MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
February 4, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on February 4, 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 Advisor
Linda Krajewski, Primary Secretary
Sheri Asay, Committee Secretary
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
George McNally, President, Nevada Trial Lawyers Association
Terry Froncek-Rankin, Commissioner of Insurance, State of Nevada Department of Insurance
Scott Young, General Counsel, State Industrial Insurance System
Larry Zimmerman, President, CDS of Nevada
Bob Ostrovsky, Lobbyist, Nevada Resort Association
Terri Potts, Lobbyist, Nevada Physicians Caucus
Marsha Berkbigler, Lobbyist, Nevada State Medical Association
Ray Badger, Lobbyist, Nevada Trial Lawyers Association
Jim Jeppson, Administrator, Division of Industrial Insurance Regulation
Robert Pike, Chief Investigator, Investigations Division,
Attorney General, State of Nevada
Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit,
Attorney General, State of Nevada
Carol Jackson, Director, Department of Industrial Relations (DIR)
John McGlamery, Attorney, DIR
Nancyann Leeder, Lobbyist, Nevada Association of Injured Workers
Lynn Grandlund, Lobbyist, Grandlund, Watson, Clark and Associates
Dan Thompson, Lobbyist, State of Nevada American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)
Dean Hardy, Lobbyist, Nevada Trial Lawyers Association
Chairman Townsend opened the meeting with an invitation to George McNally, President, Nevada Trial Lawyers Association (NTLA), to address the committee. Mr. McNally explained he would speak after his documents arrived at the meeting.
Senator Townsend announced the Research Division's Overview of the Consensus Legislation (Exhibit C), known as Bill Draft Request (BDR) 53-1157, would be voted on during the meeting. He noted the Governor's Worker's' Compensation proposal would supersede any action taken on BDR 53-1157.
Terry Rankin, Commissioner of Insurance, State of Nevada Department of Insurance, objected to SIIS Organization and Procedures, page 5, Exhibit C, which would authorize SIIS to borrow money by pledging its current assets, or use revenue anticipation notes. She thought the current financial situation of SIIS would be made worse by this action.
Senator Townsend asked whether Ms. Rankin would be using statutory or general accounting principles with regard to the unit which would be coming under her control.
Ms. Rankin explained the examiners recommended the current investment statutes stay in place but with some modification. She continued, "If we have them file an annual statement, so that we can actually look at both their gap basis and their statutory, this would not be allowed on the annual statement accounting."
Mr. Scott Young, General Counsel, SIIS, also objected to giving SIIS authorization for borrowing money. He felt the proposal could be beneficial and he would then support it, when SIIS was in a more solvent state.
Senator Townsend referred to the Fraud section, page 1, number 1, Exhibit C, requiring an injured employee to disclose to the insurer information about prior ratings received for disabilities and prior conditions. He asked if this disclosure would be affected by the American Disabilities Act (ADA).
Mr. Young did not think so.
Mr. Young made two points concerning Fraud, page 1, number 2, Exhibit C: he said it is already a crime for an employer to make a charge against an employee or to deduct from his wages any money required for industrial insurance. The proposal would merely specify that the crime is a gross misdemeanor. The second part of the proposal would require a contractor to secure industrial insurance for a subcontractor who fails to do so. This is basically a restatement of existing law.
Mr. Young discussed the proposal to make it a gross misdemeanor for an employee to conceal a material fact in order to obtain compensation, Fraud, number 3, Exhibit C. " He said, "What this does is add, concealing a material fact to the existing statute, which requires a willful misrepresentation...". He further explained the second part of the proposal, which would make it clear that in order to obtain a controlled substance from an emergency room, by falsely reporting an industrial injury, is also a violation of the statute. Mr. Young assured Senator Brown the language of the statute would emphasize "willful" misrepresen-
tation.
Mr. Young said Fraud, number 4, Exhibit C, would essentially pick up the language passed last year for medical fraud and apply it to workers' compensation.
Fraud, number 5, Exhibit C, allows SIIS investigators to use license plates which do not identify them as state employees. Mr. Young said [referring to SIIS] "They were the only agency I know of that has to have an exempt plate when we're trying to surveil people without being spotted. We'd like to change that."
Senator Townsend asked if Physician Self-Referral, page 2, Exhibit C, was part of the Governor's Workers' Compensation proposal. Mr. Scott Craigie, Chief of Staff, State of Nevada Governor's Office, said it was not. Senator Townsend put the proposal aside for later consideration.
Mr. Larry Zimmerman, President, CDS of Nevada, responded to Determination of Benefits, number 1, page 2, Exhibit C, which simplifies reporting procedures for both the injured worker, employer and physician. Regardless of the outcome of the Governor's proposal regarding the $400 minimum deductible, the injured worker would always have to report his injury and the employer would have to document it, stated Mr. Zimmerman.
Mr. McNally suggested there was a problem with Determination of Benefits, number 3, page 2, Exhibit C. This section would require a physician or chiropractor to determine by objective medical evidence whether a late manifesting injury is a part of the original claim. His concern was with the term "objective." Mr. McNally proposed the term "competent" be used instead.
Senator Brown expressed concern that the term "competent" would be even harder to define because the physicians are all licensed.
Mr. McNally thought it was a matter of semantics. He expressed that late manifesting injuries has been a continuing problem in a workers' compensation claim.
Senator Townsend held further discussion on number 3 until later in the meeting.
Mr. Young spoke on Payment of Benefits, number 1, page 2, Exhibit C, which would limit accident benefits available to injured employees. He explained that the dual purpose of this proposal was to 1) eliminate abuses that occur in granting benefits and 2) to restrict granting automobiles to only those with severe injuries. Mr. Young said the proposal to authorize an insurer to deduct overpayments from an employee's future benefits was a recommendation SIIS had been seeking for some time. The proposal would contain time limits and a hearing requirement.
Mr. Young referred to Compensation Benefits, number 1, page 2, Exhibit C, which would exclude the amount an employer pays for health care from the calculation of a injured worker's average monthly wage. He said if the employer costs were to factor into the wage, SIIS would have to increase the employer's premium. Number 3, page 2, would prohibit an insurer from advancing compensation to an injured employee before it is legally due. Mr. Young thought it would be inappropriate to advance compensation, and thought that including it in the statutes would save a resolution dispute.
Mr. Zimmerman responded to number 3, page 3, Exhibit C, which would prohibit the payment of certain compensation benefits to a person convicted and incarcerated after his injury. He said, "...we're paying people in prison that are basically taken out of the work force, and we can't offer them a light duty job because they are physically unable to do it..."
A discussion ensued on whether or not the prisoner's dependents would receive benefits in this situation. Mr. Zimmerman explained that this would only occur if an injured worker had died as a result of the injury.
Mr. McNally said the Nevada Trial Lawyers Association agreed with the language in number 3, "...as long as the suspension of benefits follows conviction."
Mr. Young explained Compensation Benefits, number 4, page 3, Exhibit C. This section would provide for the suspension of compensation if an injured employee is not recovering because of a non-industrial condition. He gave an example of this situation.
Mr. Zimmerman addressed number 5, page 3, Exhibit C, which would clarify the criteria for termination of eligibility for benefits for a temporary total disability. He believed this change would facilitate efforts by employers to return the claimant to work quickly.
Number 6, page 3, would require diseases of the heart or lungs to be rated as other disabilities are rated. According to Mr. Young, SIIS would like to conform the statute to the current method of rating, i.e., continue to choose from a rotating list of specialists. Senator Nevin asked how this would affect firemen and police.
Mr. Young's reply confirmed that firemen and police would still be rated, but the rating would be done by choosing from a rotating list. Mr. Nevin believed this would streamline the process. Mr. Young agreed.
Senator Townsend read Reopening Claims, number 1, page 3, Exhibit C. Mr. Zimmerman said the consensus group (those who drafted the Consensus Legislation, Exhibit C) had problems with this subject. Senator Townsend decided to postpone discussion.
Number 2, page 3, Exhibit C, would prohibit a retired person, who reopens his claim, from receiving benefits for a temporary total disability or for rehabilitative services. Mr. Young supported this prohibition.
Senator Townsend postponed discussion on Hearings and Appeals of Contested Claims, page 3, Exhibit C.
Subrogation Recovery, number 1, page 4, Exhibit C, would improve subrogation recovery for SIIS. Mr. Young stated that this proposal would allow primary insurers to be appropriately reimbursed by monies recovered from third party action. Mr. McNally and Bob Ostrovsky, Lobbyist, Nevada Resort Association, supported the proposal.
Mr. Young pointed out that if the Consensus Legislation differed from the SIIS business plan, SIIS would go along with the consensus
language.
Mr. McNally explained Subrogation Recovery, number 2, page 4, Exhibit C, which would allow an injured employee to receive compensation while bringing an action in tort against an uninsured employer.
Mr. Young said the exclusion from vocational rehabilitation services of child care provision and new vehicles (Vocational Rehabilitation, page 4), was an attempt to eliminate what SIIS thought were benefits which never should have been included under rehabilitation.
A discussion ensued on whether babysitter problems were taken into consideration when determining if a claimant could work a certain shift, or get to a certain job. Mr. Young said all factors were considered, but it comes down to how much of the obstacles would be at the employer's expense or at the individual's expense.
Mr. McNally said that in appropriate cases the benefits discussed under Vocational Rehabilitation, page 4, Exhibit C, can be provided. However, they cannot be ordered by the appeal process, he added. Mr. Young concurred.
Industrial Insurance Classifications, Rates and Funds, number 1, page 4, restricts the jurisdiction of the manager of SIIS to hear only appeals regarding the assignment of risk classifications to employers. Mr. Young explained this would save the general manager's time by avoiding unneccessary hearings. Senator Townsend decided to hold further discussion until later.
Number 2, page 5, requires the Division of Industrial Insurance Regulation (DIIR) administrator to accept or deny a claim for a subsequent injury within 90 days and to reimburse the insurer within 60 days. Senator Townsend asked if this proposal could be removed if the subsequent injury fund was split. Mr. Young agreed, as did Ms. Carol Jackson, Director, Department of Industrial Relations.
SIIS Organization and Procedures, number 1, page 5, authorizes SIIS to borrow money by pledging its current assets or by using revenue anticipation notes. Number 2 authorizes SIIS to maintain branch offices without complete facilities for processing claims. Mr. Young explained SIIS had offices in Elko and Reno without full claims processing facilities. He wanted this clarified, "so we don't run into a problem with somebody getting a court order that makes us open a full claims office in Elko."
Mr. Zimmerman responded to Administration of Industrial Insurance Laws, page 5, authorizing the imposition of administrative fines for intentional or repeated violations. He thought there should be leeway in the policy of imposing fines. Ms. Jackson agreed, as did Mr. Ostrovsky.
SENATOR NEVIN MOVED TO APPROVE THE CONSENSUS LEGISLATION WITH OMISSIONS.
SENATOR O'CONNELL SECONDED THE MOTION.
Senator O'Connell noted, "...there is one item that I would like
to, for the record, show that I have opposed. It's on page 5 and it's the item that authorizes SIIS to borrow money."
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend referred back to Exhibit C to discuss the proposals which were omitted. He asked Mr. Young to address Physician Self-Referral, page 2.
Mr. Young said SIIS wanted to include language that you cannot make a self-referral unless you get the prior approval of the insurer. This would cut down abuse, and would possibly allow the insurer to negotiate a better rate with the physician, he explained. Mr. Young mentioned referrals to physical therapy units, stating those costs have risen considerably.
Senator Townsend said Scott Craigie, Chief of Staff, Governor's Office, was concerned with the broad policy regarding self-referral, and not just workers' compensation. Senator Townsend asked for a representative from the medical society to address the issue.
Terri Potts, Nevada Physicians Caucus, (NPC) said Nevada has less than 3 percent of physicians who refer patients to facilities in which they have ownership interests. Physician self-referral has proven cost-effective in the Las Vegas market, according to Ms. Potts. She thought that because of the ownership interest, physicians were able to negotiate lower rates with the patient. The physicians could also maintain better control over the utilization of the tests performed in their facility, she added. Ms. Potts stated that when physicians were forced to sell their interests in these facilities, they were bought out by huge corporations who were not physician-owned, resulting in higher rates. This situation occurred in Florida, and was documented by the American Medical Association, said Ms. Potts.
A discussion ensued between Senator Nevin and Ms. Potts about whether or not physicians charge more when they refer patients to their own facilities. Senator Nevin pointed out in a managed care organization, the service must be provided at a set cost.
Ms. Potts agreed, and said most physicians were already living by utilization review standards, national protocols and standards, and discounted contracted rates, even though they refer patients to their own facilities.
Senator Nevin reiterated his opinion that huge corporations buying the facilities from the physicians could not drive the rates up, because under managed care they had to provide the service at a certain amount.
Ms. Potts thought they could drive the rates up by denial of services. "Then we get somebody else," replied Senator Nevin.
Marsha Berkbigler, Nevada State Medical Association, addressed the issue, stating a self-referral ban would hurt rural Nevada because of the limited services available. Most rural facilities are physician-owned, she added. It would also affect outpatient surgery centers, many of which are physician-owned. She pointed out these facilities actually lower the cost of medicine because they preclude admittance to a hospital. Ms. Berkbigler assured Senator Nevin that rates would not go up under managed care, because the services would still have to be provided somewhere in Nevada. "That would be a situation the physicians themselves would have to look at and see how they would handle," she said.
There was discussion on in-hospital or out-patient referral. Ms. Berkbigler expressed concern that if a patient could not be put in a physician-owned facility, they would be referred to a hospital with resulting higher costs.
Senator Lowden pointed out the need to have emergency diagnostic services available and cautioned against being too restrictive.
Ms. Berkbigler agreed. Senator Lowden also cautioned against prior authorization, which would be a hindrance in an emergency situation.
Senator McGinness expressed concern for rural areas. "If Dr. X has the only machine in town...there's no use sending the patient to Las Vegas, or Elko, or Salt Lake just to get around this ban."
Mr. Young said an advance authorization for each individual would not be required by SIIS, but SIIS would examine and authorize each physician's diagnostic equipment.
Ms. Potts pointed out that the proposal made by the Nevada Physicians Caucus provided severe penalties for physicians who abused the system.
Senator Townsend identified the consensus group, and thanked them for their efforts in putting together the workers' compensation proposals.
Senator Townsend referred to Determination of Benefits, number 3, page 2, Exhibit C, which requires a physician or chiropractor to determine by objective medical evidence whether a late manifesting injury is a part of the original claim.
Mr. Ray Badger explained late manifesting injury, and gave examples. He reiterated the objection to the term "objective" medical evidence.
Mr. Badger said the physician, not the patient, must establish a causal relationship between the new problem and the original accident.
Mr. Young said the language "competent medical evidence", which was first established in the Consensus Legislation, was acceptable to everyone. Senator Townsend asked if "medical evidence" would suffice, and Mr. Badger and Mr. Young agreed. The committee decided to leave the language "medical evidence."
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 3, UNDER DETERMINATION OF BENEFITS.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Industrial Insurance Classifications, Rates and Funds, number 1, page 4, was discussed. Senator O'Connell expressed concern that an employer needed a place to go to be heard.
There was discussion on what could and could not be appealed to the manager of SIIS. Mr. Young stated that SIIS was trying to clarify that there was a forum for appeals - in front of the insurance commissioner. He explained this proposal would eliminate bureaucratic waste due to unneccessary hearings.
Senator O'Connell thought the proposal should clarify "...that you do have the authority to make some appeal, because right now, the proposal...takes away employers' rights..."
Mr. Young reiterated that employers have the right of appeal, in front of the insurance commissioner, on any classification issue which involves the whole industry of that class. He pointed out the individual employer who thinks he was classified incorrectly can appeal directly to the manager. Further discussion was postponed.
Senator Townsend asked about splitting the subsequent injury fund, number 2, page 5, Exhibit C. Mr. Young thought a bifurcated fund system would simplify everything. Mr. Ostrovsky agreed, and said the split would eliminate the problem of SIIS drawing more out of the subsequent injury fund than it put in, at the expense of self-insureds.
Senator Townsend asked what happened to money left in a subsequent injury fund at the end of the year. Ms. Ostrovsky said it would be refunded to the insurer on a pro-rata shared basis. Mr. Young said there was not actually a fund, "...it's an assessment we pay to them and they just use it to pay us back or pay the self-insureds back."
Mr. Jim Jeppson, Administrator, Division of Industrial Insurance Regulation, concurred. Senator Townsend asked if it was true that in any other DIIR fund, money not used would revert to a general fund. Mr. Jeppson did not know, and Senator Townsend said he would get an answer, "...because that's unacceptable."
There was a discussion as to how much money was in the subsequent injury fund. Senator Nevin expressed displeasure with the fund, referring to it as a "float" fund. Mr. Ostrovsky stated there was $14,000,000 in the fund two years ago. Mr. Jeppson offered to get the current balance for the committee.
Senator Townsend said the committee would replace number 2 with language provided by Mr. Young and Mr. Ostrovsky.
SENATOR NEVIN MOVED TO APPROVE AMENDED INDUSTRIAL INSURANCE CLASSIFICATIONS, RATES AND FUNDS, NUMBER 2.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Tim Terry, Deputy Attorney General, Medicaid Fraud Control Unit, presented Exhibit E, a fiscal note on SIIS Fraud Unit Protection. He noted the estimates assume all new positions are being created, and all new equipment and operation costs are going to be incurred.
Senator Townsend wondered why a new position needed to be created to head the fraud unit. He asked if this position could be filled by the current criminal deputy. Mr. Terry assured him that the criminal division had their hands full already.
Senator Brown noted, "...if we have all these investigators and we find all this fraud, we still have to prosecute or we don't get anything out of it."
Mr. Terry replied, "It is a team concept, as presented in the bill draft, like the Medicaid Fraud Unit approach."
Senator Townsend asked what the estimated return would be on the fraud unit.
Mr. Robert Pike, Chief Investigator, Investigations Division, Attorney General's Office, thought that after the first year they would show a return on the money expended.
Senator Townsend said the committee would not authorize spending $1.7 million without knowing what they would be getting in return. He said the committee needed to see a recovery rate of at least $400,000.
Senator Nevin said he thought the fraud unit would have no problem acquiring that amount, as this would be the most aggressive fraud unit in the state.
Senator Shaffer cautioned against being too aggressive with the abusers.
A discussion took place on transferring personnel from SIIS to the fraud unit. Mr. Young mentioned the problem of transferring physical assets from one unit to another.
Senator Townsend asked if employers would fund the fraud unit.
Mr. Pike responded affirmatively.
A discussion ensued on the formula that would be used for assessing the fraud unit costs in regards to SIIS and the self-insureds. Mr. Terry said the Attorney General's office would approach the Department of Industrial Relations (DIR), which is responsible for the assessments from the insurers, and ask them for the money. Ms. Rankin responded that the formula DIR uses for the assessment is reviewed by their actuary. Mr. Zimmerman stated assessments by DIR are based on claims expenditures made by SIIS and by each individual employer for the prior fiscal year.
Mr. Zimmerman expressed concern about the response time for hiring an investigator if the Attorney General's Office took over fraud control. Mr. Terry assured the committee that they would have offices in Reno and Las Vegas where the greater population is, as well as cars equipped with radios. He said the goal of the fraud unit was to have the same response time as the private sector.
There was further discussion regarding assessment. Ms. Jackson said that assessment should be based on the total dollar amount it would cost to fund the unit. She offered to get a cost breakdown and a workup done by Administrative Services, based on numbers presented by the Office of the Attorney General. Ms. Jackson thought that would be fairer than speculating what the cost would be.
When asked to comment, Stan Smith, President, Nevada Self Insureds Association (NSIA), testified from Las Vegas that the NSIA was in total agreement with Ms. Zimmerman's comments.
Mr. Sam McMullen, Nevada Self Insureds Association (NSIA), said he wanted to examine what share self-insureds would have of the assessment and compare it to the use they would get out of it.
Senator Shaffer asked "How much credibility would you put on the self-insureds evidence or would you rather have your own evidence, for prosecuting a case?" Mr. Terry said he would have no problem accepting their evidence.
Senator Townsend said he wanted more information on the fraud unit, from those involved, before the committee would vote on it.
Mr. Dave Owen, Risk Manager, Clark County School District, testified before the committee from Las Vegas. He stated the response time of the fraud unit was of critical importance because of the large number of employees the school district has.
Senator Townsend stated the hearing would now focus on the Overview of Remaining Workers' Compensation Proposals (Exhibit D). He referred to Fraud, number 1, page 1, which prohibits an employer from declaring bankruptcy and reopening as a similar business to avoid paying his debt to SIIS for workers' compensation coverage, and require the employer to pay his debt to the system.
Senator O'Connell asked if there was a problem of making another person an accomplice to this act. Mr. Young stated that SIIS would try to incorporate a penalty in this proposal for an accomplice. He expressed concern that someone who is legitimately bankrupt needed to be protected. Mr. Young cautioned against providing a loophole by allowing a good faith exception. Senator Brown said a bad faith case is extremely expensive to litigate and wondered if SIIS could bear that burden. Mr. Young agreed that it was very expensive and difficult to litigate.
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 1, UNDER FRAUD.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Young addressed the proposal under Fraud, number 2, page 1, Exhibit D, which prohibits the DIR from imposing a fine on an insurer for deducting amounts from the claimant's future benefits whom they [the insurer] suspected had obtained benefits by fraud, unless the insurer had no reasonable basis for making the deductions. Mr. Young thought the insurer should not be fined if there was reasonable evidence of fraud presented.
Mr. John McGlamery, Attorney, DIR, agreed saying, "This needs to be a discretionary function of the administrator of DIR to look at the case and define if there was abuse, then there's a justification for a higher fine...if you put the discretion back into it, and you put the fairness back into it, I think you're going to solve this problem."
Mr. McNally thought that accountability needed to remain in the proposal.
Mr. Young and Mr. McGlamery expressed a desire to have flexibility in the proposal in regards to a fining policy.
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 2, UNDER FRAUD.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend read number 5, under Fraud, Exhibit D, to the committee. Senator O'Connell expressed concern that there be a time period for action on the statute, which would require cases of fraud by a medical professional be referred to the individual's professional licensing board for appropriate action.
Mr. McNally said the NTLA would support this legislation as long as the referral was due to a conviction and not an allegation.
Senator Nevin asked if 30 days sounded like a reasonable amount of time in which action must be taken.
Mr. McNally suggested "...the referral aspect be the time limit."
SENATOR NEVIN MOVED TO APPROVE NUMBER 5, UNDER FRAUD, WITH THE AMENDMENT THAT ACTION MUST BE TAKEN IN 30 DAYS.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend referred to Determination of Benefits, number 1, page 2, Exhibit D. This proposal prohibits payment of compensation if an employee has a preexisting condition or sustains a subsequent injury that is not the primary cause of the resulting disability. Mr. Young said this was a provision that the State of Oregon adopted, and was crucial to Nevada's system.
Mr. McNally stated NTLA would oppose this proposal. He cited court cases which gave the claimant the burden of proof to establish the industrial causation. Mr. McNally said, "We believe it is inappropriate to add an additional burden of proof, especially where a physician is required to certify a legal, rather than medical, standard."
Mr. Young responded that SIIS deals with medical/legal issues all the time.
Mr. Ostrovsky said the consensus group spent a lot of time addressing this issue. He said that it was a hard issue, and there were good arguments on both sides.
Ms. Lynn Grandlund, Grandlund, Watson, Clark and Associates, testified. "When an employer has to pay a 20 percent PPD impairment for a penile implant, due to sexual dysfunction, that was determined during the course of the claim not to be industrial, that drives costs to all employers through the ceiling. This would prohibit that type of situation...to exist."
Mr. Dan Thompson testified on behalf of AFL-CIO, and said they were opposed to the proposal.
Mr. McMullen said he wanted to get all of the groups on record who support this proposal. "Our position is, if it isn't the primary cause, it shouldn't be compensable," he added.
Mr. McNally explained apportionment and gave an example. He said apportionment might be "somewhat of a middle ground, when someone who has what appears to be an insignificant minor thing, as a result of this asympomatic condition, now all of a sudden they go to hell in a handbasket, because of this condition that's now accelerated or aggravated, maybe make some apportionment availability more stringent .. or more liberal...by allowing physicians to go back and look at records."
Mr. Dean Hardy, NTLA, cited the Kelly case. Mr. Kelly had a preexisting condition that became aggravated by his current job. He was denied a surgical procedure and took the case to the Supreme Court. They ruled in his favor, he received the minor surgery and went back to work.
Mr. Hardy thought some of the claims with preexisting conditions
were legitimate and should be given consideration.
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 1, UNDER DETERMINATION OF BENEFITS.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED WITH ONE DISSENTING VOTE. (Senator Brown opposed the motion.)
* * * * *
Mr. Young testified regarding Compensation Benefits, number 1, page 2, Exhibit D. He provided figures which would show the impact of the Harrison Decision (Exhibit F). Mr. Young demonstrated a dramatic impact in some cases, less in others. "It appears that the range of successful applications of the Harrison rule is somewhere in the neighborhood of twenty or so a year," he added.
Mr. McNally stated the NTLA opposed this proposal because the Harrison Decision would produce a fair result in a very limited number of cases.
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 1, UNDER COMPENSATION BENEFITS.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Young responded to Compensation Benefits, number 2. He stated SIIS wanted to ensure that if someone is declared permanently disabled, and they improve, the insurer could examine that person to see if they still require permanent total disability. He assured the committee that these examinations would not be at random. Mr. Young told Senator Nevin he would provide a count of how many people, in the pensions department, have been identified who might be examined.
Mr. Badger said, "... you might want to add that, if any insurer decides a person has become unpermanently totally disabled, or is not now, it ought to be their burden of proof...it should be the insurer's burden to show the change..." He added it would be inappropriate to resume the legal battle years later, with the same medical evidence. Mr. Young agreed.
SENATOR NEVIN MOVED TO APPROVE NUMBER 2, UNDER COMPENSATION BENEFITS, WITH AMENDMENT.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Compensation Benefits, number 4 prohibits a dependent from bringing an independent action for benefits which were previously denied to the injured worker. Mr. Young referred to the Lodge case, where the issue was whether the compensation rights flowed through the injured worker and the survivor did not have greater rights than the worker, or whether the survivor had an independent right to benefits. The Supreme Court decided the survivor does have an independent right, he said.
Mr. McNally expressed concern over this proposal, "That may very well be cutting off someone's cause of action before they even have it."
In response, Mr. Young said, "What we were trying to do is limit it, the application of this, to cases where the original injured employer had some kind of a determination and lost, or did not perfect their rights. So, it should end then..." Mr. Lodge presented his case in an untimely manner.
Mr. McNally expressed concern over the timeliness issue. "A statute like this might be getting into some constitutional deprivation," he said.
Senator Brown asked if this would apply to a person who filed a claim which was denied, and died before a limit was placed on his appeal process time. Mr. Young assured her it would not apply to this case, and the survivor would be "substituted for the plaintiff."
SENATOR O'CONNELL MOVED TO APPROVE NUMBER 4, UNDER COMPENSATION BENEFITS.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend referred to Compensation Benefits, number 5, which would clarify the year of data to be used for setting the maximum wage base for workers' compensation benefits.
Ms. Nancyann Leeder, Nevada Association of Injured Workers, said this proposal would amend the average monthly wage (NRS 616.027). She thought she might change the table at the bottom of the statute, which said that certain years would have an average monthly wage deemed at a certain figure. The figures inaccurately reflect what an injured worker would receive, Ms. Leeder explained.
Further discussion on proposal number 5 was postponed by Senator Townsend.
Mr. Young testified regarding Claims Administration, number 1. He exlained that the proposal would clarify that the spouse at the time of death is the spouse who is entitled to receive benefits.
SENATOR NEVIN MOVED TO APPROVE NUMBER 1, UNDER CLAIMS ADMINISTRATION.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend praised the committee for their efforts, past and present, regarding workers' compensation. He adjourned the meeting at 10:45 a.m.
RESPECTFULLY SUBMITTED:
Sheri Asay,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
??
Senate Committee on Commerce and Labor
February 4, 1993
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