MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
February 23, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Tuesday, February 23, 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 Lori L. Brown
COMMITTEE MEMBERS ABSENT:
Senator Leonard V. Nevin (Excused)
STAFF MEMBERS PRESENT:
Denise Pinnock, Committee Secretary
Brian Davie, Senior Research Analyst
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Scott Young, General Counsel, Nevada State Industrial Insurance System (SIIS)
Blackie Evans, Lobbyist, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL/CIO)
Danny Thompson, Lobbyist, AFL/CIO
Terry Rankin, Commissioner, Department of Insurance, State of Nevada
Ray Bacon, Lobbyist, Nevada Manufacturers Association
Pam Miller, Lobbyist, Associated General Contractors
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
Ray Badger, Lobbyist, Nevada Trial Lawyers Association (NTLA)
Bob Ostrovsky, Lobbyist, Nevada Resort Association
George McNally, Lobbyist, Nevada Trial Lawyers Association
Sam McMullen, Lobbyist, Nevada Self-Insurers Association
Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, Nevada State Attorney General's Office
Dave Sarnowski, Chief Deputy Attorney General, Criminal Division, Nevada State Attorney General's Office
Mike Livermore, Lobbyist, W.R. Gibbons, Inc.
Jim Wadhams, Lobbyist, Representing several associations of employers
Bryan Nix, Senior Appeals Officer, State of Nevada Department of Administration
Chairman Townsend opened the meeting and announced all the testimony would be in regard to the managed care sections of Exhibit C, Working Draft of BDR 53-1764.
Scott Young, General Counsel, Nevada State Industrial Insurance System (SIIS), stated in looking over the bill draft the consensus group realized there had been a misunderstanding with the bill drafters. Certain sections, specifically sections 47 through 62, were redundant. He also asked that section 94 be removed because the SIIS was not in a position, financially, to take advantage of the proposed legislation.
Blackie Evans, Lobbyist, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL/CIO), testified in favor of managed care and retaining a board of directors for the SIIS.
Danny Thompson, Lobbyist, AFL/CIO, objected to the language in section 81, subsection 4(b). He asked that the words "category of" be deleted. Mr. Thompson volunteered to submit specific language later in the day. Senator Townsend agreed.
Mr. Evans pointed out that while his organization agreed with the managed care portion of the bill they might have trouble supporting the entire bill. He suggested separating the managed care portion of the bill into its own bill. Senator Townsend rejected the idea.
Senator Brown clarified only the new language would be deleted from section 94. Senator Townsend agreed.
Senator O'Connell asked for an explanation of section 2. Terry Rankin, Commissioner, Department of Insurance, State of Nevada, said the section referred to a fictional entity. She explained an association trust which was marketing new health insurance would be an example of a corporate entity that is fictional.
Senator O'Connell asked if the section would preclude groups like the Retail Association or the Manufacturers Association from pooling. Ms. Rankin stated those groups would have to create a new association which would act as a third party administrator to handle their money, separate from the retail group. Senator O'Connell wondered if that was necessary. Ms. Rankin explained it was necessary.
Ray Bacon, Lobbyist, Nevada Manufacturers Association, stated he did not understand why the "unincorporated" language was in the private sector section.
Ms. Rankin said:
This is kind of like risk retention acts. Remember we were talking about the insurance codes ... you have these entities joining together. The books and records and how they do the claims for this association become separate under this statutory structure. So, the retail association itself should not want to assume that obligation. In fact, they need to keep separate books, trustees, and whatever for this association, even if it's a subset. Say the main retail association or manufacturers association has it, they would want a separate one to buffer themselves from the insurance responsibility, but also to keep the books and records straight. I still say this structure is fine.
Pam Miller, Lobbyist, Associated General Contractors, stated her organization already complied with the proposed language. She explained their reasons for doing so.
Carole Vilardo, Lobbyist, Nevada Taxpayers Association, felt the fact that not all nonprofit associations were unincorporated should be dealt with. Her understanding was that the proposed language would allow groups of that type to do whatever they wished.
Ray Badger, Lobbyist, Nevada Trial Lawyers Association (NTLA), suggested Mr. Young outline any changes the consensus group wanted to make.
Bob Ostrovsky, Lobbyist, Nevada Resort Association, stated the bill drafters, in their effort to consolidate all the proposed language, lost essential elements.
Mr. Young asked the committee to consider sections 10 through 13. He said:
This was largely Larry Zimmerman's work and we thought he did a good job. What he did, as I recall, was to combine several sections including [Nevada Revised Statutes] 616.500 and 616.345 and put all the requirements for filing a claim into one section. That way, you didn't have to jump around and try to find the law on that. He also made a very clear distinction between what was referred to in the consensus language as "a notice of injury", and he distinguished that very carefully from a claim for compensation. The idea was the notice of injury would be filed with the employer and there would be a duplicate copy that the worker could keep. This would be for the minor injuries that probably would not result in a formal claim. This would cut down the paperwork for the employer and the insurer. It also wouldn't require the employer, if they were using a third party administrator, to pay up to $300 to have a file opened. By using that notice of injury form you would have a permanent record that the employee had an injury and had reported it ... the bill drafters have not combined everything into a modified version of [NRS] 616.500 which was the intention of the consensus group. What I'd like to do is, perhaps, see them collapse all of those provisions into that. They still have, for instance, some provisions under [NRS] 616.345 and if the senate committee was agreeable to that I think we could sit down with Jan [Needham] and show her exactly how those things would go together without necessarily walking this committee through each and every one of those.
Senator Townsend obtained agreement from the other members of the consensus group and from the committee members to authorize the meeting with Ms. Needham. Mr. Young stated they would discuss sections 10 through 13, 131, 149, and 175.
Mr. Young asked that section 169 be amended to include the consensus language. He said that section dealt with subrogation recovery and there was a provision in the consensus language that would have prohibited the insurer from selling their lien to a third party. Mr. Young spoke of his concern regarding section 168 which dealt with reopening claims. He stated the consensus group left lifetime reopening intact, but had addressed what they saw as the major problems; claims reopened within the first year and claims closed with no lost time and no permanent partial disability. He said the consensus group would prefer their language be inserted.
Senator Brown and Mr. Badger pointed out there was conflicting language regarding reopening.
SENATOR O'CONNELL MOVED TO AMEND SECTION 168. (INCLUDE THE PROPOSED CONSENSUS LANGUAGE.)
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEVIN WAS ABSENT FOR THE VOTE.)
* * * * *
Mr. McNally explained section 86, which dealt with average monthly wage and using net income instead of gross income, had no support from the consensus group.
SENATOR BROWN MOVED TO AMEND SECTION 86. (CHANGE ALL REFERENCES TO "NET" TO "GROSS".)
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEVIN WAS ABSENT FOR THE VOTE.)
* * * * *
Sam McMullen, Lobbyist, Nevada Self-Insurers Association, testified against the language in section 83.
Mr. Badger said the language in section 160 did not make clear the range of cases an appeals officer could hear. Senator Townsend stated all non-medical issues should be heard by an appeals officer. Mr. Badger suggested defining which issues managed care officials would hear and stating all others would go to an appeals officer. He also suggested defining "medical issues."
Ms. Rankin stated Mr. [Scott] Craigie of the Governor's Office was compiling a list of which provisions would be heard by the managed care organizations, and therefore would be appealable through their system and directly to judicial review.
Mr. Badger asked that "stress" be defined in section 171. Mr. Young stated he hoped to have the language defining stress for the committee by that afternoon.
Mr. McMullen said his organization wanted it made clear that being fired or demoted would not be included in the stress definition. Bob Ostrovsky, Lobbyist, Nevada Resort Association, agreed.
Mr. Badger pointed out section 176, subsection 10, should not have been changed at all. He asked the committee to rescind the amendments.
George McNally, Lobbyist, Nevada Trial Lawyers Association, spoke regarding section 186 which dealt with concealing a material fact in order to obtain benefits. The section had been amended to make that a felony. Mr. McNally informed the committee that was not the intent of the consensus group.
Mr. Young stated many employers felt it should be a felony because they viewed it as a serious type of crime. He said the SIIS did not actively endorse increasing the penalty to a felony because the district attorneys would charge a violation of NRS 616.675 along with a violation of another section of statute that dealt with obtaining money by false pretenses. Obtaining money by false pretenses was always charged as a felony and the option offered to the claimant was to plead guilty to a gross misdemeanor under NRS 616.675. The reason the system preferred the gross misdemeanor was it had a penalty attached that the claimant never be paid any future benefits. He stated making it a felony and a misdemeanor made it easier for the district attorneys to negotiate a plea.
Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, Nevada State Attorney General's Office, suggested the committee might want to scale the criminal penalty.
Dave Sarnowski, Chief Deputy Attorney General, Criminal Division, Nevada State Attorney General's Office, said:
Even for a first offender, if you set a monetary amount sufficiently high, to where you have an egregious offense even on a first time basis ... a felony provision could kick in, whereas, routinely you might catch an offender after a first offense, early in a claim, and they may not get much money from the insurer, whereas, if they are able to continue the fraud over a period of time and are finally caught the insurer may be out a considerable amount of money. At that point an option to charge a felony and a forfeit of benefits on the compensation claim may be appropriate, even for a first offender.
Mr. McNally and Mr. Ostrovsky pointed out to the committee they would be testifying further on the proposed legislation, not as members of the consensus group, but as lobbyists for their organizations.
Ms. Rankin listed several changes she thought should be made: 1) section 21, change filing fee to $1000, add language to require five or more members, 2) section 22, subsection 1(c), add language saying "or an amount sufficient to fund their obligations, whichever is larger.", 3) section 22, subsection 2, change the amount to $2.5 million, 4) section 22, subsection 5, change "30 days" to "60 days", 5) section 23, change "60 days" to "90 days", 6) section 25, add a requirement for a fulltime third party administrator, 7) section 26, subsection 2(a), insert "federally insured" before "financial institution", 8) section 27, subsection 3, change "conclusions" to "conclusion", 9) section 33, add "audited" before "financial condition", and 10) section 41, subsection 2, insert "(h) Or fails to qualify because of insufficient members.", 11) section 79, subsection 1(b) change "or managed care" to "for managed care".
Mike Livermore, Lobbyist, W.R. Gibbons, Inc., asked that the "clerical errors" mentioned in section 14 be clarified.
Senator O'Connell asked Mr. Livermore to draft language for that clarification. He agreed.
Mr. Livermore also wondered why section 156 was removing "or by any other agent". He felt representatives from his company had been effectively and affordably representing employers at their appeals for many years. Senator O'Connell stated it was not the committee's intention to put a halt to that practice.
Mr. Livermore said section 171, subsection 4(b), should be omitted or clarified.
Mr. Bacon pointed out section 252 would eliminate the Nevada attorney for injured workers. He stated since the committee had not taken action on the capping of permanent partial disabilities, or capping attorney's fees they were "opening the situation up to increased litigation."
Jim Wadhams, Lobbyist, representing several associations of employers, objected to apparent discrepancies in the sections dealing with assessments.
Mr. McMullen, speaking as a representative of the self-insureds, offered to meet with Ms. Rankin and employer representatives to make sure the sections on pooling would meet the needs of those involved.
Bryan Nix, Senior Appeals Officer, State of Nevada Department of Administration, testified that a closer look needed to be taken at the training, education, and qualifications of the third party administrators representing employers at appeals.
There being no further business, the meeting was adjourned.
RESPECTFULLY SUBMITTED:
Denise Pinnock,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
February 23, 1993
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