MINUTES OF THE
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
May 5, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Christina R. Giunchigliani, at 5:42 p.m., on Wednesday, May 5, 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
Mr. 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:
Danny Thompson, AFL/CIO
Scott Young, General Counsel, State Industrial
Insurance System
Larry Zimmerman, Consensus Group
Mark Balen, Professional Firefighters' Association
Paul Aakervik, Aakervik & Associates
Jim Jeppson, (Las Vegas) Director Division of
Industrial Relations
ASSEMBLY BILL 316 - Makes various changes to provisions governing industrial insurance.
Following opening remarks made by Chairman Giunchigliani, Danny Thompson, representing the AFL/CIO, came forward to express opposition to the proposed benefit reductions proposed in Section 292. This section, Mr. Thompson related, effectively froze the average monthly wage for two years. He said there had been no increases in SIIS benefits for 13 years and the average wage changed only when a worker received a periodic pay raise covering the rate of inflation. Referring to a proposal made during testimony the previous evening, Mr. Thompson said one third of all employees in Nevada were self-insured and it was understood a growing number of those employees were government employees. The cities of Henderson, Sparks, Carson City, Clark County School District and Clark County were now self-insured and these entities had left liability in the system. Therefore, Mr. Thompson concluded, his group proposed a self-insured should be assessed $500 for a lost-time accident in order to pay a fair share of the cost. As it was written, Mr. Thompson indicated they opposed Section 292 of SB 316 and wished to see it deleted entirely.
Mr. Carpenter asked Scott Young, Counsel for the State Industrial Insurance System, to comment regarding language on the $200 deductible provision and Occupational Safety and Health Administration (OSHA) standards as seen in Section 14, page 6, lines 10-16. Mr. Young commented the language speaking of OSHA standards and the $200 deductible was not language SIIS had been involved in.
Linking up by telecommunications, Jim Jeppson, Division of Industrial Relations, said they presently did not have a specific form established for the employer to record claims which were not to be reported to the system; and he believed the language of Section 14 suggested such a form should be created for an employer to keep a record of those claims for OSHA reporting requirements. However, he said the OSHA 200 form could be used for the employer to record all accidents occurring on the job.
Mr. Carpenter asked Mr. Jeppson to supply him with a copy of the OSHA 200 form and expressed concern regarding the $200 deductible. Mr. Jeppson said he would see the committee received copies of the OSHA form.
Representing the Consensus Group, Larry Zimmerman testified he would like to see NRS 616.500 passed as written except for the language dealing with the $200 deductible. Mr. Zimmerman noted Mr. Carpenter's concerns and agreed he had some problems with the deductible and present reporting requirements regarding the $200 deductible. While claims of less than $200 were not required to be reported to SIIS, at the same time the employer had to report all claims where the employee had to go to the doctor within six days. Sometimes the employer thought he had a claim of less than $200 only because he had not received all the bills, and accordingly, had not submitted the proper form. This complicated the process because first, there was a violation of the statute in not submitting the form and it additionally prolonged the decision-making process at SIIS if the employer's report was not sent in.
Chairman Giunchigliani wondered if language could be devised to address a minor injury without stating a dollar figure. Mr. Zimmerman observed the dollar figure came with the deductible in that if the claim was less than $200 the employer did not have to report it. The confusion came when and if the claim went over $200. This was further discussed.
For medical treatment, non-lost time, Chairman Giunchigliani said they did not want the employer to have to send in paperwork. The notice of injury could be filled out, kept in the file and if nothing else happened that would be the end of it. The OSHA 200 form had to at least be documented, but this was a different reporting system.
In response to a question from Mr. Hettrick, Mr. Zimmerman reiterated he did not see a problem with NRS 616.500 as presently written with the exception of the deductible. As for how things were reported and how notices were made, he saw this as workable. Unfortunately, he said, the statute was scattered throughout SB 316, but taken as a whole it was acceptable. He further discussed the OSHA forms and the $200 deductible.
Chairman Giunchigliani distributed Exhibit C, Proposed Consensus Legislation, which showed both the old language and the language proposed by the Consensus Group. Although spread out in SB 316, she noted when codified, it would be seen in NRS 616.500.
After studying the language shown on Exhibit C, Mr. Carpenter agreed it was better stated, but he still saw a problem with the provision mandating six days for reporting an injury, as seen on page 12, paragraph 6 of Exhibit C. He proposed: 1) Wages should be reported immediately when someone was injured in order to circumvent the need for additional paperwork; and 2) a flow chart should be devised to aid the employer in tracking an injured worker in order to assure timely paperwork was submitted. He wished to see the process made as simple as possible while still being as complete as possible.
In response to Mr. Carpenter's concerns regarding wages, Mr. Zimmerman suggested the language could read that the employer "may" send in wage information with every accident. However, this could prove unnecessarily burdensome, he predicted. This was further discussed.
After the discussion, Chairman Giunchigliani agreed with Mr. Carpenter's premise and suggested amending language to Exhibit C (page 11, line 1 of the proposed new language from the Consensus Group) which would delete "physician or chiropractor" and insert "medical and health provider." Mr. Zimmerman disagreed with the suggestion.
Scott Young, Counsel for the State Industrial Insurance System, came forward to comment on Sections 16 and 17, with extended remarks on Section 19. Regarding Section 16, subsection 2, Mr. Young explained this established a new concept and attempted to address the situation in which an employer was never informed there had been an accident, and subsequently, there was a claim submitted. He said it was well known many of these claims were in retaliation and/or the person no longer had a source of income and wished something more than unemployment. Mr. Young submitted Exhibit D, which was additional language stating the subsection only applied to accidents, as opposed to an occupational disease.
Chairman Giunchigliani was concerned the termination spoken to in the language of SB 316, page 6, line 31, could have resulted from the injury. Mr. Young, however, believed there were enough safeguards to prove and avoid a circumstance in which an employer terminated an employee just because there had been an injury. The Chairman questioned whether an employee would know where to obtain a "notice of injury" form and whether an employer would make it difficult for the employee to report an accident. Mr. Young explained the employer should have the "notice of injury" forms available just as they were required to have a C-4 form available. If these forms were not readily available, the employer was subject to sanctions from DIR. If the employer did not have the form or refused to give it to the employee, the employee should go immediately to the doctor if treatment was needed, and there ask the doctor to make a note stating the employee had attempted to give notice to the employer but the employer had refused to accept the notice of injury. Also, Mr. Young said, SIIS should immediately be notified the employer would not cooperate. However, he thought this circumstance would be fairly rare.
Mr. Hettrick pointed out language which stated the employer was "required" to have the forms available and other language stated there was a $1,000 fine if these forms were not available.
Mr. Young expressed support of Section 17, and said this section was also supported by the Board and the Consensus Group. He explained the rationale for the language.
Section 18 was also supported by the Board and the Consensus Group, Mr. Young stated. There had, however, been some concern expressed on behalf of the firefighters. The language stated an employee's medical records had to show some reference to an injury or disease in case of a late-manifesting condition; however, a disease could be contracted through an incident which did not manifest itself until a later time. Mr. Young said they wished to substitute language which said, "or in claims under NRS 616.110(3)" having to do with contagious diseases. (See Exhibit E.) This would allow the police officer or fireman to fill out a form documenting his/her contact with bodily fluids. Mr. Young indicated he would supply the language later.
Discussing Section 19, Mr. Young referred to comments he had heard which alleged SIIS sent letters to claimants threatening to cut off their benefits. He submitted Exhibit F, a copy of a sample letter routinely sent to claimants and told the committee in the past some claimants had said they had not been informed their benefits could be suspended if they did not comply with certain examinations. Thus, SIIS felt the claimants needed to be apprised of the consequences of not appearing for an examination.
Further discussing Section 19 and comments regarding mismanagement, Mr. Young acknowledged SIIS had not always done the best job on claims; but he thought it was often under-management, not mismanagement. Additional personnel had helped to alleviate the problem. As for mismanagement, Mr. Young referred to a publication published by the U. S. Chamber of Commerce entitled Nation's Business. The July 1992 issue with a cover story titled "Workers' Comp Out of Control" had stated, "In state after state in every region of the country the nation's 81 year old workers' compensation system is failing the employers and injured workers it was designed to serve." Other states were having the same problems as Nevada, Mr. Young declared.
Continuing with a discussion of the article from Nation's Business, Mr. Young explained the second part of the article dealt with what was causing costs to be out of control. It said, "There is no mystery about what's fueling this destructive cost spiral. Unrestrained medical costs, excessive legal disputes in what is supposed to be a no-fault system, broadening definitions of job-related injuries and rampant fraud and abuse." In the SIIS business plan, Mr. Young stated, they had tried to address most of those areas; however, he specifically wanted to discuss "broadening definitions of job-related injuries."
Section 19 dealt with two situations centering around two cases, SIIS v. Kelly and SIIS v. Warpinsky, both having to do with pre-existing conditions, Mr. Young explained. In the Kelly case, the worker had been born with a hernia which had not bothered him until he was at work. The hernia then protruded and the worker subsequently had to have surgery. The question was whether the employer and insurer should be responsible for the worker's congenital condition. The Supreme Court had ruled if there was a pre-existing, non-industrial condition which was aggravated or accelerated by some event at work, it became a work-related condition. Under Nevada's system when Permanent Partial Disability was then considered, the permanent partial disability attributable to the non-industrial condition could be apportioned out. He said the significant finding in Kelly was that the event at work did not have to be the cause, it only had to be a cause.
Thus, Mr. Young stated, Section 19 said what happened at work had to be the primary cause of the resulting disability. The language being proposed, he stressed, did not eliminate every injury where there was a pre-existing condition -- only where the pre-existing condition was the primary cause of the resulting disability. Mr. Young then discussed three examples of actual cases, i.e., H & H Warehouse v. Vickery, 805 P.2d 1167 (Colo. 1990); Kaufman v. Co-op Refinery, 225 P.2d 129; and a Nevada case in which a laborer suffered a hip injury during the course of stacking 25 pound blocks of concrete. The worker subsequently saw a doctor and had the hip X-rayed, and it was found he had a disintegrating bone disease called avascular necrosis. The doctor realized this took many months to develop and was not the result of something the man was doing at work. However, because the man was doing a type of work which induced the onset of pain and because of the pain had to have surgery sooner than he otherwise would have, this became an industrial case.
Mr. Young explained there had been a great deal of discussion regarding the reduction of workers benefits in order to help the financial condition of the workers' compensation program. SIIS would like to see benefits retained at the present level and savings accomplished by rejecting tangentially related cases. He believed it was better to save the money for the people who clearly had a work-related injury and not to use it as a safety net for people who did not have insurance.
Mr. Young said, ". . . There was a suggestion made that whenever SIIS loses a case in the Supreme Court they come in and want to have it changed. Well, the Kelly case came down in 1983; the Warpensky case . . . came down in 1987. You remember the discussion in the Harrison case -- that has to do with the average monthly wage -- that came out in about 1986. Initially we don't come in and ask for a change in the law just because there's been one case. We wait and see, in general, if there's an experience with that case that over time shows its going to have a much more significant impact. I think I testified on the Harrison issue that the Supreme Court in one of the footnotes said 'This is a rare situation. It won't come up very often.' Our concern is it is now coming up much more frequently. . . . Our experience is showing there is a tremendous number of injuries being included under workers' compensation that we feel should not be. So I wanted to put some perspective on why we come forward with these cases. . . . This goes back to what that article indicated, it's a broadening definition of injuries and we do believe that that, along with issues like mismanagement, is what is driving costs."
Ms. Kenny wondered whether the new legislation would present language which would be constantly overturned in court. Mr. Young did not think this would be the case. He told her the Legislature was allowed to adopt the laws; and the courts then applied the laws and sometimes interpreted them if it was felt there was a gap the Legislature did not address or there was an ambiguity. He also did not think the new legislation would have any affect on previous cases.
Ms. Kenny also questioned how many cases presenting such broad interpretation there were in Nevada. In response, Mr. Young said he had no hard figures, however, in looking at the fiscal note, SIIS estimated if the Kelly and Warpensky decisions could be reversed it could mean as much as $24 million. Of every 100 cases, however, perhaps 15 or 20 percent involved this doctrine in some form or another.
The Chairman asked Mr. Young to supply her with a definition of "much more frequently." She also wanted the numbers and actual case names of those cases typical of the Kelly case and a breakdown of how the $24 million was determined.
Hypothetical situations were discussed.
Ms. Kenny expressed concern with the word "primary" as seen in Section 19, page 7, line 32. She wondered if this might actually open the way for increased litigation by attorneys in trying to prove "primary." Mr. Young did not think so. He thought the cases now litigated were very close. If a standard of "primary cause" was used, in most cases it would be clear what was within the definition and what was outside the definition. Ms. Kenny maintained the phrase "primary cause" would be tested far more extensively.
Mr. Ernaut asked Mr. Young to further explain the special provisions for heart and lung conditions extended to firemen and police officers. Mr. Young told him regardless of the cause, any such condition would be conclusively presumed to have come from the work; and if the individual had worked in his position for at least five years, any heart or lung condition contracted would be a compensable condition. The only cause subsequent which would defeat the conclusive presumption would be in the situation where there was a lifestyle condition the officer could, but had not, corrected.
Also speaking to the provisions governing firemen and police officers, Mark Balen, representing the Professional Firefighters, stressed although NRS 617.457 clearly stated that any lung or heart problems were conclusively presumed compensable for firefighters and police officers, each and every case -- without exception -- had been appealed and had gone through the appeal process. He said through diligent efforts by the Professional Firefighters' Association, they had gained the "conclusively presumed" language in the bill in 1985. Nonetheless, since that time they had still been challenged.
Recalling Mr. Balen had so testified in Senate hearings, Mr. Young said he had asked the person who handled this type of claim to check every claim since the law changed in 1987. Mr. Young thought SIIS had seen approximately 40 or 42 cases involving heart and lung conditions for firemen and police officers. Eighteen of these had been challenged. Of those 18, one had involved an officer who did not have the required five years of service; two cases had involved individuals who did not meet the requirement of lifestyle changes; and three or four had involved people who did not file within the appropriate one year after the event. Four or five initially denied did go to a hearing and SIIS was ordered to take them.
In response to Mr. Collins' question, Mr. Young acknowledged SIIS sometimes received claims for heart conditions incurred by workers not police officers or firemen. These were not compensable claims because the conclusively presumed language was specifically directed to police officers and firemen.
Ms. Kenny wondered if the lifestyle rationale was used to deny other claims. Mr. Young answered, "No."
Mr. Young indicated support of Sections 21, 86, 169, 172, 190, 193, 197 and 198. Two changes they recommended to Section 233 had already been dealt with, he remarked. He then submitted Exhibit G, which was amended language for Section 234 dealing with a joint determination by the claimant's attending physician and the examining physician designated by the insurer. There had been some problems getting a treating physician to participate, he told the committee. Thus, the original language said the police officers and firemen could jointly select a rating physician. There had been some concern the police officers and firemen wanted the treating physician in the loop. Thus, the language developed would basically leave the section as it presently read with a proviso allowing the percentage of disability to be determined by a rating physician who was a specialist from the list.
Ray Badger, representing the Nevada Trial Lawyers' Association, told the committee the last two cases going to the Supreme Court dealing with the present aggravation standard, were won by the insurer -- and the injured worker lost. He stated he was not there to talk about specific cases but would try to explain the concept. Under present law, he said, the injured worker must prove every element of the claim by a preponderance of the evidence, i.e., 51 percent probable cause. Mr. Badger did not believe there was a definition of "primary cause" nor did he know for certain whether the proposed language would lead to more litigation; however, he thought there might be increased litigation until it was clearer how the courts would interpret the new statutes. Thus, he said, the Nevada Trial Lawyers' Association opposed the language of Section 19. Mr. Badger told the committee Jack Jeffrey, who represented the Southern Nevada Building and Construction Trades Council, had also indicated opposition to Section 19.
Paul Aakervik from Aakervik & Associates, third party administrators, came forward to comment on testimony given earlier in the meeting. Speaking on the $200 deductible, Mr. Aakervik said in regard to his business as the third party administrator of self-insureds, he had nothing to be gained by the deductible. However, he saw certain problems which had not been addressed. These were:
1. What happened if an unsophisticated employer accepted a claim, and paid the $200 deductible on a claim which was not compensable. This had been addressed in the Senate, Mr. Aakervik said, and language had been added to state acceptance by the employer would not be an admission of liability and would not force SIIS to accept the claim.
2. Mr. Aakervik also pointed out in a claim to SIIS the employer had to pay a $200 deductible. Alternatively, if the employer could deny the claim as uncompensable and direct the employee to the group carrier, the employee had to pay a deductible plus whatever co-payment was required. What recourse did the employee have? Could he risk losing his job by arguing the point? Did the employer have a responsibility to provide the employee appeal rights? Under the proposed deductible language, Mr. Aakervik did not think the employer's responsibility was clear.
3. If the employer was required to provide appeal rights when he [the employer] denied a claim, who represented whom at the hearing level? Did the employer defend himself? And if, for some reason, the employer did not attend the hearing could the claim be subsequently granted to the employee simply because the employer was in default. Would SIIS take the claim?
Mr. Aakervik stated definitely he believed there would be more litigation and more problems with the deductible provision than with anything else appearing in SB 316. Indeed, Mr. Aakervik saw this as a disaster. He went on to explain the OSHA requirements. Referring to his second point, Mr. Aakervik perceived if the employer denied an employee's claim as being uncompensable and directed the employee to the group carrier, it followed the employer did not submit the proper OSHA forms as it would not be a workers' compensation claim. This became a problem.
Mentioning a fee schedule, Mr. Aakervik said doctors typically charged more for workers' compensation claims. How was this to balance against the $200 deductible?
Also addressing the prohibition of advances, Mr. Aakervik described instances in which a worker on medical disability would not have been able to take part in vocational rehabilitation without an advance against the worker's permanent partial disability. He said he would like to see the wording changed regarding advances.
Before the meeting was adjourned, Don Jayne, General Manager, State Industrial Insurance System, submitted Exhibit H, a memo dealing with the Wisconsin Payment of Permanent Partial Disability, for committee study.
There being no further business, the meeting was adjourned at 7:39 p.m.
RESPECTFULLY SUBMITTED:
Iris Bellinger
Committee Secretary
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Assembly Committee on Labor and Management
Date: May 5, 1993
Page: 1