MINUTES OF THE
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
April 12, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Christina R. Giunchigliani, at 5:35 p.m., on Monday, April 12, 1993, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Ms. Christina R. Giunchigliani, Chairman
Mr. Bernie Anderson, Vice Chairman
Mr. Douglas A. Bache
Mr. John C. Bonaventura
Mr. John C. Carpenter
Mr. Tom Collins, Jr.
Mr. Peter G. Ernaut
Ms. Lynn Hettrick
Ms. Erin Kenny
Mr. John B. Regan
Mr. Michael A. Schneider
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Don Williams, Legislative Counsel Bureau Research
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Frankie Sue Del Papa, Attorney General
L. Timothy Terry, Sr. Deputy Attorney General
Dominique Morrow, M.S., Certified Rehabilitation Counselor
Edward Howden, Certified Rehabilitation Counselor
Kathy Sigurdson, Voc. Rehabilitation & Counseling Services
Scott Young, General Counsel, State Industrial
Insurance System
Don Jayne, General Manager, State Industrial
Insurance System
Larry Zimmerman, Consensus Group
Jim Jeppson, Division of Industrial Relations
Marsha Berkbigler, Nevada Ass'n. of
Rehabilitation Professionals
Following roll call and opening remarks, Chairman Giunchigliani asked Don Williams, Principal Research Analyst, to prepare for committee information a synopsis of language in SB 316 which had been changed from what the committee had recommended and that which was left out completely. Chairman Giunchigliani announced they would hear testimony on Fraud, Fines and Vocational Rehabilitation. Fines, she said appeared to be non-controversial, so she would take that first.
SENATE BILL 316 -Makes various changes to provisions governing industrial insurance.
FINES
Larry Zimmerman, representing the Consensus Group, testified there was no problem with the intent of the language which was changed, but he thought there were bill drafting problems due to the change in the hearing process. He volunteered to work with Don Williams to resolve the language.
Representing the Division of Industrial Relations, Jim Jeppson came forward. Chairman Giunchigliani noted the language regarding fines had changed many of the "shalls" to "may." Mr. Jeppson explained the change of the language from "shall" to "may" in NRS 616.647 had been discussed by the Senate committee. He said they were looking for more permissive language at the time in order to establish a program of progressive discipline in cases where there were very minor violations. Chairman Giunchigliani said the intent during the 1991 Session was to change the "mays" to "shalls" because fines were not being imposed. They had sought to state a dollar amount, and if there was a violation there should be a fine. Two years ago the Department of Industrial Relations (DIR) said it did not have the authority to fine, so the Legislature gave them the authority. Now it appeared DIR did not want the authority. Using "shall" allowed for progressive discipline, Ms. Giunchigliani maintained. She suggested the committee should take this into consideration.
Mr. Carpenter questioned the penalty changes from a gross misdemeanor to a year's imprisonment. He recalled in Judiciary meetings there had been testimony stating a penalty of a year would probably only serve to bog down the legal system with more paperwork while the individual would be unlikely to serve any prison time. Chairman Giunchigliani agreed this was a valid point.
FRAUD
Attorney General Frankie Sue Del Papa and L. Timothy Terry, Sr. Deputy Attorney General in charge of the Medicaid Fraud Control Unit (MFCU), came forward to discuss the proposed SIIS Fraud Unit. Attorney General Del Papa read prepared testimony into the record (attached hereto as Exhibit C). She strongly urged the committee to adopt sections 52 through 65 inclusive, 202, 203, 206, 207, 237, 249, 284 and 289 of SB 316 if it was their intent to concur in the creation of the fraud unit. She asked the committee to commit appropriate resources and brought attention to a five-page fiscal note (Exhibit D) delineating the proposed positions, and start up funds of $1.6 million. She said she considered this to be an absolute minimum if the Attorney General's Office was to have a chance to succeed and responsibly discharge its duties in this area.
Mr. Collins questioned whether the SIIS fraud unit would go out into the field to investigate job sites or whether they would only be responding to complaints. Attorney General Del Papa explained they would confine their jurisdiction to claimant fraud, employer fraud and medical provider fraud. She gave a brief overview of the MFCU formation, structure, mission and goals; and stated the experience gained in the Medicaid Fraud Control Unit would set the pattern for structuring the SIIS fraud unit.
Mr. Collins also asked if the new SIIS fraud unit would work with the Labor Commissioner and the State Contractors' Board. Responding, Attorney General Del Papa said the Attorney General's Office represented the Labor Commission; however, the State Contractors' Board retained its own counsel. Although the Attorney General's Office did not represent the Contractor's Board, they did try to liaison with them; however, it was more difficult to achieve the same relationship enjoyed by a commission represented by the Attorney General's Office.
Attorney General Del Papa stressed their determination to work together with SIIS in a team effort; and part of this effort would involve prioritizing areas to address. Because the experience with the Medicaid Fraud Control Unit had been so effective, she opined the Attorney General's Office should be in a very good position to "hit the deck running" with the SIIS fraud unit.
Mr. Anderson questioned whether provisions in SB 316 would be sufficient to provide tracking of SIIS fraud, and whether the interdepartmental barriers for tracking had been removed. He thought it was important for the office to be able to keep track of social security numbers, those actually employed, claimants and job records.
Attorney General Del Papa explained the language had been patterned along the same federal statutes as the Medicaid Fraud Control Unit and the Attorney General's Office was comfortable with what had been presented. To more fully discuss this, however, she deferred to Tim Terry, Sr. Deputy Attorney General for the Medicaid Fraud Control Unit.
In responding to Mr. Anderson's question, Mr. Terry recalled in the hearings before the Senate Commerce and Labor Committee and with the assistance of Scott Young, General Counsel of the State Industrial Insurance System, a jurisdictional grant in NRS Section 237 had been developed. This required the fraud unit to cooperate with nearly every other state and federal agency which might be involved in investigating or prosecuting a fraud. Mr. Terry pointed out this language was contained mainly in SB 316, Section 237, subsection 3, subparagraph (b).
Mr. Anderson remained concerned there might be some prohibition with the use of Social Security numbers as a means of tracking. Mr. Terry said he was not sure the Attorney General's Office would be the central repository for the type of tracking information Mr. Anderson was concerned about. He thought the Attorney General's Office would generally be receiving information from other sources, primarily the State Industrial Insurance System itself.
Questioning the Attorney General, Mr. Regan asked if she saw the new unit as being proactive or reactive. Again commending the Medicaid Fraud Control Unit, Attorney General Del Papa said she thought it was in the state's best interest to take a proactive role. Although constrained by law against combining the two fraud units, Medicaid Fraud Control and SIIS fraud, she assured committee members the Attorney General's Office would exchange and share information. Thus, by using a team approach, she envisioned like success in the SIIS fraud unit as had been experienced in the Medicaid Fraud Control Unit. Attorney General Del Papa also informed the committee her office was making plans to arrange meetings with various entities such as the Medical Society to advise them of what the fraud units would be looking at.
In summary, Attorney General Del Papa said they certainly intended to be proactive, however, since only two deputies were initially being requested, they would be somewhat hampered.
Chairman Giunchigliani's questioned how the SIIS fraud unit would be funded. In response, Attorney General Del Papa said the funds would come from SIIS assessments.
Chairman Giunchigliani asked whether the $1,200 slotted for an "800" phone line was adequate. Mr. Terry told her the phone company had provided this information to the MFCU Chief Investigator. To the best of their information this was an accurate reflection of what it would cost to install and maintain the line.
Ms. Kenny questioned what would happen to the six present SIIS investigators. Attorney General Del Papa said she understood SIIS would keep some of their present investigators, but the Attorney General's Office would be accepting applications in an effort to fill the 26 positions. The duties to be assigned the present SIIS investigators would be different from the those assigned to the fraud unit.
Mr. Schneider asked Attorney General Del Papa if there were any plans afoot to mimic a sting operation recently shown on the television program "20/20." Such broad, sweeping operations were not foreseen by Attorney General Del Papa. She did believe there would be a deterrent effect obtained by investigating and prosecuting SIIS fraud. This information would be further disseminated by meeting with many entities in the medical field and law enforcement in an effort to share information as widely as possible.
Mr. Bonaventura questioned the change in the language of the bill from "willfully" to "knowingly." In response, Mr. Terry said "knowingly" was statutorily defined in NRS 193.017. After discussion in the Senate committee the question was whether there would be a problem in proving cases by continuing a requirement of "willfulness." "Willfulness" would become a specific intent crime and proving there was a specific intent to defraud or cheat the system would be a burden on the state. Thus, a decision had been made to go to a "knowing" violation standard. This would be a general intent crime and would not require the same degree of proof upon the prosecution to show a deliberate intent or scheme to defraud or cheat, only requiring a violation of the law. A general knowledge of illegal conduct was a lower threshold to prove from the prosecutorial standpoint. Mr. Bonaventura and Mr. Terry further discussed the issue using hypothetical examples.
Chairman Giunchigliani brought attention to Section 242 dealing with assessments, and asked if self-insureds were paying for any part of the fraud control unit. Attorney General Del Papa referred to Mr. Young to report on this aspect.
Chairman Giunchigliani asked Mr. Terry to touch on NRS sections 616.630 (providing and securing compensation); .635 (false statements or payroll inaccurately reported); .640 (deductions from employee); .675 (false statements regarding compensation where injury self-inflicted); .690 (self-referral); and .700 (falsely stating someone is employed). She noted NRS 616.680 (medical provider fraud) was missing; and also wished Mr. Terry to comment on the potential for abuse and fraud of toll-free phone calls; bid-rigging; and gross misdemeanor penalties as opposed to jail sentences. Chairman Giunchigliani stated she preferred the gross misdemeanor penalty. She noted currently the SIIS investigators appeared to be dealing with employee fraud rather than employer or medical fraud. She wondered if this would continue and whether the new SIIS fraud unit would be dealing with a different aspect of fraud.
Mr. Terry suggested Mr. Young had greater expertise in the subject derived from his involvement with SIIS and previous involvement in Senate hearings. With respect to provider fraud, Mr. Terry said this had been taken care of in sections 52-65 as there was nothing in existing law to address this.
As for the toll-free "800" number, Mr. Terry explained there was a section in the bill which provided an immunity to anyone reporting a violation of any of the present crimes or crimes being created under the new proposal. The caveat was there was only immunity in event of a good faith report. If someone was reporting out of malice or with no foundation in fact, that person would be subject to penalties imposed for false reporting or other remedies presently available. Chairman Giunchigliani asked what remedies there were to take care of this situation. In response, Attorney General Del Papa said her understanding was there were a number of different reporting mechanisms and additionally, the Judiciary Committee was studying the problem during this session.
Coming forward to respond to Chairman Giunchigliani's questions, Scott Young, Counsel for the State Industrial Insurance System, explained NRS 616.680 was the existing statute dealing with provider fraud. He allowed it was a rather weak statute, especially when compared to the Medicaid Fraud statute. Therefore, they had substituted sections 52-59. The new sections were basically the same as the current Medicaid Fraud sections.
Speaking to section 65 (civil liability), this provided immunity to someone who, without malice and in good faith, notified the Attorney General or some other law enforcement agency of possible fraud. Mr. Young added he did not know what penalties were available, but assumed there were penalties available for filing false reports with police agencies. He suggested perhaps those types of penalties could be extended to cover the situation for making referrals to the Attorney General's Office. Mr. Terry interjected there would also be a great many civil tort remedies available to someone who might have been abused by a false report.
Chairman Giunchigliani asked someone to discuss NRS 616.700 regarding the deletion of "gross misdemeanor" and capping the fine at $10,000. Mr. Young said he thought the intent of that section as well as other sections which essentially raised the penalties for fraud to a felony was the result of many employers' desire to see the penalties enhanced. He added in the past the system had preferred the gross misdemeanor penalty because the District Attorneys could then charge a felony of obtaining money under false pretenses and subsequently offer the individual a gross misdemeanor penalty under NRS 616.675. This gave them a lesser offense to plead to and made it easier for the District Attorneys to dispose of the cases through pleas rather than taking them to trial.
However, Mr. Young added, some District Attorneys had indicated it was inappropriate to file a felony (obtaining money by false pretenses) and thereafter reduce it to a ".675." Therefore, SIIS had withdrawn their opposition to increasing the penalty to a felony. Practically, he said, there were approximately 135 people prosecuted during the past five or six years. Only two of those individuals had ever gone to jail and the only reason they went to jail was because they had other unrelated charges. In most instances there would be a felony charge and the individual then still had the opportunity to plead to a lesser offense. However, Mr. Young did not think even one person out of every 100 persons charged would go to jail.
Chairman Giunchigliani asked if it was appropriate to state a one to six year jail sentence. Mr. Terry said the penalty provided in the refinement of NRS 616.700 was the standard felony penalty and the ultimate decision would be left to the sentencing authority, i.e., the judge in most cases. He suggested the decision the committee needed to make related primarily to medical care providers. The provisions in SB 316, patterned after the Medicaid Fraud statutes, applied to medical providers and employers who violated any provisions.
Chairman Giunchigliani asked Mr. Young if he perceived under-reporting by employers would also be considered fraudulent. Mr. Young answered, "Yes, it would be." Chairman Giunchigliani asked who would prosecute. Under the new statute, Mr. Young said if a case was discovered by SIIS it would be turned over to the Attorney General's Office which would complete the investigation and prosecution.
Mr. Young drew attention to Exhibit E which outlined two amendments on page 25. He suggested adding language to section 63 (of SB 316) in order to allow a felony charge, but which would also allow the Attorney General the flexibility to reduce the penalty to a gross misdemeanor in order to facilitate a plea. He suggested adding the words "or section 60" to line 5. This would assure the ability to charge a felony and offer a conspiracy gross misdemeanor to obtain a guilty plea.
Another change Mr. Young suggested (see Exhibit E) was to page 25, section 66. He wished to see language regarding bankruptcies included. Although not a settled issue, in this federal district the SIIS premiums had been treated as though they were taxes, which meant they were not dischargeable in a bankruptcy. He said there was language in AB 273, section 13, subsection 8, which addressed this.
Mr. Young agreed there was fraud in all three areas mentioned by the Attorney General, but SIIS had focused on injured workers fraud. With the limited number of SIIS investigators, this was the easiest area for the district attorneys to handle. He thought probably the larger amounts of money were in employer and provider fraud, but these were more difficult to investigate and prosecute.
Mr. Carpenter questioned the savings projected by the establishment of the SIIS fraud unit and what kind of breakdown was made regarding the savings obtained from workers, employers and providers. Mr. Young replied they had provided this document to the Senate committee and he believed the savings were projected at approximately $4 or $5 million. However, he said he would obtain a copy of the document which had originally been prepared and present it to the Assembly committee. He said it was somewhat difficult to predict this exactly because they did not have a good feel for how much fraud there was. However, he did not perceive Nevada suffered from the same degree of fraud as other states such as California; nor did they see doctors and lawyers conspiring to set up phony claims and then billing for services not rendered. Thus, it was hard to forecast what would be saved. If they were able to successfully prosecute several businesses and/or medical providers, the sentinel effect from that would be very great. He did not think the same emphasis was given to the prosecution of individuals.
Mr. Bache ascertained the SIIS investigators would be more focused on claimant abuse. Mr. Young agreed this would be the mission for the SIIS investigators; whereas the Attorney General's Office would focus more on medical providers rather than being burdened by claimant abuse.
VOCATIONAL REHABILITATION
Chairman Giunchigliani stated the committee would focus on sections 115, 116, 22 and 199.
Coming forward to testify for the private sector, Dominique Morrow, President of the Nevada Chapter of the National Association of Rehabilitation Professionals, told the committee he was there to recommend continued use of the private sector in the delivery of services to injured workers. He believed their services were a cost effective way of achieving a speedy and appropriate resolution to vocational rehabilitation services for injured workers. Mr. Morrow reported in 1990 SIIS had begun sending large numbers of injured workers to the private sector because it did not have sufficient numbers of SIIS employees to deal with the numbers of injured workers.
Mr. Morrow described the make-up of the firms dealing in vocational rehabilitation, stating approximately 50 percent of the private firms staffs were certified rehab counselors. He said he had recently surveyed seven firms regarding their performance in terms of length and cost of services. The average cost was approximately $2,341.25 per case and the average length of services was 10.8 months. This included time for evaluations, placements and training periods during which the injured worker acquired new skills to be used in the market place. Mr. Morrow described staffing requirements with a high ratio of clerical support to service providers which were needed to deal with the high volume of paperwork demanded by Workers' Compensation. Contract negotiations with SIIS had recently been completed, he said, which, in essence, had left them as a managed care system. Each firm selected by SIIS had agreed to cut fees by 10 percent. The contract had spelled out the qualifications to practice as vocational rehab counselors, demanding a 35/1 client to staff ratio. Mr. Morrow opined a smaller ratio of clients to counselors was more effective. He said the contract also stated standards for the delivery of services, specific time limits for the provision of these services, specific fee schedules and extensive reporting guidelines in order to monitor effectiveness of a particular firm. He reported the October 1992 contract had not yet been signed by all parties, but all selected firms had been adhering to the terms of the contract and considered the contract to be a working agreement.
In conclusion, Mr. Morrow said there was an advantage in continuing with at least partial privatization of vocational rehab, especially in service delivery. He stated they had a large pool of professional counselors; the initial setup investment had been made; the agencies had begun operations with no cost to the state; and were fully operational.
Following Mr. Morrow, Kathy Sigurdson from Rehabilitation and Counseling, came forward and submitted Exhibit F (amendments proposed to SB 316).
Chairman Giunchigliani questioned the deletion of the words "or public agency" as shown on the last line of paragraph 1, on Exhibit F. She asked if this would preclude the existence of the interagency agreements with the Bureau of Vocational Rehabilitation. Ms. Sigurdson said, "Yes." Also, Chairman Giunchigliani asked if the words "and/or" would still permit the interagency agreements. Ms. Sigurdson said it would appear that way.
Testifying on behalf of the Vocational Rehabilitation Consultants, Ed Howden told the committee SIIS had indicated to him the private rehabilitation consultants' billing of $59/hour could better be represented at $71.88/hour. He said it appeared the system had arbitrarily tacked on over $900,000 in costs which were costs SIIS chose to implement. Mr. Howden said when he looked at the costs provided him, he believed $59/hour allowed the private sector to manage their companies and did not overburden the system.
On the other hand, Mr. Howden said, the SIIS claimed it could provide rehabilitation services at $45.61/hour. By his calculations, he thought it might be closer to $71.58/hour. Therefore, he thought the private sector rehabilitation did as good, if not better, a job, had more qualified professionals in direct contact with injured workers -- and saved money in the process.
In response to Mr. Ernaut's concerns, Mr. Morrow told him most rehabilitation procedures were relatively standard. The difficulty arose in predicting how long it would take to place the individual in a job.
Continuing, Mr. Ernaut asked if Mr. Morrow was content to work with an unsigned contract. In response, Mr. Morrow said it was a good working agreement and they were content not having a signed contract.
Mr. Ernaut also questioned Don Jayne, General Manager of the State Industrial Insurance System, whether the private sector vocational rehabilitation had provided a more cost-effective and efficient system than was enjoyed before they used the private sector. Mr. Jayne said part of SIIS's problem was not having sufficient resources to handle all the rehab work coming in. Mr. Jayne agreed with Mr. Morrow's statement the agreement between the private sector vocational rehab and the state was satisfactory and they were using some 15 firms throughout the state. Whether they were more cost-effective, Mr. Jayne thought with the proper resources and staff SIIS could provide services in a more cost-effective fashion than the private sector.
Considering the situation SIIS was now experiencing, Mr. Jayne said they would not have the existing agreement with the 15 firms being used if SIIS was not satisfied with the services the private contractors provided. More internal resources, of course, would be preferable.
Chairman Giunchigliani suggested when considering amendments, they insert "vocational rehabilitation" in the two sections where rehabilitation was mentioned in section 115, paragraph 1, since there appeared to be some confusion between physical rehabilitation and vocational rehabilitation. Also, Chairman Giunchigliani referred to the amendments shown on Exhibit F, asking if the intent of the private vocational rehabilitation counselors was to make certain the private sector was still used by the system and not necessarily to prevent the agency from entering into interagency agreements with the Bureau of Vocational Rehabilitation. Ms. Sigurdson said the intent was to continue utilization of the private sector, but not to preclude other agencies.
Regarding lump sum settlements, Chairman Giunchigliani referred to Senate Bill 7 of the Sixty-sixth Session and said she was concerned about people using lump sum settlements improperly. Although the system saw merit at times in just cutting someone loose from the system, Chairman Giunchigliani said she agreed up to a point, but could not see it continue long term. She questioned the criteria used by SIIS, and advised SIIS representatives they should be prepared to present some of the criteria for committee consideration.
Questioning the private counselors, Chairman Giunchigliani asked them if they performed a full vocational assessment; whether they spoke with employers; whether they spoke with treating physicians if necessary; and whether they spoke with the employees.
Mr. Howden thought it would be difficult to relieve the system of the obligation of rehabilitation and use "lump sum" as the only way out. He said many of the counselors had worked with systems using ratings to determine the ability of the individual to return to work. Thereafter, the labor market for that skill could be identified; the wage they could obtain when returning to work; and the benefits they could expect. He said counselors had been doing this for years, but it needed a qualified rehabilitation professional to do it properly.
Turning to the bill, Chairman Giunchigliani brought attention to section 115, page 44, line 7, suggesting the wording be changed from "2. Before ordering any rehabilitative services. . .," to "2. Before ordering any vocational rehabilitative services." She asked the private counselors if they did any of the type of counseling spoken to in the paragraph. Ms. Sigurdson said they did this prior to the vocational assessment. Referring to "lump sum" pay-offs, Ms. Sigurdson said a private sector qualified rehabilitation provider not only performed the vocational assessment but also interfaced with the injured worker to assess his skills; identified potential modifications in the work-place with the potential employer; and worked with the treating physician to see if a modification or accommodation would be appropriate. She allowed this was not always done before a lump sum settlement, whether the individual was involved with SIIS or the private sector.
Chairman Giunchigliani and Ms. Sigurdson discussed cooperative efforts with employers in trying to devise job modifications in order to accommodate an injured worker. At some point, Chairman Giunchigliani said, she would be asking the SIIS representatives whether they had qualified personnel who worked with employers on job modification.
Mr. Howden interjected in addition to seeking ways to modify a job to suit an individual's skill, rehab engineering was the most important aspect of their training.
Chairman Giunchigliani questioned the issue of eligibility for rehabilitation, i.e., what would make one person eligible for rehabilitation and another not eligible. She did not see ratings as being related to rehabilitation. She also asked what time line the private sector tried to hold to. Mr. Morrow reiterated from the point of referral to closure it was 10.8 months. This included retraining, on-the-job training and any necessary services.
Chairman Giunchigliani asked the private counselors to discuss what kinds of things the committee needed to watch for which might hinder or delay the process if private rehab was used, such as burdensome paperwork or longer term maintenance. In response, Mr. Morrow explained very few of the more difficult cases could be resolved without extensive rehabilitation planning which drove up the costs and which, in turn, drove up temporary disability payments.
Mr. Anderson asked if the cost of the private vocational rehab process would decrease if the formal education requirement was dropped. Mr. Morrow replied, ". . . Rehabilitation is such an individualized task that if you take any kind of formal education out of the loop then what you're asking to do is put the responsibility for retraining of injured workers on other employers -- they end up with the problems. So an educational facility that specializes in preparing individuals for work, whether they're injured or not, is the arena to do that. The time frame that entity might have, I think is important. I believe that if you stretch it out over months they're going to take months. The other side of it is that you end up with individuals going to publicly funded institutions and you drive the cost to the taxpayer. If we want to keep the costs on the employers then I believe we have to keep some semblance of formal education active."
Mr. Carpenter was concerned about the efficiency of the system, and opined in reality, questionable results were shown for the amount of money spent. He wondered if the system would be better off just to give the person a lump sum payment and let the person use it for whatever he considered most important. In response, Ms. Sigurdson said she would be happy to prepare a report on return-to-work statistics, but relating to lump sum settlements, a small case survey in 1992 had shown over 80 percent of the individuals receiving "lump sum" payments had remained unemployed after receiving the settlement. This meant many were probably either on welfare, Aid to Dependent Children or drawing from some other public entity to live. Mr. Carpenter was not entirely convinced.
Chairman Giunchigliani noted actual rehab costs were approximately $15 to $18 million and maintenance was approximately $65 million. Rehab, in and of itself, was not driving the cost as much as maintenance time. The more this was extended, the larger the cost. Addressing Mr. Morrow, Chairman Giunchigliani thought surely there was a time for lump sum settlements.
Representing the Nevada Association of Rehabilitation Professionals, Marsha Berkbigler came forward. She agreed with Chairman Giunchigliani the biggest cost involved with vocational rehabilitation was maintenance. Ms. Berkbigler thought one of the reasons the system benefitted by the private sector was the incentive to turn the injured worker back into the system as quickly as possibly.
Mr. Carpenter wondered why, if the goal was to get the injured worker back into the work force, it was not happening. Speaking as an employer, he thought if great sums of money had to be put out for vocational rehabilitation, they should just take that money and give it to the injured worker. Mr. Carpenter insisted he would like to see statistics showing the results of what the vocational rehabilitation service was doing.
Agreeing, Chairman Giunchigliani suggested the committee should have a chance to look at exactly how many people were on rehabilitation, how many were actually referred to the Bureau of Vocational Rehabilitation and how many were referred to outside services.
Referring to earlier testimony, Ms. Kenny asked who made the decision on which firms to select when the contract with SIIS was developed. Mr. Morrow said many firms had worked with SIIS since 1990 and SIIS tended to work with the firms they were familiar with. After SIIS prepared the contract representatives from the private sector in both the south and north had discussed and provided input. Ms. Sigurdson interjected the criteria had been set forth by SIIS, SIIS developed the Request for Proposal (RFP) and the contract, and indicated what the fee schedule would be.
Again responding to Mr. Carpenter, Mr. Morrow said part of the present financial crisis was based on figures from several years ago. Prior to 1990 SIIS did not have sufficient manpower for vocational rehabilitation; nor did they refer injured workers to the private sector in significant numbers. In the past two years SIIS had not only increased its own staff, there were also more private sector people working. He thought injured workers were now receiving services much more speedily.
Mr. Collins questioned whether statistics were available which would show results from retraining, whether injured workers were returning to the same type of jobs they had before being injured and how many were actually going into different types of work after retraining. Mr. Morrow responded they had no provision for a follow-up period. However, Ms. Sigurdson said she understood SIIS kept internal statistics relating to this question.
In response to Mr. Ernaut's question, Ms. Berkbigler said she believed the private rehabilitation services returned injured workers back to work quicker than SIIS; however, this was only her opinion. Continuing, Mr. Ernaut asked Ms. Berkbigler if she knew what kind of time line SIIS maintained before SIIS went to private services. Neither Ms. Berkbigler nor Mr. Morrow were certain of the answer.
In closing, Ms. Berkbigler said the group she represented was satisfied with the way the system was presently working in respect to placing injured workers with the private sector. They did not want to bypass the system, but rather to work together as a team. Ms. Berkbigler stressed they believed the private system was working effectively in providing a good service to the state, and given sufficient time, she thought they could show drastic savings by being part of the overall team concept.
Mr. Anderson questioned language on page 44, section 115, subsection 4, lines 36-38, relating to, ". . . rehabilitative services during the time the injured employee is incarcerated." Would this move the cost of vocational rehabilitation away from SIIS and to the general fund? Answering this, Don Jayne said the intent of that section of the bill was to prevent someone incarcerated from receiving rehab maintenance benefits while they were, in fact, incarcerated. Scott Young came forward to explain while a person was incarcerated they would not receive their Temporary Total Disability (TTD) checks but would still receive medical care needed as a result of their industrial injury. This would be paid for by SIIS. As for rehabilitation, the person would not be in any formal program , they would not receive rehabilitation maintenance and they would not be trained. When released, if the person was eligible for rehabilitation, he would be picked up at that time. Mr. Anderson said he was mainly concerned costs might be incurred to the penal system which more properly belonged with the SIIS vocational rehabilitation program.
Language found on page 44, section 115, paragraph 4, line 25 and 26 regarding formal education in vocational rehab services was questioned by Mr. Anderson. He wondered if this service was being completely removed or only being transferred. Mr. Jayne replied it was his impression this was to be removed.
As a follow-up to Mr. Anderson's question, Mr. Young commented on language on page 8, section 22, subsection 3, stating "vocational rehabilitation may include formal education." He believed this indicated just a transfer in the formal education.
In response to Mr. Ernaut's question, Mr. Jayne said what he thought could be agreed upon was that over 80 percent of the cost of vocational rehabilitation was, in fact, in rehabilitation maintenance and delays in getting the injured worker back into the work force. As to referring cases to private services, Mr. Jayne took issue with comments made by private counselors that currently 49 percent of rehab cases were being referred out of the agency. He did not believe the 49 percent being referred out were the most severe cases. He said this might have been true when the private sector was first used, in order to catch up with a tremendous backlog. However, he was not aware of any internal intent or direction from himself or his management team to refer out the tougher cases. He agreed with Mr. Ernaut it could have happened in the early cases, but he said he could not agree for certain.
Mr. Jayne went on to agree whether the person was in a six-month or twelve-month or a two-year education program, the time spent incurred maintenance costs. Any time spent in waiting would definitely add to this, but he did not think it was any longer true the majority of the expense was because of sitting around waiting for something to happen. Those situations were rapidly improving, Mr. Jayne opined.
Discussing the private sector's stated average period of time to complete the rehab program, 10.8 months, Mr. Jayne said this did not include the two to three months working with the agency prior to being referred to the private service. The most recent figure prepared by SIIS was 13.6 months, but this included the entire period of time. Ultimately, he thought the periods of time were comparable.
Chairman Giunchigliani reviewed plans for the Las Vegas meeting the following Saturday, April 17, 1993; and announced vocational rehabilitation would again be scheduled to be heard in a separate meeting.
There being no further business, the meeting was adjourned at 7:47 p.m.
RESPECTFULLY SUBMITTED:
Iris Bellinger
Committee Secretary
NOTE FOR THE RECORD:
Chairman Giunchigliani has asked for the following exhibits to be included and made a part of the record in this set of minutes:
1. Exhibit G - Notes made by Chairman Giunchigliani at a later time.
2. Exhibit H - A letter from Edward N. Fishman, D.O., Nevada Osteopathic Medical Association.
3. Exhibit I - Notes submitted by Lynn Grandlund for the record.
??
Assembly Committee on Labor and Management
Date: April 12, 1993
Page: 1