not being able to transfer equipment necessary for investigation, accumulated by SIIS, to the Attorney General's office. He stated the Attorney General would not have immediate access to claims files, did not have rural offices, and would not be able to give immediate response when fraud was reported. In short, SIIS would support funding for prosecution by the Attorney General but recommended keeping investigations under SIIS.
Mr. Garner restated Mr. Young's position as being in support of the bill for prosecution and not investigation. Mr. Young agreed. Mr. Smith supported Mr. Young's position.
Mrs. Kenny asked what the process was for fraud by employers/ providers. Mr. Young explained the auditors reported inconsistencies when employers were audited. As far as providers were concerned, SIIS had tried to get payments to providers on time and had not had time to delve more deeply into overpayments.
Mrs. Kenny inquired if there was a trend toward fraud in a particular industry, i.e. construction. Mr. Young confirmed construction was, in fact, a major area of concern, however, figures were not available.
Mrs. Lambert requested further clarification on the funding for the Attorney General. She understood this would come from the general fund. Mr. Young explained the Attorney General would assess SIIS and would be paid. The funds would not come from the general fund.
Mr. Bennett and Mr. Young discussed the number of investigations, prosecutions, convictions and dollars recovered.
Mr. Bache queried Mr. Young regarding the procedure for handling claimant abuse cases in the system if they were not prosecuted. Mr. Young stated photographs could be taken to the treating physician or rating physician for disposition.
Mr. Neighbors asked about the current budget for SIIS investigative services. Mr. Young responded it was approximately under $400,000 including equipment.
Mr. Smith stressed employer support of increase of penalties for SIIS fraud.
Mr. Hettrick further questioned Mr. Smith regarding support from the business community for a bond for employers who had not paid the penalties and skipped. Mr. Young responded an inexpensive bond could be looked into which would cover the greater amount of the premium shortfall.
Mrs. Segerblom inquired as to the number of investigators. Mr. Young stated four investigators and two fraud paralegals were currently on staff. He would desire more investigators in the provider fraud division.
Mr. Garner acknowledged the presence of St. Viators Catholic School's class visiting the legislature.
Mr. Jim Jeppson, Dept. of Industrial Relations Administrator, clarified testimony regarding uninsured claims in Nevada. He further explained the system of reimbursement.
The hearing was closed on Assembly Bill 149. Mr. Garner asked Mr. Bennett to work with Dana Bennett and others of his choosing in pursuing the SIIS hotline and an increase in penalties and fines. He further requested they look into transferring of equipment, etc. to Attorney General's office and to consider the bonding issue mentioned by Mr. Hettrick.
ASSEMBLY BILL 158 - Limits use of money by district for control of floods for certain off-site improvements.
Ms. Virginia Valentine, Chief Engineer Clark County Flood Control, explained this bill was drafted by the transportation sub-committee because of concerns of expenditure of flood control funds on non-flood control but related facilities. It was the position of the board the ability to make decisions on a project-by-project basis was needed, therefore, the Board was asking the committee not to pass this bill as drafted as it would eliminate ability to be flexible in mitigating the impacts on neighborhoods and surrounding areas.
Mr. McGaughey commented the City of Las Vegas withdrew its zoning approval for the Upper Las Vegas Wash Detention Basin. Ms. Valentine explained this was a case of the city considering support of one project with the threat of withholding approval on another. Mr. McGaughey stated the city's desire was for the flood control district to provide off-sites including street lights, curbs and gutters, sidewalks, etc. Further clarification by Ms. Valentine revealed as a condition of zoning for a project in the city, which was to protect the city of North Las Vegas, the city wanted a zoning condition that would have required construction of the streets around that project. Mr. McGaughey and Ms. Valentine further discussed funds required for the project. Mr. McGaughey then requested the chairman to hold this bill until such time as another bill he had requested was heard and to consider both bills together.
Mr. Garner suggested the bill was adequate and provided the flexibility desired, and perhaps the flood control board had not thoroughly read the bill. Ms. Valentine assured Mr. Garner she had read and understood the bill, however, some people on the board felt even if water was not being discharged into the street, it was flood control's obligation to build half streets around the project.
Mr. Garner then inquired if the problem with the draft was the word "essential." Ms. Valentine acknowledged that possibility.
Mr. McGaughey requested Ms. Valentine outline the process of going to the Regional Transportation Commission and obtaining funds from road taxes. Ms. Valentine complied with Mr. McGaughey's request and explained the process involved. She stated the policy said flood control would go to RTC and RTC would set aside $500,000 annually for construction of roads around flood control projects. An entity which proposed to build a project in an urban area where streets were a priority, would go to the RTC for the funding of those facilities.
Mr. Dick Eckey, Public Works Director for City of Las Vegas, stated opposition to the bill agreeing with Ms. Valentine. Mr. Eckey sighted the Okie Detention Basin as an example of a detention basin constructed in a non-flood area. Homeowners signed a petition to prevent construction of the project; however, the basin was constructed.
Mr. Ernaut asked for clarification of why Mr. Eckey's example was not covered by the word "essential." Mr. Eckey stated the off sites that needed to be built to mitigate the impact of the detention basin in this particular neighborhood would not be viewed by the Regional Flood Control District as being essential improvements.
The hearing was closed on AB 158.
There being no further business to come before committee, the meeting was adjourned at 9:22 a.m.
RESPECTFULLY SUBMITTED:
LINDA BLEVINS
Committee Secretary
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Assembly Committee on Government Affairs
February 16, 1993
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