MINUTES OF MEETING
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
March 30, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Chris Giunchigliani at 3:38 p.m., Tuesday, March 30, 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:
Mr. Frank Krajewski, LCB Senior Research Analyst
OTHERS PRESENT:
Mr. George McNally, President, Nevada Trial Lawyers' Association
Mr. Ray Badger, Vice President, Nevada Trial Lawyers'
Association
Chairman Giunchigliani stated the purpose of the presentation by the Nevada Trial Lawyers' Association was to walk the committee through an actual workers' compensation case, to explain terminology and to provide a better understanding of the claim operation from start to finish.
Mr. George McNally, President, Nevada Trial Lawyers' Association, contended the committee would be lobbied heavily regarding the workers' compensation reform issue. He offered assistance with any questions or concerns by committee members or their constituents.
Mr. Ray Badger, Vice President, Nevada Trial Lawyers' Association, presented the case history of an actual workers' compensation case (Exhibit C) from shortly following the injury through rehabilitation, issuance of the lump sum award and the closing of the claim. The case presented was one Mr. Badger felt would illustrate many of the various circumstances and laws faced by claimants. He stated the individual, Marsh Augenstein, was a 37 year-old glass cutter, or glazier, who while cutting a large display window with a power saw, slipped and amputated his left thumb down to the bottom knuckle.
Mr. Badger maintained the first step upon injury was to inform the supervisor, whose responsibility it was to transport the injured worker to a medical facility for emergency aid if required. Following emergency treatment, the actual paperwork for a claim was started. Upon deciding the injury was job related the doctor provided the worker a C4 form which indicated what he was doing at the time of injury, his name, address, employer name, how the accident happened and who the injury was reported to. The second part of the form was completed by the doctor which indicated his diagnosis, treatment, opinion of whether the injury was job related, if additional medical care was necessary, whether referred to a specialist, determination if the worker was expected to be off work more than five days and whether any previous injury or disability contributed to the current injury. Upon completion, the C4 was submitted to the State Industrial Insurance System (SIIS) or the third party administrator which verified the employer had an active account. The provider then mailed an additional form, a C3, to the employer for completion along with a copy of the completed C4. Mr. Badger indicated the C3 verified the injured party was an employee and asked various questions related to the reported incident. The last questions on the C3 inquired if light-duty work would be available and if the claim was believed to be valid? If no problems were found upon receipt of both the C4 and C3, the claim was accepted and 100 percent of all medical bills were paid according to a fee schedule.
Mr. Badger resolved the first benefit his client, Mr. Augenstein, needed was lost-wage compensation, or Temporary Total Disability (TTD). TTD was only paid when stated in writing by the doctor the injured party was unable to work. At such time a three-month payroll history was requested from the employer. Entitlement was two-thirds of the averaged gross monthly wage, tax free. Mr. Badger indicated the current maximum salary base was $2,820 a month. If the employee's actual monthly wage was $10,000, he received only two-thirds of $2,820, not $10,000. Mr. Augenstein earned $2,421 a month which resulted in compensation of $746 every 14 days.
Emergency treatment, Mr. Badger explained, did not require prior approval. However, major procedures performed at the time of emergency care must be justified or risk non-payment. Once past the emergency situation, the injured worker had his choice of licensed physician or chiropractor. The worker could change doctors in the first 90-days of treatment, thereafter, no changes were allowed without prior approval. Mr. Badger related a plastic surgeon was summoned by the emergency room who became Mr. Augenstein's treating physician.
Once past the emergency stage approval must be obtained for certain treatment. If the insurer questioned the need for treatment or surgery he sought a second opinion prior to approval. Mr. Badger noted before a third surgery was performed on Mr. Augenstein, SIIS requested a consultation with a plastic surgeon who specialized in hands. The intent of the surgery was to restore the nerves damaged beyond the amputation site. The claimant's index finger was nonfunctional and the entire half of his hand was numb. Mr. Augenstein expressed frustration with the sensitivity of the stump because of nerve damage. One alternative, recommended by the doctor, was to replace the missing thumb with one of his large toes which might allow more grip, strength and alleviate the sensitivity problem. Following the second opinion, however, Mr. Augenstein decided against this procedure. Mr. Badger stated his claimant underwent extensive physical therapy to regain as much use of his left hand as possible. The initial need of physical therapy, in such a case, was not questioned by the insurer, but further approval would be required if treatment was extended.
The doctor stressed other than the rejected optional surgery, everything possible had been done. He, therefore, maintained Mr. Augenstein was "medically stable and rateable." This, however, did not mean the claimant was again whole. After such a determination, the insurer reviewed the medical records to determine if there might be permanency to the injury. If there was, as in Mr. Augenstein's case, the insurer scheduled a permanent disability evaluation for a cash settlement, or Permanent Partial Disability (PPD) award. Doctors who performed these evaluations were chosen by the insurer from a panel of doctors approved by the Department of Industrial Relations (DIR).
As explained by Mr. Badger, PPD awards were paid on medical impairment only. In other words, individuals with the same injuries received equal awards. In addition to the automatic disability for the level of Mr. Augenstein's amputation, motion in the remaining joints was measured and taken into account along with the sensory and motor nerve damage. The PPD award for Mr. Augenstein's injuries was 17 percent. Two payment options were available, either an annual payment until the age 70 or a one-time lump sum. Mr. Augenstein's tax-free settlement was either $2,960 annually or $40,000 as a one-time lump sum payment. Mr. Badger illustrated the survivorship issues involved in accepting the annual PPD award. If married, the surviving spouse continued receiving the award until the 70th birthdate of the deceased injured worker; however, if single, only children under the age of eighteen would continue to receive the benefit. Mr. Badger noted his experience was most injured workers accepted the lump sum payment.
The next issue determined was whether the injured worker was able to perform either full-duty or light-duty functions. Full duty, Mr. Badger maintained, meant the worker was able to return to his prior, before injury, job. Mr. Augenstein could not perform his glass cutting duties and was, therefore, released to light-duty work. Permanent limitations or restrictions were determined by the treating doctor or therapist who performed a functional capacity evaluation prior to assigning light-duty employment. A form letter to the employer was sent inquiring if a job could be offered correlating to the injured worker's limitations and/or restrictions. A response indicating the basic duties, hours and pay was expected from the employer within 30-days.
The new position must offer a wage equal to the TTD payment after taxes. If a satisfactory light duty position was rejected the claimant's TTD payments would be discontinued. However, if the employer was unable to offer a satisfactory position, the claimant became eligible for vocational rehabilitation and continued to receive a wage every 14 days. The wage was then referred to as rehabilitation maintenance compensation, but equaled the same dollar amount as the TTD.
At this point a vocational/rehabilitation counsellor was assigned to guide and assist the worker in obtaining employment. Mr. Augenstein was offered an on-the-job training program in the field of building inspection. A contract was entered with the employer which indicated the intent to hire the worker at the end of a predetermined training period. For the duration of the on-the-job training the insurer continued to pay the vocational rehabilitation wage every 14 days. Mr. Augenstein also received four one-day classes which were paid by SIIS. Following the training period Mr. Badger's client was hired, passed the licensing test and became a certified building inspector. Mr. Badger opined the final result was his client was marketable for future employment.
If none of the prior options were feasible, formal training or education was offered. The educational requirement was limited to one year unless the injury was catastrophic, such as blindness. Additionally, Mr. Badger acknowledged a settlement could be agreed upon between the claimant and the insured in lieu of rehabilitation, but the claimant then accepted the total risk of employability.
In concluding his presentation, Mr. Badger illustrated the subject of lifetime reopening rights. The injured party must note his intent to reopen his claim by informing the insured and seeing a doctor at his personal expense. The doctor must prove the condition had worsened since closure of the claim and that the prior industrial injury was the cause of the current condition. If reopening was approved, the same benefits applied and compensation would be based on the wage at the time of the initial injury.
In response to a question by Ms. Giunchigliani, Mr. Badger noted other states considered the impact of injury on the worker's occupation. As an example, the loss of a finger to Liberaci would obviously have a greater occupational impact than that realized by an attorney with the same loss.
Ms. Giunchigliani asked if claimants could receive rehabilitation if only off work a few days or if working for another employer.
Injured workers, Mr. Badger reported, were not eligible for rehabilitation if working at all, regardless of who they might be working for.
Mr. Bache inquired what happened if the employer of an injured worker was found not to have coverage.
Mr. McNally claimed the injured party could either submit a claim through the Department of Industrial Relations (DIR) and accept immediate benefits from SIIS, or sue the employer under common law. He noted the claimant gave up his irrevocable rights by accepting benefits through SIIS.
Mr. Bache questioned what happened if Mr. Augenstein reinjured his hand while employed by his new employer.
In his experience with Supreme Court cases, Mr. Badger noted the injury would result in a new claim if it made a substantial medical difference. He noted, however, there was nothing currently in statute to this effect. Further, because of the subsequent injury fund, the new employer would not be charged with the new claim because he knowingly accepted an employee with a permanent disability over 6 percent.
In response to Mr. Schneider's question on payment for private legal services, Mr. Badger explained agreement could be to either contract hourly or accept a contingency fee. A major problem seen with the hourly fee was the impossibility of predetermining charges. Additionally, Mr. Badger offered, legal assistance was provided free of charge through the Nevada Attorney for Injured Workers. He noted for the committee's information, though, these services were only provided at the second level of litigation.
Upon questioning of his customary fees, Mr. Badger indicated he charged an hourly rate of $100, whereas, as an example, his contingency fee in Mr. Augenstein's case was 20 percent of the recovered PPD award.
Relative to functional capacity and the doctor's opinion of the individual's job, Mr. Anderson asked if there was a book which listed the duties and physical tasks required of various job titles.
Mr. Badger noted such a book existed within the Department of Transportation, however, duties differed job-to-job. As an illustration, he explained his secretary was most likely to be injured while driving errands across town, yet driving might not be part of a secretary's job description.
To clarify another issue raised by Mr. Anderson pertaining to evaluation of physical job requirements by rehabilitation counsellors, Mr. Mc Nally determined any on-sight job analyses would be returned to the doctor who would, in turn, make the final determination.
In response to further inquiries by Mr. Anderson, Mr. Badger contended Mr. Augenstein's wage earning capacity had been affected for life, which was the primary reason for the PPD award.
Mr. Anderson believed injured workers perceived their PPD awards barely brought them back to their prior economic conditions. He, therefore, questioned how this award was to compensate for the impact of their injuries on future wage earning capacity.
Mr. McNally pointed out the majority of workers' compensation cases, or 80 percent, were not loss time claims, where the only expenditures were medical costs. The remaining 20 percent in which the worker was off work five consecutive days or more were loss time claims. Of that 20 percent, 70 percent were less than 30 days loss time. Further, of this number most of the PPD ratings were less than 10 percent, therefore, the 17 percent PPD award in Mr. Augenstein's case was a rarity.
For clarification, Mr. Ernaut theorized a person making $2,241 monthly, or $30,000 annually would pay 28 percent in taxes. Thus, a tax-free TTD award of 66 and two thirds of his gross wage would be a difference of only 6 percent.
Mr. Badger countered in Mr. Augenstein's case the cost of covering his family for group health insurance was $350 a month, a substantial portion of his $1,452 monthly award. Also there were other benefits, such as retirement contributions, to be considered when determining the percentages pointed out by Mr. Ernaut.
Mr. Ernaut contended, on the flip side, the legal assistance provided by Mr. Badger obviously gained something in this case which could not have been gained by Mr. Augenstein alone. He related the twenty percent cost from Mr. Augenstein's PPD award was substantial, yet he obviously benefited from the services provided. In Mr. Badger's own words, the Nevada Attorney for Injured Workers' could take over at the second level of appeal at no cost to the injured party.
In rebuttal, Mr. Badger pointed out by the time the Nevada Attorney for Injured Workers' became involved the case had been set in cement and was bound to "go to war."
The point being, Mr. Ernaut related, was the choice to hire outside legal assistance was a conscience choice by Mr. Augenstein. He opined there was an argument Mr. Augenstein could have gained what Mr. Badger obtained for him, on his own, "had he known the right buttons to push."
There being no further questions from the committee, nor any testimony from the audience, Ms. Giunchigliani stated her intent to schedule additional afternoon and evening meetings to move through SB 316 as expeditiously as possible. She requested committee members bring their meeting schedules along with calendars to the next scheduled meeting so tentative meeting plans could be made.
There being no further business to come before committee, the meeting was adjourned at 5:15 p.m.
RESPECTFULLY SUBMITTED:
BARBARA DOKE
Committee Secretary
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Assembly Committee on Labor and Management
March 30, 1993
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