MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
February 22, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Monday, February 22, 1993, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Sue Lowden, Vice Chairman
Senator Ann O'Connell
Senator Mike McGinness
Senator Raymond C. Shaffer
Senator Leonard V. Nevin
Senator Lori L. Brown
STAFF MEMBERS PRESENT:
Brian Davie, Senior Research Analyst
Jan Needham, Senate Bill Drafting Adviser
Sheri Asay, Committee Secretary
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Teresa P. Froncek-Rankin, Commissioner of Insurance, State of Nevada Department of Insurance
Ray Bacon, Executive Director, Nevada Manufacturers Association
Scott Young, General Counsel, State Industrial Insurance System
John McGlamery, Attorney, Department of Industrial Relations
Scott Craigie, Chief of Staff, State of Nevada Governor's Office
Bob Ostrovsky, Lobbyist, Nevada Resort Association
Carol Jackson, Director, Department of Industrial Relations
Mary Santina, Lobbyist, Retail Association of America
Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, State of Nevada Attorney General's Office
Senator Townsend opened the meeting by introducing Ms. Jan Needham, Senate Bill Drafting Adviser, Legislative Counsel Bureau. Ms. Needham explained the Outline for Working Draft of BDR 53-1764 (Exhibit C. Original copy is in Research Library), at Senator Townsend's request.
Senator Townsend stated the remainder of the meeting would involve testimony on BDR 53-1764 (Exhibit C):
Senator Nevin said he thought "...somewhere in the bill we were going to change the abbreviation for general intent versus specific intent on fraud cases."
Ms. Needham said she did not specifically address whether it was a specific intent or general intent crime in drafting the bill.
Senator Nevin expressed concern regarding the difference between partial and total disability (section 177).
Senator Brown pointed out areas of inconsistent language in the bill. Ms. Needham explained there were parallel sections because the sections would become effective at two different times. She referred to the office of the Nevada Attorney for Injured Workers, which was to be eliminated January 1, 1994. Senator Townsend thought that job should not be eliminated before the caseload was finished. Ms. Needham assured him that would not happen.
Senator McGinness was concerned about recouping overpayments from those no longer in the system (sections 190 and 201). Ms. Needham said the State Industrial Insurance System (SIIS) would have to address that issue. Senator Nevin thought there should be stronger methods for recouping overpayments. Ms. Needham assured him that language was added to the bill to recover overpayments due to clerical error.
Senator Townsend and Ms. Needham discussed getting the bill in final form as soon as possible. Senator Townsend thanked Ms. Needham and her staff for their efforts.
Ms. Teresa P. Froncek-Rankin, Commissioner of Insurance, State of Nevada Department of Insurance, addressed the committee on sections 21-40.
There was discussion on section 26, subsection 2(a), regarding the 70 percent of assessment going to claims, which implies that 30 percent would be usable by service corporations, according to Ms. Rankin. She thought the 30 percent figure was too high, and recommended a 25/75 percent ratio.
Under section 33, subsection 1, Ms. Rankin asked for an amendment, to read that the required statement of financial condition be filed before December 31, or at the conclusion of the association's own fiscal year.
Ms. Rankin referred to section 36, regarding dividends. She said the distribution of dividends should be approved by the insurance commissioner. Section 39, subsection 1(c), should not include the provision that each member of the association approve the additional assessment required to make up a deficiency. The members are already liable for that debt under a former provision, according to Ms. Rankin.
Referring to section 41, subsection 2(d), Ms. Rankin said the language should be amended to add "or examination cost" to the penalty, fee or assessment charges. She requested the record show that the language, as drafted in section 43, subsection 2, could be from any insurance company.
Senator Shaffer inquired about approval for rate increases. Ms. Rankin assured him the insurance commissioner could approve or disapprove, but only if the rate increase was excessive.
Mr. Ray Bacon, Executive Director, Nevada Manufacturers Association, testified on section 106, dealing with the transfer of vocational rehabilitation to the Division of Rehabilitation. He thought the Division of Rehabilitation rules, rather than SIIS rules, should apply when this transfer occurs. Mr. Bacon discussed the history of rehabilitation services.
Section 171, subsection 1(d), deals with stress. Mr. Bacon thought stress brought on by sudden traumatic incident should be compensable.
Mr. Bacon expressed concern about the impact on small businesses regarding safety programs in section 208, section 1. Mr. Bacon wanted to see more flexibility in this section. "...if you back off on the requirements, just say you've got to have one and it's got to be effective, and if your experience factor is over one it obviously isn't effective, and then it's subject to review and scrutiny by the DPS (Department of Preventative Safety), I think you've got something which creates a win-win situation. It gives the employer a clear, driving reason to make sure that he keeps clean."
Mr. Scott Young, General Counsel, SIIS, testified before the committee, regarding section 6. Mr. Young said this section should make a reference to Nevada Revised Statutes (NRS) 616.060, a statute which has exclusions for casual labor, among other things. Section 9 contains conflicting language with the consensus legislation regarding the "notice of an injury," according to Mr. Young. Senator Townsend asked Brian Davie, Senior Research Analyst, Legislative Counsel Bureau, to research the issue.
Mr. Young expressed concern over future litigation in regard to section 12, subsection 2, because that section does not have an exclusion for late filing. Referring to section 18, subsection 2, he wanted to include the provisions from the consensus legislation, which states an insurer could provide benefits (subsection 1) at their discretion, but the claimant would have no right of appeal.
There was general discussion on section 21, subsection 4(a), about the amount of the filing fee.
Mr. Young questioned the net worth issue in section 22, subsection 2. He also expressed concern over section 40, subsection 2, which gave the insurance commissioner authority to withdraw the certificate of an association of self-insured public or private employers for various reasons.
Mr. Young noted the language discrepancy in section 70, between the bill and the original consensus legislation. He referred specifically to bankruptcy, and said it was important that reference remain. Mr. Young discussed sections 74, 77 and 79. He felt the language regarding hearings was not specific enough in section 74. Section 77 should apply to all insurers, not just SIIS, according to Mr. Young.
A general discusssion ensued on section 79, subsection 2. Mr. Young thought this section was unclear ..."if in fact you're going to have a record for purposes of appeal there." Senator Nevin asked if a tape recording could stand as part of the record. Mr. Young said the Department of Administration is currently using tapes, which are transcribed in the case of appeal. John McGlamery, Legal Counsel, Department of Industrial Relations (DIR), suggested possible constitutional problems with this section. Senator Townsend said, "The answer, as I see it, is that it would be a trial de novo...if they want to sue, and I believe this was in our recommendation as well as the Governor's...they've got a right to do that."
Mr. Young discussed section 81, subsection 4(b). He thought more prohibitive language should be included to exclude categories now proscribed by statute.
According to Mr. Young, section 83 should include language to say that self-insured employers may enter into managed care agreements under the same conditions outlined in preceding sections. Otherwise, "...there are no real parameters for how they can enter into those contracts."
Mr. Scott Craigie, Chief of Staff, State of Nevada Governor's Office, testified before the committee on the Outline of the Working Draft, BDR 53-1764 (Exhibit C). He expressed concern over sections 47-62 and section 94, all issues having to do with borrowing money. Mr. Craigie discussed section 73, subsection 4, dealing with salaries and expenses. According to him, the language was not specific enough. There was discussion about a 1-year policy review on this issue.
Mr. Craigie testified regarding section 78, "...I felt the committee's intent was to allow for that option for SIIS to decide whether they were going to build that into their rate structure or not. This summary does not define what the statutory language provides." Senator Townsend addressed the deductible language in section 78.
Mr. Craigie discussed the language included in sections 80 through 83, and section 131. He said there should be statutory language that allows SIIS to delegate the appeal process for all medical type issues. Mr. Craigie discussed section 79, and sections 219-251. Referring to section 253, subsection 2, he said there was a timing gap in this provision, which would appoint a new SIIS board of directors on July 1.
Mr. Craigie reiterated earlier concerns about vocational rehabilitation. He said he did not see in this proposal where the claims examiner option was dealt with. Senator Townsend responded that section 122, subsection 2, included language regarding the third party administrator.
Mr. Bob Ostrovsky, Lobbyist, Nevada Resorts Association, discussed section 78, subsection 2, regarding deductibles. He thought employers should be forced to choose one of the deductible levels. A general discussion followed on reducing the amount of paperwork.
Section 86, subsection 1, was discussed by Mr. Ostrovsky and Senators Nevin and Townsend regarding the language of "average monthly wage." Mr. Ostrovsky expressed concern over section 149, subsection 6 and section 76, subsection 3. He thought the rehabilitation language needed to be clarified. "...I think the system shall determine which injured employees should be sent to rehab," explained Mr. Ostrovsky. Senator Nevin concurred, adding that injured workers automatically sent to rehabilitation drive up the costs of workers' compensation.
Ms. Mary Santina, Lobbyist, Retail Association of Nevada, testified on section 78. She suggested claims logged for anything under deductibles that were fully auditable would save paperwork and money. Senator Nevin asked if the log would be kept by the employer. Ms. Santina concurred. She referred to section 160, subsection 3, expressing concern that "or agents" was eliminated from the language. Regarding section 171, subsection 1(c), Ms. Santina cited Department of Transportation guidelines that specifically defined alcohol and controlled substance information.
Ms. Carol Jackson, Director, Department of Industrial Relations (DIR), addressed section 184, subsection 1. She thought managed care organizations and group self-insureds should be added to the language. In subsection 2, Ms. Jackson thought the language should be changed to read "the administrator may, rather than shall, issue a fine." Senator Nevin asked why, and Ms. Jackson said the administrator should have the discretion in this regard and gave an example.
Ms. Jackson also expressed concern over the hearing date which would be set no sooner than 30 days after notice is served in subsection 1. She thought the date should be deleted. Mr. John McGlamery, Legal Counsel, DIR, elaborated on this issue.
Mr. Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, State of Nevada Attorney General's Office, testified regarding section 69, subsection 4. He suggested restitution, rather than penalties, be made to the insurer. Mr. Terry said the penalties could be a substantial windfall, and should be paid to SIIS.
Mr. Terry referred to two issues not covered in the bill draft. The first concerned provision for investigators from the Attorney General's Office (AG0) to obtain records that would be maintained within SIIS or the self-insureds. He also suggested NRS 629.061, subparagraph 1, subparagraph (b), be amended to allow AGO investigators to go to a health care provider and obtain patient records in a fraud case, as is allowed in Medicaid fraud.
Senator Townsend asked Scott Young if SIIS had the authority to get patient's records. Mr. Young responded they could require authorization from the injured worker to obtain the records, and benefits could be suspended if the worker did not comply. He thought Mr. Terry's suggestion for obtaining the records was a better approach.
Mr. Terry noted Medicaid could withhold payments to a provider in a fraud investigation case. He thought this provision should be incorporated into workers' compensation legislation. Mr. Terry referred to federal regulation regarding withholding of payments (Exhibit D).
Mr. Young addressed the committee regarding section 96. He asked whether the intention of the bill, in deleting the reference to "rehabilitation buildings and facilities," was to abolish the Jean Hanna Clark Rehabilitation Center.
Senator Townsend explained that the intention in transferring vocational rehabilitation from SIIS to the Division of Vocational Rehabilitation was to move all rehabilitation to that division. "If you do that, it was understood by legal (Ms. Jan Needham), that would terminate the existence of Jean Hanna Clark. But she does not know that they also do therapy in there," he noted. Senator Townsend concluded that the committee would have to look at the issue more closely.
Mr. Young referred to section 143, subsection 5. He expressed concern over the deletion of this subsection. Sections 146 and 147 deal with subsequent injury. Mr. Young thought language should be included to make these sections applicable to SIIS.
A discussion followed on section 160, subsection 3, as to whether the 45-day limit for the appeals process would speed up or slow down the process. Mr. Young wanted to see it reverted to the old statute of 60 days. He thought the 45-day limit was actually prolonging the process because the litigants could not be ready in 45 days. The litigant would then continue the hearing to a later date, and continuations would become almost automatic. Part of the problem is staffing, as well as the number of appeals being filed, according to Mr. Young.
Referring to section 169, dealing with subrogation, Mr. Young wanted to reinsert the language of the original consensus legislation, "that an insurer could not sell their lien to the third party carrier." He expressed concern over the language in subsection 9.
Mr. Young stated that in section 179, he wanted to have language set up provisions for guardianships for minors.
In section 190, Mr. Young wanted language added which would allow the system or insurer to collect on an overpayment, if there were no further benefits coming to the injured worker from which you could offset the overpayment.
Mr. Young concluded his comments with section 256. He thought there would be constitutional problems with existing claims, in applying the provision that the insurer not be responsible for charges if the injured employee chooses a physician who is not participating in the managed care plan. Mr. Young referred to the Oregon plan, "...if you have an ongoing claim and you reopen, or seek a change of physicians on your ongoing claim, then you come under the managed care."
Senator Townsend asked how Oregon addressed the issue of people who are currently in the system "...getting those particular claims under control."
Mr. Young replied, "...I know they had the one provision...if you wanted to change your physician, or you reached a point of stable and ratable and worsened, you came under the new law."
Senator Townsend announced the 5:00 p.m. meeting of February 22, and adjourned the meeting at 10:17 a.m.
RESPECTFULLY SUBMITTED:
Sheri Asay,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
February 22, 1993
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