MINUTES OF MEETING
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
March 23, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Chris Giunchigliani at 3:30 p.m., Tuesday, March 23, 1993, in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Ms. Chris Giunchigliani, Chairman
Mr. Bernie Anderson, Vice Chairman
Mr. Douglas A. Bache
Mr. John C. Bonaventura
Mr. John Carpenter
Mr. Tom Collins, Jr.
Mr. Peter G. Ernaut
Mr. Lynn Hettrick
Mrs. Erin Kenny
Mr. John B. Regan
Mr. Michael A. Schneider
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Donald O. Williams, LCB Research Analyst
OTHERS PRESENT:
Mr. L. Tom Czehowski, Director of Health and Safety
Mr. Chris Denning, President, Sletten Construction of
Nevada Inc.
Ms. Rene Brock, Granite Construction Co.
Ms. Pam Miller, Associated General Constractors
Mr. Rich Ciesynski, Iron Workers Local #118
Mr. Scott Young, General Counsel, State Industrial
Insurance System
Mr. Rich Houts, Building and Constructions Trades Council
of Northern Nevada
Mr. Blackie Evans, AFL-CIO
Mr. George McNally, Trial Lawyers Association
Mr. Brent Chamberland, Nevada Mining Association
Mr. Ray Bacon, Nevada Manufacturing Association
Mr. Bryan Nix, Senior Appeals Officer, Department of
Administration
Mr. Jack Jeffrey, Southern Nevada Building and Construction
Trades Council
Mr. Mike Livermore, W. R. Gibbons Company
Ms. Debbie Thurner, Licensing and Research Officer,
Department of Insurance
Ms. Theresa Rankin, Insurance Commissioner, Department of
Insurance
Chairman Giunchigliani, after roll call, reminded those committee members who had not returned their personal interest forms to do so as soon as possible.
Testimony was opened on Assembly Bill 342.
Assembly Bill 342 - Revises maximum salary various employees are deemed to receive for certain purposes relating to industrial insurance.
Mr. L. Tom Czehowski, Director of Health and Safety, Steel Engineers Incorporated, testified in favor of AB 342. He anticipated fiscal year 1993 payments to the State Industrial Insurance System (SIIS) to be approximately $927,000 with an experience modification factor of .94. With the October 1991 payroll cap increase from $24,000 to $36,000 the company's premium would increase $34,440 per month, or $413,280 annually. Concern was expressed with the cost impact of this increase on existing contracts locked in by bid. Mr. Czehowski noted the importance of the graduated increase in the payroll cap as provided by AB 342.
Ms. Giunchigliani expanded on Mr. Czehowski's testimony explaining the increase in payroll cap provided by SB 7, of the 1991 legislative session, had been thought to be revenue neutral. However, subsequent to that time, the various parties involved including the SIIS board, labor representatives and contractors met and agreed on the language of AB 342.
Mr. Chris Denning, President, Sletten Construction of Nevada Inc., endorsed AB 342. The annual cost impact of $478,000 which would result with the payroll cap increase to $36,000 exceeded the company's current contract profit margin. He believed the result of the $36,000 payroll cap increase was an unfair burden to be placed on the construction industry. The graduated increased provided by the proposed language would allow the additional costs to be bid into future contracts.
Ms. Renee Brock, Granite Construction Co., mirrored concerns expressed by previous testimony.
Associated General Contractor's representative, Ms. Pam Miller, emphasized the increase in the payroll cap was a compromise between the Governor's office, contractors, labor and the SIIS board of directors. In conclusion, she indicated the construction industry was willing to take the $36,000 payroll cap increase based over the next four years which, as AB 342 read, would allow the increase to be built into their bids. However, because of the emergency regulation signed by the Governor December 31, 1992, she stressed the importance of expediting this legislation.
There being no one present wishing to express opposition to AB 342, Chairman Giunchigliani asked others wishing to testify in favor of the bill present their written testimony for the record.
ASSEMBLYMAN CARPENTER MOVED TO DO PASS AB 342.
ASSEMBLYMAN ANDERSON SECONDED THE MOTION.
Ms. Giunchigliani explained the final piece of this legislation would become effective January 1, 1996, however, because of the 90-day stay placed by the Governor, there was only a week-and-a-half to process the legislation. There being no further discussion she asked for the vote.
THE MOTION CARRIED UNANIMOUSLY BY THE MEMBERS PRESENT.
It was recommended, due to the urgency of this legislation, AB 342 be presented to the Assembly Floor as an emergency measure.
Assembly Bill 284 - Permits employee or his dependents to commence civil action in negligence against certain persons after accepting compensation or benefits from industrial insurance.
Mr. Rich Ciesynski, Business Agent for Iron Workers Local #118, testified in favor of AB 284. Three cases of negligence were detailed which resulted in death or serious injury to members of Local #118 (Exhibits C, D and E). Mr. Ciesynski expressed frustration with a recent newspaper article which stated most industrial injuries were a result of alcohol or drug abuse.
He argued persons under the influence would not be able to function under the rigors demanded of iron workers on steel beams several floors in the air. Additionally, he maintained unlicensed and uninsured out-of-state contractors should be required to follow the same mandates placed on the contractors of Nevada. In conclusion, Mr. Ciesynski opined the threat of civil action in cases of negligence would result in a safer work environment for all.
In response, Ms. Giunchigliani observed the committee recently passed AB 205 which dealt with the out-of-state contractor reciprocity issue. Additionally, other concerns expressed by Mr. Ciesynski were being examined by a committee presently reviewing language to strengthen the Contractor's Board.
Mr. Scott Young, General Counsel, State Industrial Insurance System (SIIS), provided history of the development of workers' compensation and the role of the exclusive remedy and no-fault provisions referred to in the Nevada Revised Statutes, Chapter 616, (Exhibits F, G and H).
Responding to a question by Mr. Collins, Mr. Young indicated he was aware of only two instances where employees could sue employers for workers' compensation injuries. If the employer was uninsured, the injured worker had the option of either receiving workers' compensation or suing the employer. Additionally, employers could not be shielded by the exclusive remedy doctrine if they intentionally caused injury to the employee.
Mr. Collins inquired where the line was drawn as to the definition of "employer."
Normally, Mr. Young believed the employer would refer to actual owner. If, however, the injury was deliberately caused by a co-worker, the employer would still be immunized from a civil suit and the co-worker could be sued in tort.
Referring to testimony by Mr. Ciesynski, Ms. Giunchigliani asked if the responsibility lay with the Department of Industrial Relations (DIR) for not adequately assessing fines in cases of safety violations.
Mr. Young thought the fines were probably issued by OSHA which might not have been directly under DIR's authority. On the collectibility concern expressed by Mr. Ciesynski, he claimed it was difficult to collect almost any kind of debt when somebody moved out of state. However, if, as Mr. Ciesynski claimed, those companies were again working in the state of Nevada, he believed those fines should have been imposed on the company's return.
Explaining how SIIS tracked businesses, Mr. Young related SIIS followed the ownership. The problem was shareholders and officers had no liability for corporations, therefore, the business could simply be abandoned or collapsed and reopened under another name, in which case the liability for the first company might be avoided altogether.
Mr. Anderson observed with the aforementioned strengthening of the State Contractor's Board, perhaps monitoring by contractor's name rather than corporations would provide better tracking in these types of situations.
Mr. Young established this might be an appropriate way to address the problem. The Contractor's Board, in those circumstances, might either revoke or deny licensing to keep those contractor from doing business in Nevada until prior obligations had been satisfied.
However, Ms. Giunchigliani noted her experience was the Contractor's Board did not generally deny licensing. She noted perhaps those working on the contractor's issue might check into Mr. Young's suggestions.
Mr. Rich Houts, Building and Construction Trades Council of Northern Nevada, expressed support of AB 284. He pointed out although an injury might have been caused by negligence of another contractor on the job site, the injured worker's employer was held liable. Secondly, Mr. Houts contended if an employee were found negligent in the use of safety devices, his benefits were automatically reduced. Therefore, he felt employers ought to be held accountable in cases of negligence also.
Mr. Blackie Evans, representing the AFL-CIO, testified his support of AB 284. He noted legislation was forthcoming which would severely restrict the acceptability of claims, reminding the committee of what employees had given up with acceptance of workers' compensation, the right to sue. In other words, if there was to be a reduction of benefits to injured workers, then there should be quid pro quo.
For the record, Mr. Evans did agree, both as organized labor and as a member of the SIIS board of directors, with the provisions of the previous bill, AB 342.
The subject of suing equipment or tool manufacturers was mentioned by Mr. Collins.
Mr. Evans stated there had been numerous cases where forklift manufacturers had been sued for product liability and a settlement collected. But to his knowledge there had never been an injured worker who successfully sued his employer in connection with those cases.
Mr. George McNally, Trial Lawyers Association, noted under current Nevada law an employer could not actually be named in a comparative negligence lawsuit. Upon further consideration he admitted an employer could be named in such a suit, but all the employer needed to do was file a motion to dismiss or for a summary judgment. Other states such as California, however, did allow some types of tort cases.
Mr. Brent Chamberland, representing the Nevada Mining Association, expressed concern with the proposed legislation. First, he believed the passage of the bill would negate the current process of workers' compensation. He observed if negligence was "alleged" to have occurred, civil action could be brought against an employer under the provisions of the proposed language. Mr. Chamberland maintained injured workers could "allege" negligence in every instance of injury in the workplace. Further, he asserted the information provided to SIIS for the processing of compensation would be limited because employers would have to set attorney-client privilege on everything because of the possibility of litigation on every case.
Mr. Chamberland stressed the mining industry was regulated by the Mine Safety and Health Administration (MSHA) which was separate and substantially different from OSHA. If there was a claim of negligence or disregard for safety in the mining industry, MSHA was required to investigate. Additionally, he emphasized MSHA had the power to close down an operation, not merely issue a fine. Mr. Chamberland believed if there were problems in other industries, those specific problems needed to be addressed, but he noted additional litigation in the workers' compensation arena was not a solution to the problem.
Mr. Ray Bacon, Nevada Manufacturing Association, opined the proposed legislation was a breach of the original contract of workers' compensation for exclusive remedy. He contended passage of AB 284, where negligence only needed to be alleged, would be a fundamental detriment to the state of Nevada, and implied its passage would probably bring business growth to a standstill.
There being no further testimony to be presented, Chairman Giunchigliani closed the hearing on AB 284, and opened testimony on AB 286.
Assembly Bill 286 - Requires certain persons who represent employer or employee before appeals officer in matter relating to workers' compensation to meet certain continuing legal education requirements.
Mr. Bryan Nix, Senior Appeals Officer, Department of Administration, testified as the proponent of AB 286. As explained, the intent of this legislation was to create a standard for continuing education by those representing parties in contested industrial insurance claims at the appeals level. Mr. Nix asserted the appeals level was a quasi-judicial hearing involving evidentiary issues and was the only opportunity for a person dealing with a contested claim to make a record for review by the District and/or Supreme Courts in the event of an appeal taken from the appeal's officer ruling. The intent was not directed to those at the hearings officer level, but only those representing individuals at the appeals level. His understanding of the statute was at one time injured workers were precluded from appearing before the appeals officer unless legally represented by an attorney. Apparently, at some point the law had changed, however, he did not believe the intent was to open the field to non-attorneys. Mr. Nix expressed concern with the growing number of non-attorneys representing both injured workers and employers at the appeals level. While he pointed out some of those individuals performed well, others did not know how to proceed at all, explaining some lacked the knowledge to present evidence or even make a record. With the passage of AB 286, all representatives at the appeals level would be required to maintain some level of continuing education, as attorneys were currently required. The requisite would be to obtain ongoing education in rules of evidence, procedures and workers' compensation.
Mr. Bonaventura questioned if some of the individuals representing injured workers were paralegal.
In response, Mr. Nix indicated many were retired attorneys from other jurisdictions, nurses, and even previously injured workers whose primary experience was going through the process of their own claim. Further, he maintained once licensed by the Commissioner of Insurance, these individuals had an "open ticket" to practice before the Appeals Division. He stated not only had he seen inadequate representation at hearings, but it appeared inadequate representation and counseling with respect to options and how to proceed with an appeal was going on prior to the hearing. He opined people were making decisions who were not familiar with the worker compensation laws.
Upon further questioning, Mr. Nix revealed the actual number of non-attorney representatives at the appeals level was small, but on the rise. In 1992, about 20 of these individuals represented claimants and 140 represented employers. He maintained there were, in deed, some non-attorney individuals who were very well trained and able to adequately represent injured workers. It was not his intent to keep them from doing such, but to merely require the same level of ongoing education required of attorneys, especially in light of the recent changes in workers' compensation law.
Mr. Bonaventura related there was presently a bill in the Commerce Committee (AB 341) pertaining to licensure of paralegals, technicians and legal assistants which would require a minimum of 96 hours of college classes.
Mr. Nix endorsed the concept, noting most legal assistants working for law firms primarily represented claimants before the hearings officer level. For the most part, he explained, the attorney usually represented his client at the appeals officer level. The problem was people had discovered they could "hang a shingle" and represent claimants for a fee before the Appeals Division, which was, in fact, a court as far as the injured worker was concerned.
Ms. Giunchigliani questioned why the Insurance Commissioner licensed these individuals rather than the Hearing Division of the Department of Administration.
It was apparently deemed by legislation, Mr. Nix responded.
Frustration was expressed by Mr. Nix with regard to obtaining a copy of the test given by the Insurance Commissioner prior to licensing. He felt his department should review standards established for the licensing of persons to represent parties before the Appeals Division.
As an example, Mr. Nix related a case of a person who had appeared regularly at hearings whose license was supposedly based on a 1,000 hours of experience. Upon checking with the Insurance Commissioner, it appeared the 1,000 hours was represented by affidavit. Mr. Nix emphasized he had never heard of this person before, he had not worked at the State Industrial Insurance System, one of the third party administrators or self-insured employers. He expressed serious concern with such a procedure for licensing.
Ms. Giunchigliani agreed with Mr. Nix's concern, noting legislation from 1991 had tried to deal with streamlining the appeals process, making the first level more mediation, and the second level truly more a court of law. She questioned the Department of Insurance handling the licensing function and asked Mr. Nix to review language to assist in changing the responsibility over to the Department of Administration.
Mr. Carpenter asked if the question was not one of continuing education, but actually the licensing of non-attorney individuals to handle workers' compensation cases at the appeals officer level.
Mr. Nix suggested it was, but at the same time thought it important to require ongoing continued education in the field of workers' compensation. Even if the licensing was made stringent and difficult, attorneys were still required to maintain ongoing education and, therefore, he believed anybody working in the field should be under the same obligation.
Mr. Carpenter did not see a problem with requiring the same ongoing education requirements expected of attorneys, but believed the problem of allowing non-attorneys in the first place should also be reviewed.
Mr. Nix observed the presented language of AB 286 did not approach the licensing issue. He contended no licenses would be revoked if persons failed to attend continuing legal education courses, but they simply would not be allowed to appear before an appeals officer.
Responding to further questioning, Mr. Nix estimated the cost of courses to range between $150 to $200 for 6 to 10 credits.
A discussion between Ms. Kenny and Mr. Nix followed relevant to malpractice or liability insurance held by attorneys. Ms. Kenny determined the injured worker represented by a qualified attorney would have some recourse should his case be mishandled, where those represented by non-attorney type individuals would not have any options available to them.
Mr. Nix described an instance where a non-attorney who represented a number of claimants absconded with their awards and killed himself when discovered after having spent the money. Mr. Nix stated he would be surprised to find non-attorneys had coverage for their actions.
Mr. Jack Jeffrey, representing the Southern Nevada Building and Construction Trades Council, provided the background history of AB 286. He was involved in the legislative process of the original draft in 1987. The purpose, he explained, was to hinder the questionable operation of an individual representing employers. Mr. Jeffrey explained the licensing was put under the Department of Insurance because it was the licensing agency for the self-insureds, which these people primarily represented. He related employers complained, feeling they could adequately represent themselves. It was the committee's belief they should be allowed to do so if they were willing to face the consequences. However, the committee did maintain injured workers should have an attorney.
Mr. Jeffrey was convinced, in his own mind, that in order to represent anybody at the appeals level they had to be an attorney. He suggested the committee request research to verify if this was, in fact, the case.
Mr. Mike Livermore, W. R. Gibbons Company, said his company was one of the agents who represented employers in both unemployment and workers' compensation cases. Their contracted services included assistance in claims management, medical cost controls and occasional representation of clients as licensed representatives at contested claims, both at the hearing and appeal levels. He explained W. R. Gibbons successfully represented several hundred employers throughout Nevada, and while he agreed with the importance of establishing the record and case at the appeals level, his company allowed employers to be adequately represented without sustaining the cost of formal legal representation. Mr. Livermore contended each case would be handled individually and if more in-depth legal representation or resources were needed, outside representation would be advised, however, the decision was always the employer's as to who would represent them.
In addressing the proposed language of AB 286, Mr. Livermore expressed no objection to the requirement for continued education, in fact, it would formalize his company's existing practice. He encouraged the committee to pass AB 286, but voiced preference that the licensing procedure remain with the Insurance Commissioner. In reference to the earlier question of recourse in the case of inadequate representation, his belief was insurance was an absolute necessity, and carried by W. R. Gibbons.
Mr. Nix reiterated Mr. Jeffrey's earlier testimony noting he believed the original exceptions in the law were to allow employers the representation of their choice and it somehow was expanded to employees. Therefore, in reference to subsection 4, lines 9 - 13, he opined an employer would be responsible for the choice of selecting someone other than an attorney to represent its cases. Also, he revealed his prior testimony on malpractice or insurance coverage was not intended to apply to employer representatives, as most of them probably had some sort of coverage. He was primarily speaking of those individuals representing claimants and employees.
Mr. Ernaut noted concern with subsection c), of Section 1, explaining the point of the proposed language was to provide a standard criteria for ongoing certification. He felt the language of subsection c) was completely incongruent to the purpose of the bill by allowing persons "an out" if the representation provided was without compensation.
The Chairman reasoned this was the issue Mr. Jeffrey raised earlier in which he questioned when the bill was expanded to include non-attorney individuals representing cases at the appeals level. In conclusion, it was noted perhaps upon further research the committee might want to consider language strengthening the original intent of the legislation.
Mr. Nix reiterated his concern was the concept of ongoing education, but if the committee wanted to delve further into the licensing process he would be happy to work with the committee. However, in conclusion he asked the ongoing education issue not be killed and replaced by more stringent licensing constraints.
Mr. Hettrick pointed out the injured worker should never have had to enter the appeals process without the benefit of legal counsel, as the state provided the services of the Attorney for Injured Workers at no charge.
In rebuttal Ms. Giunchigliani noted testimony had been presented before the Ways and Means Committee on budget shortfalls which seriously impacted the ability of the Attorney for Injured Workers to represent claimants. Ms. Nancyann Leeder had testified her office was hundreds of cases behind and, additionally, faced attorney recruitment problems because of salary issues.
Mr. Bonaventura drew attention to Section 1, paragraphs a), b), c) and d), questioning if the word (or) should not be removed. Through discussion it was clarified the omission automatically meant "or" throughout the paragraphs.
Ms. Debbie Thurner, Licensing and Research Officer, Department of Insurance, provided handouts illustrating her concerns with AB 286 (Exhibit I). The types and procedures for licensing workers' compensation representatives were detailed from the provisions of NRS 616.251 (Exhibit J). Ms. Thurner observed licensing had been on the upswing lately. She explained testing was provided every three months in both Carson City and Las Vegas. Her opinion was the legislation requiring continued education was a good idea, although she admitted she was not aware those licensed individuals could represent cases at the appeals level. She maintained the statute was "gray" as it referred only to "contested cases." An additional concern was the current licensing practice covered a three-year period unless the person changed employers, where the language of the bill provided for annual continuing education classes prior to the renewal of the license.
Ms. Giunchigliani asked Ms. Thurner where the provision relating to "at least one year of experience in contested cases" would be defined.
In response, Ms. Thurner interpreted few would qualify under the current "experience" requirement as they were not allowed to represent persons in the appeals processes without first being licensed. Her determinations were based on various "experience" such as claim examiners with prior experience before hearing officers. Additionally, she contended she might certify paralegals who had performed workups on contested cases but lacked the actual experience in appearing before the hearings officer.
Ms. Giunchigliani appreciated the dilemma faced by Ms. Thurner, but questioned the ability of claim examiners to argue and represent cases dealing with compensation.
In reference to the development of the exam, Ms. Thurner explained with her prior experience as an underwriter at the State Industrial Insurance System, she developed the questions directly from NRS 616 and 617 in addition to the Nevada Administrative Code (NAC). The exam was reviewed by the Hearings Division, SIIS attorneys and hearing advocates and the Department of Education.
A confidential copy of the exam was requested by the committee chair for review. Ms. Giunchigliani conveyed her concern of a multiple choice test being able to determine a person's ability to interpret and argue law relative to workers' compensation cases. She also asked a list be provided of those currently qualified by exam versus those qualified by experience.
Mr. Thurner inferred Exhibit K listed both companies and individuals currently licensed by the Department of Insurance to represent workers' compensation cases. She announced the requested information would be provided on the individuals who were currently licensed.
In conclusion, Ms. Giunchigliani determined the proposed bill might have to be divided to address the two concerns expressed by those testifying; the questions of continued education and non-attorney representatives at the appeals level. She regarded the most important issue was proper representation for both injured workers and employers.
Ms. Theresa Rankin, Insurance Commissioner, maintained the Department of Insurance would not be offended if the monitoring and licensing requirements were transferred to the Hearing and Appeals Division, or if the licensure was abolished altogether. Further, Ms. Rankin announced the Attorney General's opinion should be presented for the record which stated, "representation before the appeals officer, because it makes a record for review in a district court, requires a law license." The response given by the Department of Insurance to inquiries on this matter was non-attorney individuals at the appeals level were allowed there at the discretion of the Appeals Officer. She did not see AB 286 as appealing the Attorney General's opinion on the practice of law, which she maintained was a State Bar issue.
Some amendments offered by Ms. Rankin were changing the broader language of "contested case" in line 8, page 1, to "hearings at the appeals office level," in addition to possibly bonding those persons who did not work for corporations as an idea for recovery in cases of misrepresentation. Finally, she felt the decision of allowing non-attorney representation at the appeals level was the responsibility of the Appeals Officer.
Mr. Scott Young, General Counsel, State Industrial Insurance System, provided written documentation to the importance of the Appeals Officer level being a hearing of record (Exhibit L). Additionally, he provided a copy of the section on evidence from the Administrative Procedures Act which listed types of evidentiary issues which could be introduced in an administrative proceeding (Exhibit M). Mr. Young opined anyone representing persons at the Appeals Officer level ought to have minimal qualifications in dealing with evidence and/or procedure.
To the question of continuing education, Mr. Young indicated the programs were put on under the auspice of the State Bar, but provided by private companies. He recalled at least five such classes offered over the last calendar year. The State Bar, he explained, approved the courses for content and credit, in addition to tracking the mandatory annual ten hours of continued education required by attorneys. Mr. Young believed the State Bar could, in addition, track the relatively small number of these people and issue certificates as proof of course completion.
Before closing the meeting Ms. Giunchigliani asked committee members to keep their calendars clear for evening meetings to accommodate the arrival of SB 316. She apologized for overlooking Ms. Carole Bowers who had signed a secondary list wishing to testify on AB 284. However, as she had apparently left the meeting, and there being no further business to come before committee, the meeting was adjourned at 5:20.
RESPECTFULLY SUBMITTED:
BARBARA DOKE
Committee Secretary
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Assembly Committee on Labor and Management
March 23, 1993
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