MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
January 29, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, January 29, 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 Lipman Brown
STAFF MEMBERS PRESENT:
Sheri Asay, Committee Secretary
Melanie Rosenberg, Committee Secretary
Brian Davie, Senior Research Analyst
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Ray Bacon, Executive Director, Nevada Manufacturing Association
Tom Czehowski, Director of Health and Safety, Steel Engineers Incorporated
Marty Kroot, Account Executive, Joyce Advertising
B. Avakian, Private Citizen
Roger Mowbray, N.R.O. Loss Control Supervisor, SIIS
Dan Vidovich, Industrial Consultant, Nevada Industrial Ergonomics
Senator Townsend opened the meeting by stating that Senator Nevin would be late.
Dan Vidovich, Industrial Consultant, Nevada Industrial Ergonomics, testified on prevention and loss control based on Exhibit C.
Senator Lowden asked if Carpal Tunnel was a cumulative trauma. Mr. Vidovich concurred.
Mr. Vidovich continued to testify from Exhibit C.
Chairman Townsend questioned about injuries prior to computers. He also asked how we could benefit from this information. Mr Vidovich responded that employees spent less time on typewriters than they do on computers and that we should copy California's S.B. 198 which mandates all industries to submit a written program of safety and health for their workers.
Chairman Townsend questioned if the 10 percent reduction was on all figures. Mr. Vidovich responded that 10 percent reduction is used on low back and cumulative trauma.
Senator Brown asked if the State Industrial Insurance System (SIIS) safety programs would save money if "micro management" was utilized and how would these programs be implemented. Mr. Vidovich responded yes and stated that in two Texas counties a program was implemented where employees with back injuries who have received four weeks or more of benefits, would attend a mandatory back program. He stated that there are no mandated safety programs.
Chairman Townsend stated that S.B. 7 mandates such programs.
Senator O'Connell mentioned that injured workers do not listen during the training sessions. She inquired how to make the employees more attentive and responsible to safety standards. Mr. Vidovich responded that mandatory back school was good and that industry and business need a committee to see that safety procedures are implemented.
Senator O'Connell commented that this is in the Nevada Revised Statutes (NRS) but not much improvement has been shown.
Senator Lowden stated that the large resorts have aggressive safety programs and that employees must verify that they have taken courses. Even with such things as spot checks, accidents have not been reduced. She asked advice for employers or legislation to make employees listen. Mr. Vidovich suggested training management.
Chairman Townsend reiterated Senator Lowden's question, "how do you train employees to listen?" Mr. Vidovich suggested strict enforcement within the industry. Employees must attend safety classes and that safety procedures be repeated and repeated until the employee adheres to the safety requirements.
Senator Brown and Chairman Townsend commented on the quality of Exhibit C and stated they appreciated the time and effort involved in its preparation.
Senator Townsend asked if there were any people testifying from Las Vegas. No one wanted to testify at that time.
Scott Young, General Counsel, SIIS, reported that the previous day, in Elko County, Marshall Smith, the District Attorney, successfully prosecuted the first fraud case that had gone to trial.
Don Jayne, General Manager, SIIS, introduced Roger Mowbray and mentioned that cost control programs are linked to safety programs, concluding that any money saved is a result of safety programs. He also stated that education and loss control professionals have been doing a great job.
Roger Mowbray, N.R.O. Loss Control Supervisor, SIIS, testified based on Exhibit D, a Loss Control Program Statement.
Chairman Townsend interrupted the testimony to make sure each committee member had a copy of the Loss Control Program Statement.
Mr. Young stated that the facts Mr. Mowbray was referring to could be located on page 2 of Exhibit D.
Mr. Mowbray continued testifying from Exhibit D.
Senator O'Connell questioned the success of the loss control study and if the targeted employers were paying attention to safety measures. She also wanted to know how the employers were able to get and retain the interest of the employees. Mr. Mowbray responded that the employers established accountability throughout their system; management lets the employee know that preventing accidents are as important as getting the product out the door. He added that it is not possible to legislate this process, each employer must realize the effect it will have on their bottom line.
Mr. Mowbray testified regarding the distribution of accidents. He reported "roughly 5 percent of the employers have 77 percent of the claims." He then testified from Exhibit D.
Chairman Townsend inquired that if 5 percent of the employers have 77 percent of the accidents, and if 1.2 percent of SIIS accounts have 22 percent of the total expense, then it should be possible to target the serious problems. Mr. Mowbray responded that "in effect" they are doing that with the two fold approach of targeting accounts and the planning reports. He described the targeted accounts as the "Misfortune 500" because they had two or more bad years as far as losses.
Chairman Townsend asked how many staff members could SIIS live with in regards to helping the targeted employers. Mr. Mowbray responded that staffing should be one staff member per thirty employers. He concluded that in the North there were nine staff members covering 230 targeted employers but in Las Vegas there were seven staff members to 279 targeted employers.
Chairman Townsend wanted to know how many more staff members were needed in Las Vegas. Mr. Jayne responded they would like to target 500 employers and if he gave an answer based on the 279 employers then they would be limiting the services provided to others. Mr. Jayne stated as a result of the internal reorganization plan, resources were moved into the claims area in Reno. These were resources that had been targeted for the loss control departments and shifted to the claims operations. As the criteria is strengthened and the laws are enforced, he felt they could use more people to provide services across the board.
Senator Brown commented that it sounded as if the loss control people were paying for themselves. Mr. Jayne concurred.
Senator Brown asked if there is an inverse correlation between the number of claims controllers and the cost, shouldn't the targets be expanded to continually lower the costs. Mr. Jayne concurred.
Chairman Townsend asked what is the duplication in the two areas of prevention and loss control. Mr. Mowbray responded that they represent SIIS as an insurance carrier and focus on the losses. He continued by stating that only about 10 to 15 percent of the accidents are related to unsafe conditions which is almost standard, the other 85 percent is related to human factors (unsafe acts). He added that his staff is knowledgeable of OSHA regulations and try to assist people with those or refer employers to the Division on Preventative Safety if they are having specific problems covered by OSHA.
Mr. Jayne interjected the way to make people serious about safety is to have the management serious about safety. He remarked there are two areas of loss control, frequency and severity. He referred to page five of Exhibit D (the retrospective rating plan).
Senator Nevin suggested the question of duplication was not answered. Mr. Mowbray responded there is some duplication partially because of the increasing number of self insured employers. He stated there is a Division of Preventative Safety to help employers to comply with OSHA standards and enforcement is done by the Division of Enforcement for Industrial Safety and Health. He said SIIS has no authority to enforce safety procedures be performed.
Chairman Townsend stated the committee wants the best resources and if that means hiring more staff, then the committee will consider it.
Senator O'Connell asked if the "500 list" employers have had a seminar taught by the successful employers to demonstrate what they should be doing. Mr. Mowbray responded this had not been done yet, but they were working on the targeted accounts. He mentioned there have been loss control seminars for the targeted accounts.
Ray Bacon, Executive Director, Nevada Manufacturing Association, addressed Senator O'Connell's question. He stated when he was vice president of manufacturing at Bently the company went through a dramatic improvement, the company found other employers with similar problems and they interfaced. He said the problem was this was never formalized.
Senator O'Connell said they should have successful employers demonstrating to unsuccessful employers in ways such as seminars. Mr. Bacon responded when he worked for Bently they were self-insured and were large enough to order their own safety programs; this information was shared with other employers. He stated it would be hard to mandate or formalize such things as sharing between employers.
Donna Lewis, Administrator, Division of Enforcement for Industrial Safety and Health (DEISH), addressed the earlier question regarding holding employees responsible. She said that to an extent Nevada does and there is a federal move to make employees more responsible once they have been trained. She said there is resistance to this and the Occupational Safety and Hazards Act (OSHA) reform bill is sponsored by the American Federation of Labor and Congress of Industrial Organizations (AFL/CIO). She said in Nevada there is a "employee misconduct" defense an employer may use but to use they must have a written program, they must implement it, they must have trained the employee for the job, and they must have provided safety devices then DEISH will withdraw any safety citations. This is not common. DEISH will also reduce citations if employers will make the changes like having a written safety program.
Senator Lowden stated with workmans' compensation, if all criteria were met and you go to a hearing or an appeal, the employer is still responsible.
Ms. Lewis mentioned duplication was a factor in the goal of reducing accidents. She stated every insurance company should have a loss control person to target certain things and to attempt to lower premiums.
Chairman Townsend asked if Ms. Lewis has authority over an employer if safety equipment is provided and an employee fails to use it. Ms. Lewis answered no because under OSHA the employer has control over employee except in the "employee misconduct" defense.
Holly Jensen, Administrator, Division of Preventative Safety, testified when there are serious violations in the work place she can turn the employer over to enforcement. She thinks they have a pro active approach; they go in before accidents occur and do sight surveys and work with the employers to check for things that can cause serious injury or death to employees. If safety violations are found, immediate changes must occur. She stated that when enforcement is checking on the employer she is working with, she can "blanket" that employer so enforcement will "back off" and not perform the inspection. She also discussed S.B. 7 from the 1991 legislative session which created the Division of Preventative Safety. The legislature's intent was to change employee awareness. She felt employees and employers must be jointly involved in occupational health and safety.
Senator Lowden asked for suggestions to change the behavior pattern.
Ms. Jensen suggested a stringent disciplinary policy. This could be a verbal warning or time off without pay, i.e. the same way an employer is forced to comply.
Senator Nevin commented you still have the employee drawing compensation from the employer due to the employees negligence regardless of discipline. Ms. Jensen responded that the behavior pattern could be changed. She gave the scenario of the seat-belt change habit change due to laws.
Ms. Lewis mentioned (DEISH), they do not accept a written safety program without progressive discipline however discipline is to be used before the injury. She finds the breakdown in safety programs is due to middle management. She used the example in Las Vegas where there was more than one death at a particular company that had a good safety program. Because of the job size, new employees (many from out of state) were brought in. Several employees were fired, i.e. progressive discipline, there has now been a turn around at this company.
Senator Brown suggested incentives work better than punishment, but this can not be mandated by legislation.
Ms. Lewis responded that one company in Las Vegas uses incentives but it took five years for the program. She said the problem is in large companies (like the Lexor in Las Vegas) the work force can be expanded overnight; the problem is that they have to educate a large number of employees who will be gone in a few months.
Chairman Townsend asked why shouldn't an employer who has had no accidents receive a rate decrease.
Mr. Jayne responded they are dealing with an insurance company and with insurance companies they are spreading the risks among many. He stated a possibility was to have those employers who have had no accidents choose a higher deductible to bring down their cost.
Senator Lowden asked about the retrospective rating to give money back to employers who are following the plan.
Mr. Jayne answered in retrospective plans, employers can get money back, but the small employer who has had no accidents should be able to choose a higher deductible.
Senator Nevin commented people can not change from SIIS to other insurance companies, unlike automobile insurance. He asked why not increase the premiums for the few employers causing the most cost. Mr. Jayne responded the retrospective rating plan would do this.
Chairman Townsend questioned if the retrospective rating plan was currently in effect. Mr. Jayne answered that the retrospective rating plan was currently voluntary but was the recommendation in Exhibit D. He added this is not included in the business plan.
Chairman Townsend asked if the efforts made by Mr. Mowbray and Ms. Jensen (in their attempts to cut down on claims) should be the same. Ms. Jensen agreed with Mr. Mowbray that every insurance company needs a loss control person. She stated the functions she provides are different from Mr. Mowbray in that she does not take costs into account and Mr. Mowbray does.
Mr. Young stated there is a provision which states if a safety device is removed by the workman and he is injured, his compensation must be reduced by 25 percent. He said the committee may want to have Lynne Graham testify when they are in Las Vegas because she has a case on appeal.
Chairman Townsend asked how and where this statute is being applied. Mr. Young responded he has not dealt with this type of case but apparently the statute was not upheld because the worker did not remove the safety device, he never put it on. Chairman Townsend commented this argument is ridiculous and questioned when the case was going to the Supreme Court.
Mr. Young stated there are two observations regarding this statute. First, the language of the statute and liberal construction by Judges. Second, workman's compensation was originally designed to be no fault. He stated over the years there have been exceptions made to the no fault principle.
Senator Lowden asked if the "employee misconduct" criteria would make it easier for someone to decide if this is a proper defense for the purpose of workman's compensation. Mr. Young concurred.
Chairman Townsend reiterated the requirements of the "employee misconduct" criteria.
Ms. Jensen referred to NRS 353 which states, "the division of preventative safety should contract by bid or grant, educational and informational programs in order to provide a consultation service and the Department of Industrial Relations should provide funding." She stated in December of 1992 they solicited bids and Joyce Advertising was chosen. They are trying to implement informational and educational seminars and workshops. She stated it has been legislated a written safety program must be given to all employers and all employers must give employees a document outlining the rights and responsibilities of employers and employees in the work place, this document would then be placed in the employees personnel file. She told the panel a video tape on safety and responsibility will be made.
Senator O'Connell spoke of her concern about these programs being implemented prior to new legislation. She stated the committee would not allow for duplication. Ms. Jensen referenced two provisions in S.B. 7, (1) the Division of Preventative Safety was to put out a document outlining employee rights and responsibilities to promote safety in the work place and (2) SIIS should come out with a document to explain injured worker's rights.
Chairman Townsend explained a document already exists. He suggested they combine efforts to create one pamphlet. Ms. Jensen suggested they look at programs presently in effect and target particular industries. She said they would take the programs and tailor them to the industries where injuries are taking place.
Marty Kroot, Account Executive, Joyce Advertising, testified as of July 1, 1993 they will have distributed the brochures however, there will be a plate so they can change the brochure if the law changes.
Senator Lowden asked why this was not done two years ago. Townsend responded, "politics got in the way." He said it had to do with the financing and the first time they tried to fund the brochure it was done improperly. He stated the last page of the brochure has a tear off sheet that must be signed by the employee and asked if the signature card met the requirement for reduction in benefits when the employee violated the outlined safety procedures.
Ms. Jensen stated in the next six months, she and Ms. Kroot have discussed traveling to Elko, Tonopah, Carson City, Reno, and Las Vegas to hold seminars.
Ms. Kroot said they have a plan for the next six months including the brochure and a video tape. She said they have a large public relations campaign underway which will include workshops and seminars and these programs will also be done in Spanish.
Senator O'Connell asked about the number of people who would need the brochure or video tape in Spanish. Ms. Kroot answered the brochure is meant for the employer but the billboards, television, and radio are aimed at the worker; emphasis will be placed on distribution.
Ms. Jensen stated the advertising campaign, to heighten awareness, is only one step towards achieving the goals which were mandated for the Division of Preventative Safety.
Senator O'Connell asked if the committee could read the brochure and make suggestions. Ms. Jensen agreed.
Ms. Jensen responded to the educational level of the brochure. She stated it is readable from a sixth grade to a tenth grade level.
Chairman Townsend confirmed Senator O'Connell's suggestion about reading the pamphlet to confirm that the language is strong enough.
Senator O'Connell read from the brochure (page 6) which states "report any on the job injury as soon as possible. Your employer must file a first report of injury form. It is your responsibility to file or to report any injury within a certain period of time." She commented this is too general.
Senator Brown questioned the arrangements for people who speak languages other than English. Ms. Jensen responded a survey showed ten percent of the population was Spanish speaking and of that ten percent, less than one tenth of a percent spoke another language. She stated it is the employers responsibility if the employee does not speak Spanish, someone must translate. This is mandated.
Chairman Townsend requested a presentation of the entire campaign prior to the end of the session. Ms. Kroot concurred.
Chairman Townsend requested Ms. Kroot analyze her agencies appropriations and present the committee with a synopsis of what she will need in the two year interim for the safety campaign. He stated a behavior change is needed by everyone in the state regarding safety.
Ms. Jensen responded she understands she must track the success and that a provision for this appear in the contract.
Ms. Kroot responded she is unsure how much tracking they can do prior to June 30, 1993. She stated that tracking will have to take place in the next fiscal year.
B. Avakian Lavakian, private citizen, testified her husband is a carpenter and has had a bad experience with SIIS. Years ago he lost a finger while working but did not file a claim with SIIS. Recently he had a heart attack which is not covered by SIIS. The financial burden has forced them to go on welfare and in a desperate plea she begged the committee to include heart attacks in coverage from SIIS. She argued the education system was going about educating children the wrong way in regards to safety.
Chairman Townsend stated he believed in the recommendation from the committee two years ago regarding education in the schools in SB7.
He stated the program was stopped in December and was just reintroduced.
Tom Czehowski, Director of Health and Safety, Steel Engineers Inc., testified on identifying employers with significant claims. He addressed Senator Nevin's earlier question regarding building safety programs. He stated awareness of employees has to be carried to the management. He said attitudes and changes in behavior come from the employer. He said S.B. 7 section 26, was on the right track which said the manager will identify those employers "who are having an injury rate problem that is significantly greater in the preceding calender year." He discussed lost ratio which deals with incurred costs and anticipated costs, this is somewhat objective and somewhat subjective. He discussed the use of historical data in estimating future costs. He stated this historical data should be used to determine which employers are having significant accidents. He suggested the committee look at the raw data facts to help identify employers that are having a high number of injuries, these will mostly be large employers but there will also be small and middle size companies. He said that not all employers have safety programs and not all programs are effective. He stated SIIS should be budgeted and staffed to address education and training standpoints, there by reducing the claims. He does not believe in the retrospective rating plan because most average employers will not understand a retrospective rating program and retrospective rating programs historically are used in the positive mode as opposed to the negative mode and in retrospective rating programs SIIS may be pushing them toward independent self insurance. He also does not believe in identifying a small group of employers by loss ratio method nor the experience modification factor.
Senator Nevin requested a copy of the "Eight Step Safety Program." Mr. Czehowski agreed to submit a copy to the committee.
Arthur L. Busby Jr., Employee Benefits Representative, Binion's Horseshoe, addressed Senator Lowden's earlier comment regarding an employee removing a safety device. He stated an employee using a lack of common sense (such as walking across a baracaded recently waxed floor) does not consitute removing a safety device. He stated Virginia has a "common sense" rule.
Steve Kasey, Walt Kasey Water Conditioning, commented as a businessman he tries to provide a safe working environment for his employees. He stated the only way to reduce accidents is by a sharing of responsibility and cost by the employee and the employer.
There being no further business, Senator Lowden adjourned the meeting.
RESPECTFULLY SUBMITTED:
Melanie Rosenberg,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
, 1993
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