MINUTES OF THE
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
May 25, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Christina R. Giunchigliani, at 3:53 p.m., on Tuesday, May 25, 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
Kim Morgan, Assembly Bill Drafting Adviser
Leigh O'Neill, Deputy Legislative Counsel
Vivian McClay, Senior Research Technician
OTHER LEGISLATORS PRESENT:
Richard Perkins, Assembly District 23
OTHERS PRESENT:
Scott Young, Counsel, State Industrial Insurance System
Barbara Gruenewald, Nevada Trial Lawyers' Association
Carol Jackson, Director, Department of Industrial Relations
Don Jayne, General Manager, State Industrial
Insurance System
Larry Zimmerman, Consensus Group
Larry Matheis, Nevada State Medical Association
George McNally, Nevada Trial Lawyers' Association
Following roll call, Chairman Giunchigliani traced the progress of SB 316 and commended the committee for the work and long hours spent in the attempt to bring about a bipartisan bill.
SENATE BILL 316 -Makes various changes to provisions governing industrial insurance.
ASSEMBLYMAN BACHE MOVED TO DELETE SECTIONS 19 AND 212; AND TO AMEND SECTION 194 BY DELETING THE REFERENCE TO SECTION 19 IN LINE 37. (SEE EXHIBIT C.)
ASSEMBLYMAN KENNY SECONDED THE MOTION.
Mr. Hettrick asked if each section could be considered individually, however, Chairman Giunchigliani said since those were the only sections dealing with pre-existing conditions, they would be combined. Departing somewhat from a previous plan to consider each section individually, she said she wished to consider the sections of the bill by subject area.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
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ASSEMBLYMAN COLLINS MOVED TO AMEND SECTION 11, PAGE 4, BY DELETING THE LANGUAGE ON LINES 37 AND 38, "MUST NOT BE INTERPRETED OR CONSTRUED BROADLY OR LIBERALLY IN FAVOR OF AN INJURED OR DISABLED EMPLOYEE OR HIS DEPENDENTS . . ." AND INSERTING "MUST BE INTERPRETED REASONABLY AND PRACTICABLY WHEN CONSIDERING THE RIGHTS OF AN INJURED EMPLOYEE OR HIS DEPENDENTS, SO AS NOT TO BE RULING IN . . ." AFTER "NRS."
ASSEMBLYMAN BACHE SECONDED THE MOTION.
Mr. Carpenter asked for an explanation of "reasonably and practicably." Responding to Mr. Carpenter's question, Scott Young, Counsel for the State Industrial Insurance System, indicated he was uncertain how the court would interpret "reasonably and practicably." He believed leaving lines 39 and 40 in the Section would take the edge off the liberal construction, and would send a message to the court there should be more evenhanded interpretation of the statute.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
Chairman Giunchigliani asked committee members if they wished their votes noted for the record. There appeared to be a general lack of interest in doing this.
ASSEMBLYMAN BONAVENTURA MOVED TO ADD A NEW SECTION 25 WHICH WOULD CREATE A MORATORIUM ON GOING SELF-INSURED TO 12/31/93; AND TO INCREASE NET WORTH TO $5 MILLION (SEE EXHIBIT C).
ASSEMBLYMAN BACHE SECONDED THE MOTION.
Clarifying, Chairman Giunchigliani asked Mr. Bonaventura if it was his intent to add a new Section 25 by taking the concept from AB 287 with the understanding those companies which had already made application would be permitted to go self-insured. Mr. Bonaventura said this was his intent.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
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ASSEMBLYMAN KENNY MOVED TO AMEND SECTION 73 AS SHOWN IN EXHIBIT C.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
Restating, Chairman Giunchigliani clarified in Section 73 of SB 316, pages 27 and 28, the mandatory $200 deductible would be deleted and language inserted which would allow a business to select a deductible in amounts from $200 to $10,000 (in predetermined increments), and the premium would be adjusted accordingly. Also, when considering the risk pool, those employers would be required to have a mandatory deductible of $400 as originally recommended by the Governor, and self-insureds would be assessed a one-time fee.
In an attempt to determine how much revenue the mandatory $400 assessment would generate, Mr. Carpenter asked approximately how many claims were filed by self-insureds. In response, Carol Jackson, Director of the Department of Industrial Relations (DIR), came forward and said there were approximately 26,000 claims; and with a $400 deductible this would be approximately $10.4 million. This was further discussed.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
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ASSEMBLYMAN BONAVENTURA MOVED TO AMEND SECTION 194 BY DELETING SUBSECTION (a) ON PAGE 85, LINE 45.
ASSEMBLYMAN BACHE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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ASSEMBLYMAN ANDERSON MOVED TO AMEND SECTION 195 AS SHOWN IN EXHIBIT C, PAGE 3.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
Chairman Giunchigliani asked whether it was also Mr. Anderson's intent to amend language on page 88, line 6 to delete "70 years of age" and insert "65 years of age." Mr. Anderson agreed that was his intent.
Justifying the purpose of the proposed new language, Mr. Anderson said this would be an effort to follow the AMA guide; and although many would not be entirely happy with the proposed change, he thought it would bring about a substantial savings and would be a correct move relative to PPD awards.
Mr. Carpenter urged committee members to seek a compromise between the proposed .05 percent and .06 percent. He asked them to consider going to .04 percent with the hope they could realize the savings presented in SB 316.
ASSEMBLYMAN CARPENTER MOVED TO AMEND ASSEMBLYMAN ANDERSON'S MOTION BY STATING THAT AN IMPAIRMENT OF 1 TO 5 PERCENT WOULD BE COMPENSATED AT .04 PERCENT RATHER THAN .05 PERCENT; AND AT .05 PERCENT ON IMPAIRMENT OF 5 TO 10 RATHER THAN .055. (SEE PAGE 3 OF EXHIBIT C.)
ASSEMBLYMAN HETTRICK SECONDED THE MOTION.
Defending his amendment to Mr. Anderson's motion, Mr. Carpenter said his studies had shown that 1 to 5 percent impairment, in most cases, was not as serious an injury as something which caused a greater than 5 percent impairment. He indicated he was trying to save SIIS money while giving more money to the injured worker with greater impairment. Mr. Hettrick indicated his agreement with Mr. Carpenter's premise.
Mr. Anderson defended his motion and discussion ensued.
FOLLOWING A SHOW OF HANDS, THE CHAIRMAN ANNOUNCED ASSEMBLYMAN CARPENTER'S MOTION FAILED.
Returning to the main motion made by Mr. Anderson, Chairman Giunchigliani asked for the vote.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED ASSEMBLYMAN ANDERSON'S MOTION CARRIED.
The Chairman stated whenever the amendment was returned from the bill drafters, they would then have to look at the fiscal impact.
Chairman Giunchigliani asked the committee to next consider the proposed language dealing with vocational rehabilitation, Exhibit D, and asked Mr. Bache to review the exhibit.
ASSEMBLYMAN BACHE MOVED TO AMEND SECTIONS 115 (PAGE 1) AND 116 (PAGE 26) BY ACCEPTING THE LANGUAGE IN EXHIBIT D.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
In clarifying, Mr. Bache remarked the language in Exhibit D paralleled language presented in committee on May 21, 1993. He pointed out the percentage had been restored to 80 percent. The Chairman and Mr. Bache reviewed the proposed language.
Chairman Giunchigliani questioned Don Jayne, General Manager, State Industrial Insurance System, regarding what had been inserted in the bill which pertained to referrals to rehab which would be done on an alternate and rotating basis between SIIS and private rehab counselors. She said it was her understanding that private referrals had tapered off to almost nothing in northern Nevada. The Chairman said the committee believed the private sector should continue to be used as well as SIIS rehab.
Responding, Mr. Jayne said he had no information which indicated referrals had decreased. However, he agree SIIS's early intervention program had served to dramatically reduce the number of referrals to rehab. Although there was an earlier plan to hire two rehab counselors for every team, this had been stopped the previous month and there were no plans to resurrect that proposal. They did, however, have the intention of having one rehab counselor per team in both the north and the south. Mr. Jayne observed the proposed language would not allow the flexibility to go every-other-one, in and out. It would mandate that 50 percent of the rehab cases would go to the private sector. He said he did object to that proposal.
Chairman Giunchigliani expressed concern regarding the decrease in referrals and Mr. Jayne agreed with her. The Chairman's greatest concern was there were improperly certified rehab counselors making the decisions, while the fully certified counselors were not being utilized. Mr. Jayne agreed SIIS was not opposed to bringing its people up to the necessary certification levels; however, he had understood for some reason the certification criteria had not been developed for the agency.
The Chairman asked Mr. Jayne to investigate the issue of certification further and return with information for the committee. She indicated the policy statement the committee wished to extend was: 1) the counselors should be licensed; and 2) the private sector should still be utilized. Discussion followed.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION TO ACCEPT THE AMENDMENTS TO SECTIONS 115 AND 116 CARRIED.
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ASSEMBLYMAN KENNY MOVED TO AMEND SECTION 292 LANGUAGE ON PAGE 140 OF SB 316, TO DELETE "FREEZE AVERAGE MONTHLY WAGE." (See Exhibit C, page 3.)
ASSEMBLYMAN ANDERSON SECONDED THE MOTION.
Mr. Hettrick informed the committee he had received additional information from the Legislative Counsel Bureau regarding average monthly wage (AMW). He said the figures he received indicated the AMW was $2,000 in 1984. The most recent figure indicated AMW at $3,000 -- a 50 percent increase in AMW since 1984. Since the AMW drove all benefits, this meant a 50 percent increase in all benefits as well. Mr. Hettrick argued taking everything into consideration, Nevada was paying significantly higher benefits than other states. While he did not like to see a freeze placed on average monthly wage, he still thought benefits would continue to rise just because the average monthly wage rose, thereby driving the benefit package. Thus, if they did not freeze average monthly wage, Mr. Hettrick opined the Legislature needed to devise another method of controlling the rate of increase.
Mr. Bache asked if Ms. Kenny proposed to completely delete Section 292, or whether she proposed just to delete the words "average monthly wage." The Chairman clarified the proposal just had to do with the freeze on average monthly wage.
Mr. Collins defended the rationale for not freezing average monthly wage.
Mr. Carpenter opined the freeze would be at the $2,000 level, not the previously considered $1,800. This made the proposal more acceptable to Mr. Carpenter. Chairman Giunchigliani was not sure when the new rate would go into effect.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
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ASSEMBLYMAN COLLINS MOVED TO:
1. DELETE THE LEGISLATIVE OVERSIGHT COMMITTEE AS SHOWN IN SECTIONS 67-71 AND SECTION 242, AND DEVISE A NEW SECTION 67 (SEE EXHIBIT C, PAGE 4 FOR PROPOSED NEW LANGUAGE);
2. DELETE SECTION 4;
3. DELETE SECTION 81;
4. AMEND SECTION 82, LINE 37 AND LINE 46 (SEE LANGUAGE ON PAGE 5 OF EXHIBIT C);
5. DELETE PRESENT SECTION 95 AND INSERT LANGUAGE ON PAGE 5 OF EXHIBIT C;
6. DELETE SECTION 96;
7. AMEND SECTION 97 AND INSERT LANGUAGE SEEN ON PAGE 6, EXHIBIT C.
8. AMEND SECTION 98 BY DELETING "GOVERNOR" AND REINSERTING "BOARD." (SEE PAGE 6, EXHIBIT C.)
9. AMEND SECTION 100 BY DELETING "GOVERNOR" AND REINSERTING "BOARD" ON LINES 1, 5, 6 AND 15 (SEE PAGE 6, EXHIBIT C);
10. AMEND SECTION 104. (SEE LANGUAGE ON PAGE 6, EXHIBIT C);
11. AMEND SECTION 131. (SEE LANGUAGE ON PAGE 6, EXHIBIT C);
12. AMEND SECTION 132 BY DELETING REFERENCES TO "COMMISSIONER" AND INSERTING "ADMINISTRATOR;"
13. AMEND SECTION 155. (SEE LANGUAGE ON PAGE 7, EXHIBIT C);
14. AMEND SECTION 157 BY DELETING "COMMISSIONER" AND RETAINING "ADMINISTRATOR;" AND
15. AMEND SECTION 165 BY DELETING "GOVERNOR" AND REMOVING BRACKETS FROM "BOARD."
ASSEMBLYMAN ANDERSON SECONDED THE MOTION.
An error was noted by Mr. Anderson in Section 101, line 19 in which "Governor" needed to be deleted and "Board" inserted.
ASSEMBLYMAN COLLINS' MOTION WAS AMENDED TO INCLUDE ASSEMBLYMAN ANDERSON'S CORRECTION.
Mr. Bonaventura expressed concern that Mr. Collins' motion would serve to remove control from the Governor. In response, Chairman Giunchigliani suggested the intent was to take into consideration the Governor's concern that he be the one in charge. Thus, the Governor would be the chairman of the board but there would be a check and balance in the structure. It was further discussed whether, indeed, the motion would serve to take control away from the Governor.
Mr. Anderson opined there was a need for clear delineation of authority. He believed Mr. Collins' amendment would remove the legislative oversight commission which would probably serve no useful purpose. However, it would leave the Governor in the position to merely have to convince one other member of his board to perform correctly. The Governor would play the key role in managing the organization.
By adopting the amendment proposed, Mr. Carpenter observed whoever controlled the board would, with a three vote majority, be the person making the policy. Although the Governor would be the chairman, another three vote majority could overrule him.
Mr. Ernaut said he believed the amendment clearly removed control from the Governor, therefore, he opposed it. Because the issue was of such gravity, Mr. Ernaut asked for a roll call vote on the amendment.
The Chairman indicated there was also a need to address the circumstance in which the Governor did not return after two years and who would then be appointed to the board. She said there had been some discussion by self-insureds recommending a self-insured be placed on the Board of Directors. She asked if Mr. Collins wished to add that to his amendment.
In response, Mr. Collins said he preferred to retain the amendment as it was. He suggested the interim study group could make the decision regarding the fifth member of the board.
Mr. Bache opined although this did not give the Governor the type of control the Governor wished, he would have more than enough control over the system.
Discussion was held regarding the Governor's powers of appointment and removal. As a result of various concerns regarding the Governor's powers, Scott Young came forward. Mr. Young said, "It's my understanding of the way the statutes are written that the Governor appoints for fixed terms, the Governor cannot remove those people until the expiration of their terms." Chairman Giunchigliani suggested they strike the fixed terms if they wanted the Governor to have the ability to appoint and remove.
ASSEMBLYMAN BONAVENTURA MOVED TO AMEND ASSEMBLYMAN COLLINS' MAIN MOTION BY DELETING THE FIXED TERMS IN ORDER TO ALLOW THE GOVERNOR THE POWER TO APPOINT AND REMOVE BOARD MEMBERS.
ASSEMBLYMAN HETTRICK SECONDED THE MOTION.
Kim Morgan, Assembly Bill Drafting Adviser, agreed she could draft language which would still set terms, but board members would serve at the pleasure of the Governor. Mr. Bonaventura agreed this was his intent and Ms. Morgan's suggested language would address his concern.
FOLLOWING A SHOW OF HANDS, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
Recapping the main motion, the Chairman explained the language would serve to provide one person appointed from the Assembly and one person from the Senate to serve as ex officio members of the board. The Governor would be Chairman of the Board and there would be two members from labor and two from policy- holders. The motion would also serve to strike "Governor" and insert "board" wherever "Governor" had been indicated, and indicate the board served at the pleasure of the Governor. She then called for a vote on the main motion.
THE MAIN MOTION CARRIED. (ASSEMBLYMEN CARPENTER, SCHNEIDER, REGAN, HETTRICK AND ERNAUT VOTED NO, ALL OTHERS VOTED YES.)
Turning to Section 20 dealing with an injury caused by stress, Mr. Anderson reviewed the proposed language in Exhibit C.
It was noted Mr. Anderson had changed the wording in paragraph 2 of Section 20 from ". . .a clear and convincing medical . . ." to ". . .a preponderance of medical. . .".
ASSEMBLYMAN ANDERSON MOVED TO ADOPT THE PROPOSED LANGUAGE IN SECTION 20, BUT TO CHANGE "CLEAR AND CONVINCING" TO "PREPONDERANCE."
ASSEMBLYMAN BACHE SECONDED THE MOTION
Mr. Anderson explained the rationale for the change from "clear and convincing" to "preponderance," and cited certain prison circumstances which epitomized the situation. Mr. Hettrick opposed Mr. Anderson's premise.
ASSEMBLYMAN HETTRICK MOVED TO DELETE "PREPONDERANCE" AND INSERT "CLEAR AND CONVINCING."
Mr. Hettrick explained his motion.
ASSEMBLYMAN ERNAUT SECONDED THE MOTION.
Explaining his objection to Mr. Anderson's motion, Mr. Ernaut said he believed the adoption of "preponderance of evidence" would cost the system between $150 million to $200 million, based on experiences in California. The Chairman, however, took issue with Mr. Ernaut's projection. She pointed out there had been 17 cases of stress documented in Nevada which had been below $150,000.
Discussing the legal differences between "preponderance" and "clear and convincing," and quoting from a letter from Scott Young, dated April 19, 1993, Mr. Regan pointed out "preponderance" was the weaker of the two terms. Mr. Anderson defended his motion.
Mr. Young came forward and told the committee because of the subjective nature of stress claims, SIIS would be more comfortable with the higher standard, and would prefer to see "clear and convincing" remain in the language.
George McNally, Nevada Trial Lawyers' Association, believed the present standard in any civil case was by "preponderance" of the evidence. The only way the burden of proof could be changed would be by statutorily increasing it to "clear and convincing" or some greater burden.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION TO STRIKE "PREPONDERANCE" AND INSERT "CLEAR AND CONVINCING" CARRIED.
The Chairman asked for a vote on the main motion as amended.
THE MOTION CARRIED UNANIMOUSLY.
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ASSEMBLYMAN COLLINS MOVED TO MAKE THE FOLLOWING AMENDMENTS (SEE EXHIBIT C):
1. DELETE SECTION 3;
2. AMEND SECTION 52, LINE 28, 3b, BY DELETING "GOODS AND SERVICES" AND INSERTING "ACCIDENT BENEFITS;"
3. DELETE SECTION 72;
4. AMEND SECTION 146, PAGE 58, LINE 11, BY INSERTING "OR REVISED CLASSIFICATION" BETWEEN THE WORDS "RATE" AND "MAY;"
5. AMEND SECTION 172, PAGE 73, LINE 9, BY DELETING "REASON TO BELIEVE" AND INSERTING "REASONABLE CAUSE;"
6. AMEND SECTION 190, PAGE 84, LINE 1, BY DELETING "ANY CONCENTRATION" AND INSERTING "AN AMOUNT KNOWN TO IMPAIR ONE'S ABILITY TO PERFORM JOB TASKS;"
7. DELETE SECTION 233, PAGE 110 AND;
8. AMEND SECTION 234, PAGE 111 BY DELETING LINES 8-12; DELETING BRACKETS ON LINES 5 AND 7; AND DELETING BRACKETS ON LINES 16 AND 26.
ASSEMBLYMAN BACHE SECONDED THE MOTION.
Referring to Section 190, Mr. Regan said he believed there were legal definitions dealing with "controlled substances" and "alcohol." This was discussed between Chairman Giunchigliani, Ms. Morgan and Mr. Regan.
Mr. Collins said he would prefer to retain the language of the proposed amendment and then to let the drafters rewrite the section to clarify the difference between the person who had used a controlled substance and the person on medication.
Discussion centered on the quality of drug testing and what constituted impairment of an individual on the job scene.
Mr. Collins agreed to withdraw Section 190 from his previous motion.
Mr. Ernaut asked Mr. Collins to also set aside Sections 233 and 234. He said he agreed with deleting "heart and lung," however, he could not support the other recommendations being made in the motion.
Restating, Chairman Giunchigliani said they would take a vote on Sections 4, 23, 52, 72, 146 and 172.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
Returning to a vote on Sections 233 and 234, the Chairman said a motion would be entertained to support the deletion of Section 233 and amend Section 234.
ASSEMBLYMAN COLLINS MOVED TO DELETE SECTION 233 AND AMEND SECTION 234 AS SO STATED IN HIS EARLIER MOTION.
ASSEMBLYMAN BACHE SECONDED THE MOTION.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
There was further discussion regarding the issue of drugs and alcohol. Richard Perkins, Clark County Assembly District 23, stated as a police officer he did not in any way condone the use of drugs. However, he said there were "controlled substances" which were prescription drugs and went on to describe the five schedules used to define those drugs. He pointed out SIIS was not the law enforcement vehicle for the state and should not be used to convict people of narcotics violations. This was the role of law enforcement.
Impairment and probable cause were discussed between Mr. Ernaut and Mr. Perkins.
Mr. Bache noted there were two other sections included on page 27 of Exhibit D, Sections 196 and 199.
ASSEMBLYMAN BACHE MOVED TO AMEND SECTIONS 196 AND 199 AS FOLLOWS:
1. AMEND SECTION 196, PAGE 89, LINES 7 AND 8 BY DELETING BRACKETS;
2. AMEND SECTION 196, PAGE 89, BY DELETING LINES 12 AND 13 AND;
3. AMEND SECTION 199, PAGE 92, BY DELETING LINES 19-21.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
Chairman Giunchigliani told the committee the amendments to be considered had been adopted by consensus at an earlier time. They had merely been formalized for an actual vote. These included amendments proposed by the Technical and Consensus Group, amendments on fraud and fines, subrogation and reopening of claims, SIIS operations and subsequent injury fund, notice of injury and claim filing procedures. When asked if there had been anything decided on the OSHA forms, the legal researcher, Leigh O'Neill, told Chairman Giunchigliani no consensus had been reached on that issue. The Chairman believed the OSHA form should be eliminated.
Group self-insurance would be placed in a bill draft request, the Chairman reported, rather than amending it into another bill. She called for a motion adopting the Technical and Consensus Group amendment.
ASSEMBLYMAN BONAVENTURA MOVED TO ADOPT THE TECHNICAL AND CONSENSUS GROUP AMENDMENT.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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ASSEMBLYMAN ERNAUT MOVED TO ACCEPT AMENDMENTS STATED IN EXHIBIT E, NUMBERS TWO THROUGH SEVEN DEALING WITH: FRAUD AND FINES, SUBROGATION AND REOPENING CLAIMS, SIIS OPERATIONS AND SUBSEQUENT INJURY FUND, NOTICE OF INJURY AND CLAIM FILING PROCEDURES, HEARINGS AND APPEALS AND THE REMOVAL OF PROVISIONS ON GROUP SELF-INSURANCE AND PLACEMENT IN NEW BILL DRAFT REQUEST.
ASSEMBLYMAN CARPENTER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Giunchigliani drew attention to Exhibit F, which corrected the fee schedule shown in the Nevada Revised Statutes and in Section 87 of SB 316.
ASSEMBLYMAN ERNAUT MOVED TO ACCEPT THE CORRECTED FEE SCHEDULE IN SECTION 87 (SEE EXHIBIT F).
ASSEMBLYMAN CARPENTER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
The Chairman then asked the committee to vote on language submitted by Carol Jackson, Director of the Department of Industrial Relations (DIR), which would allow the DIR to adopt a schedule of fees which could either be increased or decreased. Explaining, she said currently the statute only allowed for increases. The second part of the proposed amendment would place a freeze on the medical fee schedule until October 1, 1995. (See Exhibit G.)
After discussion, it was clear the proposed language would allow the DIR to set the fee schedule. Mr. Carpenter argued SIIS should be the entity setting the fee schedule since it would have to set the premium to take care of the fee schedule. Ms. Jackson stressed it was important for DIR to have the ability to adjust the fee schedule downward if such things as managed care resulted in lower costs.
ASSEMBLYMAN COLLINS MOVED TO ADOPT THE LANGUAGE SHOWN IN EXHIBIT G, BUT TO DELETE THE REFERENCE TO "INDUSTRIAL INSURANCE" AND INSERT "THE DEPARTMENT OF INDUSTRIAL RELATIONS ADVISORY COMMITTEE."
ASSEMBLYMAN BONAVENTURA SECONDED THE MOTION.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
To clear up the issue for the employer representatives at the hearings and appeals level which had not appeared in the Technical and Consensus Group amendments, the Chairman urged the committee to continue to support letting the employers have whomever they chose, i.e., either licensed employer representative, or a third party administrator, in the hearings and appeals process.
ASSEMBLYMAN ERNAUT MOVED TO CONTINUE TO SUPPORT EMPLOYERS USING EITHER LICENSED EMPLOYER REPRESENTATIVES OR A THIRD PARTY ADMINISTRATOR IN THE HEARINGS AND APPEALS PROCESS.
ASSEMBLYMAN ANDERSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
To address the issue of managed care, Larry Matheis, Nevada State Medical Association, Assemblman Kenny, Barbara Gruenewald, Nevada Trial Lawyers' Association, and Assemblyman Hettrick came forward. Mr. Matheis reviewed Exhibit H and Exhibit I, suggested amendments dealing with managed care and utilization review.
Mr. Carpenter voiced concern regarding: 1) the bid process; 2) the 90 day certification process; and 3) protocol procedures.
Continuing with a review of Exhibit I, Mr. Matheis clarified Section 74, subsection 10 on page 3 dealing with external and internal utilization review. Mr. Carpenter asked if the time periods written into the proposed language would make it more difficult and more time consuming for the injured worker to receive the proper care.
In response to Mr. Carpenter's concern, Mr. Hettrick said the intent within the managed care system would be to provide for the doctor's own evaluation and procedure within the established protocol. The utilization review would only become a problem if the doctor did not agree with the protocol for a particular injury and went beyond the specified number of procedures. There was no intent to slow down service or restrict what the doctor could do within the protocol.
Mr. Collins was concerned regarding the over-restrictiveness posed for doctors within the internal utilization review process. Mr. Matheis agreed with his concern, but said with the managed care organization, everyone would be locking themselves into a much stricter set of promises. This was part of the trade-off in exchange for tighter utilization controls. Mr. Collins wanted to make certain a doctor could go beyond the protocol if he first understood reimbursement for the procedure would not be made if the utilization review determined the procedure was not necessary. Mr. Matheis assured him the doctor's professional responsibility remained, no matter what the payers did or said. Mr. Matheis acknowledged this was a well-known frustration for doctors.
Mr. Matheis then discussed proposed changes to Section 75, page 4 of Exhibit I, dealing with limits which should be in the contracts which might subsequently be entered into by the manager.
Mr. Anderson questioned the language, ". . .or who is more than 30 minutes from a provider participating in the organization for managed care. . .", on page 5 of Exhibit I. Mr. Matheis replied the "30 minute" provision was federal law on defining medically under-served areas, and 30 minutes was considered driving time. This was further discussed. Mr. Matheis said the intent of this language was to acknowledge there might be circumstances in which a community was a distance away, but was not necessarily in an exempted county. There might be difficulty in providing services to that area. If the managed care organization was unable to make an accommodation for that situation, this would be an area to be considered for the exemption.
Mr. Anderson also noted the language on page 5, subsection (e) stated, ". . .may choose the services of a physician, chiropractor and hospital . . .". He asked if "medical and health care provider" would be used. Mr. Hettrick agreed there were instances when the new language was not used throughout SB 316. These would have to be corrected when the language was finalized.
Mr. Anderson remained concerned by the "30 minute" provision, however, Mr. Matheis said he believed the burden would be on the managed care organization to clearly explain how services would be provided for employers and employees in the more remote areas.
Mr. Matheis continued with his review of Exhibit I.
Again questioning the language, Mr. Carpenter said he did not see language stating the physician would have the main responsibility but would work with the vocational rehabilitation counselor in making a determination on what the proper rehabilitation might be. Ms. Kenny assured him this was already covered in the statutes on vocational rehab. The new language would take nothing away from the existing statutes where the treating physician was the one to say when and whether the claimant could return to work, Ms. Gruenewald said.
After ascertaining Mr. Carpenter's concern, the Chairman said she assumed the concept would be melded by the bill drafters. Mr. Carpenter said it appeared to him the language suggested the physician was still part of the managed care organization and if that managed care organization stepped out of the picture, the doctor would no longer be a part of the vocational rehab process. Mr. Hettrick said the intent was to indicate once the worker was stable and ratable, he was past the stage of being treated, and the doctor was no longer a part of the treatment process. The managed care organization would also not be responsible but if further treatment was necessary, it would go to vocational rehabilitation.
Referring to language on page 7 (of Exhibit I) and subsection (s), Mr. Hettrick believed the language, ". . .shall not routinely consult with the insurer. . ." should probably read, ". . . may consult. . .". Ms. Gruenewald said the reason for the proposed language was to avoid problems which had evolved in Oregon. The whole purpose of managed care, she said, was to cut costs and administration. In Oregon the insurance company and managed care organization sat side by side, which meant managed care could not make a move without consulting with the insurance company. In developing language for Nevada, they had sought to provide that once the managed care contract was entered into the health care was shifted from the insurer to the managed care organization for total control. They did not have to return to consult with the insurer on each determination. This was the intent of section (s).
Mr. Hettrick voiced concern with the word "routinely" as well as "shall not."
Mr. Matheis continued with a review of the proposed amendments in Exhibit I.
In response to the Chairman's request, Mr. Matheis said the intent in paragraph 13 on page 9 was to assure there would be information made available to the manager and the Insurance Commissioner regarding the different areas making up the managed care organization. These would be in contemplation of the managed care organization being able to be assessed as to problems which might or might not be obvious.
Chairman Giunchigliani asked for clarification of the terms, "appeal or hearing officer." Discussing Section 79 and the hearings process, Barbara Gruenewald indicated the proposed amendment would set out the procedure for the appeal of a claim. If a health care benefit was denied there would be the internal utilization review. Subsequently, if an external review was requested, the managed care organization would give written notice to the claimant of the denial of the benefit as well as setting forth the procedure in the claimant's right to appeal.
The recommendations submitted by Ms. Gruenewald for Section 79 were read by the Chairman as follows: "Except as otherwise provided in subsection 2, any person who is aggrieved by determination of an insurer who has contracted with an organization for managed care, pursuant to Section 74 of this act or relating to benefits or medical health care services provided by an organization for managed care, or relating to an organization for managed care which has failed to respond within 15 days to a written request mailed or delivered to the organization for managed care by the person or entity who is aggrieved, may appeal from the determination or failure to respond by filing a request for a hearing before a hearing officer.
"For any medical or health care benefits, the organization for managed care must use internal review and external utilization review as set forth in 74 prior to making a determination. For any medical or health care benefit the injured worker's benefits shall not be denied, suspended or terminated until the injured worker is notified in writing. Within 15 days after the receipt or authorization for treatment or testing or for any medical health care benefits made by an injured employee, their medical or health care provider, the employer, or any aggrieved party, the organization for managed care shall notify in writing the person or entity making the request of its determination and shall notify in writing the person or entity their right to appeal. Within its written determination, the organization for managed care shall notify the person or entity making the request, of their right to appeal by stating: 'Any person aggrieved by the determination of an organization for managed care may appeal this determination by completing the enclosed appeals form and mailing or delivering it to the Hearings Office Department of Administration within 60 days of the date of this letter. If the request does not reach the Hearings Division within 60 days you will lose your right to appeal.'"
After reading the proposed language, Chairman Giunchigliani noted there was a dispute resolution process within the managed care organization under Section 74. The Chairman believed SIIS had language which defined what types of areas could then go directly to appeal if not resolved in the managed care organization.
Reviewing Section 76, Chairman Giunchigliani read from proposed language in Exhibit J, page 3. Ms. Gruenewald explained the intent in the proposed language was to prevent an organization for managed care from administering workers' compensation claims; to prevent an organization for managed care from acting as a third party administrator; and to prevent an employer who formed an organization for managed care to become certified to do that. In other words this would mean an employer could not also run his/her own managed care organization.
Mr. Anderson questioned the point of Section 76. In response, Ms. Gruenewald reiterated her remarks, adding they did not want the managed care organization and the administrator of the workers' compensation claim to be one and the same. This was discussed.
Larry Zimmerman, representing the Consensus Group, came forward and pointed out the proposed amendments had ". . .gutted the whole concept of managed care." He added, "The easiest thing for you to do is lower the medical fee schedule by about 15 percent and walk away from it `cause it would be a lot cheaper than what you're doing to it. The idea of managed care is to lower the cost of claims expenses. Thank God for the provision in Section 74 that says, `The manager may enter into a contract.' My advice to the State Industrial Insurance System would be just flat forget it. There's not one thing left in here that saves any money. If you sit back and look at the whole document, find one thing in here that'll save money -- there isn't anything left. . . . The idea that an insurer should not even routinely talk to a managed care company is just idiotic. How else are you going to save money unless you talk together and communicate on this injured worker? . . . For the third party administrator not to be able to work with a managed care company is ludicrous. . . .".
After further discussion, Mr. Zimmerman stated the true cost of managed care came from a closed panel; and without a real closed panel, savings would be negligent.
Mr. Ernaut took exception to the language in Exhibit I, page 6, subsection (m), ". . .allows the employee to change attending physicians or chiropractors within the organization for managed care at least once during a course of treatment." After discussion, there was agreement to delete the words "at least," thereby limiting the opportunity to change from doctor to doctor.
Returning to a discussion of Exhibit I, page 7, subsection (s), Ms. Gruenewald said after adopting managed care in Oregon, the state had experienced double administration costs because they had to pay the insurer to administer the claim and they had to pay the managed care organization to administer the claim. The intent was to prevent this by allowing the contracted managed care organization total medical responsibility without returning to the insurer for every determination. Chairman Giunchigliani did not believe the language reflected that intent.
Mr. Young agreed with Chairman Giunchigliani. He said SIIS believed the insurer should be the entity making the decisions and the managed care group to function as an adjunct to deal with the questions of medical supervision. In response, the Chairman asked if SIIS had taken the additional administrative costs into their calculations of cost. Mr. Young stated he had not been involved in determining costs, and could not answer the question. However, he said they believed managed care provided a set of protocols for guidelines. The real question was who should be supervising the workers' compensation program, the insurers or the treating physician? To those in SIIS it looked like there was a shift in control to the treating physicians. He said he shared Mr. Zimmerman's concern regarding the language which said the protocols and guidelines had to be acceptable to the doctors.
Chairman Giunchigliani and Mr. Young discussed the duplicate cost of administrative services, regulatory supervision, qualifications and certification.
Mr. Young also drew attention to language in Exhibit I, page 7, ". . .shall advise the insurer within 5 days of the date the injured worker is released. . .". Mr. Young did not believe the 5-day provision was reasonable. If SIIS was notified on the fifth day, the compensation might already have been paid for five additional days. Mr. Young believed SIIS should be notified immediately upon release. When the Chairman asked if the current practice was to notify SIIS immediately upon release, Mr. Young said currently, if things went as they should, they were in constant communication with the treating physician and on the day the person was ready to go back to work, notification was made. However, there was no statutory requirement to do this, it was merely a cooperative effort.
Subsection (r) also presented a problem, Mr. Young said. He did not believe the insurer was ever divorced from the claims management. Although the doctor gave advice or made recommendations on medical care, Mr. Young was not comfortable with the premise while medical care was being rendered, it was the attending physician who was primarily responsible for claims administration. This went back to managing the claim, and Mr. Young believed SIIS should, as the insurer, always be managing the medical as well as the insurance aspect of the claim.
Discussion ensued regarding protocols, the role of managed care organizations and the appeal process.
Chairman Giunchigliani suggested Ms. Kenny, Mr. Hettrick, Mr. Matheis and Ms. Gruenewald meet with Mr. Young at a later time to work out the language. She asked for a motion to adopt the managed care amendments and to straighten up the language before reviewing the entire amendment.
ASSEMBLYMAN ERNAUT MOVED TO ADOPT THE AMENDMENTS DEALING WITH MANAGED CARE ORGANIZATIONS.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
THE MOTION CARRIED.
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ASSEMBLYMAN ANDERSON MOVED TO ADOPT AMENDMENTS SHOWN ON EXHIBIT K.
ASSEMBLYMAN KENNY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Giunchigliani suggested the committee vote to, 1) amend and do pass SB 316; 2) allow the staff to write up the entire amendments; and 3) then the committee would review, modify and correct the language, as necessary. In the meantime, the committee could work on the more difficult areas such as managed care.
ASSEMBLYMAN COLLINS MOVED TO AMEND SECTION 190 DEALING WITH MINIMUM STANDARDS FOR DETERMINING IMPAIRMENT.
ASSEMBLYMAN ANDERSON SECONDED ASSEMBLYMAN COLLINS' MOTION.
ASSEMBLYMAN HETTRICK MOVED TO ADOPT MARKET DISCOUNT RATES FOR PERMANENT PARTIAL DISABILITY AWARDS.
ASSEMBLYMAN ERNAUT SECONDED ASSEMBLYMAN HETTRICK'S MOTION.
Explaining his motion, Mr. Hettrick said he believed the current discount rate on PPD awards was fixed at 6 percent. This meant Nevada paid an award significantly greater than current market discount rate. Also, he said it was appropriate when interest rates fluctuated to have the discount rate fluctuate with the market, and this was practiced by any financial institution.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED ASSEMBLYMAN HETTRICK'S MOTION FAILED.
Returning to Mr. Collins' motion on Section 190, the Chairman clarified the motion was to obtain language which would establish some level of measurement for determining impairment.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED ASSEMBLYMAN COLLINS' MOTION CARRIED.
SENATE BILL 316 -Makes various changes to provisions governing industrial insurance.
ASSEMBLYMAN BACHE MOVED TO AMEND AND DO PASS SB 316.
ASSEMBLYMAN BONAVENTURA SECONDED THE MOTION.
The Chairman stated the motion on SB 316 would be to amend and do pass with the understanding the bill drafting staff would need time to draft the amendments. The amendments would then be reviewed for accuracy and correctness. This would also allow SIIS the opportunity to formulate a fiscal note.
FOLLOWING A VOICE VOTE, THE CHAIRMAN ANNOUNCED THE MOTION CARRIED.
There being no further business, the meeting was adjourned at 8:39 p.m.
RESPECTFULLY SUBMITTED:
Iris Bellinger
Committee Secretary
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Assembly Committee on Labor and Management
Date: May 25, 1993
Page: 1