MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT

 

      Sixty-seventh Session

      May 12, 1993

 

 

 

The Assembly Committee on Labor and Management was called to order by Chairman Chris Giunchigliani at 5:43 p.m., Wednesday, May 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. Chris Giunchigliani, Chairman

      Mr. Bernie Anderson, Vice Chairman

      Mr. Douglas A. Bache

      Mr. John C. Bonaventura

      Mr. John Carpenter

      Mr. Tom Collins, Jr.

      Mr. Lynn Hettrick, late/excused

      Mrs. Erin Kenny, late/excused

      Mr. John B. Regan

      Mr. Michael A. Schneider

 

 

COMMITTEE MEMBERS ABSENT:

     

      Mr. Peter G. Ernaut/excused

 

           

GUEST LEGISLATORS PRESENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Mr. Frank Krajewski, Senior Research Analyst, LCB

      Ms. Vivian McClay, Senior Research Technician

      Ms. Kimberly Morgan, Assembly Bill Draft Adviser, LCB

      Ms. Leigh O'Neill, Deputy Legislative Counsel, LCB

      Mr. Donald Williams, Principal Research Analyst, LCB

 

 

OTHERS PRESENT:

 

      Mr. Scott Craigie, Chief of Staff, Governor's Office

      Mr. Scott Young, General Counsel, State Industrial

            Insurance System

      Mr. Larry Zimmerman, CDS of Nevada

      Ms. Lynn Grandlund, Grandlund, Watson, Clark, NAIB, EON

            and ASA

      Mr. George McNally, Nevada Trial Lawyers Association

      Ms. Theresa Rankin, Insurance Commissioner, State of Nevada

      Ms. Nancyann Leeder, Nevada Attorney for Injured Workers

      Ms. Carol Jackson, Director, Department of Industrial

            Relations

      Mr. Danny Thompson, Nevada AFL-CIO

      Mr. Bill Champion, Nevada Unified

      Mr. Arthur L. Busby, Jr., Horseshoe Operating Club, Inc.

 

 

Ms. Giunchigliani announced the committee would hear testimony on the areas of SB 316 pertaining to Subrogation, Reopening Rights, Hearings and Appeals (Exhibit C).

 

Senate Bill 316 -Makes various changes to provisions governing industrial insurance.

 

Ms. Giunchigliani opened the hearing on Subrogation, requesting testimony on Section 188.

 

Mr. Don Williams, Principal Research Analyst, LCB, reviewed the technical amendment of subsection 1, page 80, line 28 (Exhibit D).

 

Ms. Giunchigliani voiced concern with the language "as a gift" in subsection 1 (b). 

 

Mr. Scott Young, General Counsel, State Industrial Insurance System (SIIS), said SIIS requested the language to clarify incidents where payments made as "gifts" by employers were actually settlements in lawsuits.

 

Mr. Williams referenced Mr. Young's suggested amendments to Section 145 in his letter of April 19, 1993 and its attachment (Exhibits E & F).

 

An error in SIIS' proposed amendment was pointed out in subsection 1 (a).  The "]" in the amended language should have been "[."

 

Mr. Young maintained he had discussed the Department of Industrial Relations' (DIR) proposed amendments to Section 145 (Exhibit G) with both Mr. Jim Jeppson and Ms. Carol Jackson.  He stated SIIS and DIR were no longer in disagreement and would submit consolidated language to incorporate the agreed to changes.

 

Responding to Mr. Regan, Ms. Giunchigliani agreed the language in subsection 11, page 57, in reference to the fine should read "not less than $10,000 shall be imposed."

 

Mr. Young, in reply to an earlier request by Mr. Collins, referenced his letter of May 11, 1993 (Exhibit H) and SIIS' proposed amendment to NRS 616.630 (Exhibit I).  The amended language required payment of back premiums, plus the assessment of a penalty three times the amount of premium due.

 

Mr. Anderson reiterated a concern the assessment of penalties in addition to the payment of back premiums would ultimately push many employers into bankruptcy.  He was of the understanding the committee had decided on judicial discretion at the last meeting.

 

Ms. Giunchigliani stressed the in-house administrative fine was a separate issue.  The committee had decided in the previous meeting to change the administrative fines from "may" to "shall" and "not less than $10,000."  She conceded, however, there was nothing wrong with revisiting the issue. 

 

Various circumstances might leave companies uninsured for only a very short window, in which case Mr. Young opined the mandatory $10,000 fine inappropriate.  His suggestion was to allow discretion of "not more than" $10,000.

 

The committee agreed to the concept outlined in SIIS' proposed language to NRS 616.630.  Therefore, Ms. Giunchigliani suggested the language of Section 145 not be changed, but left at "not more than $10,000."

 

There were no further comments on Subrogation, nor any objections to the suggested amendments.  Ms. Giunchigliani next referred to Section 187 which dealt with Reopening Rights.

 

Mr. Williams reviewed a technical amendment to a parallel section, Section 215 (Exhibit J).

 

From written language, Mr. Young testified on a proposed amendment to Section 187, subsection 1(c) (Exhibit K).  He related a Supreme Court decision, The Hix Case, set the reopening standard requiring an objective change in circumstances.   Mr. Young also provided the original consensus language of Section 187 for clarification and simplification.

 

Mr. Larry Zimmerman, CDS of Nevada, referencing Mr. Young's proposed amendment to Section 187 (Exhibit K) observed a problem with subsection 9 which referenced NRS 616.567.  To accommodate self-insured employers, he requested subsection 2a) of Section 191 be eliminated.   He also suggested the committee consider increasing the figure from $200 to $500.

 

Ms. Giunchigliani concurred with the deletion of subsection 2a) from Section 191 as the provision was to apply to all insureds.  Discussion as to the appropriateness of the $200 figure ensued. It was suggested SIIS provide the average "medical only" figure for consideration in lieu of the $200 quoted in Section 191, subsection 2.

 

In reply to a question by Mr. Carpenter, Mr. Young maintained the consensus language applied only to the reopening portion of Section 187, therefore subsections 6, 7, 8 and 9 of Exhibit K were still necessary.

 

Responding to a question on the committee's preference for either language, Ms. Morgan noted the amended language of Section 187 was taken directly from the consensus language.  She stated it would be reviewed to see if it could be made more "user friendly."

 

Ms. Giunchigliani in reference to subsection 6, clarified claims reopened after retirement were for "medical only."

 

Mr. Williams observed a related amendment, proposed by the associations representing fire fighters and police, was to delete Section 233 which adversely affected the Heart and Lung statutes.

 

There were no objections to the deletion of Section 233 of SB 316, which Ms. Giunchigliani explained left the Heart and Lung provisions unaffected.

 

The Chair noted there was no further testimony on the sections pertaining to Reopening Rights.  The bill draft requestors were asked to work on the discussed areas in addition to the technical amendments of Section 215.  Testimony was opened on the areas of SB 316 relating to Hearings and Appeals.

 

Ms. Lynn Grandlund, Grandlund, Watson Clark, NAIB, EON and ASA,  suggested adding "or licensed employer representatives" following "legal counsel" in subsection 6 of Section 175 (Exhibit L).

 

Mr. George McNally, Nevada Trial Lawyers Association, thought the addition of the word "employer" would prevent other licensed representatives from counselling claimants.

 

Ms. Giunchigliani explained AB 286 would eliminate the issue of licensing altogether and return to the original intent of the law which provided for both employer and union representation.

 

Ms. Theresa Rankin, Insurance Commissioner, called attention to Section 178, NRS 616.5415, which outlined the existing law on contested case "representatives."  She noted the provisions of Section 176, where persons chose to bypass mediation to appear before an appeals officer, had been discussed in the April 20th meeting.  The consensus, she believed, was to require "employee" representation at this level by persons licensed to practice law, thus ending the dispute under NRS 616.5415. 

 

Concern was noted by Mr. Bache relative to subsection 6, of Section 175 as the Nevada Attorney for Injured Workers was prohibited from representing workers at the mediation procedure.  He feared injured workers would, therefore, be required to hire outside counsel at the first hearing level.

 

Mr. Anderson pointed out the amendment to subsection 6 which replaced "and" with "or" (Exhibit L) was submitted in response to Ms. Leeder's concern.

 

Testifying from Las Vegas, Ms. Nancyann Leeder, Nevada Attorney for Injured Workers, noted it was a legislative decision.  She pointed out that although her office could not participate at the mediation level, it could offer advice to employees.  How active the advice might be, however, depended upon her office's caseload.

 

For clarification, the Chairman asked Mr. Scott Craigie, Governor's Office Chief of Staff, to walk through the provisions of the governor's proposed mediation/appeals process.

 

Mr. Craigie explained Exhibit M provided for the inadvertent omission in SB 316 of language which dealt with alcohol/drug abuse, fraud or whether the employee's injury did or did not arise out of the course of employment.  Also, subsection (b) dealt with Mr. Carpenter's concern of the appeals process in rural areas of the state. 

 

The purpose of the amended language, as noted by Ms. Giunchigliani, was to identify the three issues as areas which should be handled by the appeals level, bypassing mediation.

 

Mr. Craigie stated the amended language of Section 79 merely provided appeal rights to the claims areas which were not compensable.

 

Mr. Collins inquired whether employers had any responsibility in the cases referred to by Mr. Craigie, specifically alcohol abuse on the job.  He hypothesized an intoxicated employee might be injured through no fault of his own, such as another employee's actions.

 

Mr. Craigie, noted there might be some responsibility.  However, he reported in terms of the involvement of the workers' compensation system, there was no indemnification of the operator of the business, and there was no claim to be made by the worker. 

 

Several individuals became involved in a discussion on the timeframe quoted in the language of SB 316, Section 79.  Mr. Craigie indicated he did not have a problem adjusting the 60 days and, in fact, thought it a wise decision.  Although, he believed the medical issues should first be reviewed by the medical care organization (MCO). 

 

Mr. McNally opined the managed care determinations should only deal with medical issues, not temporary total disability (TTD) or permanent partial disability (PPD) ratings.

 

The Chair noted Ms. Kenny and Mr. Hettrick were working on language which would be reviewed when the issue of managed care was heard before the committee.

 

Ms. Giunchigliani drew the committee's attention back to the hearings and appeals process.  She referenced the changes made by the last legislative session in SB 7.  Currently, she quoted approximately 80 percent of all appealed cases were handled at the hearings level, whereas only 5 to 10 percent continued on to district court. 

 

Mr. McNally clarified out of the 11,000 appeals filed in 1991, 9,221 were resolved at the hearings officer level.  He noted 2,269 were processed at the appeals level while only 134 of those went on to district court.

 

Mr. Craigie was asked to relate his understanding of the proposed mediation level which was to replace the hearings level in SB 316.

 

What Mr. Craigie saw happening with mediation was an even further step in the direction taken last legislative session.  He determined the mediator merely counseled the two opposing sides to draw a decision ending the appeal at that level.  Further, he noted, a means had been provided to bypass the mediation level in cases known to be contestable.

 

Because mediators had no authority to make decisions, Ms. Giunchigliani believed more cases would end up at the appeals level.    

 

Although a larger percent of cases would ultimately end up at the appeals level, Mr. Craigie felt many would skip mediation resulting in only one hearing.  He noted, in response to a question by Mr. Collins, employees currently involved in the hearings process would continue working at the mediation level, however additional training would be required.  Also, through normal attrition, personnel with mediation expertise would be employed.  He did not anticipate any increase in the number of either mediation or appeals personnel, but in response to Ms. Kenny indicated he would check with the Budget Office and report back to the committee.

 

Ms. Carol Jackson, Director, Department of Industrial Relations, claimed hearing officers were classified employees, whereas appeals officers were appointed by the Governor for a two-year term.

 

Mr. Craigie believed a large number of cases traditionally heard at the hearings level would be resolved within the managed care organization.  Every group health organization had a dispute resolution operation within it to handle medical issues.  He opined medical people judging medical issues was a more fair concept than legal representation. 

 

When asked for a definition of "medical decision," Mr. Craigie requested he return to deal with the areas he believed would be appropriately handled by the dispute resolution group within the managed care organization.

 

Mr. Anderson related appeals who fell out medically would fall out right away; however, he opined a substantial increase would be seen at the hearings level with the proposed non-binding mediation.

 

Mr. Craigie suggested if that was the committee's general consensus it ought to eliminate mediation altogether and implement "one-stop shopping" at the appeals officer level.

He believed the drawn out system of passing injured workers from one level to another resulted in a group of very frustrated injured workers.  If, as Mr. Anderson suggested, the committee preferred to make the mediation level binding, it should eliminate the appeals level, again, resulting in only one level of appeals.

 

Mr. Hettrick believed Mr. Anderson was hung up on the percentages currently seen at both the hearings and appeals level.  He pointed out with the medical organizations internal review there would be a sizable reduction in total cases seen at either level of appeal.  Further, he questioned how many cases heard at the hearings level were resolved simply with the information given by the hearings officer, rather than because of an actual decision.

 

Another piece of information to be reviewed, noted Ms. Giunchigliani, was the actual number of cases which had anything to do with the treatment offered.  One component missing was accountability of the claims examiner who made the initial recommendation of approval or disapproval. 

 

Mr. Craigie stated a major contributor to the costs incurred by the System was the cost of compensation while workers went from one level to the next awaiting a decision on their appeal.

 

Ms. Giunchigliani was of the opinion compensation was not paid while awaiting an appeal if it was a compensatory issue.

 

Mr. Collins requested a "cooling off" period be considered for appeals officers entering the private sector after being employed by the System.

 

Although Mr. Craigie favored a cooling off period, as evidenced by prior legislation he proposed with regard to public service commissioners, he requested further time to explore the issue.

He was hesitant to commit as he felt there was a need in the legal community for individuals knowledgeable of the workers compensation process.  He opined the more knowledgeable the counsel, the quicker the resolution.

 

Mr. Bache inquired as to the meaning of the language of Section 179. 

 

Responding to Mr. Bache, Mr. Craigie believed multiple issues before a mediator would be handled individually.  Therefore, if three of five issues had been resolved, only the remaining two would be presented at the appeals level.

 

Mr. Danny Thompson, representing the AFL-CIO, questioned why the appeals process was being revamped if it was not broken.  He pointed out the current process weeded out 80 percent of appealed cases at the hearings level, 19 percent at the appeals level, with only about 1 percent taking the last step to district court.  He was of the belief the mediation level, without any decision making authority, was an additional unnecessary step.  Mr. Thompson opted for the additional medical reviews to be performed by medical organizations in conjunction with the current appeals process.

 

Mr. McNally verbalized his understanding of non-binding mediation.  He stated he did not, and would not, handle non-binding mediation in the practice of law.

 

Upon questioning Mr. Craigie, Ms. Giunchigliani observed the Governor's original proposal was solely for non-binding mediation with the remaining cases moving directly to district court.

 

Mr. Craigie agreed, however, noted the medical care organization review process would be the first step.

 

Concern was expressed by the Chair with medical care organizations deciding compensability, TTD and PPD issues. 

 

Again, Mr. Craigie noted he did not care how the process was broken down.  If Ms. Giunchigliani wanted the prior mentioned issues handled outside of the MCO process, he said that was fine.  However, he maintained the idea was for one, and only one level of appeal. 

 

Cost being an issue, Ms. Giunchigliani questioned forcing cases into an appeal when the outcome would be greater cost to both the System and injured worker.  She pointed out legal counsel would be necessary at the appeals level.

 

Mr. Bill Champion, Nevada Unified, agreed with Mr. Craigie's analysis of the first stage of the appeals process.  He referenced research of an organization which did quality managed care and utilization review in which out of 832 cases in the past year, only 1 case had gone to the appeals level.  However, he concurred TTD and PPD were another matter as the mentioned organization was concerned solely with medical care issues, not workers' compensation.

 

Mr. Zimmerman noted there was no money involved on the health side, whereas workers compensation was a much more complex issue.  He saw merit with MCO's handling some sort of mediation process, but questioned who opposed the current hearings process.  Perhaps, he opined, hearing level employees ought to be classified and additional training might be needed for consistency, but the procedure worked well.  He feared the end result of non-binding mediation would be more litigation.

 

Ms. Lynn Grandlund expressed frustration with reworking the hearings and appeals area.  She noted improvement had been seen as a result of SB 7 from last legislative session.   With the addition of the proposed managed care grievance process, her belief was the hearings and appeals process should be left as it currently was.

 

Mr. Arthur L. Busby, Jr., Horseshoe Operating Club, Inc., stated none of the cases he heard within the past six or seven months were for medical reasons, other than ones which directly affected TTD or PPD payments.  He, too, was satisfied with the current hearings and appeals process.

 

Ms. Giunchigliani requested Mr. Craigie return to testify before the committee on his understanding of the medical review process. 

 

Mr. Carpenter asked the State Industrial Insurance System to provide some input as to its feelings of the hearings and appeals arena.

 

Mr. Young explained, in general, the present structure operated fairly well.  He noted issues relating to accident benefits might appropriately be handled by MCOs.  However, unresolved MCO cases might be more suitably handled by the appeals level as informal mediation would have already occurred within the MCO.  He opined the hearing level weeded out a tremendous number of cases and believed circumstances involving other than accident related benefits should continue to be handled in the current manner.  He contended there were good points to be made on both the mediation and hearing arguments and SIIS would abide by either policy decision the legislature made.

 

The Chair reviewed other proposed amendments pertaining to the Hearings and Appeals process (Exhibit I).

 

Ms. Morgan expressed a problem with the change from "the dispute" to "a dispute." 

 

Mr. Hettrick commented the concern was what if more than one issue was involved in a dispute.

 

The committee's decision was to leave the language in question to the discretion of Ms. Morgan.

 

Ms. Giunchigliani announced Mr. Brian Nix, from the Hearings and Appeals Division, would make a future presentation to the committee on time lines. 

 

Mr. Carpenter was asked to save his concern with the amendment of Section 179 adding "in person or by telephone" for the meeting in which Mr. Nix would be present.

 

Relative to Section 179, Mr. Zimmerman was of the belief someone should have to request a hearing before the appeals officer rather than having one automatically scheduled.  The claimant might decide to merely drop the issue after his hearing, but the insurer would be required to obtain counsel in anticipation of the appeal.

 

Mr. Zimmerman also noted concern with Section 182 in which Mr. Nix requested the appeals officer be allowed to order the stay of decision at any time.  He requested reconsideration of the proposal as the appeals officer could then order the stay before the actual hearing.

 

Ms. Giunchigliani stated she would discuss the concern at the next meeting with Mr. Nix.

 

There being no further business to come before committee, the meeting was adjourned at 8:15 p.m.

 

      RESPECTFULLY SUBMITTED:

 

 

                             

      BARBARA A. DOKE

      Committee Secretary

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Assembly Committee on Labor and Management

May 12, 1993

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