MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT

 

      Sixty-seventh Session

      May 20, 1993

 

 

 

The Assembly Committee on Labor and Management was called to order by Chairman Chris Giunchigliani at 3:38 p.m., Thursday, May 20, 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, 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. Brian Nix, Department of Administration, Hearings

            and Appeals Division

      Mr. Scott Young, General Counsel, State Industrial

            Insurance System

      Mr. L. Tom Czehowski, Steel Engineers Incorporated

            and Southern Associated General Contractors

      Mr. James Penrose, Dyer and McDonald

 

 

After calling role, Chairman Giunchigliani opened the meeting on SB 316.

 

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

 

Chairman Giunchigliani announced the first areas to be discussed were those pertaining to the hearings and appeals process, Sections 173 through 179 (Exhibit C), which had been discussed in Mr. Nix absence at a previous meeting.  She stated the committee had concurred with the changes proposed to Sections 172, 173 and 174.  Also, its preference was to keep the current two-tierd hearings and appeals process over the non-binding mediation proposed by the Governor.  The areas to be covered with Mr. Nix were time lines and the "stay" referenced in Section 79.  She called attention to Section 175, subsection 6, which was amended to read, "The parties to a contested claim may, if each party is represented by legal counsel or licensed employer representative, agree to forgo mediation and submit the contested claim directly to an appeals officer."  The last sentence was to be deleted.

 

Mr. Brian Nix, Department of Administration, Hearings and Appeals Division, apologized for his absence at the earlier meeting.  The amended language, he explained, provided the opportunity to bypass the hearings officer and move directly to the appeals level on hotly contested legal issues.  Mr. Nix questioned the use of "licensed employer representatives" at the appeals level, explaining the process was actually a trial before an administrative law judge.  The original intent, he believed, was to allow for employer representation at the informal proceedings before a hearings officer.  He noted the deletion of the last sentence was basically for convenience as the documentation and signatures often required longer to obtain than the scheduled hearing date which was to be bypassed.  However, he emphasized there must be agreement by all parties to bypass the hearings level, be it by phone.

 

As committee concern was noted with the "mediation" language of section 6, Ms. Giunchigliani suggested both subsections 3 and 6 be rewritten to reflect the committee's decision to return to the original hearings and appeals process.  In addition, the committee had agreed to bypass the hearings level in medical situations unresolved by medical care organizations (MCOs).

 

Mr. Nix referenced a proposed amendment to Section 79 which he believed took care of Ms. Giunchigliani's MCO concern (Exhibit D).  He said he would work on new language for Sections 3 and 6, but believed the ability to bypass the hearings level should still be an option. 

 

Mr. Scott Young, General Counsel, State Industrial Insurance System (SIIS), noted the amendment to Section 79 had been provided by his office.  It was the result of the committee's decision to leave the current appeals process intact, with the possible exception of declassification of hearings officers.  The language would be appropriate only if the committee decided against the mediation and did, in fact, want to send some portion of the disputed issues through the managed care group.

 

Mr. Young explained Section 175, subsection 6, was actually proposed by the consensus group.  The intent was to bypass the hearings level in severe cases, such as death, where the case would most certainly proceed to the appeals level.  This was the reason for language requiring "legal counsel" and "agreement" of all parties.

 

Upon a suggestion by Mr. Nix, it was agreed the clearer consensus language would be used to rewrite the sections in question.

 

In response to Mrs. Kenny, Ms. Giunchigliani said licensed representatives would be able to represent employers at the hearings level.

 

Noting his confusion, Mr. Carpenter requested Section 175 be rewritten in its entirety to reflect the concise language as discussed in this meeting.

 

Mr. Nix pointed out an area in need of attention was NRS 616.5422 relative to the 45-day requirement in which to set a hearing before the appeals officer.  The result of this mandate imposed by SB 7 of the 1991 legislative session, was a 40 percent increase in scheduled hearings.  In addition, an average of three to six months had been added to the appeals process because of calendaring problems.  He noted rarely was a case ready for hearing within 45 days, therefore, most of his clerical staff was dedicated to scheduling continuances.  His request was to repeal the 45-day rule and allow the hearing to be set within the needs of the parties.  Suggested verbiage was "shall be set expeditiously within a reasonable amount of time."  Another area of the aforementioned bill which adversely affected the process was the shortening of the appeal period from 60 to 30 days.  As individuals lacked the time to make knowledgeable decisions, they simply opted to appeal.

 

As he was uncomfortable leaving the timeframe open-ended, Mr. Ernaut asked if there was a more suitable timeframe to replace the 45 days in which to set the hearing.

 

The Hearings and Appeals Division's 1992 Annual Statistical Report (Exhibit E) was presented for committee review.  Mr. Nix announced prior to the 45-day mandate most hearings were set around the 90-day period, however, with the reduction to 45 days, he claimed the number of continuances and delays had more than doubled.  His concern was the targeted timeframe might become the standard setting date, whereas he felt some cases needed to be set within 30 days while others needed 60 or even 90 days.  If the committee determined a definite timeframe was needed, he opted for 90 days, emphasizing cases could always be moved forward to accommodate those ready earlier.

 

Ms. Giunchigliani suggested rather than imposing a timeframe, a two-year performance standard be reviewed by the committee next legislative session.

 

In general, the committee preferred a definite capped period in which to set the appeals hearing.

 

When asked his opinion, Mr. Young testified in agreement with Mr. Nix.  His first choice was not to set a limit at all, however, he suggested a minimum of 90 days and a preference of 120.  Presently SIIS was totally out of compliance with the timeframe allowed to provide copies of relevant documents to the appeals officer and other case representatives.

 

Responding to Mr. Carpenter, Mr. Nix indicated 120 days with a continuance of no longer than one year would cover most cases, but not all.  He reported it was a law which district courts construed as advisory, not mandatory.  Comparing Nevada's hearings and appeals process to Oregon's, which was believed to be good system, it took six months to process a hearing at the first level, whereas Nevada processed virtually every case within 30 days. 

 

Mr. Bache suggested requiring written justification if the time extended beyond a set period.

 

Mrs. Kenny inquired if lack of staff within SIIS had caused the time constraint problems faced by the Hearings and Appeals Division.

 

Mr. Nix offered it was a combination of several factors, stressing SIIS was not to blame.  Simply put, attorneys did not have adequate time to prepare a valid case within 45 days.

 

In an attempt to move on, Ms. Giunchigliani suggested removing the time constraint altogether, leaving the administration of the Division to Mr. Nix, noting he would be held accountable.  Taking Mr. Carpenter's suggestion, Mr. Nix was asked to incorporate all proposed amendments in written form no later than Monday, May 24th, for committee consideration.

 

Ms. Giunchigliani reiterated the intent of the committee was to remove the Governor's proposed mediation level entirely.  However, she stressed mediation would still be the focus at the hearings level with resolution training continuing.  It was suggested language to this affect also be included in the written format for consideration.

 

Mr. Anderson inquired how the appeals process would be handled within managed care organizations (MCOs).

 

The Chair determined dispute resolution language would be reviewed as a committee.  It would be defined similarly to Section 79 (Exhibit D) outlining what medical issues would be dealt with by the MCOs.  Any unresolved disputes would bypass the hearings level and be handled directly by the appeals officer.

 

Mr. Carpenter claimed Mr. Young was to present language for the selection of rating physicians referenced in Section 173.

 

The language, Mr. Young noted was in reference to Section 195 where employee were not satisfied with their initial permanent partial disability (PPD) ratings.  The amendment was presented for committee review (Exhibit F) but would be considered at the meeting which dealt with PPD ratings.

 

The timeframe change from 7 to 15 days in which hearing officers had to render decisions was a result of consensus legislation, Mr. Nix said.  The difficult-to-meet 7-day limit often resulted in non-compliance.  He explained cases varied in difficulty and believed the 15-day limit more appropriate.  However, assurance was given all cases would be handled as expedious as possible.

 

It was noted the new language should read "15 calendar days" for clarification.

 

Ms. Giunchigliani asked Mr. Nix to explain the extension from 15 to 30 days in which to grant a "stay" of decision.

 

Mr. Nix, alluding to SB 7 of the 1991 legislative session, stressed the problems faced by insurers, claimants and his office with the 15-day "stay."  In order to make reasonable decisions it was crucial to adequately review these cases which, Mr. Nix alleged, could not physically be done within a 15-day timeframe.  He pointed out statutorily "stays" could be entered whenever appropriate and, therefore, suggested all time constraints be eliminated.

 

Ms. Giunchigliani questioned the committee on its feelings of changing the two time requirement areas discussed by Mr. Nix.  The general consensus was to increase the period hearing officers had to make their decisions to 15 calendar days.  It was also resolved the time constraint on the "stay" be eliminated as requested by Mr. Nix.

 

Mr. Nix called attention to a typographical error in his amendment to Section 182, subsection 2 (Exhibit C).  The correct wording was "...upon notice and hearing to all parties."

 

In answer to a direct question by Mr. Carpenter, Mr. Nix stated some self-insureds currently allowed third party administrators (TPAs) to handle claims at the appeals level.  The committee was asked to make a decision whether to allow non-legal representation before the appeals officer.

 

Speaking as the Chair of the subcommittee on AB 286, Mr. Ernaut explained the acceptable types of representation at the hearings level were:

      -     by attorney,

      -     employed by the employer,

      -     employed by the employer's trade association or

      -     employed by the labor organization

 

Ms. Giunchigliani agreed such flexibility should be allowed at the hearings level, but questioned its appropriateness at the appeals level.  She reiterated Mr. Nix' earlier concern that the appeals process was actually a trial before an administrative law judge.

 

Mr. Hettrick felt employers should be able to hire any representation they wished, but the final decision was binding.

 

If legal counsel was required at the appeals officer level, Mr. Anderson questioned whether the Nevada Attorney for Injured Workers would provide counsel to employees not able to afford it on their own.

 

As only information presented at the appeals level could be used in district court, Mr. Carpenter suggested legal counsel for employee protection.

 

Currently, Mr. Nix observed employees could either represent themselves or hire legal counsel.  The question was not whether to require legal counsel at the appeals level, but whether to allow employers the option of hiring whomever they wished to represent their case.  He believed representation at the appeals level should either be by lawyer or self-representation, but noted employees should also be allowed to appear on the employers behalf. 

 

Mr. Ernaut voiced concern with representation at either level of appeal by persons with virtually no legal experience.  It was not enough, he opined, for licensed representatives to have merely gone through the workers' compensation process as an injured worker.  If it was decided to license these individuals, some sort of minimal legal background should be required.

 

A question pertaining to malpractice insurance was raised by Mrs. Kenny.

 

Mr. Ernaut noted non-legal licensed individuals were not insured for malpractice, nor was any recourse available in mishandled cases.  He reiterated, however, employees must either represent themselves or hire legal counsel, the non-legal licensed representative was not an option. 

 

Mr. Nix, in response to a question by Mrs. Kenny, said paralegals who worked for lawyers fell under the attorney's umbrella of liability.   However, although paralegals might appear before the hearings officer, the lawyer generally represented the case before the appeals officer.

 

To simplify the difference, Ms. Giunchigliani maintained injured workers must utilize either an attorney or represent themselves; where employers had the option to hire whomever they wished.

 

Mr. Ernaut added labor organizations could also be included.

 

Mr. Nix felt licensed agents misrepresented their ability to handle contested cases.  Most people were unaware they were entering a trial with evidentiary requirements at the appeals level.  Not only was his concern with the actual trial before the appeals officer, but with the advice and preparation required to properly advise clients.  Without the proper legal background and training he opined crucial errors could be made even before entering the courtroom.  He opined all hearings at the appeals level, both employee and employer cases, should be limited to either legal counsel or self-representation. 

 

Ms. Giunchigliani determined the committee's intent was to accept Mr. Ernaut's proposal which mirrored Mr. Nix' request to require either legal counsel or self-representation at the appeals officer level.

 

Rather than confuse the issue, Ms. Giunchigliani suggested appeals level language be kept in SB 316.  The other bill referenced by Mr. Ernaut, AB 286, dealt exclusively with the hearings level.

 

Ms. Kimberly Morgan, Assembly Bill Draft Advisor, pointed out the two bills would conflict with each other.

 

For ease of understanding, Ms. Giunchigliani requested the language be separated.  She intended to deal with the conflict at a later date.

 

Mr. Young noted previous testimony had been given by non-attorney type representatives of employers who indicated client representation at the appeals level was a substantial part of their business.  Also, those representatives felt there were employers who could not afford attorneys.  Although Mr. Young agreed with Mr. Nix on non-legal representation at the appeals level, he pointed out this type of representation had, historically, been allowed.   He brought this before the committee as none of those representatives appeared to be present.

 

Ms. Giunchigliani viewed those individuals could voice their opinion when the vote on this issue came before the committee.

 

Mr. L. Tom Czehowski, Steel Engineers Incorporated and representing Southern Associated General Contractors, believed representation at the appeals level should be left to the discretion of the employer.  He asked the committee delay any decisions until further testimony could be presented from other employers and third party administrators.

 

As the next section to be reviewed by the committee was Section 79, Ms. Giunchigliani read into the record SIIS' proposed amendment (Exhibit D).

 

Mr. Nix stated the key language was subsection 1, which rather than having the hearing before the hearing officer, it would take place before the managed care organization.  The appeal from the managed care organization decision would be taken directly to the appeals officer, bypassing the hearings level.

 

Conceptually, the committee agreed with the format of dispute resolution within the managed care organizations as outlined in the amendment.  However, the timelines might need further review noted Ms. Giunchigliani.  The issue would be discussed further before the committee when it reviewed the managed care sections of SB 316.

 

Mr. Nix concurred with Ms. Giunchigliani's suggestion to unclassify hearings officers and have them appointed by the Administrator.

 

Mr. Nix asked the committee to consider a separate issue.  He noted the appeals officers within his division were highly trained attorneys with a minimum of 10 to 15 years experience.  His concern was their level of pay was commensurate to a first-year lawyer.  He knew budget issues were ultimately decided in another committee, but expressed concern with the ability to keep and attract qualified appeals officers.

 

Ms. Giunchigliani noted she had requested an adjusted budget be presented to the Ways and Means Committee by the Nevada Attorney for Injured Workers for similar reasons.  She noted last legislative session a decision had been made to equalize all state attorneys.  As several divisions had not been reviewed she requested Mr. Nix submit another budget request to the committee on Ways and Mean, noting she would be happy to argue the case on his behalf.

 

The Chair called for a short break.

 

Upon reconvening the meeting, Ms. Giunchigliani asked for a subcommittee report on AB 135 from Mr. Bache.

 

ASSEMBLY BILL 135 -     Expands right of employee to inspect record of employment.

 

Mr. Bache presented for consideration the amendment (Exhibit G) which, he explained, reverted much of the language back to the original statute.

 

Mr. Hettrick asked how the amendment answered the question of separate investigative files.

 

Mr. Bache explained subsection 3 of the original bill had been deleted and the current format made no reference to investigative files.

 

An additional question was raised by Mr. Hettrick.  He asked if the secret record could be misconstrued as an investigative file.

 

Ms. Giunchigliani directed attention to subsection 4a) of the original language which, she pointed out had nothing to do with records of investigation.

 

      MR. BACHE MADE A MOTION TO AMEND WITH AMENDMENT NO. 564 AND DO PASS AB 135.

 

      MRS. KENNY SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.

 

      ***

 

Referring again to SB 316, Ms. Giunchigliani opened testimony on the sections pertaining to stress.

 

Mr. James W. Penrose, Dyer and McDonald, presented an amendment to Section 20 which reflected the prior testimony of Dr. Richard Ray, Director, Nevada Mental Health Institute (Exhibit H).  He reported the amended language of Section 20 set forth conditions under which compensation could be obtained for stress related injury.  He explained the bottom portion of the amended language related to specific exception for coronary illnesses which revised Section 91. 

 

Mr. Anderson inquired why the 50 percent threshold of subsection 3 was set substantially higher than California's 10 percent.

 

Mr. Penrose noted concern had been expressed with California's substantial increase in workers' compensation costs relative to stress claims.  Based on Dr. Ray's experience 50 percent was felt to be a more equitable threshold.

 

In response to Mr. Bache, Mr. Penrose pointed out it was impossible to totally eliminate frivolous claims in any area of the law.

 

Interpretation of the language of subsection c) was questioned by Mr. Hettrick.  It appeared temporary employees hired for a week or two would be eligible to file a stress claim if rehired again six months down the line. 

 

Mr. Penrose related the intent was employees had to be employed for a minimum period of six months total.  The language precluded employers from laying off workers for a short period, only to rehire them again, thus avoiding any liability.

 

Mr. Hettrick still was not comfortable with the verbiage in subsection 1c and asked it be reviewed by the bill draft advisors.  Also, he noted concern with the wording in subsection 1 a-1) relative to "associated with stress."  He opined just about anything which occurred in life could be associated with stress. 

 

Mr. Penrose referenced the requirement of objective verification using generally accepted diagnostic criteria.  He noted the illness must be an ailment accepted by medical professionals as something connected with stress.

 

The Chair asked Ms. Morgan if Section 91 affected the "Heart and Lung" statutes.

 

Ms. Morgan viewed as it was inside the definition of injury for NRS chapter 616 she did not believe the "Heart and Lung" statutes would be affected.

 

Again, Mr. Hettrick expressed frustration with the language.  The wording, he believed, could be interpreted differently.

 

Ms. Giunchigliani suggested the bill draft advisors review the language for intent.

 

The following amendment to Section 20, subsection 1 was suggested by Mr. Hettrick:

 

      Except as otherwise provided in this section, [the physical injury or death of an employee that is caused by] stress is an industrial injury...and convincing evidence that the employee's [physical] injury [or death]...

 

Ms. Giunchigliani requested Mr. Hettrick's suggested change in written form for committee review.

 

Mr. Young commented on Mr. Penrose's proposed amendment to Section 20.  He generally agreed with the insertion of "objective evidence" and the six-month period which reflected California's breaking point; but expressed concern with lack of a standard for what constituted stress, and at what level.  Normally, language was necessary limiting it to unusual or greater than everyday stress of life and work.  He opined with lack of a severity level, it would be simple to collect under the provisions of stress.  As preponderance language was the normal test for workers compensation cases, SIIS added "clear and convincing" in its amendment because of the subjectivity of stress.  Also, he pointed out the board had required the verbiage in order to support the proposed amendment (Exhibit H).  Further, he questioned who determined Mr. Penrose's definition of "lawful personnel action," and whether those issues were to be tried in workers' compensation proceedings?  "Unlawful" actions were traditionally considered a "tort" requiring civil action.  Additionally, Mr. Young's preference was "primary cause" over the 50 percent requirement proposed by Mr. Penrose.  And finally, Mr. Young voiced concern both the 50 percent and objective test requirements would not apply if the injury was sudden and traumatic. 

 

Concluding his testimony, Mr. Young reviewed his memo of April 19, 1993 (Exhibit I) which outlined SIIS' concerns about the stress language of SB 316.  He opined SIIS' proposal provided for clear, identifiable, legitimate stress cases and eliminated the questionable, subjective types.

 

There being no further business to come before committee, Ms. Giunchigliani announced because of the Assembly Democratic Luncheon, Friday's meeting would start between 1:00 and 1:30.  The time would be posted on the committee room door upon adjournment of floor session.  The meeting was adjourned at 6:00 p.m.

 

      RESPECTFULLY SUBMITTED:

 

 

                             

      BARBARA DOKE

      Committee Secretary

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Assembly Committee on Labor and Management

May 20, 1993

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