MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      January 28, 1993

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, January 28, 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:

 

Denise Pinnock, Committee Secretary

Brian Davie, Senior Research Analyst

Frank Krajewski, Senior Research Analyst

 

OTHERS PRESENT:

 

Mark Peltier, Private Citizen

Mario Pucci, Private Citizen

Ernest C. Gresham, Private Citizen

Terry Rankin, Commissioner of Insurance, State of Nevada,             Department of Insurance

Scott Young, General Counsel, Nevada State Industrial Insurance       System (SIIS)

Carol Jackson, Director, State of Nevada Department of Industrial     Relations (DIR)

John McGlamery, Counsel, DIR

David Sarnowski, Chief Deputy Attorney General, Criminal Justice      Division, Nevada Attorney General's Office

Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit,      Nevada Attorney General's Office

Bob Pike, Chief Investigator, Nevada Attorney General's Office

Jim Jeppson, Acting Administrator, Industrial Insurance Regulation     Division, DIR

 

 

 

 

Chairman Townsend opened the meeting and invited the first witness to speak to the committee.  Mark Peltier, Private Citizen, testified regarding his experience with the State Industrial Insurance System (SIIS).  He stated he had been injured on the job in 1987 and had filed a claim for benefits.  He was denied benefits, then the denial was overturned at a hearing.  The SIIS appealed and appointed Matthew H. Firetag, Associate General Counsel, SIIS, to defend their denial.  Mr. Peltier said Mr. Firetag perjured himself before the court with unsubstantiated statements.  Mr. Peltier stated Dr. Thomas L. Curt testified on behalf of SIIS, and also perjured himself with false statements and a false curriculum dictae.  The witness stated:

 

      For the record, I do have in excess of one hundred pages of black and white, clear evidence to substantiate everything I've said.  Nothing is left to interpretation.  Everything is in black and white.  I have medical documentation. I have court transcripts.  I have letters from Dr. Curt.  I  have interoffice memos from Mr. Firetag, letters from the two universities- both the University of Colorado and the University of Texas- confirming that Dr. Curt falsified his background....

 

Senator O'Connell asked the witness to supply the committee with his SIIS claim number.  Senator Brown told the witness there were already laws concerning perjury and suggested he pursue that avenue.  Mr. Peltier stated he was addressing the issue of fraud, along with perjury.

 

Scott Young, General Counsel, SIIS, testified in defense of Mr. Firetag.  He assured the committee he had worked with Mr. Firetag for eight years.  Mr. Young said, "I certainly don't want to attack anybody when I appear at this table, but most of the things he has told you I believe to be patently false."  He stated Mr. Peltier was fortunate that the proceedings in the committee room granted him immunity from prosecution for his remarks.  Mr. Young said the case had been in too many courts for fraud as blatant as Mr. Peltier claimed to have gone unnoticed.    

 

Senator Townsend asked Mr. Peltier to sign a release for his SIIS records to be released to the committee.  He agreed.  Senator Brown said an index of the materials in Mr. Peltier's file would ensure a complete record.

 

Mario Pucci, Private Citizen, testified opposing the Governor's proposal to eliminate the treatment of stress as a SIIS benefit. 

 

Ernest Gresham, Private Citizen, stated he was personally aware of fraud against the Social Security system perpetrated by physicians.  He said the doctors involved in SIIS claims were probably doing the same thing.

 

ASSEMBLY BILL (A.B.) 149:     Requires attorney general to                                       establish fraud control unit for                                   industrial insurance.

 

Senator Nevin spoke regarding A.B. 149.  The committee decided the bill did not fully encompass the Governor's proposal. 

 

Terry Rankin, Commissioner of Insurance, State of Nevada Department of Insurance, gave some background on the insurance fraud unit.  She requested the language taking away the authority of the commissioner and the insurers to report insurance fraud be excluded from the bills.   

 

Senator Townsend requested Ms. Rankin return the following Tuesday to deal with questions regarding merging the DIR with her department, and the new fraud unit. 

 

Senator Lowden asked how many of the fraud cases referred to the insurance fraud unit dealt with medical fraud.  Ms. Rankin said that figure was very low, perhaps 5 percent.  She stated most of the cases were homeowner/commercial and auto insurance claims. 

 

Carol Jackson, Director, Department of Industrial Relations (DIR), stated workers' compensation fraud is very specialized.  She said her office has been looking specifically at billing fraud.  Senator Nevin asked how many DIIR employees were assigned to locate fraud billings.  Ms. Jackson stated there were three people who, when they went in to do audits, automatically looked for fraudulent billings. 

 

John McGlamery, Counsel, DIR, testified regarding the specific definition of fraud.  He said he would like to see language included which would use the legal definition "intentional false statement of fact".

 

Mr. Young reiterated the point Mr. McGlamery made regarding the definition of fraud.  He submitted Exhibit C, regarding SIIS anti-fraud efforts.  He publicly thanked the district attorneys who handled the prosecution of the fraud cases.  Mr. Young stated those attorneys were, at times, too busy with other cases.  He said the SIIS is interested in hiring a dedicated attorney in the Attorney General's Office to prosecute the cases.  Another possibility, he said, would be to authorize prosecutorial functions for the SIIS attorneys. 

 

Senator Nevin stated:

 

      I think, Mr. Chairman, we should look at a little broader definition between "abuse" and "fraud" ... a lot of cases you may consider abuse, I declare outright fraud.  It's just interpretation, the way the law's written, and the definition.  I think we have to come up with definitions for abuse and fraud in the SIIS, and we have to go after both, not just one.

 

Mr. Young agreed, and at Senator Nevin's request, he identified elements that needed to be proven before they could prove fraud.  Mr. Young said fraud cases involve specific intent which meant the attorney had to prove there was a deliberate intentional course of conduct that led up to the action of the suspect. 

 

David Sarnowski, Chief Deputy Attorney General, Criminal Justice Division, Nevada Attorney General's Office, stated he believed the Legislature could carefully draft a statute which would eliminate a specific intent requirement and substitute a general intent crime. 

 

Senator Brown asked about the possibility of civil penalties.  Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, Nevada Attorney General's Office, stated the framework for his unit is along those lines.  The unit has both criminal prosecutorial jurisdiction and civil monetary penalty enforcement powers.  He said a fraud unit for the SIIS could work the same way. 

 

Robert Pike, Chief Investigator, Nevada Attorney General's Office, stated he had talked to the Medicaid investigators who dealt with provider fraud.  Those investigators said they had seen SIIS claims which doctors had turned in and had assured Mr. Pike there was "very fertile ground" for investigations.  Mr. Terry said, "We've got providers who have been excluded from Medicaid who are running rampant in the SIIS program."

 

Jim Jeppson, Acting Administrator, Industrial Insurance Regulation Division (DIIR), said he was collecting information from various sources for the purpose of removing those providers from the panel of physicians and chiropractors.  He stated the DIIR should be on the mailing list of the Attorney General's Office so that when action is taken against a physician, DIIR can proceed with removing the physician from the panel.

 

Senator O'Connell asked Mr. Terry whether information on fraud was given to the physician's governing board, and what action they take.  Mr. Terry said they currently notify the licensing agency involved, but are not required by statute to do so.  He said the licensing agencies are notorious for acting late when they act at all.  Senator O'Connell wondered whether it would be worth the committee's time to mandate action when fraud has been proven.  Mr. Terry stated that in his area, if someone were convicted, the federal government would automatically exclude them from any federally funded programs.  He said that would be an important tool to use in the SIIS area as well. 

 

Senator Brown suggested doing background checks for violations in other states when a physician is licensed in Nevada.  Mr. Pike said the DIIR is currently responsible for the acceptance of physicians who are deemed fit to treat injured workers.  Mr. Jeppson stated the DIIR contacts physicians who are newly licensed in Nevada and inquires about their willingness and knowledge of Nevada Revised Statutes (NRS) and workers' compensation.  If they respond affirmatively they are put on the panel. 

 

Senator Townsend suggested sending a letter to the Board of Medical Examiners inquiring as to their actions on licensees who had been convicted of fraud.  The committee members agreed.

 

As there was no further business, Senator Townsend adjourned the meeting.

 

 

 

 

                                        RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Denise Pinnock,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

DATE:                                 

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Senate Committee on Commerce and Labor

January 28, 1993

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